2018
CIVIL LAW
PART I: GENERAL PRINCIPLES
I. EFFECT AND APPLICATION OF LAWS
The New Civil Code (NCC) took effect on
August 30, 1950.
A. When Laws Take Effect (Art. 2, NCC)
Three possible scenarios:
1. If the law is silent as to its date of
effectivity: It takes effect after fifteen
(15) days following the completion of its
publication in the Official Gazette or in a
newspaper of general circulation. (Article 2,
as amended by E.O. No. 200).
2. If the law provides for its own date of
effectivity: It takes effect on such date,
provided there is publication. Publication is
indispensable. (Tañada v. Tuvera, G.R. No. L-
63915, April 24,1985, 136 SCRA 27)
3. If the law provides that it shall take
effect immediately upon its approval:
It takes effect immediately after its
publication. There is nothing in E.O. No.
200 that prevents a law from taking effect
on a date other than – even before – the
15-day period after its publication. Where
a law provides for its own date of
effectivity, such date prevails over that
prescribed by E.O. No. 200.(La Bugal-B’laan
Tribal Association, Inc. v. Ramos, G.R. No.
127882, 27 January 2004, [421 SCRA 148])
 "unless it is otherwise provided"
refers to the date of effectivity and not to
the requirement of publication itself, which
cannot in any event be omitted. This clause
does not mean that the legislature may
make the law effective immediately upon
approval, or on any other date, without its
previous publication. [Tañada v. Tuvera, Id.]
Publication
Publication is indispensable in every case, but
the legislature may in its discretion provide that
the usual fifteen-day period shall be shortened
or extended. (Tañada v. Tuvera, 146 SCRA 446)
Where to publish
PURPLE NOTES
1. Official Gazette (See Art. 2)
2. Newspaper of general circulation (EI no.
200)
 To be a newspaper of general circulation, it
is enough that it is published for the
dissemination of local news and general
information, that it has a bona fide
subscription list of paying subscribers, and
that it is published at regular intervals.
(Fortune Motors Phils. Inc. vs. Metropolitan
Bank and Trust Company, G.R. No. 115068,
citing Basa vs. Mercado 61 Phil. 632)
 The publication must be in full since
the purpose is to inform the public of the
contents of the law (Phil. Int’l Trading Corp.
v. Angeles, G. R. No. 108461, October 21,
1996)
When Publication is Required
1. Laws or statutes, including local and
private laws;
2. Presidential Decrees;
3. Executive Orders [Tañada v. Tuvera, Id.];
4. Administrative Rules and Regulations - if
their purpose is to enforce or implement
existing laws pursuant to a valid
delegation;
5. City Charter;
6. Circulars and Regulations prescribing
penalty for its violation;
 Before the public is bound by its
contents, especially its penal provisions,
a law, regulation or circular must first be
published and the people must be
officially and specifically informed of
said contents and its penalties (People v.
Que Po Lay, G.R. No. L-6791, March 29,
1954)
7. Circulars issued by the Monetary Board
where the purpose is not merely to
interpret but to fill in the details of the
Central Bank Act.
When Publication is NOT Required
1. Interpretative regulations and those merely
internal in nature regulating only the
personnel of the administrative agency and
not the public;
2. Letters of instructions issued by
administrative superiors concerning the
rules or guidelines to be followed by their
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subordinates in the performance of their are unknown or the facts come to an
duties some fact is erroneous conclusion as to
supposed to exist its legal effects
Note: which really does
 Administrative rules and regulations must not exist.
be published if their purpose is to enforce Good faith is an Not excusable, even if in
or implement existing laws pursuant to a excuse good faith
valid delegation.
C. Non Retroactivity of Laws (Art. 4,
 Circulars and regulations prescribing
NCC)
penalty for its violation should be published
before becoming effective on the general
General rule: Laws shall have no retroactive
principle and theory that before the public
effect.
is bound by its contents, especially its
penal provisions, a law, regulation or
Exceptions:
circular must first be published and the
people must be officially and specifically
1. Expressly provided by the law;
informed of said contents and its penalties.
2. Laws creating new substantive rights;
(People v. Que Po Lay, G.R. No. L-6791, March
29, 1954) 3. Emergency laws;
4. Remedial statutes;
B. Ignorance of the Law (Art. 3, NCC) 5. Curative statutes;
6. The law provides for its retroactivity;
Ignorance of the law excuses no one from 7. Penal laws favorable to the accused who is not a
compliance therewith. recidivist or a habitual delinquent;
8. Interpretative statutes; and
Conclusive Presumption 9. Tax laws when expressly declared so.
 Applies only to mandatory and prohibitory
laws; Exceptions to the Exception:
 It does not include those that are merely 1. When laws creating new substantive rights
permissive; for the first time impairs those already with
 It does not apply to foreign laws because vested rights (Belen v. Belen, 49 O.G. 997;
of lack of judicial notice. It must be proved Peo v. Alejaga, 49 OG 2833)
like any other matter of fact. (Ching Huat vs. 2. Ex Post Facto Laws;
Co Heong, G.R. No. L-1211, January 30, 1947) 3. Laws that impair obligation of contracts

Ignorantia facti excusat - Ignorance or D. Mandatory or Prohibitory Laws (Art.

mistake in point of fact is a sufficient excuse. 5, NCC)
(U.S. vs. Ah Chong, G.R. No. L-5272, March 19,
1910) General rule: Acts executed against
mandatory or prohibitory laws are void.
MISTAKE OF
MISTAKE OF LAW
FACT Exceptions:
Want of knowledge Want of knowledge or 1. When the law authorizes it, recognizes
of some facts acquaintance with the laws legal effect;
constituting or of the land insofar as they 2. When the law only makes the act voidable
relating to the apply to the act, relation, and not void; or
subject matter in duty, or matter under 3. When the law makes the act valid but
hand. consideration. punishes the violator.
When some facts Occurs when a person
which really exist having full knowledge of

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E. Waiver of Rights (Art. 6, NCC)
Rights - It is a legally enforceable claim of one
person against another, that the other shall do
a given act, or shall not do a given act (Pineda,
Persons, p. 23)
Waiver – the intentional or voluntary
relinquishment of a known right, or such
conduct as warrants an inference of the
relinquishment of such right.
Requisites of a valid waiver:
1. Existence of right
2. Knowledge of the person as to the
existence of the right
3. Actual intention and capacity to relinquish
the right
4. Waiver must be clear and unequivocal
5. Compliance of the required formalities
6. Must not prejudice third persons
General rule: Rights may be waived
Exceptions:
1. When waiver is contrary to law, public
morals, public policy and good customs;
2. When waiver is prejudicial to a third person
in a right recognized by law;
3. Waiver of inchoate rights (e.g. future
inheritance)
4. When it is a natural right (e.g. right to
support); or
5. When there is a particular formality
required by law.
F. Repeal of Laws (Art. 7, NCC)
Two ways of repealing a law:
1. Express repeal – when the statute’s
repealing clause specifically designates the
law to be repealed.
Note: When a law which expressly repeals
a prior law is itself repealed, the law first
repealed shall not be revived unless
expressly so provided.
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2. Implied repeal – the provisions of the
subsequent law is incompatible with the
previous law.
Requisites:
a. Both laws cover the same subject; and
b. The latter is repugnant to the earlier law.
 When a law which repeals a prior law, not
expressly but by implication, is itself
repealed, the repeal of the repealing law
revives the prior law, unless the language
of the repealing statute provides otherwise
(U.S. v. Soliman, 36 Phil 5)
Repeal of a repealing law
Express No revival
Implied Revival of prior law
Rules for general and special laws
In case of conflict between a general law and a
special law:
1. If the general law was enacted prior to the
special law, the latter is considered the
exception to the general law.
 The general law remains a good law
and there is no repeal.
2. If general law was enacted after the special
law, the special law remains, unless:
a. There is an express declaration to the
contrary;
b. There is a clear, necessary and
irreconcilable conflict; or
c. Subsequent general law covers the
whole subject and is clearly intended to
replace the special law on the matter.
G. Judicial Decisions (Art. 8, NCC)
Judicial decisions applying or interpreting the
laws or the Constitution shall form part of the
legal system of the Philippines.
 Only decisions of the Supreme Court
establish jurisprudence or doctrines in this
jurisdiction (Miranda vs. Imperial, 77 Phil.
1066)
General rule: Judicial decisions form part of
the law of the land as of the date of the
enactment of said law. This is so because the
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Supreme Court’s interpretation merely
establishes the contemporaneous legislative
intent that the construed law purports to carry
into effect.
Exception: When a doctrine however is
overruled and a different view is adopted, the
new doctrine should be applied prospectively
and should not prejudice parties who relied on
the old doctrine.
Stare Decisis
 When a court has laid down a principle of
law as applicable to a certain state of facts,
it will adhere to that principle and apply it
to all future cases in which the facts are
substantially the same. Stare decisis means
that when a conclusion is reached in one
case should be applied to those that follow
if the facts are substantially the same, even
though the parties may be different. It
proceeds from the first principle of justice
that, absent any powerful countervailing
considerations, like cases ought to be
decided alike. (Nancy L. Ty v. Banco Filipino
Savings, G.R. No. 188302, June 27, 2012)
Prospective application of new doctrines
When a doctrine of the Supreme Court is
overruled and a different view is adopted, the
new doctrine should be applied prospectively
and should not apply to parties who had relied
on the old doctrine and acted on the faith
thereof.
Effect of doubt in interpretation or
application of laws:
1. In case of doubt - It must be presumed
that the lawmaking body intended right
and justice to prevail.
2. If the law is clear - It is the duty of the
judge to apply the law even if the
application of the law may seem to be
harsh.
3. Resort to equity - It is applied only in the
absence of, and never against, statutory
law or judicial rules of procedure.
H. Duty to Render Judgment (Art. 9,
NCC)
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No judge or court shall decline to render
judgment by reason of the silence, obscurity or
insufficiency of the laws.
Exception: This article does not apply to
criminal prosecutions because where there is
no law punishing an act, the case must be
dismissed.
I. Presumption and Applicability of
Customs (Arts. 10-12, NCC)
Customs – Rule of conduct formed by
repetition of acts, uniformly observed as a
social rule, legally binding and obligatory.
General rule: Customs must be proved as
fact, according to the rules of evidence.
Exception: Courts may take judicial notice of
a custom if there is already a decision rendered
by the same court recognizing the same
custom.
Requisites to make a custom an
obligatory rule:
1. Plurality of acts or various resolutions of a
juridical question raised repeatedly in life;
2. Generally practiced by the great mass of
the social group;
3. Uniformity, or identity of acts or various
solutions to the juridical question;
4. The continued performance of their acts for
a long period of time;
5. The community accepts it as the power
way of acting such that it is considered as
obligatory upon all; and
6. The practice must not be contrary to law,
morals or public order.
J. Legal Periods (Art. 13, NCC as
amended by Book I, Sec. 31 of the
Administrative Code of 1987 (EO 292)
Rule if the last day is a SUNDAY or LEGAL
HOLIDAY
 If the act to be performed is within the
period is prescribed or allowed by any of
the following:

a. Rules of Court;
b. Order of the Court;
c. Other applicable statute; or
d. Stipulation of the parties
General Rule: The last day will automatically
be the next working day.
Except: If the act to be performed within the
period arises from the contractual relationship,
the act will become due on the date specified
despite the fact that the last day falls on a
Sunday or a Holiday.
Counting of periods
Year – it is understood to be twelve calendar
months.
 The provision of Article 13 of the NCC, as
to the meaning of a year, was impliedly
repealed by the Sec. 31, Chapter VIII, Book
I of the 1987 Administrative Code.
 Under the Administrative Code, the number
of days is irrelevant. (e.g. 12-calendar
months after January 31, 2012 is simply
January 31, 2013, regardless of leap year
on 2012)
 The provision of Article 13 of the NCC with
respect the meaning of a year was already
impliedly repealed by Section 31, Chapter
8, Book 1 of the 1987 Administrative
because the two provisions are totally
incompatible. Under the Civil Code, a year
means “365 days,” where the actual
number of days is important; whereas,
under the Administrative Code, a year
simply means “12 calendar months,” where
the actual number of days is no longer
important. [CIR v. Primetown Property
Group, Inc., 531 SCRA 436 (2007); CIR v.
Aichi Forging Company of Asia, Inc., 632
SCRA 422 (2010); and Co v. New
Prosperity Plastic Products, 727 SCRA 503
(2014)]
Month – understood to be thirty (30) days
unless it refers to a specific calendar month in
which case it shall be computed according to
the number of days the specific month
contains.
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Day – means 24 hours.
Night – it means from sunset to sunrise.
Note: In counting the period, the first day is
excluded while the last day is included.
K. Applicability of Penal Laws (Art. 14,
NCC)
Penal laws and those of public security and
safety shall be obligatory upon all who live or
sojourn in the Philippine territory, subject to
the principles of public international law and to
treaty stipulations.
Exemptions under International Law
(Theory of Extraterritoriality):
1. When the offense is committed by a
foreign sovereign while in Philippine
territory;
2. When the offense is committed by
diplomatic representatives; or
3. When the offense is committed in a public
or armed vessel of a foreign country.
L. Conflict of Laws
Conflict of laws – part of the municipal laws
of a state, which directs its courts and
administrative agencies, when confronted with
a legal problem involving a foreign element,
whether or not they should apply a foreign law.
1. Territoriality of penal laws
Penal laws and those of public security are
obligatory upon all who live or sojourn in the
Philippines
Exceptions:
a. Treaty stipulations; and
b. Principles of international law
2. Nationality principle (status laws)
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Laws relating to the following are binding upon
citizens of the Philippines, even though living
abroad (Art. 15, NCC):
a. Family rights and duties,
b. Status;
c. Condition; and
d. Legal capacity of persons.
Exception: 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, except the following:
1. Marriage contracted by minors (Art. 35 [1],
Family Code (FC))
2. Bigamous or polygamous marriages (Art. 35
[4], FC)
3. Marriage through mistake of identity of the
other contracting party (Art. 35 [5], FC)
4. Non compliance of recording requirements
with civil registry and registry of properties
concerning annulment or nullity of
marriage partition and distribution of
properties of spouses and presumptive
legitimes of children (Art. 35 [6], FC)
5. Psychological incapacity (Art. 36, FC)
6. Incestuous marriages (Art. 37, FC)
7. Void marriage due to public policy (Art. 38,
FC)
Note: The domiciliary rule supplants the
nationality rule in case of stateless individuals.
Application of rule to absolute divorce
General rule: Our family laws do not
recognize absolute divorce between Filipino
citizens. (Garcia vs. Recio, G.R. No. 138322,
October 2, 2001, 366 SCRA 437)
Exception: Where a marriage between a
Filipino citizen and a foreigner is validly
celebrated and a divorce is thereafter validly
obtained abroad by the alien spouse
capacitating him or her to remarry, the Filipino
spouse shall likewise have capacity to remarry
under Philippine law. (Corpuz vs. Sto. Tomas, G.R.
No. 186571, August 11, 2010) (Article 26, FC)
3. Lex Rei Sitae (Property laws)
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Real property as well as personal property is
subject to the law of the country where it is
situated (Art. 16 [1], NCC). This includes all
aspects including formalities. (Orayon savings
bank vs Suzuki)
Exceptions: National Law of the decedent will
apply in:
a. Order of succession in intestate or
testamentary succession;
b. Amount of successional rights;
c. Intrinsic validity of the provisions of the
will; or
d. Capacity to succeed from the decedent.
4. Lex Loci Celebrationis (Laws on forms
and solemnities)
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. (Art. 17, NCC)
Exceptions:
a. Lex Loci Celebrationis - does not apply
to contracts of marriage involving Filipinos
solemnized abroad when such marriages
are void in the Philippines (Pineda, Persons,
2000 ed., p.60)
b. Rule of Extra-territoriality - 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. (Art. 17 [2], NCC)
c. Rule on Prohibitive Laws - prohibitive
laws concerning persons, their acts or
property and those which have for their
object public order, public policy or good
customs are not rendered ineffective by
laws or, judgments promulgated or by
determinations or conventions agreed upon
in foreign country. (Article 17[3], NCC)
Note: Under the rule of lex loci celebrationis,
contract executed in a foreign country is

considered valid as long as it is valid in
accordance with the law of the place where it
was celebrated. However, if such kind of
contract is prohibited under the Philippine laws
like those provided under Art. 26 par. [1] of
E.O. 207, then such contract is not valid.
Theories on personal law
1. Domiciliary Theory – the personal laws
of a person are determined by his domicile.
2. Nationality Theory – the citizenship of a
person is the basis for determining the
personal laws of an individual.
Doctrine of Renvoi
When our law refers a case to another country
for solution, but the law of that country refers
it back to our country for determination. Renvoi
takes place when the conflicts rule of the forum
makes a reference to a foreign law, but the
foreign law is found to contain a conflict rule
that returns or refers the matter back to the
law of the forum (Remission).
Doctrine of Lex Fori (or presumed-identity
approach)– means law of the forum. It applies
whenever the content of the otherwise
applicable foreign law is excluded from
application in a given case for the reason that it
falls under one of the exceptions to the
applications of foreign law. (Saudi Arabian
Airlines vs. Court of Appeals, G.R. No. 122191,
October 8, 1998)
Doctrine of Processual Presumption – (or
presumed-identity approach) If the application
of a foreign law is invoked, that foreign law
must be proved as a fact by the rules of
evidence. In the absence of proof, it is
presumed to be the same as that of the
Philippine law.
 Where a foreign law is not pleaded, or
even if pleaded, is not proved, the
presumption is that foreign law is the same
as ours (ATCI Overseas Corporation vs. Echin,
G.R. No.178551, October 11, 2010)
 In a petition for support of a child. If
foreign law is contrary to public policy even
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PURPLE NOTES
if it is legal in the country of the national, it
will not be given application in the
Philippines. (Del Soccoro v. Van Wilsem [744 SCRA
516 (2014)]
Other principles in conflict of laws:
 Transmission theory – Provides that
when the conflicts rule of the forum makes
a reference to a foreign law, but the
foreign law is found to contain a conflict
rule that refers it to a third country, the law
of the third country shall apply.
 Doctrine of Operative Facts – Acts done
pursuant to a law which was subsequently
declared unconstitutional remain valid, but
not when the acts are done after the
declaration
II. HUMAN RELATIONS (Articles 19-22,
NCC)
Principle of abuse of rights - Every person
must, in the exercise of his rights and in the
performance of his duties, act with justice, give
everyone his due, and observe honesty and
good faith. (Art. 19, NCC)
Elements of abuse of rights:
1. There is a legal right or duty;
2. It is exercised in bad faith; and
3. For the sole intent of prejudicing or injuring
another.
Damnum Absque Injuria (Damage
without injury)
A person who only exercises his legal rights
does no injury.
General rule: In the exercise of one’s right,
there is no actionable injury and no one can be
held liable for damages.
Exceptions:
1. Abuse of rights; and
2. When the exercise of a right is suspended
or extinguished pursuant to a court order.
(Amonoy vs. Gutierrez, G.R. No.
140420, February 15, 2001, 351 SCRA 731)
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Doctrine of Volenti Non Fit Injuria
“To which a person assents is not esteemed in
law as injury.”
It refers to self–inflicted injury or to the
consent to the injury which precludes recovery
of damages by one who has knowingly or
voluntarily exposed himself to danger, even if
he is not negligent in doing so . (Nikko Hotel Manila
Garden vs. Roberto Reyes, G.R. NO. 154259, Feb 28,
2005)
Willful and negligent acts
Anyone who, contrary to law, willfully or
negligently causes damage to another, shall
indemnify the latter for damages. (Art. 20, NCC)
Acts Contra Bonos Mores (Acts contrary
to good morals)
Any person who willfully causes loss or injury to
another in a manner that is contrary to morals,
good customs or public policy shall compensate
the latter for the damage. (Art. 21, NCC)
Articles 19, 20, 21 are related to each other.
Under these articles, an act which causes an
injury to another may be made the basis for an
award for damages.
 While under Articles 19 and 21, the act
must be done intentionally, Article 20 does
not distinguish the act and may either be
willful or negligent. However, the act must
be contrary to law. (Albenson Enterprise
Corporation vs. Court of Appeals G.R. No. 88694,
January 11, 1993)
Breach of promise to marry
Breach of promise to marry per se is not an
actionable wrong. To be actionable, there must
be some act independent of the cause of the
breach, such as:
1. Fraud or deceit (Gashem Shookat Baksh v.
CA, 1993, 219 SCRA 115)
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2. Forcible abduction and rape (Buñag, Jr.
vs.CA, 211 SCRA 440).
3. Actual expenses are actually incurred in
preparation for the wedding and the
necessary incidents thereof. (Wassmer vs.
Velez, 12 SCRA 648).
 Mere breach of promise to marry is not an
actionable wrong. But to formally set a
wedding and go through all the above-
described preparation and publicity, only to
walk out of it when the matrimony is about
to be solemnized, is quite different. This is
palpably and unjustifiably contrary to good
customs for which defendant must be held
answerable in damages in accordance with
Article 21. (Wassmer v.Velez, 12 SCRA 648,
Dec. 26, 1964)
Duty to return what was acquired
unjustly or illegally
Every person who through an act of
performance by another, or any other means,
acquires or comes into possession of something
at the expense of the latter without just or
legal ground, shall return the same to him. (Art.
22, NCC)
Accion in Rem Verso
Principle of unjust enrichment – action for
recovery of what has been paid without just
cause.
Requisites:
1. Defendant has been enriched;
2. Plaintiff suffered a loss;
3. Enrichment of defendant is without just or
legal ground; and
4. Plaintiff has no other action based on
contract, quasi contract, crime or quasi-
delict.
Note: This is applicable only if someone
acquires or comes into possession of something
(by delivery or acquisition).
Accion in Rem Verso Distinguished from
Solutio Indebti: Mistake is an essential

element in solutio indebti but not in accion in
rem verso.
Duty to indemnify because of benefit
received
Even when an act or event causing damage to
another's property was not due to the fault or
negligence of the defendant, the latter shall be
liable for indemnity if through the act or event
he was benefited. (Art. 23, NCC)
Protection of the underdog
In all contractual, property or other relations,
when one of the parties is at a disadvantage on
account of his moral dependence, ignorance,
indigence, mental weakness, tender age or
other handicap, the courts must be vigilant for
his protection. (Art. 24, NCC)
 The Court ruled for the petitioner, a
college instructor and a non-lawyer, who
did not fully understand the terms and
conditions contained in, and the
consequences of entering into the
compromise agreement. (Santiago IV vs. NLRC,
G.R. No. 84578, September 7, 1989)
Thoughtless extravagance
Thoughtless extravagance in expenses for
pleasure or display, during a period of acute
public want or emergency, may be stopped by
order of the courts at the instance of any
government or private charitable institution.
(Art. 25, NCC)
Duty to respect dignity and privacy
Every person shall respect the dignity,
personality, privacy and peace of mind of his
neighbors and other persons. The following and
similar acts, though they may not constitute a
criminal offense, shall produce a cause of
action for damages, prevention and other
relief:
1. Prying into the privacy of another's
residence;
2. Meddling with or disturbing the private life
or family relations of another;
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3. Intriguing to cause another to be alienated
from his friends;
4. Vexing or humiliating another on account
of his religious beliefs, lowly station in life,
place of birth, physical defect, or other
personal condition. (Art. 26, NCC)
Refusal or neglect to perform official duty
Any person suffering material or moral loss
because a public servant or employee refuses
or neglects, without just cause, to perform his
official duty may file an action for damages and
other relief against the latter, without prejudice
to any disciplinary administrative action that
may be taken. (Art. 27, NCC)
Nonfeasance – the omission of an act which a
person ought to do.
Misfeasance – the improper doing of an act
which a person might lawfully do.
Malfeasance – the doing of an act which a
person ought not to do at all.
Unfair competition
Unfair competition in agricultural, commercial
or industrial enterprises or in labor through the
use of force, intimidation, deceit, machination
or any other unjust, oppressive or highhanded
method shall give rise to a right of action by
the person who thereby suffers damage. (Art.
28, NCC)
 The Court ruled that private respondent
was engaged in a sinister form of unfair
competition when the latter purchased
goods from West Germany and sold the
same in the Philippines where the
petitioner is the exclusive distributor of
such goods. (Yu vs. CA, G.R. No. 86683,
January 21, 1993)
 The concept of "unfair competition" under
Article 28 of the NCC is very much broader
than that covered by intellectual property
laws. Under this article, which follows the
extended concept of "unfair competition" in
American jurisdictions, the term covers
9
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even cases of discovery of trade secrets of
a competitor, bribery of his employees,
misrepresentation of all kinds, interference
with the fulfillment of a competitor’s
contracts, or any malicious interference
with the latter’s business [Willaware Products
Corporation vs. Jesichris Manufacturing Corp.,
734 SCRA 238 (2014)].
 In order to qualify the competition as
"unfair," it must have two characteristics:
(1) it must involve an injury to a competitor
or trade rival, and (2) it must involve acts
which are characterized as "contrary to
good conscience," or "shocking to judicial
sensibilities," or otherwise unlawful; in the
language of our law, these include force,
intimidation, deceit, machination or any
other unjust, oppressive or high-handed
method. The public injury or interest is a
minor factor; the essence of the matter
appears to be a private wrong perpetrated
by unconscionable means.
 Effect: merely a ground for suspension
 Civil action result determines whether
or not criminal action should be tried
PART II: PERSONS AND FAMILY
RELATIONS
A. PERSONS AND PERSONALITY
(New Civil Code)
Person – any being, natural or artificial,
capable of possessing legal rights and
obligations (2 Sanchez Roman 110)
Two kinds of persons
1. Natural Persons – human being created
by God through the intervention of the
parents.
2. Juridical persons – those created by law
(2 Sanchez Roman 112-114)

Prejudicial Question (Art. 36, NCC) A. Capacity to Act and Juridical Capacity

General Rule: If both criminal and civil cases Civil Personality - the external manifestation
are filed in court, the criminal case takes of either juridical capacity or capacity to act. It
precedence. is the aptitude of being the subject of rights
and obligations (2 Sanchez Roman 114-147).
Exceptions:
Juridical Capacity - the fitness to be the
1. The issues in the civil case are subject of legal relations, is inherent in every
determinative of the outcome of the natural person and is lost only through death.
criminal case. Therefore, the criminal
case is suspended; Capacity to act - the power to do acts with
2. Independent civil action granted by law legal effect; it is acquired and may be lost. (Art.
 Breach of constitutional and other 37, NCC)
rights (Art. 32)
 Defamation, fraud, physical injuries JURIDICAL
CAPACITY TO ACT
(Art.33) CAPACITY
 Refusal or failure of city or Fitness to be the Power to do acts with
municipal police to give protection subject of legal legal effects.
(Art. 34) relations.
 Quasi-delict or culpa-aquiliana (Art. Passive Active
2177) Inherent in every Merely acquired; Not
Note: natural person. inherent
Lost only through Lost through death
 Civil action must be filed ahead of the death. and may be restricted
criminal (not vice versa) by other causes
 Not a ground for dismissal of a criminal Can exist without Cannot exist without
action capacity to act. juridical capacity

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Cannot be limited or Can be restricted
restricted. modified or limited.
Note: Juridical capacity can exist even without
capacity to act; the existence of the latter
implies that of the former.
Restrictions on capacity to act (Article
38, NCC)
1. Minority (below 18 years old) – a minor
needs parental consent before he can enter
into an ordinary contract, but a contract he
entered without parental consent is merely
voidable (Article 1327, CC) and will arise to
certain obligations from him. (Cruz v. Court
of Appeals, G.R. No. L-40880, October 13,
1979)
 Under RA 9344, the age of criminal
exemption was increased from 9 to 15
years old. A child less than 15 years old is
exempted from criminal liability for it is
conclusively presumed that he acted
without discernment while a child above 15
years old but below 18 years old is
presumed to have acted with discernment.
(Cruz v. Court of Appeals, G.R. No. L-40880,
October 13, 1979)
2. Insanity (condition in which a person’s
state of mind is sick) or imbecility (feeble-
mindedness or a condition in which a
person thinks like a small child).
 Insanity in one thing does not mean
insanity in another as in the case of
monomania or partial insanity (Standard Oil
Company of New York v. Arenas, 19 Phil. 363
[1911])
 An insane person under guardianship who
entered a contract is presumed to be
insane and the contract is voidable,
(Francisco v. Herrera, G.R. No. 139982,
November 21, 2002) but may be rebutted by
substantial evidence that the same acted
within his lucid interval, thus such contract
is valid. (Dumaguin v. Reynolds, 48 O.G. 3887)
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3. State of being deaf-mute – being a
deaf-mute is not by itself alone, without
the concurrence of any of the incapacities
recognized by law, considered included
among the exceptions which in matters of
prescription, are granted to incapacitated
persons, in connection with the running of
the prescriptive periods. (Director of Land v.
Abelardo, 54 Phil. 387)
4. Prodigality – state of squandering money
or property with a morbid desire to
prejudice the heirs of a person . (Martinez v.
Martinez, 1 Phil. 182 [1902])
5. Civil interdiction – deprivation by the
court of a person’s right:
a. To have parental or marital authority;
b. To be the guardian of the person and
property of a ward;
c. To dispose of his property by an act
inter vivos (he cannot donate, for this
is an act inter vivos; but he can make a
will, for this is a disposition mortis
causa)
d. To manage his own property (Art. 34,
RPC)
Note: The penalty of civil interdiction is given
to a criminal punished by imprisonment of 12
years and 1 day or more (Art. 41, RPC).
Note: These restrictions do not exempt the
incapacitated person from certain obligations
when the latter arise from his acts or from
property relations such as easements. (Art. 38,
NCC)
Modifications or limitations on capacity to
act (Art. 39, NCC)
1. Those enumerated under Art. 38, NCC;
2. Family relations – as to marriage and
support:
a. Incestuous and void marriages (Art. 37,
FC)
b. Donations/grants of gratuitous
advantage between spouses during the
marriage shall be void, except
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moderate gifts during family occasions
(Art. 87, FC)
c. Descendants cannot be compelled to
testify in a criminal case, against his
parents and grandparents unless:
crime was against the descendant or
by one parent against the other (Art.
215, FC)
d. Spouses cannot sell property to each
other, except: Absolute separation is
agreed upon in the marriage
settlements
e. Judicial separation of property (Art.
1490)
3. Aliens/Foreigners – limitations as to:
a. acquisition of private or public
agricultural land (Krivenkov. Reg. of
Deeds, 44 O.G.471);
b. practice medicine (Sec. 226, RAC);
c. vote or be voted upon; and
d. engagement in coast shipping (Sec.
1172, RAC);
B. Natural Persons
Commencement of Personality
General rule: Birth determines personality in
case of natural persons (Article 40, NCC).
Exception: The fetus is considered born if it is
alive at the time it is completely delivered from
the mother's womb [or often the cutting of the
umbilical cord] (Art. 41, NCC).
A child is considered born “for all purposes” if
after complete delivery from the mother’s
womb:
a) A fetus with intra-uterine life of at least 7
months is alive even if the same died after
few hours;
b) A fetus with intra-uterine life of less than 7
months is deemed to be born if alive within
24 hours after delivery (Art. 40, NCC)
 A conceived child, although as yet unborn,
is given by law, a provisional personality of
12 CENTER FOR LEGAL EDUCATION AND RESEARCH
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its own for all purposes favorable to it
(Quimiguing vs. Icao, 34 SCRA 132).
The Civil personality of the child shall
commence from the time of his conception for
all purposes favorable to him, subject to the
requirements of Article 41 of the New Civil
Code (Art. 5, PD 603).
Exception to the exception: If the fetus had
an intra-uterine life of less than 7 months and
dies within 24 hours after its complete delivery
from the mother’s womb is not deemed born
(Art. 41, NCC)
 There is no dispute that the child was dead
when separated from the mother’s womb,
therefore it lacked juridical personality and
no action for damages can be constituted.
Parents, however may recover moral
damages on account of distress and
anguish to the loss of the fetus and the
disappointment of their parental
expectations. (Geluz vs. CA, 2 SCRA 801)
 While the Civil Code expressly provides that
civil personality may be extinguished by
death, it does not explicitly state that only
those who have acquired juridical
personality could die—one need not
acquire civil personality first before he/she
could die. (Continental Steel Manufacturing
Corporation vs. Montaño, 603 SCRA 621, G.R.
No. 182836 October 13, 2009)
Extinguishment of Personality
Civil personality is extinguished by death. The
effect of death upon the rights and obligations
of the deceased is determined by law, by
contract and by will. (Art. 42, NCC)
Other legal effects of death:
1. The right to support ends (Falcon v. Arca,
G.R. No. L-18135, July 31, 1963)
2. A marriage, whether voidable or valid, also
ends, however the relationship by affinity
survives (Intestate Estate of Manolita Gonzales
Vda. De Carungcong v. People, G.R. No.
181409, February 11, 2010)
3. Tenure of public office ends (Abeja v.
Tañada, G.R. No. 112283, August 30, 1994)
 2018
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4. If an individual dies, the property or estate JURIDICAL COMMENCEMENT OF

left by him should be subject to the tax in PERSONS PERSONALITY
generally the same manner as if he were Public corporations, Their personality begins
alive. (Testate Estate of Fernandez, L-9441, institutions and as soon as they have
Sept 25, 1956) entities for public been constituted
interest or purpose, according to law.
5. If a person dies after he has authorized
created by law
another to sell former’s property, the sale
Corporation Upon issuance of
after such death is not valid, if made by the Certificate of
agent with knowledge of the principal’s Incorporation by the
death. This is true even if the buyer be in Security and Exchange
good faith (Rallos v. Felix Go Chan and Sons Commission (SEC)
Realty Corporation, L-24332, Jan 3, 1978) General partnership Upon the execution of the
 Note: Estate of a deceased is a person where no immovable contract (Art. 1784, NCC)
that may continue the personality of the property contributed
deceased even after death – for the General Partnership Upon the execution of the
purpose of settling debts (Limjuco v. Estate where immovable contract (Art. 1784, NCC)
of Pedro Fragrante, 45 O.G. No. 9, p. 397) property contributed which is a public
instrument with inventory
of immovable property
 The moment a person dies, juridical contributed attached
capacity is extinguished. Therefore, he therewith
could not be validly served with summons Limited Partnership Upon submission of a
nor convicted (Dumlao v. Quality Plastic signed and notarized
Products, Inc., G.R. No. L-27956, April 30, Articles of Partnership
1976) duly filed for record with
the SEC
 Death extinguishes criminal liability but not
civil liability, therefore the case shall Public Corporation – those formed or
continue in order to determine the civil organized for the Government, a part of the
liability of the accused (People v. Tirol, State.
G.R.No. L-30538, January 31, 1981)
Private Corporations – those formed for
Presumption of survivorship some private purposes, benefit, aim, or end as
1. If there is a doubt, as between two or distinguished from public corporationswhich
more persons who are called to succeed have for their purpose the general good and
each other, as to which of them died first, welfare. (Sec. 3, Corporation Code)
whoever alleges the death of one prior to
the other, shall prove the same; in the Private Corporations
absence of proof, it is presumed that they  Regulated by laws of general application on
died at the same time and there shall be no the subject.
transmission of rights from one to the other  Partnerships and associations for private
(Art. 43, NCC) interest or purpose are governed by the
provisions of this code concerning
C. Juridical Persons partnerships. (Art. 45, NCC)
 Begin to exist as a juridical person from the
Classification of Juridical Persons moment a Certificate of Incorporation is
granted to it. Certificate is issued upon
JURIDICAL COMMENCEMENT OF filing of the Articles of Incorporation before
PERSONS PERSONALITY the SEC. (Corporation Code; Paras, p. 251)
State and its political
subdivisions
 The Roman Catholic Church (RCC) is a
person, although not considered as a

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juridical person, there being no provision of
law for their organization as one. As such,
they can acquire lands in the Philippines.
RCC is an entity or person distinct to the
Pope or the Holy See. (Roman Catholic
Apostolic Adm., G.R. No. L-8451, December 20,
1957)
Nationality of Juridical Persons
General rule: The nationality of a corporation
is determined by the place of issuance of its
incorporation.
Exceptions:
1. For the grant of rights in the Constitution
to the operation of public utilities, and for
the acquisition of land and other natural
resources, a corporation, even if
incorporated here, cannot acquire said
rights, unless 60% of its capital is owned
by the Philippines.
2. During war, we may pierce the veil of
corporate identity and go to the very
nationality of the controlling stockholders
regardless of where the incorporation had
been made. (Davis Winship v. Philippine Trust
Co., G.R. No. L-3869, January 31, 1952)
 The Roman Catholic Church is a
corporation by prescription, with
acknowledged juridical personality (Barlin v.
Ramirez, 7 Phil. 41)
 Foreign corporation not doing business
in the Philippines and not licensed in the
Philippines may sue in the Philippines
(Converse Rubber Corp. v. Universal Rubber
Products, Inc., G.R. No. L-27906, January 8,
1987)
Rights of Juridical Persons (Art. 46, NCC)
1. To acquire and possess property of all
kinds, except those prohibited under the
law;
2. To incur obligations; and
3. To bring civil or criminal actions.
14 CENTER FOR LEGAL EDUCATION AND RESEARCH
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B. MARRIAGE (Family Code)
A. NATURE OF MARRIAGE
A marriage is a special contract of
permanent union between a man and a woman
entered into in accordance with law for the
establishment of conjugal and family life. It is
the foundation of the family and an inviolable
social institution whose nature, consequences,
and incidents are governed by law and not
subject to stipulation, except that marriage
settlements may fix the property relations
during the marriage within the limits provided
by the law. (Art. 1, FC)
Concepts of Marriage
a. It is a special contract of permanent union
between a man and a woman;
b. It is the foundation of the family; and
c. It is an inviolable social institution.
 Semper praesumitur pro matrimonio.
Persons dwelling together in apparent
matrimony are presumed, in the absence of
counter-presumption or evidence special to
the case, to be in fact married. The reason
is that such is the common order of
society, and if the parties were not what
they thus hold themselves out as being,
they would be living in the constant
violation of decency and of law. There is a
presumption in favor of marriage . (Adong
vs. Cheong See Gee, 43 Phil. 43, 1956)
Note: Under the Constitution, marriage, as an
inviolable social institution, is the foundation of
the family and shall be protected by the state
(Sec. 2, Art. XV of the 1987 Constitution)
Marriage vs. Ordinary Contracts
ORDINARY
MARRIAGE
CONTRACTS
Both a contract and a Merely a contract.
social institution.
Generally, nature and Stipulations are generally
consequences as well as fixed by the parties
incidents are fixed by unless it is against law,
law – not by the parties public policy, public
(Exception: marriage order, morals or good
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settlement). Stipulations customs. 3. Parties must have the necessary

are of no value. consent of parents in certain cases.
Marrying age is 18 years The age of ordinary
old and above and does contract is the age of 2. Formal Requisites (Art. 3, FC) (Aso-
not have legal majority (18 years old)
MlMc)
impediments mentioned
in Articles 37 and 38, FC
(Art. 5, FC) a. Authority of Solemnizing Officer –
Can be dissolved only by Can be ended by mutual even if the solemnizing officer is not
death or annulment, not agreement and by other authorized, the marriage would be valid
by mutual agreement. legal causes like if either or both parties believe in good
expiration of the term of faith in his authority to solemnize
contract or fulfillment of marriage;
the purpose to which the b. Valid marriage license (not a marriage
contract was entered
certificate); and
into.
c. Marriage ceremony - which takes
Only a man and a Gender of either party is
woman can enter into not important. place with the:
marriage.
Only 2 persons of May be entered into by  personal appearance of the
opposite sex may enter as many persons. solemnizing officer;
into contract.  their personal declaration that they
Breach of the obligation Breach of contract gives take each other as husband and
imposed by law doesn’t rise to an action for wife; and
give rise to damages – damages.  in the presence of not less than two
there may only be penal
witnesses of legal age.
or civil sanctions.

Note: In the absence of any of the formal

B. REQUISITES: ESSENTIAL AND
or essential requisites, the marriage is
FORMAL
void. However, marriages which are
exempted from obtaining a marriage
1. Essential Requisites (Art. 2, FC)
license (Art. 27-34, FCP) and in case either
a. Legal capacity
or both parties believed in good faith that
1. Parties must be a male and a
the solemnizing officer had the proper
female;
authority, shall be valid.
2. 18 years old and above; and
3. Not subject to any legal
 If there is a defect in the essential
impediments in Arts. 37 and 38 of
marriage requisites the marriage is
Family Code.
voidable.
b. Consent of the contracting parties
 If there is any irregularity in the formal
1. Free and voluntary (not obtained
requisite the marriage is valid but the
through mistake, fraud, force,
party responsible shall be civilly,
intimidation or undue influence). If
criminally and administrative liable.
it is vitiated with error, fraud,
intimidation, etc., it is mere
 Although a marriage contract is considered
voidable (valid until annulled).
a primary evidence of marriage, its absence
However, if there is absolutely no
is not always a proof that no marriage took
consent at all, as it was intended to
place. (Balogbog v. Court of Appeals, G.R. No.
be a joke, the marriage is VOID;
83598 March 7, 1997, 269 SCRA 259)
2. In the presence of solemnizing  Once the presumption of marriage arises,
officer; and other evidence may be presented in
support necessary/direct to establish the
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marriage but at least enough to strengthen
the presumption of marriage. Every
intendment of law leans towards
legitimizing marriage (Delgado vda Dedela
Rosa v. Marciana vda de Damian, G.R. No.
155733, January 26, 2006)
Some of the irregularities in the formal
requisites include:
1. Presence of only one witness;
2. Lack of legal age of witness;
3. Failure to comply with the procedural
requirements under Art. 12, FC;
4. Non-observance of 3-month period under
Art. 15; and
5. Failure to comply with the requirements of
notice under Art. 17, FC.
Age of the Parties:
Parties must be at least 18 years of age at the
time of the marriage (Art. 5, FC).
Marriage Ceremony
No prescribed form or religious rite for the
solemnization of marriage is required. (Art. 6, FC)
Minimum requirements prescribed by
law:
1. Appearance of contracting parties
personally before the solemnizing officer
(Art. 3, FC)
2. Personal declaration that they take each
other as husband and wife. (Art. 3, FC)
3. Presence of at least two witnesses of legal
age. (Art. 3, FC)
4. The declaration shall be contained in the
marriage certificate. (Art. 6, FC)
5. Marriage certificate shall be signed by the
contracting parties and their witnesses and
attested by the solemnizing officer. (Art. 6,
FC)
In cases of Articulo Mortis, when the party is at
the point of death and cannot sign the
Marriage Certificate, it is sufficient that one of
the witnesses write the name of the party,
which will be attested by the solemnizing
officer. (Art. 6, FC)
Validity of Common Law Marriage
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Common law marriage is one where the man
and the woman just live together as husband
and wife without getting married. In the
Philippines, its validity will depend on the
personal law of the parties and the place where
the relationship began.
 The property acquired by the man and
woman in a live-in relationship is said to be
allocated in proportion to their respective
efforts (Mariano Adriano v. CA, G.R. No.
124118, March 27, 2000)
Validity of Marriage by Proxy (one where
the other party is merely represented by a
delegate or friend):
a. Not valid if celebrated in the Philippines
since the presence of the contracting
parties is required. (Art. 6, FC)
b. Valid if celebrated abroad and valid there
as such (Art. 26, FC).
c. The marriage by proxy is deemed
celebrated at the place where the delegate
or the proxy appears.
Persons Authorized to Solemnize
Marriages: (Art. 7-8, 10, FC)
a. Any incumbent member of the
judiciary within the court’s
jurisdiction
 A marriage solemnized by a judge outside
the court’s jurisdiction will not affect the
validity of the marriage but may subject
the officiating official to administrative
liability. (Beso v. Daguman, A.M. No. 99-1211
January 28, 2000, 323 SCRA 566). The defect is a
mere irregularity in a formal requisite.
(Navarro v. Domagtoy, 259 SCRA 129)
Members of the Judiciary:
1. Metropolitan/Municipal Trial Courts (MTC)
and Regional Trial Courts (RTC) Judges –
within their territorial Jurisdiction.
2. Court of Appeals, Court of Tax Appeals,
Sandiganbayan, and Supreme Court
Justices – Anywhere in the Philippines

b. Priests, rabbis, ministers of any
church
Requisites to Perform Marriage:
1. Must be duly authorized by his or her
church or religious sect in writing,
2. Must act within the limits of the written
authority granted to him or her by the
church or religious sect;
3. His written authority must be registered
with the civil registrar general; and
4. At least one of the contracting parties
belongs to the solemnizing officer’s church
or religious sect.
c. Ship captains or airplane chiefs or
pilot
Requisites to Perform Marriage:
1. The marriage must be in articulo mortis (at
least one of the parties is at the point of
death) Effect of recovery from illness of
dying person – Marriage is still valid. (Art.27,
FC);
2. The marriage must be between passengers
or crew members; and
3. Generally, the plane must be in flight or the
ship must be at sea or during stopovers at
the port of call. (Art 31, FC)
d. Consul generals, consuls or vice
consuls
Note: Marriages between Filipino citizens
abroad may be solemnized by them. When
performed abroad, or specifically in his place of
assignment, the solemnities established by
Philippine laws shall be observed in their
execution.
Duties to be performed by the consular
official:
1. The issuance of marriage license and other
duties of local civil registrar; and
2. The duties of solemnizing officer with
regard to celebration of marriage.
e. Military commanders of a unit;
Requisites to Perform Marriage:
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1. He or she must be a commissioned officer,
or an officer in the armed forces holding
rank by virtue of a commission from the
president (his rank should start from a
second lieutenant, ensign and above);
2. Assigned chaplain must be absent at the
time of the marriage;
3. The marriage must be one in articulo
mortis; and
4. The contracting parties, whether members
of the armed forces or civilians, must be
within the zone of military operation . (Art.32,
FC)
f. Duly elected mayors of cities and
municipalities pursuant to the Local
Government Code.
The mayor of a city or municipality, within their
exclusive jurisdiction, is empowered to
solemnize a marriage. (Sec. 444[b](1)(xviii), Local
Government Code)
When the mayor is temporarily incapacitated to
perform his duties for physical or legal reasons
such as, but not limited to, leave of absence,
travel abroad, any suspension from office, the
vice mayor or the highest ranking Sangguniang
Bayan member shall automatically exercise the
powers and perform the duties of the local
chief executive.
 They were not included under the Family
Code but their authority was restored by
the Local Government Code.
 Two laws involved: Article 7 of Family Code
and Sec. 444 and 445 of Local Government
Code.
General Rule: Those solemnized by any
person not legally authorized to perform
marriages are void. (Art. 35, par. 2, FC)
Exception: The marriage was contracted with
either or both parties believing in good faith
that the solemnizing officer had the legal
authority to do so. (Art. 35, par. 2, FC)
 If a person seeks to impugn the validity of
a marriage on the ground that the person
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who solemnized it was not really
authorized, such lack of authority must be
proved by the person petitioning. (De
Cardenas v. Cardenas, et al., L-8218, Dec. 15,
1955)
Public Solemnization – based on the
premise that the state takes an active interest
in the marriage (Estrada v. Escritor, AM No. P-02-
1651, June 22, 2006). It may be done in the:
1. Chambers of the judge or in open court;
2. Church;
3. Chapel or temple; or
4. Office of the consul-general, consul or vice-
consul.
EXCEPTIONS to the Public Solemnization:
1. At the point of death (articulo mortis);
2. In a remote place; or
3. When both of the parties requested in
writing, solemnization in some other place.
It must be stated in the sworn statement.
(Navarro vs. Judge Dumagtoy, AM No. MTJ-96-
1088, July 19, 1996)
License Required (Articles 3[2], 9, 11,20,
and 26, FC).
Marriage License must include the
following data:
a. Full name of the contracting parties;
b. Place of birth;
c. Age and date of birth;
d. Civil status;
e. If previously married, how, when and
where the previous marriage was dissolved
or annulled;
f. Present residence or citizenship;
g. Degree of relationship of the contracting
parties;
h. Full name, residence and citizenship of the
father;
i. Full name, residence and citizenship of the
mother; and
j. Full name, residence and citizenship of the
guardian or person having charge, in case
the contracting party has neither father nor
mother and is under the age of 20 years
old. (Art. 11, FC)
18 CENTER FOR LEGAL EDUCATION AND RESEARCH
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1. Validity: Valid in any part of the
Philippines for a period of one hundred
twenty (120) days from date of issue. It is
deemed automatically cancelled at the
expiration of the said period.
2. Place of Issuance:
a. If within the Philippines – in the local
civil registrar of the city or municipality
where either contracting party
habitually resides.
b. If outside the Philippines – in the office
of the consular officials.
Note: Under this rule, when a marriage
between Filipino citizens is performed abroad,
the Filipino consular official shall discharge the
duties of the LCR and of the solemnizing
official. (Art. 10, FC)
Special Requirement for Application of
Marriage License
a. Person previously married: (Art 13)
1. Death certificate of deceased spouse;
and
Note: In case the death certificate cannot
be secured, the party shall make an
affidavit setting forth this circumstance and
his/her actual civil status and name and
date of death of deceased spouse.
2. Judicial decree of annulment or
declaration of nullity of previous
marriage.
A. petition for cancellation of entries in
the marriage contract filed with the
NSO, specifically the entries in the wife
portion thereof on ground that the
identity of the petitioner is stolen is
allowed. (Republic vs. Olaybar [G.R. No.
189538, Feb. 10, 2014, 715 SCRA 605])
b. Persons between 18 and 21 years old:
(Art 14)
1. Parental consent of parents, guardian
or person exercising substitute parental
authority; and

2. Certificate of marriage counseling. (Art
16, FC)
c. Persons between 21 and 25 years old:
(Art 15)
1. Parental advice of parents or guardian;
and
2. Certificate of marriage counseling
issued by:
a. Priest, imam or minister authorized
to solemnize marriage; or
b. Marriage counselor accredited by
proper government agency.
d. Foreigners
When either or both parties are foreign
nationals: Certificate of legal capacity to
contract marriage, issued by a diplomatic or
consular official, shall be submitted before a
marriage license can be obtained. (Art. 21, FC)
3. Stateless Persons or Refugees from
other Countries: (Art. 21, FC)
a. Affidavit stating circumstances showing
capacity to contract marriage; and
b. Marriage license issued only after the
completion of the 10-day publication of
application.
Effects of the Validity of Marriage:
1. Lack of Parental Consent
 The marriage is voidable (Art. 45[1], FC)
2. Lack of Parental Advise or Marriage
Counseling
 There is no effect on the validity of
marriage. However, the issuance of the
marriage license will be suspended for
a period of 3 months from the
completion of the 10-day publication of
the application for marriage license.
3. Marriage Performed During the 3-
Month Period Without a License
 The marriage shall be void.
4. Marriage License Obtained During the
3-Month Prohibition
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PURPLE NOTES
 The marriage will be valid subject to
civil and criminal liabilities on the part
of the erring party or parties. The
issuing offices shall be subjected to
administrative sanctions.
Marriages Exempt from the requirement
of a Valid License (Arts. 27, 28, 31 to 34, FC)
a. In articulo mortis (Art 27, 31 & 32)
1. Either or both of the contracting parties
are at the point of death.
2. Marriage shall remain valid even if the
ailing party subsequently survives.
Duty of the Solemnizing officer:
1. State in an affidavit executed before the
local civil registrar or any other person
legally authorized to administer oaths that
the marriage was performed in articulo
mortis;
2. The officer took the necessary steps to
ascertain the ages and relationship of the
contracting parties and the absence of
legal impediment to the marriage; and
3. Send the affidavit stated above and the
marriage contract to the local civil registrar
of the municipality where it was performed
within the period of thirty days after the
performance of the marriage.
Note: A witness should sign the dying party’s
signature if the latter be physically unable to
do so. (Cruz vs. Catandes, CA., 39 O.G. No. 18, p.
324)
Danger of Death distinguished from Point
of Death:
If a soldier is about to go to war, he may be in
danger of death, but not at the point of death;
hence a marriage in articulo mortis would not
be applicable to him.
b. In remote places (Art 28 & 29)
The residence of either party is located where
there is no means of transportation to enable
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such party to appear personally before the
local civil registrar.
Duty of the Solemnizing officer:
1. State in an affidavit executed before the
local civil registrar or any other person
legally authorized to administer oaths that
the residence of either party, specifying the
barrio or barangay, is so located that there
is no means of transportation to enable
such party to appear personally before the
local civil registrar;
2. The officer took the necessary steps to
ascertain the ages and relationship of the
contracting parties and the absence of
legal impediment to the marriage; and
3. Send the affidavit stated above and the
marriage contract to the local civil registrar
of the municipality where it was performed
within the period of thirty days after the
performance of the marriage (Art 30, FC)
Note: There is no prescribed minimum or
maximum distance, unlike that in the Civil Code
Purpose of Affidavit: (Art 29, FC)
For the purpose of proving the basis for
exemption from the marriage license. Even if
there is failure on the part of the solemnizing
officer to execute the necessary affidavit, such
irregularity will not invalidate the marriage,
since the affidavit is not required of the parties.
(Soriano vs.Felix, L-9005, June 20, 1958)
c. Cohabitation for at least 5 years (Art
34, FC)
Requisites:
1. The parties must have been living together
as husband and wife for at least 5 years
immediately before the marriage (Ninal v.
Bayadog, 328 SCRA 122);
2. The parties must have no legal
impediment to marry each other;
3. The fact of absence of legal impediment
between the parties must be present at
the time of marriage; and
4. The parties must execute an affidavit
stating that they have lived together for at
20 CENTER FOR LEGAL EDUCATION AND RESEARCH
2018
least five years and are without legal
impediment to marry each other (Borja-
Manzano vs. Sanchez 354SCRA 1)
 The falsity of an affidavit of marital
cohabitation, where the parties have in
truth fallen short of the minimum five-year
requirement, effectively renders the
marriage void ab initio for lack of a
marriage license. Republic v. Dayot [550
SCRA 435 (2008)]
 The falsity of an affidavit of cohabitation
CANNOT be used as a defense in the crime
of bigamy, for it will be the height of
absurdity for the Court to allow the
accused to use her illegal act to escape
criminal conviction. Santiago v. People [G.R.
No. 200233, July 15, 2015]
Duty of the Solemnizing officer:
He must execute a sworn statement that he
had ascertained the qualifications of the parties
and that he had found no legal impediment to
their marriage. And send it with the marriage
contract to appropriate civil registry. (Art. 30,
FC)
d. Solemnized outside the Philippines
where no marriage license is required
by the country where it is solemnized.
If the marriage was celebrated before the
diplomatic or consular officials of the Republic
of the Philippines in a foreign country, marriage
license is still required. (Art. 17, FC)
Marriage Certificate (Article 22, FC)
 Not an essential or formal requisite of
marriage and without which, the marriage
remains valid. It is merely a proof of
marriage. (Madridejo v. De Leon, 55 Phil. 1)
 The best documentary evidence of a
marriage is the marriage contract or the
marriage certificate (Villanueva v. CA,
198SCRA 472 (1991).
 There is a legal presumption that a man
and woman deporting themselves as
husband and wife have entered into a
lawful contract of marriage (Sec. 5 [bb], Rule
131 of the Rules of Court), but may however
 2018
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be rebutted by evidence showing that the 4. Subsequent marriage celebrated without

marriage did not actually take place
(Fernandez v. Puatdu, G.R.No. L-10071,
October 31, 1957)
 Failure to sign a marriage certificate or
absence of the marriage certificate itself
does not render the marriage void or
annullable (Madridejo v. De Leon, 55 Phil. 1)
Proofs of Marriage
court’s annulment or decree of nullity of
prior marriage, partition of property and
delivery of presumptive legitime of children
in previous marriage being first registered
(Art 35 [6], FC)
5. Psychological incapacity (Art. 36, FC)
6. Incestuous marriages (Art. 37, FC)
7. Marriages void by reasons of public policy
(Art. 38, FC)

Primary Evidence – The marriage contract or  Marriage celebrated without license and
certificate of marriage (Villanueva v. CA, G.R. No. Marriage by proxy are valid in the
84464, June 21, 1991, 198 SCRA 472) Philippines if valid where celebrated, as
they are not among the exceptions and will
Secondary Evidence – If primary evidence is not contravene any public policy.
not available. Paragraph 2 of Article 26 of the Family
Code (E.O. No. 209, as amended by E.O. No.
a. Testimonies of witness to matrimony. 227), should be interpreted to allow a
b. Couple’s public and open cohabitation as Filipino citizen, who has been divorced by a
husband and wife after the alleged spouse who had acquired foreign
wedlock. citizenship and remarried, also to remarry.
c. Birth / baptismal certificates of children The reckoning point is not the citizenship of
born during such union. the parties at the time of the celebration of
d. Mention of such nuptial in subsequent the marriage, but their citizenship at the
documents. (Trinidad v. CA, supra) time a valid divorce is obtained abroad by
the alien spouse capacitating the latter to
C. EFFECT OF MARRIAGE CELEBRATED remarry. (Republic v. Orbecido III, G.R. No.
ABROAD AND FOREIGN DIVORCE 154380, October 5, 2005)
(Article 26, FC)
As to Essential and Formal requisites of
General rule: Marriages solemnized outside Marriages celebrated abroad:
the Philippines in accordance with the law of a
foreign country shall be valid in the Philippines . Essential Requisites Formal Requisites
(Lex loci celebrationis) Inherent in the parties, Requirements
carried everywhere independent of the
Exceptions: The following foreign marriages parties
are considered void: Lex Nationalii – Laws Lex loci celebrationis –
1. Marriages contracted by any party below relating to family rights if valid where
and duties, or to the celebrated, then valid
eighteen years of age even with the
status, condition and everywhere; forms of
consent of parents or guardians (Art. 35 [1],
legal capacity of persons contracting marriage
FC)
are binding upon are to be regulated by
2. Bigamous or Polygamous Marriages not Philippine citizens even the law where it is
falling under Art. 41 (Art. 35 [4], FC) though living abroad [Art. celebrated. [Art. 16,
15, NCC] NCC]
Note: Art. 41, FC – in case the first spouse Foreign marriages void Foreign marriages may
was judicially declared dead and the under Philippine law due be void under
surviving spouse re-marry. to lack of an essential Philippine law due to
requisite, even if valid absence of a formal
under foreign laws, will requisite under foreign
3. Mistake in Identity (Art. 35 [5], FC)
not be recognized. laws.

21
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Effect of Foreign Divorce 1. Presumption in favor of a valid marriage
(Art 220, NCC)
General rule: Divorce, contemplates the 2. The presumption that a man and a woman
dissolution of the lawful union for cause arising deporting themselves as husband and wife
after the marriage. Absolute divorce is not have entered into a lawful contract of
recognized in the Philippines (Tolentino, Civil marriage is satisfactory, if uncontradicted.
Code of the Philippines, Vol. 1, 2004 ed) (Sec. 3 [aa], Rule 131, ROC)
Exception: Where a marriage between a 3. In marriages of exceptional character, the
Filipino citizen and a foreigner is validly existence of the marriage is presumed,
celebrated and a divorce is thereafter validly even in the TOTAL ABSENCE of a marriage
obtained abroad by the alien spouse license. (Vda. De Jacob vs. CA [1999])
capacitating him or her to remarry, the Filipino 4. If a marriage certificate is missing, and all
spouse shall have capacity to remarry under means have not yet been exhausted to find
Philippine law (Art. 26, FC) it, then the marriage is presumed to exist
(Sevilla v. Cardenas [2006])
Requisites:
a. There is a valid marriage that has been Distinction between a void and voidable
celebrated between a Filipino citizen and a marriage
foreigner; and
b. A valid divorce is obtained abroad by the VOID MARRIAGE VOIDABLE MARRIAGE
Status of marriage
alien spouse capacitating him/her and the
Void ab initio Valid until annulled
Filipino spouse to re-marry
Petition filed
Declaration of Nullity of Annulment of Marriage
 The party pleading it must prove the Marriage
divorce as a fact and demonstrate its Who may file
conformity to the foreign law allowing it. It General Rule: Solely by General Rule: Offended
must be shown that the divorce decree the husband or wife. Spouse
allows the former spouse to remarry as
specifically required in Art. 26 of the Family Exceptions: Any real Exceptions:
Code. (Republic vs. Orbecido III, 472 SCRA party in interest, only in 1. Parents or guardians
114) the following cases: in cases of insanity; or
 Recognition of the foreign divorce decree 1. Nullity of marriage
cases commenced 2. Parents or guardians
may be made in a Rule 108 proceeding
before the effectivity of before the party reaches
itself, as the object of special proceedings A.M. No. 02-11-10- 21 years old on the
(such as that in Rule 108 of the Rules of March 15, 2003. ground of Lack of
Court) is precisely to establish the status or Parental Authority.
right of a party or a particular fact [Corpuz 2. Marriages celebrated
v. Sto. Tomas, G.R. No. 186571, 11 August during the effectivity of
2010, 628 SCRA 266; Fujiki v. Marinay, 700 the Civil Code. (De Dios
SCRA 69 (2013) Carlos v. Sandoval, G.R. No.
179922, December 16,
2008).
Requirements to prove foreign marriage
Prescriptive Period
No prescriptive period General Rule: Within 5
a. The existence of the pertinent provision of years from discovery of
the foreign marriage law; and the ground.
b. The celebration and performance of the Exception:
marriage in accordance with the said law. 1. Lifetime of spouse in
(Adong v. Cheong Seng Gee, 43 Phil. 43) cases of insanity;
2. Before the party
D. VOID AND VOIDABLE MARRIAGES reaches 21 in cases
where parents or
Presumption of marriage guardians may file

22 CENTER FOR LEGAL EDUCATION AND RESEARCH


annulment.
Judicial Declaration
General Rule: Not Necessary
necessary
Exception: In case of
remarriage
1. Void Marriages
Those which are inexistent from the very
beginning. It is ipso facto void without need of
any judicial declaration of nullity. UNLESS, for
purposes of remarriage. A judicial declaration
of its nullity is required before a subsequent
marriage can be contracted, otherwise, the
subsequent marriage is also void and may be
subjected to bigamy.
 A void marriage can be questioned even
after the death of either party. (Ninal v
Bayadog, G.R. No. 133778, March 14, 2000,
328 SCRA 122)
 The clause “on the basis solely of a final
judgment declaring such marriage void”
(Art. 40, FC) denotes that such final
judgment declaring the previous marriage
void need not be obtained only for
purposes of remarriage. (Domingo vs. CA,
GR 104818, Sept. 17, 1993, 44 SCAD 955)
The following are void marriages:
a. The absence of any of the essential or
formal requisites shall render the
marriage void ab initio, except as stated in
Article 35 [2] (Art. 4, FC);
b. Those contracted by any party below
eighteen years of age even with the
consent of parents or guardians (Art. 35 [1],
FC);
c. Those solemnized by any person not
legally authorized to perform marriages
Exception: Unless such marriages were
contracted with either or both parties
believing in good faith that the solemnizing
officer had the legal authority to do so (Art.
35 [2], FC);
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CIVIL LAW
PURPLE NOTES
d. Those solemnized without license,
except those covered in the preceding
Chapter (Art. 35 [3], FC);
e. Those bigamous or polygamous
marriages not failing under Article 41 (Art.
35 [4], FC);
Note: Art. 41 – In case the first spouse
was judicially declared dead and the
surviving spouse remarry.
f. Those contracted through mistake of
one of the contracting parties as to the
identity of the other (Art. 35 [5], FC);
Note: The mistake in identity refers to the
actual physical identity of the other
contracting party.
g. Those subsequent marriages under
Article 53 (Art. 35 [6], FC);
Note: Art. 53. FC - In case one of the
spouses, who intend to re-marry, failed to
register the judgment of annulment or
declaration of absolute nullity of the
marriage, the partition and distribution of
the properties of the spouses, and the
delivery of the children’s legitimes, the
subsequent marriage shall be void.
h. Psychological Incapacity – A marriage
contracted by any party, who, at the time
of the celebration, was psychologically
incapacitated to comply with the essential
marital obligations of marriage, shall
likewise be void even if such incapacity
becomes manifest only after its
solemnization. (Art. 36, FC)
 Psychological incapacity involves a
senseless and protracted refusal to comply
with the essential marital obligations by
one or both of the spouses although he
and/or she is physically capable of
performing such obligation (Chi Ming Tsoi vs.
CA, 266 SCRA 324). Marital obligations are
provided for in Art. 68 of the FC which
provides “the husband and wife are obliged
to live together, observe mutual love,
respect and fidelity, and render mutual
help and support.”
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Characteristics of Psychological
Incapacity (Dimayuga-Lawrence v. CA, 568 SCRA
154 [2008])
1. Gravity: Incapacity must be grave or
serious that the party would be incapable
of carrying out the ordinary duties required
in marriage. Illness must be grave enough
to bring about the disability of the party to
assume the essential obligations of
marriage. Illness must be shown as
downright incapacity or inability (not
refusal or neglect or difficulty or ill will).
(Amy Perez-Ferraris v. Brix Ferraris, 496 SCRA 396
[2006])
2. Juridical Antecedence: Incapacity must
be rooted in the history of the party
antedating the marriage, although the
overt manifestations may emerge only after
marriage (Republic v. Molina, G.R. No. 108763,
February 13, 1997).
3. Incurability: must be incurable or even if
it was otherwise, they would be beyond the
means of the party involved. Incapacity
must be shown to be medically or clinically
permanent or incurable. Such incurability
may be absolute or even relative only in
regards to the other spouse, not
necessarily absolutely against every one of
the same sex. (Santos vs. CA, 240 SCRA 20)
 Mere showing of “irreconcilable differences”
and “conflicting personalities” in no wise
constitutes psychological incapacity. It is
enough to prove that the parties failed to
meet their responsibilities and duties as
married persons. It is essential that it must
be shown to be incapable of doing so, due
to some psychological, not physical illness.
(Republic vs. CA, 268 SCRA 198)
 The senseless and protracted refusal of one
of the contracting parties of sexual
intercourse for the procreation of children
is equivalent to psychological incapacity
(Chi Ming Tsoi v. CA, G.R. No. 119190, January
16, 1997)
 The root cause of the psychological
incapacity must be:
24 CENTER FOR LEGAL EDUCATION AND RESEARCH
2018
(a) Medically and clinically identified by
neurobiological and behavioral sciences
competent to determine it (Barcelona v.
CA, 412 SCRA 41 [ 2003]);
(b) alleged in the complaint;
(c) sufficiently proven by experts; and
(d) explained in the decision (Republic v.
Molina, G.R. No. 107763, 79 SCAD 462)
 If a psychological disorder can be proven
by independent means, no reason exists
why such independent proof cannot be
admitted and given credit. Insensitivity,
sexual infidelity, emotional immaturity, and
irresponsibility, do not by themselves
warrant a finding of psychological
incapacity under Art. 36 of the FC.
(Agraviador v. Amparo-Agraviador, 637 SCRA 519
[2010]).
i. Incestuous Marriage (Art. 37, FC):
Marriages are void even if celebrated abroad
between these parties, whether their
relationship is legitimate or illegitimate:
1. Between ascendants and descendants of
any degree; and
2. Between brothers and sisters, whether of
full or half-blood.
j. Void Marriages by Reason of Public
Policy (Art 38, FC)
1. Between collateral blood relatives whether
legitimate or illegitimate, up to the fourth
civil degree;
2. Between step-parents and step-children.
Note: The prohibition still applies even
after the termination of the marriage which
is the very source of affinity, regardless of
the cause of such termination. On the
other hand, marriage between step-
brothers and step-sisters is no longer
prohibited. (Rabuya, Civil Law Reviewer)
3. Between parents-in-law and children-in-
law;

Note: The prohibition still applies even
after the termination of the marriage which
is the very source of affinity, regardless of
the cause of such termination. (Rabuya, Civil
Law Reviewer)
4. Between the adopting parent and the
adopted child;
5. Between the surviving spouse of the
adopting parent and the adopted child;
6. Between the surviving spouse of the
adopted child and the adopter;
7. Between an adopted child and a legitimate
child of the adopter;
8. Between adopted children of the same
adopter; and
9. Between parties where one, with the
intention to marry the other, killed that
other person's spouse, or his or her own
spouse.
Note: The marriage is void even if the
surviving spouse does not conspire in killing
his/her spouse. The primary intention must be
to marry the surviving spouse. No conviction is
required. (Rabuya, Civil Law Reviewer)
Other void marriages:
1. Marriages in a play, drama, or movie;
2. Marriages between two boys or two girls;
3. Marriages in jest;
4. Common law marriages;
5. Marriages between persons of the same
sex, even if celebrated abroad;
6. Marriages where parties merely signed a
marriage contract; and
7. Marriages where the parties did not
personally appear before the solemnizing
authority. (Paras, p. 441)
Note: The action or defense for the declaration
of absolute nullity of marriage shall not
prescribe (Art. 39, FC)
k. Void Marriages under Article 40, FC
Note: Under Art. 40, when a party failed to
secure a judicial declaration of nullity of the
prior marriage before contracting a subsequent
2018
CIVIL LAW
PURPLE NOTES
marriage, the subsequent marriage is also void
and is liable for the crime of bigamy.
 Judicial declaration of nullity of a void
marriage is necessary only when a
marriage, although void, had taken place,
otherwise, Article 40 will not apply. In the
case at bar, no marriage ceremony was
performed by a duly authorized solemnizing
officer, hence since no marriage took place,
Art. 40 will not apply, nor the parties be
held liable for bigamy. (Morigo v People, 422
SCRA 376, 2004)
l. Bigamous Marriages
General rule: A marriage contracted by any
person during the subsistence of a previous
valid marriage shall be null and void. (Art. 41,
FC)
Exceptions: Unless the following requisites
concur (Requisites for the Declaration of
Presumptive Death):
a. Prior spouse had been absent for four
consecutive years, or two years where
there is danger of death under Art. 391,
New Civil Code at the time of
disappearance;
b. Spouse present has a well-founded belief
that the absent spouse is already dead;
and
c. The present spouse has obtained a judicial
declaration of presumptive death. (Armas v
Calisterio, 300 SCRA 201, 206, 2000)
Note: To avoid being charged and convicted of
bigamy, the present spouse must secure a
judicial declaration of presumptive death before
contracting a subsequent marriage.
 It is not necessary for the absent spouse to
be declared an absentee, and that the only
purpose of the declaration of absence is for
the proper administration of the estate of
the absentee (Jone v. Hortinguela, 64 Phil. 179)
Issuance of a marriage license to a widow
 No marriage license shall be issued to a
widow till after 300 days following the
death of the husband, unless in the
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ARELLANO UNIVERSITY SCHOOL OF

LAW
meantime she has given birth to a child spouse.
(Art. 84, NCC) Donations by reason If the donee contracted
of marriage shall the marriage in bad
Effect of Reappearance remain valid. faith, such donations
made to said donee are
revoked by operation of
General Rule: The subsequent marriage is
law.
automatically terminated and without need
The innocent spouse
of a judicial proceeding, by recording the may revoke the
Affidavit of Reappearance in the civil registry, designation of the other
unless the previous marriage has been annulled spouse who acted in bad
or declared void ab initio. (Art. 42 [1], FC) faith as beneficiary in
any insurance policy,
Exception: Failure to Execute and Record even if such designation
the Affidavit of Reappearance be stipulated as
irrevocable.
 Mere reappearance of the absentee The spouse who
contracted the
spouse, even if made known to the present
subsequent marriage in
spouse, will NOT terminate the subsequent bad faith shall be
marriage IF no step is taken to terminate disqualified to inherit
the subsequent marriage, either by from the innocent
recording the affidavit or by court action. spouse by testate and
Since the second marriage has been intestate succession.
contracted because of a presumption that
the former spouse is dead, such m. Both Spouses to the Subsequent
presumption continues in spite of the Marriage is in Bad Faith (Art. 44, FC)
spouses’ physical reappearance, and by
fiction of law, he or she must still be Requisites:
regarded as legally an absentee until the 1. Prior spouse had been absent for four
subsequent marriage is terminated as consecutive years, or two years where
provided by law. (SSS v Jarque Vda de Bailon, there is danger of death under Art. 391,
485 SCRA 376, 2006) New Civil Code at the time of
disappearance;
Effect of Termination of Subsequent 2. The present spouse has obtained a judicial
Marriage (Art. 43, FC) declaration of presumptive death; and
3. Both the present spouse and the second
Spouse who contracted subsequent marriage is in: spouse acted in bad faith, meaning, they
Good Faith Bad Faith knew at the time of subsequent marriage,
Children of the subsequent marriage conceived the absentee spouse is still alive.
prior to its termination shall be considered
legitimate. Effects:
The absolute If either spouse is in bad 1. The subsequent marriage is void ab initio;
community of property faith, his or her share of
2. All donations by reason of marriage and
or the conjugal the net profits of the
partnership, as the community property or testamentary dispositions made by one in
case may be, shall be conjugal partnership favor of the other are revoked by operation
dissolved and property shall be of law;
liquidated. forfeited in favor of the 3. Testamentary dispositions made by one in
common children or, if favor of the other are revoked by operation
there are none, the of law; and
children of the guilty 4. Parties are liable for the crime of bigamy.
spouse by a previous
marriage or in default of
children, the innocent

26 CENTER FOR LEGAL EDUCATION AND RESEARCH


EFFECT OF FINAL JUDGMENT OF NULLITY
OF MARRIAGE
Status of Children Born under Void
Marriages
Generally, children born of void marriages are
considered illegitimate, BUT children conceived
or born of void marriages under Art. 36 and
Art. 53 are exceptionally declared as legitimate.
Other Effects:
1. The absolute community of property or the
conjugal partnership, as the case may be,
shall be dissolved and liquidated.
2. If either spouse contracted said marriage in
bad faith, his or her share of the net profits
of the community property or conjugal
partnership property shall be forfeited in
favor of the common children or, if there
are none, the children of the guilty spouse
by a previous marriage or in default of
children, the innocent spouse.
3. Donations by reason of marriage shall
remain valid, except that if the donee
contracted the marriage in bad faith, such
donations made to saiddoneeare revoked
by operation of law.
4. The innocent spouse may revoke the
designation of the other spouse who acted
in bad faith as beneficiary in any insurance
policy, even if such designation be
stipulated as irrevocable.
5. The spouse who contracted the subsequent
marriage in bad faith shall be disqualified
to inherit from the innocent spouse by
testate and intestate succession.
6. The marriage that is void ab initio is
considered as having never to have taken
place. As such, the judicial declaration of
the nullity of the marriage retroacts to the
date of the celebration of the marriage
(Morigo v. People, 422 SCRA 376, 2004)
7. 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:
1. The court decrees otherwise, or
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PURPLE NOTES
2. She or the former husband is married
again to another person (Art. 371, CC).
The final judgment in such cases shall
provide for the following:
1. Liquidation
2. Partition
3. Distribution of the properties of the
spouses
4. Custody and support of the common
children
5. Delivery of presumptive legitimes, unless
such matters had been adjudicated in
previous judicial proceedings (Art. 50, FC).
Requirement of registration of the decree
of annulment or nullity of marriage
The judgment of annulment or of absolute
nullity of the marriage, the partition and
distribution of the properties of the spouses
and the delivery of the children's presumptive
legitimes shall be recorded in the appropriate
civil registry and registries of property;
otherwise, the same shall not affect third
persons (Art. 52, FC).
Effect of partition provided for in the
judicial decree in the annulment or nullity
of marriage
Delivery shall not prejudice successional rights
of children accruing upon the death of either or
both parents. The value already received under
the decree of annulment is considered as an
advance on the legitime.
2. Voidable Marriage
 Voidable marriage is considered valid and
produces all its civil effects, until it is set
aside by final judgment of a competent
court in an action for annulment. (Suntay vs.
Cojuangco-Suntay, 300 SCRA 760)
Generally, defects of a voidable marriage can
be ratified by free cohabitation or prescription.
However, the following defects are not subject
to ratification: (i) impotent which appears to be
incurable; and (ii) STD and is found to be
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serious and incurable. These defects, however, 3. Fraud - non-disclosure or concealment of
may be subjected to prescription. certain circumstances when materiality can
affect the essence of marriage.
The marriage shall be annulled for the
following reasons: (NUFFIS) Circumstances Constituting Fraud in
Marriage (Art. 46, FC)
1. Non-age (below 18)
2. Unsoundness of mind 1. Non-disclosure of a previous conviction by
3. Fraud (as defined in Art. 46, FC) final judgment of the other party of a crime
4. Force, intimidation, or undue influence involving moral turpitude.
5. Impotence
6. STD Moral turpitude is any act done contrary to
justice, honesty, principle or good morals; or
Grounds: an act of baseness, vileness or depravity in
private and social duties which a man owes to
1. Absence of parental consent (required his fellowmen or to society in general, contrary
when party is at least 18 but below 21 to the accepted and customary rule of right and
years of age under Art. 14, FC); duty between man and man.

Note: Father, mother, surviving parent or Note: No other misrepresentation as to

guardian, or persons having legal charge of the character, health, rank, fortune or chastity shall
party must give consent. However, if the child constitute such fraud as will give grounds for
is illegitimate, consent of the mother is an action for the annulment of marriage (Art. 46
required since it is under the latter’s parental [2], FC)
authority.
 Non-disclosure of a husband’s pre-
2. Unsoundness of mind marital relationship with another woman is
not one of the enumerated circumstances
Note: Whether or not the sane spouse has that would constitute a ground for fraud.
knowledge of the other spouse’s insanity at the (Anaya vs. Palaraon, 36 SCRA 97)
time of celebration of marriage, the marriage is
2. Concealment by the wife of the fact that at
still voidable. The sane spouse can file an
the time of the marriage, she was pregnant
action for annulment ONLY if he/she has no
by a man other than her husband.
knowledge of the other spouse’s insanity at the
time of marriage, otherwise, only the insane or
 If the woman did not expressly inform
the latter’s relatives may file an action for
the man of her pregnancy, but such
annulment.
physical condition was readily apparent to
the man (seven months pregnant), he
 The true test is whether the party
cannot claim lack of knowledge of such
concerned could intelligently consent; that
pregnancy. (Buccat vs. Buccat, 72 Phil 19)
is, he knew what contract he is entering
into (Hoadley v. Hoadley, 244 N.Y. 424)
 Even if the wife is pregnant with another
 Intoxication, Somnambulism at the time of
man at the time of celebration of the
the wedding, and drug addiction which
marriage, the marriage cannot be annulled
results in lack of capacity to give consent is
because the husband knew of such fact. In
equivalent to unsoundness of mind (McKnee
the case, the present condition of the
v. McKnee, 49 Nev. 90; See also 15 Sanches
Roman 528) woman was already evident at the time of
marriage (Buccat v. Buccat, 72 Phil. 19)

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3. Concealment of sexually transmissible
disease, regardless of its nature, existing at
the time of the marriage.
Requisites for Annulment Due to STD
(Art. 45[6], FC):
a. Either party is inflicted with a sexually
transmissible disease (STD);
b. STD must exist at the time the
marriage is celebrated;
c. STD may or may not be serious or
incurable;
d. Party not afflicted by STD must be
ignorant of the other’s affliction;
e. Injured party must be free from STD;
and
f. STD was concealed from the other
party at the time of the celebration of
marriage.
4. Concealment of drug addiction, habitual
alcoholism, homosexuality or lesbianism
existing at the time of the marriage.
Note: This enumeration is exclusive.
Requisites for Annulment due to Drug
Addiction:
1. Existing at the time of the celebration of
the marriage;
2. Continuous;
3. Appears to be incurable;
4. Unknown to the other spouse at the time
of marriage; and
5. The case is filed within 5 years from
discovery.
Drug addiction as a ground for
declaration of nullity of marriage:
1. The drug addiction must amount to
psychological incapacity to comply with
essential obligations of marriage; and
2. It must be existing at the time of marriage,
grave and incurable.
4. Force, intimidation or undue
influence;
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Force – must be one as to prevent the party
from acting as a free agent. His free will is
destroyed by fear or compulsion.
Intimidation – one of the contracting parties
is compelled, by a reasonable and well-
grounded fear of an imminent and grave evil
upon the person or property or upon those of
his spouse/descendant/ascendant to give
consent.
Undue influence – a person takes improper
advantage of his power over the will of
another, depriving him of a reasonable freedom
of choice.
Requisites for Duress:
1. It must be the determining cause of the
contract;
2. It is unjust or unlawful;
3. It is serious or grave; and
4. It must produce a reasonable and well-
grounded fear from the fact that the
person who employed it has the necessary
means to inflict the threatened injury.
Note: A threat to enforce one’s claim through
competent authority, if the claim is just or
legal, does not vitiate consent (Art. 1335, NCC)
5. Impotence or impotentia copulandi
It must be continuing and incurable physical
incapacity of consummating the marriage from
the time of marriage up to the time of filing a
petition for annulment. This refers to the
physical inability to perform the act of sexual
intercourse.
The action must be brought by the potent
spouse, and such spouse must be unaware of
the other’s impotency (Kazeer, p. 478)
 If both parties are impotent, the
marriage cannot be annulled because no
one is aggrieved (Sarao v. Guevara [CA], 40
O.G. [1st Sup] 263)
 The test is not the capacity to
reproduce, but the capacity to copulate
(Menciano v. San Jose, 89 Phil. 63)
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 The advance age of a person did not ARTICLE 45 ARTICLE 46
mean that sexual intercourse is no longer (Sexually (Sexually
possible (People v. Ablog, G.R. No. 125005, Transmitted Transmitted
June 28, 1999, 108 SCAD 145) Disease) Disease)
Ground for The STD is a type of
annulment fraud which is a ground
Doctrine of Triennial Cohabitation: If the
for annulment
wife still remains a virgin after living together
Does not have to be Must be concealed
with her husband for three years, the concealed
presumption is that the husband is impotent, Must be serious and Need not be serious nor
and he will have to overcome this presumption. incurable incurable
(Tompkins v. Tompkins, 92 N.J. Eq. 113, 11 Atl. 599) The STD itself is the It is the concealment
ground for that gives rise to the
Relative Impotency as Ground for annulment annulment
Annulment: When a man may not be able to
have penile erection with his wife but can have
it with another woman. (Tompkins v. Tompkins, 92
N.J. Eq. 113, 11 Atl. 599)

Refusal to be examined by the husband

or wife: Refusal on the part of the man to
submit himself to physical examination raises
the presumption of impotence (Keezer on Marriage
and Divorce, pp. 480-481). However, refusal by the
wife does not raise such presumption because
of the natural modesty of our native girls.
(Jimenez v. Cañizares, G.R. No. L-12790, August 31, 1960)

6. Sexually transmitted disease, if

incurable

30 CENTER FOR LEGAL EDUCATION AND RESEARCH

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Prescription for Action for Annulment (Art. 47, FC)

GROUND PERSON WHO MAY FILE PRESCRIPTION CONVALIDATION OR

RATIFICATION
Absence of parental By one of the spouses; Within 5 years from Free cohabitation after
consent (require By the parent or guardian attaining the ages of 21 reaching 21
when party is at least who did not give consent
18 but below 21 under
Art. 14, FC)
Unsoundness of By the sane spouse who At any time before the Free cohabitation after
mind; have no knowledge of the death of either spouse insane regains sanity
other’s insanity
By the insane spouse During lucid interval
Fraud By the injured party Within 5 years after the Free cohabitation after
discovery of fraud knowledge of fraud.
Force, intimidation By the injured party Within 5 years from the Free cohabitation after cause
or undue influence; time the force, has disappeared.
intimidation or undue
influence disappeared or
ceased
Impotence By the injured party Within 5 years after Cannot be ratified, but
marriage action prescribes.
Sexually By the injured party Within 5 years after Cannot be ratified, but
transmitted disease marriage action prescribes.

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 marriage cannot be annulled by means
of summary proceedings (Jacson v.
Robles, 22 SCRA 521)
3. Presence of Prosecutor (Art. 48, FC)
In all cases of annulment or declaration of
absolute nullity of marriage, the Court shall
order the prosecuting attorney or fiscal
assigned to it to appear on behalf of the State
to take steps to prevent collusion between the
parties and to ensure that evidence is not
fabricated or suppressed.
The attorney’s fees and other expenses in
annulment cases are paid by:
1. Absolute community of property if the
action prospers;
2. Whoever brought the action if the marriage
is not annulled.
4. Pendency of Action (Art 49, FC)
In the absence of adequate provisions:
A written agreement between the spouses, the
Court shall provide for:
a. Support of the spouses;
b. Custody and support of the common
children; and
c. Appropriate visitation rights of the other
parent;
Paramount Considerations of the court
are:
a. Moral and material welfare of the children
b. Children’s choice of the parent with whom
they wish to remain
5. Effect of Final Judgment of Nullity of
Marriage (Art. 50-54, FC)
Final Judgment shall provide:
a. Liquidation – all creditors of the spouses,
the absolute community of property, or the
conjugal partnership shall be notified;
32 CENTER FOR LEGAL EDUCATION AND RESEARCH
2018
b. Partition (conjugal dwelling and the lot on
which it is situated, shall be adjudicated
with the provision of Articles 102 and 109);
and
c. Distribution of the properties of the
spouses;
d. Custody and support of the common
children; and
e. Delivery of the presumptive legitimes.
Exception: Unless such matter has been
adjudicated in previous proceedings. (Art. 50,FC)
Value of partition of presumptive
legitimes - In said partition, the value of the
presumptive legitimes of all common children
are computed as of the date of the final
judgment of the trial court, and shall be
delivered in:
1. Cash;
2. Property; or
3. Sound securities.
This is unless the parties, by mutual agreement
judicially approved, had already provided for
such matters. (Art. 51, FC)
The delivery of the presumptive legitimes
herein prescribed shall in no way prejudice the
ultimate successional rights of the children
accruing upon the death of either or both of
the parents; but the value of the properties
already received under the decree of
annulment or absolute nullity shall be
considered as advances on their legitime (Art.
51, FC)
Note: Children conceived and born outside a
valid marriage are illegitimate. Hence, children
born of void marriages are considered
illegitimate (Art. 54, FC).
Exceptions:
1. Children conceived or born before the
judgment of annulment or absolute nullity
of the marriage under Article 36 has
become final and executory shall be
considered legitimate.
2. Children conceived or born of the
subsequent marriage under Article 53 shall
likewise be legitimate. (Art. 54, FC)
 2018
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3. The absolute community of property or the Effect of partition provided for in the
conjugal partnership, as the case may be, judicial decree in the annulment or nullity
shall be dissolved and liquidated, of marriage
4. If either spouse contracted said marriage in Delivery shall not prejudice successional rights
bad faith, his or her share of the net profits of children accruing upon the death of either or
of the community property or conjugal both parents. The value already received under
partnership property shall be forfeited in the decree of annulment is considered as an
favor of the common children or, if there advance on the legitime.
are none, the children of the guilty spouse
by a previous marriage or in default of Distinction between Annulment and Legal
children, the innocent spouse; Separation
5. Donations by reason of marriage shall
remain valid, except that if the donee ANNULMENT LEGAL SEPARATION
contracted the marriage in bad faith, such The marriage was There was no defect in
donations made to said donee are revoked defective at the very the marriage at the
beginning beginning
by operation of law;
The cause for The cause for legal
6. The innocent spouse may revoke the
annulment must already separation arises after
designation of the other spouse who acted be existing at the time the marriage celebration
in bad faith as beneficiary in any insurance of marriage
policy, even if such designation be There are seven There are 10 grounds
stipulated as irrevocable; and grounds for annulment for legal separation
7. The spouse who contracted the subsequent Annulment dissolves the The marriage remains;
marriage in bad faith shall be disqualified marriage bond; the the parties are not
to inherit from the innocent spouse by parties are free to allowed to remarry
testate and intestate succession. marry again
From PIL, the grounds From PIL, the grounds
8. The marriage that is void ab initio is
are generally given in are those given by
considered as havingnever to have taken the lex loci celebrationis national law
place. As such, the judicial declaration of
the nullity of the marriage retroacts to the
date of the celebration of the marriage
C. LEGAL SEPARATION
(Morigo v. People, 422 SCRA 376, 2004)
9. In case of annulment of marriage, and the
Two kinds of Divorces:
wife is the guilty party, she shall resume
her maiden name and surname. If she is
a. Absolute Divorce (divorce a vincula
the innocent spouse, she may resume her
matrimonii) – marriage is dissolved
maiden name and surname. However, she
may choose to continue employing her
b. Relative Divorce or legal separation
former husband's surname, unless:
(divorce a mensa et thoro) – marriage
a. The court decrees otherwise, or
is not dissolved; here, the parties are
b. She or the former husband is married
merely separated from bed and board.
again to another person (Art. 371, CC).
If the action for Absolute Divorce is brought
Effect of Non-Registration
here in the Philippines:
a. Between Filipinos – will not prosper
Either of the former spouses may marry again
b. Between foreigners – will not prosper
after compliance with the requirements of the
c. Between a Filipino and a foreigner – will
immediately preceeding article, otherwise, the
not prosper
subsequent marriage shall be null and void (Art.
53, FC).
If the action is brought in a foreign country:

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a. Between Filipinos – will not be recognized petitioner, a common child, or a child of
here even if allowed in the foreign country, the petitioner.
and even if the ground be either adultery
on the part of the wife or concubinage on  If the physical violence is directed
the part of the husband; against the wife, a common child or a
b. Between foreigners – foreign decree will be child of the wife, the same is also
recognized here only of the following punishable under R.A. 9262, otherwise
conditions concur: known as the “Anti-Violence Against
Women and Their Children Act of
 Jurisdiction of the foreign court to 2004”
grant divorce
2. Physical violence or moral pressure to
 Said divorce is recognized as valid by compel the petitioner to change religious or
the personal law of the parties involved, political affiliation.
that is, if valid according to the national law
or the law of their domicile depending upon “Psychological violence" refers to acts or
the theory adopted by their countries. omissions causing or likely to cause mental
(Recto v. Harden, G.R. No. L-6897, November or emotional suffering of the victim such as
29, 1956) but not limited to intimidation, harassment,
stalking, damage to property, public
c. Between a Filipino and a foreigner – if ridicule or humiliation, repeated verbal
obtained by the foreigner and valid abuse and mental infidelity. It includes
according to his personal law, it is valid for causing or allowing the victim to witness
both the foreigner and Filipino. the physical, sexual or psychological abuse
of a member of the family to which the
Legal Separation vs. Separation of victim belongs, or to witness pornography
Property in any form or to witness abusive injury to
pets or to unlawful or unwanted
Legal Separation Separation of Property deprivation of the right to custody and/or
Must be done 1. If one prior to marriage visitation of common children (Sec. 3 [c],
through the court – may be done through R.A. 9262).
Note: An the marriage
Extrajudicial settlement.
Moral pressure must be directed against
agreement to 2. If done during the
separate is VOID existence of the
the petitioner-spouse. If the same is
(Art. 221, NCC) marriage- must be directed on a common child or child of the
done through the petitioner-spouse to compel the said child
courts to change religious or political affiliation,
Always involves May exist with or without there is no ground for legal separation
separation of legal separation (Rabuya 2006, p.351)
property
May be considered, May be considered, in a 3. Attempt of respondent to corrupt or induce
in a sense, as a sense, as one of the the petitioner, a common child, or a child
cause of separation effects of legal separation of the petitioner, to engage in prostitution,
of property (Art. 63 FC) or connivance in such corruption or
The spouses are The spouses are not
inducement.
necessarily necessarily separated
separated 4. Final judgment sentencing the respondent
to imprisonment of more than six years,
A. Grounds: (Art. 55, 57, FC) even if pardoned.
5. Drug addiction or habitual alcoholism
1. Repeated physical violence or grossly lesbianism or homosexuality of the
abusive conduct directed against the respondent.

34 CENTER FOR LEGAL EDUCATION AND RESEARCH


Requisites:
a. There should be no condonation or
consent to the drug addiction;
b. The action must be filed within 5 years
from the occurrence of the cause
c. Drug addiction arises during the
marriage and not at the time of
marriage.
6. Contracting by the respondent of a
subsequent bigamous marriage, whether in
the Philippines or abroad.
7. Sexual infidelity or perversion.
Sexual infidelity need not be in the form
of adultery or concubinage (Rabuya 2004, p.
355).
Sexual perversion includes all unusual or
abnormal sexual practices which may be
offensive to the feelings or sense of
decency of either the husband or the wife
0(Tolentino 1990, p. 323)
8. Attempt by the respondent against the life
of the petitioner.
9. Abandonment of petitioner without
justifiable cause for more than one year.
10. Lesbianism or Homosexuality of the
respondent
Note: These grounds for legal separation are
exclusive.
B. Proof needed
Mere preponderance of evidence, will suffice to
prove the existence of any of the grounds,
although in Final Judgment sentencing the
respondent to imprisonment of more than 6
years, even if pardoned, previous conviction is
essential, in view of the necessity of “Final
Judgment.”
C. Grounds for Denying Legal Separation
(Art. 56, FC)
a. Aggrieved party has condoned the offense
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PURPLE NOTES
Condonation – conditional forgiveness or
remission, by a husband or wife, of a
matrimonial offense which would be a ground
for legal separation.
 The act of giving money to an erring wife
and the fact that no action was taken
against her before the courts of justice are
sufficient to establish forgiveness
amounting to condonation. At any rate,
pardon or condonation does not require
sexual intercourse and it may be express or
implied. (Almacen vs. Baltazar, 103 Phil 1147)
 Forgiveness may be express or implied.
Sleeping together after full knowledge of
the offense is condonation. (Bugayong v.
Ginez, G.R. No. L-10033. December 28, 1956)
 It comes after, not before the offense
(People v. Schneckburger, 73 Phil. 413)
 Each sexual intercourse of the wife outside
marriage is a separate act of adultery.
Therefore, condonation of one act does not
necessarily imply condonation of the others
(People v. Zapata, G.R. No. L-3047, May 16,
1951)
b. Where the aggrieved party has consented
to the commission of the offense or act
complained of.
There is consent when either of the spouses
agreed to or did not object, despite full
knowledge, to the act, giving rise to a ground
for legal separation, before such act was in fact
committed. It may be express or implied and
done prior to the offense.
 The failure of the husband to look actively
for his adulterous wife after she left the
conjugal home does not constitute
condonation or consent of the wife’s
adulterous acts. It was not his duty to
search for her to bring her home. Hers was
the obligation to return. (Ocampo vs.
Floreciano, 107 Phil 35)
 An agreement between the parties that
they will not object to the other’s act of
sexual infidelity, adultery or concubinage
has been declared as void, but, though
void, is nevertheless an expression of their
clear consent to the commission of the
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sexual infidelity. (People vs. Schneckenburger,
73 Phil 413)
c. Where there is connivance between the
parties in the commission of the offense or
act constituting the ground for legal
separation.
Connivance - Implies agreement (express of
implied) by both spouses to the ground for
legal separation. It is an act of the mind before
the offense was committed and involves
criminality on the part of the individual who
connives.
d. Mutual guilt - Where both parties have
given ground for legal separation.
Recrimination or Equal Guilt (In Pari
Delicto)
A counter-charge in a suit for legal
separation that the petitioner is also guilty
of an offense constituting a ground for
divorce of legal separation. This is based
on the maxim that a person must come to
court with clean hands.
e. Where there is collusion between the
parties to obtain decree of legal separation;
Collusion - The agreement between
husband and wife for one of them to
commit or to be represented in court as
having committed a matrimonial offense, or
to suppress evidence of valid defenses, for
the purpose of enabling the other to obtain
legal separation.
f. Where the action is barred by
prescription. An action for legal
separation shall be filed within five years
from the time of the occurrence of the
cause (Art. 57, FC).
g. Death of one of the parties – an action
for legal separation which involves nothing
more than bed and board separation of the
spouses is purely personal. Being personal,
it follows that the death of one party to the
36 CENTER FOR LEGAL EDUCATION AND RESEARCH
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action causes the death of the action itself.
(Lapuz-Sy v. Eufemio, 43 SCRA 177)
D. Cooling-Off Period
General rule: An action for legal separation
shall in no case be tried before six months has
elapsed since the filing of the petition (Art. 58,
FC).
Exception: There is no cooling-off period if
the ground alleged are those under RA 9262
(Anti-Violence Against Women and Children)
E. Reconciliation
No legal separation may be decreed unless the
Court has taken steps toward the reconciliation
of the spouses and is fully satisfied, despite
such efforts, that reconciliation is highly
improbable (Art. 59, FC).
If the spouses should reconcile, a
corresponding joint manifestation under oath
duly signed by them shall be filed with the
court in the same proceeding for legal
separation. (Art. 65, FC)
Effect of Reconciliation
1. On their personal relations – resumption of
cohabitation and marital relations
2. On proceedings for the decree of legal
separation:
a. The legal separation proceedings, if still
pending, shall thereby be terminated at
whatever stage; and
b. The final decree of legal separation
shall be set aside, but the separation of
property and any forfeiture of the
share of the guilty spouse already
effected shall subsist, unless the
spouses agree to revive their former
property regime.
The court's order containing the foregoing shall
be recorded in the proper civil registries.
Note: Without the decree of reconciliation,
even if they reconcile the effects of the final

decree of legal separation will remain. (Rabuya,
Civil Law Reviewer)
Agreement to revive former property
regime upon reconciliation
The agreement to revive former property
regime shall be executed under oath and shall
specify (Art. 67, FC):
a. The properties to be contributed anew to
the restored regime;
b. Those to be retained as separated
properties of each spouse; and
c. The names of all their known creditors,
their addresses and the amounts owing to
each.
The agreement of revival and the motion for its
approval shall be filed with the court in the
same proceeding for legal separation, with
copies of both furnished to the creditors named
therein. After due hearing, the court shall, in its
order, take measure to protect the interest of
creditors and such order shall be recorded in
the proper registries of properties.
The recording of the ordering in the registries
of property shall not prejudice any creditor not
listed or not notified, unless the debtor-spouse
has sufficient separate properties to satisfy the
creditor's claim.
F. Confession of Judgment or Stipulation
of Facts
No decree of legal separation shall be based
upon a stipulation of facts or a confession of
judgment.
In any case, the Court shall order the
prosecuting attorney or fiscal assigned to it to
take steps to prevent collusion between the
parties and to take care that the evidence is
not fabricated or suppressed (Art. 60, FC).
Note: Art. 60 par. 1 applies only if the
judgment was based solely on the stipulation of
facts or solely on the confession of judgment.
Thus, if other grounds were used, Art. 60 par.
1 is not applicable. (Balane)
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G. Effects of Filing the Petition for Legal
Separation (Art. 61, FC)
1. Spouses are entitled to live separately, but
the marital bond is not severed.
2. No right to have sexual intercourse with
the other spouse.
3. In the absence of an agreement between
the parties, the court shall designate the
husband, the wife or a third person, to
manage the absolute community or
conjugal partnership property.
H. Effects of Pendency
The Court shall provide for: (Art. 62, Art. 49, FC)
1. Support of spouses
2. Custody of children
3. Visitation rights of the other spouse
 During the pendency of the action for legal
separation, the provisions of Article 49 shall
likewise apply to the support of the
spouses and the custody and support of
the common children. (Art. 62, FC; Araneta v.
Concepcion, 99 Phil. 709). However, if the
support is found to be onerous, the
husband can file a motion to modify or
reduce the same (Gaudionco v. Hon.
Peñaranda, G.R. No. L-72984, November 27,
1987)
I. Effects of the Decree of Legal
Separation
1. Spouses are entitled to live separately
(Art.61 and 63, FC). A third person may
manage the property regime. The
designation of this person may be done by
the court.
2. Marriage bond shall not be severed.
3. Dissolution and liquidation of the property
regime (Art. 63, FC) which shall be
automatic upon issuance of the decree of
legal separation (Laperal v. Republic, G.R. No.
L-18008, October 30, 1962)
4. The offending spouse shall have no right to
the net profits and such will be forfeited
according to Art. 43(2), FC. (Macandangdang
vs. CA, 108 SCRA 314)
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5. Custody of the minor children shall be
awarded to the innocent spouse, subject to
the provisions of Art. 213,FC. (Tonog vs.
Daguimol, 376 SCRA 523)
Note: Sec. 29 of R.A. 9262 prohibits the
awarding of custody of minor children to
the perpetrator of a woman who is
suffering from battered woman syndrome.
6. Disqualification of the offending spouse to
inherit from the innocent spouse by
intestate succession. The provisions in
favor of the offending spouse made in the
will of the innocent spouse shall be revoked
by operation of law. (Art. 63 FC)
7. Innocent spouse may revoke the donations
(within five years from the time the decree
of legal separation has become final) made
by him in favor of the offending spouse.
However, alienations, liens and
encumbrances registered in good faith
before the recording of the complaint for
revocation in the registries of property shall
be respected. (Art. 64, FC)
8. Innocent spouse may revoke the
designation of the offending spouse as the
beneficiary in any insurance policy, even if
the designation be irrevocable. (Art. 64, FC)
9. Pursuant to Art. 198, FC, obligation for
mutual support ceases but guilty spouse
may be ordered to give support to the
innocent one.
10. Wife continues to use her name and
surname before the legal separation.
Note: If the spouse should reconcile, a joint
affidavit under oath shall be signed and filed by
them to the court where the proceedings for
legal separation is pending (Art. 65, FC).
Reconciliation shall have the ff. consequences:
1. Termination of the pending legal separation
proceedings; and
2. If the there is final decree of legal
separation, the same shall be set aside,
however, the separation of property and
any forfeiture of the share of the guilty
spouse shall subsist (Art. 66, FC) unless
revived the same through agreement
executed and made under oath (Art. 67,
FC). Such agreement must specify:
38 CENTER FOR LEGAL EDUCATION AND RESEARCH
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a. The properties to be contributed anew
to the restored regime;
b. Properties to be retained as separate
properties;
c. Names of their known creditors, their
addresses and the amount owing to
each (Art. 67, FC)
D. RIGHTS AND OBLIGATIONS OF
HUSBAND AND WIFE
A. Essential Obligations (Art. 68, FC)
a. Live together
The right to live together also includes the right
to demand sexual intimacy from the other
spouse.
Exception: The court may exempt one spouse
from living with the other, if:
1. Other spouse will live abroad; and
2. There is a valid and compelling reasons
such as:
a. Husband’s illicit relationship with others
(Dadivas v. Villanueva, 54 Pgil 92)
b. Moderic and barbaric demands of the
husband to have sexual intercourse
(Goita v. Campos-Rueda, 35 Phil 252)
c. Gross insults from the husband (Talana
v. Willis [CA], 35 O.G. 1369
d. Maltreatment of the husband (Arroyo v.
Vasquez de Arroyo, 42 Phil. 54)
e. Virtually driving of the wife away from
family home and threaten with violence
if she return (Garcia v. Santiago, 53 Phil.
952)
f. Gambling of the husband, refusal to
support the family, and insulting of the
wife (Panuncio v. Sula [CA], 34 O.G. 1291)
g. If the husband lives as a vagabond
having no fixed home (1 Manresa 329)
Note: The exception will not apply if the same
is not compatible with the solidarity of the
family.
b. Observe mutual love, respect and
fidelity

c. Render mutual help and support
The spouses are jointly responsible for the
support of the family. The expenses for such
support and other conjugal obligations shall be
paid from the community property and, in the
absence thereof, from the income or fruits of
their separate properties. In case of
insufficiency or absence of said income or
fruits, such obligations shall be satisfied from
the separate properties. (Art. 70, FC)
Mutual help includes the right to defend the life
and honor of the other spouse (Art. 11, NCC)
d. Fix family domicile
The husband and wife shall fix the family
domicile. In case of disagreement, the court
shall decide. (Art 69, FC)
In the event that one spouse refuses to live
with the other in the family dwelling, the court
is powerless to enforce the provisions of Article
69 of the Family Code; even such refusal is not
justifiable. (Illusorio vs. Bilder, 332 SCRA 169)
e. Joint responsibility for support of the
family
f. Management of the household
The management of the household shall be the
right and the duty of both spouses. The
expenses for such management shall be paid in
accordance with the provisions of Article 70.
(Art. 71, FC)
Expenses of Household Management
Chargeable to the Following, in order of:
a. Expenses shall be paid from the community
property
b. In the absence thereof from the income or
fruits of their separate properties
c. In the absence or insufficiency thereof from
their separate properties (Art. 70, FC)
General Rule: Performance of essential
marital obligations under Art. 68 cannot be
compelled by court because it will be a violation
of personal liberty.
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Exception: Giving support (Arroyo v. Arroyo,
G.R. No. L-17014, Aug. 11, 1921)
B. Neglect of Duty (Art. 72, FC)
The aggrieved party may apply to the court for
relief when:
1. One of the spouses neglects his or her
duties to the conjugal union;
2. One of the spouses commits acts which
tend to bring danger, dishonor or injury to
the other or to the family.
C. Exercise of Profession (Art. 73, FC)
Either spouse may exercise any legitimate
profession, occupation, business or activity
without the consent of the other. The latter
may object only on valid, serious, and moral
grounds.
In case of disagreement, the court shall decide
whether or not:
1. The objection is proper, and
2. Benefit has occurred to the family prior to
the objection or thereafter. If the benefit
accrued prior to the objection, the resulting
obligation shall be enforced against the
separate property of the spouse who has
not obtained consent.
If the wife engages in business:
a. All properties will be liable if the husband
consented;
b. The community and the separate property
of the wife shall be liable if the husband
does not give his consent, unless it is
appertain to the community property.
(Paras, p. 516)
D. PROPERTY RELATIONS BETWEEN
HUSBAND AND WIFE
The property relationship between husband
and wife shall be governed in the following
order:
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1. By marriage settlements executed before
the marriage;
2. By the provisions of this Code; and
3. By the local custom. (Art. 74, FC)
A. Marriage Settlements
A contract entered into by parties about to be
married for the purpose of filing the terms and
conditions of their property relations with
regard to their present and future property.
Also referred to as Ante-Nuptial Agreement
or Matrimonial Contract.
 The future spouses may, in the marriage
settlement, agree upon the regime of
absolute community, conjugal partnership
of gains, complete separation of property,
or any other regime. In the absence of a
marriage settlement, or when the regime
agreed upon is void, the system of absolute
community of property as established in
this Code shall govern (Art.75, FC).
Requisites of a Valid Marriage Settlement
1. In writing (Art. 77, FC)
An agreement in consideration of marriage
must be in writing; otherwise, it shall be
unenforceable. (Art. 1403[2C], CC).
2. Signed by the parties (Art. 77, FC)
3. Must not contain provision contrary to law,
good morals, good customs, public order,
and public policy or against the dignity of
either spouse. It must not be prejudicial to
third person (Art. 77, FC)
4. Executed before the celebration of the
marriage (Art. 76, FC)
5. Fixing the terms and conditions of their
property relation
6. Registration (to bind third persons);
7. Additional signatories:
a. If a party executing the settlement
needs parental consent, the
parent/guardian whose consent is
needed must be made a party to the
agreement.
b. If the party executing the settlement is
under civil interdiction or any other
disability, the guardian appointed by
the court must be made a party to the
settlement.
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Effect of marriage settlement if marriage
does not take place
General rule: Everything stipulated in the
settlements or contracts referred to in the
preceding articles in consideration of a future
marriage, including donations between the
prospective spouses made therein, shall be
rendered void if the marriage does not take
place. (Art. 81, FC)
Exception: However, stipulations that do not
depend upon the celebration of the marriages
shall be valid (Art. 81, FC).
Marriage settlement executed by a
person with disability
For the validity of any marriage settlement
executed by a person upon whom a sentence
of civil interdiction has been pronounced or
who is subject to any other disability, it shall be
indispensable for the guardian appointed by a
competent court to be made a party thereto
(Art. 79, FC).
Applicable law for marriage settlements
In the absence of a contrary stipulation in a
marriage settlement, the property relations of
the spouses shall be governed by Philippine
laws, regardless of the place of the celebration
of the marriage and their residence. (Art. 80,FC)
Prior to the affectivity of the Family Code, in
the absence of a marriage settlement or when
the same is void: Conjugal Partnership of
Gains will govern.
Under the Family Code, in the absence of a
marriage settlement or when the regime
agreed upon is void: System of Absolute
Community of Property will govern.
Governed by local custom if future spouses
executed a marriage settlement and stipulated
therein that the absolute community shall not
exist between them but without providing for
the regime that will govern their property
regime, subject to Arts.74-75, of the Family
Code.

This rule shall not apply:
a. Where both spouses are aliens;
b. With respect to the extrinsic validity of
contracts affecting property not situated in
the Philippines and executed in the country
where the property is located; and
c. With respect to the extrinsic validity of
contracts entered into in the Philippines but
affecting property situated in a foreign
country whose laws require different
formalities for its extrinsic validity. (Art. 80,
FC)
B. Donations by Reason of Marriage
(Donation Propter Nuptias) (Arts. 82-
83, 86, 43[3], 50, FC)
Donations made in consideration of the
marriage in favor of one or both of the future
spouses and executed before its celebration
(Art. 82, FC).
Form Required by Law: These donations are
governed by the rules on ordinary donations
established in Title III of Book III of the Civil
Code, insofar as they are not modified by the
following articles (Art. 83, FC).
Donation of movable property
1. The donation of a movable may be made
orally or in writing (Art. 748, NCC).
2. An oral donation requires the simultaneous
delivery of the thing or of the document
representing the right donated (Art. 748,
NCC).
3. If the value of the personal property
donated exceeds five thousand pesos, the
donation and the acceptance shall be made
in writing. Otherwise, the donation shall be
void (Art. 748, NCC).
Donation of immovable property:
1. In order that the donation of an immovable
may be valid, it must be made in a public
document, specifying therein the property
donated and the value of the charges
which the donee must satisfy (Art. 749,
NCC).
2. The acceptance may be made in the same
deed of donation or in a separate public
document, but it shall not take effect
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PURPLE NOTES
unless it is done during the lifetime of the
donor (Art. 749, NCC).
3. If the acceptance is made in a separate
instrument, the donor shall be notified
thereof in an authentic form, and this step
shall be noted in both instruments (Art. 749,
NCC).
Note: Donation between common-law spouses
are void (Art. 87, FC)
Limitation on Donations by Reason of
Marriage
If the regime agreed upon is other than
absolute community, they cannot donate to
each other more than one-fifth of their present
property. Any excess shall be considered void.
(Art. 84, FC)
The donation may comprehend all the present
property of the donor, or part thereof, provided
he reserves, in full ownership or in usufruct,
sufficient means for the support of himself, and
all relatives who, at the time of the acceptance
of the donation, are by law entitled to be
supported by the donor. Without such
reservation, the donation shall be reduced on
petition of any person affected (Art. 750, NCC).
No person may give or receive, by way of
donation, more than he may give or receive by
will. The donation shall be inofficious in all that
it may exceed this limitation (Art. 752, NCC).
Requisites of Donation Propter Nuptias:
1. It is made before the celebration of
marriage.
2. It must be made in consideration of the
marriage.
3. It must be made in favor of one or both of
the future spouses.
Note: Otherwise, the general rules on donation
shall govern.
C. Donation by reason of marriage may
be revoked in the ff. cases:
1. If the marriage is not celebrated or
judicially declared void ab initio except
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donations made in the marriage
settlements, which is governed by Art. 81,
FC
2. When the marriage takes place without the
consent of the parents or guardian, as
required by law
3. When the marriage is annulled, and the
donee acted in bad faith
4. Upon legal separation, the donee being
guilty spouse
5. If it is with a resolutory condition and the
condition is complied with
6. When the donee has committed an act of
ingratitude as specified by the provision of
the CC on donations in general (Art. 86, FC)
D. Void Donations Between Spouses
(Art. 87, FC)
General Rule: Every donation or grant of
gratuitous advantage, direct or indirect,
between the spouses during the marriage shall
be void.
Reason:
1. To prevent the weaker spouse from being
influenced by the stronger spouse;
2. To protect creditors;
3. To prevent an indirect modification of the
marriage settlement during marriage (Art.
76).
Exceptions:
1. Moderate gifts given on occasion of family
rejoicing; or
2. Donations mortis causa.
Note: General rule and exception applies to
parties living together as husband and wife
without valid marriage.
Void Donations
1. Those made between persons who were
guilty of adultery or concubinage at the
time of the donation;
Note: In this case, the action for
declaration of nullity may be brought by
the spouse of the donor or donee; and the
guilt of the donor and donee may be
42 CENTER FOR LEGAL EDUCATION AND RESEARCH
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proved by preponderance of evidence in
the same action (Art. 739, NCC, last par.)
2. Those made between persons found guilty
of the same criminal offense, in
consideration thereof; and
3. Those made to a public officer or his wife,
descendants and ascendants, by reason of
his office. (Art. 739, NCC)
Prescriptive Period for Revocation of
Donation Propter Nuptias
a. If marriage is not celebrated [except
donations contained in the marriage
settlement which are automatically
rendered void if the marriage does not take
place] – 5 years (Art. 1149, NCC) from the
date of the supposed solemnization of
marriage.
b. If marriage is judicially void, it depends:
1) If subsequent marriage is void
pursuant to Art. 40, FC in relation to
Arts. 52 and 53, FC because it was
contracted by a spouse before the prior
marriage is judicially declared void.
2) If donee-spouse contracted subsequent
void marriage in bad faith, then it is
void by operation of law.
c. Judicially declared void on grounds other
than Art. 40, FC in relation to Arts. 52 and
53, FC - 5 years from finality of judicial
declaration of nullity (if action to recover
the property).
d. When the marriage takes place without the
required parental consent – 5 years.
e. If resolutory condition is complied with – 5
years from happening of condition.
f. When marriage is annulled and done is in
bad faith – 5 years from finality of decree.
g. If done commits an act of ingratitude - 1
year from donor’s knowledge of that fact.
h. In cases of legal separation – 5 years from
the time the decree of separation has
become final.
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MARRIAGE SETTLEMENT, DONATION PROPTER NUPTIAS AND ORDINARY DONATIONS
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44 CENTER FOR LEGAL EDUCATION AND RESEARCH

NATURE MARRIAGE DONATION PROPTER ORDINARY
SETTLEMENT NUPTIAS DONATION
Definition Contract entered into by a Act of liberality made An act of liberality
man and a woman who before marriage in favor of whereby a person
intend to get married, one or both of the future gratuitously disposes of a
fixing the property regime spouses. thing or a right in favor
that will govern their of another, who accepts
present and future it.
property during marriage.
Scope and Restrictions Should not prejudice 3rd May include future Cannot comprehend
persons property future property

Will be void if marriage If regime is not absolute Cannot be made by

does not take place community property minors
spouses cannot donate
Cannot stipulate that more than 1/5 of their May comprehend all
donations between them present property. property of donor
during marriage will be provided donor must
valid. No indirect donations reserve sufficient means
to support himself.
Must not prejudice
legitimes Must not prejudice
legitimes
Effectivity Start of marriage. When it is made
Who executes Future spouse Any person in favor of one Between any person
or both of the future
If party is 18-21 years old, spouses
the parent whose consent
is needed must be a party
thereto

For persons suffering from

civil interdiction or other
disability, the guardian
must be a party thereto.
When to execute Before the celebration of Before the celebration of Anytime
the marriage the marriage
Form of Execution In writing, otherwise, Same formalities as that Movables – oral or
unenforceable. required in ordinary written.
donations, otherwise, void
Immovable – public
document.
Revocation Judicial separation of Marriage is not celebrated Donor, after the donation
property, voluntarily or for or judicially declared void should have legitimate,
cause. ab initio. illegitimate, legitimated
children, even though
Marriage takes place they are posthumous.
without the needed
consent. Child of donor, whom the
latter believed dead,
Marriage is annulled, turns out to be alive.
donee acted in bad faith.
Donor subsequently
In case of legal separation adopts a minor child.
and donee is guilty spouse.
 NATURE MARRIAGE DONATION PROPTER ORDINARY
SETTLEMENT NUPTIAS DONATION
Acts of ingratitude by
Resolutory condition is not donee.
complied with.
Failure to comply with
Donee committed an act of condition attached to
ingratitutde. donation.

Who may question Heirs of any person whose Those who have right to
validity rights are prejudiced. legitimate and their heirs.

E. Kinds of Property Regime
Absolute Community of Property (ACP)
General Provision (Arts. 75-78, 88-90 FC)
Note: When the waiver takes place upon a
judicial separation of property, or after the
marriage has been dissolved or annulled, the
same shall appear in a public instrument
and shall be recorded as provided in Article 77.

A marriage settlement where spouses are Remedy of Creditors in case of waiver of

considered co-owners of ALL property brought debtor-spouse
into the marriage which are not otherwise
excluded from the community property either by The creditors of the spouse who made such
the provisions of the Family Code or by the waiver may petition the court to rescind the
marriage settlement. waiver to the extent of the amount sufficient to
cover the amount of their credits (Art. 89 [2], FC).
Applies when:
1) Agreed upon in the marriage settlement; Rules on Co-ownership applies
2) In default of a marriage settlement; and suppletorily
3) When marriage settlement is void.
The provisions on co-ownership shall apply to
Commencement the absolute community of property between
The absolute community of property between the spouses in all matters not provided for in
spouses shall commence at the precise moment this Chapter. (Art. 90 FC)
that the marriage is celebrated. Any stipulation,
express or implied, for the commencement of What constitutes community property
the community regime at any other time shall be (Arts. 91-93, FC)
void. (Art. 88, FC)
General rule: Community property shall consist
Prohibition on the waiver of rights, of all property owned by the spouses at the time
interest, shares and effects (Art. 89, FC) of the marriage or acquired thereafter.

General Rule: No waiver of rights, interests, Exceptions:

shares and effects of the absolute community of
property during the marriage can be made.
Exception: In case of judicial separation of
property.
1. Property acquired during the marriage by
gratuitous title by either spouse, its fruits
and income, unless it is expressly otherwise
provided by the donor, testator or grantor.
2. For personal and exclusive use, except
jewelry.
3. Acquired before the marriage by either
spouse who has legitimate descendants by a
former marriage including the fruits and
income.
4. Those excluded from the absolute
community in the marriage settlement.
Note: The above mentioned shall be excluded
from the absolute community property.
Presumption: Property acquired during the
marriage is presumed to belong to the
community, unless proven that is one of those
excluded therefrom (Art. 93).
Charges upon and obligations of absolute
community property and conjugal
property (Art. 94-95, FC)
The absolute community of property shall be
liable for:
1) Support- The support of the spouses, their
common children, and legitimate children of
either spouse; however, the support of
illegitimate children shall be governed by the
provisions of this Code on Support.
2) Debts
a. All debts and obligations contracted during
the marriage by the designated
administrator-spouse for the benefit of the
community, or by both spouses, or by one
spouse with the consent of the other.
b. Debts and obligations contracted by either
spouse without the consent of the other to
the extent that the family may have been
benefited.
c. Ante-nuptial debts of either spouse insofar
as they have redounded to the benefit of
the family.
d. Ante-nuptial debts of either spouse other
than those falling under paragraph (7) of
this Article, the support of illegitimate
children of either spouse, and liabilities
incurred by either spouse by reason of a
crime or a quasi-delict, in case of absence or
insufficiency of the exclusive property of the
debtor-spouse, the payment of which shall
be considered as advances to be deducted
from the share of the debtor-spouse upon
liquidation of the community.
3) Taxes
a. All taxes, liens, charges and expenses,
including major or minor repairs, upon the
community property.
b. All taxes and expenses for mere
preservation made during marriage upon
the separate property of either spouse used
by the family.
4) Education and Self-Improvement:
a. Expenses to enable either spouse to
commence or compete a professional,
vocational, or other activity for self-
improvement.
b. The value of what is donated or promised by
both spouses in favor of their common
legitimate children for the exclusive purpose
of commencing or completing a professional
or vocational course or other activity for
self-improvement.
5) Expenses of litigation between the spouses
unless the suit is found to be groundless.
In case ACP is insufficient to cover the
foregoing liabilities
Except for ante-nuptial debts, which do not
benefit the family, the spouses shall be
solidarily liable for the unpaid balance with
their separate properties. (Art. 94, par [2], FC)
Obligations Chargeable to Exclusive
Property:
1) Support of illegitimate children of either
spouse;
2) Debts contracted by the designated
administrator-spouse during the marriage
which did not benefit the community;
3) Debts contracted during the marriage by
either spouse without the consent of the
other which did not redound to the benefit
of the family;
4) Ante-nuptial debt of either spouse which did
not redound to the benefit of the family;
5) Taxes and expenses incurred during the
marriage for the preservation of a separate
 property of either spouse which is not being
used by the family
6) Civil liability of either spouse arising from
crime or quasi-delict;
7) Expenses of litigation between spouses, if
the suit is found to be groundless; and
8) Losses during the marriage in any game of
chance, betting, sweepstakes, or any other
kind of gambling, whether permitted or
prohibited by law, shall be borne by the
loser and shall not be charged to the
community but any winnings there from
shall form part of the community property
(Art. 95, FC)
Ownership, administration, enjoyment and
disposition of the community property
(Arts. 96-98)
1. Joint Administration -The administration
and enjoyment of the community property
shall belong to both spouses jointly (Art. 96,
FC).
In case of disagreement, the husband's decision
shall prevail, subject to recourse to the court by
the wife for proper remedy, which must be
availed of within five years from the date of the
contract implementing such decision.
2) Sole Administration - One spouse may
assume sole power of administration when:
a. Other spouse is incapacitated;
b. Other spouse is unable to participate in the
administration of the common properties;
c. During the pendency of a legal separation
case; or
d. If one spouse abandons the other or fails to
comply with his/her obligations to the
family.
Limitation to Sole Administration:
1. No power to dispose ACP; and
2. No power to encumber ACP.
Exceptions:
a. With authority of the court; or
b. With written consent of the other spouse
Note: In the absence of such authority or
consent, the disposition or encumbrance shall be
void.
However, the transaction shall be construed as a
continuing offer on the part of the consenting
spouse and the third person, and may be
perfected as a binding contract upon the
acceptance by the other spouse or authorization
by the court before the offer is withdrawn by
either or both offerors.
Rules on Donation and Disposition of
Interest in the Community Property:
1) Either spouse may dispose by will of his or
her interest in the community property.
2) Neither spouse may donate any community
property without the consent of the other.
Exception:
Moderate donation for:
1. Charity
2. Occasions of family rejoicing
3. Family distress (Art. 98, FC)
Dissolution of Community Regime (Arts.
99-101, FC)
Grounds for Termination of ACP
1. Decree of legal separation.
2. Annulment.
3. Declaration of nullity of marriage;
4. Death of either spouse.
5. Judicial separation of property on the
ground of:
a. Civil interdiction
b. Declared absentee
c. Loss of parental authority
d. Abandonment and failure to comply with
the obligations to the family
e. Abuse of power of administration;
f. At the time of the petition, spouses are
separated in fact for at least 1 year and
the possibility for reconciliation is highly
improbable.
Separation de Facto
The separation in fact between husband and
wife shall not affect the regime of absolute
community
Effects of Separation de Facto:
1. The spouse who leaves the conjugal home
or refuses to live therein, without just cause,
shall not have the right to be supported;
2. When the consent of one spouse to any
transaction of the other is required by law,
judicial authorization shall be obtained in a
summary proceeding; and
3. In the absence of sufficient community
property, the separate property of both
spouses shall be solidarily liable for the
support of the family. The spouse present
shall, upon proper petition in a summary
proceeding, be given judicial authority to
administer or encumber any specific
separate property of the other spouse and
use the fruits or proceeds thereof to satisfy
the latter's share.
What constitutes abandonment?
A spouse is deemed to have abandoned the
other when he or she has left the conjugal
dwelling without intention of returning. The
spouse who has left the conjugal dwelling for a
period of three months or has failed within the
same period to give any information as to his or
her whereabouts shall be prima facie presumed
to have no intention of returning to the conjugal
dwelling
Remedy of the aggrieved spouse in case of
abandonment of the other spouse
If a spouse without just cause abandons the
other or fails to comply with his or her
obligations to the family, the aggrieved spouse
may petition the court
1. Receivership;
2. Separation of property or;
3. Authority to be the sole administrator of the
absolute community.
Note: The obligations to the family mentioned
in the preceding paragraph refer to marital,
parental or property relations.
Procedure on Liquidation of the Absolute
Community Assets and Liabilities
(Arts.102-104, FC):
1. An inventory
2. Payment of debts and obligations of the
absolute community
Note: In case of insufficiency of said assets,
the spouses shall be solidarily liable for the
unpaid balance with their separate
properties in accordance with the provisions
of the second paragraph of Article 94.
3. Delivery of exclusive property to spouses -
whatever remains of the exclusive properties
of the spouses shall thereafter be delivered
to each of them.
4. Net assets of ACP
General Rule: The net remainder of the
properties of the absolute community which
shall be divided equally between husband and
wife.
Exception:
1. Unless a different proportion or division was
agreed upon in the marriage settlements or;
2. There has been a voluntary waiver of such
share provided in this Code or;
3. The share of the guilty spouse is forfeited.
Note: For purpose of computing the net profits
subject to forfeiture in accordance with Articles
43, No. 2 (one of the spouses contracted
subsequent marriage in bad faith) and 63, No. 2
(the said profits shall be the increase in value
between the market value of the community
property at the time of the celebration of the
marriage and the market value at the time of its
dissolution.
4. The presumptive legitimes of the common
children shall be delivered upon partition, in
accordance with Article 51.
5. The conjugal dwelling and lot shall be
adjudicated as follows:
 evidence. In case of doubt as to which
a. In accordance with agreement of the community the existing properties belong, the
parties, if any; same shall be divided between the different
b. if no agreement, it shall be adjudicated to communities in proportion to the capital and
the spouse with whom the majority of the duration of each. (Art 106)
common children choose to remain;
c. in case there is no majority among children, ABSOLUTE CONJUGAL
the court shall decide the matter taking into COMMUNITY OF PARTNERSHIP OF
PROPERTY GAINS
consideration the best interests of the
All the properties owned Each spouse retains
children. by the spouses at the his/her property before
time of marriage become the marriage and only
Effect of Termination of ACP due to death community property the fruits and income of
of one of the Spouses such properties become
part of the conjugal
Upon the termination of the marriage by death, properties during the
the community property shall be liquidated marriage.
within one year from death of the deceased Upon dissolution and Upon dissolution of the
liquidation of the partnership, the
spouse in the same proceeding for the
community property separate properties of
settlement of the estate of the deceased. what is divided equally the spouses are
(Art.103, FC)
between the spouses or returned and only the
their heirs is the net net profits of the
Note: If no judicial settlement proceeding is remainder of the partnership are divided
instituted, the surviving spouse shall liquidate properties of the equally between the
the community property either judicially or absolute community spouses, and their heirs.
extra-judicially within six months from the death property.
of the deceased spouse. If upon the lapse of the
six-month period, no liquidation is made, any F. Conjugal Partnership of Gains (CPG)
disposition or encumbrance involving the
community property of the terminated marriage Presumption of CPG - All property acquired
shall be void. during the marriage, whether the acquisition
appears to have been made, contracted or
Effect of Failure to Liquidate registered in the name of one or both spouses,
is presumed to be conjugal unless the contrary
Should the surviving spouse contract a is proved (Art. 116, FC)
subsequent marriage without compliance with
the foregoing requirements, a mandatory regime It is a partnership established through the
of complete separation of property shall govern marriage of a man and a woman, who as
the property relations of the subsequent partners, place in a common fund:
marriage. (Art. 103, FC)
a. The proceeds, the products, fruits and
Liquidation of ACP of Two Marriages by income from their separate properties;
the Same Person b. Those acquired by either or both of them
through their efforts;
Whenever the liquidation of the community c. Those acquired by them by chance, and the
properties of two or more marriages contracted dissolution thereof, the partners shall divide
by the same person before the effectivity of this the net gains equally, unless otherwise
Code is carried out simultaneously, the agreed upon in their marriage settlement.
respective capital, fruits and income of each
community shall be determined upon such proof The same to be divided equally upon dissolution
as may be considered according to the rules of of marriage or partnership and those acquired
by either or both of them through their efforts
or by chance. (Art. 106, FC)
Conjugal Partnership of Gains Will Govern:
In case the future spouses agree in the marriage
settlements that the regime of conjugal
partnership gains shall govern their property
relations during marriage. (Art. 105, FC)
Commencement of CPG (Art. 107 in
relation to Art. 88, FC)
The Rules provided in Articles 88 and 89 shall
also apply to conjugal partnership of gains (Art.
107, FC)
The absolute community of property between
spouses shall commence at the precise moment
that the marriage is celebrated. Any stipulation,
express or implied, for the commencement of
the community regime at any other time shall be
void. (Art 107, FC)
What constitute CPG (Art. 117, FC) -Those
acquired by the spouses:
1) Through effort and by chance;
2) Fruits, natural, industrial or civil, due or
received during marriage from common
property as well as net fruits from exclusive
property of each spouse;
3) Through occupation;
4) Share of either spouse in hidden treasure as
finder or owner of property where treasure
is found;
5) Onerous title during marriage at the
expense of common fund;
6) Livestock existing upon dissolution of
conjugal partnership of gains in excess of
number of each kind brought to the
marriage by either spouse, and
7) Labor, work, profession or industry of either
or both spouses.
Prohibition on the waiver of rights,
interest, shares and effects (Art. 104 in
relation to Art. 107, FCP)
General Rule: No waiver of rights, interests,
shares and effects of the absolute community of
property during the marriage can be made
Exception: In case of judicial separation of
property.
Note: When the waiver takes place upon a
judicial separation of property, or after the
marriage has been dissolved or annulled, the
same shall appear in a public instrument and
shall be recorded as provided in Article 77.
Remedy of creditors in case of waiver of
debtor-spouse
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[2],FC).
The conjugal partnership shall be governed by
the rules on the contract of partnership in all
that is not in conflict with what is expressly
determined in this Chapter or by the spouses in
their marriage settlements (Art. 108, FC)
Exclusive property of each spouse (Arts.
109-115)
1. Properties acquired PRIOR to the marriage;
2. That which each acquires during the
marriage by gratuitous title;
3. That which is acquired by right of
redemption, by barter or by exchange with
property belonging to only one of the
spouses; and
4. That which is purchased with exclusive
money of the wife or of the husband. (Art.
109, FC)
5. Whenever an amount or credit payable
within a period of time belongs to one of the
spouses, the sums which may be collected
during the marriage in partial payments or
by installments on the principal shall be the
exclusive property of the spouse. However,
interests falling due during the marriage on
the principal shall belong to the conjugal
partnership (Art. 119, FC)
Note: The spouses retain the ownership,
possession, administration and enjoyment of
their exclusive properties (Art. 110, FC).
Rule on transfer of exclusive property
under CPG
1. Either spouse may, during the marriage,
transfer the administration of his or her
exclusive property to the other by means of
a public instrument, which shall be recorded
in the registry of property of the place the
property is located. (Art. 110, FC)
2. A spouse, may mortgage, encumber,
alienate or otherwise dispose of his or her
exclusive property, without the consent of
the other spouse, and appear alone in court
to litigate with regard to the same. (Art. 111,
FC)
3. The alienation of any exclusive property of a
spouse administered by the other
automatically terminates the administration
over such property and the proceeds of the
alienation shall be turned over to the owner-
spouse. (Art. 112, FC)
 The settled rule is that the sale or
encumbrance of a conjugal property
requires the consent of both the husband
and the wife (Guiang v. CA, 353 Phil. 578). The
absence of the consent of one renders the
entire sale or encumbrance null and void,
including the portion of the conjugal
property pertaining to the husband who
contracted the sale. Neither would the
conjugal partnership be liable for the loan
on the ground that it redounded to the
benefit of the family. The sweeping
conclusion that the loan was obtained by the
husband in order to finance the construction
of housing units, without however adducing
adequate proof, does not persuade.
(Homeowners Savings &Loan Bank v. Dailo, G.R. No.
153802, Mar. 11, 2005)
Rules on donation of exclusive property
1. Property donated or left by will to the
spouses, jointly and with designation of
determinate shares, shall pertain to the
donee-spouses as his or her own exclusive
property, and in the absence of designation,
share and share alike, without prejudice to
the right of accretion when proper . (Art. 113,
FC)
2. If the donations are onerous, the amount of
the charges shall be borne by the exclusive
property of the donee spouse, whenever
they have been advanced by the conjugal
partnership of gains. (Art. 114., FC)
3. Retirement benefits, pensions, annuities,
gratuities, usufructs and similar benefits
shall be governed by the rules on gratuitous
or onerous acquisitions as may be proper in
each case. (Art. 115, FC)
Rule on Ownership of Improvements (Art.
120, FC)
When will apply:
1. If there is an improvement made on the
separate property whether for utility or
adornment;
2. At the expense of the partnership or
through the acts or efforts of either or both
spouses; and
3. Improvement is made during the marriage.
Those belonging to the CPG:
When the cost of the improvement made by the
conjugal partnership and any resulting increase
in value are more than the value of the property
at the time of the improvement, the entire
property of one of the spouses shall belong to
the conjugal partnership. Subject to
reimbursement of the value of the property of
the owner-spouse at the time of the
improvement.
Belong to the separate property of the
owner spouse:
When the cost of the improvement made by the
conjugal partnership and any resulting increase
in value are less than the value of the property
at the time of the improvement.
Subject to reimbursement of the cost of the
improvement.
In either case, the ownership of the entire
property shall be vested upon the
reimbursement, which shall be made at the time
of the liquidation of the conjugal partnership.
Charges upon and obligations of the
Conjugal Partnership of Gains (Arts. 121-
123).
(Same rules with that of ACP)
Administration of the Conjugal Partnership
of Gains (Arts. 124-125)
(Same rules with that of ACP)
Dissolution of the Regime of Conjugal
Partnership of Gains (Arts. 126-128)
(Same rules with that of ACP)
Liquidation of the Conjugal Partnership
Assets and Liabilities (Arts. 129-133)
1. An inventory of all the properties of the
conjugal partnership and the exclusive
properties of each spouse.
2. Amounts advanced by the conjugal
partnership in payment of personal debts
and obligations of either spouse shall be
credited to the conjugal partnership as an
asset thereof.
3. Each spouse shall be reimbursed for the use
of his or her exclusive funds in the
acquisition of property or for the value of his
or her exclusive property, the ownership of
which has been vested by law in the
conjugal partnership.
4. The debts and obligations of the conjugal
partnership shall be paid out of the conjugal
assets. In case of insufficiency of said
assets, the spouses shall be solidarily liable
for the unpaid balance with their separate
properties, in accordance with the provisions
of paragraph (2) of Article 121, FC.
5. Whatever remains of the exclusive
properties of the spouses shall thereafter be
delivered to each of them.
6. Unless the owner had been indemnified
from whatever source, the loss or
deterioration of movables used for the
benefit of the family, belonging to either
spouse, even due to fortuitous event, shall
be paid to said spouse from the conjugal
funds, if any.
7. The net remainder of the conjugal
partnership properties shall constitute the
profits, which shall be divided equally
between husband and wife, unless a
different proportion or division was agreed
upon in the marriage settlements or unless
there has been a voluntary waiver or
forfeiture of such share as provided in this
Code.
8. The presumptive legitimes of the common
children shall be delivered upon the partition
in accordance with Article 51.
9. In the partition of the properties, the
conjugal dwelling and the lot on which it is
situated shall, unless otherwise agreed upon
by the parties, be adjudicated to the spouse
with whom the majority of the common
children choose to remain. Children below
the age of seven years are deemed to have
chosen the mother, unless the court has
decided otherwise. In case there is no such
majority, the court shall decide, taking into
consideration the best interests of said
children.
Credit Payables:
General Rule: Whenever an amount or credit
payable within a period of time belongs to one
of the spouses, the sums which may be
collected during the marriage in partial
payments or by installments on the principal
shall be the exclusive property of the spouse.
(Art. 119, FC)
Exception: Interests falling due during the
marriage on the principal shall belong to the
conjugal partnership
Note: Property bought on installments paid
partly from exclusive funds of the spouses and
partly from conjugal funds: belong to the:
1. Buyer if full ownership was vested before
the marriage; or
2. Conjugal partnership if full ownership was
vested during the marriage.
 It shall belong to the conjugal partnership. is no previous
(Abalos v. Macatangay, Jr., G.R. No. 155043, agreement, in
September 30, 2004) proportion to the
amount contributed
Conjugal Partnership vs. Co-ownership Administration and Management is
enjoyment of the conferred upon the
CONJUGAL conjugal partnership partners so
CO-OWNERSHIP
PARTNERSHIP property belong to appointed by the
Arises only because of May arise by an both spouses jointly others;
marriage contract. ordinary contract. There will be no There may be
Conjugal owners are Co-owners may be liquidation or giving of division of profits
always only two two or more profits till after even without
Profits are generally Profits are dissolution dissolution.
50-50 unless a proportional to
contrary stipulation is respective interests. G. Separation of Property of the Spouses
in a marriage and Administration of Common
settlement. Property by One Spouse during the
Death of either Death of one does Marriage (Arts. 143-142, FC)
husband or wife not dissolve the co-
dissolves the conjugal ownership. When will it govern?
partnership 1. If provided for in the marriage settlement;
Generally, the Generally, all co- or
husband is the owners administer 2. By judicial order
administrator.
Encouraged by law to Co-ownership Grounds for Judicial Separation of
provide for better discouraged by law Property (Art 135, FC)
family solidarity
Created by operation Created by will or 1. That the spouse of the petitioner has been
of law upon consent of the sentenced to a penalty which carries with it
celebration of parties civil interdiction;
marriage. 2. That the spouse of the petitioner has been
It is the law that The will of the judicially declared an absentee;
governs partners shall 3. That loss of parental authority of the spouse
govern of petitioner has been decreed by the court;
Does not possess any It possesses a legal 4. That the spouse granted the power of
legal personality personality administration in the marriage settlements
distinct from that of has abused that power;
the spouses. 5. The spouse has abandoned the petitioner or
Begins precisely on Begins from the has failed to comply with marital obligations;
the date of the moment of the and
celebration of the execution of the 6. That at the time of the petition, the spouses
marriage – no contrary contract but a have been separated in fact for at least one
stipulation is allowed contrary stipulation year and reconciliation is highly improbable.
is allowed
Not formed particularly Formed for profit Note: In the cases provided for in Numbers (1),
for profit (2) and (3), the presentation of the final
Profits are divided Profits are divided judgment against the guilty or absent spouse
according to shall be enough basis for the grant of the decree
previous of judicial separation of property.
agreement; if there
H. Property Regime of Unions Without contributed through contrary
Marriage (Arts. 147-148, FC) care and
maintenance of
General rule: In a void marriage, regardless of family and
household
the cause thereof, the property relation of the (Buenaventura v.
parties during the period of cohabitation is Buenaventura, G.R.
governed by the provisions of Article 147 or 148, No. 127358, Mar. 31,
as the case may be, of the Family Code. There is 2005)
no absolute community or conjugal partnership
in a void marriage.

ART. 147 ART. 148

Applicability Forfeiture
No legal impediment Presence of legal When only one is in If one of the parties is
to marry; impediment: GF, share of party in validly married to
1. Void marriage BF in the co‐ another, his/her share in
on the ground 1. Adulterous ownership be the co‐ownership shall
of psychological relationships forfeited in favor of: accrue to the ACP or CPG
incapacity. 2. Bigamous/polygamou 1. their common existing in the marriage.
s marriages children If the party who acted in
3. Incestuous void 2. innocent party BF is not validly married
marriages under Art to another or if both
37 in default of / waiver parties are in BF, such
4. Void marriages by by any/all common share be forfeited in
reason of public children, or by manner provided in last
policy (Art. 38) their descendants par of Art. 147
Salaries & wages Proof of actual contribution
Owned in equal Separately owned by the Not necessary Necessary
shares parties. If any is married,
his/her salary pertains to This property regime applies when the
the ACP or CPG of the
following requisite concur (Art 147, FC)
legitimate marriage.
Property exclusively acquired
1. A man and a woman who are capacitated
Belongs to party Belongs to such party
upon proof of to marry each other;
acquisition through 2. Live exclusively with each other as husband
exclusive funds and wife; and
Acquired by both through their work or 3. Without the benefit of marriage or under a
industry void marriage.
Governed by rules of Owned in common in
co‐ownership proportion to their Examples:
respective contributions 1. Marriages declared void by reason of
Presumption psychological incapacity;
Property acquired No presumption of joint 2. Marriages celebrated without a valid
while living together acquisition.
marriage license.
presumed obtained Actual joint contribution
by their joint efforts, of money, property or
work or industry and industry shall be owned Shares of parties in property
owned by them in by them in common
equal shares. proportion. 1. Wages and salaries are owned in equal
If one party did not However, their shares.
participate in contributions are
acquisition: presumed equal, in the
presumed to have absence of proof to the
 Note: Wages and salaries will be divided
equally between them, even if only one
party earned the wages and the other did
not contribute thereto. (Art 147, FC)
2. De Facto Co-Ownership – With respect to
property acquired by both through work and
industry, rules on co-ownership shall apply.
 Property acquired by both spouses
through their work and industry shall be
governed by the rules of equal co-
ownership when the marriage was
declared null pursuant to Art. 36 of the
Family Code. A party who did not
participate in the acquisition of the
property shall still be considered as
having contributed thereto jointly if said
party’s “efforts consisted in the care and
maintenance of the family household.”
(Valdes v. RTC. 260 SCRA 221[1996])
3. Care and maintenance of the family and
household are deemed to be joint and
equal.
4. Parties cannot encumber or dispose by acts
inter vivos their share in the property
acquired during their cohabitation and
owned in common, without the consent of
the other, until after termination of
cohabitation.
5. In cases of void marriages, if only one party
is in good faith, the share of the spouse who
is in bad faith shall be forfeited
a. In favor of their common children
b. In case of default or waiver by any or all
of the common children or their
descendants, each vacant share shall
belong to the respective surviving
descendants.
c. In the absence of such descendants,
such share belongs to the innocent
party.
Unions Governed by Article 148, FC:
1. Bigamous marriages;
2. Adulterous relationship;
3. Relationships in a state of concubinage;
4. Relationships where both man and woman
are married to other persons; or
5. Multiple alliances of the same married man.
Notes:
 Wages and salaries earned by each party
belong to him/her exclusively.
 Only properties acquired by the parties
through their “actual joint contribution” of
money, property or industry shall be owned
in common in proportion to their respective
contributions.
 In the absence of proof to the contrary,
contributions and the share of the parties to
the properties acquired during the
cohabitation are presumed to be equal.
If one party is validly married to another:
1. His/her share in the co-owned properties
will accrue to the absolute community
property/conjugal partnership of gains of
his/her existing valid marriage.
2. If the party who acted in bad faith is not
validly married to another, his/her share
shall be forfeited in the same manner as
that provided in Art 147, FC.
3. The same rules on forfeiture shall apply if
both parties are in bad faith
Filing of petition for judicial separation of
property (Art.136, FC)
The spouses may jointly file a verified petition
with the court for the voluntary dissolution of
the absolute community or the conjugal
partnership of gains, and for the separation of
their common properties.
All creditors of the absolute community or of the
conjugal partnership of gains, as well as the
personal creditors of the spouse, shall be listed
in the petition and notified of the filing thereof.
The court shall take measures to protect the
creditors and other persons with pecuniary
interest.
Pendency of proceeding:
Once the separation of property has been
decreed, the absolute community or the
conjugal partnership of gains shall be liquidated
in conformity with this code.
During the pendency of the proceedings for
separation of property, the absolute community
or the conjugal partnership shall pay for the
support of spouses and their children. (Art. 137,
FC)
Records of the case: (Art.139-140, FC)
The petition for separation of property and the
final judgment granting the same shall be
recorded in the proper local civil registries and
registries of property.
The separation of property shall not prejudice
the rights previously acquired by creditors.
Revival of property regime:
The spouses, may, in the same proceedings
where separation of property was decreed, file a
motion in court for a decree reviving the
property regime that existed between them
before the separation of property in any of the
following instances:
1. When the civil interdiction terminates;
2. When the absentee spouse reappears;
3. When the court, being satisfied that the
spouse granted the power of administration
in the marriage settlements will not again
abuse that power, authorizes the
resumption of said administration;
4. When the spouse who has left the conjugal
home without a decree of legal separation
resumes common life with the other;
5. When parental authority is judicially restored
to the spouse previously deprived thereof;
6. When the spouses who have separated in
fact for at least one year, reconcile and
resume common life; or
7. When after voluntary dissolution of the
absolute community of property or conjugal
partnership has been judicially decreed upon
the joint petition of the spouses, they agree
to the revival of the former property regime.
No voluntary separation of property may
thereafter be granted. (Art.141, FC)
Note: The revival of the former property regime
shall be governed by Article 67, FC
Transfer of administration of exclusive
property between the spouses: ( Art. 142,
FC)
1. By agreement by means of a public
instrument, recorded in the registry of
property of the place where the property is
located.
2. The administration of all classes of exclusive
property of either spouse may be
transferred by the court to the other
spouse:
a. When one spouse becomes the guardian
of the other.
b. When one spouse is judicially declared
an absentee;
c. When one spouse is sentenced to a
penalty which carries with it civil
interdiction; or
d. When one spouse becomes a fugitive
from justice or is in hiding as an
accused in a criminal case.
Note:
 If the other spouse is not qualified by
reason of incompetence, conflict of interest,
or any other just cause, the court shall
appoint a suitable person to be the
administrator.
 Automatic termination of administration in
case the administrator-spouse alienates any
exclusive property of the other. The
proceeds shall be turned over to the owner-
spouse. (Art 112, FC)
E. THE FAMILY
The family, being the foundation of the nation,
is a basic social institution which public policy
cherishes and protects. Consequently, family
relations are governed by law and no custom,
practice or agreement destructive of the family
shall be recognized or given effect. [Art. 149, FC]
The Family as an institution:
The Family Code considers the Family as a basic
social institution which by reasons of public
policy, deserves the state’s protection. The
Philippine Constitution Recognizes the
importance of the Filipino Family, our
Constitution is committed to the policy of
strengthening the family as a basic autonomous
social institution. (Rabuya, Persons and Family
Relation, p. 513)
Family Relations Include (Art. 150, FC):
1. Between husband and wife;
2. Between parents and children;
3. Among ascendants and descendants;
4. Among brothers and sisters whether full or
half-blood.
Earnest Efforts towards Compromise
No suit between members of the same family
shall prosper, unless it should appear from the
verified complaint or petition that earnest efforts
toward a compromise have been made, but that
the same have failed. If it is shown that no such
efforts were in fact made, the same case must
be dismissed (Art. 151, FC).
Note:
 This rule shall not apply to cases which may
not be the subject of compromise under the
Civil Code.
 “members of the same family” – means
those enumerated under Art 15, FC.
Cases that cannot be compromised (Art.
2035, CC):
1. Civil status;
2. Validity of marriage or legal separation;
3. Jurisdiction of courts;
4. Any ground for legal separation;
5. Future support; and
6. Future legitime.
Family Home (Arts. 152-165, FC)
After the effectivity of the Family Code, a family
home is deemed constituted upon actual
occupation of the family. There is no need to
constitute it judicially or extra-judicially.
Constitution of family home: The family
home is deemed constituted on a house and lot
from the time it is occupied as a family
residence.
Limitations:
1. Each family can only have one family home.
After a family house is constituted, no other
family home can be established without first
dissolving the existing one.
2. The family home can be constituted only on
the dwelling place, and therefore, in the
locality where the family has its domicile.
3. The value of the family home exempt from
seizure of creditors cannot exceed the limits
fixed by law (Sempio Diy, Handbook on The
Family Code of the Philippines).
General Rule: From the time of its constitution
and so long as any of its beneficiaries actually
resides therein, the family home continues to be
such and is exempt from execution, forced sale
or attachment. (Art. 153, FC)
Exceptions: (Art. 155, FC)
1. Non-payment of taxes;
2. Debts incurred prior to the constitution of
family home;
3. Debts secured by mortgages on the
premises before or after its constitution; and
4. Debts due to laborers, mechanics,
architects, builders, materialmen and others
who have rendered service or furnished
material for the construction of the building.
Note: The Family Home is protected only up to
the extent of the following amounts:
1. P300,000.00, in urban areas; and
2. P200,000.00, in rural areas. (Art. 157, FC)
 As a rule, the family home is exempt
from execution, forced sale or attachment.
However, Article 155(3) of the Family Code
explicitly allows the forced sale of a family
home "for debts secured by mortgages on
the premises before or after such
constitution." While it is true that the family
home is constituted on a house and lot from
the time it is occupied as a family residence
and is exempt from execution or forced sale
under Article 153 of the Family Code, such
 claim for exemption should be set up and 2. They are dependent for legal support upon
proved to the Sheriff before the sale of the the head of the family.
property at public auction. Failure to do so
would estop the party from later claiming
the exemption. (Spouses Charlie Fortaleza and
Ofelia Fortaleza v. Spouses Raul Lapitan and G. PATERNITY AND FILIATION
Rona Lapitan, G.R. No. 178288, August 15,
2012) Paternity - The civil status of the father with
regard to the child.
Duration of Protection: The right to
exemption is effective from the time of the Filiation - The civil status of the child with
constitution of the family home and lasts so long regard to his father either by nature or adoption.
as its beneficiaries actually reside therein.
(Art.153, FC)
A. Legitimate Children (Arts. 163-171, FC)
Requisites for judgment creditor to avail
1. Legitimate – conceived or born during a
the rights under sale on execution of
valid marriage or within a lawful wedlock
family home: (Art. 164, FC)
1. He must be a judgment creditor;
2. His claim is not among those excepted Children who are born outside of
under Article 155; and wedlock but are considered
3. He has reasonable ground to believe that LEGITIMATE:
the family home is worth more than the a. Children of void marriages under Article
maximum amount of P200,000 (for rural 36;
areas) or P300,000 (for urban areas). (Art. b. Children of void marriages under Article
160, FC)
53; and
c. Born of a voidable marriage before the
Effect of death of the person constituting
decree of annulment.
the family home
Children by artificial insemination: A
If there are beneficiaries who survive and living
child conceived by artificial insemination (AI)
in the family home, it will continue to be such
is considered legitimate. (Art. 164, FC)
for 10 years, unless at the expiration of 10
years, there is still a minor beneficiary, in which
Requisites:
case it will remain a family home until that
1) Artificial Insemination (AI) is made on
beneficiary becomes of age. (Rabuya, Civil Law
the wife, not on another woman;
Reviewer)
2) AI on the wife is done with sperm of the
husband or that of a donor;
Beneficiaries of the Family Home under
3) AI has been authorized or ratified by the
Article 154, FC:
husband and wife in a written
1. Husband and wife, or unmarried person who
instrument;
is the head of the family; and
4) Executed and signed by them before the
2. The following relatives of such persons
birth of the child; and
whether legitimate or illegitimate:
5) The written instrument is recorded in
a. Their parents;
civil registry together with the birth
b. Their ascendants and descendants; and
certificate of the child. (Art.164, FC)
c. Their brothers and sisters,
Presumption of legitimacy
Provided they comply with the following:

1. They live in the family home; and

The child conceived or born during a valid
marriage is presumed to be legitimate. (Art. 164,
FC)
pedigree, admission by silence, the
[testimonies] of witnesses, and other kinds
of proof [admissible] under Rule 130 of the
Rules of Court." (Charles Gotardo v. Divina
buling, G.R. No. 165166, August 15, 2012)

ACTION TO IMPUGN ACTION TO CLAIM Impugning the legitimacy of a child (Art.

LEGITIMACY LEGITIMACY 171, FC)
Remedy
Action to impugn Action to claim legitimacy General Rule: Only the husband can impugn
legitimacy or (compulsory recognition) the legitimacy of a child.
illegitimacy
Real party in interest Exception: The heirs of the husband may
GR: Husband GR: Child impugn the child’s filiation in the following
XPN: Heirs, in cases XPN: Heirs of the child, in
cases:
where: cases where:
1. Husband died before 1. Child died in state of
the expiration of the insanity 1. If the husband dies before the expiration of
period for bringing 2. Child died during period for filing the action;
the action; minority 2. If the husband dies after filing without
2. Husband died after desisting;
filing the complaint, Note: Must be filed 3. If the child was born after the death of the
without having within 5 years. husband
desisted;
3. Child was born after
RATIONALE: Legitimacy can be impugned
the death of
husband. only by direct action brought for that
Prescription purpose, by the proper parties and within
1 year – husband GR: During the lifetime of the period allowed by law. It is strictly a
reside in the same the child personal right of the husband.
municipality or city XPN: Lifetime of the
where birth took place putative father. Note: Legitimacy cannot be attacked
2 years – husband In cases where the action collaterally. (Saycon v. CA, 1992)
reside NOT in the same is for the recognition of
municipality or city illegitimate child by “open Grounds for impugning the legitimacy of a
3 years – husband is and continuous
child [Art.166, FC]L
living abroad possession” of the status.
1. Physical impossibility for the husband to
have sexual intercourse with his wife within
 One can prove filiation, either legitimate
the first 120 days of the 300 days
or illegitimate, through the record of birth
immediately preceding the birth of the child
appearing in the civil register or a final
due to:
judgment, an admission of filiation in a
public document or a private handwritten
a. Physical incapacity of the husband
instrument and signed by the parent
(Impotent);
concerned, or the open and continuous
possession of the status of a legitimate or
Note: It is only impotency which the law
illegitimate child, or any other means
considers as sufficient ground to impugn
allowed by the Rules of Court and special
the child’s legitimacy, and not sterility.
laws. We have held that such other proof of (Macadangdang v. CA)
one's filiation may be a "baptismal
certificate, a judicial admission, a family
bible in which [his] name has been entered,
common reputation respecting [his]
 b. The spouses are living separately in
such a way that sexual intercourse was
not possible; and
Note: Where the husband and wife
continued to live together in the
same province after their alleged
separation, the Court did not discount
the possibility of physical access to each
other considering their proximity to each
other. (Concepcion v. CA)
c. Serious illness of the husband which
absolutely prevented intercourse.
2. Biological or scientific proof that the child
could not have been that of the husband;
Estoppel applicable: In artificial insemination
by sperm of another man, the husband is
expressly prohibited from assailing the child’s
legitimacy if he authorized or ratified such
artificial insemination in the manner required by
law.
Blood testing
a. conclusive on non-paternity
b. inconclusive on paternity
DNA testing
May now be used to establish paternity or non-
paternity
 The death of the claimed father does not
ipso facto negate the application of DNA
testing for as long as there exists
appropriate biological samples of his DNA
(Estate of Rogelio Ong v. Diaz)
 There must be first a show cause hearing
wherein the applicant must first present
sufficient evidence to establish a prima facie
case or a reasonable possibility of paternity
or good cause for the holding of the test.
(Lucas v. Lucas)
3. Written authorization or ratification for
artificial insemination was obtained through
mistake, fraud, violence, intimidation or
undue influence.
Prescriptive period for impugning
legitimacy (Arts. 170 and 171, FC)
May be brought within 1, 2, or 3 year s from the
knowledge of the birth, or the knowledge of
registration of birth.
1. Within 1 year - if husband or any heirs
reside in the same city or municipality where
the child was born or his birth was recorded.
2. Within 2 years ‐ if the husband or all heirs
live in the Philippines but do not reside in
the same city or municipality where the
child's birth took place or was recorded
3. Within 3 years ‐ if the husband or all heirs
live outside the Philippines when the child's
birth took place or was recorded in the
Philippines
Applicability of the periods
Applicable only if the action is to impugn
legitimacy, the child was the undisputed
offspring of the mother but the husband denies
paternity.
Art. 170 and 171 not applicable when:
If it asserted that the child is not the child at all
of the spouses.
Effect of expiration of period
The action to impugn legitimacy of a child would
no longer be legally feasible and the status
conferred by the presumption is fixed and
unassailable.
If the birth of the child has been concealed or
was unknown to the husband, the above periods
shall be counted:
1. From the discovery or knowledge of the
birth of the child, or
2. From the discovery or knowledge of its the
fact of registration of said birth, whichever
is earlier.
Note: The period shall be counted from the
knowledge of the child’s birth or its recording in
the civil register.
 There is a universal scientific agreement
that the blood grouping tests are conclusive
as to non-paternity, that is, the fact that the
blood type of the child is a possible product
of the mother and the alleged father does
not conclusively prove that the child is born
by such parents. If the blood type of the
child is not the possible blood of the mother
and of the alleged father after it had been
cross-matched, then the child cannot
possibly be that of the alleged father. (Jao v.
Court of Appeals, 152 SCRA 359).
Rule of the status of children born after
300 days following termination of
marriage (Art. 168, FC)
Requisites:
1. First marriage was terminated;
2. Mother contracted a subsequent marriage
within 300 days after termination;
3. A child is born within 300 days after the
termination of previous marriage.
Rules as to Whom the Child Belongs:
1. To the first marriage – if the child is born
BEFORE 180 days after the celebration of
the 2nd marriage, and within 300 days after
the termination of the 1st marriage.
2. To the second marriage – If the child was
born AFTER 180 days following the
celebration of the 2nd marriage even if born
within 300 days after the termination of the
1st marriage.
Rights of Legitimate Children (Art. 174,
FC)
1. To bear the surnames of the father and the
mother, in conformity with the provisions of
the Civil Code on Surnames;
2. To receive support from their parents, their
ascendants, and in proper cases, their
brothers and sisters, in conformity with the
provisions of this Code on Support; and
3. To be entitled to the legitimate and other
successional rights granted to them by the
Civil Code.
B. Proof of Filiation (Arts. 172-173, FC)
a. Primary
1) Record of birth appearing in civil register or
a final judgment; or
2) Admission of legitimate filiations in a public
document or a private handwritten
instrument signed by the parent concerned.
b. Secondary
1) Open and continuous possession of the
status of a legitimate child; or
2) Any other means allowed by the Rules of
Court and Special laws.
 The due recognition of an illegitimate child
in a record of birth, a will, a statement
before a court of record, or in any authentic
writing is, in itself, a consummated act of
acknowledgment of the child, and no further
court action is required. (Potenciano v.
Reynoso, G.R. No. 140707, April 22, 2003). In
fact, any authentic writing is treated not just
a ground for compulsory recognition; it is in
itself a voluntary recognition that does not
require a separate action for judicial
approval. (ECETA vs. ECETA, 428 SCRA 204)
 A birth certificate to be considered as
validating proof of paternity and as an
instrument of recognition must be signed by
the father and mother jointly, or the mother
alone if the father refuses. (Reyes vs. CA, 135
SCRA 439)
C. Illegitimate Children (Art. 176, FC as
amended by R.A. No. 9255)
Illegitimate – conceived and born outside a
valid marriage, except those children born
during void marriages under Articles 36 and 53.
Illegitimate children may use the surname of
their father if their filiation has been expressly
recognized by the father, either through:
1. Record of birth in civil register;
2. Father’s admission in public document;
3. Father’s admission in private handwritten
document.
The father, under RA 9255, Sec. 1, has the right
to file an action to prove non-filiation during his
lifetime.

Note: Use the surname of the mother if the
requisites of RA 9255 are not complied with.
How to prove filiation of Illegitimate Child
Illegitimate children may establish their
illegitimate filiation in the same way and on the
same evidence as legitimate children. Except if
proof of illegitimate filiation is any of the
following: a) open and continuous
possession of the status of an illegitimate
child; or b) any other means allowed by the
Rules of Court and special laws. In case of these
two instances, the action must be brought
during the lifetime of the putative father.
(Art. 175, FC)
Prescription Period for Claiming Filiation
of illegitimate Child - The action must be
brought by the child during his or her lifetime
and shall be transmitted to the heirs should the
child:
1. Dies during minority;
2. Dies during state of insanity; or
3. Dies after the commencement of the action.
The heirs shall have 5 years within which to
institute the action. (Art. 173 in relation to Art.
175, FC)
However, if illegitimate filiation shall be proved
by the following: (1) open and continuous
possession of status as of a legitimate child; or
(2) any other means allowed by the Rules of
Court and special laws; the action must be
brought during the lifetime of the alleged
parent, otherwise, the action will not prosper.
Rights of illegitimate Children:
1. To bear the surname of the mother
regardless of whether or not the father
admits paternity;
2. To have an option to use his/her father’s
surname if: his/her filiation is expressly
recognized by the father though the record
of birth; or when admission of paternity is
written by the father in a public or private
instrument;
3. To receive support from the mother and the
exclusive or separate property of the father;
and
4. To be entitled to the legitime and other
successional rights granted to them by the
Civil Code.
D. Legitimated Children (Art. 177-182):
Legitimated – originally illegitimate but later
considered legitimated by legal fiction because
of the subsequent marriage of the parent s who
at the time of the child’s conception had no legal
impediment to marry each other or even if
disqualified, the reason for disqualification is
simply below 18 (As amended by RA 9858)
Effects of legitimation:
1. Confers on the child the rights of legitimate
children (Art. 179, FC);
2. Retroacts to the time of the child’s birth.
(Art. 180)
How legitimation takes place:
1. At the time of conception of the child,
his/her parents were not disqualified by any
impediment to marry each other;
2. The child is conceived and born outside of
wedlock;
3. After the birth of the child, his/her parents
subsequently got married; and
4. Such marriage is not void ab initio. (Art. 178
and 177).
Effect of death before legitimation
The legitimation of children who died before the
celebration of marriage of his/her parents shall
benefit his/her descendants (Art. 181, FC).
Who may impugn?
Legitimation may be impugned only by those
who are prejudiced in their rights as a result of
the legitimation, within 5 years from the time of
death of either of the parents of the child.
(Art.182, FC).
LEGITIMATE (L) ILLEGITIMATE (IL)
LEGITIMATED (LD)
L IL LD
 Define Heirs shall
Conceived Conceived Originally have 5
or born and born illegitimate but years within
during a outside a later considered which to
valid valid legitimate by institute the
marriage. marriage or legal fiction by action.
outside lawful subsequent Proof of Filiation
Children wedlock marriage of Primary Certificate of
conceived parent who, at Record of birth appearing in Adoption
as a result the time of the civil register or a final
of artificial conception had judgement.
insemination no legal
on the wife. impediment to Admission of legitimate
marry each or filiation in a public document
Children even if or private handwritten
born to void disqualified the instrument and signed by
marriages reason for parent concerned.
under Arts. disqualification is
36 and 53. simply 18. Secondary
Rights Open and continous
Bear Use of Bear surname of possession of the status of a
surname of surname of father; legitimate child.
father the mother (or
father under Receive support Any other means allowed by
Receive R.A. 9225) from parents, the Rules of Court and special
support ascendants, laws
from Support brothers and Grounds for Impugning
parents sisters; Physical impossibility of Subsequent
ascendants, Legitimate husband to have sexual marriage of
brothers and (half of the Entitled to intercourse with his wife parents is void
sisters legitime of legitime and other within first 120 days of the
legitimate successional 300 days immediately Child not really a
Entitled to children) rights under the preceding birth child of the
legitimate Civil Code parents.
and other Biological and scientific
succession reasons At the time of
all rights child’s conception,
under the For children conceived parents are
Civil Code. through artificial insemination, disqualified to
To Establish Status written authorization obtained marry each other
May be In the same Acknowledgement thru fraud, mistake,violence, by reason other
brought by way and on the not needed: intimidation or undue than their age.
a child same evidence marriage of influence.
during his or as a legitimate parents enough Who may Impugn
her lifetime child. Husband Those who are
and should Heirs may impugn only in the prejudiced in their
be Same period, ff. cases: rights.
transmitted except if action 1. Husband dies before
to the heirs is based of Art. expiration of the period
if the child 172. Par. 2, it for bringing action
dies during must be filed 2. Husband dies after filing
minority or within the without desisting
in a state of lifetime of the therefrom
insanity. alleged parent Child was born after death of
husband
 Periods for Filing
1 year if husband/heirs reside Within 5 years
in the city or municipality from time their
where the child was born or cause accrues.
birth was recorded.
2 years if husband/heirs do
not reside in the same city or
municipality, but a resident of
the Philippines
3 years if husband is residing
abroad and the child is born
or birth recorded in the
Philippines.
H. ADOPTION
1. Domestic Adoption Act of 1998 (R.A.
No. 8552)
Adoption
A juridical act and a proceeding in rem which
creates between two persons a relationship
similar to that which respults from legitimate
paternity and filiation.
Note: The tampering of the civil registry making
it appear in the birth records that a certain child
was born to a person who is not the biological
mother, causing such child to lose his true
identity and status is simulation of birth, which
does not produce the legal effects of adoption.
b. Adopter is the spouse of the adoptee’s
parent; and
8. Permanent resident of the Philippines.
Aliens:
1. Same qualifications for Filipino citizens; and
2. His/her country has diplomatic relations with
the Republic of the Philippines;
3. His government allows adoptee to enter
his/her country as his/her adopted child;
4. Has been living in the Philippines for at least
3 continuous years prior to the filing of
application for adoption and maintains such
residence until the adoption decree is
entered; and
5. Has been certified by his/her diplomatic or
consular office or any appropriate
government agency that he/she has the
legal capacity to adopt in his/her country.
The requirements on residency and certification
of the aliens may be waived if:
1. A former Filipino citizen seeks to adopt a
relative within 4th degree of consanguinity or
affinity;
2. Seeks to adopt the legitimate child of
his/her spouse; and
3. One who is married to a Filipino citizen and
seeks to adopt jointly with his/her spouse a
relative within 4th degree of consanguinity or
affinity of the Filipino spouse. (Section
7b,DAA)

a. Who may adopt:

Joint adoption by spouses
A . Filipino Citizen:
General rule: The husband and the wife shall
1. Of legal age
jointly adopt; otherwise it shall not be allowed.
2. With full civil capacity and legal rights;
3. With good moral character;
Exceptions:
4. Has not been convicted of any crime
1. One spouse seeks to adopt the legitimate
involving moral turpitude;
son/daughter of the other;
5. Emotionally and psychological capable of
2. One spouse seeks to adopt his/her own
caring for children;
illegitimate son/daughter, provided, that the
6. In a position to support and care for his/her
other spouse has given his/her consent,
children in keeping with the means of the
3. If the spouses are legally separated from
family; and
each other. (Section 7, DAA)
7. At least 16 years older than the adoptee,
but may be waived if:
b. Who may be adopted? A child is legally
a. Adopter is the biological parent of the
available for adoption, if:
adoptee; or
1. Person below 18 years of age who has been
administratively/judicially declared available
for adoption;
2. Legitimate son/daughter of one of the
spouse by other spouse;
3. Illegitimate son/daughter by a qualified
adopter to improve his/her status to that of
legitimacy;
4. Any person of legal age, if prior to the
adoption said person has been consistently
considered by the adopter(s) as his/her own
child since minor;
5. Child whose adoption has been rescinded;
or
6. Child whose biological/adoptive parent(s)
has died.
Note: No proceedings shall be initiated within 6
months from the time of death of said parents.
 Merely permitting the child to remain for a
time undisturbed in the care of others is not
the same asabandonment. To dispense with
the requirement of consent, the
abandonment must be shown to have
existed at the time of adoption. (Landingin v.
Republic, G.R. No. 164948, June 27, 2006)
c. Rights of an Adopted Child
The adopted shall be considered for all intents
and purposes the legitimate child of the adopter
and shall be entitled to all the rights accorded to
legitimate children, to wit:
1. The right to use the surnames of the father
and the mother;
2. The right to receive support from their
parents, their ascendants, and in proper
cases, their brothers and sisters, in
conformity with the provisions of the Family
Code of the Philippines on support; and
3. To be entitled to the legitimate and other
successional rights granted to them by the
Civil Code. (Art. 174, FC)
Effects of Domestic Adoption:
1. On Parental Authority: All legal ties between
the biological parents and the adoptee shall
be severed and the same shall be vested in
the adopters, except, when the biological
parent is the spouse of the adopter.
2. On Legitimacy: Adoptee shall be considered
a legitimate child of the adopter for all
intents and purposes and is entitled to all
rights and obligations provided by law to a
legitimate child;
3. On Succession: In legal and intestate
succession, the adoptee and adopters shall
have reciprocal rights of succession without
distinction from legal filiation. The adoptee
and his/her biological parents can likewise
inherit based on testamentary succession
(Section 18, DAA) and intestate succession. (In
re In the Matter of Adoption of Stephanie Naty
Astorga Garcia, G.R. No. 148311, March 31,
2005)
4. Issuance of new birth certificate in which
the adoptee will have a new name and use
the surname of the adopter.
d. Instances when adoption may be
rescinded
1. Repeated physical and verbal maltreatment
by the adopter(s) despite having undergone
counseling:
2. Attempt on the life of the adoptee;
3. Sexual assault or violence; or
4. Abandonment or failure to comply with
parental obligations. (Section 19, DAA)
Note: The ADOPTEE is given the sole right to
rescind the adoption. (Section 19, DAA) Adoption
shall not be subject to rescission by the adopter.
However, adopter(s) may disinherit the adoptee
for causes provided in Article 919 of the Civil
Code.
e. Effects of Rescission of Adoption:
1. The parental authority of the adoptee’s
biological parent (s), if known, or the legal
custody of the DSWD shall be restored if the
adoptee is still a minor or incapacitated;
2. The reciprocal rights and obligations of the
adopter(s) and the adoptee to each other
shall be extinguished;
3. The court shall order the Civil registrar to
cancel the amended certificate of birth of
the adoptee and restore his/her original
birth certificate; and
4. Succession rights shall revert to its status
prior to adoption, but only as of the date of
judgment of judicial rescission. Vested rights
acquired prior to judicial rescission shall be
respected. (Section 20, DAA)
2. Inter-Country Adoption Act of 1995
(R.A. No. 8043)
Inter-Country Adoption
The socio-legal process of adopting a Filipino
child by a foreigner or a Filipino citizen
permanently residing abroad where the petition
is filed, the supervised trial custody is
undertaken, and the decree of adoption is
issued outside the Philippines.
The child must first be placed under adoption in
the Philippines before he is placed for inter-
country adoption.
a. When allowed
Children who cannot be placed with a qualified
adoptive family in the Philippines, Inter-country
adoption is allowed. The state shall take
measures to ensure that inter-country adoptions
are allowed when the same shall prove
beneficial to the child’s best interests, and shall
serve and protect his/her fundamental rights.
(Sec. 2, R.A. 8043)
b. Who may adopt?
Any alien or Filipino citizen permanently residing
abroad may file an application for inter-country
adoption of a Filipino child if he/she:
1. At least 27 years of age at the time of the
application;
2. At least 16 years older than the child to be
adopted, unless the adopter is the parent by
nature of the child to be adopted or the
spouse of such parent;
3. Has the capacity to act and assume all rights
and responsibilities of parental authority
under his national laws;
4. Has undergone the appropriate counseling
from an accredited counselor in his/her
country;
5. Has not been convicted of a crime involving
moral turpitude;
6. Is eligible to adopt under his/her national
law;
7. Is in a position to provide the proper care
and support and to give the necessary moral
values and example to all his children,
including the child to be adopted;
8. Agrees to uphold the basic rights of the
child as embodied under Philippine laws, the
U.N. Convention on the Rights of a Child,
and to abide by the rules and regulations
issued to implement the Inter-Country
Adoption Act;
9. Comes from a country with whom the
Philippines has diplomatic relations and
whose government maintains a similarly
authorized and accredited agency and that
adoption is allowed under his/her national
laws; and
10. Possesses all the qualifications and none of
the disqualifications under the Inter-Country
Adoption Act and other applicable Philippine
laws.
c. Who may be adopted?
Only a “leally-free child” (a child who is below
15 years of age and has been voluntarily or
involuntarily committed to the DSWD of the
Philippines, in accordance with the Child and
Youth Welfare Code) may be adopted.
Note: No child shall be matched to a foreign
adoptive family unless it is satisfactorily shown
that the child cannot be adopted locally.
3. Domestic Adoption Act of 1998 (DAA)
and Inter Country Adoption Act of
1995 (ICA)
DAA ICA
Adoption of Filipino Adopter is a Filipino
children or alien Citizen permanently
/foreigner residing abroad where
petition for adoption is
filed; or a foreigner
Within or inside the Adoption is outside the
 Philippines Philippines  If a hearing for support pendent lite, the
status of the child is at issue, the alleged
I. SUPPORT child can get support in the meantime while
the case is pending from the alleged parent
I. Legal Support (Art. 194, FC) if his status as such has been proven
provisionally. (Mangulabnan vs. IAC, 185 SCRA
It comprises everything indispensable in keeping 760)
with the financial capacity of the family:
4. Legitimate brothers and sisters (whether full
1. Food or sustenance; or half-blood); (Art. 195, FC)
2. Dwelling or shelter; 5. Brothers and sisters not legitimately related.
3. Clothing; (Art. 196, FC)
4. Medical attendance;
5. Education;  Since filiation is beyond question,
6. Transportation support follows as a matter of obligation; a
parent is obliged to support his child,
Characteristics of the Right to Support: whether legitimate or illegitimate. Support
consists of everything indispensable for
1. Not subject to levy upon attachment or sustenance, dwelling, clothing, medical
execution (Art. 205, FC) attendance, education and transportation, in
2. Cannot be renounced nor transmitted to a keeping with the financial capacity of the
3rd person (De Asis vs. CA, 303 SCRA 176) family. Thus, the amount of support is
3. Cannot be subject of compromise (Art. 2035, variable and, for this reason, no final
CC). judgment on the amount of support is made
4. Cannot be extinguished by setting up as the amount shall be in proportion to the
compensation against creditor who has a resources or means of the giver and the
claim for support due by gratuitous title necessities of the recipient. It may be
(Art.287, (2)FC). reduced or increased proportionately
according to the reduction or increase of the
II. Who are obliged to support each necessities of the recipient and the
other (Art. 195-197, 199-200, 206- resources or means of the person obliged to
208, FC) support. (Charles Gotardo v. Divina Buling, G.R. No.
165166, August 15, 2012)
1. Spouses – he/she must be the legitimate
III. Order of Liability for Support
spouse.
2. Legitimate ascendants and descendants;
When two or more persons are obliged to give
support, the following order should be followed:
 A husband may validly refuse to support a
child who is a fruit of an adulterous
1. The spouses;
relationship (Sanchez v. Zulueta, 68 Phil 110
2. The descendants in the nearest degree;
[1939]).
3. The ascendants in the nearest degree; and
3. Parents and their children (whether 4. The brothers and sisters. (Art. 199, FC)
legitimate or illegitimate) and the latter’s
children (whether legitimate or illegitimate); IV. Support during marriage litigation

The persons obliged to support each other SPOUSES CHILDREN

From the community From the community
are limited to the grandparents and the
property property
grandchildren only and vice versa.
Pending Litigation
From the community From the separate
 property assets except if
Art. 203 apply, that if the
claimant spouse is the
guilty spouse, he/she will
not be entitled to
support. If the spouses
are under conjugal
partnership of gains,
support is considered an
advance of such spouses’
share; the rule does not
apply if the spouses are
under absolute
community of property,
based on Art. 153.
After Litigation
No obligation to support
except if there is legal
separation, in which case
the court may require the
guilty spouse to give
support.
V. Amount (Arts. 201-202, FC)
The amount of support shall be in proportion to
the:
property of the The person obliged to give support shall have
spouse. the option to fulfill the obligation either by
paying the allowance fixed, or by receiving and
maintaining in the family dwelling the person
who has a right to receive support. The latter
alternative cannot be availed of in case there is
a moral or legal obstacle thereto.
VIII. Payment by Third Person (Arts.
206 and 207, FC)
If payment by a stranger or third person, he/she
is entitled to full reimbursement even if made
without the knowledge of the person obliged to
give support, unless the stranger does not want
to be reimbursed.
A third person may provide support to the needy
if the person obliged to give support refuses or
fails to give support when urgently needed. The
stranger has a right of reimbursement.
J. PARENTAL AUTHORITY
A. General Provisions (Arts. 209-215, FC)

1. Resources or means of the giver; and What Constitutes Parental Authority

2. The necessities of the recipient.
Note: In the same vein, support shall be
reduced or increased proportionately, according
to (a) the reduction or (b) increase of the
necessities of the recipient and the resources or
means of the person obliged to furnish the
same.
VI. When demandable (Art. 203, FC)
From the time the person who has a right to
receive the same needs it for maintenance, but
it shall not be paid except from the date of
judicial or extrajudicial demand.
Pursuant to the natural right and duty of parents
over the person and property of their
unemancipated children, parental authority and
responsibility shall include:
1. Taking care of their children;
2. Rearing them for civic consciousness and
efficiency; and
3. Development of their moral, mental and
physical character and well-being (Art. 209,
FC)
Rules as to the Exercise of Parental
Authority:

Payment shall be made within the first five days
of each corresponding month or when the
recipient dies, his heirs shall not be obliged to
return what he has received in advance.
VII. Options (Art. 204, FC)
1. Parental authority is exercised over the
unemancipated or minor children, however,
the law provides that even after minority,
parental authority still exists, in the
following instances:
 a. In marriage of a party who is at least 18
to below 21 years of age where parental
consent is required;
b. In marriage settlement of a party who is
below 21 but at least 18 years of age;
and
c. Vicarious liability of parents in case a
quasi-delict has been committed by their
children at least 18 but not more than
21 years of age.
2. The father and the mother shall jointly
exercise parental authority over the persons
of their common children. In case of
disagreement, the father’s decision shall
prevail UNLESS there is a judicial order to
the contrary.
3. If the child is illegitimate, parental authority
is with the mother.
4. In case of absence or death of either
parent, the parent present shall continue
exercising parental authority.
Rule on Transfer of Parental Authority
(Art. 210, FC)
Parental authority and responsibility may not be
renounced or transferred except in the cases
authorized by law, such as:
1. Adoption;
2. Guardianship;
3. In case of voluntary and involuntary
commitment of a child to the DSWD or any
duly licensed child placement agency or
individual; and
4. In case there is a need to impose
disciplinary measure upon the child pursuant
to Articles 223 and 224 of the Family Code.
(Rabuya, Civil Law Reviewer)
 Parental authority, being purely personal,
the law allows a waiver of parental authority
only in cases of adoption, guardianship and
surrender to children’s home or an orphan
institution. (Santos v. CA, 242 SCRA 407).
Effect of separation of parents
In case of separation of the parents, parental
authority shall be exercised by the parent
designated by the court. (Art. 213, FC).
Parental preference rule – The parents have
the parental authority over the child as against
all other persons. It will continue to be such in
case of death, incapacity, absence or
unsuitability of either parent. The remarriage of
the surviving parent shall not affect the parental
authority over the children (Art. 212, FC), unless
the court appoints another person to be the
guardian of the person or property of the
children.
Tender-age Presumption - No child under 7
years of age shall be separated from the
mother, unless the court finds compelling reason
to order otherwise. (Espiritu v. Ca. 242 SCRA 362)
B. Substitute and Special Parental
Authority (Arts. 216-219, FC)
Special Parental authority exercised by:
1. School;
2. School Administrator;
3. School teachers; or
4. Individual, entity or institution engaged in
child care.
Applicability of special parental authority:
Authority and responsibility shall apply to all
authorized activities whether inside or outside
the premises of the school, entity or institution.
Substitute parental authority - exercised in
case of death, absence or unsuitability of the
parents.
Exercised in the order indicated:
1. Surviving grandparent;
2. Oldest brother/sister over 21 years of age
unless unfit/disqualified;
3. Child’s actual custodian who is over 21 years
of age, unless unfit or disqualified; and
4. In case of foundlings, abandoned, neglected
or abused children, they shall be entrusted
 in summary judicial proceedings to heads of
children’s homes, orphanages and other
similar institutions duly accredited by the
proper government agency.
C. Effect of parental authority upon the
persons of the children
Rights and duties of persons exercising
parental authority:
1. To keep them in their company, to support,
educate and instruct them by right precept
and good example, and to provide for their
upbringing in keeping with their means;
2. To give them love and affection, advise and
counsel, companionship and understanding;
3. To provide them with moral and spiritual
guidance, inculcate in them honesty,
integrity, self-discipline, self-reliance,
industry and thrift, stimulate their interest in
civic affairs, and inspire in them compliance
with the duties of citizenship;
4. To furnish them with good and wholesome
educational materials, supervise their
activities, recreation and association with
others, protect them from bad company,
and prevent them from acquiring habits
detrimental to their health, studies and
morals;
5. To represent them in all matters affecting
their interests;
6. To demand from them respect and
obedience;
7. To impose discipline on them as may be
required under the circumstances; and
8. To perform such other duties as are
imposed by law upon parents and
guardians.
D. Effect of parental authority upon the
property of the children (Arts. 225-
227, FC)
1. Legal guardianship:
The father and the mother shall jointly exercise
legal guardianship over the property of the
unemancipated common child without the
necessity of a court appointment.
In case of disagreement, the father’s decision
shall prevail, unless there is a judicial order to
the contrary.
2. Income of the child:
The property of the unemancipated child earned
or acquired with his work or industry or by
onerous or gratuitous title shall belong to the
child in ownership. The child’s property shall be
devoted exclusively to the latter’s support and
education, unless the title or transfer provides
otherwise.
Note: Right of the parents over the fruits and
income of the child’s property shall be limited to
(a) primarily to the child’s support and (b)
secondarily to the collective daily needs of the
family.
E. Suspension or Termination of Parental
Authority (Arts. 228-233, FC)
Parental authority terminates
permanently:
1. Upon the death of the parents;
2. Upon the death of the child; or
3. Upon emancipation of the child. (Art. 228,FC)
4. If the person exercising parental authority
has subjected the child or allowed him to be
subjected to sexual abuse, such person shall
be permanently deprived by the court of
such authority (Art. 232, FC).
Unless subsequently revived by a final
judgment, parental authority also
terminates:
1. Adoption of child;
2. Appointment of general abandonment;
3. Judicial declaration of abandonment of the
child;
4. Final judgment divesting the party
concerned of parental authority;
5. Judicial declaration of absence or incapacity
or person exercising parental authority (Art.
229, FC).
Grounds for Judicial Suspension of
Parental authority:
1. Conviction of crime which carries with it the
penalty of civil interdiction;
2. Treating the child with excessive harshness
or cruelty;
3. Gives the child corrupting orders, counsel or
example;
4. Compels the child to beg;
5. Subjects the child or allows him/her to be
subjected to acts of lasciviousness;
6. Conviction of a crime with the penalty of
civil interdiction.
Descendant as witness in criminal case
(Art. 215, FC)
General rule: No descendant shall be
compelled, in a criminal case, to testify against
his parents and grandparents.
Exception: Testimony is indispensable in a
crime against the descendant or by one parent
against the other. The descendant may waive
the privilege by choosing to testify against his
relatives. What the law prohibits is to compel
him to testify and not his right to testify.
 In the absence of a judicial grant of custody
to one parent, both are entitled to the
custody of their child/children. The parent
who has been deprived of the rightful
custody of the child may resort to the
remedy of habeas corpus. (Salientes v.
Abanilla, G.R. No. 162734, Aug. 29, 2006)
F. Child Abuse Law (R.A. 7610)
Children refers to person below eighteen (18)
years of age or those over but are unable to
fully take care of themselves or protect
themselves from abuse, neglect, cruelty,
exploitation or discrimination because of a
physical or mental disability or condition (Sec.
3[a])
Child abuse refers to the maltreatment, whether
habitual or not, of the child which includes any
of the following (Sec. 3 [b]):
1. Psychological and physical abuse, neglect,
cruelty, sexual abuse and emotional
maltreatment;
2. Any act by deeds or words which debases,
degrades or demeans the intrinsic worth and
dignity of a child as a human being;
3. Unreasonable deprivation of his basic needs
for survival; or
4. Failure to immediately give medical
treatment to an injured child resulting in
serious impairment of his growth and
development or in his permanent incapacity
or death.
Child Exploited in Prostitution
Children, whether male or female, who for
money, profit, or any other consideration or due
to the coercion or influence of any adult,
syndicate or group, indulge in sexual intercourse
or lascivious conduct, are deemed to be children
exploited in prostitution and other sexual abuse
(Sec. 5).
Other Acts of Abuse:
1. Acts of cruelty of exploitation or other
conditions prejudicial to the Child’s
development including those covered by
Article 59 of PD No. 603, as amended, but
not covered by the RPC, as amended.
2. Any person who shall keep or have in his
company a minor, twelve (12) years or
under or who in ten (10) years or more his
junior in any public or private place, hotel,
motel, beer joint, discotheque, cabaret,
pension house, sauna or massage parlor,
beach and/or other tourist resort or similar
place. (Not applicable to relatives within the
4th degree of consanguinity or affinity or
any bond recognized by law, local custom
and tradition or acts in the performance of
a social, moral or legal duty.
3. A minor is induced, delivered or offered to
any person prohibited by RA 7610 to keep
or have in his company.
4. Any person, owner, manager or one
entrusted with the operation of any public
or private place of accommodation,
whether for occupancy, food, drink or
otherwise, including residential places, who
allows any person to take along with him to
such place or places any minor.
5. A street children or any other child is used,
coerced, forced or intimidated to: beg or
use begging as means of living; act as a
conduit or middlemen in drug trafficking or
pushing; or conduct any illegal activities.
(Sec.10)
K. Emancipation
Concept
It is the means by which a child is freed from
parental authority and custody of, and from the
obligation to render services to, the parent or
persons exercising parental authority.
How Emancipation Takes Place: By
attainment of the age of majority. Under present
laws, majority commences at the age of 18
years. (Art. 234, as amended by R.A. 6809, FC)
Effects of Emancipation:
1. Termination of parental authority over the
person and property of the child; and
2. The child then becomes qualified and
responsible for all acts of civil life. (Art. 236,
FC)
Exceptions:
1. In contracting marriage, parental consent is
still necessary if a party is at least 18 but
below 21 (Art. 14, FC). Without parental
consent, marriage is voidable (Art. 45 (1),
FC).
2. If such party will enter into a marriage
settlement, the person who is required to
give his consent to the marriage is also
required to be a party to the marriage
settlement is not valid (Art. 78, FC).
3. In contracting marriage, parental advice is
still necessary if a party is at least 21 but
below 25 (Art. 15, FC).
4. The parents or guardians are still liable for
the quasi-delict committed by a person who
is at least 18 but below 21, if the latter is
living in the company of the former (Art.
236, FC; in relation to Art. 2180, NCC).
L. RETROACTIVE APPLICATION OF
THE FAMILY CODE
This code shall have retroactive effect insofar as
it does not prejudice or impair vested or
acquired rights in accordance with the civil code
or other laws. (Art. 256, FC)
M. FUNERALS (Art. 305 – 310, FC)
Duty and the right to make arrangement for the
funeral of a relative shall be in accordance with
the following order:
1. Spouse;
2. Descendants in nearest degree;
3. Ascendants in nearest degree;
4. Brothers and sisters.
No human remains shall be retained, interred,
disposed of or exhumed without the consent of
the persons above.
In case of descendants of the same degree, or
of brothers and sisters, the oldest shall be
preferred. In case of ascendants, the paternal
shall have a better right.
NATURE OF FUNERAL: Every funeral shall be
in keeping with the social position of the
deceased. [Art. 306, CC]
Funeral Rites:
1. Every funeral shall be made in accordance
with the wishes of the deceased;
2. In the absence of such, it shall be
determined by the deceased’s religious
beliefs or affiliation;
3. In case of doubt, it shall be decided by the
person obliged to make arrangement after
consulting the other members of the family.
Disrespect to the dead: 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.
Liability for funeral expenses: It shall be
chargeable against the property of the
deceased.
N. USE OF SURNAME (Arts. 364-380,
FC)
SURNAMES OF CHILDREN
1. Legitimate and legitimated children shall
principally use the surname of the father.
2. An adopted child shall bear the surname of
the adopter.
3. Illegitimate children referred to in Article
287 shall bear the surname of the mother.
4. Children conceived before the decree
annulling a voidable marriage shall
principally use the surname of the father.
Illegitimate Children:
They shall use the surname of the mother
regardless of whether or not the father admits
paternity. However, the illegitimate child have
an option to use his/her father’s surname if:
his/her filiation is expressly recognized by the
father through the record of birth in the civil
registrar; or when admission of paternity is
written by the father in a public or private
instrument. (RA 9255)
A married woman may use:
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 full name, but prefixing a word
indicating that she is his wife, such as “Mrs”.
Note: The wife may still opt to use her maiden
name because the above is only permissive and
not mandatory.
 A middle name has practical or legal
significance as it serves to identify the
maternal pedigree or filiation of a person
and distinguishes him from others who may
have the same given name and surname as
he has. Art. 364 of the Civil Code states that
legitimate and legitimated children shall
principally use the surname of their father.
Art. 174 of the Family Code gives legitimate
children the right to bear the surnames of
the father and mother, while illegitimate
children, under Art. 176, as amended by
R.A. 9255, shall use the surname of their
mother, unless their father recognizes their
filiation, in which case, they may bear the
father's surname. In the case of these
children, their registration in the civil
registry requires that their middle names be
indicated therein, apart of course from their
given names and surnames. (In re: Petition
for Change of Name and/or Correction of Entry in
the Civil Registry of Julian Lin Carulasan Wang,
454 SCRA 155)
 Before a person can legally change his given
name, he must present proper or reasonable
cause or any compelling reason justifying
such change. In addition, he must show that
he will be prejudiced by the use of his true
and official name. Under the Civil Register
Law, a birth certificate is a historical record
of the facts as they existed at the time of
birth. Thus, the sex of a person is
determined at birth, visually done by the
birth attendant (the physician or midwife) by
examining the genitals of the infant.
Considering that there is no law legally
recognizing sex reassignment, the
determination of a person’s sex made at the
time of his or her birth, if not attended by
error, is immutable. (Silverio v. Republic, G.R.
No. 174689, Oct. 22, 2007)
 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:
1. The court decrees otherwise; or
2. She or the former husband is married
again to another person.
 When legal separation has been granted,
the wife shall continue using her name and
surname employed before the legal
separation.
 In the case of renewal of passport, a
married woman may either adopt her
husband's surname or continuously use her
maiden name. If she chooses to adopt her
husband's surname in her new passport, the
DFA additionally requires the submission of
an authenticated copy of the marriage
certificate. Otherwise, if she prefers to
continue using her maiden name, she may
still do so. The DFA will not prohibit her
from continuously using her maiden name.
However, once a married woman opted to
adopt her husband's surname in her
passport, she may not revert to the use of
her maiden name, except in the cases
enumerated in Section 5 (d) of RA 8239.
These instances are: (1) death of husband,
(2) divorce, (3) annulment, or (4) nullity of
marriage. Since petitioner's marriage to her
husband subsists, she may not resume her
maiden name in the replacement passport.
Otherwise stated, a married woman's
reversion to the use of her maiden name
must be based only on the severance of the
marriage. (Remo vs. DFA, GR No. 160202,
March 5, 2010)
What are the grounds for change of name
which have been held valid?
Grounds for Change of Name:
1. One has continuously used and been known
since childhood by a Filipino name and was
unaware of alien parentage;
2. The change results as a legal consequence,
as in legitimation;
3. There is a sincere desire to adopt a Filipino
name to erase signs of former alienage, all
in good faith and without prejudicing
anyone;
4. The change will avoid confusion;
5. The name is:
a. Ridiculous,
b. Extremely difficult to write or
pronounce,
c. Dishonorable.
O. ABSENCE (Art. 41, FC; Art. 381-389,
NCC; Art. 390-392, NCC)
A. Provisional measures in case of
absence (Art. 381-383, FC)
Appointment
When a person disappears from his domicile, his
whereabouts being unknown, and without
leaving an agent to administer his property, the
judge, at the instance of an interested party, a
relative, or a friend, may appoint a person to
represent him in all that may be necessary.
This same rule shall be observed when under
similar circumstances the power conferred by
the absentee has expired.
Duty of judge
The judge shall take the necessary measures to
safeguard the rights and interest of the
absentee and shall specify the powers,
obligations and remuneration of his
representative, regulating them, according to
the circumstances, by the rules concerning
guardians.
Preference in appointment
In the appointment of a representative, the
spouse present shall be preferred when there is
no legal separation.
If the absentee left no spouse, or if the spouse
present is a minor, any competent person may
be appointed by the court.
B. Declaration of absence (Arts. 384-386,
FC)
Two years have elapsed without any news about
the absentee or since the receipt of the last
news; or five years in case the absentee has left
a person in charge of the administration of his
property, his absence may be declared.
Who may ask for the declaration of
absence:
1. The spouse present;
2. The heirs instituted in a will, who may
present an authentic copy of the same;
3. The relatives who may succeed by the law
of intestacy; and
4. Those who may have over the property of
the absentee some right subordinated to the
condition of his death. (Art. 385)
Publication: The judicial declaration of absence
shall not take effect until six months after its
publication in a newspaper of general
circulation.
C. Administration of the property of the
absentee (Art. 387-389, FC)
The wife who is appointed as an administrator
of the husband’s property cannot alienate or
encumber the husband’s property, or that of the
conjugal partnership, without judicial authority.
Termination of administration:
1. When the absentee appears personally or by
means of an agent;
2. When the death of the absentee is proved
and his testate or intestate heirs appear;
3. When a third person appears, showing by a
proper document that he has acquired the
absentee’s property by purchase or other
title.
In these cases, the administrator shall cease in
the performance of his office, and the property
shall be at the disposal of those who may have a
right thereto.
D. Presumption of Death (Arts. 390-392)
General rule: A person shall be presumed dead
for all purposes after absence for a period of 7
years.
Exceptions: Succession
1. In succession, 10 years is required for
presumption of death.
2. If absentee disappeared after age 75, 5
years shall be sufficient.
EXTRAORDINARY ABSENCE - Only 4 years is
required for presumption to arise if:
1. A person on board a vessel lost during a sea
voyage, or an aeroplane which is missing,
who has not been heard of for four years
since the loss of the vessel or aeroplane;
2. A person in the armed forces who has taken
part in war, and has been missing for four
years;
3. A person who has been in danger of death
under other circumstances and his existence
has not been known for four years.
 Absence and Remedies

STAGES OF WHEN TO FILE WHO MAY FILE REMEDY

ABSENCE
Provisional Absence No statutory period Spouse a. Receivership;
b. Judicial separation of property; or
c. Authority to be sole administrator of
the conjugal partnership.
Declaration of Without a. The spouse; Declaration of Absence and
Absence administrator – 2 b. Voluntary heirs; Appointment of Administrator (spouse
years from time of and shall be preferred) but only under the
disappearance. c. Intestate heirs; and following cases when:
a. Absentee has properties which
d. Those who may
With administrator – have to be taked care of or
have over the
5 years from the administered by a representative
property of the
time of appointed by the Court.
absentee some
disappearance. b. Spouse of the absentee is asking
right subordinated
for separation of property.
to condition of the
c. Spouse of the absentee is asking
absentee’s death
the Court that the administration of all
classes in the marriage be transferred
to her.
PART III: PROPERTY (Art. 414-773, New 1. Applying the rules of acquisitive
Civil Code) prescription;
2. Determining the propriety of the object of
Property are things which are or may be the the contracts of pledge, chattel mortgage
object of appropriation. (Article 414, Civil Code) and real estate mortgage;
3. For purposes of determining the formalities
Note: “Thing” apparently synonymous with of a donation;
“Property”, but “Thing” broader in scope 4. In extrajudicial deposit;
because it includes both appropriable and non- 5. In crimes of theft, robbery and usurpation;
appropriable objects. 6. For purposes of determining the venue in
remedial law.
I. CHARACTERISTICS
Classification:
a. Appropriability - it is capable of being
obtained even if not yet actually As to nature (Art. 414, NCC)
appropriated. 1. Immovable
b. Utility - ability to serve as a means to 2. Movable
satisfy human needs
c. Substantivity or individuality - it has a According to the character of ownership:
separate and autonomous existence 1. Public Dominion
2. Private Ownership
According to essential form
II. CLASSIFICATION OF PROPERTY 1. Incorporeal
2. Corporeal
Based on the nature of the thing itself and
importance in point of law because of the As to existence
various legal consequences following therefrom, 1. Present
as follows: 2. Future
As to designation
1. Specific
2. Generic
According to Susceptibility of Substitution
1. Fungible
2. Non-Fungible
According to aptitude for repeated use
1. Consumable
2. Non-Consumable
According to its susceptibility to division
1. Divisible
2. Indivisible
According to its existence in time
1. Present- Res Existens
2. Future- Res Future
According to its dependence
1. Principal
2. Accessory
According to alienability
1. Within the commerce of man
2. Outside the commerce of man
Classification of Things:
1. Res Nullius- things that belong to no one;
2. Res Communes- things that is enjoyed by
everyone; and
3. Res Alicujus- things that belong to someone.
THE HUMAN BODY
During Lifetime
General Rule: Human body is not property.
Hence, it cannot be appropriated.
Exception: Within the limits prescribed by law.
(R.A. 7719 promotes voluntary blood donation,
service contracts [e.g. modelling])
After Death
General Rule: It is still not considered as
property by reason of public policy.
Exception: Within the limits prescribed by law.
R.A. 349 legalizes permission of use of human
organs or any portion of the human body for
medical, surgical, or scientific purposes under
certain conditions. R.A. 7170 authorizes the
legacy or donation of human organs after death
or for transplant as well as for the advancement
of research, medical or dental education and
therapy.
Immovable Property
1. Land, buildings, roads and constructions of
all kinds adhered to the soil.
2. Trees, plants and growing fruits, while they
are attached to the land or form an integral
of an immovable.
3. Everything attached to an immovable in a
fixed manner, in such a way that it cannot
be separated there from without breaking
the material or deterioration of the object.
4. Statues, reliefs, paintings or other objects
for use or ornamentation placed in buildings
or on lands by the owner of the immovable
in such a manner that it reveals the
intention to attach them permanently to the
tenements.
5. Machinery, receptacles, instruments or
implements intended by the owner of the
tenement for an industry or works which
may be carried on in a building or on a piece
of land, and which tend directly to meet the
needs of the said industry or works.
6. Animal houses, pigeon, beehives, fish ponds
or breeding places of similar nature, in case
their owner has placed them or preserves
them with the intention to have them
permanently attached to the land, and
forming a permanent part of it; the animals
in these places are included.
7. Fertilizer actually used on a piece of land.
8. Mines, quarries, and slag dumps, while the
matter thereof forms part of the bed, and
waters either running or stagnant.
9. Docks and structures which, though floating,
are intended by their nature and object to
remain at a fixed place on a river, lake or
coast.
10. Contracts for public works, and servitudes iv. Immovable by analogy or by law
and other real rights over immovable (Art. 415 [10])
property.
Real Right v. Personal Right
 The chattel mortgage over the house was
void since a house is an immovable and not REAL RIGHT PERSONAL RIGHT
chattel. On the other hand, in Tumalad vs. Definite active subject who Definite active
Vicencio, the SC said that the parties may has a right against all subject (creditor)
persons generally as an and a definite
treat the house as chattel. The SC further
indefinite passive subject passive subject
added that the mortgagor is estopped from (debtor)
assailing the validity of the chattel mortgage Object is generally a Object always an
over the house. How do you reconcile the corporeal thing incorporeal thing
rulings of Associated Insurance vs. Iya and
Tumalad vs. Vicencio? Tumalad applies only Created by ‘mode’ and ‘title’ Created by ‘title’
if no 3rd parties are prejudiced. Is it correct
to say that Tumalad ruling tells us that a Extinguished by the loss or Personal right
chattel mortgage over a building is proper? destruction of the thing survives the subject
No, it does not. A chattel mortgage over a which it is exercised matter
building is always improper since a building
Directed against the whole Directed against a
is always an immovable. In Tumalad, as world (action in rem against particular person
between the parties, the chattel mortgage is 3rd persons) (action in persona)
enforceable. The parties are estopped from
assailing the validity. (Associated Insurance vs.
Iya, G.R. Nos. L-10837-38)  A house (or a building) is classified as
immovable property by reason of its
i. Immovable by nature those which by adherence to the soil on which it is built.
their nature are immovable or cannot be Thus, a building which is merely
moved from one place to another such as superimposed on the soil is not a real
lands and roads (Art. 415 [1]) and mines, property. (Biscerra vs. Teneza, G.R. No. L-
quarries and slug dumps (Art. 415 [8]) 16218, November 29, 1962)

ii. Immovable by incorporation those
which are treated as immovable by reason
of their attachment or incorporation to an
immovable in such manner as to be integral
part thereof, such as buildings and
constructions of all kinds adhered to the soil
(Art. 415 [1]); trees, plants and growing fruits
(Art. 415 [2]) while they are still attached to
the land or form an integral part of an
immovable; and those that are attached to
an immovable (Art. 415 [10])
iii. Immovable by destination those
which are essentially movable, but by the
purpose for which they have been placed in
an immovable, partacle of the nature of the
latter because of the added utility derived
therefrom (Art. 415 [4,5,6,7 and 9])
Note: Even if the sole property of a corporation
consists only of real property, a share of stock in
said corporation is considered personal property
(Cedman vs. Winslow, 10 Mass 145)
Tests of Movable Character:
1. Test by exclusion - Whether the property
was not enumerated in Art. 415.
(expression unius est exclusio alterius ) (Art.
416 [1], NCC)
2. Test by description - Whether the
property can be transported or carried from
place to place (Art. 416 [4], NCC); whether
such change of location can be made
without injuring the immovable to which the
object may be attached; unless expressly
included in Art. 415; whether real property
is considered by any special provision of law
as personalty (Art. 416 [2], NCC).
Note: Test by Exclusion is superior. some public service or for the development
of the national wealth.
Classification of Movable Property
(Art. 418, NCC) Characteristics:
1. Outside the commerce of man;
CONSUMABLE NON-CONSUMABLE 2. Cannot be leased, donated, sold, or be the
Movables which Any other kind of movable object of any contract, except insofar as
cannot be used in a property
they may be the object of repairs or
manner appropriate
to their nature
improvements and other incidental things of
without their being similar things;
consumed 3. Cannot be acquired by prescription;
4. Cannot be registered under the Land
Fungible v. Non-fungible Registration Law and be the subject of a
Torrens title;
FUNGIBLE NON-FUNGIBLE 5. Cannot be levied upon by execution, nor
Capable of Incapable of substitution; attachment;
substitution of same Identical thing must be 6. They can be used by everybody; and
kind and quantity given or returned 7. Inalienable but when no longer needed for
public use or service, may be declared
Public Dominion v. Private Ownership patrimonial property.
Property is either of public dominion or of
private ownership (Art. 419, NCC). Patrimonial Property of the State - All other
property of the State, which is not of the
Public Dominion - It is not owned by the state character stated in the preceding article (Art.
but pertains to the state, which, as territorial 420) is patrimonial property. (Art. 421, NCC)
sovereign, exercises certain juridical
prerogatives over such property. The ownership  Owned by the State NOT devoted to:
of such properties is in the social group, 1. Public use
whether national, provincial or municipal. (3 2. Public service
Manresa 66-69) 3. Development of national wealth.
Kinds of Public Dominion (Arts. 420, 424,  It is the property owned by the State in its
NCC) private or propriety capacity
1. For public use  May be acquired by private individuals or
2. For public service corporations thru prescription (Art. 1113, NCC)
3. For the development of national wealth.  May be an object of ordinary contract
 Save in cases of hereditary succession, no
Note: Property is presumed to be State private lands shall be transferred or
property in the absence of any showing to the conveyed except to individuals,
contrary. (Regalian Doctrine) corporations, or associations qualified to
acquire or hold lands of the public domain
The following things are property of public (Art. XII Secs. 7, 1987 Constitution).
dominion (Art. 420):  Property of public dominion, when no longer
intended for public use or for public service,
1. Those intended for public use, such as shall form part of the patrimonial property of
roads, canals, rivers, torrents, ports and the State. (Art. 422, NCC)
bridges constructed by the State, banks,
shores, roadsteads, and others of similar  Art. XII Secs. 7 and 8 of the 1987
character; Constitution explicitly prohibits non-Filipinos
2. Those which belong to the State, without from acquiring or holding title to private
being for public use, and are intended for
 lands or to lands of public domain (Ancheta
vs. Guersey-Dalayyon, 490 SCRA 140)
 If no such declaration has been made, the
lot forms part of public domain. (Faustino
Ignacio vs. Dir. of Lands, GR No. L-12958, May
30, 1960)
 This provision is not self-executing. There
must be a formal declaration by the
executive or possible legislative department
of the government that the property of the
State is no longer needed for public use or
for public service before the same can be
classified as patrimonial or private property
of the state; otherwise, the property
continues to be property of public dominion
notwithstanding the fact that it is not
actually devoted for such use or service.
(Manila Lodge No. 761 vs. CA. 73 SCRA 162)
Government Lands – include those lands
devoted to public use or public service, as well
as public lands “before and after they are made
available for the private appropriation”, and also
patrimonial lands.
Public lands – are merely a part of
government lands which are thrown open to
private appropriation and settlement by
homestead and other like general laws (e.g.
mining, forest, and agricultural lands)
Property of Local Government Units
(LGUs)
The property of provinces, cities and
municipalities is divided into:
1. Property for public use – consists of the
provincial roads, city streets, municipal
streets, squares, fountains, public waters,
promenades, and public works for public
service paid for by said provinces, cities or
municipalities. (Art. 424[1], Civil Code)
 Manifestly owned by the city/municipal
corporation in its public and governmental
capacity and are therefore public property
over which Congress has absolute control.
Such property is held in trust for the State
for the benefit of its inhabitants, whether it
be for governmental or proprietary
purposes. (Rabuco vs. Villegas, G.R. No. L-
24661, February 28, 1974)
2. Patrimonial Property – All other property
possessed by LGUs without prejudice to
provisions of special laws.
a. Owned by the State NOT devoted to
public use, public service, or the
development of national wealth. It is the
property owned by the state in its
private or propriety capacity
b. May be acquired by private individuals
or corporations through prescription
c. May be an object of ordinary contract
d. Property belonging to private persons –
individually or collectively.
 Owned by city or Municipal Corporation in
its private or proprietary capacity which it
could not be deprived without due process
and without just compensation. Such
property is acquired with its own funds in its
private or corporate capacity. (Rabuco vs.
Villegas, G.R. No. L-24661, February 28, 1974)
 Patrimonial property can be the object of an
ordinary contract. (Cebu Oxygen vs. Bercellis,
G.R. No. 97764, August 10, 1992)
Note: In the absence of proof that the land
claimed by a municipal corporation was acquired
with its private funds, the presumption is that
such land was given to it by the State in TRUST
upon the creation of the municipality.
 It is evident that the movable and
immovable property of a municipality, which
is necessary for governmental purpose, may
not be attached and sold for the payment of
a judgment against the municipality. The
supreme reason for this rule is the character
of the public use to which such kind of
property is devoted. (Vda. de Tan Toco v.
Municipal Council of Iloilo (GR. No. L-24950,
March 25, 1926)
 In administering the patrimonial property of
municipalities, the municipal council
occupies, for most purposes, the position of
a board of directors of a private
 corporation. (Mendoza v. De Leon, G.R. No. L-
9596, February 11, 1916)
 It is essential to exempt property for public
use from execution, otherwise governmental
service would be jeopardized. (Viuda de Tan
Toco vs. Mun. Council of Iloilo (49 Phil 52)
Note: Sacred and religious objects are
considered outside the commerce of man. They
are neither public nor private property.
 Property of private ownership, besides the
patrimonial property of the State, provinces,
cities, and municipalities, consists of all
properties belonging to private persons,
either individually or collectively. (Art. 425,
NCC)
 Whenever by provision of the law, or by
individual declaration, the expression
"immovable things or property," or "movable
things or property," is used, it shall be
deemed to include, respectively, the things
enumerated in Art. 415 to 418.
 Whenever the word "muebles," or
"furniture," is used alone, it shall not be
deemed to include money, credits,
commercial securities, stocks and bonds,
jewelry, scientific or artistic collections,
books, medals, arms, clothing, horses or
carriages and their accessories, grains,
liquids and merchandise, or other things
which do not have as their principal object
the furnishing or ornamenting of a building,
except where from the context of the law,
or the individual declaration, the contrary
clearly appears. (Art. 426, NCC)
III. Ownership
Ownership can be defined
1. as a relation in law
2. by virtue of which a thing pertaining to one
person
3. is completely subjected to his will
4. in everything not prohibited by law or the
concurrence with the rights of another
(Tolentino)
Art. 427. Ownership may be exercised
over things or rights.
Rights of Person over His Property:
The Civil Code does not define ownership.
Instead, the Code simply enumerates the rights
which are included therein, as follows:
1. Right to enjoy the property (Art. 428, par. 1,
NCC);
a. Jus utendi - the right to use;
b. Jus fruendi - the right to enjoy the
fruits;
c. Jus abutendi - the right to consume
the thing by its use; and
d. Jus possidendi - the right to posses.
2. Right to dispose the property (jus
disponendi) (Art. 428, par. 1, NCC);
a. Alienate
b. Encumber
c. Transform
d. Destroy
3. The right to vindicate (jus vindicandi)
 Right to recover the property from any
holder or possessor (Art. 428, par. 2, NCC);
4. The right to exclude
a. Right to exclude any person from
enjoyment and disposal of the property
(Art. 429, NCC);
b. Right to enclose or fence the land or
tenement (Art. 430, NCC);
c. May use such force to repel or prevent
usurpation of property
5. Right to demand indemnity for damages
suffered due to lawful interference by a
third person to avert an imminent danger
(Art. 432, NCC);
6. The right to just compensation in case of
eminent domain (Art. 435, NCC);
7. Right to construct any works or make any
plantations and excavations on the surface
or subsurface of the land (Art. 437, NCC);
8. Right to hidden treasure found in the
owner’s property (Art. 438, NCC); and
9. Right to accessions. (Art. 440, NCC)
Title - That which constitutes a just cause of
exclusive possession or which is the foundation
of ownership of property.
Kinds of Ownership
1. Full Ownership- includes all rights of
owner.
2. Naked Ownership - right to use and right
to fruits has been denied.
3. Sole Ownership- vested in only one
person.
4. Co-ownership - vested in two or more
owners. Concept of co-ownership is unity of
the property and plurality of the subjects.
Actions for Recovery of Possession
1. Real Property
a. Accion Interdictal – Summary action to
recover physical possession, and not
juridical possession nor ownership.
(1) Forcible Entry – Action for recovery of
material/physical possession was
deprived thereof by force, intimidation,
strategy, threat or stealth (FISTS)
(2) Unlawful Detainer – Possession by a
landlord, vendor, vendee or other
person of any land or building is being
unlawfully withheld after the expiration
or termination of the right to hold
possession, by virtue of any contract.
Prescriptive period: Must be brought
within one year from the time of
dispossession (forcible entry) or from the
time possession becomes unlawful (unlawful
detainer).
b. Accion Publiciana - Plenary action to
recover the better right of possession or
plenaria de posesion.
Prescriptive period to bring an action for
better right of possession except in cases of
forcible entry and unlawful detainer: 10
years
Accion Interdictal Accion Publiciana
Possession de facto Possession de jure
c. Accion Reivindicatoria - Action to recover
ownership over real property
Prescriptive period:
a) 10 years (ordinary prescription) –
requires good faith and just title.
b) 30 years (extraordinary prescription) –
does not require good faith and just title
Requirements of Accion Reinvindicatoria
To successfully maintain an action to recover the
ownership of a real property, the person who
claims a better right to it must prove two (2)
things:
1. Identity of the land claimed; and
2. His title thereto.
This requirement is based on two (2) reasons:
1. Neither the plaintiff nor the defendant is the
true owner of the property in dispute;
2. The burden of proof lies on the party who
substantially asserts the affirmative of an
issue for he who relies upon the existence of
a fact should be called upon to prove that
fact.
 In an accion reinvindicatoria, the person
who claims that he has a better right to the
property must first fix the identity of the
land he is claiming by describing the
location, area and boundaries thereof.
 What really defines a piece of land is the
boundaries therein laid down; the
boundaries may either be natural or
artificial.
2. Personal Property
Replevin – recovery of personal property (Rule
60, Rules of Court)
Requisites for Recovery of Property:
a. Proof of Right Imposed by the State (e.g. police power, power
b. Identity of taxation, power of eminent domain)
c. Reliance on strength of own evidence, not
weakness of defendant’s claim Notes:

Real Right – autonomous power to derive  Ownership is not an absolute right

directly from an appropriate thing certain
economic advantages, independently of whoever
should be the possessor of the thing.
Personal Right – power to demand of another
as definite passive subject the fulfillment of a
prestation to give, to do or not to do.
A. Modes of Acquiring Ownership
Classification:
 Exercise of rights arising from ownership is
always subject to the restrictions imposed
by law, the exercise of the inherent powers
of the State, and the rights of others
 Aside from the foregoing restrictions, the
owner himself may impose limitations upon
his own right, i.e:
1. At the time that he transmits the
property to another person;
2. At the time that he continues to be the
owner of the property.

1. Original Modes – those which produce the Police Power

acquisition of ownership independent of any
pre-existing right of another person and, Power of the State exercised through the
therefore, necessarily free from any burdens legislature to regulate or restrict the use of
or encumbrances, e.g. occupation. property of individuals. (Director of Lands v. Aballa, 54
Phil. 455)
2. Derivative modes – those which produce
the acquisition of property based on a right It is an inherent power of the state that may
previously held by another person and, limit property rights. It is based on two legal
therefore, subject to the same maxims:
characteristics, powers, burdens, etc, as
when held by the previous owner, e.g. “Sic utere tuo ut alienum non laedas”,
tradition. which means “so as to use your property
without injuring others.
MODE CAUSE
Original Modes “Salus populi est suprema lex”, which
Occupation Condition of being without known means “the welfare of the people is the supreme
owner law”. Its fundamental purpose is securing the
Work which Creation, discovery or invention general welfare, comfort, and convenience of
includes the people.
intellectual
creation
 Invalid exercise of Policy Power: There is no
Derivative Modes
reasonable relation between the setting
Law Existence of required conditions
Tradition Contract of the parties
aside of at least six (6) percent of the total
Donation Contract of the parties area of private cemeteries for charity burial
Prescription Possession in the concept of the grounds of deceased paupers and the
owner promotion of health, morals, good order,
Succession Death safety, or the general welfare of the people.
The ordinance is actually a taking without
B. Limitations compensation of a certain area from a
private cemetery to benefit paupers who are
charges of the municipal corporation.
 Instead of building or maintaining a public
cemetery for this purpose, the city passes
the burden to private cemeteries. (City
Government of Quezon v. Judge Ericta, G.R. No.
L-34915, June 24, 1983)
Eminent Domain
The superior right of the State to own certain
properties under certain conditions, and is a
limitation on the right of ownership, with
payment of just compensation.
Under Article 435(1) of the Civil Code, the power
of eminent domain is expressed as follows: “No
person shall be deprived of his property except
by competent authority and for public use and
always upon payment of just compensation.”
Doctrine of Self-Help
The right of the owner or lawful possessor to
exclude any person from the enjoyment and
disposal of the property by the use of such force
as may be necessary to repel or prevent actual
or threatened unlawful physical invasion or
usurpation of his property. (Art. 429, Civil Code)
Rules for the Application of the Doctrine of
Self-Help:
The actual invasion of property may consist of:
1. A mere disturbance of possession; or
2. A real dispossession.
In the case of (a) a mere disturbance of
possession, force may be used against it at any
time as long as it continues, even beyond the
prescriptive period for an action for forcible
entry.
In the case of (b) the invasion consists of a real
dispossession, force to regain possession can be
used only immediately after the dispossession.
Note: If the property is immovable, there
should be no delay in the use of force to recover
it; a delay even if excusable, such as when due
to the ignorance of the dispossession, will bar
the right to the use of force . (3-1 Enneccerus,
Kipp & Wolff, 92-93)\
Self-Defense: Available only when the
possession has not yet been lost.
Requisites:
1. Person defending must be the owner or the
lawful possessor;
2. Force used is reasonably necessary to repel,
prevent an invasion or usurpation of his
property, otherwise, he shall be liable for
damages:
a. No delay;
b. Actual or threatened physical invasion or
usurpation; and
c. Can only be exercised at the time of
actual or threatened dispossession;
unavailing when possession has already
been lost. Thus, possessor is entitled to
remain on the property until the owner
or a person having a better right ejects
the former thru a judicial process.
(German Management & Services vs. CA,
G.R. No. 76217, September 14, 1989)
Exception: State of Necessity (Art. 432,
NCC)
 As a general rule, therefore, there is no
cause of action for acts done by one person
upon his own property in a lawful and
proper manner, although such acts
incidentally cause damage or an
unavoidable loss to another, as such
damage or loss is damnum absque injuria.
When the owner of property makes use
thereof in the general and ordinary manner
in which the property is used, such as
fencing or enclosing the same as in this
case, nobody can complain of having been
injured, because the inconvenience arising
from said use can be considered as a mere
consequence of community life. (Spouses
Custodio v. CA, G.R. No.116100, February 9,
1996)
“Doctrine of Incomplete Privilege”
The owner of a thing has no right to prohibit the
interference of another with the same, if the
interference is necessary to avert an imminent
danger and the threatened damage, compared
to the damage arising to the owner from the
interference, is much greater. The owner may
demand from the person benefited indemnity for
the damage to him. (Art. 432, NCC)
Acts in State of Necessity vs. Defense
Against unlawful aggression/dangerous
objects
a. Acts in state of necessity - if another’s
property is used to avert danger not arising
from it. (6 Von Tuhr, 305-307)
b. Defense against danger - if the danger
comes from another’s property, and the
force is employed against it.
Requisites of Doctrine of State of
Necessity:
1. There must be a situation of grave peril,
actual or imminent danger, either upon the
person of the actor or a third person or their
property;
2. Interference is necessary to avert such
danger;
3. Threatened damaged compared to the
damage arising to the owner from the
interference is much greater; and
4. The state of necessity must not be brought
about by the intentional provocation of the
party invoking the same.
 The right to enclose or fence in Article 430
is also subject to the limitation that it should
not work detriment to the servitudes
constituted therein.
 Must be legitimately exercised and must not
be attended with bad faith. Thus, if the lot
owner fenced his property for the purpose
of evicting its occupant whose lease contract
had already expired, the lot owner is liable
to said occupant for damage.
 The existence of this kind of servitude works
as a limitation upon the right of the owner
of the lower tenement to enclose his
property with walls or other means if the
same will prevent the passage of the water
which naturally falls from the higher
tenement.
Surface Right
 The owner of a parcel of land is the owner
of its surface and of everything under it, and
the airspace above it up to a reasonable
height and he can construct thereon any
works or make any plantations and
excavations which he may deem proper. (Art
437, NCC). Also called the ad coelum doctrine
(US vs. Causby, 328 U.S. 256)
Limitations:
1. Servitudes;
2. Special laws and ordinances;
3. Reasonable requirements of aerial
navigation;
4. Right of third persons (Art. 431, NCC);
5. Principles on human relations and the
prevention of injury to the rights of third
persons (Art. 19 and 431, NCC).
 Rights over the land are indivisible, and the
land itself cannot be half agricultural and
half mineral. The owner of the land is the
owner of its surface and subsurface. Thus a
party cannot claim ownership by acquisitive
prescription of mineral land by showing he
was in possession of the land or the surface
thereof in the concept of agricultural land .
(Republic v. CA, G.R. No. L-43938, April 15,
1988, 160 SCRA 228.)
Right to Hidden Treasure (Art. 438)
By treasure is understood, for legal purposes,
any hidden and unknown deposit of money,
jewelry, or other precious objects, the lawful
ownership of which does not appear. (Art. 439)
General rule: Hidden treasure belongs to the
owner of the land, buildings or other property
on which it is found.
Exception: Finder is entitled to ½ of the
treasure if:
1. Made in the property of another, or of the
state or any of its subdivisions;
2. Made by chance;
3. Finder is not a trespasser/agent of the
landowner;
4. Finder is not a co-owner of the property
where it is found; and
5. Finder is not married under the absolute
community or the conjugal partnership
system (otherwise his share belongs to the
community).
Note: If the finder is a trespasser, he shall not
be entitled to any share of the treasure. Also, if
the finder is a usufructuary or a lessee, he is not
entitled to such share of ½, unless such
usufructuary or lessee is himself the finder of
the treasure.
Exception to the Exception: If the ownership
of the treasure is known, but the owner is
already dead, the same will not be considered
“hidden treasure” and must therefore go to the
owner’s rightful heirs.
 Does not include natural wealth (i.e.
minerals and petroleum). Hence, under the
Regalian Doctrine, natural wealth is reserved
to the state even if the land where the
discovery is made be private.
 If the thing found be of interest to science
or arts, the state may acquire them by
paying just price, whether the finder of the
treasure is the owner of the property on
which it is found or a third person. (Art. 438,
NCC)
Treasure Hunting
A treasure hunter requires a permit from the
state for the discovery/recovery of hidden
treasures, shipwreck/sunken vessels, etc. (RA
8492, the National Museum act of 1998)
Boundaries
Natural - if they are permanent landmarks
established by nature such as for example a
river, a lake, a stream, etc.
Artificial - If it is through concrete monuments
established by the Bureau of Lands or it consists
in the property of neighbors.
General rule: When there is a conflict between
the area and the boundaries of a land, the latter
prevails for what really defines a piece of land is
not the area mentioned in its description, but
the boundaries therein laid down, as enclosing
the land and indicating its limits.
Exception: it is only when the boundaries given
are sufficiently certain and the identity of the
land clearly proved by the boundaries thus
indicated may an erroneous statement
concerning the area be disregarded or ignored.
Otherwise, the area stated should be followed.
IV. Accession
Accession – the right by virtue of which the
owner of a thing becomes the owner of
everything which is produced thereby, or which
is incorporated or attached thereto, either
naturally or artificially. [Art. 440, CC]
General Rules on Immovables
1. Accession Discreta
General Rule: To the owner belongs the
natural, industrial, and civil fruits. (Art. 441, NCC)
Exceptions:
1. Lease of rural lands: lessee is entitled to
the natural and industrial fruits of the thing
leased. Civil fruits in the form of rent are
given to the lessor. (Arts. 1654 and 1676[2],
NCC)
2. Usufruct: the usufructuary gets the fruits.
(3 Manresa 179-180)
3. Antichresis: the creditor acquires the right
to receive the fruits of an immovable of his
debtor, with the obligation to apply them to
the payment of interest, if owing, and
thereafter to the principal of his credit. (Art.
2123, NCC)
4. Possession in good faith: a possessor in
good faith is entitled to the fruits received
by him before his possession is legally
interrupted. (Art. 544, NCC)
5. Fruits naturally falling: if it falls upon
adjacent land, it belongs to the owner of
said land and not to the owner of the tree .
(Art. 681, NCC)

Kinds of Fruits
a. Natural fruits
Spontaneous products of the soil and the young
and other products of animals. (Art. 442(1), NCC)
Only such as are manifest or born are
considered as natural or industrial fruits. With
respect to animals, it is sufficient that they are
in the womb of the mother, although unborn.
(Article 444, NCC)
Offspring of Animals
General Rule: The owner of the female animal
owns the offspring which it produced (Partus
Sequitor Ventrem Principle)
Exception: If there is a contrary custom or
stipulation. (U.S. v. Caballero, 25 Phil. 256)
Note: Offspring is already considered as a
natural fruit even during the time that it is inside
the womb of its mother so long as the latter’s
pregnancy is already manifest or evident.
Necessary that there must be no human labor
which has intervened in its generation. If human
labor intervenes in the production of the fruit,
the same is classified as an industrial fruit.
b. Industrial fruits
Produced by lands of any kind through
cultivation or labor. (Art. 442(2), CC)
Requirements:
1. Produced by the land
2. Produced through cultivation or labor.
c. Civil fruits
The rents of buildings, the price of leases of
lands and other property and the amount of
perpetual or life annuities or other similar
income.
Income or revenues derived from the property
itself.
Note: Article 443 does not apply to a situation
where the fruits are still pending. In a situation
where the fruits are still pending (or
ungathered) at the time the owner recovers
possession from a possessor in bad faith, it is
the provisions of Article 449 of the Civil Code
that will apply.
2. Accession Continua
The right pertaining to the owner of a thing,
over everything that is incorporated or attached
thereto, either naturally or artificially by external
forces.
Basic principles of accession continua:
1. Accessory follows the principal
2. To the owner of a thing belongs the
extension or increase of such thing, subject
to certain exceptions.
3. Union or incorporation must generally be
effected in such a manner that to separate
the principal from the accessory would
result in substantial injury to either.
4. He who is in good faith may be held
responsible but not penalized.
5. He who is in bad faith may be penalized
6. No one should unjustly enrich himself at the
expertise of another.
Principle: Accession exists only if separation is
not feasible. Otherwise, separation may be
demanded.
a. With respect to Real Property
i. Accession Industrial
Related Maxims:
a. Accessorium non ducit sed sequitor
suum principali. The accessory does not
lead but follows the principal.
b. Accessirum sequitor naturam rei cui
accredit.The accessory follows the nature
of that to which it relates.
c. Aedificatum solo, solo cedit. What is Builder, useful expense. Builder,
built upon the land goes with it, or the land Planter, Planter or
is the principal, and whatever is built on it Sower, Pay the value of Sower;
becomes the accessory. indemnity; or materials to subsidiarily
Sell the land to owner of liable from
Builder or materials landowner if
Obligation to third person who pay for the Planter except Builder,
expenses if the value of Planter or
He who receives the fruits has the obligation to the land is Sower is
pay the expenses made by a third person in considerably insolvent.
their production, gathering, and preservation more.
(Art. 443, NCC). Materials can
Rent to Sower be removed if
(Arts. 448, 546 without injury.
Gathered Fruits
and 455, NCC) (Arts. 447 and
455, NCC)
PLANTER OWNER CONSEQUENCE Subsidiarily
Planter in Keeps fruits No necessity to liable to owner
Good Faith reimburse the of materials
(GF) planter of expenses GOOD FAITH BAD FAITH
since he retains the Acquire Right of Lose them
fruits improvements retention for without right
Planter in Reimbursed Gets fruits, pays and pay necessary and to indemnity
Bad Faith for expenses planter expenses indemnity to useful expenses. (Art. 449, NCC)
(BF) for production, Builder,
gathering and Planter or Keep building,
preservation Sower; or sell planting or
to Builder, sowing without
Standing Crops Planter or indemnity to
Sower if the owner of
PLANTER OWNER CONSEQUENCE value of the materials and
Planter in Reimbursed for Owns fruits land is collect damages
Good expenses for provided he pays considerable (Arts. 449 and 546,
Faith (GF) production, planter expenses for more (forced NCC)
gathering and production, lease)
preservation gathering and GOOD FAITH BAD FAITH
preservation (force Acquire Recover Recover value
co-ownership) improvement necessary from Builder,
Planter in Loses Owns fruits without paying expenses for Planter, Sower
Bad Faith everything. No indemnity and preservation. as if they
(BF) right to collect acted in good
reimbursement damages or Lose faith.
demolition or improvements
RIGHTS AND OBLIGATIONS AMONG THE restoration, without right to If Builder,
LANDOWNER, BUILDER, PLANTER AND and collect indemnity from Planter or
SOWER, AND THE OWNER OF THE MATERIALS damages or Land Owner (Art. Sower acquire
IN CASE OF ACCESSION WITH RESPECT TO sell to Builder, 452, NCC) unless improvements,
IMMOVABLE PROPERTY Planter or rent the Land Owner materials can
to Sower, and sells the land. be removed
GOOD FAITH
collect but only if
LANDOWNER BUILDER, OWNER OF damages without injury
PLANTER, THE (Art. 447, NCC)
SOWER MATERIALS BAD FAITH
Acquire Right of Collect value Same as though they acted in good faith (Art. 453,
improvements retention for of materials NCC)
and pay to necessary and primarily from BAD FAITH GOOD FAITH
Acquire Remove Remove Builder, improvements.
improvements improvements in materials if Planter or
after paying any event. without injury Sower.
indemnity and BAD FAITH GOOD FAITH BAD FAITH
damages to Be indemnified Collect value Acquire Indemnity for No indemnity
Builder, for damages. of materials, improvements damages
Planter or primarily from and pay Lose
Sower. Builder, indemnity and Remove materials. (Art.
Planter or damages to improvements in 449, NCC)
Subsidiarily Sower Builder, any event. (Arts.
liable to owner Planter or 447 and 454, NCC)
of materials Subsidiarily Sower. (Arts.
(Arts. 447, 454 liable from 447 and 454,
and 455, NCC) Land Owner NCC)

BAD FAITH GOOD FAITH ii. Accession Natural

Acquire Right of Collect value
improvements retention for of materials To the owners of lands adjoining the banks of
after necessary primarily from rivers belongs the accretion which they
indemnity to expenses. Builder, gradually receive from the effects of the current
Builder, Planter and
of the waters. (Art 457, NCC)
Planter, Sower Pay the value of Sower,
or sell to the materials to subsidiarily
Builder and owner of liable with the
1. Alluvium
Planter except materials and Land Owner
if the property pay him  Increment which lands abutting rivers
is considerably damages. (Arts. Collect gradually receive as a result of the current
more 447 and 546, NCC) damages of the waters.
If Builder,
 It is the gradual deposit of sediment by the
Planter, Sower natural action of a current of fresh water
acquires (not sea water), the original identity of the
improvements deposit being lost.
remove  Soil is gradually deposited on banks
materials in adjoining the river
any event (Art.
447 and 455,
NCC) Requisites:
GOOD FAITH BAD FAITH GOOD FAITH 1. Deposit of soil or sediment is gradual and
Acquire Recover Collect value imperceptible
without paying necessary of materials 2. As a result of the action of the currents of
indemnity and expenses (Art. and damages the waters of the river
collect 443 and 452, CC). from Builder, 3. Land where the accretion takes place is
damages or Planter or
adjacent to the banks of the rivers
sell to Builder, Sower and
4. Deemed to Exist: When the deposit of the
Planter or subsidiarily
Sower and from Land sediment has reached a level higher than
collect Owner. the highest level of the water during the
damages or year
demolish or Remove
restore and materials in
collect any event if Effects:
damages. Builder, 1. Land automatically owned by the riparian
Planter or
owner;
Pay necessary Sower
expenses to acquires
2. BUT does not automatically become
 registered property (Republic v. Court of
Appeals)
Rationale:
1. To offset the owner’s loss from possible
erosion due to the current of the river
2. Compensate for the subjection of the land to
encumbrances and legal easements
Accretion – the process by which a riparian
land gradually and imperceptively receives
addition made by the water to which the land is
contiguous.
The owners of the lands adjoining banks of the
river (riparian lands) shall own the accretion
which they gradually receive. This is to
compensate him for the loss he may suffer due
to erosion or the destructive force of the water
and danger from floods.
Where the deposit is by sea water, it belongs to
the State.
 Accretion operates ipso jure. However, the
additional area is not covered by a Torrens
title and the riparian owner must register
the additional area (Meneses vs. CA. 246 SCRA
162 [1995]).
 Since the accretion was formed by the
dumping of boulders, soil, sawdust and
other filing materials, it cannot be claimed
that the accumulation of such was gradual
and imperceptible. The deposit was not also
due to the effect of water current. The
article excludes all deposits caused by
human intervention. Alluvium must be the
exclusive work of nature. The accretion in
this case is man-made, since it was formed
as a result of sawdust dumped into the dried
up creek along the banks of rivers, hence,
part of the public domain. (Vda. De Nazareno
vs. CA, 257 SCRA 589 [1996])
 Registration under the Torrens System does
not protect the riparian owner against
diminution of the area of his land through
gradual changes in the course of adjoining
stream. (Payatas vs. Tuazon G.R. No. L-30067,
March 23, 1929, [53 Phil. 55])
2. Avulsion
 Process whereby the current of a river,
creek, and torrent segregates from an
estate on its bank a known portion of land
and transfers it to another estate
 A portion of land is segregated from one
estate by the forceful current of a river,
creek or torrent and transferred to another
Requisites:
1. Segregation and transfer of land is sudden
and abrupt
2. Caused by the current of the water
3. Portion of land transported must beknown
and identifiable; or
4. Can also apply to sudden transfer by other
forces of nature such as land transferred
from a mountain slope because of an
earthquake
Note: The owner must remove the transported
portion within two years to retain ownership.
(Art. 459, Civil Code) In avulsion, it is essential
that the detached portion be known or
identifiable. Therefore, mere placing on top will
not make the article inapplicable as long as the
identification is possible. But if because of some
force, (e.g. continuous rain) the two have so
mixed with each other that identification cannot
take place, the article should not apply. (II
Tolentino, 135) In this case, the principles of
commixtion or confusion should apply.
Effect: The ownership of the detached property
is retained by the owner subject to removal
within 2 years from the detachment.
ALLUVIUM AVULSION
The deposit of the soil here Sudden or abrupt; may
is gradual and be seen.
imprescriptible
Soil cannot be identified Soil is identifiable or
verifiable
Belongs to owner of the Belongs to the owner
property to which it is from whose property it
attached. was detached.
Merely an attachment Detachment followed by
attachment.
Note: Trees uprooted and carried away by the
current of the waters belong to the owner of the
land upon which they may be cast if the owners
do not claim them within 6 months.
If the trees form part of the soil which was
removed by action of waters, the rule on
avulsion will apply. Thus, the action will
prescribe in 2 years.
3. Change of Rivers’ Course
If there is a natural change in the course of the
waters of the river, the abandoned riverbeds
shall ipso facto belong to the owners whose
lands are occupied by the new course in
proportion to the area lost.
Island (Arts. 463-465, NCC)
Three Kinds of Island
a. When the current of a river divides
itself into branches, leaving a piece of
land. (Art. 463, NCC)
The island formed remains to be the
property of the owner of the land where
such island has been formed and the portion
of the land separated from his estate by the
current.
b. An island is formed on a sea, lake or
navigable or floatable river through
whatever cause. (Art. 464, NCC)
The island formed is owned by the State.
c. Islands formed through successive
accumulation of alluvial deposits in
non-navigable and non-floatable
rivers. (Art. 465, NCC)
Rules of Ownership:
1) It shall belong to the owner of the margins
or banks nearest to the island;
2) If the island is in the middle of the river, the
same shall be owned by the owners of both
margins, in which case it shall be divided
longitudinally in halves; or
3) If the island be more distant from one
margin than from the other, the owner of
the nearer margin shall be the sole owner
thereof.
Requisites:
1. Change in the natural course of the waters
of the river;
2. Such change causes the abandonment of
the river beds.
Natural Bed: ground covered by its waters
during ordinary floods. Such change is sudden
or abrupt.
Results:
1. Owners whose lands are occupied by the
new course automatically become owners of
the old bed, in proportion to the area they
lost;
2. Owners of the lands adjoining the old bed
are given the right to acquire the same by
paying the value of the land Not exceeding
the value of the land invaded by the new
bed (the old property of the owner);
3. The new bed opened by the river on a
private estate shall become of public
dominion.
4. Islands’ Formation
 They belong to the State if:
a. Formed on the SEAS within the
jurisdiction of the Philippines
b. Formed on LAKES
c. Formed on NAVIGABLE or FLOATABLE
RIVERScapable of affording a channel or
passage for ships and vessels
d. Must be sufficient not only to float
bancas and light boats, but also bigger
watercraft
e. Deep enough to allow unobstructed
movements of ships and vessels
 They belong to the Owners of the nearest
margins or banks if:
a. Formed through successive
accumulation of alluvial deposits
 b. On NON-NAVIGABLE and NON-
FLOATABLE RIVERS
c. If island is in the middle: divided
longitudinally in half.
b. With respect to Personal Property
i. Adjunction
Process by virtue of which two movable things
belonging to different owners are united in such
a way that they form a single object and each of
the things united preserves its own nature.
Requisites:
1. Two things must belong to different owners;
2. Form a single object;
3. Inseparable or their separation would impair
their nature.
Kinds:
1. Inclusion or engraftment
2. Soldadura or soldering
a. Ferrumination – if both accessory and
principal are of the same metal
b. Plumbatura – if they are of different
metals
3. Escitura or writing
4. Pintura or painting
5. Tejido or weaving
Test to Determine Principal
1. The “rule of importance and purpose” – to
which the other (accessory) has been united
as an ornament or for its perfection.
2. Of greater value, if they are of unequal
values
3. Of greater volume, if they are of an equal
value
4. That of greater merits taking into
consideration all the pertinent legal
provisions applicable as well as the
comparative merits, utility and volume of
their respective things.
Rules in Adjudication by either owner
General Rule: Accessory follows the principal.
Exception: If the accessory is much more
precious than the principal, the owner of the
accessory may demand the separation even if
the principal suffer some injury.
1. Adjudication in bad faith by the owner of the
principal; Option of the owner of the
accessory:
a. To recover the value plus damages; or
b. To demand separation plus damages.
2. Adjudication in bad faith by the owner of the
accessory:
a. He losses the accessory; or
b. He is liable for damages.
When separation of things allowed:
1. Separation is without injury; or
2. Accessory is more precious than the
principal; or
3. Owner of the principal acted in bad faith.
ii. Commixtion
Combination or union of materials where the
respective identities of the component elements
are lost.
Kinds:
1. Commixtion – mixture of solid
2. Confusion – mixture of liquids
Rules:
a. Mixture by will of the owners
In the absence of stipulations, each owner
acquires a right or interest in the mixture in
proportion to the value of his material as in
co-ownership.
b. Mixture caused by an owner is proportional
to the value of the part which belonged to
him.
The share of each owner is proportional to
the value of the part which belonged to him.
c. Mixture is caused by an owner in bad faith:
1. He loses his material in favor of the
other’s material; and
2. He is liable for damages
d. Mixture made with the knowledge and Property
without the objection of the other owner.
Their respective rights shall be determined Cloud to title or interest in real property
as though both acted in good faith.
 An action to remove a cloud from the title of
iii. Specification real estate.

Giving of a new form to another’s material  Persons having legal as well as equitable
through application of labor (labor is the title to or interest in a real property may
principal). bring such action. "Title" does not
necessarily denote a certificate of title
Rules: issued in favor of the person filing the suit.
1. Owner of the principal (worker) in good faith (Maestrado v. CA, 327 SCRA 678)
a. A worker/maker acquires the new thing;
b. Must indemnify the owner of the NATURE: QUASI IN REM
material. 1. A suit against a particular person or persons
Exception: If the material is more in respect to the res and the judgment will
precious/valuable than the new thing, the apply only to the property in dispute.
owner of the material may choose:
a. To appropriate the new thing to himself, 2. The action to quiet title is characterized as
but he pays for the work; or proceeding quasi in rem. Technically, it is
b. To demand indemnity for the material neither in rem nor in personam. In an action
2. Owner of the principal (worker) in bad faith: quasi in rem, an individual is named as
the owner of the material has the choice: defendant. However, unlike suits in rem, a
a. To acquire the new thing without quasi in rem judgment is conclusive only
indemnity; or between the parties. (Spouses Portic v.
b. To demand indemnity for the material Cristobal, GR No. 156171, 2005
plus damages.
3. Owner of the material in bad faith A. Requirements
a. He loses the material;
b. He is liable for damages. 1. Plaintiff must have a legal or equitable title
to, or interest in real property which is the
ADJUNCTION MIXTURE SPECIFICATION subject matter of the action.
Involves at Involves at May involve only 2. There must be a cloud on such title;
least two least two one thing (or 3. Such cloud must be done to same
things. things more) but form is instrument, record claim, encumbrance or
changed. proceeding which is apparently valid but is
Accessory Co- Accessory follows in truth invalid, voidable or unenforceable,
follows the ownership the principal and is prejudicial to the plaintiff’s title
principal results
4. Plaintiff must return to the defendant all
Things joined Things The new object
retain their mixed or retains or benefits he may have received from the
nature confused preserves the latter, or reimburse him for expenses that
may either nature of the may have redounded to his benefit.
retain or original object.
lose their B. Distinctions between quieting of title
respective and removing/preventing cloud
natures
ACTION TO QUIET ACTION TO REMOVE
V. Quieting of Title to or Interest in TITLE CLOUD
and Removal or Prevention of Cloud To put an end to To procure the
over Title to or Interest in Real troublesome, vexatious cancellation, release of
 litigation with respect an instrument, 3. To boundary disputes;
to the property encumbrance, or claim 4. To deeds by strangers to the title unless
concerned. in the plaintiffs title or purporting to convey the property of the
enjoyment of the plaintiff;
property.
5. To instruments invalid on their face;
Plaintiff asserts own Plaintiff declares his own
claim and declares that claim and title, and at
6. Where the validity of the instrument
the claim of the the same time indicates involved pure questions of law; and
defendant is unfounded the source and nature of 7. If the action has prescribed and the plaintiff
and calls on the the defendant’s claim, is not in possession of the property.
defendant to justify his pointing its defects and
claim on the property prays for the declaration VI. Co-ownership
that the same maybe of its invalidity.
determined by the Definition
court.
Remedial action Preventive action to
involving a present prevent a future cloud
The form of ownership when the ownership of
adverse claim on the title an undivided thing or right belongs to different
persons. (Art. 484, NCC)
Note: In an action to quiet title, the suit does
The right of common dominion which two or
not prescribe if the plaintiff is in possession of
more persons have in a spiritual part of a thing,
the property. However, if the property is in the
not materially or physically divided.
possession of the defendant, then the action has
prescribed. The action would not be one to quiet
Manifestation of the private right of ownership,
title, but one to recover real property. (Gallar v.
Hussain, 20 SCRA 186) which instead of being exercised by the owner
in an exclusive manner over the things subject
C. Prescription to it, is exercised by two or more owners and
the undivided thing or right to which it refers is
1. If the plaintiff is in possession of property - one and the same.
action does not prescribe. (Sapto vs. Fabiana,
G.R. No. L-11285, May 16, 1958) A. Sources of Co-ownership
2. If the plaintiff is not in possession of
property action may prescribe in 1. Law
(Immovables): 2. Contracts
a. 10 years (ordinary good faith and with 3. Succession
just title) 4. Testamentary disposition or donation inter
b. 30 years (extraordinary uninterrupted vivos
adverse possession) 5. Fortuitous event or by chance (commixtion,
3. Movables: confusion, hidden treasure)
a. 4 years – in good faith 6. Occupation or occupancy (two persons claim
b. 8 years – in bad faith ownership

Action to quiet title does not apply: Co-ownership provided for by the Law:
1. To questions involving interpretation of
contract or document; 1. Cohabitation – co-ownership between
2. To mere written or oral assertions of claim common law spouses (Arts. 147, 148, 90, FC)
except: 2. Purchase creating implied trust (Art. 1452)
a. If made in legal proceeding; 3. Easement of a party wall (Art. 658)
b. If it is being asserted that the 4. Condominium Law
instrument or reentry in plaintiff’s favor
is not what it purports to be;
Sec. 6, RA 4726. The Condominium Act. Unless event or occupancy
otherwise expressly provided in the enabling or For common enjoyment To obtain profits.
master deed or the declaration of restrictions, of the thing or right
the incidents of a condominium grant are as owned in common.
No juridical personality Has a juridical
follows:
personality.
(a) Unless otherwise, provided, the common
Share is proportionate to Shares or profits may
areas are held in common by the holders of the respective interests be subject to
units, in equal shares, one for each unit. of the co-owners. stipulation.
Co-owner may dispose of A partner cannot
B. Characteristics of co-ownership his share without the dispose of his share
In general: consent of the others – and substitute the
except when personal buyer/assignee in his
1. There are two or more co-owners (Art. 484, rights are involved. place without the
NCC); consent of the others.
Agreement to keep the Law fixes no limit
2. There is a single object which is not
thing undivided for a
materially or physically divided and over period of more than 10
which his ideal share of the whole, each of years is void.
the co-owner exercises ownership, together Generally, there is no Generally there is a
with the other co-owners; mutual representation. mutual representation,
3. There is no mutual representation by the co- Exception: When a co- unless otherwise
owners; owner files a case for stipulated.
4. It exists for the common enjoyment of the ejectment, the rest are
co-owners; represented.
5. It has no distinct legal personality; Death or incapacity of a Death dissolved the
co-owner does not partnership
6. It is governed first of all by the contract of
dissolve the co-
the parties; otherwise, by special legal ownership. The deceased
provisions, and in default of such provisions, will be represented by
by the provisions of Title III on Co- his estate or heirs in the
ownership. co-ownership.
CO-OWNERSHIP EASEMENT
Co-Ownership vs. Joint Ownership: There is in each co- Precisely a limitation
owner a right of on the right of
CO-OWNERSHIP JOINT OWNERSHIP dominion over the whole dominion.
Each co-owner owns only Each joint-tenant property and over his
his ideal share in the cannot dispose of his undivided share.
whole property own share without the The right of ownership The right of dominion
consent of all the rests solely on each and is favor of one or more
others. every co-owner over a persons and over two
In case of death, the In case of death, the single object. or more different
share of co-owners share of joint-tenant things.
remains, even if one of goes to other joint- CONJUGAL
CO-OWNERSHIP
them happens to be a tenant. PARTNERSHIP
minor May arise by an ordinary Arises only because of
Prescription runs against Prescription does not contract. the marriage contract.
all co-owners, even if run against all joint- Sex of the co-owners is One must be a male,
one of them happens to tenants if one of them immaterial the other a female.
be a minor. is a minor or is under Co-owners may be two Conjugal owners are
legal disability. or more. always two.
ORDINARY Profits are proportional Profits are generally
CO-OWNERSHIP to respective interests. 50-50 unless a
PARTNERSHIP
Created by law, contract, Created by contract contrary stipulation is
succession, fortuitous (express or implied). in a marriage
 settlement.
Death of one does not Death of either
dissolve the co- husband or wife
ownership. dissolves the conjugal
partnership.
Generally, all co-owners Generally, the husband
administer. is the administrator.
Co-ownership is Encourage by law to
discouraged by law. provide for better
family solidarity.
 Every co-owner has absolute ownership of
his undivided interest in the co-owned
property and is free to alienate, assign or
mortgage his interest except as to purely
personal rights. While a co-owner has the
right to freely sell and dispose of his
undivided interest, nevertheless, as a co-
owner, he cannot alienate the shares of his
other co-owner s – nemo dat qui non habet.
(Acabal v. Acabal, G.R. No. 148376, 2005)
Note: Only limitation: a co-owner cannot use or
enjoy the property in a manner that shall injure
the interest of his other co-owners. (Pardell v.
Bartolome)
Condominium’s Concept
Condominium – an interest in real property
consisting of a separate interest in a unit in
residential, industrial or commercial building and
an undivided interest in common directly or
indirectly, in the land on which it is located and
in other common areas of the building. (Sec. 2,
R.A. No. 4726, Condominium Act)
 The buyer of a unit in a condominium
acquires ownership over the unit only after
he has paid in full its purchase price. The
ownership of a condominium unit is the
“separate interest” of the owner which
makes him automatically a shareholder in
the condominium. (Condominium Corp. vs.
Campos, Jr., 104 SCRA 295 )
(i) Interest in Real Property
The Condominium Act (RA 4726) defines
“condominium” as:
An interest in real property consists of a
separate interest in a unit in a:
a. Residential;
b. Industrial or
c. Commercial building or in an industrial
estate; and
d. An undivided interest in common, directly
and indirectly, in the land, or the
appurtenant interest of their respective units
in the common areas. (Sec. 2, R.A. No. 4726)
(ii) Concept of Common Areas,
amendment
A “common area” refers to the entire project
excepting all units separately granted or held or
reserved. (Sec. 3[d], R.A. No. 4726)
Under Sec. 4, of R.A. No. 4726, “common areas”
may be added to or become separate areas by
amending the master deed. Amendment of the
master deed shall be done by registration of an
instrument which is:
a. Executed by the registered owner or owners
of the property; and
b. Consented to by all registered holders of
any lien or encumbrance on the land or
building or portion thereof.
The term “registered owner” shall include the
registered owners of condominiums in the
project.
Note: The enabling or master deed may be
amended or revoked upon registration of an
instrument executed by a simple majority of the
registered owners of the property; Provided,
that in a condominium project exclusively for
either residential or commercial use, simple
majority shall be on a per unit of ownership
basis and that in the case of mixed use, simple
majority shall be on a floor area of ownership
basis: Provided, further, that prior notifications
to all registered owners are done: and Provided,
finally, that any amendment or revocation,
already decided by a simple majority of all
registered owners shall be submitted to the
Housing and Land Use Regulatory Board and the
city/municipal engineer for approval before it
can be registered. Until registration of a
revocation, the provisions of this Act shall
continue to apply to such property. (R.A. No. 7899)
a) Articles of Incorporation and By-laws
of the condominium corporation
Whenever the common areas of the
condominium are owned by a condominium
corporation, the articles of incorporation and by-
laws of the said corporation shall:
1. Not contain any provision contrary to or
inconsistent with the provisions of the
Condominium Act, the enabling or master
deed, or the declaration of restrictions of the
project.
2. Limit the corporate purpose to:
a. The holding of the common areas, either in
ownership or any other interest in real
property recognized by law
b. To the management of the project, and to
such other purposes as may be necessary,
incidental or convenient to the
accomplishment of said purposes.
b) Rights and obligations of a pay in advance any installment or the full unpaid
condominium owner
Rights of condominium unit owner:
1. Absolute ownership of his unit;
2. Co-ownership of land and common areas;
3. Exclusive easement of the space of his unit;
4. Non-exclusive easement to common areas
for ingress or egress;
5. Right to sell, lease, or mortgage his unit;
6. Right to repair, paint, decorate the interior
surface of his unit; and
7. Right to participate and vote in
condominium corporation meetings. (P.D.
957)
Obligations of a condominium unit owner:
1. Pay the realty on his unit:
2. Pay the insurance on his unit;
3. Pay the shared monthly dues for
maintenance of common
areas/amenities/garbage disposal comply
with use restrictions
Realty Installment Buyer Act (R.A. No.
6552)
Section 4. In case where less than two years of
installments were paid, the seller shall give the
buyer a grace period of not less than sixty days
from the date the installment became due.
If the buyer fails to pay the installments due at
the expiration of the grace period, the seller
may cancel the contract after thirty days from
receipt by the buyer of the notice of cancellation
or the demand for rescission of the contract by a
notarial act.
Section 5. Under Section 3 and 4, the buyer
shall have the right to sell his rights or assign
the same to another person or to reinstate the
contract by updating the account during the
grace period and before actual cancellation of
the contract. The deed of sale or assignment
shall be done by notarial act.
Section 6. The buyer shall have the right to
balance of the purchase price any time without
interest and to have such full payment of the
purchase price annotated in the certificate of
title covering the property.
Section 7. Any stipulation in any contract
hereafter entered into contrary to the provisions
of Sections 3, 4, 5 and 6, shall be null and void.
Right to Refund Under RA No. 6552 and
P.D. 957
 R.A. No. 6552 – Right to refund applies as
a requisite for cancellation of contract due
to delinquency when the buyer has paid at
least two years. Refund is 50% of total
payments; additional 5% per year after 5 th
year.
 Presidential Decree 957 – Right to
refund applies when the developer fails to
complete the development within the
required period. Refund is 100% of total
payments less penalty interest.
Grounds for dissolution of the
condominium:
1) That three years after damage or
destruction to the project in which the
corporation owns or holds the common
areas, which damage or destruction renders
a material part thereof unfit for its use prior
thereto, the project has not been rebuilt or
repaired substantially to its state prior to its
damage or destruction; or
2) That damage or destruction to the project
has rendered one-half or more of the units
therein untenantable and that more than
thirty percent of the members of the
corporation, if non-stock, or the
shareholders representing more than thirty
percent of the capital stock entitled to vote,
if a stock corporation, are opposed to the
repair or reconstruction of the project, or
3) That the project has been in existence in
excess of fifty years, that it is obsolete and
uneconomical, and that more than fifty
percent of the members of the corporation,
if non-stock, or the stockholders
representing more than fifty percent of the
capital stock entitled to vote, if a stock
corporation, are opposed to the repair or
restoration or remodeling or modernizing of
the project; or
4) That the project or a material part thereof
has been condemned or expropriated and
that the project is no longer viable, or that
the members holding in aggregate more
than seventy percent interest in the
corporation, if non-stock, or the
stockholders representing more than
seventy percent of the capital stock entitled
to vote, if a stock corporation, are opposed
to the continuation of the condominium
regime after expropriation or condemnation
of a material portion thereof; or
5) That the conditions for such dissolution set
forth in the declaration of restrictions of the
project in which the corporation owns or
holds the common areas, have been met.
C. Rights of Co-Owner
Rights of each co-owner as to the thing
owned in common:
1. To use the thing owned in common (Art.
486, NCC)
Limitations:
a. Use according to the purpose for which
it was intended;
b. Interest of the co-ownership must not
be prejudiced;
c. Other co-owners must not be prevented
from using it according to their own
rights.
2. To share in the benefits and charges in
proportion to the interest of each. Any
stipulation to the contrary is void (Art. 485,
NCC);
3. To bring an action for ejectment
4. To the benefits of prescription – Prescription
by one co-owner benefits all.
5. To compel the others to share in the
expenses of preservation even if incurred
without prior notice. (Right to contributions
for expenses)
 A co-owner may exempt himself from the
duty to reimburse by RENOUNCING
(abandoning for the benefit of the others)
so much of his undivided share as may be
equivalent to his share of the expenses and
taxes. However, the renouncing cannot be
done if the co-ownership will be prejudiced.
Reimbursement covers only NECESSARY
EXPENSES, like those for the preservation
of a house in a ruinous condition (Trinidad
vs. Ricafort, et al., 7 Phil. 449) and not for
useful improvements, even if the value of
the property is thereby increased, the
purpose of co-ownership not being for
profit.
6. To oppose alterations made without the
consent of all, even if beneficial (Art. 491,
NCC).
Alteration – an act by virtue of which a co-
owner changes the thing from the state
which the others believe it should remain; or
 withdraws it from the use to which they
wish it to be intended; or transforms it
which prejudices the condition or substances
of the thing or its enjoyment by the others.
Alteration requires unanimity
If the withholding of the consent by one or
more of the co-owners is clearly prejudicial
to the common interest, the courts may
afford adequate relief.
7. To make repairs for the preservation may be
made at the WILL OF ONE of the co-owners,
but he must, if practicable, first notify his
co-owners of the necessity for such repairs.
8. Expenses to improve or embellish are
decided by MAJORITY
Acts of Administration – do not involve
alteration; temporary or transitory, do not
give rise to a real right, for the common
benefit of all co-owners.
For the administration and better enjoyment
of the thing owned in common, the financial
majority is sufficient.
9. To protest against seriously prejudicial
decisions of the majority
10. Legal redemption: to be exercised within 30
days from written notice of sale of an
undivided share of another co-owner to a
stranger. (Right To Redemption Of Co-
Owners Share)
11. To defend the co-ownership’s interest in
court
12. To demand partition at any time. (Right To
Partition) (Art. 494, NCC)
Partition
The division between 2 or more persons of real
or personal property which they own in common
so that each may enjoy and possess his sole
estate to the exclusion of and without
interference from the others.
Right to Partition (Art. 494, NCC)
1. Each may demand at any time the partition
of the thing, insofar as his share is
concerned
2. An agreement to keep the thing undivided
for a certain period NOT exceeding 10 years
is valid.
3. Term may be extended by a new agreement
4. Donor or testator may prohibit partition,
period NOT to exceed 20 years
5. No partition if prohibited by law
6. Right does not prescribe
Rights as to the ideal share of each co-
owner:
1. Each has full ownership of his part and of
his share of the fruits and benefits.
2. Right to substitute another person in its
enjoyment.
Exception: When personal rights are involved:
1. Right to alienate, dispose or encumber.
The effect of the alienation or the mortgage,
with respect to the co-owners, shall be
limited to the portion which may be allotted
to him in the division upon the termination
of the co-ownership.
2. Right to renounce part of his interest to
reimburse necessary expenses incurred by
another co-owner.
3. Transactions entered into by each co-owner
only affect his ideal share.
Effects of partition:
Once partition has been made, whether by
agreement among the co-owners or by judicial
proceedings, the following are the legal effects:
1. The co-ownership is terminated;
2. It shall not prejudice the rights of the third
persons who shall retain the right to
mortgage, servitude or any other real rights
belonging to them before the division was
made.
3. Personal rights pertaining to third persons
against the ownership shall also remain in
force.
4. Mutual accounting shall be rendered by the
co-owners to each other with regard to
benefits and expenses and each co-owner
shall pay for the damages by reason of his
negligence or fraud.
5. Every co-owner shall be liable for defects of
title and quality of the portion assigned to
each of the other co-owner.
1. Rights against individual co-owners in
case of partition:
a. The partition of thing owned in common
shall not prejudice third persons who
shall retain the rights of mortgage,
servitude or any other real rights
belonging to them before the division
was made.
b. Personal rights pertaining to them
against the co-ownership shall also
remain in force notwithstanding the
partition.
2. Partition in case-co-owners cannot
agree - Whenever the thing is essentially
indivisible and the co-owners cannot agree,
the property may be allotted to one of the
co-owners, who shall indemnify the other;
otherwise, it shall be sold, and the proceeds
distributed. (Art. 498, NCC)
When co-owner may not demand
partition:
General Rule: Partition is demandable by any
of the co-owners as a matter of right at any
time.
Exceptions:
1. By agreement (not exceeding 10 years),
partition is prohibited.
2. Partition prohibited by donor or testator (not
exceeding 20 years).
3. Partition prohibited by law.
4. Physical partition would render property
unserviceable for which it is intended.
5. Legal nature of common property does not
allow partition.
6. When another co-owner has possessed the
property as exclusive owner and for a period
sufficient to acquire it by prescription.
 Possession by tolerance is not the kind of
possession that may lead to title by
prescription. It is the respondents’ open,
continuous, adverse and uninterrupted
possession far beyond the 30-year
extraordinary period for acquisitive
prescription, coupled with the tax
declarations of their predecessors-in-interest
that continues a superior weight of evidence
that clinched their claim. (Catapusan vs. CA,
264 SCRA 534 [1996])
General Rule: No co-owner may acquire
ownership of the property co-owned by
prescription.
Exceptions:
1. When he repudiates the rights of the others;
2. Repudiation is brought to the knowledge of
the other co-owners;
3. Evidence thereon is clear and conclusive;
4. Lapse of the period fixed by law
Extinction of co-ownership:
1. Loss or destruction of the thing;
2. Merger of all the interest in one co-owner;
3. By the partition, judicial or extrajudicial, of
the respective undivided shares of co-
owner.
4. Judicial or extra-judicial partition;
5. By the termination of the period agreed
upon or imposed by the donor or testator;
or of the period allowed by law;
6. By the sale the co-owners of the thing to a
third person and the distribution of its
proceeds among them.
VII. Possession
Definition
The holding of a thing or the enjoyment of a
right, either by material occupation or by the
fact of subjecting the thing or right to the action
of our will. (Art. 523, NCC)
Requisites:
1. Holding/control or material detention or
enjoyment of a thing or right;
2. Animus possidendi or intent to possess the
thing or right; and
3. Possession must be by virtue of one’s own
right.

Forms/degrees of possession:
1. Possession without any title whatsoever (e.g.
possession of a thief);
2. Possession with juridical title (e.g. lessee,
pledge, depositary)
3. Possession with just title (e.g. a buyer in good
faith, where the property was delivered to him by one
pretending to be the owner)
4. Possession with a title in fee simple, i.e.
possession that springs from ownership
Nature of Possession:
As a right
a. Jus possidendi – right to possession which
is incidental to and included in the right of
ownership
b. Jus possessionis – right of possession
independent of and apart from the right of
ownership
Objects of Possession
General Rule: Only things and rights which are
susceptible of being appropriated may be
objects of possession (Art. 530, NCC).
Exceptions:
1. Res communes
2. Property of public dominion
3. Discontinuous servitudes
4. Non-apparent servitudes
5. Things specifically prohibited by law
Ways of acquiring possession:
1. By the material occupation of a thing or
exercise of a right.
2. By the subjection of the thing or right to our
will.
3. By proper acts and legal formalities
established for acquiring such right of
possession. (Art. 531, NCC)
Constitutum possessorium – exists when a
person who possessed property as an owner,
now possesses it in some other capacity.
Tradition brevi manu – exist when a person
who possessed property not as an owner, now
possesses it as owner.
Traditio longa manu – delivery by consent or
mere pointing.
Conflicts between several claimants
General Rule: Possession cannot be
recognized in two different personalities.
Exception: In case of co-possession when
there is no conflict.
Rules of preference of possession:
1. Present/actual possessor shall be preferred;
2. Two possessors, the one longer in
possession;
3. If the dates of possession are the same, the
one with a title; and
4. If the above are equal, the fact of
possession shall be judicially determined,
and in the meantime, the thing shall be
placed in judicial deposit.
 Non-payment for the movable is not unlawful
deprivation (because there was a valid
contract and valid transfer of ownership), but
only creates a right to demand payment or to
rescind the contract, or criminal prosecution.
Thus, he cannot recover the same from the
third person who acquired it in good faith.
(EDCA Publishing vs. Santos, G.R. No. 80298, April
26, 1990)
 Owner lost or unlawfully deprived - may
recover not only from the finder, thief or
robber, but also from third persons who may
have acquired it in good faith from such
finder, thief or robber. (Aznar vs. Yapdiangco,
G.R. No. L-18536, March 31, 1965)
Note: Possession may be acquired by the same
person who is to enjoy it, by his legal
representative, his agent, or any person without
any power whatever: but in the last case, the
possession shall not be considered as acquired
until the person in whose name the act of
possession was ratified the same, without
prejudice to the juridical consequences of to owner; to owner;
negotiorum gestio in a proper case. (Art. 532, c. Charges – prorated c. Charges – pro-rated.
NCC)
 Possession in good faith (4 years) or bad
EFFECTS OF POSSESSION faith (8 years) cannot benefit possessor in
cases where Art. 559 are applicable. (Pajunar
Possessor in Good Possessor in Bad vs. CA, G.R. No. 77266, July 19, 1989)
Faith Faith
Entitled to the fruits Reimburse the fruits Loss or unlawful deprivation of a movable
received or which
legitimate possessor The possession of movable property acquired in
would have received.
good faith is equivalent to a title. Nevertheless,
Necessary Expenses
one who has lost any movable or has been
Right of reimbursement Right of reimbursement
and retention of the only
unlawfully deprived thereof may recover it from
thing. the person in possession of the same. If the
Pending Fruits possessor of a movable lost or which the owner
Liable with the No right to the pending has been unlawfully deprived, has acquired it in
legitimate possessor for fruits. good faith at a public sale, the owner cannot
expenses of cultivation obtain its return without reimbursing the price
and shall share in the paid therefore. (Art. 559, NCC)
net harvest in
proportion to the time 1. Period to recover
of possession.
Useful Expenses
Movables must be recovered within 8 years from
Reimbursed to None
possessor (owner’s
the time the possession is lost, unless the
option). possessor acquired the thing by prescription for
a. Initial cost; a lesser period under Articles 1132, 559, 1505
b. Plus value may be and 1133. (Art. 1140, NCC)
removed if no
reimbursement, Ownership and other real rights over immovable
and no damage is property are acquired by ordinary prescription
caused to the through possession of 10 years. (Art. 1134, NCC)
principal by the
removal. The ownership of movables prescribes through
Deterioration or Loss
uninterrupted possession for 4 years in good
No liability unless due to Always
faith. ( Art. 1132, NCC)
his fault or negligence.
Ornamental expenses
Not entitled to a refund.  Not entitled to a Movables possessed through a crime can never
 Right of removal, refund be acquired through prescription by the
unless owner  Right of removal, offender. (Art. 1133, NCC)
retains possession unless owner
of ornaments, retains possession 2. Finder of lost movable
hence refund on of ornaments,
the actual amount refund shall be Requisites:
expended. LIMITED to the
1. A person finds a movable;
value at the time of
2. It is not a treasure under Art. 438.
possession of
owner.
Taxes and charges Note: The item should be returned to its owner.
a. On capital – a. On capital – charged If the owner is unknown, the finder must
charged to owner; to owner; deposit the thing with the mayor where it was
b. On fruits – charged b. On fruits – charged found, and the finding shall be published for two
consecutive weeks. If the thing will suffer
deterioration, it shall be sold at a public auction
eight days after publication.
If six months from publication the owner still did
not claim the thing, it shall be awarded to the
finder or its equivalent. The finder and the
owner shall be obliged, as the case may be, to
reimburse the expenses. However, if the owner
should appear in time he shall be obliged to pay,
as a reward to the finder, one tenth of the sum
of the price of the thing found.
3. Distinguished from void title
Where the seller of goods has a voidable title
thereto, but his title has not been avoided at the
time of the sale, the buyer acquires a good title
to the goods, provided he buys them in good
faith, for value, and without notice of the seller’s
defect of title. (Art. 1506, NCC)
Possession in the Concept of Owner,
Holder, in One’s Own Name, in the Name
of Another
Different Kinds of Possession:
1. In the concept of owner:
a. Possession under a claim of ownership or
title (en concepto de dueño) by one who is
the owner himself or one who is not the
owner but claims to be and acts as the
owner. Whether he in good faith or bad
faith is immaterial.
b. This is possession that may ripen into
ownership. This is also referred to as
adverse possession.
2. In the concept of holder:
 Possessor of a thing or right holds it merely
to keep or enjoy it.
 Recognizes another as the owner.
3. In one’s own name:
The fact of possession and the right to such
possession are found in the same person (e.g.
actual possession of an owner or a lessor of
land).
4. In the name of another:
The one in actual possession is without any right
of his own, but is merely an instrument of
another in the exercise of the latter’s possession
(e.g. possession of an agent, servant, or guard)
a. Voluntary- when exercised by virtue of an
agreement
b. Necessary or legal – when exercised by
virtue of law (e. g. possession in behalf of
incapacitated persons (Art. 1327, 1329) and
juridical entities (Art. 46).
c. Physical or material – possessor is a mere
custodian or keeper of the property of funds
received and have no independent right or
title to retain or possess the same as against
the owner.
d. Juridical – when the possession gives the
transferee a right over the thing which the
transferee may set up against the owner.
Rights of Possessor:
1. To institute an action to recover possession;
2. A possessor enjoys the presumption of just
title;
3. He has right over the fruits;
4. Right to necessary, useful and ornamental
expenses.
Loss/Termination of Possession:
1. By the will of the possessor
a. Abandonment
b. Transfer or conveyance
2. Against the will of the possessor
a. Eminent domain
b. Acquisitive prescription
c. Judicial decree in favor of better right
d. Possession of another for more than one
year. This refers to possession de facto
where the possessor loses the right to a
summary action, but he may still bring
accion publiciana or accion
reinvindicatoria.
 e. By reason of the object
1) Destruction or total loss of the
things
2) Withdrawal from commerce
3) Escaping from possessor’s contro; of
wild animals (Paras, Civil Code, supra
458)
VIII. Usufruct
Usufruct gives the right to enjoy the property of
another with the obligation of preserving its
form and substance, unless the title constituting
it or the law otherwise provides (Art. 562, NCC)
If the usufructuary who has not given security
claims, by virtue of a promise under oath, the
delivery of the furniture necessary for his use,
and that he and his family be allowed to live in a
house included in the usufruct, the court may
grant this petition, after due consideration of the
facts of the case. (Art. 587, NCC).
Abnormal Usufruct – The usufructuary does
not have the obligation of preserving the form
and the substance of the property which is the
object of the usufruct.
Distinction between usufruct and lease

General Rule: Usufructuary is bound to USUFRUCT LEASE

preserve the form and substance of the thing in 1. As to nature of right
usufruct. Always a real right. Generally a personal
right; becomes a real
Exception: Abnormal usufruct whereby the law right only when
registered
or the will of the parties may allow the
2. As to constitution
modification of the substance of the thing.
Constituted by law, by Constituted by
the will of private persons contract.
A. Characteristics: expressed in acts inter
vivos or in a last will or
1. It is real right (whether registered or not in testament, and by
the Registry of Property) of use and prescription.
enjoyment; 3. As to the person constituting it
2. It is temporary in duration; The owner. Need not be the
3. Transmissible; owner
4. May be constituted on real or personal 4. As to extent
property, consumable or non-consumable, Includes the right to use Limited to use only.
and to enjoy the fruits
tangible or intangible, the ownership of
(jus utendi and jus
which is vested in another. fruendi) of the thing.
5. To derive all advantages from the thing due 5. As to duration
to normal exploitation. There is no limitation to There is a limitation to
the duration of a the duration of a lease
How Constituted: usufructuary right. right.

1. By law; 6. As to repair
2. By will of private persons in act inter vivos; There is no limitation to Lessee is not generally
3. By the will of private persons expressed in a the duration of a under obligation to
usufructuary right. undertake repairs.
last will and testament;
7. As to taxes
4. By prescription.
Usufructuary is Lessee is not generally
responsible for taxes on under obligation to
Caucion Juratoria the fruits pay taxes.

A sworn duty to take good care of the property B. Classifications:

of another and to return the same at the end of
the usufruct.
1. Total and Partial – usufruct may be
constituted on the whole (total) or part
(partial) of a thing.
2. Simple and Multiple – it may be
constituted in favor of one person (simple)
or it may be constituted in favor of two or
more persons. (multiple)
3. Pure, with a condition or with a period-
it may be constituted from or to a certain
day (with a period), purely or conditionally.
4. Proper (normal) and improper
(abnormal) – It is proper or normal when
it is improper or abnormal when it is
constituted over a consumable thing.
C. Rights and obligations of usufructuary
(Art. 566-582, CC)
1. Rights to civil, natural, and industrial fruits
of property.
a. Civil Fruits Accrue Daily
1) Belong to the usufructuary in
proportion to the time the usufruct
may last
2) Both stock dividends and cash
dividends are considered civil fruits
b. Industrial and Natural Fruits
1) Fruits pending at the beginning of
the usufruct belong to the
usufructuary
 No necessity of refunding the owner
for expenses incurred (for the
owner gave the usufruct evidently
without any thought of being
reimbursed for the pending fruits or
because the value of said fruits
must have already been taken into
consideration in fixing the terms and
conditions of the usufruct, if for
instance, the usufruct came about
because of contract)
 BUT without prejudice to the right
of 3rd persons (thus, if the fruits had
been planted by a possessor in good
faith, the pending crop expenses
and charges shall be prorated
between said possessor and the
usufructuary)
2) Fruits pending at the termination of
usufruct
 Belong to the owner
 BUT the owner must reimburse the
usufructuary for ordinary cultivation
expenses and for seeds and similar
expenses from the proceeds of the
fruits. (Hence, the excess of
expenses over the proceeds need
not be reimbursed)
2. Rights to hidden treasure as a stranger.
If he is the actual finder he gets half; if not,
he gets nothing because he is not the
owner.
3. Right to transfer usufructuary – gratuitous
or onerous; but is co-terminus with the term
of usufruct; fruits proportionate at duration
of usufruct; but can’t do acts of ownership
such as alienation or conveyance except
when property is:
a. Consumable
b. Intended for Sale
c. Appraised when delivered; if not
appraised & consumable – return same
quality (mutuum)
4. Right to exempt from execution and can be
sold at public auction by the owner.
5. Naked owner still has the rights but without
prejudice to the usufructuary; may still
exercise rights of ownership.
6. Right to necessary expenses from cultivation
at end of usufruct
7. Right to enjoy accessions and servitudes in
its favor and all benefits inherent therein
8. Right to make use of dead trunks of fruit
bearing trees and shrubs or those uprooted
or cut by accident but obliged to plant a
new one.
9. Right to usufructuary of woodland
10. Right to leave dead, uprooted trees at the
disposal of owner with right to demand that
owner should clear and remove them.
11. Right to oblige owner to give authority and
furnish him proofs if usufruct is extended to
recover real property.
12. Right to necessary expenses.
13. Right to introduce useful and luxurious
expenses but with no obligation of
reimbursement on the part of owner.
14. Right to set-off improvements against
damages he made against property.
15. Right to administer when property is co-
owned.
16. Right to demand the increase in value of
property if owner did not spend for
extraordinary repairs when urgent and
necessary for preservation of a thing.
Note: As a rule, the lease executed by the
usufructuary should terminate at the end of the
usufruct or earlier, except in the case of leases
of rural lands, because in said case, if the
usufruct ends earlier than the lease, it continues
for the remainder of the agricultural year.
 It is not the naked owner, but the
usufructuary that has the right to choose
the tenant.
Obligations of the Usufructuary (Art. 583-
602, NCC)
Before the usufruct begins:
1. To make an inventory of the property;
2. To give security/bond;
Exceptions:
 When no prejudice would result
 When the usufruct is reserved by the donor
or parents
 In cases of caucion juratoria where the
usufructuary, being unable to file the
required bond or security, files a verified
petition in the proper court asking for the
delivery of the house and furniture
necessary for himself and his family without
any bond or security.
3. Takes an oath to take care of the things and
restore them; and
4. Property cannot be alienated or encumbered
it.
Effects of failure to post bond:
1. Owner shall have the following options:
a. Receivership of realty, sale of movables,
deposit of securities, or investment of
money; or
b. Retention of the property as
administrator.
2. The net product shall be delivered to the
usufructuary
3. Usufructuary cannot collect credits due or
make investments of the capital without the
consent of the owner or of the court until
the bond is given.
Obligation during the Usufruct:
1. To take care of the property (Art. 589)
2. To replace with the young thereof animals
that die or are lost in certain cases when the
usufruct is constituted on flock or herd of
livestock (Art. 591)
3. To make ordinary repairs (Art. 592[1])
4. To notify the owner of urgent extraordinary
repairs (Art. 593)
5. To permit works and improvements by the
naked owner not prejudicial to the usufruct
(Art. 595)
6. To pay annual taxes and charges on the
fruits (Art. 595)
7. To pay interest on taxes on capital paid by
the naked owner (Art 597)
8. To pay debts when the usufruct is
constituted on the whole of a patrimony (Art
598)
9. To secure the naked owner’s or court’s
approval to collect credits in certain case
(Art. 599)
10. To notify the owner of any prejudicial act
committed by third persons (Art 601)
11. To pay for court expenses and costs
regarding usufruct (Art 602)
12. To indemnify the owner for any
deterioration they may have suffered by
reason of his fraud/negligence (Art. 573)
13. If usufruct includes fruit-bearing trees &
shrubs, to replace them with new plants.
(Art. 574)
At the termination of the Usufruct:
1. To return the thing in usufruct to the naked
owner unless there is a right of retention (Art
602)
2. To pay legal interest for the time that the
usufruct lasts, on the amount spent by the
 owner for extraordinary repairs (Art 594) and
the proper interest on the sums paid as
taxes by the owner (Art 597)
3. To indemnity the naked owner for any
losses due to his negligence or of his
transferees.
4. If usufruct includes things which cannot be
used without being consumed, (obligation
is) to pay their appraised value at the
termination of the usufruct, if they were
appraised; or (if not appraised) to return the
same quality/quantity, or pay their current
price at the time the usufruct ceases (Art.
574)
D. Rights and Obligations of the Owner
Rights of the Owner:
1. Alienate thing
2. Can’t alter form or substance
3. Can’t do anything prejudicial to usufructuary
4. Construct any works and make any
improvement provided it does not diminish
value or usufruct or prejudice right of
usufructuary
5. If property is expropriated for public use-
owner obliged to either replace it or pay
legal interest to usufructuary of net
proceeds of the same.
Extinction/Termination:
1. Death of the usufructuary, unless contrary
intention appears;
2. Expiration of the period or fulfillment of the
resolutory condition;
3. Merger of the usufruct and ownership in the
same person; (Art. 603, NCC)
4. Renunciation of the usufructuary;
5. Total loss of the thing;
6. Termination of the right of the person
constituting the usufruct;
7. Prescription. (Art. 603, NCC)
Note: Bad use does not extinguish the usufruct,
unless the abuse should cause considerable
injury to the owner (Art. 610)
IX. Easements
Easements or Servitudes (Art.613, NCC)
Encumbrance imposed upon an immovable for
the benefit of another immovable belonging to a
different owner.
Dominant Estate - Immovable in favor of
which an easement is established.
Servient Estate - That which is subject to
easement.
Continuous easements - those the
use of which is or may be incessant,
without the intervention of any act of
man.
Discontinuous easements - those
which are used at intervals and
depend upon the acts of man.
Apparent easements - those which
are made known and are continually
kept in view by external signs that
reveal the use and enjoyment of the
same.
Nonapparent easements - those
which show no external indication of
their existence.
A. Characteristics:
1. It is a real right but will affect third persons;
2. It is imposable only on another’s property;
3. It involves two neighboring estates (in the
case of real easement, the dominant to
which a right belongs and the servient upon
which an obligation rests);
4. It is inseparable from the estate to which it
is attached and, therefore, cannot be
alienated independently of the estate;
5. It is indivisible for it is not affected by the
division of the estate between two or more
persons;
6. It is a right limited by the needs of the
dominant owner or estate, without
possession;
7. It cannot consist in the doing of an act a public highway to demand that he be allowed
when the act is accessory in relation to a a passageway throughout such neighboring
real easement; and estates after payment of proper indemnity.
8. It is a limitation on the servient owner’s
rights of ownership for the benefit of the Requisites:
dominant owner; and therefore, it is not
presumed. 1. Claimant must be an owner of enclosed
immovable or one with real right.
2. There must be no adequate outlet to a
public highway.
3. Property must be surrounded by estates of
Easement vs. Lease: others.
4. Isolation must not be due to the claimant’s
EASEMENT LEASE own act.
Always a real right. Real right only when it is 5. Easement must be established at the point
registered, or when its least prejudicial to the servient estate.
subject matter is real 6. Payment of proper indemnity
property and the
duration exceeds one
year.
 NOT compulsory if the isolation of the
A right limited to use A right limited to use and immovable is due to the proprietor’s own
without ownership or possession without acts
possession. ownership.
Can refer only to May involve either real or  Right of way is granted without indemnity if
immovable. Imposed personal property. land was acquired by and is surrounded by
only on real property. the other estates of the vendor, exchanger
Limited to particular or Included all the uses and or co-owner through:
specific use of the the fruits of the property. a. Sale
servient estate.
b. Exchange
A non-possessory right Involves a right of
over an immovable. possession in an
c. Partition
immovable or
immovable. Extinguishment
Not extinguished by Extinguished by
the death of the stipulation of the parties, a. When the dominant estate is joined to
dominant owner. or by law. another estate (such as when the dominant
owner bought and adjacent estate) which is
B. Classification abutting a public road, the access being
adequate and convenient
1. Legal Easement b. When a new road is opened, giving access
to the isolated estate.
Those imposed by law having for their object
either public use of the interest of private  BOTH cases must substantially meet the
persons. They shall be governed by the special needs of the dominant estate. Otherwise,
laws and regulations relating thereto, and in the the easement may not be extinguished
absence thereof, by the Civil Code.  The extinction is not automatic (not ipso
facto).
A. Right of way  If extinguished, must return the amount
received as indemnity to the dominant
The right granted to the owner of an estate owner without any interest.
which is surrounded by other estates belonging
to other persons and without adequate outlet to 2. Voluntary Easement

Constituted by the will of the parties or of a
testator.
The owner possessing capacity to encumber
property may constitute voluntary servitude. If
there are various owners, all must consent, but
consent once given is not revocable.
 NO JUDICIAL EASEMENTS. Resultantly,
when the court says that an easement
exists, it is not creating one. For even an
injunction cannot be used to create one as
there is no such thing as a judicial
easement. The court merely declares the
existence of an easement created by the
parties, It must be emphasized, however,
that we are not constituting an easement
along Mangyan Road, but merely declaring
the existence of one created by the manifest
will of the parties herein in recognition of
autonomy of contracts. (La Vista Association
Inc. v. CA, 278 SCRA 498 [1997])
a. Effect of Zoning Ordinance
Such prohibition is similar to other conditions
imposed by sellers of subdivision lots upon
purchasers thereof, in and around Manila. It is in
reality an easement, which every owner of real
estate may validly impose under Art. 594 of the
Civil Code or under Art. 688 of the Civil Code,
which provides that “the owner of a piece of
land may establish thereon the easements which
he may deem suitable, provided he does not
contravene the law, public policy or public
order”.
 “The validity of building restrictions limiting
buildings to residences, restrictions as to the
character or location of buildings or
structures to be erected on the land has
been sustained. (14 Am, Jur. 617, citing cases)
 A problem might arise if and when the
ordinance is amended so as to convert the
area into an industrial zone – impliedly
permitting factories. Probably, the limitation
might still bind the lot owner (with
annotation) but it is not the present issue,
and we do not now decide it. (Trias vs.
Araneta, G. R. No. L-20786, October 30, 1965)
C. Modes of acquiring easement
(Art. 620-633, NCC)
 By title
All kinds of easements whether continuous or
discontinuous, apparent or non-apparent
positive or negative, may be acquired by title.
By title as a mode of acquiring servitude, refers
to the “juridical act: which gives birth to the
servitude, such as the law, donations, contracts
and wills. Hence, the act may either be inter
vivos or mortis causa, may be onerous or
gratuitous.
 By Prescription
Only continuous and apparent easement may be
acquired by prescription.
1. Compulsory Easement
a. By prescription of 10 years (continuous and
apparent easement)
1) Positive Servitude – counted from the
day their exercise commences
2) Negative Servitude – counted from the
formal prohibition to the servitude
owner to any opposed to the servitude
(Art. 621, NCC). There must be a
notarized document.
b. By deed of recognition
c. By final judgment
d. By apparent sign established by the owner
of two adjoining estates, unless:
1) There are contrary stipulations; or
2) The sign is effaced
e. By title
2. Easement of Light (jus luminum) – right
to admit light from the neighboring estate
by virtue of the opening of a window or
making certain openings.
Requisites:
1. Opening must not be greater than 30
centimeters square, made on the ceiling or
on the wall; and
2. There must be an iron grating;
3. There must be a wire screen;
4. Opening must be at the height of the ceiling
joists or immediately under the ceiling
3. Easement of View (jus prospectus) – The
right to make openings or windows, to enjoy
the view through the estate of another and
the power to prevent all constructions or
work which would obstruct such view or
make the same difficult. It necessarily
includes easement of light.
a. Discontinuous: counted from the day they
ceased to be used
b. Continuous: Counted from the day an act
adverse to the exercise takes place.
7. Renunciation – renunciation by the
dominant owner must be specific, clear and
express.
8. Termination of the right of the grantor.
9. Abandonment of the servient estate
10. Eminent Domain
11. Fulfillment of the resolutory condition
X. Nuisance

The abutting owner may: A. Definition (Art. 694, NCC)

1. Close the openings if the wall becomes a Any act, omission, establishment, business or
party wall, unless there is a contrary condition of property or anything else which:
stipulation
2. Block the light by constructing a building or 1. Injures or endangers the health and safety
wall, unless an easement of light has been of others;
acquired. 2. Annoys or offends the senses;
3. Ask for the reduction of the opening to the 3. Shocks, defies or disregards the decency or
proper size morality;
4. Obstructs or interferes with the free passage
Restriction as to Views: to any public highway or street or any body
of water, or
1. Direct views: The distance of at least 2 5. Hinders or impairs the use of the property
meters between the wall and the boundary
must be observed. Nuisance Negligence
Liability for the resulting Liability is based on a
2. Oblique views: (walls perpendicular or at injury to others want of proper care
an angle to the boundary line) must not be regardless of the degree
of care or skill exercised
less than 60 cm between the boundary line
to avoid such injury.
to the nearest edge of the window.
Principles ordinarily apply Principles ordinarily
where the cause of apply where the cause
D. How Terminated action is for harm caused of action is for harm
by continuing or resulting from one act
1. Redemption agreed upon recurrent acts which which created an
2. Expiration of the term cause discomfort or unreasonable risk of
3. Merger of ownership of the dominant and annoyance to plaintiff in injury.
servient estate the use of his property.
4. Annulment or Recission of title
constituting the easement B. Classification
5. Permanent Impossibility to use the
easement 1. Per Se– wrong is established by proof of
6. Non-user for 10 years the mere act. It becomes a nuisance as a
matter of law;
2. Per Accidents– considered nuisance by
reason of circumstances, location and
surroundings;
Test: Whether nuisance has become dangerous
at all times and under all circumstances to life,
health, or property.
 Generally, attractive Nuisance Doctrine is
not applicable to bodies of water, artificial as
well as natural, in the absence of some
unsual condition or artificial feature other
than the mere water and its location.
(Hidalgo Enterprises Inc. vs. Balandon, 48 OG
2641 (1932))

Public – affects the community or a XI. Modes of Acquiring Ownership (Art

considerable number of persons; 712, NCC)

Private – affects only a person or a small 1. Occupation

number of persons. 2. Law
3. Donation (See item XII)
C. Remedies 4. Tradition
5. Intellectual property
1. Private Nuisance: 6. Prescription
a. Civil Action 7. Succession
b. Extrajudicial Abatement
Mode Title
Directly and immediately Serves merely to give
Requisites of summary abatement of
produces a real right the occasion for its
private nuisance: acquisition or existence
Cause Means
a. Demand must be first made upon the owner Proximate cause Remote cause
or possessor of the property to abate the Essence of the right Means whereby that
nuisance. which is to be created or “essence” is
b. Prior demand made; transmitted transmitted
c. Prior demand has been rejected;
d. Approval by district health officer and A. OCCUPATION
assistance of local police; and
e. Value of destruction does not exceed 1. Definition
P3,000.00.
The acquisition of ownership by seizing
2. Public Nuisance corporeal things that have no owner, made with
a. Prosecution under RPC or any local the intention of acquiring them, and
ordinance accomplished according to legal rules.
b. Civil Action
c. Extrajudicial Abatement 2. Requisites:

Doctrine of Attractive Nuisance 1. Thing must be res nullius – a thing which

 A person who maintains on his premises
dangerous instrumentalities or appliances of
a character which is attractive to children in
play and who fails to exercise ordinary care
to prevent children from playing therewith
or resorting thereto, is liable to a child of
tender years who is injured thereby, even if
the child is technically a trespasser. (Jarco
Marketing v. CA, 321 SCRA 375)
never had an owner or has no owner at the
time of occupation;
2. Must be appropriable by nature or one that
can be seized or apprehended;
3. Must be brought into the actual possession
or control of the one professing to acquire
it;
4. Person must acquire it with the intention of
acquiring ownership. (Rabuya, Civil Law
Reviewer)
 period having expired, they shall pertain to
Occupation Possession him who has caught and kept them. (Art. 716,
As to Mode of Merely raises NCC)
acquisition acquiring the  Pigeons and fish which from their respective
of ownership presumption breeding places pass to another pertaining
ownership of ownership to a different owner shall belong to the
when latter, provided they have not been enticed
exercised in by some article of fraud. (Art. 717, NCC)
the concept  Seizure of a corporal thing, without an
of owner owner (res nullius), with the intention to the
As to Involves only Any kind of acquire ownership in accordance with law.
property corporeal property
involved personal
property
As to Requires the The property B. DONATION (See XII)
ownership object be may be
of the thing without an owned by C. TRADITION
by another owner somebody
I. Definition
As to intent There must be May be had
to acquire intent to in the
Derivative mode of acquiring ownership and
acquire concept of a
other real rights by virtue of which they are
ownership mere holder
transmitted from the patrimony of the grantor in
As to May not take May exist
which they previously existed, to that of the
possession place without without
grantee by means of a just title, there being
some form of occupation
both the intention and capacity on the part of
possession
the parties.
As to period Short duration Generally
longer
II. Requisites:
As to Cannot lead to May lead to
leading to another mode another
1. Right transmitted should have previously
another of acquisition mode -
existed in the patrimony of the grantor;
mode of prescription
2. Transmission should be by just title;
acquisition
3. Grantor and Grantee should have intention
and capacity to transmit and acquire;
Notes:
4. Transmission should be manifested by some
act, which is physical, symbolical or legal.
 The ownership of a piece of land cannot be
acquired by occupation. (Art. 714, NCC)
 The right to hunt and to fish is regulated by XII. DONATION (ART. 725-773, NCC)
special laws. (Art. 715, NCC)
 The owner of a swarm of bees shall have a 1. Definition
right to pursue them to another’s land,
indemnifying the possessor of the latter for An act of liberality whereby a person disposes
the damage. If the owner has not pursued gratuitously of a thing or right in favor of
the swarm, or ceases to do so within two another, who accepts it. (Art. 725, NCC)
consecutive days, the possessor of the land
may occupy or retain the same. The owner Limitations on Donation of Property
of domesticated animals may also claim a. Future property cannot be donated;
them within twenty days to be counted from b. Present property that can be donated;
their occupation by another person. This
 1) If the donor has forced heirs: he cannot
give or receive by donation more than
what he can give or receive by will.
2) If the donor has no forced heirs:
donation may include all present
property provided he reserves in full
ownership or in usufruct
a) The amount necessary to support
him and those relatives entitled to
support him.
b) Property sufficient to pay the
donor’s debt contracted prior to the
donation
c. Donation should not prejudice creditors;
d. Donee must reserve sufficient means for his
support and for his relatives which are
entitled to be supported by him.
2. Essential Elements of Donation
a. Alienation of property during the lifetime
of the donor;
b. Donation is irrevocable (except for legal
causes);
c. There must be Animus Donandi
(Donative Intent); and
d. Results in a decrease in the assets or
patrimony of the donor.
(PARAS, 881-882)
3. Kinds
a. Donation Inter Vivos - Those which take
effect independently of the donor’s death.
Note: When the donor intends that the
donation shall take effect during the lifetime of
the donor, though the property shall not be
delivered until after the donor’s death, this shall
be a donation inter vivos. The fruits of the
property from the time of the acceptance of the
donation shall pertain to the donee, unless the
donor provides otherwise.
Requisites:
1. Must follow the formalities of donations;
2. Takes effect during the lifetime of the
donor;
3. Cannot be revoked except for grounds
provided by the law;
4. In case of impairment of the legitime,
donations inter vivos are preferred to
donations mortis causa.
5. The right of disposition is completely
transferred to the donee;
6. Acceptance by donee must be during
lifetime of donor.
b. Donation By Reason Of Marriage -
Those made in consideration of the
marriage in favor of one or both of the
prospective spouses and executed before
the marriage. (Art. 86, FC)
c. Donation Mortis Causa – those which
take effect upon the death of the donor.
d. Onerous Donation – those which a person
gives to another in consideration of
demandable debts.
e. Simple/Modal/Conditional
1) Simple – gratuitous
2) Remuneratory or Compensatory made
an account of donee’s merits
3) Modal – is one which imposes on one a
prestation imposed on the donee may either
be a burden or charge inferior in value to
the property donated or service to be
performed in the future.
4. Formalities Required
How made and accepted
A. Movable/personal property
With simultaneous delivery
a) If value is more than P5,000.00, donation
and acceptance must be in writing.
b) If value is P5,000.00 or less:
1) Can be made orally – but requires
simultaneous delivery of the thing.
Acceptance may be oral or written.
2) Can be made in writing – acceptance may
be oral or written.
Without simultaneous delivery
 The donation and acceptance must be in
public or private instrument.
B. Immovable/real property
1. In public instrument
2. Acceptance in same instrument in another
public instrument, notified to donor in
authentic form, and annotated in both
deeds. Otherwise, donation is void.
3. Acceptance should be made during the
lifetime of the donor; otherwise, donation
shall not take effect.
Perfection
 The donation is perfected from the moment
the donor knows of the acceptance by the
donee.
 Acceptance must be made during the
lifetime of the donor and of the donee. In
case of donation mortis causa, acceptance is
made only after the donor’s death because
they partake of a will and thus governed by
the rules on succession.
5. Qualifications of Donor and Donee
Qualifications of a DONOR
Must have the capacity to contract and to
dispose of his property.
Rules:
1. Every donation between spouses during the
marriage shall be void except moderate gifts
on the occasion of family rejoicing. The
prohibition also applies to person living
together as husband and wife without a
valid marriage.
2. Every corporation has the power and
capacity to make reasonable donations,
including those for public welfare or for
hospital, charitable, cultural, etc. However, it
cannot give donations in aid of any political
party or candidate or for purposes of
partisan political activity.
3. Guardian and trustee cannot alienate
property entrusted to them. (Art. 736, NCC).
However, this is not absolute as this only
applies to simple donation and not to
donations which are onerous and beneficial
to the beneficiary.
4. Trustees, who have repudiated the trust and
have acquired the properties by prescription,
are allowed to donate said properties.
5. Donor’s capacity is determined as of the
time of the perfection of the donation.
Qualifications of a DONEE
All persons who are not disqualified by law may
accept donations.
Rules:
1. Donations made to incapacitated persons
such as minors and those incapacitated to
contract, the acceptance can be made by
the parents or legal representatives (Art. 741,
NCC)
2. With regard to conceived and unborn
children, the acceptance can be made by
them if they were already born (Art. 742, NCC)
3. Special disqualifications under Art. 739 and
740:
a. Those made between persons who were
guilty of adultery or concubinage at the
time of the donation;
b. Those made between persons found
guilty of the same criminal offense, in
consideration thereof;
c. Those made to a public officer or his
wife, descendant and ascendants, by
reason of his office; and
d. Donations by reason of unworthiness of
the donee under Art.740, in relation to
Arts. 1032 and 1027, except for
paragraph 4 of Art. 1027.
4. The donee must accept the donation
personally, or through an authorized person
with a special power for the purpose, or
with a general and sufficient power,
otherwise the donations are void. (Art. 745,
NCC)
6. Effects of Donations/Limitations
a) In general
1. Donee may demand the delivery of the thing
donated
2. Donee is subrogated to the rights of the
donor in the property.
3. In donations propter nuptias, the donor
must release the property from
encumbrances, except servitudes
4. Donor’s warranty exists if:
a. Expressed
b. Donation is propter nuptias
c. Donation is onerous
d. Donor is in bad faith
5. When the donation is made to several
donees jointly, they are entitled to equal
portions, without accretion, unless the
contrary is stipulated.
b) Double Donations
Rule: Priority in time, priority in right (Prior est
in tempore, potio res tiure)
1. If MOVABLE – one who first took
possession in good faith
2. If IMMOVABLE – one who recorded in
registry or property in good faith
 No inscription, one who first took
possession in good faith
 In absence thereof, one who can
present oldest title
7. Excessive/Inofficious
a. Those referred to in Articles 760 and 761
where the donor at the time of donation
either had no children or thought he had no
more.
b. Those referred to in Article 771-772 where
the donor had at least one child already at
the time he made the donation.
 The donation shall be revoked or reduced
insofar as it exceeds the portion that may be
freely disposed of by will, taking into
account the whole estate of the donor at the
time of the birth, appearance or adoption of
a child (Art. 761)
 The action for revocation or reduction shall
prescribe after four years from the birth of
the first child, or from his legitimation,
recognition, or adoption, or form the time
information was received regarding the
existence of the child believed to be dead.
(Art. 763, NCC)
8. Scope of amount
The donation may comprehend all the present
property of the donor, or part thereof, provided
he reserves, in full ownership or in usufruct,
sufficient means for the support of himself, and
of all relatives who, at the time of the
acceptance of the donation, are by law entitled
to be supported by the donor. Without such
reservation, the donation shall be reduced in
petition of any person affected.
Donations cannot comprehend future property.
By future property is understood anything which
the donor cannot dispose of at the time of the
donation. (Art. 751, NCC)
The provisions of Article 750 notwithstanding,
no person may give or receive, by way of
donation, more than he may give or receive by
will. (Art. 752, NCC)
9. In fraud of creditors
There being no stipulation regarding the
payment of debts, the donee shall be
responsible therefore only when the donation
has been made in fraud of creditors. The
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. (Art. 759, NCC)
10. Void donations
Donations Prohibited by Law:
a. By persons guilty of adultery or concubinage
at the time of donation.
b. Between persons found guilty of same
criminal offense, in consideration thereof;
c. To a public officer or his or her spouse;
descendants or ascendants, by reason of his
or her office;
d. To a priest who heard confession of donor
during latter’s illness or minister of gospel
who extended spiritual aid to him during the
same period.
e. To relatives of such priest or minister within
the 4th degree, the church, order, etc., to
which such priest or minister may belong;
f. By ward to the guardian before approval of
final accounts;
g. To attesting witness of the execution of a
donation, if there is any, or to the spouse,
parents, or children, or anyone claiming
under them;
h. To physician, surgeon, nurse, health officer
or druggist who took care of the donor
during last illness;
i. By individuals, associations and corporations
not permitted by law to make donations;
and
j. By spouses to each other during marriage,
or to persons of whom the other spouse is a
presumptive heir.
11. Revocation or Reduction
Grounds:
a. Birth, Adoption or Reappearance (Art.
760, NCC)
 The action for revocation or reduction of the
grounds set forth in article 760 shall
prescribe after four years from the birth of
the first child, or from his legitimation,
recognition or adoption, or from the judicial
declaration of filiation, or from the time
information was received regarding the
existence of the child believed to be dead.
 This action cannot be renounced, and is
transmitted, upon the death of the donor, to
his legitimate and illegitimate children and
descendants.
 The property affected shall be returned or
its value if the donee has sold the same or
the donor may redeem the mortgage on the
property, with a right to recover the
property.
 The donee shall return the fruits of property
affected only from the filing of the
complaint.
b. Inofficious
 Action must be brought within five years
after the death of the donor.
 The action is transmitted to the donor’s
heirs as the donation shall be reduced as
regards the excess at the time of the
donor’s death.
 The donation takes effect during the lifetime
of the donor subject to reduction only upon
his death with regard to the excess.
 The donee appropriates the fruits as owner
of the property.
c. Insufficient property is left for support
of donor and his relative
 The action may be brought at any time by
the donor or by the relatives entitled to
support during the lifetime of the donor.
 The action is not transmissible as the duty
to give support and the right to receive is
personal in nature.
 The donation is reduced to the extent
necessary to provide support.
 The donee is entitled to the fruits as the
owner of the property donated.
d. Made in fraud of creditors
 The action for rescission must be brought
within four years from the perfection of the
donation, or at the latest from the time the
creditor had knowledge of the donation.
 The right is transmissible to the heirs of the
creditor or the latter’s successor-in-interest.
 The property affected shall be returned by
the donee for the benefit of the creditor
subject to the rights of innocent third
persons.
 The fruits of the property affected shall also
be returned. In case the donee acted in bad
faith and it should be impossible for him to
return the property affected due to any
cause, he shall indemnify the donor’s
creditor for damages suffered by the latter.
e. Effects - Upon revocation or reduction of
the donation based on Article 760, the
following effects are produced:
a. The property affected shall be returned, or if
it cannot be returned, as its value;
b. If the property is mortgaged, the donor may
redeem the mortgage, by paying the
amount guaranteed, with a right to recover
his payment from the donee. When the
property cannot be returned, it shall be
estimated at what it was worth at the time
of the donation.
c. The donee shall return the fruits of property
affected only from the filing of the
complaint.
f. Prescription
The prescriptive period of an action for
revocation or reduction of the donation under
Article 760 is four (4) years reckoned from the
birth of the first child, or from his legitimation,
recognition or adoption, or from the judicial
declaration of filiation, or from the time
information was received regarding the
existence of the child believed to be dead. If,
however, the child dies prior to the filing of the
action, it is believed that the action can no
longer be brought.
This action is not subject to waiver or
renunciation and is transmitted, upon the death
of the donor, to his legitimate or illegitimate
children and descendants.
Acts of Ingratitude (Art. 765, NCC)
1. If the donee should commit some offense
against the person, honor or property of the
donor, or of his wife or children under his
parental authority.
2. If the donee imputes to the donor any
criminal offense, or any act involving moral
turpitude even though he should prove it,
unless the crime or act has been committed
against the donee himself, his wife, or
children under his authority.
3. Unduly refuses to support the donor when
the donee is legally or morally bound to do
so.
Note: The maximum period of inalienability,
when imposed by will is 20 years (Art. 870, NCC),
unless a fideicommisary substitution has been
established, in which case, the inalienability will
last during the lifetime of the first heir. (Art. 863)
By analogy, the same maximum period of 20
years should apply to inalienability imposed by
the donor on the donee, because this is also a
gratuitous disposition; but the period may be
longer when the donor provides for reversion
under Article 757.
PRESCRIPTION
I. Definition
One acquires ownership and other real rights
through the lapse of time in the manner and
under the conditions laid down by law. In the
same way, rights and actions are lost by
prescription. (Art. 1106, NCC)
II. Acquisitive Prescription
A mode of acquiring ownership and other real
rights or losing rights or actions to enforce such
rights through the lapse of time. It is either
ordinary or extraordinary.
A. CHARACTERISTICS
A. It is a derivative mode which vests
ownership or other real rights on the
occupant;
B. The possession must be in the concept of an
owner, public in nature, peaceful and
uninterrupted;
C. It is based on economic necessity and public
policy;
D. It is purely of statutory origin;
E. It is applicable to ownership and other real
rights;
F. It is the acquisition of ownership or lost
thereof or real rights in another.
1. Ordinary Acquisitive Prescription
Requires possession of things in good faith and
with just title for the time fixed by law.
Requisites:
a. Possession in good faith
In its positive aspect, the good faith of the
possessor consists in the reasonable belief that
the person from whom he received the thing
was the owner thereof, and could transmit his
ownership. In its negative aspect, it consists in
the ignorance of the possessor of any flaw
which would invalidate his title or mode of
acquisition. (Art. 1127 and 1128, 526, NCC)
b. Just title
There is just title when the adverse claimant
came into possession of the property through
one of the modes recognized by law for the
acquisition of ownership or other real rights, but
the grantor was not the owner or could not
transmit any right and that the title is true and
valid (Art. 1129 and 1130, NCC).
c. Within the time fixed by law (4 years for
movables and 10 years for immovables)
d. In the concept of an owner
e. It must be public, peaceful and
uninterrupted
f. Capacity to acquire by prescription
g. Object must be susceptible of prescription.
2. Extraordinary Acquisitive Prescription
Acquisition of ownership and other real rights
without need of title or of good faith or any
other condition.
Requisites:
a. Within the time fixed by law (8 years for
movables, 30 years for immovable)
b. Capacity to acquire by prescription
c. Object must be susceptible of prescription
d. In the concept of an owner
e. It must be public, peaceful and
uninterrupted.
Acquisitive Prescription is based on the assertion
of a usurper of an adverse right for such a long
period of time, uncontested by the true owner of
the right, as to give rise to the presumption that
the latter has given up such right in favour of
the former. (Tolentino, Civil Code of the Philippines,
Vol. IV, p. 2)
B. Period of Prescription:
Movables:
 The ownership of movables prescribes
through uninterrupted possession of four
years in good faith. (Ordinary)
 The ownership of personal property also
prescribes through uninterrupted possession
for eight years, without need of any other
condition. (Extraordinary)
 As to the right to recover personal property
lost or illegally deprived of or those acquired
in public sale, fair, market or from merchant
stores, Articles 559 and 1505 of the Civil
Code shall apply.
Immovables:
 Ownership and other real rights over
immovable property are acquired by
ordinary prescription through possession of
ten years.
 Ownership and other real rights over
immovables also prescribe through
uninterrupted adverse possession thereof
for thirty years, without need of title or of
good faith.
Rules for the computation of time
necessary for prescription:
a. The present possessor may complete the
period necessary for prescription by tacking
his possession to that of his grantor or
predecessor in interest.
b. It is presumed that the present possessor
who was also the possessor at a previous
time, has continued to be in possession
during the intervening time, unless there is
proof to the contrary.
c. The first day shall be excluded and the last
day included. (Art. 1138, NCC)
A. What cannot be acquired by acquisitive
prescription
a. Public Domain 6. Should be affirmatively pleaded and proved
b. Intransmissible Rights to bar the action or claim of the adverse
c. Movables possessed through time party.
d. Registered land
B. Requisites:
Acquisitive Extinctive
Prescription Prescription a. Capacity to acquire by prescription
Requires positive action Requires inaction of b. The thing is capable of acquisition by
of the possessor who is the owner out of prescription
not the owner possession or neglect c. Possession of the thing under certain
of one with a right to
conditions
bring his action
Applicable to ownership Applicable to all kinds
d. Lapse of time as provided for by law.
and other real rights of rights, whether real
or personal Laches distinguished from Prescription
Vests the property and Vests the property and
raise a new title in the raise a new title in the LACHES PRESCRIPTION
occupant occupant Concerned with the Concerned with the fact
Results in the acquisition Merely results in the effect of delay of delay
of ownership or other loss of a real or
Question of inequity of A question or matter of
real rights in a person as personal right, or bars
permitting a claim to time
well as the loss of said the cause action to
be enforced, this
ownership or real rights enforce said right
inequity being founded
in another
on some subsequent
Can be proven under the Should be affirmatively
change in the
general issue without its pleaded and proved to
condition or the
being affirmatively bar the action or claim
relationof the parties
pleaded of the adverse party
Equity; Not statutory Statutory
III. Extinctive Prescription Need not specifically Cannot be availed of
pleaded unless it is specifically
It is the loss or extinguishment of property pleaded as an affirmative
rights or actions through the possession by allegation
another of a thing for the period provided by law
or through failure to bring the necessary action
to enforce one’s right within the period fixed by IV. Prescription or limitation of actions
law.
PRESCRIPTIVE
ACTIONS
A. Characteristics: PERIOD
Imprescriptible -To declare an inexistent or
1. One does not look to the act of the void contract
possessor but the neglect of the owner; -To quiet title
2. Requires inaction of the owner or neglect of
-To demand a right of way
one with a right to bring his action;
3. Applies to all kinds of rights, whether real or -To bring an action for
personal; abatement of public
4. Produces the extinction of rights or bars a nuisance
right of action; -To enforce a trust
5. Results in the loss of a real or personal
-Probate of a will
right, or bars the cause of action to enforce
said right; -To recover possession of a
registered land under the
 land registration act by the 4 years Action to revoke donations
registered owner due to non-compliance of
conditions
30 years Real actions over
immovables (but not Action to rescind partition
foreclosure) without of deceased’s estate on
prejudice to the acquisition account of lesion
of ownership or real rights
Action to claim rescission of
by acquisitive prescription
contracts
(Art. 1141)
Annulment of contracts for
10 years Actions upon a written
vice of consent
contract
Actions upon a Quasi- delict
Actions upon an obligation
created by law Action to revoke or reduce
donations based on birth,
Actions upon a judgment
appearance or adoption of
from the time judgment
a child
becomes final
Actions upon an injury to
Actions among co-heirs to
the rights of the plaintiff
enforce warranty against
(not arising from contract)
eviction in partition
3 years Actions under the eight
Mortgage action
-hour labor law
8 years Action to recover movables
Actions to recover losses in
without prejudice to
gambling
acquisition of title for a
shorter period or to the Money claims as a
possessor’s title under Art. consequence of employer-
559, 1505 and 1133 employee relationship
6 years Actions upon an oral Action to impugn legitimacy
(verbal) contract of a child if the husband or
his heirs reside abroad.
Actions upon a quasi-
contract
5 years Action for annulment of INTERRUPTION OF PRESCRIPTION OF
marriages (except on the ACTIONS
ground of insanity) and for
legal separation counted a. It is filed in court;
from the occurrence of the b. There is a written extrajudicial demand by
cause the creditor; and
Actions against the co-heirs c. Written acknowledgement of the debt by
for warranty of solvency the debtor. (Art. 1155, NCC)
the debtor in credits
assigned in partition
Action for the declaration of PART IV: OBLIGATIONS AND CONTRACTS
the incapacity of an heir
(devisee or legatee) to
OBLIGATIONS
succeed
All other actions whose I. DEFINITION
period are not fixed by law,
counted from the time the It is the juridical necessity to give, to do or not
right of action accrues
to do. (Art. 1156, NCC)

It is also defined as a juridical relation whereby
a person (Creditor) may demand from another
(Debtor) the observance of a determinate
conduct, and in case of breach, may obtain
satisfaction from the asset of the latter. (Makati
Stock Exchange Inc. vs. Campos, GR No. 138814, 16
April 2009, Cited in Rabuya, Civil Law Reviewer
Volume II, 2017 Ed., p. 3)
Juridical Necessity - enforceable by court action
The juridical tie between two or more persons,
by virtue of which one of them, the creditor or
obligee, has the right to demand of the other,
the debtor or obligor, a definite prestation.
(Tolentino, Civil Code of the Philippines Volume 4,
1991 ed., p.55)
ELEMENTS OF AN OBLIGATION
1. Active subject (obligee or creditor);
2. Passive subject (obligor or debtor);
3. Object - the prestation or the particular
conduct required to be observed by the
debtor (to give, to do or not to do);
4. Juridical tie (vinculum juris) - the efficient
cause between the two subjects by reason
of which the debtor is bound in favor of the
creditor to perform the prestation.
Note: The legal tie, whereby upon default or
refusal of the debtor to perform, the creditor can
go to court.
DIFFERENT KINDS OF OBJECT OR
PRESTATIONS
“to give” - prestation consists in the delivery of
a movable or an immovable thing in order to
create a real right, or for the use of the
recipient, or for possession, or to return to its
owner (e.g. obligation to deliver the thing in a
contract of sale, deposit, lease, antichresis,
pledge and donation)
“to do” - includes all kinds of work or services.
(e.g. contract of employment or professional
services)
“not to do” - consists in abstaining from some
act. (e.g. duty not to create a nuisance)
(Tolentino, Civil Code of the Philippines Volume 4,
1991 ed., p.57-58)
Real – if the prestation involved is that of giving
or the obligation to give.
Personal – if the prestation involved is that of
doing or not doing, i.e. obligation to do or not to
do.
Requisites of Prestation:
1. It must be possible, physically and
juridically
2. It must be determinate, or atleast
determinable; and
3. It must have a positive equivalent in
money. (Susceptible of pecuniary
appreciation)
CLASSIFICATION OF OBLIGATIONS
a. As to judicial enforceability:
1. Civil– Those that are based on positive law
and give a right of action to compel their
performance (Art. 1423 NCC);
2. Natural– Those that are based on equity
and natural law and which do not grant a
right of action to enforce their performance,
but after voluntary fulfillment by the obligor,
they authorize the retention of what has
been delivered or rendered by reason
thereof (Art. 1423 NCC);
3. Moral – obligations arising from the moral
law or law of the church and not from
positive law; therefore, not enforceable in
court. It is the obligation of a person in
relation to his God or Church; the sanction is
limited to conscience or morality, and not
through legality.
4. Mixed Obligation – obligations that are in c. As to the number of persons bound to
accordance with both natural and positive perform:
law.
1. Unilateral obligation
Natural Obligation v. Moral Obligation – an obligation where only one of the
parties is bound to fulfill a prestation;
NATURAL MORAL
OBLIGATION OBLIGATION 2. Bilateral obligation –
Whether or not juridical tie exists an obligation where both parties are bound
Yes No to perform a part in the obligation.
Legal effects
The law recognizes It does not produce
a) Reciprocal – Obligations that depend
the following legal any legal effects.
effects:
upon the performance of both subjects.
(See Art. 1169, last par., NCC for the effects
After voluntary
of delay in reciprocal obligations; and, Art
fulfillment by the
1191, NCC for the rules regarding their
obligor, natural
rescission);
obligations authorize b) Non-Reciprocal– Obligations where
the retention of what performance by one is not dependent
has been delivered or upon the performance of the other.
rendered by reason
thereof; and d. As to the capability of fulfillment:

A natural obligation 1. Possible

may be guaranteed
obligation – an obligation that is capable
(Art. 2052, 2nd par.)
Negligence
of accomplishment or fulfillment in nature or
Merely incidental to Substantive and in law;
the performance of an independent
already existing 2. Impossible
obligation obligation – an obligation that is not
Vinculum juris capable of accomplishment or fulfillment in
Exists independently Is created by the nature or in law (Art. 1183, NCC)
of the negligence negligence itself
Good father of a family e. As to susceptibility of partial
Not a defense Complete and proper fulfillment:
defense (Art. 2180)
Presumption of negligence
1. Divisib
Yes No
le obligation - when the obligation is
susceptible of partial performance;
b. As to the subject matter:
2. Indivis
1. Real obligation – obligations
ible obligation – when the obligation is
to give or to deliver. (See Articles 1163-1166,
& 1169, NCC for the nature and effects of real
not susceptible of partial performance.
obligations);
f. As to their dependence upon one
2. Personal obligation – another:
obligations to do or not to do. (See Articles
1167 & 1169, NCC for the nature and effects of 1. Principal obligation – refers to the main
positive personal obligations; and, Art. 1168, obligation created by the parties;
NCC for negative personal obligations)
2. Accessory obligation – refers to the
secondary obligation created to guarantee
the fulfillment of the principal obligation.
g. As to the existence of a burden or
condition:
1. Pure obligation – an obligation whose
performance does not depend upon a
condition or a term and is demandable at
once. (Art. 1179, NCC)
2. Conditional obligation – an obligation
which is subject to a condition. The
condition is suspensive if the happening of
which shall give rise to the acquisition of a
right; the condition is resolutory if it shall
result to the extinguishment or loss of rights
already acquired. (Art. 1181, NCC)
Condition, defined: It is an uncertain
event which wields an influence on a legal
relation. It is also defined as every futire
and uncertain event upon which an
obligation or provision or provision is made
to depend. The essential thing about
condition is uncertainty. Thus, although the
death of the person may be in the future
and there is uncertainty as to the dates of
its arrival, the certainty of its happening
makes it a term and not a condition (Rabuya,
Civil Law Reviewer Volume II, 2017 Ed., p. 48-
49)
3. Obligation with a term – an obligation
that is subject to the fulfillment of an event
that is certain to happen, although the date
may not be known as of the moment. The
term may be suspensive (from a day
certain), if the obligation becomes
demandable only after the expiration of the
term. On the other hand, a term is
resolutory (to a day certain) if the obligation
terminates upon the expiration of the term
(Art. 1193, NCC).
When the debtor binds himself to pay when
his means permit him to do so, the
obligation shall be deemed to be one with a
term (Art. 1180, NCC). In such instance, the
courts shall fix the duration thereof (Art.
1197, NCC). The obligation therein is NOT
VOID under Art. 1182 since what is
dependent upon the sole will of the debtor
is only the TIME of payment, not the
payment itself nor a condition precedent or
antecedent thereto. As opposed to a
condition, a term only affects the
demandability of an obligation but not its
very existence.
h. As to the nature of performance:
1. Positive obligation – when a debtor is
obliged to give or do something in favor of a
creditor.
2. Negative obligation – when an obligor is
forbidden from doing something.
i. As to the nature of creation of the
obligation:
1. Legal obligation – obligations imposed by
law (Art. 1158, NCC);
2. Conventional obligation – obligations
established by the agreement of the parties
like contracts.
j. As to the character of responsibility or
liability (when there is a concurrence of
two or more creditors or two or more
debtors in one and the same obligation)
1. Joint obligation – an obligation wherein
each debtor shall be liable only for a part of
the whole liability and to each creditor
belongs only a part of the correlative rights,
the credits/debts of which are distinct from
one another (8 Marensa 194; Art. 1208, NCC);
Note: As contemplated in Art. 1208, NCC,
the division of credit/debt into equal shares
among the creditors/debtors is only a
PRESUMPTION. The nature or the wording
of the obligation supersedes the
presumption.
2. Solidary obligation (joint and several
obligation) – an obligation wherein each
one of the creditors has a right to demand
entire compliance with the prestation, or
 that each one of the debtors is bound to
render entire compliance as demanded (Art.
1207) without prejudice to his right to collect
from his co-debtors their shares in the
obligation. (Art. 1217, par.2, NCC).
Note: There is solidary liability only when it
is expressly stated, or when the law or the
nature of the obligation requires solidarity.
(Art, 1207, NCC; See Articles 1211-1222, NCC for
the effects of solidary obligations)
k. As to the grant of right to choose one
prestation out of several, or to
substitute the first one:
1. Alternative obligation – an obligation
wherein the obligor may choose to
completely perform one out of the several
prestations (Art. 1199, NCC)
2. Facultative obligation – an obligation
wherein only one prestation has been
agreed upon, but the obligor may render
another in substitution (Art. 1206, NCC).
l. As to the imposition of penalty:
should be complied with in good faith. (Art. 1159,
NCC). =This is known as the principle of
obligatory force of contracts.
Jus civili - obligations derived from contracts
have the force of law between the contracting
parties.
Jus gentium- there must be compliance in good
faith.
(3) Quasi-Contract - Quasi-contracts are
those juridical relations arising from lawful,
voluntary and unilateral acts, by virtue of
which the parties become bound to each
other, based on the principle that no one
shall be unjustly enriched or benefited at the
expense of another (Art. 2142, NCC)
CONTRACT QUASI-CONTRACT
With consent whether Unilateral act. There is
express or implied. no consent given
whether express or
implied.

1. Simple obligation – an obligation wherein The 2 Principal Kinds:

no penalty is imposed for the violation of its
terms (Art. 1226, NCC);
2. Obligation with penalty – an obligation
that imposes a penalty for violation of its
terms (Art. 1226, NCC).
1. Negotiorum Gestio (unauthorized
management); - arises when a person
voluntarily takes charge of the management
of the business or property of another
without any power from the latter.

II. SOURCES OF OBLIGATIONS (Arts. 2. Solutio indebiti (unjust enrichment)–takes

1156 – 1157, NCC) place when a person receives something
from another without any right to demand
(1) Law - Obligations derived from law are not for it, and the thing was unduly delivered to
to be presumed but must be expressly him through mistake.
provided for by law (Art. 1158, NCC). (e.g.
obligation to give legal support under the
provisions of the Family Code) NEGOTIORUM GESTIO SOLUTIO INDEBITI
A juridical relation which If something is
arises whenever a person received when there is
(2) Contracts - A Contract is a meeting of
voluntarily takes charge no right to demand it
minds between two persons whereby one of the agency or and it was unduly
binds himself, with respect to the other, to management of the delivered through
give something or to render some service. business or property of mistake, the obligation
(Art. 1305, NCC) another without any to return it arises. (Art.
power or authority from 2154, NCC)
Obligations arising from contracts have the force the latter. (Art. 2144,
of law between the contracting parties and NCC)
 position to do so shall pay legal
Requisites: Requisites: (Art. 2144, NCC). interest if a sum of
1. An “officious 1. Payment is made money is involved.
manager” or when there exist 2. He is personally
“gestor” voluntarily no binding relation liable to third 3. Obligation to
assumes the between the persons with whom deliver fruits –
management or payor, who has no he contracted with whoever in bad
agency of the duty to pay, and unless: (a) the faith accepts a
business or property the person who owner has ratified thing by mistake
of another; received the the management; or shall be liable for
2. Property or business payment; and (b) the contract fruits received or
must be neglected 2. Payment is made refers to things which should have
or abandoned; through mistake pertaining to the been received if
otherwise what and not through owner (Art. 2152, thing produces
results is a case of liberality or some NCC). fruits (Art. 2159,
unenforceable other cause. NCC).
contract and not (Commissioner of b. On the part of the
negotiorum gestio. Internal Revenue owner:
1. No authorization v. MERALCO, G.R.
from the owner, 181459, June 9, 1. If he
whether express or 2014) enjoys the
implied, otherwise advantages of the
what results is a unauthorized
contract of agency management, he
and not negotiorum shall be liable to the
gestio; and officious manager:
(a) for obligations
NB: A contract is incurred in his
unenforceable if entered interest; (b) for
into the name of another reimbursement of
by one who has been necessary and useful
given no authority or expenses incurred
legal representation, or by the latter; and (c)
who has acted beyond for reimbursement
his powers (Art. 1403 of damages which
[1]); the latter may have
suffered in the
2. Assumption of performance of his
agency or duties.
management must
be done in good 2. If he did not derive
faith. benefit but the
Obligations Created: Obligations Created: management had for
a. On the part of the 1. Obligation to its purpose the
officious manager: return - It creates prevention of
an obligation to imminent and
1. He is obliged to return what has manifest loss, the
continue with the been delivered by owner shall also be
management or mistake (Art. liable for the
agency until the 2154, NCC) foregoing
termination of the obligations.
affair and its 2. Obligation to pay
incidents, unless he legal interest – 3. If he did not derive
requires the owner whoever in bad benefit and although
to substitute for him faith accepts an there has been no
if the latter is in a undue payment, imminent and
 manifest danger, he illegal possession of firearms, there is no civil
shall still be liable for liability ex delicto.
the foregoing
obligations provided (5) Quasi-delict
that: (a) the
officious manager
has acted in good Whoever by act or omission causes damage to
faith; and (b) the another, there being fault or negligence, is
property or business obliged to pay for the damage done. Such fault
is intact, ready to be or negligence, if there is no pre-existing
returned to the contractual relation between the parties, is
owner. (Arts. 2150 called a quasi-delict. (Art. 2176, NCC)
& 2151, NCC).
Requisites for recovery:
1. Damages suffered by the plaintiff;
2. Fault or negligence of the defendant, or
some other person for whose acts he must
Distinguished From Delict & Quasi-Delict: respond; and
3. The connection of cause and effect between
In quasi-contract, the unilateral act done is the fault or negligence of the defendant and
lawful; whereas in delict and quasi-delict, the the damage incurred by the plaintiff.
unilateral done is unlawful. (Indophil Textile v. Engr. Adviento, G.R. 171212,
August 4, 2014)
(4) Acts or Omissions punished by Law
TEST OF NEGLIGENCE: Would a prudent man,
Crime as a source of obligation – There are many in the position of the person on whom negligence
crimes from which, civil liability arises in their is attributed, foresee harm to the person injured
commission, in addition to the criminal penalty as a reasonable consequence of the course about
attached to them. This underlines the two to be pursued.
aspects of a crime: one, as an offense against
the state, and two, as an offense against the KINDS OF NEGLIGENCE:
victim. It is in the latter case that civil liability is 1. Culpa aquiliana- negligence as a source of
recoverable. obligation. There is no contractual relation at
all.
Basis: Every person liable for felony is also civilly 2. Culpa contractual- negligence in the
liable. (Art. 100, RPC) performance of a contractual obligation.

Civil Liability Includes The Following: Scope of Quasi-Delict:

1. Restitution
2. Reparation of the damage caused
3. Indemnification for consequential damages
(Art. 104, RPC)
Basis of civil liability Ex Delicto:
Criminal liability shall give rise to civil liability
only if the same felonious act or omission results
in damage or injury to another and is the direct
and proximate cause thereof (Romero Y
Dominguez v. People, G.R. 167546, July 17, 2009) .
In other words, there must be a PRIVATE
offended party. Hence, in rebellion, treason or
 Culpa aquiliana (fault or negligence) covers
not only acts “not punishable by law” but
also acts criminal in character, whether
intentional and voluntary or negligent
(Safeguard Security Agency v. Tangco, et. al.,
G.R. 165732, December 14, 2006) . Hence, the
same negligent act causing damages may
produce two kinds of civil liability: (1) civil
liability arising from a crime under Article
100 of the RPC, or (2) an action for quasi-
delict or culpa extra-contractual under
Article 2176 of the Civil Code (Cerezo vs.
Tuazon, G.R. 141538, March 23, 2004).
 An obligation to give may either involve a
Prohibition against double recovery: determinate or generic thing.

The plaintiff cannot recover damages twice for It is determinate when the object is
the same act or omission of the defendant (Art. particularly designated or physically segregated
2177, NCC). from all others of the same class. (Art. 1460[1],
NCC)
DELICT QUASI - DELICT
Affects public interest; Affects private concern It is generic when the object is designated
only; merely by its class or genus.
Criminal act is punishable Damage done is
under the Penal Code; repaired by means of
A. Obligation to give a determinate or
indemnification under
the Civil Code; specific thing
Punishable only if there is Punishes all acts in
a penal law covering the which any kind of fault Accessory obligations in determinate
crime committed. (Diana or negligence obligation
v. Batangas Transportation, intervenes. (Diana v.
G.R. L-4920, June 29, 1953) Batangas Transportation, 1. Obligation to take care of the thing with the
G.R. L-4920, June 29, proper diligence of a good father of a family,
1953)
unless the law or the stipulation of parties
requires another standard of care .(Art. 1163,
A person while not criminally liable may
NCC)
still be civilly liable - Failure of the plaintiff to
reserve in the criminal case his right to file a
General rule: The diligence required is that
separate civil action is not fatal to the civil action
of a good father of a family.
after the acquittal of the accused.
Pre-existing contractual obligation, not
Exceptions:
bar to recovery under Quasi-Delict:
a) If the law requires another standard of
care
In fine, a liability for tort may arise even under a
b) If the parties stipulate another standard
contract, where tort is that which breaches the
of care
contract (Loadmasters Custom Services v. Glodel
Brokerage, G.R. 179446, January 10, 2011). Stated
2. Obligation to deliver the fruits from the time
differently, when an act which constitutes a
the obligation to deliver (the principal thing)
breach of contract would have itself constituted
arises (Art. 1164, NCC); and
the source of a quasi-delictual liability had no
contract existed between the parties, the
Note: The creditor acquires a right to
contract can be said to have been breached by
demand for the delivery of the fruits of the
tort, thereby allowing the rules on tort to apply.
determinate thing due from the time the
(LRTA v. Navidad, G.R. No. 145804, February 6,
2003) obligation to deliver the determinate thing
arises. (Art. 1164, NCC)
Note: The enumeration of sources of
obligations is exclusive. (Sagrada vs. NACOCO , 91 3. Obligation to deliver the accessions and
Phil 503) accessories (Art. 1166, NCC).

With respect to what is produced by a

III. NATURE AND EFFECTS OF property – FRUITS may be natural,
OBLIGATIONS industrial, or civil.

(1) Real Obligation (Obligation to GIVE)

 With respect to an immovable property – 2. Negative obligation - if the prestation
whatever is built, planted or sown on the consists of not doing (e.g. negative easements,
land of another and the improvements or See Art. 616, NCC; particularly, easements of
repairs made thereon. (Art. 445, NCC) light and view, See Arts. 667-673, NCC)

The right of the creditor is not to demand an

B. Obligation to give indeterminate or
act but an omission, and its non-fulfillment
generic thing
consists in executing an act which the
obligor is forbidden to do.
A thing is indeterminate if it is designated
merely by its class or genus without any
Breach of Obligations
particular designation or segregation from all
others of the same class (Gaisano Cagayan, Inc. v.
Insurance Co., of North America, G. R. No. 147839, Forms of breach of obligations:
June 8, 2006).
1. Voluntary - Those causes which arise from
Remedies of the creditors: the will of the parties. Debtor is liable for
damages if he is guilty of:
SPECIFIC GENERIC OBLIGATION a. Default (mora)
OBLIGATION b. Fraud (dolo)
Specific performance Specific performance c. Negligence (culpa)
(delivery of any thing d. Breach through contravention of the
belonging to the same tenor thereof
species)
Rescission (action to Ask that the obligation be 2. Involuntary – debtor is unable to perform
rescind under Art. complied with at the the obligation due to fortuitous event, thus
1380, NCC) debtor’s expense
not liable for damages.
Resolution (action for Resolution or specific
cancellation under Art. performance, with
1191, NCC) damages in either case A. Delay/Default (Mora)
(Art. 1191, NCC)
Damages, in both cases (Art. 1170, NCC) Three Kinds of Default:

Note: May be exclusive or in addition to the above‐ 1. Mora Solvendi –

mentioned remedies (Pineda, Obligations and Contracts, There is delay on the part of the debtor.
2000 ed, p. 37) a. ex re – refers to
obligation to give;
(2) Personal Obligation (Obligation TO DO b. ex persona – refers to
or NOT TO DO) obligation to do.

Two kinds: General rule: The debtor is in delay or in

default only if there has been a DEMAND made
1. Positive obligation - if the prestation consists by the creditor, either judicial or extrajudicial
of doing; (Art. 1169, NCC).

Considered breached if: Exceptions: Demand is no longer necessary in

a. If the debtor fails to do the obligation;
or
b. Even in case of performance but the
same is done either in a poor manner or
in contravention of the tenor of the
obligation.
order to place the debtor in delay or in default
if:
1. The law expressly declares that demand is
not necessary;
2. The stipulation of the parties expressly
states that demand is not necessary;
 Under the first and second exception, it is
not enough that the law or the obligation
fixes a period for the performance of the
latter, if it does not expressly add that, upon
the expiration thereof, delay shall
commence. Hence, mere expiration of the
period fixed by the parties will not cause
delay (Palmares vs. CA, G.R. No. 126490, 31
March 1998)
3. The time is the controlling motive for the
establishment of the contract.
 In determining whether time is of the
essence of the contract, the ultimate
criterion is the actual or apparent intention
of the parties and before time may be so
regarded by the court, there must be a
sufficient manifestation, either in the
contract itself or the surrounding
circumstances of that intention (Lorenzo
Shipping Corp. v. BJ Marthel International, Inc.,
G.R. 145483, November 19, 2004)
4. Demand would be useless, as when the
debtor has rendered the obligation beyond
his power to perform (Art. 1169, NCC).
Effect of delay/default:
a. Debtor is liable for damages (Art. 1170, NCC);
b. Debtor is liable for fortuitous event until he
has affected the delivery (Art. 1165 last par.,
NCC)
2. Mora Accipiendi –
There is delay on the part of the creditor;
If the creditor to whom tender of payment has
been made refuses without just cause to accept
it, the debtor shall be released from
responsibility by the consignation of the thing or
sum due.
(The effects of mora accipiendi are discussed
under consignation)
3. Compensatio Morae
– Delay of both parties existing in reciprocal
obligations when neither of them has
performed the prestation required.
Concept of Reciprocal Obligations:
 These are obligations arising from the SAME
CAUSE, and in which each party is a debtor
and a creditor of the other, such that the
obligation of one is dependent upon the
obligation of the other. They are to be
performed SIMULTANEOUSLY such that the
performance of one is conditioned upon the
simultaneous fulfillment of the other. (DBP v.
Guariña G.R. 160758, January 15, 2014)
Also, Art. 1187, par.1, NCC, provides that: if a
reciprocal obligation has a condition, the fruits
and interests during the pendency of the
condition shall be deemed to have been
mutually compensated.
Requirement of Demand- In reciprocal
obligations, as in a contract of sale, the general
rule is that the fulfillment of the parties’
respective obligations should be simultaneous.
Hence, no demand is generally necessary
because, once a party fulfills his obligation and
the other party does not fulfill his, the latter
automatically incurs in delay. But when different
dates for performance of the obligations are
fixed, the default for each obligation must be
determined by the rules given in the first
paragraph of Art. 1169, NCC, that is, the other
party would incur in delay only from the
moment the other party demands fulfillment of
the formers obligation. Thus, even in reciprocal
obligations, if the period for the fulfillment of the
obligation is fixed, demand upon the obligee is
still necessary before the obligor can be
considered in default and before a cause of
action for rescission will accrue (Solar Harvest Inc.
vs. Davao Corrugated Carton Corp. G.R. No. 176868,
26 July 2010)
When delay occurs
In reciprocal obligations, neither party incurs in
delay if the other does not comply or is not
ready to comply in a proper manner with what is
incumbent upon him. From the moment one of
the parties fulfills his obligation, delay by the
other begins. (Art. 1169, last par., NCC)
 fulfillment of an other party to
 Rescission of reciprocal obligations in Art. obligation enter in to
1191, NCC is different from rescission of contract
contracts in Art. 1383, NCC. The former is Breach or non- Voidable
based on resolution due to a breach of faith fulfillment of contract since
the obligation Result consent is
by one party while the latter involves a
vitiated
subsidiary action due to lesion. (Ong v. CA,
Recover Annulment of
G.R. 97347, July 6, 1999)
damages from Remedy of the contract
the debtor the innocent
Rescission / Rescission (Art. party
Resolution (Art. 1191, 1380, NCC)
NCC) Note: For the obligor to be held liable for
Based on non- Based on lesion or damages
performance or non- fraud upon creditors.
fulfillment of obligation  The fraud must be incidental fraud, or that
Action is instituted only Action is instituted by which is present during the performance of
by the injured party either party or by a
the obligation, and not causal fraud, or
third person.
fraud employed in the execution of a
Nonperformance by the Nonperformance by
other party is important the other party is contract, which vitiates consent.
immaterial.
C. Negligence in the performance of
B. Fraud in the performance of obligation obligation

Fraud is the deliberate and intentional evasion Negligence or Culpa defined: It is the
of the normal fulfillment of obligations. There is omission of that diligence which is required by
malice or bad faith. the nature of the obligation and corresponds
with the circumstances of the persons of the
Responsibility arising from fraud is demandable time and place (Art. 1173, NCC). It is the failure
in all obligations. Any waiver of an action for to observe for the protection of the interests of
future fraud is void. (Art. 1171, NCC) another person that degree of care, precaution
Kinds of Fraud (Dolo): and vigilance, which the circumstances justly
1. Incidental Fraud (Dolo Incidente) – demand, by reason of which such other person
Fraud is merely incidental to the suffers injury (ANECO vs. Balen, G.R. No. 173146,
performance of an already existing 25 November 2009, cited in Rabuya, Civil Law
Reviewer, Volume II, 2017 Ed., p. 42)
obligation. It renders the debtor liable for
damages.
Kinds of Negligence (Culpa):
2. Causal Fraud (Dolo Causante) – Fraud is
a. Culpa Contractual – Negligence is merely
the very reason for the existence of the
incidental to the performance of an already
obligation. It is the fraud employed by one
existing obligation. The source of obligation
party to induce the other to enter into a
is contract and the occurrence of negligence
contract with him. This is a ground to annul
during the performance of the obligation
the contract.
only renders the debtor liable for damages.
INCIDENTAL CAUSAL
b. Culpa Extra-Contractual or Culpa
vs. Aquiliana - Negligence is the very source
FRAUD FRAUD
During the At the time of of the obligation. Without the negligence,
performance of the birth of there is no juridical tie between the parties.
When
an existing the obligation
present
obligation General Rule: The diligence required is that of
Evading the Securing the a good father of a family.
normal Purpose consent of the

Exceptions:
1. If the law requires another standard of care
(e.g. in case of common carries, the
diligence required is extraordinary diligence)
2. If the parties stipulate another standard of
care
Note: In case of fraud, bad faith, malice or
wanton attitude, the obligor shall be responsible
for all damages which may be reasonably
attributed to the non-performance of the
obligation. (Art. 2201, NCC)
D. Contravention of tenor of obligation
It includes all cases of defective performance
and even cases of non-performance attributable
to the debtor even though there is no bad faith,
malice or negligence.
Effect: It renders the debtor liable for damages.
(Art. 1170, NCC)
Note: Under Art. 1170, NCC, the phrase “in any
manner contravene the tenor” of the obligation
includes any illicit act which impairs the strict
and faithful fulfillment of the obligation, or every
kind of defective performance.
Legal excuse for breach of obligation:
fortuitous event
 A fortuitous event has been defined as one
which could not be foreseen, or which
though foreseen, is inevitable (Art. 1174,
NCC; The Philippine American General Insurance,
Co., Inc. v. MGG Marine Services, Inc. G.R. No.
135645, March 8, 2002). A fortuitous event
under Article 1174 may either be an “act of
God”, or natural occurrences such as riots,
strikes or wars. (Philippine Communication
Satellite Corp., v. Globe Telecom, Inc., G.R. No.
147324, May 25, 2004)
Rule: The debtor is not liable for non-
performance of the obligation due to fortuitous
event (Art. 1174, NCC).
Requisites: To exempt the obligor from liability
for a breach of an obligation by reason of a
fortuitous event, the following requisites must
concur:
1. Cause of the breach of the obligation must
be independent of the will of the debtor;
2. Event must be either unforeseeable or
unavoidable;
3. Event must be such as to render it
impossible for the debtor to fulfill his
obligation in a normal manner, and
4. Debtor must be free from any participation
in, or aggravation of the injury to the
creditor. (Mondragon Leisure and Resorts Corp.,
v. CA G. R. No. 154188, June 15, 2005; citing
Huibonhoa v. CA, 320 SCRA 625)
Exceptions to the Rule: In the following
cases, the debtor remains liable for non-
performance of the obligation due to fortuitous
event:
1. In cases expressly specified by law;
e.g. If the obligor delays, or has promised to
deliver the same thing to two or more
persons who do not have the same interest,
he shall be responsible for fortuitous event
until he has effected the delivery (Art. 1165,
last par., NCC).
2. When the stipulation of the parties provides
to that effect; and
3. When the nature of the obligation requires
the assumption of risk (Art. 1174, NCC).
 If the robbery takes place without any
concurrent fault or negligence on the part of
the debtor, it may exempt the debtor from
liability (Hernandez v. Chairman, COA, G.R.
71871, November 6, 1989). But the robbery is
not considered fortuitous event if it takes
place with the concurrent fault or negligence
of the debtor. Hence, when the robbery
took place in a pawnshop which is under the
control of the petitioners, the latter are not
exempt from liability because they failed to
exercise the required degree of diligence.
(Sicam v. Jorge, G.R. 159617,August 8, 2007)
Effects of fortuitous event:
1. On determinate obligation – the obligation is
extinguished
2. On generic obligation – the obligation is not
extinguished (genus nun quam peruit – 3. Damages, in any Event
genus never perishes)
The injured party may choose between the
Remedies available to creditor in cases of fulfillment and the rescission of the obligation,
breach: with the payment of damages in either case. He
may also seek rescission, even after he has
1. Specific Performance chosen fulfillment, if the latter should become
impossible. (Art. 1191[2], NCC)
When positive personal obligation
(obligation to do) is considered breached The court shall decree the rescission claimed
(Art. 1170, NCC) unless there be just cause authorizing the fixing
of a period. (Art. 1191 [3], NCC)
It may be breached in two ways:
a. There is no performance at all; or This is understood to be without prejudice to the
b. There is performance but the same is either rights of third persons who have acquired the
poor or in contravention of the tenor of the thing, in accordance with Articles 1385 and 1388
obligation. and the Mortgage Law.

Remedies in cases of breach of: 4. Subsidiary Remedies of

Creditors
POSITIVE PERSONAL NEGATIVE
OBLIGATION PERSONAL a. Accion Subrogatoria
OBLIGATION
The law expressly grants to the creditor the
If there is failure to do If it is still possible, the
right to exercise all of the rights and bring all of
what has been remedy is to demand
promised, the obligation that what has been
the actions which the debtor may have against
may be executed by done be undone at the third persons. (Jurado, Comments and
another person at the expense of the debtor Jurisprudence on Obligations and Contracts, 2010
cost of the debtor. (Arts. 1168, NCC). ed., p. 104)
Same rule shall be
observed if obligor does If undoing is no longer Exception: Purely personal rights in the sense
it in contravention of possible, either that they are inherent in the person of the
the tenor of the physically or legally, the debtor.
obligation. (Art. 1167, remedy is simply
NCC); OR indemnification for Requisites:
damages. (Art. 1170,
1) Debtor to whom the right of action properly
The creditor may NCC)
demand that what has pertains must be indebted to the creditor;
been poorly done be 2) Creditor must be prejudiced by the inaction
undone at the expense or failure of the debtor to proceed against
of the debtor. (Art. the third person;
1167, par. 2)
3) Creditor musts have pursued or exhausted
2. Rescission all the properties of the debtor, which are
not exempted for execution.
Cancellation of the contract or reciprocal
obligation in case of breach on the part of one,
which breach is violative of the reciprocity b. Accion Pauliana
between the parties. This is properly called
resolution. (Art. 1191, NCC)
It refers to the right available to the creditor for
the rescission of any act of the debtor which is
in fraud and to the prejudice of his rights as a
creditor. By its very nature, it is subsidiary in
character. (Art. 1383, NCC)
It refers to one where the acquisition of rights,
as well as the extinguishment or loss of those
already acquired, shall depend upon the
happening of the event which constitutes the
condition. (Art. 1181, NCC)

Requisites: CONDITIONAL OBLIGATION WITH A

1) There must be a credit prior to alienation; OBLIGATION TERM/PERIOD
2) Debtor has made a subsequent contract A Condition is any Any future but certain
conveying a patrimonial benefit to a third future and uncertain event;
event which wields an
person;
influence on a legal
3) The creditor has no other legal remedy to relationship.
satisfy his claim;
4) The act being impugned is fraudulent; and Affects the very Affects ONLY the
5) The third person who received the property existence of the demandability of the
conveyed, if by onerous title, has been an obligation. obligation.
accomplice in the fraud. (Siguan vs. Lim, G.R. If the fulfillment of the If it is the designation of
134685, November 19, 1999) condition is left to the the period which is left
sole will of the debtor, to the exclusive will of
IV. KINDS OF CIVIL OBLIGATIONS the obligation is void the debtor, the
(Art. 1182, NCC) obligation remains valid
A. Pure Obligation (Art. 1197, NCC)

It is an obligation whose performance does not

Kinds of Condition:
depend upon a future or uncertain event, or
upon a past event unknown to the parties. Pure
1. Suspensive & Resolutory (Art. 1181,
obligations are demandable at once. (Art. 1179
[1], NCC) NCC)

Effect: Its effectivity or extinguishment does a. Suspensive Condition – A future and

not depend upon the fulfillment or non-
fulfillment of a condition or upon the expiration
of a term or period and characterized by the
quality of its being IMMEDIATELY
DEMANDABLE. (Art. 1179, NCC).
Past Event Unknown to the Parties – Art.
1179, par. 1, NCC contemplates on a “future
knowledge of a past event” that will determine
whether or not an obligation will rise. An
obligation which depends on such event is an
obligation with a term since a past event is a
certain event, and such event only affects the
demandbility of the obligation (e.g., an
obligation to give monetary assistance after a
survey of the aftermath of a calamity has been
conducted; the amount thereof depends on the
number of casualties thus surveyed.)
B. Conditional Obligation
uncertain event, the fulfillment of which
gives rise to the obligation or acquisition of
rights.
Principle of Retroactivity in Suspensive
Conditions: Once the condition is fulfilled,
its effects must logically retroact to the
moment when the essential elements, which
gave birth to the obligation, have taken
place. The condition which is imposed is
only accidental, not an essential element of
the obligation. This is applied only to
consensual contracts. No application to real
contracts which can only be perfected by
delivery. (Art.1187 [1], NCC)
b. Resolutory Condition – A future and
uncertain event, the happening of which
extinguishes obligations or rights already
acquired.
 SUSPENSIVE RESOLUTORY choose between
CONDITION CONDITION rescission and
Prior to Fulfillment of Prior to Fullfillment fulfillment, with
Condition: of Condition: damages in either
case (Art. 1189,
a. The obligation and 1. The obligation is par.4, NCC);
rights do not exist immediately
yet and the nature demandable (Art. f. If the thing is
of the interest of 1179, par.2, NCC); improved by nature
the expectant (and later on the
creditor is but a 2. If the obligation is condition is
mere hope or already performed, fulfilled), the
expectancy. Unlike the previous debtor improvement inures
other hopes or becomes an to the benefit of the
expectancies, expectant creditor creditor (Art. 1189,
however, it is entitled to bring the par.5, NCC);
protected by law. appropriate action
to protect his hope g. If the thing is
b. If the thing is lost or expectancy. improved at the
without the fault of expense of the
the debtor (and debtor (and later
later on the on the condition is
condition is fulfilled), the debtor
fulfilled), the shall have no other
obligation is right over the
extinguished (Art. improvements than
1189, par.1, NCC); that granted to the
usufructuary (Art.
c. But if the thing is 1189, par.6, NCC).
lost thru the fault of Effect: Upon Fulfillment of
the debtor (and Condition:
later on the 1. The obligation and Rights already acquired,
condition is rights come into as well as the
fulfilled), the existence. obligations, are
obligation is 2. If the obligation is extinguished (Art. 1181,
converted into to give, the effects NCC). If the previous
indemnification for of the happening of obligation is that of
damages (Art. 1189, the condition shall giving which has already
par.2, NCC); retroact to the day been performed, the
of the constitution parties shall return to
d. If the thing of the obligation. each other what they
deteriorates without But when the have received (Art. 1190,
the fault of the obligation imposes par.1, NCC), including
debtor (and later reciprocal fruits and interest.
on the condition is obligations, the
fulfilled), the fruits and interest
impairment is borne during the
by the creditor (Art. pendency of the
1189, par.3, NCC); condition shall be
deemed mutually
e. If it deteriorates compensated. (Art.
thru the fault of the 1187, par.1, NCC)
debtor (and later
on the condition is 3. In obligations to do
fulfilled), the and not to do, the
creditor may court shall
 determine, in each
case, the
retroactive effect of
the condition that
has been complied
with. (Art.1187,
par.2, NCC)
2. Potestative, Casual & Mixed Condition
Potestative – The fulfillment of the condition is
left to the exclusive will of one of the parties.
Note: When the fulfillment of the condition
depends upon the sole will of the debtor, the
conditional obligation shall be void. ( Art. 1182,
NCC) It must be noted that Art. 1182 is
applicable only to suspensive condition.
Causal – The fulfillment of the condition is left
to the will of a third party or chance.
Mixed – The fulfillment of the condition is left
partially to the will of either of the parties and
partly to the will of a third person or by chance.
Effect upon the Obligation:
1. The obligation becomes void when the
condition is suspensive and its fulfillment is
left exclusively to the will of the debtor. (Art.
1182, NCC);
2. But if the condition is resolutory, the
obligation remains valid even if the
fulfillment of such condition is left to the
exclusive will of the debtor;
3. If the condition is casual or mixed, the
obligation remains valid.
a. Possible Condition – when it is capable of
realization not only according to its nature,
but also according to law, good customs and
public policy.
b. Impossible Condition – refers to
conditions which are:
1. Physically impossible because they are
contrary to law of nature;
2. Contrary to good customs or public
policy; or
3. Prohibited by law.
Effect upon the Obligation:
If impossible condition is imposed ---
1. Ordinary Obligation: obligation itself
becomes void (Art. 1183, NCC);
2. Simple or Remuneratory Donation: the
donation remains valid because the
condition is considered not imposed (Art.
727, NCC);
3. Onerous Donation: the donation becomes
void because an onerous donation is
governed by the law on obligations and
contract (Art. 733, in rel. to Art. 1183, NCC);
and
4. Testamentary Disposition: the disposition
remains valid because the impossible
condition is considered not imposed, even if
testator provides otherwise (Art. 873, NCC).

Doctrine of Constructive Fulfillment

When the condition is partly dependent upon
chance or the will of a third party dependent 4. Positive & Negative Condition
upon the will of the debtor, the obligations is
valid. In this scenario, if the debtor voluntarily POSITIVE NEGATIVE
prevents the fulfillment of the condition partly CONDITION CONDITION
dependent upon him, the condition is deemed A certain event must A certain event must
fulfilled. (Art. 1186, NCC) happen at a not happen at a
determinate time. determinate time.
3. Possible & Impossible Conditions Effects: Effects:
 The obligation is In negative condition, Suspensive (ex die) – The obligation becomes
considered extinguished the obligation becomes demandable only upon the arrival of a day
if: effective if: certain.
1. The period expires 1. The period expires;
without the condition 2. Even before the Resolutory (in diem) – The obligation is
happening; or expiration of the
2. It is certain that the immediately effective and demandable but will
period, when it is
event will not take be extinguished when the period arrives.
certain that the
place, even before event cannot
said period expires happen; A DAY CERTAIN – Understood to be that
(Art. 1184, NCC). 3. If no period is fixed, which must necessarily come, although it may
the intention of the not be known when. (Art. 1193 [3], NCC)
parties, considering
the nature of the PERIOD / TERM CONDITION
obligation, shall A future and certain A future and uncertain
determine the time or event which event;
period. (Art. 1185, must necessarily come;
NCC).
Always refers to the May, under the law,
future; refer even to the past;
Effect of Breach of Both Parties:
Merely fixes the time or Causes an obligation to
1. The liability of the first infractor shall be efficaciousness of an arise or to cease. (8
obligation. Manresa 153, 154).
equitably tempered by the courts;
2. If it cannot be determined which of the
parties first violated the contract, the same Benefit of Period
shall be deemed extinguished, and each
shall bear his own damages. (Art. 1192, NCC). General Rule: If period is designated, it is
presumed for the benefit of both the creditor
Note: “The above rules are deemed just. The and debtor (Art. 1196, NCC). Hence, the creditor
first one is fair to both parties because the cannot demand for early performance and
second infractor also derived or thought he neither may the debtor compel the creditor to
would derive some advantage by his own act or accept an early performance.
neglect. The second rule is likewise just,
because it is presumed that both at about the  This Article applies only where the parties to
same time tried to reap some benefit.” a contract themselves have fixed a period,
and not to a case where the parties have
C. Obligation with a Term/Period authorized the Court to fix a reasonable
term. (Orit v. Balrodgan Co., Ltd., L-12277, Dec.
PERIOD – A term or period consists in a space 29, 1959)
of time which has an influence on obligations as
a result of a judicial act, and either suspends Exception: Unless from the tenor of the
their demandableness, or produces their obligation or other circumstances it appears that
extinguishment. Obligations with a period are, the period has been established in favor of the
therefore, those whose consequences are creditor or the debtor alone (Art. 1196, NCC).
subjected in one way or another to the
expiration of said term. (Manresa, Commentaries Effect if for the benefit of creditor alone:
on the Civil Code, Vol. 8, p. 153). He cannot be compelled by the debtor to accept
an early performance but he can compel the
1. Suspensive and Resolutory Terms: debtor to perform even prior to the arrival of the
period.

Effect for the benefit of debtor alone: He
cannot be compelled by the creditor to perform
prior to the arrival of the period but he can
compel the creditor to accept an early
performance.
Instances where the debtor loses right to
make use of period (in which case, the period
becomes for the benefit of creditor alone):
1. Debtor becomes INSOLVENT, unless he
gives guaranty or security;
2. Debtor FAILS TO FURNISH the promised
security or guaranty;
3. Debtor, by his act, IMPAIRS the guaranty or
security, unless he gives a new security or
guaranty;
4. When guaranty or security DISAPPEARS thru
FORTUITOUS EVENT;
5. Debtor VIOLATES ANY UNDERTAKING in
consideration of which the creditor agreed
period; or
6. Debtor ATTEMPTS to ABSCOND (Art. 1198,
NCC)
When May Court Fix the Period:
1. No period is fixed but same is intended
based from the nature of obligation and the
circumstances; (Art. 1197 [1], NCC)
2. If the duration of period depends upon the
will of the debtor; (Art. 1197[2], NCC)
3. If debtor binds himself to pay when his
means permit him to do so. (Art. 1180, NCC)
 Generally, the court must first fix the period
before an action for the enforcement of the
obligation can be maintained. However,
when such separate action would be a mere
formality and would serve no purpose than
to delay, such technicality need not be
adhered to. (Tiglao vs. Manila Railroad Co., 52
O.G. 179)
 Once the period has been fixed by the court
it becomes part of the contract, and it
cannot be subsequently changed or
extended by the court without the consent
of both parties (Barretto vs. City of Manila, 11
Phil. 624)
 When the obligation is payable on demand,
the obligation is without a term and, hence,
the court cannot fix the period . (People’s
Bank & Trust Co. vs. Odom, 64 Phil. 164)
D. Alternative and Facultative Obligations
Kinds of obligations in case of plurality of
objects:
1. Conjunctive - The debtor has
to perform all prestations;
2. Distributive – The debtor has
to perform only one or some but not all of
the prestations. It may either be:
a. Alternative – several prestations are
due but the performance of one is
sufficient to extinguish the obligation; or
b. Facultative – only one prestation is
due, but the debtor has reserved the
right to substitute it with another.
Note: Facultative obligations always involve
choice by the debtor.
a. Only One prestation is DUE and
enforceable by the creditor at the time of
choice.
b. If after choosing the substitute and
choice is communicated to creditor and
the principal prestation becomes
impossible, The obligation is not
extinguished but has become a simple
obligation.
c. If the principal obligation becomes
impossible by fault or negligence of
creditor, debtor cannot be compelled to
perform the substitute (no more
substitute, obligation becomes simple).
Thus, obligation is extinguished.
FACULTATIVE ALTERNATIVE
OBLIGATION OBLIGATION
The choice to substitute The right of choice debtor’s fault, the
another prestation lies belongs to the debtor, creditor is entitled
only with the debtor. unless it has been to recover the value
(Art. 1206, par. 1). expressly granted to the of the last thing
creditor (Art. 1200, 1st which disappeared,
par.). or that of the
service which last
Limitations on became impossible
exercise of right: The (Art. 1204).
following prestation
cannot be chosen: 4. If all prestations
1. Those which are were lost by reason
impossible; of fortuitous event,
2. Those which are the obligation is
unlawful; or extinguished and
3. Those which could the debtor is not
not have been the liable for damages.
object of the
obligation(Art. If right of choice
1200, 2nd par.). belongs to creditor:
Substitution becomes Choice becomes
effective only from the effective only from the 1. If one of the
time it has been time that it has been prestations is lost
communicated to the communicated to the due to debtor’s
creditor. other party (Art. 1201). fault, the creditor
After that, the obligation may either choose
is converted into a from the remaining
simple obligation of (without being
performing the chosen entitled to
prestation. damages) or the
Effect of loss of If right of choice price of that which
substitute: belongs to debtor: has disappeared
If the thing intended as (with the right to
a substitute is lost even 1. And only of the recover damages)
due to the fault of the several prestations (Art. 1205[2]);
debtor, the latter is not is practicable, the 2. If all the prestations
liable because obligation becomes were lost due to
obligation simply ceases simple (Art. 1202); debtor’s fault, the
to be a facultative one. creditor may choose
2. And thru the the price of any of
But if the loss of the creditor’s act, the them, with
substitute due to the debtor cannot make indemnity for
fault of the debtor a choice in damages (Art.
occurs after the accordance with the 1205[3]).
substitution has been terms of the 3. If only one
made, the obligation is obligation, the prestation is lost by
converted into debtor may either fortuitous event,
indemnification for rescind the contract the creditor can still
damages. (Art. 1206, with damages (Art. exercise the right of
2nd par.). 1203) or choose to choice, hence, the
perform that which obligation remains
remains. as alternative if
there are several
3. And all the prestations left
prestations were (Art. 1205[1]). If
lost due to the only one prestation
 is left, obligation
ceases to be an
alternative one.
 Generally: the right of choice belongs to the
debtor (Art. 1200, NCC), unless such next is
expressly granted to the creditor or to a third
person, upon agreement.
Requirement of Communication of choice -
If the choice belongs to the creditor, he has to
communicate his choice to the debtor.
There is no required form. It may be ORAL, IN
WRITING, TACITLY, OR OTHER UNEQUIVOCAL
MEANS.
E. Divisible and Indivisible
Divisible Obligation – are those which are
susceptible of partial performance without the
essence of the obligation being changed.
Indivisible Obligation – those which are not
susceptible of partial performance, otherwise the
essence of the obligation will be changed.
Determination of Divisibility and
Indivisibility
Obligation to Give and to Do:
1. Obligations to give
definite things and those which are not
susceptible of partial performance shall be
deemed to be indivisible
2. When the obligation has
for its object the execution of a certain
number of days of work, the
accomplishment of work by metrical units,
or analogous things which by their nature
are susceptible of partial performance, it
shall be divisible.
3. However, even though
the object or service may be physically
divisible, an obligation is indivisible if so
provided by law or intended by the parties.
Obligation Not to Do
In obligations not to do, divisibility or
indivisibility shall be determined by the character
of the prestation in each particular case . (Art.
1225, NCC)
F. Obligation with a Penal Clause
One which an accessory undertaking is attached
for the purpose of insuring its performance by
virtue of which the obligor is bound to pay a
stipulated indemnity or perform a stipulated
prestation in case of breach.
General Rule: In obligations with a penal
clause, the penalty shall substitute the
indemnity for damages and the payment of
interests in case of noncompliance (Art. 1226 [1],
NCC).
Exceptions:
a. When there is a stipulation to the contrary;
b. Obligor refuses to pay the penalty; or
c. Guilty of fraud in the fulfillment of the
obligation.
Penalty, when demandable: Upon breach or
non-fulfillment of the principal obligation, the
penalty stipulated becomes demandable,
provided that it is not contrary to law, morals,
customs, public order or public policy (Art. 1226
[2], NCC).
Limitation on the right of debtor: The
debtor cannot exempt himself from the
performance of the obligation by paying the
penalty, save in the case where this right has
been expressly reserved for him (Art. 1227, NCC).
Limitation on the right of the creditor:
Neither can the creditor demand the fulfillment
of the obligation and the satisfaction of the
penalty at the same time, unless this right has
been clearly granted him. However, if after the
creditor has decided to require the fulfillment of
the obligation, the performance thereof should
become impossible without his fault, the penalty
may be enforced (Art. 1227, NCC).
Proof of actual damages: Proof of actual
damages suffered by the creditor is not
necessary in order that the penalty may be
demanded (Art. 1228, NCC).
When penalty may be reduced
1. The judge shall equitably reduce the penalty GUARANTY WITH PENAL CLAUSE
when the principal obligation has been It is a contract by which It is an obligation to pay
partly or irregularly complied with by the virtue, a 3rd person the penalty in case of
debtor; (guarantor) obliged non-performance of the
himself to fulfill the obligation and is different
2. Even if there has been no performance, the obligation in lieu of the from the principal
penalty may also be reduced by the courts if debtor’s non-performance obligation.
it is iniquitous or unconscionable. (Art. 1229, Both are intended to insure performance of the
NCC). principal obligation
Both are considered as an accessory and subsidiary
Effect of nullity of penal clause obligation

The nullity of the penal clause does not carry G. JOINT AND SOLIDARY OBLIGATION
with it that of the principal obligation.
Joint Obligation- An obligation in which each
The nullity of the principal obligation carries with debtor is liable only for a proportionate part of
it that of the penal clause. (Art. 1230, NCC). the debt, and the creditor is entitled to demand
only a proportionate part of the credit form each
Alternative vs. With a Penal clause: debtor (Rabuya, Civil Law Reviewer Volume ii,
2017 Ed., p. 78. Cited in Dy-Dumalasa vs
ALTERNATIVE WITH PENAL CLAUSE Fernandez, et.al., GR No. 178760, 23 July 2009)
Two or more obligations There is only one principal
are due but the obligation and in the case Presumption of Joint Obligation
performance of one of non-performance of
extinguishes the obligation such will enforce the Presumption: Obligation is presumed joint if
penal clause there is a concurrence of several creditors, of
In case of impossibility of The impossibility of several debtors, or of several creditors and
one of the obligations, the principal obligation debtors in one and the same obligation ( Art.
others still subsist. Hence, extinguishes the penal
1207, NCC).
the obligation is not clause.
extinguished.
Debtor can choose which Debtor cannot choose to Exceptions:
prestation to fulfill pay penalty to avoid 1. When the obligation expressly states that
performance of the there is solidarity
obligation, unless 2. When the law requires solidarity i.e. quasi-
expressed. delicts
3. When the nature of the obligation requires
Facultative v. With a Penal clause: solidarity
4. When the nature or condition is imposed
FACULTATIVE WITH PENAL CLAUSE upon heirs or legatees, and the testament
Debtor can make a Debtor cannot make such expressly makes the charge or condition in
substitution substitution unless solidum
expressly agreed by the 5. When the solidary responsibility is imputed
parties by a final judgment upon several defendants
Creditor cannot demand Such right to demand
both prestations both may be given Presumption of Equal Division

Presumption: Credit or debt shall be presumed

to be divided into as many equal shares as there
Guaranty v. With a Penal clause: are creditors or debtors.
Joint creditor cannot act in representation of the
others, neither can a joint debtor be compelled Joint Indivisible Obligation
to answer for the liability of others.
Indivisibility of an obligation does not
Division of shares: necessarily give rise to solidarity nor does
1. The co-creditors or co-debtors may regulate solidarity of itself imply indivisibility (Art. 1210,
their rights or liabilities in their internal NCC).
relations with each other;
2. In the absence of clear agreement, the law INDIVISIBILITY SOLIDARITY
PRESUMES that the credit or debt is divided Refers to the prestation, Refers to the legal tie or
into as many equal shares as there are which is not capable of vinculum juris defining
creditors or debtors (Art. 1208, NCC). partial performance the extent of liability of
the parties
Effect of Joint Divisible Obligation: Each Effect to Joint Creditors
creditor can demand only for the payment of his Each cannot demand Each may demand the
proportionate share of the credit, while each more than his share full prestation
debtor can be held liable only for the payment
Effect to Joint Debtors
of his proportionate share of the debt.
Each is only liable for his Each has the duty to
respective share comply with entire
Distinct character of each share: In joint
prestation
obligation, the share pertaining to each creditor
or debtor is distinct from the share pertaining to
Reason: Indivisibility and solidarity refers to
the others (Art. 1208, NCC). As a consequence –
two distinct concepts. Solidarity refers to the
vinculum that binds the parties and, therefore,
1. As to
principally to the subjects of the obligation.
demand: Demand made by one creditor
Indivisibility refers to the prestation or the
upon one debtor produces the effects of
object of the obligation.
default only with respect to the creditor who
made the demand and the debtor upon
Test of Divisibility: Whether an obligation is
whom the demand has been made, without
divisible or not depends on whether the
affecting the others.
obligation is susceptible of partial fulfillment,
according to the purpose of the said obligation.
2. As to
interruption of prescription: The
Concept of Joint Indivisible Obligation: It
interruption of prescription by the judicial
exists when the prestation is indivisible or
demand of one creditor upon one debtor
incapable of partial performance and yet, there
does not inure to the benefit of the other
is plurality of subjects who are not bound
creditors nor interrupt the running of the
solidarily.
prescriptive period as to other debtors.
Legal Effects:
3. As to personal
defenses: The vices of each obligation
1. Since the obligation is
arising from the personal defect of a
joint, on the side of the debtors, each is
particular debtor or creditor do not affect
liable only for a portion of the debt; on the
the obligation or rights of the others.
side of the creditors, each is entitled only to
a portion of the credit.
4. As to
2. Since the obligation is
Insolvency: The insolvency of one debtor
joint, if one of the debtors should be
does not increase the liability of his co-
insolvent, the others shall not be liable for
debtors.
his share (Art. 1209, NCC)
3. But since the prestation
is at the same time indivisible, compliance is
possible only if all joint debtors shall act
TOGETHER; therefore, the obligation can be
enforced only by proceeding against all the
debtors. (Art. 1209, NCC)
Effect of Breach:
1. If a creditor
chooses specific performance, all debtors
must be sued because the obligation can be
performed only by the concurrence of all
debtors (Art. 1209, NCC).
2. It also gives
rise to indemnity for damages from the time
anyone of the debtors does not comply with
his undertaking; in which case, the debtors
who may have been ready to fulfill their
promises shall not contribute to the
indemnity beyond the corresponding portion
of the price of the thing or of the value of
the service in which the obligation consist
(Art. 1224, NCC). Only the debtor who was
responsible for the breach shall be liable to
pay damages.
Solidary Obligation – an obligation where
there is a concurrence of several creditors, or of
several debtors, or of several debtors, or of
several creditors and debtors in one and the
same obligation wherein each one of the
creditors has a right to demand entire
compliance with the prestation, or that each one
of the debtors is bound to render entire
compliance as demanded. (Art. 1207, NCC)
Solidarity exists when:
1. The obligation expressly declares;
2. The law expressly requires solidarity; or
3. The nature of obligation requires solidarity
(Art. 1207, NCC).
These are the only instances when the the
obligation is solidary.
Terms indicating solidarity:
1. Jointly and
severally;
2. Juntos o
separadamente;
3. In solidum;
4. Individually and
collectively.
“I” Promise to Pay: Where an instrument
containing the words “I promise to pay” is
signed by two or more persons, they are
deemed to be jointly and severally liable thereon
(Sec. 17 (g), Negotiable Instruments Law) . Hence,
when the instrument contains the words “We
promise to pay” and followed by separate
signatures of the makers, the obligation is
merely joint.
Kinds of Solidarity:
1. Active – existing on the side of the creditors;
2. Passive – existing on the side of the
debtors; or
3. Mixed – existing on both sides.
Active Solidarity
Distinguishing characteristic: There is an
existence of mutual representation or mutual
agency. Hence, any one of them has the right to
collect the entire credit.
Effect of Demand: The debtor may pay
anyone of the solidary creditors, but if any
demand, either judicial or extrajudicial, is made
by one of the solidary creditors, payment should
be made only to him (Art. 1214, NCC). If the
payment is made to the other creditors, that is a
case of payment made to a wrong person.
In case of mixed solidarity:
(1) The creditor can validly refuse payment
coming from debtors who were not recipient
of the demand (the latter are considered
third person); and
(2) The debtor who received the demand is
obliged to make payment only to the
creditor who made the demand.
In case of mixed solidarity, the prohibition in
Article 1214 does not extend to other debtors
upon whom no demand has been made, so each
 of the debtor can make a valid payment to a
creditor who did not make the demand.
Effect of condition: Solidarity may exist
although the creditors and debtors may not be
bound in the same manner and by the same
periods and condition. (Art. 1211, NCC)
Only one is indispensable party: Where the
obligation of the parties is solidary, either of the
parties is indispensable, and the other is not
even a necessary because complete relief is
available from either. (Justice Jose Feria, Civil
Procedure, 1969 Ed., p. 153 cited in Cerezo v.
Tuazon, G.R. 141538, March 23, 2004)
Effect of Judgment:
1. If favorable, this inures to the benefit of the
co-creditors pursuant to Article 1212 of the
Civil Code of the Philippines;
2. If adverse:
a. It cannot be set up against the others if
the same is founded on a cause
personal to the plaintiff-creditor;
b. But if the judgment is founded on a
cause not personal to the plaintiff-
creditor, the same can be set up against
the co-creditors because once an action
is filed by a solidary creditor, he
represents all the others and payment
can be made only to him.
Effect of beneficial act: Each one of the
solidary creditors may do whatever may be
useful to the others (Art. 1212, NCC). Hence, each
solidary creditor may interrupt the running of
the prescriptive period, constitute the debtor in
default, or bring the suit so that the obligation
may produce interest.
Effect of prejudicial acts:
1. As far as the
debtors are concerned, the acts are valid
because of the principle of mutual
representation which exists among the
creditors (Art. 1215, NCC).
2. However, as far
as the co-creditors are concerned, this
prejudicial act does not prejudice the rights
of the other creditors to recover their
respective shares in the credit from the
creditor who effected such prejudicial acts
(Art. 1212, NCC).
Effect of assignment of rights:
Rule: A solidary creditor cannot assign his
rights without the consent of the others. (Art.
1213, NCC); but the assignment of rights to a co-
creditor even without the consent of the other
creditors is not prohibited.
Effect of violation of prohibition: The
assignment is not valid. Hence, the assignee
does not become a co-creditor. If payment is
made to the assignee, such payment is made to
a wrong person.
Effect of condoning the solidary
obligation:
1. If remission covers the entire obligation, the
obligation is totally extinguished.
2. If remission is for the benefit of one of the
debtors covering the latter’s entire share:
a. As far as the creditors are concerned, he
is completely released;
b. But as far as the debtors are concerned,
he remains a debtor in case of
insolvency of one of the remaining
debtors.
3. If remission is for the benefit of one of the
debtors covering only part of the latter’s
share, his character as a solidary debtor is
not affected, both insofar as the creditors
and debtors are concerned.
Effects of Novation:
1. Novation effected by substituting another
person in place of the debtor – solidary
debtor who effected the novation is liable
for the acts of the new debtor in case there
is a deficiency in performance or in case
damages are incurred by other solidary
creditors as a result of the substitution;
2. Novation by subrogating a third person in
the rights of the solidary creditor –
obligation of the debtor remains the same
3. Novation by subrogating a third person in
the rights of the solidary creditor – creditor
 is responsible for such novation is liable to
the other creditors for the share which
corresponds to them in the obligation.
Effect of payment to a creditor: If one of the
solidary creditors was able to collect the entire
amount or debt of the solidary debtors, the
obligation is totally extinguished, although there
arises a consequent obligation on his part to
render an account to his co-creditors . (Art. 1215
[2], NCC).
Passive Solidarity
Each solidary debtor, insofar as the creditor or
creditors are concerned, is the debtor of the
entire amount; however, with respect to his co-
debtors, he is a debtor only to the extent of his
share in the obligation.
 Solidary obligation cannot lightly be inferred.
There is a solidary liability only when the
obligation expressly so states, when the law
so provides or when the nature of the
obligation so requires. In the dispositive
portion of the labor arbiter, the word
"solidary" does not appear. The said fallo
expressly states the following respondents
therein as liable, namely: Filipinas Carbon
Mining Corporation, Sicat, Gonzales, Chiu
Chin Gin, Lo Kuan Chin, and INIMACO. Nor
can it be inferred therefrom that the liability
of the six respondents in the case below is
solidary, thus their liability should merely be
joint. (INIMACO v. NLRC,G.R. No. 101723, May
11, 2000)
Distinguished from Suretyship:
1. A surety (fiador
in solidum) answers for the debt, default or
miscarriage of another while a solidary
debtor is liable not only for the payment of
the debt of another, but also for the
payment of a debtor which is his own
property.
2. Hence, in
reimbursement, the surety is entitled to
recover the entire amount that he paid while
a solidary debtor can only demand
reimbursement of the shares pertaining to
the others (Escano v. Ortigas, Jr., G. R. No.
151953, June 29, 2007).
3. Extension of
time granted by the creditor to one of the
solidary debtors for the payment of the
obligation without the knowledge or consent
of the other solidary debtors would not have
the effect of releasing the latter from their
obligation, but in suretyship such extension
would release the surety from the
obligation.
PASSIVE SOLIDARITY SURETY
Solidary Debtors Solidary Guaranty
Distinctions
Solidary debtor is liable Liable only as to his own
for the entire obligation obligation
Extent of Liability
Primary Subsidiary
Effects of Extension of time granted by creditor
Solidary obligation is not Surety is released from
extinguished the obligation
Characteristic of passive solidarity:
Existence of a mutual guaranty among the
solidary debtors. Hence:
1. Each is liable for the
entire obligation and the creditor has the
right to choose whom to be called upon to
perform the obligation (Art. 1218, NCC)
2. Payment made by one
of the solidary debtors extinguishes the
obligation (Art. 1217, NCC).
Effect of Demand upon a Debtor
The creditor may proceed against any one of the
solidary debtors or some or all of them
simultaneously. The demand made against one
of them shall not be an obstacle to those which
may subsequently be directed against the
others, so long as the debt has not been fully
collected. (Art. 1216, NCC)
Effects of judgment:
1. If adverse to defendant solidary debtor and
the latter turns out to be insolvent, other
 debtors can still be sued until the debt is
fully paid (Art. 1216, NCC). The judgment
against the defendant-debtor cannot,
however, be enforced against the others; a
new action must be filled against the latter.
2. If favorable to defendant-debtor:
a. And judgment is based on a defense
personal to defendant, the others can
avail of it as partial defense pertaining
only to share of the defendant-debtor;
b. If the judgment is based on the
inexistence of the obligation, its
unenforceability or some other cause
inherent in the vinculum juris, judgment
inures to the benefit of the other
debtors who can avail of it as a total
defense.
In case of remission:
1. If what was remitted was the entire
obligation in favor of one of the solidary
debtors, the entire obligation is extinguished
(Art. 1215, NCC), but the solidary debtor who
obtained such remission is not entitled to
reimbursement (Art. 1220, NCC);
2. If what was remitted was only the whole
portion pertaining to the solidary debtor
who obtained such remission, he is
considered completely released in so far as
the creditors are concerned but he is still
bound to his co-debtors in case of
insolvency of one of the remaining debtors;
3. If what was remitted was only a portion of
the share pertaining to the solidary debtor
who obtained such remission, his character
as a solidary debtor is not affected and
continuous to be so, both with respect to
the creditors and the other solidary debtors.
Effects of loss or impossibility of
performance:
1. Without the fault of the debtors – obligation
shall be extinguished;
2. If one of the debtors is at fault – all shall be
responsible to the creditor for the price and
damages without prejudice to their own
action against the guilty or negligent debtor;
3. In case of fortuitous event and one of the
debtors is in delay – all shall be responsible
to the creditor for the price and damages
without prejudice to their own action against
the guilty or negligent debtor (Art. 1221, NCC).
Defenses available to solidary debtors:
1. Defenses
derived from the nature of the obligation
such as payment, prescription, minority of
all debtors. These defenses constitute as a
total or complete defense;
2. Defenses
personal to the defendant-debtor, which
may either be:
a. Insanity or minority, which operates as
a complete defense of the defendant-
debtor from liability.
b. Special terms or conditions, which
operate only as a partial defense
applicable only to his portion.
3. Defenses
personal to others: It operates only as a
partial defense pertaining to the share of the
debtors to whom it is available.
V. EXTINGUISHMENT OF OBLIGATIONS
Modes of extinguishment of an obligation.
(Art. 1231, NCC)
1. Payment or performance
2. Loss of the thing due
3. Condonation or remission of debt
4. Confusion or merger
5. Compensation
6. Novation
7. Annulment
8. Rescission
9. Fulfillment of a resolutory condition
10. Prescription
Other modes of extinguishing an
Obligation:
1. Death – when the obligation is purely
personal. Renunciation by the creditor.
2. Compromise
3. Arrival of Resolutory Term / fulfillment of
resolutory condion
4. Mutual Desistance
5. Unilateral Withdrawal
 objection, the obligation is deemed fully
A. PAYMENT complied with. (Art. 1235, NCC).

Concept: Payment means not only the delivery Exceptions:

of money but includes the performance, in any
other manner, of an obligation (Art. 1232, NCC).
Burden of Proof: One who pleads payment
has the burden of proving it. Even where the
plaintiff must allege non-payment, the general
rule is that the burden rests on the defendant to
prove payment, rather than on the plaintiff to
prove non-payment. However, where the debtor
introduces some evidence of payment, the
burden of going forward with the evidence – as
distinct from the general burden of proof – shift
to the creditor, who is then under a duty of
producing some evidence to show non-payment.
(Jimenez v. NLRC, 326 Phil. 89; Royal Cargo Corp. v.
DFS Sports Unlimited, Inc., 573 SCRA 414)
Requisites for Valid Payment:
1. It must be complete
and regular;
2. It must be tendered by
the proper party;
3. It must be made to the
property party;
4. The payor and payee
must be capacitated;
5. There must be identity,
in that the very thing or service due must be
delivered or released; and
6. It must be tendered in
the proper place.
Payment must be complete and regular
1. (Substantial Performance in Good Faith) If
the obligation was substantially performed
in good faith, in which case, the debtor may
recover as if there was complete
performance, less damages suffered by the
creditor (Art. 1234, NCC);
2. (Waiver) If the creditor accepts a defective
performance and, thru his words or actions,
intentionally waives his right to insist on a
complete and regular performance (Art. 1235,
NCC).
Payment must be made by the proper
party
Proper Party: The following can compel the
creditor to accept the payment if the other
requisites of valid payment are present:
1. The
debtor or his representative; or
2. Third
person who has an interest in the fulfillment
of the obligation, such as a surety or a
guarantor.
Rule of payment coming from third
person:
General Rule: The creditor cannot be
compelled to accept payment coming from a
third person.

Rule: An obligation is not considered paid Exceptions:

unless there is complete and regular 1. If third person has interest in the fulfillment
performance (Art. 1233 & 1235, NCC). Hence – of the obligation;
2. Unless there is a stipulation to the contrary
1. The (Art. 1236 [1], NCC).
creditor cannot be compelled to accept
partial payment, unless there is an express Effect of payment by a third person
stipulation to that effect.
2. When WITH/WITHOUT
the obligee accepts the performance, KNOWLEDGE OF THE EFFECT
knowing its incompleteness or irregularity, DEBTOR
With knowledge and Obligation is
and without expressing any protest or
consent of the debtor extinguished.
 Third person who pays Payment should be made to the PROPER
the obligation may PARTY:
recover from the 1. The
debtor; and
person in whose favor the obligation has
He is subrogated to all been constituted (original creditor);
the rights of the 2. Success
creditor. or-in-interest of the original creditor;
Without knowledge of Obligation is 3. Person
the debtor extinguished but third authorized to receive it, whether such
person may recover authorization comes from the creditor,
only insofar as the agreement or provision of law (Art. 1240, NCC).
payment has been
beneficial to the said
Effect of payment made to wrong person
debtor.

Third Person is not General rule: Payment made by the debtor to

subrogated to the the wrong party does not extinguish the
rights of the creditor obligation as to the creditor who is without fault
(Art. 1237, NCC). or negligence, even if the debtor acted in
Payment without Payment is deemed utmost good faith and by mistake as to the
intention of being donation (Art. 1238, person of the creditor, or through error induced
reimbursed NCC). by fraud of a third person (BPI v. CA, 232 SCRA
302).
However, donation
necessitates consent
Exception: Payment made to a wrong person
of the debtor as in the
case of the donee in will be considered valid and shall extinguish the
ordinary donations debtor’s obligation in the following instances:
(Art. 734, NCC).
1. If the
payment redounded to the creditor’s
benefit (Art. 1241 [2], NCC);
Subrogation v. Reimbursement
Note: Ordinarily, it is the burden of the debtor
SUBROGATION REIMBURSEMENT to prove that his payment made to a wrong
Debt is extinguished in The new creditor has person has in fact redounded to the benefit of
one sense, but a new different rights, the creditor. But in the following instances, such
creditor, with exactly the imposing that there benefit is presumed and need not be proved:
same rights as the old has indeed been an
a. If after payment, the third person acquires
one, appears on the extinguishment of the
scene. obligation; the creditor’s rights;
b. If the creditor ratifies the payment to the
More than a personal Only a personal action third person;
action of recovery. to recover the amount. c. If by the creditor’s conduct, the debtor has
(8 Manresa 269). been led to believe that the third person had
authority to receive the payment (Art. 1241[2],
NCC).
Payor Must Be Capacitated: If the payor is
not capacitated to make the payment, the 2. If
payment is not valid. In obligations to give, made in good faith to a possessor of
payment made by one who does not have the the credit (Art. 1242, NCC);
free disposal of the thing due and capacity to
alienate it shall not be valid (Art. 1239, NCC).
a. Possession of the credit is different from
possession of the document evidencing the
credit.
e.g. If A obtains possession of a promissory
note payable to C and, without negotiation
or assignment, the latter obtains payment
from the maker, such payment is not valid
because C is merely a possessor of the
document of the credit himself.
b. The possessor of the credit referred to in
Article 1242 must be a wrong person who is
not entitled to the payment but since the
debtor acted in good faith, he is already
released from the obligation.
e.g.
a. If the promissory note is payable to bearer,
the possessor thereof is a possessor of the
credit itself and if the same is presented to
the debtor for payment and the latter pays
in good faith, the debtor is already released
from the obligation even if the possessor is
not actually entitled to the payment because
the instrument was never assigned nor
negotiated to him.
b. But if ther instrument was negotiated or
assigned in favor of the possessor, the
payment is valid not pursuant to Article
1242 but pursuant to the general rule in
Article 1240. In this case, the possessor is a
proper party because he is a successor – in-
interest of the original creditor.
3. If the
debtor pays the creditor prior to
acquiring knowledge of the latter’s
assignment of his credit (Art. 1626, NCC).
Recipient of payment must be capacitated
The general rule is that payment made to a
person who is incapacitated to administer his
property is invalid and does not extinguish the
obligation, except: (1) If such incapacitated
person has kept the thing delivered; or (2)
insofar as the payment has been beneficial to
the incapacitated person (Art. 1241 [1], NCC).
Payment after judicial order of retention
If the obligation has been substantially
performed in good faith, the obligor may recover
as though there had been a strict and complete
fulfillment, less damages suffered by the
obligee. (Art. 1243, NCC)
Identity of Prestation
What should payment consist of:
1. In specific or determinate
obligations, what should be delivered is the
thing due. Hence, the debtor cannot compel
the creditor to receive a different one,
although the latter may be of the same or
value or more valuable (Art. 1244 [1], NCC);
2. In generic or determinate
obligations, the thing to be delivered must
be in accordance with the quality and
circumstances stated in the agreement. If
the quality and circumstances have not been
stated, the creditor cannot demand a thing
of superior quality and neither may the
debtor deliver a thing of inferior quality (Art.
1246, NCC);
3. In obligations to do or not to
do, there shall be no substitution of another
act or forbearance against the will of the
creditor (Art. 1244 [2], NCC);
4. In obligations to pay debts in
money, the payment shall be made in the
currency stipulated, and if it is not possible
to deliver such currency, then in the
currency which is the legal tender in the
Philippines. (Art. 1249 [1], NCC).
Concept of Legal Tender: Such kind of
currency which in a given jurisdiction can be
used for the payment of debts, whether public
or private, and which cannot be refused by the
creditor.
Legal Tender
In the Philippines, all notes and coins issued by
the Bangko Sentral ng Pilipinas and
guaranteed by the Republic of the Philippines
are considered legal tender for all debts, both
public and private (Sec. 52, RA No. 7653).

With respect to coins, it is considered legal
tender:
(1) Only up the maximum amount of P1,000.00,
for coins having denominations of 1, 5 and
10 pesos; or
(2) Only up to the maximum amount of
P100.00, for coins having denominations of
1 centavo, 5 centavo, 10 centavo and 25
centavo (BSP Circular No. 537, Series of 2006,
issued on July 18, 2006).
Tender of payment in checks: Checks are
not legal tender (PAL v. CA, 181 SCRA 557).
Hence, the creditor may not be compelled to
accept payment in the form of a check. This
dictum does not, however, prevent a creditor
from accepting a check as payment. In other
words, the creditor has the option and discretion
of refusing or accepting it (FEBTC v. Diaz Realty,
Inc., 363 SCRA 659).
Payment Using Check
General Rule: A negotiable instrument or
document is not a legal tender, however, it may
constitute as a valid payment if:
Exceptions:
1. It had been encashed in case of checks; or
2. In case of a document, when it had been
impaired through the fault of the creditor.
Sufficiency of tender of checks: The tender
of check may be considered sufficient depending
of the purpose, as follows ---
1. If what is involved is the payment of an
obligation, the Civil Code provisions on
payment of obligations, particularly Article
1249 thereof, are applicable (Philippine
Airlines, Inc. v. CA, 181 SCRA 557);
2. However, when the case does not involve
the payment of an obligation but the
exercise of a right, i.e., the right of
redemption, the Civil Code provisions on
payment of obligations do not apply. What
applies is the settled rule that a mere tender
of a check is sufficient to compel redemption
(Biana v. Gimenez, 469 SCRA 486, 493). A
check may be used for the exercise of the
right of redemption, the same being a right
and not an obligation (Fortunado v. CA, 196
SCRA 269, 279).
Effect of Extraordinary Inflation or
Deflation: In case an extraordinary inflation or
deflation of the currency stipulated should
supervene, the value of the currency at the time
of the establishment of the obligation (and not
the value at the time of payment) shall be the
basis of payment, unless there is an agreement
to the contrary (Art. 1250, NCC).
 Extraordinary inflation exists when there is a
decrease or increase in the purchasing
power of the Philippine currency which is
unusual or beyond the common fluctuation
in the value of said currency, and such
increase or decrease could not have been
reasonably foreseen or was manifestly
beyond the contemplation of the parties at
the time of the establishment of the
obligation (Citibank, N.A. v. Sabeniano, 514
SCRA 441).
 Absent an official pronouncement or
declaration by competent authorities of the
existence of extraordinary inflation during a
given period, the effects of extraordinary
inflation are not to be applied (Telengtan
Brothers & Sons, Inc. v. United States Lines,
Inc.).
Place of Payment
Rule: The tender of payment must be made in
the proper place; otherwise, the creditor may
not be compelled to accept the payment.
Proper Place of Payment:
1. Gener
al Rule: Payment shall be made at the
domicile of the debtor (Art. 1251 [3],. NCC).
This rule applies even if the debtor changes
his domicile in bad faith, except that the
additional expenses shall be borne by the
debtor (Art. 1251 [3], NCC).
2. Except
ions: The foregoing rule does not apply—

a. If there is another place of payment
designated in the obligation (Art. 1251[1],
NCC); or
b. In case of determinate obligations, the place
of payment is wherever the thing might be
at the moment the obligation was
constituted. (Art. 1251[2], NCC)
1. Dacion en Pago or Dation in payment
(Art. 1245)
Concept: It is the alienation of property to the
creditor in satisfaction of a debt in money (Fort
Bonifacio Development Corp. v. Yllas Lending Corp.,
567 SCRA 454).
 It requires delivery and transmission of
ownership of a thing owned by the debtor to
the creditor as an accepted equivalent of the
performance of the obligation. There is no
dation in payment when there is no transfer
of ownership in the creditor’s favor, as when
the possession of the thing is merely given
to the creditor by way of security. (Ibid)
In a true dacion en pago, the assignment of the
property extinguished the monetary debt. Where
the alienation of the properties was by way of
security, and not by way of satisfying the debt,
there is no dacion en pago. (Ong v. Roban
Lending Corp., 557 SCRA 516, July 9, 2008)
Dation in payment, a form of Novation
Although in the modern concept what actually
takes place in dacion en pago is an objective
novation of the obligation where the thing
offered as an accepted equivalent of the
performance of an obligation is considered as
the object of the contract of sale while the debt
is considered as the purchase price (Filinvest
Credit Crop. V. Phil. Acetylene Co., Inc., G. R. No. L-
50449, Jan. 30, 1982), the Civil Code classifies
dacion en pago as a special form of payment.
Hence, in dacion en pago, the obligation is
extinguished by way of payment and not by
novation. But what is considered as dacion en
pago under the Code is the alienation of a
property in favor of the creditor in satisfaction of
a debt in money. Hence, if what is offered as
payment in lieu of money is not a property but
service, for example, it is not dacion en pago
but a case of objective novation.
Requisites of Dacion En Pago - In order that
there be a valid dation in payment, the following
are the requisites:
1. There must be the performance of the
prestation in lieu of payment (animus
solvendi) which may consist in the delivery
of a corporeal thing or a real right or a
credit against the third person;
2. There must be some difference between the
prestation due and that which is given in
substitution (aliud pro alio); and
3. There must be an agreement between the
creditor and debtor that the obligation is
immediately extinguished by reason of the
performance of a prestation different from
that due (Lo v. KJS Eco-Formwork System Phil.,
Inc., G. R. No. 149420, Oct. 8, 2003).
Governed by law on sales: Dacion en pago is
governed by the law on sales (Art. 1245, NCC). The
undertaking really partakes in one sense of the
nature of sale, that is, the creditor is really
buying the thing or property of the debtor,
payment for which is to be charged against the
debtor’s debt. As such, the essential elements of
a contract of sale, namely, consent, object
certain, and cause or consideration must be
present. (Filinvest Credit Crop.V.Phil. Acetylene Co.,
Inc., supra; Lo v. KJS Eco-Formwork System Phil.,
Inc., supra.)
Effect of Dacion En Pago: The dation in
payment extinguishes the obligation to the
extent of the value of the thing delivered, either
as agreed upon by the parties or as may be
proved, unless the parties by agreement,
express or implied, or by their silence, consider
the thing as equivalent to the obligation, in
which case the obligation is totally extinguished
(Lopez v. CA, 114 SCRA 671). In other words, a
dation in payment does not necessarily mean
total extinguishment of the obligation. The
obligation is totally extinguished only when the
parties, by agreement, express or implied, or by
their silence, consider the thing as equivalent to
the obligation. (Caltex Phils., Inc. v. IAC, G. R. No.
72703, Nov. 13, 1992)
 requires its application to interest first (Art. 1253,
2. Application of payment (Art. 1252- NCC).
1254, NCC):
Legal application of payment
Concept: It is the designation of the debt
which is being paid by a debtor who has several Debts which are not of same burden
obligations of the same kind in favor of the
creditor to whom payment is made when the When debts due are not of the same burden,
amount is not sufficient to cover all the rule is that the debt which is most onerous
indebtedness. to the debtor shall be deemed to have been
satisfied (Art. 1254, NCC).
Requisites of application of payment:
1. There should be one debtor and one TYPES OF DEBTS MORE ONEROUS
creditor; Principal v. Surety Debt covering that of
the principal
2. There should be several debts between
Interest Bearing v. Interest bearing debts
them of the same kind;
Non
3. The payment is not sufficient to cover all Secured v. Non– A secured debt is more
indebtedness; and secured onerous than another
4. The debts are all due, except when (a) the which is has no
parties so stipulate or (b) the application is security (Traders
made by the party with the benefit of the Insurance v. DyengGiok
term. (Art. 1252, NCC) 104 Phil 806)
One in default while Debt in default
the others are not
Who has right to apply:
All other things being Older obligation
the same
General Rule: Initially, it is the debtor who has Liquidated v. Non - Liquidated
the right to choose the debt to which his liquidated
payment is to be applied (Art. 1252 [1], NCC).
Debts are of the same burden: If the debts
Exceptions: due are of the same nature and burden, the
1. If the debtor accepts from the creditor a payment shall be applied to all of them
receipt in which an application of the proportionately (Art. 1254 [2], NCC).
payment is made, the former cannot
complain of the same, unless there is a 3. Payment by Cession (Art. 1255)
cause for invalidating the contract. (Art. 1252
[2], NCC; Art. 1330, NCC.); Concept: Cession or assignment consists in the
2. If both the debtor and the creditor did not abandonment of the totality of the property of
choose the debt to which the payment is to the debtor in favor of the creditors in order that
be applied first, the debt which is most the same may be applied for the satisfaction of
onerous to the debtor, among those due their credits (8 Manresa 321).
(Art. 1254 [1] NCC). If the debts due are of
the same nature and burden, the payment Requisites:
shall be applied to all of them 1. There must be two or more debts;
proportionately (Art. 1254 [2] NCC). 2. There must be two or more creditors;
3. There must be one debtor who is insolvent;
Application of payment to interest first: 4. The debtor must abandon his properties in
But if the debt produces interest, the debtor favor of the creditors; and
cannot apply his payment to the capital first 5. The creditors must accept the abandonment
prior to paying the interest because the law in their favor.
 Oct. 9, 2009; Far East Bank & Trust Company vs.
DATION IN PAYMENT BY Diaz Realty, Inc., 363 SCRA 659, 668).
PAYMENT CESSION
There may only be one Plurarity of creditors Tender of payment presupposes not only that
creditor the obligor is able, ready, and willing, but more
Debtor not necessarily Debtor is in a state of so, in the act of performing his obligation
insolvent partial or relative (Roman Catholic Bishop of Malolos, Inc. vs. IAC, 191
insolvency SCRA 411). In obligations to pay in money,
What is delivered is a What is ceded is the tender of payment involves a positive act and
specific thing to be universality of the
unconditional act by the obligor of offering legal
considered as the debtor’s property
equivalent of the tender currency as payment to the obligee for
performance of the the former’s obligation and demanding that the
obligation latter accept the same (Cebu International Finance
Ownership is Only the possession Corp. vs. CA, 316 SCRA 488).
transferred to the and administration are
creditor transferred to the Distinguished From Consignation:
creditors.
 Consignation is the act of depositing the
May totally extinguish Assignment only thing due with the court or judicial
the obligation and extinguishes the credits
authorities whenever the creditor cannot
release the debtor to the extent of the
amount realized from
accept or refuses to accept payment, and it
the properties assigned, generally requires a prior tender of
unless otherwise payment. It should be distinguished from
agreed upon. tender payment. Tender is the antecedent
of consignation, that is, an act preparatory
to the consignation, which is the principal,
and from which are derived the immediate
4. Tender of Payment and Consignation
consequences which the debtor desires or
(Art. 1256-1257)
seeks to obtain. Tender of payment may be
extrajudicial, while consignation is
Tender of Payment, Not Sufficient: Tender
necessarily judicial, and the priority of the
of payment even if valid, does not by itself
first is the attempt to make a private
produce legal payment, unless it is completed by
settlement before proceeding to the
consignation. The effect of a valid tender of
solemnities of consignation. (Meat Packing
payment is merely to exempt the debtor from Copr.Of the Phils. V. Sandiganbayan, 259 SCRA
payment of interest and/or damages. (PNB v. 409; B. E. San Diego, Inc. v. Alzul, G. R. No.
Relativo, G. R. No. L-5298, Oct. 29, 1952). Well 169501, June 8, 2007).
settled is the rule that tender of payment must
be accompanied by consignation in order that When Consignation Alone is Sufficient:
the effects of payment may be produced . (State
Investment House, Inc. V. Court of Appeals, G. R. No. Consignation generally requires a prior tender of
90676, June 19, 1991, 198 SCRA 390, 399; Pasricha payment. But in the following instances,
v. Don Luis Dison Realty, Inc., G. R. No. 136409,
consignation alone shall produce the effect of
March 14, 2008).
payment:
Concept of “Tender of Payment”
1. When creditor is ABSENT;
2. When creditor is UKNOWN;
Tender of payment is the definitive act of
3. When creditor DOES NOT APPEAR at place
offering the creditor what is due him or her,
of payment;
together with the demand that the creditor
4. When creditor is INCAPACITATED TO
accept the same (Cinco v. CA, G. R. No. 151903,
RECEIVE payment at the time it is due;
5. When without just cause, creditor REFUSES
TO GIVE RECEIPT;
6. When TWO OR MORE PERSONS claim the
same right to collect, and
7. When TITLE OF THE OBLIGATION has been
LOST (Art. 1256, NCC).
Requisites of Effectivity of Consignation:
In order that consignation may be effective, the
debtor must show that:
1. There was a debt due;
2. The consignation of the obligation had been
made because the creditor to whom tender
of payment was made refused to accept it,
or because she was absent or incapacitated,
or because several persons claimed to be
entitled to receive the amount due or
because the title to the obligation had been
lost;
3. Previous notice of the consignation had
been given to the person interested in the
performance of the obligation;
4. The amount due was placed at the disposal
of the court; and
5. After the consignation had been made, the
person interested was notified of the action.
(B. E. San Diego, Inc. v. ALzul, G. R. No. 169501,
June 8, 2007; Banco Filipino Savings and
Mortgage Bank v. Diaz, G. R. No. 153134, June
27, 2006; Pabugais v. Sahijwani, 423 SCRA 596)
 Failure to prove any of these requirements
is enough ground to render a consignation
ineffective. (Allandale Sportsline, Inc., v. The
Good Development Corp., 574 SCRA 625, Dec.
18, 2008; Insular Life Assurance Company, Ltd.
v. Toyota Bel-Air, Inc., 550 SCRA 70, March 28,
2008)
Expenses of Consignation - The expenses of
consignation, when properly made, shall be
charged against the creditor (Art. 1259, NCC).
Effects of consignation
Before Acceptance of the Creditor: Before
the creditor has accepted the consignation, or
before a judicial declaration that the
consignation has been properly made, the
debtor may withdraw the thing or the sum
deposited, allowing the obligation to remain in
force.
After the Acceptance of the Creditor:
1. Once the consignation has been duly made,
the debtor may ask the judge to order the
cancellation of the obligation (Art. 1260,
NCC);
2. If the creditor accepts the thing or amount
deposited without contesting the validity or
efficacy of the consignation, obligation is
deemed extinguished (Jurado, Comments and
Jurisprudence on Obligations and Contracts,
2010 ed., p. 287);
3. If the creditor contests the validity or
efficacy of the consignation, the result is
litigation. (Supra)
Contract of Lease with option to buy
Consignation requires the existence of a debt.
Hence, it does not apply to a case of a lessee
with option to buy since the lessee was not
indebted to the lessor for the purchase price.
Here, the lessee is merely exercising a right of
option and had no obligation to pay said price
until execution of the deed of sale. (Vda. De
Quirino vs. Palarca, 29 SCRA 1)
Right of Redemption
 Consignation is likewise inapplicable in cases
of exercise of right of redemption since the
right to redeem is a right not an obligation.
Consignation is not necessary to preserve
the right to redeem (Immaculata v. Navarro, 160
SCRA 211). In cases which involve the
performance of an obligation and not merely
the exercise of a privilege or right, the
payment may be effected not by mere
tender alone but by both tender and
consignation. The rule is different in cases
which involve an exercise of a right or
privilege, such as an option contract, legal
redemption or sale with right to repurchase,
wherein tender of payment would be
sufficient to preserve the right or privilege.
(Torcuator v. Bernabe, 459 SCRA 439; citing
Adelfa Properties, Inc. vs. CA, 240 SCRA 565)
 The essential requisites of a valid
consignation must be complied with fully
and strictly in accordance with the law . (Arts
1256-1261, NCC). Substantial compliance is not
enough. (Soco v. Militante, 123 SCRA 160)
B. Loss of the Thing Due
In Real Obligation
Concept of loss in real obligations: It is
understood that the thing is lost when:
(1) It perishes;
(2) It goes out of commerce; or
(3) It disappears in such a way that its
existence is unknown or it cannot be
recovered
Not Applicable to Generic Obligation: Only
a specific obligation can be extinguished by way
of loss of the thing due. In a generic obligation,
the loss or destruction of anything of the same
kind does not extinguish the obligation (Art. 1263,
NCC). This rule is based on the principle that the
genus of a thing can never perish. Genus
nunquan perit. (Gaisano Cagayan, Inc. v. Insurance
Co. of North America, G. R. No. 147839, June 8,
2006).
Note: An obligation to pay money is generic;
therefore, it is not excused by fortuitous loss of
any specific property of the debtor. (Gaisano
Cagayan, Inc. v. Insurance Co. of North America, citing
Ramirez v. Court of Appeals, 98 Phil. 225)
General Rule: A determinate obligation is
extinguished if the determinate thing is lost
without the fault of the debtor and before he
has incurred in delay. (Art. 1262 [1], NCC)
Effect of Loss in Determinate Obligations
to Give - Before the loss of the determinate
thing may result in the extinguishment of the
obligation, it is necessary that the following
requisites must concur:
1. The thing loss must be determinate;
2. Thing is loss without the fault of the debtor;
3. Thing is loss before the debtor has already
incurred in delay.
Effect of Loss Due to Fortuitous Event
General Rule: If the determinate thing is loss
due to a fortuitous event, the debtor is not
liable.
Exceptions:
1. When by law, the debtor is liable even for
fortuitous event;
2. When by stipulation, the debtor is liable
even for fortuitous event, or
3. When the nature of the obligation requires
the assumption of risk (Art. 1262[2], NCC).
Disputable presumption of fault on the
part of debtor: If the thing is lost while in the
possession of the debtor, he is presumed to be
at fault, unless there is proof to the contrary.
This presumption does not apply if the thing is
lost on occasions of earthquake, flood, storm or
other natural calamity. (Art. 1265, NCC)
In positive Personal Obligation
Concept of loss in positive personal
obligation: An obligation to do is considered
lost, therefore extinguished, if:
1. The prestation becomes either legally or
physically impossible without the fault of the
debtor (Art. 1266, NCC); or
2. The service has become so difficult as to be
manifestly beyond the contemplation of the
parties. (Art. 1267, NCC).
 The obligation to pay rentals or deliver the
thing in a contract of lease falls within the
prestation “to give” hence, it is not covered
within the scope of Article 1266 (PCC v. CA,
G.R. No. 116896, May 5, 1997).
 Article 1267, which enunciates the doctrine
of unforeseen events, is not an absolute
application of the principle of rebus sic
stantibus, which would endanger the
security of contractual relations. The parties
to the contract must be presumed to have
 assumed the risks of unfavorable
developments. It is therefore only in
absolutely exceptional changes of
circumstances that equity demands
assistance for the debtor. (PCC v. CA, G.R.
No. 116896, May 5, 1997)
Remedy of creditor if thing is lost thru
fault of third person:
If the determinate thing is lost thru the fault of a
third person, the obligation is extinguished since
it was lost without the fault of the debtor (Art.
1262, NCC). The creditor acquires, however, all
the rights of action which the debtor may have
against third persons by reason of the loss (Art.
1269, NCC).
C. CONDONATION or REMISSION
Concept: it is an act of liberality by which the
obligee, who receives no price or equivalent
thereof, renounces the enforcement of the
obligation, which is extinguished in its entirety
or in part or aspect of the same to which the
remission refers (8 Manresa 365)
Requisites for Valid Condonation:
1. It must be gratuitous (Art. 1270 [1], NCC);
2. The obligation must be demandable at the
time of the condonation;
3. The condonation must be accepted by the
debtor (Art. 1270 [1], NCC);
4. It must not amount to an inofficious
donation (Art. 1270 [2], NCC); and
5. If the condonation is made expressly, it
must comply with the formalities of
donation.
 It is an essential characteristic of remission
that it be gratuitous, that there is no
equivalent received for the benefit given;
once such equivalent exists, the nature of
the act changes. It may become dation in
payment when the creditor receives a thing
different from that stipulated; or novation,
when the object or principal conditions of
the obligation should be changed; or
compromise, when the matter renounced is
in litigation or dispute and in exchange of
some concession which the creditor
receives. (Dizon v. CA. G. R. No. 140944, April
30, 2008; citing IV Tolentino, Civil Code, 1991
ed., 353).
Formalities of Condonation: Implied
condonation has no special form. But if the
condonation is done expressly, it must conform
with the following formalities, otherwise, the
condonation is not valid—
1. If the obligation
condoned involves a real property, the
condonation and its acceptance must be
made in a public instrument (Art. 749, in rel.
to Art. 1270, NCC);
2. If the obligation
condoned involves a personal property, the
condonation and its acceptance must be in
writing if the value of the personal property
exceeds five thousand pesos (Art. 748, in rel.
to Art. 1270, NCC).
Disputable presumptions of condonation:
1. If the private
document evidencing a credit is found in the
possession of the debtor, it gives rise to a
presumption that the creditor voluntarily
delivered it to the debtor, unless the
contrary is proved (Art. 1272, NCC). The
voluntary delivery of such document by the
creditor to the debtor, in turn, gives rise to a
presumption that the debt is being
condoned (Art. 1271, NCC);
2. The accessory
obligation of pledge is presumed condoned
when the thing pledged, after its delivery to
the creditor, is found in the possession of
the debtor, or of a third person who owns
the thing (Art. 1274, NCC).
Note: If the thing pledged is returned
(voluntarily) by the pledgee to the pledgor or
owner, the pledge is extinguished and any
stipulation to the contrary shall be void. (Art.
2110, NCC)
D. CONFUSION or MERGER
Concept: It exists when the the characters of
the creditor and debtor are merged in the same
person.
Illustration: A executes a promissory note
payable to the order of B. B uses it to pay C.
Then C uses it to pay A.
Requisites of Merger:
1. It must take place in the the person of the
principal creditor and principal debtor (Art.
1276, NCC)
If the merger involves a creditor and a
guarantor, the obligation is not
extinguished. However, when the merger
takes place in the person of the guarantor,
the accessory obligation is extinguished by
the the principal obligation continues (Art.
1276, NCC)
2. It must be complete and definite, because
if not complete, the obligation still subsists
(2 Castan, 60.)
Effects of Merger in Joint and Solidary
Obligations:
a. Joint Obligation- merger does not
extinguish a joint obligation except as
regards the share corresponding to the
creditor or debtor in whom the two
characters concur (Art. 1277, NCC)
b. Solidary Obligation- merger has the effect
of extinguishing the obligation (Art. 1215,
NCC.
E. COMPENSATION
Concept: It is the offsetting of two obligations
which are reciprocally extinguished to their
concurrent amount between persons who in
their own right are creditors and debtors of each
other.
Kinds of Compensation:
1. Legal – It takes place ipso jure when all the
requisites of law are present (Mavest [USA],
Inc. v. Sampaguita Garment Corp., G. R. No.
127454, Sep. 21, 2005);
2. Conventional or Voluntary – It occurs
when the parties agree to the mutual
extinguishment of their credits or to
compensate their mutual obligations even in
the absence of some of the legal requisites
(Mavest (USA), Inc. v. Sampaguita Garment
Corp., G. R. No. 127454, Sep. 21, 2005);
3. Judicial – It takes place by order of the
court or by judicial decree.
Minimum Requirement of Compensation:
There must be the confluence of the characters
of mutual debtors and creditors. Without this,
the contracting parties cannot stipulate (in
conventional compensation) to the
compensation of their obligations, for the legal
tie that binds contracting parties to their
obligations would be absent. At least one party
would be binding himself under an authority he
does not possess. (CKH Industrial and Development
Corp., 272 SCRA 333). But while compensation, be
it legal or conventional, requires the confluence
in the parties of the characters of mutual
debtors and creditors, their rights as such
creditors, or their obligations as such debtors,
need not spring from one and the same contract
or transaction (Mavest (USA), Inc. v. Sampaguita
Garment Corp., G. R. No. 127454, Sep. 21, 2005).
Requisites of Legal Compensation - In
order that legal compensation may be proper,
the following requisites must be present –
1. The parties must be creditors and debtors of
each other in their own right (Art. 1278,
NCC);
2. They must be bound principally (Art. 1279
[1], NCC);
Note: However, the law permits a
guarantor to set up compensation as
regards what the creditor may owe his
principal debtor (Art. 1280, NCC). Thus, such
guarantor may set up credits which
personally belong to him and also credits
which belong to his principal, the former
under the general rule.
3. Both debts consist in a sum of money, or if
the things due are consumable, they be of
the same kind, and also of the same quality
if the latter has been stated (Art. 1279[2],
NCC);
4. The two debts be due, liquidated and
demandable (Art. 1279 [3] and [4], NCC); and
5. Over neither of them there be any retention
or controversy, commenced in due time to
the debtor (Art. 1279 [5], NCC).
 Article 1279 requires, among others, that in
order that legal compensation shall take
place, “the two debts be due” and “they be
liquidated and demandable.” Compensation
is not proper where the claim of the person
asserting the set-off against the other is
neither clear nor liquidated; compensation
cannot extend to unliquidated, disputed
claim existing from breach of contract.
(Silahis Marketing Corp. v. IAC, G.R. No. L-
74027, Dec. 7, 1989)
Effects of legal compensation: When all the
foregoing requisites are present, compensation
takes effect by operation of law, and
extinguishes both debts to the concurrent
amount, even though the creditors and debtors
are not aware of the compensation (Art. 1290,
NCC).
 Legal compensation operates even against
the will of the interested parties and even
without the consent of them (BPI v. CA, 255
SCRA 571). Since this compensation takes
place ipso jure, its effects arise on the very
day on which all its requisites concur. When
used as a defense, it retroacts to the date
when its requisites are fulfilled. (BPI v. CA,
supra.; Trinidad v. Acapulco, G. R. No. 147477,
June 27, 2006).
Prohibited compensation - Compensation is
prohibited in the following instances:
1. When one of the debts arises from a
contract of deposit/depositum or from the
obligations of a depositary (Art. 1287, NCC);
Note: The relationship between a bank and
its depositor is that of creditor and debtor.
For this reason, a bank has the right to set-
off the deposits in its hands for the payment
of a depositor’s indebtedness. (Equitable PCI
Bank v. Ng Sheung Ngor, 541 SCRA 223)
2. When one of the debts arises from the
obligations of a bailee in commodatum (Art.
1287, NCC);
3. Over a claim for support due by gratuitous
title (Art. 1287, NCC);
4. If one of the debts consists in civil liability
arising from a penal offense (Art. 1288, NCC);
5. Over claims of the Government for taxes.
 Taxes cannot be subject to
compensation for the simple reason that the
government and the taxpayer are not
creditor and debtors of each other. There is
a material distinction between a tax and
debt. Debts are due to the Government in
its corporate capacity, while taxes are due
to the Government in its sovereign capacity.
We find no cogent reason to deviate from
the aforementioned distinction . (Philex Mining
Corp. v. Commissioner of Internal Revenue, G. R.
No. 125704, Aug. 28, 1998; Caltex Philippines,
Inc. v. Commission on Audit, 208 SCRA 726;
Francia v. IAC, 162 SCRA 753)
Effect of assignment upon legal
compensation:
1. An
assignment made after compensation has
legally taken place can produce no effect as
against the debtor, and the only recourse of
the assignee is an action for damages based
on fraud or eviction against the creditor-
assignor (8 Manresa 413-414);
Illustration: A is indebted to B for P500
and B is indebted to A for P300. Upon
concurrence of all requisites, both debts
become extinguished up to the concurrent
amount of P300, so that A remains liable to
B only for the balance of P300. But suppose
A assign his credit of P300 against B in favor
of X, after compensation had taken place by
operation of law, X would have acquired no
credit enforceable against B, because of the
extinguishment of said credit by
compensation.
2. If the
debtor consents to the assignment, he
cannot set up against the assignee
compensation which would have pertained
to him against the creditor-assignor, unless
the debtor notifies the assignor that he
 reserves his right to the compensation (Art.
1285 [1], NCC);
Illustration: In the above example, if X
consents that B assign the former’s
indebtedness to him for P300, A cannot set
up any defense of compensation. He has to
pay B or his assignee X P500, unless in
consenting to said assignment, A expressly
reserved his right to the compensation.
3. If the
creditor communicated the assignment to
the debtor but the debtor did not consent
thereto, the debtor may set up the
compensation of debts previous to the
assignment of the creditor but not of
subsequent ones (Art. 1285 [2], NCC);
Illustration: In the above example, if B
assigns his credit of P500 against A in favor
of X, communicating the same to A but
without obtaining his consent, A may set up
as against X his credit of P300 against B
only and if said credit has become due and
has given rise to compensation as against
B’s credit of P500 before the assignment.
4. If the
assignment is made without the knowledge
of the debtor, such debtor may set against
the assignee not only the compensation of
all credits prior to the assignment, but also
of later ones (even after the assignment)
until he had knowledge of the assignment.
(Art. 1285 [3], NCC)
Illustration: Suppose B’s credit against A
matures on January 1 while A’s credit
against B matures on January 30. A, on
January 15, assign his credit of P300 against
B in favor of assignee X, and, B does not
know of said assignment until February 1.
Although the compensation has taken place
15 days after the assignment, B may still set
up against the assignee X compensation
which pertains to him against the assignor A
in as much as said compensation occurred
prior to February 1, when debtor B had
knowledge of the assignment.
F. NOVATION (Arts. 1291-1304, NCC)
Concept: it is the extinguishment of obligation
by the substitution or change of the obligation
by a subsequent one which extinguishes or
modifies the first, either by changing the object
or principal conditions, or by substituting
another in place of the debtor, or by subrogating
a third person in the rights of the creditor.
Unlike other modes of extinction of obligations,
it is a juridical act with a dual function, namely,
it extinguishes an obligation and creates a new
one in lieu of the old (Rabuya, Civil Law Reviewer
Volume II, 2017 Ed. p. 158-159)
Kinds of Novation:
1. As to its effect:
a. Extinctive – An old obligation is terminated
by the creation of a new obligation that
takes the place of the former (Quinto v.
People, 305 SCRA 708, 714). For example, if
what is changed is any of the principal
conditions of the obligation or terms and
conditions, which are considered to be the
essence of the obligation itself, the
novation, is extinctive (Aquinley v. Tibong,
Dec. 2006; Swagman Hotels and Travel, Inc. v.
CA, G. R. No. 161135, April 8, 2005). It has the
twin effects first, it extinguishes the existing
obligation and, second, it creates a new one
in its stead.
b. Modificatory– The old obligation subsists
to the extent it remains compatible with the
amendatory agreement (Quinto v. People, 305
SCRA 708, 714). For example, novation is
merely modificatory where the change
brought about by any skubsequent
agreement is merely incidental to the main
obligation (e.g. a change in interest rates or
an extension of time to pay). In this
instance, the new agreement will not have
the effect of extinguishing the first but will
merely supplement it or supplant some but
not all of its provisions. (Aquintey v. Tibong,
Dec. 2006; Swagman Hotels and Travel, Inc. v.
CA, G. R. No. 161135, April 8, 2005).
2. As to its essence:

a. Real or Objective – Novation is effected
by changing the object, cause or any of the
principal conditions of the obligation (Rio
Grande Oli Co. v. Coleman [CA], 39 O. G 986);
b. Personal or Subjective – Novation is
effected by substituting the person of the
debtor or by subrogating a third person in
the rights of the creditor (Rio Grande Oli Co.
v. Coleman [CA], 39, O.G. 986). May either be
expromision or delegacion.
3. As to its form:
a. Express – The contracting parties
incontrovertibly disclose that their object in
executing the new contract is to extinguish
the old one (Sueno v. Land Bank of the Phil;,
565 SCRA 611, Sep. 17, 2008);
 Novation is never presumed, and the
animus novandi, whether totally or partially,
must appear by express agreement of the
parties, or by their acts that are too clear
and unmistakable (Sueno v. Land Bank of the
Phil., 565 SCRA 611, Sep. 17, 2008). In order to
extinguish or discharge an obligation by
novation the intent of the parties to do so
(animus novandi) must be either expressed
or else clearly apparent from the
incompatibility “on all points” of the old and
the new obligations (La Tondena, Inc. v. Alto
Surety & Insurance Co., Inc. 101 Phil. 879).
b. Implied – There is no express novation but
there is irreconcilable incompatibility
between the old and the new obligations
(Sueno v. Land Bank of the Phil;, 565 SCRA 611,
Sep. 17, 2008) or that the new obligations is
on every point incompatible with the old
one (Ajax Marketing & Development Corp. v.
CA, G. R. No. 118585, Sep. 14, 1995).
Note: In order that an obligation may be
impliedly extinguished by another which
substitutes the same, it is imperative that the
old and the new obligations must be
incompatible with each other. (Art. 1292, NCC)
Objective Novation – change of the object
of the obligation, requisites of valid
novation:
1. Previous valid obligation;
Note: The novation is void if the original
obligation was void. This rule admits of two
exceptions: (1) when the annulment may be
claimed only by the debtor; or (2) when
ratification validates acts which are voidable.
(Art. 1298, NCC)
2. Agreement of all parties to the new
obligation;
3. Extinguishment of old obligation; and
4. Validity of the new obligation (Tiu Siuco v.
Habana, 45 Phil. 707).
Note: If the new obligation is void, the original
one shall subsist, unless the parties intended
that the former relation should be extinguished
in any event. (Art. 1297, NCC)
Novation of conditional obligation: If the
original obligation was subject of a suspensive
or resolutory condition, the new obligation shall
be under the same condition, unless it is
otherwise stipulated (Art. 1299, NCC).
Two forms of novation by substitution of
debtor
1. Expromission– substitution of debtors is
effected with the consent of the creditor at
the instance of the new debtor without the
knowledge or against the will of the old
debtor;
2. Delegacion – The debtor offers and the
creditor accepts a third person who
consents to the substitution so that the
intervention and the consent of these three
persons are necessary and they are
respectively known as delegante,
delegatario and delegado (Testate Estate of
Mota v. Serra, 47 Phil. 464).
For Novation by substitution of debtor to
exist, the old debtor must be released
from the obligation

 In novation effected by way of
substituting the person of the debtor, it is
essential that the old debtor be released
from the obligation, and the third person or
new debtor takes his place in the new
relation. If the old debtor is not released,
no novation occurs and the third person
who has assumed the obligation of the
debtor becomes merely a co-debtor or
surety or a co-surety. (Cochingyan, Jr. v. R &
B Surety and Insurance Co., Inc., 151 SCRA 339,
Lopez v. CA, 114 SCRA 67).
 Thus, the mere circumstance of the creditor
accepting payments from a third person
who acquiesced to assume the obligation of
the debtor when there is clearly no
agreement to release the debtor from his
responsibility does not constitute novation –
at most, it only creates a juridical relation of
co-debtorship or suretyship on the part of
the third person to the contractual obligation
of the debtor, and the creditor can still
enforce the obligation against the debtor
(Reyes v. CA, 264 SCRA 35; Magdalena Estates,
Inc. v. Rodriquez, G. R. No. L-18411, Dec. 17,
1966).
Creditor’s Consent Essential:
1. Whether the substitution is thru
expromission or delegacion, the creditor’s
consent is always necessary (Garcia v. Khu Yek
Chiong, 65 Phil. 466). The reason for the
requirement of the creditor’s consent to
such substitution is obvious. Substitution of
one debtor for another may delay or prevent
the fulfillment or performance of the
obligation by reason of the temporary
inability or insolvency of the new debtor (Rio
Grande Oil Co. v. Coleman, [CA], 39 O.G. 1410);
2. It is not necessary that the
creditor should give his consent
simultaneously with the execution of the
new contract. He may do so afterwards.
(Testate Estate of Mota v. Serra, 47 Phil. 464);
3. Creditor’s consent may be
implied (Asia Banking Corporation v. Elser,
54 Phil. 994). It is true that it need not be
given simultaneously with those of the
debtor and the third party who assumes the
debtor’s obligation, nor is it necessary that it
be given by the creditor in any particular or
specific form, but it must be given by the
creditor in one way or another (Rio Grande
Oil Co. v. Coleman, supra);
4. But the creditor’s acceptance of
payments by a third party for the benefit of
a debtor whose accounts the third party has
assumed, without further facts does not
constitute a novation (Pacific Commercial CO.
v. Sotto, 34 Phil. 237).
Effect of substitution without the consent
of the debtor
If the substitution is without the knowledge or
against the will of the debtor, the new debtor's
insolvency or non-fulfillment of the obligations
shall not give rise to any liability on the part of
the original debtor. (Art. 1294, NCC)
Effect of insolvency of new debtor
The insolvency of the new debtor, who has been
proposed by the original debtor and accepted by
the creditor, shall not revive the action of the
latter against the original obligor, except when
said insolvency was already existing and of
public knowledge, or known to the debtor, when
the delegated his debt (Art. 1295, NCC).
Effect of Objective Novation and Novation
by Substitution of Debtor:
1. Generally, the extinction of the
old obligation carries with it the extinction of
the accessory obligations which are
subordinate to and dependent upon the
principal obligation thus extinguished;
2. However, accessory obligations
subsist insofar as they may benefit third
persons who have not given their consent to
the novation (Art. 1296, NCC).
Subrogation
Concept: It is the transfer of all the rights of
the creditor to a third person, who substitutes
him in all his rights.
Two forms of subrogation

1. Conventional – It takes place by the
agreement of and requires the consent of
the original parties (the debtor and original
creditor) and of the third person (the new
creditor) (Art. 1301, NCC);
2. Legal – It takes place by operation of law
and is not to be presumed outside of the
following cases:
a. When a creditor pays another creditor
who is preferred, even if the payment is
without the debtor’s knowledge;
b. When a third person interested in the
fulfillment of the obligation pays the
obligation, even if such payment is
without the knowledge of the debtor
without prejudice to the effects of
confusion as to the latter’s share;
c. When a third person, not interested in
the obligation, pays the obligation but
only if such payment is with the consent
of the debtor, whether express or
implied. (Arts. 1300 and 1302, NCC)
SUBROGATION ASSIGNMENT
The debtor’s consent is Not required
necessary
Extinguishes an Refers to the same
obligation and gives rise right which passes
to a new one from one person to
another.
Nullity of an old The nullity of an
obligation may be cured obligation is not
by subrogation, such that remedied by the
the new obligation will be assignment of the
perfectly valid (Ledonio v. creditor’s right to
Capitol Development Corp., another.
526 SCRA 63)
 In an assignment of credit, the consent of
the debtor is not necessary in order that the
assignment may fully produce the legal
effects. What the law requires in an
assignment of credit is not the consent of
the debtor, but merely notice to him as the
assignment takes effect only from the time
he has knowledge thereof. A creditor may,
therefore, validly assign his credit and its
accessories without the debtor’s consent. On
the other hand, conventional subrogation
requires an agreement among the parties
concerned – the original creditor, the
debtor, and the new creditor. It is a new
contractual relation based on the mutual
agreement among all the necessary parties.
(Ledonio v. Capitol Development Corp., 526
SCRA 63)
 If the approval of the debtor to the
subrogation of a third person in place of the
creditor is expressly required, the intention
of the parties is that the transaction is one
of conventional subrogation and not just an
assignment of credit. (Licaros v. Gatmaitan,
414 Phil. 857)
Effect of Subrogation: It transfers the credit,
together with the rights annexed thereto (the
right to the exercise of other accessory rights,
such as the right to the mortgage or pledge),
whether those rights be against the debtor or
against third persons (Art. 1303, NCC). This is
true for legal subrogation. But in conventional
subrogation, the effects thereof may be
modified by the express agreement of the
parties.
Reimbursement vs. Subrogation: In case of
reimbursement, the person paying for another
has only a personal action to recover what he
has paid without the rights, powers and
guaranties attached to the original obligation. In
subrogation, the person who pays for another
acquires not only the right to be reimbursed for
what he has paid but also the other rights
attached to the obligation originally contracted
by the debtor.
Effect of partial subrogation: In case of
partial payment, the creditor, to whom partial
payment has been made, may exercise his right
for the remainder and he shall be preferred in
his place to the person who has been
subrogated in virtue of the partial payment of
the same credit. (Art. 1304, NCC)
CONTRACTS
Definition
It is the meeting of minds between two persons
whereby one binds himself, with respect to the
other, to give something or to render some
service. (Art. 1305, NCC)
OBLIGATION CONTRACT
Juridical necessity Source of obligation
May exist without Cannot exist without
contract obligation
Elements of a Contract
A. Essential elements without which there
can be no contract. (3 Castan, 7th Ed., pp. 322-
324)
c. Common (communes) those which
are present in all contracts, such as
consent, object certain and cause.
d. Special (especiales) those which
present only in certain contract, such as
delivery in real contracts, or form in
solemn ones.
e. Extraordinary(especialissimos)
those which are peculiar to a specific
contract (i.e.price in sales)
B. Natural elements are those derived from
the nature of the contract and ordinarily
accompany the same. They are presumed
by law, although they can be excluded by
the contracting parties if they so desire. (3
Castan, 7th Ed., p. 324)
a. Right to resolve (Art. 1191, NCC)
b. Warranties in sales contracts, implied
C. Accidental elements are those which
exist only when the parties expressly
provide for them for the purpose of
limiting or modifying the normal effects of
the contract (i.e. condition, terms or
modes). (3 Castan, 7th Ed., p. 324)
Stages of a Contract
1. Negotiation- it begins from the time the
prospective contracting parties manifest
their interest in the contract and ends at the
moment of agreement of the parties;
2. Perfection (or birth) — Here, the parties
have at long last came to a definite
agreement, the elements of definite subject
matter and valid cause have been accepted
by mutual consent.
3. Consummation (or death or termination)
— Here the terms of the contract are
performed, and the contract may be said to
have been fully executed.
1. Characteristics of a Contract:
a. Obligatory force and Character of Contracts
Obligations arising from contracts have the
force of law between the contracting parties
and should be complied with in good faith
(Art. 1159, NCC).
From the moment the contract is perfected,
the parties are bound not only to the
fulfilment of what has been expressly
stipulated but also to all consequences
which, according to their nature, may be in
keeping with good faith. Also, the
stipulations of the contract being the law
between the parties, courts have no
alternative but to enforce there as they were
agreed upon and written (Pangilinan vs. CA,
279 SCRA 590)
b. Autonomy of Contracts
The contracting parties are accorded with
liberality and freedom to establish
stipulations, clauses, terms and conditions
as they may deem appropriate, provided the
same are not contrary to law, morals, good
customs, public order or public policy (See
Art. 1306, NCC).
The right to enter into lawful contracts
constitutes one of the liberties of the people
of the state. If that right be struckdown, or
arbitrarily interfered with, there is
substantial impairment of the liberty of the
 people under the constitution (Rabuya, Civil
Law Reviewer Volume II, 2017 ed, p. 180, cited
in People vs. Pomar, 46 Phil. 440).
c. Mutuality of Contracts
Contracts must bind the contracting parties,
its validity or compliance cannot be left to
the will of one of them (see Art. 1308, NCC)
However, the performance of a contract can
be left to the determination of third persons.
The determination of the performance by a
third person shall be obligatory upon both
contracting parties from the moment it is
made known to them. (Art. 1310, NCC)
d. Relativity of Contracts
Contracts can only bind the parties who
entered into it, including their heirs and
assigns, and it cannot prejudice a third
person, even if he is aware of such contract
and has acted with the knowledge thereof
(See Art. 1311, NCC)
Exceptions:
a. Where the obligations arising from the
contract are not transmissible by their
NATURE, by STIPULATION, or by
PROVISION OF LAW. (Art. 1311, NCC).
b. Where there is a STIPULATION POUR
AUTRUI (a stipulation in favor of a third
party). (Art. 1311, NCC).
c. Where a third person induces another to
violate his contract. (Art. 1314, NCC).
d. Where, in some cases, third persons may be
adversely affected by a contract where they
did not participate. (Arts. 1312, 2150, 2151,
Civil Code; Act 1956, the Insolvency Law; and
Rep. Act 875)
e. Where the law authorizes the creditor to sue
on a contract entered into by his debtor
(“Accion Directa”).
I. ESSENTIAL REQUISITES
A. Consent;
B. Object or subject matter; and
C. Cause or consideration
A. Consent (Art. 1319, NCC)
It is the meeting of the minds between the
parties on the subject matter and the cause of
the contract, even if neither one has been
delivered.
Consent is manifested by the meeting of the
offer and acceptance upon the thing and the
cause which are to constitute the contract (Art.
1319 [1], NCC). Thus, an offer that is not accepted
does not give rise to consent, and the contract
does not come into existence (Gamboa v. Gonzales,
17 Phil. 381).
Requisites of Consent:
1. There must be two or more parties.
Note: One person may represent two or
more parties, unless there are contradictory
or prejudicial interests involved. (Art. 1490,
NCC; Garchitorena v. Sotelo, 74 Phil. 25)
2. The parties must be capable or capacitated
(hence, if one party be insane, the contract
is merely voidable).
3. There must be no vitiation of consent.
(Example: There must be no fraud or
intimidation, otherwise the contract is
voidable.)
4. There must be no conflict between what
was expressly declared and what was really
intended. Otherwise, the remedy may be
reformation, as when the parties really
intended to be bound, or else the contract is
VOID, as when the contract is fictitious or
absolutely simulated.
5. The intent must be declared properly (that
is, whatever legal formalities are required
must be complied with).
Consent may either be expressed or implied
(Clarin v. Rulona, 127 SCRA 512). Note that
acceptance of the offer may either be express or
implied (Art. 1320, NCC).
Meeting of the Minds
1. An offer that must be CERTAIN;
2. An acceptance that must be UNQUALIFIED
and ABSOLUTE.
Note: If the acceptance is qualified, let us say
by a condition, this merely constitutes a
COUNTER-OFFER.
Offer
An offer is a proposal to enter into a contract. It
must be one which is intended of itself to create
legal relations on acceptance, and must be
capable of creating a definite obligation and not
a mere expression of desire or hope. A mere
statement of willingness to enter into
negotiations or a mere inquiry as to whether a
person could make specified articles is not an
offer.
Distinguished from invitations to make an
offer:
If a proposal is nothing more than an invitation
to the person to whom it is made to make an
offer to the proposer, it is not such an offer that
be turned into an agreement by acceptance.
Thus:
1. Unless it
appears otherwise business advertisements
of things for sale are not definite offers, but
mere invitations to make an offer (Art. 1325,
NCC).
2. Advertisements
for bidders are simply invitations to make
proposals, and the advertiser is not bound
to accept the highest or lowest bidder,
unless the contrary appears (Art. 1326, NCC).
Accordingly, the terms and conditions of the
bidding disseminated by the proponent
constitute the “advertisement” to bid on the
project. The bid proposals or quotations
submitted by the prospective suppliers are
the offers. And, the reply of the proponent,
the acceptance or rejection of the offers .
(Jardine Davies, Inc. v. CA, 333 SCRA 684)
Requisites of effective offer:
1. The
terms of the offer must be reasonably
certain or definite (Art. 1319, NCC) and there is
an offer in the context of Article 1319 of the
Civil Code only if the contract can come into
existence by the mere acceptance of the
offer without any further act on the part of
the offeror (Paredes v. CA, 463 505);
2. The
offeror must have a serious intention to
become bound by his offer; and
3. The
offer must be communicated by the offeror
to the offeree, resulting in the offeree’s
knowledge of the offer.
(a) Under American jurisprudence, mutual
assent is judged by an objective
standard, looking to the express words
the parties used in the contract. Under
the objective theory of contract,
understandings and beliefs are effective
only if shared. (Moreno, Jr. v. Private
Management Office, G. R. No. 159373, Nov. 16,
2006)
Termination of offer:
1. Thru the action of the offeree by rejecting
the offer; or
2. Thru the action of the offeror by rejecting
the offer; or
3. Thru operation of law by supervening
illegality of the proposed contract, by lapse
of time, by destruction of the subject matter
of the offer, or by death, civil interdiction,
insanity or insolvency of the offeror or
offeree.
Revocation of offer: The offer may be
revoked at any time prior to the perfection of
the contract (Laudico v. Arias, 43 Phil. 270).
However, if the offer is encapsulated in an
option contract (as when the option is supported
by a consideration distinct from the price), the
offer may not be withdrawn by the offeror
within the period agreed upon without incurring
liability for damages.
Definition of option contract: It is a
preparatory contract in which one party grants
to the other, for a fixed period and under
specified conditions, the power to decide,
whether or not to enter into a principal contract.
It binds the party who has given the option, not
to enter into the principal contract with any
other person during the period designated, and,
within that period, to enter into such contract
with the one to whom the option was granted, if
the latter should decide to use the option.
(Carceller v. Arias, 302 SCRA 718)
Effects of Option Contract:
1. If supported by a consideration distinct and
separate from the price, in which case, there
is a perfected contract of option, and it
would be a breach of that contract to
withdraw the offer during the agreed period.
(Arts. 1324 and 1479, NCC).
2. If the period is not itself founded upon or
supported by a consideration, the offeror is
still free and has the right to withdraw the
offer before its acceptance, or, if an
acceptance has been made, before the
offeror’s coming to know of such fact, by
communicating that withdrawal to the
offeree (Art. 1324, NCC; Atkins, Kroll & Co. vs.
Chua, 102 Phil. 948, Rural Bank of Parañaque,
Inc. v. Remolado, 135 SCRA 409; Sanchez v.
Rigos, 45 SCRA 368). Nonetheless, pending
notice of its withdrawal, the accepted
promise partakes of the nature of an offer
which, if accepted results in a perfected
contract. (Sanchez vs. Rigos, supra)
Consideration in option contracts:
 The consideration need not be monetary but
could consist of other things or
undertakings. However, if the consideration
is not monetary, these must be things or
undertakings of value, in view of the
onerous nature of the option contract.
Furthermore, when a consideration for an
option contract is not monetary, said
consideration must be clearly specified as
such in the option contract or clause. (Bible
Baptist Church vs. CA, 444 SCRA 399; Eulogio v. Apes,
576 SCRA 561)
OPTION MONEY EARNEST MONEY
money given as a distinct part of the purchase
consideration in an price
option contract
applies to a sale not yet given only where there
perfected is already a sale
the would-be buyer gives When earnest money is
the option money, he is given, the buyer is
not required to buy bound to pay the
balance
(Adelfa Properties, Inc. v. CA, 240 SCRA 565).
Rejection and counter-offer: By rejecting the
offer, the offeree thereby terminates the offer
and his subsequent attempt to accept the
previous offer will not result in its reinstatement.
A “counter –offer” is the rejection of the original
offer and the simultaneous making of a new
offer.
Lapse of time: The offeror may fix the time of
acceptance which must be complied with (Art.
1321, NCC). Thus, an offer terminates
automatically when the period of time specified
in the offer has lapsed.
Death, insanity, civil interdiction or
insolvency: The offer becomes ineffective upon
the death, civil interdiction, insanity, or
insolvency of either the offeror or the offeree
before acceptance is conveyed (Art. 1323, NCC).
The contract is not yet perfected at any time
before acceptance is conveyed; hence, the
disappearance of either party or his loss of
capacity, before perfection prevents the
contractual tie from being formed . (Villanueva v.
CA, 244 SCRA 395)
Contract of Adhesion - one party has already
a prepared form of a contract, containing the
stipulations he desires, and he simply asks the
other party to agree to them if he wants to
enter into the contract.
Acceptance
Acceptance must be absolute: To be
effective an acceptance must be absolute (Art.
1319 [1], NCC). Only an absolute or unqualified
acceptance of a definite offer manifests the
consent necessary to perfect a contract (Weldon
Construction Corp. vs. CA, 154 SCRA 618).
Effect of qualified acceptance: A qualified
acceptance, or one that involves a new
proposal, constitutes a counter-offer (Art. 1319
[1], NCC) and is a rejection of the original offer.
“Mirror-Image Rule”
The acceptance must be identical in all respects
with that of the offer so as to produce consent
or meeting of the minds (Limketkai Sons Milling,
Inc. v. CA, 255 SCARA 626; ABS-CBN Broadcasting
Corp. v. CA, 301 SCRA 572). Consequently, when
something is desired which is not exactly what is
proposed in the offer, such acceptance is not
sufficient to generate consent because any
modification or variation from the terms of the
offer annuls the offer. (ABS-CBN Broadcasting
Corp. v. CA, supra.)
Manner and form of acceptance:
1.
The offeror has a right to prescribe in his offer
the time, place and manner of acceptance,
all of which must be complied with (Art. 1321,
NCC).
2.
The acceptance may be expressed or implied
(Art. 1320, NCC).
3.
If an offer is made through an agent, it is
deemed accepted from the moment
acceptance is communicated to said agent
(Art. 1322, NCC).
4.
Presumed (by law) as when there is failure to
repudiate hereditary rights within the period
fixed by law (Art. 1057, NCC); or when there is
SILENCE in certainspecific cases as would
tend to mislead the other party, and thus
place the silent person in estoppels. (Arts.
1670, 1870, 1871, 1872 and 1873, NCC)
Acceptance thru Letter or Telegram:
Acceptance made by letter or telegram does not
bind the offerer except from the time it came to
his knowledge. The contract in such a case is
presumed to have been entered into in the place
where the offer was made.
Cognition theory – A contract is perfected
only from the time an acceptance of an offer is
made known to the offeror.
Note: The Civil Code adopts this theory. The
second paragraph of Article 1319 of the Civil
Code provides that acceptance made by letter or
telegram does not bind the offerer except from
the time it came to his knowledge.
Withdrawal of Acceptance:
For a contract to arise, the acceptance must be
made known to the offeror. Accordingly, the
acceptance can be withdrawn or revoked before
it is made known to the offeror . (Jardine Davies,
Inc. CA, 333 SCRA 684)
Capacity of Contracting Parties
Importance of Legal Capacity:
There is no effective consent in law without the
capacity to give such consent. In other words,
legal consent presupposes capacity. (Delos Reyes
vs. CA. 313 SCRA 632)
Persons Incapable of Giving Consent:
1. Unemancipated minors.
Note: Under the regime of the Family Code,
there are no longer unemancipated minors.
2. Insane or demented persons;
Note: Contracts entered into during a lucid
interval are valid. Contracts agreed into in a
state of drunkenness or during a hypnotic spell
are voidable (Art. 1328, NCC).
Note: Only insanity, which prevents a person
from knowing the character of the act that he is
performing as well as its legal effects, will be a
ground for annulment (I Caguioa, 1967 ed., p. 79-
80). Thus, monomania, which is insanity on a
certain point does not necessarily annul a
contract except when the contract refers to that
point where the person concerned is insane.
3. Deaf-mutes who do not know
how to write (and read).
Note: If they know how to read, but do not
know how to write, it is submitted that the
contract is valid, for then they are capable of
understanding, and therefore capacitated to give
consent.
4. Persons suffering from civil
interdiction (Art. 34, RPC);
5. Incompetents under
guardianship (Rule 92-97, ROC); and
6. Other persons specially
disqualified (Art. 1329, NCC).
Old age or other physical infirmities: A
person is not incapacitated to contract merely
because of advanced years or by reason of
physical infirmities, only when such age or
infirmities impair his mental faculties to such
extent as to prevent him from properly,
intelligently, and fairly protecting his property
rights, is he considered incapacitated. (Loyola v.
Court of Appeals, 326 SCRA 285)
Contracts by Illiterates:
General Rule: Who ever alleges fraud or
mistake in any transaction must substantiate his
allegation.
Exception: Where a party to a contract is
illiterate, or cannot read nor understand the
language in which the contract is written, the
burden is on the party interested in enforcing
the contract to prove that the terms thereof
were fully explained to the former in a language
understood by him. (Art. 1332, NCC; Cayabyab v. IAC,
232 SCRA 1)
Status of contract where parties are
incapacitated: If only one of the contracting
parties is incapacitated to give his consent, the
contract is voidable (Art. 1390 [1], NCC). If both
parties are incapacitated to give their consent,
the contract is unenforceable. (Art. 1403 [3],
NCC)
Vitiation of Consent: A contract where
consent is procured thru mistake, violence,
intimidation, undue influence or fraud is
voidable. (Art. 1330, NCC)
Note: Mistake and fraud affect the
INTELLECT (which is the faculty in the mind of
man, the proper object of which is the TRUTH.
They thus affect COGNITION.) Cognition must
be intelligent.
Note: Violence, intimidation, and undue
influence affect the WILL (which is the faculty in
the mind of man, the proper object of which is
the GOOD. They thus affect VOLITION.) Volition
must be free.
Note: Mistake and fraud result in defects of the
intellect; the others result in defects of the will.
Mistake (Art. 1331, NCC)
Wrong conception and lack of knowledge with
respect to a thing. (Jurado, Comments and
Jurisprudence on Obligations and Contracts, 2010 ed., p.
429)
Mistake of Law: As a general rule, mistake of
law does not make a contract voidable because
ignorance of the law does not excuse any one
from its compliance (Luna, et. Al. v. Linatoc, 74 Phil.
15). Thus, ordinarily, it is only a mistake of fact
which will vitiate consent rendering the contract
voidable. There is, however, an exception to this
rule. According to Article 1334 of the Civil Code
“mutual error as to the legal effect of an
agreement when the real purpose of the parties
is frustrated, may vitiate consent.”
Mistake of Fact: One or both of the
contracting parties believe that a fact exists
when in reality it does not (Supra)
Requisites for Mistake of fact which to
Vitiate Consent:
(a) The error must be substantial regarding:
1) The object of the contract (error in re):
 When the thing constitutes the
object of the contract is confused
with another thing (Mistake as to
Identity of the thing – error in
corpore)
 Mistake as to the substance of the
thing (error in substantia)
 Mistake regarding the quantity of
the thing (error in quantitate);
mistake referes only to accidental or
secondary qualities, the contract is
not rendered voidable (error in
qualitate)
2) The conditions which principally moved
or induced one of the parties

3) Identity or qualifications (error in
personae), but only if such was the
principal cause of the contract.
(b) The error must be excusable (not caused by
negligence).
(c) The error must be a mistake of fact, and not
of law. (Jurado, Comments and Jurisprudence
on Obligations and Contracts, 2010 ed., pp. 430-
432)
A simple mistake of account, however, shall only
give rise to its correction (Art. 1331, NCC).
(d) An error so patent and obvious that nobody
could have made it, or one which could have
been avoided by ordinary prudence, cannot
be invoked by the one who made it in order
to annul his contract (Alcasid v. CA, 237 SCRA
419).
Violence and Intimidation (Art. 1335,
NCC)
There is Violence when in order to wrest
consent, serious or irresistible force is employed.
There is Intimidation when one of the
contracting parties is compelled by a reasonable
and well grounded fear of an imminent and
grave evil upon his person or property, or upon
the person or property of his spouse,
descendants or ascendants, to give his consent
Requisites of Violence:
1. Force employed to wrest consent must be
serious and irresistible;
2. It must be the determining cause for the
party upon whom it is employed in entering
into the contract (Jurado, Comments and
Jurisprudence on Obligations and Contracts,
2010 ed., p. 436)
Requisites of Intimidation:
1. Reasonable and well-grounded fear of an
imminent and grave evil upon his person,
property, or upon the person or property of
his spouse, descendants, or ascendants
(Supra);
2. It must have been the reason why the
contract was entered into
 The threat must be of an unjust act, an
actionable wrong. (Therefore, a threat to
enforce one’s claim thru competent
authority, if the claim is just or legal, does
not vitiate consent.) (Art. 1335, last par.,
NCC).
 A threat to prosecute is not considered as
intimidation. (P. Agustinos v. Del Rey, 56 Phil.
512; Sotto v. Mariano, [C.A.] 36 O.G. 1056)
 But, of course, an agreement not to
prosecute on account of a crime is against
public policy. (Arroyo v. Berwin, 36 Phil. 386
and Hibberd v. Rhode, 32 Phil. 476)
Violence or Intimidation Caused by Third
Person
Even if a third person exercised the violence or
intimidation, the contract may be annulled. This
is because the consent is still vitiated. (De Asis v.
Buenviaje, [C.A.] 45 O.G. 317)
Undue Influence (Art. 1337, NCC)
When a person takes improper advantage of his
power over the will of another, depriving the
latter of a reasonable freedom of choice
Requisites for Undue Influence
1. Improper advantage;
2. Power over the will of another (reflected for
example in a superior bargaining power)
(Martinez v. Hongkong and Shanghai Bank, 15
Phil. 252);
3. Deprivation of the latter’s will of a
reasonable freedom of choice (The influence
exerted must be of a kind that overpowers
the mind as to destroy the party’s free
agency.) (Coso v. Fernandez Deza, 42 Phil. 596)
Undue Influence Caused by Third Person
Undue influence exercised by a third party
vitiates consent, just like in the case of violence
and intimidation. (Memorandum to the Joint
Congressional Committee on Codification, Mar. 8,
1951)
Fraud
Use of insidious words or machinations
employed by one of the contracting parties in
order to induce the other to enter into a
contract, without them, he would not have
agreed to (Jurado, Comments and Jurisprudence on
Obligations and Contracts, 2010 ed., p. 444)
Kinds of Fraud
1. Fraud in the PERFECTION of
contract(Supra):
a. Dolo causante (or causal fraud): Here,
were it not for the fraud, the other party
would not have consented. (This is the fraud
referred to in Art. 1338, NCC) Effect: The
contract is VOIDABLE.
b. Dolo incidente (or incidental fraud):
Here, even without the fraud the parties
would have agreed just the same, hence the
fraud was only incidental in causing consent.
Very likely though, different terms would
have been agreed upon. Effect: The
contract is valid, but there can be an action
for damages. (Woodhouse v. Halili, 93 Phil.
526)
2. Fraud in the PERFORMANCE of
obligation (Art. 1170, NCC)
Requisites for Fraud (Art. 1338, NCC)
(a) Fraud or insidious words or machinations
must have been employed by one of the
contracting parties
(b) The fraud must have been serious;
(c) The insidious words or machinations must
have induced the other party to enter into
the contract
(d) The fraud should have been employed by
one of the contracting parties or by third
persons (Jurado, Comments and Jurisprudence
on Obligations and Contracts, 2010 ed., p. 445)
 The parties must not be in pari delicto
(mutual guilt), otherwise, neither party may
ask for annulment. The contract would,
therefore, be considered valid. (Valdez v.
Sibal, 46 Phil. 930)
Fraud by Third Persons (Art. 1342, NCC)
Misrepresentation by a third person does not
vitiate consent, unless such misrepresentation
has created substantial mistake and the same is
mutual.
the
Note: Misrepresentation made in good faith is
not fraudulent but may constitute error (Art. 1343,
NCC)
Simulation of a Contract
It is the act of intentionally deceiving others by
producing the appearance of a contract that
really does not exist (absolute simulation) or
which is different from the true agreement
(relative simulation) (Art. 1345-1346, NCC)
Kinds of Simulated Contracts
1. Absolutely simulated (simulados) fictitious
contracts:
a) Here, the parties do not intend to be
bound.
b) Effect: The contract is VOID.
the 2. Relatively simulated (disimulados) disguised
contracts:
a) Here, the parties conceal their true
agreement.
b) Effect: The parties are bound to the real
or true agreement except —
1) If the contract should prejudice a
third person; or
2) If the purpose is contrary to law,
morals, good customs, public order,
or public policy.
B. Object (Art. 1347, NCC)
Object of contract: Things which are not
outside the commerce of men or rights or
services which are not intransmissible can be
the object of contracts. (Art. 1347 [2], NCC)
General Rule: All things or services may be the
object of contracts.
Exceptions:
1. Things outside the commerce of men; contracts shall render them void, if it should
2. Intransmissible rights; not be proved that they were founded upon
3. Future inheritance, except in cases expressly another cause which is true and lawful (Art.
authorized by law; 1353, NCC).
4. Services which are contrary to law, morals,
good customs, public order or public policy; Presumption in favor of existence of
5. Impossible things or services; and cause: Although the cause is not stated in the
6. Objects which are not possible of contract, it is presumed that it exists and is
determination as to their kind. lawful, unless the debtor proves the contrary
(Art. 1354, NCC).
Requisites for object of contracts:
Effect of inadequacy of cause: Unless
1. The thing must be within the commerce of
specified by law, lesion or inadequacy of cause
men; or the right must not be
shall not invalidate a contract, unless there has
intransmissible (Art. 1347 [1], NCC); It should
been fraud, mistake or undue influence
be susceptible of appropriation and
(Art.1355, NCC).
transmissible from one person to another;
2. The thing or services must not be impossible CAUSES IN:
(Art. 1348, NCC); in other words, it should
exist at the moment of the celebration of
Onerous Renumeratory Pure
the contract, or, at least, it can exist
Contracts Contracts Beneficence
subsequently or in the future.
The The service or Mere
3. It must be licit, in other words, it should not
undertaking benefit which is liberality of
be contrary to law, morals, good customs,
or the renumerated the
public order or public policy or it must be
promise of benefactor
capable of coming into existence; and
the thing or
4. It must be determinate, or at least, possible
service by
of determination, as to its kind. (Art. 1349,
the other
NCC; 3 Castan 7th Ed., pp. 342-343; 8 Manresa,
5th Ed., Bk. 2, pp. 431-432.) party

C. Cause (Art. 1350, NCC) II. KINDS OF CONTRACTS

Concept A. Consensual Contracts

Cause is the essential reason which moves the
contracting parties to enter into it. The cause is
the immediate, direct and proximate reason
which justifies the creation of an obligation
through the will of the contracting parties. (Uy v.
CA, G.R. No. 120465, Sept. 9, 1999)
Requisites for Cause:
1. Cause must be lawful or not contrary to law,
morals, good customs, public order or public
policy (Art. 1352, NCC). A contract whose
cause is contrary to law, morals, good
customs, public order or public is void (Art.
1409 [1], NCC).
2. Cause must be true, otherwise the contract
is without cause and produces no effect
whatever. The statement of a false cause in
Contracts which are perfected by mere consent
of the parties regarding the subject matter and
the cause of the contract (Art. 1315, NCC).
Consequences of Perfection
The parties are bound to the fulfillment of what
has been EXPRESSLY STIPULATED (Art. 1315,
NCC), and compliance thereof must be in GOOD
FAITH. (Art. 1159, NCC)
 If the true intention is not expressed in a
written agreement, in case one has been
made, the proper remedy is REFORMATION.
(Art. 1359, NCC)
1. The parties are ALSO bound to all the
CONSEQUENCES which, according to their
 nature, may be in keeping with GOOD
FAITH, USAGE, and LAW.
General rule: No particular form is required in
order to make the contract binding and effective
between the parties thereto.
Exceptions:
1. When the law requires a contract to be in
some form in order that it may be valid (for
the purpose of validity); or
2. When the law requires a contract to be in
some form in order that it may be
enforceable, or that a contract be proved in
a certain way (Art. 1356, NCC).
B. Real Contracts
A real contract requires consent, subject matter,
cause or consideration, and DELIVERY. Delivery
is required of the very nature of the contract. (8
Manresa 637)
The real contracts referred to in Art 1316 are:
1. Deposit
2. Pledge
3. Commodatum, a loan where the identical
object must be returned.
C. Formal or Solemn Contracts
A formal or solemn contract requires a certain
specified form (compliance with the formalities
required by law), in addition to consent, subject
matter, and cause.
Principle of relativity of contracts
General rule: A contract is binding not only
between parties but extends to the heirs,
successors in interest, and assignees of the
parties, provided that the contract involves
transmissible rights by their nature, or by
stipulation or by provision of law.
Exceptions:
1. Stipulation pour autrui (stipulation in
favor of a third person) – benefits
deliberately conferred by parties to a
contract upon third persons.
Requisites:
a. The stipulation must be part, not whole of
the contract;
b. Contracting parties must have clearly and
deliberately conferred a favor upon third
person;
c. Third person must have communicated his
acceptance; and
d. Neither of the contracting parties bears the
legal representation of the third person.
2. When a third person induces a party to
violate the contract
Requisites:
a. Existence of a valid contract
b. Third person has knowledge of such
contract
c. Third person interferes without justification
3. Third persons coming into possession of the
object of the contract creating real rights
4. Contracts entered into in fraud of creditors
FORMALITY
Statutory Basis: (Art. 1356, NCC)
Contracts shall be obligatory, in whatever form
they may have been entered into, provided all
the essential requisites for their validity are
present. However, when the law requires that a
contract be in some form in order that it may be
valid or enforceable or that a contract be proved
in a certain way, that requirement is absolute
and indispensable.
Rules in the form of contract:
1. Contracts shall be obligatory, in whatever
form they may have been entered into,
provided all essential requisites for their
validity are present.
2. Contracts must be in a certain form.
General Rule: Form is not required in
consensual contracts.
Exceptions: When the law requires a contract
be in certain form:
i. TO BE VALID (This is true in formal or
solemn contracts.)
ii. TO BE ENFORCEABLE (This is true for the
agreements enumerated under the Statute
of Frauds, but of course this requirement
may be waived by acceptance of benefits
(partial) or by failure to object to the
presentation of oral (parol) evidence. (Art.
1403, NCC)
iii. FOR CONVENIENCE (This is true for the
contracts enumerated for example under
Art. 1358, NCC)
3. The parties may compel each other to
reduce the verbal agreement into writing.
Examples of formal contracts
If the form is not complied with, Art. 1357 of the
Civil Code cannot be availed of.
a. Donations of real property (these require a
public instrument). (Art. 749, NCC)
b. Donations of personal property (these
require a written contract or document if the
donation exceeds P500). (Art. 748, NCC)
c. Stipulation to pay interest on loans, interest
for the USE of the money (said stipulation
must be in writing).
d. Transfer of large cattle (this requires the
transfer of certificate of registration). (Sec.
523, Rev. Adm. Code)
e. Sale of land through an agent (the authority
of the agent must be in writing; otherwise,
the sale is null and void). (Art. 1874, NCC)
f. Contracts of antichresis (here the principal
loan, and the interest of any, must be
specified in writing; otherwise, the contract
of antichresis is void). (Art. 1773, NCC)
Right to compel each other to execute
required form
If the law requires a document or other special
form, as in the acts and contracts enumerated in
Article 1358 of the Civil Code , the contracting
parties may compel each other to observe that
form (Art.1357, NCC). But before the remedy
granted under Article 1357 can be availed, it is
necessary that the contract must have already
been perfected (Art.1357, NCC) and that the
same must have already been valid and
enforceable as to formalities (Art.1356, NCC).
Contracts which require form for
convenience
Necessity of Public Document in Article
1358, NCC
The provision of Article 1358 of the Civil Code
on the necessity of a public document is only for
convenience, not for validity or enforceability
(Dalion v. CA, 182 SCRA 872).
In other words, even if the following contracts
which are required to appear in a public
document pursuant to the provisions of Article
1358, they nevertheless remain valid and
enforceable as between the parties thereto:
1. Acts and contracts which have for their
object the creation, transmission,
modification or extinguishment or real rights
over immovable property; sales of real
property or of an interest therein are
governed by Articles 1403, No. 2, and 1405.
2. The cession, repudiation or renunciation of
hereditary rights or of those of the conjugal
partnership of gains.
3. The power to administer property, or any
other power which has for its object an act
appearing or which should appear in a
public document, or should prejudice a third
person.
4. The cession of actions or rights proceeding
from an act appearing in a public document
(Art. 1358, NCC)
Contracts, which require form for
enforceability
Statute of frauds: (Art. 1358, NCC)
This law provides that the following agreement
shall be unenforceable by action, unless the
same, or some note or memorandum thereof,
be in writing, and subscribed by the party
charged, or by his agent;
1. Agreement
that by its terms is not to be performed
within a year from the making thereof;
The test to determine whether an oral contract
is enforceable under the one-year rule of the
Statute of Frauds is whether, under its own
term, performance is possible within a year from
the making thereof. If so, the contract is outside
of the Statute of Frauds and need not be in
writing to be enforceable.
The broad view is that the Statute of Frauds
applies only to agreements not to be performed
on either side within a year from the making
thereof. Agreements to be fully performed on
one side within a year are taken out of the
operation of the statute. (National Bank v.
Philippine Vegetable Oil Co., 49 Phil. 857)
2. Special
promise to answer for the debt, default
or miscarriage of another;
Whether an oral promise to pay the debt of
another is enforceable under the Statute of
Frauds depends on whether such promise is an
original one or collateral promise. The Statute
applies only to a collateral promise, one which is
made by a third party to answer for the debt or
obligation of a primary party to a contract if that
party does not perform. If the promise is an
original or an independent one, that is, if the
promissory becomes thereby primarily liable for
the payment of the debt, the promise is not
within the Statute.
3. Agreement
made in consideration of marriage,
other than a mutual promise to marry;
A marriage settlement is an agreement made in
consideration of marriage covered by the
Statute of Frauds. Hence, it must be in writing
(Art. 77, FC) in order to be enforceable. On the
other hand, while donation propter nuptias are
likewise made in consideration of the marriage,
the same is no longer covered by the Statute
because the requirement of form in donation
propter nuptias is for validity. (Art. 83, FC; in relation
to Arts. 748-749, NCC)
4. Agreement
for the sale of goods, chattels or things
in action, at a price not less than
P500.00;
5. Agreement
for the leasing for a longer period than
one year, or for the sale of real
property or of an interest therein;
Not all agreements “affecting land” must be put
in writing to attain enforceability (Hernandez v. CA,
supra). Under the Statute, such formality is only
required of contracts involving leases for longer
than one year, or for the sale of real property or
of an interest therein (Art. 1403 [2][e], NCC).
6. A
representation as to the credit of a
third person.
 The note or memorandum, in fact, need not
be contained in a single document; nor,
when contained in two or more papers,
need each paper to be sufficient as to
contents and signature to satisfy the statute
(Berg v. Magdalena Estate, Inc., 92 Phil. 110).
Two or more writings properly connected
may be considered together; matters
missing or uncertain in one may be supplied
or rendered certain by another, and their
sufficiency will depend on whether, taken
together, they meet the requirement of the
statute as to contents and the requirements
of the statute as to signature (Ibid).
 That the exchange of written
correspondences between the parties may
constitute sufficient writing to evidence the
agreement for purposes of complying with
the Statute of Frauds. (City of Cebu v. Heirs of
Rubi, 306 SCRA 408)
Fundamental principles governing Statute
of Frauds:
1.
The statute simply provides the method by
which the contracts enumerated therein
may be proved, but does not declare them
invalid because they are not reduced to
writing (Swedish Match, Ab v. CA, 441 SCRA 1).
2.
The statute applies only to executory contracts
and not to contracts which are either
partially or totally performed (Averia v.
Averia, 436 SCRA 459).
 If the rule were otherwise, the Statute of
Frauds could be used to perpetuate fraud,
which is contrary to its avowed purpose of
preventing fraud (Carbonnel v. Poncio, 103
Phil. 655).
3.
Stated otherwise, the defense is applicable only
if the action is either for specific
performance of the oral contract or for
recovery of damages arising from a violation
thereof. (Asia Productions Co., Inc. v. Paño, 205
SCRA 458; citing Facturan v. Sabanal, 81 Phil.
512 and Eusebio v. Sociedad Agricola del Balarin,
16 SCRA 569).
4.
The defense of the Statute of Frauds is personal
to the contracting parties and may not be
raised by strangers to the contract (Art.
1408, NCC; Ayson v. CA, 97 Phil. 965).
5.
The defense of the Statute of Frauds may be
waived either by: (a) failing to object to the
presentation of oral evidence to prove the
contract, or (b) accepting benefits there
from (Art. 1405, NCC)
6.
The Statute of Frauds refers to specific kinds of
transactions and cannot apply to any other
transaction that is not enumerated in Article
1403, paragraph 2, of the Civil Code (Cruz v.
J.M. Tuason& Co., Inc., 76 Phil. 543; Western
Mindanao Lumber Co, Inc. v. Medalle, 79 SCRA
70; Rosencor Development Corp. v. Inquing, G.
R. No. 140479, March 8, 2011).
 An oral partition of real property is
enforceable since partition is not a
conveyance of property but simply a
segregation and designation of the part of
the property, which belongs to the co-
owners (Vda. De Espina v. Abaya, 196 SCRA
312).
 A right of first refusal need not be written to
be enforceable and may be proven by oral
evidence since it is not by any means a
perfected contract of sale of real property
(Rosencor Development Corp. v. Inquing, supra). An
oral agreement creating an easement of
right-of-way is also enforceable since it is
not a sale of real property or of an interest
therein (Western Mindanao Lumber Co., Inc. v.
Medalle, 79 SCRA 70).
7.
The Statute of Frauds is not applicable when
writing does not express the true intent of
the parties, and one of such parties offers to
prove by parol evidence the true agreement.
(Cuyugan v. Santos, 34 Phil. 100)
Contracts that MUST be registered:
 Chattel mortgages (Art. 2140, NCC)
 Sale or transfer of large cattle (Cattle
Registration Act)
III. REFORMATION OF INSTRUMENT
A. Definition – It is a remedy to conform to
the real intention of the parties due to
mistake, fraud, inequitable conduct,
accident (Art. 1359, NCC).
It is remedy in equity by means of which a
written instrument is made or construed so
as to express or conform to the real
intention of the parties (Huibonhoa vs. CA,
320 SCRA 625)
B. Requisites in Reformation of
Instruments (De Leon & De Leon Jr.,
Comments and Cases: Obligations and Contracts,
2010 ed., p 648)
1. Meeting of the minds to the contract
2. The true intention is not expressed in
the instrument
3. It was not expressed by reason of
(MAFI)
a. Mistake
b. Accident
c. Fraud
d. Inequitable conduct
4. The facts upon which relief by way of
reformation of the instrument is sought
are put in issue by the pleadings.
5. There must be a clear and convincing
proof of the mistake, accident, fraud, or
inequitable conduct (MAFI)
C. Cases where Reformation is
Allowed:
1. When a mutual mistake of the parties
causes the failure of the instrument to
disclose the agreement (Art. 1361, NCC)
2. When one party was mistaken and the
other acted fraudulently or inequitably
in such a way that the instrument does
not show their true intention, the former
may as for the reformation of the
instrument (Art. 1362, NCC)
3. When one party was mistaken and the
other knew or believed that the
instrument did not state their real
agreement, but concealed that fact from
the former (Art. 1363, NCC)
4. When through the ignorance, lack of
skill, negligence, or bad faith on the part
of the person drafting the instrument,
does not express the true intention of
the parties. (Art. 1364, NCC)
5. If the parties agree upon the mortgage
or pledge of real or personal property,
but the instrument states that the
property is sold absolutely or with right
of purchase (Art. 1365, NCC)
D. Cases where reformation IS NOT
allowed (Arts. 1366 and 1367, NCC)
1. Simple, unconditional donations
intervivos;
2. Wills;
3. When the agreement is void;
4. When an action to enforce the
instrument is filed (estoppel).
E. Prescriptive Period for Reformation
of Instruments
1. 10 years from the date of execution of
the instrument. (Pineda, Obligations and
Contracts, 2000 ed., p. 483)
2. It may be ordered at the instance of:
a. If the mistake is mutual – either party
or his successors in interest;
otherwise;
b. Upon petiion of the injured party; or
c. His heirs or assigns. (Art. 1368, NCC)
3. In reformation of contracts, what is
reformed is not the contract itself, but
the instrument embodying the contract.
4. It follows that whether the contract is
disadvantageous or not is irrelevant to
reformation and therefore, cannot be an
element in the determination of the
period for prescription of the action to
reform. (Pineda, Obligations and Contracts,
2000 ed., p. 469)
IV. INTERPRETATION OF CONTRACTS
A. Definition – Interpretation of a contract is
the determination of the meaning of the
words used by the parties in their contract.
(De Leon and De Leon Jr., Comments and Cases:
Obligations and Contracts, 2010 ed., p. 661)
B. Application – If the terms of a contract are
clear and leave no doubt upon the intention
of the contracting parties, the literal
meaning of its stipulations shall control.
If the words appear contrary to the evident
intention of the parties, the latter shall
prevail over the former. (Art. 1370, NCC)
C. Applicable rules on determining the
intention of parties:
1. In order to judge the intention of the
contracting parties, their contemporaneous
and subsequent acts shall be principally
considered. (Art. 1371, NCC)
2. A contract is what the law defines it to be,
considering its essential elements, and not
 what is called by the contracting parties. (De
Leon and De Leon, Comments and Cases:
Obligations and Contracts, 2010 ed., p 678.,
citing Schmid and Aberly, Inc. vs RJL Martinez
Fishin Corp, and Filinvest Credit Corp. vs. Court
of Appeals)
3. However general the terms of a contract
may be, they shall not be understood to
comprehend things that are distinct and
cases that are different from those which
the parties intend to agree (Art. 1372, NCC)
4. If some stipulation of any contract should
admit of several meanings, it shall be
understood as bearing that import which is
most adequate to render it effectual (Art.
1373, NCC)
5. The various stipulations of a contract shall
be interpreted together, attributing to the
doubtful ones that sense which may result
from all of them taken jointly (Art. 1374,
NCC)
6. Words which may have different
significations shall be understood in that
which is most in keeping with the nature
and object of the contract (Art. 1375, NCC)
7. The usage or custom of the place shall be
borne in mind in the interpretation of the
ambiguities of a contract, and shall fill the
omission of stipulations which are ordinarily
established (Art. 1376, NCC)
8. The interpretation of obscure words or
stipulations in a contract shall not favor the
party who caused the obscurity. (Art. 1377,
NCC)
9. If the doubts refer to incidental
circumstances of a gratuitous contract (see
Art. 1350, NCC), such interpretation shall be
made which would result in the least
transmission of rights and interests. (De
Leon and De Leon Jr., Comments and Cases:
Obligations and Contracts, 2010 ed., p 699)
10. If the contract in question is onerous (see
Art. 1350), such interpretation should be
made which would result in favor of the
greatest reciprocity of interests (De Leon and
De Leon Jr., Comments and Cases: Obligations
and Contracts, 2010 ed., p 699 citing Rodriguez
vs. Belgica, 1 SCRA 611[1961])
11. If the doubt refers to the principal object of
the contract and such doubt cannot be
resolved, thereby leaving the intention of
the parties unknown, the contract shall be
null and void. (Art 1378, NCC)
12. The Rules of Court on the interpretation of
documents contained in Rule 130, Section
10-19 are applicable for interpretation of
contracts (De Leon and De Leon Jr., Comments
and Cases: Obligations and Contracts, 2010 ed.,
p 702)
V. DEFECTIVE CONTRACTS
A. Rescissible Contracts (Art. 1381)
These are contracts, which are validly agreed
upon (Art. 1380, NCC) but in the cases
established by law (Arts. 1381-1382, NCC), the
remedy of rescission is granted in the interest of
equity.
It is a remedy granted by law to the contracting
parties and even to third persons, to secure the
reparation of damages caused to them by a
contract, even if this should be valid, by
restoration of things to their condition at the
moment prior to the celebration of the contract.
It implies a contract, which even if eventually
valid, produces a lesion or a pecuniary damage
to someone (Rabuya, Civil Law Reviewer Volume II,
2017 ed., p. 250)
Contracts Declared Rescissible Under
Articles 1381 and 1382, NCC:
1. Contracts entered into
by guardians on behalf of the ward and
contracts entered into by legal
representatives on behalf of the absentee, if
the ward or the absentee suffers lesion by
more than ¼ of the value of the things
which are the object of the contract (Art. 1381
[1] and [2], NCC). But if the court approved the
contract, the same is not rescissible (Art.
1386, NCC).
2. Contracts undertaken in
fraud of creditors (Art. 1381[3], NCC).
3. Contracts, which refer
to things under litigation if they have been
entered into by the defendant without the
knowledge and approval of the litigants or
 of competent judicial authority (Art. 1381[4], 3. The plaintiff must be able to return what he
NCC). may be obliged to restore if rescission is
4. All other contracts granted by the court (Art. 1385 [1], NCC).
specially declared by law to be subject to 4. The things, which are the object of the
rescission (Art. 1381[5], NCC); and contract, must not be in the legal possession
5. Payments made in a of third persons who did not act in bad faith
state of insolvency for obligations to whose (Art. 1385 [2], NCC).
fulfillment the debtor could not be
compelled at the time they were effected Prescriptive period
(Art. 1382, NCC).
The action for rescission must be filed within
ART. 1381 ART. 1191 four (4) years from accrual of the right of action
As to nature of remedy (Art. 1389, NCC).
Rescission is a subsidiary The rescission is a
remedy principal remedy B. Voidable Contracts (Art. 1390, NCC)
As to basis
The ground is lesion or The ground is breach of
These are contracts in which the consent of one
economic prejudice faith by the defendant
that violates the
party is defective, either because of want of
reciprocity between the capacity or because it is vitiated (Art. 1390, NCC),
parties but which contract is valid and binding and
As to who may be considered “ injured party” produces all its civil effects, until it is set aside
The action may be The action can be by final judgment of a competent court in an
availed of even by a third availed of only by a action for annulment (Art. 1390, last par., NCC;
party (as in the case of party to the contract Suntay v. Conjuangco-Suntay, 300 SCRA 760).
accion pauliana)
As to applicability to kinds of obligations Nature and Characteristics:
The rescission applies to The rescission applies 1. It is valid and binding and produces all its
all kinds of obligations exclusively to reciprocal civil effects, until it is set aside by final
obligations judgment of a competent court.
As to prescriptive period
2. However, it is defective because the consent
4 years from accrual of Either 10 years (for
right of action written contracts) or 6
of one of the parties was vitiated by want of
years (for oral contracts capacity, error, violence, intimidation, undue
As to discretionary power of court influence, or deceit. Hence, may be annulled
If the ground is proved, The court has by an action in court.
the court has no discretionary power not 3. It may be rendered perfectly valid by
discretion but to order to grant rescission if ratification, which can be express or implied,
rescission there is a just cause for such as by accepting and retaining the
the fixing of period. benefits of a contract.

4. The action for annulment is subject to the

Requisites of Rescission (as subsidiary
remedy):
1. The action must originate from any of the
causes specified in Articles 1381 and 1382,
NCC.
2. The plaintiff has no other legal means to
obtain reparation for the damage suffered
by him (Art. 1383, NCC).
statute of limitations. In other words, the
action for annulment may prescribe after the
lapse of four years.
5. A voidable contract can be assailed only in a
direct proceeding for that purpose and not
collaterally. (Niñal v. Bayadog, 328 SCRA 122)
Two kinds of voidable contracts:
1. Those where one of the parties is incapable
of giving consent to a contract; and
 Note: But where both parties are incapable
of giving consent, the contract is not merely
voidable but unenforceable (Art. 1403[3],
NCC).
2. Those were the consent is vitiated by
mistake, violence, intimidation, undue
influence or fraud (Art. 1390, NCC; Fule v. CA.
286 SCRA 698).
Who may institute action for annulment?
General Rule: In order for a party to have the
necessary standing to institute an action for
annulment, the following requisites must be
satisfied:
1. He must be a party obliged principally or
subsidiary in the contract; and
2. He is not the person sui juris or the party
responsible for the vice or defect. (Art. 1397,
NCC)
Exception: A person who is not a party obliged
principally or subsidiarily under a contract may
exercise an action for annulment of the contract
if (a) he is prejudiced in his rights with respect
to one of the contracting parties; and (b) he can
show detriment which would positively result to
him from the contract in which he has no
intervention. (Teves v. People’s Homesite & Housing
Corp., 23 SCRA 1141)
Prescriptive period for annulment - Action
for annulment must be brought within FOUR (4)
years (Art. 1391, NCC) and the period begins to
run:
a. In case of incapacity, from the time the
guardianship ceases;
b. In case of mistake or fraud, from the time of
its discovery;
c. In case of intimidation, violence or undue
influence, from the time the defect ceases.
Effects of ratification: Ratification cleanses
the contract from all its defects from the
moment it was constituted (Art. 1396, NCC).
Hence, it extinguishes the action to annul
voidable contract (Art. 1392, NCC).
How ratification can be effected:
1. It can be effected either expressly or
impliedly. An implied ratification is deemed
made when the party entitled to ask for
annulment, (1) with the knowledge of the
reason which makes the contract voidable,
(2) and such reason having ceased, (3)
should execute any act evincing an intent to
abide by the contract and implying an
intention to waive his right to annul the
same (Art. 1393, NCC).
2. If the defect consists in the incapacity of
one of the parties, the ratification may be
effected by the guardian of the
incapacitated person (Art. 1394, NCC).
3. It does not require the conformity of the
contracting party who has no right to bring
the action for annulment (Art. 1395, NCC).
Requisites for Ratification:
1. The contract must be voidable or annullable;
2. Ratification is made with knowledge of the
reason which makes the contract voidable
(Art. 1393, NCC);
3. At the time it is made, the reason which
makes the contract voidable has already
ceased. (Art. 1393, NCC);
4. It is effected by the party who has the right
to bring the action for annulment (Art. 1395,
NCC).
Effects of Annulment Decree:
General Rule: The effect of a judicial decree
annulling voidable contract is to restore to the
contracting parties their original condition before
the contract, and hence, they are required to
make mutual restitution of the subject matter,
with its fruits, and the price with its interest. In
obligations to render service, the value thereof
shall be the basis for damages. (Art. 1398, NCC).
Exception: When the defect of the contract
consists in the incapacity of one of the parties,
the incapacitated person IS NOT obliged to
make any restitution EXCEPT INSOFAR as he
has been benefited by the thing or price
received by him (Art. 1399, NCC).
Note: As long as one of the contracting parties
does not restore what in virtue of the decree of
annulment he is bound to return, the other
cannot be compelled to comply with what is
incumbent upon him (Art. 1402, NCC).

Effects of loss of object of contract:
If lost by DEFENDANT:
1. Thru his fault, he is obliged to return the
fruits received, the value of the thing at the
time of its loss, with interest from the same
date (Art. 1400, NCC);
2. If the loss is without fault on the part of the
defendant, but by fortuitous event, the
action for annulment is extinguished by loss
of the thing only when such loss is due to
the fault or fraud of the person entitled to
ask for annulment. The defendant is free
from liability (Tolentino, Civil Code of the
Philippines Volume 4, 1991 ed., p.613-614)
If lost by party who has right to annul
(plaintiff):
1. Thru his fault or fraud, the action for
annulment is extinguished (Art. 1404, NCC),
even if at the time of the loss, the plaintiff
was still a minor or was insane. (Report of
the Code Commission, March 8, 1951)
2. Thru fortuitous event and without his fault,
the action for annulment is not
extinguished. Hence, if the plaintiff offers
the value of the thing at the time of its loss
(without need of paying interest thereon),
the defendant can be obliged to make
restitution. (Tolentino, Civil Code of the
Philippines Volume 4, 1991 ed., p.613-614)
Note: The action for annulment is extinguished
only when the loss of the object of the contract
is due to the fault or fraud of the plaintiff (or the
party entitled to ask for annulment (Art. 1401,
NCC)
C. Unenforceable Contracts (Art. 1403,
NCC)
Nature and Characteristics:
1. They cannot be sued upon or enforced
unless they are ratified (Art. 1403, NCC), as
distinguished rescissible and annullable
contracts which produce legal effects unless
they are set aside by a competent court.
2. But it is a valid contract, though
unenforceable. The defect of the contract
can be cured by ratification.
3. They cannot be assailed by third persons
(Art. 1408, NCC). In other words, the defense
of unenforceability of contracts is personal
only to the parties to the contract.
Three kinds of unenforceable contracts:
1. Those entered into in the name of another
without the latter’s authority or legal
representation, or beyond the agent’s
power,
2. Those that do not comply with the Statute
of Frauds; and
3. Those where both parties are incapable of
giving consent to a contract (Art. 1403, NCC).
Without or Excess of Authority:
1. If the agent contracts without authority:
a. And the contract involves the sale of a
parcel of land or any interest therein
belonging to the principal, the sale is
void (Art. 1874, NCC);
b. And the principal does not ratify the
contract, the contract is void as the
alleged principal but the agent is
personally liable to the party with whom
he contracted.
c. The third person with whom the agent
contracted may revoke the contract
prior to its ratification by the principal
(Art. 1317, NCC).
2. If the agent exceeds his authority and the
principal does not ratify the contract:
a. The principal is not bound (Art. 1910, NCC),
except when he allows the agent to act
as though the latter had full powers, he
becomes solidarily liable with the agent
(Art. 1911, NCC).
b. The agent is personally liable to the
party with whom he contracts if he did
not give such party sufficient notice of
his powers (Art. 1897, NCC).
3. If the agent exceeds his authority and the
principal ratifies the contract or has signified
his willingness to ratify the agent’s acts, a
third person cannot set up the fact that the
 agent has exceeded his powers (Art. 1901, validity of contract
NCC).
 Cause is the essential reason of a
Ratification of unenforceable contracts: contracting party which does not affect the
other party. (Uy v. CA, G. R. No. 120465, Sept.
1) For contracts infringing the Statute of 9, 1999)
Frauds, they are ratified either by:
a. Failure to object to the presentation of For example, in a contract of sale of a piece of
oral evidence to prove the contract; or land, such as in this case, the cause of the
b. Acceptance of benefits under the vendor in entering into the contract is to obtain
contract (Art. 1405, NCC); the price, and for the vendee, NHA, it is the
acquisition of the land. The motive of the NHA,
2) For contracts which are unenforceable by on the other hand, is to use said lands for
reason of incapacity of both parties: housing.
a. The ratification may be made by the
parents or guardian of the General Rule: It is the illegality or immorality
incapacitated; of the cause which renders the contract void
b. If the contract is ratified by the parent and, ordinarily, a party’s motives for entering
or guardian of one of the contracting into the contract do not affect the contract (Uy
parties, the contract becomes voidable v. CA, G. R. No. 120465, Sept. 9, 1999).
because such ratification shall give the
contract the same effect as if only of Exception: When the motive predetermines the
them were incapacitated (Art. 1407 [1], purpose of the contract, the motive may be
NCC); regarded as the cause (Liguez v. CA. G. R. No.
c. If the ratification is made by the parents 11240, Dec. 18, 1957). When they blend to that
or guardians of both the contracting degree, and the motive is unlawful, then the
parties, the contract is considered contract entered into is null and void. (Olegario v.
validated from the inception (Art. 1407 CA, G.R. No. 104892 November 14, 1994)
[2], NCC).
2. Those which are absolutely simulated or
fictitious (Art. 1409 [2]. NCC);
D. Void and Inexistent Contracts (Art. 3. Those whose cause or object did not exist at
1409, NCC) the time of the transaction (Art. 1409 [3].
NCC);
These contracts are absolute nullity and produce 4. Those whose object is outside the
no effect, as if it had never been executed or commerce of men (Art. 1409 [4], NCC);
entered into:
5. Those which contemplate of an impossible
1. Those whose cause, object or purpose is service (Art. 1409 [5], NCC);
contrary to law, morals, good customs,
public order or public policy (Art. 1409 [1],  At the time of delivery or consummation
NCC); stage of the sale, it is required that the
seller be the owner of the thing sold;
CAUSE MOTIVE otherwise, he will not be able to comply with
The essential reason Not essential, but
his obligation to transfer ownership to the
which moves the particular or personal
buyer. It is at the consummation stage
contracting parties to reason to enter a
enter into contract contract where the principle of nemodat quod non
It is always known to the It may be unknown to habet applies (Cavite Development Bank v. Lim,
other party the other party February 1, 2000).
Absence of cause Absence of motive  When the sellers can no longer deliver the
renders the contract void does not affect the object of the sale to the buyers, as the
 buyers themselves have already acquired
title and delivery thereof from the rightful
owner, the contract of sale is not valid.
Thus, such contract may be deemed to be
inoperative and may thus fall, by analogy,
under item No. 5 of Article 1409 of the Civil
Code. (Nool v. CA, 276 SCRA 144)
6. Those where the intention of the parties
relative to the principal object of the
contract cannot be ascertained (Art. 1409 [6],
NCC); and
7. Those expressly prohibited or declared void
by law (Art. 1409 [7], NCC).
 The principle of in pari delicto cannot be
invoked with respect to inexistent contracts
(Modina v. CA, 317 SCRA 696). It can only be
invoked in relation to void contracts. Hence,
the latter may eventually produce legal
effects while the former cannot produce any
effect whatsoever.
Characteristics of void or inexistent
contracts:
1. The contract produces no effect whatsoever
either against or in favor of anyone
following the principle quod nullum est
nullum producit effectum.
VOID INEXISTENT
If nullity proceeds from Absolutely cannot
illegality, it will produce produce any legal
barring effect effect
May prescribe according Imprescriptible
to Statute of Limitations
 Although not barred by prescription, the
right to have a contract declared void ab
initio may be barred by laches (MWSS v. CA,
297 SCRA 287).
2. Void or inexistent contracts cannot be
ratified (Quano v. CA, 188 SCRA 799). The
defect of a void or inexistent contract is
permanent (Teja Marketing v. IAC, 148 SCRA
347). Mere lapse of time cannot its efficacy
(Fomilda v. Branch 164, RTC IVth Judicial
Region, Pasig, 166 SCRA 281). Hence, it cannot
be validated either by time or by ratification
(Palmera v. Civil Service Commission, 235 SCRA
87).
3. The right to set up the defense of
inexistence or absolute nullity cannot be
waived (Fomilda v. Branch 164, RTC IVth
Judicial Region, Pasig, 166 SCRA 281).
4. The inexistence or absolute nullity of a
contract cannot be invoked by a person
whose interests are not directly affected
(Art. 1421, NCC; Chavez v. PCGG, 307 SCRA
394).
Necessity of action to declare contract
inexistent or void:
If purely executory - If the void or inexistent
contract is still fully executory, there is no need
for such an action (Razon v. Phil. Ports Authority, 151
SCRA 233). But if any party should bring an action
to enforce it, the other party can simply set up
the nullity of the contract or its non-existence as
a defense.
If already executed – If the void or inexistent
contract had already been executed, an action
to declare the non-existence of the contract or
its nullity can be maintained for the purpose of
recovering what has been given by virtue of that
contract (Rongavilla v. CA, 294 SCRA 289). The reason
for this rule is that nobody can take the law into
his own hands.
1. Pactum Commissarium (Arts. 2088,
2130, NCC)
A stipulation whereby the thing pledged or
mortgaged or under antichresis shall
automatically become the property of the
creditor in the event of non-payment of the debt
within the term fixed. This is forbidden by law
and any stipulation to this effect is declared null
and void. (Art. 2088, NCC). Pactum
Commissarium is prohibited by law and a
stipulation to this effect is null and void.
However, only the prohibited stipulation is void
and shall not affect the validity of the principal
obligation.
Requisites of Pactum Commissarium:
a. A pledge, mortgage, or antichresis of
property by way of security for the payment
of the principal obligation;
b. A stipulation for an automatic appropriation
by the creditor of the property in the event
of non-payment of the obligation within the
stipulated period.
2. Pactum De Non Alienando (Art. 2130,
NCC)
A stipulation forbidding the owner from
alienating the immovable mortgage shall be void
for being contrary to public policy inasmuch as
the transmission of property should not be
unduly impeded.
3. Pactum Leonina (Art. 1799, NCC)
In a contract of partnership, none of the
partners can be excluded from participation in
the profits and losses.
NATURAL OBLIGATIONS
A. Civil and Natural Obligations
Distinguished:
 Obligations are civil or natural.
1. Civil obligations give a right of action to
compel their performance.
2. Natural obligations, not being based on
positive law but on equity and natural law,
do not grant a right of action to enforce
their performance, but after voluntary
fulfillment by the obligor, they authorize the
retention of what has been delivered or
rendered by reason thereof. (Art. 1423, NCC)
B. Voluntary Fulfillment
Voluntary fulfillment means that the debtor
complied with the same even if he knew that he
could not have been legally forced to do so.
Thus, payment through a coercive process of
the writ of execution issued at the instance and
insistence of the prevailing party is NOT
considered voluntary, and the provisions of the
law on natural obligations cannot be applied
thereto. (Manila Surety & Fidelity Co. vs. Lim, G.R.
No. L-9343, December 29, 1959)
 In case of partial voluntary fulfillment, the
balance cannot be recovered, since on said
balance, there has not yet been created a
legal obligation.
C. No Juridical Tie in Moral Obligations
 While there is a juridical tie in natural
obligations, there is none in moral
obligations. Thus giving a legal assistance to
one’s employee (accused of a crime) is
merely a moral obligation, and the employee
cannot recover attorney’s fee from the
employer. (Dela Cruz vs. Northern Theatrical
Enterprises, Inc., et. al., 50 O.G. 4225,
September 1954)
D. Extinctive Prescription
 When a right to sue upon a civil obligation
has lapsed by extinctive prescription, the
obligor who voluntarily performs the
contract cannot recover what he has
delivered or the value of the service he has
rendered. (Art. 1424, NCC)
 Effect of Extinctive Prescription: By virtue of
extinctive prescription, a right or property
has been lost.
E. Payment by Third Person
 When without the knowledge or against the
will of the debtor, a third person pays a debt
which the obligor is not legally bound to pay
because the action thereon has prescribed,
but the debtor later voluntarily reimburses
the third person, the obligor cannot recover
what he has paid. (Art. 1425, NCC)
 If payment is made with the consent of the
debtor, a civil obligation arises.
F. Contracts by Minors
 When a minor who has entered into a
contract without the consent of the parent
or guardian, after the annulment of the
 contract voluntarily returns the whole thing
or price received, notwithstanding the fact
the he has not been benefited thereby,
there is no right to demand the thing or
price thus returned. (Art. 1426, NCC)
Contracts by minors; when there has been
annulment:
1. This applies to minors when the contract
was without parental consent.
2. Here after annulment, there was a
VOLUNTARY return.
 When a minor who has entered into a
contract without the consent of the parent
or guardian, voluntarily pays a sum of
money or delivers a fungible thing in
fulfillment of the obligation, there shall be
no right to recover the same from the
obligee who has spent or consumed it in
good faith. (Art. 1427, NCC)
Contracts by Minors – No Annulment Yet:
a. Generally, annulment requires mutual
restitution. Here, the obligee who has spent
or consumed the object in good faith is not
required to restore.
b. Good faith of the obligee must be present at
the time of spending or consuming.
c. Note that the majority age today is 18, and
“fungible” here really means “consumable”.
G. Performance after an Action to Enforce
a Civil Obligation has failed
 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. (Art. 1428, NCC)
H. Rule in case of Payment of Debts
Beyond Value of the Decedent’s Estate
 When a testate or intestate heir voluntarily
pays a debt of the decedent exceeding the
value of the property which he received by
will or by the law of intestacy from the
estate of the deceased, the payment is valid
and cannot be rescinded by the payer. (Art.
1429, NCC)
 Heirs inherit only to the extent of the value
of the inheritance.
I. Payment of Legacies despite the fact
that the Will is Void
 When a will is declared void because it has
not been executed in accordance with the
formalities required by law, but one of the
intestate heirs, after the settlement of the
debts of the deceased, pays a legacy in
compliance with a clause in the defective
will, the payment is effective and
irrevocable. (Art. 1430, NCC)
 If the will is void, the legacy would also be
void and the deceased is considered to have
died without a will
ESTOPPEL (Art. 1431-1439)
A. The Rule on Estoppel
Through estoppel an admission or
representation is rendered conclusive upon the
person making it, and it cannot be denied or
disproved as against the person relying thereon
(Art. 1431, NCC)
B. Kinds of Estoppel
There are generally three kinds of estoppel:
(1) estoppel in pais - a person is considered in
estoppel if by his conduct, representations or
admissions or silence when he ought to speak
out, whether intentionally or through culpable
negligence, causes another to believe certain
facts to exist and such other rightfully relies and
acts on such belief, as a consequence of which
he would be prejudiced if the former is
permitted to deny the existence of such facts;
(2) estoppel by deed - occurs when a party to a
deed and his privies are precluded from denying
any material fact stated in the said deed as
against the other party and his privies; and
 intention
(3) estoppel by laches – It is considered an Applied if the other party Does not rest upon
equitable estoppel wherein a person who failed would be unjustly prejudice
or neglected to assert a right for an prejudiced
unreasonable and unexplained length of time is
presumed to have abandoned or otherwise D. Laches
declined to assert such right and cannot later on
seek to enforce the same, to the prejudice of 1. Definition – It is failure or neglect, for an
the other party, who has no notice or knowledge unreasonable and unexplained length of
that the former would assert such rights and time, to which, by exercising due diligence,
whose condition has so changed that the latter one could or should have done earlier; it is
cannot, without injury or prejudice, be restored negligence or omission to assert a right
to his former state. within a reasonable time, warranting a
presumption that the party entitled to assert
it either has abandoned it or declined to
assert it. (Tijam vs. Sibonghanoy, 23 SCRA 29)

C. Estoppel distinguished from other 2. Elements of estoppels by laches:

concepts i. Conduct on the part of the defendant or
of one under whom he claims, giving
1. Distinguished from waiver (De Leon and De rise to the situation of which complaint
Leon Jr., Comments and Cases: Obligations and is made;
Contracts, 2010 ed., p 855) ii. Delay in asserting the complainant’s
right, the complainant having had
Estoppel Waiver knowledge or notice of the defendant’s
May arise even though Voluntary and conduct and having been afforded an
there was no intention intentional opportunity to sue
on the part of the party abandonment or iii. Lack of knowledge or notice on the part
estopped to relinquish or relinquishment of a of the defendant that the complainant
change any existing right known right
would assert the right on which he
Prejudice to the other Not necessarily imply
party is one of the that the party asserting
bases his suit
essential elements of an it has been misled to iv. Injury or prejudice to the defendant in
equitable estoppel his prejudice the event relief is accorded to the
Involves the conduct of Involves the conduct of complainant, or the suit is not held to be
both parties only one of the parties barred
Frequently carries the Does not carry the
implication of fraud implication of fraud 3. Laches and Prescription Distinguished (De
Leon and De Leon, Comments and Cases:
2. Equitable Estoppel distinguished from Obligations and Contracts, 2010 ed., p 865)
ratification (De Leon and De Leon Jr.,
Comments and Cases: Obligations and Contracts,
2010 ed., p 855-856) PRESCRIPTION LACHES
Concerned with the fact Concerned with the
Estoppel Ratification of delay fact of delay and deals
The substance of The substance of with the effect of
estoppels is inducement ratification is unreasonable delay
to another to act to his confirmation after A matter of time Principally a question
prejudice conduct of inequity or
He is bound A party is bound unfairness founded on
notwithstanding that because he intended to some change in the
there was no such be condition of the
 property or the relation 2. Estoppel against agent who sells for another
of the parties (Art.1435)
Statutory Not statutory 3. Estoppel against tenant or bailee (Art.1436)
4. Estoppel against owner of immovable
Applies at law Applies in equity
(Art.1437)
Based on a fixed time Not based on a fixed
time 5. Estoppel by acceptance of benefits (Art.1438)

E. Estoppel as applied

1. Estoppel against vendor who subsequently

acquires title (Art.1434)
 SUMMARY OF DEFECTIVE CONTRACTS:

Rescissible
Voidable Contracts Unenforceable Contracts Void Contracts
Contracts
Defect
Damage to a party or Vitiation of consent Without or in excess of Absolute lack of essential
to a third party authority, or does not requisite in fact or in law.
comply with Statute of
Frauds, or both parties are
incapacitated.
Effect
Cannot be enforced by court Does not produce any
Valid until rescinded. Valid until annulled.
action. effect.
Grounds
Arts. 1381 – 1382,
Art. 1390, NCC Art. 1403, NCC Art. 1409, NCC
NCC
Necessity of Damage
Necessary Not necessary
Ratification
Cannot be ratified May be ratified. Cannot be ratified.
Prescription
Prescriptible - Imprescriptible
Assailability by third persons
Assailable by a party Assailable by a party or by
or by a third party Assailable only by a party to the contract a third party who is
who is damaged. damaged.
 PART V: SALES
I. DEFINITION AND ESSENTIAL
REQUISITES OF A CONTRACT OF
SALE
A. Definition
By the contract of sale, one of the contracting
parties obligates himself to transfer the
ownership and to deliver a determinate thing,
and the other to pay therefore a price certain
in money or its equivalent. (Art. 1458, NCC)
 The contract of sale is not a mode for
acquisition or transmission of ownership;
it only creates title. (San Lorenzo
Development Corp. v. CA, G. R. No. 124242,
Jan. 21, 2005; Equatorial Realty Development,
Inc. v. Mayfair Theater, Inc., 370 SCRA 56;
Norkis Distributors, Inc., v. CA, 193 SCRA 694;
Aznar v. Yapdiangco, 13 SCRA 486)
B. Characteristics of a Contract of Sale
1. Nominate – it has been given a
particular name by law (Art. 1458).
2. Principal – it can stand on its own, and
does not depend on another contract for
its validity.
3. Bilateral – it creates reciprocal
obligations – the seller obligates himself
to transfer the ownership of and deliver a
determinate thing, and the buyer
obligates himself to pay therefor a price
certain in money or its equivalent.
Reciprocal obligations are those which
arise from the same cause and in which
party is a debtor and a creditor of each
other, such that the obligation of one is
dependent upon the obligation of the
other. (Carrascoso, Jr. v. CA, 477 SCRA 666)
4. Consensual – It is perfected by mere
consent of the parties. The essence of
consent is the agreement of the parties
on the terms of the contract, the
acceptance by one and the offer made by
the other. (Vda. De Ape v. CA, 456 SCRA
193; Torcuator v. Bernabe, 459 SCRA 439)
The essence of consent is the agreement
of the parties on the terms of the
contract, the acceptance by one of the
offer made by the other. It is the
concurrence of the minds of the parties
on the object and the cause, which
constitutes the contract. The area of
agreement must extend to all points that
the parties deem material or there is no
consent at all. (Leonardo v. Court of Appeals,
G.R. No. 125485)
5. Onerous and Commutative – A
contract of sale is normally commutative
and onerous: not only does each one of
the parties assume a correlative obligation
(the seller to deliver and transfer
ownership of the thing sold and the buyer
to pay the price), but each party
anticipates performance by the other from
the very start. (Gaite v. Fonacier, 2 SCRA
830, 837)
 In a sale the obligation of one party can
be lawfully subordinated to an uncertain
event, so that the other understands that
he assumes the risk of receiving nothing
for what he gives [as in the case of a sale
of hopes or expectations, emptio spei,
which makes the contract ALEATORY and
not commutative (Art. 2010, NCC). But this
exception is not the usual course of
business; hence, the contingent character
of the obligation must clearly appear.
(Gaite v. Fonacier, supra.)
C. Elements
I - ESSENTIAL REQUISITES OF A VALID
CONTRACT OF SALE – ART. 1505, NCC
1. Consent or meeting of the minds to
transfer ownership in exchange for the
price
Being a consensual contract, the contract of
sale is perfected at the moment there is a
“meeting of the minds” upon the thing which
is the object of the contract and upon the
price. (Art. 1475, NCC)

Requisites:
a. Capacity,
b. Offer and acceptance, and
c. No vitiation of consent
2. Determinate subject matter
3. Price certain in money or its equivalent.
(CORONEL VS. COURT OF APPEALS, 1996)
 It is not enough for the parties to agree
on the price of the property, but they
must also agree on the manner of
payment of the price of the property to
give rise to a binding and enforceable
contract of sale or contract to sell. This is
because the agreement as to the manner
of payment goes into the price, such that
a disagreement on the manner of
payment is tantamount to a failure to
agree on the price. (Boston Bank of the Phil.
V. CA, 482 SCRA 108)
 In expropriation and foreclosure
proceedings, there can be a valid sale but
not by the meeting of the minds since the
other party is compelled to enter into a
contract.
II - Natural Elements – These are the
elements that exist naturally in a contract of
sale, unless the parties provide the contrary.
These are the implied warranties against
eviction and hidden defects (Art. 1547, NCC).
III - Accidental Elements – those, which
are dependent on the parties’ stipulation (e.g.
conditions, interest, penalty, time or place of
payment).
D. Stages
1. Preparation: the period of negotiation
and bargaining.
2. Perfection: It is the stage where the
validity of the contract of sale is
determined; the moment when the parties
come to agree on the terms of the
contract.
3. Performance
4. Consummation: The stage of
consummation begins when the parties
perform their respective undertakings
under the contract culminating in the
extinguishment thereof. Sale by the
owner is valid as well as the transfer of
title. A sale by a non-owner is likewise
valid because it has passed perfection
stage; however, the transfer of title is
VOID.
E. Sale Distinguished from Other
Contracts
1. Distinguished From Barter
Barter is a contract where there is an
exchange of a thing for another thing. If the
consideration is partly in money and partly in
another thing, the contract is either barter or
sale (Art. 1638, NCC):
a. The contract shall be one of sale or barter
depending on the manifest intention of
the parties
b. If such intention is not clear:
1) The contract is barter if the value of
the thing given as part of
consideration exceeds the amount of
the money;
2) The contract is one of sale if the
amount of money exceeds the value
of the thing given as part of the
consideration (Art. 1468, NCC).
2. Distinguished From Contract For
Piece of Work:
a. If the contract is for the delivery at a
certain price of an article which the
vendor in the ordinary course of his
business manufactures or procures for the
general market, whether on hand at that
time or not, the contract is one of sale
(Art. 1467, NCC).
b. If the goods are to be manufactured
especially for the customer and upon his
 special order, and not for the general
market, the contract is one for a piece of
work (Art. 1467, NCC). In short, if the thing
will not come into existence except upon
the order of a customer, the contract is
one for a piece of work.
3. Distinguished from Agency To Sell:
a. In sale, the buyer, after delivery, normally
becomes the owner of the subject matter.
In agency to sell, the principal retains
ownership of the goods, even as it
delivered possession unto the dealer for
resale to customers, the price and terms
of which were subject to the principal’s
control. (Ker & C0., Ltd. vs. Lingad, 38 SCRA
524)
b. In sale, the buyer has the obligation to
pay the purchase price. In agency to sell,
the agent has no such obligation and his
obligation is to deliver to the principal the
price he obtains from the sale of the
thing, and if he does not succeed in
selling it, he returns it. (Quiroga vs.
Parsons, 38 Phil. 501)
c. Lastly, one factor which most clearly
distinguishes agency form other legal
concepts is control; one person – the
agent- agrees to act under the control or
direction of another – the principal.
(Victorias Milling Co. vs. CA, 333 SCRA 663)
4. Contract of Sale vs. Contract to Sell
Contract to Sell
A bilateral contract whereby the prospective
seller, while expressly reserving the ownership
of the property despite delivery thereof to the
prospective buyer, binds himself to sell the
property exclusively to the prospective buyer
upon fulfillment of the condition agreed, that
is, full payment of the purchase price. (Tan v.
Benolirao, G. R. No. 153820, Oct. 16, 2009) As
defined in this manner, a contract to sell as
defined hereinabove may not even be
considered as a conditional contract of sale.
(United Muslim and Christian Urban Poor
Association, Inc. v. Bryc – V. Development Corp. G.
R. No. 179653, July 31, 2009)
Importance of Distinctions Between
Contract to Sell and Conditional Contract
of Sale:
 In a contract to sell, there being no
previous sale of the property, a third
person buying such property despite the
fulfillment of the suspensive condition
such as the full payment of the purchase
price, cannot be deemed a buyer in bad
faith and the prospective buyer cannot
seek the relief of reconveyance of the
property. There is no double sale in such
case. Title to the property will transfer to
the buyer after registration because there
is no defect in the owner-seller’s title per
se, but the latter may be sued for
damages by the intending buyer. (United
Muslim and Christian Urban Poor Association,
Inc. v. Bryc-V Development Corp., supra.)
 In a conditional contract of sale, however,
upon the fulfillment of the suspensive
condition, the sale becomes absolute and
this will definitely affect the seller’s title
thereto. In fact, if there had been
previous delivery of the subject property,
the seller’s ownership or title to the
property is automatically transferred to
the buyer such that, the seller will no
longer have any title to transfer to any
third person. Applying Article 1544 of the
Civil Code, second buyer of the property
who may have had actual or constructive
knowledge of such defect in the seller’s
title, or at least was charged with the
obligation to discover such defect, cannot
be a registrant in good faith. Second
buyer cannot defeat the first buyer’s title.
In case
 a title is issued to the second buyer, the
first buyer may seek reconveyance of the
property subject of the sale. (Ibid.)
Contract of Sale and Contract to Sell,
Distinguished:
 Contract of Sale Contract to Sell
The non-payment of The payment in full of
price is a resolutory the price is a positive
condition, i.e., the suspensive
contract of sale may condition.
by such occurrence
put an end to a IF the price is not
transaction that once paid, it is as if the
upon a time existed obligation of the
seller to deliver and
to transfer ownership
never became
effective and binding.
(Paras, 2008 Ed., p. 9)
Title over the Ownership is retained
property generally by the seller,
passes to the buyer regardless of delivery
upon delivery and is not to pass
until full payment of
the price (Paras, 2008
Ed., p. 9)
The vendor has lost The title remains in
and cannot recover the vendor if the
the ownership of the vendee does not
land sold until and comply with the
unless the contract of condition precedent
sale is itself resolved of making payment at
and set aside. the time specified in
the contract. (PNB v.
CA, G.R. No. 119580, Sep.
26, 1996)
II. OBLIGATIONS CREATED (Art. 1165,
NCC)
General Obligations of Vendee:
1. Payment of price; and
2. Accepting the delivery of thing sold.
Obligation to Pay Price:
1. As to time and place: Must pay at the
time and place stipulated in the contract.
If no stipulation, at the time and place of
the delivery of the thing sold (Art. 1582,
NCC)
2. Liability for interest: For the period
between delivery and payment of price, in
the following cases-
a. If stipulated
b. If thing sold and delivered produced
fruits and income; or
c. If buyer is in default, from time of
judicial or extrajudicial demand for
payment of price (Art. 1589, NCC).
Obligation to Accept Delivery:
1. Time and place: The vendee is bound to
accept delivery at the time and place
stipulated in the contract. If not
stipulated, at time and place of the
delivery of thing sold (Art. 1582, NCC).
2. Rule in delivery of goods by
installment. Buyer cannot be compelled
to accept delivery of goods by installment,
unless otherwise agreed upon (Art. 1583,
NCC)
Rule on right of buyer to examine:
1. If not previously examined by buyer – if
no stipulation to contrary, delivery is not
deemed accepted unless buyer has
reasonable opportunity to examine the
delivered goods (Art. 1584 [1], NCC).
2. Buyer has, upon request and unless there
is contrary agreement, the right to
examine the goods when seller tenders
delivery of the same (Art. 1584 [2], NCC).
3. If goods are delivered to carrier by seller
upon terms that goods are not to be
4. delivered by carrier to buyer until the
latter has paid the price, buyer is not
entitled to examine prior to payment of
price, unless there is an agreement or
usage of trade permitting such
examination (Art. 1584 [3], NCC).
Circumstances indicating acceptance of
goods:
1. When buyer intimates to the seller that he
has accepted them;
2. When goods have been delivered to buyer
and he does any act in relation to them
which is inconsistent with the ownership
of the seller; or
3. When, after the lapse of a reasonable
time, buyer retains the goods without
 intimating to seller that he has rejected
them (Art. 1585, NCC) A. Capacity of Parties, ARTS. 1489-
1492, NCC
Effect of acceptance on seller’s breach: General Rule: All persons, whether natural
1. Seller remains liable for damages or other or juridical, who can bind themselves, have
legal remedy for breach of any promise or legal capacity to buy and sell.
warranty in the contract of sale, in the
absence of agreement to the contrary. Exception - Those incapacitated to enter
2. But buyer must give notice to seller of into contracts:
such breach within a reasonable time 1. Absolute incapacity
after the buyer knows, or ought to know, 2. Relative incapacity
of such breach; otherwise, seller is not 3. Specific incapacity/Special disqualifications
liable (Art. 1586, NCC).
Absolute Incapacity (Arts. 1327, 1397,
Effect of refusal to accept delivery: 1399, NCC):
If refusal is justified – 1. Minors
1. Buyer is not bound to return goods to 2. Insane or Demented
seller but he must notify seller of his 3. Deaf-mutes who do not know how to
refusal; write
2. If buyer is not justified, titled thereto 4. Civil Interdiction
passes to him from the moment goods a. Judicially-declared Incompetents
are placed at his disposal (Art. 1588, NCC). Prodigals
b. Imbeciles
General Obligations of the Vendor: c. Absence & presumption of death
1. Transfer the ownership d. Persons not of unsound mind but by
2. Deliver the thing sold reason of age, disease, weak mind,
and other similar causes, cannot take
3. Deliver the fruits and accessories care of
4. Make warranties themselves and manage their
5. Take of the thing, pending delivery, with property without outside aid
proper diligence
6. Pay for the expenses for the execution Relative Incapacity:
and registration of the sale, unless there 1. Married Persons - Husband and Wife
is stipulation to the contrary (Art. 1490, NCC)
7. Accord the buyer the right to examine the
goods. General Rule: Cannot sell property to each
8. Enter into contract with the carrier on other
behalf of other buyer as may be Exceptions:
reasonable under the circumstances a. Separation of property in marriage
9. Notify the buyer. settlement, OR
b. Judicial separation of property.
Sale is a Title and not a Mode of Aquiring
Ownership: It only constitutes the legal 2. Alienage (Art. 39, NCC)
basis by which to affect dominion or
ownership. Therefore, sale by itself does not General Rule: Aliens are disqualified from
transfer or affect ownership. The most that it purchasing or acquiring lands.
does is to create the obligation to transfer Exception: If acquisition is through
ownership. It is delivery that transfers hereditary succession
ownership. (Villanueva, Law on Sales, 2009 ed., p.15)
3. Trusteeship
III.PARTIES TO A CONTRACT OF SALE
Special Disqualifications (Arts. 1491-
1492, NCC)
1. Agents
General Rule: Cannot purchase or acquire
property whose administration or sale was
entrusted to them
Exception: Principal gives consent.
2. Guardian
Cannot purchase property of person under his
guardianship
Rationale: Guardianship is a trust of the
highest order, and the trustee cannot be
allowed to
have any inducement or neglect his ward’s
interest (Phil Trust Co vs. Roldan, 1956).
3. Executors and Administrators
Cannot acquire or purchase property of estate
under their administration
4. Public Officers and Employees
Cannot acquire or purchase property of
State/any of its subdivisions, GOCC or
administration, the administration of which
was entrusted to them. Includes judges and
government experts who in any manner
whatsoever take part in the sale.
5. Lawyers
Cannot acquire or purchase property or rights
in litigation in which they take part by virtue
of their profession
Rationale: Lawyers may have undue
influence over client; greed may get the
better of the sentiments of loyalty and
disinterestedness.
(Valencia v Cabanting, 1991)
Prohibition is definite and permanent and
cannot be cured by ratification . (Rubias v
Batiller, 1973)
Exceptions: An assignment to a lawyer by
his client of an interest in the property does
not violate Art. 1491, where:
a. A judgment has been rendered and has
become final; and
b. In case of contingency fee arrangements:
the interest of the lawyer may be
annotated as an adverse claim on the
property awarded to hi client (Director of
Lands vs. Ababa, 1979)
6. Justices, Judges, prosecuting
attorneys, clerks and other officers
and employees connected with the
administration of justice
Cannot acquire or purchase property or rights
in litigation or levied upon on execution before
the court within which jurisdiction or territory
they exercise their respective functions.
Rationale: to prevent fraud and to surround
their profession with prestige.
Prohibition applies only on sales or
assignment during the pendency of litigation
involving the property. (Macariola v Asuncion,
1963)
Sale to a Minor
Rule: The contract is voidable. But where
necessaries are sold and delivered to a minor
or other person without capacity to act, the
incapacitated person must pay a reasonable
price therefor (Art. 1489 [2], NCC).
Necessaries cover everything indispensable for
sustenance, dwelling, clothing, medical
attendance, education, and transportation
(Art. 194, FC).
Sale between Husband and Wife:
General Rule: Sale between husband and
wife is void (Art. 1490, NCC; Camia De Reyes v.
Reyes de Ilano, 63 Phil. 629). The prohibition
applies –

a. To sales in legal redemption, compromise
and renunciations (Art. 1492, NCC); and
b. To common-law spouses. (Calimlim-
Canullas vs. Fortun, 129 SCRA 675)
Exception: The sale between them is not
prohibited if they are governed by a regime of
complete separation of property, either
pursuant to a marriage settlement or a decree
of the court obtained in legal separation or in
petition for judicial separation of property (Art.
1490, NCC).
Who may question validity of sale:
a. The heirs of the spouses who have been
prejudiced, prior creditors and the State
when it comes to the payment of the
proper taxes due on the transactions
(Medina v. CIR, 317 SCRA 696).
b. However, the spouses, since they are
parties to an illegal act, cannot avail
themselves of the illegality of the sale on
the ground of in pari delicto and creditors
who became such only after the
prohibited sale (Medina v. CIR, supra).
Sale to Guardian of Ward’s Property:
Rule: Sale of property belonging to the ward
in favor of the guardian is void (Art. 149[1],
NCC; Philippine Trust Co. v. Roldan, 99 Phil. 392) .
But after the inhibition has ceased, a new
contract may be executed which will be valid
from the time of the execution of the new
contract (Rubias v. Batiller, 51 SCRA 120).
The prohibition applies to the following:
a. Even if the sale is at a public or judicial
auction, either in person or through the
mediation of another (Art. 1491, NCC);
b. To sales in legal redemption,
compromises and renunciations (Art. 1492,
NCC).
Sale to Agent of Principal’s Property:
General Rule: The agent cannot acquire
property of principal entrusted to him for sale
or under his administration (Art. 1491 [2],
NCC). Such sale is void if made without the
consent of the principal (Gregorio Araneta, Inc.
v. Tuazonde Paterno, 91 Phil. 786) . But after the
inhibition has ceased (or after the termination
of the agency), a new contract may be
executed which will be valid from the time of
the execution of the new contract (Rubias v.
Batiller, 51 SCRA 120).
Exception: But if the principal consented to
the sale, the same is valid (Art. 1491[2], NCC;
Cui v. Cui, 100 Phil. 913).
Sale to executors/administrators of
property under his administration:
Rule: The sale in favor of executor or
administrator of property under his
administration is void (Art. 1491[3], NCC).
Qualifications:
1. Prohibition applies to sale of specific
property under administration. But after
the inhibition has ceased (or after the
termination of the administration), a new
contract may be executed which will be
valid from the time of the execution of the
new contract (Rubias v. Batiller, 51 SCRA
120).
2. Prohibition does not apply to acquisition
of hereditary rights because these
hereditary rights are not part of the
property under his administration. (Naval
v. Enriquez, 3 Phil. 669; Garcia v. Rivera, 95
Phil. 83)
Sale to public officers of property under
his administration:
 Public officers and employees cannot
acquire the property of the State or of any
political subdivision, or any GOCC, or
institution, the administration of which
has been entrusted to them; including
judges and government experts, who, in
any manner whatsoever takes part in the
sale. (Art. 1491[4], NCC). Such contract is
void. (Maharlika Broadcasting Corp. v. Tagle,
142 SCRA 663)
Sale of property under litigation:
Justices, judges, prosecuting attorneys, clerks
of courts, and other officers and employees
connected with the administration of justice,
cannot acquire the property and rights in
litigation or levied upon an execution’ before
the court within whose jurisdiction or territory
they exercise their respective functions;
lawyers cannot likewise acquire property and
rights which may be the object of any
litigation of which they may take part by
virtue of their profession (Art. 1491[5], NCC).
Applicability of Prohibition: Prohibition
applies ---
a. Even if the sale is at a public or judicial
auction, either in person or through the
mediation of another (Art. 1491, NCC).
b. To sales in legal redemption compromises
and renunciations (Art. 1492, NCC).
c. Only during the period of litigation.
Hence, in a case where the judge
acquired the property after the decision
had long become final, there is said to be
no violation (Macariola v. Asuncion, 114
SCRA 77).
When prohibition does not apply:
a. It does not apply to the sale of a parcel of
land acquired by a client to satisfy a
judgment in his favor to his attorney, as
long as the property was not the subject
of the litigation. (Daroy v. Abecia, 298 SCRA
172)
b. It does not apply to a contingent fee
based on the value of the property
involved in litigation because the transfer
or assignment of the property in litigation
takes effect only after the finality of a
favorable judgment. (Recto v. Harden, 100
Phil. 427; Vda. De Laig v. CA, 86 SCRA 641; Director
of Lands v. Ababa, 88 SCRA 513)
IV. SUBJECT MATTER
A. Requisites of a valid subject matter,
arts. 1459-1465, NCC:
1. Subject matter must be within the
commerce of men;
2. Subject matter must be determinate or, at
least, determinable;
3. Subject matter must be licit; and
4. Vendor must have the right to transmit
ownership at the time of delivery.
B. Particular Kinds
As to Existence:
1. Either existing or future goods (Art. 1462,
NCC);
a. Existing goods are those owned or
possessed by the seller at the time of the
perfection of the contract of sale.
b. There can be a sale of “future goods” or
goods to be manufactured, raised, or
acquired by the seller after the perfection
of the contract of sale (Art. 1462, NCC);
c. However, a contract for the sale or
purchase of goods/commodity to be
delivered at future time, if entered into
without the intention of having any
goods/commodity pass from one party to
another, but with an understanding that
at the appointed time, the purchaser is
merely to receive or pay the difference
between the contract and the market
price, is a transaction which the law will
not sanction, for being illegal. And the
loser may recover what he has paid. (Art.
2018, NCC; Onapal Phil. Commodities, Inc. v.
CA, Feb. 1, 1993)
2. Emptio rei speratae: Sale of a thing
with potential existence, subject to a
suspensive condition that the thing will
come into existence. If the subject matter
does not come into existence, the
contract is deemed extinguished as soon
as the time expires or if it has become
indubitable that the event will not take
place (Art. 1461, NCC).
3. Emptio Spei:
a. The sale of hope itself is valid. Example:
sale of a sweepstakes ticket. Here, sale is
effective even if the thing does not come
into existence.
b. However, the sale of a vain hope or
expectancy is void (Art. 1461, NCC).
Example: Sale of a lotto ticket which had
already been drawn and did not win.

4. Things subject to resolutory
condition – May be the object of a
contract of sale (Art. 1465, NCC). Upon the
happening of the condition, the contract is
extinguished, requiring the return of the
price received by the seller.
Things Must Be Determinate:
1. A thing is determinate when it is
particularly designated or physically
segregated from all others of the same
class (Art. 1460[1], NCC).
2. The requisite that a thing be determinate
is satisfied if at the time the contract is
entered into, the thing is capable of being
made determinate without the necessity
of a new or further agreement between
the parties. (Art. 1460[2], NCC; 1349, NCC)
Note: Sale involving a generic thing is
allowed if at the time the contract is
entered into, the thing is capable of being
made determinate and without the
necessity of a new or further agreement
between the parties.
3. Sale of undivided share in mass: In case
of fungible goods, there may be a sale of
an undivided share of a specific mass,
though the seller purports to sell and the
buyer to buy a definite number, weight or
measure of the goods in mass, and
though the number, weight or measure if
the goods in mass is undetermined. (Art.
1464, NCC)
Consequences:
1. If the mass contains less than the
number, weight or measure bought, the
buyer becomes the owner of the whole
mass and the seller is bound to make
good the deficiency from goods of the
same kind and quality, unless a contrary
intent appears (Art. 1464, NCC);
2. If otherwise, there shall be co-ownership
over the mass (Art. 1464, NCC);
3. Sale of undivided interest: The sole owner
of a thing may sell an undivided interest
therein (Art. 1463, NCC).
Thing must be licit:
A contract whose object is contrary to law,
morals, good customs, public order or public
policy is void (Art. 1409[1], NCC).
1. All things which are outside the commerce
of men cannot be the object of a contract
(Art. 1347[1], NCC).
2. Impossible things cannot be the object of
contracts (Art. 1348, NCC).
3. No contract may be entered into upon
future inheritance except in cases
expressly authorized by law (Art. 1347[2],
NCC).
V. OBLIGATIONS OF THE SELLER TO
TRANSFER OWNERSHIP
A. Right to Transmit Ownership:
Not required at the time of the perfection of
the contract, but required only at the time of
delivery (Art. 1459, NCC). Hence, a perfected
contract of sale cannot be challenged on the
ground of the seller’s non-ownership of the
thing sold at the time of the perfection of the
contract of sale. (Quijada v. CA, 299 SCRA 695)
Effect if seller is not the owner at the
time of delivery: The seller is liable for
damages for breach of his obligation to
transmit ownership to the buyer.
B. Sale by a Person Having a Voidable
Title
General Rule: In a sale by the non-owner,
the buyer acquires no better title to the goods
than the seller had (he merely steps into the
shoes of the seller)
Exceptions: (True Owner Cannot Recover):
1. Owner is estopped or precluded by his
conduct; (Art. 1505, NCC)
2. Sale made by the registered or apparent
owner in accordance with registration
laws; (Art. 1505, NCC)
3. Sales sanctioned by judicial or statutory
authority; (Art. 1505, NCC)
4. Purchases in a merchants store, fairs or
markets; the thing must be on display to
make it part of the goods for sale to bar
recovery by the true owner; (Art. 1505,
NCC)
5. When a person who is not the owner sells and
delivers a thing, and subsequently
acquires title thereto; (Art. 1434, NCC)
6. When the seller has a voidable title which
has not been avoided at the time of the
sale; (Art. 1506, NCC)
7. Sale by co-owner of whole property or a
definite portion thereof;
8. Special rights of unpaid seller. (Arts. 1526-
1533, NCC)
Note: When a non-owner who sells and
delivers a thing subsequently acquires title
thereto, the title passes by operation of law to
the buyer (Art. 1434, NCC).
Other obligations of the Seller:
1. Deliver the thing sold (Arts. 1458 and 1495)
– cannot be waived;
2. Deliver the fruits and accessories (Arts.
1164, 1166, and 1537);
3. Make Warranties (Arts. 1545 - 1581) - can
be waived or modified; warranty is not an
essential element of the contract of sale;
4. Take care of the thing, pending delivery,
with proper diligence (Art. 1163);
5. Pay for the expenses for the execution
and registration of the sale, unless there
is stipulation to the contrary
6. Accord the buyer the right to examine the
goods (Art. 1584);
7. Enter into contract with the carrier on
behalf of the buyer as may be reasonable
under the circumstances (Art. 1523);
8. Notify the buyer regarding necessity to
insure goods if it is usual to insure them
VI. RISK OF LOSS
Perfection of Contract of Sale:
1. When perfected: Contract of sale is
consensual (Buenaventura v. CA, 416 SCRA
263). Hence, it is perfected at the moment
when there is a meeting of the minds
upon the thing, which is the object of the
contract, and upon the price (Art. 1474, 1st
par., NCC).
2. Effect of earnest money:
a. When earnest money is given, it shall be
considered part of the price and proof of
the perfection of the contract (Art. 1482,
NCC).
b. And it in effect exempts the sale from the
requirement of the Statute of Frauds.
Recall that the Statute of Frauds does not
apply when the contract has already been
performed, either partial or complete.
3. Effect of perfection:
General Rule: From that moment on, the
parties may reciprocally demand performance,
subject to the provisions of the law governing
the form of contracts (Art. 1475, 2nd par., NCC).
Exception: In conditional sales, the
obligations of the parties are subject to the
general law of obligations with respect to
conditional ones. Accordingly, the acquisition
of the rights of the vendor and the vendee, as
well as the extinguishment of those already
acquired, depends upon the event.
4. Effect of Loss of Thing Sold:
a. If occurs prior to perfection---would-be
seller bears the loss, being the owner of
the thing (res perit domino).
b. If loss occurs at perfection:
1) If subject matter has been “entirely”
lost, contract shall be without any
effect (Art. 1493, NCC).
2) If the subject matter has been lost in
part only, the buyer may choose
between:
a) Withdrawing from the contract; or
 b) Demanding the remaining part,
paying its price in proportion to
the total sum agreed upon (Id).
3) In the case of sale of specific goods,
and without the knowledge of the
seller, the goods have perished in part
or wholly or in a material part so
deteriorated in quality as to be
substantially changed in character,
the buyer may at his option;
 Treat sale as avoided; or
 Treat sale as valid in all of the
existing goods or in so much
thereof as have not deteriorated,
and as binding the buyer to pay
the agreed price for the goods in
which the ownership will pass, if
the sale was divisible (Art. 1494,
NCC).
c. If loss occurs after perfection but before
delivery:
General Rule: In case of loss, deterioration
or improvement of the thing before its
delivery, the rules in Article 1189 shall be
observed, the vendor being considered the
debtor (Art. 1538, NCC). Hence—
1) If lost without fault of vendor, obligation
is extinguished.
2) If lost thru fault of vendor, he is obliged
to pay damages.
3) If thing deteriorates without fault of
vendor, impairment is borne by vendee.
4) If it deteriorates thru fault of vendor,
vendee may choose between rescission of
obligation and its fulfillment, with
indemnity for damages in either case.
If loss without seller’s fault: Two views ---
1) First view: Seller is released from his
obligation to deliver but buyer’s obligation
to pay subsists (Paras, Vol. V. (1990 ed.),58;
Padilla, Civil Code, 840-841). Hence, buyer
bears the risk of loss.
2) Second view: Counter-prestation is also
extinguished (IV Tolentino, Civil Code, 1991
ed., 337). Hence, risk of loss is borne by
seller and buyer need not pay the price.
 View of Tolentino is more just and
equitable and in conformity with the
principle of res perit domino. At any rate,
the Supreme Court had the occasion to
hold that after perfection but before
delivery, the risk of loss is borne by the
seller under the rule of res perit domino
(Union Motors v. CA, 361 SCRA 506; Chrysler
Philippines v. CA, 133 SCRA 567).
d. If loss and deterioration occurs after
delivery:
Rule: When ownership over goods has been
transferred to buyer, goods are buyer’s risk
(Art. 1504, NCC).
Exception:
1) When delivery is made to buyer in
pursuance of contract and ownership is
retained by seller merely to secure
performance of buyer’s obligations, goods
are still at buyer’s risk from time of such
delivery (Art. 1504, NCC).
2) Where actual delivery is delayed thru fault
of either buyer or seller, goods are at risk
of party in fault (Art. 1504, NCC).
VII. BREACH OF CONTRACT
Action to Recover Price
Effect of Failure to Pay
Failure of the vendee to pay the price after
the execution of the contract does not make
the sale null and void for lack of consideration
but results at most in default on the part of
the vendee, for which the vendor may
exercise his legal remedies (Balatbat v. CA, 261
SCRA 128). Failure to pay the consideration
results in a right to demand the fulfillment or
cancellation of the obligation under an
existing valid contract (Buenaventura v. CA, 416
SCRA 263).
When Vendee Liable to Pay Interest:
1. If it has been so stipulated;
2. If the thing sold and delivered produce
fruits or income; or
3. If the buyer be in default, from the time
of judicial or extrajudicial demand for the
payment of price (Art. 1589, NCC).
1. Sale of Personal Property thru
Installment
Remedies of Vendor: In a contract of sale
of personal property the price of which is
payable in installments, the vendor may
exercise any of the following remedies:
1. Exact fulfillment of the obligation, should
the vendee fail to pay at least one
installment;
2. Cancel the sale, should the vendee’s
failure to pay cover two or more
installments;
3. Foreclose the chattel mortgage on the
thing sold, if one has been constituted,
should the vendee’s failure to pay cover
two or more installments (Art. 1484, NCC).
 Foregoing remedies are alternative and
not cumulative. If the creditor chooses
one remedy, he cannot avail himself of
the other two (Delta Motors Sales Corp. v.
Niu Kim Duan, 213 SCRA 259; Elisco Tool
Manufacturing Corp. v. CA, 307 SCRA 731).
What constitute “sale on installment”:
1. The price must be payable in several
installments (Levy Hermanos, Inc. v.
Gervacio, 69 Phil. 52).
2. The Recto law does not apply to a sale
where there is an initial payment and the
balance is payable in the future. This is
not a sale on installment (Id.).
Specific Performance
General Rule: The general rule is that when
the seller has chosen specific performance, he
can no longer seek for rescission nor
foreclosure of the chattel mortgage
constituted on the thing sold. The seller is
deemed to have chosen specific performance,
thereby foreclosing resort to the other two
remedies, when he files an action in court for
recovery.
Exception: Even if seller had chosen specific
performance, but if the same becomes
impossible, the seller may still choose
rescission (Art. 1191, NCC).
 In Chieng v. Sps. Santos (G.R. No. 169647,
Aug. 31, 2007), involving a real estate
mortgage obligation, the Supreme Court
held that the filing of the criminal cases
for violation of B.P. Blg. 22 where the civil
action for recovery of the amount of the
checks is impliedly instituted (Sec. 1[b] of
Rule 111 of the 2000 Rules on Criminal
Procedure), the remedy of collection suit is
deemed to have been availed, thus
barring the complainant from
subsequently resorting to an action for
foreclosure.
Rescission/Cancellation of Sale:
1. When rescission is deemed chosen: The
rule is that the seller is deemed to have
chosen the remedy of rescission, and can
no longer avail of the other two remedies,
when he has clearly indicated to end the
contract, such as: (1) when he sends a
notice of rescission; or (2) takes
possession of the subject matter of the
sale; or (3) when he files an action for
rescission.
2. Forfeiture of installment or rentals paid:
General Rule: As a rule, rescission obliges
the parties to make mutual restitution (Art.
1385, NCC). Hence, the payments must be
returned.
Exception: A stipulation that the installments
or rents paid shall not be returned to the
vendee or lessee shall be valid insofar as the
same may not be unconscionable under the
circumstances (Art. 1486, NCC).
Effects of rescission:
In general: It abrogates the contract from the
very beginning, subject to the provisions of
Article 1486 allowing the vendor to retain
installments payments if there is such
stipulation and the same is not
unconscionable under the circumstances.
 As a consequence, the seller is barred
from exacting payment from the buyer
the balance of the price (Nonato v. IAC, 140
SCRA 255; Delta Motor Sales Corp. v. Niu Kim
Duan, supra.). The same is not consistent
with the remedy of rescission.
Foreclosure of Chattel Mortgage:
When remedy is deemed chosen:
General Rule: Where the mortgagee elects a
remedy of foreclosure, the law requires the
actual foreclosure of the mortgaged chattel.
Thus, in (Manila Motor Co. v. Fernandez 99 Phil. 782),
the Court held that it is the actual sale of the
mortgaged chattel in accordance with Sec. 14
of Act No. 1508 that would bar the creditor
(who chooses to foreclose) from recovering
any unpaid balance (Pacific Commercial Co. v.
De la Rama, 72 Phil. 380). And it is deemed that
there has been foreclosure of the mortgage
when all the proceedings of the foreclosure,
including the sale of the property at public
auction, have been accomplished (Macondray&
Co., Inc. v. Tan, 38 O.G. 2606).
Exception: Although no actual foreclosure as
contemplated under the law has taken place
but since the vehicle is already in the
possession of the creditor and it has
persistently and consistently avowed that it
elects the remedy of foreclosure, the creditor
can be directed to foreclosure the said vehicle
without more (Magna Financial Services Group,
Inc. v. Colarina, 477 SCRA 245).
Effect of foreclosure of mortgage:
General Rule: In case of foreclosure, the
creditor-mortgagee shall have no further
action against the purchaser to recover “any
unpaid balance of the price.” Any agreement
to the contrary shall be void. This is known as
the Recto Law (Art. 148[3], NCC).
Notwithstanding the language of the law,
current jurisprudence upholds the full barring
effect in recovery to include damages,
interests and attorney’s fees (and not only the
balance of the purchase price).
Exception: However, where the mortgagor
plainly refuses to deliver the chattel subject of
the mortgage upon his failure to pay two or
more installments, or if he conceals the
chattel to place it beyond the reach of the
mortgagee, the creditor-mortgagee is allowed
to recover the expenses properly incurred in
effecting seizure of the chattel and reasonable
attorney’s fees in prosecuting the action for
replevin (Filipinas Investment & Finance Corp., v.
Ridad, 30 SCRA 564; Agustin v. CA, 271 SCRA
457).
 The court held that the seller can no
longer proceed to foreclose on the real
estate mortgage because if the guarantor
should be compelled to pay the balance of
the purchase price, the guarantor will in
turn be entitled to recover what he has
paid from the debtor vendee; so
ultimately, it will be the buyer who will be
made to bear the payment of the balance
of the price, despite the earlier
foreclosure of the chattel mortgage given
by him (Cruz v. Filipinas Investment &
Finance Corp. 23 SCRA 791).
Applicability of Recto Law: The Recto law
applies also to contracts purporting to be
leases of personal property with option to
buy, when the lessor has deprived the lessee
of the possession or enjoyment of the thing
(Art. 1485, NCC).
 This law covers contracts of sale of
personal property by installments (Act No.
4122). It is also applied to contracts
purporting to be leases of personal
property with option to buy, when the
lessor has deprived the lessee of the
possession or enjoyment of the thing.
(PCI Leasing and Finance Inc. v. Giraffe‐ X
Creative Imaging, Inc., G.R. No. 142618, July
12, 2007)
 In choosing, through replevin, to deprive
the lessee-buyer of possession of the
leased equipment, the lessor-seller waived
its right to bring an action to recover
unpaid rentals on the said leased items.
The condition that the lessor has deprived
 the lessee of possession or enjoyment of
the thing for the purpose of applying
Article 1485 was fulfilled upon filing of the
lessor-seller of the complaint for a sum of
money with prayer for replevin to recover
possession of the office equipment. By
virtue of writ of seizure issued by the
court, the lessor-seller has effectively
deprived lessee-buyer of their use, a
situation which, by force of Recto Law, in
turn precludes the former from
maintaining an action for recovery of
“accrued rentals” or the recovery of the
balance of the purchase price plus
interest. (PCI Leasing and Finance, Inc. v.
Giraffe-X Creative Imaging, Inc., supra).
2. Sale of immovable property thru
installment (MACEDA LAW: R.A.
6552)
Applies to sale or financing of real estate on
installment payments, including residential
condominium apartments. The MACEDA law
applies to sale of real estate on installments,
whether the contract be one of contract to sell
(Villanueva, Sales, 432; Rillo v. CA, 274 SCRA 461).
Not Applicable:
1. Sale of industrial lots
2. Sale of commercial buildings
3. Sale of urban land covered by Urban Land
Reform and agricultural land under
Agrarian Reform Law
4. Sale of lands payable in straight terms
If Buyer Has Paid At Least 2 Years of
Installments:
1. Buyer is entitled to—
a. Grace period within which to pay unpaid
installments, without additional interest:
1) Grace period is at the rate of 1 month
per one year of installment payment;
2) This right can only be exercised by
buyer only once in every 5 years of
life of contract and its extensions.
3) Buyer may also assign his right during
the grace period.
b. Refund of cash surrender value, in case
seller cancels/rescind the contract;
c. Cash surrender value is equivalent to 50%
of total payments.
 After 5 years of installments, there is an
additional cash surrender value equivalent
to 50% of total payments.
2. Seller has right to cancel the contract
after the grace period:
Requisites for validity of cancellation:
a. Receipt by the buyer of the notice of
cancellation or demand for rescission
of contract by notarial act.
b.Full payment of the cash surrendered
value.
 Failure to comply with the mandatory twin
requirements for a valid and effective
cancellation under the law renders the
contract between the parties valid and
subsisting (Active Realty & Development
Corp. v. Daroya, 382 SCRA 152). In Layug v.
CA, 369 SCRA 36, the Court held that
there was no actual cancellation of the
contract when the buyer was not given
the cash surrender value.
 Actual cancellation takes effect only after
30 days from receipt by buyer of notice of
cancellation or demand for rescission by a
notarial act.
If Buyer Has Paid Less Than Two Years
Of Installments:
1. Buyer is entitled to pay unpaid
installments within a grace period of NOT
less than 60 days from the date the
installments became due. Within the
grace period, buyer also has the right to
assign his rights.
2. After the grace period, seller may cancel
the contract AFTER 30 days from receipt
of the buyer of notice of cancellation or
demand for rescission by a notarial act.
3. Here, there is no cash surrender value.
Maceda Law, MANDATORY: Any stipulation
of the parties contrary to the foregoing rules
shall be null and void (Sec. 7, RA 6552).
Sale of Immovable Property in General:
Anticipatory breach (No Actual Breach):
Seller may sue for rescission of sale of
immovable property even in the absence of
actual breach by buyer, if the following
conditions are present:
1. Seller has already delivered the
immovable property but the buyer has not
yet paid the price; and
2. Seller has reasonable grounds to fear the
loss of the immovable property and its
price (Art. 1591, NCC).
Where there was actual breach (buyer
failed to pay agreed price within agreed
period):
1. Buyer may still pay after the expiration of
the period as long as no demand for
rescission of the contract has been made
upon him either judicially or by a notarial
act. After the demand, the court may not
grant the buyer a new term (Art. 1592,
NCC).
2. The foregoing rule applies even if the
contract provides for its automatic
rescission upon failure of the buyer to pay
the price at the time agreed upon (Art.
1592, NCC).
3. An offer to pay prior to the demand for
rescission is sufficient to defeat the
seller’s right under Article 1592 of the Civil
Code (Laforteza vs. Machuca, 333 SCRA 643).
4. Under the provisions of Article 1592, the
demand for rescission must either be
judicial or by notarial act. A letter
informing the buyer of the automatic
rescission of an agreement does not
amount to a demand for rescission if it is
not notarized (Laforteza v. Machuca, 333
SCRA 643)
5. The foregoing rules (or Article 1592) does
not apply in the following:
a. Cases covered by RA No. 6552 (or
Maceda Law)
b. Contracts to sell – Article 1592 of the
NCC, requiring demand by suit or by
notarial act in case the vendor of
realty wants to rescind does not apply
to a contract to sell but only to
contract of sale (Pangilinan v. CA, 279
SCRA 590).
c. Sale on installment of real estate
where parties have laid down the
procedure to be followed in the event
vendee failed to fulfill his obligation
(Torralba v. Delos Angeles, 96 SCRA 69).
Remedies of Buyer
Action for Specific Performance (Art.
1598):
1. When seller has broken a contract to
deliver specific or ascertained goods,
buyer may ask for specific performance,
without giving seller the option to retain
the goods on payment of damages.
2. Judgment may be unconditional, or upon
such terms and conditions as to damages,
payment of the price and otherwise, as
the court may deem just.
In case of breach of warranty by seller:
Buyer may, at his election –
1. Accept or keep goods and set up against
the seller, the breach of warranty by way
of recoupment in diminution or extinction
of price;
2. Accept or keep goods and maintain an
action against seller for damages for
breach of warranty;
3. Refuse to accept goods, and maintain an
action against seller for damages for
breach of warranty; or
4. Rescind contract of sale and refuse to
receive goods or if goods have already
been received, return them or offer to
return them to seller and recover the price
or any part thereof, which has been paid
(Art. 1599, NCC).
Remedy of Rescission by Buye r (Art.
1599, NCC):

1. Not entitled to rescind:
a. If he knew of breach of warranty when he
accepted the goods without protest;
b. If he fails to notify the seller within a
reasonable time of the election to rescind;
c. If he fails to return or offer to return the
goods to the seller in substantially as
good condition as they were in at the time
the ownership was transmitted to the
buyer.
2. If entitled to rescind and elected to do so
(Art. 1599, NCC):
a. He shall cease to be liable for the price
upon returning or offering to return the
goods.
b. If price or any part thereof has already
been paid, seller shall be liable to repay
so much thereof as has been paid,
concurrently with the return of the goods,
or immediately after an offer to return of
the goods, or immediately after an offer
to return the goods in exchange for
repayment of the price.
c. If the seller refuses to accept an offer of
buyer to return the goods, the buyer is
deemed to hold the goods as bailee for
seller, but subject to a lien to secure
payment of any portion of the price,
which he has been paid, and with
remedies for the enforcement of such
lien.
Right to Suspend Payment:
1. In sales not involving subdivision or
condominium projects:
a. Grounds for suspension of payment:
1) The vendee is disturbed in the
possession or ownership of the thing
acquired; or
2) Vendee has reasonable grounds to
fear such disturbance, by a A. Causes of Extinguishment:
vindicatory action or for a foreclosure
of mortgage (Art. 1590 NCC).
Note: But a mere act of trespass does not
authorize the suspension of the payment of
the price (Art. 1590, NCC).
b. Remedies of buyer: He may suspend
payment of the price until the vendor has
caused the disturbance or danger to
cease. But this remedy of suspension may
not be availed of if the seller gives
security for the return of the price or it
has been stipulated that, notwithstanding
any such contingency, the vendee shall be
bound to make the payment (Art. 1590,
NCC).
2. In sales involving subdivision or
condominium projects:
a. Ground for suspension of payment:
Failure of the owner or developer to
develop the subdivision or condominium
project according to the approved plans
and within the time limit for complying the
same (Sec. 23, PD 957).
b. Alternative remedies of the buyer:
1) The buyer may suspend payment and
wait for further development; or (2) he
may demand reimbursement of the total
amount paid (Sec. 23, PD 957).
2) In case of the first option, the
owner/developer may not forfeit the
installment payments made by the buyer
(Sec. 23, PD 957). He may not also be
ousted from the subdivision (Relucio v.
Brillante-Garfin, 187 SCRA 405).
3) In case of the second option, the notice of
informing the developer of the intention
not to remit further payments on account
of non-development of the subdivision,
and the demand for refund, can be made
at the same time (Casa Filipina Realty Corp.
v. Office of the Pres. 241 SCRA 165).
VIII. EXTINGUISHMENT OF SALE
(Arts.
1600, 1231, NCC)
1. Same causes as all other obligations;
2. By various causes of extinguishment in
Title VI (Sales) such as:
a. Cancellation of sale of personal property
payable in installments. (Art. 1484, NCC)
b. Resale of goods by the unpaid seller. (Art.
1532, NCC)
c. Rescission of the sale by the unpaid seller.
(Art. 1534)
d. Rescission by the buyer in case of partial
eviction. (Art. 1556)
e. Rescission by the buyer in case of breach
of warranty against hidden defects. (Art.
1567)
f. Rescission by the buyer of sale of animals
with redhibitory defects. (Art. 1580);
3. By redemption, whether conventional or
legal.
B. Conventional redemption
That which takes place when vendor reserves
the right to repurchase the thing sold with the
obligation to reimburse to the vendee the
price of the sale, the expenses of the
contract, other legitimate payments made by
reason of the sale, as well as necessary and
useful expenses made on the thing sold (Arts.
1601, 1616, NCC).
 The general rule in redemption is that it is
not sufficient that a person offering to
redeem manifests his desire to do so. The
statement of intention must be
accompanied by an actual and
simultaneous tender of payment for the
full amount of the repurchase price. (BPI
Family Savings Bank, Inc. v. Veloso, G.R. No.
141974. August 9, 2004)
C. Period of Conventional Redemption:
1. When no period is fixed:
If the right of redemption was agreed
upon but there was no stipulation as to
the period within which the right shall be
exercised, the period of redemption shall
be four years from the date of the
contract.
2. When a period is fixed by the parties:
a. If the period does not exceed ten years-
such as when the right to repurchase shall
be exercised within five years, then the
period shall be five years from the date of
the contract.
b. If the period exceeds ten years, then the
period shall be ten years from the date of
the contract, the stipulation as to the
excess being null and void. (Montiero v.
Salgado, 27 Phil. 631)
c. When the period agreed upon is
indefinite, such as when the repurchase
may be made “at any time”, the
repurchase may be exercised within ten
years from the date of the contract.
d. In case there was a civil action between
the parties the vendor may still exercise
the right to repurchase within thirty days
from the time final judgment was
rendered in a civil action on that basis
that the contract was true sale with a
right to repurchase.
Effect of failure to exercise right of
repurchase
Ownership is consolidated in the vendee.
However, in case of real property, a judicial
order, after the vendee has been duly heard,
is required for the purpose of recording the
consolidation in the Registry of Property. (Art.
1607, NCC)
Against whom right to repurchase
available
a. The vendee a retro (original vendee)
If the vendee should leave several heirs, the
action for redemption cannot be brought
against each of them except for his own
share, whether the thing be undivided, or it
has been partitioned among them.
But if the inheritance has been divided, and
the thing sold has been awarded to one of the
heirs, the action for redemption may be
instituted against him for the whole. (Art.
1615, NCC)
b. Every possessor whose right is derived payment of a debt or the transaction shall
from the vendee a retro, even if no secure the payment of a debt or the
mention is made in the second contract of performance of any other obligation.
the right to repurchase, provided the right
has been recorded in the Register of Note: The presumption of equitable
Deeds, or even if the right is not mortgage created in Article 1602 of the CC is
registered, but the possessor has not conclusive – It may be rebutted by
knowledge of the existence of the right. competent and satisfactory proof of the
(Art. 1608, Mortgage Law, Land Registration contrary (Santiago v. Dizon, 543 SCRA 402).
Law)
Remedy: The apparent vendor may ask for
D. Equitable Mortgage: (ARTS. 1602- the reformation of the instrument (Art. 1605,
1604, NCC) NCC).
E. Distinguished from Option to Buy
One which, although lacking in some
formality, or form, or words, or other OPTION TO
RIGHT TO REDEEM
requisites demanded by a statute, PURCHASE
nevertheless reveals the intention of the Not a separate contract Generally, it is
parties to charge real property as security for but merely part of a main principal contract
a debt, and contains nothing impossible or contract of sale
contrary to law (Dorado Vda. De Delfin v. Dellota, Does not need its To be valid, it must
542 SCRA 397; Deheza-Inamarga v. Alano, 574 separate consideration in have a consideration
SCRA 651). order to be valid and separate and distinct
effective from purchase price
Cannot exceed 10 years May be beyond 10
Essential Elements:
years
There must be a tender of May be exercised by
1. That the parties entered into a contract payment of the amount notice of its exercise
denominated as a contract of sale; and required by law, including to the offeror
2. That their intention was to secure an consignment thereof if
existing debt by way of mortgage tender of payment cannot
(Bacungan v. CA, 574 SCRA 642). be made effectively on the
Contracts presumed to be an equitable buyer.
mortgage: F. Exercise of the Right to Redeem

A contact of sale with a right to repurchase Obligations of Vendor A Retro When He

and other contracts purporting to be an
absolute sale, shall be presumed to be an
equitable mortgage, in any of the following
cases:
1. When the price of a sale with a right to
repurchase is unusually inadequate;
2. When the vendor remains in possession
as lessee or otherwise;
3. When the period for the exercise of the
right to repurchase is extended;
4. When the purchaser retains for himself a
part of the purchase price;
5. When the vendor binds himself to pay the
taxes on the thing sold;
6. When the real intention of the parties is
that the transaction shall secure they
Exercises Right to Repurchase (Art.
1616, NCC):
1. Return to vendee price of sale;
2. Pay expenses of the contract and other
legitimate payments made by reason of
sale; and
3. Pay all necessary and useful expenses
made on the thing sold.
G. Legal redemption
Concept
The right to be subrogated upon the same
terms and conditions stipulated in the
contract, in the place of one who acquires a justifies shall be preferred (Art. 1622,
thing by purchase or dation in payment, or by NCC).
any other transaction whereby ownership is
transmitted by onerous title (Art. 1619, NCC). 4. Redemption by a debtor: if a credit or
Thus, this right is not available if the transfer other incorporated right in litigation be
of ownership is by gratuitous title. sold by the creditor to a third person (Art.
1634, NCC).
Instances of legal redemption under civil
code: Period of Redemption/Pre-emption: The
right of legal redemption shall not be
1. Redemption by other co-owners or any exercised except within 30 days from the
one or some of them. If a co-owner sells notice in writing by the prospective seller, or
his undivided share to a third person. If seller, as the case may be. The deed of sale
two or more co-owners desire to exercise shall not be recorded in the Registry of
the right, they may only do so in Property unless accompanied by an affidavit
proportion to the share they may of the seller that he has given written notice
respectively have in the thing owned in thereof to all possible redemptioners. (Art.
common (Art. 1620, NCC). 1623, NCC)
2. Redemption by other co-heirs, or by any
one of them. If a co-heir sells his Redemption vs. Pre-emption:
hereditary right to a stranger (Art. 1088,
NCC). Redemption Pre-emption
3. Redemption by owner of adjoining land: Effected after the sale Effected prior to sale
a. In case of rural – If owner alienate it Directed against third Directed against the
to a third person, the area of which persons who bought prospective vendor
does not exceed one hectare. If two the property who is about to resell
or more adjoining owners desire to the property
exercise the right at the same time, May be exercised
the owner of the smaller area shall be only where there is
preferred; and should both lands have prospective resale of
the same area, the one who first a small piece of
requested the redemption (Art. 1621, urban land originally
NCC). bought by the
b. In case of urban land – If owner of prospective vendor
urban land, which is so small and so merely for
situated that a major portion thereof speculation
cannot be used for any practical
purpose within a reasonable time and IX. ASSIGNMENT OF CREDITS
which said owner had bought merely
for speculation, resell it to a third DEFINITION
person. If resale has not yet been
perfected, an owner of adjoining land An assignment of credit has been defined as
shall have a right of pre-emption; in the process of transferring the right of the
other words, his right to buy the assignor to the assignee who would then have
property is preferred to that of third the right to proceed against the debtor. The
persons. If two or more adjoining assignment may be done gratuitously or
owners desire to exercise the right of onerously, in which case, the assignment has
pre-emption or redemption as the an effect similar to that of a sale. (Abelardo B.
case may be, the owner whose Licaros vs. Antonio P. Gatmaitan, G.R. No. 142838,
August 9, 2001)
intended use of the land appears best
PERFECTION
An assignment of creditors and other
incorporeal rights shall be perfected in
accordance with the provisions of Article
1475. (Art. 1624, NCC)
Art. 1475. The contract of sale
is perfected at the moment
there is a meeting of minds
upon the thing which is the
object of the contract, and
upon the price. From that
moment, the parties may
reciprocally demand
performance, subject to the
provisions of the law governing
the form of contracts.
EFFECTS:
1. An assignment of a credit, right or
action shall produce no effect as
against third person, unless it appears
in a public instrument, or the
instrument is recorded in the Registry
of Property in case the assignment
involves real property. (Art. 1625, NCC)
2. The debtor who, before having
knowledge of the assignment, pays
his creditor shall be released from the
obligation. (Art. 1626, NCC)
3. The assignment of a credit includes all
the accessory rights, such as a
guaranty, mortgage, pledge or
preference. (Art. 1627, NCC)
4. The vendor in good faith shall be
responsible for the existence and
legality of the credit at the time of the
sale, unless it should have been sold
as doubtful; but not for the solvency
of the debtor, unless it has been so
expressly stipulated or unless the
insolvency was prior to the sale and
of common knowledge.
Even in these cases he shall only be
liable for the price received and for
the expenses specified in No. 1 of
Article 1616.
The vendor in bad faith shall always
be answerable for the payment of all
expenses, and for damages. (Art.
1628, NCC)
5. In case the assignor in good faith
should have made himself responsible
for the solvency of the debtor, and
the contracting parties should not
have agreed upon the duration of the
liability, it shall last for one year only,
from the time of the assignment if the
period had already expired.
If the credit should be payable within
a term or period which has not yet
expired, the liability shall cease one
year after the maturity. (Art. 1629,
NCC)
6. One who sells an inheritance without
enumerating the things of which it is
composed, shall only be answerable
for his character as an heir. (Art. 1630,
NCC)
7. One who sells for a lump sum the
whole of certain rights, rents, or
products, shall comply by answering
for the legitimacy of the whole in
general; but he shall not be obliged to
warrant each of the various parts of
which it may be composed, except in
the case of eviction from the whole or
the part of greater value. (Art. 1631,
NCC)
OBLIGATION OF THE VENDOR:
Should the vendor have profited by some of
the fruits or received anything from the
inheritance sold, he shall pay the vendee
thereof, if the contrary has not been
stipulated. (Art. 1632, NCC)
OBLIGATION OF THE VENDEE:
Art. 1633. The vendee shall, on his part,
reimburse the vendor for all that the latter
may have paid for the debts of and charges
on the estate and satisfy the credits he may
have against the same, unless there is an
agreement to the contrary. (Art. 1633, NCC)
EXTINGUISHMENT:

When a credit or other incorporeal right in
litigation is sold, the debtor shall have a right
to extinguish it by reimbursing the assignee
for the price the latter paid therefor, the
judicial costs incurred by him, and the interest
on the price from the day on which the same
was paid.
A credit or other incorporeal right shall be
considered in litigation from the time the
complaint concerning the same is answered.
The debtor may exercise his right within thirty
days from the date the assignee demands
payment from him. (Art. 1634, NCC)
EXCEPTIONS - From the provisions of the
preceding article shall be excepted the
assignments or sales made:
1. To a co-heir or co-owner of the right
assigned;
2. To a creditor in payment of his credit;
3. To the possessor of a tenement or piece
of land which is subject to the right in
litigation assigned. (Art. 1635, NCC)
PART VI: LEASE
I. GENERAL PROVISIONS
 A contract of lease is a consensual,
bilateral, onerous and commutative
contract by which h the owner
temporarily grants the use of his property
(Chua Tee Dee v. Court of Appeals, 429 SCRA
418, 434, citing Lim Si v. Lim, 98 Phil, 868,
870) or rendering of some service to
another who undertakes to pay the rent.
 Being a consensual contract, it is
perfected at the moment there is a
meeting of the minds on the thing and the
cause and consideration, which are to
constitute the contract (Bugatti v. Court of
Appeals, 397 Phil. 376, 3905 (2000), citing
Vitug, Compendium of Civil Law and
Jurisprudence, 1993 edition, 653-654).
General Rule: Without the agreement of
both parties, no contract of lease can be said
to have been created or established. Nobody
can force an owner to lease out his property if
he is not willing (Pagurayan v. Reyes, G. R. No.
15477, July 23, 2008).
Exception: In industrial accession where
both the landowner and the builder may not
be compelled to buy the land because the
value of the building or of trees, the builder
can be required to pay reasonable rent (Art.
448, NCC)
"Rent" may be defined as the compensation
either in money, provisions, chattels, or labor,
received by the owner of the soil from the
occupant thereof. It is defined as the return
or compensation for the possession of some
corporeal inheritance, and is a profit issuing
out of lands or tenements, in return for their
use. It is that, which is to be paid for the use
of land, whether in money, labor or other
thing agreed upon. (Tolentino and Manio v.
Gonzales SyChiam, G.R. No. 26085, August 12,
1927)
Characteristic of Lease of things:
1. Consensual Contract
2. Onerous (essentially onerous)
3. Bilateral
4. Nominate
5. Principal
6. Commulative
Kinds:
1. Lease of things, whether real or personal
property;
2. Lease of service, including household
service, contract of labor, and common
carriers; and
3. Lease of work, which properly should be
termed a contract for a piece of work,
since the phrase “lease of work” may
erroneously be confused with the lease of
service (Art. 1642, NCC).
Essential Requisites of Contract of Lease
1. Consent
Note: As a contract again, you have to go
into the essential requisite of contract in
general which would be applicable also to distinguished from rent, mentioned
lease. is usually not mentioned

But specifically as to consent in sale, there are LEASE SIMPLE LOAN

Lessor does not lose Lender loses ownership
people who are prohibited from entering in ownership
specific kind of lease, those mentioned in Relationship is one of Relationship is one of
1490, 1491. When spouses are prohibited lessor and lessee obligor and obligee
from selling to each other similarly they are Not governed by the Governed by the Usury
Usury Law Law
also prohibited from entering in contract of If what is leased is real Not governed by the
lease as spouses. Property for more than statute of frauds
One year, the statute of
As 1491 is also applicable to lease, hence the Frauds must be
guardian cannot lease property of the ward as complied with
Refers to real and Refers only to personal
much as the agent cannot lease the property personal property property
of the principal which he is suppose to
administer. LEASE COMMODATUM
Onerous contract This is essentially
2. Object (although the rent may gratuitous; if there is a
later on be remitted) price or rent, the
contract ceases to be a
3. Cause commodatum
Not essentially personal Personal in character,
Lease of thing – the consideration for the in character, hence right thus death of either
may be transmitted to bailor or bailee ends the
lessor is the payment of rental
heirs commodatum
Consensual contract Real contract —
Lease of work or service - it is the requires delivery for
compensation to be paid by the other party perfection

Lease of right – it is the payment of RULE FOR LEASE OF CONSUMABLE

royalties which is the cause and consideration GOODS
of the one leasing the right to another
Consumable goods cannot be the subject
A. LEASE OF THINGS matter of a contract of lease of things. To use
or enjoy them, they will have to be consumed.
In the lease of things, one of the parties binds This cannot be done in lease since ownership
himself to give to another the enjoyment or over them is not transferred by the contract of
use of a thing for a price certain, and for a lease.
period which may be definite or indefinite.
However, no lease for more than ninety-nine Exceptions:
years shall be valid. (Art. 1643, NCC)
1. If they are merely exhibited
LEASE SALES 2. If they are accessory to an industrial
Only use or enjoyment Ownership is transferred establishment. (Art. 1645, NCC)
is transferred Formalities required:
Transfer is temporary Transfer is permanent
Lessor need not be the Seller must be the 1. A contract of lease is not required to be in
owner owner at the time the
any form in order to be valid.
property is supposed to
be delivered 2. But for the purpose of enforceability, the
The price of the object, Usually, selling price is Statute of Frauds requires that the
 contract be in writing or be in some note personal right
or memorandum signed by the party as to the CREATOR
charged, if “the agreement for the leasing can be created only by the lessor may or
is for a longer period than one year (Art. the owner, or by duly may not be the
1403[2][e], NCC). authorized agent, acting owner (as when there is
in behalf of the owner a sublease)
3. The requirement of the Statute of Frauds
as to ORIGIN
is also necessary in case of agreement to
may be created by law, may be created as a
renew the lease. In (Fernandez v. CA 166 SCRA contract, will, or rule only by contract;
577), where it was alleged that the prescription(Art. 563) and by
respondent had assured the petitioner way of exception by law
over a telephone conversation that the (as in the case of an
former would willingly renew the lease for implied new lease, or
another ten years upon expiration of the when a builder has built
original, the Court held that such alleged in good faith a building
verbal assurance of renewal of a lease is on the land of another,
when the land is
inadmissible to qualify the terms of the
considerably worth
written lease agreement under the parole more in value than the
evidence rule and unenforceable under building) (See
the Statute of Frauds. Art. 448)
4. In lease of real property, the recording of as to CAUSE
the lease contract is only for the purpose The owner is more or The owner or lessor
of binding third persons (Art. 1648, NCC). less PASSIVE is more or less ACTIVE,
and he ALLOWS the and he MAKES the
Lessor need not be owner: usufructuary lessee enjoy
1. The lessor need not be the owner of the to enjoy the thing given
property leased (Ballesteros v. Abion, 482 in usufruct
SCRA 23), because lease does not involve
as to REPAIRS
transfer of ownership.
The usufructuary The lessee generally
2. However, the lessor must have a right (e. has the duty to make has no duty to pay for
g. usufructuary or lessee) or at least an the ordinary repairs repairs
authority (e.g. as an agent of the owner, as to TAXES
usufructuary, or lessee), otherwise, the The usufructuary The lessee generally
contract is legally inexistent for lack of an pays for the annual pays no taxes.
object certain. Under Articles. 1318 and charges and taxes on
1409(3) of the CC, contracts the cause or the fruits
object of which did not exist at the time of as to other things
the transaction are inexistent and void ab A usufructuary may The lessee cannot
lease the property itself constitute a usufruct on
initio (Ballesteros v. Abion, supra.).
to another. (Art. 572) the property leased
USUFRUCT LEASE
as to EXTENT Subject matter or object of contract:
Covers all fruits and Generally covers and 1. Either personal or real property.
uses as a rule uses as a rule only a 2. But consumables generally cannot be the
particular or specific use object of the contract, except:
as to NATURE of the right a. When they are merely to exhibited; or
is always a real right is a real right only if, as b. When they are accessory to an industrial
in the case of a lease establishment (Art. 1645, NCC).
over REAL PROPERTY,
the lease is Persons disqualified to become lessees:
REGISTERED, or is for
1. The persons disqualified to buy under
MORE THAN ONE YEAR,
otherwise, it is only a Articles 1490 and 1491 of the NCC are
 likewise disqualified to become lessees of 1. If a shoemaker is asked to make shoes
the things mentioned therein (Art. 1646, “to order”
NCC). 2. If a tailor is asked to make a suit of
clothes
2. If the lease is to be recorded in the 3. If an engineer or independent contractor
Registry of Property, the following cannot is asked to construct a road or a house
constitute the same without proper 4. If an orchestra is hired to furnish music,
authority; (a) the husband, with respect whether the service be done nightly or
to the paraphernal property of the wife; only on special occasions.
(b) the father or guardian as to the
property of the minor or ward; (c) and the LEASE OF SERVICES AGENCY
manager, without special power (Art. 1647, Reason is employment; Reason is
NCC).
representation;
Lessor of services does Agent represents his
B. LEASE OF WORKS OR SERVICES not represent his principal, and enters
employer, nor does he into juridical acts;
In the lease of work or service, one of the execute juridical acts; moreover, agency is
parties binds himself to execute a piece of only a preparatory
work or to render to the other some service contract — because the
for a price certain, but the relation of principal purpose is to enter into
other contracts;
and agent does not exist between them.
Services must be for a Presumed for
(Art.1644)
price or consideration compensation
Will of both parties is Will of one is sufficient;
CONTRACT FOR A necessary for the
LEASE OF SERVICES
PIECE OF WORK extinguishment of the
locatiooperatum
locatiooperis relationship;
The important object The important object Only 2 persons are 3 persons are involved:
here is the labor here is the work done involved: lessor and Principal, Agent and
performed for the lessor (the result of the labor). lessee; Third person with whom
The result is The result is generally the agent has
generallynot important, important. Generally, contracted
hence,the laborer is the price is not payable The risk of loss before Risk borne by the
entitled to be paid even until the work is delivery is borne by the principal (since agent
if there is destruction of completed, and said independent party axts merely as
the work thru a price cannot contractor (especially in representative;
fortuitous event. generally be lawfully the lease of work for a
demanded if the work is fixed price)
destroyed before it is Independent contractor Agent is not liable,
finished and accepted. is personally liable for except he expressly
his contract with third binds himself or
Examples Lease of Services: person; exceeds the limits of his
authority;
1. Shoemaker employed for 8 hours a day, Lessor ordinarily Agent exercises
with the duty of making shoes. performs only discretionary powers.
2. The job of a pre-bar or pre-week review ministerial duties.
lecturer. (Whether or not the pre-bar
reviewees pass the bar is not generally II. LEASE OF RURAL AND URBAN LANDS
important; what is controlling is the fact
that the professor is paid for his efforts.) RURAL LANDS URBAN LANDS
Product producing lands Non-product producing
lands
Examples of Contract for a Piece of
Regardless of site, if the Lands leased principally
Work: principal purpose is to for purposes of
 obtain products from residence are called
the soil, the lease is of urban lands.
rural lands.
Rule on Assignment of Lease
sublease:
Sublease - A separate and distinct contract
of lease wherein the original lessee becomes a
sublessor to a sublessee.
General Rule: Lessee cannot assign without
the consent of the lessor.
Exception: Unless expressly prohibited (Art.
1650, NCC).
Note: The assignment constitutes a novation
by substituting the person of the debtor-
lessee; hence, creditor-lessor’s consent is
necessary.
Effects of sublease:
1. The sublease is without prejudice to the
responsibility of the lessee for the
performance of the contract toward the
lessor (Art. 1650, NCC);
2. Sublessee is bound to the lessor for all
acts which refer to the use and
preservation of the thing leased in the
manner stipulated between lessor and the
lessee (Art. 1650, NCC);
3. Sublessee is subsidiarily liable to lessor for
any rent due from the lessee. However,
sublesee shall not be responsible beyond
the amount of rent due from him, in
accordance with the terms of the
sublease, at the time of the extra-judicial
demand by the lessor (Art. 1652, NCC);
4. Payments of rent in advance by sublesee
shall be deemed not to have been made,
so far as the lessor’s claim is concerned,
unless said payments were effected in
virtue of custom of the place (Art. 1652,
NCC).
III.RIGHTS AND OBLIGATIONS
LESSOR AND LESSEE
Obligations of Lessor:
1. Delivery of object of contract;
2. Making necessary repairs in order to keep
leased premises suitable for the use to
which it has been devoted, unless there is
a stipulation to the contrary;
or 3. Maintaining the lessee in the peaceful and
adequate enjoyment of the lease for the
entire duration of the contract (Art. 1654,
NCC).
Remedies of Lessee
In case lessor should not comply with the
foregoing obligations, lessee may:
1. Rescind the contract with damages; or
2. Recover damages only, allowing contract
to remain in force (Art. 1659, NCC); or
3. Simply suspend payment of rent in case
the lessor fails to make the necessary
repairs or to maintain the lessee in
peaceful and adequate enjoyment of
property leased (Art. 1658, NCC).
Alteration of Form
Lessor cannot alter the form of thing leased in
such a way as to impair the use to which the
thing is devoted under terms of the lease.
(Art. 1661, NCC)
Rule in case of urgent repairs:
1. If repairs are urgent and cannot be
deferred until the termination of the lease,
lessee is obliged to tolerate it although it
may be annoying to him and he may be
deprived of a part of the property for
which the lessee has been deprived.
2. If repairs last more than 40 days, rent
shall be reduced in proportion to the time
and the part of the property for which to
the time and the part of the property for
which the lessee has been deprived.
3. If by reason of the repairs, the portion,
which the lessee and his family need for
their dwelling, becomes uninhabitable,
lessee may rescind the contract if main
purpose of the lease is to provide a
dwelling place for the lessee.
OF 4. If lessor fails to make urgent repairs, the
lessee, in order to avoid an imminent
danger, may order the repairs at the
lessor’s cost. (Art. 1663, last par., NCC)
Obligations of Lessee:
1. Pay rent according to terms stipulated;
2. Use the thing leased as a diligent father of
a family, devoting it to the use stipulated;
and in the absence of stipulation, to that
which may be inferred from nature of
thing leased, according to custom of
place;
3. Pay expenses for the deed of lease (Art.
1657, NCC);
4. Lessee is obliged to inform the lessor,
within shortest possible time, of every
usurpation or untoward act which any
third person may have committed or may
be openly preparing to carry out upon the
thing leased, failure to do so shall render
the lessee liable for damages which,
through his negligence, may be suffered
by the proprietor (Art. 1663, NCC).
5. Lessee is obliged to advise the owner,
with the same urgency, of need of all
necessary repairs included in No. 2 of
Article 1654. Failure to do so shall render
the lessee liable for damages, which,
through his negligence, may be suffered
by the proprietor (Art. 1663, NCC).
6. Lessee is responsible for deterioration or
loss of thing leased.
a. Exception: He is not liable if he proves
that it took place without his fault.
b. Presumption of fault does not apply:
When destruction is due to
earthquake, flood storm, or other
natural calamity (Art. 1667, NCC).
7. Lessee is also liable for any deterioration
caused by members of his household and
by guests and visitors (Art. 1668, NCC).
8. Lessee is obliged to return thing leased,
upon termination of the leased, in the
same condition as when he received it,
except what has been lost or impaired;
a) By lapse of the time;
b) By ordinary wear and tear,
c) By reason of an inevitable cause (Art. 1665,
NCC).
Introduction of useful improvements:
1. Lessee may introduce useful
improvements on the leased premises
provided he does not alter the form and
substance of the property leased (Art.
1678, NCC).
2. But he has no right of retention and
reimbursement, which rightfully belongs
to a builder in good faith; otherwise, such
a situation would allow the lessee to
easily “improve” the lessor out of its
property (SulosaNayon, Inc. vs. Nayong
Pilipino Foundation, G.R.No. 170923, January
20, 2009).
3. In this situation, the lessor has the option
of paying one-half of the value of the
improvements which the lessee made in
good faith, which are suitable for the use
for which the lease is intended, and which
have not altered the form and substance
of the land (Art. 1678, NCC).
4. Should the lessor refuse to reimburse said
amount, the lessee may remove the
improvement, even though the principal
thing may suffer damage thereby. He
shall not, however, cause any more
impairment upon the property leased than
what is necessary (Art. 1678, NCC).
 A lessee, in order to be entitled to one-
half the value of the improvements
introduced by him in the leased premises,
or to remove them should the lessor
refuse to reimburse the half value thereof,
must show that the same were introduced
in good faith; are useful; suitable to the
use for which the lease is intended
without altering the form and substance
of the premises (Imperial Insurance, Inc. vs.
Simon, 14 SCRA 855).
Introduction of Ornamental Objects:
1. Lessee may introduce ornamental objects
on the leased premises provided he does
not alter the form and substance of the
property leased (Art. 1678, NCC).
2. He is not entitled to any reimbursement
with regard to ornamental expenses.
3. But may remove the ornamental objects,
provided no damage is caused to the
principal thing, and the lessor does not
choose to retain them by paying their
 value at the time the lease is extinguished
(Art. 1678, NCC).
Duration and termination of lease
Duration:
1. Period may either be definite or indefinite.
2. But period cannot be more than 99 years
(Art. 1643, NCC). If the period is more than
99 years, the lease is considered
terminated after the end of 99 years.
After that, it will be a lease for an
indefinite term (V Tolentino, 1992 ed., 209).
Lease for definite period:
1. It ceases upon the day fixed, without
need of demand (Art. 1669, NCC).
2. Implied new lease (tacitareconduccion) –
If at the end of the contract the lessee
should continue enjoying the thing leased
for 15 days with the acquiescence of the
lessor, and unless a notice to the contrary
by either party has previously been given,
it is understood that there is an implied
new lease, not for the period of the
original contract, but for the time
established in Articles 1682 and 1687 of
the NCC. The other terms of the original
contract shall be revived (Art. 1670, NCC).
3. If the lessee continues enjoying the thing
after the expiration of the contract, over
the lessor’s objection, the lessee shall be
subject to the responsibilities of a
possessor in bad faith (Art. 1671, NCC).
 A notice to vacate constitutes an express
act on the part of the lessor that he no
longer consents to the continued
occupation by the lessee of the property
(Josefa vs. San Buenaventura, 484 SCRA 49).
IV. SPECIAL RULES FOR THE LEASE OF
RURAL/URBAN LANDS
The lessee shall have no right to a reduction
of the rent on account of the sterility of the
land leased, or by reason of the loss of fruits
due to ordinary fortuitous events; but he shall
have such right in case of the loss of more
than one-half of the fruits through
extraordinary and unforeseen fortuitous
events, save always when there is a specific
stipulation to the contrary. (Art. 1680, NCC)
 Extraordinary fortuitous events are
understood to be: fire, war, pestilence,
unusual flood, locusts, earthquake, or
others which are uncommon, and which
the contracting parties could not have
reasonably foreseen.
Neither does the lessee have any right to a
reduction of the rent if the fruits are lost after
they have been separated from their stalk,
root or trunk. (Art. 1681, NCC)
Lease for indefinite period:
1. In lease of rural land – It is understood to
have been made for all the time
necessary for the gathering of the fruits,
which the whole estate leased, may yield
in 1 year, or which it may yield once,
although 2 or more years may have to
elapse for the purpose (Art. 1682, NCC).
2. In lease of urban land – It is understood
to be:
a. From year to year, if rent agreed
upon is annual;
b. From month to month, if rent agreed
upon is monthly, but court may fix a
longer term after lessee has occupied
the premises for over one year, but
court may fix a longer period after
lessee has been in possession for over
six months;
c. From week to week, if rent agreed
upon is weekly;
d. From day to day, if rent agreed upon
is to be paid daily, but court may fix a
longer period after lessee has stayed
in the place for over 1 month (Art,
1687, NCC).
Termination of lease:
1. By expiration of period.
2. By total destruction of the thing leased
thru fortuitous event. If destruction is
partial, lessee may choose between
proportionate reduction of rent or
rescission of lease (Art. 1655, NCC).
3. By resolution of right of lessor, such as
when lessor is a usufructuary and usufruct
is terminated
4. By the will of the purchaser or transferee
of the thing leased, except: (a) when
lease of piece of land is recorded in the
Registry of Property; (b) there is
stipulation to the contrary in the contract
of sale; (c) purchaser knows of the
existence of lease; or (d) sale is fictitious
(Art. 1676, NCC).
 Unlike resolution of reciprocal obligations
under Article 1191 of the Civil Code, the
rescission of lease contracts under Article
1659 of the Civil Code is not one that
requires an independent action (Dio v.
Concepcion, 296 SCRA 579,591; cited in Chua
v. Victorio, 428 SCRA 447).
 Under applicable laws, upon non-payment
of rent by the lessee, the lessor may elect
to treat the contract as rescinded and
thereby determine the right of the lessee
to continue in possession; and his right to
recover possession may be enforced in an
action of unlawful detainer. It is not
necessary, in such situation, that an
independent action for the rescission of
the lease should first be instituted in
court, for the purpose of putting an end
to the right of the tenant to remain in
possession under the lease (Chua vs.
Victorio, supra, 455).
Obligations of Contractor:
1. If contractor agrees to produce the work
from material furnished by him, he is
obliged to deliver the thing produced to
employer and to transfer dominion over
the thing (Art. 1714, NCC).
2. The contractor shall execute the work in
such a manner that it has the qualities
agreed upon and has no defects, which
destroy or lessen its value or fitness for its
ordinary or stipulated use.
Remedies:
1. If the work be not of such quality as
agreed upon, the employer may require
the contractor
a. To remove the defect; or
b. To execute another work
2. If contractor fails or refuses to comply
with his obligation, the employer may;
a. Have the defect removed, at
contractor’s cost; or
b. Have another executed, at
contractor’s cost (Art. 1715, NCC).
3. Contractor is responsible for the work
done by persons employed by him (Art.
1727, NCC).
4. He is also liable for all the claims of
laborers and others employed by him, and
of third persons for death or physical
injuries during the construction (Art. 1728,
NCC).
Effect of Waiver: An agreement waiving or
limiting the contractor’s liability for any defect
in the work is—
1. VOID if the contractor acted fraudulently
(Art. 1716, NCC).
2. VALID if the contractor did not act
fraudulently.
Effect of Loss:
1. If contractor binds himself to furnish the
material (he furnishes both labor and
material), he shall suffer the loss if the
work is destroyed before its delivery,
except when there has been delay in
receiving it (Art. 1717, NCC).
2. If contractor undertakes to furnish labor
only and the thing is destroyed by
fortuitous event, he cannot recover
compensation for his labor or work,
except when there has been delay in
receiving it or if the destruction was
caused by the poor quality of the
material, provided this fact was
communicated in due time to the owner.
He is not liable for damages to the owner,
nor for the value of the materials
furnished by the latter. (Art. 1718, NCC).
Effect of Acceptance of Work
Acceptance of the work by the employer
relieves the contractor of liability for any
defect in the work, except:
1. For hidden defects and the employer is
not, by his special knowledge, expected to
recognize the same; or
2. Employer expressly reserves his right
against the contractor by reason of the
defect (Art. 1719, NCC).
Liability for Collapse of Building
In case of collapse of building within 15 years
from completion of the structure—
1. By reason of a defect in the plans and
specifications, or due to defects in the
ground, the engineer or architect who
drew up the plans and specification is
liable for damages (Art. 1723, NCC).
2. On account of defects in the construction
or the use of materials of inferior quality
furnished by him, or due to any violation
of the terms of the contract, the
contractor is also liable for damages. If
the engineer or architect supervises the
construction, he shall be solidarily liable
with the contractor (Art. 1723, NCC).
3. The acceptance of the building, after
completion, does not imply the waiver of
any of the causes of action by reason of
any defect mentioned above (Art.1723,
NCC).
4. The action must be brought within 10
years following the collapse of the
building (Art. 1723, NCC).
Right to withdraw from contract:
1. The owner may withdraw at will from the
construction of the work, although it may
have been commenced, indemnifying the
contractor –
a. For all the latter’s expenses
b. For the work; and
c. Usefulness, which the owner may
obtain therefrom (Art. 1725, NCC).
2. The contract who undertakes to build a
structure or any other work for a
stipulated price, in conformity with the
plans and specifications agreed upon with
the land owner, cannot withdraw from the
contract nor demand an increase in the
price on account of higher cost of labor or
materials except upon compliance with
the following requirements:
a. There has been change in the plans
and specifications;
b. Such change has been authorized by
the owner in writing; and
c. The additional price to be paid to the
contractor has been determined in
writing by both parties (Art. 17424, NCC).
Rescission of Contract:
1. The contract is rescinded if:
a. Contractor dies and contract was
entered into by reason of the personal
qualifications of the contractor; or
b. Contractor cannot finish the work due
to circumstances beyond his control
(Art. 1276, NCC).
2. Effects: Owner shall pay the heirs of
contractor in proportion to price agreed
upon, the value of the part of work done,
and of the materials prepared, provided
the materials yield him some benefit (Art.
1726, NCC).
Remedies of laborers and suppliers of
materials for unpaid claims:
1. They can go after the contractor.
2. They can also go after up to the amount
owing from the owner to the contractor at
the time the claim is made (Art. 1729, NCC).
3. However, they are not prejudiced by the
following acts:
a. Payments made by the owner to
contractor before they are due; and
b. Renunciation by the contractor of any
amount due him from owner (Art. 1729,
NCC).
4. Mechanic’s lien – He who has executed a
work upon a movable has a right to retain
it by way of pledge until he is paid (Art.
1731, CC). The right to retain, however,
does not arise when the mechanic fails to
accomplish the repairs on the truck
(Optimum Motor Center Corp. v. Tan, 558
SCRA 267).
PART VII:
LAW ON PARTNERSHIP
I. CONTRACT OF PARTNERSHIP

A. Definition
A partnership is a contract of two or more
persons who bind themselves to contribute
money, property or industry to a common
fund, with the intention of dividing the profits
among themselves. Two or more persons may
also form a partnership for the exercise of a
profession (Art. 1767, NCC). It is both:
1. A contract (Art. 1768, NCC); and
2. A business organization.
 It is a juridical entity, which has a
personality separate and distinct from that
of each of the partners (Art. 1768, NCC). It
begins from the moment of the execution
of the contract, unless it is otherwise
stipulated (Art. 1784, NCC).
Characteristics:
1. Consensual – it is perfected by mere
consent.
2. Principal – it does not depend upon any
other contract for its validity or existence
3. Bilateral or multilateral – it is entered into
by two or more persons whose rights and
obligations are reciprocal.
4. Nominate – It has a special name given to
it by law. (Art. 1767, NCC)
5. Preparatory – It is a means by which
other contracts will be entered into as a
partnership pursues its business.
6. Onerous – The partners contribute
money, property, or industry to a
common fund. (Art. 1767, NCC)
Essential requisites of partnership:
1. It is a contract;
2. There must be a contribution of money,
property or industry to a common fund;
3. It must have a lawful object or purpose;
4. There must be an intention of dividing the
profit among the partners.
Separate personality:
1. Partnership has a juridical personality
separate and distinct from the partners
(Art. 1768, NCC) EVEN IF:
a. It does not appear in a public
instrument and its capital is P3,000.00
or more, in money or property (Art.
1772; Art. 1768, NCC).
b. It is not recorded in the SEC (Art.
1772; Art. 1768, NCC).
 The fact that there is no record in the SEC
of a public instrument embodying the
partnership did not cause the nullification
of the partnership (Tocao v. CA, G.R. No.
127405, October 4, 2000).
 Mere failure to register the contract of
partnership with the SEC does not
invalidate a contract that has the essential
requisites of a partnership. The purpose
of registration of the contract of
partnership is to give notice to third
parties. Failure to register the contract of
partnership does not affect the liability of
the partnership and of the partners to
third persons. Neither does such failure to
register affect the partnership’s juridical
personality (Angeles v. Sec. of Justice, G.R.
No. 142612. July 29, 2005).
2. However, associations whose articles are
kept secret among the members, and
wherein any one of the members may
contract in his own name with third
persons, shall have no juridical personality
and shall be governed by the provisions
relating to co-ownership (Art. 1775, NCC).
Effects:
1. As to the members inter se: There is no
partnership. They are governed by the
rules relating to co-ownership (Art. 1775,
NCC)
2. As to third persons: Under the Doctrine of
Estoppel, the absence of personality
cannot be invoked against third persons
for the purpose of exempting themselves
 from complying with their obligations
contracted pursuant to the stipulations
kept secret among themselves. They
cannot profit from their own wrongdoing.
VALIDITY OF PARTNERSHIP
General Rule: It is valid and enforceable in
any form (Art. 1356, NCC; Tocao v. CA, supra).
Exception: Whenever immovable property is
contributed to the partnership, an inventory of
said property, signed by the parties, and
attached to the public instrument, is
indispensable to the validity of the
partnership. If this requirement is not
complied with, the partnership is void (Art.
1773, NCC).
Purpose or object must be lawful:
1. If the purpose or object is unlawful,
contract of partnership is void (Art.
1409[1], NCC).
2. Effects upon partners inter se:
a. The partners have no right to enforce
claims which depend upon the validity
of contract (Arbes v. Polistico, G.R. No.
31057, September 7, 1929). Hence,
upon the dissolution of the
partnership as decreed by the court,
profits shall be confiscated in favor of
the State (Art. 1770, NCC) and shall not
enrich the partners.
b. But partners may recover their
contributions from the manager or
administrator because such claim
does not depend upon the validity of
the contract (Arbes v. Polistico, supra).
3. Effects upon third persons:
a. If the third person acted in good faith,
he may recover indemnity from the
partner who dealt with him.
b. If third person acted in bad faith, he
cannot recover.
WHO CAN BE A PARTNER?
General Rule: Anyone who is capable of
entering into contractual relations (capacity to
act)
Exceptions: In universal partnership
(whether of all present property or all profits),
persons who are prohibited from giving each
other any donation or advantage cannot enter
into such kind of partnership (Art. 1782, NCC).
Hence, the following CANNOT become
partners in a universal partnership:
1. The spouses during their marriage (Art.
87, FC);
2. Those cohabiting as husband and wife
(Art. 87, FC); and
3. Those who cannot donate to each other
under Article 739 of the NCC.
Notes: While spouses cannot enter into a
universal partnership, they can enter into a
particular partnership or be members thereof.
(Paras, Civil Code of the Philippines Annotated,
2008, p. 619)
 A corporation cannot become a member
of a partnership in the absence of express
authorization by statute or charter
(Mendiola v. CA, G.R. No. 159333, July 31,
2006; citing J.M. Tuason v. Bolanos, 95 Phil.
106 (1954); Esteban B. Bautista, Treatise on
Philippine Partnership Law, 1978 ed., citing 60
A.L.R. 2nd 917; 6 Fletcher, Cyclopedia of
Corporations, Sec. 2520)
 Under Philippine law, a joint venture is a
form of partnership and should thus be
governed by the law of partnerships. The
Supreme Court has recognized, however,
a distinction between these two business
forms, and has held that although a
corporation cannot enter into a
 partnership contract, it may however
engage in a joint venture with others
(Aurbach, et. al. v. Sanitary Wares
Manufacturing Corp., G.R. No. 75875
December 15, 1989; citing Tuazon v.
Bolaños,G.R. No. L-4935 May 28, 1954)
through a contract or agreement if the
nature of the venture is authorized by its
charter. (SEC Opinion, April 29, 1985)
RULES TO DETERMINE EXISTENCE OF
PARTNERSHIP
a. Requirement of Consent:
General Rule: Persons who are not partners
as to each other are not partners as to third
persons (Art. 1769[1], NCC).
Exception: When a person represents
himself or consents to another representing
him to anyone, as a partner in an existing
partnership or with one or more persons not
actual partners. (Partnership by estoppel) (Art.
1825, NCC).
b. Co-ownership or Co-possession:
1. Co-ownership or co-possession does not
of itself establish a partnership, whether
such co-owners or co-possessors do or do
not share any profits made by the use of the
property (Art. 1769[2], NCC).
2. There must be a clear intent to form a
partnership.
c. Sharing of Gross Returns:
1. The sharing of gross returns does not of
itself establish a partnership, whether or
not the persons sharing them have a joint
or common right or interest in any
property from which the returns are
derived (Art. 1769[3], NCC).
2. There must be a clear intent to form a
partnership, the existence of a juridical
personality different from the individual
partners, and the freedom of each party
to transfer or assign the whole property.
(Pascual v. CIR, G.R. No. L-78133, October 18,
1988.)
d. Sharing of Profits:
 Receipt by a person of a share of the
profits of a business is prima facie
evidence that he is a partner in the
business (Art. 1769[4], NCC).
Exception: No such inference can be
drawn if profits were received in payment
as:
a. Debt by installments or otherwise
b. Wages of an employee
c. Rent to a landlord
d. Annuity to a widow or representative of
a deceased partner
e. Interest on a loan
f. Consideration for the sale of goodwill of
a business or other property by
installments or otherwise (Art. 1769[4],
NCC).
Term of Existence: The contracting parties
may establish such stipulations, clauses, terms
and conditions as they may deem convenient,
provided they are not contrary to law, morals,
good customs, public order, or public policy.
(Art. 1306, NCC)
Classifications of partnership and Kinds
of Partners
As to object:
a. Universal partnership - One wherein the
partners contribute all the property, which
actually belong to them to a common
fund, with the intention of dividing the
same among themselves, as well as the
 profits, which they may acquire therewith.
(Art. 1779, NCC).
1. Universal partnership of all present
property
2. Universal partnership of profits
b. Particular partnership - Is one which has
for its object determinate things, their use
and fruits, or a specific undertaking, or
the exercise of a profession or vocation.
(Art. 1783, NCC).
As to liability of partners:
a. General partnership - Is one where all the
partners are general partners (that is,
they are liable even with respect to their
individual properties, after the assets of
the partnership have been exhausted).
(Paras, Civil Code of the Philippines Annotated,
2013, p.612)
b. Limited partnership - Is one where at
least one partner is a general partner, and
the rest are limited partners. (Paras, Civil
Code of the Philippines Annotated, 2013,
p.612). The general partners are liable to
the extent of their separate property,
while the limited partners are liable only
to the extent of their investment in the
partnership.
As to duration:
a. Partnership at will - Is one without a
definite period of existence and which can
at anytime be terminated by any of the
partners.
b. Partnership with a fixed period - One
where the term for which the partnership
is to exist is fixed or agreed upon or one
formed for a particular undertaking.
c. Partnership for a particular undertaking -
One which is organized for a certain
undertaking, which when attained, will
cause the termination of the partnership,
(Art. 1785, NCC) such as a partnership
formed to construct 20 residential houses.
As to legality of existence:
a. De jure partnership - One which has
complied with all the legal requirements
for its establishment.
b. De facto partnership - One which has
failed to comply with all the legal
requirements for its establishment.
As to representation to others:
a. Ordinary or real partnership - Is one
which actually exists among the partners
as well as third persons.
b. Ostensible or partnership by estoppel -
One which in reality is not a partnership
but is considered as one with respect to
those who, by reason of their conduct or
admission are precluded from denying its
existence. (Art. 1825, NCC)
As to publicity:
a. Secret partnership - One wherein the
existence of certain persons as partners is
not made known to the public by any of
the partners.
b. Notorious or open partnership - One
whose existence is made known to the
public by the members of the firm.
As to purpose:
a. Commercial or trading; or
b. Professional or non-trading
UNIVERSAL PARTNERSHIP
Object: It may refer either to—
1. All present properties of partners; or
2. All profits.
Universal Partnership of All Present
Property:
Concept – That in which the partners
contribute all the property which actually
belongs to them to a common fund, with the
intention of dividing the same among
themselves, as well as all the profits they may
acquire therewith (Art. 1778, NCC).
What are included:
1) The property, which belonged to each of
the partners at the time of the
constitution of the partnership (present
property)
2) Profits which may be acquired from the
present property. (Art. 1779, NCC).
3) Property acquired by each partner after
the formation of the partnership but only
if stipulated. This property shall include:
a. The property itself except that the
stipulation shall not include property
acquired by inheritance, legacy or
donation.
b. The profits and fruits therefrom
including those from property
acquired by inheritance, legacy or
donation. (Art. 1779, NCC).
Not included – The inclusion of property,
which might thereafter be acquired by each of
the partners by way of donation, inheritance
or legacy, cannot be stipulated. However, the
fruits thereof may be included in the
partnership by agreement (Art. 1779[2], NCC).
Universal Partnership of All Profits:
What are Included:
1. All that the partners may acquire by their
industry or work during the existence of
the partnership; and
2. The usufruct of their present property
(Art. 1780, NCC).
3. Profits and fruits, if stipulated, of property
acquired by each partner after the
constitution of the partnership.
Presumption in Favor of All Profits:
Articles of universal partnership entered
without specification of its nature (whether it
is universal partnership of all present property
or universal partnership of profits), is
presumed to be a universal partnership of
profits only (Art. 1781, NCC).
PARTICULAR PARTNERSHIP
Object:
1. Determinate things, their use or fruits;
2. Specific undertaking; or
3. Exercise of a profession or vocation (Art.
1783, NCC).
KINDS OF PARTNERS
1. As to Nature of Contribution:
a. Capitalist – contributes money or property
to the common fund (Art. 1767, NCC);
b. Industrialist – contributes only his industry
or service. Such industry may be physical
or intellectual industry.
c. Capitalist - industrial partner – one who
contributes not only money or property
but also his services to the partnership
(Art. 1797, NCC).
2. As to Nature of Liability:
a. General partner – has control and
management of the business and is
personally liable for partnership
obligations with his separate properties.
b. Limited partner – is not entitled to
participate in the management and
control of the business, but is exempt
 from personal liability for the partnership
obligations because his liability is limited (2) Prior to the time
only to his capital contribution. when the limited partner
became such, the
c. General-limited partner – one who has all business had been
the rights and powers and is subject to all carried on under a name
the restrictions of a general partner, in which his surname
except that, in respect to his contribution, appeared. (Article 1846,
he shall have the rights against the other NCC)
members, which he would have had, is he Prohibition against No prohibition against
were not also a general partner. (Art. 1853, engaging in a business engaging in a business
NCC)

(Qualification: An
industrial partner cannot
GENERAL LIMITED engage in business for
himself, unless the
Personally liable for Liability extends only to
partnership expressly
partnership obligations his capital contributions
permits him to do so,
When manner of No participation in the and if he should do so,
management not agreed management the capitalist partners
upon, all general may either exclude him
partners have equal from the firm or avail
rights in the themselves of the
management of the benefits which he may
business have obtained in
violation of this
Contributes cash, Contributes cash or provision, with a right to
property, or industry property only, not damages in either case.)
industry (Article 1789, NCC)

Proper party of a Not proper party to a

proceeding by/against proceeding by/against
3. As to Management:
the partnership the partnership (except
when the issue in the
case is his interest/ a. Managing partner – is entitled to manage
subject of suit) (De the business or affairs of the partnership.
Leon, 2012, Partnership,
b. Silent partner – does not take any active
Agency and Trust)
part in the business although he may be
Interest not assignable Interest is freely known to be a partner.
without the consent of assignable
c. Secret partner – takes active part in the
the partners
business but is not known to be a partner
by outside parties.
Name may appear in Name must not appear
the firm name in the firm name d. Liquidating partner – takes charge of the
Except: winding up of partnership affairs upon
(1) If it is also the dissolution.
surname of a general
partner, or
4. As to Exposure to Public Perception: a. Original partner – one who is a member
of a partnership at the time of its
a. Ostensible partner – one who takes active organization.
part and is known to the public as a
partner in the business (Art. 1834[2], NCC), b. Incoming partner – one who becomes a
whether or not in reality he is such. If in member of an existing partnership.
fact he is not a partner, he is subject to
liability by the doctrine of estoppel (Art.
1825, NCC).
7. As to Continuation of Business
b. Nominal partner – is held out to the world Affairs After Dissolution:
as a partner but he has no real interest in
the firm. He then becomes a partner by a. Continuing partner – one who continues
estoppel. the partnership business after the
dissolution of the partnership due to
c. Dormant partner – one who does not take
reasons stated in Article 1840.
active part in the business and is not
known or held out as partner (Art. b. Discontinuing partner – one who does not
1834[2]).
participate in the partnership business
d. Silent partner – one who does not take after its dissolution.
any active part in the business although
he may be known to be a partner.
CAPITALIST INDUSTRIAL
e. Secret partner – one who does not take PARTNER PARTNER
active part in the business although he
may be known to be partner (Art. 1834, As to Contribution
NCC).
Contributes money and Contributes industry or
f. Partner by estoppel – although not an property personal service
actual partner, he has made himself liable
as such by holding himself out as a As to Prohibition to Engage in Other Business
partner or allowing himself to be so held
out. (Art. 1825, NCC). Cannot generally Cannot engage in any
engage in the same or business for himself
similar enterprise as (Reason: all his industry
5. As to Actual Membership: that of his firm (the test is supposed to be
is the possibility of contributed to the firm).
a. Actual or real partner – is really a partner unfair competition).
by agreement among the parties.
b. Partner by estoppel – is not a real or As to Profits
actual partner but he becomes liable as a
According to the The industrial partner
partner because he holds himself out as a
agreement among the receives a just and
partner.
partners; if none, pro- equitable share.
rata to his contribution

As to Losses
6. As to Timing of Membership:
First, the stipulation as Exempted as to losses
to losses; as between partners;
but is liable against third
person without prejudice
 to reimbursement from
If none, the the capital partners.
agreement as to
profits; and if none, pro
rata to his contribution.
PARTNERSHIP BY ESTOPPEL
When Partnership by Estoppel Exists: It
exists when a non-partner, by words spoken
or written or by conduct, represents himself,
or consents to another representing or with
one or more persons who are not actual
partners (Art. 1825, NCC).
Requisites for Liability: In order for
estoppel to apply, it is necessary that the third
person must have knowledge of the
representation and acted in reliance upon the
same.
When Estoppel Does Not Apply
When although there is misrepresentation, the
third party is not deceived, the doctrine of
estoppel does not apply (Paras, Civil Code of the
Philippines Annotated, 2013, p.693).
Who shall be liable:
1. A partnership liability results when all
members of the existing partnership
consent to the representation, in which
case, the partner by estoppel (or
ostensible partner) is liable as though he
were an actual member of the partnership
(Art. 1825, NCC).
2. When no partnership liability results
because not all the members of an
existing partnership consent to the
representation-
a. The person acting and persons
consenting to the representation shall
all be liable as partners to a third
person who deals with them upon the
faith of such representation, the
transaction being considered their
joint act or obligation.
b. The partner by estoppel is liable pro
rata with the other persons so
consenting to the contract or
representation, if any (Art. 1825, NCC).
Liability of Incoming Partner for
Obligations Arising Prior to His
Admission: He is liable as though he had
been a partner when such obligations were
incurred. But his obligations shall be satisfied
only out of partnership property unless there
is a stipulation to the contrary (Art. 1826, NCC).
PARTNERSHIP VS. JOINT VENTURE
Joint Venture: An association or persons or
companies jointly undertaking some
commercial enterprise; generally contribute
assets and share risks. It requires a
community of interest in the performance of
the subject matter, a right to direct and
govern the policy in connection therewith, and
a duty which may be altered to share both in
profits and losses (Kilosbayan v. Guingona, G.R. No.
113375, May 5, 1994).
Requisites of a Joint Venture:
a. A community of interest in the
performance of the subject matter.
b. A right to direct and govern the policy in
connection therewith; duty to share
profits and losses (Kilosbayan vs. Guingona,
supra).
PARTICULAR PARTNERSHIP VS. JOINT
VENTURE
Usually, but not necessarily, a joint venture is
limited to a single transaction, although the
business of pursuing it to a successful
termination may continue for a number of
years; a partnership generally relates to a
continuing business of various transactions of
a certain kind (Heirs of Tan EngKee v. CA, G.R.
No. 126881, Oct. 3, 2000).
PROFESSIONAL PARTNERSHIP
Two or more persons may also form a
partnership for the exercise of a profession
(Art. 1767, NCC).
The law does not allow the practice of a
profession as a corporate entity. Personal
qualifications for such practice cannot be
possessed by a corporation.
Exception: A corporation may be registered
or licensed for the practice of architecture
provided that certain conditions are met, one
of which is: registered and licensed architects
shall compose at least seventy-five percent
(75%) of the owners, shareholders, members,
incorporators, directors, executive officers, as
the case may be. (Sec. 37, RA 9266)
PARTNERSHIP AT WILL
It is called partnership “at will” because its
continued existence really depends upon the
will of the partners, or even on the will of any
of them.
TWO KINDS
1. When there is no term, express or implied
2. When it is continued by the habitual
managers – although the period has
ended, or the purpose has been
accomplished.
Note: This is “prima facie” evidence of the
firm’s continuation (Paras, Civil Code of the
Philippines Annotated, 2013, p.623-624).
WHO SHALL BEAR THE RISK OF THINGS
CONTRIBUTED TO THE PARTNERSHIP?
1. Specific and determinate things which are
not fungible where only the use and fruits
may be for the common benefit – the risk
of loss is borne by the partner who owns
them. (Art. 1795[1], NCC)
2. Specific and determinate things the
ownership of which is transferred to the
partnership – the risk of loss is for the
account of the partnership.
3. Fungible things or things which cannot be
kept without the deteriorating even if they
were contributed only for the use of the
partnership – the risk of loss is borne by
the partnership for evidently the
ownership was being transferred since
use is impossible without the things being
consumed or impaired.
4. Things contributed to be sold – the
partnership bears risk of loss for there
cannot be any doubt that the partnership
was intended to be the owner; otherwise,
the partnership could not effect the sale.
5. Things brought and appraised in the
inventory –The partnership bears the risk
of loss because the intention of the
parties was to contribute to the
partnership the price of the things
contributed with an appraisal in the
inventory (De Leon, 2010, Partnership,
Agency and Trust, p. 107).
MANAGEMENT OF PARTNERSHIP
No Agreement as to Manner of
Management:
1. All the partners shall be considered agents
and whatever any one of them may do
alone shall bind the partnership (Art.
1803[1], NCC).
2. But if any of them should oppose the acts
of the others, the decision of the majority
shall prevail, and in case of a tie, the
matter shall be decided by the parties
owing the controlling interest (Art. 1803, in
relation to Art. 1801, NCC).
3. In case of alteration in the immovable
property, unanimous consent is required
even if the same is useful to partnership
(Art. 1803 [2], NCC).
When Manner of Management Has Been
Agreed Upon:
A. When a managing partner has been
appointed: The managing partner may
execute all acts of administration despite
the opposition of his partners unless he
acts in bad faith. (Art. 1800, NCC)
General Rule: Power is irrevocable without
just or lawful cause
Exceptions:
a. To remove him for JUST CAUSE, vote of
partners having controlling interest is
necessary;
b. To remove him WITHOUT JUST CAUSE,
unanimous vote is necessary, including his
own vote.
B. When a partner has been appointed
manager after the partnership has
been constituted.
Scope of authority: He may execute all acts
of administration but in case of opposition by
the other partners, the partners owning the
controlling interest may resort to voting for his
removal as manager.
Revocation of his appointment:
He may be removed with or without just
cause by the vote of the partners owning the
controlling interest. (Art. 1800, NCC)
This is because such partner is only an agent
whose authority may be revoked at any time
by his principal, which is the partnership.
C. When two or more partners have
been appointed as managers:
1. When there is specification of their
respective duties
2. When there is no specification of their
respective duties or there is no stipulation
that one shall not act without the consent
of the others.
a. Each one may separately execute all
acts of administration (Art. 1801, NCC)
b. Rule in case of opposition of the other
managers
1) The decision of the majority of the
managing partners shall prevail (per
head)
2) In case of tie, the decision of the
managing partner/s owning the
controlling interest shall prevail. (Art.
1801, NCC)
c. When there is a stipulation that none
of the managing partners shall act
without the consent of the others:
1) Vote required
 The concurrence of all of them shall
be necessary for the validity of the
acts.
2) Rule in case of absence or disability of
one of the managing partners.
 The absence or disability of any one
of them cannot be alleged, unless
there is imminent danger of grave or
irreparable injury to the partnership.
D. When the manner of management
has not been agreed upon:
1. All the partners shall be considered agents
of the partnership
2. Whatever any one of them may do alone
shall bind the partnership
3. Rule in case of opposition of the other
partners
a. The decision of the majority shall
prevail.
b. In case of a tie, the decision of the
partners owning the controlling
interest shall prevail. (Arts. 1801, 1803,
NCC)
E. Where stipulation requiring
unanimous consent
Unanimous consent is required for the validity
of the acts. Except when there is imminent
danger of grave or irreparable injury to the
partnership (Art. 1802, NCC).
Rule where there is opposition by a managing
partner – imminent danger of grave or
irreparable injury to the partnership is not
applicable when one of the managers, in the
exercise of his right to oppose, objects to the
proposed act.
II. RIGHTS AND OBLIGATIONS OF
PARTNERSHIP
RIGHTS OF PARTNERS
1. Property rights:
a. Rights in specific partnership property
b. Interest in the partnership (share in
the profits and surplus).
c. Right to participate in the
management (Art. 1810, NCC).
Note: This right is not given to the
limited partner. (Art. 1848, NCC)
2. Right to associate with another person in
his share. (Art. 1804, NCC)
3. Right to reimbursement for amounts
advanced to the partnership and to
indemnification for risks in consequence
of management. (Art. 1796, NCC)
4. Right of access and inspection partnership
books. (Art. 1805, NCC)
5. Right to demand a formal account of
partnership affairs (Art. 1809, NCC).
6. Right to have the partnership dissolved
under certain conditions (Arts. 1830-1831,
NCC).
A. Right to Recover Expenses Incurred
For the Partnership
To refund amounts: Each member of a
partnership is entitled to reimbursement
therefrom for all expenditures made by him
on behalf of the partnership plus interest.
Right to interest: The partnership shall be
responsible for the corresponding interest
from the time the expenses are made.
Obligations contracted in good faith. The
partnership is also liable to a partner for
contractual obligations incurred by the latter
in good faith in the interest of the partnership
business, and for risks in consequence of its
management (Art. 1796, NCC).
Distribution of Profits and Losses
1. Distribution is Primarily Determined
by Agreement of the Partners:
a. The losses and profits shall be distributed
in conformity with the agreement (Art.
1797[1], NCC).
b. However, none of them can be excluded
from participation in the profits and
losses. A stipulation, which excludes one
or more partners from any share in the
profits or losses, is void (Art. 1799, NCC).
2. In the Absence of Agreement
As to Profits:
The profits shall be divided in proportion to
their respective contribution, except that in
the case of the industrial partner he shall
receive such share as may be just and
equitable under the circumstances (Art.
1797[2], NCC).
As to Losses:
If there is NO AGREEMENT as to the share of
each partner in the losses, but there is an
agreement as to the share in the profits, the
loss shall be borne in the same proportion as
that in which they share in the profits (Art.
1797[1], NCC).
The industrial partner shall not be liable for
the losses, in the absence of a contrary
stipulation (Art. 1797[2], NCC).
3. If Designation Entrusted to Third
Persons:
The partners may agree to entrust to a third
person the designation of the share of each
one in the profits and losses (Art. 1798[1], NCC).
Such designation may be impugned only when
it is manifestly inequitable.
A partner cannot impugn the decision of a
third person if:
a. The aggrieved partner has begun to
execute said decision; or
b. He has not impugned the same within a
period of three months from the time he had
knowledge thereof (not from the time of
making).
4. Designation by One Partner,
Prohibited
The designation of losses and profits cannot
be entrusted to one of the partners (Art.
1798[2], NCC).
B. Right to Enter Into Sub-Partnership
Property
A partner may associate another person with
him in his share without the consent of the
other partners (Art. 1804, NCC). The contract
between them is called a sub-partnership.
The sub-partners are partners inter se.
However, the sub-partner does not become a
member of the original partnership in the
absence of the mutual assent of all the other
partners, even if the partner having an
associate should be a manager (Art. 1804,
NCC).
He does not acquire the rights of the partner
nor is he liable for its debts.
Property Rights of a Partner:
1. His rights in specific partnership property;
2. His interest in the partnership; and
3. His right to participate in the management
(Art. 1810, NCC).
C. Rights in Specific Partnership
Property (Art. 1811, NCC):
Nature of Right – A partner is co-owner
with his partners of specific partnership
property.
a. Contemplates tangible property;
b. The specific partnership property
belongs to the partnership. The
partners have no actual interest in it
until after dissolution, and
The right over a specific partnership property
is not subject to attachment or execution
except if it is based on a claim against the
partnership itself.

The rules on “co-ownership in partnership”
are detailed in the subsequent paragraphs.
Right to Possess – Has an equal right to
possess specific partnership property for
partnership purposes. He has no right to
posses such property for any other purpose
without the express or implied conset of the
other partners.
Right not assignable – a partner cannot
separately assign his right to specific
partnership property but all of them can
assign their rights in the same property.
Reasons:
1. Assignment would in effect allow a
stranger to become a partner without the
consent of all other partners;
2. It prevents interference by outsiders in
partnership affairs;
3. It protects the right of other partners and
partnership creditors to have partnership
assets applied to firm debts;
4. It is impossible to measure or value a
partner’s beneficial interest in a particular
partnership asset.
Right is NOT SUBJECT to Attachment or
Execution, except on a claim against the
partnership.
Note: If there is partnership debt, the specific
property can be attached.
Right is NOT SUBJECT to Legal Support under
Art. 195 of the Family Code.
Reason: The property belongs to the
partnership and not to the partners. His
interest in the partnership, however, is subject
to legal support.
Partner’s Interest in the Partnership:
A partner’s interest in the partnership is his
share of the profits and surplus. (Art. 1812,
NCC)
Profit – the excess of returns over
expenditure in a transaction or series of
transactions.
Surplus – refers to the assets of the
partnership debts and liabilities are paid and
settled and the rights of the partners among
themselves are adjusted.
Note: Only a partner’s share in interest and
not the whole profit of the partnership can be
assigned, be attached, and be subjected to
legal support (Arts. 1813 and 1814, NCC).
Procedure for Enforcement to Partner’s
Interest:
1. Charging Order: Any judgment creditor
of a partner may apply in court for a
charging order. In said order, the court
may charge the interest of the debtor
partner with payment of the unsatisfied
amount of such judgment debt with
interest thereon (Art. 1814[1], NCC).
Note: This remedy is without prejudice to
the preferred rights of partnership
creditors under Article 1827. It means that the
claims of partnership creditors must be
satisfied first before the separate creditors of
the partners can be paid out of the interest
charged (Art.1839[8], NCC).
2. Redemption of Interest Charged.
Redemption – the extinguishment of the
charge or attachment on the partner’s interest
in the profits.
How is Redemption Made
1. The “interest charge” may be redeemed
or bought at any time BEFORE
foreclosure.
2. AFTER the foreclosure, it may still be
bought with separate property (by any
one or more of the partners) OR with
partnership property (with consent of all
the other partners).
Preferred Rights of Partnership
Creditors
The creditors of the partnership shall be
preferred to those of each partner as regards
the partnership property (Art. 1827, NCC).
Assignment of Partner’s Whole Interest
in the Partnership (Art. 1813, NCC)
1. Right to Convey – Since a partner’s
interest in the partnership is his personal
property, he has the right to convey such
property.
2. Such conveyance does not of itself
dissolve the partnership. However, the
non-assigning partners may dissolve the
partnership if they so desire.
3. The purchaser of a partner’s interest may
secure from the court a decree of
dissolution in two instances:
a. After the termination of the specified
term or particular undertaking; or
b. In case of partnership at will, when
the interest was assigned or when the
charging order was issued.
4. The assignee does not become a partner
without the concurrence of all of the other
partners. Hence, during the continuance
of the partnership, he does not acquire
the right:
a. To interfere in the management or
administration of the partnership
business or affairs;
b. To require any information or account
of partnership transactions; or
c. To inspect the partnership books.
5. Rights of Assignee
a. To receive in accordance with his
contract the profits to which the
assigning partner would otherwise be
entitled.
b. In case of fraud in the management
of the partnership, the assignee may
avail himself of the usual remedies.
c. In case of dissolution of partnership,
the assignee is entitled to receive his
assignor’s interest and may require an
account from the date only of the last
account agreed to by all the partners.
OBLIGATIONS OF PARTNERS
A. Obligation to Contribute to Capital
1. Proportion of Capital Due from
Partners
In the absence of contrary stipulation,
partners shall contribute equal shares to
the capital of partnership (Art. 1790, NCC);
An industrial partner cannot be required
to contribute capital without stipulation to
that effect.
2. Debtor of Partnership
Every partner is a debtor of the
partnership for whatever he may have
promised to contribute thereto (Art. 1786,
[1], NCC).
3. Contribution of Money
A partner who has undertaken to
contribute a sum of money and fails to do
so becomes a debtor for the interest and
damages from the time he should have
complied with his obligation (Art. 1788,
NCC).
Note that no demand is necessary. The
interest and damages accrue ipso jure.
4. Contribution of Property:
a. To deliver to the partnership at the
time it was constituted or on the date
stipulated the property he has
promised to contribute.
b. To take care of the property before its
delivery to the partnership with the
diligence of a good father of a family
as a rule. (Art. 1163, NCC)
c. To be liable for damages in case of
default.
d. The partner shall also be liable for the
fruits of the specific and determinate
things, which he may have promised
to contribute from the time they
should have been delivered, without
the need of any demand (Art. 1786[2],
NCC).
e. He shall also be bound for warranty in
case of eviction with regard to specific
and determinate things, which he may
have contributed to the partnership
(Art. 1786[2], NCC).
5. Contribution of Additional Capital to
Save Venture
In case of imminent loss of the business
of the partnership, the partners can be
compelled to contribute an additional
share to the capital to save the venture.
Except: Industrial partners (Art. 1791, NCC).
Effect of Refusal to Contribute: The
partner who refuses to contribute shall be
obliged to sell his interest to the other
partners, except if there is an agreement to
the contrary (Art. 1791, NCC).
B. Obligation to Observe Good Faith
1. Private Use of Partnership Money - If
a partner uses partnership money for his
own use, he is liable to pay interest and
damages to the partnership from the time
he converted said amount to his own use.
(Art. 1788[2], NCC).
2. Individual Transactions in
Connection with Partnership Affairs
or Involving Use of Firm Property:
a. Partner must account to the partnership
for any benefit, and hold as trustee for it
any profits derived by him without the
consent of the other partners from any
transaction connected with the formation,
conduct, or liquidation of the partnership
or from any use by him of its property .
(Art. 1807, NCC).
b. He is holding any such profit only as a
trustee for the partnership (Art. 1807,
NCC).
Engagement in Individual Business:
By an Industrial Partner:
a. Prohibition: Prohibited from engaging in
any kind of business, unless expressly
permitted by all partners (Art. 1789, NCC).
b. Effect of Violation: The capitalist
partner may either:
1) Exclude the industrial partner from the
firm
OR
2) Avail themselves of the benefits, which he
may have obtained in violation of the
prohibition, with a right to damages in
either case (Art. 1789, NCC).
By a Capitalist Partner
Prohibition: Prohibited from engaging in
business of same nature as that of
partnership, unless there is a stipulation to
the contrary (Art. 1808, [1], NCC).
Effect of Violation: He is required to bring
to the common funds any profits accruing to
him from his transactions, and shall personally
bear all the losses (Art. 1808[2], NCC)
Equal Knowledge of Partnership Affairs:
1. Right to Examine Partnership Books:
Every partner shall at any reasonable hour
have access to and may inspect and copy
the partnership books (Art. 1805, NCC).
2. Matters Affecting Partnership:
Partners shall render ON DEMAND true
and full information of all things affecting
the partnership to any partner or the legal
representative of any deceased partner or
of any partner under legal disability (Art.
1806, NCC).
III.RIGHTS AND OBLIGATIONS OF
PARTNERS AMONG THEMSELVES
A. Obligation with Respect to
Contribution of Property
1. To contribute what was promised;
2. To answer for eviction in case the
partnership is deprived of determinate
property contributed;
3. To answer to the partnership for the fruits
of the property the contribution of which
is deprived, from the date they should
have been contributed to the time of
actual delivery; (Art. 1786, NCC)
4. To preserve the property with the
diligence of a good father of a family
pending delivery to the partnership; and
5. To indemnify the partners for any
damages caused to it by the retention of
the same or by delay in its contribution.
B. Obligation With Respect to
Contribution of Money and Money
Converted to Personal Use
1. To contribute on the date due the amount
he has undertaken to contribute to the
partnership;
2. To reimburse any amount he may have
taken from the partnership coffers and
converted to his own personal use;
3. To pay the agreed legal interest, if he fails
to pay his contribution on time or in case
he takes any amount from the common
fund and converted to his own personal
use; and
4. To indemnify the partnership for the
damages caused to it by the delay in the
contribution or the conversion of any sum
for his personal benefit.
C. Obligation Not to Engage in Other
Business for Himself
INDUSTRIAL PARTNER – cannot engage in
any business for himself unless the
partnership expressly permits him to do so;
and if he should do so, the capitalist partners
may either exclude him from the firm or avail
themselves of the benefits which he may have
obtained in violation of this provision, with a
right to damages in either case (Art. 1789,
NCC).
CAPITALIST PARTNER – the prohibition
extends only to any operation which is of the
same kind of business in which the
partnership is engaged unless there is
stipulation to the contrary (Art. 1808, NCC).
D. Obligation to Contribute Additional
Capital (Art. 1791, NCC).
General Rule: A capitalist partner is not
bound to contribute to the partnership more
than what he agreed to contribute.
Exception: In case of imminent loss of the
business, and there is no agreement to the
contrary, he is under obligation to contribute
an additional share to save the venture.
If he refuses to contribute: he shall be obliged
to sell his interest in the partnership to the
other partners.
E. Obligation of Managing Partners who
Collect Debt (Art. 1792, NCC).
Where a person is separately indebted to the
partnership and to the managing partner at
the same time, any sum collected by the
managing partner shall be applied to the two
credits in proportion to their amount, except
where he received it entirely for the account
of the partnership credit only.
Requisites:
1. The existence of two debts (one where
the collecting partner is a creditor, the
other, where the partnership is creditor);
2. Both debts are demandable;
3. The partner who collects is authorized to
manage and actually manages the
partnership
F. Obligation of Partner Who Receives
Shares in Partnership Credit
A partner who receives in whole or in part his
share in the partnership, when the others
have not elected theirs, shall be obliged, if the
debtor should thereafter become insolvent, to
bring to the partnership capital what he
received even though he may have given
receipt for his share only.
Requisites:
1. A partner has received in whole or in part;
2. The other partners have not collected
their shares;
3. The partnership debtor has become
insolvent.
Art. 1792 In comparison with Art. 1793
(Where a Partner Receives His Share of
a Partnership)
Art. 1792 Art. 1793
Two debts One debt only
Applies only to Applies to any
managing partner partner
G. Obligation of Partner for Damages to
Partnership (Art. 1794, NCC).
Every partner is responsible to the partnership
for damages suffered by it through his fault.
He cannot compensate them with the profits
and benefits which he may have earned for
the partnership by his industry.
However, the court may equitably lessen his
responsibility if thru the partner’s
EXTRAORDINARY efforts in other activities of
the partnership, UNUSUAL PROFITS have
been realized.
H. Duty to Render Information
Partners shall render on demand true and full
information of all things affecting the
partnership to any partner or the legal
representative of any deceased partner of any
partner under legal disability.
I. Obligation to Account for Any Benefit
and Hold as Trustee Unauthorized
Personal Profits.
Every partner must account to the partnership
for any benefit, and hold as trustee for it any
profits derived by him without the consent of
the other partners from any transaction
connected with the formation, conduct,
liquidation of the partnership or from any use
by him of a property.
THREE important duties of every
partner
1. The duty to contribute what had been
promised
2. The duty to deliver the fruits of what
should have been delivered, and
3. The duty to warrant (Art. 1786, NCC)
What are the property rights of a
partner and whether these rights are
assignable?
The property rights of a partner are: (1) His
rights in specific partnership property, (2) his
interest in the partnership; and (3) his right to
participate in the management (Art.1810, NCC).
Among the three rights, only the interest in
the partnership can be assigned (Art. 1813 and
Art. 1811, NCC).
IV. OBLIGATIONS OF PARTNERSHIP/
PARTNERS TO THIRD PERSONS
Use of Partnership Name:
1. Requirement of firm name: Every
partnership is required to operate under a
firm name (Art. 1815, NCC).
2. Name to be adopted:
 It can adopt any name, which may or
may not include the name of one or
more of the partners (Art.1815, NCC).
 In case of limited partnership, it is
required that the word “Ltd.” be
included in the name of the
partnership (Art. 1844[1], NCC).
3. Use of Name of Non-Partner. Article
1825 of the Civil Code prohibits a third
person from including his name in the firm
name under pain of assuming the liability
of a partner (In re: Petition for Authority to
Continue Use of the Firm Name “Sycip”, July
30, 1979).
Those who, not being members of the
partnership, include their names in the firm
name shall be subject to the liability of a
partner (Art. 1815[2], NCC).
Liability for Contractual Obligations:
Nature of liability:
a. Pro-rata – The Liability of the partnership
shall be equally divided among the
partners.
b. Subsidiary – Each partner shall be liable
with his separate property after all the
assets of the partnership have been
extinguished.
Stipulation against liability – Any stipulation
against the foregoing liability is:
 Void, in so far as third persons are
concerned;
 Valid, as among the partners (Art. 1817,
NCC).
Nature of liability – Only secondary or only
after exhaustion of partnership assets.
Extent of liability – Only PRO RATA (or in
proportion to his interest in the partnership).
Hence, he is not solidarily liable.
Separate obligation by a partner – If a
partner undertakes in his individual capacity
and on his individual credit to perform a
partnership contract, he becomes primarily
(not secondarily) liable for the same (Art.
1816, NCC).
RIGHT OF REPRESENTATION
General Rule: Every partner is an agent of
the partnership and his act binds the
partnership if it is for apparently carrying on
in the usual way the business of the
partnership.
Exception:
1. The partner so acting has in fact no
authority to act for the partnership in the
particular matter; and
2. The person with whom he is dealing has
knowledge of the fact he has no such
authority (Art. 1818, NCC).
Partnership is NOT BOUND by act of a
partner if:
1. Act is not apparently for the carrying on
of business of the partnership in the usual
way, unless authorized by other partners
(Art. 1818[2], NCC).
2. Although the act is for apparently carrying
on in the usual way the business of the
partnership, the partner so acting has no
authority to act in the particular matter
and the person with whom he dealt with
had knowledge of such fact (Art. 1818[1],
NCC).
3. Act is in contravention of a restriction on
authority and the person he dealt with
had knowledge of the restriction (Art.
1818, last par., NCC).
Acts requiring unanimous consent of all
partners (if business has not been
abandoned):
1. Assignment of partnership property in
trust for creditors or on the assignee’s
promise to pay the debts of the
partnership;
2. Disposition of goodwill of the business;
3. Doing of any other act which would make
it impossible to carry on the ordinary
business of partnership;
4. Confession of judgment;
5. Entering into a compromise concerning
partnership claim or liability;
6. Submission of partnership claim or liability
to arbitration; and
7. Renunciation of a partnership claim (Art.
1818[3], NCC).
CONVEYANCE OF REAL PROPERTY
Where title is in partnership’s name: Can
be conveyed only in the partnership name
(Art. 1774, NCC).
Effect of conveyance by a single partner:
1. If conveyance is in the usual course of
business, the same is within the scope of
the partner’s apparent authority, therefore
binding upon the principal.
2. If conveyed in partnership name but not
authorized, the partnership may recover
the property unless the same has been
conveyed by the grantee to a holder for
value without knowledge that the partner
has exceed his authority (Art. 1819[1], NCC).
3. If conveyed in his own name and the act
is one within the authority of the partner
has exceeded his authority (Art. 1819[1],
NCC).
Where title is in name of one or more
but not all the partners and the record
does not disclose the right of the
partnership and the conveyance is
executed without authority in the name
of the partner or partners in whose
name the title stands:
The partners in whose name the title stands
may convey title to such property.
But the partnership may recover such
property if the partners act does not bind the
partnership under the provisions of Article
1818, unless the purchaser or his assignee, is
a holder for value, without knowledge (Art.
1819[3], NCC).
Where title is in name of one or more or
all partners, or in a third person in trust
for the partnership:
A conveyance executed by a partner in the
partnership name, or in his own name, passes
the equitable interest of the partnership,
Provided the act is one within the authority of
the partner under the provisions of the first
paragraph of Article 1818 (Art. 1819[3], NCC).
Where title in names of all partners: A
conveyance executed by all the partners
passes all their rights in such property (Art.
1819[5], NCC).
Effect of admission and representation
by a partner - It binds the partnership when:
1. It concerns partnership affairs; and
2. It is within the scope of his authority (Art.
1820, NCC).
Liability arising from partner’s tort or
breach of trust:
Instances giving rise to liability:
1. Where a partner, by any wrongful act or
omission and acting in the ordinary course
of the business of the partnership or with
the authority of his co-partners, causes
loss or injury to a non-partner (Art. 1822,
NCC).
2. Where a partner acting within the scope
of his apparent authority receives money
or property of a third person and
misapplies it (Art. 1823[1], NCC).
3. Where the partnership in the course of its
business receives money or property of a
third person and the money or property
so received is misapplied by any partner
while it is in the custody of the
partnership (Art. 1823[2], NCC)
Who shall be liable:
1. The partnership is liable to the same
extent as the partner so acting or omitting
to act (Art. 1822, 1823, NCC).
2. But all the partners are liable solidarily
with the partnership for everything
chargeable to the partnership in the
abovementioned instances (Art. 1824,
NCC).
3. In such representation, the transaction
would be considered as their joint act or
obligation.
4. The partner by estoppel is liable pro rata
with the other persons so consenting to
the contract or representation, if any (Art.
1825, NCC).
Liability of incoming partner for
obligations arising prior to his
admission:
1. He is liable even though he had not been
a partner when such obligations were
incurred.
2. But his obligations shall be satisfied only
out of partnership property.
3. His own property shall not be liable,
unless there is a stipulation to the
contrary. (Art. 1826, NCC)
Principle of Delectus Personae
A rule inherent in every partnership wherein
no one can become a member of the
partnership without the consent of all of the
partners.
V. DISSOLUTION OF A PARTNERSHIP
Dissolution: Change in the relation of the
partners caused by any partner ceasing to be
associated in carrying on the business
(Art.1828, NCC).
Winding Up: It is the process of settling the
partnership business or affairs of the
partnership after dissolution.
Termination: Point when all partnership
affairs are wound up or completed and is the
end of the partnership life. It takes place after
both dissolution and winding up have
occurred.
CAUSES OF DISSOLUTION:
The parties may agree to expand the grounds
provided under Article 1830 but NOT to
DELIMIT them. The causes are enumerated
as follows:
1. Extrajudicial Dissolution – by act of
the parties WITHOUT violation of
their agreement
a. By the termination of the definite term or
particular undertaking specified in the
agreement;
b. By the express will of any partner, who
must act in good faith, when no definite
term or particular undertaking is specified;
Note: The partner who is guilty of wrongfully
causing the dissolution will be liable for
damages (Art. 1837, NCC)
c. By the express will of all the partners who
have not assigned their interests or
suffered them to be charged for their
separate debts, either before or after the
termination of any specified term or
particular undertaking;
d. By the expulsion of any partner from the
business bona fide in accordance with
such a power conferred by the agreement
between the partners.
2. Extrajudicial Dissolution – by act of
the parties WITH violation of their
agreement
In contravention of the agreement
between the partners, where the
circumstances do not permit, dissolution
under any other provision of this article
by the express will of any partner at any
time.
3. Dissolution by Operation of Law
a. 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;
b. When a specific thing, which a partner
had promised to contribute to the
partnership, perishes before the delivery;
in any case by the loss of the thing, when
the partner who contributed it having
reserved the ownership thereof, has only
transferred to the partnership the use or
enjoyment of the same; but the
partnership shall not be dissolved by the
loss of the thing when it occurs after the
partnership has acquired the ownership
thereof;
c. By the death of any partner;
d. By the insolvency of any partner or of the
partnership;
e. By the civil interdiction of any partner.
4. Judicial Dissolution
When so decreed by the court, the presiding
judge may place the partnership under
receivership and direct an accounting to
be made towards winding up the partnership
affairs (Art. 1831, NCC).
Effects of Dissolution
1. Partnership not terminated –
dissolution does not automatically result
in the termination of the legal personality
of the partnership, or the cessation of his
business, nor the relations of the partners
among themselves who remain as co-
partners until the partnership is
terminated.
2. Partnership continues for a limited
purpose – for the purpose of making
good all outstanding engagements, of
taking and settling accounts, and
collecting all the property, means and
assets of the partnership existing at the
time of its dissolution for the benefit of all
interested
3. Transaction of new business
prohibited - the partnership remains
viable only for the purpose of winding up
its affairs.
Grounds for Dissolution by Decree of
Court
1. A partner declared insane in any judicial
proceeding or shown to be of unsound
mind;
2. A partner becomes in any other way
incapable of performing his part of the
partnership contract;
3. A partner has been guilty of such conduct
as tends to affect prejudicially the
carrying on the business;
4. A partner willfully or persistently commits
a breach of the partnership agreement, or
otherwise conducts himself in matters
relating to the partnership business that it
is not reasonably practicable to carry on
the business in partnership with him;
5. The business of the partnership can only
be carried on at a loss.
Other circumstances which render dissolution
equitable. (Art. 1831, NCC)
Upon application by purchaser of partner’s
interest under Art. 1813 or 1814
a. After termination of specified term or
particular undertaking; OR
b. At any time if partnership was a
partnership at will when interest was
assigned or when the charging order was
issued.
Effect of dissolution on authority of a
partner - Dissolution terminates all authority
of any partner to act for the partnership,
except with respect to the following:
1. Acts to wind up partnership affairs.
2. Acts to complete transactions begun
before dissolution
This applies to wholly or partly executor
contracts.
In the above cases, the act of the partner
binds the partnership. If the assets of the
partnership are not sufficient to pay the
liabilities, the partners can be held liable to
the extent of their separate properties.
Right of Partners upon Dissolution (Art.
1837, NCC)
1. If dissolution is WITHOUT violation
of partnership agreement:
a. To have partnership property applied to
discharge the liabilities of the partnership;
b. To have surplus applied to pay in cash the
net amount owing to respective partners.
2. If dissolution is due to expulsion of a
partner, rights of expelled partner:
a. To be discharged from all partnership
liability;
b. To receive in cash only the net amount
due to him from the partnership.
3. If dissolution is due to violation of
partnership agreement
Partner who has not caused dissolution
wrongfully (Innocent partner):
a. To have partnership property applied for
payment of its liabilities
b. To receive in cash his share in the surplus
c. To demand damages from the guilty
partner for breach of the agreement
d. To continue the business under the same
name
e. To possess the partnership property
should they decide to continue the
business
Rights of a partner who has wrongfully caused
the dissolution (Guilty Partner):
1) If the business is NOT continued –
a. To have partnership property applied
to discharge partnership liabilities
b. To receive his share of the surplus
less damages owing to the innocent
partner
2) If the business is continued –
a. To have the value of his interest less
damages and
b. To be released from all existing and
future liabilities of the partnership
4. Right of a retiring or the estate of
the deceased partner when business
is continued without settling the
accounts
Unless otherwise agreed, retiring partner or
his legal representative shall receive as an
ordinary creditor:
An amount equal to the value of his interest in
the dissolved partnership with interest, or, at
his option or at the option of his legal
representative, in lieu of interest, the profits
attributable to the use of his right in the
property of the dissolved partnership;
Note: Provided that the creditors of the
dissolved partnership as against the separate
creditors, or the representative of the retired
or deceased partner, shall have priority on
any claim arising under this article
Rescission on the ground of fraud or
misrepresentation of one of the parties
thereto, the party entitled to rescind,
without prejudice to any other right is
entitled to. (Art. 1838, NCC)
1. Right of lien or retention
2. Right of subrogation
3. Right of indemnification
Note: Although the law uses “rescind” the
proper technical term should be “annulled”
RULES IN SETTLING ACCOUNTS
BETWEEN PARTNERS AFTER
DISSOLUTION (Art. 1839, NCC)
Assets of partnership for payment of
liabilities:
1. The partnership property,
2. The contributions of the partners
necessary for the payment of all the
liabilities
Partnership property insufficient to pay
all liabilities
1. Contributions of the partners shall be in
accordance with their:
a. Agreement as to sharing of losses;
b. If there is no agreement as to losses,
according to their agreement as to
sharing of profits;
c. If there is no agreement as to sharing of
both profit and losses, then in accordance
with their capital contribution.
2. If any partner does not pay his share in
the loss, the remaining partner shall have
to pay. However, the latter or his legal
representative who paid in excess of his
share in the liability shall have the right to
enforce the rule specified in the preceding
paragraph;
3. In case one of the partners died, his
individual property shall be liable for his
share of the loss.
Priority in Partnership Property and
Individual Property
When partnership property and the individual
properties of the partners are in possession of
the court for distribution, partnership creditors
shall have priority on partnership property and
separate creditors on individual property,
saving the rights of lien or secured creditors.
Where a partner has become insolvent
or his estate is insolvent, the claims against
his separate property shall rank in the
following order:
1. Those owing to separate creditors;
2. Those owing to partnership creditors;
3. Those owing to partners by way of
contribution.
Note: Insolvency here of the partner or his
estate does not necessarily mean that there is
no more money or property; it is enough that
the assets are less than the liabilities (Paras,
Civil Code of the Philippines Annotated, 2013, p.
713).
Liquidation of dissolved partnership
Concept: This involves the sale of the assets
of the partnership, the payment of its
liabilities, and the distribution of the remaining
cash or other property to the partners.
Order of Payment of Partnership
Liabilities
1. Those owing to creditors other than
partners
2. Those owing to partners other than for
capital and profits
3. Those owing to partners in respect of
capital
4. Those owing to partners in respect of
profits.
Who has the right or duty to wind up or
liquidate partnership affairs?
 If it is judicial, the right or duty to wind
up or liquidate partnership affairs
devolves upon partner or legal
representative or assignee designated by
the court (Art. 1836, NCC), whereas if it is
extrajudicial, the right or duty devolves
upon the managing partner.
 But where there is no managing partner,
or even where there is, he dies, then the
right or duty devolves upon the partners
who have not wrongfully dissolved the
partnership or the legal representative of
the last surviving partner, not insolvent
(Art. 1836, NCC).
When does the four (4) years
prescription period of the right of a
partner to demand an accounting of the
partnership business start to run?
As long as the partnership exists, any of the
partners may demand an accounting of the
partnership business. Prescription of the said
right starts to run only upon the dissolution of
the partnership and when the final accounting
is done (Emnace vs. Court of Appeals, G.R. No.
126334, November 23, 2001).
VI. LIMITED PARTNERSHIP

Definition
A limited partnership is a partnership which
has one or more general partners and one or
more limited partners. The limited partners as
such shall not be bound by the obligations of
the partnership (Art. 1843, NCC), except up to
the extent of their contribution.
Limited partnership not created by mere
voluntary agreement.
Essential Requirements for Formation of
Limited Partnership
1. A certificate or articles of limited
partnership which states the matters
enumerated in Article 1844, which must
be signed and sworn;
2. Such certificate must be filed for record in
the Office of the Securities and Exchange
Commission.
Note: It is only the property of the
partnership that can be pursued by the
creditors.
Execution of the Prescribed Certificate
A prime requisite to the formation of a limited
partnership, under Article 1844, is the
execution of the prescribed certificate. This
document, as a rule, must contain the matters
enumerated in said article. Thus, a limited
partnership cannot be constituted orally.
The statements required in the certificate
must be true at the time the certificate and
other required papers are filed with the SEC.
A strict compliance with the legal
requirements is not necessary. It is sufficient
that there is substantial compliance in good
faith.
The firm becomes a general partnership only
as to its relation to third persons. It is, in
form, still a limited partnership subject to all
the rules applicable to a limited partnership.
How Limited Partnership is Amended
In the following cases, a certificate shall
be amended:
1. There is a change in the name of the
partnership or in the amount or character
of the contribution of any limited partner;
2. A person is substituted as a limited
partner;
3. An additional limited partner is admitted;
4. A person is admitted as a general partner;
5. A general partner retires, dies, becomes
insolvent or insane, or is sentenced to civil
interdiction and the business is continued
under Article 1860;
6. There is a change in the character of the
business of the partnership;
7. There is a false or erroneous statement in
the certificate;
8. There is a change in the time as stated in
the 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.
Note: The certificate must be signed and
sworn to by all the members, and an
amendment substituting a limited partner or
adding a limited or general partner shall be
signed also by the member to be substituted
or added, and when a limited partner is to be
substituted, the assigning limited partner shall
also sign the amendment.
The cancellation or amendment must be
recorded in the SEC.
Specific Rights of Limited Partners:
1. To have partnership books kept at
principal place of business;
2. To inspect and copy at a reasonable hour
partnership books or any of them.
3. To demand true and full information of all
things affecting the partnership;
4. To demand formal account of partnership
affairs whenever circumstances render it
just and reasonable;
5. To ask for dissolution and winding up by
decree of court;
6. To receive a share of profits or other
compensation by way of income;
7. To receive return of his contribution
provided the partnership assets are in
excess of all its liabilities.
Obligations of a Limited Partner
1. Not to allow the inclusion of his surname
in the partnership name. (Art. 1846, NCC)
Exceptions:
a. If it is also the surname of a general
partner.
b. The business had been carried on
under a name in which his surname
appeared prior to his admission as a
limited partner.
2. To be liable as a general partner if he
takes part in the control of the business;
3. To be liable to the partnership for the
following:
a. For the difference between his actual
contribution and that stated in the
certificate.
b. For any unpaid contribution which he
agreed in the certificate to make in
the future at the time and on the
conditions stated in the certificate.
(Art. 1858, NCC)
4. To hold as trustee for the partnership the
following:
a. Specific property stated in the
certificate as contributed by him, but
which was not contributed.
b. Specific property, which has been
wrongfully returned to him.
c. Money or property wrongfully paid or
conveyed to him on account of his
contribution. (Art. 1858, NCC)
5. To be liable to the partnership after he has
rightfully received the return of his capital
contribution, for any sum not in excess of
such return with interest, which is
necessary to discharge its liabilities to all
creditors which extended credit or whose
claims arose before such return. (Art. 1858,
NCC)
6. Not to receive or hold as collateral security
any partnership property on accounts of
his claims for loan granted to or other
business transaction with the partnership.
(Art. 1854, NCC)
7. Not to receive from a general partner or
the partnership on account of such claims
any payment, conveyance, or release from
liability, if at the time the assets of the
partnership are not sufficient to discharge
partnership liabilities to persons not
claiming as general or limited partnership.
(Art. 1854, NCC)
Liability for Unpaid Contribution:
1. For the difference between his
contribution as actually made and that
stated in the certificate as having been
made;
2. For any unpaid contribution, which he
has, agree in the certificate to make in
the future at the time and conditions
stated in the certificate.
Liability as Trustee:
1. Specific property stated in the certificate
to be contributed by him, but which was
not contributed or which has been
wrongfully returned; and
2. Money or other property wrongfully paid
or conveyed to him on account of his
contribution.
Waiver of Liabilities of Limited Partner:
These liabilities can be waived or
compromised only by consent of all the
members.
General Rule: He has all the rights and
powers and is subject to all the restrictions
and liabilities as assignor;
Exception: Those liabilities, which he was
ignorant at the time, he became a limited
partner and which could not be ascertained
from the certificate (Arts. 1846, 1848, NCC).
Prohibited Transactions
The limited partner is prohibited from:
1. Receiving or holding as collateral security
any partnership property;
2. Receiving any payment, conveyance, or
release from liability if it will prejudice the
right of third persons.
 A limited partner as such cannot be held
liable for partnership obligations (Art. 1843,
NCC). However, if his surname appears in
the partnership or firm name or if he
participates in the management or control
of the business, he can be held liable
(Arts. 1846, 1848, NCC).
PART VIII: LAW ON AGENCY
I. DEFINITION OF AGENCY
Contract whereby a person (agent) binds
himself to render some service or to do
something in representation or on behalf of
another (principal), with the consent or
authority of the latter (Art. 1868, NCC).
Elements of Agency
The essence of agency is representation. In
the case of Tuazon vs. Ramos (G.R. No.
156262 July 14, 2005), the Court had the
occasion to set forth the elements of agency,
thus:
1. The parties’ consent, express or implied,
to establish the relationship;
2. The object, which is the execution of a
juridical act in relation to a third person;
3. The representation, by which the one who
acts as an agent does so, not for oneself,
but as a representative;
4. The limitation that the agent acts within
the scope of his or her authority
PARTIES
Principal – The person represented by the
agent and from whom the latter derives his
authority; he is the party primarily and
originally concerned in the contract of agency.
Agent – He who acts for and represents the
principal and from whom he derives his
authority.
Characteristics of Contract of Agency:
1. Principal – It can stand by itself.
2. Preparatory – It is a means by which other
contracts may be entered into.
3. Bilateral – The parties are bound
reciprocally to each other.
4. Onerous – It is presumed to be for a
compensation, unless there is proof to the
contrary. (Art. 1875, NCC)
5. Consensual – It is perfected by mere
consent.
6. Nominate – it has a name given to it by
law. (Art. 1868, NCC)
7. Commutative – The parties give and
receive almost equivalent values; hence,
there is real fulfillment.
AGENCY PARTNERSHIP
Acts for the principal Acts for himself, his
firm, and for his
partners
LEASE OF
AGENCY
SERVICE
 Agent represents the The worker or the
principal lessor of services does
not represent his B. By Ratification
employer
Relationship can be Generally, the
An agency by ratification is created when a
terminated at the will of relationship can be
person adopts or confirms an act performed
either principal or agent terminated only at the
will of both parties by another in his behalf without prior
authority.
Agent exercises The employee has
discretionary powers ministerial functions
C. By Estoppel
Usually involves 3 Usually involves only
persons: the principal, two persons
the agent, and a stranger The following must be established:

a. The principal manifested representation of

AGENCY TRUST the agent’s authority or knowingly allowed
the agent to assume such authority;
Agent usually holds no Trustee may hold legal b. The third person, in good faith, relied
title at all title to the property upon such representation; and
Usually, agent acts in the The trustee may act in
name of the principal his own name c. Relying upon such representation, such
Usually, agent may be The trust is usually third person has changed his position to
terminated or revoked ended by the his detriment. (Country Bankers Insurance
at any time accomplishment Corp. v. Keppel Cebu Shipyard, G.R. 166044,
of the purposes 18 June 2012)
for which it was
formed
Agency may not be Trust involves control
D. By necessity
connected at all with over property
An agency by necessity arises when an
property
emergency makes it necessary for one to act
Agent has authority to Trustee does not
for another without receiving any authority
make contracts which will necessarily or even
from the latter.
be binding on his possess such authority
principal to bind the trustor or
the cestui que trust.
Agency is really a A trust may be the II. POWERS (Arts. 1877-1878)
contractual relation. result of the contract
or not; it may be
created also by law
(Paras, Civil Code Annotated, 2008) A. To bind principal (Arts. 1897-1902)

HOW AGENCY RELATIONSHIP IS

CREATED Requisites in order to bind principal by
agent’s acts:

A. By Appointment 1. Agent must act within the scope of his

authority (Art. 1881, NCC); and
This is usually made by giving a person a 2. Agent must act in the name of the
power of attorney. principal.
Effect of Acting Beyond Scope of
Authority:
General Rule: Principal is not bound. A
contract entered into by an agent who has
acted beyond his powers is unenforceable,
unless it is ratified by the principal (Art. 1317
and 1403[1], NCC).
Exceptions: Principal is liable in the following
situations even if the agent acted beyond the
scope of his authority-
1. When the principal ratifies the agent’s act,
either expressly or impliedly (Art. 1910,
NCC).
2. Principal is solidarily liable if he allowed
the agent to act as though the latter had
full powers (Art. 1911, NCC).
3. If the limitations to the agent’s authority
is known only between the agent and
principal and not to third persons (Art.
1900, NCC).
4. Where the principal placed in the hands of
the agent instruments signed by him in
blank.
B. Exception (Art. 1883)
Effect of agent acting in his own name:
1. Principal has no right of action against the
third person with whom the agent has
contracted (Art. 1883, NCC).
2. Third person has no right of action
against the principal (Id).
3. Agent is the one directly bound in favor of
contracted as if the transaction were his
own, except when the contract involves
things belonging to the principal (Art.
1883[2], NCC).
Acts, which may be delegated to an
agent (subject matter of agency):
General Rule: What he may do in person, he
may do through another (Qui facit per alium
facit per se).
Exceptions:
1. Peculiarly personal acts; and
2. Illegal acts
Delegation of Authority (Sub-Agent):
1. When permissible: Agent may appoint
a substitute if the principal has not
prohibited him from doing so (Art. 1892,
NCC).
2. Effect as between principal and third
person:
If substitution is not prohibited: The acts
of the substitute will produce the same
effect between the principal and third
persons as if they were those of the agent
himself.
If substitution is prohibited: All acts of the
substitute appointed against the
prohibition of the principal shall be void
(Art. 1892, last par., NCC).
3. Effects as between principal and
agent:
If agent is not empowered to appoint a
substitute but not prohibited: Agent shall
be responsible for the acts of the
substitute (Art. 1892[1], NCC).
If agent is empowered:
But principal did not designate a particular
person: Agent is responsible for the acts
of the substitute if the substitute (Art. 1892,
NCC).
But principal designated a particular
person: Substitution is the act of the
principal himself rather than of the agent.
Consequently, the agent is totally and
absolutely exempt from responsibility for
the acts of the sub-agent.
If agent is prohibited from appointing
substitute: The agent acts beyond the
scope of his authority and shall be held
 liable for whatever damage that may
result.
4. Effect as between principal and
substitute: Both substitute and agent
are directly and personally liable to the
principal for the acts of substitute if—
Agent appoints a substitute although not
empowered to do so; or
Even if empowered, agent selects a
substitute notoriously incompetent or
insolvent (Art. 1893, NCC).
III. KINDS OF AGENCY
A. According to form
EXPRESS VS. IMPLIED AGENCY
EXPRESS – One where the agent has been
actually authorized by the principal, either
orally or in writing.
1. Oral Agreement – An oral agency is valid
unless the law requires a specific form.
(Art. 1869, NCC)
2. Written Agreement:
a. Those that require a specific power of
attorney, such as those enumerated
under Art. 1878. The act performed is
not enforced against the principal, if
the power of attorney is not special.
b. When the sale of a piece of land or an
interest therein (such as easement
and usufruct) is made through an
agent, the authority of the agent must
be in writing otherwise the sale is
void. (Art. 1874, NCC)
IMPLIED AGENCY – One, which is implied
from:
1. Acts of the PRINCIPAL- from his silence or
lack of action, or his failure to repudiate
the agency knowing that another person
is acting on his behalf without authority.
2. Silence of the principal.
3. Lack of action of the principal.
4. Failure of the principal to repudiate the
agency knowing that another person is
acting in his behalf without authority. (Art.
1869, NCC)
Note: As indicated in Article 1869, the
principal must know “that the person is acting
on his behalf without authority” for an agency
to be implied.” (De Leon, Comments and Cases
on Partnership, Agency and Trusts, 2010, p. 373)
B. According to extent
1. General Agency – One that comprises all
the business of the principal
2. Special Agency – One that comprises one
or more specific transaction.
C. According to authority conferred
1. Agency couched in general terms (General
Power of Attorney) - This comprises only
acts of administration. This is true even if
the principal should state:
a. That he withholds no power; or
b. That the agent may execute acts as he
may consider appropriate; or
c. Even though the agency should authorize
a general and unlimited management.
(Art. 1877, NCC)
Note: A general agency must not be
confused with one couched in general terms
which is a special agency when it involves
only one or more specific transactions (De
Leon, Comments and Cases on Partnership, Agency
and Trusts, 2010, p. 403)
Effect: The authority conferred in general
terms is confined to acts of administration.
They are those that do not involve acts of
dominion, such as alienations, except where
these are incidental to the authority to
administer.
2. Agency couched in specific terms – A
special power of attorney is required for
the performance of the following specific
acts (Art. 1878, NCC):
a. To make such payments as are not
usually considered as acts of
administration;
b. To effect novations which put an end
to obligations already in existence at
the time the agency was constituted;
c. To compromise, to submit questions to
arbitration, to renounce the right to
appeal from a judgment, to waive
objections to the venue of an action or
to abandon a prescription already
acquired;
d. To waive any obligation gratuitously;
e. To enter into any contract by which
the ownership of an immovable is
transmitted or acquired either
gratuitously or for a valuable
consideration;
f. To make gifts, except customary ones
for charity or those made to
employees in the business managed by
the agent;
g. To loan or borrow money, unless the
latter act be urgent and indispensable
for the preservation of the things
which are under administration;
h. To lease any real property to another
person for more than one year;
i. To bind the principal to render some
service without compensation;
j. To bind the principal in a contract of
partnership;
k. To obligate the principal as a
guarantor or surety;
l. To create or convey real rights over
immovable property;
m. To accept or repudiate an inheritance;
n. To ratify or recognize obligations
contracted before the agency;
o. Any other act of strict dominion
Powers not included:
1. Special power to sell excludes the power
to mortgage; and a special power to
mortgage does not include the power to
sell. (Art. 1879, NCC)
2. Special power to compromise does not
authorize submission to arbitration (Art.
1880, NCC)
Note: When the sale through an agent
involves a piece of land or any interest
thereon, the authority of the agent shall be in
writing; otherwise the sale shall be void. (Art.
1847, NCC)
 Agency is generally not presumed. The
relation between principal and agent must
exist as a fact. However, a presumption of
agency may arise in cases where an
agency may arise by operation of law or
to prevent unjust enrichment. (De Leon,
Comments and Cases on Partnership, Agency
and Trusts, 2010, p. 375)
Doctrine of Agency by Necessity
By virtue of the existence of an emergency,
the authority of an agent is correspondingly
enlarged in order to cope with the exigencies
or the necessities of the moment. The five
conditions laid down for authority of agency
by necessity are:
1. The real existence of an emergency;
2. Inability of the agent to communicate with
the principal;
3. Exercise of the additional authority for the the misrepresentation.
principal’s own protection;
In an implied agency, If the estoppel is caused
4. The adoption of fairly reasonable means, the agent is never by the agent, it is only
premises duly considered; personally liable. the agent who is liable,
never the alleged
5. The ceasing of the authority the moment principal.
the emergency no longer demands the
same. (Paras, Civil Code of the Philippines
GENERAL VS. SPECIAL AGENCY
Annotated, 2008, p. 785)

GENERAL AGENT SPECIAL AGENT

AGENCY BY ESTOPPEL
Scope of Authority
There is agency by estoppel where a person,
by words or conduct, represents or permits it Usually authorized to do Authorized to do only
to be represented that another person is his all acts connected with one or more specific
agent. In such a case, he is stopped to deny the business in which acts in pursuance of
the agency as against third persons who have he is engaged particular instructions or
dealt, on the faith of such representation, with with restrictions
necessarily implied from
the person so held out as agent, even if no
the act to be done
agency existed in fact.
Continuity
Elements:
Conducts a series of Usually involves a single
1. Representation by the principal; transactions involving a transaction or a series
continuity of service of transactions not
2. Reliance upon such representation by a
involving continuity of
third person; and service
3. Change of position by such third person in
reliance upon such representation. Extent to which agent may bind principal

Binds his principal by an Cannot bind his

act within the scope of principal in a manner
his authority although it beyond or outside the
AGENCY BY may be contrary to his specific acts which he is
IMPLIED AGENCY
ESTOPPEL special instructions authorized to perform

Between the principal and the agent Termination of authority

In an implied agency, In an agency by Apparent authority does Termination effective as

the agent is a true estoppel (caused for not terminate by mere to third party unless
agent, with rights and instance by estoppel on revocation of authority agency was for purpose
duties of an agent. the part of the agent), without notice to third of contracting with that
the “agent” is not a true parties third party
agent; hence he has no
rights as such. Construction of instructions of principal

As to third persons Statement of principal Authority of the agent

with respect to the must be strictly
In an implied agency, If the estoppel is caused agent’s authority would construed
the principal is always by the principal,he is ordinarily be regarded
liable. liable, but only if the as advisory only
third person acted on
AGENCY COUCHED IN GENERAL TERMS
Not affected by other statements of
principal
If the mandate conferred by the principal is
couched in general terms, the fact that the
principal made the following statements will
not extend the authority beyond the
performance of mere acts of administration:
(1) He withholds no power, (2) the agent may
execute such acts as he may consider
appropriate; (3) That the mandate authorizes
“a general and unlimited management.”
AGENCY BY OPERATION OF LAW
The heirs’ duty to continue the agency after
the death of the agent arises from what may
be termed as an agency by operation of
law or a presumed or tacit agency. (11
Manresa 588; Arts. 1884, par. 2, 1885, 1929, and
1931) Of course, the heirs can continue the
agency only temporarily for, as we have seen,
the essence of the contract is personal
confidence. The principal has a right to an
agent of his choice. There is nothing to
suggest that he would or should expect the
authority to pass to the agent’s heirs or
personal representatives. (De Leon, 2010,
supra, p.618)
IV. OBLIGATIONS OF AGENT TO
PRINCIPAL
a. If Agency was declined – In case a
person declines an agency:
 Such person is bound to observe the
diligence of a good father of a family in
the custody and preservation of the goods
forwarded to him by the owner until the
latter should appoint an agent or take
charge of the goods (Art. 1885, NCC).
 The owner, as soon as practicable, must
either appoint an agent or take charge of
the goods (Art. 1885, NCC).
b. If Agency Was Accepted
1. Obligation to carry out agency
What constitutes “carrying out” – It
means to perform whatever acts may be
necessary to bring the business to conclusion.
Effect of principal’s death – Death of the
principal extinguishes the agency (Art. 1919[3],
NCC). However, the agent is obligated to finish
the business already begun on the death of
the principal, should delay entail any danger
(Art. 1884[2], NCC).
Liability for damages in case of non-
performance - Agent is liable for damages
which, through his non-performance, the
principal may suffer (Art. 1884[1], NCC). But if,
after non-performance, the principal confers a
second mandate for the same purpose, this
will bar an action for damages as it constitutes
a tacit assent to the conduct of the agent
under the first agency.
Cases when agent is not bound to carry
out the agency – If its execution would
manifestly result in loss or damage to the
principal (Art. 1888, NCC).
2. Obligation to advance funds
General Rule: Agent is not bound to
advance the necessary funds to carry out the
agency.
Exception: Unless there is stipulation to that
effect.
Exception to the exception: Even if there
is a stipulation that agent should advance the
necessary funds, he is not obliged to do so if
the principal is insolvent (Art. 1886, NCC).
3. Obligation to obey instructions
 Rule: In the execution of the agency, the
agent shall act in accordance with the
instructions of the principal (Art. 1887, NCC).
In default of instructions: Agent shall do
all that a good father of a family would do, as
required by the nature of the business (Art.
1887, NCC).
4. Obligation to observe good faith and
loyalty
In General: An agent is a fiduciary with
respect to the matters within the scope of his
agency.
Conflict of interest: If, there is a conflict
between his interests and those of the
principal, he should prefer his own; he shall
be liable for damages (Art. 1889, NCC).
If authorized to borrow money: If the
agent has been empowered to borrow money,
he may himself be the lender at the current
rate of interest (Art. 1890, NCC).
If authorized to lend money: If he has
been authorized to lend money at interest, he
cannot borrow it without the consent of the
principal (Art. 1890, NCC).
Prohibition against buying property of
principal: An agent cannot, without his
principal’s consent purchase, whether directly
or indirectly, and even at public or judicial
sale, property, which he is authorized to sell
or administer (Art. 1491, NCC).
Duty to render account
In General: Every agent is bound:
1. To render an account of his transactions;
and
2. To deliver to the principal whatever he
may have received by virtue of the
agency, even though it may not be owing
to the principal (Art. 1891, NCC).
5. Obligation to pay interest
a. On sums he has applied to his own use
from the day on which he did so; and
b. On those, which he still, owes after the
extinguishment of the agency (Art. 1896,
NCC).
6. Obligation to observe diligence
 Diligence required is bonus pater familias
 The agent is responsible not only for
fraud, but also for negligence (Art. 1909,
NCC).
 The negligence of the agent shall be
judged with more or less rigor by the
courts, according to whether the agency
was or was not for a compensation (Art.
1909, NCC).
Duty of Commission Agent (Factor):
Definition: One engaged in the purchase
and sale for a principal of personal property,
which for this purpose, has to:
Care and custody of goods:
 The commission agent shall be
responsible for the goods received by him
in the terms and conditions and as
described in the consignment, unless
upon receiving them he should make a
written statement of the damage and
deterioration suffered by the same (Art.
1903, NCC).
 If the commission agent handles goods of
the same kind and mark belonging to
different owners, he has the obligation to
distinguish them by countermarks, and to
designate the merchandise respectively
belonging to each principal (Art. 1904,
NCC).
Care of cash: He is not the insurer of the
safety of the money. But he must observe
diligence of a good father of a family.
As to authority to sell on credit:
Duty not to sell on credit: A commission agent
cannot, without the express or implied
consent of the principal, sell on credit (Art.
1905, NCC).
Effect of sale on credit:
If not authorized: The principal may demand
from him payment in cash, but the
commission agent shall be entitled to any
interest or benefit, which may result from
such sale (Art. 1905, NCC).
If authorized: Should the commission agent,
with authority of the principal, sell on credit,
he shall so inform the principal, with a
statement of the names of the buyers. Should
he fail to do so, the sale shall be deemed to
have been made for cash insofar as the
principal is concerned (Art. 1906, NCC).
Obligation to collect credits:
1. Effect of failure to collect credits when
due and demandable:
a. Commission agent becomes liable to
principal for damages.
b. Unless: he proves that he exercises due
diligence for that purpose (Art. 1908, NCC).
2. Del Credre Agent - A commission agent
who receives on sale a guaranty
commission, in addition to the ordinary
commission. The guaranty commission is
given in return for the risk of collecting
the credit.
Effects:
a. He guarantees the risk of collection and
he shall pay the principal the proceeds of
the sale on the same terms agreed upon
with the purchaser, if the latter is not able
to pay (Art. 1907, NCC).
b. Either the principal or the del credre agent
may sue the purchaser and the suit of one
will bar the subsequent suit of the other.
“Doctrine of Procuring Cause” – If the
agent is the procuring cause of the sale – that
the measures employed by him and the
efforts he exerted resulted in the sale – he is
entitled to the payment of the commission
(Ramos v. CA, G.R. No. 25463, April 4, 1975).
In case of two or more Agents (Joint
Agents): The responsibility of two or more
agents, even though they have been
appointed simultaneously is merely joint and
not solidary, unless solidarity has been
expressly stipulated (Art. 1894, NCC).
IRREVOCABLE AGENCY
The agency is not revocable at will if —
1. If a bilateral contract depends upon it.
2. If the agency is a means of fulfilling an
obligation already contracted
3. If a partner is appointed manager of
partnership in the contract of partnership
and his removal from the management is
unjustifiable (Art. 1927, NCC).
V. RIGHTS AND OBLIGATIONS OF
PRINCIPAL
1. Obligation to pay compensation
General Rule: Agency is presumed to be for
compensation (Art. 1875, NCC).
Exception: Unless there is proof to the
contrary (Art. 1875, NCC).
2. Obligation to advance funds
Rule: Principal is obliged to advance funds
necessary for the execution of the agency
upon the request of the agent (Art. 1912, NCC).
When agent is obliged to advance funds:
If there is a stipulation to that effect. But
notwithstanding such stipulation, he cannot
be obliged to do so if the principal is insolvent
(Art. 1886, NCC).
Right of agent who made such
advances:
1. He is entitled to be reimbursed, even if
the business or undertaking was not
successful, provided the agent was free
from all fault (Art. 1912[2], NCC).
2. Such reimbursement shall include interest
on the sums advanced, from the day on
which the advance was made (Art. 1912[3]
NCC).
Instances where principal is not liable
for expenses incurred by agent:
1. If agent acted in contravention of
principal’s instructions, unless the latter
should wish to avail himself of the
benefits derived from the contract.
2. When expenses were due to fault of the
agent.
3. When agent incurred them with
knowledge that an unfavorable result
would ensue, if the principal was not
aware thereof.
4. When it was stipulated that the expenses
would be borne by the agent, or that the
latter would be allowed only a certain sum
(Art. 1918, NCC).
3. Obligation to indemnify agent for
damages
Requisites:
1. Agent suffers damage as a result of the
execution of agency.
2. The agent is free from fault or negligence
(Art. 1913, NCC).
Agent’s Lien:
Agent may retain in pledge the things which
are the object of the agency until the principal
effects the reimbursement and pays:
The advances made by the agent; and
The damages suffered by the agent in
executing the agency (Art. 1914, NCC).
The enforcement of the lien is the same as
that required in foreclosing a pledge.
If there be several principals (joint
principals): If there be several principals
who have appointed the agent for a common
transaction or undertaking, they shall be
solidarily liable to the agent for all the
consequences of the agency (Art. 1915, NCC).
Rights and liabilities between principal
and third person
For contracts contracted by agent as
such (in behalf of principal) and contract
is within scope of agent’s authority:
1. Principal is bound. He must comply with
the obligations which the agent may have
contracted (Art. 1910, NCC).
2. Agent is not personally liable to third
person with whom he contracts, unless he
expressly binds himself (Art. 1897, NCC).
3. The cause of action of third person is
against the principal, unless the agent
expressly binds himself.
When agent deemed to have acted
within scope of his authority as to third
persons:
1. If authority is in writing-
a. Act is deemed to have been performed
within the scope of the agent’s authority if
the same 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 (Art.
1900, NCC).
b. Private or secret orders and instructions
of the principal do not prejudice third
 persons who have relied upon the written
power of attorney or instructions shown
them (Art. 1902, NCC).
c. For this purpose, a third person with
whom the agent wishes to contract on
behalf of the principal may require the
presentation of the power of attorney or
the instructions as regards the agency
(Art. 1902, NCC).
2. If authority is not in writing – rule is
that 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 upon the
fact of the agency but the nature and
extent of the authority of the agent.
3. And contract is beyond the scope of
agent’s authority:
a. Principal is not bound except when he
ratifies it expressly or tacitly (Art. 1910[2],
NCC). The contract is unenforceable (Art.
1317 and 1403[1], NCC).
b. Exceptions: Principal is bound
notwithstanding the fact that agent
exceeded his authority—
 If the limits of the agent’s authority is
known only to the principal and agent
and the party with whom the agent
contacted is not aware of the limits of
the powers granted by the principal
(Art. 1898 and 1900, NCC).
 If the principal allowed the agent to
act as though the latter had full
powers, in which case, principal is
solidarily liable with the agent (Art.
1911, NCC).
Agent is personally liable to the person he
contracted with if—
1) He exceeds his authority, without giving
such party sufficient notice of his powers
(Art. 1897, NCC).
2) He exceeds his authority and he
undertook to secure the principal’s
ratification (Art. 1898, NCC).
For Contracts Executed By Agent In His
Own Name:
1. Principal has no right of action against the
person with whom the agent has
contracted, except when the contract
involves things belonging to principal (Art.
1883, NCC).
2. Such third person likewise has no cause of
action against the principal, except when
the contract involves things belonging to
principal (Art. 1883, NCC).
3. Agent is the one directly bound to the
person whom he contracted with, except
when the contract involves things
belonging to principal (Art. 1883, NCC).
4. The exception does not apply when the
agent acted beyond the scope of his
authority.
5. If the principal ratifies the contract and
has signified his willingness to ratify the
agents acts, the same becomes
enforceable between the parties and the
third person with whom the agent
contracted with cannot set up the fact the
agent exceed his powers (Art. 1901, NCC).
Double sale by principal and agent
Situation: Two persons contract with regard
to the same thing, one of them with the agent
and the other with the principal, and the two
contracts are incompatible with each other.
Whose contract is preferred: That of prior
date shall be preferred, without prejudice to
the provisions of Article 1544 on double sale
(Art. 1916, NCC).
Who is liable to the person who’s
contract is rejected:
1. If the principal has agent acted in good
faith, the principal is liable. The agent is
not liable
2. If the agent has acted in bad faith, only
the agent is liable for damages. The
principal is not liable (Art. 1917, NCC).
When is Principal Liable for
Delict/Quasi-delict Committed by Agent:
1. Person sought to be held must stand in
relation of principal to the one committing
the act; and
2. Act of the agent must have been done
within the scope of his authority.
VI. MODES OF EXTINGUISHMENT
1. Revocation by principal;
2. Withdrawal of the agent;
3. Death, civil interdiction, insanity or
insolvency of the principal or of the agent;
4. Dissolution of the firm or corporation
which entrusted or accepted the agency;
5. Accomplishment of the object or purpose
of the agency;
6. Expiration of the period for which the
agency was constituted (Art. 1919, NCC).
Note: The list is not exclusive.
Revocation of agency by principal
Revocable at will: The principal may revoke
the agency at will, and compel the agent to
return the document evidencing the agency
(Art. 1920, NCC). When two or more principals
have granted a power of attorney for a
common transaction, any one of them may
revoke the same without the consent of the
others (Art. 1925, NCC).
Manner of revocation: Either express or
implied (Art. 1920, NCC). There is implied
revocation in the following—
1. When a new agent is appointed for the
same business or transaction (Art. 1923,
NCC).
2. When the principal directly manages the
business entrusted to the agent, dealing
directly with third persons (Art. 1924, NCC).
3. When a special power of attorney is
granted to another, it revokes the general
power of attorney as regards the special
matter involved in the general power (Art.
1926, NCC).
Necessity and sufficiency of notice of
revocation:
Between principal and third person –
If agent had general powers:
 Notice of revocation in a newspaper of
general circulation is a sufficient warning
to third persons (Art. 1922, NCC).
 Without such notice, revocation does not
prejudice third persons who acted in good
faith and without knowledge of the
revocation (Art. 1922, NCC).
If Agency is for contracting with
specified persons: The specified persons
who acted in good faith and without
knowledge of the revocation (Art. 1922, NCC).
Between principal and agent – Agent
must be notified.
Withdrawal by Agent
Manner: By giving due notice to the principal
(Art. 1928, NCC).
Liabilities of agent incident to
withdrawal:
 If the principal suffers damage by reason
of withdrawal, agent is liable for damages
unless he based his withdrawal upon the
impossibility of continuing the
performance of the agency without grave
detriment to himself (Art. 1928, NCC).
 If the withdrawal is for valid reason, agent
must continue to act until principal has
had reasonable opportunity to take
necessary steps to meet the situation (Art.
1929, NCC).
 If agency has been constituted in the
interest of a third person who has
accepted the stipulation in his favor (Art.
1930, NCC).
Death of Principal
General Rule: Death of principal results in
the extinguishment of agency (Art. 1919[3],
NCC).
Exceptions:
1. It agency has been constituted in the
common interest of both principal and
agent.
2. If agency has been constituted in the
interest of a third person who has
accepted the stipulation in his favor (Art.
1930, NCC).
Obligation of agent upon
extinguishment of agency by reason of
death of principal: He must finish the
business already begun on the death of the
principal, should delay entail any danger (Art.
1884[2], NCC).
Acts done by agent prior to notice of
death of principal or of any other cause
which extinguished agency: Considered
valid and fully effective with respect to third
persons who may have contracted with the
agent in good faith (Art. 1931, NCC).
PART IX: LAW ON TRUST
I. DEFINITION
A trust is the legal relationship between one
person having an equitable ownership of
property and another person owning the legal
title to such property, the equitable ownership
of the former entitling him to the performance
of certain duties and the exercise of certain
powers by the latter. (Estate of Margarita
Cabacungan vs. Laigo, G.R. No. 175073, August
15, 2011)
II. KINDS OF TRUST:
1. Express Trust - Express or direct trusts
are created by the direct and positive acts
of the parties, by some writing or deed, or
will, or by oral declaration in words
evincing an intention to create a trust.
(supra)
2. Implied Trust - also called "trusts by
operation of law," "indirect trusts" and
"involuntary trusts" – arise by legal
implication based on the presumed
intention of the parties or on equitable
principles independent of the particular
intention of the parties. They are those
which, without being expressed, are
deducible from the nature of the
transaction as matters of intent or,
independently of the particular intention
of the parties, as being inferred from the
transaction by operation of law basically
by reason of equity. (supra)
Express Trust and Implied Trust
Distinguished
Express Trust Implied Trust
As to Creation
Created by the intention By operation of law
of the parties
As to Proof of Trust
An express trust over an An implied trust over an
immovable property or immovable property or
any interest therein any interest therein may
cannot be proved by be proved by oral
parol evidence. evidence
As to Repudiation of Trust
An express repudiation In constructive trusts,
made known to the even if there is no
beneficiary is necessary repudiation, laches may
in order that laches or bar an action to enforce  The property so held which is the subject
acquisitive prescription an implied trust. of the trust;
may bar an action to  Also called “trust res”
enforce an express  It must consist of property actually in
trust.
existence in which the trustor has a
transferable interest or title although it
may, as a rule, be any kind of transferable
Classifications of Implied Trust:
property either realty or personalty. But it
cannot be a mere expectancy without
1. Constructive trusts - come about in the
right or interest or a mere interest in the
main by operation of law and not by
performance of a contract, although such
agreement or intention. They arise not by
interest is in the nature of property right.
any word or phrase, either expressly or
impliedly, evincing a direct intention to
Note: A trust is not void for indefiniteness if
create a trust, but one which arises in
by its terms the whole property will go to
order to satisfy the demands of justice.
beneficiaries who are undetermined but will
be determined at the termination of the trust,
2. Resulting trusts - arise from the nature
at the latest. It is not necessary to the
or circumstances of the consideration
creation of a trust that the cestui que trust be
involved in a transaction whereby one
named or even be in existence at the time of
person becomes invested with legal title
its creation.
but is obligated in equity to hold his title
for the benefit of another. This is based
PART X: CREDIT TRANSACTIONS
on the equitable doctrine that valuable
consideration and not legal title is
All transactions on loan of goods, services, or
determinative of equitable title or interest
money in the present with a promise to pay or
and is always presumed to have been
deliver in the future.
contemplated by the parties.
I. LOAN
PERSONS INVOLVED IN A TRUST:
A contract wherein one of the parties delivers
1. Trustor – the one who intentionally
to another, either something not consumable
creates a trust;
so that the latter may use the same for a
2. Trustee – person who holds the legal
certain time and return it, or money or other
title to the trust property for the benefit of
consumable thing, upon the condition that the
another, and with certain powers and
same amount of the same kind and quality
subject to certain duties; and
shall be paid. (Art. 1933, NCC)
3. Beneficiary or cestui que trust –
Characteristics:
person who has the equitable interest in
the property and enjoys the benefit of
1. Real Contract – delivery of the thing
administration by the trustee. He may be
loaned is necessary for the perfection of
a natural person or legal entity. The
the contract
trustor may establish a trust with himself
as the beneficiary (usual case).
Note: An accepted promise to make a
future loan is a consensual contract, and
therefore binding upon the parties but it is
only after delivery, will the real contract of
loan arise. (Art 1934, NCC)
TRUST PROPERTY
2. Unilateral Contract - once the subject As to the Thing to be returned
matter has been delivered, it creates The exact thing loaned Equal amount of the
obligations on the part of only one of the same kind and quality
parties (i.e. borrower). As to when to Return
In case of urgent need Upon the expiration of
and commission of any the term only.
acts of ingratitude, even
A. Commodatum before the date of
expiration of the term.
Commodatum – A gratuitous contract where
one of the contracting parties delivers to Obligations Bailor and Bailee
another a non-consumable thing so that the
other may use the same for a certain time and Obligations of the Bailor (Art. 1946 to
return after using it, without compensation. Art. 1952, NCC)

Kinds of commodatum: 1. To respect the duration of the loan

1. Ordinary Commodatum –
use by the borrower of the thing is for a
certain period of time
2. Precarium- one whereby the bailor may
demand the thing loaned at will and it
exists in the following cases:
a. Neither the duration nor
purpose of the contract is stipulated; or
b. The use of the thing is merely
tolerated by the owner
Mutuum or Simple Loan – contract
whereby one of the contracting parties
delivers to the other, money or any other
consumable thing subject to the condition that
the same amount of the same kind and
quality be paid and returned. (Art. 1953, NCC)
because the bailor is bound by the terms
of the contract of commodatumwhich is
for a certain time.
General Rule: Allow the bailee the use
of the thing loaned for the duration of the
period stipulated or until the
accomplishment of the purpose for which
the commodatum was instituted.
Exceptions:
a. In case of urgent need in which case
the bailor may demand its return or
temporary use;
Reason: Commodatum is essentially
gratuitous (Art. 1946, NCC)
b. The bailor may demand immediate
return of the thing if the bailee
commits any act of ingratitude
specified in Art. 765 (Art. 1948, NCC).

COMMODATUM MUTUUM Acts of ingratitude under Art. 765:

As to Object
Generally non- Consumable  If the bailee should commit some
consumable
offenses against the person, honor or
Exception: Art. 1936 property of the bailor, or of his wife,
As to Cause children under his parental authority;
Essentially Gratuitous Maybe Gratuitous or  If the bailee imputes to the bailor any
not criminal offense, or any act involving
As to Purpose moral turpitude, even though he
Use or temporary Consumption should prove it, unless the crime or
possession the act has been committed against
As to Subject matter the bailee himself;
Real or personal property Only personal property  If the bailee unduly refuses the bailor
As to Ownership of the thing support when the bailee is legally or
Retained by the bailor Passes to the borrower morally bound to give support; and
  If the loan is for illegal or immoral use
(Tolentino, Civil Code of the Philippines
Vol. 5, 1992 ed., p.448)
Reason: The contract is void. (Art.1409[1] and
[7]).
2. To refund to the bailee extraordinary
expenses for the preservation of the thing
loaned, provided the bailee brings the
same to the knowledge of the bailor
before incurring them, except when they
are so urgent that the reply to the
notification cannot be awaited without
danger (Art. 1949 [1], NCC).
3. To be liable to the bailee for damages for
known hidden flaws (Art. 1951, NCC).
Requisites:
a. Existence of Flaw or defect in the
thing loaned;
b. The flaw or defect is Hidden;
c. The bailor is Aware thereof;
d. The bailee is Not aware thereof; and
e. The bailee Suffers damages by reason
of said flaw or defect.
If the above requisites concur, the bailee has
the right of retention for damages . (Art. 1944
NCC)
The bailor cannot exempt himself from the
payment of expenses or damages by
abandoning the thing to the bailee.
Reason: The expenses or damages may
exceed the value of the thing loaned (Art.
1952, NCC)
If in making use of the thing, the bailee
incurred expenses other than ordinary and
extraordinary expenses he is NOT entitled to
reimbursement (Art. 1950, NCC)
Obligations of the Bailee (Arts. 1941-
1945)
Principal Obligations:
1. Take care of the thing with diligence of a
good father of a family (Art. 1163, 1169,
1170 and 1173)
2. Return the thing upon expiration of terms
or upon accomplishment of purpose (Art.
1933, NCC)
The bailee has no right to retain the thing
loaned as security for claims he has against
the bailor even for extraordinary expenses
except for a claim for damages suffered
because of the flaws of the thing loaned (Art.
1944, NCC).
Other obligations:
1. To pay for the ordinary expenses for the
use and preservation of the thing loaned.
(Art. 1941, NCC).
2. To be liable for the loss of the thing, even
if it should be through a fortuitous event,
in the following cases:
a. When he keeps it longer than the
period stipulated, or after the
accomplishment of its use;
Reason: Delay (Art. 1165, 1169, and
1170)
b. When he lends or leases it to third
persons who are not members of his
household;
Reason: Commodatum is purely
personal (Art. 1939, NCC).
c. When the thing loaned has been
delivered with appraisal of its value
unless there is a stipulation exempting
the bailee from responsibility in case
of fortuitous event;
Reason: The law presumes that the
parties intended that the barrower
shall be liable for the loss of the thing
even if due to a fortuitous event for
otherwise they would not have
appraised the thing (Republic vs.
Bagtas, GR. No. L-17474 October 25,
1962)
d. When, being able to save either of the
thing borrowed or his own things, he
chose to save the latter; or
e. When the bailee devoted the thing for
any purpose different from that for
which it has been loaned (Art. 1942,
NCC).

3. Liability for the deterioration due to the
use of the thing:
General Rule: Bailee is not liable (Art. 1943,
NCC)
Exceptions:
a. If expressly stipulated;
b. If guilty of fault or negligence (Art. 1170,
NCC);
c. If he devoted the thing to any purpose
different from that for which it has been
loaned (Art.1942[1], NCC); or
d. If he uses the thing beyond the period
stipulated.
1. To pay for extraordinary expenses arising
from the actual use of the thing by the
bailee, which shall be borne equally by
both the bailor and the bailee, even
though the bailee acted without fault,
unless there is a stipulation to the
contrary (Art. 1949[2], NCC).
 The bailee has no right to retain the thing
loaned as security on the ground that the
bailor owes him something, even though
it may be by reason of expenses (Art. 1944,
NCC),
EXCEPT for damages suffered by the
bailee because of the hidden flaws of
things known to the bailor (Art. 1951, NCC).
 In a contract of deposit, when there are
two or more bailees to whom a thing is
loaned in the same contract, such
relationship will be deemed solidarily. (Art.
1945, NCC)
 This is an exception by express provision
of law to the general rule that the
concurrence of 2 or more parties in the
same obligation gives rise only to a joint
obligation (Arts. 1207, 1208, NCC)
 As a general rule, under Art. 1933, the
subject matter of commodatum must be
non‐consumable because the thing must
be returned. Nonetheless, by way of an
exception, consumable goods may be the
object of commodatum if the purpose is
not to consume them such as when they
were loaned merely for ad ostentationem
or exhibition purposes. After the affair,
the same and identical goods shall be
returned to the lender or bailor (Art. 1936,
NCC).
 No. The bailee in commodatum acquires
only the use of the thing loaned but not
its fruits (Art. 1935, NCC).
 Art. 1942 (2) contemplates wrongful
retention or a situation where the bailee is
not entitled to retain the thing loaned.
B. Mutuum
Mutuum – A contract whereby one of the
parties delivers to another money or other
consumable thing with the understanding that
the same amount of the same kind and
quality shall be paid (Art. 1933, NCC)
It involves the return of the equivalent
amount only and not the identical thing
because the borrower acquires ownership of
the money or the consumable thing loaned
(Art. 1978, NCC).
A loan of money may be payable in kind (Art.
1958, NCC)
Note: Mere issuance of checks to the debtor
does not perfect the contract of loan. It is
only after the checks have been cashed by the
debtor that the contract may be deemed
perfected (Art. 1249, NCC).
The destruction of the thing loaned does not
extinguish one’s obligation to pay because his
obligation is not to return the thing loaned but
to pay a generic thing.
Form of Payment
1. If the thing loaned is money, payment
must be made in the currency stipulated,
otherwise that which in legal tender in the
Philippines and in case of extraordinary
inflation or deflation, payment shall be in
the value of the currency at the time of
the creation of the obligation (Art. 1249,
1250 and 1255 [1], NCC).
2. If the thing loaned is other than money,
payment shall be of another thing of the
 same kind, quality and quantity. In case it
is impossible to do so, the barrower shall
pay its value at the time of the perfection
of the loan (Art. 1955 [2], NCC).
C. Interest
1. Simple interest – that which is paid for
the principal at a certain rate fixed or
stipulated by the parties
2. Compound interest – that which is
imposed interest due and unpaid. The
accrued interest is added to the principal
sum and the whole is treated as a new
principal upon which the interest for the
next period is calculated.
3. Legal interest – that which the law
directs to be charged in the absence of
any agreement as to the rate between the
parties.
4. Lawful interest – that which the laws
allow or do not prohibit
5. Unlawful or usurious interest – paid
or stipulated to be paid beyond the
maximum fixed by law.
Payment of unstipulated interest:
1. Where unstipulated interest is paid by
mistake, the debtor may recover, this
would be a case of solutioindebiti or
undue payment
2. Where the unstipulated is paid voluntarily
because the debtor feels morally obliged
to do so, there can be no recovery as in
the case of natural obligations.
Requisites for Demandability of Interest
1. Must be expressly stipulated
Exceptions:
a. Indemnity for damages (Art. 2209,
NCC); and
b. Interest accruing from unpaid interest
(Art 2212, NCC)
2. Must be lawful
3. Must be writing
Requisites for Recovery of Compound
Interest
General Rule: Accrued/Unpaid interest shall
not earn interest.
Exceptions:
1. When judicially demanded as provided in
Art. 2212, interest due shall earn legal
interest from the time it is judicially
demanded although the obligation may be
silent upon this point.
2. When there is an express stipulation
made by the parties that the interest due
and unpaid shall be added to the principal
obligation and the resulting total amount
shall earn interest.
Guidelines for the application of proper
interest rates:
1. Stipulated rate shall apply
2. When an obligation is breached, the
contravener may be held liable for
damages.
3. When the obligation breached consists of
forbearance of money, in the absence of
stipulation, the rate shall be the legal rate
computed from default. The interest due
shall itself earn legal interest from the
time it is judicially demanded.
4. If the obligation does not consist of
forbearance of money, the rate of interest
shall be 6% per annum.
Notes: No interest shall be adjudged on
unliquidated claims until the demand can be
established with reasonable certainty.
When the demand cannot be established, the
interest shall begin to run only from the date
of the judgment is made.
 When the judgment of the court awarding
a sum of money becomes final and
executory, the rate of legal interest shall
be 12% per annum from the finality
until its satisfaction, the interim period
deemed to be equivalent to a forbearance
of money (Eastern Shipping Lines v. CA, G.R.
No. 97412, July 12, 1994)
Note: Central Bank Circular No. 416 fixing the
rate of interest at 12% per annum deals with
loans, forbearance of any money, goods or
credits and judgments involving such loans or
forbearance in the absence of express
agreement to such rate.
 When an obligation, not constituting a
loan or forbearance of money , is
breached, an interest on the amount of
damages awarded may be imposed at
the discretion of the court at the rate of
6% per annum. (Eastern Shipping v. CA,
supra) The obligation consisting in the
payment of sum of money referred to in
Art. 2209 is not confined to a loan or
forbearance of money but has been
applied by the SC in cases involving
default in the payment of price or
consideration under a contract of sale and
an action for damages for injury o
persons and loss of property and an
action for damages arising from unpaid
insurance claims (Castelo vs. CA GR No.
96372 May 22, 1995).
 When the agreed rate is iniquitous and
unconscionable, the courts may reduce
the same as reason and equity demand.
(Imperial vs. Jaucian, GR No. 149004 April 14,
2004)
 The right to interest arises by reason
of the contract (stipulation in writing) or
by reason of delay or failure to pay
principal on which interest is demanded
(Baretto v. Santa Marina, GR No. 11908, Feb.
4, 1918).
 If the obligation consists of the payment
of a sum of money, and the debtor incurs
delay, the indemnity for damages shall be
the payment of legal interest (Philrock, Inc.
v. Construction Industry Arbitration
Commission, G.R. Nos. 132848‐49, June 25,
2001)
 Payment of monetary interest is allowed
only if:
1. There was an express stipulation for the
payment of interest; and
2. The agreement for the payment of
interest was reduced in writing.
The concurrence of the two conditions is
required for the payment of monetary
interest. Thus, collection of interest without
any stipulation therefor in writing is prohibited
by law. (Siga‐an v. Villanueva, G.R. No. 173227,
Jan. 20, 2009.)
II. DEPOSIT
A contract constituted from the moment a
person receives a thing belonging to another
with the obligation of safety keeping it and
returning the same. If the safekeeping of the
thing delivered is not the principal purpose of
the contract, there is no deposit but some
other contract (Art. 1962, NCC)
Principal Purpose
SAFE KEEPING. If the safekeeping is not the
principal purpose it may be either: (a)
commodatum; (b) lease; or (c) agency.
The depositor need not be the owner of the
thing deposited because the purpose of the
contract is safekeeping and not transfer of
ownership. The depository cannot dispute the
title of the depositor (Art. 1984[1], NCC). The
depository is in estoppel (Art. 1436, NCC).
Characteristics of deposit:
1. Real Contract - contract is perfected by
the delivery of the subject matter. Where
there has been no delivery, there is
merely an agreement to deposit, which
however is binding and enforceable upon
the parties.
2. Unilateral – when gratuitous because only
the depositary has an obligation.
3. Bilateral – If with compensation because
it gives rise to obligations on the part of
both the depositary and depositor.
4. Voluntary as a general rule
5. Gratuitous as a general rule.
Subject Matter of Deposit
1. Only MOVABLE/PERSONAL property may
be the object of EXTRAJUDICIAL deposit,
whether voluntary or necessary. The
provisions do not embrace incorporeal or
intangible property, like rights and
actions.
2. JUDICIAL deposit may cover MOVABLE as
well as IMMOVABLE property, its purpose
being to protect the rights of the parties
to a suit.
Kinds of Deposit:
A. Judicial (sequestration) – when an
attachment or seizure of property in
litigation is ordered (Art. 2005, NCC).
B. Extra-judicial
1. Voluntary – delivery is made by the will
of the depositor or by 2 or more persons
each of whom believes himself entitled to
the thing deposited. (Arts. 1968-1995, NCC)
2. Necessary – made in compliance with
(1) a legal obligation; or (2) on occasion
of any calamity; or (3) by travelers in
hotels and inns; or (4) by travelers with
common carriers.
 The prevailing rule is that the relation
between a bank renting out safety-deposit
boxes and its customer with respect to
the contents of the box is that of a bailor
and bailee, the bailment being for hire
and manual benefit (CA Agro-Industrial Dev.
Corp. v. C.A., Mar. 3, 1993, G.R. No. 90027)
Another difference between a voluntary
deposit and necessary deposit is that in the
former, the depositor is free to choose the
depositary, in the latter, there is lack of free
choice in the depositor.
Extra-judicial deposit does not include
incorporeal/intangible property such as right
and actions for it follow the person of the
owner.
General Rule: A contract of deposit is
gratuitous (Art. 1965, NCC).
Exceptions:
1. When there is a contrary stipulation;
2. The depositary is engaged in the business
of storing goods; and
3. Property is saved from destruction without
the knowledge of the owner.
RULES ON THE CAPACITY OF DEPOSITARY
AND DEPOSITOR
Depositary is Depositary is
capacitated and incapacitated and
Depositor is Depositor is
incapacitated (Art. capacitated(Art.
1970) 1971)
Depositary is subject to Depositary does not
ALL the obligations of a incur obligations of a
depositary whether or depositary
not the depositor is
capacitated.
Depositary must return Depositary, however is
the property either to: liable to:
The legal representative Return the thing
of the incapacitated; deposited while still in
The depositor himself if his possession; and
he should acquire Pay the depositor the
capacity amount by which he
may have benefited
himself with the thing
or its price subject to
the right of any third
person who acquired
the thing in good faith.
General obligations of Depositary
1. To keep the thing safely (Art. 1972, NCC)
Depositary is liable if the loss occurs
through his fault or negligence even if the
thing is insured. The loss of the thing
while in his possession ordinarily raises
the presumption of fault on his part.
The required degree of care is greater
when:
a. Stipulated;
b. It is the depositary who voluntarily
offered to keep the thing;
c. The deposit is compensated; or
d. The deposit produces benefit to the
depositary (Tolentino, Civil Code of the
Philippines Vol. 5, 1992 ed., p. 460)
2. To return the thing (Art. 1972, NCC)
Person to whom the thing deposited
must be returned:
a. Depositor, to his heirs and successors,
or the person who may have been
designated in the contract.
Note: If 2 or more persons each claiming to
be entitled to a thing, the depositary can file
an action to compel the depositors to settle
their conflicting claims among themselves in
the nature of interpleader (Sec. 1 Rule 62,
ROC).
b. Guardian or administrator of the person
who made the deposit or the latter
himself should acquire capacity (Art. 1970,
NCC).
c. Legal representative of the depositor
should the latter subsequently lose his
capacity during the deposit. (Art. 1986,
NCC)
Time of return:
General Rule: Upon demand even though a
specified period of time for such return may
have been fixed.
Exceptions:
a. When the thing is judicially attached
while in the depositary’s possession;
b. Should he have been notified of the
opposition of a 3rd person to the
return or removal of the thing
deposited in such instance, the
depositary must immediately inform
the depositor of the attachment or
opposition (Art. 1988, NCC); or
c. If the deposit is gratuitous, the
depositary may return the thing
deposited notwithstanding that a
period has been fixed for the deposit
if justifiable reasons exists for its
return. If the depositor refuses to
receive it, the depositary may secure
its consignation from the court (Art.
1989, NCC).
Note: If the deposit is for a valuable
consideration, period must be followed
even if the depositary suffers
inconvenience as a consequence.
(Art.1989, NCC)
What to return:
a. Product, accessories, and accessions of
the thing deposited (Art. 1983, NCC)
b. If by force majeure or government order,
the depositary loses the thing, and
receives money or another thing in its
place, he shall deliver the sum or other
thing to the depositor. (Art. 1990, NCC)
Where to return:
a. Place agreed upon by the parties, or
b. At the place where the thing deposited
might be even if it should not be the same
place where the deposit was made
provided there was no malice on the part
of depositary (Art. 1987).
3. Not to deposit the thing with a 3rd person
unless authorized by express stipulation
(Art. 1973, NCC)
Reason: Deposit is founded on trust and
confidence.
The depositary is liable for the loss
under the following:
a. He transfers the deposit with a 3rd person
without authority, although there is no
negligence on his part and the third
person;
b. He deposits the thing with a 3rd person
who is manifestly careless and unit,
although authorized, even in the absence
of negligence; or
c. The thing is lost through the negligence of
his employees whether the latter are
manifestly careless or not.
4. To change the way of the deposit if under
the circumstances, the depositary may
reasonably presume that the depositor
would consent to the change if he knew
of the facts of the situation, provided, that
the former notifies the depositor thereof
 and wait for his decision, unless delay
would cause danger. (Art. 1974, NCC)
5. If the thing deposited should earn interest
(Art. 1975, NCC):
a. To collect interest and the capital
itself as it falls due; and
b. To take steps to preserve its value
and rights with regards to it.
Note: A contract for the rent of safety deposit
boxes is a special kind of deposit; hence, it is
not to be strictly governed by the provisions
on deposit. The relation between the bank
and its customer is that of a bailor and bailee,
the bailment being for hire and mutual
benefit.
 It cannot be characterized as an
ordinary contract of lease because full and
absolute control of the safety deposit
boxes was not given to the joint renters.
(CA Agro v. CA, G.R. No. 90027 March 3,
1993)
6. Not to commingle things deposited if so
stipulated (Art. 1976, NCC)
Depositary can only commingle if the
articles are of the same kind and quality.
If commingling is allowed, each depositor
shall be entitled to each portion of the
entire mass as the amount deposited by
him bears to the whole.
7. Not to make use of the thing deposited
unless authorized (Art. 1977, NCC).
General Rule: Deposit is not for use of the
thing. Use by the depositary would make him
liable for damages.
Exceptions:
a. When the preservation of the thing
deposited requires its use;
b. When authorized by the depositor (the
authorization shall not be presumed and
its existence must be proved) (Art. 1977,
NCC)
Effect if permission to use is given:
If the thing deposited is non-consumable, the
contract is a commodatum, unless
safekeeping is still the principal purpose.
If the thing deposited consists of consumable
things, the contract is converted into a simple
loan or mutuum unless safekeeping is still the
principal purpose in which case it is called an
irregular deposit (example: bank deposit)
8. To be liable for loss through fortuitous
event (Art. 1979, NCC):
a. If stipulated
b. If he uses the thing without the
depositor’s permission
c. If he delays it return
d. If he allows others to use it
9. When the thing deposited is delivered
sealed and closed (Art. 1981, NCC):
a. To return the thing deposited in the
same condition;
b. To pay for damages should the seam
or lock be broken through his fault, which
is presumed unless proven otherwise; and
c. To keep the secret of the deposit
when the seal or lock is broken with or
without his fault.
Note: The depositary is authorized to open
the thing deposited which is closed and sealed
when (Art. 1982, NCC):
a. There is presumed authority; or
b. There is necessity to do so.
10. To pay interest on sums converted to
personal use if the deposit consists of
money (Art. 1983, NCC)
Fixed, savings, and current deposits of
moneys in banks and similar institutions
shall be governed by the provisions
concerning simple loans. (Art. 1980, NCC)
A bank can compensate or set-off the
deposit in its hands for the payment of
any indebtedness to it on the part of the
 depositor. In true deposit, such
compensation or set-off is NOT allowed.
1. To advise the true owner that a deposit
has been made should he discover that
the thing deposited was stolen from the
owner (Art. 1984, NCC)
If the owner despite such information
does not claim it within the period of 1
month, the depositary shall be relieved
from all responsibility by returning the
same to the depositor.
Rule when there are two or more
depositors (Art. 1985):
1. If the thing deposited is divisible and
depositors are not solidary. Each
depositor can demand only his
proportionate share thereto.
2. If obligation is solidary or if the thing is
not divisible.
 Rules on active solidarity shall apply, i.e.
each one of the solidary depositors may
do whatever may be useful to the others
but not anything which may be prejudicial
to the latter, (Art. 1212, NCC) and the
depositary may return the thing to anyone
of the solidary depositors unless a
demand, judicial or extrajudicial, for its
return has been made by one of them in
which case, delivery should be made to
him (Art. 1214, NCC).
3. Return to one of depositors stipulated.
The depositary is bound to return it only
to the person designated although the
latter has not made any demand for its
return.
Note: The depositary may retain the thing in
pledge until payment of what may be due him
by reason of the deposit. (Art. 1994, NCC)
The depositor’s heir who in good faith may
have sold the thing which he did not know
was deposited shall only be bound to return
the price he may have received or to assign
his right of action against the buyer in case
the price has not been paid him. (Art. 1991,
NCC)
Obligations of the Depositor:
1. To pay expenses for preservation
(contemplates ordinary and extraordinary
& necessary expenses)
a. If the deposit is gratuitous, the
depositor is obliged to reimburse the
depositary for expenses incurred for
the preservation of the thing
deposited (Art. 1992).
b. If the deposit is for valuable
consideration, expenses for
preservation are borne by the
depositary due to the character of the
thing deposited.
General Rule: The depositor shall reimburse
the depositary for any loss arising from the
character of the thing deposited.
Exceptions:
1. At the time of the deposit, the depositor
was not aware of the dangerous character
of the thing;
2. When the depositor was not expected to
know the dangerous character of the
thing;
3. When the depositor notified the
depositary of the same; or
4. The depositary was aware of it without
advice from the depositor.
Extinguishment of voluntary deposit
(Art. 1995) - Same as the modes of
extinguishment of obligations in Art. 1231 of
the New Civil Code:
1. Novation
2. Compensation
3. Merger
4. Remission
5. Payment
6. Loss
7. Prescription
8. Rescission
9. Fulfillment of resolutory condition
10. Annulment
A deposit is extinguished:
1. Upon the loss or destruction of the thing effect that he is not liable for the loss of
deposited; articles brought by the guest. Any
2. In case of gratuitous deposit, upon the stipulation to such effect shall be void.
death of either the depositor or the (Art. 2000, NCC)
depositary (Art. 1995, NCC); or  Notice is necessary only for suing civil
3. Other causes, such as return of the thing, liability but not criminal liability. (Art. 2003,
novation, merger, expiration of the term, NCC)
fulfillment of the resolutory condition, etc.
(Art. 1231, NCC). When hotelkeeper liable: When the loss
Note: A deposit for compensation is not or injury is caused:
extinguished by the death of either party 1. By his servants or employees as well as
because, unlike a gratuitous deposit, an by strangers provided that the notice has
onerous deposit is not personal in nature (De been given and proper precautions (Art.
Leon, Comments and Cases on Credit Transactions, 2010 2180, NCC); and
ed., p. 145). 2. By the act of a thief or robber done
Necessary Deposits: without the use of arms and irresistible
1. Made in compliance with a legal force, for in this case, the hotel-keeper is
obligation. apparently negligent. (Art. 2001, NCC)
2. Made on the occasion of any calamity
such as fire, storm, flood, pillage, When hotel-keeper not liable: When the
shipwreck or other similar events loss or injury is caused by:
(deposito miserable). 1. Force majeure, theft or robbery by a
3. Made by travelers in hotels and inns or by stranger with the use of irresistible force;
travelers with common carrier. 2. The acts of guests, his family, servants or
visitors; or
Deposit by travelers in hotels and inns 3. Arises from the character of the things
The keepers of hotels or inns shall be brought into the hotel.
responsible as depositaries for the deposit of
effects made by travelers, provided: C. Judicial or Sequestration Deposit
1. Notice was given to them or to their
employees of the effects brought by the Judicial Deposit or sequestration takes
guest; and place when an attachment or seizure of
2. The guest takes the precautions, which property in litigation is ordered (Art. 2005,
said hotel-keepers or their substitutes NCC).
advised, relative to the care and vigilance
of their effects. JUDICIAL EXTRA-JUDICIAL
This also applies to deposits made to Creation
common carriers. (Art. 1754, NCC) By order of the court. By the will of the
parties or by contract.
Notes: Purpose
 Liability extends to vehicles, animals and For security or to insure For custody and
articles, which have been introduced or the right of a party to a safekeeping
property or to recover in
placed in the annexes of the hotel. (Art.
1999, NCC) case of favorable
judgment
 Liability shall EXCLUDE losses, which
Subject Matter
proceed from force majeure. The act of a
Movables or immovable, Movables only.
thief or robber is not deemed force but generally immovable
majeure unless done with the use of arms
or irresistible force. (Art. 2000, NCC) Cause
 The hotelkeeper cannot free himself from Always onerous Maybe onerous or
responsibility by posting notices to the gratuitous
 When must the thing be returned
Upon order of the court Upon demand of the
or when litigation is depositor
ended.
 The depositary may change the
manner of the deposit if he may own
reasonably presume that the depositor
would consent to the change if he knew
of the facts of the situation. However,
before the depositary may make such
change, he shall notify the depositor
thereof and wait for his decision, unless
delay would cause danger (Art. 1974, NCC)
If the depositary has permission to use
the thing deposited:
General Rule: The contract loses the
concept of a deposit and becomes a loan or
commodatum.
Exception: Where safekeeping is still the
principal purpose of the contract (Art. 1978,
NCC). Note: The permission shall not be
presumed, and its existence must be proved.
If the depositary has not been paid the
amount due to him the depositary may retain
the thing in pledge until full payment of what
may be due him by reason of the deposit (Art.
1994, NCC)
 Bank deposits are in the nature of
irregular deposits. They are really loans
because they earn interest. All kinds of
bank deposits, whether fixed, savings or
current, are to be treated as loans and
are to be covered by the law on loans.
Current and savings deposits are loans to
a bank because it can use the same.
Serrano, in making time deposits that
earn interest with OBM was in reality a
creditor of the respondent bank, and not
a depositor. The bank was in turn a
debtor of Serrano. Failure of OBM to
honor the time deposits is failure to pay
its obligation as a debtor and not a breach
of trust arising from a depositary’s failure
to return the subject matter of the deposit
(Serrano v. Central Bank, G.R. No. 30511, Feb.
14, 1980).
Necessarry Deposit:
1. When it is in compliance with a legal
obligation;
2. It takes place on the occasion of any
calamity, such as fire, storm, flood,
pillage, shipwreck, or other similar events;
3. Made by passengers with common
carriers; or
4. Made by travelers in hotels or inns.
III. GUARANTY AND SURETYSHIP
GUARANTY
Guaranty is an accessory contract whereby a
person called the guarantor binds himself to
the creditor to fulfill the obligation of the
principal debtor in case the latter fail to do so
(Art. 2047[1], NCC).
A. Nature and extent of guaranty
Guaranty and surety are nearly related for
there is a promise to answer for the debt or
default of another. Surety is usually bound
with his principal by the same contract of
guaranty. The guarantor’s own separate
undertaking is often supported by a
consideration separate from that supporting
the contract of the principal; the original
contract of his principal is not his contract.
(Phil. Export & Guarantee v. VPE Usebio
Construction, Inc. G.R. No. 140047, July 13, 2004)
Guaranty may be entered into even against
the will or without the consent of the debtor.
Classification of Guaranty:
1. In the broad sense:
a. Personal – the guaranty is the credit
given by the person who guarantees
the fulfillment of the principal
obligation.
 b. Real – the guaranty is the property,
movable or immovable.
2. As to its Origin:
a. Conventional – agreed upon by the
parties
b. Legal – one imposed by virtue of a
provision of a law.
c. Judicial – one which is required by a
court to guarantee the eventual right
of one of the parties in a case.
3. As to consideration:
a. Gratuitous – the guarantor does not
receive any price or remuneration for
acting as such.
b. Onerous – the guarantor receives
valuable consideration.
4. As to the Person Guaranteed:
a. Single – one constituted solely to
guarantee or secure performance by
the debtor of the principal obligation.
b. Double or sub-guaranty – one
constituted to secure the fulfillment
by the guarantor of a prior guaranty.
5. As to Scope and Extent:
a. Definite – the guaranty is limited to
the principal obligation only, or to a
specific portion thereof.
b. Indefinite or simple – one which not
only includes the principal obligation
but also all its accessories including
judicial costs.
6. As to whether it covers future debts:
a. Continuing – one where it is given as
security for future debts, the amount
of which is not yet known; or
b. Not continuing – one where the
contract does not stipulate that the
security covers future debts. (Art.
20153, NCC)
B. Effect of Guaranty
1. Between the Guarantor and the
Creditor
Benefit of Excussion (Art. 2058)
The right by which the guarantor cannot be
compelled to pay the creditor unless the latter
has exhausted all the properties of the
principal debtor, and has resorted to all of the
legal remedies against such debtor.
 Cannot even begin to take place
before judgment has been obtained
against the debtor (Baylon v. CA, 312 SCRA
502, G.R. No. 109941, August 17, 1999)
How it is exercised:
1. Demand for payment upon the guarantor
only after judgment upon the debt; and
2. Point out the available property (not in
litigation or encumbered) of the debtor
within the Philippines.
Effect of failure of the creditor to
exhaust and resort to all legal remedies
He shall suffer the loss but only to the extent
of the value of the said property for the
insolvency of the debtor.
Note: Not applicable to a contract of
suretyship (Arts. 2047[2]2; 2059[2], NCC)
When guarantor not entitled to the
benefit of excussion (Art. 2059)
1. Renunciation has been expressly made by
the guarantor;
2. It would be useless because execution on
the property of the principal debtor would
not after all result in the satisfaction of
the obligation; (Not necessary that the
debtor be judicially declared insolvent or
bankrupt)
3. When guarantor has bound himself
solidarily with the principal debtor;
4. Insolvency of the debtor; (Must be actual;
proven by unsatisfied writ of execution)
5. When the debtor has absconded or
cannot be sued within the Philippines,
unless he has left a manager or
representative;
6. If he is a judicial bondsman or sub-surety;
7. If he fails to interpose it as a defense
before judgment is rendered against him;
8. If the guarantor does not set up the
benefit against the creditor upon the
latter’s demand for payment from him;
 Demand can be made only after
judgment on the debt
 Demand must be actual; joining the
guarantor in the suit against the
principal debtor is not the demand
intended by law
9. Where the pledge or mortgage has been
given by him as special security.
Benefit of Division
Should there be several guarantors of only
one debtor and for the same debt, the
obligation to answer for the same is divided
among all (Art. 2065, NCC).
General Rule: Joint liability
Exceptions:
1. When solidarity is stipulated; or
2. If any of the circumstances enumerated in
Art. 2059 should take place.
Consideration:
 A guaranty is gratuitous, unless there is a
stipulation to the contrary. The cause of
the contract is the same cause, which
supports the obligation as to the principal
debtor.
 The peculiar nature of a guaranty or
surety agreement is that it is regarded as
valid despite the absence of any direct
consideration received by the guarantor
or surety either from the principal debtor
or from the creditor; a consideration
moving to the principal alone will suffice.
 It is never necessary that the guarantor or
surety should receive any part or benefit,
if such there be, accruing to the principal.
(Willex Plastic Industries Corp. vs. CA, 256
SCRA 478, G.R. No. 103066, April 25, 1996)
Procedure When Creditor Sues:
The guarantor cannot be sued with the
principal, much less alone except in Art. 2059.
1. Notice to the guarantor appears, he is still
given the benefit of exhaustion even if
judgment should be rendered against him
and the principal debtor. Voluntary
appearance does not constitute a
renunciation of his right to excussion. (Art.
2059[1], NCC)
 Guarantor cannot set up the defenses
if he does not appear and it may no
longer be possible for him to question
the validity of the judgment.
2. A guarantor is entitled to be heard before
execution can be issued against him
where he is not a party in the case
involving his principal (procedural due
process).
Rights of the Guarantor after Payment
of the Principal’s Obligation:
1. Reimbursement
a. Total amount of the debt
b. Interest (legal) from the time payment
was made known to the debtor.
c. Expenses incurred by the guarantor after
having notified the debtor that payment
had been demanded of him
d. Damages, if they are due (Art. 2066, NCC)
Exceptions to guarantor’s right to
reimbursement:
a. Where the guaranty is constituted without
the knowledge or against the will of the
principal debtor, the guarantor can
recover only insofar as the payment had
been beneficial to the debtor.
b. Payment by a 3rd person who does not
intend to be reimbursed by the debtor is
deemed to be a donation, which,
however, requires the debtor’s consent.
But the payment is in any case valid as to
the creditor who has accepted it (Art.
1238, NCC).
c. Waiver of the right to demand
reimbursement.
2. Subrogation
Subrogation transfers to the person
subrogated, the credit with all the rights
thereto appertaining either against the
debtor or against 3rd persons, be they
guarantors or possessors of mortgages,
subject to the stipulation in conventional
subrogation.
Notes: The guarantor who pays is
subrogated by virtue thereof to all the rights,
which the creditor had against the debtor.
If the guarantor has compromised with the
creditor, he cannot demand of the debtor
more than what he has really paid. (Art. 2067,
NCC)
Reminders:
 This right of subrogation is necessary to
enable the guarantor to enforce the
indemnity given in Art. 2066.
 It arises by operation of law upon
payment by the guarantor. It is not
necessary that the creditor cede to the
guarantor the former’s rights against the
debtor.
 It is not a contractual right. The right of
guarantor who has paid a debt to
subrogation does not stand upon contract
but upon the principles of natural justice.
 The guarantor is subrogated by virtue of
the payment to the right of the creditor,
not those of the debtor.
 If the guarantor paid a smaller amount by
virtue of a compromise, he cannot
demand more than he actually paid.
 Guarantor cannot exercise the right of
redemption of his principal. (Umutia & Co.
vs. Moreno et al., G.R. No. 8147, Oct. 26,
1914)
Effect of payment by guarantor:
1. Without notice to debtor (Art. 2068, NCC) –
The debtor may interpose against the
guarantor those defenses which he could
have set up against the creditor at the
time the payment was made, e.g. the
debtor can set up against the guarantor
the defense of previous extinguishment of
the obligation by payment.
2. Before maturity (Art. 2069, NCC) – Not
entitled to reimbursement unless the
payment was made with the consent or
has been ratified by the debtor
(Ratification may be express or implied)
Effect of Repeat Payment by Debtor
(Art. 2070):
General Rule: Before guarantor pays the
creditor, he must first notify the debtor,
otherwise the latter may set up defenses he
could have set up against the creditor (Art.
2068, NCC). If he fails to give such notice and
the debtor repeats payment, the guarantor
can only collect from the creditor and
guarantor has no cause of action against the
debtor for the return of the amount paid by
guarantor even if the creditor should become
insolvent.
Exceptions: The guarantor can still claim
reimbursement from the debtor in spite of
lack of notice if the following conditions are
present;
1. Guarantor was prevented by fortuitous
event to advise the debtor of the
payment;
2. The creditor becomes insolvent; and
3. The guaranty is gratuitous.
When Guarantor May Proceed Against
Principal Debtor Even Before Payment:
General Rule: Guarantor has no cause of
action against debtor until after the former
has paid the obligation.
Exceptions: (Art. 2071, NCC): The guarantor,
even before having paid, may proceed against
the principal debtor:
1. When he is sued for the payment;
2. In case of insolvency of the principal
debtor;
3. When the debtor has bound himself to
relieve him from the guaranty within a
specified period, and this period has
expired;
4. When the debt has become demandable,
by reason of the expiration of the period
for payment;
5. After the lapse of ten years, when the
principal obligation has no fixed period for
its maturity, unless it be of such nature
that it cannot be extinguished except
within a period longer than ten years;
6. If there are reasonable grounds to fear
that the principal debtor intends to
abscond;
7. If the principal debtor is in imminent
danger of becoming solvent.
 In all cases, the action of the guarantor is
to obtain release from the guaranty, or to
demand a security that shall protect him
from any proceedings by the creditor and
from the danger of insolvency of the
debtor. (Art. 2071, NCC) Art. 2071 is
applicable and available to the surety.
(Manila Surety & Fidelity Co., Inc. v. Batu
Construction & Co., G.R. No. L-9353, May 21,
1957)
Remedies of Guarantor (Alternative
remedies):
1. Obtain release from the guaranty (can
only be exercised against the principal
debtor);
2. Demand a security that shall protect him
from any proceedings by the creditor, and
against the danger of insolvency of the
debtor.
ART. 2066 ART. 2071
Provides for the Provides for
enforcement of the protection before he has
rights of the paid but after he has
guarantor/surety become liable
against the debtor after
he has paid the debt
Gives a right of action Protective remedy
after payment before payment
Substantive right Preliminary remedy
Guarantor of 3rd person at request of
another
Guarantor may demand payment from:
1. Person who requested him to be a
guarantor;
2. Debtor
3. Between Co-guarantors
Right to contribution of co-guarantor
who pays: May demand of each of the
others the share which proportionally owing
from him. (Art. 2073, NCC)
Restrictions
It is required that the payment made to the
creditor by the guarantor who is seeking for
the reimbursement from his co-guarantor(s)
the share which is proportionately owing him,
must have been made (a) in virtue of a
judicial demand or (b) because the principal
debtor is insolvent.
Effect of insolvency of any co-guarantor:
If any of the guarantors should be insolvent,
his share shall be borne by the others,
including the paying guarantor, in the same
proportion.
Accrual/Basis of Right: Acquired ipso jure
by virtue of said payment without any prior
cession of rights to such guarantor.
Defenses: The co-guarantors may set up
against the one who paid the same defenses
which would have pertained to the principal
debtor against the creditor, and which are not
purely personal to the debtor (Art. 2074, NCC).
Liability of sub-guarantor in case of
this insolvency of guarantor
A sub-guarantor is liable to the co-guarantors
in the same manner as the guarantor whom
he guaranteed. (Art. 2075, NCC)
C. Extinguishment of Guaranty:
1. Extinguished at the same time as the
obligation of the debtor (Art. 2076, NCC);
2. Release by the creditor in favor of one of division in case the
the guarantors, without the consent of the creditor proceeds against
others, benefits all to the extent of the him.
share of the guarantor to whom it has Guarantor binds himself Surety undertakes to
to pay if the principal pay of the principal
been granted (Art. 2078, NCC);
CANNOT PAY. does not pay.
3. If the creditor voluntarily accepts
Not bound to take notice Held to know every
immovable or other property in payment of the non-performance default of his principal
of the debt, even if he should afterwards of his principal
lose the same through eviction (Art. 2077, Often discharged by the Not discharged by
NCC); mere indulgence of the mere indulgence of the
4. Whenever by some act of the creditor, the creditor or want of notice creditor or want of
guarantors even though they are solidarily of default notice of default.
liable cannot be subrogated to the rights,
mortgages and preferences of the former SURETYSHIP
(Art. 2080, NCC);
5. For the same causes as all other A contract of guaranty where the guarantor
obligations under Art. 1231; binds himself solidarily with the principal
6. Extension granted to the debtor by the debtor (Art. 2047[2], NCC).
creditor without the consent of the
guarantor. However, the mere failure on Nature of Surety’s Undertaking:
the part of the creditor to demand
payment after the debt has become due 1. Liability is contractual and accessory
does not of itself constitute any extension but direct.
of time referred to herein. (Art. 2079, NCC)
He directly, primarily and equally binds
Note: The guarantor may also set up against himself with the principal as original promisor,
the creditor all the defenses which pertain to although he possesses no direct or personal
the principal debtor and are inherent in the interest over the latter’s obligation, nor does
debt; but not those that are purely personal he receive any benefits therefrom. (PNB vs. CA
to the debtor. (Art. 2081, NCC) 198 SCRA 767, G.R. No. 33174, July 4, 1991)

Exceptions: 2. Liability limited by the terms of the

1. Creditor did not collect from 3rd persons contract.
2. Obligations payable in installments
3. Waiver by guarantor It cannot be extended by implication beyond
4. Extension granted by creditor on bond the terms of the contract (PNB vs. CA, 198
5. Extension granted to first tier obligors SCRA 767, G.R. No. 33174, July 4, 1991)
cannot prejudice second tier parties
3. Liability arises only if principal
GUARANTY SURETYSHIP debtor is held liable.
Liability depends upon an Surety assumes
independent agreement liability as regular The creditor may sue separately or sue jointly
to pay the obligation if party to the
the principal debtor and the surety. Where
the primary debtor fails undertaking.
there are several sureties, the obligee may
to do so.
Collateral undertaking Original promisor proceed against any one of them.
Guarantor is secondarily Surety primarily liable.
liable.  In the absence of collusion, the surety
Insurer of the insolvency Insurer of the debt. is bound by a judgment against the
of debtor. principal even though he was not a party
Guarantor can avail of Surety cannot avail of to the proceedings. The nature of its
benefit of excussion and such benefit. undertaking makes it privy to all
 proceedings against its principal (Finman
General Assurance Corp. v. Salik, 188 SCRA
740, G.R. No. 84084, August 20, 1990)
4. Surety is not entitled to the benefit
of excussion.
Benefit of Excussion – the right of the
guarantor to demand exhaustion of debtor’s
assets before he can be compelled to pay.
He assumes a solidary liability for the
fulfillment of the principal obligation (Towers
Assurance Corp. v. OroramaSupermart, 80 SCRA
262, G.R. No. 45848, Nov. 9, 1977) as an original
promissory and debtor from the beginning.
5. Undertaking is to creditor and not to
debtor.
The surety makes no covenant or agreement
with the principal that it will fulfill the
obligation guaranteed for the benefit of the
principal. Such a promise is not implied by law
either; and this is true even where under the
contract the creditor is given the right to sue
the principal, or the latter and the surety at
the same time. (Arranz v. Manila Fidelity & Surety
Co., Inc., 101 Phil. 272, G.R. L-9674, April 29,
1957)
6. Surety is not entitled to notice of
principal’s default
The creditor owes no duty of active diligence
to take care of the interest of the surety and
the surety is bound to take notice of the
principal’s default and to perform the
obligation. He cannot complain that the
creditor has not notified him in the absence of
a special agreement to that effect. (Palmares v.
CA, 288 SCRA 422, G.R. No. 126490, March 31,
1998)
7. Prior demand by the creditor upon
principal is not required
As soon as the principal is in default, the
surety likewise is in default.
8. Surety is not exonerated by the
neglect of creditor to sue the
principal
A contract of guaranty must be express and in
writing (Art. 1403[2], NCC); otherwise, it is
unenforceable unless ratified. It need not be
in a public instrument. Note: Guaranty, as a
contract, requires the expression of the
consent of the guarantor in order to be
bound. It cannot be presumed because of the
existence of a contract or principal
obligation.
Since guaranty is an accessory contract, it is
an indispensable condition for its existence
that there must be a principal obligation.
Hence, if the principal obligation is void, it is
also void.
There is nothing procedurally objectionable in
impleading the guarantor as a co‐defendant.
As a matter of fact, the Rules of Court on
permissive joinder of parties explicitly allow it.
If the creditor obtained a favorable judgment
against the debtor and guarantor, the latter is
entitled to a deferment of the execution of the
said judgment against him until all properties
of the debtor shall have been exhausted to
satisfy the latter’s obligation involved in the
case.
 Indemnity Agreements are contracts
of indemnification not only against
actual loss but against liability as well.
While in a contract of indemnity against
loss an indemnitor will not be liable until
the person to be indemnified makes
payment or sustains loss, in a contract
of indemnity against liability, as in this
case, the indemnitor's liability arises as
soon as the liability of the person to be
indemnified has arisen without regard
to whether or not he has suffered actual
loss. Accordingly, R & B Surety was
entitled to proceed against petitioners
not only for the partial payments
already made but for the full amount
owed by PAGRICO to the PNB.
(Cochingyan, Jr. v. R&B Surety and Ins. Co.,
G.R.No.L‐47369, June 30, 1987)

IV. PLEDGE, MORTGAGE AND
ANTICHRESIS, CHATTEL MORTGAGE
PLEDGE
A contract by virtue of which the debtor
delivers to the creditor or to a third person a
movable or a document evidencing
incorporeal rights, for the purpose of securing
the fulfillment of a principal obligation, the
thing delivered shall be returned with all its
fruits and accessions.
Kinds:
1. Conventional/Voluntary – created by
contract
2. Legal – created by operation of law (e.g.
Art. 546, 1731 & 1914)
Essential requirements:
1. Constituted to secure the fulfillment of a
principal obligation;
2. Pledgor must be the absolute owner of
the thing pledged;
3. Pledgor has the free disposal of his
property, or is legally authorized for the
purpose;
4. It can only cover movable property and
incorporeal rights evidenced by
documents of title and the instruments
proving the right pledged shall be
delivered to the creditor, and if negotiable
must be endorsed (Art. 2094, NCC); and
5. The description of the thing pledged and
the date must appear in a public
instrument to bind third persons, but not
for the validity of the contract (Art. 2096,
NCC);
6. Possession of the thing pledged must be
transferred to the creditor or a third
person by agreement;
7. When the principal obligation becomes
due, the thing in which the pledge or
mortgage consists may be alienated for
the payment of the creditor. (Art. 2087, NCC)
Object of the pledge:
a. All movables within the commerce of
men, which are susceptible of possession.
(Art. 2094, NCC)
b. Incorporeal rights evidenced by
negotiable instruments, bills of lading,
shares of stocks, bonds, warehouse
receipts and similar documents.
The instrument proving the right pledged shall
be delivered to the creditor, and if negotiable,
must be endorsed. (Art. 2095, NCC)
Form of pledge
1. Between the parties
 The pledge may be in any form as in fact
the mere delivery of the object is
sufficient to bind the parties.
2. As regards third person
 To take effect against third persons, the
pledge must be in a public instrument
showing a description of the thing
pledged and the date of the pledge. (Art.
2096, NCC)
Obligations of pledge:
1. Take care of the thing with the diligence
of a good father of a family. (Art. 2099,
NCC)
2. To be liable for the loss or deterioration of
the thing pledge unless it is due to
fortuitous event. (Art. 2099, NCC)
3. Not to deposit the thing with a 3 rd person
unless so stipulated. (Art. 2100, NCC)
4. Responsibility for acts of agents and
employees as regards the thing. (Art.
2100, NCC)
5. Not to use thing unless authorized by the
owner or its preservation requires its use.
(Art. 2104, NCC)
6. To advise the pledgor without delay, of
any danger to the thing (Art. 2107, NCC)
7. To promptly advise the pledgorof the
result of the public auction. (Art. 2116,
NCC)
8. To return the thing upon payment of
debt. (Art. 2098, NCC)
Rights of the Pledgee
a. Option to demand the replacement
ofrimmediate payment of the debt in case
 of deception as to substance or quality of
the thing pledged (Art. 2109, NCC).
Note: Remedies are alternative.
b. To sell at public auction in case of
reasonable grounds to fear destruction,
impairment, or diminution in value of the
thing without his fault (Art. 2108, NCC).
Note: The proceeds shall be a security
for the principal obligation in the same
manner as the thing originally pledged.
c. To bring actions pertaining to he owner or
to defend against third persons.
d. To choose which of the several things
pledged shall be sold.
e. To collect and receive amount due on
credit pledged.
f. To bid at the public auction, unless he is
the only bidder.
g. To appropriate the thing in case of failure
of the second public auction.
h. To apply the fruits, income, dividends or
interests or earnings to the interest, if
any, then to the principal of credit.
i. To retain excess value received in the
public sale unless it is otherwise agreed.
j. To retain the thing until after full payment
of the debt.
k. To be reimbursed for the expenses made
for the preservation of the thing pledged.
l. To object to the alienation of the thing.
m. To possess the thing.
Obligations of the Pledgor:
1. To pay damages that the pledgee may
suffer by reason of the flaws of the thing
pledged, if he was aware of such flaws
but did not advise the pledgee of the
same. (Art. 1951, NCC)
2. Not to demand the return of the thing
until after full payment of the debt and its
interest, with expenses in a proper case.
(Art. 2105, NCC)
Exception: Pledgor is allowed to substitute
the thing pledged which is in danger of
destruction or impairment with another thing
of the same kind and quality. (Art. 2107, NCC)
Rights of a Pledgor:
1. To alienate, with the consent of the
pledgee, the pledged.
The ownership of the thing pledged is
transmitted to the vendee or transferee as
soon as the pledgee consents to the
alienation, but the pledgee shall continue
in possession. (Art. 2097, NCC)
2. To ask that the thing pledged be judicially
or extra-judicially deposited if it is used
without authority or for a purpose other
than for its preservation.(Art. 2104, NCC)
3. To continue to be the owner of the thing
pledged unless it is expropriated. (Art.
2103, NCC)
4. To ask for the return of the thing pledged
after he has paid the debt and its
interests, with expenses in a proper case.
(Art. 2105, NCC)
5. To require that the thing pledged be
deposited with a third person if it is in
danger of being loss or impaired through
the negligence or willful act of the
pledgee. (Art. 2106, NCC)
6. To demand the return of the thing
pledged, upon offering another thing in
pledge, provided the latter is of the same
kind and quality, if there are reasonable
grounds to fear the destruction or
impairment of the thing pledged without
the fault of the pledgee. (Art. 2107, NCC)
This right, however, is without prejudice
to the right of the pledgee to have the
thing sold at a public sale. The proceeds
of the auction shall be security for the
principal obligation in the same manner as
the thing originally pledged; (Art. 2107-
2108, NCC)
7. To bid and be preferred at the public
auction. (Art. 2113, NCC)
When pledgor may demand the return of
the thing pledged.
1. Pledgor has reasonable grounds to fear
the destruction or impairment of the thing
pledged;
2. If pledgee misuses the thing;
3. Pledgor is offering in place of the thing,
another thing in pledge which is of the
same kind and quality as the former and
not of interior quality;
4. If pledgee uses the thing without
authority.
Perfection
1. Possession of the thing pledged must be
transferred to the creditor or a third
person by agreement. (Art. 2093, NCC)
Absent delivery the creditor acquires no
right to the property because pledge is
merely a lien and possession is
indispensable to the right of a lien.
The description of the thing pledged and the
date must appear in a public instrument to
bind 3rd persons, but not for the validity of the
contract (Art. 2096, NCC).
Reason: to forestall fraud because the debtor
might attempt to conceal his property by
simulating a pledge.
Prohibition against double pledge
Double Pledge exists when the same thing
or property subject of a first pledge will be the
subject of another pledge.
 Property, which has been lawfully pledged
to one creditor, cannot be pledged to
another as long as the first one subsists.
Possession of a creditor of the thing
pledged is an essential requisite of
pledge.
Extinguishment of Pledge:
1. For the same causes as all other
obligations; in Art. 1231;
2. Return of the thing pledged by the
pledgee to the pledger; (Art. 2110, NCC)
3. Statement in writing by the pledgee that
he renounces or abandons the pledge;
(Art. 2111, NCC)
4. Payment of the debt; (Art. 2105, NCC)
5. Sale of thing pledged at public auction;
(Art. 2115, NCC)
6. To appropriate the thing in case of failure
of the second public auction. (Art. 2112,
NCC)
Foreclosure
Requirements in sale of the thing
pledged by a creditor, if credit is not
paid on time:
1. The debt is due and unpaid;
2. Sale must be at a public auction;
3. There must be notice to the pledgor and
owner, stating the amount due;
4. Sale must be with the intervention of a
notary public.
Effect of sale of the thing pledged: (Art.
2115)
1. The sale of the thing pledged shall
extinguish the principal obligation,
whether or not the proceeds of the sale
are equal to the amount of the principal
obligation, interest and expenses in a
proper case;
2. If the price of the sale is more than the
amount due the creditor, the debtor is not
entitled to the excess unless the contrary
is provided; and
3. If the price of the sale is less, the creditor
is not entitled to recover the deficiency
even if there is a stipulation to that effect.
c. Pledge by operation of law (e.g. Arts.
546, 1731 & 1994)
Legal pledge:
 In legal pledge, there is no definite period
for the payment of the principal
obligation. The pledgee must make a
demand for the payment of the amount
due him; otherwise he cannot exercise
the right of sale at public auction. (Art.
2122, NCC)
 The rules governing conventional pledge
apply.
 The remainder of the price pertains to the
debtor.
 Only 1 public auction.

Procedure: Sell the thing at a public auction
after one month from the date of demand;
otherwise, the debtor may require the return
of the thing.
security for the principal obligation in the
same manner as the thing originally
pledged (Art. 2108, NCC).
IV. ANTICHRESIS

d. Distinguished from chattel mortgage A contract whereby the creditor acquires the
right to receive the fruits of an immovable of
CHATTEL MORTGAGE PLEDGE his debtor, with the obligation to apply them
Consensual contract Real contract to the payment of the interest, if owing, and
Possession of the thing Possession of the thing thereafter to the principal of his credit (Art.
mortgaged MAY remain pledged is vested with 2132, NCC).
with the debtor the creditor.
Procedure for Sale at public auction Characteristics:
foreclosure is by public
auction but the parties
1. Accessory contract
may stipulate that it be
by private sale.  It secures the performance of a
Debtor still liable for Debtor not liable for principal obligation.
deficiency. deficiency. 2. Formal contract
 The mere taking of the property in pledge  It must be in a specified form to be
is not enough. There must be continuous valid, i.e., “in writing.” (Art. 2134, NCC)
possession of the thing. However, the 3. Nominate
pledgee is allowed to temporarily entrust  It has a specific name under the law
the physical possession of the thing 4. Real Right
pledged to the pledgor without  It creates a lien on immovable
invalidating the contract. But here, the property.
pledgor would be in possession as a mere 5. Real Property
trustee and his possession is subject to  It is a real property by itself
the order of the pledgee. 6. Indivisible
 It subsists as long as the principal
 He who is not the owner or proprietor obligation remains unpaid.
of the property pledged or mortgaged to
guarantee the fulfillment of a principal ANTICHRESIS PLEDGE MORTGAGE
obligation, cannot legally constitute such Deals only with Refers only Refers to
immovable with immovable
a guaranty as may validly bind the
properties personal and personal
property in favor of his creditor, and the properties properties
pledgee or mortgagee in such a case Right to the fruits Right to No right to the
acquires no right whatsoever in the the fruits fruits
property pledged or mortgaged. There is Property is Property is In general,
likewise no valid deposit, in this case, delivered delivered property is not
where the principal purpose for receiving delivered
the object is not safekeeping. (Calibo Jr. v.
CA, G.R. No. 120528, Jan. 29, 2001) Obligations of Antichretic Creditor

 Question: the pledgee can cause the sale
of the thing pledged in public auction
where the obligation is not yet due if
without the fault of the pledge, there is
danger of destruction, impairment or
diminution in value of the thing pledged.
The proceeds of the auction shall be
1) To pay taxes and charges on the estate,
including necessary expenses.
The creditor may avoid said obligation by:
a. Compelling the debtor to reacquire
enjoyment of the property; or
b. By stipulation to the contrary
2) To apply all the fruits, after receiving
them, to the payment of interest, if
owing, and thereafter to the principal;
3) To render an account of the fruits to the
debtor; and
4) To bear the expenses necessary for its
preservation and repair.
Rights of the Antichretic Creditor
1. The right to the fruits and income of the
thing.
Note: The actual market value of the
fruits at the time of the application
thereof to the interest and principal shall
be the measure of such application. (Art.
2133, NCC)
2. To retain the thing until the debt is paid.
3. To have the thing sold upon non-payment
at maturity.
4. Preference to the proceeds of the sale of
the thing (Tolentino, Civil Code of the
Philppines, Vol. 5, 1992 ed., p. 567).
Remedies of creditor in case of non-
payment of the debt:
1. Bring an action for specific performance;
2. Petition for the sale of the real property as
in a foreclosure of mortgage under Rule
68 of the Rules of Court. (Art. 2137, NCC)
 The parties, however, may agree on an
extrajudicial foreclosure in the same
manner as they are allowed in contracts
of mortgage and pledge (Tavera vs. El
Hogar Filipino, Inc., 68 Phil. 712, G.R. No.
45963, Oct. 12, 1939).
 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, NCC).
V. REAL MORTGAGE
A contract whereby the debtor secures to the
creditor the fulfillment of a principal
obligation, specially subjecting to such
security immovable property in case the
principal obligation is not complied with at the
time stipulated.
 An essential requisite of a contract of
mortgage is that the mortgagor be the
absolute owner of the thing mortgaged.
The effect of a mortgage by a co-owner
shall be limited to the portion that may be
allotted to that person upon the
termination of the co-ownership. (Ocampo,
et al., VS Ocampo, et al., G.R. No. 150707,
April 14, 2004)
 As an accessory contract, its consideration
is the same as that of the principal
contract from which it receives life.
 A mortgage does not involve a transfer,
cession or conveyance of property but
only constitutes a lien thereon.
 A mortgage gives the mortgagee no right
or claim to the possession of the property,
and therefore, a mere mortgagee has no
right to eject an occupant of the property
mortgaged unless the mortgage should
contain some provision to that effect.
Essential requisites:
1. Constituted to secure the fulfillment of a
principal obligation;
2. Pledgor, mortgagor or antichretic debtor
must be the absolute owner of the thing
pledged or mortgaged;
3. Pledgor, mortgagor or antichretic debtor
have the free disposal of their property, or
are legally authorized for the purpose;
Reason for requisites 2 and 3- In
anticipation of a foreclosure sale
4. When the principal obligation becomes
due, the subject matter of the pledge,
mortgage or antichresis may be alienated
for the payment to the creditor.
Special requisites:
1. It can cover only immovable property and
alienable real rights imposed upon
immovables;
2. It must appear in a public instrument;
3. Registration in the registry of property is
necessary to bind 3rd persons, but not for
the validity of the contract.
 Order of foreclosure cannot be refused on
the ground that the mortgage was not
 registered provided no innocent 3rd the property or by selling the right to
parties are involved. redeem and thus recover alleged losses.
No personal notice is even required,
Kinds of Mortgage: because an extrajudicial foreclosure is an
1. Voluntary – agreed to by the parties or action in rem, requiring only notice by
constituted by the will of the owner of the publication and posting, in order to bind
property on which it is created. parties interested in the foreclosed
2. Legal – one required by law the persons property. (New Sampaguita Builders
are whose favor the law establishes a Construction Inc. et al., Phil. Nat’l Bank, G.R.
mortgage has no other right than to No. 148753, July 30, 2004)
demand the execution and the recording
of the document in which the mortgage is The mortgage credit may be alienated or
formalized (Art. 2125[2], NCC). assigned to a 3rd person in whole or in part,
3. Equitable (Art. 1602, NCC) – one which, with the formalities required by law (Art. 2128,
although lacking the formalities of a NCC). In this case, the assignee may foreclose
mortgage, shows the intention of the the mortgage in case of non-payment by the
parties to make the property a security for debtor.
a debt.
CHATTEL MORTGAGE REAL MORTGAGE
Important points: Constituted on Constituted on
movables immovables.
1. As a general rule, the mortgagor retains
Property is delivered to Delivery is not
possession of the property. He may
pledge, or by common necessary
deliver said property to the mortgagee consent, to a third
without altering the nature of the contract person.
of mortgage. Not valid against third Not valid against third
persons unless a persons unless
2. It is not an essential requisite that the description of the thing registered.
principal of the credit bears interest, or pledged and the date of
that the interest as compensation for the pledge appears in a
use of the principal and the enjoyment of public instrument.
its fruits be in the form of a certain
percentage thereof. Extent of Mortgage: Absent any express
stipulation to the contrary, the mortgage
Special Characteristics of Real includes the accessions, improvements,
Mortgage: growing fruits and income of the property not
1. Real right; yet received when the obligation becomes due
2. Accessory obligation; and to the amount of the indemnity granted
3. Indivisibility; or owing to the proprietor from the insurers of
4. Retention of Possession; and the property mortgaged, or in virtue of
5. Inseparability expropriation for public use. (Art. 2127, Civil
Code)
 In the accessory contract of real
Object of Mortgage: Future property cannot
mortgage, in which immovable property
be an object of a contract of mortgage (Art.
or real rights thereto are used as security
2085[2], NCC). However, a stipulation
for the fulfillment of the principal loan
subjecting to the mortgage lien, properties
obligation, the bid price may be lower
(improvements) which the mortgagor may
than the property’s fair market value. The
subsequently acquire, install, or use in
loan value itself is only 70 percent of the
connection with real property already
appraised value. A low bid price will make
mortgaged belonging to the mortgagor is valid
it easier for the owner to effect
redemption by subsequently reacquiring
 (People’s Bank and Trust Co. vs. Dahican Lumber when the mortgage contract is one of
Co., 20 SCRA 84) adhesion.
Special Rights:
Stipulation of upset price or “tipo”
Mortgagor

To alienate the mortgaged property, but the It is a stipulation in a mortgage of real

mortgage shall remain attached to the property of minimum price at which the
property. property shall be sold, to become operative in
the event of a foreclosure sale at public
a. A stipulation forbidding the owner from auction. It is null and void for the property
alienating the immovable mortgage shall must be sold to the highest bidder. Parties
be void (Art. 2130, NCC), for being contrary cannot, by agreement, contravene the law
to public policy inasmuch as the and interfere with the lawful procedure of the
transmission of property should not be courts (BPI vs. Yulo, 31 Phil 476, G.R. No. 9358, Sept.
24, 1915)
unduly impeded.
b. In a sale with assumption of mortgage,
 Where the proceeds of the sale are
the alienation needs the consent of the
insufficient to cover the debt in an
mortgagee.
extrajudicial foreclosure of mortgage, the
mortgagee is entitled to claim the
Mortgagee
deficiency from the debtor. The creditor is
not precluded from taking action to
To claim from a 3rd person in possession of
recover any unpaid balance on the
the mortgaged property the payment of the
principal obligation simply because he
part of the credit secured by the property
chose to extrajudicially foreclose the real
which said third person possesses. (Art. 2129,
NCC)
estate mortgage. (Cunada, et al., v. Drilon,
G.R. No. 159118, June 28, 2004).
 It is necessary that prior demand for
Purpose
payment must have been made on the
Operates as convenience and accommodation
debtor and the latter failed to pay (BPI v.
to borrowers as it makes available additional
Concepcion & Hijos, Inc., 53 Phil 906, G.R. L-
27701, July 21, 1928). funds without the parties having to execute
additional funds without the parties having to
Blanket or Dragnet Clause – A clause, execute additional security documents
(Prudential Bank v. Don A. Alviar, supra, G.R. No.
which implies an understanding that
150197, July 28, 2005)
subsequent loans need not be secured by
other securities, as to loans, will be secured
Nature
by the first mortgage.
A mortgage with a dragnet clause is an “offer”
One, which is specifically phrased to subsume
by the mortgagor to the bank to provide the
all debts of past or future origins. Mortgages
security of the mortgage for advances of and
of this character enable the parties to provide
when they were made. It can be said that the
continuous dealings, the nature or extent of
“offer” was not accepted by the bank when a
which may not be known or anticipated at the
subsequent advance was made because of
time, and they avoid the expense and
new security (Prudential Bank v. Don A. Alviar,
inconvenience of executing a new security on supra, G.R. No. 150197, July 28, 2005).
each new transaction (Prudential Bank v. Don A.
Alviar, et al., G.R. No. 150197, July 28, 2005).
Provisions of this nature are carefully
Foreclosure
scrutinized and strictly construed particularly
The remedy available to the mortgagee by
which he subjects the mortgaged property to
the satisfaction of the obligation to secure
that for which the mortgage was given.
Redemption is the transaction by which the
mortgagor reacquires or buys back the
property which may have passed under the
mortgage, or divests the property of the lien
which the mortgage may have created.

Validity and effect: Note: The sale by a mortgagor to a third

1. When the principal obligation is not paid
when due, the mortgagee has the right to
foreclose the mortgage and to have the
property seized and sold, and to apply the
proceeds thereof to the payment of
principal obligation.
2. The power to foreclose resides on the
mortgagee.
3. In case of deficiency, the debtor is
required to pay the same even after
foreclosure.
4. The rule governing public notice of
foreclosure must be strictly complied with
and slight deviations will invalidate the
sale or render it voidable.
Kinds of Foreclosure:
1. Judicial – Ordinary action for foreclosure
under Rule 68 of the Rules of Court
2. Extrajudicial – when the mortgagee is
given a special power of attorney to sell
the mortgaged property by public auction,
under Act. No. 3135.
party of the mortgaged property during the
period for redemption transfers only to said
third person the right to redeem the property
and the right to possess, use and enjoy the
same during said period.
Where the sale with assumption of mortgage
was not registered and made without the
consent of the mortgagee, the buyer, thereof,
was not validly substituted as debtor and,
hence, had no right to redeem (Bonnevie vs.
CA GR No. L-4910, October 24, 1983).
Kinds of Redemption:
1. Equity of Redemption is the right of
the defendant mortgagor to extinguish
and retain ownership of the property by
paying the amount fixed in the decision of
the court within ninety (90) days to one
hundred twenty (120) days after entry of
judgment or even after the sale but prior
to its confirmation.

JUDICIAL EXTRAJUDICIAL 2. Right of Redemption, on the other

FORECLOSURE FORECLOSURE hand, is the right granted to the debtor-
There is court mortgagor, his successor in interest or
No court intervention
intervention any judicial creditor of said debtor-
Not appealable mortgagor or any person having a lien in
Decisions are the property subsequent to its mortgagor
because it is
appealable
immediately executory deed of trust under which the property is
Order of the courts sold to redeem the property within one
There is a right of
cuts off all rights of (1) year from registration of the sheriff’s
redemption
the parties impleaded. certificate of sale.
Period of redemption
Period to redeem
starts from the finality
starts from the date of  A foreclosure sale retroacts to the
of the judgment until
the order of
registration of the date of registration of the mortgage and
certificate of sale. that a person who takes a mortgage on
confirmation
No need for a special Special power of good faith and for valuable consideration,
power of attorney in attorney in favor of the record showing clear title to the
the contract of mortgagee is needed mortgagor will be protected against
mortgage in the contract. equitable claims on the title in favor of 3rd
Governed by Rule 68 persons, of which he had no actual or
Governed by Act. 3135
of the Rules of Court.
 constructive notice. (St. Dominic Corp. vs.
IAC, G.R. No. 70623, June 30, 1987)
 Mere inadequacy of the price obtained
at the sheriff’s sale will not be sufficient to
set aside the sale unless “the price is so
inadequate as to shock the conscience of
the court” taking into consideration the
peculiar circumstances attendant thereto.
(Sulit vs. CA, G.R. No. 119247, Feb. 17, 1997)
Should there remain a balance due to the
mortgagee after applying the proceeds of the
sale; the mortgagee is entitled to recover the
deficiency (Rule 68, ROC). This rule does not
apply to extrajudicial foreclosure of real estate
mortgage.
The action to recover a deficiency after
foreclosure prescribed after 10 years from the
time the right of action accrues (Art. 1142 and
1144, NCC).
Period of Redemption:
1. Extra-judicial (Act. No. 3135)
a. Natural Person – One year from
registration of certificate of sale with
the Registry of Deeds
b. Juridical Person- same as a natural
person.
c. Juridical person (mortgagor) and bank
(mortgagee) – Three months after
foreclosure or before registration of
certificate of foreclosure whichever is
earlier (Sec. 47 of General Banking Law)
2. Judicial – before confirmation of the sale
by the court except when the mortgagee
is a banking institution redemption will
then be one year from the registration of
sale (Sec. 25, P.D. 694) (De Leon Comment
and Cases on Credit Transactions, 2006 ed., p.
418)
Nature of Judicial Foreclosure
proceedings:
1. Quasi-in rem action
2. Foreclosure is only the result or incident
of the failure to pay debt
3. Survives the death of the mortgagor.
Right of the mortgagee to recover
deficiency (for judicial foreclosure only):
1. Mortgagee is entitled to recover
deficiency.
2. If the deficiency is embodied in a
judgment, it is referred to as deficiency
judgment.
3. Action for recovery of deficiency may be
filed even during redemption period.
4. Action to recover prescribed after 10
years from the time the right of action
accrues.
Extrajudicial foreclosure of real property
(Act No. 3135)
 Extrajudicial foreclosure must be
STIPULATED in the contract.
 The law covers only real estate
mortgages.
 It is intended merely to regulate the
extrajudicial sale of property mortgaged.
 The authority to sell is not extinguished
by the death of the mortgagor (or
mortgagee) as it is an essential and
inseparable part of a bilateral agreement
(Perez v. PNB, G.R. No. L-21813, July 30,
1966)
Nature of the power of foreclosure by
extrajudicial sale:
1. Conferred for mortgagee’s protection.
2. An ancillary stipulation
3. A prerogative of the mortgagee.
Effects of inadequacy of price in
foreclosure sale:
1. Where there is right to redeem,
inadequacy of price is immaterial because
the judgment debtor may redeem the
property.
2. Exception: Where the price is so
inadequate as to shock the conscience of
the court, taking into consideration the
peculiar circumstances.
3. Property may be sold for less than its fair
market value, upon the theory that the
 lesser the price the easier it is for the
owner to redeem.
4. The value of the mortgaged property has
no bearing on the bid price at the public
auction, provided that the public auction
was regularly and honestly conducted.
Waiver of security by creditor:
1. Mortgagee may waive right to foreclose
his mortgage and maintain a personal
action for recovery of the indebtedness.
2. Mortgagee cannot have both remedies
 The mortgagor and mortgagee have no
right to waive the posting and publication
requirements under Act. No. 3135.
Notices are given to secure bidders and
prevent a sacrifice of the property.
Clearly, the statutory requirements of
posting and publication are mandated, not
for the mortgagor’s benefit, but for the
public or 3rd persons. Failure to comply
with the statutory requirements as to
publication of notice of auction sale
constitutes a jurisdictional defect which
invalidates the sale. Lack of republication
of notice of foreclosure sale made
subsequently after the original date
renders such sale void (PNB vs.
Nepomuceno Productions, Inc. G.R. No.
139479 Dec. 27, 2002).
 Sec. 3 of Act. 3135 does not require
personal or any particular notice on the
mortgagor much less on his successors-
interest where there is no contractual
stipulation thereof. Hence, unless required
in the mortgage contract, the lack of such
notice is not a ground to set aside a
foreclosure sale.
 Neither does Sec. 3 require posting of
notice of sale on the mortgage property
and the certificate of posting is not
required, much less considered
indispensable, for the validity of a
foreclosure sale.
 Mortgages given to secure future
advancements are valid and legal
contracts; that the amounts named as
consideration in said contract do not limit
the amount for which the mortgage may
stand as security, if from the four corners
of the instrument the intent to secure
future and other indebtedness can be
gathered. A mortgage given to secure
advancement is a continuing security and
is not discharged by repayment of the
amount named in the mortgage, until the
full amount of the advancements is paid
(Mojica v. CA, G.R. No. 94247, Sept. 11,
1991);
 The creditor claim from the third
person in possession of the property
payment of the credit up to the extent
secured by the property which the third
party possesses, in terms and with the
formalities which the law establishes (Art.
2129, NCC).
 A foreclosure sale is not complete
until it is confirmed and before such
confirmation, the court retains control of
the proceedings by exercising sound
discretion in regard to it either granting or
withholding confirmation as the rights and
interests of the parties and the ends of
justice may require (Rural Bank of Oroquieta
v. CA, No. 53466, Nov. 10, 1980).
 If there be a balance due to the
mortgagee after applying the proceeds of
the sale, the mortgagee is entitled to
recover the deficiency (DBP v. Mirang, G.R.
No. L‐29130, Aug. 8, 1975).
 The purchaser at the foreclosure sale
merely acquired an inchoate right to the
property which could ripen into ownership
only upon the lapse of the redemption
period without his credit having been
discharged, it is illogical to hold that
during that same period of twelve months
the mortgagor was "divested" of his
ownership, since the absurd result would
be that the land will consequently be
without an owner although it remains
registered in the name of the mortgagor.
Such mortgage does not involve a
 transfer, cession or conveyance of the
property but only constitutes a lien
thereon (Medida v. CA, G.R. No. 98334, May
8, 1992).
CHATTEL MORTGAGE
A contract by virtue of which personal
property is recorded in the Chattel Mortgage
Register as a security for the performance of
an obligation (Art. 2140, NCC)
 A registered mortgage lien is considered
inseparable from the property inasmuch
as it is a right in rem. The mortgage
creates a real right or a lien, which, after
being recorded, follows the chattel,
wherever it goes. Under Article 2129 of
the same Code, the mortgage on the
property may still be foreclosed despite
the transfer. Even if the mortgaged
property is in the possession of the
debtor, the creditor is still protected. To
protect the latter from the former’s
possible disposal of the property, the
chattel mortgage is made effective
against third persons by the process of
registration. (PNB vs. RBL Enterprises, Inc.,
et al., G.R. No. 149569, May 28, 2004)
Characteristics:
1. Accessory contract – It is for the purpose
of securing the performance of a principal
obligation.
2. Formal contract- registration in the
Chattel Mortgage Register is indispensable
for its validity.
3. Unilateral contract – It produces only
obligations on the part of the creditor to
free the thing from the encumbrance
upon fulfillment of the obligation.
Subject Matter:
1. Shares of stock in a corporation
2. Interest in business
3. Machinery and house of mixed materials
treated by parties as personal property
and no innocent 3rd person will be
prejudiced thereby (Makati Leasing and
Finance Corp. v. Weaver Textile Mills, Inc.,
122 SCRA 296)
4. Vessels, the mortgages of which have
been recorded with the Philippine Coast
Guard in order to be effective as to 3rd
persons.
5. Motor vehicles, the mortgage of which
had been registered both with the Land
Transportation Office and the Chattel
Mortgage Registry in order to affect 3rd
persons.
6. House which is intended to be
demolished.
7. Growing crops and large cattle (Section 7,
pars. 2 and 3 Act. No. 1508).
 Section 7 of the Chattel Mortgage Law
does not demand specific description of
every chattel mortgaged in the deed of
mortgage, but only requires that the
description of the mortgaged property be
such as to enable the parties to the
mortgage or any other person to identify
the same after a reasonable investigation
and inquiry (Saldana vs. Phil. Guaranty Co.
Inc., 106 Phil. 919); otherwise, the
mortgage is invalid.
Affidavit of Good Faith
An affidavit of good faith is an oath in a
contract of chattel mortgage wherein the
parties “severally swear that the mortgage is
made for the purpose of securing the
obligation specified in the conditions thereof
and for no other purposes and that the same
is a just and valid obligation and one not
entered into for the purpose of fraud. (Sec. 5,
Chattel Mortgage Law)
Note: The absence of the affidavit vitiates the
mortgage only as against third persons
without notice like creditors and subsequent
encumbrances.
Effect of Registration
Creates a real right
 The registration of the chattel mortgage is
an effective and binding notice to other
creditors of its existence and creates a
real right or a lien which, being recorded,
follows the chattel wherever it goes. The
registration gives the mortgagee
symbolical possession. (Northern Motors,
Inc. v. Coquia. G. R. No. L-40018, Dec. 15,
1975)
Effect of failure to register chattel
mortgage in the chattel Mortgage
Registry
Article 2140 makes the recording in the
Chattel Mortgage Registry an essential
requisite but if the instrument is not recorded,
the mortgage is nevertheless binding between
the parties. But the person in whose favor the
law establishes a mortgage has no other right
than to demand the execution and the
recording of the document.
Foreclosure of Chattel Mortgage
Foreclosure sale in chattel mortgage is by
public auction under Act No. 1508, but the
parties may stipulate that it be by private sale.
V. QUASI-CONTRACTS
Quasi Contract is that judicial relation
resulting from a lawful, voluntary, and
unilateral act, and which has for its purpose
the payment of indemnity to the end that no
one shall be unjustly enriched or benefited at
the expense of another (Art. 2142)
 See Quasi-contract under sources of
obligation for further discussion.
Two Principal Kinds:
A. Negotiorum gestio
 Unauthorized management
 This takes place when a person voluntarily
takes charge of another’s abandoned
business or property without the owner’s
authority.
 As a rule, reimbursement must be made
for the necessary and useful expenses
(Art. 2150, NCC).
Requisites of Negotiorum Gestio:
1. No meeting of the minds
2. Taking charge of another’s business or
property
3. The property or business must have been
abandoned or neglected (otherwise the
rule on unauthorized contracts would
apply)
4. The officious manager must not have
been expressly or implicitly authorized
(otherwise, the rule on agency would
apply)
5. The officious manager (gestor) must have
voluntarily taken charge (that is, there
must be no vitiation of consent, such as
error in thinking that he owned the
property or business) (Paras, Civil Code of
the Philippines Vol. 5, 2008 ed., p. 1156).
B. Solutio indebiti
Undue payment
This takes place when something is received
when there is no right to demand it, and it
was unduly delivered thru mistake.
When the borrower pays interest for the
money loaned to him without any express
stipulation in writing, no interest is due. (Art.
1956 and 1960, NCC)
Solutio indebiti may be applied to payment by
reason of a mistake in the construction or
application of a doubtful or difficult question
of law. (Art. 2155, NCC)
VI. CONCURRENCE AND PREFERENCE
OF CREDITS
Concurrence of Credits: Implies the
possession by two or more creditors of equal
rights or privileges over the same property or
all of the property of a debtor.
Preference of Credit: The right held by a
creditor to be preferred in the payment of his
claim above others out of the debtor’s assets.
A. Nature and Effect of Preference:
Debtors are obliged to pay their creditors
when the debt becomes due and demandable.
Preference applies only when there are 2 or
more creditors with separate claims against a
debtor who has insufficient property to
answer for all his obligations. Since it is an
exception to the general rule, the law as to
preferences is strictly construed.
 Does not create an interest in property:
Preference simply creates a right to be
paid first from the proceeds of the sale of
property of the debtor. It does not create
a lien on the property itself, but merely a
preference in the application of the
proceeds after it is sold.
 The creditor does not have the right to
take the property and sell it as against
another creditor: Preference applies after
a sale, and it is sold.
 It must be asserted: If the right claimed is
not asserted or maintained, it is lost. If
property has not been seized, it is open to
seizure by another.
 It must be maintained: Where a creditor
released his levy, leaving the property in
the possession of the debtor thereby
indicating that he did not intend to press
his claim further as to that specific
property, he is deemed to have
abandoned his claim of preference.
The rules of preference are applicable
when:
1. There are 2 or more creditors
2. With separate and distinct claims
3. Against the same debtor
4. Debtor has insufficient property
 There must be a proceeding wherein the
creditors can file their claims. The right
becomes significant only after the
properties of the debtor have been
inventoried and liquidated, and the claims
of the various creditors have been
established. Prior to the proceedings, the
debtor has no way of ascertaining who
the creditors are, and has no liquidated
property out of which he can pay them.
PREFERENCE OF
LIEN
CREDITS
Applies only to claims Creates a charge on a
which do not attach to particular property.
specific properties.
Liability of debtor’s property for his
obligations: Debtor is liable with all his
property, present and future, for the
fulfillment of his obligations (Art. 2236, NCC).
Preferred credits on specific movables
With reference to specific movable property of
the debtor, the following claims or liens shall
be preferred (Art. 2241, NCC):
1. Duties, taxes and fees due thereon to the
State or any subdivision thereof;
2. Claims arising from misappropriation,
breach of trust, or malfeasance by public
officials committed in the performance of
their duties, on the movables, money or
securities obtained by them;
3. Claims for the unpaid price of movables
sold, on said movables, so long as they
are in the possession of the debtor, up to
the value of the same; and if the movable
has been resold by the debtor and the
price is still unpaid, the lien may be
enforced on the price; this right is not lost
by the immobilization of the thing by
destination, provided it has not lost its
form, substance and identity; neither is
the right lost by the sale of the thing
together with other property for a lump
sum, when the price thereof can be
determined proportionally;
4. Credits guaranteed with a pledge so long
as the things pledged are in the hands of
the creditor, or those guaranteed by a
chattel mortgage, upon the things
pledged or mortgaged, up to the value
thereof;
5. Credits for the making, repair,
safekeeping or preservation of personal
property, on the movable thus made,
repaired, kept or possessed;
6. Claims for laborer’s wages, on the goods
manufactured or the work done;
7. For expenses of salvage, upon the goods
salvaged;
8. Credits between the landlord and the
tenant, arising from the contract of
tenancy on shares, on the share of each
in the fruits or harvest;
9. Credits for transportation, upon the goods
carried, for the price of the contract and
incidental expenses, until their delivery
and for thirty days thereafter;
10. Credits for lodging and supplies usually
furnished to travelers by hotel keepers, on
the movables belonging to the guest as
long as such movables are in the hotel,
but not for money loaned to the guests;
11. Credits for seeds and expenses for
cultivation and harvest advanced to the
debtor, upon the fruits harvested;
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 same, but not on money or
instruments of credit;
13. Claims in favor of the depositor if the
depositary has wrongfully sold the thing
deposited, upon the price of the sale.
In the foregoing cases, if the movables to
which the lien or preference attaches have
been wrongfully taken, the creditor may
demand them from any possessor, within
thirty days from the unlawful seizure.
Take note of the following under Art.
2241:
1. Taxes – the tax must be due on the
movable itself
2. Misappropriation, breach of trust,
malfeasance of public officers:
a) The acquisition must have been in the
performance of official functions and
b) The property must still be in the
hands of the public official. If it is sold
to a purchaser for value and in good
faith, there can be no more claim on
the said movable.
3. Guaranteed with a pledge or chattel
mortgage – to be a preferred credit:
a. Pledge – must be embodied in a
public instrument
b. Chattel mortgage – must be
registered with the chattel mortgage
registry
4. Under the last par. of Art. 2241 – If the
movable is wrongfully taken, the preferred
creditor may get it back within 30 days
through an accion subrogatoria, exercising
the right of the debtor to recover the
property wrongfully taken from him
granted under Art. 559. The last par. of
Art. 2241 applies only when the right of
ownership in such property continues in
the debtor. As such, the remedy under
Art. 2241 is not applicable to cases where
the debtor has parted with his ownership
of the property in question, as where he
has sold the property. (Pena vs. Mitchell, G.R.
No. L-3764, Jan. 15, 1908)
B. Exempt property:
1. Present property – those provided under
Arts. 155 and 205 of the Family Code,
Sec. 13, Rule 39 of the Rules of Court and
Sec. 118 of the Public Land Act.
 Art. 155 FC – Family home
 Art. 205 FC – Support
 Sec. 13 Rule 39 ROC – Properties
exempt from execution
 Sec. 118 (PLA) – land acquired under
free patent or homestead provisions
2. Future Property – a debtor, who obtains a
discharge from his debts on account of his
insolvency, is not liable for the unsatisfied
claims of his creditors with said property
subject to certain exceptions expressly
provided by law (Sec. 68, 69, Insolvency
Law [Act. No. 1956]).
3. Property in custodial legis and of public
dominion (owned by municipal
 corporations necessary for governmental
purposes)
 Art. 2238 – IF one of the spouses is
insolvent, the assets of the conjugal
partnership of gains (CPG) or absolute
community property (ACP) do not pass to
the assignee, except if the obligations
have redounded to the benefit of the
family.
Reason: CPG or AC is distinct from the
individual spouses.
The exemption applies provided that:
 The CPG or ACP subsists; and
 The obligations of the insolvent spouse
have not redounded to the benefit of the
family.
 Assignment of credit does not need
the consent of the debtor. Such
assignment does not extinguish the
obligations of the parties. (South City
Homes Inc. et. al., vs. BA Finance, et. Al. G.R.
No. 135462, Dec. 7, 2001)
 On the other hand, conventional
subrogation requires an agreement
among the three parties concerned – the
original creditor, the debtor and the new
creditor. It is a new contractual relation
based on the mutual agreement among all
the necessary parties. Thus, Article 1301
of the Civil Code explicitly states that
“conventional subrogation of a third
person requires the consent of the original
parties and of the third person . (Licaros v.
Gatmaitan, G. R. No. 142838, Aug. 9, 2001)
Reflectionary Credit
Primary indebtedness incurred in the repair or
reconstruction of something previously made,
such repair or construction being made
necessary by the deterioration or destruction
of the thing as it formerly existed.
C. Classification of Credits
Special Preferred Credits – those listed in
Arts. 2241 and 2242 shall be considered as
mortgages and pledges of real or personal
property or liens (Art. 2243). Hence, they are
not included in the insolvent debtor’s assets.
Note: Arts 2241 and 2242 do not give the
order of preference or priority of payment.
They merely enumerate the credits which
enjoy preference with respect to specific
movables or immovables.
Take note of the following under Art.
2242:
1. Taxes – this provision pertains to real
property taxes. Thus, capital gains tax is
NOT a preferred credit because it is really
a tax on income and not on the property
itself;
2. Unpaid seller – there is no need to
register the sale in order for the unpaid
seller to have a preferred claim against
the immovable;
3. Mortgage – it must be registered in the
Registry of Property in order for the credit
to be a preferred claim against the
immovable. A recorded mortgage credit is
superior to an unrecorded unpaid vendor’s
lien (De Baretto vs. Villanueva G.R. No. L-
14938 January 28, 1961);
4. Credits annotated in the Registry of
Property by virtue of a judicial order,
attachment or execution – unlike the
other special preferred credits, these
credits do not share proportionately in the
property upon which they are imposed;
Ordinary Preferred Credits – those listed in
Art. 2244 as amended by Art. 110 of the
Labor Code.
Effects of Art.110 of Labor Code to Art.
2244:
1. Removed the one-year limitation found in
No. 2 of Art. 2244
2. Moving up the claims of unpaid wages
(and other monetary claims) of laborers
or workers of insolvent from second
 priority to first priority in the order of
preference established by Art. 2244
 When a financially distressed individual or
enterprise is in rehabilitation or
liquidation, credits per services rendered
by employees to the debtor shall enjoy
first preference under article 2244, unless
the claim constitute legal liens under
Article 2241 and 2242 (Sec. 133, R.A.
10142)
 In case of bankruptcy or liquidation of the
employer’s business, the unpaid wages
and other monetary claims of the
employees shall be given first preference
and shall be paid in full before the claims
of government and other creditors may be
paid. The terms “declaration of
bankruptcy” or “judicial” liquidation have
been eliminated, nevertheless, according
to the SC, bankruptcy or liquidation
proceedings are still necessary for the
operation of the preference accorded to
workers under Art. 110 of the Labor Code.
(Development Bank of the Philippines v. NLRC,
G.R. No. 82763-64, March 19, 1990)
 Under Art. 2242 no. 14, the order of
preference is first, in favor of credits
evidenced by a final judgment (should
they have been the subject of litigation),
and secondly, in favor of credits
evidenced by a public instrument, the
preference among the 2 kinds of credits
being determined by priority of dates.
(Rizal Surety and Insurance Co. v. Dela Paz,
May 26, 1954 OG No. 6, 2501; Credit
Transactions by Rodriquez, 2002 ed.)
 To recognize such judgments as entitled
to priority would mean that depositors in
insolvent banks, after learning that the
bank is insolvent as shown by the fact
that it can no longer pay withdrawals or
that it has closed its doors or has been
enjoined by the Monetary Board from
doing business would rush to the courts
to secure judgments for the payment of
their deposits. Less alert depositors would
be prejudiced, that inequitable situation
could not have been contemplated by law.
(CB v. Morfe G. R. No. L-38247, March 12,
1975; Credit Transactions by Rodriquez)
 The provision not only enumerates the
preferred credits with respect to other
property, real and personal, of the debtor,
but also gives their order of preference in
the order named.
 In contrast with Arts. 2241 and 2242, Art.
2244 creates no liens on determinate
property which follow such property.
What Art. 2244 creates are simply rights
in favor of certain creditors to have the
cash and other assets of the insolvent
applied in a certain sequence or order of
priority.
 Art. 2244 particularly par. 14 item (a)
thereof, is not applicable to obligations of
the State since it is always solvent. It is
inconceivable for the State to voluntarily
initiate insolvency or general liquidation
proceedings or to be subjected to such
proceedings under its own laws.
 It should be noted that fixed, savings and
current deposits of money in banks and
similar institutions are not true deposits.
They are considered simple loans and as
such, are not preferred credits. (Art. 1980,
NCC).
 Thus, final judgments regarding the said
deposits maintained by depositors in the
event that the bank has been declared
insolvent cannot be considered preferred.
 Reason: The available assets of such a
bank are held in trust, and so conserved
that each depositor or other creditor shall
receive payment or dividend according to
the amount of his debt, and that none of
equal class shall receive any advantage or
preference over another.
Common Credits – If it is not among those
mentioned in 2241, 2242 and 2244, it is a
common credit. There is no order of
preference among common creditors; they
share whatever is left in proportion to their
credit, regardless of date.
Note: Ordinary preferred and Common
Credits cover only “free property” of the
debtor, or those not subjected to Special
Preferred Credit.
Two-Tiered Order of Preference of
Credits:
Arts.2241 and 2242, jointly with Arts. 2246 to
2249 establish a two-tier order of preference:
1. First tier – includes taxes, duties and fees
due on specific movable or immovable
property;
2. Second tier – all other special preferred
(non-tax) credits shall be satisfied pro-
rata, out of any residual value of the
specific property to which such credits
relate. In other words, they stand on
equal footing as among one another.
Reminders: The pro-rata rule does not apply
to credits annotated in the Registry of
Property by virtue of a judicial order, by
attachments and executions, which are
preferred as to “later credits”. In satisfying
several credits annotated by attachments or
executions, the rule is still preference
according to the priority of the credits in the
order of time.
 In order to make the pro rating provided
in Art. 2249 fully effective, the preferred
creditors enumerated in Nos. 2 to 14 of
Art. 2242 must necessarily be convened,
and the import of their claims ascertained.
There must be some proceeding where
the claims of all the preferred creditors
may be bindingly adjudicated, e.g.,
insolvency, settlement of decedent’s
estate, or other liquidation proceedings,
except where there is not more than one
creditor.
 Credits which do not enjoy any preference
with respect to specific property because
they are not among those mentioned in
Arts. 2241 and 2242 and those, while
included in said articles, are unpaid
because the value of the property to
which the preference refers is less than
the preferred credit or credits, shall be
satisfied in the order established in Art.
2244 with reference to other real and/or
personal property.
 Common credits or those, which do not
fall under Arts. 2241, 2242, and 2244 do
not enjoy any preference and shall be
paid pro rata regardless of dates.
How to apply the rules in Preference and
Concurrence of Credits:
1. Classify credits into the following
categories:
a. SPECIAL PREFERRED CREDITS listed
in Articles 2241 and 2242;
b. ORDINARY PREFERRED CREDITS
under Article 2244; &
c. COMMON CREDITS under Article
2245.
2. Determine or make an inventory of the
assets or properties of the insolvent.
3. Segregate specific immovables and/or
movables mentioned under Articles 2241
and 2242, respectively. Only credits in
number 1 of both articles enjoy
preference; all other credits enumerated
therein have no preference and the rule
on concurrence applies to these credits.
4. Sell movables and determine if the
proceeds are sufficient to cover the
special preferred credit in Article 2241
(taxes); exclude all other credits to the
extent of the value of the movable credit
in Article 2241 concur, apply proceeds of
sale pro-rata (pari passu) to the credits
applying articles 2246 and 2247.
Note: For immovables and real rights –
Sell immovable and real right and
determine if the proceeds of sale are
sufficient to cover the special preferred
credits in Article 2242. Exclude all other
credits to the extent of the value of
immovables and real rights to which
preference refers. Pay number 1 in Article
2242 (taxes due on land & building), if 2
or more credits in Article 2242 concur,
apply proceeds of sale pro-rata
(paripassu) to the credits applying articles
2248 and 2249.
5. If proceeds of sale from specific movable
and immovable are insufficient, the
balance of said special preferred credits
 become common credits under Article
2245.
Note: If proceeds of sale from specific
movable and immovables exceed the total
special preferred credits (there is excess
in proceeds) such excess becomes part of
the free property of the debtor to be
added to other assets in order to satisfy
the ordinary preferred credits under
Article 2244 and then the common credits
under Article 2245.
6. With the excess cash sale of assets
covered in Articles 2241 and 2242, if any,
sell other assets of debtor and satisfy the
ordinary preferred credits by applying
proceeds of sale in accordance with the
order of preference of credits established
in Article 2242 (par. 1, Article 2251). Rule
on preference applies.
7. After applying the proceeds of sale of all
properties under Step 6, apply any
balance of the proceeds of the sale to
common credits in accordance with the
rule provided in Article 2251. Common
credits are those, which are not covered
or enumerated in Articles 2241, 2242,
2243 and 2244. Rule on Concurrence
applies; they are paid pro-rata regardless
of dates (par. 2, Article 2251).
PART XI: LAW ON SUCCESSION
I. GENERAL PROVISIONS
Succession is a mode of acquisition by virtue
of which the property, rights and obligations
to the extent of the value of the inheritance of
a person are transmitted through his death to
another or others either by his will or by
operation of law (Art. 774, NCC).
Important Elements of the Definition:
1. Mode of acquisition (or ownership)
2. Transfer of property, rights, and
obligations to the extent of the value of
the inheritance of a person (called grantor
or transferor, decedent, testator)
3. Transmission thru death (not during life)
4. Transmission to another (called grantee,
or transferee, heir, legatee, or devisee)
5. By will or by operation of law
(testamentary or legal succession) (Paras,
Civil Code III, Succession, p.3 )
One of the modes of acquiring ownership and
other real rights over property (Art. 712, NCC)
Kinds of Succession
1. Testamentary – that which results from
the designation of an heir, made in a will
executed in the form prescribed by law.
(Art. 779, NCC)
2. Legal or Intestate – that which takes
place by operation of law in the absence
of a valid will. (Art. 960, NCC)
3. Mixed – that which is effected partly by
will and partly by operation of law. (Art.
780, NCC)
Other authors claim that there are 2 other
kinds of Succession:
1. Compulsory – succession to the legitime
and prevails over all other kinds of
succession (Paras, Civil Code III, Succession,
p. 31)
2. Contractual – effected when the future
spouses donate to each other in their
marriage settlements their future property
to take effect upon the death of the donor
and to the extent laid down by the
provisions of the NCC relating to
testamentary succession (Art 130, NCC;
Jurado Civil Law Reviewer)
Object of Succession:
1. The inheritance includes all the property,
rights and obligations of a person which
are not extinguished by death (Art. 776,
NCC)
2. Those which have accrued thereto since
the opening of the succession (Art. 776,
NCC)
According to renowned authors, this is
not part of the inheritance although it
pertains to the heir because it is not
transmitted by death but acquired by the
 latter by virtue of the right of accession. their nature, or by stipulation or by
(Rabuya, Civil Law Reviewer Vol I, 2017, p. provision of law
712 citing Tolentino, Civil Code of the 4. Pecuniary obligations arising from
Philippines) contract, while transmissible to the heirs,
the latter’s liability shall be limited only up
Succession vs. Inheritance to the value of the property they received
from the decedent. (Rabuya, Civil Law
Succession Inheritance Reviewer Vol. I, 2017, p 712-714)
Refers to all of the Refers to the legal
property and mode by which Subject of Succession
transmissible rights property, rights and
and obligations of obligations are 1. Decedent- A person whose property is
the decedent which transmitted transmitted through succession, whether
are not extinguished or not he left a will. If he left a will, he is
by his death also called the testator. (Art. 775, NCC)
(Jurado, Civil Law Reviewer, p. 461)
Death Contemplates
Transmission of Successional Rights
a. Actual or Natural Death
The rights to the succession are transmitted
from the moment of the death of the Death has been defined as cessation of
decedent. (Art. 777, NCC) life. Life is not synonymous with civil
personality. One need not acquire civil
Elements of Transmission personality first before he/she could die.
1. Express will of the testator, within the (Rabuya, Civil Law Reviewer Vol. I, 2017, p
limits prescribed by law, calling persons to 719 citing Continental Steel Manufacturing
succeed him, or, in the absence of a will, Corp. vs Montano (2009))
the provision of the law prescribing the
If there is a doubt, as between two or
presumed will of the decedent;
more persons who are called to succeed
each other, as to which of them died first,
2. Death of the person whose succession is
the person alleging the death of one prior
in question; and
to the other shall prove the same. In the
absence of proof, it is presumed that they
3. Acceptance of the inheritance by the
died at the same time and there shall be
person called to the succession. (Tolentino,
Civil Code of the Philippines Vol. III, no transmission of rights from one to the
Succession, p. 20) other (Art. 43, NCC)

Rules on Transmissibility of Rights and

Obligations b. Presumptive death for purposes of
1. Purely personal rights, such as those succession:
relating to family rights are extinguished
by death. Presumptive Death: Death in the legal
2. Patrimonial rights, generally are sense may be actual death or presumed
transmissible to the heirs unless otherwise death. Presumptive death may be ordinary or
provided by law or by the will of the extraordinary.
testator.
3. Rights and obligations arising from i. Ordinary Absence
contracts are, as a rule, binding upon the If a person has been absent, it being
heirs unless they are not transmissible by unknown whether or not he still lives, he shall
be presumed dead for purposes of opening
his succession after:
10 years - The absentee shall not be
presumed dead for the purpose of opening his
succession till after an absence of ten years
b) Voluntary or testamentary heirs - Those
who are instituted by the testator in his
will, to succeed to the inheritance or the
portion thereof of which the testator can
freely dispose.

5 years - If he disappeared after the age of c) Legal or intestate heirs - Those who
seventy-five years, an absence of five years succeed to the estate of the decedent
shall be sufficient in order that his succession who dies without a valid will, or to the
may be opened. (Art. 390, NCC) portion of such estate not disposed of by
will. (Tolentino, Civil Code of the Philippines
ii. Extraordinary or Qualified Absence Vol. III, succession, p. 27)
The following shall be presumed dead for all
purposes, including the division of the estate Devisee- Persons to whom gifts of real
among the heirs: property are given by virtue of a will (Art. 782,
1. A person on board a vessel lost NCC)
during a sea voyage, or an
aeroplane which is missing, who Legatee - Persons to whom gifts of personal
has not been heard of for four property are given by virtue of a will (Art. 782,
NCC)
years since the loss of the vessel
or aeroplane;
DISTINCTIONS BETWEEN HEIRS AND
2. A person in the armed forces
LEGATEES OR DEVISEES:
who has taken part in war, and
has been missing for four years;
Heirs Legatees or Devisees
3. A person who has been in Determinability of amount of inheritance
danger of death under other Inherit an indeterminate Are always given a
circumstances and his existence or aliquot portion by the determinate thing or a fixed
has not been known for four decedent’s hereditary amount.
years. estate.
Extent of Successional Right
Reckoning point of death - On the very day of Succeed to the Only succeed to the
the occurrence of the event from which death remainder of the determinate thing or
is presumed; and if such date cannot be fixed, properties after all the quantity which is mentioned
debts and all the in the legacy or devise
the court shall determine. (Rabuya, Civil Law
legacies and devices
Reviewer Vol. I, 2017, p 721
have been paid or given
As to when they exist
Both in testamentary Only in testamentary
and intestate succession succession
2. Successors
Instances where the distinctions
Heir – A person called to the succession between heirs and devisees/legatees
either by the provision of a will or by are important:
operation of law (Art. 782, NCC).
1. Preterition - The effect is to annul
a) Compulsory heirs - Those who succeed by entirely the institution of heirs, but
force of law to some portion of the legacies and devises shall be valid insofar
inheritance, in an amount predetermined as they are not inofficious. (Art. 854, NCC).
by law, of which they cannot be deprived
by the testator, except by a valid 2. Defective/Imperfect Disinheritance -
disinheritance. The effect is to annul the institution of
 heirs to the extent that the legitime of the
disinherited heir is prejudiced, but
legacies and devises shall be valid insofar
as they are not inofficious. (Art. 918, NCC)
3. After – acquired properties - As a
rule, they are not included among the
properties disposed of unless it should
expressly appear in the will itself that
such was the testator’s intention (Art. 793,
NCC). There is a view that this rule is
applicable only to legacies and devises
and not to institution of heirs.
II. TESTAMENTARY SUCCESSION
Will – An act whereby a person is permitted,
with the formalities prescribed by law, to
control to a certain degree the disposition of
his estate, to take effect after his death. (Art.
783, NCC)
A. CHARACTERISTICS OF WILLS
1. It is a strictly personal act – it cannot
be left in whole or in part to the discretion
of a third person, or accomplished
through the instrumentality of an agent or
attorney. (Art. 784, NCC)
Acts which the testator cannot entrust
to third persons:
a. The duration or efficacy of
designation of heirs, devisees or
legatees, (Art. 785, NCC) or
b. The determination of portions which
they are to take, when referred to by
name (Art. 785, NCC)
c. Determination whether or not a
disposition is operative (Art. 787, NCC)
because to delegate to a third person
such power is in effect delegating the
power to make the testamentary
disposition (Tolentino, Civil Code of the
Philippines Vol. III, Succession)
The testator may only entrust to a third
person:
a. The distribution of specific property or
sums of money that he may leave in
general to specified classes or causes, and
b. The designation of persons, institutions or
establishments to which such property or
sums of money are to be given or applied.
(Art. 786, NCC)
2. It is a unilateral and individual act -
does not involve an exchange of value;
joint wills are prohibited (Art. 818, NCC)
3. It is a free and voluntary act – it must
have been executed freely, knowingly,
and voluntarily, otherwise it will be
disallowed (Paras, Civil Code of the
Philippines Annotated Wills and Succession,
2016, p 44)
4. It is a formal or a solemn act (Art. 783,
NCC)
5. It is a disposition of property (Art. 783,
NCC)
Testator must have animus testandi –
intent to transfer title via a testamentary
disposition in contemplation of death, to
take effect upon testator’s death.
6. It is an act mortis causa - it will take
effect upon death (Art. 777, NCC)
7. It is ambulatory and revocable - a will
may be revoked by the testator at any
time before his death (Art. 828, NCC)
8. The testator must have a
testamentary capacity.
Testamentary Capacity must exist at the
time of the execution of the will (Jurado,
Comments and Jurisprudence on Succession, 2009
ed. p40)
REQUISITES OF TESTAMENTARY
CAPACITY:
1. Not prohibited by law - All persons
who are not expressly prohibited by law
may make a will. (Art. 796, NCC)
 The law presumes capacity to make a will;
hence in order that a person may be
disqualified to make one, he must
expressly prohibited by law. (Tolentino,
Civil Code of the Philippines Vol.
succession p. 46)
2. 18 years old or over - Persons of either
sex under eighteen years of age cannot
make a will. (Art. 797, NCC)
3. Of sound and disposing mind - In
order to make a will it is essential that the
testator be of sound mind at the time of
its execution. (Art. 798, NCC)
To be of sound mind, the testator, at the time
of execution must know:
a. The nature of the estate to be
disposed of (Art. 799, NCC) – testator
must have a fairly accurate
knowledge of what he owns (Rabuya,
Civil Law Review Vol. I, 2017, p738 ;
b. The proper objects of his bounty (Art.
799, NCC) – testator should know
under ordinary circumstances, his
relatives in the most proximate
degrees (Rabuya, supra, at 739); and
c. The character of the testamentary act
(Art. 799, NCC) - testator must be
aware that the instrument he is
executing is an act mortis causa
which will dispose of his property
upon his death (Rabuya, supra, at 739).
The law presumes that the testator is of
sound mind, unless: (Inverted Presumptions)
a. One month or less before making his
will, he was publicly known to be
insane; and
b. He was under guardianship at the
time of making his will. (Art. 800, NCC)
Note: The will of an incapable is not validated
by the supervening of capacity. (Art. 801, NCC)
Conversely, if the testator was of sound mind
at the time of the making of the will, the will
is valid even if the testator should later on
become insane and die in that condition. In
other words, supervening incapacity does not
invalidate an effective will. (Rabuya, supra, at
737)
III, There is no presumption of incapacity merely
because of advance years. (Tolentino, Civil Code
of the Philippines Vol. III, succession 53) It is
senile dementia and not senility that produces
testamentary incapacity (Jurado, Comments and
Jurisprudence on Succession, 2009 ed. 46)
Insane Delusions
Not every insane (delusion) will render one
incapable of making a will. A testator may
have delusions regarding matters which do
not affect or concern his testamentary act and
which have no influence upon the disposition
which he makes of his estate. In such a case,
if the testator is otherwise mentally qualified,
the existence of such delusions would not
invalidate his will. (Tolentino, Civil Code of the
Philippines Vol. III, Succession p. 55)
Deaf, Dumb, and Blind
Neither blindness, nor deafness and
dumbness, nor all of them combined, will
alone incapacitate a person to perform
testamentary act. If a person afflicted has
testamentary capacity and can communicate
his desires, no reason exists for rejecting his
will. (Tolentino, Civil Code of the Philippines Vol.
III, Succession, p. 56)
Note: Other circumstances such as family
relations, civil interdiction, prodigality,
insolvency, alienage, and other similar nature,
which ordinarily modify or limit capacity to act
do not affect or restrict testamentary capacity.
(Jurado, Comments and Jurisprudence on Succession,
2009 ed. p.39)
B. INTERPRETATION OF WILLS
Rule Favoring Testacy
The intent or will of the testator, expressed in
the form and within the limits prescribed by
law, must be recognized as the supreme law
in succession. All rules of construction are
designed to ascertain and give effect to that
intention.
It is only when then the intention of the
testator is contrary to law, morals, or public
policy that it cannot be given effect. (Rabuya,
Civil Law Review, Vol. I, 2017, p 728)
If a testamentary disposition admits of
different interpretations, in case of doubt, that
interpretation by which the disposition is to be
operative shall be preferred. (Art. 788, NCC)
Parole Evidence Rule with respect to
interpretation of wills.
When there is an imperfect description, or
when no person or property exactly answers
the description, mistakes and omissions must
be corrected, if the error appears from the
context of the will or from extrinsic evidence,
excluding the oral declarations of the testator
as to his intention; and when an uncertainty
arises upon the face of the will, as to the
application of any of its provisions, the
testator's intention is to be ascertained from
the words of the will, taking into consideration
the circumstances under which it was made,
excluding such oral declarations. (Art. 789,
NCC)
Kinds of ambiguities
1. Patent or Extrinsic ambiguity - one which
appears upon the face of the instrument.
E.g. When the testator gives a legacy to
“some of the six children of my brother
Juan
2. Latent or Intrinsic ambiguity - one which
cannot be seen from a mere perusal or
reading of the will, but which appears
only upon consideration of extrinsic
circumstances.
E.g. When the testator gives a legacy to
“my cousin Pedro” and it turns out that
he has two or more cousins named Pedro.
Note: There is no distinction between patent
and latent ambiguities in so far as the
admissibility of parole or extrinsic evidence to
aid testamentary disposition is concerned.
(Tolentino, Civil Code of the Philippines Vol. III,
Succession, p. 36)
How to cure ambiguities:
1. By determining the intention of the
testator through examining the words of
the will;
2. By considering extrinsic evidence such as
written declarations of the testator (oral
declarations not allowed since contrary to
the dead man’s statute rule)
Interpretation of words
1. Non-technical words
General Rule: The words of a will are to be
taken in their ordinary and grammatical sense
Exception: When a clear intention to use
them in another sense can be gathered, and
that other can be ascertained. (Art. 790, NCC)
2. Technical words
General Rule: They are to be taken in their
technical sense
Exception: When the context clearly
indicates a contrary intention, or unless it
satisfactorily appears that the will was drawn
solely by the testator, and that he was
unacquainted with such technical sense. (Art.
790, NCC)
Interpretation as a whole
The words of a will are to receive an
interpretation which will give to every
expression some effect, rather than one which
will render any of the expressions inoperative;
and of two modes of interpreting a will, that is
to be preferred which will prevent intestacy.
(Art. 791, NCC)
 The will of the testator is the first and
principal law in the matter of testaments.
When his intention is clearly and precisely
expressed, any interpretation must be in
accord with the plain and literal meaning
of his words, except when it may clearly
 appear that his intention was different
from that literally expressed. The
testator’s intention is to be ascertained
from the words of the will, taking into
consideration the circumstances under
which it was made. x xx Inasmuch as the
testator was not survived by any nephew
who became a priest, the unavoidable
conclusion is that the bequest in question
was ineffectual or inoperative. Therefore,
the administration of the rice lands by the
parish priest of Victoria, as envisaged in
the will, was likewise inoperative. (Parish
Priest of Roman Catholic Church of Victoria,
Tarlac vs. Rigor, 89 SCRA 493)
Separability of invalid provisions
The invalidity of one of several dispositions
contained in a will does not result in the
invalidity of the other dispositions.
Exception: Unless it is to be presumed that
the testator would not have made such other
dispositions if the first invalid disposition had
not been made. (Art. 792, NCC)
After-acquired property
Property acquired after the making of a will
shall only pass thereby, as if the testator had
possessed it at the time of making the will,
should it expressly appear by the will that
such was his intention (Art. 793, NCC), such as
when the will speaks of the “whole estate” or
the “entire inheritance”.
Extent of interest covered
Every devise or legacy shall cover all the
interest which the testator could device or
bequeath in the property disposed of, unless
it clearly appears from the will that he
intended to convey a less interest. (Art. 794,
NCC)
C. LAW GOVERNING FORM
1. As to the time of execution
Extrinsic validity
The validity of a will as to its form depends
upon the observance of the law in force at the
time it is made. (Art. 795, NCC)
Effect of statutory changes
a. After the testator’s death
Successional rights arising from the will
are vested in the person called to the
inheritance. These vested rights are
protected under the due process clause of
the constitution. (Jurado, Comments and
Jurisprudence on Succession, 2009 ed. p. 37)
b. Before the testator’s death
General Rule: Any statutory change enacted
after the execution of the will but before the
death of the testator cannot have any
retroactive effect upon the formal validity of
the will.
Exception: When a retroactive effect is
expressly declared by the statue itself or is
necessarily implied from the language used
therein. (Jurado, Comments and Jurisprudence on
Succession, 2009 ed. p. 38)
Intrinsic validity
1. Successional rights are governed by the
law in force at the TIME OF THE
DECEDENT’S DEATH; (Art. 2263, NCC)
2. Laws that must be observed in relation to
intrinsic validity under Philippine Law:
a. National law of the decedent; law of his
country or nationality; regardless of the
place of execution and the place of death;
(Art. 16 [2], NCC)
b. RENVOI DOCTRINE: referring back to
the forum of the problem
Where the conflict rules under the decedent’s
national law refers the matter to the law of
the domicile;
Note: A holographic will is subject to no other
form, and may be made in or out of the
Philippines. (Art. 810, NCC)
2. As to the place of execution
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. (Art. 17, NCC)
Extrinsic Validity - A will produces effect in
the Philippines if made by either a Filipino
Testator or an Alien within the formalities
prescribed by:
a. Filipino Testator (Art. 815 and Art. 17,
NCC)
1. Philippine Law
2. The law of the country where it is
executed
b. Alien Testator
1) Executed abroad (Art. 17 and 816, NCC)
a) The law of the place where it is
executed
b) The law of the place which he
resides
c) The law according to the
formalities observed in his country
d) Philippine Law
2) Executed in the Philippines (Art. 817,
NCC)
1) Philippine Law
2) The law of the country of which
he is a citizen or subject
Aspects of a Will Governed by the
National Law of the Decedent
1. Order of succession;
2. Amount of successional rights;
3. Intrinsic validity of testamentary
dispositions; and
4. Capacity of the heir to succeed from
decedent. (Art. 16 (2), NCC)
Note: Two or more persons cannot make a
will jointly, or in the same instrument, either
for their reciprocal benefit or for the benefit of
a third person. (Art. 818, NCC) This provision
extends to all Filipinos even if they are in a
foreign country that allows joint wills. (Art.
819, NCC)
D. FORMALITIES OF WILLS
Forms and solemnities of will are governed by
the law of the country in which the will was
executed. (Art 17, NCC)
KINDS OF WILLS
1. Notarial/Attested or Ordinary will –
Executed in accordance with the
formalities prescribed in Arts. 804 to 808
of the Civil Code.
2. Holographic will – A will which must be
entirely written, dated and signed by the
hand of the testator HIMSELF, without the
necessity of any witness. (Art. 810, NCC)
Common Formalities of Wills: (Art. 804,
NCC)
1. Must be in writing
2. Written in a language or dialect known to
the testator. Otherwise, the will is void.
Special Formalities of Notarial Wills (Art.
805, NCC)
1. Subscription - It must be subscribed at
the end thereof by the testator himself or
by the testator’s name written by some
other person in his presence and express
direction.
a. Subscription by testator himself
 A thumbprint is considered sufficient
signature (De Gala v. Gonzales, 53 Phil. 104).
 A cross written across the testator’s name
is not sufficient signature unless it is
shown that it is the testator’s habitual
signature or one of the ways by which he
signs his name (Matias v. Salud, L-10751,
June 23, 1958).
 Thus, in an earlier case, the Court
declared that the cross appearing on the Distinction between Attestation and
will is not the usual signature of Antero Subscription
Mercado or even one of the ways by
which he signed his name. After mature Attestation Subscription
reflection, we are not prepared to liken Act of senses Act of the hand
the mere sign of the cross to a Mental Mechanical
thumbmark, and the reason is obvious. Consists in witnessing It is the signing of
The cross cannot and does not have the the testator’s the witnesses’
trustworthiness of a thumbmark. (Garcia v. execution of the will in names upon the
Lacuesta, L-4067, November 29, 1951) order to see and take same paper for the
note mentally that purpose of
b. Subscription by the testator’s name those things are done identification of
written by some other person in his which the statute such paper as the
presence, and by his express direction requires for the will which was
execution of a will and executed by the
Requisites: that the signature of testator
1) The testator’s name is written by the testator exists as
some other person in his presence a fact.
and by his express direction; (Rabuya, Civil Law Review Vol. I, 2017, p 757)
2) Such person signed the will and every
page thereof in the presence of the  Attestation is the act of the senses, while
instrumental witnesses; subscription is the act of the hand. Hence,
3) The person requested by the testator if the will consisted of two pages, both
signs the testator’s name, not his; signed by the witnesses on the left-hand
and margin thereof, but without signing the
4) The fact that the testator caused attestation clause at its bottom, the will is
some other person to write his name void because an unsigned attestation
in his presence and by his express clause results in an unattested will. The
direction and also in the presence of signatures on the left-hand margin cannot
the instrumental witnesses is stated in be deemed compliance with the signature
the attestation clause. (Rabuya, Civil on the attestation clause since the
Law Review Vol. I, 2017, p 750-751)
signatures that do appear on the page
were directed towards a wholly different
End of the will – It refers to the point where
avowal. (Azuela v. Court of Appeals, 487
the last testamentary disposition ends or at its
SCRA 119)
logical end
Meaning of “in the presence of the
Purpose of the Requirement - To prevent testator and of one another”:
fraud or interpolation between the
testamentary dispositions and the signature.  The true test of signing in each other’s
An instrument in the form of a will cannot be presence is not whether they actually saw
probated, if it is not signed at the end. each other sign, but whether they might
(Tolentino, Civil Code of the Philippines, Vol. III,
1992, p 70)
have seen each other sign had they
chosen to do so, considering their mental
2. Attestation and Subscription by 3 and physical condition and position in
witnesses - Attested and subscribed by relation to each other at the moment of
3 or more qualified or competent inscription of each signature. Hence, if a
witnesses in the presence of the testator witness could see everything that took
and of one another. place by merely casting his eyes in the
proper direction and without any physical
 obstruction to prevent his doing so, the
requirement of the statute is satisfied.
(Nera v. Rimando, 18 Philo. 451).
Number of witnesses a mandatory
requirement:
 A notarial will, as the contested will in this
case, is required by law to be subscribed
at the end thereof by the testator himself.
In addition, it should be attested and
subscribed by three or more credible
witnesses in the presence of the testator
and of one another. The will in question
was attested by only two witnesses,
Noynay and Grajo. On this circumstance
alone, the will must be considered void.
(Lee v. Tambago, A.C. No. 5281, February 12,
2008)
If the third witness is the notary public himself
before whom the will was supposed to have
been acknowledged, the requirements of
Articles 805 and 806 of the Civil Code are not
satisfied. (Rabuya, supra, at p 760)
3. Marginal Signatures - Signatures of
testator or the person requested by him
to write his name and his witnesses on
the left margin of each and every page,
except the last.
Three requirements:
a. The testator or the person requested
by him to write his name must sign
on every page, except the last
(MANDATORY)
b. Such signature be on the left margin
(DIRECTORY)
c. The signing must be done in the
presence of the witnesses
(MANDATORY) (Rabuya, supra, at p
762)
4. Pages numbered correlatively in letters
placed on the upper part of each page.
 The will in question comprises two
pages, each of which is written on one
side of a separate sheet. The first sheet is
not paged either in letters or in Arabic
numerals. This, the appellant believes, is
a fatal defect.
The purpose of the law in prescribing
the paging of wills is guard against fraud,
and to afford means of preventing the
substitution or of defecting the loss of any
of its pages.
In the present case, the omission to put a
page number on the first sheet, if that be
necessary, is supplied by other forms of
identification more trustworthy than the
conventional numerical words or
characters. The unnumbered page is
clearly identified as the first page by the
internal sense of its contents considered
in relation to the contents of the second
page. By their meaning and coherence,
the first and second lines on the second
page are undeniably a continuation of the
last sentence of the testament, before the
attestation clause, which starts at the
bottom of the preceding page.
Furthermore, the unnumbered page
contains the caption "TESTAMENTO," the
invocation of the Almighty, and a recital
that the testator was in full use of his
testamentary faculty, — all of which, in
the logical order of sequence, precede the
direction for the disposition of the
marker's property. Again, as page two
contains only the two lines above
mentioned, the attestation clause, the
mark of the testator and the signatures of
the witnesses, the other sheet cannot by
any possibility be taken for other than
page one. (Lopez v Liboro, L-1787, August
27, 1948)
If the paging should be placed on the lower
part, the testament is not void for this sole
reason. (Rabuya, supra, at p 769 citing Unson v
Abella, 43 Phil 504)
It is not necessary that the pages of the will
be numbered correlatively in letters such as
“one,” “two,” “three,” etc. The requirement of
the law is sufficiently complied with if the
folios were paged with the letters “A,” “B,”
“C,” etc. or in Arabic numerals or in any form
of identification. (Rabuya, supra, at p 769 citing
Aldaba v Roque, 43 Phil 504, and Unson v Abella,
43 Phil 504)
5. Contain an attestation clause
embodying the following:
a. Number of pages used upon which the
will is written;
b. The fact that testator signed the will and
every page thereof, or caused some other
person to write his name, under his
express direction and in his presence, in
the presence of the instrumental
witnesses;
c. The fact that the witnesses witnessed and
signed the will and all the pages thereof
in the presence of the testator and of one
another.
 If the attestation clause is the only
evidence of the fact required to be stated
therein, the omission to state such fact in
the attestation clause is fatal (Caneda v.
CA, 222 SCRA 781). For example, if the
attestation clause failed to state that the
testator signed the will in the presence of
the witnesses.
 But if the omitted statement may be
proven by the mere examination of the
will, such omission does not invalidate the
will (Caneda v. CA, 222 SCRA 781). For
example, the fact that all the pages were
signed by the testator and all the
witnesses.
6. Acknowledged before a notary public by
the testator and all the witnesses.
 An acknowledgment taken outside the
territorial limits of the notary public’s
jurisdiction is void because outside of the
place of his commission, a notary public is
bereft of power to perform any notarial
act. Hence, the will becomes void because
of absence of acknowledgment (Guerrero
v. Bihis, 521 SCRA 394).
 A will which does not contain an
acknowledgment, but a mere jurat, is
fatally defective, as the express
requirement of the law is that the will be
acknowledged, and not merely subscribed
and sworn to (Azuela v. CA, 487 SCRA 119).
 The notary public before whom the will
was acknowledged cannot be considered
as the third instrumental witness since he
cannot acknowledge before himself the
will (Cruz v. Villasor, 54 SCRA 31).
Special Requirements in Special Cases:
A. Deaf or Deaf-Mute Testator
1. He must personally read the will, if able to
do so; or
2. Designate two persons to read and
communicate to him, the contents
thereof. (Art. 807, NCC)
B. Blind Testator (Art. 808, NCC)
The will shall be read to him twice; once by
one of the subscribing witnesses, again when
the will is acknowledged.
Rule Qualified:
 The will was held to be valid where,
instead of a Notary Public and an
instrumental witness, it was the lawyer
who drafted the will who read the same
aloud to the testator once, not twice as
the law requires, in the presence of the
testator, his three instrumental witnesses
and the notary public. Prior and
subsequent thereto the testator affirmed
upon being asked that the contents read
corresponded with his instructions. Only
then did the signing and acknowledgment
take place. (Alvarado v. Gaviola, Jr., 226
SCRA 347[1993])
Special formalities of Holographic wills:
Must be entirely:
1. Written by the hand of the testator;
2. Dated by the hand of the testator; and
3. Signed by the hand of the testator. (Art.
810, NCC)
Otherwise the will is void.
No Witness Required – During the
execution of the holographic will, no witnesses
are necessary and required. (Rabuya, supra, at
p 791)
Note:
In the probate of a holographic will, it shall be
necessary that at least one witness who
knows the handwriting and signature of the
testator explicitly declares that the will and
the signature are in the handwriting of the
testator.
If the will is contested at least three of
such witness shall be required. In the absence
of any competent witness and if the court
deems it necessary expert testimony maybe
resorted to. (Art. 811, NCC)
 In an earlier case (Azaola v. Singson, 109
Phil. 102), it was held that even if the
genuineness of the holographic will is
contested, the requirement of three
witnesses is not compulsory. In a later
case, (Codoy v. Calugay, 312 SCRA 333)
however, the Court ruled that the
requirement is mandatory.
Rules in case of insertion, cancellation,
erasure or alterations made by testator:
1. He must authenticate the same with his
full signature (Art. 814, NCC).
2. If not authenticated with his full
signature, it is considered as not made,
but the will is not invalidated as a whole,
but at most only with respect to the
particular words erased, corrected or
interlined. (Kalaw v. Relova, 132 SCRA 257)
Effect of insertion by another person on
the validity of a holographic will:
1. If made after the execution of the will but
without the consent of the testator, such
insertion is considered as not written
because the validity of the will cannot be
defeated by the malice or caprice of a
third person.
2. If the insertion was made after the
execution of the will but with the consent
of the testator, the will remains valid but
the insertion is void.
3. If the insertion was made after the
execution of the will but validated by the
testator by his signature thereon, then the
insertion becomes part of the will, and the
entire will becomes void.
4. If the insertion was made
contemporaneous to the execution of the
will, then the entire will becomes void.
5. If the insertion was made
contemporaneous to the execution of the
will, then the will is void because it is not
written entirely by the testator. (III
Tolentino, Civil Code, 1979, 115)
E. WITNESSES TO WILL
Requirements (Arts. 820, 821, NCC)
1. At least 18 years of age;
2. Of sound mind;
3. Not blind, deaf or dumb;
4. Able to read and write;
5. Domiciled in the Philippines, and
6. Has not been convicted of falsification of a
document, perjury or false testimony
Note: The requirement that witnesses must
be domiciled in the Philippines applies only if a
Filipino citizen executes his will in the
Philippines.
Other reminders:
1. The competency of the witnesses is
determined at the time of the attestation
of the will. (Art. 822, NCC)
2. If a witness is given a share of the
inheritance, a devise or a legacy, or the
same is given to his spouse, parent or
child:
a) The disposition is void if there are no
other three qualified witnesses, but the
will is still valid.
b) The witness is not disqualified; only his
entitlement to the inheritance, legacy or
devise is affected – it becomes void (Art.
823, NCC).
3. DOCTRINE OF SUBSTANTIAL A will and a codicil, A prior will and a
COMPLIANCE - In the absence of bad being regarded as a subsequent will, being
faith, forgery or fraud, or undue and single instrument, are to two separate wills, may
improper pressure and influence, defects be construed together be construed
independently of each
and imperfections in the form of
other.
attestation or in the language used
therein shall not render the will invalid if it
G. REVOCATION OF WILLS AND
is proved that the will was in fact
TESTAMENTARY DISPOSITIONS
executed and attested in substantial
compliance with all the requirements of
Revocation is an act of the mind,
Article 805. (Art. 809, NCC)
terminating the potential capacity of the will
to operate at the death of the testator,
F. CODICILS AND INCORPORATION BY
manifested by some outward and visible act
REFERENCE
or sign, symbolic thereof. (Tolentino, Civil Code
of the Philippines Vol. III, Succession p. 129)
Codicil – is a supplement or addition to a will
made after the execution of a will and A. Rules on revocability of wills: (Art.
annexed to be taken as a part thereof by 828, NCC)
which any disposition made in the original will 1. A will may be revoked at will by the
is explained added to or altered . (Art. 825, testator at any time before his death
NCC) In order that it may be effective, it shall 2. Any waiver or restriction of the right to
be executed as in the case of a will. (Art. 826, revoke the will is void, but it shall not
NCC) affect the validity of the will.

Incorporation by reference - An exception B. Governing law in revocation: (Art. 829,

to the rule that if an instrument is not NCC)
executed with all the formalities of a will it 1. If made outside the Philippines:
cannot be admitted to probate. (Tolentino, Civil a. By a person not domiciled in the
Code of the Philippines Vol. III, Succession p.127) Philippines, valid if –
1. In accordance with the law of the
Requisites for the validity of place where the will was made; or
incorporation by reference of documents 2. In accordance with the law of the
or paper to notarial will: place in which he is domiciled at the
1. Must be in existence at the time of the time of revocation.
execution of the will;
2. Will must clearly describe and identify the b. By a person domiciled in the
same stating, among other things, the Philippines, the revocation must be
number of pages thereof; done in accordance with Philippine law.
3. It is to be identified by clear and
satisfactory proof as the document or 2. If made in the Philippines: Must be done
paper referred therein; and in accordance with Philippine laws,
4. It must be signed by the testator and the whether the testator be domiciled in the
witnesses on each and every page. (Art. Philippines or not.
827, NCC)
C. Modes of revoking wills: (Art. 830, NCC)
Codicil Subsequent Will
1. By implication of law;
Forms part of the New or separate
original will 2. By some will, codicil, or other writing
Supplements the Makes dispositions executed as provided in case of wills
original will, explaining, without reference to and 3. By burning, tearing, cancelling, or
adding to, or altering independent of the obliterating the will with the intention
any of its dispositions original will of revoking it, by the testator himself,
 or by some other person in his
presence, and by his express
direction.
Instances of revocation by implication of
law:
1. If the subsequent marriage in Art. 41 of
the Family Code is terminated by the
recoding of the affidavit of reappearance,
the spouse who contracted the marriage
in bad faith is disqualified to inherit from
the other, whether the succession is
testamentary or intestate (Art. 43[5], FC).
2. If both spouses in the subsequent
marriage are in bad faith, the marriage is
void, and any testamentary disposition by
one in favor of the other is revoked by
operation of law (Art. 44, FC).
3. In case of annulment of marriage, the
spouse who contracted the marriage in
bad faith is disqualified to inherit from the
other, whether the succession is
testamentary or intestate (Art. 50, FC).
4. In case of legal separation, the
testamentary disposition in the will of the
innocent spouse in favor of the guilty
spouse is revoked by operation of law
(Art. 63[4], FC).
5. In case of preterition of a compulsory heir
in the direct line, the institution of heir is
totally annulled but without affecting the
legacies and devises which are not
inofficious (Art. 854).
6. When the heir, legatee or devisee
commits an act of unworthiness which by
express provision of law will incapacitate
him to succeed (Art. 1032).
7. When in the testator’s will there is a
legacy of credit against a third a person or
of a remission of a debt of the legatee,
and subsequently, after the execution of
the will, the testator brings an action
against the debtor for the payment of his
debt. In such a case, the legacy is
revoked by operation of law (Arts. 935 &
936).
8. When the testator transforms the thing
bequeathed in such a manner that it does
not retain either the form or denomination
it had, or when he alienates by any title or
for any cause the thing bequeathed or
any part thereof, or when the thing
bequeathed is totally lost during the
testator’s lifetime or after his death
without the heir’s fault. In such cases, the
legacy is revoked by operation of law (Art.
957, NCC). (Rabuya, Civil Law Reviewer, Vol.
III, 2017, p 803-804)
Revocation by subsequent instrument
May be made either expressly or impliedly.
1. Express Revocation
a. Revocation is express when in a
subsequent instrument executed in the
form of a will there is a revocatory
clause expressly revoking the previous
will or part thereof. (Jurado, Comments and
Jurisprudence on Succession, 2009 ed. p. 120)
b. In order that a former will may be
revoked by a subsequent will, it is
necessary that the latter will should be
valid and executed with the formalities
required for the making of wills (Tolentino,
Civil Code of the Philippines Vol. III,
Succession p. 131)
c. If the subsequent will containing a clause
revoking previous will is disallowed by the
probate court on the ground that it was
not executed in accordance with the
formalities prescribed by law. The
revocatory clause will not produce any
effect whatsoever. (Jurado, Comments and
Jurisprudence on Succession, 2009 ed. p. 121)
d. A revocation of a will based on a false
cause or an illegal cause is null and void.
(Art. 833, NCC)
Doctrine of Dependent Relative
Revocation
If the testator revokes his will with the
present intention of making a new one
immediately and substitute, and the new will
is not made, or if made, fails to take effect for
any reason whatsoever, it will be presumed
that the testator prefers the old will to
intestacy; consequently, the old will can still
be admitted to probate. (Molo vs. Molo, G.R. L-
02538, September 21, 1951)
Exception
A revocation made is a subsequent will shall
take effect, even if the new will should
become inoperative by reason of:
a. Incapacity of the heirs, devisees or
legatees designated therein
b. Renunciation or repudiation (Art. 832, NCC)
2. Implied Revocation
Rules on Implied Revocation:
a. A will is impliedly revoked when the
subsequent will or codicil is partially or
absolutely inconsistent with that of the
previous will. (Jurado Civil Law Reviewer,
p.491- 492)
b. Subsequent wills which do not revoke the
previous ones in an express manner,
annul only such dispositions in the prior
wills as are inconsistent with or contrary
to those contained in the latter wills. (Art.
831, NCC)
c. Parol evidence is competent to show
which was in fact last executed, whether
they are dated or not. But if of the same
date, or not dated, and there is nothing to
show which was the last, all fail for
uncertainty (III Tolentino, Civil Code, 1992
ed., 131-132).
Revocation by Physical Destruction:
Requisites:
1. Testator must, at the time of performing
it, be in possession of his faculties and
capable of making wills; (Tolentino, Civil
Code of the Philippines Vol. III, Succession p.
132)
2. The destruction must be with intent to
revoke or coupled with animus revocandi;
(Tolentino, Civil Code of the Philippines Vol.
III, succession p.132)
3. Intention to revoke must be accompanied
by overt physical act of burning, tearing,
obliterating or cancelling the will (Testate
Estate of Adriana Maloto vs. Court of Appeals,
G. R. no. L-76464. February 29, 1988.)
4. The overt act must be made by the
testator or by another person in his
presence and under his express direction.
(Testate Estate of Adriana Maloto vs. Court of
Appeals, G. R. no. L-76464. February 29,
1988.)
5. There must be a completion at least of
the subjective phase of the overt act.
(Paras, Civil Code III, Succession, 139)
Who may do the physical destruction?
1. The testator himself; or
2. Another person, acting under the express
direction of the testator and the physical
destruction is done in the presence of the
testator.
Burning: It is necessary that some part
thereof be scorched or burned, that the paper
itself on which the will is written be partially
burned or scorched. (Tolentino, Civil Code of the
Philippines Vol. III, succession p. 135)
Tearing: It is enough that the paper is torn;
nothing need to be torn off entirely; it may
still be together and all legible, but will be
considered revoked. (Tolentino, Civil Code of the
Philippines Vol. III, succession p. 135)
Cancelling: A will is well canceled by drawing
lines over it that do not cross each other. It
has held that an indorsement on the back of
the will, “Cancelled and is null and void,”
signed by the testator, is sufficient
cancellation. (Tolentino, Civil Code of the Philippines
Vol. III, succession p. 135-136)
Obliteration: Obliteration is effected by
erasing or scrapping off any word or
disposition which the testator tends to revoke.
(Jurado, Comments and Jurisprudence on
Succession, 2009 ed., p. 127)
Note: Revocation effected by burning or
tearing is always total as opposed to
revocation through cancelling and obliterating
which may be either total or partial. It is total
if directed against an essential part of the will
and partial if it is directed against a
nonessential part of the will. (Jurado,
Comments and Jurisprudence on Succession, 2009
ed. p. 127-126)
Presumption of revocation:
 Where a will which cannot be found is
shown to have been in the possession of
the testator, when last seen, the
presumption is, in the absence of other
 competent evidence, that the same was
cancelled or destroyed. The same
presumption arises where it is shown that
the testator had ready access to the will
and it cannot be found after his death. It
will not be presumed that such will has
been destroyed by any other person
without the knowledge or authority of the
testator. (Gago vs. Mamuyac G. R. No.
26317. January 29, 1927)
In case of unauthorized destruction:
1. In case of notarial will, parol evidence is
competent to prove the contents or
provisions of the will.
2. In case of holographic will, if there is no
copy left, the will may not be probated
even if the loss or destruction was
unauthorized (Gan v. Yap, 104 Phil. 509). But
if there is a photostatic or Xerox copy left,
then the will may still be probated
(Rodelas v. Aranza, 119 SCRA 16).
Note: The recognition of an illegitimate child
does not lose its legal effect, even though the
will where it was made should be revoked.
(Art. 834, NCC)
H. REPUBLICATION AND REVIVAL OF
WILLS
Republication – the re-execution or re-
establishment by a testator of a will which is
void or a will which the testator had once
revoked. It requires a positive act on the part
of the testator. (Rabuya, Civil Law Reviewer Vol.
I, 2017, p 810)
Two ways of republishing wills:
1. Express- By reproducing the contents of
the will to be republished in a subsequent
will.
2. Implied- By execution of a codicil which
simply referred to the previous will to be
republished (without reproducing its
contents).
If the previous will is void because of failure
to comply with the formalities required of a
will, it can only be republished by reproducing
its contents. (Art. 835, NCC)
Revival - the restoration to validity of a
previously revoked will by operation of law.
Republication Revival
Takes place by an act Takes place by
of the testator operation of law
Corrects extrinsic and Restores a revoked will.
intrinsic defects
Revival in relation to Revocation
Express - If after making a will, the testator
makes a second will expressly revoking the
first, the revocation of the second does not
revive the first will, which can be revived only
by another will or codicil. (Art. 837, NCC)
Implied - Where there is merely
inconsistency between two wills, but no
revoking clause, it has been held in common
law that upon the destruction of the second
will the first was revived automatically,
regardless of the intention of the testator,
provided the first will has been preserved,
undestroyed and cancelled. (Tolentino, Civil
Code of the Philippines Vol. III, succession p. 145)
I. ALLOWANCE AND DISALLOWANCE OF
WILLS
Probate - the probate of a will is a special
proceeding for establishing the validity of a
will. (Jurado, Comments and Jurisprudence on
Succession, 2009 ed. p.134)
No will shall pass either real or personal
property unless it is proved and allowed in
accordance with the Rules of Court. (Art. 838,
NCC)
To prove before some officer or tribunal the:
1. Due execution of will.
2. Identity of the will; and
3. Testamentary capacity of the testator
Kinds of probate proceedings:
1. Post Mortem – Probate after the
testator’s death.
2. Ante Mortem – Probate during the
lifetime of the testator. But even after the
 ante mortem probate, the will may still be
revoked by the testator.
Probate is mandatory, thus:
1. Estoppel is not applicable.
2. There can be no valid partition among the
heirs until after the will has been
probated.
Jurisdiction
A [Regional Trial Court] acquires jurisdiction
to probate a will when it is shown by evidence
before it:
1. That a person executed a will or has died
leaving a will;
2. In case of a resident of this country, that
he resides or died in the province where
the court exercise territorial jurisdiction;
3. In case of a non-resident, that he has
estate in the province where the court is
situated,
4. That the testament or last will has been
delivered to the court and is in the
possession thereof. (Tolentino, Civil Code of
the Philippines Vol. III, succession p. 149-150)
Residence: The term “resides” refers to
actual or physical place or abode of the
deceased as distinguished from his legal
residence or domicle. (Tolentino, Civil Code of
the Philippines Vol. III, Succession p. 150)
Who may institute
Any executor, devisee, or legatee named in a
will, or any other person interested in the
estate, may at any time after the death of the
testator, petition the court, having jurisdiction
to have the will allowed, whether the same be
in his possession or not, or is lost or destroyed
(Rule 76, Sec. 1, Rules of Court)
Issues to be resolved in probate
proceedings.
General rule: The probate court cannot
inquire into the intrinsic validity of
testamentary provisions. Only the extrinsic
validity of such wills may be examined. (Art.
839, NCC)
Exceptions: Issues affecting the intrinsic
validity were allowed to be passed upon –
1. When the defect of the will is apparent on
its face and the probate of the will
become a useless ceremony if it is
intrinsically invalid (Nepomuceno v. CA, 139
SCRA 206);
2. Because practical considerations
demanded it as when there is preterition
of heirs or the testamentary provisions
are of doubtful legality (Balanay v. Martinez,
64 SCRA 452);
3. Where the parties agree on the intrinsic
validity and settles only the question of
whether the testator, being of sound
mind, freely executed it in accordance
with the formalities prescribed by law;
(Valera vs. Inserto [1987])
4. When the provisions are unusual and of
dubious legality, the Court may pass upon
the will’s intrinsic validity even before its
formal validity had been established
because the probate of a will might
become an idle ceremony if on its face it
appears to be intrinsically void (Balanay v.
Martinez, 64 SCRA 452); or
5. When the instrument presented for
probate is denominated as a donation
mortis causa the issues of whether said
instrument is a donation mortis causa or
in fact a donation inter vivos, may be
passed by the probate court (Del Rosario v
Ferrer, 630 SCRA 683)
Witnesses to Probate
If the will is uncontested - court may grant
allowance thereof, on the testimony of one of
the subscribing witnesses only, if such witness
testifies that the will was executed as required
by the law. (Tolentino, Civil Code of the
Philippines Vol. III, Succession p. 153)
If contested - all the subscribing witnesses
present in the Philippines, and not insane,
must be produced and examined, and the
death absence, or insanity or any of them
must be satisfactorily shown to the court.
(Tolentino, Civil Code of the Philippines Vol. III,
Succession p. 153)
In case of death of the subscribing witnesses,
the court may admit the testimony of other
witnesses to prove the sanity of the testator,
and the due execution of the will (Tolentino,
Civil Code of the Philippines Vol. III, Succession p.
153)
Probate of Holographic wills
If the will is uncontested - it shall be
necessary that at least one witness who
knows the handwriting and signature of the
testator explicitly declare that the will and the
signature are in the handwriting of the
testator.
If the will is contested - at least three such
witnesses shall be required. In the absence of
any such witnesses, (familiar with decedent’s
handwriting) and if the court deems it
necessary, expert testimony may be resorted
to.
 The witnesses so presented do not need
to have seen the execution of the
holographic will. They may be mistaken in
their opinion of the handwriting, or they
may deliberately lie in affirming it is in the
testator’s hand. However, the oppositor
may present other witnesses who also
know the testator’s handwriting, or some
expert witnesses, who after comparing
the will with other writings or letters of
the deceased have come to the conclusion
that such will has not been written by the
hand of the deceased. (Gan v Yap, No. L-
12190. August 30, 1958)
The will shall be proved as a lost or
destroyed will if:
1. The execution and validity of the same be
established;
2. The will is proved to have been in
existence at the time of the testator, or is
shown to have been fraudulently or
accidentally destroyed in the lifetime of
the testator without his knowledge
3. Its provisions are clearly and distinctly
proved by at least 2 credible witnesses.
(Tolentino, Civil Code of the Philippines Vol. III,
Succession p. 153)
Note: A photostatic or Xerox copy of a lost or
destroyed will is admissible; comparison can
be made with standard writings of the
testators. (Tolentino, Civil Code of the Philippines
Vol. III, Succession p. 153)
Effect of probate of Wills:
1. Probate proceedings are in rem and
mandatory. If allowed, it becomes
conclusive as to its extrinsic validity which
provides that:
a. The testator was of sound mind when
he executed the will;
b. Testator was not acting under duress
or fraud; his consent was not vitiated;
c. The will was executed in accordance
with the formalities required by law;
and
d. The will is genuine and is not a
forgery.
2. Question regarding the intrinsic validity of
the will may still be raised.
3. Subject to appeal but once final, it
becomes conclusive.
 The probate of a will by the probate court
having jurisdiction thereof is usually
considered as conclusive as to its due
execution and validity, and is also
conclusive that the testator was of sound
and disposing mind at the time when he
executed the will, and was not acting
under duress, menace, fraud, or undue
influence, and that the will is genuine and
not a forgery. (Mercado vs. Santos, G.R. No.
45629, September 22, 1938)
Grounds for the disallowance of wills:
(Art. 839, NCC)
1. Formalities required by law have not been
complied with;
2. Testator was insane or mentally incapable
of making a will, at the time of its
execution;
3. Will was executed through force or under
duress, or the influence of fear, or
threats;
4. It was procured by undue and improper
pressure and influence, on the part of the
beneficiary or of some other person;
5. Signature of the testator was procured by
fraud;
6. Testator acted by mistake or did not
intend that the instrument he signed
should be his last will at the time of
affixing his signature thereto.
Note: The enumeration is exclusive. They
neither make the will void or valid. There is no
such thing as a voidable will.
Violence or intimidation
Serious or irresistible force is employed and
there is intimidation.
Fraud
If by misrepresentation and deception, the
testator is led into making a will different from
what he would have made but for the
misrepresentation and deception. (Jurado p.
157)
Mistake
Generally known as mistake in execution
(Jurado p. 158)
Undue pressure and influence
To be sufficient to avoid a will, the influence
exerted must be of a kind that so overpowers
and subjugates the mind of the testator as to
destroy his free agency and make him express
the will of another rather than his own; that
the exercise of improper pressure and undue
influence must be supported by substantial
evidence that it was actually exercised; that
the burden is on the person challenging that
will to show that such influence was exerted
at the time of its execution; that mere general
or reasonable influence is not sufficient to
invalidate a will; nor is moderate and
reasonable solicitation and entreaty addressed
to the testator. or omission of relatives, not
forced heirs, evidence of undue influence.
(Pascual vs. De la Cruz, G.R. No. L-24819. May 30,
1969)
Allegations of fraud and undue influence are
mutually repugnant and exclude each other;
their joining as grounds for opposing probate
shows absence of definite evidence against
the validity of the will. (Icasiano vs. Icasiano
G.R. No. L-18979. June 30, 1964)
Effect of Disallowance
If any of the above grounds for disallowance
is proved, the will shall be set aside as void.
(Rabuya, Civil Law Reviewer Vol. I, 2017, p 820)
Ratification
When a will is void because of non-compliance
with the formalities prescribed by law,
ratification is not possible. The testator should
republish it.
When the will is executed through violence,
intimidation, undue influence, fraud or
mistake, since we cannot exactly say that the
will is void or inexistent, ratification is
possible. (Jurado, Comments and Jurisprudence
on Succession, 2009 ed., p. 158-159)
Revocation Disallowance
Voluntary act of the Express deprivation of a
testator compulsory heir of his
legitime
With or without cause Must always be for a
legal cause
May be partial or total General Rule: Always
total
Exception: When the
ground of fraud or
undue influence, for
example, affects only
certain portions of the
will
(Paras, Civil Code III, Succession, p. 194)
J. INSTITUTION OF HEIRS
An act by virtue of which a testator designates
in his will the person or persons who will
succeed him in his property and transmissible
rights and obligation. (Art. 840, NCC)
However, a will shall still be valid even though
it should not contain an institution of heir, or
such institution should not comprise the entire
estate, and even though the person so
instituted should not accept the inheritance or
should be incapacitated to succeed. (Art. 841,
NCC)
Effect of Lack of Institution
1. In case of no institution of heir:
Rule: A will shall be valid even though it
should not contain an institution of heir or
even if the institution does not comprise the
entire estate. (Art. 841 [1], NCC)
Effect: If there is no institution of heir (which
includes the designation of devisees and
legatees), the estate shall pass to the legal
heirs by intestate succession. Likewise, if the
institution does not comprise the entire
estate, the remainder of the estate shall pass
to the legal heirs. (Art. 841 [2], NCC)
2. In case of repudiation or incapacity:
Rule: A will shall still be valid even though
the person so instituted should not accept the
inheritance or should be incapacitated to
succeed. (Art. 841 [1], NCC)
Effect: In such a case, the testamentary
dispositions made in accordance with law shall
be complied with and the remainder of the
estate shall pass to the legal heirs. (Art. 841
[2], NCC)
Extent of Freedom of Disposition
1. No Compulsory Heirs – May dispose by
will all of his assets or any part of it in
favor of any person having the capacity to
succeed. (Art. 842 [1], NCC)
2. With Compulsory Heirs – May dispose
of his estate provided he does not
contravene the provisions of the Civil
Code with regard to the legitime of said
heirs. (Art. 842 [2], NCC) (Rabuya, Civil Law
Reviewer Vol. I, 2017, p 821 -822)
How Designation is made:
General Rule: Heir must be designated by
his name and surname.
Qualification: Even when the name is
omitted but testator has designated the heir
in such a manner that there can be no doubt
as to who has been instituted, the institution
is valid.
1. If two or more persons have same
names: (Art. 843-844, NCC)
a. Testator must indicate some circumstance
by which the instituted heir may be
known;
b. If no such circumstance has been
provided, ambiguity may be resolved by
extrinsic evidence (other than the oral
declaration of the testator as to his
intention).
c. If there is similarity of circumstance,
ambiguity may be resolved by extrinsic
evidence (other than the oral declaration
of the testator as to his intention).
d. If there is similarity of circumstance and
the ambiguity cannot be resolved through
the use of other proof and the person
instituted cannot still be identified, none
shall be heir.
2. Disposition in favor of unknown person is
void, except:
a. If the identity can become certain by
some event or circumstance provided in
the will; or
b. A disposition in favor of a definite class or
group of persons is valid (Art. 845, NCC)
Designation of Shares:
If instituted without designation of shares,
they shall inherit in equal shares. (Art. 846,
NCC)
It should be understood as referring to heirs
who are of the same class or juridical
condition, and to the portion of the
inheritance of which the testator can freely
dispose. (Tolentino, Civil Code of the Philippines
Vol. III, succession p. 178)
The legitime must first be satisfied before the
instituted heirs without designation shall
inherit in equal shares.
Individual and Collective Institution: If
some are individually designated and others
collectively, those collectively designated are
considered as individually instituted unless it
clearly appears that the intention of the
testator was otherwise. (Art. 847, NCC)
E.g. “I designate as my heirs A and B and the
children of C.” - The children of C shall be
considered as individually instituted unless the
testator clearly intended otherwise.
Institution of Brothers and Sisters: If
instituted heirs are brothers and sisters, some
of full blood and some of half-blood, the
inheritance shall be distributed equally unless
a different intention appears. (Art. 848, NCC)
Note: In intestate succession, brothers and
sisters of the full blood shall be entitled to a
share double that of the brothers and sisters
of the half-blood. (Art. 1006, NCC)
Instituting a Person and the Latter’s
Children: When the testator calls to the
succession a person and his children they are
all deemed to have been instituted
simultaneously and not successively. (Art. 849,
NCC)
If the testator institutes “A” and his five
children as his heirs with respect to the
disposable free portion of the inheritance, it is
clear that such disposable portion shall be
divided equally among “A” and the five
children (Jurado, Comments and Jurisprudence on
Succession, 2009 ed. p.169)
Statement of False Cause (Art. 850, NCC)
General rule: Statement of a false cause for
the institution of an heir is considered not
written.
Exception: Unless it appears from the will
that the testator would not have made such
institution if he had known the falsity of such
cause.
Requisites for the Annulment of
Institution by Reason of False Cause:
1. The cause is stated in the will;
2. It is shown to be false; and
3. It appears on the will that the testator
would not have made the institution if he
had known the falsity of the cause.
Institution in aliquot parts
Institution of Only One Heir: If the
testator has instituted only one heir, and the
institution is limited to an aliquot part of the
inheritance, legal succession takes place with
respect to the remainder of the estate. (Art.
851, NCC)
E.g. Testator in his will wrote: “I hereby
institute my child, “A” as my heir who will
inherit 3/4 of my estate.” – Here, intestate
succession takes place to the remaining ¼ of
the estate.
Institution of Several Heirs: The same rule
applies, if the testator has instituted several
heirs each being limited to an aliquot part,
and all the parts do not cover the whole
inheritance.
E.g. Testator in his will wrote: “I hereby
institute my children “A,” “B” and “C” as my
heirs who will inherit 1/4, 1/8, and 1/8,
respectively, of my estate.” – Here, intestate
succession takes place to the remaining 1/2
of the estate.
However, if it was the intention of the testator
that the instituted heirs should become sole
heirs to the whole estate, or the whole free
portion, as the case may be, and each of
them has been instituted to an aliquot part of
the inheritance and their aliquot parts
together do not cover the whole inheritance,
or the whole free portion, each shall be
increased proportionally. (Art. 852, NCC)
If each of the instituted heirs has been given
an aliquot part of the inheritance, and the
parts together exceed the whole inheritance,
or the whole free portion as the case may be,
each part shall be reduced proportionally.
(Art. 853, NCC)
Preterition
The preterition or omission of one, some, or
all of the compulsory heirs in the direct line,
whether living at the time of the execution of
the will or born after the death of the testator,
shall annul the institution of heir; but the
devises and legacies shall be valid insofar as
they are not inofficious. If the omitted
compulsory heirs should die before the
testator, the institution shall be effectual,
without prejudice to the right of
representation. (Art. 854, NCC)
Requisites:
a. The heir omitted must be a
compulsory heir in the direct line;
(Jurado, Comments and Jurisprudence on
Succession, 2009 ed. p.174)
 Even if the surviving spouse is a
compulsory heir, there is no preterition
even if she is omitted from the
inheritance, for she is not in the direct
line.
Preterition applies also to legally adopted
child. Under Article 39 of P.D. No. 603,
known as the Child and Youth Welfare
Code, adoption gives to the adopted
person the same rights and duties as if he
were a legitimate child of the adopter and
makes the adopted person a legal heir of
the adopter. (Acain vs. Intermediate
Appellate Court Gr. No. L-72706. October
27,1987)
All persons who are compulsory heirs are
included within its scope, including
illegitimate children and illegitimate
father or mother. (Tolentino, Civil Code of
the Philippines Vol. III, Succession p. 189)
b. The omission must be complete and
total in character in such a way that
the omitted heir does not and has
not received anything at all from the
testator by any title whatsoever; and
(Jurado, Comments and Jurisprudence on
Succession, 2009 ed. p.174)
There is total omission, when the testator
does not disinherit the heir, but leaves him
nothing of the hereditary estate, whether or
not he is mentioned in the will. (Tolentino, Civil
Code of the Philippines Vol. III, Succession, p.188)
If the omission of the heir is intentional, it is
not a case of preterition but of a defective
disinheritance.
 If the heir was given a share, even if very
small or minimal, there is no preterition.
All he has to do is ask for the completion
of his share. (Reyes v. Barreto-Datu, 19 SCRA
85)
c. The compulsory heir omitted should
survive the testator. (Jurado, Comments
and Jurisprudence on Succession, 2009 ed.
p.174)
E.g. Testator with an estate of 10M was
survived by his legitimate children, A, B and C,
and wife, W. During his lifetime, he gave a
donation to B worth 2M.
1. If Testator institutes B, C and W as his sole
heirs, is there preterition?
Answer: Yes, A was omitted. “A” being a child
is a compulsory heir in the direct line.
2. What if B was omitted?
Answer: No. B received a donation of 2M from
testator, hence, omission was not complete
and total in character.
3. What if wife W was omitted?
Answer: No. Wife W, though a compulsory
heir, is not a compulsory heir in the direct
line.
Effects of Preterition:
1. It annuls entirely the institution of heirs.
2. But legacies and devises shall be valid
insofar as they are not inofficious. (Art. 854,
NCC)
E.g. Testator with an estate of 10M was
survived by his legitimate children, A, B and C,
and wife, W. He instituted his children A and Step 4: Get total share
B as well as wife W as sole heirs. He also left
a legacy of 100K to his beloved friend, F. A 2,475,000.00
Legitime plus
1. Is there preterition?
B Voluntary Share 2,475,000.00
2. Distribute the estatate.
(Hence,
C 1,666,666.67 + 2,475,000.00
Answer to No. 1: Yes, child C, a compulsory
808,333.33)
heir in the direct line was omitted. W 2,475,000.00

Answer to No. 2: The institution of A, B an W F Legacy 100,000.00

will be annulled. Their shares will be
computed based on their legitimes and the
free portion shall be divided equally among A,
B, C and W. Legacy to F will be satisfied, if it
is not inofficious and from the free portion, if
any. Hence:
Step 1: Satisfy respective legitimes
Heir Legitime Amount of Legitime
Total 10,000,000.00
In defective disinheritance, there is no
annulment of the institution of heirs but the
disinherited heir shall only be entitled to the
restoration of anything to which he is entitled
by operation of law.

A 1,666,666.67 Preterition Disinheritance

1/2
Omission in the Deprivation of a
B (Hence, 5M 1,666,666.67 testator’s will of any of compulsory heir of his
divided by 3) the compulsory heirs in legitime through a
C 1,666,666.67 the direct line testamentary disposition
Presumed to be Always voluntary
W Same as 1 child 1,666,666.67
involuntary
Results to the Results to the
Total 6,666,666.67
annulment of the annulment of the
institution of heirs in institution of heirs but
Step 2: Satisfy legacy from free portion
toto but devises and only in so far as it may
legacies remain valid in prejudice the person
F Total of legitime 100,000.00
so far as they are not disinherited
is less than 10M,
in officious
hence, legacy can (Rabuya, Civil Law Reviewer Vol. I, 2017, p 832-836)
be satisfied
The share of a child or descendant omitted in
Total 100,000.00
a will must first be taken from the part of the
Step 3: Distribute the remaining free portion
estate not disposed of by the will, if any; if
among the heirs
that is not sufficient, so much as may be
necessary must be taken proportionally from
Amount of the shares of other compulsory heirs. (Art. 855,
Heir Free Portion NCC)
Voluntary Share

A 808,333.33 Effect of Predecease, Incapacity and

Equally divided Repudiation
B 808,333.33
(Hence, 10M less
6,666,666.67 A voluntary heir who dies before the
C 808,333.33 testator transmits nothing to his heirs. (Art.
divided by 4)
856, NCC)
W 808,333.33
A compulsory heir who dies before the
testator, a person incapacitated to succeed,
and one who renounces the inheritance, shall
transmit no right to his own heirs except in
cases expressly provided for in this Code. (Art.
856, NCC)
Right of Representation in Testamentary
Succession
When Allowed: Representation is allowed
with
respect to the legitime, in case of a
compulsory heir in the descending line when
such heir dies before the testator
(predecease) or is incapacitated to succeed or
validly disinherited
Not Allowed: In case of heirs who
repudiated their share. A voluntary heir
cannot likewise be represented.
K. SUBSTITUTION OF HEIRS
It is the designation by the testator of a
person or persons to take the place of the heir
or heirs first instituted. (Tolentino, Civil Code of the
Philippines Vol. III, p.201)
Substitution is the appointment of another
heir so that he may enter into the inheritance
in default of the heir originally instituted.
(Art.857, NCC)
Effects of substitution
General Rule: The substitute is subrogated
in the rights of the heir. (Art. 862, NCC)
Exceptions:
1. When the testator expressly provides the
contrary. The will of the testator is the
supreme law in the succession.
2. When the condition is personal to the
heir. It is impossible for the substitute to
have exactly taken into account by the
testator in making his institution. (Tolentino,
Civil Code of the Philippines Vol. III, succession,
p.209)
Kinds of Substitution
1. Simple — When a testator designates
one or more persons to substitute the heir
or heirs instituted in case such heir or
heirs should die before him, or should not
wish, or should be incapacitated to accept
the inheritance. (Art. 859, NCC)
Simple substitution is extinguished:
a. by the nullity of the will
b. the annulment of the institution of heir
c. by the death of the substitute before the
testator
d. when the substitute himself is
incapacitated to succeed the testator, and
e. when the substitute repudiates or
renounces the inheritance. (Tolentino, Civil
Code of the Philippines Vol. III, Succession, p.206)
Variations of Simple substitution
a. Brief – when 2 or more persons are
designated to substitute for one heir, (Art.
860, NCC)
b. Compendious – when there is only one
designated to substitute for 2 or more
heirs. (Art. 860, NCC)
Note: If the substitutes named for any or all
of several heirs instituted, substitution will
take place even if only one renounces the
inheritance, but only with respect to the share
of such instituted heir. (Tolentino, Civil Code of the
Philippines Vol. III, Succession, p. 207)
c. Reciprocal – when two or more persons
are reciprocally substitutes for each other.
(Art. 861, NCC)
2. Fideicommissary – When the testator
leaves his property to one person with the
express charge that it be transmitted to
another or others. (Art. 863, NCC)
Fideicommissary Substitution
Requisites: (Art. 863-865, NCC)
a. A first heir called primarily to the
enjoyment of the estate (called
fiduciary);
Recognized as an instituted heir, and is
entitled to the enjoyment of property but
he cannot alienate it. (Tolentino, Civil Code of
the Philippines Vol. III, Succession, p. 210-211)
b. An obligation clearly imposed upon
the first heir to preserve and
transmit the whole or part of the
estate; and
 In the absence of an obligation on the
part of the first heir to preserve the
property for the second heir, there is no
fideicommissary substitution. (PCIB vs.
Escolin [1974])
c. A second heir to whom the property
is transmitted by the first heir (called
the fideicommissary).
Persons conceived are considered living,
provided they are subsequently born with the
requisites for civil personality. (Tolentino, Civil
Code of the Philippines Vol. III, Succession, p. 213)
The second heir shall acquire a right to the
succession from the time of the testator’s
death, even though he should die before the
fiduciary. The right to second heirs shall pass
to his heirs. (Art. 866, NCC)
Limitations upon Fideicommissary
Substitution—
1. The substitution must not go beyond one
degree from the heir originally instituted.
One degree means one generation. (Art.
863, NCC)
2. Both the fiduciary and fideicommissary
must be living at the time of death of
testator. (Art. 863, NCC)
3. Substitution must not burden the legitime.
(Art. 864, NCC)
4. Substitution must be expressly made. (Art.
865, NCC)
Effects of Valid Fideicommissary
Substitution:
1. The right of the first heir with respect to
the property is similar to that of a
usufructuary. He is obliged to preserve
and transmit the inherited property to the
second heir.
2. The time of transmission depends upon
the intention of the testator. If not
provided for, it is understood to be at the
time of death of the first heir.
A provision whereby the testator leaves to a
person the whole or part of the inheritance,
and to another the usufruct shall be valid. If
he gives the usufruct to various persons, not
simultaneously, but successively the
provisions of Art. 863 shall apply.
Void Fideicommisssary Substitution (Art.
867, NCC)
1. Fideicommissary substitution not made in
an express manner;
2. Provisions which contain a perpetual
probation to alienate, and even a
temporary one beyond the time limit fixed
in Art. 863;
3. Those which impose upon the heir the
charge of paying to various persons
successively beyond the limits prescribed
in Art. 863, e.g. a certain income or
pension;
4. Those which leave to a person the whole
or part of the hereditary property in order
that he may apply or invest the same
according to secret instructions
communicated to him by the testator.
The dispositions of the testator declaring all
part of the estate inalienable for more than 20
years are void. (Art. 870, NCC)
Effect of Void Fideicommissary
Substitution
If the foregoing limitations are violated, the
fideicommissary substitution is considered as
not written but the validity of the institution of
the first heir is not affected.
The nullity of the fideicommissary substitution
does not prejudice the validity of institution of
the heirs first designated; the fideicommissary
clause shall simply be considered as not
written.
Hence, the first heir acquires the inheritance
without the obligation of transmitting the
same to the second heir.
L. CONDITION, MODE AND TERM
Conditional Testamentary Disposition –
when the acquisition or extinguishment of
successional rights is made to depend upon
the happening or non-happening of a future
and uncertain event. (Rabuya, Civil Law Reviewer,
Vol. I, 2017, p 849)
2. Condition Not to Marry (Art. 874)
a. An absolute condition not to contract a
first or subsequent marriage is not a valid
condition, except if imposed on the widow
or widower by the deceased spouse or by
the latter’s ascendants or descendants.
b. But if the prohibition is relative with
respect to persons, time or place, such
condition is valid and must be complied
with unless the testator practically renders
it impossible for the heir to marry at all.
3. Disposition Captatoria (Art. 875, NCC)
One which imposes as condition that the heir
shall make some provision in his will in favor
of the testator or of any other person. Such
disposition is void, without affecting the other
provisions of the will.
Kinds of Conditions

The institution of an heir may be made 1. With regard to the cause upon which
conditionally, or for a certain purpose or their fulfillment depends:
cause. (Art. 871, NCC)
Potestative Casual Mixed
Conditions imposed by the testator upon the One which One that does It depends
heirs shall be governed by the rules depends not depend jointly upon
established for conditional obligations in all exclusively upon upon the will the will of the
matters not provided for by this section. (Art. the will of the of the heir, heir, devisee,
88, NCC) heir, devisee, or devisee, or or legatee and
legatee, and legatee, but upon chance
General rule – Testator is free to impose any must be upon the and/or the will
performed by chance and/or of a third
condition, mode or term on testamentary
him personally. upon the will person.
dispositions. (Tolentino, Civil of a third (Tolentino, Civil
Code of the person. Code of the
Exception – But the testator cannot impose Philippines Vol. III, (Tolentino, Civil Philippines Vol.
upon the legitime any burden, encumbrance, succession, p. 234) Code of the III, succession,
Philippines Vol. p. 234)
charge, term, condition or substitution of any
III, succession,
kind whatsoever. Should he do so, the same p. 234)
is considered as not imposed (Art. 872, NCC).
Impossible Conditions It must be It shall be sufficient that it
fulfilled by him as happens or be fulfilled at any
1. Effect – Impossible conditions and those soon as he learns time before or after the death
contrary to law or good customs in of the testator’s of the testator, unless he has
testamentary dispositions shall be death. provided otherwise.
considered as not imposed and shall not
This rule shall Should it have existed or should
affect the validity of the disposition (Art. not apply when it have been fulfilled at the time
873). the condition, the will was executed and the
already complied testator was unaware thereof, it
 with cannot be shall be deemed complied with. placed under administration. If it becomes
fulfilled again. certain that the condition will not be
(Art. 876) If he had knowledge thereof, fulfilled, the same must be delivered to
the condition shall be the substitute (if one is provided), or to a
considered fulfilled only when it
co-heir (if accretion is proper) or to the
is of such nature that it can no
longer exist or be complied with legal heirs. (Rabuya, supra, at 851)
again (Art. 877)

Negative Potestative Condition (Art. 879,
NCC)
Potestative Conditions which are negative in
character (Jurado, Comments and Jurisprudence on
Succession, 2009 ed. p. 224).
If the heir be instituted under a suspensive
term or condition, the estate shall be placed
under administration until the condition is
fulfilled, or until it becomes certain that it
cannot be fulfilled, or until arrival of the term.
(Art. 880, NCC)

The heir shall comply by giving a security that The law governing administration is the Rules
he will not do or give that which has been of Court (Art. 881, NCC)
prohibited by the testator, and that in case of
contravention he will return whatever he may b. Resolutory Condition - Successional
have received, together with its fruits and rights are acquired immediately upon the
interest. death of the testator but subject to
extinction upon the happening of the
Such security or bond is known as “caucion condition. (Art. 1181 in relation to Art. 884, NCC)
muciana” which will answer for his violation in
case he cannot return what he may have If the condition is fulfilled, the instituted
received heir loses his right over the inheritance
and the same shall be passed on to the
2. With regard to their effects substitute (if one is provided), or to a co-
heir (if accretion is proper) or to the legal
a. Suspensive Condition - Successional heirs. (Rabuya, supra, at 851)
rights are transmitted only upon the
happening of the condition, although the Condition vs. Term
effects thereof retroact to the moment of
the death of the testator. Hence – Condition Term
A condition is an uncertain A term is sure to
1. The capacity of the heir is determined, event which may or may happen or to arrive,
not only at the time of the testator’s not happen (Tolentino, Civil even if the exact date
Code of the Philippines Vol. of such happening or
death, but also at the time of the III, succession, p. 236) arrival may be
happening of the condition. (Art. 1034, NCC) uncertain (Tolentino,
Civil Code of the
2. If the conditional heir dies before the Philippines Vol. III,
happening of the condition, although he succession, p. 236)
dies after the testator’s death, his The acquisition of the The right is already
capacity to succeed terminates and thus right of the heir depends transmitted to the heir
renders the testamentary disposition upon the happening of the upon the death of the
inoperative and without effect. (Rabuya, Civil condition, such that if the testator (Tolentino, Civil
Law Reviewer Vol. 1, 2017, 850) condition does not Code of the Philippines
happen, the heir does not Vol. III, succession,
3. After the death of the testator but prior to succeed. (Tolentino, Civil p.236)
the fulfillment of the condition, the Code of the Philippines Vol.
inheritance or property involved shall be
 III, succession, p. 236)
Art. 885 - The designation of the day or time
when the effects of the institution of an heir
shall commence or cease shall be valid.
In both cases, the legal heir shall be
considered as called to succession until the
arrival of the period or its expiration. But in
the first case (commence) he shall not enter
into possession of the property until after
having given sufficient security, with the
intervention of the instituted heir.
Suspensive Term - The inheritance can be
delivered to the heir only upon the arrival of
the term. (Tolentino, Civil Code of the Philippines Vol.
III, Succession, p. 236)
If the legal heirs cannot file the required bond
or security, then the inheritance or property
shall be placed under administration. (Jurado,
Comments and Jurisprudence on Succession, 2009 ed., p.
231)
Resolutory Term - The inheritance is
delivered immediately to the instituted heir,
who holds it until the arrival of the period
(Tolentino, Civil Code of the Philippines Vol. III,
succession, p. 236)
As a consequence, the inheritance devise or
legacy shall pass to the legal heirs of the
testator. (Jurado, Comments and Jurisprudence on
Succession, 2009 ed., p.232)
Modal Institution
Modal institution - the institution of an heir
made for a certain purpose or cause. (Art 881
and 882, NCC)
While a condition suspends, but does not
obligate, a mode obligates, but does not
suspend.
In case of doubt, the institution, devise or
legacy must be considered as modal. (Jurado,
Comments and Jurisprudence on Succession, 2009 ed., p.
229)
1. In a modal institution, the testator states:
(1) the object of the institution, or (2) the
purpose or application of the property left
by the testator, or (3) the charge imposed
by him upon the heir.
2. As a rule, an obligation imposed upon an
heir is not considered a condition unless it
clearly appears that such was the
intention of the testator.
3. Effect of mode: The instituted heir can
claim immediately the delivery of the
inheritance subject to the giving of
security or bond for the compliance of his
obligation. In case of failure to comply
with the obligation, the instituted heir
shall be compelled to return whatever he
may have received by virtue of the
institution, together with their fruits and
interests.
Constructive Compliance (Art. 883, NCC)
When without the fault of the heir, an
institution referred to in the preceding article
cannot take effect in the exact manner stated
by the testator, it shall be complied with in a
manner most analogous to and in conformity
with his wishes.
If the person interested in the condition
should prevent its fulfillment, without the fault
of the heir, the condition shall be determined
to have been complied with.
Note: Both paragraphs are applicable
whether the institution of heirs, devise or
legacy is modal or conditional in character.
(Jurado, Comments and Jurisprudence on Succession,
2009 ed., p. 229)
Doctrine of Constructive Compliance
does not apply to casual conditions
In case of casual conditions, since their
performance does not depend on the will of
the heir, devisee or legatee, there must
always be fulfillment as a fact or actual
compliance. (Tolentino, Civil Code of the Philippines
Vol. III, Succession, p. 235)
M. LEGITIME
 Compulsory heirs - In general, compulsory
That part of the testator’s property which he heirs are those for whom the law has reserved
cannot dispose of because the law has a portion of the testator’s estate which is
reserved it for certain heirs, who are therefore known as the legitime. (Art. 887)
called compulsory heirs. (Art. 886, NCC)
General Rule: The testator cannot deprive
his compulsory heirs of their legitime. Neither Legitimate Testator Illegitimate Testator
can he impose upon the same burden, Legitimate children Legitimate children and
encumbrance, condition, or substitution of any and descendants descendants
kind whatsoever. (Art. 904, NCC) In default of the Illegitimate children and
foregoing, legitimate descendants
parents and
Exceptions:
ascendants
Surviving spouse In default of the
1. Valid and effective disinheritance (Art. 915, foregoing, illegitimate
NCC); parents only
2. The testator may forbid the partition of Illegitimate children Surviving spouse
the inheritance including the legitime for
not more than 20 years (Art. 1083, NCC) Kinds of Compulsory Heirs
3. Reserva Troncal (Art. 891, NCC)
4. Family Home Legitimate Testator Illegitimate Testator
1. Primary Heirs: Those who have precedence and
Every renunciation or compromise as exclude other compulsory heirs
regards a future legitime between the
person owning it and his compulsory a. Legitimate a. Legitimate children
heirs is void. (Art. 905, NCC) children and and descendants
descendants - an
Reason: The heir does not acquire any right adopted child or
over the same until the death of the testator. legitimated child falls in
(Tolentino, Civil Code of the Philippines Vol. III, this category
Succession, p. 323) 2. Secondary Heirs: Those who succeed only in the
absence of the primary heirs
The compulsory heir may claim the same a. Legitimate parents a. Illegitimate parents
upon death of the decedent but they must and ascendants - only - excluded by
bring to collation or whatever they may have excluded by legitimate legitimate and illegitimate
received by virtue of the renunciation or children and children and descendants
compromise. descendants
3. Concurring: Those who succeed together with
Incomplete legitime the primary or the secondary heirs.

a. Surviving spouse – a. Surviving spouse –

Any compulsory heir to whom the testator has the innocent spouse in the innocent spouse in
left by any title less than the legitime case of legal separation case of legal separation
belonging to him may demand the same be remains to be a remains to be a
fully satisfied. (Art. 906, NCC) compulsory heir of the compulsory heir of the
other spouse other spouse
Testamentary dispositions that impair or b. Illegitimate b. Illegitimate children
diminish the legitime of the compulsory heirs children - note that they become
primary heirs in default of
shall be reduced on petition of the same,
legitimate children and
insofar as they may be inofficious or descendants thereby
excessive. (Art. 907) excluding illegitimate
parents
(Rabuya, Civil Law Reviewer Vol. 1, 2017, p 860-875)
 SS Surviving Spouse
Steps in determining the legitime of CH Compulsory Heirs
compulsory heirs (Art. 908) FP Free Portion

1. Determination of the gross value of the SURVIVOR LEGITIME NOTES

estate at the time of the death of the 1. When compulsory heir/s of the same kind
testator; survive alone
2. Determination of all debts and charges 1LC ½ of the
which are chargeable against the estate; whole Whether they survive
estate alone or with
3. Determination of the net value of the
2 or more ½, to be concurring CH, Art.
estate by deducting all the debts and 888
LCs divided
charges from the gross value of the equally
estate;
4. Collation- or addition of the value of all LPA ½
donations inter vivos to the net value of
the estate;
5. Determination of the amount of the
legitime from the total thus found; IP ½ Parents of illegitimate
6. Imputation of the value of all donations children are
inter vivos made to compulsory heirs compulsory heirs of
the latter only in the
against their legitime and of the value of
case, when such child
all donations inter vivos made to leaves neither LC, nor
strangers against the disposable free a SS, nor IC. (Art.
portion and restoration to the hereditary 903)
estate if the donation is inofficious; and SS 1/2 Art.900
7. Distribution of the residue of the estate in 1/3 if marriage is in
accordance with the will of the testator. articulo mortis and
ailing spouse dies
Rules on Donation within 3 mos. After
the marriage. But if
parties have been
1. Donations given to children shall be cohabiting as H & W
charged to their legitime. (Art. 909) for more than 5 years
2. Donations made to strangers shall be prior to marriage, SS
charged to the free portion. (Art. 909) is entitled to ½.
3. Donations which an illegitimate child IC ½ Divide equally among
may have received during the lifetime of the IC
his father or mother, shall be charged to 2. When Primary concurs with compulsory
his legitime (Art. 910) heirs
1LC; ½ Art. 888 and 892
Note: Donations are subject to reduction in SS ¼
cases they are inofficious or if they exceed the Legitime of SS shall
disposable portion. be taken from the FP.

In case of legal
Amount of Legitime separation, the SS
may inherit if it was
LEGEND: the deceased who
LC Legitimate Children, including adopted and had given cause for
legitimated children the same. The rule is
subject to
LPA Legitimate Parents/Ascendants;
reconciliation
IC Illegitimate Children;
LC; ½ of the Art. 888 and 892 (2)
IP Illegitimate Parents;
 whole equal
SS estate portions
divided in
equal Sample Problem: Testator with an estate of
portions;
1.0M was survived by his 2 LC, 4 ILC, spouse,
share of
that equal 5 siblings and father. (1) Who are the
to a child compulsory heirs? (2) What is the legitime of
each?
LC ½, in equal Art. 888 and Art. 176
IC portions; of FC Answer:
½ share of 1. 2 LC, 4 ILC and spouse
each LC
1 LC ½ Art.888, 892 (1) and
Note: Siblings are not one of the compulsory
SS ¼ Art. 176 of the FC
IC ½ of LC heirs while the testator’s father being a
All the concurring CH secondary heir is excluded by the primary
get from the free heirs.
portion.
The share of the SS 2. Legitime of:
has preference over
that of the IC, whose
2 LC (½): 1.0M x ½ = 500K
share may suffer
reduction pro rata in 500  2 = 250K for each LC
case of insufficiency.
LC ½ in equal Art. 892 (2), 897 and Spouse (same as 1 LC): 250K
IC proportions 888.
SS ; 4 ILC (1/2 of 1 LC share): 250K  2 = 125K
½ of LC;
equal to Note that 125k multiplied to 4 is
1LC
500K, hence, the remaining amount
3. When secondary concurs with concurring
compulsory heirs of the estate is not sufficient. In such
LPA ½ IC succeed in the ¼ case, the 4 ILC will suffer a pro rata
IC ¼ in equal shares, reduction, hence -
Art.896; Note: Share
of IC taken from free 1.0 M – (500K + 250K) = 250K
portion 250K  4 = 62.5K for each ILC
LPA ½ Art. 889 and 893
SS ¼
LPA ½ Art. 899
SS 1/8 - FP Children and Descendants (Art. 888):
IC ¼ - FP 1. Legitimate
IP Excluded; Children inherit in the
Any Child It depends amounts established This class includes legitimate children or
whether in the foregoing descendants proper, legitimated children or
the child is rules; descendants, and adopted children. (Jurado,
legitimate Comments and Jurisprudence on Succession, 2009 ed., p.
or not 236)
IP ¼ Only the IP are CH.
SS ¼ Other ascendants are Their legitime is ½ of hereditary estate of the
excluded. Art.903 decedent, which is to be distributed equally
4. Concurrence among concurring among the children.
compulsory heirs
SS 1/3 Art.894
IC 1/3 in
The decedent may freely dispose the
remaining half, subject to the rights of
illegitimate children and the surviving spouse.
In case of different degrees of the decedent’s
descendants, the proximity rule should apply.
In every inheritance, the relative nearest in
degree excludes the more distant ones, saving
the right of representation when it properly
takes place. (Jurado, Comments and Jurisprudence on
Succession, 2009 ed., p. 243)
2. Illegitimate
The basis for the computation of the legitime
of illegitimate children is the legitime of each
legitimate child. Each illegitimate child is
entitled to ½ of the legitime of a legitimate
child.
Limitations
1) Their filiation must be proved
2) Shares are taken from the free portion
3) If there is a surviving spouse concurring
with legitimate and illegitimate children,
the legitime of the surviving spouse must
first be satisfied before the legitimes of
the illegitimate children.
4) In case the total amount of the legitimes
of all illegitimate children exceeds what
remains of the free portion after
deducting the legitime of the surviving
spouse, they are subject to reduction.
(Tolentino, Civil Code of the Philippines Vol. III,
Succession, p. 312)
Parents and Ascendants:
Their legitime is ½ of hereditary estate of
their children and descendant. (Art. 889, NCC)
In case of an in illegitimate parent
The illegitimate parents of the deceased are
compulsory heirs only when the latter does
not have legitimate or illegitimate children or
descendants. (Tolentino, Civil Code of the Philippines
Vol. III, Succession, p. 321)
The presence of surviving spouse of the
deceased, however, does not exclude
illegitimate parent as a compulsory heir.
(Tolentino, Civil Code of the Philippines Vol. III,
Succession, p. 321) The legitime is ¼ for the
illegitimate parent and ¼ for the surviving
spouse.
In case of an Adopting Parents
The adoption shall give the adopter and
adoptee reciprocal rights and obligations
arising from the relationship of parent and
child, including but not limited to: xxx ii. the
rights of the adopter and adoptee to be legal
and compulsory heirs of each other. (Sec. 33,
Art. VI, Rules and Regulations to Implement Domestic
Adoption Act of 1998)
Shares in Legitime (Art. 890, NCC)
If both mother and father survive, they divide
the legitime equally; but if only one of them
survives, he gets the entire legitime. (Tolentino,
Civil Code of the Philippines Vol. III, Succession, p. 266)
Surviving Spouse
The condition of being a surviving spouse
requires that there should have been a valid
marriage between the deceased and the
survivor. (Tolentino, Civil Code of the Philippines Vol.
III, Succession, p. 257)
The marriage must be subsisting at the time
of the death of one parties, in order that the
survivor can be called a widow or widower
and thus be entitled to a legitime. (Tolentino,
Civil Code of the Philippines Vol. III, Succession, p. 259)
Art. 900
General Rule: If the only survivor is the
spouse, the legitime is ½ of hereditary estate
of the decedent.
Exception: If marriage is in articulo mortis,
and the testator died within 3 months form
marriage, the legitime is 1/3.
Exception to the Exception: When they
have been living as husband and wife for
more than 5 years. Legitime is ½.
Effect of legal separation
1. The widow or widower will be entitled to
succeed only when he or she is the
innocent spouse.
2. If death should occur during the
pendency of the legal separation
proceedings, the result of the suit should
be awaited.
3. To exclude from legitime the guilty
spouse.
4. If after such reconciliation, one of the
spouses should die, the survivor gets his
or her legitime, regardless of whether he
or she is the guilty party. Tolentino, Civil Code
of the Philippines Vol. III, Succession, p. 259-260)
Reserva Troncal or Reserva Lineal
Note: GF=grandfather, F=father, M=Mother
The reservation by virtue of which an
ascendant (called reservista) who inherits by
operation of law from his descendant (called
propositus) any property which the latter may
have acquired by gratuitous title from another
ascendant, or a brother or sister, is obliged to
reserve such property (called reserve) for the
benefit of relatives (called reservatarios) who
are within the third degree and who belong to
the same line from which said property came
(Art. 891, NCC).
Purpose:
1. To reserve certain property in favor of
certain relatives. (Tolentino, Civil Code of the
Philippines Vol. III, Succession, p. 270)
2. To prevent persons who are strangers to
the family from acquiring by some chance
or accident, property which would have
remained with said family.
Requisites of Reserva Troncal: (Art. 891;
Chua v. CFI of Negros Occidental, Branch V, 78 SCRA
412, 1977)
1. Property previously acquired by gratuitous
title (e.g. donation or succession) by the
descendant (propositus) from another
ascendant or from a brother or sister
(origin);
2. Descendant-praepositus should have died
without any legitimate issue;
3. Property should have been acquired by
operation of law (intestate or compulsory
succession) by an ascendant (reservista)
from the descendant-praepositus; and
4. There are living relatives within the third
degree counted from the descendant-
praepositus and belonging to the same
line from where the property originally
came (reservatarios).
In order that the reserve will exist, all the
foregoing persons should be legitimately
related.
To be a reservatario, the relative must be:
a. Within third degree of consanguinity
from the descendant-praepositus;
b. Belong to the same blood line from
which the property came; and
c. Should be related by blood not only
from the praepositus but also from
the person from whom the property
originally came.
d. Able to survive the reservista.
The reservatarios inherit from the descendant-
praepositus and not from the reservista. This
is a case of delayed succession.
Among the reservatarios, the rules on
intestate succession should be applied.
Relatives who are within the third
degree that is capable to be a
reservatorio
1st degree Father or Mother
2nd degree a. Grandparents of the line from
which the property came.
b. Full blood brothers or sisters
c. Half blood brothers or sisters from
which the property came.
3rd degree a. Great-grandparents
b. Uncles by consanguinity (full or half
blood brothers or sisters of the
father or mother)
c. Nephews and nieces (children of
full or half blood brothers or sisters
of the descendant)
Preference among Reservees
While all relatives within the third degree, as a
group are called to succeed as reserves, as
among themselves the rules of intestacy will
apply, particularly Articles 1001, 1004, 1005
and 1009 in this case. (Tolentino, Civil Code of the
Philippines Vol. III, Succession, p. 280)
Effects of Reserva Troncal:
1. The reserve creates two resolutory
conditions: (a) death of the reservista;
and (b) survival, at time of the reservista’s
death, by reservatario. Hence, the
reservista has the legal title and dominion
to the reservable property but subject to
the happening of the resolutory
conditions.
2. During the lifetime of the reservista, the
reservatario merely has contingent or
inchoate rights or a mere expectancy; the
reservista is the owner of the property
subject to a resolutory condition.
3. If the resolutory conditions are fulfilled,
then the property should be conveyed to
the reservatarios.
Rights of the Reservista
1. Reservista’s right over the property is that
of ownership;
2. It is subject to a resolutory condition
which is that the reservatarios survive the
reservista’s death;
3. It is alienable but subject to the same
resolutory condition. The buyer’s
ownership is subject to the same
resolutory condition;
4. It is registrable.
Obligations of Reservista
1. To annotate in the Registry of Deeds the
reservable character of the immovable;
2. To make an inventory of all the reservable
property;
3. To constitute a mortgage or give security
to guaranty, upon his death, the delivery
to the reservatarios the personal property,
the value of properties, movable or
immovable, that has been alienated, and
the reimbursement of deteriorations
occasioned by his fault or negligence;
(Tolentino, Civil Code of the Philippines Vol. III,
Succession, p. 292)
 Reservista has a period of 90 days from
the time the reserve arises, in which to
register the reservable character of the
property; if he does not voluntary cause
the registration, reservatarios may
judicially demand that he be compelled to
make it. (Tolentino, Civil Code of the Philippines
Vol. III, succession, p.292)
4. To appraise the value of all reservable
movable property.
Rights of the Reservatarios
1. Their right over the property during the
life of the reservista is a mere expectance
2. The expectancy is subject to a suspensive
condition which is that the reservatarios
are alive at the death of the reservista.
3. The right of expectancy can be alienated
but it will be subject to the same
suspensive condition.
4. The right of expectancy is registrable. It
must be annotated at the back of the title
 to protect the reservatarios from innocent
purchasers for value.
 The reservista cannot execute a will
disposing the reservable property because
it does not belong to him as his estate.
The property belongs to the reservatarios,
if they are existing upon the reservista’s
death. (Cano v. Director of Lands, 105 Phil, 1)
 The reservista may dispose of the
reservable property by acts inter vivos.
This is logical because it acquires the
ownership of the reservable property
upon the death of the descendant-
praepositus, subject to the resolutory
condition that there must exist at the time
of his death relatives of the descendant
who are within the third degree and who
belong to the line from which the property
came. He can, therefore, alienate or
encumber the property if he so desires
but he will only alienate or encumber
what he has and nothing more. (Lungsod v.
Ortega, 46 Phil. 664)
Property subject to reserve
The property which has been acquired by the
descendant gratuitously should pass to the
ascendant reservista by operation of law in
order to be reservable.
General Rule: The reservista cannot
substitute them with others.
Exception: In case of loss by fault of the
reservista, or alienation of the property, or if
the things are fungible, it is inevitable that
substitution with other property or the
payment of a sum of money should be
allowed. (Tolentino, Civil Code of the Philippines Vol.
III, Succession, p. 283)
N. DISINHERITANCE (Art. 915, NCC)
It is a testamentary disposition by which a
compulsory heir is deprived of, or excluded
from, the inheritance to which he has a right.
Disinheritance is not automatic. There must
be evidence presented to substantiate the
disinheritance and must be for a valid and
sound cause.
Requisites for a valid disinheritance
1. Disinherited heir must be designated in a
manner that there is no doubt as to his
identity;
2. Effected through a valid will (Art. 916, NCC);
3. For causes provided by law (Art. 918, NCC);
4. Legal cause must be specified in the will
itself (Art. 916, NCC);
5. Cause must be true and proven to be true
if challenged by the person disinherited
(Art. 918, NCC);
6. Unconditional (refers to suspensive
condition) and total. (Rabuya, Civil Law
Reviewer Vol. I, 2017, p 902)
Implications of disinheritance
1. Only compulsory heirs can be disinherited,
for they alone are entitled to the legitime.
2. Since compulsory heirs may be
disinherited only for lawful cause, it is
clear that the courts may properly inquire
into the validity of the disinheritance.
3. Disinheritance excludes the heirs not only
from the legitime but also from the free
portion.
Effects of a valid disinheritance:
1. Deprivation of the disinherited compulsory
heir from any participation in the
inheritance.
2. Children and descendants of the person
disinherited shall take his or her place and
shall preserve the rights of compulsory
heirs with respect to the legitime. In other
words, a disinherited heir may still be
represented.
3. A disinherited parent shall not have the
usufruct or administration of the property
which constitutes the legitime.
Imperfect/Invalid Disinheritance IMPERFECT
PRETERITION
DISINHERITANCE
Express attempt of the testator to deprive a Person disinherited Person omitted must
compulsory heir of his legitime without must be any compulsory be a compulsory heir
heir. in the direct line.
complying with the requisites / formalities
Attempt to deprive the The attempt to
prescribed by law.
heir of legitime is deprive the heir of
always express. legitime is always
Effect: Partial annulment of the institution of implied.
heirs in so far as it may prejudice the legitime Attempt to deprive the Attempt may or may
of the person disinherited. Devisees and heir of his legitime is not be intentional.
legacies remain valid provided it does not always intentional.
affect legitime. Partial annulment of Total annulment of
institution of heirs. the institution of
heirs.
 Grounds for Disinheritance

CHILDREN AND DESCENDANTS PARENTS OR ASCENDANTS SPOUSE

1. Leads a dishonorable life; 1. Abandonment of their 1. Conviction by final judgment
2. Accused the testator of a crime for children or inducing their of an attempt against the life
which the law prescribes daughters to live a corrupt or of the testator, his/her
imprisonment for 6 years or more, if immoral life, or attempting descendants/ascendants.
accusation has been found to be against their virtue; 2. Accusing the testator of a
groundless: 2. Conviction by final judgment crime for which the law
of an attempt against the life prescribes the imprisonment
Accusation includes: of the testator, his/her for 6 years or more and
a. Filing an information against the spouse, accusation has been found to
testator 3. Accusing the testator of a be false;
b. Acting as a witness against the crime for which the law 3. By fraud, violence, or
testator prescribes imprisonment for 6 intimidation or undue
years or more and accusation influence, causes the testator
3. Convicted of adultery/concubinage has been found to be false; to make a will or to change
with the spouse of the testator; 4. Conviction of adultery one already made;
4. Conviction of a crime which carries /concubinage with the 4. Has given cause for legal
with it the penalty of civil spouse of the testator; separation;
interdiction; 5. By fraud, violence, or 5. Has given ground for loss of
5. By fraud, violence, intimidation, or intimidation or undue parental authority; and
undue influence causes the testator influence, causes the testator 6. Unjustifiable refusal to support
to make a will or to change one to make a will or to change the children or the other
already made one already made; spouse. (Art. 921, NCC)
6. Conviction by final judgment of an 6. Loss of parental authority;
attempt against the life of the 7. Refusal without justifiable
testator, his/her spouse, cause to support the
ascendant/descendant; children/descendants; and
7. Refusal without justifiable cause to 8. Attempt by one of the
support the parent or ascendant; parents against the life of the
and other, unless there has been
8. Maltreatment of the testator by reconciliation between them.
word or deed. (Art. 919, NCC) (Art. 920, NCC)
 disinheritance instituted.
Causes of already made is (Tolentino, Civil In a devise or
Code of the
Revocation of rendered legacy, a person
Philippines Vol. III,
Disinheritance: ineffectual. succession, p.372) succeeds by
universal title, to
1. Reconciliation  There is no Representation in specific property.
(Art. 922, NCC) required form. Disinheritance
2. The subsequent It may be An heir is a person
institution of express or tacit. The children and who succeeds by
the disinherited descendants of the universal title, to an
heir, inasmuch If the ground is person disinherited aliquot portion of
as this will unworthiness: shall take his or her the estate.
impliedly Under Art. 1033, place and shall
revoked the these causes of preserve the rights Persons charged
disinheritance unworthiness shall of compulsory heirs with legacies and
clause in the be without effect if with respect to the Devises
earlier will. the testator had legitime; but the
3. The nullity of knowledge thereof disinherited parent
the will at the time he made shall not have the
containing the his will, or if having usufruct or
Extent o
disinheritance, known of them administration of
such as when it Any compulsory heir Shall not be
subsequently, he the property which
is denied charge b
should condone constitutes the amount of
probate. them in writing. legitime. (Art. 923, portion give
NCC) (Art. 925, NCC
Effects of 1. If disinheritance Any voluntary heir His liability
Reconciliation is made, O. LEGACIES only to the
reconciliation AND DEVISES received by
A subsequent Civil Law Re
renders the 2017, p 909)
reconciliation disinheritance A legacy is a gift of Any legatee or devisee May be lia
between the ineffective. personal property charge only
offender and the 2. If there is given by virtue of a of the value
offended person express will, while a devise or the devise
deprives the latter disinheritance, is a gift of real them. (Art. 92
of the right to the heir will property given by No one is charged All shall be
disinherit and continue to be virtue of a will. same propo
renders ineffectual incapacitated to (Jurado, Comments & inherit. (Art
any disinheritance Jurisprudence on This applies
succeed even to
that may have been Succession, p. 926) absence of a
his legitime, proceedings
made. unless he is A legacy is settlement
pardoned in “bequeathed”’ while decedent’s e
1. If there is no writing or the a devise is
will, it deprives testator makes If two or more heirs
“devised”.
the offended a new will re- take possession of
person of right instituting him the estate, they
All things and rights
to disinherit the or reiterating shall be solidary
which are within the
offending the provisions liable for the loss or
commerce of man
person. of the former destruction of a
may be bequeathed
will wherein the or devised. (Art. 924, thing devised or
2. If already heir is bequeathed, even
NCC)
disinherited,
though only one of
them should have VALIDITY AND EFFECT OF
been negligent. (Art. LEGACY/DEVISEE
927, NCC)
NATURE
Liability for Thing owned in part by testator (Art. 929, NCC) General r
Eviction - If the by testator
legacy or devise is:
Exception
1. Indeterminate 1. T
th
or generic - the
2. K
heir is charged with th
payment or delivery (J
of the legacy or S
devise shall be
liable in case of a. He ma
eviction. (Art. 928, estate
NCC) owned
unwillin
2. Determinate or legatee
specific - the heir b. He may
Thing owned by another (Art. 930 and 931, NCC) General r
who is charged
cannot be held a. If the t
liable in case of the ord
eviction. (Jurado, unwillin
Comments & legatee
Jurisprudence on equival
Succession, p. 346-347)
b. If the t
belonge
NCC)

Exception
onerously
disposition

c. If the t
to him
Code is
valid. T
doubts
931, NC
Things already owned by the legatee/devisee. 1. If
ow
930
2. If t

i.

ii.

iii.
 to satisfy the
legitimes, reduce or
annul donation inter
Legacy of credit
vivos. (If there are
and remission several, reduce or
annul the more
Legacy of Credit recent).
Effective only as regards that part of the credit or Application
Legacy/Devise to remove an encumbrance over a 1. When
debt existing at the time of the death of thethe reduction 1. When th
testator
thing belonging to testator is on necessary
The legacy shall comprise all interests the credit to compulso
or debt which may be due the testator preserve
at the time of the and t
his death. legitime of estate is
The estate shall comply compulsory heirs by the
with the legacy by from impairment legacies
assigning to the legatee whether there is or
all rights of action it donation inter vivos 2. When
may have against the or not; or compu
debtor. 2. When although, the but th
(Art. 935, NCC) legitime has been has al
preserved by the provide
testator himself the te
there are donation there
inter vivos. donatio
vivos.

Grounds for
revocation of
legacies and
devises (Art. 957,
NCC)

1. Testator
transforms the
thing
bequeathed in
such a manner
that it does not
retain either the
form or the
ART. 911 denomination it
(Applies in case of had.
concurrence of legitime,
2. Testator by any
donation inter vivos and
devises and legacies) title or for any
cause alienates
Order of Preference
1. Reduce first devises the thing
and legacies pro bequeathed, or
rata, (except if any part
testator directed thereof, it being
that a certain legacy understood that
or devise be in the latter
preferred).
case the legacy
or devise shall
2. If not yet sufficient
be without
 effect only with is that which is heir does not does not take
respect to the effected by happen or is place
part alienated. operation of law in not fulfilled (Art. 8. When there is
default of a will. It 960 (3), NCC) preterition (Art.
Except: when is legal because it 4. When a 854, NCC)
the thing should takes place by voluntary heir 9. When the
again belong to operation of law; it repudiates the resolutory
the testator is intestate because inheritance and condition
after alienation it takes place in the there being no attached to the
absence or in substitution and institution of
3. Thing default of a last will no right of heir happens
bequeathed is of the decedent. accretion takes and there being
totally lost (Jurado, Comments and place (Art. 960 no substitution
Jurisprudence on (3), NCC) and no right of
during the
Succession, 2009 ed., p. 5. When a
lifetime of the accretion takes
377)
testator, or compulsory heir place
after his death repudiates the 10. When the
without the inheritance, resolutory term
When Legal legal succession
heirs fault. Succession Takes attached to the
4. Other causes: shall also take institution of
Place place with
nullity of the the heir arrives
will, non- respect to the and there being
1. When a person legitime
compliance with dies: no substitution
suspensive because he and no right of
a. Without a
conditions cannot be accretion takes
will represented
affecting the b. With a void
place
bequests, sale thereto 11. When a
will 6. When a
of the thing to c. With a will
testamentary
pay debts of voluntary heir disposition is
that dies before the
the deaths subsequentl impossible of
during the testator or compliance or is
y lost its when he is
settlement of efficacy (Art. ineffective.
his estates incapable of (Rabuya, Civil Law
960 (1), NCC)
succeeding and Reviewer Vol. I,
2. When the will 2017, p 924-925)
Note: List is does not there being no
Not Exclusive institute an heir substitution and
no right of A. Rules on legal
(or when the or intestate
institution of accretion or
representation succession
III. LEGAL OR heir is void) or
INTESTATE when the will takes place (Art.
960 (3)(4), NCC) 1. Rule of
SUCCESSION does not 7. When a Preference
dispose of all compulsory heir Between
That which is the property is incapable of Lines,
effected by belonging to succeeding, Concurrence
operation of law in the testator (Art. legal succession and Exclusion
the absence or in 960 (2), NCC)
3. When the shall also take
default of a will. place with a. Those in the
suspensive direct
condition respect to his
Note: Legal or legitime when descending
intestate succession attached to the line shall
institution of representation
 exclude those in ascendants children but the relatives can
the direct shall inherit surviving only succeed ab
ascending and from him to the spouse excludes intestato in the
collateral lines, exclusion of the other absence of
and those in the collateral collateral descendants,
direct ascending relatives (Art. relatives of the ascendants,
line shall, in 985 NCC). deceased (Art. illegitimate
turn, exclude 1003, NCC) except children,
those in the The surviving the brothers, surviving
collateral line. spouse (Art. 997, sisters, spouse,
(Arts. 978, 985, NCC) and nephews and brothers,
988, 995, 1003 and illegitimate nieces of the sisters,
1011, NCC)
children (Art. deceased (Art. nephews,
991, NCC) of the 1001, NCC). nieces (Art. 1009,
i. The legal deceased are NCC).
heirs in the not excluded by
direct e. As mentioned
the legitimate above, the The right to
descending parents and
line include brothers, inherit ab
ascendants of sisters, intestato shall
the the deceased.
legitimate nephews, and not extend
children nieces of the beyond the fifth
c. In the absence deceased are degree of
and their of legitimate
descendant excluded by the relationship in
descendants descendants, the collateral
s as well as and ascendants,
adopted ascendants, or line. (Art. 1010,
the presence of illegitimate NCC)
children illegitimate
(Art. 979, children but
NCC) children shall they are not They exclude
ii. The result in the excluded by the the State from
surviving exclusion of all surviving the succession.
spouse (Art. collateral spouse.
996, NCC) relatives, The State shall
and the including The absence of inherit the
illegitimate brothers and brothers, whole estate in
children sisters of the sisters, default of the
(Art. 983, deceased. (Art. descendants,
nephews and
NCC) of the 1003, NCC) ascendants,
nieces of the
deceased illegitimate
decedent is a
are not The illegitimate children,
precondition to
excluded by children do not surviving
the other
the direct exclude the spouse, and
collaterals
descending surviving collateral
(uncles, cousins
line. spouse. (Art. 998, relatives within
etc.) being
NCC)
called to the the fifth degree
b. In default of of relationship.
d. The surviving succession.
legitimate or (Art. 1009, NCC) (Art. 1010, NCC)
adopted spouse is not
children and excluded by the f. As mentioned Note: The
descendants, descendants, above, the foregoing rules,
the legitimate ascendants and other presupposes that
parents and illegitimate collateral
the descendant is a Except: Succession is by head that of the half-
legitimate child. or by number of blood. (Arts. 895,
a. Ascending persons who succeed 983, NCC)
In case the Line - There is – which finds
decedent is an first division application when the
illegitimate child, between lines heirs are of same 6. Rule in Case
the illegitimate and within each degree. They inherit of
parents are line there is equally. Repudiation
excluded by the further division and
children and per capita. (Art. Incapacity
descendants 987, NCC) 4. Rule of
whether legitimate Barrier a. Incapacity –
or illegitimate. (Art. b. Full Between the in case of
993, NCC) Blood/Half Legitimate incapacity, the
(Rabuya, Civil Law Blood Family and share which is
Reviewer Vol. I, 2017, p
Relatives - Full Illegitimate rendered vacant
925-928)
Blood will (Iron Curtain shall pass to co-
2. Proximity receive double Rule) (Art. 992, heirs (within the
Rule of that of what NCC) same degree) if
is received by the right of
half-blood. (Art. An illegitimate child representation
The relatives
1006, NCC) has no right to does not obtain
nearest in degree to
inherit ab intestato (Art. 968, NCC)
the decedent shall Note: If decedent from the legitimate
exclude the more is ascendant, FB/HB children and E.g. X is survived by
distant ones, saving relationship is relatives of his three children, A, B
the right of immaterial. father or mother; and C. C is
representation
nor shall such incapacitated to
when it properly Right of
c. children or relatives inherit.
takes place. (Art. Representatio
962[1], NCC)
inherit in the same
n - The manner from the Share of C will
Hence, the other of representatives illegitimate child accrue to A and B,
preference between will divide who will share
lines is first among Except: When the equally but if C has
observed, and themselves only parent is also a son, C’s share will
within each line, the the share illegitimate. (Art. 902, go to his son by
rule of proximity pertaining to NCC) way of right of
applies. (Rabuya,
the parent representation.
supra, at 928) whom they
represent (per 5. Rule of b. Repudiation
3. Rule of Equal stirpes division). Double Share
Division for full blood i. If not all of
Per Capita Division collaterals the heirs
Relatives of the within the
same degree shall When full and half- same
inherit in equal blood brothers or, degree
shares. (Art. 962[2], sisters, nephew or repudiate,
NCC) nieces, survive the but only
full blood shall take some of
a portion in the them, the
inheritance double shares of
 those who full or half- devises are Calisterio, G.R.
No. 136467
did not blood brothers charged to the
April 6, 2000)
accept shall and sister (Art. free portion b. They inherit
accrue to 1006, NCC); and proportionately in their own
the co-heirs the division against the right when
within the between heirs, who are they do not
same paternal and given more concur with
degree. (Art. maternal lines than their aunts and
968, NCC) (Art. 987, NCC); legitimes, but in
This is a 4. There is no uncles. In
no case, shall this case,
case of representation the legitimes be
accretion. in the they divide
impaired. per capita
ii. If all of the ascending line 10. Grandchildren
heirs within (Art. 972, NCC); or equally
always inherit (Art. 975,
the same 5. There is by
representation NCC).
degree representation
repudiate in the direct whether they
their descending line 12. Illegitimate
concur with the children do not
(Art. 972, NCC);
inheritance, children or not.
those of the 6. In the collateral inherit ab
line, there is They inherit in intestato from
next degree their own right
shall inherit representation the legitimate
only in favor of only when all children and
in their own the children
right. (Art. children of relatives of his
brothers and renounce, and illegitimate
969, NCC)
sister, whether they share father or
full or half- equally or per mother, nor do
Other rules in capita (Art. 928,
intestate blood, but only said legitimate
NCC);
succession: in cases where children and
said nephews 11. Nephews and relatives inherit
and nieces nieces inherit form the
1. An intestate either by
heir is not survive with illegitimate child
their uncles and representation (Art. 992, NCC);
necessarily a or in their own
compulsory heir aunts. (Art. 972, 13. There is also
NCC); right (Art. 1005, reserva troncal
(like a brother NCC);
or sister) 7. Representation in legal
2. Relatives nearer in the collateral succession,
line is true only a. They inherit since it is
or nearest in by right of
degree, exclude in legal succession by
succession, representati operation of
the more on when
distant ones, because law;
collateral they concur 14. A person who
saving the right with aunts
of relatives are not repudiates or
compulsory and uncles, renounces his
representation who divide
when proper heirs. share can
8. A voluntary heir per capita, represent, but
(Art. 962, NCC);
3. Relatives in the cannot be while he cannot be
same degree represented. nephews represented.
inherit in equal 9. In partial and nieces (Art. 976-977,
shares, subject intestacy, divide per NCC)
to the rule on legacies and stripes.
(Calisterio v.
 adopted. The from the person
Rules in adopted is represented but 4. An illegitimate
relationship deemed a from the one child can
(Arts. 963 to 969, legitimate child whom the latter represent their
NCC) of the adopter. would have parents, if the
succeeded. (Art. latter are also
1. Number of B. Right of 971, NCC) Hence of illegitimate
generations Representatio - filiation to the
determines n decedent-
proximity a. Their ascendant. But
2. Each generation A right created by capacity to if the parent of
forms a degree. fiction of law by succeed the illegitimate
3. A series of virtue of which the must be child is
degrees forms a representative is determined legitimately
line. raised to the place in relation filiated to the
4. A line maybe and the degree of to the decedent-
direct or the person decedent ascendant, an
collateral. represented, and and not the illegitimate child
acquires the rights person may not
Direct line is that which the latter represented represent his
constituted by the would have if he . parent by virtue
series of degrees were living or if he b. An adopted of the iron
among ascendants could have child, who barrier curtain
and descendants inherited. (Art. 970, is not rule. (Art. 992,
(ascending and NCC) related by NCC)
descending). blood to the
Important Rules adopter, 5. Representation
Collateral line is in may not takes place only
that constituted by Representation: represent in case of
the series of the adopter predecease (Art.
992, NCC),
degrees among 1. Representation because the
persons who are takes place only adopter is incapacity (Art.
1035, NCC), and
not ascendants or with respect to not related
descendants, but inheritance to the disinheritance
(Art. 923, NCC). It
who come from a conferred by deceased.
common ancestor. law (legal does not take
succession and 3. Representation place in case of
5. Full blood: compulsory takes place in repudiation or
same father succession). the direct renunciation.
and mother; (Tolentino, Civil descending line,
Half-blood: only Code of the
but never in the Consequences:
Philippines Vil. III,
one of either 1992, p 447) ascending line.
parent is the In the collateral 1. The son who
Hence, a repudiates the
same. voluntary heir line, it exists
6. In adoption, the only in favor of inheritance
may not be from his father
legal filiation is represented. nephews and
personal and nieces if they does not lose
exists only survive with the right to
2. The represent the
between the representative their uncles and
adopter and the aunts. (Art. 972, latter in the
inherits not inheritance
NCC)
 from the representation. in the direct there is no
grandfather. The relationship descending line exclusion) had
2. Great grandson created by the is disinherited predeceased
may be called adoption is and who has the decedent
to the between only children or and they had
inheritance the adopting descendants. children or
even if parents and the (Representation descendants.
grandfather adopted child covers only the 4. Art. 989 – When
should die and does not legitime) the illegitimate
before the great extend to the 4. Art. 954 – A children
grandson has blood relatives devisee or represent their
been conceived. of either party. legatee who illegitimate
3. Son who cannot (Sayson vs. CA, 205 died after the parents who
SCRA 321)
inherit from his death of the already died in
father on the testator may be the estate of
ground of Situations and represented by their
unworthiness cases when right his heirs. grandparents.
can still inherit of representation 5. Art. 1005 –
from his takes place Intestate When nephews
grandfather by Succession and nieces
representing Testamentary inherit together
the latter, Succession 1. Art. 981 and 982 with their
provided he – When a legal uncles and
himself is not 1. Art 856 (2nd heir in the aunts, in
unworthy with par.) – When a direct representation
regard to the compulsory heir descending line of their
said in the direct had predeceased
grandfather. descending line predeceased parents who are
4. Since the has the descendant brothers/sisters
person predeceased and is survived of their said
representing the by his children uncles or aunts.
virtually predecessor, or descendants.
succeeds to the and is survived 2. Art. 1035 – When The right of
inheritance, he by his children a legal heir in representation can
must be or descendants. the direct only represent a
possessed of all 2. Art 1035 – descending line person immediately
the qualities When a is excluded higher in degree.
necessary for compulsory heir from the
the right to in the direct inheritance by Representation
inherit. descending line reason of does not take place
5. He succeeds is excluded incapacity or with respect to
not only to the from the unworthiness. rights or inheritance
rights but also inheritance due (This is also voluntarily given by
the obligations to incapacity or applied in will, but rather, to
which are unworthiness testamentary right or inheritance
transmissible. and he has succession) conferred by law.
6. An adopted children or 3. Art. 981 and 975
child does not descendants. – When The adoptee has
have the right 3. Art. 923 – brothers or right to represent
of When a sisters (when the adopting parent
compulsory heir
in the inheritance of are incapable of on Succession, c. Illegitimate
the latter’s parents succeeding the 2009 ed. pp. children
or ascendants. decedent. 392-393) and
(Pineda, Succession and 3. When all descendant
Prescription, 2001 ed.,
children are Division Per s (ILC)
pp. 376-378)
dead or are Stirpes d. Surviving
Representation in incapable of spouse (SS)
the Direct succeeding the Representative or e. Brothers
Descending Line - decedent representatives and sisters
The right of leaving children shall not inherit (B/S),
representation or descendants more than what the nephews,
takes place in the of the same person they nieces
direct descending degree. represent would (N/N)
line, but never in inherit, if he were f. Other
the ascending line. Representation in living or could collateral
(Art. 972, NCC) Collateral inherit. (Art. 974, NCC) relatives
Line within 5th
The right of C. Order of degree
representation in  Right can only Intestate g. The State
the direct line takes be exercised by Succession
place in the nephews and  One who is
following cases: nieces of the Intestate or merely related
decedent. Legal Heirs by affinity to
1. When children  Right can be the decedent
concur with exercised by In general, the legal does not inherit
grandchildren, the nephews or heirs are the from the latter
the latter being nieces of the legitimate and and cannot
the children of decedent if they illegitimate relatives become a co-
other children will concur with of the deceased, owner of the
who died before at least one the surviving decedent’s
the decedent or brother or sister spouse and the property. (Ining v
of the State. (Art. 961, NCC) Vega, 703 SCRA
who are
407 (2013))
incapable of decedent.
succeeding the  If they 1. Regular Order
(nephews and of Intestate  A surviving
decedent. spouse is not
2. When all nieces) are the Succession
only survivors, (Decedent is an intestate heir
children are of his or her
dead or are they shall legitimate
inherit in their person): parent-in-law
incapable of (Rosales v Rosales,
succeeding the own right and 148 SCRA 69
decedent and not by right of a. Legitimate (1987))
grandchildren representation. children or
concur with  Right of descendant
great- representation s (LCD) 2. Irregular
grandchildren, is possible only b. In default Order of
the latter being in intestate of LCD, Intestate
the children of succession. Legitimate Succession
other children (Jurado, parents and (Decedent is
who died before Comments and ascendants an
the decedent or Jurisprudence (LPA).
 illegitimate will inherit only in the the TESTATE AND
person): absence of B/S and N/N. testamentary INTESTATE
1LC disposition must SUCCESSION
a. Legitimate SS be deducted S
children IC from the
and disposable free A. Right of
descendant portion, to be Accretion
s; borne by all the
b. Illegitimate intestate heirs A right by virtue of
children in the which, when 2 or
and proportions more persons are
descendant which they are called to the same
s; D. Mixed entitled to inheritance, devise,
c. Illegitimate Succession or receive from or legacy, the part
parents; Partial such disposable assigned to the one
d. Surviving Intestacy free portion as who renounces or
spouse; intestate heirs. cannot receive his
e. Illegitimate Succession that is 3. If the intestate share, or who died
brothers affected partly by share of a before the testator,
and sisters, will and partly by compulsory heir is added or
nephews operation of law. is equal to his incorporated to that
and nieces; legitime, then of his co-heirs, co-
and Rules: the amount of devisees, or co-
f. The State the legatees. (Art 1027,
1. The law of testamentary NCC)
SURVIVOR legitimes must disposition must
Any class alone be brought into be deducted
LCD operation in only form the
LPA partial intestate shares Basis of
1 LCD of the others, in Accretion:
intestacy,
SS Presumed will of
because the the proportions
2 or more LCD decedent.
SS testamentary stated above.
dispositions can 4. If the
affect only the testamentary Rules in
LPA Accretion:
SS disposable free dispositions
LPA portion but consume the
never the entire 1. In testamentary
SS
ILC legitimes. disposable free succession,
Any kind of children of 2. If among the portion, then accretion takes
ILC concurring the intestate place only with
ILP intestate heirs heirs will get respect to the
ILP there are only their free portion.
SS compulsory legitimes, and There is no
Note: only ILP is accretion with
heirs whose those who are
considered legal heir. respect to the
legal or not compulsory
Other ascendants of heirs will get legitime.
intestate
deceased ILC, not legal portions exceed nothing. 2. With respect to
heirs. their respective the free portion,
SS IV. PROVISIONS there is
legitimes, then
BS/NN accretion when
the amount of COMMON TO
Other collateral relatives the following
 requisites are Incapacitated, or the legitime. 2. Free Portion
present: Renounced if: 3) Note that no substitution may be imposed upon
the legitime. a. Predecease X

a. Two or 1. Provided by b. Incapacity X
FREE PORTION 
more testator - Will go
In case of predecease, incapacity or repudiation:
persons to the mass c. Repudiation X
1) Vacant share goes to substitute, if substitution 
are called estate unless is provided. Intestate Succession
to same there is 2) If no substitution is provided, vacant share
inheritanc substitution goes to co-heirs by a. right of accretion, ifX
Predecease

e, or to 2. There is requisites are present and testator has not
same substitution - provided to the contrary.b. Incapacity X

portion Substitution is 3) If substitution and accretion are not available,
c. Repudiation
vacant share shall be distributed to legal heirs. X X
thereof, preferred over
4) Note that representation does not take place
jointly or accretion
with respect to the free portion. A voluntary
pro 3. There is right of heir may not be represented.
indiviso; representation - LEGAL OR INTESTATE SUCCESSION B. Capacity to
and In so far as the In case of repudiation Succeed by Will
b. There is legitime of the 1) Vacant share goes to co-heirs or by
by right Abof
vacancy in co-heir is accretion. In legal succession, the share of the
Intestato
the concerned. one who repudiated always accrue to his co
inheritanc 4. Instituted heirs heirs.
Requisites
2) In default thereof, the vacant share goes to
in
e as a are given
result of specific/aliquot heirs of the next degree, who inherit in theira
order that
person
own right. In default thereof, it shall may be
go to the
predeceas portions of capacitated to
heirs in the next order of intestacy.
e, property. 3) Note that representation does succeed:
not take place in
incapacity case of repudiation.
or Substitution, In case of predecease and incapacity:
1. Heir, legatee or
repudiatio Representation, 1. The vacant share goes to representative,
devisee must be if
n. Accretion and representation is proper.
living or in
Succeeding in 2. If representation is not available, the vacant
existence
share goes to heirs of the next degree, who
at the
3. In intestate One’s Own Right moment
succession, inherit in their own right. In default thereof,the
it
shall go to the heirs in thesuccession
next order of
repudiation will TESTAMENTARY SUCCESSION opens.
intestacy.
always give rise 2. Heir, legatee or
LEGITIME
to accretion. In devisee must
In case of predecease, incapacity or disinheritance
case of (PID): not be
Summary:
predecease and 1) If representation is proper, representative incapacitated by
incapacity, if getsthe vacant share, (representation takes Substitution law to succeed.
representation place in case of PID);
does not take 2) If representation is not Testamentary
available, thenSuccession
vacant
place, other co- share goes to co-heirs of the same degree,
heirs inherit in who inherit in their own right. In default
1. Legitime
thereof, the vacant portion goes to other
their own right a. Predecease X
secondary and/or compulsory heirs.
and not by right 3) Note that there is no accretion with respect to
of accretion. the legitime. b. Incapacity X
Kinds of
In case of repudiation: Incapacity:
c. Disinheritance X
No Accretion 1) The vacant share goes to co-heirs of the same
even if degree, who inherit ind. their own right. InX
Repudiation A. Absolute
Predeceased, default thereof, the vacant portion goes to
other secondary and/or compulsory heirs.
2) Note that there is no accretion with respect to
 a. Those not n by Reason NOT permitted parents, or
living or not of Undue by law to children, or any
in existence Influence (Art. inherit. one claiming
at the time 1027 pars. 1-5, 3. Guardian with under such
NCC)
of the respect to witness, any
death of testamentary one claiming
the Fundamental dispositions under such
decedent. Characteristics given by a ward witness,
b. Those that in his favor, spouse,
cannot be a. These before the final parents, or
identified incapacities or accounts of the children, except
(Art. 845, disqualification guardianship when there are
NCC) are based either have been 3 other
c. Individuals, on possibility of approved, even witnesses;
associations undue influence if the testator 6. Physician,
, or or of interest. should sign surgeon, nurse,
corporation b. They are not after the health officer or
s not only in approval druggist who
permitted testamentary thereof; took care of the
by law succession; and nevertheless, testator during
inherit (Art. c. They are not any provision his last illness.
1027 par.6, only relative in
NCC) made by the
character but ward in favor of II. Incapacity
they are also the guardian Based on
B. Relative partial in the when the latter Morality or
sense that if the is his Public Policy
a. Based on incapacitated or ascendants, (Art. 1028 in
possibility disqualified heir relation to Art. 739)
of undue descendant,
is a compulsory brother, sister
influence or heir, only the The capacity based
interest (Art. or spouse shall
free portion be valid; on this Article is not
1027 pars. 1-
5, NCC) given to him is 4. Relatives of only relative but
b. Based on affected, but such priest or also partial in a
morality or not his legitime. minister of the sense that if the
public gospel within heir disqualified is
policy (Art. 1. Priest/Minister – the fourth also a compulsory
1028, NCC) who heard the degree, the heir, the incapacity
c. Based on confession or shall apply only to
church, order,
acts of gave spiritual the free portion
chapter,
unworthine aid to the given to him, but
community,
ss (Art. 1032, testator during NOT THE
organization, or
NCC) his last illness. LEGITIME.
d. By institution to
The illness which such
operation of referred to III. Incapacity
law. priest or
must be the minister may Due to
one in which belong; Unworthines
Relative the testator s (Art. 1032,
Incapacity 5. Attesting
dies. NCC)
witness to the
2. Individuals, execution of a
I. Incapacity or associations, Fundamental
Disqualificatio will, the spouse, Characteristics:
corporations,
 2. Person 6. Person who by
1. They are based convicted of an fraud, violence, There are grounds
on offenses attempt against intimidation, or for disinheritance
committed by the life of the undue influence which are also
the disqualified testator, his, or should cause causes of incapacity
person against her spouse, the testator to to succeed by
the decedent descendants, or make a will or reason of
which render ascendants; to change one unworthiness.
him unworthy 3. Person who has already made; Among them are
to succeed; accused the 7. Person who the abandonment
2. They are testator of a falsifies or of children, and the
applicable not crime for which forges a attempt to take the
only in the law supposed will of life of the testator,
testamentary prescribes the decedent; etc. (Art. 1032, NCC).
succession, but imprisonment 8. Person who by
also in intestate for six years or the same If the cause of
succession; and more, if the means prevents unworthiness was
3. Although they accusation another from made a ground for
are relative in has been making made, disinheritance and
character, they found or who there is
are also total in groundless; supplants, reconciliation, Art.
a sense that if 4. Person conceals, or 922 will govern, and
the heir convicted of alters the NOT Art. 1033. In
disqualified is a adultery or latter’s will (Art. other words, the
compulsory concubinage 1032, NCC) mere fact of
heir, incapacity with the spouse reconciliation
shall apply not of the testator; Note: In par. 5 the extinguishes the
only to the free 5. Heir of full age spouse is not unworthiness and
portion, but who, having rendered unworthy NO written
ALSO TO THE knowledge of to inherit from the document is needed
LEGITIME the violent decedent, but only for a condonation.
death of the the person with
The following are testator, should whom the spouse is Reason: A person
incapable of fail to report it guilty with. is rendered
succeeding by to an officer of unworthy to
reason of the law within a Unworthiness vs. succeed only
unworthiness: month, unless Disinheritance because the law
the authorities presumes this to be
1. Parents who have already The moment the the will of the
have taken action; testator uses one of testator. This
abandoned this probation the acts of presumed intent
their children or shall not apply unworthiness as a certainly cannot
induced their to cases cause for prevail over the
daughters to wherein, disinheritance, he express will of a
lead a corrupt according to thereby submits it person shown by
or immoral life, law, there is no to the rules on his act of
attempted obligation to disinheritance. reconciliation. If the
against their make an Thus, reconciliation cause for
virtue; accusation; renders the unworthiness was
disinheritance NOT made the
ineffective.
ground for executes a will manifests his 3. Petition
disinheritance, or instituting the desire, in presented to
there has been no person who has accordance with the the court
disinheritance at all, committed the formalities having
Art. 1033 will apply. offence as an prescribed by law jurisdiction over
Art. 1033 says: heir. not to succeed to the
“The causes of the inheritance, testamentary or
unworthiness shall IV. By Operation legacy or devise. intestate
be without effect if of Law proceedings
the testator had 1. In case of legal If the heir should
knowledge thereof separation, die without having The acceptance or
at the time he made incapacity of accepted or repudiation of an
the will, or if having guilty spouse to repudiated the inheritance, once
known of them inherit from inheritance, his made, is
subsequently, he innocent right shall be irrevocable, and
should condone spouse. transmitted to his cannot be
them in writing.” 2. Incapacity of heirs (Art. 1053) impugned, except
adopter to when it was made
Instances when inherit from Forms of through any of the
the spouse adopted child. Acceptance: causes that vitiate
cannot inherit: 3. Incapacity of consent, or when
illegitimate 1. Express an unknown will
1. If the spouse children & Acceptance – appears (Art.1056,
will actively legitimate one made in a NCC).
participate by relatives of public or private
securing the decedent to document. Principal
decree of legal inherit from 2. Tacit Characteristic of
separation; each other. Acceptance – Acceptance or
2. By disinheriting one resulting Repudiation:
him/her. from acts by
C. Acceptance which the 1. It is voluntary
PARDON may be and Repudiation intention to and free;
express or accept is 2. It is retroactive;
implied Acceptance – an necessarily and,
act by virtue of implied or 3. Once made, it is
1. There is an which an heir, which one irrevocable.
express pardon legatee or devisee would have no
when the manifests his right to do
decedent desire, in except in the D. Collation
condones the accordance with the capacity of an
acts of formalities heir. Every compulsory
unworthiness in prescribed by law, heir, who succeeds
writing. to succeed to the How Repudiation with other
2. There is an inheritance, legacy is made: compulsory heirs
implied or tacit or devise. must bring into the
pardon when 1. Public mass of the estate
the testator has Repudiation – an instrument; any property or
knowledge of act by virtue of 2. Authentic right which he may
the act of the which an heir, instrument; receive from the
unworthiness, legate or devisee decedent, during
the lifetime of the
latter, by way of the donee is a by gratuitous other career
donation, or any stranger) title during the unless the
other gratuitous 3. Reduction – testator’s parents so
title, in order that it determining to lifetime. provide or
may be computed what extent the 2. All that they unless they
in the determination donation will may have impair the
of the legitime of remain and to received from legitime.
each heir, and in what extent it is the decedent b. Wedding gifts
the account of excessive or during his by parents and
partition. (Art. 1061, inofficious. lifetime. ascendants
NCC) 4. Restitution – 3. All that their consisting of
return or parents would jewelry,
An act to returning payment of the have brought to clothing, and
or restoring to the excess to the collation if alive. outfit except
common mass of mass of when they
the estate, either hereditary Properties not exceed 1/10 of
actually or estate. subject to the sum
fictitiously, any collation (2nd disposable by
property which a Persons Obliged concept): will.
person may have to Collate
received from the 1. Absolutely no E. Partition
decedent during the 1. Compulsory collation (all
latter’s lifetime, but heirs concepts); The separation,
which is understood Expenses for division and
for legal purposes Exceptions: support, assignment of a
as an advance from education thing held in
inheritance. a. When the (elementary common among
testator should and secondary those to whom it
Operations have so only), medical may belong. The
related to expressly attendance, thing itself may be
collation: provided; and even in divided, or its value.
b. When the extraordinary (Art. 1079, NCC)
1. Collation - compulsory heir illness,
adding to the should have apprenticeship, A partition may be
mass of the repudiated his ordinary rescinded or
hereditary inheritance. equipment, or annulled for the
estate the value customary gifts same causes as
of the donation 2. Grandchildren (Art. 1067). contracts
or gratuitous who survive
disposition. with their 2. Generally not Persons to
2. Imputing or uncles, aunts, imputable to demand
Charging - or 1st cousins, legitime: partition:
crediting the and inherit by
donation as an right of a. Expenses 1. Decedent
advance on the representation. incurred by himself during
legitime (if the parents in his lifetime by
donee is a What to Collate: giving their an act inter
compulsory children vivos or by will
heir) or on the 1. Any property or professional, (Art. 1080, NCC);
free portion. (if right received vocational or 2. Third person
designated by
 the decedent 2. By ordinary bad faith or law, wherein a
(Art. 1081, NCC); action for fraud on the person grants or
3. The heirs partition; part of the conveys to another
themselves (Sec. 3. By judicial other persons certain land,
1, Rule 74, ROC); summary interested, but tenements or
or settlement; or the latter shall hereditaments.
4. Competent 4. By be
court (Rule 69, administration proportionately I. TORRENS
ROC) proceeding obliged to pay SYSTEM
the true heir of
When partition Partition Inter his share. A system for
cannot be Vivos registration of land
demanded: A void will may under which, upon
It is one that merely be a valid the landowner’s
1. Expressly allocates specific partition: application, the
prohibited by items or pieces of court may, after
the testator for property on the a. If the will was appropriate
a period not basis of the pro in fact a proceedings, direct
exceeding 20 indiviso shares fixed partition; and the issuance of a
years; by law or given b. If the certificate of title.
2. Co-heirs agreed under the will to beneficiaries in (Aquino, Land
that the estate Registration and Related
heirs or successors. the void will
Proceedings, 2007, p.1
shall not be (Art. 1080) were legal citing Black’s Dictionary)
divided for a heirs.
period which Effects of Purpose of land
shall exceed 10 Inclusion of registration
years, Intruder in under the
renewable for Partition: Torrens system
PART XII: LAND
another 10 (Aquino, Land
TITLES AND Registration and Related
years; 1. Between a true
3. Partition is DEEDS Proceedings, 2007, p.1
heir and several citing Black’s Dictionary)
prohibited by mistaken heirs -
law; or partition is Land Title – 1. To provide
4. Partition of the VOID. Evidence of the security of
estate would 2. Between right of the owner ownership,
render it several true or the extent of his avoid possible
unserviceable heirs and a interest and by conflicts of title
for the use for mistaken heir – means of which he in and to real
which it is transmission to can maintain property
intended. mistaken heir is control, and as a 2. To facilitate
VOID. rule, assert his right transactions
Four ways in 3. Through error to exclusive relative thereto
which the estate or mistake, possession and by giving the
of the decedent share of true enjoyment of the public the right
may be heir is allotted property. to rely upon the
partitioned: to mistaken heir face of the
– partition shall Deed – A written Torrens
1. By extrajudicial not be instrument certificate of
settlement rescinded executed in title and to
unless there is accordance with dispense with
 the need of such title over a G.R. No. 133250, rights or
inquiring particular May 6, 2003) burdens
further. property granted by
 Registration Effects of legislation even
Purpose of does not give Registration though no
Registration: the registrant a under the notice appears
better right Torrens System: on the title.
 Binds the land/ than what the (Three Guiding Two Components
Third person registrant had Principles) of “Mirror
(Aznar Brothers prior to the Principle”
Realty vs. CA and A. The Mirror
registration.
Anying, et. al., G.R.
No. 128102, March Principle- This 1. Certainty to the
7, 2000) refers to the Identity of the
 Incontestability Torrens Title “register” or Land- the
of Title certificate of identity or
(Estrellado vs. Certificate of title, which metes and
Martinez, G.R. No. supposedly
ownership issued bounds of the
L-23847, Nov. 18,
1925) under the Torrens reflects land is
 Notice to the System through the accurately and accomplished
World (In Rem Register of Deeds completely the through a
under sec. 2, P.D. which names and current facts survey; survey
1529) (Gatioan vs. declares the owner about a is a requirement
Gafud, G.R. No. L- person’s title. It
21953, March 28,
in fee simple of the before a land
1969) real property does not can be
 To Transfer described therein, provide for facts registered.
Ownership those that any or changes that
(Reyes vs. expressly noted could be Under CA 141
Noblejas, G.R. No. therein, or those registered but Section 8, only the
L-23691, Nov. 25 which are not.
1967)
otherwise reserved following lands can
by law. In other words, be surveyed:
a title is not
Exception: When
General rule: Title free from a. Declared open
the party concerned
once registered adverse claims to disposition or
has actual
cannot be defeated or burdens, concession
knowledge of facts
by prescription. which affect a b. Delimited and
and circumstances
person’s title Classified
that should impel a
Exception: Subject even though c. Not reserved for
reasonably cautious
to the right of a they are not public or quasi-
man to make such
third person on reflected in the public use
further inquiry.
principle of equity. title. Public d. Not
rights and appropriated by
Note:
 Registration of burdens include the government
lands under the the right of e. Not private
 Registration
Torrens System, expropriation by property
does not vest
by itself, cannot certain
title.
convert public authorities, 2. Certainty as to
 It is not a mode
lands into unpaid taxes, a the Ownership
of acquiring
private lands. title or right of the Land -
ownership.
(Chavez v. PEA, gained by fraud the identity of
 It is merely
and certain the landowners
evidence of
 is ensured 1. When the party Registry of  Proceeding in
during original concerned has Deeds rem
registration actual 3. Unpaid real (enforceable
proceedings, knowledge of estate taxes against the
cadastral facts and levied and whole world)
registration circumstances assessed within
proceedings, or that should 2 years Concept of
through impel a 4. Public Torrens System
application for a reasonably highways/canal
public land cautious man to s or private way  Confirms and
grant; the make further if the title does records pre-
personal inquiry. not state that existing title
circumstances 2. Fraud the boundaries  Does not create
of applicants of such highway or vest title
are secured C. The have been
during the Insurance or determined  So that the
proceedings. Guarantee 5. Disposition owner may rest
Principle – pursuant to the secure without
B. The Curtain Agrarian the necessity of
Principle (or This provides Reform Law waiting in the
Indefeasibilit compensation for 6. Registered portals of the
y of Titles) – loss of rights by the lands which are courts, or
This means that State. The principle subject to sitting in the
the current is that the register burdens and mirador de su
certificate of must absolutely incident as may casa, to avoid
title contains all reflect the correct arise by the possibility of
the information status of the land. operation of law losing land,
about the title. If, through human 7. Rights (Alvienda v. CA,
135 SCRA
Therefore, a error, a flaw incidental to
402[1985])
historical search appears and anyone marital relation  To facilitate
to verify that suffers a loss, it is 8. Landlord and transactions
the title is good made right so far as tenant relative to land
is unnecessary. money is able to relationship giving the
This principle is compensate. 9. Change the public the right
not always laws of descent to rely upon the
applied and 10. Restriction on face of the
historical or Exceptions to the Patents transfer
“chain” 3 principles of 11. Deferred Certificate of
searches are the Torrens Indefeasibility Title (TCT) and
made in certain System: 12. Reconveyance to dispense
circumstances. 13. Reversion with the need
1. Statutory liens 14. Caveat Emptor of inquiring
General rule: A and restrictions further, except
historical search to 2. Liens, claims, or Nature of Torrens when fraud is
verify that the title rights which, Title attendant.
is good is under the law, (Republic v. Umali,
unnecessary. are not required  Judicial, not 171 SCRA
to appear of merely 647[1989])
Exceptions: record in the administrative
Advantages of the decree of be reopened the public
the Torrens registration. except if such domain into the
System: decree was following:
 It cannot be obtained by
1. It substituted defeated by actual fraud, 1. Agricultural –
security for adverse, open action should Those public
insecurity; and notorious be filed within 1 lands acquired
2. It reduced the possession year after the from Spain
cost of neither can it issuance of which are not
conveyances be defeated by decree. (Sec. 32, timber or
and the time prescription. P.D. 1529) mineral lands
spent for  It cannot be  In Patents – (Mapavs
the date of InsularGovt, GR No.
registration; collaterally
L-3793, February
3. It exchanged attacked. issuance of
19, 1908)
brevity and patents
clearness for  The Certificate correspond to 2. Forest or
obscurity and of Title is the date of the timber – PD
verbiage; indefeasible and issue of the 705 Section 3
4. It simplified imprescriptible decree in defines the
ordinary and all claims to ordinary following:
dealings on the parcel of registration
land that one land are quieted cases, because Forest lands-
may transact upon issuance the decree include the public
his own of the said finally wards forest, the
convenyancing; certificate the land applied permanent forest or
5. It affords  A person for registration forest reserves, and
protection dealing with to the party forest reservations
against fraud; registered land entitled to it
6. It restored just may safely rely and the patent Public forest-
value on upon the issued by the mass of lands of the
estates, held correctness of Director of public domain which
under good the Certificate Lands equally has not been the
holding titles, of Title (CoT) and finally subject of the
but issued thereof grants, awards present system of
depreciated, in and the law will and conveys classification for the
consequence of in no way the land applied determination of
some blur or oblige him to go for to the which lands are
technical defect beyond the CoT applicant. The needed for forest
in title, and to determine purpose and purposes and which
barred the the condition of effect of both are not
reoccurrence of the property the decree and
such similar (Dela Cruz v. Dela patent is the Permanent forest
Cruz, G. R. No. same.
faults. or forest
146222, January
15, 2004). reserves- those
Certificate of CONSTITUTIONA lands of the public
Title: It is a mere Deferred L LIMITATIONS domain which have
evidence of indefeasibility been the subject of
ownership. It is not Art. XII, Section the present system
the title to the land  In Decree – 3 of the 1987 of classification and
itself, but a copy of the case cannot Constitution determined to be
classified lands of
needed for forest JUDICIAL Reorganization Act of the claimant
of 1980”)
purposes TITLING/ or by
ORIGINAL  The RTC has agreement of
Under PD 705, REGISTRATION jurisdiction the respective
lands, which are where the claimants if
18% in slope, are A. ORDINARY assessed value there are more
not suitable to REGISTRATIO of the property than one, or
become alienable N involved from the
and disposable. As PROCEEDING exceeds Php corresponding
such, lands, which S UNDER ACT 300,000.00 or, tax declaration
are already 496 as for civil actions of the real
classified as amended by in Metro Manila, property. Their
alienable and PD 1529, THE where such decision in
disposable, revert PROPERTY value exceeds these cases
to forestlands if REGISTRATIO Php 400,000.00 shall be
they are 18% in N DECREE OF appealable in
slope. 1978: Delegated the same
jurisdiction in manner as
3. Mineral lands 1. Nature of the cadastral and decisions of the
– Any area Proceeding land registration Regional Trial
where mineral (In Rem) cases Courts. (Sec. 34,
resources are Republic Act. No.
7691)
found (RA NO.  Land  Metropolitan
7923, Mining Act registration or Trial Courts,  The rules of
of 1995) judicial titling is Municipal Trial Court shall not
an action in rem Courts, and apply to land
4. National or property Municipal Circuit registration and
Parks – A (subject matter Trial Courts cadastral
forest of registration) may be proceedings
reservation and seeks assigned by the except by
essentially for judgment with Supreme Court analogy or in a
national respect to as to hear and suppletory
wilderness against the determine character and
character which whole world. cadastral or whenever
has been (Section 2, PD
1529) land registration practicable and
withdrawn from
cases covering convenient.
settlement, (Sec. 4, Rules of
2. Jurisdiction lots where there
occupancy or Court)
is no
form of
 The Regional controversy or
exploitation (RA Register of
Trial Courts are opposition, or
NO.7586, Deeds: Constitutes
National generally contested lots
where the value a public repository
Integrated vested with of records of
Protected Areas exclusive of which does
not exceed One instruments
System Act) original
hundred affecting registered
jurisdiction over or unregistered
II. ORIGINAL judicial titling. thousand pesos
(P100, 000.00), lands and chattel
REGISTRATIO (B.P. 129 as
amended by R.A. such value to mortgages in the
N
No.7691, otherwise
be ascertained province or city
known as the wherein such office
“Judiciary by the affidavit
is situated (Sec. 10, face an N UNDER P.D. under the
P.D. 1529) infirmity. Thus, 1529 (OPAL) existing laws.
if the conjugal
RD’s duty to character of the The following 4. Those who
register is purely property persons may file in have acquired
ministerial subject of a the proper court, an ownership of
The Register of deed of application for land in any
Deeds is entirely donation by the registration of title other manner
precluded by husband “is to land: provided for by
Section 10 of P.D. assumed” and Law (Sec. 14,
1529 (formerly Sec. 4, 2/3 portion of 1. Those who by Chapter III, P.D.
R.A. 1151) from 1529)
the property themselves or
exercising his was donated by through their
personal judgment the husband predecessors-
and discretion when alone, then in-interest have Under
confronted with the such donation been in Open, Commonwealth
problem of whether clearly exceeds continuous, Act 141
to register a deed the 1/2 share exclusive and
or instrument on that pertains to notorious Public lands suitable
the ground that it is him. possession and for agricultural
invalid. The c. Where the occupation of purposes can be
determination of validity of the alienable and disposed of only as
whether a instrument disposable follows, and not
document is valid or sought to be lands of the otherwise:
not is a function registered is an public domain
that belongs issue in a under a bona 1. For
properly to a court pending suit. fide claim of Homestead
of competent The registration ownership since Settlement
jurisdiction. (Aquino, may be June 12, 1945,
Land Registration and
suspended to or earlier; Who may apply?
Related Proceedings,
p.11, 2007) await the final
outcome of the 2. Those who Any citizen of the
case and the have acquired Philippines over the
When RD may age of 18 years, or
deny registration: rights of the ownership of
interested private lands by the head of a
parties could be Prescription family, who does
a. Where there not own more than
are more than protected in the under the
meantime by provision of twelve (12)
one copy of the hectares of land in
owner’s filing the proper existing laws.
notice of the Philippines or
duplicate has not had the
certificate of lispendens. 3. Those who
(Aquino, Land have acquired benefit of any
title and not all gratuitous allotment
Registration and
such copies are ownership of
Related of more than twelve
presented to Proceedings, p.11- private lands or
abandoned (12) hectares of
the Register of 12, 2007)
riverbeds by land since the
Deeds. occupation of the
b. Where the B. WHO MAY right of
APPLY FOR Accession or Philippines by the
voluntary United States, may
instrument ORIGINAL accretion
REGISTRATIO enter a homestead
bears on its of not exceeding
twenty-four Note: They may permitted to lease or for any other
hectares of lease any tract of lands hereunder cause, not
agricultural land of agricultural public which are not received title
the public domain. land available for reasonably therefore, if such
not exceeding a necessary to carry applicants or
2. By Sale total of one on his business in grantees and
thousand (1,000) case of an their heirs have
Who may apply? hectares, for individual, or the occupied and
corporations and business for which cultivated said
a. Any citizen of five hundred it was lawfully lands
lawful age of hectares, for created and which it continuously
the Philippines, individuals. may lawfully pursue since the filing of
and any such in the Philippines, if their
citizen who is a No member, an association or applications.
head of a stockholder, of corporation. 2. Those who, by
family; officer, themselves or
representative, 4. By through their
Note: They may attorney, agent, Confirmation predecessors in
purchase any tract employee or Of Imperfect interest, have
of public agricultural bondholder of any or Incomplete been in open,
land disposable corporation or Titles: continuous,
under this Act, not association holding exclusive, and
to exceed twelve or controlling By Judicial notorious
(12) hectares. agricultural public Legalization possession and
land shall apply, occupation of
3. By lease directly or indirectly, Who may apply? agricultural lands
for agricultural of the public
Who may apply? public land shall 1. Those who, prior domain, under a
a. Any citizen of apply, directly or to the transfer of bona fide claim
lawful age of indirectly, for sovereignty from of acquisition or
the Philippines agricultural public Spain to the ownership, for at
b. Any corporation land except under United States, least thirty (30)
or association the homestead and have applied for years
of which at free patent the purchase, immediately
least sixty per provisions of this composition or preceding the
centum (60%) act. Provided, That other form of filing of the
of the capital no lease shall be grant of lands of application for
stock or of any permitted to the public confirmation of
interest in said interfere with any domain under title except when
capital stock prior claim by the laws and prevented by
belongs wholly settlement or royal decrees war or force
to citizens of occupation, until then in force and majeure. These
the Philippines, the consent of the have instituted shall be
and which is occupant or settler and prosecuted conclusively
organized and is first had, or until the proceedings presumed to
constituted such claim shall be in connection have performed
under the laws legally extinguished, therewith, but all the conditions
of the and no person, have with or essential to a
Philippines. corporation, or without default Government
association shall be upon their part, grand and shall
 be entitled to a predecessors- under this interest, have been
certificate of in-interest, a provision of the in continuous
title. tract or tracts of Public Land possession and
3. Members of the agricultural Law. occupation of the
national cultural public lands same in the concept
minorities who subject to Under Republic of an owner since
by themselves or disposition, or Act No. 8371 time immemorial
through their who shall have or for a period of
predecessors-in- paid the real Concept of not less than
interest have estate tax Ancestral thirty (30) years
been in open, thereon while Lands/Domains immediately
continuous, the same has preceding the
exclusive and not been Ancestral approval of this
notorious public occupied by any lands/domains shall Act and
domain suitable person shall be include such uncontested by
to agriculture, entitled to have concepts of the members of
whether a free patent territories which the same
disposable or issued to him cover not only the ICCs/IPs shall
not, under a for such tract or physical have the option to
bona fide claim tracts of such environment but secure title to their
of ownership for land not to the total ancestral lands
at least thirty exceed twelve environment under the
(30) years shall (12) hectares. including the provisions of
be entitled to the b. A member of spiritual and cultural Commonwealth Act
rights granted in the national bonds to the area 141, as amended,
sub-section (b) cultural which the ICCs/IPs or the Land
hereof. minorities who possess, occupy Registration Act
has and use and to 496.
5. By continuously which they have
Administrativ occupied and claims of For this purpose,
e Legalization cultivated, ownership. said individually-
(Free Patent) either by owned ancestral
himself or Option to secure lands, which are
a. Any natural- through his Certificate Of agricultural in
born citizen of predecessors- Title under character and
the Philippines in-interest, a Commonwealth actually used for
who is not the tract or tracts of Act 141, as agricultural,
owner of more land, whether amended, or the residential, pasture,
than twelve disposable or Land Registration and tree farming
(12) hectares not since July 4, Act 496. purposes, including
and who since 1955. Provided, those with a slope
July 4, 1926 or that at the time Individual members of eighteen percent
prior thereto, he files his free of cultural (18%) or more, are
has patent communities, with hereby classified as
continuously application he is respect to alienable and
occupied and not the owner individually-owned disposable
cultivated, of any real ancestral lands agricultural lands.
either by property who, by themselves
himself or secured or or through their
through his disposable predecessors-in-
Recognition of exceeding 15 years not be reopened or within one year
Ancestral Domain from the date of revised by reason of from issuance
Rights transfer. absence, minority, of the decree of
or other disability of registration
The rights of Unauthorized and any person must be actual.
ICCs/IPs to their Unlawful adversely affected There must
ancestral domains intrusion thereby, nor by any have been
by virtue of Native proceeding in any intentional
Title shall be Unauthorized and court for reversing concealment or
recognized and unlawful intrusion judgments. (Sec. 32, omission of a
respected. Formal upon, or use of any PD 1529) fact required by
recognition, when portion of the Exception: FRAUD law to be stated
solicited by ancestral domain, in the
ICCs/IPs concerned, or any violation of  Any person, application or a
shall be embodied the rights herein including the willful
in a Certificate of before enumerated, government statement of a
Ancestral Domain shall be punishable and the claim against
Title (CADT), which under this law. branches the truth, either
shall recognize the Furthermore, the thereof, of which is
title of the Government shall deprived of land calculated to
concerned ICCs/IPs take measures to or of any estate deceive or
over the territories prevent non- or interest deprive another
identified and ICCs/IPs from therein by such of his legal
delineated. taking advantage of by actual fraud, rights. (Nicolas
the ICCs/IPs may file in the vs. Director of
proper Regional Lands, 9 SCRA 935
C. REMEDIES customs or lack of
[1963]
understanding of Trial Court a
Right to laws to secure petition for  The fraud must
Redemption ownership, reopening and be extrinsic. It
possession of land review of the is extrinsic
In cases where it is belonging to said decree of when it is
shown that the ICCs/IPs. registration not employed to
transfer of Review of Decree later than one deprive a party
land/property rights year from and of his day in
by virtue of any General rule: One after the date court, thereby
agreement or (1) year after the of the entry of preventing him
devise, to a non- issuance of the final such decree of from asserting
member of the decree, the Torrens registration. his right to the
concerned ICCs/IPs title becomes property
is tainted by the indefeasible and  Under Section registered in
vitiated consent of incontrovertible and 32 of PD 1529, the name of the
the ICCs/IPs, or is is generally courts may re- applicant. (Frias
transferred for an conclusive evidence open vs. Esquivel, 5
unconscionable of the ownership of proceedings SCRA 774[1966]
consideration or land referred already closed  The rule on
price, the transferor therein. (Calalang vs. by final decision incontrovertibilit
ICC/IP shall have RD, 231 SCRA or decree when y and
88( [1994]). an application indefeasibility of
the right to redeem
the same within a for review is title applies as
period not The decree of filed by the well to
registration shall party aggrieved homestead and
 free patents. interest of some man upon his no longer open
(Iglesiani Cristo other person in guard, and then to review or
vs. CFI of Nueva the property. claim that he acted attack although
Ecija, 208 Phil. Good faith in good faith under its issuance is
441, [1983]) consists in an the belief that there attended with
honest intention was no defect in the actual fraud.
Exception to the to abstain from title of the vendor. But if the
Exception: taking any (Leung Yee vs. Strong property has
Machinery Co., 37 Phil
unconscientious not yet passed
Innocent 644[1918]
advantage of to an innocent
Purchaser in Persons dealing
another. (San purchaser for
Good Faith and Lorenzo
with property
value, an action
for Value Development covered by Torrens
for
Corporation v. CA, title are not
7 SCRA 351 [1963] reconveyance is
But in no case shall required to go
still available,
such petition be beyond what
Property which is an
entertained by the appears on the face
Registration action in
court where an of the title. He is
Decree personam.
innocent purchaser only charged with
(Ching vs. CA,
has acquired the notice of the
Guarantees to every 181 SCRA 9
land or an interest burdens on the [1990])
purchaser of property, which are
therein, whose registered land in
rights may be noted on the face of  An action for
good faith that they the certificate of
prejudiced; which is reconveyance
can take and hold title. (Centeno vs. CA,
deemed to include presupposes
the same free from 139 SCRA 545 [1985])
an innocent lessee, the existence of
any and all prior
mortgagee, or other a defrauded
claims, liens and Action for
encumbrancer for party who is the
encumbrances Reconveyance
value. (Sec. 32, PD lawful owner of
except those set
1529). the disputed
forth on the This is a legal and property. It is
 Purchaser in certificate of title equitable remedy thus essential
good faith and and those expressly granted to the for petitioners
for value is one mentioned in the rightful owner of to prove by
who buys decree as having land which has clear and
property of preserved against been wrongfully or convincing
another, it. Without which, erroneously evidence their
without notice the efficacy of the registered in the title to the
that some other conclusiveness of name of another for property, and
person has a the certificate of the purpose of the fact of fraud
right to, or title which the compelling the committed.
interest in, such Torrens System latter to transfer or (Heirs of Brusas vs.
property and seeks to guarantee reconvey the land CA, G.R. No.
pays a full and would be left futile to him. (Esconde vs. 126875, August
and nugatory. Barlongay, 152 SCRA 26,1999)
fair price for the 603)
(Sajonas v. CA, 258
same, at the SCRA 79 [1996] Relevant
time of such  After the lapse allegations:
purchase, or A purchaser cannot of one year, a
before he has close his eyes to decree of 1. That the
notice of the facts, which should registration is plaintiff was the
claim of or put a reasonable
 owner of the title to land quieted, remedy to file an private lands
land as against one who action for damages. were to be
2. That the is asserting some included in a
defendant had adverse claim or Action for cadastral
illegally lien thereon, is not Reversion: survey. (Cadastral
dispossessed barred while the Reversion connotes Act: No. 2259,
enacted February
him of the plaintiff or his restoration of public
11, 1913)
same. grantors remain in land fraudulently  Such is also
actual possession of awarded or provided in
Prescription of the land, claiming disposed of to the Section 53 of
Action for to be owners mass of the public the Public Land
Reconveyance: thereof, the reason domain and may Act (CA No. 141)
for the rule being again be the subject enacted in Nov.
1. Action based on that while the of disposition in the 7, 1936.
fraud - 10 years owner in fee manner prescribed  Lands already
from the continues liable to by law to qualified titled either
issuance of title an action, applicants. through judicial
or date of proceeding, or suit confirmation of
registration of upon the adverse State not bound by imperfect or
deed. (Caro vs. claim, he has a prescription. incomplete
CA, GR No. 76148, continuing right to (Republic vs. Ruiz, GR
Dec. 20, 1989) No. L-23712, April 29, titles under
the aid of a court of Public Land Act
2. Action based on 1968)
equity to ascertain or through
implied trust - and determine the
10 years after By the OSG – voluntary
nature of such claim Section 101 of registration
issuance of title and its effect on his
or date of Public Land Act (CA proceedings
title, or to assert 141), mandates under the Land
registration any superior equity
(Villagonzalo vs. that an action for Registration Act
IAC, GR No. 71110, in his favor. He may reversion to the are excluded
Nov. 22, 1988) wait until his government of from the
3. Action based on possession is lands of the public survey. (Section
void contract - disturbed or his title domain or 35, PD. 1529)
Imprescriptible is attacked before improvements  Lands already
(Solid State Multi- taking steps to thereon shall be titled cannot be
Products Corp. vs.
vindicate his right. instituted by the subject of
CA GR No. 8338,
(Sapto vs. Fabiana, GR
May 6, 1991) Solicitor General. cadastral
No. L-11285, May 16,
4. Action based on 1958) proceedings. As
fictitious deed- such are private
imprescriptible Action for lands, already
(Lacsamana vs. CA, registered, are
Damages: An
GR No. 121658,
action for excluded.
March 27, 1988)
(Addison v. Payatas
5. Action to quiet reconveyance is not
Estate improvement
title - feasible where the CADASTRAL co., G.R. No.
imprescriptible property has passed REGISTRATION 39095, September
into the hands of an 27, 1934)
when in
possession. innocent purchaser PROCEEDINGS
for value. A person A cadastral
The prevailing rule deprived of his right  The Cadastral proceeding is also
is that the right of a or interest in the Act implies that in rem and hence
plaintiff to have his property has the both public and binding generally
upon the whole Applicant and opponent encumbrance on voluntary acts of
world, inclusive of the land. The the parties thereto.
persons not party exception to this These include:
thereto, and Purposerule is if the
particularly upon Petitioners comes to instrument is a 1. Sales,
court to confirm his title
those who had WILL. conveyances or
and seeks the
actually taken part registration of the land in
transfer of
in the proceeding his name  The act of ownership over
and their registration
Person who request the Survey the titled
successors-in- Landowner serves as property;
interest by title constructive 2. Mortgages and
Effect of Judgment
subsequent to the notice to the leases;
No adverse claim; if the
commencement of whole world of 3. Powers of
applicant fails to prove
the action. (Baroga his title, his application such voluntary attorney;
vs. Albano, G.R. No. L- or involuntary 4. Trusts
43445, January 20,
may be dismissed
without prejudice (no res conveyances,
1988)
judicata) instruments, For entry to be
The rule is different writs or court considered as
in case of public processes. registration,
III. SUBSEQUEN (Section 51, PD payment of fees
lands under sec.
T 1529) mandatory
103, PD 1529,
property is not REGISTRATI For the entry to be
considered ON  It is settled in considered to have
registered until the this jurisdiction the effect of
final act or the A. Voluntary that a sale of registration there is
entry in the dealings real estate, still a need to
registration book of whether made comply with all that
the Registry of General as a result of a is required for entry
Deeds had been Principles: private and registration,
accomplished. transaction or including the
(Merced v. CA, 5 The mere execution of a foreclosure payment of the
SCRA 240[1962]) of deed of sale, or execution prescribed fees.
mortgages, leases sale, becomes (Durawood vs. Bona,
G.R. No. 179884,
PD No. 1529 and or other voluntary legally effective January 25, 2012)
Cadastral documents serves against third
Distinguished only as: persons only Conveyances and
from the date other Dealings by
P.D. No. 1529 1. A contract of its Registered
between
Nature of Registration the registration. Owner:
parties, and (Campillo vs. CA,
Voluntary
G.R. No. L-564483,
Applicant2. As evidence of 1. Sale of
authority to the May 29, 1984)
Landowner Registered
Register of Land
Lands Covered Voluntary
Deeds to
Usually involves private register such dealings with land
land; it may also refer to The general rule is
documents. refer to deeds,
public agricultural lands if that one who buys
instruments or
the object of the action is from a person who
They do not, in documents, which
confirmation of an is not the registered
imperfect title themselves, affect a are the results of
owner is not a
Parties conveyance or the free and
purchaser in good
faith. But in intimated. (Bass v. Bank, Inc. v. CA G. R. cannot acquire any
Dela Rama, 73 Phil No. 132161, January 17,
deciding the right.
2005)
question of good 682 [1942])
faith, the legal The provision on Rules of
environment of The Supreme Court Preference
double sale, Article
each case must be (Director of Lands (Article 1544) in
1544 of the Civil
considered. vs. Abad , 61 Phil., cases of Double
Code is not
479) held that the Sale of an
applicable in a case
Purchaser in good entry of an Immovable:
of multiple sales by
faith is one who instrument in the
a single vendor.
buys property of entry book of the a. The first
More specifically, it
another without register of deeds registrant in
covers a situation
notice that some produces no legal good faith;
where a single
other person has a effect unless a b. Should there be
vendor sold one
right to, or interest memorandum of no entry, the
and the same
in such property such instrument is first in
immovable property
and prays in full noted on the possession in
to two or more
and fair price for certificate of title. good faith; and
buyers.
the same, at the c. In the absence
time of such 3. Double Sale thereof, the
It is necessary that
purchase, and the conveyance buyer who
before he has In cases of double presents the
must have been
notice of the claim sale, the property oldest title in
made by a party
or interest of some belongs to the good faith.
who has an existing
other person in the purchaser who first  Prior
right in the thing
property. (Inquimboy registers the registration of
and the power to
v. Cruz, 108 Phil transaction in his the subject
185[1960]) dispose of it. It
name in the registry property does
cannot be invoked
of property. not by itself
2. Encumbrance where the two
different contracts confer
s Banks, their ownership or a
of sale are made by
business being better right
It is a principal two different
impressed with over the
feature of the persons, one of
public interest, are property.
Torrens System of them being the
expected to  Article 1544
registration that all owner of the
exercise more care requires that
encumbrances on property sold.
and prudence than before the
the land or special private individuals second buyer
estates therein shall Even if the sale was
in their dealings, can obtain
be shown or at least made by the same
even those priority over the
intimated upon the person, if the
involving registered first, he must
certificate of title so second sale was
lands. The bank is a show that he
that a person made when such
mortgagee in bad acted in good
dealing with the person was no
faith, for merely faith throughout
owner of the land longer the owner of
relying on the (i.e., in
need not go behind the property,
certificates of title ignorance of
the certificate and because it had been
and for its failure to the first sale
inquire into acquired by the first
ascertain the status and of the first
transactions the purchaser in full
of the mortgaged buyer’s rights)
existence of which dominion, the
properties. from the time
is not there (Consolidated Rural second purchaser
 of acquisition another in an stipulation to the
until the title is earlier land contrary, the 6. Ministerial
transferred to registration payment of the Duty To
him by case (Heirs of purchase price of Register
registration or Gonzaga vs. CA, the goods is not a
261 SCRA 327)
failing condition precedent Upon presentation
registration, by to the transfer of of a deed of
delivery of  Applies to title to buyer, but conveyance of a
possession. subsequent title passes by the registered land,
 While owners who delivery of the together with the
certificates of derives his title goods. (Suburban grantor’s duplicate
title are from the earlier Development certificate, the
indefeasible, title (Sales Corporation v. Auditor register of deeds
Enterprise, Inc. vs. General, GR No. L-
unassailable IAC, 154 SCRA 327) shall:
19455, April 18,
and binding
1975)
against the Exception: When a. Make out in the
whole world, there is infirmity in registration
As between the
they merely the prior title book a new
parties to a contract
confirm or (Azarcon v. Vallarta, 100 certificate of
SCRA 450) of sale, registration
record title title;
is not necessary to
already existing b. Prepare and
Two apparently make it valid and
and vested. deliver to the
valid titles, which effective, for actual
They cannot be grantee an
one held valid : notice is equivalent
used to protect owner’s
The principle that to registration.
a usurper from duplicate
the true owner, the earlier title certificate of
prevails over a Section 50 of the
nor can they be title;
subsequent one Land Registration
used for the c. Note upon the
applies when there Act provides that,
perpetration of original and
are two apparently even without the
fraud; neither duplicate
valid titles over a act of registration, a
do they permit certificates the
single property. The deed purporting to
one to enrich date of transfer,
existence of the convey or affect
him at the the volume and
earlier valid title registered land shall
expense of page of the
renders the operate as a
other. registration
subsequent title contract between book where the
void because a the parties. The
4. Double Title new certificate
single property registration is is registered,
cannot be intended to protect
General rule: Prior and a reference
registered twice. the buyer against
title prevails: by number to
(Oliveros vs. SMC, G.R. claims of third the last prior
No. 173531, February 1, persons arising
 A land 2012) certificate;
from subsequent
registration d. Require the
alienations by the
court has no surrender of the
vendor, and is
jurisdiction to 5. Effect of grantor’s
certainly not
order the Failure to duplicate
necessary to give
registration of register certificate for
effect to the deed
the land already purposes of
of sale, as between
decreed in the In the absence of cancellation;
the parties to the
name of an express contract.
e. Cancel likewise valid title when was made DISCHARGE:
the original an innocent possible by the Section 62, PD 1529
certificate and purchaser for owner’s act in allows the discharge
f. File and indorse value entrusting the or cancellation of a
in the manner intervenes. certificate of mortgage or lease
required the However, this title to another. on registered land
deed of does not apply (De Lara v. by means of an
conveyance where the Ayroso, G.R. No. instrument
presented for owner still holds L-6122, 95 Phil. executed by the
registration a valid and 185[1960]) mortgagee or lessee
(Section 57, Act. existing in a form sufficient
No. 496) Certificate of 8. Other in law, which shall
Title covering important be filed with the
 The duties the same Voluntary Register of Deeds
enjoined upon property. Dealings who shall make the
the register of appropriate
deeds by  Where the Mortgages and memorandum upon
Section 57 of mortgage is leases: the certificate of
the Land admittedly a title.
Registration Act forgery and the  Sec. 60, PD
are clearly registered 1529 requires Mortgage is
ministerial and owner was not deeds of discharged only
mandatory in shown to have mortgage or upon full payment
character not been negligent lease and all of all indebtedness.
only as is or in instruments It is well settled
indicated by the connivance with which assign, that where
auxiliary “shall” the forger, the extend, annotation at the
but by the mortgage discharge or back of the title
nature of such cannot be otherwise deal about a 1st
functions enforced with the mortgage states
required to be against the mortgage or that “mortgage
performed by owner. lease to be secured the
him. (In re registered, with payment of a
Consulta filed by  “As between the mortgage or certain sum of
Attorney Vicente two innocent lease to be money plus interest
J. Francisco on persons, one of registered, and plus other
behalf of such deeds
whom must obligations arising
Domingo shall take effect
Cabantog, 67 Phil
suffer the thereunder,” there
consequences upon the title is no need for any
222[1939])
of the breach of only upon (further) notation of
trust, the one registration. later loans on the
7. Registration
who made it Unless title. (Mojica v. CA. 201
of Forged
possible by his recorded, such SCRA 517[1991])
Deeds
act of deeds are not
confidence binding on third Discharge is done
 Although forged
must bear the persons even by:
documents are
loss.” This is though they are
generally null
the principle of binding a. Creditor
and void, they
equity applied between the executing a
can legally be
when the fraud parties. public
the root of a instrument
 canceling or the building and registered in registration of
releasing the the land on the Registry of sale or
mortgage; and which it is Deeds conveyance of a
b. After erected, concerned and condominium
foreclosure, by acquisition of annotated on unit with the
an order of the ownership the common areas
court and thereof is corresponding and facilities
submission of a limited only to certificate of thereunto
final certificate those qualified title as such. appertaining,
of sale which to acquire or This is a legal such is
cancels old title. hold lands of prerequisite in annotated on
the public order that a the
CONDOMINIUMS domain. Thus, condominium corresponding
units therein project may certificate of
Nature and can be come under the title and the
Registrability, conveyed or operation of the transferee is
R.A. 4726 transferred only condominium issued a
to Filipino Act. condominium
Condominium Act citizens or 2. Deed of owner’s copy.
asserts that corporations at Restrictions.
condominium least 60% of Before any  Where the
implies both co- the capital condominium Master Deed
ownership and belongs to unit may be provides that
limited ownership Filipino citizens. sold or the land
such that it consists  If the land on conveyed, it is a included in the
of interest in: which the pre-requisite project is to be
building is that a owned in
1. A separate part erected is held declaration of common by the
or unit in a only under restrictions condominium
residential, lease, units in relating to the owners therein,
industrial or such may be project be the Register of
commercial conveyed to registered, Deeds may, at
building; non-Filipino which the request of
2. An undivided citizens and to restrictions all
common a corporation constitute a lien condominium
interest, directly even when that shall be owners and
or indirectly, in 100% of its binding upon all upon surrender
the land on capital is condominium of all their
which the foreign-owned. owners, to be condominium
building is enforced by the owner’s copies,
erected; and Three most owner of the cancel the
3. A similar important project by the certificate of
interest in other documents to be owner of the title of the
common areas registered: project and or property and
of the building its management issue a new one
itself 1. Enabling or body. in the name of
Master Deed 3. Individual the said
 When a of a Deeds of condominium
condominium condominium Conveyance. owners as pro
project covers project must be Upon
 indiviso co- duplicate of the Transfer duplicate, to
owners thereof. certificate of Certificates of surrender the same
title; Title; to the registry of
 In case of (c) A certified copy (e) A document, on deeds. After the
subsequent of the file in the reconstitution said
conveyance of a certificate of registry of owner's duplicate
condominium title, previously deeds, by which shall be returned to
unit, its issued by the the property, the person
registration register of the description concerned.
cannot be given deeds or by a of which is
due course legal custodian given in said Section
unless thereof; document, is 7. Reconstituted
accompanied (d) An mortgaged, certificates of title
with a authenticated leased or shall have the same
certificate from copy of the encumbered, or validity and legal
the decree of an effect as the
management registration or authenticated originals thereof:
body to the patent, as the copy of said Provided, however,
effect that the case may be, document that certificates of
conveyance is pursuant to showing that its title reconstituted
in accordance which the original had extrajudicially, in
with the original been the manner stated
provisions of certificate of registered; and in sections five and
the Deed of title was issued, (f) Any other six hereof, shall be
Restrictions. in case of document, without prejudice to
Original which, in the any party whose
RECONSTITUTIO Certificate of judgment of the right or interest in
N OF TORRENS Title; or The court, is the property was
CERTIFICATES deed of transfer sufficient and duly noted in the
OF TITLE LOST or other proper basis for original, at the time
OR DESTROYED document, on reconstituting it was lost or
(Republic Act No. file in the the lost or destroyed, but entry
26) registry of destroyed or notation of which
deeds, certificate of has not been made
Sections 2 and 3. containing the title. on the reconstituted
Titles shall be description of certificate of title.
reconstituted from the property, or Section 6. The This reservation
such of the sources an register of deeds shall be noted as an
hereunder authenticated may motupropio encumbrance on
enumerated as may copy thereof, reconstitute a the reconstituted
be available, in the showing that its certificate of title certificate of title.
following order: original had from its
been registered, corresponding Section 19. If the
(a) The owner's and pursuant to owner's duplicate, certificate of title
duplicate of the which the lost and, for this considered lost or
certificate of or destroyed purpose, may destroyed, and
title; transfer compel the subsequently found
(b) The co-owner's, certificate of registered owner, or or recovered, is not
mortgagee's, or title was issued, any person holding in the name of the
lessee's in case of such owner's same person in
whose favor the reconstitution, shall  In contrast to A notice of lis
reconstituted be followed with voluntary pendens is proper
certificate of title respect to the new registration, a in actions:
has been issued, certificate of title, mere entry in
the register of and to such new the day book 1. To recover
deeds should bring liens or (primary entry possession of
the matter to the encumbrances, if book) of the real estate;
attention of the any, as may have Registry of 2. To quiet title
proper Court of First been made on the Deeds in cases thereto;
Instance, which, latter after the of involuntary 3. To remove
after due notice and issuance thereof. registration is a clouds upon the
hearing, shall order sufficient notice title thereof;
the cancellation of Involuntary to all persons 4. For partition;
the reconstituted dealings even if the and
certificate of title owners 5. Any other
and render, with Involuntary dealings duplicate CT is proceeding of
respect to the refer to writs, not presented any kind in
memoranda of new orders or processes to the Register court directly
liens or issued by a court of of Deeds. affecting the
encumbrances, if record affecting (Because the title to the land
any, made in the registered land proceedings or the use or
reconstituted which by law should were occupation
certificate of title, be registered to be involuntary, the thereof or the
after its effective. They owner’s CT may building
reconstitution, such likewise refer to not be available thereon. (Sec.
judgment as justice instruments which because the 76, PD 1529, Sec.
14, Rule 13, Rules
and equity may are not the willful owner did not
of Court)
require: Provided, acts of the freely enter into
however, That, if registered owner the transaction Purposes of lis
the reconstituted and which may involved.) pendens:
certificate of title have been executed
has been cancelled even without his 1. Lis pendens 1. To protect the
by virtue of any knowledge or rights of the
deed or instrument, against his consent. Lis pendens party causing
whether voluntary These dealings literally means a the registration
or involuntary, or by include: pending suit. The of the lis
an order of the Doctrine of lis pendens, and
court, and a new 1. Writs of pendens refers to 2. To advise 3rd
certificate of title attachment, the jurisdiction, persons who
has been issued, injunction of power or control, purchase or
the procedure judgment; which a court contract on the
prescribed above, 2. Sales of acquires over subject
with respect to execution of property involved in property that
memoranda of new judgment; a suit, pending the they do so at
liens or 3. Sales for taxes; continuance of an the peril and
encumbrances 4. Adverse claims; action, and until subject to the
made on the 5. Notices of final judgment. result of the
reconstituted lispendens pending
certificate of title, litigation.
after its
Notice of lis decree shall be owner thereof. Shall Under PD 1529, a
pendens rendered have been filed and notice of lispendens
abortive and registered. (Section may be cancelled:
 This is an impossible of 76, PD 1529, Property
Registration Decree)
announcement execution. 1. Upon order of
to the whole (Laroza, et al. vs. D the court, or
world that a Guia, G.R. L-45252, Effects of Lis 2. Upon action by
particular real
Jan. 31, 1985) Pendens: the register of
property is in No action to recover Deeds, upon
litigation. The 1. Keeps the verified petition
possession of real subject matter
inscription estate, or to quiet of the party
serves as a of the litigation who caused the
title thereto, or to within the
warning that remove clouds upon registration
one who power of the thereof. (Section
the title thereof, or court until the
acquires an for partition, or 77, PD 1529)
interest over entry of final
other proceedings judgment so as
litigated of any kind of court a. Before final
property does to prevent the judgment
directly affecting defeat of the
so at his own the title to land or
risk, or that he latter by May be done upon
the use or successive
gambles on the occupation thereof proper showing that
result of the alienations. the notice is for the
or the buildings
litigation of the thereon, and no purpose of
property. 2. Binds the molesting the
judgment, and no purchaser of
(Marasigan vs. IAC, adverse party, or
152 SCRA proceeding to the land subject
vacate or reverse that it is not
253[1987]) of the litigation
any judgment, shall necessary to protect
to the judgment the rights of the
 The doctrine of have any effect or decree that
lis pendens is upon registered party who caused it
will be to be recorded.
founded upon land as against promulgated
reason of public persons other than thereon
policy and the parties thereto, A mere incident to a
whether such a court action, and
necessity, the unless a purchaser is a
purpose of memorandum or may therefore be
bona fide ordered by the
which is to keep notice stating the purchaser or
the subject institution of such court having
not. jurisdiction of it at
matter of the action or
litigation within proceeding and the any given time
3. Does not create (certificate of
the power of court wherein the a non-existent
the Court until same is pending, as finality issued by
right or lien. the court will not
the judgment or well as the date of (Carrasco v. CA,
decree shall the institution G.R. No. 123672, suffice; should be
have been thereof, together Dec. 14, 2005) done with judicial
entered; with a reference to authority).
otherwise, by the number of the
successive certificate of title, Cancellation of b. After final
alienations and an adequate Lis Pendens judgment
pending the description of the
litigation, its land affected and Deemed cancelled
judgment or the registered upon the
registration of a 3rd persons. insolvency or or interest
certificate of the (Marasigan v. IAC, 152 order or therein, is
SCRA 253 [1987])
Clerk of Court in adjudication in expropriated (or
which the action or bankruptcy with taken by
proceeding was Notice of the insolvent’s eminent
pending stating the Insolvency or bankrupt’s domain), the
manner of disposal duplicate National
thereof.  Whenever certificate of Government,
proceeding in title; but the province, city,
Under the Rules of bankruptcy or new certificate municipality, or
Court, a notice of insolvency, or shall state that any other
lispendens may be analogous it is entered to agency or
cancelled on two proceedings, him as assignee instrumentality
grounds: are instituted in insolvency or exercising such
against a debtor trustee in right, shall file
1. If the who owns bankruptcy or for registration
annotation was registered land, other in the proper
for the purpose it shall be the proceedings, as Registry a
of molesting the duty of the the case may certified copy of
title of the officer serving be. (Section 83, the judgment;
adverse party; the notice of PD 1529)  Private lands
or the institution  Under the taken for public
2. When the of such Insolvency law, use under the
annotation is proceedings on creditors power of
not necessary the debtor to holding security eminent domain
to protect the file a copy shall vote for become
title of the party thereof with the the election of unquestionably
who caused it office of the an assignee. part of the
to be recorded. Register of But if they fail public domain.
(Section 145,
Deeds of the to elect an
Rule 13 1997 province or city assignee, or if  Section 85 of
Rules of Court) where the land vacancy occurs, PD 1529
of the debtor the court shall authorizes the
In case of lies. The appoint an Register of
subsequent sales or assignee or assignee and fix Deeds to issue
transfers, the trustee the amount of in the name of
Registry of Deeds is appointed by his bond. (Sec. the national
duty bound to carry the court in 30 and 31, Act. No.
government
such 1956)
over the notice of new certificates
lispendens on all proceedings of title covering
titles to be issued. shall be entitled such
Otherwise, if he to the entry of expropriated
cancels any notice anew certificate lands.
of the 2. Expropriated
of lispendens in Consequently,
registered land Land
violation of his duty, such lands
he may be held of the debtor or registered
bankrupt, upon  According to
civilly and even under PD 1529
presenting and Section 85 of
criminally liable for are not
filing a certified PD 1529,
any prejudice exclusively
copy of the whenever any
caused to innocent private or
assignment in registered land,
 patrimonial certificate of title, new parties severally
land. Thus, title, and certificates of entitled thereto
lands of the thereupon the title shall be in accordance
public domain Register of issued to the with the
may also be Deeds shall parties severally approved
registered enter upon the entitled thereto partition and
pursuant to certificate a in accordance distribution.
existing laws. memorandum with the (Section 92, PD
(Chavez v. PEA, thereof, making approved 1529)
G.R. No. 133250,
reference to the partition and
May 6, 2003)
letters and/or distribution. 4. Attachment
3. Devise/Desce will by their file (Section 92, PD
number, and 1529). An attachment, or a
nt
(Succession) the date of copy of any writ,
filing the same Registration of order or process
Filing of letters of (Section 87, PD Final Distribution issued by a court of
1529) of Estate record, intended to
administration
and will create or preserve
Registration of  A certified copy any lien, status,
 Before the Final Distribution of the partition right, or attachment
executor or of Estate and distribution, upon registered
administrator of together with land, shall be filed
the estate of a  A certified copy the final and registered in
deceased owner of the partition judgment or the Registry of
of registered and distribution, order of the Deeds for the
land may deal together with court approving province or city in
with the same, the final the same or which the land lies,
he shall file with judgment or otherwise and, in addition to
the office of the order of the making final the particulars
Register of court approving distribution, required in such
Deeds a the same or supported by papers for
certified copy of otherwise evidence of registration, shall
his letters of making final payment of contain a reference
administration distribution, estate law or to the number of
or if there is a supported by exemption the certificate of
will, a certified evidence of therefrom, as title to be affected
copy thereof payment of the case may and the registered
and the order estate law or be, shall be owner or owners
allowing the exemption filed with the thereof, and also if
same, together therefrom, as Register of the attachment,
with the letters the case may Deeds, and order, process or
testamentary or be, shall be upon the lien is not claimed
of filed with the presentation of on all the land in
administration Register of the owner’s any certificate of
with the will Deeds, and duplicate title a description
annexed, as the upon the certificate of sufficiently accurate
case may be, presentation of title, new for identification of
and shall the owner’s certificates of the land or interest
produce the duplicate title shall be intended to be
duplicate certificate of issued to the affected. A
restraining order, proceeding in alleged right or petition
injunction or which it was interest, and withdrawing his
mandamus issued attached. Thus, how or under adverse claim.
by the court shall conveyance in whom acquired,
be entered and fraud of a reference to  After lapse of
registered on the creditor. (Manila the number of 30 days
certificate of title Mercantile Co. v. the certificate a. By party in
affected, free of Flores, 50 Phil of title of the interest: by
charge. (Section 69, 759 [1927] registered filing a verified
PD 1529) owner, the petition for
5. Adverse Claim name of the cancellation;
Attachment is a registered b. No 2nd adverse
legal process of  An adverse owner, and a claim based on
seizing another’s claim is a notice description of the same
property in of a claim the land in ground may
accordance with a adverse to the which the right thereafter be
writ or judicial order registered or interest is registered by
for the purpose of owner, the claimed. the same
securing satisfaction validity of which (Section 70, PD claimant.
of a judgment yet is yet to be 1529)
to be rendered. established in  After
court at some  Period of cancellation, no
 Writ of future date, and effectivity: 30 adverse claim
attachment is is no better days from the shall be
used primarily than a notice of date of registered by
to seize the lispendens registration; the same
debtor’s already pending lapse of the 30- claimant
property in in court (Acap day period does
order to secure vs. CA, 251 not result in the  Cancellation of
the debt or SCRA 30) automatic the adverse
claim of the cancellation of claim is still
corresponding  Whoever claims the adverse necessary to
certificate of any part or claim (a petition render it
title. (DBP v. interest in for cancellation ineffective;
Acting RD of registered land must first be otherwise, the
Nueva Ecija, 162 adverse to the filed) inscription will
SCRA 450[1988] registered remain
owner, arising How cancelled: annotated and
 By the subsequent to shall continue
dissolution of the date of the  Before lapse as a lien upon
an attachment original of 30 days the property
levied on registration, (Sajonas v. CA,
property, may, if no other a. By party in G.R. No.
through filing of provision is interest: by 128563, March
bond, the made in this filing a petition 25, 2004)
released Decree for in the proper  The register of
property registering the RTC for Deeds cannot
becomes free same, make a cancellation unilaterally
and no longer statement in b. By claimant: by cancel the
liable to the writing setting filing a sworn adverse claim.
results of the forth fully his
 There must be on the same or a registration; private
a court hearing better right than the and ownership.
for the purpose registered on the 3. No other Their
(Diaz-Dutante v. same or a better provision is subsequent
Ong. G.R. No. right than the made in the release of forest
130352, registered owner, Decree for the lands as
November 9, and that any registration of alienable and
1998). transaction such right or disposable
regarding the claim. (Sec. 70, lands does not
Purpose of disputed land is PD 1529; validate the
Adverse Claim subject to the Arrazola v. grant (Ituralde v.
outcome of the Bernas, 86 SCRA Falcasantos, 301
To apprise 3rd disputed land is 279 [1978] SCRA 293)
persons that there subject to the
is a controversy outcome of the  Note that a  Minerals found
over the ownership dispute. mere money in public and
of the land and to claim CANNOT even in private
preserve and  Subsequent be registered as lands belong to
protect the right of sale of the an adverse the state (Rep v.
the adverse claim. CA and Dela Rosa,
property 160 SCRA 228)
claimant during the covered by a  Formal
pendency of the certificate of requisites must
3. Foreshore
controversy. Such is title cannot be complied
lands;
registered by filing prevail over an with.
a sworn statement adverse claim,  Failure to do so
 Those are
with the RD of the duly sworn to renders such
parts of the
province where the and annotated adverse claim
land adjacent
property is located, on the non-registrable
to the sea
setting forth the certificate of and ineffective.
which is
basis of the claimed title previous to alternately
right together with the sale. covered and
other data pertinent (Sajonas v. CA, 258 IV. NON-
left dry by the
thereto. SCRA 79[1196] REGISTRABL
ordinary flow
E
of the tides
Annotation is a Requisites for PROPERTIES (Republic v. CA,
measure designed Valid Adverse 299 SCRA 199)
to protect the Claim: Properties
interest of a person outside the  They can only
over a piece of real 1. The claimant’s Commerce of be disposed of
property where the right or interest Men; under foreshore
registration of such in registered lease or
interest or right is land must be 1. Lands for revocable
not otherwise adverse to the public use or permit
provided for by Act registered public application filed
496, now PD 1529. owner; service; with the Lands
It serves as a 2. Such right or 2. Forest and Management
warning to third interest must mineral lands; Bureau.
parties dealing with have arisen
the said property subsequent to  They are public 4. Swamplands;
that someone is the date of lands not 5. Mangrove
claiming an interest original subject to lands;
6. Watershed; system shall be ground or grounds  It is true that
7. Rivers, lakes, valid, except as for his refusal. petitioner was
and creeks; between the parties able to present
8. Navigable rivers thereto, unless such Note: It may be testimonial
cannot be instrument shall appealed to the evidence that
appropriated have been recorded Commissioner of his
and registered in the manner Land Registration in predecessors-
(Republic vs. prescribed in the accordance with in-interest had
Sioson, 9 SCRA
office of the Sec. 117. possessed the
533).
9. Seashore; and, Register of Deeds land prior to 12
10. Reclaimed and for the province or Register of Deeds June 1945 or
public city where the land shall endorse even
reservation. lies. among other things, earlier. Howeve
the file number and r, it has been
 Lands inside a Note: Tax sale, the date all well as established that
military and attachment and the hour and the subject
naval levy, notice of lis minute when the property
reservation pendens, adverse document was became
cannot be claim and other received for alienable and
registered instruments in the recording as shown disposable only
(Republic vs. nature of in the Primary Entry on 3 January
Southside involuntary dealings Book, returning to 1968 by virtue
Homeowners with respect to the registrant or of Forestry
Association, G.R.
unregistered lands, person in interest Administrative
No. 156951, Sept.
2, 2006). if made in the form the duplicate of the Order No. 4-
sufficient in law, instrument, with 1141. It is
 The land must shall likewise be proper annotation, already settled
first be declared admissible to record certifying that he that any period
as alienable and under this section. has recorded the of possession
disposable instrument after prior to the
agricultural land Procedure for reserving one copy date when the
before the entry Registration of thereof to be subject
can be counted Instruments furnished the property was
for purposes of dealing with provincial or city classified as
registration. unregistered assessor. alienable and
(Pagkatipunan vs. land: disposable is
CA GR. No. 129682, Register of Deeds
March 21, 2002).
inconsequential
The Register of shall collect the and should be
Deeds shall then same amount of excluded from
V. DEALINGS
record the fees prescribed for the
WITH
instrument. similar services for computation of
UNREGISTER
However, in case the registration of the period of
ED LANDS
the Register of deeds or instrument possession;
Deeds refuses its concerning such possession
No deed,
administration to registered lands. can never ripen
conveyance,
record, said official into ownership
mortgage, lease, or
shall advise the MUNIMENTS OF and unless the
other voluntary
party in interest in TITLE / ADVERSE land had been
instrument affecting
writing of the POSSESSION classified as
land not registered
under the Torrens alienable and
 disposable, the evidence and er, if the holders of public domain for
rules on the testimony the land present a residential,
confirmation of as regards the deed of conveyance commercial, or
imperfect title actual industrial
in their favor from
shall not apply possession for purposes, on the
thereto. more than 30 its former owner to
other hand, are
(Ponciano vs. LLDA, years by support their claim governed by
G.R. No. 174536, of ownership, the
respondent’s Sections 58 to 68,
October 29, 2008)
predecessors- declaration of Title III of the same
Note: The in-interest with ownership and tax statute. Without a
classification of the general receipts relative to definite
subject property is submissions in classification of the
the property may
important for it proving his subject property,
claims amply be used to prove
determines the there results
established that their good faith in reasonable doubt as
applicable statutory
respondent and occupying and to the appropriate
requirements and
procedures for the his possessing legal means for
proper disposition predecessors- it. Additionally, petitioner to acquire
thereof. Confirmatio in-interest when considered title to the same.
n or legalization of owned and
with actual
an imperfect or possessed the  The pieces of
subject lots possession of the documentary
incomplete title
openly, property, tax evidence and
under Section 48,
continuously, receipts constitute the testimony
Title II of the Public
Land Act, as exclusively, and evidence of great as regards the
amended, applies notoriously, as value in support of actual
only to agricultural required by our possession for
the claim of title of
lands. Lands of the registration more than 30
ownership by
laws. (Republic vs. years by
public domain for prescription.
Ng, G.R. No. respondent’s
residential, 182449, March 6,
commercial, or 2013)
predecessors-
industrial Note: The in-interest with
purposes, on the Note: The classification of the general
subject property is submissions in
other hand, are voluntary
important for it proving his
governed by declaration of a determines the claims amply
Sections 58 to 68, piece of property applicable statutory established that
Title III of the same
for taxation requirements and respondent and
statute. Without a
purposes is an procedures for the his
definite
announcement of proper disposition predecessors-
classification of the
thereof. Confirmatio in-interest
subject property, one’s claim against
n or legalization of owned and
there results the State and all
an imperfect or possessed the
reasonable doubt as other interested incomplete title subject lots
to the appropriate parties. In fact, under Section 48, openly,
legal means for
these documents Title II of the Public continuously,
petitioner to acquire
already constitute Land Act, as exclusively, and
title to the same.
prima facie amended, applies notoriously, as
only to agricultural required by our
 The pieces of evidence of
lands. Lands of the registration
documentary possession. Moreov
 laws. (Republic vs. ownership by (Vinzons-Chato v. the same
Ng, G.R. No. prescription. Fortune, G.R. No. general
182449, March 6,
141309, June 19, neighborhood
2013)
2007) and in the same
Note: The PART XIII: general line of
TORTS Elements of Tort practice
voluntary
AND DAMAGES or an Actionable ordinarily
declaration of a Conduct possess and
piece of property exercise in like
BOOK I – TORTS
for taxation 1) Duty cases. (Lucas v.
purposes is an I. Definition Tuano, G.R.
announcement of  When a patient No. 178763,
It is an act or engages the April 21, 2009)
one’s claim against
omission producing services of a
the State and all
an injury to physician, a 2) Breach
other interested physician-
another, without
parties. In fact, any previous patient  There
these documents existing lawful relationship is is breach of
already constitute relation of which generated. And duty of care,
prima facie the said act or in accepting a skill and
omission may be case, the diligence, or the
evidence of
said to be a natural physician, for all improper
possession. Moreov intents and performance of
outgrowth or
er, if the holders of purposes, such duty, by
incident. (Robles
the land present a vs. Castillo, 61 O.G. represents that the attending
deed of conveyance 1220, 5 C.A.R. [2s] he has the physician when
in their favor from 213) needed training the patient
its former owner to and skill is injured in
Essentially, “tort” possessed by body or in
support their claim
consists in the physicians and health [and
of ownership, the surgeons this] constitutes
violation of a right
declaration of practicing in the the actionable
given or the
ownership and tax omission of a duty same field; and malpractice.
receipts relative to imposed by law. that he will Proof of such
the property may (Naguiat vs. NLRC, employ such breach must
be used to prove G.R. No. 116123, training, care, likewise rest
March 13, 1997) and skill in the upon the
their good faith in
treatment of testimony of an
occupying and the patient. expert witness
A tort is a wrong, a
possessing Thus, in that the
tortious act which
it. Additionally, has been defined as treating his treatment
when considered the commission or patient, a accorded to the
with actual omission of an act physician is patient failed to
by one, without under a duty to meet the
possession of the
right, whereby [the former] to standard level
property, tax exercise that of care, skill
another receives
receipts constitute degree of care, and diligence
some injury, directly
evidence of great or indirectly, in skill and which
value in support of person, property, or diligence, which physicians in
the claim of title of reputation. physicians in the same
 general injuring also in the
neighborhood another. performance of 2. Intentional
and in the same one’s duties. torts -
general line of  This principle is (Nikko Hotel perpetrated by
practice based upon the Manila Garden one who
ordinarily famous maxim vs. Reyes, intends to do
possess and suum jus 2005) that which the
exercise in like summa injuria law has
cases. (Lucas v. (the abuse of a Article 20, NCC. declared to be
Tuano, G.R. right is the Every person who, wrong.
No. 178763, greatest contrary to law
April 21, 2009) possible willfully or 3. Strict Liability
wrong). negligently causes - based on the
(Arlegui v. CA damage to another, breach of an
3) Injury G.R. No. shall indemnify the absolute duty to
126437, Mar. 6, latter for the same. make
4) Proximate 2002) something safe.
causation  When a right is Article 21, NCC. Strict liability is
exercised in a Any person who imposed by
 The proximate manner, which willfully causes loss articles 1314,
cause of an does not or injury to another 1711, 1712,
injury is that conform to the in manner that is 1723, 2183,
cause, which, in norms in NCC contrary to morals, 2187, 2189,
the natural and 19, and results good customs or 2190, 2191,
continuous in damage to public policy shall 2192, 2193,
sequence, another, a legal compensate the NCC.
unbroken by wrong is latter for the
any efficient thereby damage. III. TORTFEASOR
intervening committed.
cause, produces  Article 19, II. CLASSIFICATI Whoever by act or
the injury, and known to ON OF TORTS omission causes
without which contain what is According to damage to another,
the result would commonly scope: there being fault or
not have referred to as negligence, is
occurred. the principle of a. General obliged to pay for
abuse of rights, b. Specific the damage done.
Elements of is not a (Art. 2176, NCC)
abuse of right panacea for all According to
based on Article human hurts manner of Direct tortfeasor:
19, NCC; and social commission:
grievances. The 1. Natural persons
1) There is a legal object of this 1. Negligent tort 2. Juridical
right or duty article is to set - consists in the persons
2) Which is certain failure to act
exercised in bad standards which according to the Direct Liability –
faith must be standard of liability for one’s
3) For the sole observed not diligence own acts
purpose of only in the required under
prejudicing or exercise of the attendant Vicarious Liability
one’s rights but circumstances. – liability of a
person for the acts damages article 2176 aid or abet the
of another for caused by their shall be commission of a
whom the former is employees in applicable. tort, or who
responsible the service of approve of it
the branches in 6. Teachers and after it is done,
Persons which the latter heads of for their
vicariously liable are employed establishments benefit;
or made or on the of arts and  They are each
responsible for occasion of trades solidarily liable
others: their functions. as principals
Teachers or (Art. 2194,
1. Parents 4. Employers heads of NCC)
establishments
The father and, Employers shall of arts and IV. CONCEPTS
in case of his be liable for the trades shall be AND
death or damages liable for DOCTRINES:
incapacity, the caused by their damages
mother, are employees and caused by their 1. RES IPSA
responsible for household pupils and LOQUITUR
the damages helpers acting students or (The thing or
caused by the within the apprentices, so transaction
minor children scope of their long as they speaks for
who live in their assigned tasks, remain in their itself)
company. even though custody.
the former are As a rule of
2. Guardian not engaged in  The evidence, the
any business or responsibility of doctrine of res ipsa
Guardians are industry. persons loquitur is peculiar
liable for vicariously liable to the law of
damages shall cease negligence, which
caused by the when the recognizes that
minors or persons prove prima facie
incapacitated 5. State that they negligence may be
persons who observed all the established without
are under their The State is diligence of a direct proof, and
authority and responsible in good father of a furnishes a
live in their like manner family to substitute for
company. when it acts prevent specific proof of
through a damage. negligence. (Capili
3. Owners and special agent; vs. Sps. Cardana
managers of but not when Joint Tortfeasors: G.R. No 157906
establishments the damage has Nove. 2, 2006)
and enterprises been caused by  All the persons
the official to who command, The doctrine of res
The owners and whom the task instigate, ipsa loquitor states
managers of an done properly promote, that the happening
establishment pertains, in encourage, of an injury permits
or enterprise which case advise, an inference of
are likewise what is countenance, negligence where
responsible for provided in cooperate in, plaintiff produces
substantial evidence care. (Africa v. (b) it is caused by is also known as the
that injury was Caltex (Phil.), an instrumentality “doctrine of
caused by an Inc., G.R. No. within the exclusive imputed
agency or L-12986] control of the negligence.”
instrumentality defendant or
under exclusive Requisites: defendants; and Note: Art 2180, par
control and 2 of the Civil Code
management of a. The thing that (c) the possibility of which holds the
defendant, and that caused the contributing father liable for
the occurrence was injury is under conduct that would damages has been
such that in the the exclusive make the plaintiff modified by the
ordinary course of control of the responsible is Family Code and PD
things would not defendant eliminated. (BJDC 603. Art. 211 of the
happen if b. That the Construction v. FC declare joint
reasonable care had occurrence was Lanuzo, G.R. No. parental authority
been used. such that in the 161151, March 24, of the mother and
(Layugan vs. IAC ordinary course 2014) father over common
G.R. No. 73998 of things would children. The
Nov. 14, 1998) not happen if Limitation: The parent(s) exercising
reasonable care doctrine can be parental authority
 Where the had been used; invoked when and are liable for the
thing which c. The injury only when, under torts of their
caused the happened and the circumstances children.
injury no sufficient involved, direct
complained of explanation was evidence is absent Legal Provisions:
is shown to be given by the and not readily
under the defendant available. (Jarcia  Liability for acts
management of d. The injury vs. People of the or omission of
the defendant suffered must Philippines, G.R. those persons
or his servants not have been No. 187926. Feb for whom one is
and the due to any 15, 2012) responsible, the
accident is such voluntary action employer,
as in the or contribution 2. PRINCIPLE parents,
ordinary course of the person OF guardians,
of things does injured VICARIOUS teachers and
not happen if LIABILITY heads of
those who have For the doctrine of schools of Arts
its res ipsa loquitur to A person who has and Trade
management or apply, the following not committed the (however, now
control use requirements must act or omission, it applies to all
proper care, it be shown to exist, which caused kinds of
affords namely: damage or injury to schools), and
reasonable another, may the owner and
evidence, in the (a) the accident is nevertheless be manager of
absence of of a kind that held civilly liable to establishments
explanation by ordinarily does not the latter either are solidarily
the defendant, occur in the directly or liable. However,
that the absence of subsidiarily under under the
accident arose someone’s certain Revised Penal
from want of negligence; circumstances. This Code, the
 employer is minor. The living in their  Employers shall
subsidiarily parents, judicial company. be liable for the
liable, that is, guardians or (Note: Under damages
only if the the persons the Civil Code, caused by their
employee is exercising the liability of employees and
insolvent. (Art. substitute mother is household
2180, NCC) parental subsidiary, but helpers acting
 The school, its authority over in the Family within the
administrators said minor shall Code, the scope of their
and teachers, be subsidiarily liability is joint). assigned tasks,
or the liable. (Art.  The guardian is even though
individual, 219, FC) liable for acts of the former are
entity or  Parents and the minors or not engaged in
institution other persons incapacitated any business or
engaged in exercising under their industry. (Art
child care shall parental authority and 2180, par. 5,
have special authority shall living in their NCC)
parental be civilly liable company.  The defense of
authority and for the injuries  The owners and due diligence in
responsibility and damages manager of the selection
over the minor caused by the establishment and supervision
child while acts or are liable for of the employee
under their omissions of acts of their is not available
supervision, their employees in if the defendant
instruction or unemancipated the service of is sued under
custody. children living in the branches in the Revised
 Authority and their company which they are Penal Code.
responsibility and under their employed or on  One who hires
shall apply to all parental the occasion of an independent
authorized authority their functions. contractor but
activities subject to the  Employers are controls the
whether inside appropriate liable for acts or latter’s works is
or outside the defenses omission of responsible also
premises of the provided by their employees for the latter’s
school, entity or law. (Art. 221, and household negligence.
institution. (Art. FC) helpers who are
218, FC) acting within  The State is
 Those given the Liability for acts the scope of liable when
authority and or omissions of their assigned acting through
responsibility those persons for tasks even if a special agent
under the whom one is the employers and not when
preceding responsible: are not the damage has
Article shall be engaged in any been caused by
principally and  Father, or in business or the official to
solidarily liable case of death or industry. whom the task
for damages incapacity, the done properly
caused by the mother, is liable Notes on pertains.
acts or for damage Employers: (Government v.
omissions of the caused by Springer, 50
unemancipated minor children
 Phil. 259, April 3. School has nature, in which have either
01, 1927) liability based case, it is the "control or
on contract head thereof supervision"
Special Agent – (PSBA case); who should be over said street
those specially thus: responsible or road. (City of
commissioned to (Amadora v. Manila vs.
carry out the acts  If the culprit is CA, 160 SCRA Teotico G.R.
complained of a teacher, sue 315). No. L-23052
outside of such school as Jan. 29, 1968)
agent’s regular employer (St.  Provinces, Cities
duties. (Meritt v. Francis ruling) and 3. PROXIMATE
Insular Gov’t, 34  If culprit is a Municipalities CAUSE
Phil 311) stranger, sue are liable for
school based on damages for Doctrine of
 Teachers or contract (PSBA the death or Proximate Cause
heads of ruling) injuries suffered
establishments  If culprit is a by any person, It is not enough
of arts and student apply by reason of that there be just
trades are liable Art. 2180 the defective some kind of
for acts of their condition of connection between
pupils and  Art. 2180 roads, streets, fault or negligence
students or should apply to bridges, public and the loss or
apprentices all schools, buildings, and injury, but that the
who remain in academic and other public former must be the
their custody. non-academic. works under proximate cause of
This applies to As a general their control the latter. The
academic rule, where and supervision. proximate cause is
institutions as school is that “which in
well. Liability academic, tort  Under Article natural and
attaches to the committed by 2189 of the Civil continuous
teacher-in- the student Code, it is not sequence, unbroken
charge. should attach to necessary for by any efficient
the teacher. the liability intervening cause,
General rule: Except in cases therein produces the injury
Schools are not of established to and without which
liable as party establishments attach that the the result would not
defendants of arts and defective roads have occurred” (38
trade where it is or Am. Jur. 695;
Exception: the head streets belong t Fernando vs. Court
thereof, and o the province, of Appeals, 208
1. Schools are only he may be city or SCRA 714)
expressly made held liable. municipality
liable (Art. 218, Thus, teachers from which Test of Proximate
FC) in general shall responsibility is Cause:
2. School’s liability be liable for the exacted. What
as an employer acts of their said article 1. Negligence
(St. Francis students except requires is that 2. Damage
High School vs. where the the province, 3. Casual
CA) school is city or connection
technical in municipality between the
 damage and the conduct is a the illegal Corp. vs. CA,
negligent act or substantial invasion of a G.R. No. 88694,
omission factor in legal right; January 11,
bringing about damage is the 1993)
Two part tests of harm to loss, hurt or
Proximate cause: another, the harm which  One may use
fact that the results from the any lawful
1. Cause –in-fact, actor neither injury; and means to
the inquiry foresaw nor damages are accomplish a
stops should have the recompense lawful purpose
2. Policy test foreseen the or and though the
extent of the compensation means adopted
 If the harm or the awarded for the may cause
defendant’s manner in damage damage to
negligence was which it suffered. Thus another, no
not the cause- occurred does there can be cause of action
in-fact, the not prevent him damage without arises in the
inquiry stops. from being injury in those latter’s favor.
 If it is, the liable instances in An injury or
inquiry shifts to (Philippine which the loss damage
the question of Rabbit Bus or harm was occasioned
limit of the Lines, Inc. vs. not the result of thereby is
defendant’s IAC G.R. No. a violation of a damnun absque
liability. (Policy 661102-04 legal duty. injuria. The
test) August These situations courts can give
 In determining 30,1990) are often called no redress for
the proximate 3. Necessary and damnun absque hardship to an
cause of the sufficient test injuria. individual
injury, it is first (Equitable resulting from
necessary to 4. DAMNUM Banking action
determine if the ABSQUE Corporation vs. reasonably
defendant’s INJURIA Calderon, G.R. calculated to
negligence was No. 156168, achieve a lawful
the cause-in-  A principle that December 14, means. (Sps.
fact of the involves 2004) Custodio, et.al.
damage to the damage but no vs. CA, et. al.,
plaintiff. liability therefor  Whatever injury G.R. No.
(Cause-in-fact is incurred; or damage may 116100,
test) hence there is have been February 9,
no legal injury. sustained by 1996)
Main test of An example is private
cause-in-fact fortuitous respondents by 5. PRESUMPTIO
event. reason of the NS OF
1. Sine qua non rightful use of NEGLIGENCE
test – refers to  There is a the said land by
absolute material petitioners is A. Res Ipsa
necessity distinction damnun absque Loquitor
2. Substantial between injuria. B. Respondent
factor test - if damages and (Albenson Superior
the actor's injury. Injury is Enterprises
C. Violation of ART. 2184. In violating any traffic reasonable care
Traffic Rules motor vehicle regulation. and prudence
D. Dangerous mishaps, the owner might have
Weapons and is solidarily liable If the owner was avoided
Substances with his driver, if not in the motor injurious
the former, who vehicle, the consequences
A. RES IPSA was in the vehicle, provisions of Art. to the plaintiff.
LOQUITOR could have, by the 2180 are applicable.
use of due  Where both
See discussion diligence, prevented D. DANGEROUS parties are
above on Res the misfortune. It is WEAPONS negligent but
Ipsa Loquitur disputably AND the negligent
presumed that a SUBSTANCES act of one
B. RESPONDENT driver was succeeds that
SUPERIOR negligent, if he had Art. 2188. There is of the other by
been found guilty of prima facie an appreciable
When an injury is reckless driving or presumption of interval of time,
caused by the violating traffic negligence on the the one who
negligence of an regulations at least part of the has the last
employee, there twice within the defendant if the reasonable
instantly arises a next preceding two death or injury opportunity to
presumption of law months. If the results from his avoid the
that there was owner was not in possession of impending harm
negligence on the the mirror vehicle, dangerous weapons and fails to do
part of the the provisions of or substances, such so, is
employer in the Art. 2180 are as firearms and chargeable-with
selection or in the applicable. poison, except the
supervision of its when the consequences,
employees. The If the causative possession or use without
presumption, factor was the thereof is reference to the
however, may be driver's negligence, indispensable in his prior negligence
rebutted by a clear the owner of the occupation or of the other
showing on the part vehicle who was business. party. (Picart v.
of the employer present is likewise Smith, 37 Phil
that is has held liable if he 809)
could have 6. LAST CLEAR
exercised the care  The doctrine of
prevented the CHANCE
and diligence of a last clear
good father of a mishap by the chance applies
exercise of due  Even though a
family in the only in a
diligence. person’s own
selection and situation where
acts may have
supervision of his the defendant,
ART 2185. Unless placed him in a
employees. (China having the last
there is proof to the position of peril
Air Lines, Ltd. vs CA fair chance to
contrary, it is an injury
G. R. No. 45985. avoid the
presumed that a results, the
May 18, 1990) impending harm
person driving a injured is
and failed to do
C. VIOLATION motor vehicle has entitled to
so, becomes
OF TRAFFIC been negligent if at recover if the
liable for all the
RULES the time of the defendant
consequences
mishap, he was through the
of the accident
exercise of
 notwithstanding and drivers of in which the 116100,
the prior colliding vehicles. It loss or harm February 9,
negligence of does not arise was not the 1996)
the plaintiff. where a passenger result of a
demands violation of a  The law
In order that responsibility from legal duty. In affords no
the doctrine of the carrier to such cases the remedy for
last clear enforce its consequences damages
chance may be contractual must be borne resulting from an
applied, it must obligations. For it by the injured act which does
be shown that would be person alone, not amount to a
the person who inequitable to the law affords legal injury or
allegedly had exempt the no remedy for wrong.
the last negligent driver and damages
opportunity to its owners on the resulting from Essential
avert the ground that the an act which Requisites for the
accident was other driver was does not Principle of
aware of the likewise guilty of amount to a Abuse of Right
existence of the negligence. legal injury or can be applied
peril or with (Philippine Rabbit wrong. (Art. 21, NCC):
exercise of due Bus Lines, Inc. v. (Equitable
care should Intermediate Banking 1. The defendant
have been Appellate Court, et Corporation vs. should have
aware of it. al. G.R. Nos. Calderon G.R. acted in a
(Pantranco 66102-04, August No. 156168 manner that is
North Express, 30, 1990) December 14, contrary to
Inc. vs. Baesa 2004) morals, good
G.R. Nos. V. LEGAL customs or
79050-51. INJURY  In order public policy;
November 14, that a plaintiff
1989)  Injury is the may maintain an 2. The acts should
illegal invasion action for be willful; and
Exception: of a legal right; injuries of which
damage is the he complains, he 3. There was
This doctrine of last loss, hurt or must establish damage or injury
chance has no harm which that such injuries to the plaintiff.
application to a results from the resulted from a
case where a injury; and breach of duty Assumption of
person is to act damages are which the Risk
instantaneously, the recompense defendant owed
and if the injury or to the plaintiff a Art. 1174 Except
cannot be avoided compensation concurrence of in cases expressly
by using all means awarded for the injury to the specified by the
available after the damage plaintiff and legal law, or when it is
peril is or should suffered. responsibility by otherwise declared
have been the person by stipulation, or
discovered. (Ibid) Thus, there can causing it. (Sps. when the nature of
be damage Custodio, et.al. the obligation
It applies in a suit without injury in vs. CA, et. al., requires the
between the owners those instances G.R. No. assumption of risk,
no person shall be the modern 1. Express waiver recover before
responsible for concept of of the right to the negligent
those events which social law. It recover act was
could not be cannot be said committed. If
foreseen, or which, that a person 2. Implied waiver was
though foreseen, exercises a made after the
Assumptions
were inevitable. right when he cause of action
a. Dangerous
unnecessarily accrued, the
Unreasonable prejudices Activities waiver is valid
Risk or Harm: another. Over b. Contractual and may be
and above the Relations construed as a
 Negligence is a specific c. Defendant’s condonation of
conduct that precepts of negligence the obligation.
creates an undue positive law are
risk or harm to the supreme
others. norms of Express waiver of IMPLIED
 A plaintiff who justice; and he the right to ASSUMPTION
voluntarily who violates recover:
assumes a risk of them violates Dangerous
harm arising from the law. For this  There is Conditions
the negligent or reason, it is not assumption of
reckless conduct permissible to risk if the  A person, who,
of the defendant abuse our rights plaintiff, in knowing that he
cannot recover to prejudice advance, has is exposed to a
from such harm. others. expressly dangerous
(Amonoy vs. waived his right condition,
Gutierrez, GR to recover voluntarily
“Volenti non fit No. 140420, assumes the
damages for
injuria” – One is 2001) risk of such
the negligent
not legally injured if dangerous
act of the
he consented to the condition, may
defendant.
act complained of Elements of not recover
 A person cannot
or was willing that it assumption of from the
contract away
should occur. defendant who
risk: his right to
recover maintained
 The exercise of such dangerous
a right ends 1. Plaintiff must damages
resulting from conditions.
when the right know that the
disappears, and risk is present, negligence.
Such waiver is Contractual
it disappears 2. He must further
contrary to Relations
when it is understand its
abused, public policy
nature; and  There may be
especially to the and cannot be
3. His choice to implied
prejudice of allowed.
incur is free and However, the assumption of
others. The risk if the
voluntary. waiver
mask of a right plaintiff entered
without the contemplated
by this into a
spirit of justice, contractual
Kinds of prohibition is
which gives it relation with
life, is Assumption of the waiver of
the right to the defendant.
repugnant to risk:
 By entering into in such injury done or a damage suffered.
a relationship activities. wrong sustained as (Custodio v. CA ,
freely and a consequence of GR 116100, (1996))
voluntarily Example: A the breach of some
where the professional athlete duty or violation of Classification of
negligence of is deemed to some right. (PNB v. Damages:
the defendant is assume the risks of RBL Enterprise, G.
obvious, the injury to their trade. R. No. 149569, May A. Under Art.
plaintiff may be 28, 2004). 2197 of the
found to have Defendant’s New Civil
accepted and negligence The pecuniary Code:
consented to it. compensation,
 When the recompense or 1. Moral (see Art.
Examples: plaintiff is satisfaction for an 2217, NCC)
aware of the injury sustained, or 2. Exemplary or
 The employee risk created by as otherwise corrective (see
assumes the the defendant’s expressed, the Art. 2229, NCC)
ordinary risks negligence, yet pecuniary 3. Nominal (see
inherent in the he voluntarily consequences, Art. 2221, NCC)
industry in decided to which the law 4. Temperate or
which he is proceed to imposes for the moderate (see
employed. As to encounter it, breach of some Art. 2224, NCC)
abnormal risks, there is an duty or violation of
there must be implied some rights. 5. Actual or
cogent and admission. (People vs. compensatory
convincing Ballesteros 285 (see Art. 2199,
evidence of Example: If the SCRA 438) NCC)
consent. plaintiff has been 6. Liquidated (see
 When a supplied with a Art. 2226, NCC)
passenger product which he Damage – is the
boards a knows to be unsafe, detriment, injury or B. According to
common he is deemed to loss which is purpose
carrier, he takes have assumed the occasioned by
the risks risk of using such reason of fault of 1. Compensatory
incidental to the unsafe product. another in the 2. Corrective
mode of travel property or person.
he has taken. BOOK II – C. According to
DAMAGES manner of
Dangerous Injury v. Damage determination
Activities I. GENERAL D. Special and
PROVISIONS Injury is the illegal ordinary
 Persons who invasion of a legal
voluntarily Damages – A sum right. Damage is II. ACTUAL AND
participate in of money which the the loss, hurt, or COMPENSATO
dangerous law awards or harm which results RY DAMAGES
activities imposes as from the injury.
assume the pecuniary Damages is the Under Article 2199
risks which are compensation, recompense or of the Civil Code,
usually present recompense or compensation actual or
satisfaction for an awarded for the compensatory
damages are those  Art. 2199. indemnifyin cannot be
awarded in Except as g the presumed but
satisfaction of, or in provided by law plaintiff for must be proved
recompense for, or by any loss with reasonable
loss or injury stipulation, one suffered. certainty.
sustained. They is entitled to an (PNOC (People v.
proceed from a adequate Shipping Ereño, G.R.
sense of natural compensation and No.124706,
justice and are only for such Transport February 22,
designed to repair pecuniary loss Corporation 2000)
the wrong that has suffered by him vs. CA, G.R.
been done, to as he has duly No. Requisites to
compensate for the proved. Such 107518, award actual
injury inflicted and compensation is October 8, damages:
not to impose a referred to as 1998) 1. The loss is
penalty. In actions actual or alleged and
based on torts or compensatory Manner of proved
quasi-delicts, actual damages. Determination: 2. The loss is not
damages include all speculative
the natural and  In the  To justify an
probable absence of award for actual Component
consequences of competent damages, there elements of
the act or omission proof on must be actual
complained of. the actual competent damages/actual
damage proof of the damages may be
There are two kinds suffered, a actual amount recovered:
of actual or party is of loss.
compensatory entitled to Credence can 1. For loss or
damages: one is the nominal be given only to impairment of
loss of what a damages, claims duly earning
person already which, as supported by capacity in case
possesses (daño the law receipts. of temporary or
emergente), and says, is (ComSavings permanent
the other is the adjudicated Bank, G.R. physical injury.
failure to receive as in order No.170942, (Art. 2205,
a benefit that which that a right August 28, NCC)
would have of the 2013) 2. For injury to the
pertained to him plaintiff, plaintiff’s
(lucro cesante). which has  Claimant must business
been produce standing or
The purpose of the violated or competent commercial
law in awarding invaded by proof or the credit (Art.
actual damages is defendant, best evidence 2205, NCC)
to repair the wrong may be obtainable such 3. For attorney’s
that has been done, vindicated as receipts to fees and
to compensate for and justify an award expenses of
the injury inflicted, recognized, therefore. litigation
and not to impose a and not for Actual or 4. Interest
penalty. the purpose compensatory 5. For value of the
of damages loss suffered
 (Art. 2200, 4. In case of a the parties “such interest is
NCC) clearly stipulate it. in fact a part of
6. Unrealized unfounded civil the loss
profits (Art. action or The law allows a suffered” (Arts.
2200, NCC) proceeding party to recover 2209-2213)
7. Indemnity for against the attorney’s fees
Death and loss plaintiff; under a written Interest may be
of earning 5. Where the agreement. Article recovered from:
capacity of the defendant acted 2208 of the Civil
deceased (Art. in gross and Code provides that 1. Obligation
2206 NCC) evident bad an award of consisting in
8. Support for faith in refusing attorney’s fees is payment of a
Compulsory to satisfy the proper if the parties sum of money,
Heirs plaintiff’s plainly stipulate it. and debtor
valid, just and incurs delay
Attorney’s Fees demandable Article 2208 allows (Art. 2209,
and Expenses of claim; attorney’s fees to NCC).
Litigation 6. In actions for be awarded by a 2. Breach of
legal support;’ court when its contract, in the
In the absence of 7. In actions for claimant is discretion of the
stipulation, the recovery of compelled to litigate court (Art.
attorney’s fees and wages of with third persons 2210, NCC)
expenses of household or to incur expenses 3. Crimes and
litigation, other than helpers, to protect his quasi-delicts, at
judicial costs, laborers and interest by reason the discretion of
cannot be skilled workers; of an unjustified act the court
recovered, except: 8. In actions for or omission of the (Art.2211, NCC)
indemnity under party from whom it 4. When obligation
1. When workmen’s is sought. The is judicially
exemplary compensation matter cannot and demanded (Art.
damages are and employer’s should not be left to 2212, NCC)
awarded; liability laws; speculation and 5. Unliquidated
2. When the 9. In a separate conjecture. claims or
defendant’s act civil action to (Spouses damages in
or omission has recover civil Hernandez, et al. v. which the
compelled the liability arising Dolor, et al, G.R. demand when
plaintiff to from a crime; No. 160286, July established with
litigate with 10. When at least 30, 2004) reasonable
third persons or double judicial INTEREST certainty (Art.
to incur costs are 2213, NCC)
expenses to awarded;  The code
protect his 11. In any other Commission Interest on
interest; case where the included Damages:
3. In criminal court deems it provisions in
cases of just and the Civil Code  Six percent
malicious equitable that allowing (6%) per
prosecution attorney’s fees interest on annum if the
against the and expenses damages obligation
plaintiff; fees is proper if because they consists in the
believed that payment of a
 sum of money, interest due should certainty, the vs. CA G.R. No.
and the debtor be that which may interest shall begin 97412 July 12,
incurs in delay have been to run from the 1994)
and there being stipulated in time the claim is
no stipulation to writing. (Art. 1956, made judicially or Extent or Scope
the contrary. NCC) Furthermore, extrajudicially (Art. of Actual
(Art. 2209, the interest due 1169, Civil Code) Damages
NCC) shall itself earn but when such
 Interest due legal interest from certainty cannot be To enable an
shall earn legal the time it is so reasonably injured party to
interest (6% judicially established at the recover actual or
per annum) demanded. (Art. time the demand is compensatory
from the time it 2212, NCC) In the made, the interest damages, he is
is judicially absence of shall begin to run required to prove
demanded, not stipulation, the only from the date the actual amount
from default, interest shall be the judgment of the of loss with
even if the computed from court is made (at reasonable degree
obligation is default, i.e., from which time the of certainty
silent on the judicial or quantification of premised upon
matter. (Art. extrajudicial damages may be competent proof
2212, NCC) demand. deemed to have and on the best
 Interest cannot been reasonably evidence available.
be recovered When an obligation, ascertained). The The burden of proof
upon not constituting a actual base for the is on the party who
unliquidated loan or forbearance computation of would be defeated
claims or of money, is legal interest shall, if no evidence
damages, breached, an in any case, be on would be presented
except when interest on the the amount finally on either side. He
the demand can amount of damages adjudged. must establish his
be established awarded may be case by a
with reasonable imposed at the When the judgment preponderance of
certainty. (Art. discretion of the of the court evidence which
2213, NCC) court (Art. 2210, awarding a sum of means that the
 In quasi-delicts, NCC) at the rate of money becomes evidence, as a
the contributory 6% per annum final and executory, whole, adduced by
negligence of (Art. 2209, NCC). the rate of legal one side is superior
the plaintiff No interest, interest, whether to that of the other.
shall reduce the however, shall be the case falls under In other words,
damages that adjudged on paragraph 1 or damages cannot be
he may recover. unliquidated claims paragraph 2, above, presumed and
(Art. 2214, or damages except shall be 12% per courts, in making
NCC) when or until the annum from such an award must
demand can be finality until its point out specific
When obligation is established with satisfaction, this facts that could
breached and it reasonable interim period being afford a basis for
consists in payment certainty.(Art 2216, deemed to be by measuring
of a sum of money NCC) Accordingly, then an equivalent whatever
(ie. Loan or where the demand to a forbearance of compensatory or
forbearance of is established with credit. (Eastern actual damages are
money), the reasonable Shipping Lines, Inc. borne. (PNOC
Shipping and In crimes and accrued to the permanent
Transport quasi-delicts, the defendant in certain injury is
Corporation vs. CA, defendant shall be cases. ordinarily the
G. R. No. 107518, liable for all difference
October 8, 1998) damages, which are Damage to between the
the natural and Property reasonable
probable market value of
Extent in consequences of  Where goods the property
Contracts and the act or omission where immediately
Quasi-Contracts: complained of. It is destroyed by before and after
not necessary that the wrongful the injury.
In contracts and such damages have act of the  In case of total
quasi-contracts, the been foreseen or defendant, the loss, the value
damages for which could have plaintiff is of the real
the obligor who reasonably been entitled to their property at the
acted in good faith foreseen by the value at the time and place
is liable shall be defendant. time of of the loss must
those that are the destruction. also be
natural and Restitutio in Normally, the assessed and
probable Integrum award is the such assessed
consequences of sum of money value is the
the breach of the The basic principle which plaintiff measure of the
obligation, and for the measure of would have to damage due to
which the parties damages in pay in the plaintiff.
have foreseen or integrum. The market for  Where the
could have amount to be identical or plaintiff was
reasonably foreseen awarded to the essentially merely deprived
at the time the plaintiff should be similar good, of his
obligation was that sum of money plus in proper possession, said
constituted. (Art. which will put the cases, damages plaintiff is
2201, NCC) party who has been for the loss of entitled to the
injured or who has use during the value or use of
In contracts and suffered in the period before the premises.
quasi-contracts and same position as he replacement. In Thus the rental
in case of fraud, would have been in cases of profit- value should be
bad faith, malice or if he had not earning assessed
wanton attitude, the sustained the wrong chattels, what against the
obligor shall be for which he is now has to be plaintiff for
responsible for all getting his assessed is the tress-pass or
damages which compensation or value of the illegal
may be reasonably reparation. chattel to its occupation of
attributed to the Consequently, the owner as a house.
non-performance of damages are going concern
the obligation. (Art. measured on at the time and Damages in
2202, NCC) plaintiff’s loss and place of the crimes and quasi-
not on defendant’s loss. delicts causing
Extent in crimes gain. By way of  With respect to death
and quasi-delicts: exception, damages real property,
are measured by the measure of  The amount of
the benefit that has damage for a damages for
 death caused testate or that person need of proof
by a crime or intestate who was because from the
quasi-delict succession, may injured to nature of the crime,
shall be at least demand answer for his it can be assumed
three thousand support from future medical that she has
pesos, even the person expenses. suffered moral
though there causing the injuries entitling her
may have been death, for a  In proper cases, to such award. Such
mitigating period not the award of award is separate
circumstances. exceeding five damages may and distinct from
In addition: years, the exact likewise include civil indemnity.
duration to be the amount (People vs.
a. The defendant fixed by the spent for the Astrologo, June 8,
shall be liable court; plastic surgery 2007)
for the loss of c. The spouse, of the plaintiff
the earning legitimate and or any The commission of
capacity of the illegitimate procedure to an offense has a
deceased, and descendants restore the part two (2)-pronged
the indemnity and ascendants of the body that effect, one (1) on
shall be paid to of the deceased was affected. the public as it
the heirs of the may demand breaches the social
latter; such moral damages  In case of order, and the other
indemnity shall for mental death, the upon the private
in every case be anguish by plaintiff is victim as it causes
assessed and reason of the entitled to the personal sufferings
awarded by the death of the amount that he —each effect is
court, unless deceased. (Art. spent during respectively
the deceased 2206, NCC) the wake and addressed by the
on account of funeral of the prescription of
permanent  If the plaintiff is deceased. heavier punishment
physical asking for However, it has for the accused and
disability not damages for his been ruled that by an award of
caused by the own injury or expenses after additional damages
defendant, had for the death of burial are not to the victim.
no earning his relative, said compensable.
capacity at the plaintiff is Although it is
time of his entitled to the Damages in Rape essential to observe
death; amount of the requirements
b. If the deceased medical Civil indemnity, imposed by
was obliged to expenses as which is actually in Sections 8 and 9 of
give support well as other the nature of actual Rule 110 of the
according to the reasonable or compensatory Revised Rules of
provisions of expenses that damages, is Criminal Procedure,
article 291, the he incurred to mandatory upon the as amended, the
recipient who is treat his or his finding of the fact requirements
not an heir relative’s of rape. The case should affect only
called to the injuries. Courts law also requires the criminal liability
decedent’s may also award automatic award of of the accused,
inheritance by monthly moral damages to a which is the State’s
the law of payments to rape victim without concern, and should
not affect the civil received or would living and other the victim's line of
liability of the have received from incidental expenses. work no
accused, which is him had he not died (Candano Shipping vs documentary
Sugata-on, GR 163212,
for the benefit of in consequence of evidence is
March 13, 2007)
the injured party. negligence of available; or
petitioner's agent. (2) employed as a
Where the special In fixing the Net Earning daily-wage worker
qualifying amount of that Capacity = life earning less than
circumstances of support, we must expectancy x the minimum wage
age and reckon with the (gross annual under current labor
relationship, 'necessary expenses income — laws (People vs.
although not of his own living', Ibanez, GR. 197813,
reasonable and
September 25, 2013)
alleged in the which should be necessary living
information, are deducted from his expenses).
nonetheless earnings. Thus, it III. MORAL
established during has been DAMAGES
Life expectancy is
the trial, the award consistently held determined in
of civil indemnity that earning Designed to
accordance with compensate the
and moral damages capacity, as an the formula:
in a conviction for element of damages claimants for actual
simple rape should to one's estate for injury and is not
2 / 3 x [80 — age meant to enrich the
equal the award of his death by of deceased at the
civil indemnity and wrongful act is complainant at the
time of death] expense of the
moral damages in necessarily his net
convictions for earning capacity or defendant.
General Rule. On
qualified rape. his capacity to the award of loss of
(People v. Bartolini, acquire money, 'less Moral damages
earning capacity, include:
August 3, 2010) necessary expense the compensation
for his own living.' 1. Physical
for lost income is in suffering
LOSS OF Stated otherwise, the nature of
EARNING the amount 2. Mental anguish
damages and as 3. Fright
CAPACITY recoverable is not such requires due
the loss of entire 4. Serious anxiety
proof of the 5. Besmirched
The award of earning, but rather damages suffered.
damages for loss of the loss of that reputation
earning capacity is portion of the 6. Wounded
Exception that feelings
concerned with the earnings which the "documentary
determination of beneficiary would 7. Moral shock
evidence should be 8. Social
losses or damages have received. In presented to
sustained by the other words, only humiliation
substantiate the 9. Similar injury
private net earnings, and claim for damages
respondents, as not gross earnings (Art. 2217,
for loss of earning NCC)
dependents and are to be capacity”:
intestate heirs of considered that is, (1) self-employed
the deceased, and the total of the Though incapable of
earning less than pecuniary
that said damages earnings less the minimum wage
consist, not of the expenses necessary computation, moral
under current labor damages may be
full amount of his in the creation of laws, and judicial
earnings, but of the such earnings or recovered if they
notice may be taken are the proximate
support they income and less of the fact that in result of the
defendant’s in bad faith. injury sustained  An appeal in a
wrongful act for (Arts. 2219- by the claimant criminal case opens
omission. (Art. 2220, NCC) 4. The award of the whole case for
2217, NCC) damages is review and this
Notes: predicated on 'includes the review
When any of the of the penalty,
recoverable:  The parents of cases stated in indemnity and
the female Article 2219. damages. Even if
1. In a criminal seduced, the offended party
offense abducted, Article 309, NCC. had not appealed
resulting in raped, or Any person who from said award,
physical injuries abused may shows disrespect to and the only party
2. In quasi-delicts also recover the dead, or who sought a
causing physical moral damages. wrongfully review of the
injuries; (Art. 2219, interferes with a decision of said
3. In cases of NCC) funeral shall be court was the
seduction,  The spouse, liable to the family accused, the court
abduction, rape, descendants, of the deceased for can increase
or other ascendants, and damages, material damages awarded.
lascivious acts; brothers and and moral. (Sumalpong vs. CA,
4. In cases of sisters may Corporations and G.R. No. 123404,
adultery or bring the action other artificial being 1997)
concubinage; mentioned in are not entitled to
5. In illegal or Article 309 CC, recover moral IV. NOMINAL
arbitrary in the order damages. DAMAGES
detention or named.
arrest; General Rule: A Nominal damages
6. In illegal Requisites: juridical person os are adjudicated in
search; generally not order that a right of
7. In libel, slander 1. There must be entitled to moral the plaintiff, which
or any other an injury, danages because, has been violated or
form of whether unlike a natural invaded by the
defamation; physical, mental person, it cannot defendant, may be
8. In malicious or expericne physical vindicated or
prosecution; psychological, suffering or such recognized, and not
9. In acts clearly sentiments as for the purpose of
mentioned in sustained by wounded feelings, indemnifying the
Article 309 of the claimant; serious anxiety, plaintiff for any loss
NCC; 2. There must be mental anguish or suffered by him.
10. In acts and a culpable act moral shock (Filipinas (Art. 2221, NCC)
actions referred or omission Broadcating vs. Ago
Medical, GR No. 141994,
to in articles 21. factually When awarded:
January 17, 2005).
26, 27, 28, established The court may
29,30, 32, 34, 3. The wrongful Exception: Unless award nominal
and 35 act or omission the corporation damages in every
11. In breaches of of the enjoyed good obligation arising
contract where defendant is the reputation that the from any source
the defendant proximate offender debased enumerated in
acted cause of the and besmirched. Article 1157, or in
fraudulently or every case where
any property right accessory 1. There is some
has been invaded. questions. (Art. pecuniary loss  Interest
(Art. 2222, NCC) 2223, NCC) suffered (Art. recoverable for
2224, NCC) damages in a
Award of nominal  No proof of 2. The loss is breach of
damages is in lieu pecuniary loss incapable of contract is left
of actual, moral, is likewise pecuniary to the discretion
temperate or necessary in estimation (Art. of the court. It
liquidated damages. order that 2224, NCC) is computed not
moral, nominal, 3. The award is from the date
Sources of temperate, reasonable (Art. of filing of the
obligation based liquidated or 2225, NCC) complaint but
on Art. 1157, NCC exemplary from the date
(See damages may VI. LIQUIDATED the judgment of
OBLIGATIONS) be adjudicated, DAMAGES the trial court is
and it is quite rendered.
1. Law enough that  Liquidated
2. Contracts proof of damages are Ordinary
3. Quasi-contracts damage or those agreed Damages – that
4. Acts or injury is upon by the which is a generally
omissions adduced. parties to a inherent breach of
punished by law (People of the contract, to be typical contract
5. Quasi-delicts Philippines vs. paid in case of
Dianos G.R. No. breach thereof. Special Damages
Elements: 119311 October (Art. 2226, – That which exists
7, 1998) NCC) because of special
1. There exists a circumstances and
right of plaintiff; V. TEMPERATE  Liquidated for which a debtor
2. The resulting OR damages in good faith can be
damage must MODERATE cannot co-exist held liable only if he
not be capable DAMAGES with actual had been previously
of pecuniary damages. (Art. informed of such
estimation; These are damages, 2226, NCC) circumstances.
3. There is a which are more
violation of such than nominal but  Liquidated VII. EXEMPLARY
right; and less than damages, OR
4. The purpose of compensatory, and whether CORRECTIV
the award is not may be recovered intended as an E DAMAGES
to indemnify when the court indemnity or a
but to vindicate finds that some penalty, shall  Imposed by
or recognize pecuniary loss has be equitably way of example
right violated. been suffered, but reduced if they of correction for
its amount cannot are iniquitous or public good in
Note: The be proved with unconscionable. addition to the
adjudication of certainty (Art. (Art 2227, NCC) moral,
nominal damages 2224, NCC) temperate,
shall preclude liquidated or
further contest When awarded: Rules governing compensatory
upon the right in case of breach damages. (Art.
involved and all of contract: 2229, NCC)
 have resulted minimize the be equitably
When recovered: because the act or damages reduced if they
omission of the resulting from are iniquitous or
1. In criminal defendant including the act or unconscionable.
offenses (Art. medical expenses omission in (Art. 2227, NCC)
2230, NCC) and loss of earning question. (Art. 3. In contracts,
2. In quasi-delicts capacity. It should 2203, NCC) quasi-contracts,
(Art. 2231, NCC) be noted, however and quasi-
3. In contracts that the SC had  Doctrine of delicts, the
and quasi- repeatedly Avoidable court may
contracts (Art. increased the Consequences equitably
2232, NCC) amount of - a party cannot mitigate the
indemnity from recover damages under
Requisites: three thousand damages circumstances
pesos in order to flowing from other than the
1. It is for the reflect the current consequences, case referred to
court to decide value of currency which the party in the preceding
whether or not and prevailing could article, as in the
they should be inflation. The reasonably have following
adjudicated. current amount of avoided. It has instances:
(Art. 2233, fixed damages as reasonable a. That the
NCC) increased by the corollary, that plaintiff himself
2. Claimant must Court is P50, is, a person has
prove that he is 000.00. (Gregorio who reasonably contravened the
entitled to Pestano et al. vs. attempts to terms of the
moral, Spouses Paz, G.R. No. minimize his contract;
temperate or 139875, December 4, damages can b. That the
compensatory 2000) plaintiff has
recover the
damages even expenses that derived some
if liquidated Death indemnity was
granted by the court he incurred. benefit as a
damages have result of the
in the amount of
been agreed on P50,000 for the death Rules in contract;
in order that of the passengers. graduation of c. In cases where
exemplary (Sulpicio Lines, Inc. v. damages exemplary
damages may Curso, et al., G.R. No. damages are to
be awarded. 157009, March 17, 1. In quasi-delicts, be awarded,
(Art. 2234, NCC). 2010) that the
the contributory
negligence of defendant acted
VIII. DAMAGES IX. GRADUATION upon the advice
the plaintiff
IN CASE OF OF DAMAGES of counsel;
shall reduce the
DEATH d. That the loss
damages that
Duty of injured would have
he may recover.
The law requires party resulted in any
(Art. 2203,
payment of event;
NCC).
P3,000.00 to the  The party e. That since the
2. Liquidated
heirs of the suffering loss or filing of the
damages,
deceased. The fixed injury must action, the
whether
amount of three exercise the defendant has
intended as an
thousand pesos is in diligence of a done his best to
indemnity or a
addition to any good father of a lessen the
penalty, shall
damage that may family to
 plaintiff’s loss or preserve the
injury; (Art. property injured
2215, NCC) and for injuries
incurred in
 Article 2203 of attempting to
the Civil Code prevent damage
exhorts parties to it. (Lim and
suffering from Gunnaban vs. CA
loss or injury to GR 125817,
exercise the 2002)
diligence of a
good father of a X. MISCELLANE
family to OUS RULES:
minimize the
damages  Nominal
resulting from damages then
the act or cannot co-exist
omission in with other kinds
question. One or types or
who is injured damages. (Art.
then by the 2223, NCC)
wrongful or  Liquidated
negligent act of damages
another should cannot co-exist
exercise with actual
reasonable care damages. (Art.
and diligence to 2226, NCC)
minimize the
Moral, temperate or
resulting
compensatory
damage.
damages must first
Anyway, he can
exist where there is
recover from
an award for
the wrongdoer
exemplary
money lost in
damages. (Art. 2234,
reasonable
NCC)
efforts to
HAIL TO THE CHIEFS!