CIVIL LAW

2019 GOLDEN NOTES

FACULTY OF CIVIL LAW
UNIVERSITY OF SANTO TOMAS
MANILA
 The UST GOLDEN NOTES is the annual student-edited bar review
material of the University of Santo Tomas, Faculty of Civil Law.
Communications regarding the Notes should be addressed to the
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Address: Academics Committee

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Academics Committee
Faculty of Civil Law
University of Santo Tomas
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2019 Edition.

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No. ____________

Printed in the Philippines July 2019.

 ACADEMIC YEAR 2019-2020
CIVIL LAW STUDENT COUNCIL
LYODYCHIE Q. CAMARAO PRESIDENT
MARIA FRANCES FAYE R. GUTIERREZ INTERNAL VICE PRESIDENT
KRYSTAL GAYLE R. DIGAY SECRETARY

TEAM: BAR-OPS
NICOLE MARIE A. CORTES
MARYLOU RENZI M. OLOTEO
CHRISTINE JOYCE P. ANDRES
KRIZA NIÑA B. MALALUAN
ELOUISA ANN DC. CARREON
CIARI T. MENDOZA
ELISHA ELAINE D. BAYOT
JOSEPHINE GRACE W. ANG
PATRICIA MAE D. GUILLERMO
RAFAEL JEROME M. MENDOZA
KHYNA MATHEA N. CANLAS
MARSHAN DEINN S. GUALBERTO
KIER JOHN V. UY
GLENN MATTHEW C. MANLAPID
VAN ANGELO K. RESPICIO
JAMES ROSS L. TAN
LOUELL JUDE B. QUE
MON FRANCIS A. TOLENTINO
CLARA LOUISSE J. YUMANG
JOCHRIS DANIEL Z. GUADES
JERREMIAH KRIZIAH B. BATALLER
CHAIRPERSON
VICE-CHAIRPERSON
SECRETARY
ASST. SECRETARY
HEAD, PUBLIC RELATIONS OFFICER
ASST. HEAD, PUBLIC RELATIONS OFFICER
HEAD, FINANCE COMMITTEE
HEAD, HOTEL ACCOMODATIONS COMMITTEE
ASST. HEAD, HOTEL ACCOMODATIONS COMMITTEE
ASST. HEAD, HOTEL ACCOMODATIONS COMMITTEE
ASST. HEAD, HOTEL ACCOMODATIONS, COMMITTEE
ASST. HEAD, HOTEL ACCOMODATIONS, COMMITTEE
LOGISTICS COMMITTEE
LOGISTICS COMMITTEE
LOGISTICS COMMITTEE
LOGISTICS COMMITTEE
LOGISTICS COMMITTEE
SENIOR MEMBER
SENIOR MEMBER
SENIOR MEMBER
SENIOR MEMBER

ATTY. AL CONRAD B. ESPALDON

ADVISER
 ACADEMICS COMMITTEE
EDREA JEAN V. RAMIREZ SECRETARY GENERAL
AYA DOMINIQUE S. CAPARAS ASST. SECRETARY GENERAL
ARIANNA LAINE T. SARMIENTO EXECUTIVE COMMITTEE
BELLE COLLEEN T. DE LEON EXECUTIVE COMMITTEE
PAMELA NICOLE S. MANALO EXECUTIVE COMMITTE
RUTH MAE G. SANVICTORES EXECUTIVE COMMITTEE
LAURISSE MARIE T. PERIANES LAYOUT ARTIST
CIARI T. MENDOZA COVER DESIGN ARTIST

CIVIL LAW COMMITTEE

KATRINA VIANCA N. DECAPIA
CIVIL LAW COMMITTEE HEAD

LORENZ DALE S. TIBUS ASST. HEAD, CREDIT/PROPERTY

KRYSTAL GALE DIGAY ASST. HEAD, OBLIGATIONS AND CONTRACTS
JONATHAN SANTOS ASST. HEAD, SUCCESSION
ALYSSA ABIGAEL GOMEZ ASST. HEAD, TORTS
SELYNA ROÑO ASST. HEAD, PERSONS AND FAMILY

MEMBERS
JOSHUA UROLAZA PATRICK RYUZAKI
PATRICIA ANN RECTO BEATRICE FANGON
DALE APAREJADO SHERLEEN ANNE DAMIAN
DANICE GAN PAULINE BODO
KAMILLE IMSON CHERIE BUZON
KEL MAGTIRA
CALOY DUNGAO

ATTY. TERRENCE DOMINGO

ATTY. KENNETH JAMES CARLO HIZON
ATTY. KING JAMES CARLO HIZON
Advisers
 FACULTY OF CIVIL LAW
UNIVERSITY OF SANTO TOMAS

ACADEMIC OFFICIALS

ATTY. NILO T. DIVINA REV. FR. ISIDRO C. ABAÑO, O.P.

DEAN REGENT

ATTY. ARTHUR B. CAPILI

FACULTY SECRETARY

ATTY. ELGIN MICHAEL C. PEREZ

LEGAL COUNSEL
UST CHIEF JUSTICE ROBERTO CONCEPCION LEGAL AID CLINIC

JUDGE PHILIP A. AGUINALDO

SWDB COORDINATOR

LENY G. GADANIA, R.G.C.

GUIDANCE COUNSELOR
 OUR DEEPEST APPRECIATION TO OUR
MENTORS AND INSPIRATION

JUSTICE OSWALDO AGCAOILI

JUDGE PHILIP A. AGUINALDO
DEAN AUGUSTO K. ALIGADA
ATTY. RUBEN F. BALANE
ATTY. VINCENT Z. BOLIVAR
ATTY. ENRIQUE DELA V. CRUZ, JR.
ATTY. AMADO PAOLO C. DIMAYUGA
ATTY. IRVIN JOSEPH M. FABELLA
ATTY. RAFAELITO M. GARAYBLAS
ATTY. ALDEN FRANCIS C. GONZALES
ATTY. RENE B. GOROSPE
JUDGE GEORGINA D. HIDALGO
ATTY. JESUSA LAPUZ-GAUDIANO
DEAN MARIA LIZA A. LOPEZ-ROSARIO
ATTY. ANICIA C. MARQUEZ
ASSOC. DEAN VIVIANA M. PAGUIRIGAN
ATTY. BENIGNO G. PAR, JR.
JUDGE MYRA B. QUIAMBAO
ATTY. TEOFILO R. RAGADIO
ATTY. CARLA E. SANTAMARIA-SEÑA
ATTY. MAURICIO C. ULEP
ATTY. RIGOR PASCUAL
ATTY. KATLYN ANNE AGUILAR-BILGERA

For being our guideposts in understanding the intricate sphere of Civil Law.
-Academics Committee 2019
TABLE OF CONTENTS
*Based on 2019 Bar syllabus

PART I – GENERAL PRINCIPLES

I. Effect and Application of Laws (Civil Code) .......................................................................................................... 1

Conflict of Laws (Private International Law)............................................................................................... 10
II. Human Relations (Arts. 19-22, Civil Code).......................................................................................................... 26

PART II - PERSONS AND FAMILY RELATIONS

I. Persons and Personality (Civil Code) .................................................................................................................... 30

II. Marriage (Family Code)................................................................................................................................................ 33
III. Legal Separation (Family Code) ............................................................................................................................... 61
IV. Rights and Obligations Between Husband and Wife (Family Code)........................................................ 69
V. Property Relations of the Spouses (Family Code) ........................................................................................... 69
VI. The Family (Family Code) ........................................................................................................................................... 88
1. The family as an institution ........................................................................................................................... 88
2. The family home ................................................................................................................................................ 89
VII. Paternity and Filiation (Family Code) ................................................................................................................... 92
VIII. Adoption ........................................................................................................................................................................... 102
A. Domestic Adoption Act of 1998 (R.A. No. 8552) .......................................................................................... 102
1. Who can adopt................................................................................................................................................. 102
2. Who can be adopted ...................................................................................................................................... 104
3. Instances when adoption may be rescinded ......................................................................................... 105
4. Effects of rescission ....................................................................................................................................... 105
B. Inter-Country Adoption Act of 1995 (R.A. No. 8043) ................................................................................. 106
1. When allowed .................................................................................................................................................. 106
2. Who can adopt................................................................................................................................................. 106
3. Who can be adopted ...................................................................................................................................... 107
C. Distinction between domestic adoption and inter-country adoption .................................................. 108
IX. Support (Family Code) ............................................................................................................................................... 112
X. Parental Authority (Family Code) ........................................................................................................................ 116
Child Abuse Law (R.A. No. 7610), specifically Sec. 10 (c). .................................................................... 120
XI. Emancipation (Arts. 234 and 236, Family Code, as amended by R.A. No. 6809 which lowered the
age of majority) ............................................................................................................................................................. 123
XII. Retroactivity of the Family Code (Art. 256) ..................................................................................................... 123
XIII. Funerals (Arts. 305-310, Civil Code) ................................................................................................................... 124
XIV. Use of Surnames ............................................................................................................................................................ 125
XV. Absence ............................................................................................................................................................................. 129
A. Art. 41, Family Code............................................................................................................................................... 133
B. Art. 381-389, Civil Code........................................................................................................................................ 133
C. Art. 390-392, Civil Code (Presumption of Death) ........................................................................................ 133

PART III - PROPERTY

I. Characteristics ............................................................................................................................................................... 134

II. Classification .................................................................................................................................................................. 134
III. Ownership ....................................................................................................................................................................... 143
IV. Accession .......................................................................................................................................................................... 156
V. Quieting of Title or Interest in and Removal or Prevention of Cloud over Title or Interest in Real
Property ............................................................................................................................................................................ 178
VI. Co-ownership ................................................................................................................................................................. 181
VII. Possession........................................................................................................................................................................ 192
VIII. Usufruct ............................................................................................................................................................................. 211
IX. Easements ......................................................................................................................................................................... 223
X. Nuisance ............................................................................................................................................................................ 240
XI. Modes of Acquiring Ownership .............................................................................................................................. 243
XII. Donations.......................................................................................................................................................................... 245

PRESCRIPTION

I. Definition .......................................................................................................................................................................... 254

II. Acquisitive and Extinctive Prescription ................................................................................................. 257
III. Instances when prescription is not allowed .................................................................................................... 261
IV. Prescription or limitation of actions ................................................................................................................... 262

PART IV - SUCCESSION

I. General Provisions ....................................................................................................................................................... 264

II. Testamentary Succession/Wills ............................................................................................................................ 267
III. Legal or Intestate Succession .................................................................................................................................. 307
IV. Provisions Common to Testate and Intestate Succession.......................................................................... 314

PART V - OBLIGATIONS AND CONTRACTS

I. Definition, Elements .................................................................................................................................................... 320

II. Sources of Obligation .................................................................................................................................................. 322
III. Nature and Effects of Obligations .......................................................................................................................... 326
IV. Kinds of Obligations..................................................................................................................................................... 340
A. Pure and Conditional.............................................................................................................................................. 340
B. Obligations with a Period ..................................................................................................................................... 345
C. Alternative Obligations.......................................................................................................................................... 346
D. Joint and Solidary Obligations............................................................................................................................. 349
E. Divisible and Indivisible Obligations ................................................................................................................ 354
F. Obligations with a Penal Clause ......................................................................................................................... 355
V. Extinguishment of Obligations ............................................................................................................................... 357
A. Payment or Performance...................................................................................................................................... 357
B. Loss of the Thing Due............................................................................................................................................. 366
C. Condonation or remission of debt ..................................................................................................................... 368
D. Confusion or merger of rights of creditor and debtor ................................................................................ 369
E. Compensation........................................................................................................................................................... 370
F. Novation ..................................................................................................................................................................... 375

CONTRACTS

I. Essential Requisites ..................................................................................................................................................... 386

II. Objects, Cause and Form of Contracts ................................................................................................................. 394
III. Kinds of Contracts......................................................................................................................................................... 398
IV. Reformation of Instruments .................................................................................................................................... 399
V. Interpretation of Contracts ...................................................................................................................................... 400
VI. Rescissible Contracts................................................................................................................................................... 404
VII. Voidable Contracts ....................................................................................................................................................... 408
VIII. Unenforceable Contracts ........................................................................................................................................... 411
IX. Void and Inexistent Contracts ................................................................................................................................. 413

Natural Obligations....................................................................................................................................................................... 417

Estoppel.............................................................................................................................................................................................. 418
 PART VI - TRUST

I. Definition ......................................................................................................................................................................... 421

II. Kinds of Trust................................................................................................................................................................. 422
A. Express Trust ........................................................................................................................................................... 422
B. Implied Trust ........................................................................................................................................................... 423

PART VII - SALES

I. Nature and Form of Contract .................................................................................................................................. 427

II. Capacity to Buy or Sell ................................................................................................................................................ 433
III. Obligations of the Vendor......................................................................................................................................... 438
IV. Obligations of the Vendee ........................................................................................................................................ 439
V. Effects of the Contract when the Thing Sold has been lost ....................................................................... 451
VI. Breach of Contract ....................................................................................................................................................... 452
A. Recto Law: sale of movables on installment (Articles 1484-1486, Civil Code) ................................. 452
B. Maceda Law: sale of immovable on installment (RA 6552) ..................................................................... 454
VII. Extinguishment of Sale .............................................................................................................................................. 465
VIII. Assignment of Credits ................................................................................................................................................ 470

PART VIII - LEASE

I. General Provisions ...................................................................................................................................................... 479

A. Lease of Things ........................................................................................................................................................ 479
B. Lease of Work and Services................................................................................................................................. 481
II. Lease of Rural and Urban Lands ............................................................................................................................ 483
III. Rights and Obligations of Lessor and Lessee .................................................................................................. 487

PART IX - PARTNERSHIP

I. Contract of Partnership ............................................................................................................................................. 496

II. Rights and Obligations of Partnership ............................................................................................................... 510
III. Rights and Obligations of Partners Among Themselves ............................................................................ 510
IV. Obligations of Partnership/Partners to Third Persons ............................................................................. 515
V. Dissolution and Winding Up ................................................................................................................................... 518
VI. Limited Partnership .................................................................................................................................................... 523

PART X - AGENCY

I. Definition ......................................................................................................................................................................... 528

II. Nature, Form and Kinds of Agency ....................................................................................................................... 528
III. Obligations of the Agent ............................................................................................................................................ 534
IV. Obligations of the Principal ..................................................................................................................................... 540
V. Modes of Extinguishment ......................................................................................................................................... 542

PART XI - CREDIT TRANSACTIONS

I. Loan .................................................................................................................................................................................... 546

II. Pledge, Mortgage and Antichresis, Chattel Mortgage (include Act 1508) ......................................... 552
III. Deposit............................................................................................................................................................................... 595
IV. Guaranty and Suretyship .......................................................................................................................................... 603

PART XII - LAND TITLES AND DEEDS

I. Torrens System (General Principles) .................................................................................................................. 609
II. Original Registration ................................................................................................................................................... 611
III. Subsequent Registration ........................................................................................................................................... 650
A. Voluntary Dealings ................................................................................................................................................. 650
B. Involuntary Dealings .............................................................................................................................................. 655
IV. Non-registrable Properties ...................................................................................................................................... 658

PART XIII - TORTS AND DAMAGES

Book I - Torts/Quasi-Delicts

I. Definitions, Elements .................................................................................................................................................. 661

II. The Tortfeasor................................................................................................................................................................ 664
III. Legal Injury ...................................................................................................................................................................... 675
IV. Classification of Torts ................................................................................................................................................. 675
A. Negligent Torts......................................................................................................................................................... 675
B. Intentional Torts...................................................................................................................................................... 675
C. Strict Liability ........................................................................................................................................................... 676
V. The Concepts and Doctrines of Res Ipsa Loquitur, Last Clear Chance, Proximate Cuase, Damnum
Absque Injuria, Presumption of Negligence, Vicarious Liability ............................................................. 681

Book II - Damages

I. General Provisions ....................................................................................................................................................... 684

II. Actual and Compensatory Damages ..................................................................................................................... 687
III. Moral Damages............................................................................................................................................................... 692
IV. Nominal Damages ......................................................................................................................................................... 694
V. Temperate or Moderate Damages ........................................................................................................................ 695
VI. Liquidated Damages .................................................................................................................................................... 696
VII. Exemplary or Corrective Damages ....................................................................................................................... 697
VIII. Damages in Case of Death ......................................................................................................................................... 697
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 GENERAL PRINCIPLES
GENERAL PRINCIPLES
EFFECT AND APPLICATION OF LAWS
Law
It is a rule of conduct formulated and made
obligatory by legitimate power of the state (Diaz,
2013).
Effectivity of laws
Laws shall take effect after fifteen days following
the completion of their publication either in the
Official Gazette, or in a newspaper of general
circulation in the Philippines, unless it is
otherwise provided [New Civil Code (NCC), Art. 2,
as amended by EO 200)].
Effectivity: It depends on whether or not it has
provided a specific date for its effectivity:
1. If date is specified– Upon the lapse of the said
period following its complete publication and
not before.
2. If no date is specified– 15-day period, which
may either be on the 15th or on the 16th day
depending on the language used by the
Congress in fixing the effectivity date of the
statute (Rabuya, 2009).
a. 15th day - If the law declares that it shall
become effective “15 days after its
publication”
b. 16th day - If the law declares that it shall
be effective “after 15 days following its
publication”
3. If the law provides for immediate effectivity
or upon approval – It is effective immediately
after its complete publication and not after
signing by the President.
4. If the law is voluminous– Reckoning shall
begin from the release of the last of the series.
“Unless it is otherwise provided” provision on
effectivity of laws
The clause "unless it is otherwise provided"
refers to the date of effectivity and not to the
requirement of publication itself. The requirement
of publication may not be omitted in any event.
This clause does not mean that the legislator may
make the law effective immediately upon
1
approval, or on any other date without its
previous publication.
Publication requirement
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 (Umali v. Estanislao, G.R. No. 104037,
May 29, 1992; Tañada v. Tuvera, G.R. No. L-63915,
December 29, 1986).
Publication must be in full or it is no publication at
all since its purpose is to inform the public of the
contents of the law. The mere mention of the
number of the presidential decree, the title of such
decree, its whereabouts, the supposed date of
effectivity, and in a mere supplement of the
Official Gazette cannot satisfy the publication
requirement. This is not even substantial
compliance (Tañada v. Tuvera, G.R. No. L-63915,
December 29, 1986).
Indispensability of publication
GR: All laws are required to be published in full.
NOTE: The reason for this rule is that the basic
constitutional requirement of due process must be
satisfied. (Rabuya, 2009). Without such notice and
publication, there would be no basis for the
application of the maxim ignoratia legis non
excusat (Rabuya, 2009).
XPNs to the Publication Requirement: O-R-L-I
1. Municipal Ordinances (governed by the Local
Government Code);
2. Rules and regulations which are internal in
nature;
3. Letters of Instruction issued by administrative
supervisors on internal rules and guidelines;
4. Interpretative regulations regulating only the
personnel of administrative agency.
XPNs to the XPNs: D-E-P
Administrative rules and regulations that require
publication:
1. The purpose of which is to implement or
enforce existing laws pursuant to a valid
Delegation;
2. Penal in nature;
3. It diminishes Existing rights of certain
individuals.
 CIVIL LAW
NOTE: Circulars issued by the monetary board are
required to be published if they are meant not to
merely “fill in details” of the Central Bank Act. As
a rule, circulars which prescribe a penalty for
violations should be published before coming into
effect. However, circulars which are mere
statements of general policies as to how the law
should be construed do not need publication in
the Official Gazette for their publication.
Where to publish
1. Official Gazette; or
2. Newspaper of general circulation in the
Philippines
Newspaper of general circulation
For a newspaper to be considered of general
circulation:
1. It must be published within the court’s
jurisdiction;
2. It must be published at regular intervals
for disseminating local news and general
information;
3. It has a bona fide subscription list of
paying subscribers; and
4. It is not devoted to the interest or
published for the entertainment of a
particular class, profession, trade, calling,
race or religious denomination (Alvarez v.
People, G.R. No. 192591, June 29, 2011).
Q: Honasan questions the authority and
jurisdiction of the DOJ panel of prosecutors to
conduct a preliminary investigation and to
eventually file charges against him, claiming
that since he is a senator with a salary grade of
31, it is the Office of the Ombudsman, not the
DOJ, which has authority and jurisdiction to
conduct the preliminary investigation. DOJ
claims that it has concurrent jurisdiction,
invoking an OMB-DOJ Joint Circular which
outlines the authority and responsibilities
among prosecutors of the DOJ and the Office of
the Ombudsman in the conduct of preliminary
investigations. Honasan counters that said
circular is ineffective as it was never
published. Is OMB-DOJ Circular No. 95-001
ineffective because it was not published?
A: NO. OMB-DOJ Circular No. 95-001 is merely an
internal circular between the two offices which
outlines the authority and responsibilities among
prosecutors of the DOJ and of the Office of the
Ombudsman in the conduct of preliminary
investigations. It does not contain any penal
provision nor prescribe a mandatory act or
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
prohibit any under pain of penalty. It does not
regulate the conduct of persons or the public, in
general. It need not be published (Honasan, II v.
The Panel of Investigating Prosecutors of the DOJ,
G.R. No. 159747, June 15, 2004).
Q: The Sangguniang Bayan of Hagonoy,
Bulacan enacted an ordinance which increased
the stall rentals of the market vendors in
Hagonoy. Art. 3 of the said ordinance provided
that it shall take effect upon approval. The
ordinance was posted from November 4 to 25,
1996. In the last week of November 1997,
petitioners were personally given copies and
were informed that it shall be enforced in
January 1998. The petitioners contended that
the subject ordinance was not published as
required by law. Did the ordinance comply
with the rule of publication?
A: YES. An ordinance which increased the stall
rentals of the market vendors has complied with
the publication requirement when the same was
posted in 3 conspicuous places (Sec. 188, Local
Government Code; Hagonoy v. Municipality, G.R. No.
137621, February 6, 2002).
NOTE: Within ten (10) days after their approval,
certified true copies of all provincial, city, and
municipal tax ordinances or revenue measures
shall be published in full for three (3) consecutive
days in a newspaper of local circulation: Provided,
however, That in provinces, cities and
municipalities where there are no newspapers of
local circulation, the same may be posted in at
least two (2) conspicuous and publicly accessible
places (Sec. 188, Local Government Code).
Exceptions to the publication requirement
1. An interpretative regulation;
2. A regulation that is merely internal in nature;
and
3. A letter of instruction issued by an
administrative agency concerning rules or
guidelines to be followed by subordinates in
the performance of their duties (Association of
Southern Tagalog Electric Cooperatives, Inc. v.
Energy Regulatory Board, G.R. No. 192117,
September 18, 2012).
Q: Judge Ferdinand Villanueva was appointed
as a presiding judge of MTC, Compostela-New
Bataan. The following year, Judge Villanueva
applied as Presiding Judge in several Regional
Trial Courts. The Judicial and Bar Council
(JBC) then informed him that he was not
included in the list. The JBC’s decision upheld
2
 GENERAL PRINCIPLES
its long-standing policy of opening the chance
for promotion to second-level courts to those
judges who have served in their current
positions for at least five years. Judge
Villanueva then directly went to Court to assail
the said policy on the ground it is
unconstitutional; it violates the procedural
due process for lack of publication. Did the JBC
violate the procedural due process for not
publishing the questioned policy?
A: YES. The petition was dismissed but the SC
directed the JBC to comply with the publication
requirement of the assailed policy. According to
SC, it is but a natural consequence that potential
applicants be informed of the requirements to the
judicial positions so that they would be able to
prepare for and comply with them (Villanueva v.
Judicial and Bar Council, G.R. No. 211833, April 07,
2015).
Examples of administrative issuances which
were not given force and effect for lack of
publication
1. Rules and regulations issued by the Joint
Ministry of Health-Ministry of Labor and
Employment Accreditation Committee
regarding the accreditation of hospitals,
media clinics and laboratories.
2. Letter of Instruction No. 416 ordering the
suspension of payments due and payable by
distressed copper mining companies.
3. Memorandum Circulars issued by the POEA
regulating the recruitment of domestic
helpers to Hongkong.
4. Administrative Order No. SOSPEC 89-08-01
issued by Philippine International Trading
Corporation regulating applications for
importation from the People’s Republic of
China.
5. Corporate Compensation Circular No. 10
issued by the Department of Budget and
Management discontinuing the payment of
other allowances and fringe benefits to
government officials and employees (Ulep,
2006).
Q: “A” alleges violation of his right to due
process considering that he is summoned to
attend the Senate hearings without being
apprised not only of his rights therein through
the publication of the Senate Rules of
Procedure Governing Inquiries in Aid of
Legislation. Senate invoked the provisions of
R.A. No. 8792, otherwise known as the
Electronic Commerce Act of 2000, to support
their claim of valid publication through the
3
internet. Did the publication of the assailed
Rules of Procedure through the Senate’s
website satisfy the due process requirement of
law?
A: NO. R.A 8792 – Electronic Act of 2000
considers an electronic data message or an
electronic document as a functional equivalent of
a written document only for evidentiary purposes.
It does not make the internet a medium for
publishing laws, rules or regulations (Garcillano v.
The House of Representatives Committee on Public
Information, Public Order and Safety, National
Defense and Security, Information and
Communications Technology and Suffrage and
Electoral Reforms, G.R. No. 170338, December 23,
2008).
IGNORANCE OF THE LAW
Presumption of knowledge of laws
GR: Everyone is conclusively presumed to know
the law. Hence, ignorance of the law excuses no
one from compliance therewith (NCC, Art. 3).
This conclusive presumption presupposes that the
law has been published. Without such notice and
publication, there would be no basis for the
application of the maxim ignoratia legis non
excusat (Rabuya, 2009).
XPNs:
a. Mistake upon a doubtful or difficult question
of law may be the basis of good faith [NCC, Art.
526 (3)].
b. Payment by reason of a mistake in the
construction or application of a doubtful or
difficult question of law may come within the
scope of the preceding article (NCC, Art. 2155).
c. In order that fraud may make a contract
voidable, it should be serious and should not
have been employed by both contracting
parties. Incidental fraud only obliges the
person employing it to pay damages (NCC, Art.
1344).
NOTE: The possession of the antichretic credit as
possession in good faith since a difficult question
of law was involved – antichresis. In this case, the
parties were not very knowledgeable of the law
(Kasilag v. Rodriguez, G.R. No. 46623, December 7,
1939).
Laws covered
 CIVIL LAW
The laws referred to under Art. 3 of the NCC are Q: Eduardo was married to Ruby. He then met
those of the Philippine Laws and it applies to all Tina and proposed marriage, assuring her that
kinds of domestic laws, whether civil or penal, he was single. They got married and lived
substantive or remedial. However, the article is together. Tina, upon learning that Eduardo
limited to mandatory and prohibitory laws. It does had been previously married, charged
not include those which are merely permissive Eduardo for bigamy for which he was
(Rabuya, 2006). convicted. Eduardo testified that he declared
he was “single” because he believed in good
Non-applicability to foreign laws faith that his first wife was already dead,
having not heard from her for 20 years, and
Ignorance of a foreign law is a mistake of fact. that he did not know that he had to go to court
There is no presumption of knowledge of foreign to seek for the nullification of his first
laws. It must be alleged and proved as a matter of marriage before marrying Tina. Is Eduardo
fact; otherwise, the doctrine of processual liable for the crime of bigamy?
presumption will apply.
A: YES. Eduardo is presumed to have acted with
Doctrine of Processual Presumption malice or evil intent when he married
Tina. Mistake of fact or good faith of the accused is
In international law, the party who wants to have a valid defense in a prosecution for a felony by
a foreign law applied to a dispute or case has the dolo; such defense negates malice or criminal
burden of proving the foreign law. The foreign law intent. However, ignorance of the law is not an
is treated as a question of fact to be properly excuse because everyone is presumed to know the
pleaded and proved as the judge or labor arbiter law. Eduardo has the burden to prove that when
cannot take judicial notice of a foreign law. He is he married Tina, he has a well-grounded belief
presumed to know only domestic or forum law that his first wife was already dead. He should
(ATCI Overseas Corporation, et al. v. Echin, G.R. No. have adduced in evidence a decision of a
178551, October 11, 2010; See case of Del Socorro v. competent court declaring the presumptive death
Brinkman G.R. No. 193707 December 10, 2014). of his first wife as required by Art. 349 of the RPC,
in relation to Art. 41 of the FC. Such judicial
Mistake of fact v. Mistake of law declaration constitutes proof that Eduardo acted
in good faith, and would negate criminal intent on
BASIS MISTAKE OF MISTAKE OF his part when he married the private
FACT LAW complainant (Manuel v. People, G.R. No. 165842,
Want of Want of November 29, 2005).
knowledge of knowledge or
some fact or acquaintance Q: Complainants who were connected with the
facts with the laws of Daily Informer (a widely circulated newspaper
Want of
constituting or the land insofar in Western Visayas) were charged before the
knowledg
relating to the as they apply to MTC by Judge Pamonag of the crime of libel.
e pertains
subject matter the act, relation, Respondent judge conducted a preliminary
to
on hand. duty, or matter investigation and thereafter issued warrants
under for the arrest of the complainants.
consideration. Complainants filed an administrative case
against the judge for gross ignorance of the
When some Occurs when a law. They contended that the judge neither has
facts which person having authority to conduct a preliminary
really exist are full knowledge of investigation nor to issue warrants for their
unknown or the facts come to arrest. The judge said that it was his first libel
Nature of some fact is an erroneous case and that he issued the warrants in good
Mistake supposed to conclusion as to faith. Is the respondent guilty of gross
exist which its legal effects. ignorance of the law?
really does not
exist. A: YES. Judges are expected more than just
cursory acquaintance with statutes and
Good faith is an Not excusable, procedural rules. They must know the law and
Defense excuse. even if in good apply them properly in good faith. The provisions
faith. of Art. 360 of the RPC on the persons authorized
to conduct preliminary investigation in libel cases

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 4
 GENERAL PRINCIPLES
is so elementary. Not to know it constitutes gross
ignorance of the law (Miaque v. Judge Pamonag,
A.M. No. MTJ-02-1412, March 28, 2003).
Q: Cheong Boo, a native of China died intestate
in Zamboanga. He left a property worth
P100,000. The estate of the deceased was
claimed on one hand by Gee, who alleged that
he was a legitimate child by a marriage
contracted by Boo with Tan Dit in China in
1895. The estate was claimed, on the other
hand, by Mora Adong who alleged that she had
been lawfully married to Boo in 1896. Gee
introduced in evidence a document in Chinese
stating the marriage ceremony that took place
in Amoy, China. Is the document presented by
Gee sufficient enough to prove the Chinese
marriage of Cheong Boo and Tan Dit?
A: NO. The Supreme Court held that the document
is not sufficient to prove the Chinese marriage
between Cheong Boo and Tan Dit. Gee only
presented a document in Chinese stating the
alleged marriage ceremony but there is no
competent testimony as to what the laws of China
in the Province of Amoy concerning marriage
were in 1895. Therefore, there is lacking proof so
clear, strong and unequivocal as to produce a
moral conviction of the existence of the alleged
prior Chinese marriage.
Ignorance of a foreign law is not ignorance of the
law but of fact because such foreign law must be
first alleged and proved as a matter of fact, there
being no judicial notice of said foreign law. The
Chinese marriage was not adequately proved
(Estate of Boo v. Gee, G.R. No. 18081, March 3,
1922).
RETROACTIVITY OF LAWS
Laws shall have no retroactive effect, unless the
contrary is provided (NCC, Art. 4).
Retroactive law
A legislative act that looks backward or
contemplates the past, affecting acts or facts that
existed before the act come into effect (Black’s
Law Dictionary, 2009).
Retroactive effect of laws
GR: Laws shall have no retroactive effect (lex
prospicit, non respicit).
XPNs: (T-I-N-C-R-E-E-P)
5
1. Tax laws;
2. Interpretative statutes;
3. Laws creating New substantive rights;
4. Curative statutes;
5. Remedial/procedural;
NOTE: Statutes regulating the procedure of
the courts will be construed as applicable to
actions pending and undetermined at the time
of their passage. Procedural laws are
retrospective in that sense and to that extent
(Mun. Gov’t of Coron v. Carino, G.R. No. 65894,
September 24, 1987).
6. Emergency laws;
7. When Expressly provided;
8. Penal laws favorable to the accused
provided, the accused is not a habitual
delinquent.
XPNs to the XPNs:
If the application of the retroactive law:
1. Impairs obligation of contracts;
2. Is in the nature of ex post facto law or a
bill of attainder,
3. Divests vested rights; or
4. Is constitutionally forbidden (Black’s Law
Dictionary, 2009).
NOTE: In case of doubt, laws apply prospectively.
Non-retroactivity of laws vis-à-vis judicial
decisions
Judicial decisions have no retroactive effect. 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 thereon (Rabuya, 2009).
Lex prospicit, non respicit
The maxim means, “the law looks forward not
backward”. The retroactive application of a law
usually divests rights that have already become
vested or impairs the obligations of contract and
hence, is unconstitutional (Chavez v. PEA, G.R. No.
133250, May 6, 2003)
Retroactivity clause of the Family Code (2005,
2010 BAR)
The Family 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 (FC, Art. 256).
 CIVIL LAW
MANDATORY AND PROHIBITORY LAWS
Mandatory law
A law or a provision in a statute is said to be
mandatory when disobedience to it, or want of
exact compliance with it, will make the act done
under the statute absolutely void (Black’s Law
Dictionary, 2009).
Prohibitory law
A law or a provision in a statute is said to be
prohibitory when it forbids a certain action
(Black’s Law Dictionary, 2009).
Permissive law
A law or a provision in a statute is said to be
permissive or directory when it allows certain
acts but does not command them (Black’s Law
Dictionary, 2009).
Violation of Mandatory or Prohibitory Laws
GR: Acts executed against the provisions of
mandatory or prohibitory laws shall be void (NCC,
Art. 5).
XPNs: When the law:
1. Itself authorizes its validity (e.g. lotto,
sweepstakes);
2. Makes the act valid but punishes the
violator (e.g. Marriage solemnized by a
person not authorized to do so);
3. Makes the act merely voidable;
4. Declares the nullity of an act but
recognizes its effects as legally existing
(e.g. Child born after the annulment of
marriage is considered legitimate).
WAIVER OF RIGHTS
Waiver
It is a voluntary and intentional relinquishment or
abandonment of a known existing legal right,
advantage, benefit, claim or privilege, which
except for such waiver the party would have
enjoyed.
The voluntary abandonment or surrender, by a
capable person, of a right known by him to exist,
with the intent that such right shall be
surrendered and such person forever deprived of
its benefit; or such conduct as warrants an
inference of the relinquishment of such right; or
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
the intentional doing of an act inconsistent with
claiming it (Cruz & Co., Inc. v. HR Construction
Corp., G.R. No. 187521, March 14, 2012).
NOTE: Waivers can be express or implied,
however, it cannot be presumed. It must be clearly
and convincingly shown, either by express
stipulation or acts admitting no other reasonable
explanation.
Right
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, 2009).
Kinds of rights
1. Natural Rights – Those which grow out
of the nature of man and depend upon
personality (e.g. right to life, liberty,
privacy, and good reputation);
2. Political Rights – Consist in the power to
participate, directly or indirectly, in the
establishment or administration of
government (e.g. right of suffrage, right to
hold public office, right of petition); and
3. Civil Rights– Those that pertain to a
person by virtue of his citizenship in a
state or community (e.g. property rights,
marriage, equal protection of laws,
freedom of contract, trial by jury) (Pineda,
2009).
a. Rights of personality or human rights;
b. Family rights; and
c. Patrimonial rights:
i. Real rights;
ii. Personal rights (Rabuya, 2009).
Unwaivable rights
1. Right to live and right to future
support.
2. Right to personality and family rights.
3. Right to future inheritance.
NOTE: This is especially so if the waiver is
intended to prejudice creditors. Hence, if an
heir repudiates the inheritance to the
prejudice of his own creditors, the latter may
petition the court to authorize them to accept
it in the name of the heir (NCC, Art. 1052;
Albano, 2013).
NOTE: If a candidate for mayor agrees to split
his term of office with the vice-mayor to
6
 GENERAL PRINCIPLES
prevent the latter from running against him, It is the abrogation of an existing law by a
the contract is void by reason of public policy legislative act (Black’s Law Dictionary, 2009).
(Albano, 2013).
Laws are repealed only by subsequent ones, and
Waiver of rights their violation or non-observance shall not be
excused by disuse, or custom or practice to the
GR: Rights may be waived. contrary (Art. 7, 1st par.).

XPNs: Ways of repealing laws

1. If waiver is:
a. Contrary to law, public order, public
policy, morals or good customs;
b. Prejudicial to a third person with a
right recognized by law. (e.g. If A owes
B P10M, B can‘t waive the loan if B
owes C and B has no other assets).
2. If the right is:
a. A natural right, such as right to life;
b. Inchoate, such as future inheritance.
1. Express - If the law expressly provides for
such;
2. Implied - If the provisions of the
subsequent law are incompatible or
inconsistent with those of the previous
law, provided, it is impossible to reconcile
the two laws.
Requisites of an implied repeal

A person may waive any matter which affects his 1. The laws cover the same subject matter; and
property, and any alienable right or privilege of 2. The latter is repugnant to the earlier (Rabuya,
which he is the owner or which belongs to him or 2009).
to which he is legally entitled, whether secured by
contract, conferred with statute, or guaranteed by NOTE: Implied repeals are NOT to be favored
constitution, provided such rights and privileges because they rest only on the presumption that
rest in the individual, are intended for his sole because the old and the new laws are
benefit, do not infringe on the rights of others, and incompatible with each other, there is an intention
further provided the waiver of the right or to repeal the old (Rabuya, 2009).
privilege is not forbidden by law, and does not
contravene public policy (Cruz & Co., Inc. v. HR Instances of implied repeal
Construction Corp., G.R. No. 187521, March 14,
2012). 1. When the provisions in the two
acts on the same subject matter
Requisites of a valid waiver are irreconcilably contradictory,
in which case, the later act, to the
1. Waiving party must actually have the extent of the conflict, constitutes
right he is renouncing; an implied repeal of earlier one;
2. He must have full capacity to make the and
waiver; 2. When the later act covers the
3. Waiver must be clear and unequivocal; whole subject of the earlier one
4. Waiver must not be contrary to law, and is clearly intended as a
public order, public morals, etc; substitute; thus it will operate to
5. When formalities are required, they must repeal the earlier law (Carmelita
be complied with. Lledo v. Atty. Cesar V. Lledo, A.M.
No. P-95-1167, February 9, 2010).
Q: A student was granted a scholarship but
agreed not to transfer to another school unless Revival of repealed law
he would refund all the benefits he derived out
of his scholarship. Is the stipulation valid? BASIS EXPRESS IMPLIED
Why? REPEAL REPEAL
If the 1st law is If the 1st law is
A: NO. It is void because it is contrary to public expressly repealed by
policy and morals (Cui v. Arellano University, G.R. repealed by implication
L-15127, May 30, 1961). Manner of
the 2nd law and by the 2nd law
Repeal
the 2nd law is and the 2nd law
REPEAL OF LAWS repealed by is repealed by
the 3rd law. the 3rd law.

7
 CIVIL LAW
The 1st law is The 1st law is
NOT revived revived unless
Effect of
unless otherwise
Repeal
expressly provided.
provided so.
Conflict between general and special laws
If the general law was enacted prior to the special
law, the latter is considered the exception to the
general law. If the general law was enacted after
the special law, the special law remains.
XPNs:
1. There is an express declaration.
2. There is a clear, necessary and irreconcilable
conflict.
3. The subsequent general law covers the
whole subject and is clearly intended to
replace the special law on the matter
(Rabuya, 2009).
Self-lapsing laws
Laws that provide for their limited application
(e.g. House Rental Law, Annual Appropriations
Act, Import Control Law).
JUDICIAL DECISIONS
Judicial decisions applying or interpreting the
laws or the Constitution shall form a part of the
legal system of the Philippines (NCC, Art. 8). (1994
BAR)
Judicial decisions are evidence of what the laws
mean.
The judicial decisions form part of the law of the
land as of the date of the enactment of said law.
The Supreme Court’s interpretation merely
establishes the contemporaneous legislative
intent that the construed law purports to carry
into effect. However, the decisions referred to in
Art. 8 of the NCC are only those enunciated by the
SC (Rabuya, 2009).
When a doctrine 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.
Doctrine of Stare Decisis
It is adherence to judicial precedents. Once a
question of law has been examined and decided, it
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
should be deemed settled and closed to further
argument.
However, when in the light of changing conditions,
a rule has ceased to be beneficial to the society,
courts may depart from it.
Obiter Dictum
An opinion expressed by a court upon some
question of law which is not necessary to the
decision of the case before it. Such are not binding
as precedent (Rabuya, 2009).
DUTY TO RENDER JUDGMENT
Rendering of judgment by reason of silence of
law
No judge or court shall decline to render judgment
by reason of the silence, obscurity or insufficiency
of the laws (NCC, Art. 9). (2003 BAR)
However, in criminal prosecutions, the judge must
dismiss the case if a person is accused of a non-
existent crime following the maxin “nullum
crimen, nulla poena sine lege” (Rabuya, 2009).
NOTE: This duty, however, is not a license for
courts to engage in judicial legislation. The duty of
the courts is to apply or interpret the law, not to
make or amend it.
Guidelines on rendition of decisions under Art.
9
1. When there is no law exactly applicable to
the point in controversy, the custom of
the place shall be applied and in default
thereof, the general principles of law;
2. Decisions of foreign courts;
3. Opinions of known authors and
professors;
4. Applicable rules of statutory construction;
5. Principles formulated in analogous cases.
PRESUMPTION AND APPLICABILITY OF
CUSTOM
Presumption in case of doubt in the
interpretation of laws
In case of doubt in the interpretation or
application of laws, it is presumed that the
lawmaking body intended right and justice to
prevail (NCC, Art. 10). (2003 BAR)
8
 GENERAL PRINCIPLES
In case of silence, obscurity or insufficiency of
the law with respect to a particular
controversy
If the law is silent, or is obscure or insufficient
with respect to a particular controversy, the judge
shall apply the custom of the place, and in default
thereof, the general principles of law and justice.
Customs
Customs are rules of conduct, legally binding and
obligatory, formed by repetition of acts uniformly
observed as a social rule.
Necessity of proving customs
GR: A custom must be proved as a fact, according
to the rules of evidence (NCC,Art. 12).
XPN: Courts may take judicial notice of a custom if
there is already a decision rendered by the same
court recognizing the custom.
Requisites before such custom could be
considered a source of right
1. Plurality of acts;
2. Uniformity of acts;
3. General practice by the great mass of the
people of the country or community;
4. Continued practice for a long period of
time;
5. General conviction that the practice is the
proper rule of conduct;
6. Conformity with law, morals or public
policy (Tolentino, 1987).
Application of customs in civil cases
In civil cases, customs may be applied by the
courts in cases where the applicable law is:
a. Silent
b. Obscure
c. Insufficient
NOTE: Provided said customs are not contrary to
law, public morals, etc.
Non-applicability of customs in criminal cases
In criminal cases, customs cannot be applied
because of the maxim nullum crimen nulla poena
sine lege (There is neither crime nor punishment,
without a law).
LEGAL PERIODS
9
Computation of period
1. Year – 12 calendar months (CIR v.
Primetown Property Group, Inc., G.R. No.
162155, August 28, 2007).
NOTE: In the said case, the Supreme Court
declared that the provision of Section 31,
Chapter VII, Book I of the Administrative Code
of 1987, being a more recent law, governs
the computation of legal periods with respect
to counting “a year.”
A Calendar Month is “a month designated in
the calendar without regard to the number of
days it may contain.” It is the “period of time
running from the beginning of a certain
numbered day of the next month, and if there
is not sufficient number of days in the next
month, then up to and including the last day of
that month.”
Illustration: One calendar month from
December 31, 2007 will be from January 1,
2008 to January 31, 2008; one calendar
month from January 31, 2008 will be from
February 1, 2008 until February 29, 2008.
Hence, twelve calendar months from
December 31, 2007 is December 31, 2008;
while twelve calendar months from January
31, 2008 to January 31, 2009 (Rabuya, 2009).
2. Month – 30 days, unless designated by
their name, in which case, they shall be
computed according to the number of
days which they respectively have;
3. Day– 24 hours;
4. Night time – from sunset to sunrise;
5. Week – 7 successive days regardless of
which day it would start;
6. Calendar week – Sunday to Saturday.
NOTE: In the computation of period, the
first day shall be excluded, and the last
day included.
If the last day falls on a Sunday or a legal
holiday
If the act to be performed within the period is:
1. Prescribed or allowed by:
a. The Rules of Court;
b. An order of the court; or
c. Any other applicable statute.
The last day will automatically be the next
working day.
 CIVIL LAW
2. From a contractual relationship – The Private International Law v. Public
act will still become due despite the fact International law
that the last day falls on a Sunday or a
legal holiday. Two views:

CONFLICT OF LAWS 1. Monist school - Both subjects are

essentially the same, because they
manifest a single concept of law,
GENERAL PRINCIPLES ultimately addressed to the same
individual

Private international law 2. Dualist School - This school of thought

differentiates private and public
It is a part of municipal law of a state which international law in the following
directs its courts and administrative agencies manner:
when confronted with a legal problem involving
foreign element, whether or not they should apply Private international Public International
the foreign law. law law
As to nature
Conflict of laws Municipal in character International in
character
It is the inconsistency or difference between the As to persons involved
laws of different states or countries, arising in the Private individuals Sovereign states and
case of persons who have acquired rights, other entities
incurred obligations, injuries or damages, or made possessed of
contracts, within the territory of two or more international
jurisdictions. (Black’s Law Dictionary, Fifth personality
Edition) As to transactions involved
Private transactions Transactions generally
Functions of private international law with private individuals affect public interest; or
of interest only to
Functions of private international law sovereign states
As to remedies and sanctions
1. Prescribes conditions under which a Resort to municipal Remedies may be
court or agency is competent to entertain tribunals peaceful or forcible
proceedings with foreign elements’
2. Specifies the circumstances in which Sources of Philippine conflict rules
foreign judgment will be recognized as
valid and binding in the forum; 1. Family code
3. Determines the particular system of law Articles 10, 21, 26, 35, 36, 37, 38, 80, 96, 184,
for each class of cases to ascertain the and 187
rights of the parties (Paras, 1990) 2. Civil code
Articles 14, 15, 16, 17, 815, 816, 818, 819,
Elements of Conflict of laws 829, 1039, 1319, and 1753
3. Penal code
1. Legal problem or case involving foreign Article 2
element; 4. Corporation code
Section 133 – Doing business without a
Foreign element – a factual situation cutting license
across territorial lines, affected by diverse 5. Constitution
laws of two or more states. Article IV and Article 5, Section 1
6. Rules of court
2. Primary function is to determine whether Rule 14 and 39, Section 48, Rule 131, Section
the law or judgments of other state/s will 3 (n), 132, Section 35.
govern and if so the extent if its
recognition or application in the forum Territoriality Principle
(Coquia, 2000).

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 10
 GENERAL PRINCIPLES
Penal laws and those of public security and safety
shall be obligatory upon all who live or sojourn in
the Philippines, subject to the principles of
international law and treaty stipulations (NCC,
Article 14).
Nationality principle
Laws relating to family rights and duties or to the
status, condition, and legal capacity of persons are
binding upon citizens of the Philippines, even
though living abroad (NCC, Article 15).
Lex rei sitae
Real property as well as personal property is
subject to the law of the country where it is
situated (NCC, Article 16).
Lex Loci Celebrationis
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
(NCC, Article 17).
JURISDICTION
JURISDICTION AND CHOICE OF LAW
JURISDICTION
GR: It is the right of a State to exercise authority
over persons and things within its boundaries.
Rules to follow when the court is confronted
with a case involving a foreign element
If the court is faced with a case involving a foreign
element, it should first determine:
1. Whether it has jurisdiction over the case
2. If it has no jurisdiction, it should be
dismissed on that ground;
3. If it has jurisdiction, the court will
determine whether it should assume
jurisdiction, or it should dismiss the case
on the ground of forum non-convenience;
4. Once the court has determined it has
jurisdiction over the case, it will next
determine whether to apply the internal
law of the forum or apply the proper
foreign law.
Forum Non Conveniens
11
It refers to the refusal to assume jurisdiction
because it would prove inconvenient for the
forum.
Grounds for dismissal of the case on the basis
of forum non conveniens
1. Evidence and witnesses may not be
readily available in the forum;
2. Court dockets of the forum are already
clogged that would hamper the speedy
administration of justice;
3. The matter can be better tried and
decided in another forum;
4. To curb the evils of forum shopping;
5. The forum has no particular interest in
the case, as when the parties are not
citizens of the forum or are residents
elsewhere;
6. Inadequacy of the local judicial machinery
in effectuating the right sought to be
enforced;
7. Difficulty in ascertaining the foreign law
applicable.
When can internal or domestic law be applied
1. Law of the forum expressly so provides in
its conflicts rule;
2. Proper foreign law has not been properly
pleaded and proved;
3. Case involves any of the exceptions to the
application of the foreign law.
Instances:
1. When the foreign law, judgment or
contract is:
a. Contrary to sound and established
policy of the forum
b. Contrary to almost universally
conceded principles of morality
(contra bonus mores)
c. Involves procedural matters
d. Purely fiscal or administrative
matters
e. Involves real or personal property
situated in the forum
2. When the application of the foreign law,
judgment or contract:
a. May work undeniable justice to the
citizens/residents of the forum
b. May work against vital interests &
national security of the state of the
forum
Doctrine of Processual Presumption of law
 CIVIL LAW
When the proper foreign law has not been
properly proved, the court of the forum may
presume that said foreign law is the same as the
law of the forum that said court can now apply. It
applies when the foreign law is not alleged or if
alleged, it is not proved.
Where a foreign law is not pleaded or, even if
pleaded, is not proved, the court of the forum may
presume that the foreign law applicable to the
case is the same as the local or domestic law.
Foreign laws do not prove themselves in our
jurisdiction and our courts are not authorized to
take judicial notice of them. Like any other fact,
they must be alleged and proved.
A Philippine court may take judicial notice of a
foreign law, as when the laws are already within
its actual knowledge, such as when they are well
and generally known or they have been actually
ruled upon in other cases before it and none of the
parties concerned claim otherwise (PCIB v. Escolin,
G.R Nos. L-27860 & 27896, September 30, 1975)
CHOICE OF LAW
CHOICE OF LAW
Questions that Choice-of-applicable law seeks
to answer
Important questions that choice-of-law
problems seeks to answer
1. What legal system should control a given
situation where some of the significant
facts occurred in two or more states; and
2. To what extent should the chosen
system regulate the situation. (Saudi
Arabian Airlines v. CA, G.R. No. 122191,
October 8, 1998)
NOTE: Foreign law has no extraterritorial effect
and any exception to this right must be traced to
the consent of the nation.
Theories on why the foreign law may be given
effect
1. Theory of Comity - The application of foreign
legal systems in cases involving foreign
element is proper, otherwise, the non-
application would constitute a disregard of
foreign sovereignty or lack of comity towards
other States.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Comity - It is the recognition which one state
allows within its territory to the legislative,
executive, or judicial acts of another state,
having due regard both to international duty
and convenience and to the rights of its own
citizens or of other persons who are under the
protection of its laws (Agpalo. 2004).
Kinds:
a. Comity based on reciprocity
b. Comity based on the persuasiveness of
the foreign judgment
2. Theory of Vested Rights - Courts enforce not
the foreign law or foreign judgment but the
rights vested under such law or judgment.
Thus, rights acquired in one country must be
recognized and legally protected in other
countries. The forum will not apply the
foreign law but will simply recognize the right
vested by said law.
3. Theory of Local Law - This involves the
appropriation of a foreign rule by the State of
the forum and transforming it into a domestic
rule. A foreign law is applied because our own
law, by applying a similar rule, requires us to
do so, as if the foreign law as become part of
our internal or domestic law.
4. Theory of Harmony of Law - Identical or
similar problems should be given identical
and similar solutions, thus resulting in
harmony of laws. The application of the same
or similar solution prevents the bad practice
of forum shopping.
5. Theory of Justice - Choice of law should be
determined by considerations of justice and
social expediency and should not be the result
of mechanical application of the rule or
principle of selection.
CHARACTERIZATION
CONFLICT RULES
These are a provision found in our own law which
governs a factual situation possessed of a foreign
element. It is usually expressed in the form of an
abstract proposition that a given legal question is
governed by the law of a particular country
(which may be an internal law or the proper
foreign law), to be ascertained in the manner
indicated in the provision (Sempio-diy, 2004).
Kinds of conflict rules
12
 GENERAL PRINCIPLES
1. One-sided rule – indicates when the
Philippine law will apply,
e.g., Article 15 and Art. 818 of the Civil Code
only apply to Filipinos
2. All-sided rule – indicates whether to
apply the local law or the proper foreign
law.
Characterization (Doctrine of Qualification or
Classification)
It is the process of deciding whether or not the
facts relate to the kind of question specified in a
conflits rule (Saudi Arabian Airlines v. CA, G.R. No.
122191, October 8, 1998).
Steps in characterization
1. The determination of facts involved;
2. The characterization of factual situation;
3. The determination of conflicts rule which
is to be applied
4. The characterization of the point of
contact where the connecting factor;
5. The characterization of the problem as
procedural or substantive;
6. The pleading and proving of the proper
foreign law and
7. The application of the proper foreign law
to the problem (Paras, 1990).
Q: A (Iraqi government) granted B (Domestic
corp.) a service contract for the construction of
build-ing in Iraq. The bond was guaranteed by
C (Domestic corp.). When it was ascertained
that B will not be able to finish the project in
the scheduled agreement, C paid the bond for
failure of B to complete such building. When C
was claiming reimbursement, B refused to pay.
Thus a case was filed. Should Philippines law
govern in determining B's default?
A: YES. It must be noted that the service contract
between SOB and VPECI contains no express
choice of the law that would govern it. In the
United States and Europe, the two rules that now
seem to have emerged as "kings of the hill" are (1)
the parties may choose the governing law; and (2)
in the absence of such a choice, the applicable law
is that of the State that "has the most significant
relationship to the transaction and the parties."
Another authority proposed that all matters
relating to the time, place, and manner of
performance and valid excuses for non-
performance are determined by the law of the
place of performance or lex loci solutionis, which is
13
useful because it is undoubtedly always connected
to the contract in a significant way.
In this case, the laws of Iraq bear substantial
connection to the transaction, since one of the
parties is the Iraqi Government and the place of
performance is in Iraq. Hence, the issue of
whether respondent VPECI defaulted in its
obligations may be determined by the laws of Iraq.
However, since that foreign law was not properly
pleaded or proved, the presumption of identity or
similarity, otherwise known as the processual
presumption, comes into play. Where foreign law
is not pleaded or, even if pleaded, is not proved,
the presumption is that foreign law is the same as
ours (Philippine Export and Foreign Loan
Guarantee Corporation v. V.P. Eusebio Construction,
Inc. Et Al, G.R. No. 140047, July 13, 2004).
Q: A, a foreign corporation, won a collection
case in Japan against B, a domestic corporation
doing business in Japan. A filed a suit for
enforcement of the judgment in the RTC of
Manila. B assails the judgment on the ground
that the Japanese court did not validly acquire
jurisdiction over B’s person since B was served
with summons in the Philippines and not in
Japan. Is B correct?
A: NO. It is settled that matters of remedy and
procedure such as those relating to the service of
process upon a defendant are governed by the lex
fori or the internal law of the forum. In this case, it
is the procedural law of Japan where the judgment
was rendered that determines the validity of the
extraterritorial service of process on B. As to what
this law is a question of fact, not of law. It may not
be taken judicial notice of and must be pleaded
and proved like any other fact. B did not present
evidence as to what that Japanese procedural law
is and to show that under it, the assailed
extraterritorial service is invalid. Accordingly, the
presumption of validity and regularity of the
service of summons and the decision thereafter
rendered by the Japanese court must stand.
(Northwest Orient Airlines, Inc. v. Court of Appeals
and C.F. Sharp & Company Inc., G.R. No. 112573,
February 9, 1995)
DOMICILE AND CITIZENSHIP
CITIZENSHIP
Personal law
The law which attaches to a person wherever he
may go and generally governs his status, capacity,
 CIVIL LAW
condition, family relations, and the consequences
of his actuations (Sempio-Diy, 2004).
Theories of personal law
1. The Nationality Theory or Personal
Theory – the status and capacity of a
person is determined by the law of his
nationality or national law (Sempio-Diy,
2004).
NOTE: The Philippines follows the Nationality
Theory.
2. Domiciliary Theory or Territorial Theory
– the status and capacity of a person is
determined by the law of his domicile
(Ibid.).
3. Situs or eclectic theory – the particular
place or situs of an event or transaction is
generally the controlling law (Ibid.).
Problems in applying the nationality principle
in dual or multiple citizenship
It arises from the concurrent application of jus soli
and jus sanguinis at birth or from a refusal of
certain States to accept a full application of the
doctrine of expatriation, from marriage, or from a
formal and voluntary act.
1. In matters of status, a person is usually
considered by the forum as exclusively its
own national. His additional foreign
nationality is disregarded.
2. In case litigation arises in a third country,
the law most consistently applied is that
of the country of which the person is not
only a national but where he also has his
domicile or habitual residence, or in the
absence thereof, his residence.
Theory of effective nationality
A third state shall recognize exclusively in its
territory either the nationality of the country of
which one is habitually and principally a resident,
or the nationality of the country with which in the
circumstances one appears to be in act most
closely connected (Hague Convention on Conflict
Nationality Lawes, Art. 5).
Q: On February 8, 1961, Lau Yuen Yeung
applied for a passport visa to enter the
Philippines as a non-immigrant. She stated
that she desired to take a pleasure trip to visit
her great grand uncle. On the date of her
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
arrival, Asher Cheng filed a bond of P1,000 to
undertake that Lau would depart the
Philippines on or before the expiration of her
authorized period of stay or within the period
as in the discretion of the Commission of
Immigration might properly allow. After
repeated extensions, Lau was allowed to stay
in the country until February 13, 1962. On
January 25, 1962, she contracted a marriage
with Moy Ya Lim Yao, a Filipino citizen. Does
Lau, as an alien woman, may be deemed a
citizen of the Philippines by virtue of her
marriage to a Filipino citizen?
A: YES. An alien woman may be deemed a citizen
of the Philippines by virtue of her marriage to a
Filipino citizen only if she possesses all the
qualifications and none of the disqualifications
specified in the law, because these are the explicit
requisites provided by law for an alien to be
naturalized. Section 15 of the Revised
Naturalization Law (Commonwealth Act No. 473)
provides that “Any woman who is now or may
hereafter be married to a citizen of the
Philippines, and who might herself be lawfully
naturalized shall be deemed a citizen of the
Philippines.” Section 15 was obviously to accord
to an alien woman, by reason of her marriage to a
Filipino, a privilege not similarly granted to other
aliens (Moy Ya Lim Yao “Alias” Edilberto Aguinaldo
Lim And Lau Yuen Yeung v. Commissioner of
Immigration, G.R. No. L-21289 October 4, 1971).
Q: Ernesto S. Mercado and Eduardo Manzano
were candidates for vice mayor of the City of
Makati. Manzano won the elections, however
his proclamation was suspended because a
certain Ernesto Mamaril filed a petition for the
disqualification and alleged that Manzano was
not a citizen of the Philippines but of the US.
COMELEC 2nd Division granted the petition
and cancelled the certificate of candidacy on
the grounds that dual citizens are disqualified
from running any elective position under
Sec.40 of the LGC. But, COMELEC en banc
reversed the said decision. It found that
Manzano acquired US citizenship by operation
of the US Constitution. He was also a natural
born Filipino Citizen by operation of 1935
Constitution, as his father and mother were
Filipinos at the time of his birth. At the age of 6
his parents brought him in the country and
registered his as an alien, but this however did
not result in the loss of Phil. Citizenship, as he
did not renounce Phil. Citizenship and did not
take oath of allegiance to the US. A the age of
Majority, Manzano registered himself as a
voter and voted in the elections of 1992, 1995
14
 GENERAL PRINCIPLES
and 1998, which effectively renounce the US
Citizenship under American Law. Is Dual
citizenship a ground for disqualification?
A: NO. Dual citizenship is different from dual
allegiance. The phrase “dual citizenship” in RA
7160 must be understood as referring to “dual
allegiance”, and persons with dual citizenship do
not fall under this disqualification. Dual
Citizenship is involuntary, it arises out of
circumstances like birth or marriage, while dual
allegiance is a result of a person’s volition. It is a
situation wherein a person simultaneously owes,
by some positive act, loyalty to 2 or more states.
Also, Manzano upon filing his certificate for
candidacy have elected Phil, Citizenship thus
terminating his dual citizenship. He made these
statements: “I am a Filipino citizen…. Natural
born. I am not a permanent resident of, or
immigrant to, a foreign country. I am eligible for
the office I seek to be elected…I will support the
Constitution of the Philippines and will maintain
true faith and allegiance thereto…”, thus the filing
sufficed to renounce his American citizenship
(Mercado v. Manzano & COMELEC, G.R. No. 135083
May 26, 1999).
Q: Teodoro Cruz was born in San Clemente,
Tarlac, of Filipino parents making him a
natural-born citizen of the Philippines.
However, respondent Cruz was enlisted in the
United States Marine Corps and, without the
consent of the Republic of the Philippines, took
an oath of allegiance to the United States. As a
consequence, he lost his Filipino Citizenship by
his naturalization as a U.S. citizen in
connection with his service in the U.S. Marine
Corps. Thereafter, respondent Cruz reacquired
his Philippine citizenship through repatriation
under Republic Act No. 2630. He ran for and
was elected as the Representative of the
Second District of Pangasinan in the 1998
elections. He won over Antonio Bengson III,
who was then running for reelection.
Subsequently, Bengson filed a case with House
of Representatives Electoral Tribunal (HRET)
claiming that respondent Cruz was not
qualified to become a member of the House of
Representatives since he is not a natural-born
citizen as required under Article VI, Section 6
of the Constitution. The HRET dismissed the
petition for quo warranto and declared
respondent Cruz was duly elected as a
Representative. The HRET also denied
Bengson’s motion for reconsideration. Is Cruz,
a natural-born Filipino who became an
American citizen, can still be considered a
15
natural-born Filipino upon his reacquisition of
Philippine citizenship?
A: YES. Cruz can still be considered a natural-born
Filipino upon his reacquisition of Philippine
citizenship. He may have lost his Filipino
citizenship when he rendered service in the
Armed Forces of the United States. However, he
subsequently reacquired Philippine citizenship
under R.A. No. 2630, Section 1, which
provides: ”Any person who had lost his Philippine
citizenship by rendering service to, or accepting
commission in, the Armed Forces of the United
States, or after separation from the Armed Forces
of the United States, acquired United States
citizenship, may reacquire Philippine citizenship
by taking an oath of allegiance to the Republic of
the Philippines and registering the same with
Local Civil Registry in the place where he resides
or last resided in the Philippines. The said oath of
allegiance shall contain a renunciation of any
other citizenship”. Cruz upon taking the required
oath of allegiance to the Republic and having
registered the same in the Civil Registry of
Mangatarem, Pangasinan in accordance with the
aforecited provision, is deemed to have recovered
his original status as a natural-born citizen, a
status which he acquired at birth as the son of a
Filipino father. It bears stressing that the act of
repatriation allows him to recover, or return to,
his original status before he lost his Philippine
citizenship (Bengson v. HRET and Cruz, G.R. No.
142840. May 7, 2001).
Q: What are the effects of marriages of: 1) a
citizen to an alien; and 2) an alien to a citizen
on their spouses and children?
A: The following are the effects:
1. Filipino citizens who marry aliens retain their
citizenship, unless by their act or omission, they
are deemed, under the law, to have renounced it.
(1987 Constitution, Art. IV, Sec. 4)
2. Sec. 15 of the Revised Naturalization Law
provides that a foreign woman who marries a
Filipino citizen becomes a Filipino citizen
provided she possesses all the qualifications and
none of the disqualifications for naturalization.
Sec. 15 was obviously to accord to an alien
woman, by reason of her marriage to a Filipino, a
privilege not similarly granted to other aliens. On
the other hand, a foreign man who marries a
Filipino citizen does not acquire Philippine
citizenship. But under Sec. 3 of the same law, in
such a case, the residence requirement for
naturalization will be reduced from 10 to 5 years.
 CIVIL LAW
Under Sec. 1(2), Art. IV of the Constitution, the
children of an alien and a Filipino citizen are
citizens of the Philippines. (Moy Ya Lim Yao “Alias”
Edilberto Aguinaldo Lim and Lau Yuen Yeung v.
Commissioner of Immigration, G.R. No. L-21289,
October 4, 1971)
DOMICILE
It is the place with which a person has a settled
connection for certain legal purposes, either
because his home is there or because that is the
place assigned to him by law.
Domiciliary or Territorial Theory/Lex
Domicilii
The individual’s private rights, condition, status,
and capacity are determined by the law of his
domicile.
It is adopted mostly by common law countries
with population consisting of different
nationalities. Their unity may be achieved by
adopting the law of their domicile.
Basic Fundamental principles of domicile
1. No person shall be without a domicile.
2. A person cannot have two simultaneous
domiciles.
3. Every natural person, as long as he is
free and sui juris, may change his
domicile at his pleasure.
4. A domicile once acquired is retained
unless a new one is gained.
5. The presumption is in favor of
continuance of domicile, the burden of
proof is on the one who alleges that
change of domicile has taken place.
6. To acquire a fresh domicile, residence
and intention must concur; to retain an
existing domicile, either residence there
or intention to remain must be present;
to abandon a domicile, residence in a
new place and intention to abandon the
old place must concur (Gallego v. Verra,
G.R. No. L-48641, November 24, 1941).
Essential requisites needed in order to acquire
a domicile of choice
1. Capacity;
2. Actual physical presence in the place
chosen
3. Freedom of choice
4. Provable intent that it should be one’s
fixed and permanent place of abode –
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
one’s home – hat is, there should be
“animus manendi” (intent to remain) or :
“animus non-revertendi” (intent not to
return to the original abode).
Legal classifications of domicile
1. Domicile of origin – the domicile of a
person’s parents at the time of birth.
2. Constructive domicile – domicile
established by law after birth in case of
persons under legal disability, regardless
of their intention or voluntary act.
Rules in determining the domicile of a person
A minor follows the domicile of his parents
(Imelda Romualdez-Marcos v. Comelec, G.R. No.
119976, September 18, 1995).
His domicile of origin is
that of his parents at the
time of his birth.
If the child is
legitimate If parents are separated,
the domicile of the
custodial parent.
His domicile of origin is
If the child is that of the mother at the
illegitimate time of his birth.
The domicile of his
If the child is father at the time of his
legitimated birth controls.
RULES DETERMINING
ONE’S CONSTRUCTIVE DOMICILE
MINORS
1. If legitimate, the domicile of both
parents.
In case of disagreement, that of the
father, unless there is a judicial order to
the contrary.
2. If illegitimate, the domicile of the
mother.
3. In case of absence or death of either
parent, the domicile of the present
parent.
Even in case of remarriage of the
surviving parent, still his/her domicile
determines the constructive domicile of
16
 GENERAL PRINCIPLES
the minor child.
4. If the child is adopted, the domicile of
choice of the adopter is the child’s
constructive domicile.
INSANES, IDIOTS, IMBECILES
The law assigns their domicile to them:
1. If they are below the age of majority, the
rules on minors apply to them.
2. If they are of age and have guardians, they
follow the domicile of choice of their
guardians.
3. If they are of age and have no guardians,
their constructive domicile is their
domicile of choice before they became
insane.
MARRIED WOMEN
1. The constructive
domicile of the wife
is the domicile of
both spouses, unless
the law allows the
wife to have a
separate domicile for
valid and compelling
reasons.
If the marriage is valid 2. If there is legal
separation between
the spouses, the wife
can have her own
domicile of choice.
3. If there is a petition to exclude Luis Asistio from the
separation de facto,
the wife can also
have a separate
domicile.
Apply the same rules
when the marriage is
valid. However, after
If the marriage is annulment, the wife
voidable can freely select her
own domicile of
choice.
The wife can have a
domicile separate
If the marriage is void
from the husband.
OTHER PERSONS
His domicile is the one
Convict or prisoner
he had possessed
17
prior to his
incarceration.
Their domicile is their
domicile before their
Soldiers
enlistment.
Their domicile is the
one they had before
they were assigned
Public officials or
elsewhere, unless they
employees abroad
voluntarily adopt their
(diplomats, etc.)
place of employment as
their permanent
residence.
Q: Does leasing a condominium unit shows an
intention to establish not just a residence but a
domicile of choice?
A: NO. While a lease contract may be indicative of
the petitioner’s intention to reside in a place, it
does not engender the kind of permanency
required to prove abandonment of one’s original
domicile.
To successfully effect a change of domicile,
petitioner must prove an actual removal or an
actual change of domicile; a bona fide intention of
abandoning the former place of residence and
establishing a new one and definite acts which
correspond with the purpose. In the absence of
clear and positive proof, the domicile of origin
should be deemed to continue (Agapito Aquino V.
COMELEC, Move Makati, Mateo Bedon and Juanito
Icaro, G.R. No. 120265, September 18, 1995).
Q: On January 26, 2010, Enrico Echiverri filed a
permanent list of voters of Caloocan City.
Echiverri alleged that Asistio is not a resident
of Caloocan City, specifically not of 123
Interior P. Zamora St., Barangay 15, Caloocan
City, the address stated in his Certificate of
Candidacy for Mayor in 2010 elections.
According to him, he found out that the
Asistio’s address is non-existent. In defense,
Asistio alleged that he is a resident of No. 116,
P. Zamaro St., Caloocan City, and a registered
voter of Precinct No. 1811A because he
mistakenly relied on the address stated in the
contract of lease with Angelina dela Torre
Tengco. Should Asistio be excluded from the
permanent list of voters of Caloocan city for
failure to comply with the residency required
by law?
 CIVIL LAW
A: NO. The residency requirement of a voter is at
least one year residence in the Philippines and at
least six months in the place where the person
intends to vote. Residence, as used in the law pre-
scribing the qualifications for suffrage and for
elective office, is doctrinally settled to mean
domicile, importing not only an intention to reside
in a fixed place but also personal presence in that
place, coupled with conduct indicative of such
intention inferable from a person’s acts, activities,
and utterances. Domicile denotes a fixed
permanent residence where, when absent for
business or pleasure, or for like reasons, one
intends to return. In the consideration of
circumstances obtaining in each particular case,
three rules must be borne in mind, namely: (1)
that a person must have a residence or domicile
somewhere; (2) once established, it remains until
a new one is acquired; and (3) that a person can
have but one residence or domicile at a time.
Asistio has always been a resident of Caloocan city
for more than 72 years. Asistio served in public
office of Caloocan City in 1992, 1995, 1998, 2004
and 2007. In all of these occasions, Asistio cast his
vote in the same city. Taking these circumstances,
it cannot be denied that Asistio has qualified, and
continues to qualify, as a voter of Caloocan city.
There is no showing that he has established, or
that he had consciously and voluntarily
abandoned his residence in Caloocan City. Thus,
he should remain in the list of permanent voters of
Caloocan city (Luis Asistio v. Hon. Thelma Canlas
Trinidad-Pe Aguirre, G.R. No. 191124, April 27,
2010).
FAMILY LAW AND PERSONAL CAPACITY
Applicable Civil Code provisions
1. Laws relating to family rights and duties,
or to the status, condiition, and legal
capacity of persons are binding upon
citizens of the Philippines, even though
living abroad (NCC, Art. 15)
2. 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 those
prohibited under Articles 35(1), (4), (5)
and (6), 36, 37, and 38 (FC, Art. 26).
GR: Under Article 26 of the Family Code, All
marriages solemnized outside the Philippines in
accordance with the laws in force in the country
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
where they were solemnized and valid there as
such, is also valid in the Philippines.
XPN: If the marriage is void under Philippine law,
then marriage is void even if it is valid in the
country where the marriage was solemnized, viz:
1. Those contracted by any party below 18
years of age even with the consent of
parents or guardians; [FC, Art. 35 (1)]
2. Those bigamous or polygamous
marriages not falling under Art. 41, FC;
[FC, Art. 35 (4)]
3. Those contracted through mistake of one
contracting party as to the identity of the
other; [FC, Art. 35 (5)]
4. Those subsequent marriages that are
void under Art. 53, FC; [FC, Art. 35 (6)]
5. Marriage contracted by any party who, at
the time of the celebration, was
psychologically incapacitated to comply
with the essential marital obligations of
marriage; (FC, Art. 36)
6. Incestuous marriage; (FC, Art. 37) and
7. Void ab initio marriages or reasons of
public policy. (FC, Art. 38)
Effect of laws, judgments promulgated or
conventions agreed upon in a foreign country
on Philippine prohibitive laws
GR: Prohibitive laws concerning persons, their
acts, or property and laws which have for their
object public order, public policy or good customs
are not rendered ineffective by laws, judgments
promulgated or conventions agreed upon in
foreign country.
XPN: Art. 26 par. 2 of the Family Code (FC), on
mixed marriages where the foreigner obtained a
divorce decree abroad and was thereby
capacitated to remarry.
Even though divorce is not recognized in the
Philippines as a mode of terminating marriage,
still the marriage is terminated by virtue of a
judgment of divorce and issuance of a divorce
decree by a foreign court.
Requirements for the application of par. 2 of
Art. 26 of the Family Code
1. It must be a case of mixed marriage (one party
is Filipino and the other is an alien);
2. The divorce must be obtained by the alien
spouse and not by the Filipino spouse; and
18
 GENERAL PRINCIPLES
3. The divorce obtained by the alien spouse law of the last common nationality of the
must capacitate him or her to remarry spouses would govern.
(Rabuya, 2009). 3. If the spouses retain their different
nationalities after the marriage –
Law that governs the validity of marriage in National law of both spouses should
case of mixed marriages govern.

If the marriage is valid CONTRACTS

under the law of one of
the spouses while void The extrinsic or formal validity – is governed by
under the law of the lex loci celebrationis or lex loci contractus (NCC,
other, the validity of the Art. 17).
Marriage between a
marriage should be
Filipino and foreigner
upheld, unless the Lex loci contractus
ABROAD
marriage is universally
incestuous or highly It means “the law of the contract;” the law that
immoral (the same rule governs the intrinsic validity of a contract.
as to foreigners who get
married abroad). It may be determined either through;
The national law of the
Marriage between a Filipino – Philippine 1. Lex voluntatis or the law specifically
Filipino and a law should be followed stipulate by the parties in their contract;
foreigner in the – otherwise the or
PHILIPPINES country’s public policy 2. Lex intentionis or the law intended by the
would be violated parties in the absence of an express
Ipso facto becomes a stipulation.
Filipino citizen if she
does not suffer under Law that governs the validity of contracts
any disqualification for
Alien woman who naturalization as a Capacit
marries a Filipino Filipino citizen. Extrinsic Intrinsic
Contract y of
husband Personal relations: validity validity
parties
National law of the
husband shall govern Barter, sale,
(GR). donation Lex
Lex situs Lex situs
situs

Law that governs the personal relations of the Lease of

spouses property: Lex
Lex situs Lex situs
creates real situs
GR: The personal relations of the spouses are rights
governed by the national law of the husband.

Effects of change of nationalities of the spouses Lex

– governing law (NCC, Art. 15). Lease of
Persona voluntati
property: Lex loci
l law of s or
XPN: Change of nationalities of the spouses — does not celebration
the lex loci
governing law. (NCC, Art. 15) create real is
parties intention
rights
is
Effects:

1. If the spouses have the same Pledge,

nationality but they acquire a new chattel
nationality by their common act – their mortgage, Lex
new national law will govern their Lex situs Lex situs
real estate situs
personal relations. mortgage,
2. If the husband alone changes his antichresis
nationality after the marriage – The

19
 CIVIL LAW
Lex loci improper discrimination, carrier
voluntati is liable for damages beyond
Persona
Contract of Lex loci s or those limited by Warsaw
l law of
loan: celebration lex loci Convention.
the
mutuum is intention
parties
is NOTE: If contracts involve encumbrances of
property, real or personal, apply lex situs. If
personal contracts, law on contracts will apply.
Contract of
loan: Lex
Lex situs Lex situs
commodatu situs SUCCESSION
m

Applicable Civil Code provisions

Lease of
service, 1. Real property as well as personal
agency, property is subject to the law of the
guaranty, country where it is stipulated.
Lex loci
suretyship
voluntati
Lex loci Persona However, intestate and testamentary
s or
NOTE: celebration l law of successions, both with respect to the order of
lex loci
Agency to is parties succession and to the amount of successional
intention
alienate or rights and to the intrinsic validity of
is
encumber testamentary provisions, shall be regulated by
real property the national law of their person whose
is governed succession is under consideration, whatever
by lex situs may be the nature of the property and
regardless of the country wherein said
property may be found (NCC, Art. 16).
Persona
Lex loci Lex loci
l law of NOTE: Capacity to succeed is governed by the
celebration voluntati
the national law of the decedent. (NCC, Art. 1039)
is s
parties
2. The will of an alien who is abroad
Liability for loss, destruction, produces effect in the Philippines if made
deterioration of goods in transit: with the formalities prescribed by the law
law of destination of goods (NCC, of the place in which he resides, or
Art. 1753). according to the formalities observed in
his country, or in conformity with those
If COGSA applies, limitation on which this Code prescribes (NCC, Art.
Contract of liability applies, unless the 816).
transportati shipper declares value of goods
on or and inserts such declaration in NOTE: Proof that the will conforms to the
carriage the bill of lading. laws mentioned is imperative. (Salud Teodoro
(render Vda. De Perez v. Hon. Tolete, G.R. No. 76714,
services) Contract for air transportation June 2, 1994)
(Warsaw Convention)
3. A will made in the Philippines by a citizen
1. The liability of the airline in or subject of another country, which is
case of death, injury to executed in accordance with the law of
passengers, or loss or damage the country of which he is a citizen or
to cargo is governed by Warsaw subject, and which might be proved and
Convention. allowed by the law of his own country,
shall have the same effect as if executed
according to the laws of the Philippines
(NCC, Art. 817)
2. If there was malice, gross
negligence, or bad faith, or

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 20
 GENERAL PRINCIPLES
NOTE: Probate is an adjudication that the last
will and testament of a person was executed
with all the formalities required by law. It
does not pass upon the validity of the
provisions of the will. The disallowance of a
will being essentially procedural in character,
the law of the forum will govern the
procedural matters. However, the court will
look into the law of the foreign state where
the suit was made as to whether the extrinsic
requirements in the execution of the will have
been complied with.
NOTE: The will of an alien who is abroad produces
effect in the Philippines if made within the
formalities prescribed by the law of the place in
which he resides, or according to the formalities
observed in his country, or in conformity with
those which this Code prescribes. Proof that the
will conforms to the laws mentioned is imperative
(Salud Teodoro Vda. De Perez v. Hon. Tolete, G.R.
No. 76714, June 2, 1994).
4. Joint wills executed by Filipinos in a
foreign country shall not be valid in the
Philippines, even though authorized by
the laws of the country where they may
have been executed. (NCC, Art. 819)
Q: How can a will executed abroad be made
effective in the Philippines?
A: A will made in a foreign country may be
probated in the Philippines after sufficient proof
is presented showing that the will was duly
executed in the manner required by law and that
the testator had capacity at the same time he
executed the will.
Evidence necessary for the allowance of wills
which have been probated outside the
Philippines
1. Due execution of the will in accordance
with the foreign laws;
2. The testator has his domicile in the
foreign country and not in the
Philippines;
3. The will has bee admitted to probate in
such country;
4. The fact that the foreign tribunal is a
probate court; and
5. The laws of a foreign country on
procedure and allowance of wills (Suntay
v. Suntay, G.R. No. 132524, December 29,
1998).
RENVOI
21
A procedure whereby a jural matter presented is
referred by the conflict of laws rules of the forum
to a foreign state, the conflict of laws rules of
which in turn refers the matter back to the law of
the forum (remission) or a third state
(transmission) (Coquia, 2000). Thus, it is clear that
renvoi can arise only from conlict rules and not
from internal rules.
Cases:
Q: What will the Court do, if it is confronted
with a case with a “Renvoi” Problem?
A:
1. Reject the renvoi – If the conflict rules of
the forum refer later the case to the law of
another state, it is deemed to mean only
the internal law of that state. Thus, the
court will apply the foreign law (Paras,
1990)
2. Accept the renvoi – If the conflict rules of
the forum refer the case to the law of
another state, it is deemed to include the
totality of the foreign law (internal law
and conflict of law rules). Thus the court
will recognize the referral back and apply
the local law (Ibid.).
3. Follow the Theory of Desisment – also
referred to as Mutual Disclaimer of
Jurisdiction Theory. The forum court
upon reference to another state’s law sees
that such law is limited in application to
its own nationals domiciled in its territory
and has no provision for application to
nationals domiciled outside of the
territory. Hence the local court will apply
the local law.
NOTE: This has the same result as the
acceptance of the renvoi doctrine but the
process used by the forum court is to desist
applying the foreign law (Ibid.).
4. Make use of the Foreign Court Theory –
Forum acourt assumes the same position
that the foreign court would take if the
case is litigated in the foreign state.
Double renvoi
It is that which occurs when the local court, in
adopting the foreign court theory, discovers that
the foreign court accepts the renvoi (Sempio-diy,
2004)
 CIVIL LAW
Transmission
It is the process of applying the law of a foreign
state through the law of a second foreign state.
Not the same as renvoi, Renvoi involves two laws
while transmission involves three laws (Paras,
1990).
Renvoi v. Transmission
Renvoi Transmission
Deals with 2 countries Deals with 3 or more
countries
Deals with “referring Deals with “referring
back” across” or
“transmitting”
Q: Linnie Hodges, an American citizen from
Texas, made a will in 1952. In 1957, she died
while domiciled in Iloilo, Philippines. In her
will, she left her entire estate in favor of her
husband, Charles Hodges. Also, that should her
husband later die, the entire estate shall be
turned over to her brother and sister. A certain
Avelina Magno, a trusted employee of the
Hodges, was appointed as the estate’s
administratrix.
When Charles died in 1962, his lawyer, Atty.
Gellada filed a motion before the probate court
(Linnie’s estate) that Magno be temporarily
appointed as the administratrix of Charles’
estate. According to Atty. Gellada, Charles left a
will but the same cannot be presently
presented. The court granted the motion.
When Charles’ will was later found, a petition
for probate was filed for the said will. Magno
opposed the said petition contending that
Charles should turn over the properties to
Linnie’s brother and sister as provided in
Linnie’s will. The probate court dismissed the
opposition.
Thereafter, the Philippine Commercial and
Industrial Bank was appointed as
administrator of Charles’ estate. However,
Magno refused to turn over the properties.
According to Magno, Linnie wanted was a
citizen of Texas, USA at the time of her death.
Thus, successional rights as to linnie’s estate
should governed by the law of Texas.
What law should be applied in the case at bar?
A: The Supreme Court remanded the case back to
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
the lower court. Both parties failed to adduce
proof as to the law of Texas.
Further, the Supreme Court held that for what the
Texas law is on the matter, is a question of fact to
be resolved by the evidence that would be
presented in the probate court.
The Supreme Court, however, emphasized that
Texas law at the time of Linnie’s death is the law
applicable. As to whether the law of Texas refers
the matter back to Philippine laws must be proven
by evidence presented before the court (Philippine
Commercial and Industrial Bank v. Hon. Venicio
Escolin, G.R. Nos. L-27860 and L-27896 March 29,
1974).
Q: On November 8, 2001 Ruperta C. Palaganas
(Ruperta), a Filipino who became a naturalized
United States (U.S.) citizen, died single and
childless. In the last will and testament she
executed in California, she designated her
brother, Sergio C. Palaganas (Sergio), as the
executor of her will for she had left properties
in the Philippines and in the U.S. Respondent
Ernesto C. Palaganas (Ernesto), another
brother of Ruperta, filed with the RTC a
petition for the probate of Ruperta’s will and
for his appointment as special administrator of
her estate. However, petitioners Manuel
Miguel Palaganas (Manuel) and Benjamin
Gregorio Palaganas (Benjamin), nephews of
Ruperta, opposed the petition on the ground
that Ruperta’s will should not be probated in
the Philippines but in the U.S. where she
executed it. The RTC issued an order: (a)
admitting to probate Ruperta’s last will; (b)
appointing re-spondent Ernesto as special
administrator at the request of Sergio, the U.S.
based executor desig-nated in the will; and (c)
issuing the Letters of Special Administration to
Ernesto. CA affirmed.
Can a will executed by a foreigner abroad may
be probated in the Philippines although it has
not been previously probated and allowed in
the country where it was executed?
A: YES. The law does not prohibit the probate of
wills executed by foreigners abroad although the
same have not as yet been probated and allowed
in the countries of their execution.
A foreign will can be given legal effects in our
jurisdiction. The Civil Code states that the will of
an alien who is abroad produces effect in the
Philippines if made in accordance with the
formalities prescribed by the law of the place
22
 GENERAL PRINCIPLES
where he resides, or according to the formalities
observed in his country (Palaganas v. Palaganas,
G.R. No. 169144, January 26, 2011).
REVOCATION OF WILLS
Rules if a person dies testate
1. If revocation takes place in the Philippines,
whether the testator is domiciled in the
Philippines or in some other country, it is
valid if in accordance with Philippine laws.
2. If revocation takes place outside the
Philippinesm by a testator domiciled in the
Philippines, it is valid when it is in
accordance with the laws of the
Philippines.
3. Revocation done outside the Philippines,
by a testator who does not have his
domicile in this country, is valid when it is
done according to the:
a. Law of the place where the will was
made; or
b. Law of the place where the testator
had his domicile at the time of
revocation.
Rule if a person dies intestate
Follow lex nationali or the law of the nationality of
the decedent.
CRIMES
Territoriality Principle
Penal laws and those of public security and safety
shall be obligatory upon all who live or sojourn in
the Philippines, subject to the principles of
international law and treaty stipulations. (NCC,
Article 14)
Extra-territoriality
Penal statutes may find application even outside
the territorial jurisdiction of an enacting state
pursuant to treaty obligations and general
principles of international law. An example of
extra-territoriality is Art. 2 of the RPC.
Q: May a Filipino convicted of a crime abroad
serve his sentence in the Philippines?
A: NO. Under the territoriality principle, a crime is
punishable only in the territorial jurisdiction
23
where it was committed. Allowing a Filipino
convicted abroad to serve sentence in the
Philippines will be tantamount to recognizing and
enforcing a foreign judgment which is penal in
nature.
Protective Theory
Any state whose national interests are adversely
affected by the crime may protect itself by
prosecuting and punishing the offender. The
Philippines adheres to this theory to a limited
extent. States claim extraterritorial criminal
jurisdiction to punish crimes committed abroad
which are prejudicial to their national security or
vital interests, even where the offenses are
perpetrated by non-nationals. Jurisdiction is
vested in the state whose national interests are
injured or national security compromised.
Universality Principle
A state has extraterritorial jurisdiction over all
crimes regardless of where they are committed or
who committed them, whether nationals or
nonnationals. This is, however, generally
forbidden under international law. Jurisdiction is
vested with the state which has custody of
offender who committed universal crimes such as
piracy, genocide, etc.
Bigamy is punishable only when committed in
the Philippines
Our penal laws apply to all crimes committed
within Philippine territory. Consequently, crimes
committed outside the territory of the Philippines
are not within the jurisdiction of Philippine
authorities to prosecute, subject only to certain
exceptions. Because of this principle, a criminal
case for bigamy cannot be filed against a Filipino
who contracted a second or bigamous marriages
abroad.
TORTS
GR: Lex loci delicti comissior the law of the place
where the tort was committed will govern.
Reason: The state where the social disturbance
occurred has the primary duty to redress the
wrong and determine the effects of the injury; to
compensate the victim for the damage or injury
suffered.
Obligation Theory
 CIVIL LAW
The tortuous act gives rise to an obligation, which 1. The defendant has been given reasonable
is transitory and follows the person committing notice and opportunity to be heard;
the tortuous act and may be enforced wherever he 2. There is adequate proof of foreign judgment;
may be found (Coquia, 2000). 3. The foreign judgment must have disposed of
the controversy on the merits and must be res
Philippine conflict rules on tort problems judicata, i.e., judgment on the merits is final,
issued by a foreign court having jurisdiction
If the tort law of the Philippines embodies a social over the subject matter and parties, and there
or economic policy, then the law of the forum on was identity of parties, subject matter, and the
torts shall be applied. cause of action
4. It must not be barred by prescription both in
If the Philippines has no concern or interest in the the state where it was promulgated and the
application of the internal law, and the other State where it is sought to be enforced;
have an interest, apply the law of such State. 5. State where the foreign judgment was
obtained allows recognition or enforcement of
NOTE: The state where an injury has occurred has Philippine judgments;
interest in compensating the injured party, while 6. If the foreign judgments is for a sum of money,
the state where the tortfeasor acted has an it must be fixed;
interest in regulating the conduct of persons 7. Foreign judgment must not be contrary to the
found in its territory. public policy or good morals of the country
where it is to be enforced;
8. Judgment must not have been obtained by
RECOGNITION AND ENFORCEMENT OF fraud, collusion, mistake of fact or law; and
FOREIGN JUDGMENT 9. It must be a judgment in civil or commercial
matters, including questions of status, not on
a criminal, revenue, or administrative matter.
Recognition of foreign Enforcement of
judgment foreign judgment
The defendant or the The plaintiff or Effects of a judgment or final order of a foreign
respondent is petitioner wants the tribunal or court in case the judgment is being
presenting the foreign court to positively carry sought in Philippine Courts
judgment merely as a out and make effective
defense, on the basis of the foreign judgment. 1. In a judgment or final order upon a
res judicata. specific thing, the judgment or final order
Invokes merely as Implies an act of is conclusive upon the title to the thing;
sense of justice. sovereignty and
2. In a judgment or final order against a
Needs no proceeding or Requires a separate
action but implies that action brought person, the judgment or final order is
presumptive evidence of a right as
the same has already precisely to make the
been filed against the foreign judgment between the parties and their successors
in interest by a subsequent title.
defendant who is effective
invoking the foreign
NOTE: In either case, the judgment or final order
judgment.
may be repelled by evidence of want of
Recognition is a passive Enforcement is an
jurisdiction, want of notice to a party, collusion,
effect of foreign active recognition and
fraud or clear mistake of law or fact (ROC, Rule 39,
judgment. implementation of the
Sec. 48).
foreign judgment from
the local court,
Q: The Special Sixth Division of the Court of
rendering the foreign
Appeals refused to recognize the Entry of
judgment and seeking
Appearance of Quasha Law Office as the new
its enforecement by the
counsel of Legend International Resorts,
sheriff on accordance
Limited (LIRL). It said that the appointment of
with the Rules of Court.
LIRL’s joint and several liquidators were made
pursuant to an Order of the Hong Kong Court.
Requisites for recognition or enforcement of a
Since it was a foreign judgment, Philippine
foreign judgment
Courts could not take judicial notice thereof as
the final orders of foreign tribunals could only

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 24
 GENERAL PRINCIPLES
be enforced in the Philippines after
appropriate proceedings. The CA concluded
that it was only Picazo Law Office is the only
counsel entitled to represent and file
pleadings for and on behalf of petitioner LIRL.
Quasha Law Office and LIRL then filed a special
civil action for Certiorari under Rule 65
seeking to reverse and set aside on the ground
of grave abuse of discretion amounting to lack
or excess of jurisdiction the Special Sixth
Division of the CA. Did the special CA Division
gravely abuse its discretion in considering the
Orders of the Hong Kong Court appointing
liquidators for LIRL involved enforcement and
recognition of a foreign judgment?
A. No. It has already been settled in the aforesaid
two Decisions that the Orders of the Hong Kong
Court appointing liquidators for petitioner LIRL
did not involve the enforcement of a foreign
judgment. The act of terminating the legal services
of private respondent Picazo Law Office and en-
gaging in its place petitioner Quasha Law Office
was a mere exercise of petitioner LIRLs
prerogative, through its appointed liquidators,
which was an internal affair that required no prior
recognition in a separate action. There was no
enforcement of a foreign judgment when one of
the appointed liquidators terminated the legal
services of private respondent Picazo Law Office
and engaged in its stead petitioner Quasha Law
Office to be the duly authorized counsel of
petitioner LIRL. What is involved is the
prerogative of petitioner LIRL, through its duly
authorized representative -- which, in this case, is
its appointed liquidators -- to terminate and
engage the services of a counsel, which is an
internal affair that requires no prior recognition in
a separate action (Quasha Ancheta Pea et al v. the
Special Sixth Division of the Court of Appeals, GR
No. 182013, December 4, 2009).
Q: Gerbert, a naturalized Canadian citizen,
married Daisylyn, a Filipino, but subsequently
left for Canada due to work and other
professional commitments. When he returned
to the Philippines, he discovered that Daisylyn
was already romantically involved with
another man. Hurt and disappointed, Gerbert
returned to Canada and filed a petition for
divorce which was eventually granted. Two
years later, he has fallen in love with another
Filipina and wished to marry her. He went
then to the civil registry to register the divorce
decree of his marriage certificate with
Daisylyn. However, despite the registration, an
official of NSO informed Gerbert that the
former marriage still subsists under the
25
Philippine law until there has been a judicial
recognition of the Canadian divorce by a
competent judicial court in view of NSO
Circular No. 4, series of 1982. Consequently, he
filed a petition for judicial recognition of
foreign divorce and/or declaration of
dissolution of marriage with the RTC. RTC
denied the same and concluded that Gerbert
was not the proper party to institute the action
for judicial recognition of the foreign divorce
decree as he is a naturalized Canadian citizen.
It ruled that only the Filipino spouse can avail
of the remedy, under the second paragraph of
Article 26 of the Family Code.
Q: Does the second paragraph of Article 26 of
the Family Code extend to aliens the right to
petition for the recognition of a foreign
divorce decree?
A: YES. While the general rule is that the alien
spouse can claim no right under the second
paragraph of Article 26 of the Family Code as the
substantive right it establishes is in favor of the
Filipino spouse, the foreign divorce decree is
presumptive evidence of a right that clothes the
party with legal interest to petition for its
recognition in this jurisdiction. Divorce obtained
by an alien abroad may be recognized in the
Philippines, provided the divorce is valid
according to his or her national law. The foreign
divorce decree itself, after its authenticity and
conformity with the alien’s national law have been
duly proven according to our rules of evidence,
serves as a presumptive evidence of right in favor
of Gerbert, pursuant to Section 48, Rule 39 of the
Rules of Court which provides for the effect of
foreign judgments.
Ruling with regard to the annotation of decree
on marriage certificate:
But while the law requires the entry of the divorce
decree in the civil registry, the law and the sub-
mission of the decree by themselves do not ipso
facto authorize the decree’s registration. The law
should be read in relation with the requirement of
a judicial recognition of the foreign judgment
before it can be given res judicata effect. In the
context of the present case, no judicial order as yet
exists recognizing the foreign divorce decree.
Thus, the Pasig City Civil Registry Office acted
totally out of turn and without authority of law
when it annotated the Canadian divorce decree on
Gerbert and Daisylyn’s marriage certificate, on the
strength alone of the foreign decree presented by
Gerbert. For being contrary to law, the
registration of the foreign divorce decree without
 CIVIL LAW
the requisite judicial recognition is patently void
and cannot produce any legal effect (Corpuz v. Sto.
Tomas and the Solicitor General, G.R. No. 186571,
August 11, 2010).
HUMAN RELATIONS
Abuse of right (2006 BAR)
A right, though by itself legal because recognized
or granted by law as such, may become the source
of some illegality. When a right is exercised in a
manner which does not conform to the norms
enshrined in Art. 19 and results in damage to
another, a legal wrong is thereby committed for
which the wrongdoer must be held responsible.
This principle is based upon the famous maxim
summum jus summa injuria (the abuse of a right
is the greatest possible wrong) (Arlegui v. CA,
G.R. No. 126437, March 6, 2002).
Rationale: The exercise of a right ends when
the right disappears, and it disappears when it
is abused, especially to the prejudice of others.
It cannot be said that a person exercises a right
when he unnecessarily prejudices another or
offends morals or good customs. (Pineda, 2009)
Elements of abuse of right (L-B-P-A)
1. There is a Legal right or duty;
2. Such duty is exercised in Bad faith;
3. It is for the sole intent of Prejudicing or
injuring another;
4. The Absence of good faith is essential to
abuse of right (Rabuya, 2009).
Principle of Damnum Absque Injuria
It means damage without injury. One who
merely exercises one’s rights does no actionable
injury and cannot be held liable for damages
(Amonoy v. Guitierrez, G.R. No. 140420, February
15, 2001).
Injury is the illegal invasion of a legal right;
damage is the loss, hurt, or harm which results
from the injury; and damages are the recompense
or compensation awarded for the damage suffered
(Panteleon v. American Express, G.R. No. 174269,
August 25, 2010).Pantaleon
There can be damage without injury in those
instances in which the loss or harm was not the
result of a violation of a legal duty. In such cases,
the consequences must be borne by the injured
person alone (Ibid.)
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Article 19, 20 and 21 in the enforcement and
sanctions of abuse of right
While Art. 19 lays down the rule of conduct for
the government of human relations, it does not
provide a remedy (Rabuya, 2006).
Generally, an action for damages under either Art.
20 or Art. 21 of the NCC would be proper. Art. 21
deals with acts contra bonus mores or contrary to
good morals and presupposes loss or injury,
material or otherwise, which one may suffer as a
result of such violation. Under Arts. 19 and 21, the
act must be intentional (Rabuya, 2006).
Article 20 speaks of the general sanction for all
other provisions of law which do not especially
provide for their own sanction. Article 21 on the
other hand, speaks of act which is legal but is
contrary to morals, good custom, public order or
public policy and is done with intent to injure.
Sanction for abuse of right under Article 20 of
the NCC
Generally, laws provide for their own sanctions
and methods of enforcement thereof. Article 20
applies only in cases where the law does not
provide for its own sanctions.
Every person who, contrary to law, wilfully or
negligently causes damage to another shall
indemnify the latter for the same (NCC, Art. 20).
The said article provides for a general sanction –
indemnification for damages (Pineda, 2009).
(1996, 2006, 2009 Bar)
In view of the general sanction provided for under
Art. 20, a person however does not have an
absolute right to be indemnified, it is essential that
some right of his be impaired. Without such, he is
not entitled to indemnification (Pineda, 2009).
Contra Bonus Mores (1996, 1998, 2006, 2009
Bar)
Any person who wilfully 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 (NCC, Art. 21). It fills
countless gaps in the statutes, which leave so
many victims of moral wrongs helpless, even
though they suffered material and moral damages
(Tolentino, 1987).
Elements of an action under Art. 21
1. There is an act which is legal;
26
 GENERAL PRINCIPLES
2. Such act is contrary to morals, good
customs, public order or policy;
3. It is done with intent to injure.
Civil liability for moral negligence
There is no civil liability for moral negligence. A
person is required to act with prudence towards
others, but not with charity; the law imposes
diligence and not altruism. Hence, the failure to
make sacrifices or egoism does not constitute a
source of liability (Tolentino, 1987).
Illustration: A person who fails to render
assistance to a drowning person or to the victim of
an accident, cannot be held liable for damages (3
Colin & Capitant 826).
While a person can be absolved from criminal
liability because his negligence was not proven
beyond reasonable doubt, he can still be held
civilly liable if his negligence was established by
preponderance of evidence. The failure of the
evidence to prove negligence with moral certainty
does not negate (and is in fact compatible with) a
ruling that there was preponderant evidence of
such negligence. And that is sufficient to hold him
civilly liable (Dominguez v. People, G.R. No. 167546,
July 17, 2009).
Breach of promise to marry
GR: A breach of promise to marry per se is not an
actionable wrong.
There is no provision in the NCC authorizing an
action for breach of promise to marry.
XPN: When the act constitutes one where
damages pursuant to Art. 21 of the NCC may be
recovered and is not a mere breach of promise to
marry, such as:
1. Where the woman is a victim of moral
seduction (Gashem Shookat Baksh v. CA,
G.R. No. 97336, February 19, 1993).
2. Where one formally sets a wedding,
and go through and spend for all the
preparations and publicity, only to
walk out of it when the matrimony was
about to be solemnized (Wassmer v.
Velez, G.R. No. L-20089, December 26,
1964).
3. Where the woman is a victim of
abduction and rape, and thereafter the
accused promised to marry her to
avoid criminal liability but later
27
reneged on his promise (Buñag, Jr. v.
CA, G.R. No. 101749, July 10, 1992).
A breach of promise to marry per se is not an
actionable wrong. But where a man's promise to
marry is the proximate cause of the acceptance of
his love by a woman and his representation to
fulfill that promise thereafter becomes the
proximate cause of the giving of herself unto him
in a sexual congress, proof that the promise was
only a deceptive device to inveigle her to obtain
her consent to the sexual act, could justify the
award of damages pursuant to Art. 21 not because
of such promise to marry but because of the fraud
and deceit behind it and the wilful injury to her
honor and reputation which followed thereafter. It
is essential, however, that such injury should have
been committed in a manner contrary to morals,
good customs or public policy (Gashem Shookat
Baksh v. CA, G.R. No. 97336, February 19, 1993).
Q: Soledad a high school teacher used to go
around together with Francisco who was
almost ten (10) years younger than her.
Eventually, intimacy developed between them
after Soledad became an underwriter in Cebu.
One evening, they had sexual intercourse in
Francisco’s cabin on board M/V Escaño, to
which he was then attached as apprentice
pilot. After a few months, Soledad advised
Francisco that she was pregnant, whereupon
he promised to marry her. Later their child
was born. However, subsequently, Francisco
married another woman. Soledad filed a
complaint for moral damages for alleged
breach of promise to marry. May moral
damages be recovered for breach of promise
to marry?
A: NO. It is the clear and manifest intent of our
law-making body not to sanction actions for
breach of promise to marry. Francisco is not
morally guilty of seduction, not only because he is
approximately 10 years younger than the
complainant — who around 36 years of age, and
as highly enlightened as a former high school
teacher and a life insurance agent are supposed to
be — when she became intimate with him, than a
mere apprentice pilot, but, also, because, the Court
of First Instance found that, complainant
“surrendered herself” to Francisco because,
“overwhelmed by her love” for him, she “wanted
to bind” “by having a fruit of their engagement
even before they had the benefit of clergy
(Hermosisima v. CA, G.R. No. L- 14628, September
30, 1960).
 CIVIL LAW
NOTE: To constitute seduction there must be
some sufficient promise or inducement and the
woman must yield because of the promise or
other inducement. If she consents merely from
carnal lust and the intercourse is from mutual
desire, there is no seduction.
Prohibition against Unjust Enrichment
No one shall unjustly enrich himself at the
expense of another (Pacific Merchandising Corp. v.
Consolacion Insurance and Surety Co., Inc., G.R. No.
L-30204, October 29, 1976).
NOTE: The article applies only if:
1. Someone acquires or comes into possession of
“something” which means delivery or
acquisition of things”; and
2. Acquisition is undue and at the expense of
another, which means without any just or
legal ground.
Q: Mekeni Food Corp. offered its employee
Locsin a car plan. One-half of the cost of the
vehicle is to be paid by Mekeni and the other
half is to be deducted from Locsin’s salary. The
car was an absolute necessity in Mekeni’s
business operations. Locsin paid for his 50%
share through monthly salary deductions.
Subsequently, Locsin resigned. By then, a total
of ₱112,500 had been deducted from his
monthly salary and applied as part of his share
in the car plan. The vehicle remained in the
ownership and possession of Mekeni, and so
Locsin sought reimbursement of his
amortization payments on the vehicle and
posits that if the amount is not reimbursed,
unjust enrichment would result, as the vehicle
remained in the possession and ownership of
Mekeni. Should the amortization payments be
refunded in favor of Locsin?
A: YES, the amortization payments must be
refunded in favor of Locsin. In the absence of
specific terms and conditions governing a car plan
agreement between the employer and employee,
the employer may not retain the installment
payments made by the employee on the car plan
and treat them as rents for the use of the service
vehicle, in the event that the employee ceases his
employment and is unable to complete the
installment payments on the vehicle. The
underlying reason is that the service vehicle was
precisely used in the employer's business; any
personal benefit obtained by the employee from
its use is merely incidental. Mekeni may not enrich
itself by charging Locsin for the use of its vehicle
which is otherwise absolutely necessary to the full
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
and effective promotion of its business. (Locsin v.
Mekeni Food Corporation, G.R. No. 192105, 09
December 201) (Del Castillo, J.).
Accion In Rem Verso
It is an action for recovery of what has been paid
or delivered without just cause or legal ground. If
a person acquires or comes into possession of
something at the expense of another without just
or legal ground through an act or of performance
by another or any other means has the obligation
to return the same (NCC, Art. 22).
Accion in rem verso is considered merely an
auxiliary action, available only when there is no
other remedy on contract, quasi-contract, crime,
and quasi-delict. Hence, if there is an obtainable
action under any other institution of positive law,
that action must be resorted to, and the principle
of accion in rem verso will not lie. (Shinryo
Philippines Company v. RRN Incorp. G.R. No.
172525, October 20, 2010)
Requisites (E-L-W-A)
1. The defendant has been Enriched;
2. The plaintiff has suffered a Loss;
3. The enrichment of the defendant is
Without just or legal ground; and
4. The plaintiff has no other Action based on
contract, quasi-contract, crime or quasi-
delict.
Accion in rem verso v. Solutio Debiti
In accion in rem verso, it is not necessary that
there should have been mistake in the payment
unlike in solutio indebiti where mistake is an
essential element (Rabuya, 2006).
Accion in rem verso v. Unjust Enrichment
An accion in rem verso is merely an auxiliary
action available only when there is no other
remedy on contract, quasi-contract, crime, and
quasi-delict while unjust enrichment, wherein one
is unjustly enriched at the expense of or from the
efforts or obligations of others, may be availed of
as a prerequisite for the enforcement of the
doctrine of restitution. (Shinryo Philippines
Company v. RRN Incorp. G.R. No. 172525, October
20 2010)
Liability without fault or negligence
Even when an act or event causing damage to
another’s property was not due to the fault or
28
 GENERAL PRINCIPLES
negligence of the defendant, the latter shall be criminal action and not its dismissal by reason of a
liable for indemnity if through the act or event he prejudicial question. (Rabuya, 2006)
was benefited (NCC, Art. 23).

PREJUDICIAL QUESTION UNDER ART. 36 OF

THE NEW CIVIL CODE

Prejudicial questions, which must be decided

before any criminal prosecution may be instituted
or may proceed, shall be governed by the Rules of
Court which the Supreme Court shall promulgate
and which shall not be in conflict with the
provisions of this Code. (Article 36, NCC).

Concept of a prejudicial question

It is a question of a purely civil character but

connected in such a manner to the crime on which
the criminal case is based that it is determinative
of the guilt or innocence of the accused. (De Leon
vs. Mabanag, 70 Phil. 202)

It is one based on a fact distinct and separate from

the crime but so intimately connected with it that
it determines the guilt or innocence of the
accused, and for it to suspend the criminal action,
it must appear not only that said case involves
facts intimately related to those upon which the
criminal prosecution would be based but also that
in the resolution of the issue or issues raised in
the civil case, the guilt or innocence of the accused
would necessary be determined. (Rabuya, 2006)

Elements

1. The previously instituted civil action involves

an issue similarly or intimately related to the
issue raised in the subsequent criminal action;
and
2. The resolution of such issue determines
whether or not the criminal action may
proceed.

NOTE: It is the issue in the civil action that is

prejudicial to the continuation of the criminal
action, and not vice-versa. (Rabuya, 2006)

Suspension of Proceedings

A petition for suspension of the criminal action

based upon the pendency of a prejudicial question
in a civil action may be filed in the office of the
prosecutor or the court conducting the
preliminary investigation. When the criminal
action has been filed in court for trial, the petition
to suspend shall be filed in the same criminal
action at any time before the prosecution rests.
The rule authorizes only the suspension of the

29
 CIVIL LAW
PERSONS AND FAMILY RELATIONS
PERSONS AND PERSONALITY UNDER THE
CIVIL CODE
A person is every physical or moral, real or
juridical and legal being susceptible of rights and
obligations or being the subject of legal relations
(Rabuya, 2006).
Persons v. Things
A person is the subject of legal relations, while a
thing is the object of legal relations.
Personality is the aptitube to be the subject,
active or passive, or juridical relations. One is a
person, while one has personality (Rabuya, 2006).
Status
The status of a person is the legal condition or class to
which one belongs in a society (1 Viso 32, 2 Sanchez
Roman 110).
Civil personality
It is merely the external manifestation of either juridical
capacity or capacity to act. Consequently, it may be
defined as the aptitude of being the subject of rights and
obligations (2 Sanchez Roman 114-147).
RESTRICTIONS ON CAPACITY TO ACT
Restrictions on capacity to act (M-I-D-I-P-C)
(NCC, Art. 38)

Kinds of persons 1. Minority - State of a person who is under the age

1. Natural – human beings and have physical of legal majority which is eighteen years of age;
existence 2. Insanity – State of a person whose mental
2. Juridical - artificial persons and product of faculties are diseased;
legal fiction 3. Deaf-mute – Lacking sense of hearing and the
inability to speak;
Juridical capacity v. Capacity to act
NOTE: Only deaf-mutes who do not know how to write
JURIDICAL CAPACITY TO are declared by law incapable of giving consent.
CAPACITY ACT
4. Imbecility – State of a person who while
Fitness to be Powerto do acts advanced in age has the mental capacity
the subject withlegaleffect comparable to that of a child between two and
Definition of legal (Art. 37). seven years of age;
relations
(Art. 37). 5. Prodigality – A spendthrift or squanderer;
Inherent Through the
NOTE: Prodigality per se doesn’t automatically modify or
(co-exists fulfillment
restrict a person’s capacity to act. There must be a
Acquisition with the of specific
declaration thereof and be placed under guardianship
natural legal
under the Rules on Special Proceeding.
person). activities.
Only Through death and
6. Civil Interdiction – An accessory penalty imposed
Loss through other causes.
upon an accused who is sentenced to a principal
death.
penalty not lower than reclusion temporal.
Can exist Cannot exist w/o
In relation without juridical capacity. NOTE: The following are the effects of civil
to the capacity to interdiction:
other act.
None. Art. 38 (restriction) 1. Deprivation of parental or marital authority;
Art. 39 2. Deprivation of the right to be the guardian of the
Limitation (modification/ person and property of a ward;
limitation), 3. Deprivation of his property by act inter vivos; and
among others. 4. Deprivation of the right to manage one's
properties (Revised Penal Code, Art. 34).
NOTE: A person is presumed to have capacity to act
(Standard Oil Co. v. Arenas, et al., G.R. No. L-5921, They do not exempt the incapacitated person from
December 15, 1908). certain obligations.

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 30
 PERSONS AND FAMILY RELATIONS
Circumstances that modify or limit capacity to act hours after its complete delivery from the
maternal womb.
(FC, Art. 39) 2. At least 7 months – If born alive, it shall be considered
born even if it dies within 24 hours after
1. Insanity; complete delivery.
2. Prodigality;
3. Age; Complete delivery
4. Imbecility;
5. Deaf-Mute; It means the cutting of the umbilical cord from the
6. Family Relations; mother’s womb.
7. Alienage;
8. Trusteeship; Provisional personality of a conceived child
9. Penalty;
10. Insolvency; and A conceived child, although as yet unborn, has a limited and
11. Absence provisional personality. Its personality is provisional
because it depends upon the child being born alive later
The enumeration in Articles 38 and 39 is not exclusive. under certain conditions.
There are others spread throughout the code (e.g., a lawyer
cannot buy property in litigation). [NCC, Art. 1491 (5)] Rights of the conceived child

BIRTH Since a conceived child has a provisional personality even

while inside the mother’s womb, it is entitled to the
Determination of personality following rights: (S-A-D)

The Civil Code provides that birth determines personality, a. Right to Support
but the conceived child shall be considered born for all b. To be Acknowledged
purposes that are favorable to it, provided it is born later c. To receive Donations (Rabuya, 2009)
with the conditions specified in Art. 41 (NCC, Art. 40).
(1999, 2003, 2008 BAR) DEATH

This provision has been superseded by Art. 5 of P.D. No. Civil personality ceases depending upon the
603 (The Child and Youth Welfare Code), which declares classification of persons
that the civil personality of the child shall commence
from the time of his conception, for all purposes 1. Natural persons – by death
favorable to him, subject to the requirements of Art. 41. 2. Juridical persons – by termination of existence

Acquisition of personality through birth Effect of death on civil personality

GR: Actual/Permanent Personality– Personality begins at
birth, not at conception.
XPN: Presumptive/Temporary – The law considers the
conceived child as born (Conceptus pro nato habetur)
Death extinguishes civil personality. However, the rights
and obligations of the deceased are not necessarily
extinguished by his death (Pineda, 2009).
Rules to apply in case there is doubt as to who died
first

The provisional personality of a conceived child
(conceptus pro nato habetur) under Article 40, expressly
limits such provisional personality by imposing the
condition that the child should be subsequently born
alive: "Provided it be born later with the condition
specified in the following article" (Geluz v. CA, G.R. No. L-
16439, 20 July 1961).
“Born later in accordance with law” (1995, 1999, 2008
BAR)
It depends on whether the parties are called to
succeed each other.
1. If successional rights are involved– Art. 43 of the NCC:
Survivorship Rule, and Rule 131, Sec. 3(kk):
Presumption of simultaneous deaths between
persons called to succeed each other, apply.
2. If no successional rights are involved – Rule 131,
Sec. 3 (jj) of the Rules of Court applies
(Presumption ofsurvivorship).

A foetus with an intra-uterine life of: NOTE: Both are to be applied only in the absence of
1. Less than 7 months – Must survive for at least 24 facts.

31
 CIVIL LAW
COMPARISON OF ART. 43 AND RULE 131 OF 1. The parties are heirs to one another;
THE RULES OF COURT 2. There is no proof as to who died first; and
3. There is doubt as to who died first.
Q: Jaime, who is 65, and his son,Willy, whois 25, died
in aplane crash. There is no proof as to who died first. PRESUMPTION OF SURVIVORSHIP UNDER THE
Jaime’s only surviving heir is his wife, Julia, who is also RULES OF COURT
Willy’s mother. Willy’s surviving heirs are his mother,
Julia, and his wife, Wilma. In the settlement of Jaime’s Requisites
estate, can Wilma successfully claim that her late
husband, Willy, had a hereditary share since he was much 1. There are two or more persons;
younger than his father and therefore, should be 2. They perish in the same calamity;
presumed to have survived longer? 3. It is not shown who died first; and
4. There are no particular circumstances from
A: NO, Wilma cannot successfully claim that Willy had a which it can be inferred that one died ahead
hereditary share in his father’s estate. of the other.
Two persons “who are called to succeed each other” are The presumption under the survivorship rule under
presumed to have died at the same time, in the absence the Rules of Court is that the survivorship shall be
of proof as to which of them died first (NCC, Art. 43). determined from the probabilities resulting from the
This presumption of simultaneous death applies in strength and age of the sexes according to the
cases involving the question of succession as between following rules:
the two who died, who in this case, are mutual heirs,
being father and son. Age/Sex of decedents at
Who is presumed
the time of death
Q: Suppose, Jaime had a life insurance policy with his to have survived
Decedent A Decedent B
wife Julia, and his son, Willy, as the beneficiaries. Can
Under 15 Under 15 Older
Wilma successfully claim that one-half of the proceeds
Above 60 Above 60 Younger
should belong to Willy’s estate? (1998 BAR)
Under 15 Above 60 Under 15 (younger)
Above 15 Above 15 Different sexes –
A: YES, Wilma can invoke the presumption of
survivorship and claim that one-half of the proceeds BUT under BUT under male
60 60
should belong to Willy’s estate, under Rule 131, Sec.3 (jj),
par. 5, Rules of Court, as the dispute does not involve Same sex – older
succession.
Under 15 OR Between 15 Between 15 and 60
Under this presumption, the person between the ages over 60 and 60
of 15 and 60 is deemed to have survived one whose
age was over 60 at the time of their deaths. The estate of NOTE: The statutory rules in the determination of
Willy endowed with juridical personality stands in sequence of death do not absolutely apply in a case
place and stead of Willy, as beneficiary. where indirect and/or inferential evidence
surrounding the circumstances of the deaths exists.
SURVIVORSHIP RULE UNDER THE NEW CIVIL CODE
Where there are facts, known or knowable, from which
a rational conclusion can be made, the presumption
If there is doubt as to who died first between 2 or more does not step in, and the rule of preponderance of
persons who are called to succeed each other, as to evidence controls. It is the "particular circumstances
which of them died first: from which survivorship can be inferred" that are
required to be certain as tested by the rules of evidence
1. Burden of Proof: Whoever alleges the death of one (Joaquin v. Navarro, G.R. No. L-5426, May 29, 1953).
prior to the other has the burden of proving such
claim. Q: At the age of 18, Marian found out that she was
2. Absent such proof: Presumption is they died at the pregnant. She insured her own life and named her
same time. There shall be no transmission of unborn child as her sole beneficiary. When she was
successional rights [Sec. 3(kk), Rule 131, Rules of already due to give birth, she and her boyfriend
Court]. (1998, 1999, 2000, 2008, 2009 Bar) Pietro, the father of her unborn child, were kidnapped
in a resort in Bataan. The military gave chase and
Conditions in the application of the survivorship rule after one week, they were found in abandoned hut in
Cavite. Marian and Pietro were hacked with bolos.
It applies when the following conditions are present:

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 32
 PERSONS AND FAMILY RELATIONS
Marian and the baby she delivered were both found NATURE OF MARRIAGE
dead, with the baby’s umbilical cord already cut.
Pietro survived. Marriage as an inviolable social institution
a. Can Marian’s babybe the beneficiary of the insurance Under the Constitution, “marriage, as an inviolable
taken on the life of the mother? social institution, is the foundation of the family and shall be
b. Between Marian and the baby, who is protected by the State” (1987 Constitution, Art. XV, Sec.
presumed to have died ahead? 2).
c. Will Prieto, as surviving biological father of the
baby, be entitled to claim the proceeds of the life Marriage is an institution in which the community is
insurance on the life of Marian? (2008 Bar) deeply interested. The State has surrounded it with
safeguards to maintain its purity, continuity and
A: permanence. The security and stability of the State are
a) YES. An unborn child may be designated as the largely dependent on it. It is in the interest and duty of
beneficiary in the insurance policy of the mother. each member of the community to prevent the bringing
An unborn child shall be considered a person for about of a condition that would shake its foundation and
purposes favorable to it provided it is born later in lead to its destruction. The incidents of the status are
accordance with the NCC. There is no doubt that the governed by law, not by will of the parties (Beso v.
designation of the unborn child as a beneficiary Daguman, A.M. No. MTJ-99-1211, January 28, 2000).
is favorable to the child.
b) If the baby was not alive when completely delivered Marriage as a status
from the mother’s womb, it was not born as a person,
then the question of whom between two persons As a status, the principle in contracts that the parties may, by
survived will not be an issue. The baby had an mutual agreement, put an end to it, cannot certainly apply,
intra- uterine life of more than 7 months, thus, it for the consequences of the marriage as a rule are fixed by
would be considered born if it was alive at the time of law (Paras, 2016).
its complete delivery from the mother’s womb. We
can gather from the facts that the baby was Marriage v. Ordinary Contract
completely delivered. But whether or not it was
alive has to be proven by evidence.
BASIS MARRIAGE ORDINARY
c) Since the baby did not acquire any right under the
CONTRACT
insurance contract, there is nothing for Prieto to
Nature a. Special Merely a
inherit. Prieto is not married to Marian neither was he
contract contract
named as the beneficiary of the insurance.
b. Sui generis
c. Social
Domicile of juridical persons
institution
Governing Law on marraige Law on
1. The place fixed by the law creating or recognizing
Law contracts
the juridical person;
Right of GR: Not The parties are
2. In the absence thereof, the place where their
legal representation is established or where they the parties subject to free to stipulate
to stipulate stipulation subject to certain
exercise their principal functions.
limitation.
XPN:
Property
MARRIAGE UNDER FAMILY CODE relations in
marriage
settlement s.
A special contract of permanent union between a Capacity to Legal Minors may
man and and a woman entered into in accordance contract capacity is contract through
with law for the establishment of conjugal and required. their parents or
family life. It is the foundation of the family and an guardians or in
inviolable social institution whose nature, some instances, by
consequences, and incidents are goverened by law themselves.
and not subject to stipulation, except that Gender Contracting Contracting
marriage settelement may fix the property requirement parties parties
relations during the marriage within the limits must only may be
provided by the Family Code (Family Code, Art. 1). be two two or
persons of more

33
 CIVIL LAW
opposite persons marriage already celebrated cannot be changed by a
sexes. regardless of sex. subsequent amendment to the law (Sta. Maria, 2010).
Dissolution Dissolved Can be
by only by dissolved ESSENTIAL REQUISITES OF VALID MARRIAGE
agreement death or through (1996, 2009 Bar)
annulment, express
never by provision 1. Legal capacity of the contracting parties who
mutual of the law, must be a male and a female;
agreement. through 2. Consent freely given in the presence of the
expiration solemnizing officer (FC, Art. 2).
of the term
for which Legal capacity of the parties to marry
the
contract 1. Age – at least 18 years of age
was
entered The attainment of the required minimum age for
into, or by marriage should be reckoned, not on the date of
mutual filing of the application for issuance of a marriage
agreement license, but on the date of the marriage. Pursuant to
by the Article 6 of the Family Code, parties may contract
parties marriage on the date of the solemnization of the
concerned. marriage, i.e., when they appear personally before
the solemnizing officer and declare in the presence of
not less than two witnesses of legal age that they
take each other as husband and wife (Rabuya, 2009).
Evidence of Marriage
2. Sex – between a male and a female
The best documentary evidence of a marriage is the
marriage contract. However, the failure to present it is not, Two females are incapable of entering into marriage.
however, proof that no marriage took place, as other There is no constitutional protection of the rights of
evidence may be presented to prove marriage marriage between two persons of the same sex
(Balogbog v. CA, G.R No. 83598, March 7, 1997). (Jones v. Hallahan, 501 S.W.2d 588, November 9,
1973).
The following may be presented as proof of marriage:
(a) testimony of a witness to the matrimony, (b) the 3. Lack of legal impediment to marry
couple’s public and open cohabitation as husband and wife
after the alleged wedlock, (c) the birth and baptismal The legal impediments which may affect legal
certificate of children born during such wedlock, and capacity are those mentioned in Articles 37 and 38 of
(d) the mention of such nuptial in subsequent the Family Code. Thus, the contracting parties are
documents (Sarmiento v. CA, G.R. No. 96740, March 25, not legally capacitated to marry each other.
1999).
Other requirements needed for the validity of
STATUS OF MARRIAGES such marriage depending upon the age of the
contracting party
I. Valid
II. Void
ADDITIONAL
III. Voidable AGE REQUIREMENTS

I. VALID MARRIAGES Parental consent and

18 to 21 years old Marriage counseling
The requisites for a valid marriage are provided 22 to 25 years old Parental advice and
by law. Marriage counseling

The principle that the validity of a marriage is

determined by the law effective at the time of the Absence of the additional requirement of parental
celebration of the marriage is further highlighted by advice
the fact that, as a general rule, the nature of the

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 34
 PERSONS AND FAMILY RELATIONS
It does not make the marriage void or voidable, it only initio (FC, Art. 4).
affects the release of the marriage license to be 2. Absence of any of the formal requisites – Void ab
postponed until (3) three months from the complete initio(FC, Art. 4).
publication of the application (FC, Art. 15).
XPNs: Valid even in the absence of formal requisite:
FORMAL REQUISITES OF VALID MARRIAGE
(C-A-L) a. Marriages exempt from license requirement
(1996, 2009 Bar) b. Either or both parties believed in good faith that the
solemnizing officer had the proper authority [FC,
1. Marriage Ceremony Art. 35 (2)].
2. Authority of the solemnizing officer
3. Valid marriage License, except in a marriage of 3. Defect in any of the essential requisites – Voidable (FC,
exceptional character (FC, Art. 3). Art. 4).
4. Irregularity in any of the formal requisites - Valid, but
the party responsible for such irregularity shall be
EFFECT OF ABSENCE OF REQUISITES civilly, criminally or administratively liable (FC, Art.
4).
Effect in the status of marriage (1995, 1996, 1999,
2008 Bar) 1. MARRIAGE CEREMONY

Status of Marriage in case of: That which takes place with the:

1. Absence of any of the essential requisites - Void
ab initio (FC, Art. 4).
2. Absence of any of the formal requisites – Void ab
initio(FC, Art. 4).
XPNs: Valid even in the absence of formal requisite:
a. Marriages exempt from license requirement
b. Either or both parties believed in good faith that
the solemnizing officer had the proper authority
[FC, Art. 35 (2)].
3. Defect in any of the essential requisites –
Voidable (FC, Art. 4).
4. Irregularity in any of the formal requisites -
Valid, but the party responsible for such
irregularity shall be civilly, criminally or
administratively liable (FC, Art. 4).
FORMAL REQUISITES OF A VALID MARRIAGE
(C-A-L)
(1996, 2009 Bar)
1. Personal appearance of the contracting parties
before the solemnizing officer;
NOTE: There is no marriage ceremony if what transpired
was a mere private act of signing a marriage contract by the
contracting parties, without the presence of the
solemnizing officer (Morigo v. People, G.R. No. 145226,
February 6, 2004).
2. Their personal declaration that they shall take each
other as husband and wife; and
3. In the presence of not less than 2 witnesses of legal
age.
No particular form of ceremony or religious rite for
solemnization of the marriage is required by law (FC,
Art. 6).
The declaration of consent need not be vocally
expressed. It can be shown by other manifestations or signs
of approval and consent. It is the agreement itself, and not the
form in which it is couched, which constitutes the contract
(Sta. Maria, 2010).

1. Marriage Ceremony Common-law marriages are not recognized in the

2. Authority of the solemnizing officer Philippines
3. Valid marriage License, except in a marriage of
exceptional character (FC, Art. 3). A common-law marriage, otherwise referred to as a live-in
relationship, is one where the man and the woman just live
EFFECT OF ABSENCE OF REQUISITES together as husband and wife without getting married
(Paras, 2016). This form of marriage is not recognized
Effect in the status of marriage (1995, 1996, 1999, in the Philippines.
2008Bar)
Validity of marriage by proxy
Status of Marriage in case of:
It depends on the place of celebration of the
1. Absence of any of the essential requisites - Void ab marriage:

35
 CIVIL LAW
1. If performed in the Philippines – No, it is not
allowed, hencethemarriage isvoid.
Philippine laws prohibit marriages by proxy. Since the
marriage is performed in the Philippines, Philippine laws
shall apply following the principle of lex loci
celebrationis.
“If valid where celebrated, it is also valid here.” This is
the doctrine of “lex loci celebrationis”, the law of the
place of celebration (Paras, 2016).
2. If performed abroad – Whether it is allowed or
not depends upon the law of the place where the
marriage was celebrated (lex loci celebrationis).
As to marriages between Filipinos - all marriages
solemnized outside the Philippines, in accordance with
the laws enforced in said country where they are
solemnized, and valid there as such, shall also be valid
here in the country, except those prohibited under Art.
35 (1), (2), (4), (5), (6), 36, 37 and 38 (FC,Art. 26).
2. SOLEMNIZING AUTHORITY
Persons authorized to solemnize marriage (1994
1995, 1999 BAR)
The following are the persons authorized to
solemnize marriage depending upon the
circumstances:
1. Under ordinary circumstances (FC, Art. 7):
a. Incumbent judiciary member – Provided,
It is within the court’s jurisdiction.
NOTE: Where a judge solemnized a marriage outside
his court’s jurisdiction, this is a mere irregularity in the
formal requisite, which while it may not affect the
validity of the marriage, may subject the officiating
official to administrative liability (Rabuya, 2009)
b. Priest , rabbi, imam or minister of any
church/religious sect duly authorized - by his
church or religious sect and registered with
the civil registrar general, acting within the
limits of the written authority granted him by
his church or religious sect –
Provided at least one of the parties belongs
to such church or religious sect.
c. Consul general, consul or vice-consul –
Provided both parties are Filipinos and
marriage takes place abroad in the country
where the consul holds office (FC, Art. 10).
d. Mayors (LGC, Arts. 444 and 445) –
including “Acting Mayor”
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
NOTE: From the time of the effectivity of the Family Code
(August 3, 1988) up to the time of the effectivity of the
Local Government Code (January 1, 1992), mayors do
not have the authority to solemnize marriage.
2. Marriages in articulo mortis:
a. Ship captain or airplane chief – provided
themarriageis performed:
i. During voyage, even during
stopovers
ii. Between passengers or crew members
(FC, Art. 31).
Such authority may be exercised not only while the
ship is at sea or the plane is in flight but also during
stop-overs at ports of call (Rabuya, 2018).
b. Military commander of a unit who is a
commissioned officer – provided the marriage is
performed (FC, Art. 32):
i. In absence of chaplain;
ii. Within zone of military operation;
iii. Between members of the armed forces
or civilians.
Duty of the solemnizing officer in a marriage in
articulo mortis
The solemnizing officer in a marriage in articulo mortis
after solemnizing such marriage shall 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 and that he took the
necessary steps to ascertain the ages and
relationship of the contracting parties and the
absence of a legal impediment to the marriage (FC, Art.
29).
Effectofsolemnizingofficer’sfailuretoexecutean
affidavit
It willhave no effect asto thevalidityofthemarriage. The
marriage will still be valid.
The local civil registrar is given the original of the affidavit
which takes the place of a marriage license (Paras, 2016).
Such affidavit is not an essential or formal requisite of
marriage, the same with a Marriage Contract. The
signing of the marriage contract and the affidavit is only
required for the purpose of evidencing the act, not a
requisite of marriage. It is the obligation of the
solemnizing officer. It does not affect the validity of
marriage (De Loria v. Felix, G.R. No. L-9005, June 20,
1958).
Authorized venues of marriage
36
 PERSONS AND FAMILY RELATIONS
GR: Must be solemnized publicly within the
jurisdiction of the authority of the solemnizing officer:
a. Chambers of the judge or in open court;
b. Church, chapel or temple; or,
c. Office of the consul-general, consul or vice-consul
(FC, Art. 8).
XPNs:
1. Marriage at the point of death;
2. Marriage in remote places;
Marriage at a house or place designated by both of the
parties with the written request to the solemnizing
officer to that effect. (FC, Art. 8)
NOTE: This provision is only directory, not mandatory. The
requirement that the marriage be solemnized in a
particular venue or a public place is not an essential
requisite for the validity of the marriage.
A marriage solemnized by a judge outside of his
jurisdiction is valid
Under Art. 3 of the FC, one of the formal requisites of
marriage is the "authority of the solemnizing officer."
Under Art. 7, marriage may be solemnized by, among
others, "any incumbent member of the judiciary within the
court's jurisdiction." Art. 8, which is a directory
provision, refers only to the venue of the marriage
ceremony and does not alter or qualify the authority of the
solemnizing officer as provided in the preceding
provision. If there is defect in such requirement, the same
would not make the marriage void, but it merely subjects
the officer to criminal, civil, or administrative
responsibility (Navarro v. Domagtoy, A.M. No. MTJ-96-
1088, July 19, 1996).
NOTE: In case of a marriage solemnized by a mayor
outside of his territorial jurisdiction, LGC is silent on the
matter, hence the abovementioned case may be applied by
analogy
Exception to the rule requiring authority of the
solemnizing officer
The exception to the rule requiring authority of the
solemnizing officer is when a marriage is contracted with
either or both parties believing in good faith that the
solemnizing officer had the authority to do so [FC, Art. 35
(2)].
3. MARRIAGE LICENSE
A marriage license is required in order to notify the
public that two persons are about to be united in
matrimony and that anyone who is aware or has
37
knowledge of any impediment to the union of the two
shall make it known to the local civil registrar.
The requirement and issuance of marriage license is the
State’s demonstration of its involvement and participation
in every marriage (Rabuya, 2018).
What is required is the marriage license, not the
marriage certificate. The latter is not an essential or
formal requisite; thus an oral solemnization is valid. In
fact, a marriage may be proved by oral evidence (Paras,
2016).
Validity of marriage license
The license shall be valid in any part of the Philippines for a
period of 120 days from the date of issue, and shall be
deemed automatically cancelled at the expiration of said
period if the contracting parties have not made use of it (FC,
Art. 20).
If the parties contracted marriage after the lapse of 120
days from the issuance of the marriage license, such
marriage shall be considered void for lack of marriage
license.
Effect of lack of parental advice
In case a party who is required by law to obtain parental
advice or undergo marriage counselling fails to do so, the
issuance of marriage license is suspended for 3 months
from the completion of publication of the application
(FC, Art. 15).
Status of marriages celebrated during the suspension
of the issuance of marriage license
The status of the marriage if the parties get married within
the said 3-month period depends:
1. If the parties did not obtain a marriage license –
the marriage shall be void for lack of marriage
license.
2. If the parties were able to obtain a marriage
license – the marriage shall be valid without
prejudice to the actions that may be taken against
the guilty party.
Persons authorized to issue the marriage license
The marriage license is issued by the local civil registrar of
the city or municipality where either contracting party
habitually resides (FC, Art. 9).
Obtaining a marriage license in a place other than where
either party habitually resides is a mere irregularity.
 CIVIL LAW
Requirement in the application for marriage license
Each of the contracting parties is required to file
separately a sworn application for the issuance of
marriage license, specifying the following:
1. Full name of the contracting party;
2. Place of birth;
3. Age and date of birth;
4. Civil status;
5. If previously married, how, when and where
the previous marriage was dissolved or
annulled;
6. Present residence and citizenship;
7. Degree of relationship of the contracting
parties;
8. Full name, residence and citizenship of the
father;
9. Full name, residence and citizenship of the mother;
and
10. 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 twenty-one years (FC, Art. 11).
FOREIGN NATIONAL
Additional requirement for foreign national applicants
When either or both of the contracting parties are citizens
of a foreign country, it shall be necessary for them to
submit a certificate of legal capacity to contract marriage,
issued by their respective diplomatic or consular officials.
Stateless persons or refugees from other country shall, in lieu
of the certificate of legal capacity herein required, submit
an affidavit stating the circumstances showing such
capacity to contract marriage (FC, Art. 21).
Marriage without the required certificate of legal
capacity to marry is valid
The status of the marriage celebrated on the basis of a
license issued without the required Certificate of Legal
Capacity is valid as this is merely an irregularity in
complying with a formal requirement of the law in
procuring a marriage license, which will not affect the
validity of the marriage (Garcia v. Recio, G.R. No. 138322,
October 2, 2001).
EXCEPTIONS TO MARRIAGE LICENSE
REQUIREMENT
Marriages exempt from the license requirement
(MARCO)
1. Marriages among Muslims or members of ethnic
cultural communities – Provided they are
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
solemnized in accordance with their customs, rites or
practices (FC, Art. 33);
2. Marriages in Articulo mortis
a. In case either or both of the contracting
parties are at the point of death (FC, Art.
27);
b. Solemnized by a ship captain or airplane
pilot
(FC, Art. 31); and
c. Within zones of military operation (FC,
Art. 32).
3. Marriages in Remote places (FC, Art. 28)
Remote Place - no means of transportation to enable
the party to personally appear before the local civil
registrar (Rabuya, 2018).
4. Marriages between parties Cohabiting for at least 5
years and without legal impediment to marry
each other (FC, Art. 34);
5. Marriages solemnized Outside the Philippines
where no marriage license is required by the
country where it was solemnized.
Requisites for the 5-year cohabitation as an
exception to the marriage license requirement
(2002, 2008 BAR)
The requisites are:
1. Living together as husband and wife at least 5 years
before the marriage.
The 5 year period must be characterized by:
a. Exclusivity – the partners must live together
exclusively, with no other partners, during the
whole 5-yearperiod.
b. Continuity– such cohabitation was unbroken.
NOTE: The period is counted from the date of
celebration of marriage. It should be the years
immediately before the day of the marriage.
2. No legal impediment to marry each other During the
period of cohabitation.
NOTE: The five-year period of cohabitation must have
been a period of legal union had it not been for the absence
of marriage.
3. Fact of absence of legal impediment must be
Present at the time of the marriage.
4. Parties must execute an Affidavit that they are
living together as husband and wife for 5 years and
that they do not have any impediment to marry.
5. Solemnizing officer must execute a Sworn statement
that he had ascertained the qualifications of the
parties and found no legal impediment to their
38
 PERSONS AND FAMILY RELATIONS
marriage (Manzano v. Sanchez, A.M. No. MTJ-00-
1329, March 8, 2001).
Q: Pepito was married to Teodulfa. Teodulfa was
shot by him resulting in her death. After 1 year and
8 months, he married Norma without any marriage
license. In lieu thereof, they executed an affidavit
stating that they had lived together as husband and
wife for at least five years and were thus exempt
from securing a marriage license.
a. What is the status of their marriage?
b. Would your answer be the same if Pepito was
separated in fact from Teodulfa?
A:
a) The marriage is void for lack of marriage
license. To be exempt from the license
requirement under the 5-year cohabitation rule,
the cohabitation should be in the nature of a
perfect union that is valid under the law but
rendered imperfect only by the absence of the
marriage contract and is characterized by
continuity, that is, unbroken, and exclusivity,
meaning no third party was involved at anytime
within the 5 years. It should be a period of legal
union had it not been for the absence of the
marriage.
In this case, Pepito and Norma are not exempt from the
marriage license requirement because at the time of
Pepito and Norma's marriage, it cannot be said that they
have lived with each other as husband and wife for at
least five years prior to their wedding day because from
the time Pepito's first marriage was dissolved to the
time of his marriage with Norma, only about twenty
months had elapsed.
b) YES, the marriage is still void. Even if they were
separated in fact, and thereafter both Pepito and
Norma had started living with each other that has
already lasted for five years, the fact remains that
Pepito had a subsistingmarriage at the time when he
started cohabiting with Norma. It is immaterial that
when they lived with each other, Pepito had
already been separated in fact from his lawful
spouse. The subsistence of the marriage even where
there was actual severance of the filial
companionship between the spouses cannot make
any cohabitation by either spouse with any third
party as being one as "husband and wife" (Niñal v.
Bayadog, G.R. No. 133778, March 14, 2000).
Q: Roderick and Faye were high school
sweethearts. When Roderick was 18 and Faye, 16
years old, they started living together as husband
and wife without the benefit of marriage. When
Faye reached 18 years of age, her parents forcibly
39
took her back and arranged for her marriage to
Brad. Although Faye lived with Brad after the
marriage, Roderick continued to regularly visit
Faye while Brad was away at work. During their
marriage, Faye gave birth to a baby girl, Laica. When
Faye was 25 years old, Brad discovered her continued
liaison with Roderick and in one of their heated
arguments, Faye shot Brad to death. She lost no time in
marrying her true love Roderick, without a marriage
license, claiming that they have been continuously
cohabiting for more than 5 years. Was the marriage of
Roderick and Faye valid? (2008 Bar)
A: NO, the marriage is void because there was no
marriage license. Their marriage was not exempt from the
requisite of a marriage license because Roderick and Faye
have not been cohabiting for at least 5 continuous
years before the celebration of their marriage. Their
lovers’ trysts and brief visitations did not amount to
“cohabitation”.
MARRIAGE CERTIFICATE
Marriage license v. Marriage certificate
BASIS MARRIAGE MARRIAGE
LICENSE CERTIFICATE
Nature Authorization Best evidence of
by the state to the existence of
celebrate marriage.
marriage.
Requisite of Formal Neither
Marriage requisite of essential nor
marriage. formal requisite
of marriage.
Q: Guillermo and Josefa lived together as
husband and wife, but there is doubt as to whether
they got married, since no record of the marriage existed
in the civil registry but their relatives and friends
maintained that the two in fact married each other and
lived as husband and wife for more than half a
century. Is Guillermo married to Josefa?
A: They are presumed to be married. In this jurisdiction,
every intendment of the law leans toward legitimizing
matrimony. Persons dwelling together apparently in
marriage are presumed to be in fact married. This is the
usual order of things in society and, if the parties are not
what they hold themselves out to be, they would be
living in constant violation of the common rules of law
and propriety. Semper praesumitur pro matrimonio –
always presume marriage (Vda.De la Rosa v. Heirs of Vda.
De Damian, G.R. No. 103028, October 10, 1997).
Although a marriage contract is considered a primary
evidence of marriage, its absence is not always proof that
 CIVIL LAW
no marriagetook place (Vda.De la Rosa v. Heirs of Vda. De
Damian, G.R. No. 103028, October 10, 1997).
EFFECT OF MARRIAGE CELEBRATED ABROAD
AND FOREIGN DIVORCE
Rules governing the validity of marriage (2002,
2004, 2006, 2009, 2010 Bar)
1. As to its extrinsic validity – Lex loci
celebrationis
NOTE: Locus regit actum (the act is governed by the law
of the place where it is done) - is adhered to here in the
Philippines as regards the extrinsic validity of marriage.
2. As to its intrinsic validity – Personal law
NOTE: Personal law may either be the national law or
the law of the place where the person is domiciled.
If the person involved is a stateless person, domiciliary rule
applies, otherwise, lex nationalii applies.
The 1st paragraph of Article 26 of the Family Code
(FC)on the validity of foreign marriages applies,
however, only to Filipinos. Foreign marriages of
foreigners or of a Filipino and a foreigner are governed
by the Rules on Conflict of Laws (Sempio-Diy, 1995).
Marriages between Filipinos solemnized abroad in
accordance with the law in force in said country
GR: Marriages between Filipinos solemnized outside
the Philippines in accordance with the law of the
foreign country where it is celebrated, if valid there,
shall be valid here as such.
XPNs: It shall be void, even if it is valid in the foreign
country where the marriage was celebrated, if any of the
following circumstances are present:
1. Lack of legal capacity even with parental
consent (e.g. party is below 18);
2. Incestuous;
3. Contracted through Mistake of one party as to
the identity of the other;
4. Contracted following the annulment or
declaration of nullity of a previous marriage
but Before partition, etc.;
5. Bigamous or polygamous except as provided
in Art. 41 FC on terminable bigamous
marriages;
6. Void due to Psychological incapacity;
7. Void for reasons of Public policy.
Requirements to prove a foreign marriage
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
1. The existence of the pertinent provision of the
foreign marriage law.
2. The celebration or performance of the marriage
in accordance of said law.
Requirements for the application of par. 2 of Art. 26 of the
Family Code
1. It must be a case of mixed marriage (one party
is Filipino and the other is an alien);
2. The divorce must be obtained by the alien
spouse and not by the Filipino spouse; and
The divorce obtained by the alien spouse must
capacitate him or her to remarry (Rabuya,
2018).
Q: Suppose in a valid mixed marriage the foreign
spouse obtained a divorce decree abroad and was
capacitated toremarry.
a. May the Filipino spouse remarry despite the fact
thatdivorceisnotvalidinthePhilippines?
b. Will your answer be the same if it was a valid
marriage between Filipinos?
A:
a. YES, the Filipino spouse may remarry. Divorce
validly obtained abroad by the alien spouse
capacitating him/her to remarry will likewise allow
the Filipino spouse to remarry (FC, Art. 26, 2nd par.).
NOTE:Under the nationality principle embodied in Art. 16
of the NCC, only Philippine nationals are covered by the
policy against absolute divorces, the same being
considered contrary to our concept of public policy and
morality. Nevertheless, aliens may obtain divorces abroad
which may be recognized in the Philippines, provided they
are valid according to their national law (Van Dorn v.
Romillo, Jr., G.R. No. L- 68470, October 8, 1985).
b. It depends. What is material in this case is the
citizenship of the spouse who obtained a divorce
decree abroad at the time the decree was obtained and
not their citizenship at the time the marriage was
celebrated. If the Filipino spouse was naturalized as a
citizen of a foreign country before he/she obtains a
divorce decree and was thereafter capacitated to
remarry, the Filipino spouse will be capacitated to
remarry (Republic v. Orbecido, G.R. No. 154380,
October 5, 2005).
Q: A Filipina was married to an American who
obtained a divorce decree in the U.S. When the
Filipina came back to the Philippines and started
her business, the American followed suit and
wanted to enforce his rights over the Filipina to
the extent of claiming his rights to administer the
properties of the woman, contending that they
40
 PERSONS AND FAMILY RELATIONS
are still married. He also claimed hereditary
rights. Is he correct? Why?
A: NO, the divorce in the U.S. released the Filipina from the
marriage. Thus, pursuant to American law, he is no longer
the husband of the Filipina. He would therefore have no
standing to sue the Filipina (Van Dorn v. Romillo, Jr., G.R.
No. L-68470, October 8, 1985).
Burden of proof in recognition of foreign divorce
Burden of proof lies with "the party who alleges the
existence of a fact or thing necessary in the prosecution
or defense of an action." Since the divorce was a defense
raised by respondent, the burden of proving the
pertinent foreign law validating it falls squarely upon
him. Courts cannot take judicial notice of foreign laws.
The power of judicial notice must be exercised with
caution, and every reasonable doubt upon the subject
should be resolved in the negative (Garcia v. Recio, G.R.
No. 138322, October 2, 2001).
The naturalization of one of the parties, as well as the
divorce decree obtained by him or her, must be proven
as a fact under our rules on evidence. The foreign law
under which the divorce was obtained must likewise be
proven as our courts cannot take judicial notice of
foreign laws and judgments; hence, like any other facts,
both the divorce decree and the national law of the alien
must be alleged and proven according to our law on
evidence (Garcia v. Recio, G.R. No. 138322, October 2,
2002).
However, if the Filipino spouse remained to be a citizen
of the Philippines when he/she obtained a divorce
decree abroad, such decree will not be recognized in the
Philippines even if that spouse is subsequently
naturalized as a citizen of a foreign country because at
the time the spouse obtained the divorce decree, he/she
was still a citizen of the Philippines and being
naturalized afterwards does not cure this defect
(Republic v. Iyoy, G.R. No. 152577, September 21, 2005).
Q: If a foreigner who was divorced seeks to obtain a
marriage license in the Philippines, what should he
do?
A: The applicant for marriage license has to prove his
legal capacity. If the marriage was dissolved by reason
of divorce, he has to file a sworn statement as to how
the marriage was dissolved (FC, Art. 11) and furnish the
local civil registrar with the judgment (FC, Art. 13) and
must register the same with the local civil registrar to
bind third persons (FC, Art. 52).
NOTE: Without the divorce decree and foreign law as
part of the evidence, the Court cannot rule on the issue
of whether petitioner has the personality to file the
41
petition for declaration of nullity of marriage. After all,
petitioner may have the personality to file the petition
but the divorce decree obtained was a limited divorce or
a mensa et thoro or the foreign law may restrict
remarriage even after the divorce decree becomes
absolute (Garcia v. Recio, G.R. No. 138322, October 2,
2002).
Q: Luzviminda was married to Ryoji Morisono in
Quezon City on December 8, 2009. Thereafter, they
lived together in Japan for 1 year and 3 months but
were not blessed with a child. During their married
life, they would quarrel mainly due to Ryoji’s
philandering ways, in addition to the fact that he
was much older than Luzviminda. As such, the two
of them submitted a “Divorce by Agreement” before
the City Hall of Mizuho-ku in Nagoya, Japan, which
was approved and duly recorded. In view of this,
Luzviminda filed a petition for recognition of
foreign divorce decree obtained by her and Ryoji
before the RTC so that she could cancel the surname
of her husband and be able to marry again.
The RTC denied Luzviminda’s petition, holding that
while a divorce decree held that while a divorce
obtained abroad by an alien spouse may be
recognized in the Philippines – provided that such
decree is valid according to the national law of the
alien – the same does not find application when it
was the Filipino spouse, i.e., petitioner, who
procured the same. Invoking the nationality
principle provided under Article 15 of the Civil
Code, in relation to Article 26 (2) of the Family Code,
the RTC opined that since petitioner is a Filipino
citizen whose national laws do not allow divorce,
the foreign divorce decree she herself obtained in
Japan is not binding in the Philippines. Did the RTC
correctly deny Luzviminda’s petition for recognition
of divorce decree she procured?
A: No. It had been ruled in Republic vs. Manalo that
foreign divorce decrees obtained to nullify marriages
between a Filipino and an alien citizen may already be
recognized in this jurisdiction, regardless of who
between the spouses initiated the divorce; provided, of
course, that the party petitioning for the recognition of
such foreign divorce decree – presumably the Filipino
citizen – must prove the divorce as a fact and
demonstrate its conformity to the foreign law allowing
it. a plain reading of the RTC ruling shows that the
denial of Luzviminda's petition to have her foreign
divorce decree recognized in this jurisdiction was
anchored on the sole ground that she admittedly
initiated the divorce proceedings which she, as a
Filipino citizen, was not allowed to do. In light of the
doctrine laid down in Manalo, such ground relied upon
by the RTC had been rendered nugatory. However, the
Court cannot just order the grant of Luzviminda's
 CIVIL LAW
petition for recognition of the foreign divorce decree, as
Luzviminda has yet to prove the fact of her. "Divorce by
Agreement" obtained in Nagoya City, Japan and its
conformity with prevailing Japanese laws on divorce.
Notably, the RTC did not rule on such issues. Since these
are questions which require an examination of various
factual matters, a remand to the court a quo is
warranted. (Morisono v. Morisono, G.R. No. 226013, July
2, 2018)
II. VOID MARRIAGES
Marriages that are void ab initio(1993, 2004, 2005,
2006 BAR)
1. Solemnized without License, except those
marriages that are exempt from the license
requirement;
2. Absence of any of the essential or formal
requisites of marriage;
3. Solemnized by any person not legally Authorized
to perform marriages 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;
4. Contracted through Mistake of one of the
contracting parties as to the identity of the other;
5. Bigamous or polygamous marriages not falling
under Article 41 of the Family Code or those
allowed under special laws such as the Muslim
Code;
6. Marriages contracted by any party below 18 years
of age even with the consent of parents or
guardians;
7. Marriages contracted by any party, who at the
time of the celebration of the marriage, was
Psychologically incapacitated, even if such
incapacity becomes manifest only after its
solemnization (FC, Art. 36);
8. Incestuous Marriages (FC, Art. 37);
9. Marriages declared void because they are contrary
to Public policy (FC, Art. 38);
10. Subsequent marriages which are void under Art.
53;
11. Marriages in jest;
“Marriages in jest is a pretended one, legal in form
but entered as a joke, with no real intentions of
entering into the actual marriage status, and with
a clear understanding that the parties would not
be bound (Republic of the Philippines v. Albios, G.R.
No. 198780, October 16, 2013); and
12. Common-law marriages.
1. ABSENCE OF ANY ESSENTIAL OR FORMAL
REQUISITES OF MARRIAGE
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Marriage between Filipinos who are of the same sex
is VOID
For a marriage to be valid, it must be between persons
of opposite sexes.
Although gay marriages are definitely not covered
within the purview of Article 2 of the Family Code, the
emerging issue of transsexuals and intersexual gender
identities have called the attention of the Supreme
Court in the cases of Silverio v. Republic (G.R. No.
174689, October 22, 2007) and Republic v. Cagandahan
(G.R. No. 166676, September 125, 2008), respectively
(Sta. Maria, 2010).
Q: Sidley and Sol were married with one (1)
daughter, Solenn. Sedfrey and Sonia were another
couple with one son, Sonny. Sol and Sedfrey both
perished in the same plane accident. Sidley and
Sonia met when the families of those who died sued
the airlines and went through grief-counseling
sessions. Years later, Sidney and Sonia got married.
At that time, Solenn was four (4) years old and
Sonny was five (5) years old. These two (2) were
then brought up in the same household. Fifteen (15)
years later, Solenn and Sonny developed romantic
feelings towards each other, and eventually eloped.
On their own and against their parents’ wishes, they
procured a marriage license and got married in
church.
a. Is the marriage of Solenn and Sonny valid,
voidable or void?
b. If the marriage is defective, can the marriage be
ratified by the free cohabitation of the spouses?
(2018 Bar)
A:
a. The marriage is voidable. Under Article 14 of the
Family Code, if a party to the marriage is between
the ages of eighteen and twenty-one; the consent of
their father, mother, surviving parent or guardian,
or persons having legal charge of them, in the order
mentioned, is an additional requirement. In the
absence of such parental consent, the consent given
by the party between the ages of eighteen and
twenty-one is considered defective. Also, under
Article 4 of the Family Code, a defect in the essential
requisites of marriage renders the marriage
voidable. In this case, Solenn and Sonny are
nineteen and twenty years old respectively during
the time of the celebration of their marriage. Thus,
the absence of parental consent renders the
marriage of Solenn and Sonny voidable.
b. Yes. Although voidable marriage, their marriage
could be ratified by free cohabitation. Under Article
45(1) of the Family Code, such marriage may be
ratified by the cohabitation of the contracting
parties (after attaining the age of twenty-one) as
42
 PERSONS AND FAMILY RELATIONS
husband and wife.
Q: In case of a change in sex, can the person who has
undergone said change be allowed to marry another
of the same sex as he/she originally had? (2014
BAR)
A: It depends upon the cause for the change in sex.
1. If the change is artificial – No, he/she cannot.
The sex or gender at the time of birth shall be taken into
account. He is still, in the eyes of the law, a man although
because of the artificial intervention, he now has the
physiological characteristics of a woman (Silverio v.
Republic, G.R. No. 174689, October 22, 2007).
2. If the change is natural – He/she can. Ex.
Hermaphrodite, Congenital Adrenal Hyperplasia
Q: Jennifer was registered as a female in her
Certificate of Live Birth. In her early years, she
suffered from clitoral hypertrophy and was found
out that her ovarian structures had minimized. She
also alleged that she has no breasts or
menstruation. She was diagnosed to have
Congenital Adrenal Hyperplasia (CAH) a condition
where persons thus afflicted possess secondary
male characteristics because of too much secretion
of androgen. She then alleged that for all interests
and appearances as well as in mind and emotion,
she has become a male person. What is Jennifer’s
gender or sex?
A: MALE. Where the person is biologically or naturally
intersex the determining factor in his gender
classification would be what the individual, having
reached the age of majority, with good reason thinks
of his/her sex. Jennifer here thinks of himself as a male
and considering that his body produces high levels of
androgen, there is preponderant biological support for
considering him as being male. Sexual development in
cases of intersex persons makes the gender
classification at birth inconclusive. It is at maturity that
the gender of such persons is fixed (Republic v. Jennifer
Cagandahan, G.R. No. 166676, September 12, 2008).
Marriage where one or both of the parties are below
18 years of age is VOID
Such marriage is void for lack of legal capacity even if the
parents consented to such marriage (Sempio-Dy, 1995).
Validity of the marriage if it is a mixed marriage
where the Filipino is 18 years old but the foreigner
is below 17 years of age
43
If the national law of the foreigner recognizes 17 year old
persons to be capacitated to marry, then their
marriage is valid, otherwise it is void.
Effect of lack of authority of solemnizing officer
GR: The marriage is void ab initio.
XPNs:
1. Express- If either or both parties believed in good
faith that the solemnizing officer had the legal
authority to do so (FC, Art. 35).
2. Implied - Article 10 in relation to Article 26 of the
Family Code. If the marriage between a foreigner and
a Filipino citizen abroad solemnized by a
Philippine consul assigned in that country is
recognized as valid in the host country, such
marriage shall be considered as valid in the
Philippines (Sta. Maria, 2010).
Q: Judge Palaypayon solemnized marriages even
without the requisite of marriage license. Thus,
some couples were able to get married by the
simple expedient of paying the marriage fees. As a
consequence, their marriage contracts did not
reflect any marriage license number. In addition,
the judge did not sign their marriage contracts and
did not indicate the date of the solemnization, the
reason being that he allegedly had to wait for the
marriage license to be submitted by the parties.
Such marriage contracts were not filed with the
Local Civil Registry. Are such marriages valid?
A: NO. A valid marriage license is necessary for the
validity of marriage, except in the cases provided for
therein. The absence of any of the essential or formal
requisites shall generally render the marriage void
ab initio(Cosca v. Palaypayon, A.M. No. MTJ-
92-721, September 30, 1994).
Mistake to render the marriage void
For marriage to be rendered void, the mistake in
identity must be with reference to the actual physical
identity of other party, not merely a mistake in the
name, personal qualifications, character, social
standing,etc (Rabuya, 2018).
2. PSYCHOLOGICAL INCAPACITY
Psychological incapacity is “no less than a mental
(not physical) incapacity that causes a party to be
truly (cognitive) of the basic marital covenants that
concomitantly must be assumed and discharged by
the parties to the marriage which include their
mutual obligations to live together, observe love,
respect, fidelity, and to render help and support”
 CIVIL LAW
(Republic of the Philippines v. Iyoy, G.R. No. 152577,
September 21, 2005).
Psychological incapacity does not refer to mental
incapacity tantamount to insanity. (Paras, 2016)
Clearly, the ground is restricted to psychological
incapacity to “comply with the essential marital
obligations” (Sta. Maria, 2010).
In such case, the spouse declared to be psychologically
incapacitated cannot be held liable to pay moral
damages to the other spouse based on Articles 2217 and
21 of the NCC, which connotes (willfulness) of the acts
complained of, if the same acts constitutive of the
psychological incapacity were to be made the basis for the
award of moral damages. It is contradictory to
characterize acts as a product of psychological
incapacity, and hence beyond the control of the party
because of an innate inability, while at the same time
considering the same set of acts as willful (Rabuya,
2018).
Constitutional provision on marriage vis-à-vis
validity of declarations of nullity of marriage based on
psychological incapacity
Q: Does a petition or declaration of nullity of
marriage based on Art. 36 of the FC destroy the
constitutional mandate to protect the sanctity of
marriage and promoting such marriage as a
foundation of the family?
A: NO. In dissolving marital bonds, the Court is not
demolishing the foundation of families, but it is actually
protecting the sanctity of marriage, because it refuses to
allow a person afflicted with a psychological disorder, who
cannot comply with or assume the essential marital
obligations, from remaining in that sacred bond. Article 36,
in classifying marriages contracted by a psychologically
incapacitated person as a nullity, should be deemed as
an implement of this constitutional protection of marriage.
Given the avowed State interest in promoting marriage as
the foundation of the family, which in turn serves as the
foundation of the nation, there is a corresponding interest
for the State to defend against marriages ill-equipped to
promote family life. (Kalaw v. Fernandez, G.R. No.
166357, January 14, 2015)
Determination of psychological incapacity is left solely
with the courts on a case- to-case basis
Every court should approach the issue of nullity “not on the
basis of a priori assumptions, predilections or
generalizations, but according to its own facts” in
recognition of the verity that no case would be on “all
fours” with the next one in the field of psychological
incapacity as a ground for the nullity of marriage; hence,
every “trial judge must take pains in examining the
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
factual milieu and the appellate court must, as much as
possible, avoid substituting its own judgment for that of the
trial court.
By the very nature of Article 36 of the Family Code,
courts, despite having the primary task and burden of
decision- making, must not discount but, instead, must
consider as decisive evidence the expert opinion on the
psychological and mental temperaments of the parties
(Kalaw v. Fernandez, G.R. No. 166357, January 15, 2015).
Requisites of Psychological Incapacity (1996, 1997, 2002,
2006 Bar)
3. Juridical antecedence s– Must be rooted in the
history of the party antedating the marriage,
although overt manifestations may arise only
after such marriage.
4. Gravity – grave enough to bring about the
disability of the party to assume the essential
marital obligations.
5. Permanence or Incurability – must be
incurable or, if curable, the cure should be
beyond the means of the parties involved.
Proof of Psychological Incapacity
The root cause of psychological incapacity must be:
a. Medically or clinically identified;
b. Alleged in the complaint;
c. Sufficiently proven by experts; and
d. Clearly explained in the decision.
NOTE: Expert evidence may be given by qualified
psychiatrists and clinical psychologists.
The physician’s examination is not required in
establishing psychological incapacity as ground for
declaration of nullity
If the totality of evidence presented is enough to
sustain a finding of psychological incapacity,
physician’s examination of the person concerned
need not be resorted to (Marcos v. Marcos, G.R. No.
136490, October 19, 2000; Glenn Viñas v. Mary Grace
Parel-Viñas, G.R. No. 208790, January 21, 2015).
Guidelines set by the Court to aid it in its disposition
of cases involving psychological incapacity
In the landmark case of Republic of the Philippines
v. Court of Appeals and Molina, the Supreme Court
enumerated the following guidelines in invoking and
proving psychological incapacity under Article 36 of
the Family Code:
1. Burden of proof to show the nullity of the
marriage belongs to the plaintiff;
44
 PERSONS AND FAMILY RELATIONS
2. The root cause of the psychological incapacity
must be: (a) medically or clinically identified, (b)
alleged in the complaint, (c) sufficiently proven
by experts and (d) clearly explained in the
decision;
3. The incapacity must be proven to be existing at
“the time of the celebration” of the marriage;
4. Such incapacity must also be shown to be
medically or clinically permanent or incurable;
5. Such illness must be grave enough to bring
about the disability of the party to assume the
essential obligations of marriage;
6. The essential marital obligations must be those
embraced by Arts. 68 up to 71 of the FC as
regards the husband and wife, as well as Arts.
220, 221 and 225 of the same Code in regard to
parents and their children. Such non-complied
marital obligation(s) must also be stated in the
petition, proven by evidence and included in the
text of the decision;
7. Interpretations given by the National Appellate
Matrimonial Tribunal of the Catholic Church in
the Philippines, while not controlling or decisive,
should be given great respect by our courts;
8. The trial court must order the prosecuting
attorney or fiscal and the Solicitor General to
appear as counsel for the state.
No decision shall be handed down unless the Solicitor
General issues a certification, which will be quoted in the
decision, briefly stating therein his reasons for his
agreement or opposition, as the case may be, to the petition
(Republic of the Philippines v. Court of Appeals and Molina,
G.R. No. 108763, February 13, 1997; Danilo A. Aurelio v. Vide
Ma. Corazon P. Aurelio, G.R. No. 175367, June 6, 2011).
NOTE: In Republic v. Quintero-Hamano, the SC held that
these guidelines may not be relaxed just because the
spouse alleged to be psychologically incapacitated happens
to be a foreign national. The norms used for determining
psychological incapacity should apply to any person
regardless of nationality because the rules were formulated
on the basis of studies of human behavior in general
(Rabuya, 2018)
In Marcos v. Marcos, the SC held categorically that
psychological incapacity “may be established by the totality
of evidence presented” and that “there is no requirement
that the respondent should be examined by a physician or a
psychologist as a condition sine qua non for such
declaration” (Marcos v. Marcos, G.R. No. 136490, October 19,
2000).
Instances where allegations of psychological incapacity
were not sustained
1. Mere showing of irreconcilable differences and
conflicting personalities (Carating- Siayngco v.
45
Siayngco, G.R. No. 158896, October 27, 2004).
NOTE: Mere sexual infidelity or perversion, emotional
immaturity and irresponsibility and the like, do not by
themselves warrant a finding of psychological incapacity as
the same may only be due to a person's refusal or
unwillingness to assume the essential obligations of
marriage. (Castillo v. Republic of the Philippines, G.R.
No. 214064, February 6, 2017)
It must be shown that these acts are manifestations of
a disordered personality which would make respondent
completely unable to discharge the essential
obligations of a marital state, not merely youth,
immaturity or sexual promiscuity (Dedel v. CA, G.R. No.
151867, January 29, 2004).
2. Disagreements regarding money matters (Tongol
v. Tongol, G.R. No. 157610, October 19, 2007)
3. Mere abandonment. To constitute psychological
incapacity, it must be shown that the unfaithfulness
and abandonment are manifestations of a
disordered personality that completely prevented
the erring spouse from discharging the essential
marital obligations (Republic of the Philippines v.
Cesar Enselan, G.R. No. 170022, January 9, 2013).
4. Sexual infidelity (Republic v. Dagdag, G.R No.
109975, February 9, 2001)
5. Living an adulterous life when specific evidence was
shown that promiscuity as a trait already existing at
the inception of marriage (Baccay v. Baccay, G.R. No.
173138, December 1, 2010)
Q: A and B were married. They have four (4)
children. A, the husband, had an affair with C, who gave
birth to a child. After 12 years of marriage, B left the
conjugal home and her 4 children with A. Now, A started
living with C. Nine years since the de facto separation
from B, A filed a petition for declaration of nullity of
marriage based on Article 36 of the Family Code. A
psychologist and a canon law expert testified that B,
were indeed psychologically incapacitated alleging that
she may reflect a narcissistic personality disorder with
her sexual infidelity, habitual mahjong playing, and her
frequent night-out with friends. They based their
diagnosis onan interview with the family relative of B and
statements made by their own son. Is the marriage
of A and B void on the ground of psychological
incapacity?
A: YES. The Court held that B was indeed
psychologically incapacitated as they relaxed the
previously set forth guidelines with regard to this case.
Article 36 of the Family Code must not be so strictly and too
literally read and applied given the intendment of the
drafter to adopt its enacted version of “less
specificity” obviously to enable “some resiliency in its
application.” Expert opinion considered as decisive
 CIVIL LAW
evidence as to psychological and emotional
temperaments. The long-term effects of the
respondent’s obsessive mahjong playing surely
impacted her family life particularly on her very young
children. Her willfully exposing her children to the
culture of gambling on every occasion of her mahjong
sessions was a very grave and serious act of
subordinating their needs for parenting to the
gratification of her own personal and escapist desires. The
respondent revealed her wanton disregard for her
children’s moral and mental development. This
disregard violated her duty as a parent to safeguard and
protect her children (Kalaw v. Fernandez, G.R. No.
166357, January 14, 2015)
Q: Was the Molina doctrine abandoned by the recent
ruling in the abovementioned case of Kalaw vs.
Fernandez(G.R.No.166357,January14,2015)?
A: NO. The Court in this case merely recognized the
unintended consequences of strictly applying the
standards set in Molina. The resiliency with which the
concept (of psychological incapacity) should be applied and
the case-to-case basis by which the provision should
be interpreted, as so intended by its framers, had,
somehow, been rendered ineffectual by the
imposition of a set of strict standards in Molina. In
hindsight, it may have been inappropriate for the Court to
impose a rigid set of rules, as the one in Molina, in
resolving all cases of psychological incapacity. The
unintended consequences of Molina has taken its toll on
people who have to live with deviant behavior, moral
insanity and sociopathic personality anomaly, which, like
termites, consume little by little the very foundation
of their families, our basic social institutions. Far from
what was intended by the Court, Molina has become a strait-
jacket, forcing all sizes to fit into and be bound by it.
In the abovementioned case, the Supreme Court is
not suggesting the abandonment of Molina. It simply
declares that there is a need to emphasize other
perspectives as well which should govern the
disposition of petitions for declaration of nullity
under Article 36.
Q: Rodolfo and Natividad were married. On
December 28, 1998, Rodolfo filed a verified
complaint for declaration of nullity of marriage
before the RTC alleging that Natividad was
psychologically incapacitated to comply with her
essential marital obligations. In support of his
complaint, Rodolfo testified, among others, that
he first met Natividad when they were students at
the Barangay High School of Sindangan, and he
was forced to marry her barely three (3) months
into their courtship in light of her accidental
pregnancy. At the time of their marriage, he was
21 years old, while Natividad was 18 years of age.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
He had no stable job and merely worked in the
gambling cockpits as "kristo" and "bangkero sa
hantak." When he decided to join and train with
the army, Natividad left their conjugal home and
sold their house without his consent. Thereafter,
Natividad moved to Dipolog City where she lived
with a certain Engineer Terez (Terez), and bore
him a child named Julie Ann Terez. After
cohabiting with Terez, Natividad contracted a
second marriage on January 11, 1991 with
another man named Antonio Mondarez and has
lived since then with the latter in Cagayan de Oro
City. From the time Natividad abandoned them in
1972, Rodolfo was left to take care of Ma. Reynilda
and Ma. Rizza and he exerted earnest efforts to
save their marriage which, however, proved
futile because of Natividad’s psychological
incapacity that appeared to be incurable. For her
part, Natividad failed to file her answer, as well as
appear during trial, despite service of summons.
Nonetheless, she informed the court that she
submitted herself for psychiatric examination to
Dr. Cheryl T. Zalsos (Dr. Zalsos) in response to
Rodolfo’s claims. Rodolfo also underwent the
same examination.
In her two-page psychiatric evaluation report, Dr.
Zalsos stated that both Rodolfo and Natividad
were psychologically incapacitated to comply
with the essential marital obligations, finding
that both parties suffered from "utter emotional
immaturity [which] is unusual and unacceptable
behavior considered [as] deviant from persons
who abide by established norms of conduct." As
for Natividad, Dr. Zalsos also observed that she
lacked the willful cooperation of being a wife and
a mother to her two daughters. On February 10,
1999, the Office of the Solicitor General (OSG),
representing petitioner Republic of the
Philippines (Republic), filed an opposition to the
complaint, contending that the acts committed by
Natividad did not demonstrate psychological
incapacity as contemplated by law, but are mere
grounds for legal separation under the Family
Code. Should the marriage be dissolved?
A: NO. "Psychological incapacity," as a ground to nullify
a marriage under Article 36 of the Family Code, should
refer to no less than a mental – not merely physical –
incapacity that causes a party to be truly incognitive of
the basic marital covenants that concomitantly must be
assumed and discharged by the parties to the marriage
which, as so expressed in Article 68of the Family Code,
among others, include their mutual obligations to live
together, observe love, respect and fidelity and render
help and support. The RTC, as affirmed by the CA,
heavily relied on the psychiatric evaluation report of Dr.
Zalsos which does not, however, explain in reasonable
46
 PERSONS AND FAMILY RELATIONS
detail how Natividad’s condition could be characterized
as grave, deeply-rooted, and incurable within the
parameters of psychological incapacity jurisprudence.
Aside from failing to disclose the types of psychological
tests which she administered on Natividad, Dr. Zalsos
failed to identify in her report the root cause of
Natividad's condition and to show that it existed at the
time of the parties' marriage. Neither was the gravity or
seriousness of Natividad's behavior in relation to her
failure to perform the essential marital obligations
sufficiently described in Dr. Zalsos's report. To hark
back to what has been earlier discussed, psychological
incapacity refers only to the most serious cases of
personality disorders clearly demonstrative of an utter
insensitivity or inability to give meaning and
significance to the marriage. In the final analysis, the
Court does not perceive a disorder of this nature to exist
in the present case. Thus, for these reasons, coupled too
with the recognition that marriage is an inviolable social
institution and the foundation of the family, the instant
petition is hereby granted. (Republic v. Gracia, G.R. No.
171557, February 12, 2014)
Q: Rachel worked as a domestic helper in Hong Kong
to provide for the needs of Jose, the love of her life.
Eventually, the couple got married and settled in a
house they acquired. The married life ran smoothly
up until Rachel filed a petition for declaration of
nullity of marriage. Her petition anchored on the
ground that Jose was psychologically incapacitated
to fulfill his essential marital obligations. She
alleged that Jose was a violent man who used to
physically abuse her. She added that Jose was a
drunkard and always had sexual relations with
different women aside from Rachel. On his part, Jose
simply denied all the allegations in the petition. Is
Jose psychologically incapacitated?
A: No. For psychological incapacity to exist, it should
refer to no less than a mental and not merely physical
incapacity that causes a party to be truly incognitive of
the basic marital covenants as provided for under
Article 68 of the Family Code. In other words, it must be
a malady that is so grave and permanent as to deprive
one of awareness of the duties and responsibilities of
the matrimonial bond one is about to assume. Also,
following the case of Republic vs Molina, the totality of
evidence must show that psychological incapacity exists
and its gravity, juridical antecedence, and incurability
must be duly established. Here, there is no sufficient
evidence to prove that psychological incapacity exists.
Absent sufficient evidence, Courts are compelled to
uphold the indissolubility of the marital tie. (Del Rosario
v. Del Rosario, G.R. No. 222541, February 15, 2017)
Q: Reghis and Olivia were married and were blessed
with two (2) children. However, the couple
experienced a turbulent and tumultuous marriage,
47
often having violent fights and jealous fits. Reghis
could not forgive Olivia for dragging him into
marriage and resented her condescending attitude
towards him. They became even more estranged
when Reghis secured a job as a medical
representative and became engrossed in his career
and focused on supporting his parents and siblings.
As a result, he spent little time with his family,
causing Olivia to complain that Reghis failed to be a
real husband to her. In 1986, the couple parted
ways. Reghis then filed a petition for declaration of
nullity of marriage citing his psychological
incapacity to comply with his essential marital
obligations. The clinical psychologist submitted a
report and testified that Reghis suffered from
Obsessive Compulsive Personality Disorder (OCPD).
This gave him a strong obsession for whatever
endeavour he chooses, such as his work, to the
exclusion of other responsibilities and duties such
as those pertaining to his roles as father and
husband. Dr. Basilio surmised that Reghis’ OCPD was
the root of the couple’s disagreements and that the
same is incurable. The Office of the Solicitor General
(OSG), representing the Republic, opposed the
petition. Should the marriage be declared null and
void?
A: No. The requirements for psychological incapacity do
not concur. Reghis’ testimony shows that he was able to
comply with his marital obligations which, therefore,
negates the existence of a grave and serious
psychological incapacity on his part. Reghis admitted
that he and Olivia lived together as husband and wife
under one roof for fourteen (14) years and both of them
contributed in purchasing their own house. Reghis also
fulfilled his duty to support and take care of his family.
Moreover, the OCPD which Reghis allegedly suffered
from was not shown to have juridical antecedence. No
specific behavior or habits during his adolescent years
were shown which would explain his behavior during
his marriage with Olivia. Dr. Basilio simply concluded
that Reghis’ disorder is incurable but failed to explain
how she came to such conclusion. Based on the
appreciation of the RTC, Dr. Basilio did not discuss the
concept of OCPD, its classification, cause, symptoms,
and cure, and failed to show how and to what extent the
respondent exhibited this disorder in order to create a
necessary inference that Reghis’ condition had no
definite treatment or is incurable.
Article 36 of the Family Code must not be confused with
a divorce law that cuts the marital bond at the time the
grounds for divorce manifest themselves; rather, it must
be limited to cases where there is a downright
incapacity or inability to assume and fulfill the basic
marital obligations, not a mere refusal, neglect or
difficulty, much less, ill will, on the part of the errant
 CIVIL LAW
spouse. (Republic v. Romero II, G.R. No. 209180, February
26, 2016)
Q: Would the state of being of unsound mind or the
concealment of drug addiction, habitual alcoholism,
homosexuality or lesbianism be considered indicia of
psychological incapacity, if existing at the inception of
marriage? (2002 Bar)
A: The state of being of unsound mind, the
concealment of drug addiction, habitual alcoholism,
lesbianism or homosexuality may be indicia of
psychological incapacity, depending on the degree of
severity of the disorder. However, the concealment of drug
addiction, habitual alcoholism, lesbianism or
homosexuality is a ground of annulment of marriage
(Santos v. CA, G.R. No. 112019, January 4, 1995).
Q: Art. 36 of the FC provides that 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 be void. Choose the spouse listed
below who is psychologically incapacitated.
a. Nagger
b. Gay or Lesbian
c. Congenital sexual pervert
d. Gambler
e. Alcoholic (2006 Bar)
A: B and C. They may serve as indicia of psychological
incapacity, depending on the degree and severity of the
disorder (Santos v. CA, G.R. No. 112019, January 4, 1995).
If the condition of homosexuality, lesbianism or sexual
perversion, existing at the inception of the marriage, is
of such a degree as to prevent any form of sexual intimacy,
any of them may qualify as a ground for psychological
incapacity. The law provides that the husband and wife are
obliged to live together, observe mutual love, respect and
fidelity (FC, Art. 68).
More than just showing the manifestations of
incapacity, the petitioner must show that the
respondent is incapacitated to comply with the
essential marital obligations of marriage and that it is also
essential that he must be shown to be incapable of doing so
due to some psychological, not physical illness
(Republic v. Quintero- Hamano, G.R. No. 149498, May 20,
2004).
Q: After living together as husband and wife for two
(2) years, Gina and Marjune formalized their
marital union through civil rites. As months passed,
the communication between Gina and Marjune
became less frequent until it ceased altogether.
Thus, Gina filed a petition to declare her marriage
with Marjune null and void on the basis of the
latter's psychological incapacity.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
During trial, Gina presented the findings of
Professor Emma Astudillo-Sanchez (Prof. Sanchez),
the psychologist who conducted a psychological
examination of the parties. She concluded that Gina
and Marjune's personality disorders "affected their
behaviors even before they contracted marriage
and, in the presence of situational factors, became
more evident during the time they were together
during the marriage. Is upholding the annulment
based on the expert opinion of the psychologist
sufficient proof of the presence of psychological
incapacity?
A: NO, the said report failed to show that these traits
existed prior to Gina's marriage and that her alleged
personality disorder is incurable or that the cure is
beyond her means. There was simply no discernible
explanation on the juridical antecedence or incurability
of Gina's supposed condition. More significantly, the
relation of such condition to Gina's inability to perform
her essential marital obligations was not sufficiently
shown. To reiterate, the psychological condition ought
to pertain to personality disorders that are grave and
serious such that the party would be incapable of
carrying out the ordinary duties required in a marriage.
Unfortunately, the Case Analysis Report fails to
demonstrate this crucial point. In determining the
existence of psychological incapacity, a clear and
understandable causation between the party's condition
and the party's inability to perform the essential marital
covenants must be shown A psychological report that is
essentially comprised of mere platitudes, however
speckled with technical jargon, would not cut the
marriage ties. (Republic v. Tecag, G.R. No. 229272,
November 19, 2018)
3. INCESTUOUS MARRIAGES
a. Between ascendants and descendants of any degree;
b. Between brothers and sisters whether of the full or
half-blood (FC, Art. 37).
NOTE: Regardless of whether the relationship between the
parties is legitimate or illegitimate.
Void marriages by reason of public policy (1999, 2007,
2008 Bar)
Marriages between:
1. Collateral blood relatives (legitimate or
Illegitimate) up to the 4th civildegree;
2. Step-parents & step-children;
3. Parents-in-law &children-in-law;
NOTE: The prohibition under Nos. 2 and 3 applies even
after the termination of the marriage which is the very
48
 PERSONS AND FAMILY RELATIONS
source of the relationship by affinity, regardless of the
cause of such termination.
4. Adopting parent & the adopted child;
5. Surviving spouse of the adopting parent & the adopted
child;
6. Surviving spouse of the adopted child & the adopter;
7. Adopted child & legitimate child of the adopter;
8. Adopted children of the same adopter;
9. Parties where one, with the intention to marry the
other, kills the latter’s spouse, or his/her spouse (FC,
Art. 38).
NOTE: The list is EXCLUSIVE. If not falling within this
enumeration, the marriage shall be valid. Such as
marriages between:
i. Adopted and Illegitimate child of the adopter;
ii. Step brother and step sister;
iii. Brother-in-law and sister-in-law;
iv. Parties who have been guilty of adultery or
concubinage.
Q: Amor gave birth to Thelma when she was 15 years
old. Thereafter, Amor met David and they got married
when she was 20 years old. David has a son, Julian, with
his ex-girlfriend Sandra. Can Julian and Thelma get
married? (2007 BAR)
A: The marriage between stepbrother and stepsister is void.
However, under the FC, the marriage may be valid.
4. SUBSEQUENT MARRIAGE
Q: If a person contracts a subsequent marriage during
the subsistence of a prior marriage, what is the status
of the subsequent marriage? (1992, 2005, 2008 Bar)
A:
GR: Void for being bigamous or polygamous, even if
celebrated abroad and valid there as such.
XPN: Valid if it is a terminable bigamous marriage.
Bigamous Marriage
Bigamy - When a person contracts a second or
subsequent marriage before the former marriage has
been legally dissolved, or before the absent spouse has
been declared presumptively dead by means of
judgment rendered in the proper proceedings (RPC, Art.
349).
NOTE: The same applies to polygamy.
A subsequent void bigamous marriage contemplates a
situation where such subsequent marriage was
contracted at the time when the first marriage, which is
valid in all respects, was still subsisting. A void
49
bigamous marriage therefore involves a situation where
the first marriage is not void but completely valid or at
least annullable (Sta. Maria, 2010).
If the first marriage is void and a party to that first
marriage subsequently remarries without obtaining a
judicial declaration of nullity of the first marriage, the
subsequent marriage is likewise void. It is void not
because it is bigamous but because it failed to comply
with the requirements under Article 40 in relation to
Articles 52 and 53 of the Family Code (Valdes v. RTC, G.R.
No. 122749, July 31, 1996).
Q: Arnold, a Filipino, and Britney, an American, both
residents of California, decided to get married in their
local parish. Two years after their marriage, Britney
obtained a divorce in California. While in Boracay,
Arnold met Jenny, a Filipina, who was vacationing
there. Arnold fell in love with her. After a brief
courtship and complying with all the requirements,
they got married in Hong Kong to avoid publicity, it
being Arnold’s second marriage. Is his marriage with
Jenny valid? (2006 BAR)
A: YES. The marriage will not fall under Art. 35(4) of the
Family Code on bigamous marriages provided that
Britney obtained an absolute divorce, capacitating her
to remarry under her national law. Consequently, the
marriage between Arnold and Jenny may be valid as
long as it was solemnized and valid in accordance with
the laws of Hong Kong.
Q: May a person contract a valid subsequent
marriage before a first marriage is declared void ab
initio by a competent court?
A: NO. A judicial declaration of nullity is required before
a valid subsequent marriage can be contracted; or else,
what transpires is a bigamous marriage, reprehensible
and immoral (FC, Art. 40; In re: Salvador v. Serafico, A.M.
2008-20-SC, March 15, 2010).
NOTE: Before one can contract a second marriage on the
ground of nullity of the first marriage, there must first be a
final judgment declaring the first marriage void (FC, Art.
40). If a party fails to secure a judicial declaration of nullity
of the first marriage, he or she runs the risk of being
charged with bigamy as the marital bond or vinculum in
the first nuptial subsists (Mercado v. Tan, G.R. No. 137110,
August, 2000; Te v. CA, G.R. No. 126746, November 29, 2009).
Special cases when subsequent marriage is
allowed
1. Marriage between a Filipino and a foreigner and
procurement by the alien spouse of a valid
divorce decree abroad, capacitating him/her to
remarry.
 CIVIL LAW
2. Terminable bigamous marriages (FC, Art. 41)
Requisites for validity of subsequent marriage under
Art. 41 under the Family Code (B-A-D)
Before the celebration of the subsequent marriage:
1. The Absent spouse had been absent for 4 consecutive
years (ordinary absence) or 2 consecutive years
(extra-ordinary absence);
2. The present spouse has a well-founded Belief that the
absent spouse is already dead;
NOTE: The Court in Cantor, pointed out the term, “well-
founded belief” has no exact definition under the law. In
fact, the Court notes such belief depends on the
circumstances of each particular case. Such belief must
result from diligent efforts to locate the absent spouse.
Such diligence entails an active effort on the part of the
present spouse to locate the missing one. The mere absence
of a spouse, devoid of any attempt by the present spouse to
locate the former, will not suffice. (Republic v. Catubag, G.R.
No. 210580, April 18,2018)
3. There is judicial Declaration of presumptive death in a
summary proceeding in accordance with Article 253
of the Family Code.
NOTE: If both spouses of subsequent marriage acted in bad
faith, such marriage is void ab initio.
Requisites for issuance of judicial declaration of
presumptive death
1. That the absent spouse has been missing for four
consecutive years, or two consecutive years if the
disappearance occurred where there is danger of
death under the circumstances laid down in Article
391 of the New Civil Code;
2. That the present spouse wishes to remarry;
3. That the present spouse has well-founded belief that
the absentee is dead;
4. That the present spouse files a summary proceeding
for the declaration of presumptive death of the
absentee (Republic of the Philippines v. Nolasco, G.R. No.
94053, March 17, 1993).
The requirement for a judgment of the presumptive
death of the absent spouse is for the benefit of the
spouse present because she could be charged and
convicted of bigamy if the defense of good faith based on
mere testimony is found incredible. It is also for the
protection of the State. The law regulating civil marriages
are necessary to serve the interest, safety, good order,
comfort or general welfare of the community and the
parties can waive nothing essential to the validity of the
proceedings. A civil marriage anchors an ordered society
by encouraging stable relationships over transient ones; it
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
enhances the welfare of the community (Eduardo Manuel v.
People, G.R. No. 165842, November 29, 2005).
Finality of judicial declaration of presumptive death
GR: The order of the trial court granting the petition for
judicial declaration of presumptive death under Article 41
of the Family Code is immediately final and executory by
the express provision of Article 247 of the Family Code
(Republic of the Philippines v. Bermudez-Lorino, G.R. No.
160258, January 19, 2005).
XPN: Under Article 41 of the Family Code, the losing party
in a summary proceeding for the declaration of
presumptive death may file a petition for certiorari with
the CA on the ground that, in rendering judgment thereon,
the trial court committed grave abuse of discretion
amounting to lack of jurisdiction. From the decision of the
CA, the aggrieved party may elevate the matter to this
Court via a petition for review on certiorari under Rule 45
of the Rules of Court (Republic of the Philippines v. Yolanda
Cadacio Granada, G.R. No.187512, June 13, 2012).
The declaration of presumptive death is without prejudice
to the effect of reappearance of the absent spouse (Sta.
Maria, 2010). The declared presumption will still only be
prima facie, and can be overthrown by evidence (People v.
Archilla, G.R. No. L-15632, February 28, 1961).
Effect if both parties in the subsequent marriage under
Article 41 acted in bad faith
1. The subsequent marriage is void ab initio.
2. All donations propter nuptias made by one in favour
of the other are revoked by operation of law.
3. All testamentary dispositions made by one in favour of
the other are revoked by operation of law.
4. The parties shall be liable for the crime of bigamy
(Rabuya, 2009).
Termination of Subsequent Bigamous Marriage
The recording of the affidavit of reappearance of the absent
spouse in the civil registry of the residence of the parties to
the subsequent marriage shall automatically terminate the
terminable bigamous marriage (subsequent marriage)
unless there is a judgment annulling the previous marriage
or declaring it void ab initio (FC, Art. 42).
In Art. 42, no judicial proceeding to annul a subsequent
marriage contracted under Art. 41 is necessary. Also, the
termination of the subsequent marriage by affidavit
provided for in Art. 42 does not preclude the filing of an
action in court to prove the reappearance of the absentee
and obtain a declaration of dissolution or termination of
the subsequent marriage (SSS v. Jarque Vda. De Bailon, G.R.
No. 165545, March 24, 2006).
50
 PERSONS AND FAMILY RELATIONS
Q: Gregorio married Janet. When he was employed
overseas, he was informed that Janet left. Five years
later, he filed an action for her to be declared
presumptively dead without alleging that he wishes to
remarry. Will his action prosper?
A: NO. A petition to declare an absent spouse
presumptively dead may not be granted in the absence of
any allegation that the spouse present will remarry
(Republic v. Nolasco, G.R. No. 94053, March 17, 1993).
Q: What is the effect if the parties to the subsequent
marriage obtains knowledge that the spouse absent
has reappeared?
A: NONE. If the absentee reappears, but no step is taken to
terminate the subsequent marriage, either by affidavit or
by court action, such absentee's mere reappearance, even if
made known to the spouses in the subsequent marriage,
will not terminate such marriage (SSS v. Jarque Vda. De
Bailon, G.R. No. 165545, March 24, 2006).
Any interested party of the parties, including the parents,
their children, the present spouse, or the subsequent
spouse of the present spouse, may file the sworn statement
of reappearance of the spouse who was absent (Sta. Maria,
2010).
Q: RTC declared Celerina presumptively dead after her
husband, Ricardo, had filed a petition for declaration of
absence or presumptive death for the purpose of
remarriage on June 15, 2007. Subsequently, Ricardo
remarried.
Celerina claimed that she learned about Ricardo’s
petition only sometime in October 2008 when she
could no longer avail the remedies of new trial, appeal,
petition for relief, or other appropriate remedies.
Thereafter, on November 17, 2008, she filed a petition
for annulment of judgment before the CA on the
grounds of extrinsic fraud and lack of jurisdiction. She
argued that she was deprived her day in court when
Ricardo, despite his knowledge of her true residence,
misrepresented to the court that she was a resident of
Tarlac City when, in fact, she never resided there. As a
result of Ricardo’s misrepresentation, she was
deprived of any notice of and opportunity to oppose
the petition declaring her presumptively dead. The CA
dismissed Celerina’s petition for annulment of
judgment for being a wrong mode of remedy and ruled
that the proper remedy was to file a sworn statement
before the civil registry, declaring her reappearance in
accordance with Article 42 of the Family Code. Was the
CA correct?
A: NO. Mere filing of an affidavit of reappearance would not
suffice for the purpose of terminating the subsequent
marriage and also of nullifying the effects of the declaration
of presumptive death and the subsequent marriage.
51
Celerina does not admit to have been absent. She also seeks
not merely the termination of the subsequent marriage but
also the nullification of its effects. A subsequent marriage
contracted in bad faith, even if it was contracted after a
court declaration of presumptive death, lacks the
requirement of a well- founded belief that the spouse is
already dead; the first marriage will not be considered as
validly terminated. Hence, Celerina’s choice to file an action
for annulment of judgment is the proper remedy as
annulment of judgment is the remedy when the RTC’s
judgment, order, or resolution has become final, and the
remedies of new trial, appeal, petition for relief (or other
appropriate remedies) are no longer available through no
fault of the petitioner (Celerina J. Santos v. Ricardo T. Santos,
G.R. No. 187061, October 8, 2014).
Q: Nilda was married to Dante on November 29, 1975.
On December 2, 1975, Dante, a member of the Armed
Forces of the Philippines, left Nilda, and went to Jolo,
Sulu where he was assigned. Since then, Nilda heard no
news from Dante and has tried everything to locate him
by making inquiries with his parents, relatives, and
neighbors as to his whereabouts, but unfortunately,
they also did not know where to find him. Thus, on
April 14, 2009, she filed before the RTC a petition to
declare Dante as presumptively dead for the purpose of
remarriage, alleging that after the lapse of thirty-three
(33) years without any kind of communication from
him, she firmly believes that he is already dead. Both
RTC and CA ruled in favor of Nilda. Is the ruling of the
courts correct?
A: No. Before a judicial declaration of presumptive death
can be obtained, it must be shown that the prior spouse had
been absent for four consecutive years and the present
spouse had a well-founded belief that the prior spouse was
already dead.
The "well-founded belief in the absentee's death requires
the present spouse to prove that his/her belief was the
result of diligent and reasonable efforts to locate the absent
spouse and that based on these efforts and inquiries,
he/she believes that under the circumstances, the absent
spouse is already dead. It necessitates exertion of active
effort, not a passive one. As such, the mere absence of the
spouse for such periods prescribed under the law, lack of
any news that such absentee spouse is still alive, failure to
communicate, or general presumption of absence under the
Civil Code would not suffice.
In this case, Nilda testified that after Dante's disappearance,
she tried to locate him by making inquiries with his
parents, relatives, and neighbors as to his whereabouts, but
unfortunately, they also did not know where to find him.
Other than making said inquiries, however, Nilda made no
further efforts to find her husband. She could have called or
proceeded to the AFP headquarters to request information
about her husband, but failed to do so. She did not even
 CIVIL LAW
seek the help of the authorities or the AFP itself in finding
him (Republic v. Tampus, G.R. No. 214243, March 16, 2016).
Q: When are non-bigamous subsequent marriages
void?
A: The subsequent marriage of a person whose prior
marriage has been annulled but contracted said subsequent
marriage without compliance with Art. 52 (of the) FC, shall
be VOID.
Before he contracts a subsequent marriage, he must first
comply with the requirement provided for in Art. 52, viz:
The recording in the civil registries and registries of
properties of the following:
1. Judgment of annulment;
2. Partition;
3. Distribution of properties, and,
4. Delivery of presumptive legitimes.
Q: Ana Rivera had a husband, a Filipino citizen like her,
who was among the passengers on board a commercial
jet plane which crashed in the Atlantic Ocean ten (10)
years earlier and had never been heard of ever since.
Believing that her husband had died, Ana married
Adolf Cruz Staedler, a divorced German national born
of a German father and a Filipino mother residing in
Stuttgart. To avoid being required to submit the
required certificate of capacity to marry from the
German Embassy in Manila, Adolf stated in the
application for marriage license stating that Adolf was
a Filipino, the couple got married in a ceremony
officiated by the Parish Priest of Calamba, Laguna in a
beach in Nasugbu, Batangas, as the local parish priest
refused to solemnize marriage except in his church. Is
the marriage valid? (2008 Bar)
A: If the missing husband was in fact dead at the time the
second marriage was celebrated, the second marriage was
valid. Actual death of a spouse dissolves the marriage ipso
facto whether or not the surviving spouse had knowledge
of such fact. A declaration of presumptive death even if
obtained will not make the marriage voidable because
presumptive death will not prevail over the fact of death.
If the missing husband was in fact alive when the second
marriage was celebrated, the second marriage was void ab
initio because of a prior subsisting marriage. Had Ana
obtained a declaration of presumptive death, the second
marriage would have been voidable.
In both cases, the fact that the German misrepresented his
citizenship to avoid having to present his Certificate of
Legal Capacity, or the holding of the ceremony outside the
church or beyond the territorial jurisdiction of the
solemnizing officer, are all irregularities which do not affect
the validity of the marriage.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
JUDICIAL DECLARATION OF NULLITY OF
MARRIAGE
Necessity of Judicial Declaration of Nullity of Marriage
The absolute nullity of a previous marriage may be invoked
for purposes of remarriage on the basis solely of a final
judgment declaring such previous marriage void (FC, Art.
40).
There has yet to be a judgment declaring it void, for it is
solely on the basis of that final judgment that a party can
remarry (Albano, 2013).
Remarriage is not the sole purpose of declaration of nullity
of a marriage, as it can be declared void for other purposes.
In Valdes v. RTC, it was said that the law aims to do away
with
any continuing uncertainty on the status of the second
marriage (G.R. No. 122749, Valdez v. Gomez- Valdez, July 31,
1996; Albano, 2013).
Prescriptive Period
The time for filing an action or defense for the declaration
of absolute nullity of marriage, whether in a direct or
collateral manner, does not prescribe (FC, Art. 39) (2002,
2006 Bar).
Any of the parties in a void marriage can file an action for
the declaration of nullity of marriage even though such
party is the wrongdoer.
Effect of death of a party in a petition for declaration of
nullity of marriages
1. Before the entry of judgment – The court shall order
the case closed and terminated without prejudice to
the settlement of estate in proper proceedings.
2. After the entry of judgment – The decision shall be
binding upon the parties and their successors-in-
interest in the settlement of the estate.
Petition for the declaration of nullity of marriage by
the heirs of a deceased person after his death
The heirs cannot file for declaration of nullity of marriage.
The advent of the Rule on Declaration of Absolute Nullity of
Void Marriages marks the beginning of the end of the right
of the heirs of the deceased spouse to bring a nullity of
marriage case against the surviving spouse. The heirs can
still protect their successional right, for, compulsory or
intestate heirs can still question the validity of the marriage
of the spouses, not in a proceeding for declaration of nullity
but upon the death of a spouse in a proceeding for the
settlement of the estate of the deceased spouse filed in the
regular courts.
52
 PERSONS AND FAMILY RELATIONS
However, with respect to nullity of marriage cases
commenced before the effectivity of A.M. No. 02-11-10 and
marriages celebrated during the effectivity of the NCC, the
doctrine laid down in Niñal v. Bayadog still applies; that the
children have the personality to file the petition to declare
the nullity of marriage of their deceased father to their
stepmother as it affects their successional rights (De Dios
Carlos v. Sandoval, G.R. No. 179922, December 16, 2008).
Q: If the court denies a petition for declaration of
nullity of marriage based on psychological incapacity,
may a party to the said case file another petition for
declaration of its nullity based on the absence of
marriage license?
A: NO. A petition to declare the marriage void due to
absence of marriage license, filed after the court denied a
petition to declare the marriage void due to psychological
incapacity is barred by res judicata. There is only one cause
of action which is the declaration of nullity of the marriage.
Hence, when the second case was filed based on another
ground, there was a splitting of a cause of action which is
prohibited (Mallion v. Alcantara, G.R. No. 141528, October
31, 2006).
Q: Is the declaration of nullity of marriage applied
prospectively?
A: NO, it retroacts to the date of the celebration of the
marriage.
Although the judicial declaration of nullity of a marriage on
the ground of psychological incapacity retroacts to the date
of the celebration of the marriage insofar as the vinculum
between the parties is concerned, it must be noted that the
marriage is not without legal consequences or effects. One
such consequence or effect is the incurring of criminal
liability for bigamy. To hold otherwise would be to render
nugatory the State’s penal laws on bigamy as it would allow
individuals to deliberately ensure that each marital
contract be flawed in some manner, and to thus escape the
consequences of contracting multiple marriages (Tenebro v.
CA, G.R. No. 150758, February 18, 2004).
Q: Is a decree of nullity of the first marriage required
before a subsequent marriage can be entered into
validly?
A: GR: Under the Art. 40 of the FC, the absolute nullity of a
previous marriage may be invoked for purposes of
remarriage on the basis solely of a final judgment declaring
such previous marriage void.
XPN: If the second marriage, however, took place prior to
the effectivity of the FC, there is no need for judicial
declaration of nullity of the first marriage pursuant to the
prevailing jurisprudence at that time (Rabuya, 2006).
53
NOTE: Art. 40 is applicable to remarriages entered into
after the effectivity of the FC on August 3, 1988 regardless
of the date of the first marriage. Besides, under Art. 256 of
the FC, said Article is given “retroactive effect” insofar as it
does not prejudice or impair vested or acquired rights in
accordance with the Civil Code or other laws” (Atienza v.
Brillantes, A.M. No. MTJ-92-706, March 29, 1995).
Q: While his first marriage is subsisting, Veronico
married Leticia, which marriage was later declared
void on the ground of psychological incapacity. When
Veronico got married for the third time, Leticia filed a
case for bigamy against him. For his defense, Veronico
claims that effects of the nullity of his marriage with
Leticia retroacts to the date when it was contracted,
hence, he is not guilty of bigamy for want of an
essential element – the existence of a valid previous
marriage. Rule on Veronico’s argument.
A: Veronico’s argument has no merit. Art. 349 of the RPC
penalizes the mere act of contracting a second or
subsequent marriage during the subsistence of a previous
valid marriage. Here, as soon as the second marriage to
Leticia was celebrated, the crime of bigamy had already
been consummated as the second marriage was contracted
during the subsistence of the valid first marriage (Tenebro
v. CA, G.R. No. 150758, February 18, 2004).
EFFECTS OF JUDICIAL DECLARATION OF NULLITY OF
MARRIAGE
1. Status of the Children(1990, 2010 Bar)
GR: (Children conceived and born outside a valid marriage
or inside a void marriage are Illegitimate.)
XPNs:
i. Legitimate if the marriage is void:
1. On the ground of psychological incapacity of
either or both parties;
2. Due to the non-compliance with the
requirements set forth under Article 52 of the
Family Code
ii. Legitimate if the children were conceived or born
before the judgment of annulment or absolute nullity
of the marriage under Article 36 has become final and
executory (FC, Art. 54, 1st sentence).
iii. Legitimate if the children were conceived or born of
the subsequent marriage under Article 53 (FC, Art. 54,
2nd sentence).
2. Property Relations
GR: Either Article 147 or 148 (Co- Ownership) of the
Family Code will apply.
 CIVIL LAW
XPN: If the subsequent marriage is void due to non-
compliance with Article 40 of the Family Code, the property
relations of the void subsequent marriage will either be
absolute community or conjugal partnership of gains.
3. Donations Propter Nuptias
GR: Donations propter nuptias are revocable at the
instance of the donor.
XPNs:
a. If the donation propter nuptias is embodied in a
marriage settlement, the donation is void under Article
86 par. 1 of the Family Code;
b. If the subsequent marriage is judiciallydeclared
void by reason of Article 40 of the Family Code, the
donation remains valid;
XPNto the XPN: If the donee spouse contracted the marriage
in bad faith, all donations are revoked by operation by
law.
c. When both parties to a subsequent marriage
contracted in bad faith under Article 44 of the Family
Code, all donations propter nuptias are revoked
by operation by law.
4. Designation as Beneficiary in Insurance Policy
5. If the subsequent marriage is judicially declared
to void by reason of Article 40 of the Family Code,
the innocent spouse may revoke such
designation if the beneficiary spouse acted in
bad faith, even if such designation be stipulated as
irrevocable Right to inherit
a. Intestate Succession: The parties cannot
inherit from each other by way of intestate
succession since they are no longer
considered as spouses;
b. Testate Succession:
GR: Any Testamentary provision by one in favor of
the other shall remain valid.
XPNs:
1. If the subsequent marriage is rendered void by
non-compliance with Article40 oftheFamily Code, the
spouse who contracted the subsequent marriage
in bad faith is disqualified to inherit from the
innocent spouse.
2. If the marriage is void by reason of the bad faith of
both parties under Article 41 of the Family Code, all
testamentary dispositions made by one in favor of the
otherarerevoked by operation of law.
NOTE: The parties are not disqualified to institute each
other as voluntary heir in their respective wills to be
executed after the judicial declaration of nullity
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
6. Parental Authority and Custody of Children
GR: Since the children are considered as illegitimate,
the parental authority and the custody of the children
will be exercised by their mother. The illegitimate father
even if he admits paternity, will only have visitation
rights.
XPN: If the marriage is declared void by the reason of
psychological incapacity of either or both of the parties, the
parental authority and the custody will be exercised by the
parent designated by the court.
Effects of Decree of Annulment
1. Termination of the marital bond, as if it had never
been entered into, but the effects thereof are not
totally wiped out;
2. Children conceived or born before the judgment of
annulment has become final and executory are
considered legitimate;
3. Absolute community property regime or the
conjugal partnership property regime is
terminated or dissolved and the same shall be
liquidated in accordance with the provisions of
Arts. 102 and 129;
4. The innocent spouse may revoke the designation
of the other spouse who acted in bad faith as
beneficiary in the insurance policy whether or not
the designation is revocable;
5. The spouse who contracted the marriage in bad
faith shall be disqualified to inherit from the
innocent spouse by testate and intestate
succession;
6. Donation propter nuptias.
GR: It shall remain valid.
XPN:If the donee spouse acted in bad faith, the donor
may revoke the donation.
Liquidation of Property if either spouse contracted
the marriage in bad faith
His or her share of the net profits of the community
property or conjugal partnership property shall be
forfeited in favor of the common children or if there be
none, the children of the guilty spouse by previous
marriage or in default thereof, the innocent spouse.
The final judgment of nullity or annulment shall
provide thefollowing:
1. Liquidation, partition and distribution of the
properties of the spouses;
2. Custody and support of the common children; and
3. Delivery of their presumptive legitimes.
54
 PERSONS AND FAMILY RELATIONS
Unless such matters had already been adjudicated in
previous judicial proceedings, in which case, the final
judgment of nullity or annulment need not provide for
those which have already been adjudicated.

NOTE: Where there was a failure to record in the

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

Forms of presumptive legitime

a. Cash
b. Property
c. Sound security

Remarriage after declaration of nullity or

annulment

A person must comply with the requirements of

Art.52 of the FC before he can remarry, viz, the
Recording and registration of: (JPDD):

1. Judgement of Annulment
2. Partition
3. Distribution of properties; and
4. Delivery of presumptive legitime

55
 CIVIL LAW
Void v. Voidable Marriages

VOID MARRIAGES VOIDABLE MARRIAGES

Status of marriage Void ab initio Valid until annulled

Petition filed Declaration of Nullity of Marriage Annulment of Marriage
GR:Solely by the husband or wife. GR: Offended Spouse

XPNs: Any real party in interest, only in XPNs:

the following cases: 1. Parents or guardians in cases of
1. Nullity of marriage cases insanity
commenced before the effectivity 2. Parents or guardians before the
of A.M. No. 02-11-10 - March 15, party reaches 21 years old on the
2003. ground of Lack of Parental
Who may file 2. Marriages celebrated during the Authority
effectivity of the Civil Code (De
Dios Carlos v. Sandoval, G.R. No.
179922, December 16, 2008).
3. A party to the previous marriage
may seek the nullity of the
subsequent marriage on the
ground that the subsequent
marriage is bigamous (Estrellita
Juliano-Llave v. Republic of the
Philippines G.R. No. 169766 March
20, 2011).
No prescriptive period GR: Within 5 years from discovery of the
ground

Prescriptive period XPNs:

1. Lifetime of spouse in cases of
2. Insanity
3. Before the party reaches 21 in cases
4. where parents or guardians may
file Annulment
How may be impugned Either directly or collaterally Judicial declaration is necessary
GR: Illegitimate; Legitimate

XPNs: Those conceived or born of

Children marriages declared void under:
1. Art. 36 (Psychological incapacity) of
the Family Code, or
2. Art. 52 in relation to Art. 53 of the
3. Family Code
GR: Property relations are governed by GR: Governed by rules on absolute
rules on co-ownership community

XPN: If the marriage is declaredvoid by XPN: Unless another system is agreed

Property reason of non-compliance with Article upon in marriage settlement
40 of the FC, the absolute community or
the conjugal partnership, as the case
may be, shall be dissolved and liquidated
(FC, Art. 43 (2), in relation to Art. 50).

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 56
 PERSONS AND FAMILY RELATIONS
GR: There is no necessity to obtain a Necessary
judicial declaration
Judicial Declaration
XPN: For purposes of remarriage, Judicial
declaration of nullity is required.

VOIDABLE MARRIAGES No other misrepresentation or deceit as to character,

A 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 (Rabuya,
2018). Simply, a voidable marriage is valid until it is
annulled (Paras, 2016).
health, rank, fortune or chastity shall constitute such fraud as
will give ground for action for the annulment of marriage
(FC, Art. 46, last par.).
Circumstances constituting FRAUD under Art. 45(3)
(1996, 1997, 2002, 2003, 2006 Bar)

Determination of the unsoundness of mind as a ground 1. Non-disclosure of a previous conviction by final

forannulment
It is essential that the mental incapacity must relate
specifically to the contract of marriage and the test is
whether the party at the time of the marriage was
capable of understanding the nature and consequences
of the marriage (Rabuya, 2018).
Fraud as a ground for annulment
Fraud, as distinguished from fraud as a ground for
annulment of contracts, refers to the non-disclosure or
concealment of some facts deemed material to the
marital relations (Rabuya, 2009).
judgment of the other party of a crime involving
moralturpitude;
2. Concealment by the wife of the fact that at the time of
marriage, she was pregnant by a man other than her
husband;
3. Concealment of sexually transmitted disease,
regardless of nature, existing at the time of marriage;
or
4. Concealment of drug addiction, habitual
alcoholism, homosexuality and lesbianism (FC, Art.
46).
NOTE: Where there has been no misrepresentation or
fraud, that is, when the husband at the time of the marriage
knew that the wife was pregnant, the marriage cannot
be annulled (Buccat v. Buccat, G.R. No. 47101, April 25,
1941)

Voidable marriages and its ratification

GROUND (1999, 2003,

2006, RATIFICATION WHO MAY FILE WHEN TO FILE
2007,
2009 Bar)
Contracting party who failed By the contracting party Within 5 years after attaining
Marriage of a party 18 years to obtain parental consent: the age of 21
of age or over but below 21 Through free cohabitation Parent, guardian, or person At any time before such party
solemnized without the after attainingtheageof21. having legal charge of the has reached the age of 21
consent of the parents, contracting party
guardian or person having NOTE: The parents cannot
substitute parental authority ratify the marriage. The effect
over the party, in that order of prescription on their part
is that they are barred from
contesting it but the marriage
is not yet cleansed of its
defect.

Either party was of Insane spouse: Through free GR: Sane spouse who had no At any time before the death
unsound mind cohabitation after coming knowledge of the other’s of either party
to reason. insanity

57
 CIVIL LAW
XPN: Any relative, guardian During a lucid interval or after
or person having legal charge regaining sanity
of the insane; or
Insane spouse during a lucid
interval or after regaining
sanity
Consentofeither party was Injured party: Through free Injured party Within 5 years after the
obtainedbyfraud cohabitation with full discovery of fraud
knowledge of the facts
constituting the fraud
Vices of consent such as force, Injured party: Through free Injured party Within 5 years from the time
intimidation or undue cohabitation after the vices the force, intimidation or
influence have ceased or disappeared. undue influence disappeared
or ceased
Impotence (impotencia May not be ratified but action Only the potent spouse can file Within 5 years after the
copulandi) and afflicted with may be barred by the action (,) and he or she celebration of marriage
STD found to be serious and prescription only, which is 5 must not havebeen awareof
appears to be incurable years after the marriage. the other’s impotency at the
time of the marriage.

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 58
 PERSONS AND FAMILY RELATIONS
Q: Aurora prayed for the annulment of her marriage with from the occurrence
Fernando on the ground of fraud in obtaining her of the cause.
consent after having learned that several months c. Drug addiction
prior to their marriage, Fernando had pre- marital arises during the
relationship with a close relative of his. According to marriage and not at
her, the "non-divulgement to her of such pre-marital the time of marriage.
secret" constituted fraud in obtaining her consent
w/in the contemplation of Art. 46 of the FC. Is the Q: If drug addiction, habitual alcoholism, lesbianism or
concealment by the husband of a pre-marital homosexuality should occur only during the
relationship with another woman a ground for marriage, would these constitute grounds for a
annulment of marriage? declarationofnullity orforlegalseparation,orwould they
render the marriage voidable? (2002 BAR)
A: NO. The non-disclosure to a wife by her husband of his
pre-marital relationship with another woman is not a A: If drug addiction, habitual alcoholism, lesbianism or
ground for annulment of marriage. For fraud as a vice of homosexuality should occur only during the marriage,
consent in marriage, which may be a cause for its they will:
annulment, comes under Art. 46 of the FC, the fraud, as
vice of consent, is limited exclusively by law to those 1. Not constitute grounds for declaration of nullity
kinds or species of fraud enumerated in Art. 46 in (FC, Art. 36).
relation to Art. 45(3). 2. Not constitute grounds to render the marriage
voidable (FC, Arts. 45 and 46); and
Q: Under what conditions, respectively, may drug 3. Constitute grounds for legal separation (FC, Art. 55).
addiction be a ground, if at all,for the declaration of nullity
of marriage, annulment of marriage, and legal Vitiated consent as a ground for annulment of
separation? (1997 Bar) marriage

A: There is vitiation of consent when:

Declaration of Nullity of
Marriage
Annulment of Marriage
Legal Separation
a. The drug addiction
must amount to GR: Consent of either party was obtained by force,
psychological intimidation or undue influence.
incapacity to
comply with the Force or violence – “There is violence when, in order to
essential obligations wrest consent, serious or irresistible force is employed.
of
marriage; Intimidation – “There is intimidation when one of the
b. It must be contracting parties is compelled by a reasonable and well-
antecedent (existing grounded fear of an imminent and grave evil upon his
at the time of person or property, or upon the person or property of his
marriage), grave and spouse, descendants, or ascendants, to give his consent”
incurable (.) (NCC, Art. 1335, par. 2,).
a. The drug addiction
must be concealed; Undue influence – control over one’s will
b. It must exist at the time
of marriage; XPN: However, if the same having disappeared or ceased,
c. There should be no such party thereafter freely cohabited with the other as
cohabitation with full husband and wife.
knowledge of the drug
addiction; A threat to enforce one's claim through competent
d. The case is filed authority however, if the claim is just or legal, does not
within five (5) years vitiate consent.
from
discovery. Impotence or physical incapacity
a. There should be no
condonation or Impotence (impotentia copulandi) refers to lack of
consent to the drug power of copulation and not to mere sterility
addiction; (impotentia genrandi) which refers to ability to
b. Theaction mustbe filed procreate. The test is not the capacity to reproduce, but the
within five (5) years capacity to copulate (Paras, 2008). Although impotency

59
 CIVIL LAW
carries with it sterility, a sterile person is not necessarily
impotent. (Paras, 2016)
Requisites for impotence to be a ground for
annulment of marriage
1. Exists at the time of the Celebration of marriage;
2. Permanent (does not have to beabsolute);
3. Incurable;
4. Unknown to the other spouse; and,
5. The other spouse must not also be Impotent.
Presumption of potency of one spouse
GR:Presumption is in favor of potency.
XPN: Doctrine of triennial cohabitation.
Doctrine Triennial cohabitation
If after 3 years of living together with her husband, the wife
remained a virgin, the husband is presumed to be
impotent (Rabuya, 2018). The husband will have to
overcome this presumption.
Relative impotency may now be invoked as a ground for
annulment. The Committee has decided to include
relative impotency of one party because there are cases
where a person is impotent with respect to his spouse but not
with other men or women (Sempio Diy, 1995).
Q: The day after John and Marsha got married, John told
her that he was impotent. Marsha continued to live with
John for two years. Is Marsha now estopped from filing an
annulment case against John? (2007 Bar)
A: NO. Unlike the other grounds for annulment of
voidable marriage which are subject to ratification by
continued cohabitation, the law does not allow
ratification in case of impotency.
Requisites of affliction of a SEXUALLY TRANSMITTED
DISEASE (STD) as a ground for annulment
1. One of the parties is afflicted with STD;
2. STD mustbe:
a. Existing at the time the marriage is
celebrated;
b. Serious; and
c. Apparently Incurable;
3. The other spouse is not aware of the other’s affliction;
and
4. The injured party must be free from STD.
Q: Yvette was found to be positive for HIV virus,
considered sexually transmissible, serious and
incurable. Her boyfriend Joseph was aware of her
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
condition and yet married her. After two (2) years of
cohabiting with Yvette, and in his belief that she
would probably never be able to bear him a healthy
child, Joseph now wants to have his marriage with
Yvette annulled on the ground that Yvette has STD.
Yvette opposes the suit contending that Joseph is
estopped from seeking annulment of their marriage
since he knew even before their marriage that she was
afflicted with HIV virus. Can the action of Joseph for
annulment of his marriage with Yvette prosper?
A: NO. Concealment of a sexually transmitted disease may
annul the marriage if there was fraud existing in the party
concerned. In this case, there was no fraud because Joseph
knew that Yvette was suffering from HIV when he married her
(FC, Art. 46, par. 3).
Art. 45 v. 46 of the FC on STD as ground for
annulment
ARTICLE 45 ARTICLE 46
Affliction Concealment
Ground for Annulment
The fact of being afflicted The act of concealing
because it constitutes fraud
Concealment
Not necessarily Necessary
Nature of the Disease
Must be serious and incurable Doesnothaveto be serious
and incurable
PRESENCE OF PROSECUTOR
Role of the prosecutor or Solicitor General in cases of
annulment and judicial declaration of nullity
The prosecutor or Solicitor General shall take steps to
prevent collusion between the parties and to take care that
evidence is not fabricated or suppressed. Even if there is
no suppression of evidence, the public prosecutor has to
make sure that the evidence to be presented or laid down
before the court is not fabricated. Only the active
participation of the public prosecutor or the Solicitor
General will ensure that the interest of the State is
represented and protected in proceedings fordeclaration
of nullity of marriages by preventing the fabrication or
suppression of evidence (FC, Art. 48).
NOTE: The non-intervention of the prosecutor is not fatal
to the validity of the proceedings in cases where the
respondent in a petition for annulment vehemently
opposed the same and where he does not allege that
evidence was suppressed or fabricated by any of the
parties (Tuason v. CA, G.R. No. 116607, April 10, 1996).
Collusion – Where for purposes of getting an annulment or
nullity decree, the parties come up with an
60
 PERSONS AND FAMILY RELATIONS
agreement making it appear that the marriage is
defective due to the existence of any of the grounds for the
annulment of marriage or the declaration of its nullity
provided by law and agreeing to represent such false or
non-existent cause of action before the proper court (Sta.
Maria, 2010).
Actionsprohibitedinannulmentanddeclarationof
absolute nullity of marriage cases
1. Compromise;
2. Confession ofjudgment;
3. Stipulation of facts;
4. Summary judgment; and
5. Judgment on the pleadings.
What the law prohibits is a judgment based exclusively or
mainly on defendant's confession (Ocampo v.
Florenciano, G.R. No. L-13553, February 23, 1960). Thus,
stipulation of facts or confession of judgment if
sufficiently supported by other independent substantial
evidence to support the main ground relied upon, may
warrant an annulment or declaration of absolute
nullity.
PENDENCY OF ACTION
During the pendency of the action for annulment,
declaration of absolute nullity of marriage or legal
separation, the Court shall, in the absence of adequate
written agreement between the spouses, provide for the:
1. Support of the spouses;
2. Support and custody of the common children;
3. Visitation rightsof the other parent (FC, Art.49).
LEGAL SEPARATION
Legal separation is a legal remedy available to parties in a
valid but failed marriage for the purpose of obtaining a
decree from the court entitling him or her certain reliefs
such as the right to live separately from each other
(without affecting the marital bond that exists between
them), the dissolution and liquidation of their absolute
community or conjugal partnership property regime and
the custody of their minor children.
Nature of legal separation
An action for legal separation which involves nothing
more than bed-and-board separation of the spouses is
purely personal. The Civil Code recognizes this by:
1. By allowing only the innocent spouse and no one
else to claim legal separation;
2. By providing that the spouses can, by their
61
reconciliation, stop or abate the proceedings and
even rescind a decree of legal separation already
granted (Lapuz v. Eufemio, G.R. No. L-31429,
January 31, 1972).
GROUNDS FOR LEGAL SEPARATION (FC, ART.
55)
(1997, 2002, 2003, 2006, 2007 Bar)
1. Repeated physical violence or grossly abusive
conduct against petitioner, common child, child of
petitioner;
NOTE: Respondent’s child is not included
2. Attempt to corrupt or induce petitioner, common
child, child of petitioner to engage in prostitution, or
connivance in such corruption or inducement;
3. Attempt by respondent against the life of
petitioner;
4. Final judgment sentencing respondent to
imprisonment of more than 6 years, even if pardoned;
5. Drug addiction or habitual alcoholism of
respondent;
NOTE: It must exist after celebration of marriage
6. Physical violence or moral pressure to compel
petitioner to change religious or political
affiliation;
7. Bigamous marriage subsequently contracted by
respondent in the Philippines or abroad;
8. Sexual infidelity or perversion;
9. Lesbianism or homosexuality of respondent; and
NOTE: It must exist after celebration of marriage
10. Abandonment of petitioner by respondent without
justifiable cause for more than 1 year.
Q: If a man commits several acts of sexual
infidelity, particularly in 2002, 2003, 2004, 2005, does
the prescriptive period to file for legal separation
runfrom 2002?(2007 Bar)
A: The prescriptive period begins to run upon the
commission of each act of infidelity. Every act of sexual
infidelity committed by the man is a ground for legal
separation.
Q: Lucita left the conjugal dwelling and filed a
petition for legal separation due to the physical
violence, threats, intimidation and grossly abusive
conduct she had suffered at the hands of Ron, her
husband. Ron denied such and claimed that since it was
Lucita who had left the conjugal abode, then the decree of
legal separation should not be granted, following Art. 56
par. 4 of the FC which provides that legal separation
 CIVIL LAW
shall be denied when both parties have given ground for
legal separation. Should legal separation be denied
onthebasisofRon’sclaimofmutual guilt?
A: NO. Art. 56 par. 4 of the FC does not apply since the
abandonment that is a ground for legal separation is
abandonment without justifiable cause for more than one
year. In this case, Lucita left Ron due to his abusive
conduct. Such act does not constitute the abandonment
contemplated in the said provision. Therefore, there is no
mutual guilt between them as there is only one erring
spouse (Ong Eng Kiam v. CA, G.R No. 153206, October
23, 2006).
NOTE: No criminal conviction is necessary to issue a decree
of legal separation. In legal separation, preponderance
of evidence is enough (Gandionco v. Penaranda, G.R. No.
79284, November 27, 1987).
Actsconsideredasactsof violence underR.A. 9262
1. Causing, threatening to cause, or attempting to
cause physical harm to the woman or her child;
2. Threatening to cause the woman or her child
physical harm;
3. Attempting to cause the woman or her child
physical harm;
4. Placing the woman or her child in fear of
imminent physical harm;
5. Attempting to compel or compelling the woman
or her child to:
a. Engage in conduct which the woman or her
child has the right to desist from; or
b. Desist from conduct which the woman or her
child has the right to engage in,
6. Attempting to restrict or restricting the woman’s
or her child’s freedom of movement or conduct by:
a. Force, or
b. Threat of force;
c. Physical, or Other harm, or
d. Threat of physical or other harm;
7. Intimidation directed against the woman or child.
This shall include, but not limited to, the following
acts committed with the purpose or effect of
controlling or restricting the woman’s or her child’s
movement or conduct:
a. Threatening to deprive or actually depriving the
woman or her child of custody to her/his family;
b. Depriving or threatening to deprive the
woman or her children of financial support
legally due her or her family, or deliberately
providing the woman’s children insufficient
financial support;
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
c. Depriving or threatening to deprive the
woman orher child of a legal right;
d. Preventing the woman in engaging in any
legitimate profession, occupation, business or
activity or controlling the victim’s own money
or properties, or solely controlling the conjugal
or common money, or properties;
e. Inflicting or threatening to inflict physical harm
on oneself for the purpose of controlling her
actions or decisions;
f. Causing or attempting to cause the woman or
her child to engage in any sexual activity which
does not constitute rape, by:
i. Force, or
ii. Threat of force;
iii. Physical harm, or
iv. Through intimidation directed against
the woman or her child or her/his
immediate family;
8. Engaging in purposeful, knowing, or reckless
conduct, personally or through another that alarms
or causes substantial emotional or psychological
distress to the woman or her child. This shall include,
but not be limited to, the following acts:
a. Stalking or following the woman or her child in
public or private places;
b. Peering in the window or lingering outside
the residence of the woman or her child;
c. Entering or remaining in the dwelling or on
the property of the woman or her child against
her/his will;
d. Destroying the property and personal
belongingness or inflicting harm to animals or
pets ofthewoman orherchild;and
e. Engaging in any form of harassment or violence;
9. Causing mental or emotional anguish, public
ridicule or humiliation to the woman or her child,
including, but not limited to, repeated verbal and
emotional abuse, and denial of financial support or
custody of minor children of access to the woman’s
child/children.
Protection Order
A protection order under R.A. 9262 is an order issued
under this act for the purpose of preventing further acts
of violence against a woman or her child and granting
other necessary relief.
The relief granted under a protection order serves
the purpose of safeguarding the victim from further
harm, minimizing any disruption in the victim’s daily
life, and facilitating the opportunity and ability of the
victim to independently regain control over her life. The
provisions of the protection order shall be enforced
by law enforcement agencies. The protection orders
62
 PERSONS AND FAMILY RELATIONS
that may be issued under this Act are the Barangay
Protection Order (BPO), Temporary Protection Order
(TPO) and Permanent Protection Order (PPO).
Who may file Petition for Protection orders
1. The offended party;
2. Parents or guardians of the offended party;
3. Ascendants, descendants or collateral relatives
within the fourth civil degree of consanguinity or
affinity;
4. Officers or social workers of the DSWD or social
workers of local government units (LGUs);
5. Police officers, preferably those in charge of
women and children’s desks;
6. Punong barangay or Barangay Kagawad;
7. Lawyer, counselor, therapist or healthcare
provider of the petitioner;
8. At least 2 concerned responsible citizens of the
city or municipality where the violence against
women and their children occurred and who has
personal knowledge of the offense committed.
(Sec. 9. R.A. 9262)
DEFENSES
Grounds for denial of petition for legal separation
(2006 Bar)
1. Condonation of the act complained of;
2. Consent to the commission of the offense/act;
3. Connivance in the commission of the act;
4. Collusion in the procurement of decree of LS;
5. Mutual Guilt;
6. Prescription: 5 yrs from occurrence of cause;
7. Death of either party during the pendency of
the case (Lapuz-Sy v. Eufemio, G.R. No. L-31429,
January 31, 1972);
8. Reconciliation of the spouses during the
pendency of the case (FC, Art. 56).
Prescriptive period for filing a petition for legal
separation
An action for legal separation shall be filed within five
years from the time of the occurrence of the cause (FC,
Art. 57).
Failure to interpose prescription as a defense
When prescription was not interposed as a defense, the
courts can take cognizance thereof, because actions
seeking a decree of legal separation, or annulment of
marriage, involve public interest and it is the policy of our
law that no such decree be issued if any legal
obstacles thereto appear upon the record.
This is an exception to the Rules of Court provision
that defenses not raised in the pleadings will not be
63
considered since provisions on marriage are
substantive in nature (Brown v. Yambao, G.R. No. L-
10699, October 18, 1957).
Q: Rosa and Ariel were married in the Catholic
Church of Tarlac, Tarlac on January 5, 1988. In
1990, Ariel went to Saudi Arabia to work. There,
after being converted into Islam, Ariel married
Mystica. Rosa learned of the second marriage of
Ariel on January 1, 1992 when Ariel returned to
the Philippines with Mystica. Rosa filed an action
for legal separation on February 5, 1994.
a. Does Rosa have legal grounds to ask for
legal separation?
b. Has the action prescribed? (1994 Bar)
A:
a. YES, the abandonment of Rosa by Ariel for
more than one (1) year is a ground for legal
separation unless upon returning to the
Philippines, Rosa agrees to cohabit with Ariel
which is allowed under the Muslim Code. In
this case, there is condonation. The contracting
of a subsequent bigamous marriage whether in
the Philippines or abroad is a ground for legal
separation under Art. 55 par. 7 of the FC.
Whether the second marriage is valid or not,
Ariel having converted into Islam, is
immaterial.
b. NO. The aggrieved spouse must file the action
within 5 years from the occurrence of the
cause (FC, Art. 57). The subsequent marriage of
Ariel could not have occurred earlier than
1990, the time he went to Saudi Arabia. Hence,
Rosa has until 1995 to bring the action under
the FC.
COOLING-OFF PERIOD
An action for legal separation shall be in no case tried before
6 months has elapsed since the filing of the petition, to
enable the contending spouses to settle differences. In
other words, it is for possible reconciliation (FC, Art.
58).
GR: The 6 months cooling-off period is a mandatory
requirement. Petition shall not be granted if it is not
observed (Pacete v. Carriaga, G.R. No. L-53880, March 17,
1994).
Note: Matters other than the merits of legal separation
can be determined by the court without waiting for the
lapse of the 6-month period.
XPN: There is no cooling-off period if the grounds
alleged are those under R.A. 9262 (Anti-Violence against
 CIVIL LAW
Women and Children Act). The court can immediately
hear the case.
RECONCILIATION EFFORTS
The Court is required to take steps toward the
reconciliation of the spouses and must be fully satisfied
that, despite such efforts, reconciliation is highly
improbable (FC, Art. 59).
CONFESSION OF JUDGMENT
Rule in rendering a judgment of legal separation
based upon a stipulation of facts or confession of
judgment
A decree of legal separation cannot be issued solely on
the basis of a stipulation of facts or a confession of
judgment. The grounds for legal separation must be
proved. Neither confession of judgment nor summary
judgment is allowed. In any case, the court shall order
the prosecuting attorney or fiscal to take steps to
prevent collusion between the parties and to take care
that the evidence is not fabricated or suppressed (FC,
Art. 60).
What the law prohibits is a judgment based exclusively
or mainly on defendant’s confession (Ocampo v.
Florenciano,
G.R. No. L-13553, February 23, 1960).
Filing of petition for legal separation
Who may file Husband or wife
Within 5 years from the time of the
When to file occurrence of the cause
Family Court of the province or city
Where to file where the petitioner or the respondent
has been residing for at least 6 months
prior to the date of filing or in case of a
non- resident, where he may be found
in the Philippines, at the election of the
petitioner
EFFECTS OF FILING A PETITION FOR LEGAL
SEPARATION
(FC, ART. 61)
The spouses shall be entitled to live separately from
each other.In the absence of a written agreement between
the parties, the court shall designate either the husband or
the wife or a 3rd person to administer the absolute
community or conjugal partnership property.
Effect of death of a party during pendency
Being personal in character, it follows that the death of
one party to the action causes the death of the action
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
itself– actio personalis moritur cum persona (Rabuya,
2009).
Effect of death of a party before entry of judgment
The court shall order the case closed and terminated
without prejudice to the settlement of estate proper
proceedings in the regular courts (Sec. 21, A.M. 02-11-
11- SC).
Effect of death of a party after entry of judgment
If the party dies after the entry of judgment, the same
shall be binding upon the parties and their
successors in interest in the settlement of the estate
in the regular courts (Sec. 21, A.M. 02-11-11-SC).
Q: May the heirs of the deceased spouse continue the suit
(petition for decree of legal separation) if the death of
the spouse takes place during the pendency of thesuit?
A: NO. An action for legal separation is purely personal,
therefore, the death of one party to the action causes the
death of the action itself – action personalis moritur cum
persona.
NOTE: In cases where one of the spouses is dead, or
where the deceased’s heirs continue the suit, separation of
property and any forfeiture of share already effected
subsists, unless spouses agree to revive former property
regime.
EFFECTS OF LEGAL SEPARATION
1. Spouses entitled to live separately but the
marriage bond is not severed;
2. ACP/CPG shall be dissolved and liquidated. The share
of the offending spouse in the net profits shall be
forfeited in favour of:
a. Common children,
b. In default of the common children, children of
the guilty spouse by a previous marriage,
c. In default of common children and the children
of the guilty spouse, innocent spouse;
3. Custody of minor children is awarded to the
innocent spouse (subject to FC, Art. 213);
4. Offending spouse is disqualified to inherit from
innocent spouse by intestate succession;
5. Provisions in the will of innocent spouse which
favors offending spouse shall be revoked by
operation of law;
6. Innocent spouse may revoke donations he/she made
in favor of offending spouse; and
NOTE: Prescriptive period: 5 years from finality of
decree of legal separation
7. Innocent spouse may revoke designation of
64
 PERSONS AND FAMILY RELATIONS
offending spouse as beneficiary in any insurance
policy, even when stipulated as irrevocable.
Q: In case an action for legal separation is granted,
what will happen to a child below the age of seven?
Is the rule absolute?
A: As a rule, the custody of the child shall be awarded to the
innocent spouse, except if the child is below the age of
seven where the law says that the child cannot be
separated from the mother, except if there is a compelling
reason to do so.
The common-law relationship of a child's mother with a
married man is a ground to separate the child from the
mother, because such a situation will not afford the child
a desirable atmosphere where he can grow and develop
into an upright and moral-minded person (Cervantes v.
Fajardo, G.R. No. 79955, January 27, 1989).
Q: Which of the following remedies:
1. Declaration of nullity of marriage,
2. Annulment ofmarriage,
3. Legal separation, and/or
4. Separation ofproperty,
Can an aggrieved spouse avail himself/herself of:
1. If the wife discovers after the marriage that her
husband has “AIDS”?
2. If the wife goes abroad to work as a nurse and
refuses to come home after the expiration of
her three-year contract there?
3. If the husband discovers after the marriage that
his wife has been a prostitute before they got
married?
4. If the husband has a serious affair with his
secretary and refuses to stop notwithstanding
advice from relatives and friends?
5. If the husband beats up his wife every time he
comes home drunk? (2003 Bar)
A:
a. ANNULMENT OFMARRIAGE
Since AIDS is a serious and incurable sexually
transmissible disease, the wife may file an action for
annulment of the marriage on this ground whether
such fact was concealed or not from the wife, provided that
the disease was present at the time of the marriage. The
marriage is voidable even though the husband was not
aware that he had the disease at the time of marriage.
b. SEPARATION OFPROPERTY
If the wife refuses to come home for three (3) months
from the expiration of her contract, she is presumed to have
65
abandoned the husband and he may file an action for
judicial separation of property. If the refusal continues
for more than one year from the expiration of her
contract, the husband may file the action for legal
separation under Art. 55, par. 10 of the FC on the
ground of abandonment of petitioner by respondent
without justifiable cause for more than one year. The
wife is deemed to have abandoned the husband when
she leaves the conjugal dwelling without any intention
of returning (FC, Art. 101). The intention not to return
cannot be presumed during the 3-year period of her
contract.
c. NONE
If the husband discovers after the marriage that his wife
was a prostitute before they got married, he has no
remedy. No misrepresentation or deceit as to character,
health, rank, fortune or chastity shall constitute fraud as
legal ground for an action for the annulment of marriage
(FC, Art. 46).
d. LEGAL SEPARATION
The wife may file an action for legal separation. The
husband’s sexual infidelity is a ground for legal
separation (FC, Art. 55). She may also file an action for
judicial separation of property for failure of her
husband to comply with his marital duty of fidelity [FC,
Art. 135(4), Art. 101].
e. LEGAL SEPARATION, AND SEPARATION OF PROPERTY
The wife may file an action for legal separation on the
ground of repeated physical violence on her person
[FC, Art. 55(1)]. She may also file an action for judicial
separation of property for failure of the husband to
comply with his marital duty of mutual respect [FC, Art.
135(4), Art. 101]. She may also file an action for
declaration of nullity of the marriage if the husband’s
behavior constitutes psychological incapacity existing at
the time of the celebration of marriage.
Effect to the donations made by the spouses to each
other
The revocation of the donations shall be recorded in the
registries of property in the places where the properties
are located. Alienations, liens and encumbrances
registered in good faith before the recording of the
complaint for revocation in the registries of property
shall be respected. The revocation of or change in the
designation of the insurance beneficiary shall take effect
upon written notification thereof to the insured.
The action to revoke the donation must be brought
within five years from the time the decree of legal
separation has become final (FC, Art. 64).
 CIVIL LAW
EFFECTS OF RECONCILIATION Effects of reconciliation while the petition is being
heard by the court
As to the Decree:
If the spouses should reconcile, a corresponding joint
During the pendency of the case: manifestation under oath duly signed by them shall be
LS proceedings terminated at whatever stage filed with the court in the same proceeding for legal
separation.
After the issuance of the decree:
Final decree of LS to be set aside (FC, Art. 66). The legal separation proceedings, if still pending, shall
thereby be terminated at whatever stage.
As to the Property Regime:

GR: In case there had been already separation of

property and forfeiture of the share of the guilty spouse,
the same shall be maintained (Pineda, 2008).

XPN: The parties, however, can come into an agreement

to revive their previous regime. Their agreement must
be under oath and must contain a list of the properties
desired to be returned to the community or conjugal
property and those which will remain separate, a list of
creditors and their addresses.

As to capacity to succeed: The Family Code does not

provide for the revival of revoked provisions in a will
originally made in favor of the offending party as a
result of the LS. This absence gives the innocent spouse
the right to choose whether the offending spouse will be
reinstituted.

As to the forfeited shares: Those given to the children

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

Revival of previous property regime after

reconciliation

Reconciliation does not automatically revive the former

property regime of the spouses. If the spouses want to
revive the previous property regime, they must execute
an agreement to revive the former property regime,
which agreement shall be submitted in court, together
with a verified motion for its approval (FC, Art. 67).

The agreement to revive must be under oath and

specify:

1. The properties to be contributed anew to the

restored regime;
2. Those to be retained as separated properties of
each spouse; and
3. The names of all their known creditors, their
addresses and the amounts owing to each (Pineda,
2008).

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 66
 PERSONS AND FAMILY RELATIONS
Difference of Declaration of Nullity of Marriage, Annulment and Legal Separation

BASIS DECLARATIONOFNULLITYOFMARRIAGE ANNULMENT LEGAL SEPARATION

Marriage bond Dissolved Dissolved No effect, marriage bond

remains
GR: Illegitimate Legitimate

Status of XPN: Children conceived or born of

children marriages before declaration of nullity
under Arts. 36 and 53 of the FC considered
legitimate
GR: Governed either by Article 147 or
Article 148 of the Family Code FC. Thus,
property regime shall be liquidated
pursuant to the ordinary rules on co-
ownership.
Property XPN: Marriages declared void under Article
relations 40 which shall be liquidated in accordance
with Article 43 par. 2 (Valdes v. RTC, G.R. No.
122749. July 31, 1996).
ACP/CPG shall be dissolved & liquidated.[FC,
Art.43(2)]
Share of spouse, who contracted the subsequent
marriage in bad faith, in the net profits of the
community property or conjugal partnership,
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.

GR: Donations propter nuptias are GR: Shall remain valid [FC, Art.43(3)].
revocable at the instance of the donor
XPN:
XPN: 1. If donee contracted the marriage in bad faith, such
ii. If the donation propter nuptias is embodied donations made to said donee shall be revoked by
in a marriage settlement, the donation is operation of law.
void under Article 86 par. 1 of the FC. 2.
iii. If the subsequent marriage is judicially 3. If both spouses to the marriage acted in bad faith,
Donations declared void by reason of Art. 40 of the FC, all donations propter nuptias shall be revoked by
propter the donation remains valid. operation of law.
nuptias
XPN to the XPN:
1. If the donee spouse contracted the marriage
in bad faith, all donations are revoked by
operation by law.
2.
3. When both parties to a subsequent marriage
contracted in bad faith under Article 44 of the
FC, all donations propter nuptias are revoked
by operation by law.
If the subsequent marriage is judicially If one spouse acted in bad faith, innocent spouse may
declared by void by reason of Article 40 of the revoke his designation as beneficiary in the
Insurance FC, the innocent spouse may revoke such insurance policy even if such designation be
designation if the beneficiary spouse acted in stipulated as irrevocable [FC, Art.43(4)].
bad faith, even if such designation be stipulated
as irrevocable

67
 CIVIL LAW
Intestate Succession: The parties cannot
inherit from each other by way of intestate
Succession succession since they are no longer considered
as spouses.
If one spouse acted in bad faith, innocent spouse may
revoke his designation as beneficiary in the
insurance policy even if such designation be
stipulated as irrevocable[FC, Art.43(4)].

Testate Succession: If one spouse contracted the marriage in bad faith, he

shall be disqualified to inherit from innocent spouse
GR: Any Testamentary provision by one in by testate and intestate succession [FC,
favor of the other shall remain valid Art.43(5)]

XPN:
1. If the subsequent marriage is rendered void by
non- compliance with Article 40 of the Family
Code FC, the spouse who contracted the
subsequent marriage in bad faith is
disqualified to inherit from the innocent
spouse
2.
3. If the marriage is void by reason of the bad
faith of both parties under Article 41 of the
Family Code FC, all testamentary dispositions
made by one in favor of the other are revoked
by operation of law

NOTE: The parties are not disqualified to

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

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 68
 PERSONS AND FAMILY RELATIONS
c. In the absence or insufficiency thereof from
RIGHTS AND OBLIGATIONS BETWEEN their separate properties
HUSBAND AND WIFE 4. Manage the household (FC, Art. 71);
5. Not to neglect duties, or commit acts which tend to
bring danger, dishonor, or injury to family (FC, Art.
ESSENTIAL OBLIGATIONS 72);
6. Either spouse may practice any legitimate
profession/business, even without the consent of the
Rights and obligations of the spouses (2010 Bar)
other.
1. Essential marital obligations (LOR) (FC, Art. 68):
NOTE: The other spouse may object on valid, serious
a. Live together which includes consortium
and moral grounds. In case of disagreement, the court
(cohabitation) and copulation (sexual
intercourse), shall decide whether:
b. Observe mutual love, respect, fidelity, and
a. Objection is proper; and
c. Render mutual help and support
b. Benefit has accrued to the family prior to the
objection or thereafter. If the benefit accrued
NOTE: It is true that the Family Code, obligates the spouses
to love one another but this rule sanctions affection and prior to the objection, the resulting obligation
shall be enforced against the community
sexual intimacy, as expressions of love, that are both
spontaneous and mutual and not the kind which is property. If the benefit accrued thereafter, such
obligation shall be enforced against the separate
unilaterally exacted by force or coercion. Further, the
property of the spouse who has not obtained
delicate and reverent nature of sexual intimacy between a
consent. (FC, Art. 73 as amended by R.A.
husband and wife excludes cruelty and coercion. When
10572)
sexual intimacy it is egoistically utilized to despoil marital
union in order to advance a felonious urge for coitus by
force, violence or intimidation, the Court will step in to The foregoing provisions shall not prejudice the rights of
creditors who acted in good faith.
protect its lofty purpose, vindicate justice and protect our
laws and State policies. Besides, a husband who feels
Other obligations of spouses
aggrieved by his indifferent or uninterested wife's absolute
refusal to engage in sexual intimacy may legally seek the
1. Exercise the duties and enjoy the rights of parents;
court's intervention to declare her psychologically
2. Answer for civil liability arising from injuries caused
incapacitated to fulfill an essential marital obligation. But
he cannot and should not demand sexual intimacy from her by children below 18;
3. Exercise parental authority over children’s property
coercively or violently (People v. Jumawan, G.R. No.
187495, April 21, 2014). Therefore:
Essential marital obligations cannot be compelled by
court
a. The right to sexual intercourse involves
normal intercourse. The wife may refuse to
GR: Performance of essential marital obligation under
have sexual intercourse with the husband if
he resorts to abnormal or perverse practices. Art. 68 of the FC cannot be compelled by court because
it will be a violation of personal liberty. (Arroyo v.
b. The wife can also refuse to have sexual
Arroyo, G.R. No. L-17014, August 11, 1921)
intercourse with the husband if she is ill, if it
would endanger her health, or if he is
XPN:Giving support.
suffering from some venereal disease.
c. If the husband forces the wife to have sexual
Reasons when the Court may exempt one spouse
intercourse with him against her will, he
may be charged with coercion (Sempio-Diy, from living with the other
1995).
a. If one spouse should live abroad.
b. Other valid and compelling reasons.
2. Fix the family domicile (FC, Art. 69);

NOTE: In case of disagreement the Court shall decide. NOTE: The Court shall not grant the exemption if it is
not compatible with the solidarity of the family.
3. Jointly support the family (FC, Art. 70);
a. Expenses shall be paid from the community
property, PROPERTY RELATIONS OF THE SPOUSES
b. In the absence thereof from the income or fruits
of their separate properties,

69
 CIVIL LAW
The property relations shall be governed by the ff. in the
stated order:
1. Property relation agreed and embodied in the
marriage settlement;
2. Provisions of the FC; and
3. Local custom (FC, Art. 74).
Commencement of Property Regime
A property regime commences at the precise moment of
the celebration of the marriage (i.e. actual time the marriage
is celebrated on a certain date).
Any stipulation, express or implied, for the
commencement of the community regime at any other
time shall be void (FC, Art. 88).
Laws that will govern the property relations of the
spouses
GR: Philippine laws shall govern, regardless of place of
celebration of marriage and residence of spouses, in the
absence of contrary stipulation in a marriage settlement
(FC, Art. 80).
XPN: Lex rei sitae applies:
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; or
c. With respect to 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 (FC, Art. 80).
Rule on waiver of rights over the share in the
community or conjugal property
GR: Cannot be waived during the marriage.
XPN: In case of judicial separation of property.
NOTE: The waiver must be in a public instrument and
recorded in the office of the local civil registrar where the
marriage contract was recorded as well as in the proper
registry of property.
Property regime governing the property relations of
spouses in the absence of marriage settlement or when
regime agreed upon is void (1992, 1995, 2005 Bar)
GR: Absolute Community Property (FC, Art. 75)
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
XPNs:
1. For marriages contracted prior to the effectivity of the
FC on August 3, 1988, conjugal partnership of gains
shall govern the property relations and Art. 116 of the
NCC will apply. The provisions of the FC shall have no
retroactive effect because it shall impair vested rights.
2. Subsequent marriage contracted within one year from
the death of the deceased spouse without liquidation
of the community property or conjugal partnership of
gains, either judicially or extra-judicially, as required
under Arts.103 and 130 of the FC. In such case, a
mandatory regime of complete separation of property
shall govern the subsequent marriage (Rabuya, 2009).
Q: Marriage being a contract, may the parties enter into
stipulations which will govern their marriage?
A: The nature, consequences and incidents of marriage are
governed by law and not subject to stipulation between the
spouses. This, however, is not an absolute rule. The law
allows the spouses to fix their property relations during the
marriage through a device known as “marriage settlement”
subject only to the condition that whatever settlement they
may have must be within the limits provided by the Family
Code.
MARRIAGE SETTLEMENT
It is a contract entered into by a man and a woman who
intend or plan to get married fixing the property regime
that will govern their present and future properties during
their marriage. It is also called as Ante-nuptial Agreement
(Sempio-Diy, 1995).
Requisites of a valid Marriage Settlement (FC, Art. 77)
a. In Writing;
b. Signed by the parties;
c. Executed before the celebration of marriage;
d. Registration (to bind 3rd persons)
The provisions in the marriage settlement must be in
accordance with law, morals or public policy; otherwise
such agreement is void (Paras, 2008).
A marriage settlement need not be notarized. The law is
clear that the marriage settlements and any modification
thereof shall be in writing signed by the parties and
executed before the celebration of the marriage (FC, Art.
77). The law merely requires it to be in writing; it does not
require that it be in a public instrument for purposes of its
validity (Albano, 2013).
The marriage settlements must be registered in the proper
local civil registry where the marriage contract was
recorded as well as in the proper registries of property in
order that they may prejudice or bind third persons (FC,
Art. 77).
70
 PERSONS AND FAMILY RELATIONS
BASIS DONATION ORDINARY Modification of the marriage settlement (FC, Art. 76)
PROPTER DONATION (2005 BAR)
NUPTIAS
As to Donations of Governed by For any modification in the MS to be valid:
formalities future property Title III, Book 1. The requisites for a valid MS must be present;
are governed by III of the NCC. 2. There must be judicial approval;
the provisions 3. Subject to the provisions of Arts. 66, 67, 128, 135, and
on 136 of FC.
testamentary
succession and Effect on the ante-nuptial agreement in case the
the formalities marriage is not celebrated (FC, Art. 81)
of wills [FC, Art.
82(2)] GR: Everything stipulated in the settlements or contracts in
As to Present There is no consideration of the marriage shall be rendered void.
inclusion of property may be limit except
present donated up to that the XPN: Those stipulations not dependent upon, or are not
property 1/5 of the donor shall made in consideration of, the marriage, subsist.
donor’s present leave sufficient
property if the property for DONATION PROPTER NUPTIAS OR DONATION
future spouses his support BY REASON OF MARRIAGE
have chosen a and that of all (FC, ART. 82)
regime other relatives
than absolute entitled to Those donations which are made before the celebration of
community of support from the marriage, in consideration of the same, and in favor of
property (FC, him (NCC, one or both of the future spouses.
Art. 84) Art. 750) and
further no The formalities of the donation propter nuptias follows the
legitimes of same formalities as set forth in the law on donations.
compulsory
heirs shall be NOTE: Donations of future property are governed by
impaired. provisions on testamentary succession and formalities of
(NCC, Art. 752) wills.
As to Future property Future
inclusion may be included, property Donation propter nuptias (DPN) v. Ordinary
of future provided the cannot be Donation
property donation is included. [NCC,
mortis causa. Art. 751] Requisites for Donation Propter Nuptias
[NCC, Art. 84(2)]
Revocation Grounds for Grounds for a. Made before celebration of marriage;
revocation are revocation are b. Made in consideration ofthemarriage; and
found in Art. 86 found in c. Made in favor of one or both of the future spouses.
of FC. donations.
Requisites if the DPN is made by one spouse in favor of the
Additional requirements for validity of the MS other

1. There must be a MS stipulating a property regime

FACTUAL SITUATION ADDITIONAL other than AC;
REQUIREMENT 2. Donationin theMS benot morethan 1/5 of the present
If one of both of the The ff. must be made property; and
parties are: a party to the MS, 3. There mustacceptance byotherspouse.
otherwise the
MS is void: Rule regarding DPN made between spouses
18-21 years old Parents; or those
required to give consent GR: Future spouses cannot donate to each other more
than 1/5 of their present property and any excess
Sentenced with civil Guardian appointed by
from which shall be considered void.
interdiction the court
XPN: If they are governed by ACP, then each spouse can
Disabled Guardian appointed by
donate to each other in their marriage settlements
the court

71
 CIVIL LAW
present property without limit, provided there is sufficient solemnized on the
property left for their support and the legitimes are not fixed date(FC, Art.
impaired. 1149).

Effect of donations of encumbered property 2. Marriage is Ground for Revoked by

judicially nullity: operation of law.
Such donations are valid. In case of foreclosure of the declared void. Contracted
encumbrance and the property is sold for less than the total subsequent
amount of the obligation secured, the donee shall not be marriage before
liable for the deficiency. If the property is sold for more than prior marriage
the total amount of the obligation, thedoneeshallbeentitled has been
to theexcess(FC, Art. 85). judicially
declared
Donations that may be revokedby the donor void.
(FC, Art. 86) Any other 5 yrs
grounds.
Adonation by reasonofmarriagemayberevoked by the 3. Marriage took place without
donor in the following cases: consent of parents or guardian, Finality of judicial
when required by law. declaration of nullity
1. GR: Marriage is not celebrated or is judicially declared (if action is to recover
void ab initio. property).
5 yrs
XPN: donations made in the marriage settlements
Time the donor came
2. Marriage takes place without therequired consent to know that the
of parents or guardians. required parental
3. Marriage is annulled and donee acted in bad faith. consent was not
4. Upon legal separation, the donee being the guilty obtained.
spouse. 4. Marriage is annulled and 5 yrs
5. If with a resolutory condition which was donee acted in bad faith.
complied with. Finality of decree
6. Donee has committed an act of ingratitude as 5. Upon legal separation 5 yrs
specified by the provisions of the Civil Code on (LS), donee being the
donations in general. guilty spouse. Finality of decree
6. Donation subject to 5 yrs
Groundsfor filinganactionfor revocationofa DPNand resolutory condition
theirrespectiveprescriptiveperiods which was complied with. Happening of the
resolutory condition
The prescriptive periods in other provisions of the Civil 7. Donee committed an act 1 yr
Code should apply, depending on the ground of of ingratitude
revocation Except for the action to revoke a donation to From donor’s
the guilty spouse in case of a legal separation, which the knowledge of the
second paragraph of Art. 64 of the Code states must be commission of an act
brought within of ingratitude.
5 years from the time of the decree of legal separation
has become final, there is no other provision in the Acts of ingratitude: (NCC, Art. 765)
Family Code on the period of prescription of the action
to revoke a donation proper nuptias. (Sempio-Diy, 1. Commission of an offense against the person, honor
2010) or property of the donor, his wife or his children
under his parental authority;
GROUNDS (FC, Art. 86) PRESCRIPTIVE PERIOD 2. GR: Imputation to the donor any criminal
(reckoning offense or any act involving moral turpitude;
point)
1. Marriage is not 5 yrs XPN: if the crime was committed againstthe
celebrated. doneehimself,hiswifeorhis children under his
From the time the authority
XPN: Those automatically marriage was
rendered void by law. not 3. Undue refusal to support the donor when he is

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 72
 PERSONS AND FAMILY RELATIONS
legally or morally bound to give such support.

DONATION DURING THE MARRIAGE

Rule regarding donations between spouses during

the marriage (FC, Art. 87)

GR: Every donation or grant of gratuitous advantage,

direct or indirect, between spouses is considered void.

XPN: Moderate gifts on the occasion of any family rejoicing.

The aforementioned rules also apply to common law

spouses (Matabuena v. Cervantes, G.R. No. L- 28771,
March 31, 1971).

PROPERTY RELATIONS OF SPOUSES

Different property regimes which may be adopted

by future spouses

I. Absolute Community of Property (ACP)

II. Conjugal Partnership of Gains (CPG);
III. Absolute Separation of Property (ASOP);
IV. A combination of the above regimes;
V. Any other regime within limits provided by the
FC.

The rule against donation to one another between the

spouses does not include a spouse being a beneficiary of an
insurance contract over the life of the other (Gercio v.
Sun Life Assurance Co., of Canada, G.R. No. 23703,
September 28 1925).

73
 CIVIL LAW
ACP v. CPG v. CSOP

ABSOLUTE CONJUGAL COMPLETE

COMMUNITY OF PROPERTY PPARTNERSHIP OFGAINS SEPARATION OF PROPERTY
When applicable
When spouses: 1. When the future spouses adopt it in a 1. When future spouses adoptit in a
1. Adopt it in amarriage settlement; marriage settlement. marriagesettlement;
2. Do not choose any economic system; 2. Ifthemarriage is celebrated under the 2. ACP or CPG is dissolved;
or New Civil Code and they have not 3. Prior marriage is dissolved due to
3. Adopted a different property regime adopt any economic system. death of one spouse and surviving
and thesame isvoid. spouse failed to complywiththe
requirements under Art. 103
(judicial settlement proceeding of
the estateof deceased spouse);
4. By judicial order. Judicial separation
of property may either be voluntary
or for sufficient cause.
Composition
All the properties owned by the spouses Each spouse retains his/her property
at the time of marriage become before the marriage and only the fruits and
community property. income of such properties becomepart
ofthe conjugal properties during the
marriage.
Effect of Separation In Fact
The separation in fact shall not affect the regime of ACP, but:
1. The spouse who leaves the conjugal home or refuses to live therein, withoutjust
cause, shall nothave therightto be supported;
2. When consent ofonespouseto any transaction oftheother is required by law,
judicial authorization shall beobtained in a summary proceeding.
3. In case of insufficiency of community orconjugal partnership property,
separate property of both spouses shall be solidarily liable for the support of the
family. 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 spouseandusethefruitsorproceeds thereofto satisfy thelatter’s
share (FC, Arts. 100 & 127).
Effect of Dissolution
Upon dissolution and liquidation of the Upon dissolution of the partnership, the
community property, what is divided separate properties of the spouses are
equally between the spouses or their returned and only the net profits of the
heirs is the net remainder of the partnership are divided equally
properties of the between the
ACP. spouses of their heirs.

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 74
 PERSONS AND FAMILY RELATIONS
Grounds for revival of former property regime title, if expressly made to form part of the
community property by the donor, testator or
1. Civil interdiction of the prisoner-spouse grantor;
terminates; 3. Jewelry or properties with monetary value;
2. Absentee spouse reappears; 4. Winnings in gambling.
3. Court authorizes resumption of administration by the
spouse formerly exercising such power; Properties excludedintheAbsoluteCommunity
4. Spouse who has abandoned the conjugal home returns
and resumes common life with the other; 1. Property acquired during the marriage by gratuitous
5. Parental authority is judicially restored to the title and its fruits as well as income thereof unless
spouse previously deprived thereof; the grantor expressly provide they shall form part
6. Reconciliation and resumption of common life of of the community property;
spouse who had been separated in fact for at least 1 2. Property for personal and exclusive use of either
year; spouse but jewelries shall form part of the ACP
7. Spouses agree to revive their former property because of their monetary value;
regime. 3. Property acquired before the marriage by one with
legitimate descendants by former marriage and its
Grounds for transfer ofadministration of the exclusive fruits and income, if any;
property of each spouse 4. Those excluded by the marriage settlement (FC,
Art. 92).
When one spouses:
Presumption of inclusion in the absolute
1. Is sentenced to penalty with civil community
interdiction;
2. Becomes fugitive from justice or is hiding as an In absence of evidence, property acquired during the
accused in a criminal case; marriage is presumed to belong to the community, unless
3. Is judicially declared absent proven otherwise by strong and convincing evidence
4. Becomes guardian of another (FC, Art. 93).

NOTE: Transfer of administration of the exclusive The sale or encumbrance of a conjugal property
property of either spouses does not confer requires the consent of both the husband and the wife
ownership over the same (Rodriguez v. De la Cruz, G.R. (Guiang v. CA, G.R. No. 125172, June 26, 1998). The
No. 3629, September 28, 1907). absence of the consent of one renders the entire sale or
encumbrance null and void, including the portion of the
I. ABSOLUTE COMMUNITY OF PROPERTY conjugal property pertaining to the husband who
(ACP) contracted the sale. Neither would the conjugal
partnership be liable for the loan on the ground that it
A property regime wherein the spouses are considered co- redounded to the benefit of the family (Homeowners
owners of all property brought into the marriage, as well as Savings & Loan Bank v. Dailo, G.R. No. 153802, March
those acquired during the marriage, which are not 11, 2005).
otherwise excluded from the community either by the
provisions of the Family Code or by the marriage A wife, by affixing her signature to a deed of sale on the
settlement. (Rabuya, 2009) space provided for witnesses, is deemed to have given
her implied consent to the contract of sale. The consent
Laws that govern the absolute community of need not always be explicit or set forth in any particular
property document so long as it is shown by acts of the wife that
such consent or approval was in fact given (Pelayo v.
1. Family Code Perez, G.R. No. 141323, June 8, 2005).
2. Civil Code provisions on co-ownership
When the sale was entered into prior to the effectivity of the
Properties included in the absolute community FC Art.173, in relation to Art. 166 of the NCC will apply if there
was a finding of lack of the wife's consent. Under said
1. All the property owned by the spouses: provisions, the sale would have been merely
a. At the time of the celebration of the voidable, and not void.
marriage; or
b. Acquired thereafter; The use of the jurat, instead of an acknowledgment, does not
elevate the marital consent into the level of a public
2. Property acquired during the marriage by gratuitous document but instead consigns it to the status of a private

75
 CIVIL LAW
writing. Hence, the presumption of regularity does not
apply and the wife still needs to prove its genuineness and
authenticity as required under the rules of evidence (Pan
Pacific Industrial Sales Co., Inc. v. CA, G.R. No. 125283,
February 10, 2006).
The fact that the document contains a jurat, and not an
acknowledgment, should not affect its genuineness or
that of the related document of conveyance itself, the
Deed of Absolute Sale. In this instance, a jurat suffices as the
document only embodies the manifestation of the
spouse's consent, a mere appendage to the main
document (Pan Pacific Industrial Sales Co., Inc. v. CA, G.R.
No. 125283, February 10, 2006).
A. CHARGES UPON AND OBLIGATIONS OF
THE ABSOLUTE COMMUNITY
PROPERTY
Charges upon the ACP
1. The support of
a. The spouses
b. Their common children
c. Legitimate children of either spouse;
NOTE: Support of illegitimate children of either spouse is
chargeable to exclusive property of the illegitimate parent
(FC, Art. 197).
2. All debts and obligations contracted during
the marriage by:
a. The designated administrator-spouse for the
benefit of the community
b. By both spouses
c. By one spouse with the consent of the other;
3. Debts and obligations contracted by either spouse
without the consent of the other to the extent that
the family may have been benefited;
4. All taxes, liens, charges and expenses, including
major or minor repairs, upon the community
property;
5. All taxes and expenses for mere preservation
made during marriage upon the separate
property of either spouse used by the family;
6. Expenses to enable either spouse to commence
or complete a professional or vocational course, or
other activity for self-improvement;
7. Ante-nuptial debts of either spouse insofar as
they have redounded to the benefit of the family;
(2007 Bar) NOTE: For ante-nuptial debts, those
contracted by one spouse without the consent of the
other during the marriage and those contracted by
the administrator-spouse, the burden of proof that
such debts were contracted for the benefit of the
community or of the family lies with the creditor-
party litigant claiming as much (Rabuya, 2009).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
8. 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;
9. Payment, in case of absence or insufficiency of
the exclusive property of the debtor-spouse, of:
a. Ante-nuptial debts of either spouse which
did not redound to the benefit of the
family;
b. The support of illegitimate children of
either spouse;
c. Liabilities incurred by either spouse by
reason of a crime or quasi-delict;
NOTE: The payment of which shall be considered as
advances to be deducted from the share of the debtor-
spouse upon liquidation of the community
10. Expenses of litigation between the spouses.
However, if suit is found to be groundless, it cannot
be charged against the ACP (FC, Art. 94).
ACP v. CPG as to charges
ACP (FC, Art. 94) CPG(FC, Art. 121)
Support of the spouses, their common children, and
legitimate children of either spouse.
Debts and obligations contracted during
marriage:
a. Bytheadministratorspouse designated inthe
marriage settlement/appointed by court/one
assuming sole administration;
b. By one without the consent of the other;
c. By one with the consent of other; or
d. By both spouses
e. For (a) and (b), creditor has the burden of
proving benefit to the family and ACP/CPG
chargeable to the extent of benefit proven,
otherwise, chargeable to the separate property of
the obligor spouse.
f. For (c) and (d), real (Rul) benefit to family is
presumed.
All taxes, liens, charges and expenses including minor
repairs upon ACP or CP.
Expenses to enable either spouse to commence/complete
a professional, vocational or other activity for self-
improvement.
Value donated/promised by both spouses in favor of
common legitimate children for exclusive purpose of
commencing or completing professional or vocational
course or other activity for self-improvement.
Expenses of litigation between spouses unless the suit is
found to be groundless.
For illegitimate children, For illegitimate children,
support from separate support from separate
property of person property of person
76
 PERSONS AND FAMILY RELATIONS
obliged to give support. obliged to give support. In There is no presumption that the obligations incurred
In case of insufficiency or case of insufficiency or by one of the spouses during the marriage are charged
absence of separate absence of separate against their community of property. Before any
property, ACP shall property, CP shall obligation may be chargeable against the community of
advance support, advance support, property, it must first be established that such obligation is
chargeable to share of chargeable to share of among the charges against the same (Wong, et al, v. IAC, G.R.
parent upon liquidation. parent upon liquidation, No. 70082, August 19, 1991).
but only after
obligations in Art. 121 Insufficiency of thecommunity property to cover
have been covered (FC, Art. liabilities
121).
Taxes and expenses for Taxes and expenses for GR: The spouses shall be solidarily liable for the unpaid
preservation during mere preservation balancewith theirseparate properties.
marriage upon separate during marriage upon
property of either spouse separate property of XPN: Those falling under paragraph 9 of Art. 94. of the
used by family. either spouse, Family Code (Ante-nuptial debts, support of illegitimate
regardless of whether children, liabilities incurred by spouse by reason of a crime
used by the family or quasi-delict) –in which case the exclusive property of
because the use and the spouse who incurred such debts will be liable.
enjoyment of separate However, if the exclusive property is insufficient,
property of the spouses payment will be considered as advances to be deducted
belong tothe from share of debtor- spouse. (FC, Art. 94 [9])
partnership.
1. Ante-nuptial debts are For ante-nuptial debts, B. OWNERSHIP, ADMINISTRATION, ENJOYMENT
chargeable to ACP if same as ACP but in case of AND DISPOSITION OF THE ABSOLUTE
they redounded to the insufficiency of COMMUNITY PROPERTY
benefit of family. separate property,
obligations enumerated in Administration of Community Property
2. Personal debts not Art. 121 must first be
redounding to benefit of satisfied before such GR: The administration of community property
the family such as debts may be belongs to both spouses jointly.
liabilities incurred by chargeable to the CP (FC,
reason of crime or Art. 12). XPN:
quasi-delict are
chargeable to the 1. Agreement that only one of the spouses shall
separate property of administer the community property;
the debtor spouse. 2. If one spouse is incapacitated or otherwise
unable to participate in the administration of the
3. In case of insufficiency common properties – capacitated or able spouse
of separate property, may assume sole powers of administration without
chargeable to ACP but the need of court approval or authorization;
considered advances 3. If a spouse without just cause abandons the other or
deductible from the fails to comply with his or her obligations to the
share of the debtor- family, the aggrieved spouse may petition the court
spouse upon for soleadministration;
liquidation. 4. During the pendency of the legal separation case,
the court may designate either of the spouses as
Q: An individual, while single, purchases a house and lot sole administrator.
in 1990 and borrows money in 1992 to repair it. In
1995, such individual is married while the debt is NOTE: But such powers do not include:
still being paid. After the marriage, is the debt still
the responsibility of such individual? (2007 Bar) 1. Disposition;
2. Alienation; or
A: NO. Ante-nuptial debts of either spouse shall be 3. Encumbrance of the conjugal or
conidered as the liability of the absolute community of community property.
property insofar as they have redounded to the benefit
of the family. "Courtauthorization"inthesaleofconjugal properties

77
 CIVIL LAW
Court authorization is resorted to in cases where the
spouse who does not give consent is incapacitated. If
there is no showing that the spouse is incapacitated,
court authorization cannot be sought (Manalo v.
Fernandez, G.R. No. 147928, January 23, 2002).
Disagreement in the administration of community
property(FC, Art. 96)
In case of disagreement, the decision of the husband shall
prevail but subject to recourse to the court by the wife for
proper remedy.
NOTE: Prescriptive period for recourse is within 5 years
fromthedateofthe contract implementingsuch decision.
Sale or Disposition of Community Property
Alienation or encumbrance of community property
must have the written consent of the other spouse or the
authority of the court without which the disposition or
encumbrance is 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 (FC, Arts. 96
and 124; Sps. Antonio and Luzviminda Guiang v. CA, et
al., G.R. No. 125172, June 26, 1998).
The absence of consent of one of the spouses renders the
entire sale null and void, including the sale of the portion
of the conjugal property pertaining to the spouse who
contracted the sale.
The consent of one spouse regarding the disposition does
not always have to be explicit or set forth in any particular
document, so long as it is shown by acts of the said spouse
that such consent or approval was indeed given (Sps.
Cirelos v. Sps. Hernandez, et al. G.R. No. 146523, June
15, 2006). However, even if the other spouse actively
participated in negotiating for the sale of the property, that
other spouse's written consent to the sale is required by
law for its validity. Being aware of a transaction is not
consent (Jader-Manalo v. Camaisa, G.R. No. 147978,
January 23, 2002).
Q: Marco and Gina were married in 1989. In 1999, Gina
left Marco and lived with another man, leaving the two
children of school age with Marco. When Marco needed
money for their children’s education he sold a parcel of
land registered in his name, without Gina’s consent,
which he purchased before his marriage. Is the sale by
Marco valid, void, or voidable? Explain with legal
basis.(2015 BAR)
A:Thesale is VOID. Thepartieswere married in 1989. In the
absence of a marriage settlement, the parties shall be
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
governed by ACP whereby all the properties owned by the
spouses at the time of the celebration of the marriage as
well as whatever they may acquire during the marriage
shall form part of the absolute community. In ACP, neither
spouse can sell or encumber property belonging to the ACP
without the consent of the other. Any sale or encumbrance
made by one spouse without theconsent of the other shall be
void although it is considered as a continuing offer on the
part of the consenting spouse upon authority of the
court or written consent of the other spouse.
Q: Does the prohibition cited above include lease by the
husband over properties of the community of
propertywithout the consentof the wife?
A: YES. In the contract of lease, the lessor transferred his
right of use in favor of the lessee. The lessor's right of use is
impaired therein. He may even be ejected by the lessee if
the lessor uses the leased realty. Therefore, the lease is a
burden on the land. It is an encumbrance on the land.
Moreover, lease is not only an encumbrance but also a
qualified alienation, with the lessee becoming, for all intents
and purposes, and subject to its terms, the owner of the thing
affected by the lease (Roxas v. CA, G.R. No. 92245, June 26,
1991).
Donation of a community property by a spouse
GR: A spouse cannot donate any community property
without the consent of the other.
XPN: Moderate donations for charity or on occasion of family
rejoicing or distress (FC, Art. 98).
Separation in fact between husband and wife (FC, Art.
100)
GR: Such separation does not affect the regime of
absolute community
XPNs:
1. Spouse who leaves the conjugal home or refuses to live
therein without just cause has no right to be
supported;
2. When consent of one spouse to any transaction of the
other spouse is required by law, judicial
authorization must be obtained;
3. If community property is insufficient, the
separate property of both spouses shall be
solidarily liablefor the support of the family.
Abandonment (1999, 2003 Bar)
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 courtfor:
1. Receivership;
2. Judicial separation of property;
78
 PERSONS AND FAMILY RELATIONS
3. Authority to be the sole administrator of the
absolute community (FC, Art. 101).
Presumption of 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 (Pineda, 2008).
The presumption is rebuttable by the presentation of
clear, strong and convincing evidence that the absent
spouse did not intend to leave the present spouse and
family (Pineda, 2008).
Prohibition against the sale of property between
spouses
GR: Spouses cannot sell property to each other.
XPNs:
1. When a separation of property was agreed upon in
the marriage settlement;
2. When there has been a judicial separation of property
under Articles 135 and 136 of the Family Code
(NCC, Art. 1490).
NOTE: The proscription against the sale of property
between spouses under Art. 1490 of the New Civil Code
applies even to common law relationships. In an earlier
ruling, the SC nullified a sale made by a husband in favor
of a concubine, after he had abandoned his family and
left the conjugal home where his wife and children lived,
and from whence they derived their support, for being
contrary to morals and public policy. The sale was
regarded by the court as subversive of the stability of the
family, a basic social institution which public policy
cherishes and protects (Ching v. CA, G.R. No. 165879,
November 10, 2006).
C. DISSOLUTION OF ABSOLUTE COMMUNITY
REGIME
Dissolutionof Absolute Community Property (2009
BAR)
Absolute Community Property is terminated by: (FC, Art.
99)
1. Death of either spouse;
NOTE: If the surviving spouse contracts another marriage
without compliance with the foregoing requirement, a
79
mandatory regime of complete separation shall govern the
property relations of the subsequent marriage.
Upon lapse of the one-year period and liquidation is made,
any disposition or encumbrance involving the
community property of the terminated marriage shall
be void (FC, Art. 103).
The reason for the law is that, the law seeks to protect
the children's interest in the first marriage (Albano,
2013).
2. Legal separation;
3. Annulment;
4. When the marriage is declared void under Art.40 of the
Family Code;
5. Judicial separation of property during marriage (FC,
Art. 99).
NOTE: The absolute community of property or the
conjugal partnership is considered dissolved only
upon the issuance of the judicial decree of separation,
not at the moment when the parties enter into a
compromise agreement in the course of the
proceedings for separation of property (Albano,
2013).
D. LIQUIDATION OF THE ABSOLUTE
COMMUNITY ASSETS AND LIABILITIES
Procedure in case of dissolution of ACP
1. Inventory of all properties of the ACP, listing
separately the communal properties from
exclusive properties of each spouse;
2. Payment of community debts;
NOTE: First, pay out of the community assets. If not
enough, husband and the wife are solidarily liable
for the unpaid balance with their separate
properties.
3. Delivery to each spouse of his/her remaining
exclusive properties;
4. Equal division of net community assets Unless there
is:
a. Anagreementforadifferentproportion;or
b. A voluntary waiver of such share;
5. Delivery of the presumptive legitimes of the
common children;
6. Adjudication of conjugal dwelling and custody of
common children (FC, Art. 102).
Applicable procedure inthe dissolution of the ACP incase
themarriageisterminatedbydeath
 CIVIL LAW
Community property shall be liquidated in the same
proceeding for the settlement of the estate of the
deceased.
If no judicial proceeding is instituted, the surviving
spouse shall, judicially or extra-judicially, liquidate the
community property within 1 year from the death of the
deceased spouse (FC, Art. 103).
Consequences of failure to liquidate within 1 year
1. Failure to liquidate the community property within
1 year from the death of the deceased spouse
contrary to Art. 103 of the Family Code, would render
any disposition or encumbrance involving
community property of the terminated marriage void.
2. If the surviving spouse contracts a subsequent
marriage without compliance with the foregoing
requirements, the subsequent marriage shall be
governed, mandatorily, by a regime of complete
separation of property (Rabuya, 2006).
II. CONJUGAL PARTNERSHIP OF GAINS
(CPG)
It is the property relation formed by the husband and the
wifeby placingin acommon fund: (FC, Art. 106)
1. The proceeds, product, fruits and income of their
separate properties;
2. Those acquired by either or both of them
through:
a. Effort;
b. Chance.
Commencement of CPG
CPG shall commence at the precise moment when the
marriage ceremony is celebrated.
Law that governs the conjugal partnership
The rules on the contract of partnership in all that is not in
conflict with what is expressly determined in the FC and by
the spouses in their marriage settlements (FC, Art. 108).
Only inchoate right over conjugal property
The interest of the spouses in the conjugal properties is only
inchoate or a mere expectancy and does not ripen into title
until it appears the dissolution and liquidation of the
partnership that there are net assets (Sempio-Diy, 1995).
EXCLUSIVE PROPERTY OF THE SPOUSES (FC,
ART. 109)
1. Those brought into the marriage as his/her own;
NOTE:
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
a. A property purchased before the marriage
and fully paid during the marriage remains to
be a separate property of either spouse
(Lorenzo v. Nicolas, G.R. No. L-4085, July 30,
1952).
b. Fruits and income of said properties shall be
included theconjugal partnership
c. Those included therein in the marriage
settlement, subject to the 1/5 limitation
under Article 84 and the rule in Article
92(3) of the Family Code which apply by
analogy
2. Those acquired during the marriage by gratuitous
title;
NOTE:
a. Pensions will not form part of the conjugal
partnership of gains when it is given to
him voluntarily and he is not entitled as a
matter of right such as a fruit of industry
or labor.
b. Proceeds of life insurance policy will not
form part of the conjugal partnership of
gains when the beneficiary of the life
insurance is the estate and the premiums
are sourced from the separate property of
the spouse.
c. Retirement Benefits will not form part of
the conjugal partnership of gains when it
is given to him voluntarily and he is not
entitled as a matter of right such as a fruit
of industry or labor.
3. Those acquired by right of redemption, barter or
exchange with exclusive property;
NOTE: In right of redemption, for it to form part of
the exclusive property of the spouse, the ownership
over such property must still pertain to the said
spouse.
4. That purchased with exclusive money of either
spouse.
NOTE: The controlling factor is the source of the
money used, or the money promised to be paid.
Alienation of exclusive properties of either
spouse
Either spouse may mortgage, encumber, alienate or
otherwise dispose of his or her exclusive property (FC, Art.
111 as amended by R.A. 10572).
Rules in cases of improvement of exclusive
property (FC, Art. 120)
1. Reverse accession – If the cost of the
80
 PERSONS AND FAMILY RELATIONS
improvement and the value of the improvement is
more than the value of the principal property at
the time of the improvement, the entire property
becomes conjugal.
NOTE: For reverse accession to apply, the separate
property must be owned by a spouse exclusively at
the time of the introduction of the improvement
neither it will apply if the property is partly owned
by a spouse and partly owned by a third person.
2. Accession– If the cost of the improvement and the
value of the improvement is equal to or less than
the value of the principal property, the entire
property becomes the exclusive property of the
respective spouse.
NOTE: In either case, there shall be
reimbursement upon the liquidation of the conjugal
partnership and ownership of entire property
shall be vested only upon reimbursement.
Q: A parcel of land is owned by the father of W. With his
permission, H and W constructed their house over the
said parcel of land. After some time, the father of W
died leaving W as his sole heir. Who now owns the
parcel of land and the improvements introduced by the
H and W? Assume that the property regime of the H and
W is conjugal partnership of gains.
A: The wife will now own both the parcel of land the
house introduced by H and W. Reverse Accession under
Article 120 of the Family Code will not apply since at the
time of the introduction of the improvement the parcel
of land is owned by the father of W which she inherited
it when her father died. What will apply here instead is
the ordinary rule of accession. However, the conjugal
partnership of gains will still enjoy the said property as
a usufructuary and W will be the naked owner thereof.
Presumption of inclusion of property in the
Conjugal Partnership of Gains
GR: All property acquired during the marriage, whether
the acquisition appears to have been made, contracted
or registered in the name of one or both spouses, is
presumed to be conjugal.
XPN: Unless the contrary is proved.
Obligations Chargeable to Separate Property
1. Support of illegitimate children;
2. Liabilities incurred by reason of a crime or quasi-
delict;
3. Expenses of litigation between the spouses if found
to be groundless;
4. Debts contracted during the marriage by the
81
administrator-spouse which does not benefit the
community;
5. Debts contracted during the marriage without the
consent of the other which did not benefit the
family;
6. Ante-nuptial debts by either spouse which did not
benefit the family;
7. Taxes incurred on the separate property which is
not used by the family;
8. Expenses incurred during the marriage on a
separate property if the property is not used by the
family and not for its preservation.
CONJUGAL PARTNERSHIP PROPERTY
Composition of CPG (1995,1998,2004,2005, 2008
Bar) (FC, Art. 117)
1. Those acquired by onerous title during the marriage
with conjugal funds;
NOTE: Requisites:
a. Acquisition is made during the marriage,
b. Thru onerous title,
c. At the expense of common fund;
2. Livestock in excess of what was brought to the
marriage;
3. Those acquired by chance such as winnings in
gamblings and bettings (FC, Art. 117).
Property bought through installment (FC, Art. 118)
Requisites:
1. Property is bought on installment prior to the
marriage; and
2. Paid partly from exclusive funds and partly from
conjugal funds.
Rules in determining ownership:
1. If full ownership was vested before the marriage
– it shall belong to the buyer spouse.
2. If full ownership was vested during the marriage
– it shall belong to the conjugal partnership.
NOTE: In either case, any amount advanced by
the partnership or by either or both spouses
shall be reimbursed by the owner/s upon
liquidation of the partnership.
Q: Yamane asserts that the parcel of land, which was
purchased at auction, belonged to the conjugal
partnership of him and his late wife. In the title, his
name appeared to be merely descriptive of the civil
status of the registered owner, his late wife. The
purchase took place prior to the advent of the Family
 CIVIL LAW
Code. Is the property conjugal or paraphernal
property of his latewife?
A: CONJUGAL. In this case, the provisions of the NCC would
apply since the purchase took place before the FC took
effect. Under Art. 160 of the NCC, all property of the
marriage is presumed to belong to the conjugal
partnership, unless it be proved that it pertains
exclusively to the husband or the wife. In this case,
there was no proof that the property had been
acquired exclusively by Yamane's late wife. The mere
registration of a property in the name of one spouse
does not destroy its conjugal nature in the absence of
strong, clear and convincing evidence that it was
acquired using the exclusive funds of said spouse
(Spouses Go v. Yamane, G.R. No. 160762, May 3, 2006).
3. Those obtained from labor, industry, work or
profession of either or both spouses;
3. Fruits of conjugal property due or received during the
marriage and net fruits of separate property;
NOTE: Net fruits refer to the remainder of the fruits after
deducting the amount necessary to cover the
expenses of administration of said exclusive
property.
4. Share of either spouse in hiddentreasure;
5. Those acquired through occupation such as hunting
orfishing;
Q: Dolores seeks to recover a parcel of land, alleging
that she and her husband acquired such during their
marriage, that it formed part of their conjugal properties
and that he sold it without her consent. She presents as
evidence their marriage contract and the initial tax
declaration over the property.
A: RECOVERY IS NOT WARRANTED. The rule is all
property of the marriage is presumed to be conjugal in
nature. However, for this presumption to apply, the party
who invokes it must first prove that it was acquired
during the marriage. Here, Dolores' evidence consisted
of her marriage contract and the initial tax declaration
over the property. She did not identify when she and
her husband first occupied and possessed the land.
Neither did she present any witness to prove that they
first occupied the property during their marriage and
that they both worked on the land (Pintiano-Anno v.
Anno, G.R. No. 163743, January 27, 2006).
The presumption of conjugality of the properties of the
husband and wife applies only when there is proof that
the property was acquired during the marriage. If there
is no showing as to when the properties alleged to be
conjugal were acquired, the presumption does not apply
(Francisco v. CA, G.R. No. 102330, November 30, 1998).
Proof of acquisition during the coverture is a condition
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
sine qua non to the operation of the presumption in
favor of the conjugal partnership (Pintiano-Anno, v.
Anno, et al., G.R. No. 163743, January 27, 2006).
Effect if properties were registered during the
marriage
The fact that the properties were registered in the name
of the spouses is no proof that the properties were
acquired during the marriage. It is well-settled that the
registration does not confer title but merely confirms
one already existing (Jocson v. CA, G.R. No. L-55322,
February 16, 1989).
Q: H & W got married on October 1926. H
subsequently cohabited with X. During the
cohabitation of H with X, H acquired certain
properties and places his status as single. What is the
nature of said properties?
A: THEY ARE CONJUGAL PROPERTIES. Whether a
property is conjugal or not is determined by law and not by
the will of one of the spouses. No unilateral
declaration by one spouse can change the character of
conjugal property. The clear intent of H in placing his
status as single is to exclude W from her lawful share in the
conjugal property. The law does not allow this. The
cohabitation of a spouse with another person, even for a
long period, does not sever the tie of a subsisting
previous marriage.
H and X’s cohabitation cannot work to the detriment of W as
thelegalspouse. The marriage of H and W continued to exist
regardless of the fact that H was already living with X.
Hence, all property acquired from the date of their
marriage until the death of W are presumed conjugal. It was
neither claimed nor proved that any of the subject
properties was acquired outside or beyond this period
(Villanueva v. CA, G.R. No. 143286, April 14, 2004).
Q: Suppose a property was acquired by one spouse while
they were living separately, is this property conjugal
ornot?
A: It is presumed to be conjugal. All property acquired
during the marriage regardless of whether the spouses are
living together or not, are presumed to be conjugal
property (Flores v. Escudero, G.R. No. L-5302, March 11,
1953).
A. CHARGE UPON AND OBLIGATIONS OF
THE CONJUGAL PARTNERSHIP OF GAINS
(CPG)
1. Support of the spouses, their common children and
the legitimate children of either spouse;
2. Debts and obligations contracted by one without the
consent of the other to the extent that the family
82
 PERSONS AND FAMILY RELATIONS
benefited;
3. Debts and obligations contracted during the marriage
by an administrator-spouse, both spouses or one with
the consent of the other;
4. Taxes, liens, charges, expenses, including major or
minor repairs upon conjugal property;
5. Taxes and expenses for mere preservation made
during the marriage of separate property;
6. Expenses for professional, vocational or self-
improvement courses of either spouse;
7. Ante-nuptial debts to the extent the family has been
benefited;
8. Value of what is donated or promised to common
legitimate children for professional, vocation or self-
improvement courses;
9. Expenses of litigation between the spouses unless the
suit is found to be groundless (FC, Art. 121).
NOTE: If the conjugal partnership is insufficient to
cover the foregoing liabilities, spouses shall be
solidarily liable for the unpaid balance with their
separate properties.
Charges against the Separate Property that may be
charged upon the CPG
Requisites:
1. All the responsibilities of the partnership have
already been covered; and
2. The spouse who is bound has no exclusive
properties or the same are insufficient.
Charges:
1. Personal debts of either spouse contracted
before the marriage which did not redound to
the benefit of the family;
2. Support of the illegitimate children of either
spouse;
3. Fines and indemnities arising from delicts
and quasi- delicts.
If levy was made on the conjugal property by reason of
the husband being a guarantor, the levy is improper.
The payment of personal debts contracted by the
husband or the wife before or during the marriage shall
not be charged to the conjugal partnership except as
they redounded to the benefit of the family (FC, Art.
122). (2000, 2005 Bar)
Q: If one of the spouses committed the crime of
slander and was held liable for damages in a
damage suit, is it chargeable against the conjugal
partnership?
A: NO. Unlike in the system of absolute community
where liabilities incurred by either spouse by reason of
a crime or quasi-delict is chargeable to the absolute
community of property, in the absence or insufficiency
83
of the exclusive property of the debtor-spouse, the same
advantage is not accorded in the system of conjugal
partnership of gains. To reiterate, conjugal property
cannot be held liable for the personal obligation
contracted by one spouse, unless some advantage or
benefit is shown to have accrued to the conjugal
partnership (Go v. Yamane, G.R. No. 160762, May 3,
2006).
B. ADMINISTRATION OF THE CONJUGAL
PARTNERSHIP OF GAINS (ART. 124)
GR: The right to administer the conjugal partnership
belongs to both spouses jointly.
XPN:
1. If one spouse is incapacitated or otherwise unable
to participate in the administration of the common
properties – capacitated or able spouse may
assume sole powers of administration.
2. 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
for sole administration.
3. During the pendency of a legal separation case, the
court may designate either of the spouse as sole
administrator.
But such powers do not include:
1. Disposition;
2. Alienation; or
3. Encumbrance of the conjugal or community
property.
NOTE: The sale of conjugal property without the
consent of the husband is void. If one spouse is
incapacitated or otherwise unable to assume sole
powers of administration of the conjugal properties, the
other spouse may assume sole powers of
administration. These powers do not include
disposition or encumbrance without authority or
written consent of the other spouse. (Aggabao v.
Parulan, G.R. No. 165803, September 1, 2010)
Disagreement in the administration of the CPG
In case of disagreement, the decision of the husband shall
prevail subject to recourse to the court by the wife for
proper remedy.
NOTE: Prescriptive period for recourse is 5 years from
the date of the contract implementing such decision.
(2000, 2002 Bar)
C. DISSOLUTION OF CONJUGAL
PARTNERSHIP OF GAINS
Conjugal partnership is terminated by:
 CIVIL LAW
1. Death of either spouse;
2. Legal separation;
3. Annulment or Declaration of Nullity;
4. Judicial separation of property during marriage
(FC, Art. 126).
D. LIQUIDATION OF THE CONJUGAL
PARTNERSHIP ASSETS AND LIABILITIES
1. Inventory of all the properties;
2. Restitution of advances made to each of the
spouses;
3. Reimbursement for use of exclusive funds;
4. Debts and obligations of the CP are paid;
5. Delivery of exclusive properties;
6. Payment of losses and deterioration of movables
belonging to each of the spouses;
7. Division of the net conjugal partnership;
8. Delivery of the common children’s presumptive
legitimes;
9. Adjudication of conjugal dwelling and custody of
common children (FC, Art. 129).
Liquidation of community property if the
termination of the marriage by death
Upon termination of marriage by death, the community
property shall be liquidated in the same proceeding for
the settlement of the estate of the deceased spouse (FC,
Art. 130).
Support to the surviving spouse and to the children
during liquidation
The support to be given to the surviving spouse and to
the children during liquidation shall come from the
common mass of property and shall be particularly
charged against the fruits, rents or income pertaining to
their shares to the inventories property. But where the
support given exceeds the fruits, rents or income
pertaining to their shares, the excess shall be deducted
from their respective shares as these are deemed
advances from the inventoried property (FC, Art. 133).
Liquidation of community property in the absence
of a judicial settlement proceeding (FC, Art. 130)
In the absence of a judicial settlement proceeding, the
surviving spouse shall liquidate the community
property either, judicially or extra-judicially within 1
year from the death of the deceased spouse.
III. COMPLETE SEPARATIN OF PROPERTY
(CSOP)
If during the liquidation of the CP, the conjugal
partnership assets are less than the conjugal
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
partnership liabilities, the surviving spouse and the
children shall not be entitled to support.
Effects if the community property is not liquidated
(FC, Art. 130)
1. Any disposition or encumbrance made by the
surviving spouse involving community property
of the terminated marriage shall be void.
2. Should the surviving spouse contract a
subsequent marriage a mandatory regime of
complete separation of property shall govern the
property relations of the subsequent marriage.
The system of complete separation of property will
govern the property relations between the spouses only
in the following cases:
1. When it is expressly provided for in the marriage
settlement
2. When it is so decreed by a competent court
3. Mandatory regime of complete separation of
property
4. By failure of the surviving spouse to liquidate the
absolute community or conjugal partnership of
gains of a previous marriage which has been
terminated by death within the one-year period
required by law prior to contracting another
marriage. The subsequent marriage is
mandatorily governed by a regime of complete
separation.
Rules governing the regime of separation of
property
1. Marriage settlement
2. Family Code in supplemental character (FC, Art.
149)
Kinds of separation of property
1. As to extent: (FC, Art. 144)
a. Total
b. Partial – In this case, the property not agreed
upon as separate shall pertain to the absolute
community.
2. As to kinds of property: (FC, Art. 144)
a. Present property
b. Future property
c. Both present and future property
Instances when separation of property is allowed
(FC, Art. 134)
1. By agreement through marriage settlement
2. By judicial order
84
 PERSONS AND FAMILY RELATIONS
Sufficient causes for judicial separation of property
1. Civil interdiction of the spouse of petitioner;
2. Judicial declaration of absence;
3. Loss of parental authority as decreed by the
court;
4. Abandonment or failure to comply with
family obligation; (2003 Bar)
5. Administrator spouse has abused authority;
6. Separation in fact for one year and
reconciliation is highly improbable. (FC, Art.
135)
NOTE: In cases provided in 1, 2 and 3, the presentation
of the final judgment against the guilty or absent spouse
shall be enough bases for the grant of the decree of
judicial separation of property.
Effects of judicial separation of property between
spouses
1. The absolute community or conjugal partnership is
dissolved;
2. The liability of the spouses to creditors shall be
solidary with their separate properties;
3. Mutual obligation to support each other continues
except when there is legal separation;
4. Rights previously acquired by creditors are not
prejudiced.
In case of voluntary agreement for the separation of
property, the law does not require specific reasons to
justify the Court in approving the same. The law leaves
the matter to the discretion of the court (Sempio-Diy,
1995). (2005 Bar)
Rights of the spouses under the regime of
separation of property
1. Each spouse shall own, dispose of, administer,
possess, and enjoy his or her own separate
property, without need of the consent of the other.
2. Each spouse shall own all earnings from his or her
profession, business or industry and all fruits,
natural, industrial or civil, due or received during
the marriage from his or her separate property (FC,
Art. 145).
Liabilities of the spouses for family expenses under
the regime of separation of property (FC, Art. 146)
GR: Both spouses shall bear the family expenses in
proportion to their income.
XPN: In case of insufficiency or default thereof, to the
current market value of their separate properties.
Revival of previous property regime
85
If the spouses opted for voluntary separation of
property, the parties may agree to the revival even in
the absence of a reason/ground. However, a subsequent
voluntary separation of property is no longer allowed.
If the separation of property is for a sufficient cause, the
revival of the previous property regime depends upon
the cessation of the ground which was the basis of the
judicial order. A subsequent judicial separation of
property for a sufficient cause may be allowed so long
as there is a new ground to rely on.
The procedure of the revival of previous property
regime is the same as those followed upon
reconciliation of the spouses after the finality of legal
separation.
Transfer of Administration of Exclusive Property to
another Spouse during the Marriage
(a) By agreement
Requisites:
1. By means of a public instrument;
2. To be recorded in the registry of
property of the place where the property
is located.
(b) By order of the court upon petition
Based on these grounds:
1. Other spouse becomes the guardian of
the other;
2. The other spouse is judicially declared an
absentee;
3. Other spouse is sentenced to a penalty
which carries with it civil interdiction; or
4. Other spouse becomes fugitive from
justice or hiding as an accused in a
criminal case (FC, Art. 142).
 CIVIL LAW
IV. PROPERTY REGIME OF UNIONS WITHOUT MARRIAGE

BASIS ART. 147(1997, 2000, 2006, 2009, 2010 BAR) ART. 148(1992, 1998, 2000, 2006, 2009 Bar)
1. Parties without legal impediment to marry; With legal impediment caused by:
2. Void marriage on the ground of psychological 1. Adulterous relationships
Applicability incapacity. 2. Bigamous/polygamous marriages
3. Incestuous void marriages under Art. 37
4. Voidmarriagesby reason ofpublicpolicy (FC,
Art. 38).
1. The man and the woman must be capacitated to 1. The man and the woman must be
marry each other; incapacitated to marry each other or they do
2. live exclusively with each other ashusband and not live exclusively with each other as
As to requisites wife; and husband and wife; and
3. their union is without the benefit of marriage or 2. Theirunion iswithoutthebenefitofmarriage
their marriage is void (Mercado-Fehr v. Fehr, or their marriage is void (FC, Art. 148).
G.R. No. 152716, October 23, 2003
Salas, Jr. v. Aguila, G.R. No. 202370,
September 23, 2013).
Owned in equal shares Separately owned by theparties.Ifany is married,
Salaries & wages his/her salary pertains to the CPG of the legitimate
marriage.

Property exclusively Belongs to party Belongs to such party

acquired uponproofofacquisition throughexclusivefunds

Property acquired by Governed by rules of co-ownership Owned in common in proportion to their

both through their respective contributions
work or industry
Property acquired while living together No presumption of joint acquisition.
presumed obtained by their joint efforts, work or
industry andowned by them in equalshares. Actual joint contribution of money, property or
industry shall be owned by them in common
Presumption If one party did not participate in acquisition:proportion.
presumed to have contributed through care and
maintenance of family and household However, their contributions are presumed equal,
(Buenaventura v. CA, G.R. No. in the absence if proof to the contrary.
127358, March 31, 2005).
When only one of the parties to a void marriage is in If one of the parties is validly married to another,
good faith, theshare of theparty in bad faith in the his/her share in the co-ownership shall accrue to
co-ownership shall be forfeited in favorof: the ACP or CPG existing in the marriage.

Forfeiture 1. their common children If the party who acted in BF is not validly married
2. in caseof defaultof orwaiver by any or all of the to anotherorifboth parties arein BF, such sharebe
common children or their descendants, each forfeited in mannerprovided in the last par. of Art.
vacant share shall belong to the respective 147
surviving descendants
3. In the absence of descendants, such shareshall
belong to the innocent party.
Proof of actual Not necessary Necessary
contribution

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 86
 PERSONS AND FAMILY RELATIONS
NOTE: For as long as it is proven that s property was
acquired during marriage, the presumption of conjugality
will attach regardless in whose name the property is
registered.
The presumption is not rebutted by the mere fact that the
certificate of title of the property or the tax declaration is in
the name of one of the spouses (Villanueva v. CA, G.R. No.
143286, April 14, 2004).
Property regime in case the marriage is declared null
and void on the ground of psychological
incapacity
The property relation between the parties is governed by
Art. 147 of the Family Code. Property acquired by both
spouses through their work and industry shall be
governed by the rules on equal co-ownership. Any
property acquired during the union is prima facie
presumed to have been obtained through their joint
efforts. 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." Unlike the conjugal partnership of gains, the
fruits of the couple's separate property are not included in
the co-ownership.
Q: Miko and Dinah started to live together as husband
and wife without the benefit of marriage in 1984. 10 years
after, they separated. In 1996, they decided to live
together again, and in 1998 they got married. On
February 17, 2001, Dinah filed a complaint for
declaration of nullity of her marriage with Miko on the
ground of psychological incapacity. The Court rendered
the following decision:
1. Declaringthe marriage null and void;
2. Dissolving the regime of Absolute Community of
Property; and
3. Declaring that a decree of absolute nullity of
marriage shall only be issued after liquidation,
partition, and distribution of the parties’ properties
under Art, 147.
Dinah filed a Motion for Partial Reconsideration
questioning the portion of the decision on the
issuance of a decree of nullity of marriage only after the
liquidation, partition and distribution of properties
under Article 147. If you are the judge, how will you
decide the petitioner’s Motion? Why? (2014 Bar)
A: I will grant the partial reconsideration. If the
marriage is declared void under Art. 36, the provisions of the
Family Code on liquidation, partition and distribution
of the properties on absolute community or conjugal
partnership will not apply but rather Art 147 or Art. 148
87
depending on the presence or absence of the legal
impediment between them.
Art. 50 of the Family Code, and Sec. 19 of the Rules on
Declaration of Nullity applies only to marriages which are
declared void ab initio or annulled by final judgement
under Art. 40 and 45 of the Family Code. Art. 50 does not
apply to marriages which are declared void ab initio
under Art. 36 which should be declared void without
waiting for the liquidation of the properties of the
parties.
In this case, petitioner’s marriage to respondent was
declared void under Art. 36 of the FC and not under Art.
40. Thus, what governs the liquidation of property owned
in common by petitioner and respondent are the rules
on co-ownership under Art. 496 of the NCC. Partition
may be made by agreement between the parties or by
judicial proceedings. It is not necessary to liquidate
the property of the spouses in the same proceeding for
declaration of nullity of marriage (Dino v. Dino, G.R. No.
178044, January 19, 2011).
Co-ownership under Art. 147
When a man and a woman who are capacitated to marry
each other, live exclusively with each other as husband
and wife without the benefit of marriage or under a void
marriage, their wages and salaries shall be owned by them
in equal shares and the property acquired by both of them
through their work or industry shall be governed by the
rules of co-ownership.
In the absence of proof to the contrary, properties
acquired while they lived together shall be presumed to
have been obtained by their joint efforts, worker industry,
and shall be owned by them in equal shares. A party who
did not participate in the acquisition by the other party of
any property shall be deemed to have contributed jointly in
the acquisition thereof if the former's efforts consisted in
the care and maintenance of the family and of the
household.
Under this article, there is a presumption that the
properties which they acquired during their cohabitation
were acquired through their joint efforts, work or
industry. It further provides that a party who did not
participate in the acquisition thereof shall be deemed to
have contributed jointly in the acquisition thereof if his or
her efforts consisted in the care and maintenance of the
family and of the household.
Co-ownership under Art. 148
Co-ownership may ensue in case of cohabitation where,
for instance, one party has a pre-existing valid marriage,
provided that the parties prove their actual joint
contribution of money, property or industry and only to
 CIVIL LAW
the extent of their proportionate interest thereon
(Francisco v. Master Iron Works Construction Corp., G.R.
No. 151967, February 16, 2005).
Q: Romeo and Juliet lived together as husband and wife
without the benefit of marriage. During their
cohabitation, they acquired a house. When they broke up,
they executed an agreement where he agreed to leave
the house provided Juliet will pay his entire share in
their properties. She failed to do so butshe also ignored
his demand for her to vacate. Romeo sued her for
ejectment which the court granted. Was the court
correct in granting the same?
A: NO. Under Art. 147 of the Family Code, the property is co-
owned by the parties. In the absence of proof to the
contrary, any property acquired by common-law spouses
during their cohabitation is presumed to have been
obtained thru their joint efforts and is owned by them in
equal shares. Their property relationship in such a case is
essentially governed by the rules on co-ownership. Thus,
Romeo cannot seek the ejectment of Juliet therefrom. As a co-
owner, she is as much entitled to enjoy its possession and
ownership as him (Abing v. CA, G.R. No. 146294, July 31,
2006).
Q: Bert and Joe, both male and single, lived together
as common law spouses and agreed to raise a son of
Bert’s living brother as their child without legally
adopting him. Bert worked while Joe took care of
they were able to acquire real estate assets
registered in their names as co-owners.
Unfortunately, Bert died of cardiac arrest, leaving
no will. Bert was survived by his biological siblings,
Joe and the boy.
a. Can Article 147 on co-ownership apply to Bert
and Joe, whereby all properties they acquired
will be presumed to have been acquired by their joint
industry and shallbe ownedby them in equal shares?
b. If Bert and Joe had decided in the early years of
their cohabitation to jointly adopt the boy, would
they have been legally allowed to do so? Explain
with legal basis.
A:
a. NO, Article 147 of the Family Code cannot apply to
Bert and Joe because the law only applies to a man and a
woman who are capacitated to marry each other who live
together as husband and wife without the benefit of
marriage or under a void marriage. In the case of Bert and
Joe, they are both men so the law does not apply.
b. NO, because joint adoption is allowed between
husband and wife. Even if Bert and Joe are cohabiting
with each other, they are not vested with the right to
jointly adopt under the Family Code or even under the
Domestic Adoption Act (Sec. 7, R.A. 8552).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Q: Benjamin is married to Azucena. While Azucena is out
of country, Benjamin developed a romantic
relationship with Sally, but her father was against this. In
order to appease her father, Sally convinced Benjamin to
sign a purported marriage contract. Eventually, their
relationship ended a few years later. Benjamin asked
the court for the partition of the properties he acquired
with Sally in accordance with Article 148 of the FC, for his
appointment as administrator of the properties
during the pendency of the case. Among the 44
properties which were the subject of the partition, 7
were enumerated by Benjamin while Sally named 37
properties in her answer. Is Benjamin’s contention
correct?
A: YES. The property relations of Benjamin and Sally is
governed by Article 148 of the Family Code. They
cohabitated without the benefit of marriage. Thus, only
the properties acquired by them through their actual
joint contribution of money, property, or industry shall
be owned by them in common in proportion to their
respective contributions. Thus, the 37 properties being
claimed by Sally is excluded as part of her conjugal
properties with Benjamin because Sally was not legally
married to Benjamin. As regards the seven remaining
properties, only one of them is registered in the names
of the parties as spouses. The other four were registered
in the name of either one of them with the description
“married to” and the last two were named to Sally as an
individual. The words “married to” preceding the name
of a spouse are merely descriptive of the civil status of
the registered owner, which do not prove co-ownership.
Without proof of actual contribution from either or both
spouses, there can be no co-ownership under Article
148 of the Family Code (Go-Bangayan v. Bangayan, Jr.,
G.R. No. 201061, July 3, 2013).
Retroactive application of Art. 148 of the Family Code
Although the adulterous cohabitation of the parties or the
acquisition of the property occurred before the
effectivity of the Family Code on August 3, 1998,
Article 148 applies because the said provision was
intended precisely to fill up the hiatus in Article 144 of the
NCC. Before Article 148 of the Family Code was enacted,
there was no provision governing property relations of
couples living in a state of adultery or concubinage
(Atienza v. De Castro, G.R. No. 169698, November 29,
2006).
THE FAMILY UNDER THE FAMILY CODE
THE FAMILY AS AN INSTITUTION
Being the foundation of the nation, it is a basic social
institution which public policy cherishes and protects. (FC,
Art. 149).
88
 PERSONS AND FAMILY RELATIONS
Family relations include:
1. Between husband and wife;
2. Between parents and children;
3. Among other ascendants and descendants;
4. Among brothers and sisters, whether of the full or
half-blood (FC, Art. 150).
A suit between a brother-in-law and a sister-in-law is not
within the coverage of the law, hence, the failure of the
plaintiff to allege earnest efforts to effect a
compromise is not necessary. The relationship is based on
consanguinity, except that of the husband and wife (Gayon
v. Gayon, G.R. No. L-28394, November 26, 1970). The
enumeration of brothers and sisters as members of the
same family does not comprehend brothers- or sisters-
in-law (Guerero v. RTC, G.R. No. 109068, January 10,
1994).
Rules to remember:
1. Family relations exists even if they are not living
together
2. Illegitimate children are not included in the
family relations under this Article because they
have their own families.
3. Adopted children are included. (Minutes of
Committee Meeting of August 24, 1985)
Rules governing family relations
Family relations are governed by law. No custom,
practice or agreement destructive of the family shall be
recognized or given effect (FC, Art. 149).
NOTE: Even if not all forms of extra-marital relations
are punishable under penal law, the sanctity of marriage
is constitutionally recognized and likewise affirmed by
our statutes as a special contract of permanent union.
Accordingly, the Court has had little qualms with
penalizing judicial employees for their dalliances with
married persons or for their own betrayals of the
marital vow of fidelity (Concerned Employee v. Glenda
Mayor, A.M. No. P- 02-1564, November 23, 2004).
Requisites before a suit between members of the
same family may prosper
1. Earnest efforts toward a compromise have been
made;
2. Such efforts failed;
3. The fact that earnest efforts toward a
compromise have been made but the same have
failed appears in the verified complaint or petition
(FC, Art. 151).
89
This rule shall not apply to cases which may not be
subject of compromise under the Art. 2035 of the
New Civil Code.
Q: Jose alleged that he and his family have been
occupying two (2) parcels of land, which was then
offered to sell to Jose the subject lands which Jose
accepted. However, Consuelo decided to "cancel"
their agreement. In response, Jose expressed his
disapproval to Consuelo's plan and demanded
that respondents proceed with the sale, which
the latter ignored. Upon learning of such sale,
Jose sent a demand letter to Rene asserting his
right to the subject lands. As his demands went
unheeded, Jose brought the matter to the
barangay upon for conciliation proceedings
between him and Rene. When it reached the CA
such Court moto proprio dismissed the case on
the ground that they failed to apply article 151.
Can the CA motu proprio dismiss such case?
A: YES, Non-compliance with the earnest effort
requirement under Article 151 of the Family Code is
not a jurisdictional defect which would authorize the
courts to dismiss suits filed before them motu
proprio. Rather, it merely partakes of a condition
precedent such that the non-compliance therewith
constitutes a ground for dismissal of a suit should the
same be invoked by the opposing party at the earliest
opportunity, as in a motion to dismiss or in the
answer. Otherwise, such ground is deemed waived.
If the respondents as parties-defendants could not,
and did not, after filing their answer-to-petitioner’s
complainant, invoke the objection of absence of the
required allegation on earnest efforts at a
compromise, the appellate court unquestionably did
not have any authority or basis to motu propio order
the dismissal of petitioner’s complaint (Moreno vs.
Kahn, G.R. No. 217744, July 30, 2018).
The following cannot be compromised:
1. Civil status of persons;
2. Validity of a marriage or legal separation;
3. Any ground for legal separation;
4. Future support;
5. Jurisdiction of courts; and
6. Future legitime (NCC, Art. 2035).
NOTE: A sister-in-law or a brother-in-law is not covered
by these two provisions. Being an exception to the
general rule, Art. 150 of the Family Code must be strictly
construed (Gayon v. Gayon, G.R. No. L-28394, November
26, 1970).
THE FAMILY HOME
 CIVIL LAW
It is the dwelling house where the husband and wife and
their family reside, and the land on which it is situated.
It is constituted jointly by the husband and the wife or
by an unmarried head of a family (FC, Art. 152).
Constitution of Family Home (FH)
The FH is deemed constituted on a house and lot from
the time it is occupied as a family residence, (FC Art.
153).
Guidelines in the constitution of the Family Home
1. FH is deemed constituted from the time of actual
occupation as a family residence;
2. Only 1 FH may be constituted;
3. Must be owned by the person constituting it;
4. Must be permanent;
5. Same rule applies to both valid and voidable
marriages and even to common law spouses; (FC,
Arts. 147 and 148)
6. It continues despite death of one, both spouses,
or an unmarried head of the family for 10 years
or as long as there is a minor beneficiary (FC, Art
159).
The heirs cannot partition the same unless the court
finds compelling reasons therefor. This rule shall apply
regardless of whoever owns the property or constituted
the FH (FC, Art 159).
The FH must be part of the properties of the absolute
community or the conjugal partnership or the exclusive
properties of either spouse, with the latter’s consent. It
may also be constituted by an unmarried head of a
family on his or her own property (FC, Art 156).
NOTE: Property that is subject of a conditional sale on
instalments where ownership is reserved by the vendor
to guarantee payment of the purchase price may be
constituted as a FH.
Beneficiaries of a Family Home (FC, Art. 154)
1. Husband and wife, or
2. Unmarried head of the family,
3. Parents (may include parents-in-law),
4. Ascendants,
5. Descendants
6. Brothers and sisters (legitimate or illegitimate)
living in the FH and dependent on the head of
the family for support.
Requisites to be considered as beneficiary (FC, Art
156)
1. They must be among the relationships enumerated
in Art. 154 of the Family Code;
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
2. They live in the FH; and
3. They are dependent for legal support upon the
head of the family.
Q: On March 30, 2000, Mariano died intestate and
was survived by his wife, Leonora and children,
Danilo and Carlito. One of the properties he left was
a piece of land in Alabang where he built his
residential house. After his burial, Leonora and
Mariano’s children extra-judicially settled his
estate. Thereafter, Leonora and Danilo advised
Carlito of their intention to partition the property.
Carlito opposed invoking Art. 159 of the Family
Code. Carlito alleged that since his minor child
Lucas still resides in the premises, the family home
continues until the minor beneficiary becomes of
age. Is the contention of Carlito tenable? (2014 Bar)
A: NO. To qualify as beneficiary of the FH the person
must be among those mentioned under Art. 154 of the
Family Code, he/she must be actually living in the FH
and must be dependent for legal support upon the head
of the family (Patricio v. Darion, G.R. No. 170829,
November 20, 2006). While Lucas satisfies the first and
second requisites, he cannot, however, directly claim
legal support from his grandmother, Leonora because
the person primarily obliged to give him support is his
father Carlito. Thus, the partition may be successfully
claimed by Leonora and Danilo. Occupancy of the FH
either by the owner thereof or by “any of its
beneficiaries” must be actual. That which is “actual” is
something real, or actually existing, as opposed to
something merely possible, or to something which is
presumptive and constructive. Actual occupancy,
however, need not be by the owner of the house. Rather,
the property may be occupied by the “beneficiaries”
enumerated by Art. 154 of the Family Code (Manacop v.
CA, G.R. No. 97898, August 11, 1997).
NOTE: This enumeration may include the in-laws where
the FH is constituted jointly by the husband and wife.
But the law definitely excludes maids and overseers.
Effect of death of one or both spouses or of the
unmarried head of the family upon the family home
The FH shall continue despite the death of one or both
spouses or of the unmarried head of the family for a
period of 10 years or for as long as there is a minor
beneficiary and the heirs cannot partition the same
unless the court finds compelling reasons therefor. This
rule shall apply regardless of whoever owns the
property or constituted the FH (FC, Art. 159). (2010
BAR)
Exemption of Family Home from execution, forced
sale or attachment
90
 PERSONS AND FAMILY RELATIONS
GR: FH is exempt from execution, forced sale or
attachment.
From the time of its constitution and so long as any of
its beneficiaries resides therein, the FH continues to be
such and is exempt from execution, forced sale or
attachment (FC, Art. 153).
However, the rule is not absolute. Art. 155 of the Family
Code provides the circumstances wherein the FH will
not be exempt from execution, forced sale of
attachment, to wit:
XPN: Under Art. 155 of the Family Code:
1. Debts due to laborers, mechanics, architects,
builders, material men and others who rendered
service or furnished materials for the
constitution of the building;
2. Non-payment of Taxes;
3. Debts incurred Prior to its constitution;
4. Debts secured by Mortgages on the premises
before or after such constitution.
NOTE: Exemption is limited to the value allowed in the
Family Code.
Rule for the family home to be exempted from
execution
1. If the FH was constructed before the effectivity
of the FC, then it must have been constituted
either judicially or extra-judicially as provided
under Arts. 225, 229-231 and 233 of the NCC.
Judicial constitution of the FH requires the filing of
a verified petition before the courts and the
registration of the court’s order with the Registry
of Deeds of the area where the property is located.
Meanwhile, extrajudicial constitution is governed
by Arts. 240 to 242 of the New Civil Code and
involves the execution of a public instrument
which must also be registered with the Registry of
Property.
2. For FH constructed after the effectivity of the
FC, there is no need to constitute extra- judicially
or judicially, and the exemption is effective from
the time it was constituted and lasts as long as any
of its beneficiaries actually resides therein.
Moreover, the FH should belong to the absolute
community or conjugal partnership, or if
exclusively by one spouse, its constitution must
have been with consent of the other, and its value
must not exceed certain amounts depending upon
the area where it is located. Further, the debts
incurred for which the exemption does not apply
as provided under Art. 155 for which the FH is
made answerable must have been incurred after
the effectivity of the Family Code.
91
3. And in both cases, whether under the Civil Code
or the Family Code, it is not sufficient that the
person claiming exemption merely alleges that
such property is a FH. This claim for exemption
must be set up and proved (Juanita Trinidad
Ramos, et al. v. Danilo Pangilinan et al. G.R. No.
185920, July 20, 2010).
Exemption of Family Home must first be set up and
proved
The FH’s exemption from execution must be set up and
proved to the Sheriff before the sale of the property at
public auction. It should be asserted that the property is
a FH and that it is exempted from execution at the time
it was levied or within a reasonable time thereafter. It is
not sufficient that the person claiming exemption
merely alleges that such property is a FH. Failure to do
so will estop one from later claiming the said exemption
(Spouses Araceli Oliva-De Mesa and Ernesto de Mesa v.
Spouses Claudio D. Acero Jr. and Ma.Rufina D. Acero,
Sheriff Felixberto L. Samonte and Registrar Alfredo
Santos, G.R. No. 185064, January 16, 2012).
Requisites for the creditor to avail of the right to
execute (FC, Art 160)
1. He must be a judgment creditor;
2. His claim must not be among those excepted
under Art. 155;
3. He has reasonable grounds to believe that the FH
is worth more than the maximum amount fixed in
Art. 157
Procedure in exercising the right to execute
1. Creditor must file a motion in the court
proceeding where he obtained a favorable
judgment for a writ of execution against the FH;
2. There will be a hearing on the motion where the
creditor must prove that the actual value of the
FH exceeds the maximum amount fixed by the
Family Code, either at the time of its constitution
or as a result of improvements introduced after
its constitution;
3. If the creditor proves that the actual value
exceeds the maximum amount, the court will
order its sale in execution;
4. If the FH is sold for more than the value allowed,
the proceeds shall be applied as follows:
a. The obligations enumerated in Art. 155 of
the Family Code must be paid
b. The judgment in favor of the creditor will
be paid, plus all the costs of execution
The excess, if any, shall be delivered to the judgment
debtor (FC, Art. 160).
 CIVIL LAW
NOTE: The actual value of the FH shall not exceed, at
the time of its constitution, the amount of P300,000 in
urban areas, and P200,000 in rural areas, or such
amounts as may hereafter be fixed by law (FC, Art. 157).
Q: A complaint for damages was filed against
Hinahon in 1986 when she incurred liabilities as
early as 1977, which action prospered in 1989. The
house and lot that she owned was levied upon and
sold at auction. She assails the levy and sale on the
ground that it was her family home and therefore
exempt from execution. Decide.
A: IT IS NOT EXEMPT. Under Art. 155 of the Family
Code, the FH shall be exempt from execution, forced
sale, or attachment except for, among other things,
debts incurred prior to the constitution of the FH. The
house and lot was not constituted as a FH, whether
judicially or extra-judicially, at the time that the debtor
incurred her debts. Under prevailing jurisprudence, it is
deemed constituted as such by operation of law only
upon the effectivity of the Family Code on August 3,
1988, thus, the debts were incurred before the
constitution of the FH (Gomez-Salcedo, et al. v. Sta. Ines,
et al., G.R. No. 132537, October 14, 2005).
Here, the complaint against Hinahon was instituted on
June 17, 1986, to seek redress for damages suffered by
them due to acts and omissions committed by her as
early as 1977. This means that Hinahon’s liability arose
long before the levied property was constituted as FH
by operation of law in August 1988. It is thus clear that
the liability incurred by Hinahon falls squarely under
one of the instances when a FH may be the subject of
execution, forced sale, or attachment to answer for
debts incurred prior to the constitution of the FH
(Gomez-Salcedo, et al. v. Sta. Ines, et al., G.R. No. 132537,
October 14, 2005).
Q : Has the residential house and lot of Cesario
Montana which he and his family built in 1960 but
which was not constituted as a family home,
whether judicially or extrajudicially, under the NCC
been constituted as a family home by operation of
law under Art. 153 of the FC, and therefore, exempt
from execution from a money judgement where the
debt or liability was incurred before the effectivity
of the FC?
A : NO. Under Art. 162 of the Family Code, it is provided
that “the provisions of this Chapter shall also govern
existing family residences insofar as said provisions are
applicable.” It does not mean that Arts. 152 and 153 of
the Family Code have a retroactive effect such that all
existing family residences are deemed to have been
constituted as a FH at the time of their occupation prior
to the effectivity of the FX and are exempt from
execution for the payment of obligations before the
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
effectivity of the Family Code. Art. 162 simply means
that all existing family residences at the time of the
effectivity of the Family Code are considered FH and are
prospectively entitled to the benefits accorded to a
family home under the Family Code (Manacop v. CA, 277
SCRA 64, August 11, 1997).
NOTE: The Family Code does not have a retroactive
effect. Thus, prior to August 5, 1988, the procedure
mandated by the Old Civil Code had to be followed for a
Family Home to be constituted as such. There being no
proof that the subject property was judicially or
extrajudicially constituted as a family home, it follows
that petitioner cannot avail of the law’s protective mantle.
(Modequillo v. Breva, G.R. No. 86355, May 31, 1990)
Requisites in the sale, alienation, donation, assignment
or encumbrance of the FH
The following must give their written consent:
1. The person who constituted the FH;
2. The spouse of the person who constituted the FH;
3. Majority of the beneficiaries of legal age.
NOTE: In case of conflict, the court shall decide.
Limitations on Family Home
1. Each family can have only one FH. After one FH
has been constituted, no other FH can be
established without first dissolving the existing
one.
2. FH can be constituted only on the dwelling place,
and therefore in the locality where the family has
its domicile.
3. The value of the FH must not exceed the limit
fixed by law (Tolentino, 2013).
PATERNITY AND FILIATION
Paternity is the civil status of a father with regard to the
child.
Filiation is the civil status of a child with regard to his
parents.
Filiation may be by nature or adoption, legitimate or
illegitimate.
NOTE: Paternity or filiation is established by clear and
convincing evidence (Constantino v. Mendez, G.R. No.
57227, May 14, 1992).
Classifications of filiation (2009 Bar)
I. Natural
a. Legitimate – conceived OR born within a valid
marriage
92
 PERSONS AND FAMILY RELATIONS
b. Illegitimate – conceived AND born outside
a valid marriage
II. Judicial Act
a. Legitimated – conceived and born outside of
wedlock of parents without impediment to
marry at the time of conception or were so
disqualified only because either or both of
them were below eighteen (18) years of age
(FC, Art. 177).
b. Adopted – a filiation created by law which
vests between two persons a relationship
similar to that which results from legitimate
paternity and filiation.
I. NATURAL
A. LEGITIMATE CHILDREN
Legitimate child
GR: One who is conceived OR born during the marriage
of the parents (FC, Art. 164).
XPN: Born outside of a valid marriage (void marriages)
but considered as legitimate child:
1. Children of marriages which are declared void
under Art. 36; and
2. Children of marriages which are declared void
under Art. 53 (Rabuya, 2009).
Requisites for a child conceived by artificial
insemination to be considered legitimate (FC, Art.
166 no. 3)
1. The artificial insemination is made on the wife,
not on another woman;
2. The artificial insemination on the wife is done
with the sperm of the husband or of a donor, or
both the husband and a donor;
3. The artificial insemination has been authorized
or ratified by the spouse on a written instrument
executed and signed by them before the birth of
the child; and
4. The written instrument is recorded in the civil
registry together with the birth certificate of the
child (FC, Art. 164).
Rights of legitimate children (FC, Art. 174)
1. To bear the surname of the father and the
mother;
2. To receive support from their parents, their
ascendants, and in proper cases, their brothers
and sisters;
3. To be entitled to the legitimate and other
successional rights granted to them by Art. 174 of
93
the Family Code.
Presumption of legitimacy (2006, 2008, 2010 Bar)
Article 164 of the Family Code provides that the
children conceived or born during the marriage of the
parents are legitimate.
The presumption of legitimacy of children does not only
flow out from a declaration contained in the statute but
is based on the broad principles of natural justice and
the supposed virtue of the mother. The presumption is
grounded in a policy to protect innocent offspring from
the odium of illegitimacy (Liyao, Jr. v. Tanhoti-Liyao, G.R.
138961, March 7, 2002).
The presumption of legitimacy under Article 164 of the
Family Code may be availed only upon convincing proof
of the factual basis therefor, i.e., that the child’s parents
were legally married and that his/her conception or
birth occurred during the subsistence of that marriage.
Else, the presumption of law that a child is legitimate
does not arise (Angeles v. Maglaya, G.R. No. 153798,
September 2, 2005).
NOTE: The child by himself cannot choose his own
filiation. Neither can he elect the paternity of the
husband of his mother when the presumption of his
legitimacy has been successfully overthrown.
Q: What is the effect of the declaration of a wife
against the legitimacy of the child where the child is
conclusive presumed to be the legitimate child of H
and W?
A: The child shall still be legitimate, although the
mother may have declared against his legitimacy. This
law likewise applies to such instances where the mother
may have been sentenced as an adulteress (FC, Art. 167).
NOTE: Art. 167 of the Family Code applies only to a
situation where the wife denies the paternity of the
husband. Art. 167 does not apply to a situation where a
child is alleged not to be the child of nature or biological
child of the couple (Rabuya, 2009).
Q: Roderick and Faye were high school sweethearts.
When Roderick was 18 and Faye, 16 years old, they
started living together as husband and wife without
the benefit of marriage. When Faye reached 18
years of age, her parents forcibly took her back and
arranged for her marriage to Brad. Although Faye
lived with Brad after the marriage, Roderick
continued to regularly visit Faye while Brad was
away at work. During their marriage, Faye gave
birth to a baby girl, Laica. When Faye was 25 years
old, Brad discovered her continued liaison with
Roderick and in one of their heated arguments, Faye
 CIVIL LAW
shot Brad to death. She lost no time in marrying her the death
true love Roderick, without a marriage license, of
claiming that they have been continuously husband.
cohabiting for more than 5 years. Prescripti 1 year – husband GR: During the
on resides in the lifetime of the
1. What is the filial status of Laica? same municipality child
2. Can Laica bring an action to impugn her own or city where
status on the ground that based on DNA birth took place XPN: Lifetime
results, Roderick is her biological father? of the putative
(2008 Bar) 2 years – husband father.
does NOT reside
A: in the same In cases where
a) Having been born during the marriage of Faye municipality or the action is
and Brad, she is presumed to be the legitimate city for the
child of Faye and Brad. This presumption had recognition of
become conclusive because the period of time to 3 years – husband illegitimate
impugn her filiation had already prescribed. is living abroad child by “open
b) NO, she cannot impugn her own filiation. The law and continuous
does not allow a child to impugn his or her own possession” of
filiation. In the problem, Laica’s legitimate the status.
filiation was accorded to her by operation of law
which may be impugned only by Brad, or his Person/s who may attack the legitimacy of the child
heirs in the cases provided by law within the
prescriptive period. GR: Only the husband can contest the legitimacy of the
child.
Action to impugn legitimacy v. Action to claim
legitimacy XPNs: Heirs of the husband may impugn the filiation of
the child within the period prescribed in Art. 170 of the
BASIS ACTION TO ACTION TO Family Code only in the following cases:
IMPUGN CLAIM
LEGITIMACY LEGITIMACY 1. If the husband should die before the expiration of
(FC, ART. 166) (FC, ART. 173) the period fixed for bringing his action;
Remedy Action to impugn Action to claim 2. If he should die after the filing of the complaint,
legitimacy or legitimacy without having desisted therefrom; or
illegitimacy (compulsory 3. If the child was born after the death of the husband
recognition) (FC, Art. 171). (2008 BAR)
Real party GR: Husband GR: Child
in interest Prescriptive period for filing action impugning the
XPNs: Heirs, in XPNs: Heirs of legitimacy of the child (2010 BAR)
cases where: the child, in
1. Husband cases where: GR: The prescriptive period for filing action impugning
died 1. Child the legitimacy of the child shall be counted from the
before the died in knowledge of birth or its recording in the civil registry.
expiratio state
n of the of XPN: If the birth was:
period for insanit
bringing y 1. Concealed from; or
the 2. Child 2. Was unknown to the husband or his heirs, the
action; died periods shall be counted from the discovery or
2. Husband during knowledge of the birth of the child or of the act of
died after minori registration of said birth, whichever is earlier (FC,
filing the ty Art. 170).
complaint
, without NOTE: Must be Grounds in impugning legitimacy of a child (FC, Art.
having filed within 5 166)
desisted; years.
3. Child was Legitimacy of the child may be impugned only on the
born after following grounds:

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 94
 PERSONS AND FAMILY RELATIONS
1. Physical impossibility for the husband to have
sexual intercourse with his wife within the first 120
days of the 300 days which immediately preceded
the birth of the child because of:
a. Physical incapacity of the husband to have
sexual intercourse with his wife,
b. The fact that the husband and wife were living
separately in such a way that sexual
intercourse was not possible, or
c. Serious illness of the husband which
absolutely prevented intercourse;
2. Proved that for biological or other scientific
reasons, the child could not have been that of the
husband, except in the case of children conceived
through artificial insemination;
3. In case of children conceived through artificial
insemination, the written authorization or
ratification of either parent was obtained through
mistake, fraud, violence, intimidation or undue
influence.
physical inability to copulate (Menciano v. San Jose, G.R.
No. L-1967, May 28, 1951).
Q: Will an infliction of the last stages of tuberculosis
be a ground for impugnation of the legitimacy of the
child?
A: Tuberculosis, even in its last stages, is not the kind of
serious illness of the husband that will establish
physical impossibility of access (Andal v. Macaraig, G.R.
No. L- 2474, May 30, 1951).
Rule on status of child where the mother contracted
another marriage within 300 days after termination
of the former (1999 Bar)
The child shall be considered as conceived during the:
1. Former marriage– if child is born:
Before 180 days after the solemnization of the
subsequent marriage, provided it is born within 300
days after termination of former marriage

Sterility and Impotency 2. Subsequent marriage –if a child is born:

Sterility is not synonymous with impotency. Sterility is 180 days after the celebration of the subsequent
the inability to procreate, while impotency is the marriage, even though it be born within 300 days after
the termination of the former marriage.

Illustrations:

1. 180th day takes place before 300th day

180th day from 300th day from

solemnization of termination of former
marriage
terminated solemnized

Born during this period: Born during this period:

Marriage Marriage

2. 180th day takes after 300th day

300th day from
termination of 180th day from
solemnization of
former marriage subsequent
terminated solemnized marriage

Born during this period:

Born during this period:
conceived during Marriage
Former Marriage

95
 CIVIL LAW
B. ILLEGITIMATE CHILDREN (2005, 2009,
2010 Bar)
1. Children conceived and born outside a valid
marriage:
2. Children born of couples who are not legally
married or of common law marriages;
3. Children born of incestuous marriage;
4. Children born of bigamous marriage;
5. Children born of adulterous relations between
parents;
6. Children born of marriages which are void for
reasons of public policy under Art. 38, Family Code;
7. Children born of couples below 18
8. Children born of void marriages under art. 35,
except where the marriage is void for lack of
authority on the part of the solemnizing officer, but
the parties or either of them believed in good faith
that the solemnizing officer had authority, in which
case the marriage will be considered valid and the
children will be considered legitimate.
Rights of an illegitimate child (1990, 2003, 2006,
2009, 2010 Bar)
1. They shall use the surname of the mother;
2. They shall be under the parental authority of the
mother;
3. They shall be entitled to support in conformity with
the FC, PROVIDED, only as to the separate property
of the parent
4. They shall be entitled to a legitime which shall
consist of ½ of the legitime of a legitimate child (FC,
Art. 176).
Effect of the recognition of an illegitimate child by
the
father
Such recognition would be a ground for ordering the
latter to give support to, but not the custody of the child.
The law explicitly confers to the mother sole parental
authority over an illegitimate child; it follows that only
if she defaults can the father assume custody and
authority over the minor (Briones v. Miguel, G.R. No.
156343, October 18, 2004).
Also, under the R.A. 9255, the illegitimate child has the
option to use the surname of the father.
Republic Act 9255
This act provides that illegitimate children may
optionally use the father’s surname provided that:
1. Filiation has been recognized by the father
through the record of birth appearing in the
civil register
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
2. Admission in public document OR private
handwritten instrument is made by the father
NOTE: Provided that the father has the right to institute
an action before the regular courts to prove non-
filiation during his lifetime.
ESTABLISHING ILLEGITIMATE FILIATION (1995,
1999, 2005, 2010 Bar)
Q: Julie had a relationship with a married man who
had legitimate children. A son was born out of the
illicit relationship in 1981. Although the putative
father did not recognize the child in his birth
certificate, he nevertheless provided the child with
all the support he needed and spent time regularly
with the child and his mother. When the man died in
2000, the child was already 18 years old so he filed a
petition to be recognized as an illegitimate child of
the putative father and sought to be given a share in
his putative father’s estate. The legitimate family
opposed, saying that under the FC his action cannot
prosper because he did not bring the action for
recognition during the lifetime of his putative
father.
1. If you were the judge, how would you rule?
2. Wishing to keep the peace, the child during the
pendency of the case decides to compromise
with his putative father’s family by abandoning
his petition in exchange for what he would have
received as inheritance if he were recognized as
an illegitimate child. As the judge, would you
approve such compromise? (2015 Bar)
A:
1. If I were the judge, I will not allow the action for
recognition filed after the death of the putative
father.
Filiation of illegitimate children, like legitimate
children is established by:
(1) Record of birth appearing in the civil register
or a final judgment;
(2) An admission of legitimate filiation in a public
document or in a private handwritten
instrument signed by the parent concerned;
AND IN THE ABSENCE THEREOF, Filiation
may be proved by:
(3) The open and continuous possession of the
status of a legitimate child;
An illegitimate child who has not been recognized by
options (1) or (2) of the abovementioned
enumeration MAY PROVE his filiation under number
(3) based on open and continuous possession of the
status of an illegitimate child but pursuant to Article
96
 PERSONS AND FAMILY RELATIONS
175 of the NCC, provided that he or she must file the
action for recognition during the lifetime of the
putative father. The provision of Article 285 of the
Civil Code allowing the child to file the action for
recognition even after the death of the father will not
apply because in the case presented, the child was no
longer a minor at the time of death of the putative
father.
2. NO, I will not approve the compromise agreement
because filiation is a matter to be decided by law. It
is not for the parties to stipulate whether a person
is a legitimate or illegitimate child of another (De
Jesus v. Estate of Dizon, G.R. No. 142877, October 2,
2001). In all cases of illegitimate children, their
filiation must be duly proved (NCC, Art. 887).
Public instrument subscribed and made under oath
by the putative father indicating the illegitimate
child as his is sufficient to establish illegitimate
filiation
Q: Why is an illegitimate child of a woman, who gets
married, allowed to bear the surname of her
subsequent spouse, while a legitimate child may
not?
A: To allow the child to adopt the surname of his
mother’s second husband, who is not his father could
result in confusion in his paternity. It could also create
the suspicion that the child, who was born during the
covertures of his mother with her first husband, was in
fact sired by the second husband, thus bringing his
legitimate status into discredit (Republic v. Vicencio, G.R.
No. 88202. December 14, 1998).
II. JUDICIAL
A. LEGITIMATE CHILDREN
Legitimated children are those who, because of the
subsequent marriage of their parents to each other, are
by legal fiction considered legitimate.
Legitimation (2004, 2010 BAR)
Legitimation is a remedy or process by means of which
those who in fact not born in wedlock and should
therefore be ordinarily illegitimate, are by fiction,
considered legitimate.
It takes place by a subsequent valid marriage between
parents. Furthermore, it shall retroact to the time of the
child’s birth (FC, Art 180).
NOTE: The annulment of a voidable marriage shall not
affect the legitimation (FC, Art. 178).
97
Children entitled to legitimation
Only children conceived and born outside of wedlock of
parents who, at the time of conception, were not
disqualified by any impediment to marry each other or
were so disqualified only because either or both of them
were below eighteen (18) years of age (Art. 177, FC as
amended by R.A. 9858). (1990, 2004, 2008, 2009 Bar)
Requisites of legitimation
1. Child must have been conceived and born outside
of wedlock;
2. Child’s parents, at the time of former’s
conception, were not disqualified by any
impediment to marry each other or were so
disqualified only because either or both of them
were below eighteen (18) years of age;
3. The subsequent valid marriage of the parents.
Q: Who may impugn the legitimation? (FC, Art. 182)
A: Legitimation may be impugned only by those who are
prejudiced in their rights, within 5 years from the time
their cause of action accrues, that is, from the death of
the putative parent.
NOTE: The right referred to are successional rights.
Hence, only those whose successional rights are directly
affected may impugn the legitimation that took place.
Q: Roderick and Faye were high school sweethearts.
When Roderick was 18 and Faye, 16 years old, they
started living together as husband and wife without
the benefit of marriage. When Faye reached 18
years of age, her parents forcibly took her back and
arranged for her marriage to Brad. Although Faye
lived with Brad after the marriage, Roderick
continued to regularly visit Faye while Brad was
away at work. During their marriage, Faye gave
birth to a baby girl, Laica. When Faye was 25 years
old, Brad discovered her continued liaison with
Roderick and in one of their heated arguments, Faye
shot Brad to death. She lost no time in marrying her
true love Roderick, without a marriage license,
claiming that they have been continuously
cohabiting for more than 5 years. Can Laica be
legitimated by the marriage of her biological
parents? (2008 Bar)
A: NO, she cannot be legitimated by the marriage of her
biological parents. In the first place she is not, under the
law, the child of Roderick. In the second place, her
biological parents could not have validly married each
other at the time she was conceived and born simply
because Faye was still married to Roderick Brad at that
time. Only children conceived or born outside of
wedlock of parents who, at the time of the conception of
 CIVIL LAW
the child were not disqualified by any impediment to marry each other, may be legitimated. (FC, Art. 177)

RIGHTS OF LEGITIMATE AND ILLEGITIMATE CHILDREN

NOTE: Legitimated children shall enjoy the same rights as legitimate children. (FC, Art. 179)

BASIS LEGITIMATECHILDREN ILLEGITIMATE CHILDREN

Bear the surname of either the mother or
the father under R.A. 9255

Surname Bear the surnames of both parents NOTE: Under the amendatory provisions of
(mother and father) RA 9255, the use of illegitimate father's
surname is
permissive and not obligatory (Rabuya,
2008).
Receive support from: Receive support according to provision of
1. Parents; Family Code
2. Ascendants; and
Support 3. In proper cases, brothers and sisters
under Art. 174 of the Family Code.
Full Legitimes and other successional Share is equivalent to ½ of the share of a
Legitime rights under the New Civil Code legitimate child

His/her whole lifetime regardless of type For primary proof:

of proof provided under Art. 172 of the his/her whole lifetime
Period for filing action for claim of Family Code
legitimacy or illegitimacy For secondary proof:
only during the lifetime of the alleged
parent
Transmissibility of right to file an Yes No
action to claim legitimacy
Yes No right to inherit ab intesto from
legitimate children and relatives of
Right to inherit ab intesto father and mother under Art. 992, New
Civil Code (Iron Curtain Rule).

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 98
 PERSONS AND FAMILY RELATIONS
ACTION TO CLAIM FILIATION
Paternity and filiation or the lack of the same is a
relationship that must be judicially established and it is
for the court to declare its existence or absence. It
cannot be left to the will or agreement of the parties (De
Asis v. CA, G.R. 127578, February 15, 1999).
The manner of claiming filiation is the same for both
legitimate and illegitimate children
Person/s who may file for claim legitimate filiation
(FC, Art. 173)
GR: The right of claiming legitimacy belongs to the child

The manner of claiming filiation is the same for both XPN: The right is transferred to his heirs when the child
legitimate and illegitimate children dies:
4. During minority or
Person/s who may file for claim legitimate filiation 5. In a state of insanity.
(FC, Art. 173) 6. After commencing the action for legitimacy

GR: The right of claiming legitimacy belongs to the child NOTE: Questioning legitimacy may not be collaterally
attacked. It can be impugned only in a direct action
XPN: The right is transferred to his heirs when the child
dies: Person/s who may file for claim illegitimate filiation
1. During minority or
2. In a state of insanity. GR: The right of claiming illegitimacy belongs to the
3. After commencing the action for legitimacy child
NOTE: Questioning legitimacy may not be collaterally
XPN: The right is transferred to his heirs when:
attacked. It can be impugned only in a direct action
1. During minority or
2. In a state of insanity.
Person/s who may file for claim illegitimate filiation
3. After commencing the action for illegitimate
filiation
GR: The right of claiming illegitimacy belongs to the
child
Prescription of action to claim legitimacy or
illegitimacy
XPN: The right is transferred to his heirs when:
1. During minority or
An action must be brought:
2. In a state of insanity.
3. By the child – during his lifetime
3. After commencing the action for illegitimate
4. By his heirs – within 5 years should the child dies
filiation
during minority, in a state of insanity or after
commencing the action for legitimacy
Prescription of action to claim legitimacy or
illegitimacy
NOTE: Provided that the action for illegitimacy is based
on admission of paternity or filiation in a birth
An action must be brought:
certificate or written instrument.
1. By the child – during his lifetime
However, if the action for illegitimacy is based on open
2. By his heirs – within 5 years should the child dies
and continuous possession of status of illegitimate
during minority, in a state of insanity or after
filiation or any other means allowed by the Rules of
commencing the action for legitimacy
Court and special laws, the action must be brought
during the lifetime of the alleged parent.
NOTE: Provided that the action for illegitimacy is based
on admission of paternity or filiation in a birth
Kinds of proof of filiation (1995, 1999, 2010 Bar)
certificate or written instrument.
Proof of filiation has two kinds (FC, Art 172, 1st par):
However, if the action for illegitimacy is based on open
1. Primary proof consists of the ff.:
and continuous possession of status of illegitimate
a. Record of birth appearing in civil registrar or
filiation or any other means allowed by the Rules of
final judgment;
Court and special laws, the action must be brought
b. Admission of legitimate filiation in public
during the lifetime of the alleged parent.
document or private handwritten
Paternity and filiation or the lack of the same is a
instrument signed by parent concerned.
relationship that must be judicially established and it is
2. Secondary consists of the ff. (FC, Art 172, 2nd
for the court to declare its existence or absence. It
par):
cannot be left to the will or agreement of the parties (De
a. Open and continuous possession of
Asis v. CA, G.R. 127578, February 15, 1999).

99
 CIVIL LAW
legitimacy;
b. Any means allowed by the Rules of Court
and special laws.
NOTE: To prove open and continuous possession of the
status of an illegitimate child, there must be evidence of
manifestation of the permanent intention of the
supposed father to consider the child as his, by
continuous and clear manifestations of parental
affection and care, which cannot be attributed to pure
charity.
Such acts must be of such a nature that they reveal not
only the conviction of paternity, but also the apparent
desire to have and treat the child as such in all relations
in society and in life, not accidentally, but continuously
(Jison v. CA, G.R. No. 124853, February 24, 1998).
Rules in proving filiation
GR: Primary proof shall be used to prove filiation.
XPN: In absence of primary proof, secondary proof may
be resorted to.
Pictures or certificate of baptism do not constitute
authentic documents to prove the legitimate
filiation of a child
Pictures or canonical baptismal certificate do not
constitute the authentic documents to prove the
legitimate filiation of a child. The baptismal certificate of
the child, standing alone, is not sufficient. It is not a
record of birth. Neither is it a public instrument nor a
private handwritten instrument (Abelle v. Santiago, G.R.
No. L- 16307, April 30, 1963).
Baptismal certificate does not prove filiation
Just like in a birth certificate, the lack of participation of
the supposed father in the preparation of a baptismal
certificate renders this document incompetent to prove
paternity. And “while a baptismal certificate may be
considered a public document, it can only serve as
evidence of the administration of the sacrament on the
date specified but not the veracity of the entries with
respect to the child’s paternity. Thus, baptismal
certificates are per se inadmissible in evidence as proof
of filiation and they cannot be admitted indirectly as
circumstantial evidence to prove the same” (Antonio
Perla v. Mirasol Baring and Randy B. Perla, G.R. No.
172471, November 12, 2012).
NOTE: A will which was not presented for probate
sufficiently establish filiation because it constitutes a
public document or private handwritten instrument
signed by the parent concerned.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Prima facie case of sexual relations with the
putative father
A prima facie case exists if a woman declares —
supported by corroborative proof — that she had sexual
relations with the putative father; at this point, the
burden of evidence shifts to the putative father. Further,
the two affirmative defenses available to the putative
father are:
1. Incapability of sexual relations with the mother
due to either physical absence or impotency; or
2. That the mother had sexual relations with other
men at the time of conception (charles gotardo v.
Divina buling, g.r. no. 165166, august 15, 2012).
Q: Rosanna, as surviving spouse, filed a claim for
death benefits with the SSS upon the death of her
husband, Pablo. She indicated in her claim that the
decedent is also survived by their minor child, Lyn,
who was born in 1991. The SSS granted her claim
but this was withdrawn after investigation, when a
sister of the decedent informed the system that
Pablo could not have sired a child during his
lifetime because he was infertile. However in Lyn’s
birth certificate, Pablo affixed his signature and he
did not impugn Lyn’s legitimacy during his lifetime.
Was the SSS correct in withdrawing the death
benefits?
A: NO. Children conceived or born during the marriage
of the parents are legitimate (FC, Art. 164). This
presumption becomes conclusive in the absence of
proof that there is physical impossibility of access under
Art. 166 of the Family Code. Upon the expiration of the
periods for impugning legitimacy under Art. 170, and in
the proper cases under Art. 171, of the Family Code, the
action to impugn would no longer be legally feasible and
the status conferred by the presumption becomes fixed
and unassailable. In this case, there is no showing that
Pablo, who has the right to impugn the legitimacy of
Lyn, challenged her status during his lifetime. There is
adequate evidence to show that the child was in fact his
child, and this is the birth certificate where he affixed
his signature (SSS v. Aguas, et al., G.R. No. 165546,
February 27, 2006).
Q: In an action for partition of estate, the trial court
dismissed it on the ground that the respondent, on
the basis of her birth certificate, was in fact the
illegitimate child of the deceased and therefore the
latter's sole heir, to the exclusion of petitioners.
However, trial court failed to see that in said birth
certificate, she was listed therein as “adopted.” Was
the trial court correct in dismissing the action for
partition?
100
 PERSONS AND FAMILY RELATIONS
A: NO. The trial court erred in relying upon the said birth
certificate in pronouncing the filiation of the
respondent. However, since she was listed therein as
“adopted”, she should therefore have presented
evidence of her adoption in view of the contents of her birth
certificate. In this case, there is no showing that she
undertook such. A record of birth is merely prima facie
evidence of the facts contained therein. It is not
conclusive evidence of the truthfulness of the
statements made there by the interested parties.
(Rivera v. Heirs of Romualdo Villanueva, G.R. No. 141501,
July 21, 2006)
Q: In a complaint for partition and accounting with
damages, Ma. Theresa alleged that she is the
illegitimate daughter of Vicente, and therefore
entitled to a share in the estate left behind by the latter.
As proof, she presented her birth certificate which
Vicente himself signed thereby acknowledging that
she is his daughter. Is the evidence presented by
Ma.Theresa sufficient to prove her claim that she is an
illegitimatechild of Vicente?
A: YES. Ma. Theresa was able to establish that Vicente was
in fact her father. 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,
andno further court action is required (De Jesus v. Estate of
Juan Dizon, G.R. No. 142877, October 2, 2001. Any
authentic writing is treated not just as a ground for
compulsory recognition; it is in itself a voluntary
recognition that does not require a separate action for
judicial approval (Eceta v. Eceta, G.R. No. 157037, May
20, 2004).
Q: Gerardo filed a complaint for bigamy against Ma.
Theresa, alleging that she had a previous subsisting
marriage when she married him. The trial court
nullified their marriage and declared that the son, who
was born during their marriage and was registered
as their son, as illegitimate. What is the status of the
child?
A: The first marriage being found to be valid and
subsisting, whereas that between Gerardo and Ma.
Theresa was void and non-existent; the child should be
regarded as a legitimate child out of the first marriage. This
is so because the child's best interests should be the
primordial consideration in this case.
Q: Gerardo and Ma. Theresa, however, admitted that
the child was their son. Will this affect the status of the
child?
A: NO. The admission of the parties that the child was their
son was in the nature of a compromise. The rule is that:
the status and filiation of a child cannot be
101
compromised. Art. 164 of the Family Code is clear that a
child who is conceived or born during the marriage of his
parents is legitimate (Concepcion v. CA, G.R. No.
123450, August 31, 2005).
Q: What is the effect of Ma. Theresa’s claim that the child is
her illegitimate child with her second husband, to
the status of the child?
A: NONE. This declaration – an avowal by the mother that
her child is illegitimate – is the very declaration that is
proscribed by Art. 167 of the Family Code. This
proscription is in consonance with, among others, the
intention of the law to lean towards the legitimacy of
children (Concepcion v. CA, G.R. No. 123450, August 31,
2005).
Q: In a petition for issuance of letters of
administration, Cheri Bolatis alleged that she is the sole
legitimate daughter of decedent, Ramon and Van
Bolatis. Phoebe, the decedent’s second wife, opposed
the petition and questioned the legitimate filiation of
Cheri to the decedent, asserting that Cheri’s birth
certificate was not signed by Ramon and that she had
not presented the marriage contract between her
alleged parents which would have supported her claim.
In said birth certificate, it was indicated that her birth
was recorded as the legitimate child of Ramon and Van
Bolatis, and contains as well the word “married” to
reflect the union between the two. However, it was not
signed by Ramon and Vanemon Bolatis. It was merely
signed by the attending physician, who certified to
having attended to the birth of a child. Does the
presumption of legitimacy apply toCherimon?
A: NO. Since the birth certificate was not signed by
Cher’s alleged parents but was merely signed by the
attending physician, such a certificate, although a public
record of a private document is, under Sec. 23, Rule 132 of the
Rules of Court, evidence only of the fact which gave rise to
its execution, which is, the fact of birth of a child. A birth
certificate, in order to be considered as validating proof
of paternity and as an instrument of recognition, must be
signed by the father and mother jointly, or by the
mother alone if the father refuses. There having been no
convincing proof of respondent’s supposed legitimate
relations with respect to the decedent, the presumption
of legitimacy under the law did not therefore arise in her
favour (Angeles v. Angeles- Maglaya, G.R. No. 153798,
September 2, 2005).
Q: On the basis of the physical presentation of the
plaintiff-minorbefore itandthe factthat thealleged father
had admitted having sexual intercourse with the child's
mother, the trial court, in an action to prove filiation
with support, held that the plaintiff- minor is the child
 CIVIL LAW
of the defendant with the plaintiff- minor's mother.
Wasthetrialcourtcorrect inholding such?
A: NO. The birth certificate that was presented by the
plaintiff-minor appears to have been prepared without
the knowledge or consent of the putative father. It is
therefore not a competent piece of evidence on
paternity. The local civil registrar in this case has no
authority to record the paternity of an illegitimate
child on the information of a third person. A
baptismal certificate, while considered a public
document, can only serve as evidence of the
administration of the sacrament on the date specified
therein but not the veracity of the entries with respect to
the child's paternity (Macadangdang v. CA,G.R. No. L-
49542, September 12, 1980). Thus, certificates issued
by the local civil registrar and baptismal certificates
are per se inadmissible in evidence as proof of filiation and
they cannot be admitted indirectly as circumstantial
evidence to prove the same (Jison v. CA, G.R. No.
124853, February 24, 1998; Cabatania v. CA, G.R. No.
124814, October 21, 2004).
NOTE: In this age of genetic profiling and DNA analysis,
the extremely subjective test of physical resemblance or
similarity of features will not suffice as evidence to
prove paternity and filiation before courts of law. This
only shows the very high standard of proof that a child
must present in order to establish filiation.
Q: Ann Lopez, represented by her mother Araceli Lopez,
filed a complaint for recognition and support of
filiation against Ben-Hur Nepomuceno. She assailed
that she is the illegitimate daughter of Nepomuceno
submitting as evidence the handwritten note
allegedly written and signed by Nepomuceno. She
also demanded for financial support along with filial
recognition. Nepomuceno denied the assertions
reasoning out that he was compelled to execute the
handwritten note due to the threats of the National
People’s Army. RTC ruled in favor of Ann. Is the trial
court correct?
A: Ann’s demand for support is dependent on the
determination of her filiation. However, she relies only on
the handwritten note executed by petitioner. The note does
not contain any statement whatsoever about her filiation to
petitioner. It is, therefore, not within the ambit of Article
172(2) vis-à-vis Art. 175 of the Family Code which admits as
competent evidence of illegitimate filiation an admission of
filiation in a private handwritten instrument signed by the
parent concerned.
The Court is mindful that the best interests of the child in
cases involving paternity and filiation should be advanced.
It is, however, just as mindful of the disturbance that
unfounded paternity suits cause to the privacy and peace
of the putative father’s legitimate family (Ben-Hur
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Nepomuceno v. Archbencel Ann Lopez, represented by
her mother Araceli Lopez G.R. No. 181258, March 18,
2010).
ADOPTION
Adoption is the process of making a child, whether
related or not to the adopter, possess in general, the
rights accorded to a legitimate child. It is a juridical act,
a proceeding in rem which creates between two
persons a relationship similar to that which results from
legitimate paternity and filiation. The modern trend is
to consider adoption not merely as an act to establish a
relationship of paternity and filiation, but also as an act
which endows the child with a legitimate status (In the
Matter of the Adoption of Stephanie Nathy Astorga
Garcia, G.R. No. 148311, March 31, 2005).
The relationship established by the adoption is limited
to the adopting parents and does not extend to their
other relatives, except as expressly provided by law.
Thus, the adopted child cannot be considered as a
relative of the ascendants and collaterals of the
adopting parents, nor of the legitimate children which
they may have after the adoption, except that the law
imposes certain impediments to marriage by reason of
adoption. Neither are the children of the adopted
considered descendants of the adopter.
Preference in adoption (AID)
1. Adoption by the extended family;
2. Domestic Adoption;
3. Inter-Country Adoption.
I. DOMESTIC ADOPTION ACT (R.A. 8552)
Applies to adoption of Filipino children, where the
entire adoption process beginning from the filing of the
petition up to the issuance of the adoption decree takes
place in the Philippines (Rabuya, 2009).
A. WHEN ALLOWED
Adoption need NOT be a last resort
B. WHO CAN ADOPT
1. Filipino citizens;
2. Aliens;
3. Guardians with respect to their ward.
NOTE: A guardian may only adopt his ward after
termination of guardianship and clearance of his
financial accountabilities.
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 PERSONS AND FAMILY RELATIONS
Qualifications of a Filipino who may adopt Filipino spouse.
(Section 7 (a) Article 3, RA 8552)
Rule on Joint Adoption of Spouses
1. Of legal age;
2. In possession of full civil capacity and legal GR:Husband and wife shall adopt jointly (Sec. 7, Article 3,
rights; RA 8552)
3. Possesses good moral character;
4. Has not been convicted of any crime involving XPNs:
moral turpitude; a. One spouse seeks to adopt the legitimate son or
5. Emotionally and psychologically capable of daughter of the other;
caring forchildren; b. One spouse seeks to adopt his own illegitimate son
6. Who is in a position to support and care for or daughter, provided, that the other signifies
his/her children in keeping with the means of the his consent
family; and
7. GR: at least sixteen (16) years older than the NOTE: In seeking to adopt his own illegitimate son or
adoptee. daughter, the law requires that the consent of the
spouse of the adopter must be given to such adoption.
XPN:
If on the other hand, the spouse would adopt the
a. Adopter is the biological parent of the illegitimate son or daughter of the other, joint
adoptee; or adoption is still mandatory
b. Adopter is the spouse of the adoptee's
parent. c. Spouses are legally separated.

NOTE: A reading of Arts. 27 and 28 of P.D. 603 clearly
shows that the temporary residence of the adopting
parents in a foreign country does not disqualify them
from adopting (Nieto v. Magat, G.R. No. L-62465, May 24,
1985).
Qualifications of an alien who may adopt
(Section 7 (b), Article 3, RA 8552)
1. Possesses same qualifications as those
enumerated for Filipino adopters;
2. His country has diplomatic relations with the
Philippines;
3. His government allows the adoptee to enter his
country as his adopted child;
4. He has been certified by his diplomatic or
consular office or any appropriate government
agency that he has the legal capacity to adopt in
their country;
GR: Has been living in the Philippines for at least 3
continuous years prior to the application for adoption
and maintains such residence until adoption decree has
been entered.
XPNs:
i. He is a former Filipino who seeks to adopt a
relative within the 4th civil degree of
consanguinity or affinity;
ii. He is married to a Filipino and seeks to adopt
jointly with his spouse a relative within the
4th degree of consanguinity or affinity;
iii. He is married to a Filipino and seeks to adopt
the legitimate or illegitimate child of his
Q: Spouses Esteban decided to raise their two
nieces, Faith and Hope, both minors as their own
children after their parents died in a vehicular
accident. Ten years after, Esteban died. Maria later on
married her boss Daniel, a British National who had been
living in the Philippines for 2 years. With the permission
of Daniel, Maria filed a petition for the adoption of Faith
and Hope. She did not include Daniel as her co-
petitioner because for Maria, it was her former
husband Esteban who has raised the kids. If you are the
judge, how will youresolve the petition? (2014 BAR)
A: I will dismiss the petition. The husband and wife must
jointly adopt and there are only three recognized
exceptions to the joint adoption: 1) one spouse seeks to
adopt the legitimate child of the other; 2) if one spouse
seeks to adopt his or her own illegitimate child; 3) if the
spouses are legally separated. The case of Maria and
Daniel does not fall under any of the exceptions,
accordingly the petition by the wife alone should be
dismissed.
Q: Spouses Primo and Monina Lim, childless, were
entrusted with the custody of two minor children, the
parents of whom were unknown. Eager to have children
of their own, the spouses made it appear that they were
the children’s parents by naming them Michelle P.
Lim and Michael Jude Lim. Subsequently, Monina
married Angel Olario after Primo’s death. She decided to
adopt the children by availing the amnesty given under
R.A. 8552 to those individuals who simulated the birth of
a child. She filed separate petitions for the adoption of
Michelle, then 25 years old and Michael, 18. Both
Michelle and Michael gave consent to the adoption. The

103
 CIVIL LAW
trial court dismissed the petition and ruled that Monina
should have filed the petition jointly with her new
husband. Monina, in a Motion for Reconsideration
argues that mere consent of her husband would
suffice and that joint adoption is not needed, for the
adoptees are already emancipated. Is the trial court
correct in dismissing the petitions for adoption?
A: YES. Section 7, Art. 3 of R.A. 8552 reads: Sec. 7 –
Husband and wife shall jointly adopt x x x.
The use of the word “shall” in the above-quoted
provision means that joint adoption by the husband and the
wife is mandatory. This is in consonance with the concept
of joint parental authority over the child which is the ideal
situation. As the child to be adopted is elevated to the
level of a legitimate child, it is but natural to require the
spouses to adopt jointly. The rule also ensures harmony
between the spouses.
The law is clear. There is no room for ambiguity.
Monina, having remarried at the time the petitions for
adoption were filed, must jointly adopt. Since the
petitions for adoption were filed only by Monina
herself, without joining her husband, Olario, the trial court
was correct in denying the petitions for adoption on this
ground (In Re: Petition for Adoption of Michelle P. Lim,
In Re: Petition for Adoption of Michael Jude P. Lim,
Monina P. Lim, G.R. Nos. 168992-93, May 21, 2009).
Joint adoption when the adoptees are already
emancipated
Even if emancipation terminates parental authority, the
adoptee is still considered a legitimate child of the
adopter with all the rights of a legitimate child such as:
(1) To bear the surname of the father and the mother;
(2) To receive support from their parents; and (3) to
be entitled to the legitime and other successional
rights. Conversely, the adoptive parents shall, with
respect to the adopted child, enjoy all the benefits
to which biological parents are entitled such as
support and successional rights.
C. ADOPTEE
1. Any person BELOW eighteen (18) years of age who
has been administratively or judicially declared
available for adoption;
2. The legitimate son/daughter of one spouse by the
other spouse;
3. An illegitimate son/daughter by a qualified adopter
to improve his/her status to that of legitimacy;
4. A person of legal age if, prior to the adoption, said
person has been consistently considered and
treated
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
by the adopter(s) as his/her own child since
minority;
5. A child whose adoption has been previously
rescinded; or
6. A child whose biological or adoptive parent(s) has
died: Provided, that no proceedings shall be
initiated within six (6) months from the time of
death of said parent(s) (Sec. 8, Art. 3, RA 8552).
Child
A child is any person below 18 years old (Sec. 3, Art. 1, RA
8552)
Child legally free for adoption
A child voluntarily or involuntarily committed to the
DSWD as dependent, abandoned or neglected pursuant
to the provisions of the Child and Youth Welfare Code
maybe subject of Inter-Country Adoption; provided that
in case of a child shall be made not earlier that six (6)
months from the date the Deed of Voluntary
Commitment was executed by the child’s biological
parent/s. A legally-free child is freed of his biological
parents, guardians, or adopters in case of rescission.
NOTE: The prohibition against physical transfer shall
not apply to adoption by a relative or children with
special medical conditions (Rabuya, 2018).
Necessity of written consent for adoption under
domestic adoption
The written consent of the following is necessary for
adoption:
a. Biological parent(s) of the child, if known, or the
legal guardian, or the proper government
instrumentality which has legal custody of the
child;
b. Adoptee, if ten (10) years of age or over;
c. Illegitimate sons/daughters, ten (10) years of
age or over, of the adopter if living with said
adopter and the latter's spouse, if any;
d. Legitimate and adopted sons/daughters, ten
(10) years of age or over, of the adopter(s) and
adoptee, if any;
e. Spouse, if any, of the person adopting or to be
adopted (Sec. 9, Art. 3, RA 8552).
Q: Bernadette filed a petition for adoption of the three
minor children of her late brother, Ian. She alleged that
when her brother died, the children were left to thecareof
their paternal grandmother, becausetheir biological
mother Amelia went to Italy to work and has allegedly
abandoned her children. This grandmother died
however, and so she filed the petition for adoption.
The minors gave their written consent to the adoption
104
 PERSONS AND FAMILY RELATIONS
and so did all of her own grown-up children. The trial
court granted the decree of adoption even though the
written consent of the biological mother of the children
was not adduced by Bernadette. Was the trial court correct
in granting the decree ofadoption?
A: NO. The rule is adoption statutes must be liberally
construed in order to give spirit to their humane and
salutary purpose which is to uplift the lives of
unfortunate, needy or orphaned children. However, the
discretion to approve adoption proceedings on the part of the
courts should not to be anchored solely on those
principles, but with due regard likewise to the natural
rights of the parents over the child. The written consent of
the biological parents is indispensable for the
validity of the decree of adoption. Indeed, the natural
right of a parent to his child requires that his consent must be
obtained before his parental rights and duties may be
terminated and vested in the adoptive parents. In this
case, petitioner failed to submit the written consent of
Amelia Ramos to the adoption. This is so under Sec. 9 (b) of
R.A. 8552, otherwise known as the Domestic Adoption Act of
1998. Bernadette failed in this respect, thus
necessitating the dismissal of her petition for adoption
(Landingin v. Republic, G.R. No. 164948, June 27, 2006).
Effects of Domestic Adoption
GR: Severance of all legal ties between the biological parents
and the adoptee and the same shall then be vested on the
adopters (Sec. 16, Art. 5, RA 8552).
XPN: In cases where the biological parent is the spouse
of the adopter;
1. Deemed a legitimate child of the adopter
(Sec. 17, Article 5, RA 8552);
2. Acquires reciprocal rights and obligations arising
fromparent-child relationship;
3. Right to use surname of adopter (NCC, Art. 365);
4. In legal and intestate succession, the adopters
and the adoptee shall have reciprocal rights of
succession without distinction from
legitimate filiation. However, if the adoptee
and his/her biological parents had left a will, the
law on testamentary succession shall govern (Sec.
18, Art. 5, RA 8552).
Who may file the action for rescission of domestic
adoption
The adoptee has the sole right to severe the legal ties
created by adoption and the one who will file the action for
rescission. However, if the adoptee is still a minor or above
18 years of age but incapacitated, the Department of
Social and Welfare Development as the adoptee’s guardian
or counsel may assist the adoptee for rescinding the
decree of adoption.
105
The adopter cannot seek the rescission of the adoption but
he may disinherit the adoptee.
Grounds upon which an adoptee may seek judicial
rescissionof the adoption (S-A-R-A)
When the adopter has committed the following:
1. Sexual assault or violence committed against the
adoptee;
2. Attempt on the life of the adoptee;
3. Repeated physical and verbal maltreatment by the
adopter despite having undergone counseling;
4. Abandonment and failure to comply with
parental obligations;
Grounds by which an adopter may disinherit adoptee
a. Groundless accusation against the testator of a crime
punishable by 6 years or more imprisonment;
b. Found guilty of attempt against the life of the
testator, his/her spouse, descendant or
ascendant;
c. Causes the testator to make changes or changes
a testator’s will through violence, intimidation,
fraud orundue influence;
d. Maltreatment of the testator by word or deed;
e. Conviction of a crime which carries a penalty of civil
interdiction;
f. Adultery or concubinage with the testator’s wife;
g. Refusal without justifiable cause to support the
parent or ascendant;
h. Leads adishonorable ordisgraceful life.
Effects of rescission of the adoption under the
Domestic Adoption Act of 1998 (R.A. 8552)
1. If adoptee is still a minor or is incapacitated –
Restoration of:
a. Parental authority of the
adoptee’s biological parents, if known; or
b. Custody of the DSWD;
2. Reciprocal rights and obligations of the adopters
and adoptee to each other shall be extinguished;
3. Court shall order the civil registrar to cancel the
amended certificate of birth of the adoptee and restore
his/heroriginal birth certificate;
4. Succession rights shall revert to its status prior to
adoption, but only as of the date of judgment of
judicial rescission;
5. Vested rights acquired prior to judicial rescission
shallberespected.(Sec. 20, Art. 6, RA 8552)
Q: Despite several relationships with different
women, Andrew remained unmarried. His first
relationship with Brenda produced a daughter, Amy,
now 30 years old. His second, with Carla, produced
 CIVIL LAW
two sons: Jon and Ryan. His third, with Donna, bore him
two daughters: Vina and Wilma. His fourth, while
Elena, bore him no children although Elena has a
daughter Jane, from a previous relationship. His last,
with Fe, produced no biological children but they
informally adopted without court proceedings, Sandy,
now 13 years old, whom they consider as their own.
Sandy was orphaned as a baby and was entrusted to
them by the midwife who attended to Sandy’s birth. All
the children, including Amy, now live with Andrew in
his house.
a. Is there any legal obstacle to the legal adoptionof
Amy by Andrew?
b. To the legal adoption of Sandy by Andrew
and Elena?
c. In his old age, can Andrew be legally entitled to
claim support from Amy, Jon, Ryan, d. Vina,
Wilma and Sandy assuming that all of them
have the means to support him?
d. Can Amy, Jon, Ryan, Vina, Wilma and Sandy
legally claim support from each other?
e. Can Jon and Jane legally marry? (2008 Bar)
A:
a. NO, there is no legal obstacle to the legal adoption of
Amy by Andrew. While a person of age may not be
adopted, Amy falls within two exceptions: (1) she is
an illegitimate child and she is being adopted by her
illegitimate father to improve her status; and (2)
even on the assumption that she is not an
illegitimate child of Andrew, she may still be
adopted, although of legal age, because she has been
consistently considered and treated by the adopter
as his own child since minority. In fact, she has been
living with him until now.
b. YES. There is a legal obstacle to the adoption of Sandy by
Andrew and Elena. Andrew and Elena cannot adopt
jointly because they are not married.
c. YES. Andrew can claim support from all of them, except
from Sandy, who is not his legitimate, illegitimate or
adopted child.
d. YES. Amy, Jon, Ryan, Vina and Wilma can ask support
from each other because they are half- blood brothers
and sisters, and Vina and Wilma are full-blood sisters
(Art. 195 [5], FC), but not Sandy who is not related to
any of them.
e. YES. Jon and Jane can legally marry because they are not
related to each other. Jane is not a daughter of
Andrew.
II. INTER-COUNTRY ADOPTION ACT OF
1995 (R.A. 8043)
Inter-Country Adoption
It is a socio-legal process of adopting a Filipino child by a
foreigner or a Filipino citizen permanently residing
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
abroad where the petition is filed, the supervised
trial custody is undertaken, and the decree of adoption
is issued outside the Philippines (Sec. 3(a), RA 8043).
A. WHEN ALLOWED
Adoption ONLY AS A LAST RESORT: No child shall be
matched to a foreign adoptive family unless it is
satisfactorily shown that the child cannot be adopted locally
(Sec. 11, Article 3, RA 8043)
B. WHO MAY ADOPT
a. Any alien;
b. Filipino citizen, both permanently residing
abroad.
Qualifications needed for a Filipino or alien to
adopt (Sec. 9, Article 3, RA 8043)
At least 27years old and16yearsolderthan the
child to beadopted atthetimeof the application
unless:
1. Adopter is the parent by natureofthe child;
2. Adopter is the spouse of the parent by
nature of the child to be adopted
c. If married, his spouse must jointly file for
adoption;
d. Has the capacity to act or assume all rights and
responsibilities of parental authority;
e. Not been convicted of a crime involving moral
turpitude;
f. Eligible to adopt under his national law;
g. In a position to provide for proper care and
support and give necessary moral values;
h. Agrees to uphold the basic rights of the child
mandated by the UN convention of rights of Child and the
Philippine Laws;
i. Comes from a country with which the Philippines
has diplomatic relations and adoption is allowed under
his national law;
j. Possesses all the qualifications and none of the
disqualifications under the law or other applicable
Philippinelaws.
Necessity of written consent for adoption in inter-
country adoption
The written consent of the following is necessary for
adoption:
1. Written consent to the adoption in the form of a
sworn statement by the biological and/or
adopted children of the applicants who are ten
(10) years of age or over, to be attached to the
application filed with the Family Court or Inter-
106
 PERSONS AND FAMILY RELATIONS
Country Adoption Board (Sec. 28, Art. 8, Amended
Implementing Rules and Regulations of RA 8043);
and
2. If a satisfactory pre-adoptive relationship is
formed between the applicant and the child, the
written consent to the adoption executed by the
DSWD is required. (Sec. 50, Art. Art. 8, Amended
Implementing Rules and Regulations of RA 8043)
Q: Sometime in 1990, Sarah, born a Filipino but by
then a naturalized American citizen, and her
American husband Sonny Cruz, filed a petition in the
Regional Trial Court of Makati, for the adoption of the
minor child of her sister, a Filipina, can the petition be
granted? (2000 Bar)
A: IT DEPENDS. If Sonny and Sarah have been residing in the
Philippines for at least three (3) years prior to the
effectivity of R.A. 8552, the petition may be granted.
Otherwise, the petition cannot be granted because the
American husband is not qualified to adopt.
While the petition for adoption was filed in 1990, it was
considered refiled upon the effectivity of R.A. 8552. This
is the law applicable, the petition being still pending
with the lower court. Under the Act, Sarah and Sonny
must adopt jointly because they do not fall in any of the
exceptions where one of them may adopt alone. When
husband and wife must adopt jointly, the Supreme
Court has held in a line of cases that both of them must
be qualified to adopt. While Sarah, an alien, is qualified
to adopt, for being a former Filipino citizen who seeks to
adopt a relative within the 4th degree of consanguinity
or affinity, Sonny, an alien, is not qualified to adopt
because he is neither a former Filipino citizen nor
married to a Filipino. One of them not being qualified to
adopt, their petition has to be denied. However, if they
have been residents of the Philippines 3 years prior to
the effectivity of the Act and continues to reside here
until the decree of adoption is entered, they are
qualified to adopt the nephew of Sarah under Sec. 7(b)
thereof, and the petition may be granted.
C. ADOPTEE
Only a legally free child may be adopted provided the
following are submitted:
a. Child study;
b. Birth certificate/ foundling certificate;
c. Deed of VoluntaryCommitment/Decree of
Abandonment/Death Certificate ofparents;
d. Medical evaluation or history;
e. Psychological evaluation; and
f. Recent photo.
Child
A child is any person below 15 years old (Sec. 3, RA
8043).
107
NOTE: No child shall be matched to a foreign adoptive
family unless it is satisfactorily shown that the child
cannot be adopted in the Philippines.
GR: There shall be no physical transfer of a voluntarily
committed child earlier than 6 months from the date of
execution of Deed of Voluntary Commitment.
XPN:
a. Adoption by relative;
b. Child with special medical condition.
INTER-COUNTRY ADOPTION BOARD
Function of Inter-Country Adoption Board
The Inter-Country Adoption Board (ICAB) acts as the
central authority in matters relating to inter-country
adoption. The Board shall ensure that all the
possibilities for adoption of the child under the Family
Code have been exhausted and that the inter-country
adoption is in the best interest of the child
Trial custody
It is the pre-adoptive relationship which ranges six (6)
months from the time of the placement. It starts from the
actual transfer of the child to the applicant who, as actual
custodian, shall exercise substitute parental authority
over the person of the child.
Results of Trial Custody
1. If unsatisfactory – the relationship shall be
suspended by the board and the foreign
adoption agency shall arrange for the child’s
voluntary care.
2. If satisfactory – the Board shall submit the
written consent of the adoption to the foreign
adoption agency within 30 days after the
request of the latter’s request.
NOTE:The child shall be repatriated as a last
resort if found by the ICAB to be in his/her
interests.

Distinction Between Domestic Adoption Act and Inter-country Adoption Act
DOMESTIC ADOPTION ACT (R.A. 8552)
Governing body
When may adoption be resorted to
Who may adopt
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
CIVIL LAW
DSWD
Adoption need not be the last resort
1. Any FILIPINO CITIZEN 1. FILIPINO CITIZEN permanently
(regardless of where residing)
b. Of legal age;
c. At least sixteen (16) years older
than the adoptee, (may
bewaived when the adopter is
the biological parent of the
adoptee, or is the spouse of the
adoptee’s parent;
d. In possession of full civil
capacity and legal rights;
e. Of good moral character, has
not been convicted of any crime
involving moral turpitude,
emotionally and
psychologically capable of
caring for children; and
f. Who is in a position to support
and care for his/her children in
keeping with the means of the
family.
2. Any ALIEN possessing the same
qualifications as above stated for
Filipino nationals, Provided;
a. That he/she has been living in
the Philippine for at least three
(3) continuous years prior to
the filing of the application for
adoption and maintains such
residence until the adoption
decree is entered;
b. That his/her country has
diplomatic relations with the
Republic of the Philippines;
c. He/she 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;
d. That his/her government
allows the adoptee to enter
his/her country as his/her
adopted son/daughter; and
108
INTER-COUNTRY ADOPTION ACT (R.A.
8043)
Inter-country Adoption Board (ICAB)
Adoption only as last resort: No child
shall be matched to a foreign adoptive
family unless it is satisfactorily shown
that the child cannot be adopted locally
(Sec. 11).
residing abroad may file an
application for inter-country
adoption of a Filipino child if
he/she:
a. Is at least twenty-seven
(27) years of age;
b. At least sixteen (16) years older
than the child to be adopted, at
the time of application unless
the adopter is the parent by
nature of the child to be adopted
or the spouse of such parent;
c. Has the capacity to act and
assume all rights and
responsibilities of parental
authority under his national
laws, and has undergone the
appropriate counseling from an
accredited counselor in his/her
country;
d. Has not been convicted of a
crime involving moral turpitude;
e. Is in a position to provide the
proper care and support to give
the necessary moral values and
example to all his children
including the child to be
adopted;
f. If married, his/her spouse must
jointly file for the adoption;
g. Is eligible to adopt under his/her
national law;
h. Agrees to uphold the basic rights
of the child as embodied under
Philippine laws, the U.N.
Convention on the Rights of the
Child and to abide by the rules
and regulations issued to
implement the
provisions of this Act;
i. Comes from a country with
whom the Philippines
has diplomatic relations and
whose government maintains a
similarly Authorized and
 PERSONS AND FAMILY RELATIONS
e. The requirements on residency accredited agency and that
and certification to adopt in adoption is allowed under
his/her country may be his/her national laws; and
WAIVED for the following: j. Possesses all the qualifications
i. A former Filipino and none of the
citizen who seeks disqualifications provided
to adopt a relative herein and in other applicable
within the fourth Philippine laws.
(4th) degree of
consanguinity or 2. ALIEN with above qualifications
affinity; or

One who seeks to

ii.
adopt the
legitimate
son/daughter of
his/her Filipino
spouse; or
iii. One who is married
to a Filipino citizen
and seeks to adopt
jointly with his/her
spouse a relative
within the fourth
(4th) degree of
consanguinity or
affinity of the
Filipino spouse.
3. The GUARDIAN with respect to the
ward after the termination of the
guardianship and clearance of his/her
financial

Who may be adopted
a. Any person below eighteen a. Filipino children [Sec. 3(a)];
(18) years of age who has b. Below 15 years of age
been administratively or [Sec. 3(b)]; and
judicially declared c. Who are legally free,
available for adoption; meaning children who have
b. The legitimate been voluntarily
son/daughter of one spouse or involuntarily committed
by the other spouse; to the DSWD [Sec. 3(f) and
c. An illegitimate Sec. 8)].
son/daughter by a qualified
adopter to improve his/her NOTE: IRR of 2004 adds that: Any
status to that of legitimacy; child who has been voluntarily or
d. A person of legal age if, involuntarily committed to the
prior to the adoption, said Department as dependent,
person abandoned or neglected pursuant
has been consistently to the provisions of the Child and
considered and treated by Youth Welfare Code may be the
the adopter(s) as his/her subject of Inter-Country Adoption
own child since minority; xxx (Sec. 26).
e. A child whose adoption
has been previously
rescinded; or
f. A child whose biological or
adoptive parent(s) has died:
Provided, That

109
 CIVIL LAW
no proceedings shall be
initiated within six (6)
months from the time of
death of said parent(s)(Sec.
8).
Venue Petition for adoption shall be filed with Either with the Philippine RTC
Family Court of the province or city having jurisdiction over the child, or
where the prospective adoptive parents with the Inter-country Board
reside (Rule on Adoption, Sec. 6) through an intermediate agency, in
the country of the adoptive parents
(Sec. 10).

IRR of 2004 provides that:

Application shall be filed with the
Board or the Central Authority or the
Foreign Adoption Agency in the
country where the applicant resides.
In case of foreign nationals who file
petition for adoption under RA 8552
or Domestic Adoption Law, the Court
after finding petition to be sufficient
in form and substance and proper
case for inter-country adoption shall
immediately transmit the petition to
the board for appropriate
action (Sec. 30).
Trial Custody Takes place in the Philippines Where adoptive parents reside
Rescission Only upon petition of adoptee, never by No provision limiting act of rescission
adopters (Sec.19). only to adoptee. In IRR, the procedure
is provided for when adoption
process is terminated:
SECTION 47. DISRUPTION AND
TERMINATION OF PLACEMENT. - In
the event of serious damage in the
relationship between the child and
the applicant/s where the continued
placement of the child is not
inhis/her best interests, the Central
Authority and/or the
FAA shall take the necessary
measures to protect the child, in
particular, to cause the child to be
withdrawn from the applicant/s and
to arrange for his/her temporary
care. The Central Authority and/or
FAA shall exhaust all means to
remove the cause of the
unsatisfactory relationship which
impedes or prevents the creation of a
mutually satisfactory adoptive
relationship. A complete report
should be immediately forwarded to
the Board with actions taken as well
as recommendations and appropriate
plans. Based on the report, the Board
may terminate the pre-adoptive
relationship.
SEC. 48. NEW PLACEMENT FOR
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES 110
PERSONS AND FAMILY RELATIONS
CHILD. In the event of termination of
the pre-adoptive relationship, the
Board shall identify from the Roster
of Approved Applicants a suitable
family with whom to place the child.
The Central Authority and/or the
FAA may also propose a replacement
family whose application shall be
filed for the approval of the Board.
No adoption shall take place until
after the Board has approved the
application of such replacement
family.

111
 CIVIL LAW
NOTE: If the community property or the
SUPPORT conjugal partnership is insufficient to cover
them, the spouses shall be solidarily liable for
the unpaid balance with their separate
It comprises everything indispensable for sustenance, properties.
dwelling, clothing, medical attendance and
transportation, in keeping with the financial capacity of 2. Separate property of person- For the support of the
the family, including the education of the person following:
entitled to be supported until he completes his
education or training for some profession, trade or a. Illegitimate children;
vocation, even beyond the age of majority (FC, Art. 194). b. Legitimate ascendants;
(2010 Bar) c. Descendants, whether legitimate
or illegitimate;
Characteristics of support (PRIMPEN) d. Brothers and sisters, whether legitimately
or illegitimately related (Rabuya, 2009).
1. Personal;
2. Reciprocal on the part of those who are by law PERSONS OBLIGED TO GIVE SUPPORT
bound to support each other;
3. Intransmissible; Persons obliged to support each other (2008 Bar)
4. Mandatory;
5. Provisional character of support judgment; 1. Spouses;
6. Exempt from attachment or execution; and
7. Not subject to waiver or compensation NOTE: The spouse must be the legitimate spouse in
order to be entitled to support
COMPOSITION OF SUPPORT
2. Legitimate ascendants & descendants;
Support comprises everything indispensable for: 3. Parents and their legitimate children, and the
a. Sustenance; legitimate and illegitimate children of the latter;
b. Dwelling; 4. Parents and their illegitimate children, and the
c. Clothing; 5. legitimate and illegitimate children of the latter;
d. Medical attendance; 6. Legitimate brothers and sisters whether full or
e. Education – includes schooling or training for half- blood (FC, Art. 195).
some profession, trade or vocation, even beyond
the age of majority; NOTE: Brothers and sisters not legitimately related
f. Transportation – includes expenses going to and likewise bound to support each other. However, when
from school, or to from place of work. the need for support of the brother or sister, being of
age, is due to a cause imputable to the claimant’s fault
Kinds of support or negligence, in this case, the illegitimate brother or
sister has no right to be supported (FC, Art. 196;
1. Legal – required or given by law; Rabuya, 2009).
2. Judicial– required by court; May be:
a. Pendente lite Q: Rule when:
b. In a final judgment a. Two or more persons are obliged to give
3. Conventional – by agreement support;
b. Two or more recipients at the same time claim
Rules on support of illegitimate children of either support from the same persons who does not
spouse have sufficient means to satisfy all claims

1. It depends upon the property regime of the A:

spouses. a. The payment of the same shall be divided
between them in proportion to the resources of
ACP or CP- For the support of the following: each. However, in case of urgent need and by
special circumstances, the judge may order only
a. spouses; one of them to furnish support provisionally,
b. common children of the spouses; and without prejudice to his right to claim
c. legitimate children of either spouse reimbursement from the other obligors of their
corresponding shares (FC, Art. 200).
b. The order established under Art. 199 of the

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 112
 PERSONS AND FAMILY RELATIONS
Family Code shall be followed, unless the
concurrent obliges should be the spouse and a
child, in which case, the child shall be preferred
(FC, Art. 200).
Sources of Support
Q: Belen, in behalf of her minor children, instituted a
petition for declaration of legitimacy and support
against Federico, their alleged father, and Francisco,
father of Federico. It appears that the marriage of the two
was annulled due to the minority of Federico. May
Francisco be ordered to give support?

SOURCES OF SUPPORT A: YES. There appears to be no dispute that the children are
DURING PENDING AFTER indeed the daughters of Federico by Belen. Under Art. 199 of
MARRIAGE LITIGATION LITIGATION the Family Code, “Whenever two or more persons are
Spouses obliged to give support, the liability shall devolve upon
From the ACP GR: No the following persons in the following order herein
community obligation to provided:
property GR: From the support
community 1. The spouse;
property assets XPN: If there is 2. The descendants in the nearest degree;
Legal 3. The ascendants in the nearest degree: and
XPN: If Art. Separation. In 4. The brothers and sisters.
203 applies, which case, the
that if the court may The obligation to give support rests principally on those
claimant require the more closely related to the recipient. However, the more
spouse is the guilty spouse remote relatives may be held to shoulder the
guilty spouse, to give responsibility should the claimant prove that those who
he/she is not support. are called upon to provide support do not have the means to
entitled to do so. Here, since it has been shown that the girls' father,
support. Federico, had no means to support them, then Francisco,
as the girls’ grandfather, should then extend the support
CPG needed by them.
NOTE: The second option in Art. 204 of the Family Code, that
Support is of taking in the family dwelling the recipient, is
considered an unavailing in this case since the filing of the case has
advance of evidently made the relations among the parties bitter and
such spouses’ unpleasant (Mangonon, et al. v. CA, et al., G.R. No. 125041,
share. June 30, 2006).

NOTE: The Q: Marcelo and Juana called Dr. Arturo to their house to
rule does not render medical assistance to their daughter-in- law
apply if the who was about to give birth to a child. He
spouses are performed the necessary operation. When Dr.
under ACP Arturo sought payment, Marcelo and Juana refused to
based on Art. pay him without giving any good reason. Who is bound
153. to pay the bill for the services rendered by Arturo?
Children
From the From the From the A: HER HUSBAND, not her father and mother- in-law. The
community community separate rendering of medical assistance in case of illness is
property property properties of comprised among the mutual obligations to which the
the spouses spouses are bound by way of mutual support (FC, Arts. 142
and 143). If every obligation consists in giving, doing
Liability to support (FC, Art. 199) or not doing something (NCC, Art. 1088), and spouses
are mutually bound to support each other, there can be
Theliability to support should beobserved in the following no question but that, when either of them by reason of
order: illness should be in need of medical assistance, the
a. Spouse; other is under the unavoidable obligation to furnish
b. Descendants in the nearest degree; the necessary services of a physician in order that
c. Ascendants in the nearest degree; health may be restored, and he or she may be freed from
d. Brothers and sisters. the sickness by which life is jeopardized (Pelayo v. Lauron,
G.R. No. L-4089, January 12, 1909).

113
 CIVIL LAW
Q: Cheryl married Edward Lim and they begot three
children. Cheryl, Edward and their children lived at the
house of Edward’s parents, Prudencio and
Filomena, together with Edward’s ailing
grandmother and her husband. Edward was
employed with the family business, which provided him
with a monthly salary of P6,000 and shouldered
the family expenses. Cheryl had no steady source of
income. Cheryl caught Edward in “a very compromising
situation” with the midwife of Edward’s
grandmother. After a violent confrontation with
Edward, Cheryl left the Forbes Park residence. She
subsequently sued, for herself and her children,
Edward, Edward’s parents and grandparents for
support. Edward and his parents were ordered by the
RTC to “jointly” provide, monthly support to Cheryl
and her children. Is the court’s judgment in making
Edward’s parents concurrently liable with Edward to
provide support to Cheryl and her children correct?
A: YES. However, the Supreme Court modified the
appealed judgment by limiting liability of Edward’s
parents to the amount of monthly support needed by
Cheryl’s children. Edward’s parents are liable to
provide support but only to their grandchildren. By
statutory and jurisprudential mandate, the liability of
ascendants to provide legal support to their
descendants is beyond cavil. Petitioners themselves
admit as much — they limit their petition to the narrow
question of when their liability is triggered, not if they are
liable.
There is no showing that private respondent is without
means to support his son; neither is there any evidence to
prove that petitioner, as the paternal grandmother, was
willing to voluntarily provide for her grandson's legal
support. Cheryl is unable to discharge her obligation
to provide sufficient legal support to her children. It also
shows that Edward is unable to support his children. This
inability of Edward and Cheryl to sufficiently provide for
their children shifts a portion of their obligation to the
ascendants in the nearest degree, both in the paternal
(petitioners) and maternal lines, following the ordering
in Article 199 (Spouses Lim v. Cheryl Lim, G.R. No.
163209, October 30, 2009).
SUPPORT DURING MARRIAGE LITIGATION
During the pendency of the action for annulment or
declaration of absolute nullity of marriage and action for
legal separation, the court shall provide for the support
of the spouses and their common children in the absence
of a written agreement between the spouses. (FC, Art.
49).
Sources of support shall be the properties of the
absolute community or conjugal partnership.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Mutual support of the spouses after the final
judgment granting the petition for legal separation,
annulment and declaration of nullity of marriage
GR: Spouses are no longer obliged to render mutual
support after final judgment. The obligation of mutual
support ceases after final judgment.
XPN: In case of legal separation the Court may order that
the guilty spouse shall give support to the innocent one.
Effect of adultery of the wife
Adultery of the wife is a valid defense in an action for
support. If adultery is proved and sustained, it will
defeat the action for support. But if both are equally at fault,
the principle of in pari delicto applies in which the
husband cannot avail of the defense of adultery.
Q: H and W are living separately. Both had been
unfaithful to each other. After their separation, H had
been giving money to W for her support.
Subsequently, W brought an action against H for
separatemaintenance.Willtheactionprosper?
A: YES. The principle of in pari delicto is applicable. Both
are at fault. Consequently, H cannot availof himself of the
defense of adultery of W. Besides, the act of H in giving
money to W is implied condonation of the adultery of
W (Amacen v. Baltazar, G.R. No. L-10028, May 28, 1958).
AMOUNT
Amount shall be in proportion to the resources or
means of the giver and to the necessities of the recipient (FC,
Art. 201).
Support may be decreased or increased
proportionately according to the reduction or increase of
the necessities of the recipient and the resources of the
person obliged to furnish the same (FC, Art. 202).
WHEN DEMANDABLE
Theobligation to givesupport isdemandable fromthe time
the person who has a right to receive support needs it
for maintenance.
The support shall be paid only from the date of judicial or
extrajudicial demand.
The right to support does not arise from mere fact of
relationship but from imperative necessity without which
it cannot be demanded. The law presumes that such
necessity does not exist unless support is demanded.
Effect of Reaching Age of Majority
114
 PERSONS AND FAMILY RELATIONS
If a person is of age and no longer studies, he still entitled
to support unless there are just reasons for the
extinguishment of the right. (Javier v. Lucero, 94 Phil.
634). If, upon the other hand, he has not yet finished
his studies even if already of age, he still entitled
generally to be supported. Of course, if the person
supporting dies, the obligation ceases (Falcon v. Arca, L-
18135, July 31, 1963).
MANNER OF PAYMENT
Payment shall be made within first five days of each
corresponding month. In case of death of the person
entitled to receive support, his heirs shall not be obliged
to return what he has received in advance for such support.
(FC, Art. 203).
PaymentbyThirdPersonUnder Article208
The obligation to reimburse under this article is one that
likewise arises from quasi-contract. As distinguished
from articles 206 of the Family Code and 2164 of the Civil
Code, “the obligor unjustly refuses or fails to give
support.” The law creates a promise of reimbursement on
the part of the person obliged to furnish support, inspite of
the deliberate disregard of his legal and moral duty
(Rabuya, 2006).
OPTIONS
Options given to persons giving support
a. To give a fixed monthly allowance; or
b. To receive and maintain the recipient in the giver’s
homeor family dwelling(FC, Art. 204).
If support is given by a stranger without the
knowledge of the person obliged to give support;
GR: The stranger shall have the right of
reimbursement
XPN: Unless it appears that he gave it without any
intention of being reimbursed (FC, Art. 206).
NOTE: If the person obliged to give support unjustly refuses
or fails to give it when urgently needed, any third person
may furnish support to the needy individual, with a
right of reimbursement (FC, Art. 207).
ATTACHMENT
Attachment or execution of the right to receive support
(FC, Art. 208)
GR:The right to receive support and any money or property
obtained as support cannot be attached nor be subject to
execution to satisfy any judgment against the recipient.
115
XPN:In caseof contractual support or support given by will,
the excess in amount beyond that required for legal support
shall be subject to levy on attachment or execution.
NOTE: Contractual support shall be subject to adjustment
whenever modification is necessary due to changes in
circumstances beyond the contemplation of the parties.
Q:Jurisdictional questionsmay be raisedatany time. What
is the exception with respect to the provisional character
of judgment for support and the application of
estoppel?
A: Judgment for support is always provisional in
character. Res Judicata does not apply. The lower court
cannot grant a petition based on grounds, such as bigamy, not
alleged in the petition. Such a decision based on
grounds not alleged in the petition is void on the ground of
no jurisdiction.
However, if the lower court’s void decision is not assailed on
appeal which dealt only with the matter of support, the losing
party is now estopped from questioning the
declaration of nullity and the SC will not undo the
judgment of the RTC declaring the marriage null and void for
being bigamous.
It is axiomatic that while a jurisdictional question may be
raised at any time, this however admits of an exception
where estoppel has supervened (Lam v. Chua, G.R. No.
131286, March 18, 2004).
Q: Edward abandoned his legitimate children when they
were minors. After 19 years from the time Edward
left them, they, through their mother, finally sued him for
support, which the court granted. The court ordered
him to pay 2M pesos as support in arrears.
Edward assails the grant of the support in arrears as
erroneous since under Art. 203 of the FC, there was
never any demand for support, judicial or extra-
judicial, from them. Is his contention right?
A: NO. Edward could not possibly expect his daughtersto
demand support from him considering their tender
years at the time that he abandoned them. In any event, the
mother of the girls had made the requisite demand for
material support although this was not in the
standard form of a formal written demand. Asking one to
give support owing to the urgency of the situation is no less
a demand just because it came by way of a request or a plea
(Lacson v. Lacson, et al., G.R. No. 150644, August 28,
2006).
 CIVIL LAW
Q: Noel helped Lea by extending financial help to
support Lea’s children with Edward. May Noel seek
reimbursement of his contributions? If yes, from
whom may he do so?
A: YES. Pursuant to Art. 207 of the Family Code, Noel can
rightfully exact reimbursement from Edward. This
provision reads that “[W]hen the person obliged to
support another unjustly refuses or fails to give support
when urgently needed by the latter, any third person
may furnish support to the needy individual, with right
of reimbursement from the person obliged to give
support.” The resulting juridical relationship between the
Edward and Noel is a quasi-contract, an equitable principle
enjoining one from unjustly enriching himself at the
expense of another (Lacson v. Lacson, et al., G.R. No.
150644, August 28, 2006).
Q: Fe and her son Martin sued Martin’s alleged
biological father Arnel for support. Arnel denied
having sired Martin, arguing that his affair and
intimacy with Fe had allegedly ended in long before
Martin’s conception. As a result, Fe and Martin moved
for the issuance of an order directing all the parties to
submit themselves to DNA paternity testing. The said
motion was granted by the court. Did the order of the
court convert the complaint for support to a petition
for recognition?
A: The assailed order did not convert the action for
support into one for recognition but merely allowed Fe to
prove their cause of action. But even if the order
effectively integrated an action to compel recognition with
an action for support, such was valid and in accordance
with jurisprudence. The integration of an action to compel
recognition with an action to claim one’s inheritance is
allowed (Tayag v. CA, G.R. No. 95229, June 9, 1992). A
separate action will only result in a multiplicity of suits.
Furthermore, the declaration of filiation is entirely
appropriate to the action for support (Agustin v. CA, G.R.
No. 162571, June 15, 2005).
Q: Can DNA testing be ordered in a proceeding for support
without violating the constitutional right against self-
incrimination?
A: YES. Compulsory DNA testing and the admissibility of the
results thereof as evidence are constitutional (People
v. Yatar, G.R. No. 150224, May 19, 2004).
Moreover, it has mostly been in the areas of legality of
searches and seizure and in the infringement of
privacy of communication where the constitutional right
to privacy has been critically at issue.
If, in a criminal case, an accused whose very life is at stake
can be compelled to submit to DNA testing, so much more
so may a party in a civil case, who does not face such dire
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
consequences, be likewise compelled. DNA testing andits
results is now acceptable as object evidence without
running afoul self-incrimination rights of a person
(Agustin v. CA, G.R. No. 162571, June 15, 2005)
PARENTAL AUTHORITY
Parental Authority is “the mass of rights and obligations
which parents have in relation to the person and
property of their children until their emancipation and
even after this under certain circumstances” (Sempio- Diy,
1995).
Parental authority includes
1. Caring for and rearing of such children for civic
consciousness and efficiency;
2. Development of their moral, mental and
physical character and well-being (FC, Art. 209).
Characteristics of parental authority
1. Jointly exercised by the father and mother;
2. Natural right and duty of the parents;
GR: Cannot be renounced, transferred or
waived;
XPN: In cases authorized by law such as in cases
of adoption, guardianship and surrender to a
children's home or an orphan institution (Santos
v. CA, G.R. No. 113054, March 16, 1995).
3. Purely personal;
4. Temporary.
Exercise of parental authority
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 (FC, Art. 211).
If the child is illegitimate, parental authority is with the
mother.
NOTE: Parental authority and responsibility are
inalienable and may not be transferred or renounced
except in cases authorized by law. The right attached to
parental authority, being purely personal, the law
allows a waiver of parental authority only in cases of
adoption, guardianship and surrender to a children's
home or an orphan institution (Arts. 222-224, FC; Act
No. 3094).
Visitation rights
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 PERSONS AND FAMILY RELATIONS
It istheright ofaccessof anoncustodial parent to his or her
child or children.
Who are entitled of visitation rights
1. The non-custodial parent in cases of:
a. Legal separation;
b. Separation de facto;
c. Annulment;
d. Declaration of nullity on the ground of
psychological incapacity or failure to comply
with the requirements of Article 52;
2. Illegitimatefatheroverhisillegitimatechild.
NOTE: In case of annulment or declaration of absolute
nullity of marriage, Article 49 of the Family Code grants
visitation rights to a parent who is deprived of custody of
his children. Such visitation rights flow from the
natural right of both parent and child to each other’s
company. There being no such parent-child relationship
between them, a person has no legally demandable right of
visitation (Concepcion v. CA, G.R. No. 123450, August 31,
2005).
Q: Carlitos Silva and Suzanne Gonzales had a live- in
relationship. They had two children, namely, Ramon
Carlos and Rica Natalia. Silva and Gonzales eventually
separated. They had an understanding that Silva would
have the children in his company on weekends. Silva
claimed that Gonzales broke that understanding on
visitation rights. Hence, Silva filed a petition for
custodial rights over the children before the RTC. The
petition was opposed by Gonzales who claimed that Silva
often engaged in gambling and womanizing which she
feared could affect the moral and social values of the
children. In the meantime, Suzanne had gotten
married to a Dutch national. She eventually
immigrated to Holland with her children Ramon Carlos
and Rica Natalia. Can Silva be denied visitation rights?
A: GR: NO.
XPN: If the fears and apprehensions were founded as to the
father’s corrupting influence over the children and if it is
proven therefore that indeed the father is a negative
influence because of reasons like immorality,
drunkenness, etc. on the children, the court, taking into
consideration the best interest of the children, can deny his
petition for the exercise of his visitation rights (Silva v. CA,
G.R. No. 114742, July 17, 1997).
Parentalpreference rule
The natural parents, who are of good character and who
can reasonably provide for the child are ordinarily
entitledtocustody asagainstallpersons.
117
NOTE: Tender-Age Presumption
No child under seven years of age shall be separated from
the mother, unless the court finds compelling reasons to
order otherwise [FC, Art 213(2)]. (2006 Bar)
The paramount consideration in matters of custody of a
child is the welfare and well-being of the child.
The use of the word “shall” in Art. 213 of the FC is
mandatory in character. It prohibits in no uncertain terms
the separation of a mother and her child below 7 years,
unless such separation is grounded upon compelling
reasons as determined by a court (Lacson v. San Jose-
Lacson, G.R. No. L-23482, August 30, 1968).
“Compelling Reasons”
The so-called “tender-age presumption” under Article213
of the Family Code may be overcome only by compelling
evidence of the mother’s unfitness. The mother has been
declared unsuitable to have custody of her children in one or
more of the following instances:
1. Insanity
2. Abandonment
3. Neglect
4. Drug addiction
5. Affliction with a communicable disease
6. Maltreatment of the child Immorality
7. Unemployment
8. Habitual drunkenness
NOTE: In one case, the SC ruled that sexual preference or
moral laxity alone does not prove parental neglect or
incompetence; to deprive the wife of custody, of her
minor child, her moral lapses must have an adverse effect on
the welfare of the child or it must have distracted the
offending spouse from exercising proper parental care
(Pablo-Gualberto v. Gualberto, G.R. No. 154994 &
156254, June 28, 2005).
Exercise of parental authority in case of absence,
death, remarriage of either parent, or legal or de facto
separation of parents
a. Absence or death of either parent – parent
present shall continue exercising parental
authority
b. Remarriage of either parent – it shall not
affect the parental authority over the
children, unless the court appoints another person
to be the guardian of the person or property of
the children (FC, Art. 213).
c. Legal or de facto separation of parents – the
parent designated by the court.
 CIVIL LAW
Considerations in the designation of child custody
The Court shall take into account all relevant
considerations in the designation of the parent, especially the
choice of the child over seven years of age except when
the parent chosen is unfit.
NOTE: The relevant Philippine law on child custody for
spouses separated in fact or in law (Art. 213, 2nd par.) is
also undisputed: “no child under seven years of age shall be
separated from the mother x x x.”(This statutory
awarding of sole parental custody to the mother is
mandatory, grounded on sound policy consideration,
subject only to a narrow exception not alleged to obtain
here.) Clearly then, the Agreement’s object to establish a
post-divorce joint custody regime between respondent and
petitioner over their child under seven years old
contravenes Philippine law. The Philippine courts do not
have the authority to enforce an agreement that is
contrary to law, morals, good customs, public order, or
public policy (Dacasin v. Dacasin, G.R. No. 168785,
February 5, 2010).
Q: If the parents are separated de facto, who
between them has custody over their child/
children?
A: In the absence of a judicial grant of custody to one
parent, both of them have custody over 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, August 29,
2006).
NOTE: The general rule that children less than 7 years
of age shall not be separated from the mother finds its
raison d'etre in the basic need of minor children for
their mother's loving care. This is predicated on the
"best interest of the child" principle which pervades not
only child custody cases but also those involving
adoption, guardianship, support, personal status and
minors in conflict with the law (Pablo-Gualberto v.
Gualberto, G.R. No. 154994/G.R. No. 156254, June 28,
2005).
Q: Queenie was born to Renalyn and Ricky James,
who had been living together with Renalyn's
parents without the benefit of marriage. Three (3)
years later, the relationship ended. Renalyn went to
Manila, supposedly leaving Queenie behind in the
care and custody of her father, Ricky James. Ricky
James alleged that, the parents of Renalyn took
Queenie from the school where he had enrolled her.
When asked to give Queenie back, Renalyn's
parents refused. Consequently, Ricky James filed a
petition for habeas corpus and child custody before
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
the RTC (petition a quo). Upon reaching the CA it
remanded the case a quo for determination of who
should exercise custody over Queenie. Was such
action proper?
A: NO, CA erroneously applied Section 6 of Rule 99 of
the Rules of Court. This provision contemplates a
situation in which the parents of the minor are married
to each other but are separated either by virtue of a
decree of legal separation or because they are living
separately de facto. In the present case, it has been
established that petitioner and Respondent Loreta were
never married. Hence, that portion of the CA Decision
allowing the child to choose which parent to live with is
deleted, but without disregarding the obligation of
petitioner to support the child.
General rule is that the father and the mother shall
jointly exercise parental authority over the persons of
their common children. However, insofar as illegitimate
children are concerned, Article 176 of the Family Code
states that illegitimate children shall be under the
parental authority of their mother. Accordingly,
mothers (such as Renalyn) are entitled to the sole
parental authority of their illegitimate children (such as
Queenie), notwithstanding the father's recognition of
the child. In the exercise of that authority, mothers are
consequently entitled to keep their illegitimate children
in their company, and the Court will not deprive them of
custody, absent any imperative cause showing the
mother's unfitness to exercise such authority and care.
(Masbate vs. Relucio, G.R. No. 235498, July 30, 2018)
SUBSTITUTE PARENTAL AUTHORITY
Substitute Parental Authority (2004 BAR)
It is the parental authority which the persons
designated by law may exercise over the persons and
property of unemancipated children in case of death,
absence or unsuitability of both parents or in default of
a judicially appointed guardian.
Order of substitute parental authority
1. Surviving Grandparent;
NOTE: The law considers the natural love of a
parent to outweigh that of the grandparents, such
that only when the parent present is shown to be
unfit or unsuitable may the grandparents
exercise substitute parental authority (Santos v.
CA, G.R. No. 113054, March 16, 1995).
2. Oldest brother or sister, over 21 years unless unfit
ordisqualified;
3. Actual Custodian over 21 year unless unfit or
disqualified (FC, Art. 216);
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 PERSONS AND FAMILY RELATIONS
4. In case of foundlings, abandoned, neglected or supervision instruction or custody. It can also co- exists
abused children similarly situated, parental with the parents’ parental authority.
authority shall be entrusted in summary judicial
proceedings to heads of children’s homes, Persons who may exercise special parental
orphanages and similar institutions duly authority (FC, Art. 218)
accredited by the proper government agency (FC,
Art. 217). a. The school;
b. School administrators;
Q: Bonifacia Vancil, a US citizen, is the mother of c. School teachers;
Reeder C. Vancil, a US Navy serviceman who died in d. Individual, entity or institution engaged in child
the USA on December 22, 1986. During his lifetime, care.
Reeder had two children named Valerie and Vincent
by his common-law wife, Helen G. Belmes. Bonifacia Scope of special parental authority
obtained a favorable court decision appointing her
as legal and judicial guardian over the persons and The scope of special parental authority and
estate of Valerie Vancil and Vincent Vancil, Jr. She responsibility applies to all authorized activities,
alleged that Helen was morally unfit as guardian of whether inside or outside the premises of the school,
Valerie considering that Helen’s live-in partner entity or institution.
raped Valerie several times. Can Bonifacia exercise
substitute parental authority over Valerie and NOTE: The nature of the liability of persons having
Vincent? special parental authority over said minors for their
acts or omissions causing damage to another is
A: NO. Bonifacia, as the surviving grandparent, can principal and solidary. The parents, judicial guardians
exercise substitute parental authority only in case of or the persons exercising substitute parental authority
death, absence or unsuitability of Helen. Considering over said minor shall be subsidiarily liable (FC, Art.
that Helen is very much alive and has exercised 219). (2003, 2010 Bar)
continuously parental authority over Vincent, Bonifacia
has to prove, in asserting her right to be the minor’s Substitute parental authority vis-à-vis Special
guardian, Helen’s unsuitability. Bonifacia, however, has parental authority
not proffered convincing evidence showing that Helen is
not suited to be the guardian of Vincent. Bonifacia SUBSTITUTE PARENTAL SPECIAL PARENTAL
merely insists that Helen is morally unfit as guardian of AUTHORITY AUTHORITY
Valerie considering that her live- in partner raped
Valerie several times. (But Valerie, being now of major Exercised in case of: Exercised concurrently
age, is no longer a subject of this guardianship (DAU) with the parental authority
proceeding). of the parents;
1. Death Rests on the theory that
Even assuming that Helen is unfit as guardian of minor 2. Absence, or while the child is in the
Vincent, still Bonifacia cannot qualify as a substitute 3. Unsuitability of custody of the person
guardian. She is an American citizen and a resident of parents. exercising special parental
Colorado. Obviously, she will not be able to perform the authority, the parents
responsibilities and obligations required of a temporarily relinquish
guardian.In fact, in her petition, Bonifacia admitted the parental authority over the
difficulty of discharging the duties of a guardian by an child
expatriate, like her. To be sure, she will merely delegate to the latter.
those duties to someone else who may not also qualify
as a guardian (Vancil v. Belmes, G.R. No. 132223, June 19, EFFECTS OF PARENTAL AUTHORITY UPON THE
2001). PERSON OF THE CHILDREN

Special Parental Authority (2003, 2004, 2005, 2010
Bar)
It is the parental authority granted by law to certain
persons, entities or institutions in view of their special
relation to children under their supervision instruction
or custody. It is denominated as special because it is
limited and is present only when the child is under their
Right to Child’s Custody
The right of parents to the custody of their minor
children is one of the natural rights incident to
parenthood, a right supported by law and sound public
policy. The right is an inherent one, which is not created
by the state or decisions of the courts, but derives from
the nature of the parental relationship (Sagala-Eslao v.
CA, G.R. No. 116773, January 16, 1997).

119
 CIVIL LAW
Parents’ right to custody of the child
GR: Parents are never deprived of the custody and care
of their children.
XPNS:
1. For cause;
NOTE: the law presumes that the child’s welfare
will be best served in the care and control of his
parents.
2. If in consideration of the child’s welfare or well-
being, custody may be given even to a non-
relative.
Basis for the duty to provide support
Family ties or relationship, not parental authority.
NOTE: The obligation of the parents to provide support
is not coterminous with the exercise of parental
authority.
Rule on the parent’s duty of representation
GR: Parents are duty-bound to represent their minor
children in all matters affecting their interests;
NOTE: This duty extends to representation in court
litigations.
XPN: A guardian ad litem may be appointed by the court
to represent the child when the best interest of the child
so requires.
Scope of the parent’s right to discipline the child
(FC, Art. 223)
Persons exercising parental authority may:
1. Impose discipline on minor children as may be
required under the circumstances;
2. Petition the court for the imposition of
appropriate disciplinary measures upon the
child, which include the commitment of the child
in entities or institutions engaged in child care or
in children’s homes duly accredited by the proper
government agency.
NOTE: Such commitment must not exceed 30 days.
Limitations on the exercise of the right to discipline
the child and its consequences
Persons exercising such right are not allowed to:
1. Treat the child with excessive harshness or
cruelty; or
2. Inflict corporal punishment.
Otherwise, the following are its consequences:
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
1. Parental authority may be suspended;
2. Parent concerned may be held criminally liable
for violation of RA 7160 (Special Protection of
Children against Abuse, Exploitation and
Discrimination Act)
CHILD ABUSE LAW (R.A. 7610) SEC. 10
Section 10. Other Acts of Neglect, Abuse, Cruelty or
Exploitation and Other Conditions Prejudicial to
the Child's Development. –
a. Any person who shall commit any other acts of
child abuse, cruelty or exploitation or to be
responsible for other conditions prejudicial to
the child's development including those covered
by Article 59 of Presidential Decree No. 603,
as amended, but not covered by the Revised
Penal Code, as amended, shall suffer the penalty
of prision mayor in its minimum period.
b. 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 places shall suffer the
penalty of prision mayor in its maximum period and
a fine of not less than Fifty thousand pesos
(P50,000): Provided, That the provision shall not
apply to any person who is related within the
fourth 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.
c. Any person who shall induce, deliver or offer a
minor to any one prohibited by the Act to keep or
have in his company a minor as provided in the
preceding paragraph shall suffer the penalty of
prision mayor in its medium period and a fine of
not less than Forty thousand pesos (P40,000);
Provided, however, That should the
perpetrator be an ascendant, stepparent or
guardian of the minor, the penalty to be imposed
shall be prision mayor in its maximum period, a
fine of not less than Fifty thousand pesos (P50,000),
and the loss of parental authority over the
minor.
d. 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 as described in the law shall be imposed a
penalty of prision mayor in its medium period and
a fine of not less than Fifty thousand pesos
(P50,000), and the loss of the license to operate
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 PERSONS AND FAMILY RELATIONS
such a place or establishment.
e. Any person who shall use, coerce, force or
intimidate a street child or any other child to:
1. Beg or use begging as a means of living;
2. Act as conduit or middlemen in drug
traffickingorpushing;or
3. Conduct any illegal activities, shall suffer the
penalty of prision correccional in its
medium period to reclusion perpetua.
The penalty for the commission of acts punishable
under Articles 248, 249, 262, paragraph 2, and 263,
paragraph 1 of Act No. 3815, as amended, the Revised
Penal Code, for the crimes of murder, homicide, other
intentional mutilation, and serious physical injuries,
respectively, shall be reclusion perpetua when the
victim is under twelve (12) years of age.
The penalty for the commission of acts punishable
under Article 337, 339, 340 and 341 of Act No. 3815, as
amended, the Revised Penal Code, for the crimes of
qualified seduction, acts of lasciviousness with the
consent of the offended party, corruption of minors, and
white slave trade, respectively, shall be one (1) degree
higher than that imposed by law when the victim is
under twelve (12) years age.
The victim of the acts committed under this section
shall be entrusted to the care of the Department of
Social Welfare and Development (Sec. 10, R.A. 7610).
Liabilities of Parents under Art. 59 of Presidential
Decree No. 603 (Child and Youth Welfare Code)
Article 59. Crimes. - Criminal liability shall attach to any
parent who:
1. Conceals or abandons the child with intent to
make such child lose his civil status.
2. Abandons the child under such circumstances as
to deprive him of the love, care and protection he
needs.
3. Sells or abandons the child to another person for
valuable consideration.
4. Neglects the child by not giving him the
education which the family's station in life and
financial conditions permit.
5. Fails or refuses, without justifiable grounds, to
enroll the child as required by Article 72.
6. Causes, abates, or permits the truancy of the child
from the school where he is enrolled. "Truancy"
as here used means absence without cause for
more than twenty schooldays, not
necessarilyconsecutive.
7. It shall be the duty of the teacher in charge to
report to the parents the absences of the child the
moment these exceed five schooldays.
121
8. Improperly exploits the child by using him,
directly or indirectly, such as for purposes of
begging and other acts which are inimical to his
interest and welfare.
9. Inflicts cruel and unusual punishment upon the
child or deliberately subjects him to indignation
and other excessive chastisement that embarrass
or humiliate him.
10. Causes or encourages the child to lead an
immoral or dissolute life.
11. Permits the child to possess, handle or carry a
deadly weapon, regardless of its ownership.
12. Allows or requires the child to drive without a
license or with a license which the parent knows
to have been illegally procured. If the motor
vehicle driven by the child belongs to the parent,
it shall be presumed that he permitted or ordered
the child to drive (Art. 59, PD 603).
Liability of persons exercising special parental
authority over the child (FC, Art. 219)
They are principally and solidarily liable for damages
caused by the acts or omissions of the child while under
their supervision, instruction or custody.
NOTE: Parents, judicial guardians or those exercising
substitute parental authority over the minor are
subsidiarily liable for said acts and omissions of the
minor.
Q: Jayson and his classmates were conducting a science
experiment about fusion of sulphur powder and iron
fillings under the tutelage of Tabugo, the subject
teacher and employee of St. Joseph College. Tabugo left
her class while the experiment was ongoing without
having adequately secured the students from any
untoward incident or occurrence. In the middle of the
experiment, Jayson checked the result of the
experiment by looking into the test tube with
magnifying glass and it was moved towards his eyes. At
that instance, the compound spurted from the test tube
and several particles hit Jayson’s eyes. His left eye
was chemically burned, for which he had to undergo
surgery and spend for medication. Jayson filed a
complaint for damages against the school and Tabugo.
Can the said school and its teacher, Tabugo, be held
liable for the unfortunate incident ofJayson?
A: YES. The proximate cause of the student’s injury was
the concurrent failure of petitioners to prevent the
foreseeable mishap that occurred during the conduct of
the science experiment. Petitioners were negligent by
failing to exercise the higher degree of care, caution and
foresight incumbent upon the school, its administrators
and teachers. Art. 218 of the Family Code, in relation to
Art. 2180 of the New Civil Code, bestows special
parental authority on a school, its administrators and
 CIVIL LAW
teachers, or the individual, entity or institution engaged
in child care, and these persons have responsibility over
the minor child while under their supervision,
instruction or custody. Authority and responsibility
shall apply to all authorized activities whether inside or
outside the premises of the school, entity or institution.
A parent is required to post a bond if the market value
of the property or the annual income of the child
exceeds P50,000.
NOTE: The bond shall not be less than 10% of the value
of the property or annual income (FC, Art. 225).

In this case, the petitioners’ negligence and failure to
exercise the requisite degree of care and caution was
demonstrated by the following: (i) petitioner school did
not take affirmative steps to avert damage and injury to
its students although it had full information on the
nature of dangerous science experiments conducted by
the students during class; (ii) petitioner school did not
install safety measures to protect the students who
conduct experiments in class; (iii) petitioner school did
not provide protective gears and devices, specifically
goggles, to shield students from expected risks and
dangers; and (iv) petitioner Tabugo (the teacher) was
not inside the classroom the whole time her class
conducted the experiment, specifically, when the
accident involving the student occurred (St. Joseph’s
College v. Miranda, G.R. No. 182353, June 29, 2010).
EFFECTS OF PARENTAL AUTHORITY UPON THE
PROPERTY OF THE CHILDREN
Legal guardianship can be exercised by the father or
mother, jointly, without need of court appointment over
the property of an unemancipated child.
NOTE: In case of disagreement, the father’s decision
shall prevail unless there is a judicial order to the
contrary (FC, Art. 229).
Rules regarding the use of the child’s property
(Art. 226, FC)
1. The property of minor children shall be devoted
to their support and education unless the title or
transfer provides otherwise.
2. The parents have the right to use only the fruits
and income of said property for the following
purposes:
a. Primarily, to the child’s support;
b. Secondarily, to the collective daily needs of the
family.
Rule on lease of property belonging to minor
children
GR: The parents, as legal guardians of the minor’s
property, may validly lease the same, even without
court authorization, because lease has been considered
as an act of administration.
XPNs: Court authorization is required if:
1. If the lease will be recorded in the Registry of
Property;
2. If the lease is for a period of more than one year,
because this is already deemed an act of dominion.

Kinds of properties of a minor SUSPENSION OR TERMINATION OF PARENTAL

AUTHORITY
ADVENTITIOUS PROSFECTITIOUS
1. Earned or 1. Property given by the Grounds for Termination of Parental Authority
acquired by the child parents to the child
through his work or for the latter to 1. Permanently:
industry by onerous administer; a. Death of parents;
or gratuitous title; b. Emancipation of the child;
2. Owned by the parents; c. Death of child (FC, Art. 228).
2. Owned by the child;
3. Parents are 2. Temporarily:– it may be revived
3. Child is also the usufructuary; a. Adoption of the child;
usufructuary, but the b. Appointment of general guardian;
child’s use of the 4. Property c. Judicial declaration of abandonment of the
property shall be administered by the child in a case filed for the purpose;
secondary to all child. d. Final judgment divesting parents of
collective daily needs parental authority;
of the family; e. Incapacity of parent exercising parental
authority;
4. Administered by the f. Judicial declaration of absence or incapacity
parents. of person exercising parental authority (FC,
Art. 229).
Necessity of posting a bond by the parents

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2019 GOLDEN NOTES 122
 PERSONS AND FAMILY RELATIONS
NOTE: In case of temporary termination of
parental authority, parental authority may be
revived thru a court judgment (Rabuya, 2009).
Grounds for suspension of Parental Authority
1. Gives corrupting orders, counsel or example;
2. Treats child with excessive harshness and cruelty;
3. Subjects/allows child be subjected to acts of
lasciviousness (FC, Art. 231);
4. Conviction of crime with penalty of civil
interdiction
(FC, Art. 230);
5. Culpable negligence of parent or person exercising
parental authority;
6. Compels the child to beg.
NOTE: If the person exercising Parental Authority has
subjected the child or allowed him to be subjected to
sexual abuse, he/she shall be permanently deprived of
PA.
If the ground for suspension of parental authority is
civil interdiction, the suspension is automatic so as its
reinstatement.
Revocation of suspension of Parental Authority and its
revival
The suspension may be revoked and parental authority
revived by filing a case for the purpose, or in the same
proceeding if the court finds that the cause therefore
had ceased and will not be repeated.
Transfer or renunciation of Parental Authority
GR: Parental authority and responsibility are
Inalienable and may not be transferred and renounced.
XPN: In cases authorized by law.
Loss of parental authority over the minor under the
Child Abuse Law (RA 7610)
When an ascendant, stepparent or guardian of the
minor, induces, delivers or offers him to any person
who would keep or have in his company such 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 places.
Corporal punishment
It is the infliction of physical disciplinary measures to a
student. This is absolutely prohibited under the Family
Code (Sta. Maria, 2010).
123
NOTE: While a teacher is administratively liable or
civilly liable in the event that he or she inflicts corporal
punishment to a student, it has been held that where
there was no criminal intent on the part of the teacher
who angrily and repeatedly whipped a student resulting
in slight physical injuries to the said student and where
the purpose of the teacher was to discipline a student,
the said teacher cannot be held feloniously liable for the
criminal offense of slight physical injuries (Bagajo v.
Marave, G.R. No. L-33345, November 20, 1978).
EMANCIPATION
It is the release of a person from parental authority
whereby he becomes capacitated for civil life.
Emancipation takes place by attainment of majority at
the age of (18) eighteen years (FC, Art. 234 as amended
by RA 6809). (2010 Bar)
Effects of emancipation
1. Parental authority over the person and property of
the child is terminated.
2. Child shall be qualified and responsible for all acts
of civil life, save exceptions established by existing
3. Contracting marriage shall require parental consent
until the age of 21.
4. The responsibility of parents or guardians for
children and wards below 21 under the second and
third paragraphs of Art. 2180 of the New Civil Code
shall not be derogated.
RETROACTIVITY OF FAMILY CODE
GR: The Code shall have retroactive effect (FC, Art. 256).
XPN: When retroactivity would prejudice vested rights.
(2005, 2010 Bar)
Vested right
Some right or interest in property that has become fixed
or established and is no longer open to doubt or
controversy. Rights are vested when the right to
enjoyment, present or prospective, has become the
property of some person as present interest.
Q: Antonia Aruego and her sister Evelyn filed a
petition in the courts seeking Jose Aruego, Jr. and
his five children to recognize them as illegitimate
children and compulsory heirs of Jose. They claim
that there is open and continuous possession of
status of illegitimate children of Jose who had an
amorous relationship with their mother Luz Fabian
until the time of the death of Jose. The court
 CIVIL LAW
declared that Antonia Aruego is an illegitimate
daughter of the deceased with Luz Fabian while
Evelyn is not. Antonia and Evelyn contested the
decision citing provisions of the Family Code
particularly Art. 127 on Filiation, Art.172 on
illegitimate children’s filiation, and Art.256 on the
retroactivity of the code. Whether the provisions of
the Family Code can be applied retroactively and
will it impair the vested rights of the respondents?
A: The action for compulsory recognition and
enforcement of successional rights which was filed
prior to the advent of the Family Code, must be
governed by Art. 285 of the New Civil Code and not by
Art. 175, par. 2 of the Family Code. The present law
cannot be given retroactive effect insofar as the instant
case is concerned, as its application will prejudice the
vested right of private respondent to have her case
decided under Art. 285 of the New Civil Code. The right
was vested to her by the fact that she filed her action
under the regime of the New Civil Code. Prescinding
from this, the conclusion then ought to be that the
action was not yet barred, notwithstanding the fact that
it was brought when the putative father was already
deceased, since private respondent was then still a
minor when it was filed, an exception to the general rule
provided under Art. 285 of the New Civil Code. Hence,
the trial court, which acquired jurisdiction over the case
by the filing of the complaint, never lost jurisdiction
over the same despite the passage of E.O. No. 209, also
known as the Family Code of the Philippines (Aruego v.
CA, G.R. No. 112193, March 13, 1996).
NOTE: If an action for recognition was filed prior to the
effectivity of the FC, Art. 173 of the Family Code cannot
be given retroactive effect because it will prejudice the
vested rights of petitioners transmitted to them at the
time of the death of their father, Eutiquio Marquino.
"Vested right" is a right in property which has become
fixed and established and is no longer open to doubt or
controversy. It expresses the concept of present fixed
interest, which in right reason and natural justice
should be protected against arbitrary State action
(Marquino v. IAC, G.R. No. 72078, June 27, 1994).
FUNERALS
General Guidelines:
1. Duty and right to make arrangements in funerals
in accordance with Art. 199, FC:
a. Spouse;
b. Descendants in the nearest degree;
c. Ascendants in the nearest degree;
d. Brothers and sisters.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
NOTE: 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 (NCC, Art. 305).
2. Funeral shall be:
a. In keeping with the social position of the
deceased;
b. In accordance with the expressed wishes of
the deceased;
c. In absence of the expressed wishes, his
religious beliefs or affiliation shall
determine;
d. In case of doubt, the form of funeral is to be
decided upon by the person obliged to make
arrangements for the same, after consulting
the other members of the family (NCC, Art.
307).
3. Any person who:
a. Shows disrespect to the dead, or
b. Wrongfully interferes with a funeral shall be
liable to the family of the deceased for
damages, material and moral (NCC, Art. 309).
4. Funeral expenses are chargeable against the
property of the deceased. However, if the
deceased is one of the spouses, they are
chargeable against the conjugal partnership
property (NCC, Art. 310).
Q: Adriano and Rosario are married to each other.
However, their marriage turned into sour and they
were eventually separated-in-fact. Years later,
Adriano met Fe which he courted and eventually
decided to live together as husband and wife while
his marriage with Rosario is still subsisting. Adriano
later died while Rosario and the rest of his family
are in the United States spending their Christmas
vacation. When Rosario learned of Adriano’s death,
she immediately called Fe for the delay of Adriano’s
interment which was unheeded by Fe. The remains
of Adriano were interred at the mausoleum of Fe’s
family allegedly according to Adriano’s oral request
from her. Who between Rosario and Fe is entitled to
the remains of Adriano?
A: The law gives the right and duty to make funeral
arrangements to Rosario, she being the surviving legal
wife of Atty. Adriano. The fact that she was living
separately from her husband and was in the United
States when he died has no controlling significance. To
say that Rosario had, in effect, waived or renounced,
expressly or impliedly, her right and duty to make
arrangements for the funeral of her deceased husband
is baseless. The right and duty to make funeral
arrangements, like any other right, will not be
considered as having been waived or renounced, except
124
 PERSONS AND FAMILY RELATIONS
upon clear and satisfactory proof of conduct indicative document or private
of a free and voluntary intent to that end. handwritten instrument
(Art. 176, FC, as amended
Even assuming, ex gratia argumenti, that Atty. Adriano by RA. 9225)
truly wished to be buried in the Fe’s family plot at the
Manila Memorial Park, the result remains the same. Under the amendatory
Article 307 simply seeks to prescribe the "form of the provision of R.A. 9225, the use
funeral rites" that should govern in the burial of the of the illegitimate father’s
deceased. The right and duty to make funeral surname s PERMISSIVE and
arrangements reside in the persons specified in Article not obligatory (Rabuya, 2009).
305 in relation to Article 199 of the Family Code. Even if Conceived prior Father’s
Article 307 were to be interpreted to include the place to annulment of
of burial among those on which the wishes of the marriage
deceased shall be followed, Dr. Arturo M.Tolentino (Dr. Conceived after Mother’s
Tolentino), an eminent authority on civil law, annulment of
commented that it is generally recognized that any marriage
inferences as to the wishes of the deceased should be
established by some form of testamentary disposition Rule with regard to the use of surname of a
(Valino v. Adriano, G.R. No. 182894, April 22, 2014). married woman

FACTUAL SURNAME TO BE
USE OF SURNAMES CIRCUMSTANCE OF USED
THE WIFE
Valid marriage (before 1. First name and
Rule with regard to the use of surname by a child who is husband dies) (NCC, maiden name (her
(1) legitimate, (2) legitimated, (3) adopted and (4) Art. 370) maiden first name
illegitimate and surname) (FC,
Art. 370) +
CHILD SURNAME TO BE USED husband’s
CONCERNED surname.
Legitimate 2. Firstname +
Legitimated husband’s surname
Natural child 3. Husband’s full
acknowledged Father’s name + prefix
both parents indicating that is
Natural child by his wife (e.g., Mrs.)
legal fiction 4. Retain the use of
Natural child Recognizing parent her maiden name
acknowledged *Use of husband’s
by one parent surname is not a duty
Adopted Adopter’s but merely an option for
Illegitimate Mother’s or father’s if the wife.
requisites R.A. 9255 are Marriage Wife is the Shall resume using her
complied with is guilty party maiden name
annulled Wife is the Choices:
NOTE: An illegitimate child (NCC, Art. innocent 1. Resume using her
shall have the “option” to use 371) party maiden name
the surname of the father in 2. Continue using
the following instances: husband’s surname

1. If his/hre filiation has been Unless:

expressly recognized by a. Courth decrees
the father through the otherwise;
record of birth appearing b. She or the former
in the civil register; or husbnad is married
2. When an admission of again to another
paternity is made by the person
father in a public Legally separated (NCC, Wife shall continue

125
 CIVIL LAW
Art. 372) using the name and sought prior to the filing (Sec. 2, Rule 103, Rules of
surname employed by Court);
her prior to the legal B. Must not be filed within 30 days prior to an election
separation (Sec. 3, Rule 103, Rules of Court);
Widowed spouse (NCC, She may use deceased’s C. Petition must be verified (Sec. 2, Rule 103, Rules
Art. 373) husband’s surname as of Court).
though he is still living.
Divorced (at least if Choices same as Q: Virginia Remo, a Filipino citizen, is married
they allow it later or for widowed spouse. to Francisco Rallonza. In her passport, the
those who got divorced following entries appear: “Rallonza” as her
the Japanese surname, “Maria Virginia” as her given name,
occupation) and “Remo” as her middle name. Prior to the
expiration of her passport, Virginia applied for
Grounds for change of name which have been held the renewal of her passport with the DFA, with
valid a request to revert to her maiden name and
surname in the replacement passport.
1. One has continuously used and been known Virginia, relyingon Article 370 of the Civil
since childhood by a Filipino name and was Code, contends that the use of the husband’s
unaware of alien parentage; surname by the wife is permissive rather than
2. The change results as a legal consequence, as obligatory. Is Virginia correct ?
in legitimation;
3. There is a sincere desire to adopt a Filipino A: NO. A married woman has an option, but not a
name to erase signs of former alienage, all in duty, to use the surname of the husband in any of the
good faith and without prejudicing anyone; ways provided by Art. 370 of the New Civil Code.
4. The change will avoid confusion; However, R.A. 8239 or the Philippine Passport Act of
5. The new first name or surname has been 1996 limits the instances when a married woman
habitually and continuously used by the applicant may exercise the option to revert to the use
petitionerand is publicly known by that first of her maiden name. These are death of husband,
name or nickname (Pineda, 2010). divorce, annulment, and declaration of nullity of
6. The name is: marriage.
a. Ridiculous,
b. Extremely difficult to write or In case of renewal of passport, a married woman
pronounce; and may either adopt her husband’s surname or
c. Dishonorable. continuously use her maiden name. However, once
she opted to use her husband’s surname in her
Q: Can a person change his registered first original passport, she may not revert to the use of
name and sex on the basis of a sex her maiden name, except if any of the four grounds
reassignment? provided under R.A. 8239 is present.

A: NO. 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, October 22, 2007).
Further, even assuming R.A. 8239 conflicts with the
Civil Code, the provisions of R.A. 8239 which is a
special law specifically dealing with passport
issuance must prevail over the provisions of the Civil
Code which is the general law on the use of
surnames. A basic tenet in statutory construction is
that a special law prevails over a general law (Remo v.
Sec. of Foreign Affairs, G.R. No. 169202, March 5, 2010).
Identity of names and surnames
In case of identity of names and surnames, the younger
person shall be obliged to use such additional name or
surname as will avoid confusion (NCC, Art. 374).

Procedural requirements for a petition for change of In case of identity of names and surnames between
name ascendants and descendants, the word "Junior" can be
used only by a son. Grandsons and other direct male
A. 3 years residency in the province where the change is descendants shall either:

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 126
 PERSONS AND FAMILY RELATIONS
1. Add a middle name or the mother's surname, or
2. Add the Roman Numerals II, III, and so on (NCC,
Art. 375).
NOTE: No person can change his name or surname
without judicial authority (NCC, Art. 376).
Elements of usurpation of name
1. Actual use of another’s name by the defendant;
2. Use is unauthorized;
3. Use of another’s name is to designate
personality or identify a person.
Remedies available to the person whose name has
been usurped
1. Civil – insofar as private persons are concerned:
a. Injunction
b. Damages
2. Criminal – when public affairs are prejudiced.
NOTE: If the purpose of the usurpation is to conceal ones
true identity then, he is guilty of concealing true name
under Art.178 of theRPC(Pineda, 2010).
It can also be a violation of CA 142 or the Anti-Alias
Law.
Use of another’s name is not always actionable
GR: The unauthorized or unlawful use of another
person’s surname gives a right of action to the latter
(NCC, Art. 378).
XPN: It is not actionable when it is used as stage,
screen or pen name.
Provided:
1. Use is in good faith;
2. No injury is caused to the rights of the person
whose name was used;
3. Use is motivated by:
a. Modesty
b. Desire to avoid unnecessary trouble
c. Other reason not prohibited by law or morals.
MIDDLE NAME
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
127
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, G.R. No. 159966, March 30, 2005)
Q: Does an illegitimate child have a middle name?
A: NO. An illegitimate child whose filiation is not
recognized by the father bears only a given name and his
mother's surname, and does not have a middle name.
Itis only when the illegitimate child is legitimated by
the subsequent marriage of his parents or acknowledged
by the father in a public document or private handwritten
instrument that he bears both his mother's surname as his
middle name and his father's surname as his surname (In
Re: Petition for Change of Name of Julian Wang v. Cebu
Civil Registrar, G.R. No. 155966, March 30, 2005).
Q: Honorato filled a petition to adopt his minor
illegitimae child Stephanie. Stephanie has been
using her mother’s middle name and surname.
He prayed that Stephanie’s middle name be
changed from “Astorga” to “Garcia,” which is
her mother’s surname and that her surname
“Garcia” be changed to “Catindig,” which is his
surname. This the trial court denied. Was the
trial court correct in denying Honorato’s
request for Stephanie’s use of her mother’s
surname as her middle name?
A: No. The name of a individual has two parts –
the given name or proper name and the surname
or family name. the given name may be freely
selected by the parents for the child, but the
surname to which the child is entitled is fixed by
law. The Civil Code (Arts. 364 to 380) is silent as to
the use of a middle name. een Art. 176 of the
Family Code, as amended by R.A. 9225 (An Act
Allowing Illegitimate Children to Use the Surname
of their Father) is siled as to what middle name a
child may use.
An adopted child is entitled to all the rights provided
by law to a legitimate child without discrimination of
any kind, including the right to bear the surname of
her father and her mother. As she had become a
legitimate child on account of her adoption, it follows
that Stephanie is entitled to utilize the surname of
her father, Honorato Catindig, and that of her
mother, Gemma Garcia.
Since there is no law prohibiting an illegitimate child
adopted by her natural father, like Stephanie, to use,
as middle name her mother's surname, the High
 CIVIL LAW
Court found no reason why she should not be
allowed to do so.
NOTE: The Supreme Court granted the petition for 2
reasons:
1. The adopted child's continued use of her
mother's surname as her middle name will
maintain her maternal lineage; and
2. It will also eliminate the stigma of her
illegitimacy.
The Supreme Court, in granting the petition,
predicated its ruling upon the statutory principle
that adoption statutes, being humane and salutary,
should be liberally construed to carry out the
beneficent purposes of adoption. The modern trend
is to consider adoption not merely as an act to
establish a relationship of paternity and filiation, but
also as an act which endows a child with legitimate
status (In the Matter of the Adoption of Stephanie
Nathy Astorga Garcia, G.R. No. 148311, March 31,
2005).
Q: The petition filed by the parents in behalf of
their minor son Julian Lin Carulasan Wang
sought the dropping of the latter's middle name,
"Carulasan." The parents averred that their plan
for Julian to study in Singapore and adjust to its
culture necessitates the drop since in that
country, middle names or the mother's surname
are not carried in a person's name. They
therefore anticipate that Julian may be subjected
to discrimination on account of his middle name,
which is difficult to pronounce in light of
Singapore's Mandarin language which does not
have the letter "R" but if there is, Singaporeans
pronounce it as "L." Should the petition for the
dropping of his middle name be granted?
A: NO. Petitioners’ justification for seeking the
change in the name of their child, that of
convenience, was characterized by the Supreme
Court as amorphous, to say the least, and would not
warrant a favorable ruling. As Julian is only a minor
and has yet to understand and appreciate the value
of any change in his name, it is best that the matter
be left to his judgment and discretion when he
reaches legal age.
The State has an interest in the names borne by
individuals and entities for purposes of
identification, and that a change of name is a
privilege and not a right, such that before a person
can be allowed to change the name given him either
in his birth certificate or civil registry, he must show
proper or reasonable cause, or any compelling
reason which may justify such change. Otherwise,
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
the request would be denied (In Re: Petition for
change of name and/or correction/cancellation of
entry in civil registry of Julian Lin Carulasan Wang,
G.R. No. 159966, March 30, 2005).
NOTE: The touchstone for the grant of a change of
name is that there be proper and reasonable cause
for which the change is sought.
Q: Giana was born to Andy and Aimee, who at the
time of Giana’s birth were not married to each
other. While Andy was single at that time, Aimee
was still in the process of securing a judicial
declaration of nullity on her marriage to her ex-
husband. Gianna’s birth certificate, which was
signed by both Andy and Aimee, registered the
status of Gianna as “legitimate”, her surname
carrying that of Andy’s, and that her parents
were married to each other.
Can a judicial action for correction of entries in
Gianna’s birth certificate be successfully
maintained to:
a. Change her status from “legitimate” to
“illegitimate”; and
b. Change her surname from that of Andy’s
to Aimee’s maiden surname?
c. Instead of a judicial action, can
administrative proceedings be brought
for the purpose of making the above
corrections?
d. Assuming that Aimee is successful in
declaring her former marriage void, and
Andy and Aimee subsequently married
each other, would Gianna be legitimated?
(2008 Bar)
A:
a. A judicial action cannot be maintained to
change the status of Gianna from “legitimate”
to “illegitimate” child of Andy and Aimee.
While it is true that Gianna is the biological
daughter of Andy and Aimee conceived and
born without marriage between them,
Gianna is presumed, under the law as the
legitimate child of Aimee and her husband.
This filiation may be impugned only by the
husband. To correct the status of Gianna in
her birth certificate from “legitimate child of
Andy and Aimee” to “illegitimate child of
Andy and Aimee” will amount to indirectly
impugning her filiation as the child of
Aimee’s husband in a proper action. What
cannot be done directly cannot be done
indirectly.
b. A judicial action to change the surname of
Gianna from the surname of Andy to the
128
 PERSONS AND FAMILY RELATIONS
maiden surname of Aimee is also not
allowed. Gianna, being presumed to be the
legitimate child of Aimee’s husband is
required by law to be registered under the
surname of Aimee’s husband. While it is true
that Gianna’s registered surname is
erroneous, a judicial action for correction of
entry to change the surname of Gianna to
that of Aimee’s maiden surname will also be
erroneous. A judicial action to correct an
entry in the birth certificate is allowed to
correct an error and not to commit another
error.
Alternative Answers: It may be noted that the
problems does not show whether Gianna was born
while Aimee was living with her ex-husband. Neither
does it show who filed the judicial action to correct
the entries.
If the problem is intended only for purpose of
determining whether factual changes are in order,
then the answers are:
a. A Change from “legitimate” to “illegitimate” is
properupon proof of lack of marriage between
Andy and Aimee
b. If the child is considered illegitimate, then she
should follow the surname of her mother.
c. Under R.A. 9048, only typographical errors
are allowed to be corrected administratively.
The change of status from legitimate to
illegitimate is not typographical error and
even assuming that it is, its administrative
correction is not allowed under R.A. 9048.
Typographical error involving status, age,
citizenship, and geneder are expressly
excluded from what may be corrected
administratively.
The change of surname is also not allowed
administratively. R.A. 9048 provides for an
administrative procedure for change of first name
only and not for change of surname.
d. No, Gianna will no t be legitimated. While the
court may have declared the marriage void ad
initio and therefore, no marriage took place in
the eyes of the law, Gianna will still not be
legitimated. This is because at the time she
was conceived and born, her biological
parents could not havevalidly married each
other. For their marriage to be valid, the court
must first declare the first marriage null and
void. In the problem, Gianna was conceived
and born before the court has decreed the
nullity of her mother’s previous marriage.
129
NOTE: The word "principally" as used in the codal
provision is not equivalent to "exclusively" so that
there is no legal obstacle if a legitimate or
legitimated child should choose to use the surname
of its mother to which it is equally entitled. If the
mother's surname is used by the child since
childhood and the child has been using it already in
various records, then there is an ample justification
for the continuation of the use of the mother’s
surname. It is therefore, not whimsical, but on the
contrary, is based on a solid and reasonable ground,
i.e. to avoid confusion (Alfon v. Republic, G.R. No. L-
51201, May 29, 1980).
ABSENCE
The special status of a person who has left his
domicile and thereafter his whereabouts and fate are
unknown, it being uncertain whether he is already
dead or still alive (Olaguiviel v. Morada, 63 O.G.
4940).
Kinds of absence
1. Physical Absence
2. Legal Absence
3 Stages of Absence
1. Provisional Absence – when a person
disappears from his domicile his whereabouts
being unknown, without leaving an agent to
administer his property (NCC, Art. 381).
2. Declared Absence– when a person disappears
from his domicile and 2 years thereafter have
elapsed without any news about him or since the
receipt of the last news, or 5 years have elapsed
in case he left a person to administer his
property (NCC, Art. 384)
3. Presumptive Death – the absentee is presumed
dead (Jurado, 2011).
Provisional absence
1. When a person disappears from his domicile
2. His whereabouts are unknown; and
a. He did not leave any agent; or
b. He left an agent but the agent’s power has
expired
Remedy of an interested party, a relative or a friend of the
absentee toprotect the latter's interest
They may petition the Court for the appointment of a
representative to represent the absentee in all that may be
necessary.

Duty of the Court after appointing the representative
The Court shall:
1. Take the necessary measures to safeguard the rights
and interests of the absentee;
2. Specify the powers, obligations,
remuneration oftherepresentative;
3. Regulate the powers, obligations
remuneration according to the circumstances by
the rules concerning guardians (NCC, Art. 382).
Order of preference in the appointment of a
representative
1. Spouse present, except, when legally separated.
2. In the absence of spouse, anycompetent person (NCC,
Art. 383).
NOTE: The administrator of the absentee's property shall
be appointed in accordance with the same order.
DECLARTION OF ABSENCE
Requisite (NCC, Art. 384):
1. The absentee have disappeared from his
domicile;
2. His whereabouts are not known; and
3. He has been absent without any news for 2
years if noboby was left to administer his
property or 5 years if somebody was left to
administer such property.
Absence may be judicially declared if (NCC, Art.
387):
1. The absentee left no agent to administer his
property – after two (2) years without any
news about the absentee or since receipt of
the last news.
2. The absentee has left a person to administer
his property – after five (5) years
Person who may ask for the declaration of
absence (NCC, Art. 385)
2. Spouse present;
3. Heirs instituted in a will;
4. Relatives who may succeedby intestacy;
5. Persons who may have over the property of
the absentee some right subordinated to the
condition of his death.
Effectivity of judicial declaration of absence
Judicial declaration of absence take effect six (6)
months after its publication in a newspaper of
general circulation.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
CIVIL LAW
NOTE: A judicial declaration of absence is
necessary for interested persons to be able to
protect their rights, interests and benefits in
connection with the person who has disappeared.
It is also necessary to protect the interest of the
and absentee. (Sta. Maria, Jr., 2010)
and ADMINISTRATION OF THE PROPERTY OF THE
ABSENTEE
Administration of the property of the absentee
ceases when (NCC, Art. 389):
1. Absentee appears personally or by means of an
agent.
2. Death of the absentee is proved, and his testate
or intestate heirs appear.
3. A third person appears, showing by a proper
document that he has acquired the absentee's
property by purchase or other title.
PRESUMPTION OF DEATH
Kinds:
1. Ordinary presumption – ordinary absence;
absentee disappears under normal conditions
without danger or idea of death.
2. Extraordinary presumption – qualified
absence; disappearance with great probability
of death.
Rules in ordinary presumption of death (NCC, Art.
390)
In case of:
1. Disappearance upon or before reaching the age
of seventy five (75) years:
a. After an absence of seven (7) years -the
absentee is presumed dead for all purposes
except succession.
b. After an absence of ten (10) years - the
absentee is presumed dead for all purposes
including succession.
2. Disappearance at the age of seventy six (76)
years or older after an absence of five (5) years -
the absentee is presumed dead for all purposes
including succession.
NOTE: The word “absence” in the rule that a
presumption of death is raised by the “absence” of a
person from his domicile when unheard of for seven
years, means that a person is not at the place of his
domicile and his actual residence is unknown, and it
is for this reason that his existence is doubtful, and
that, after seven years of such absence, his death is
resumed. But removal alone is not enough (Gorham
130
 PERSONS AND FAMILY RELATIONS
v. Settegast, 98 SW 655, also cited by Sta. Maria,
2010).
Presumption of death of absentee under an
ordinary presumption
Absentee is presumed to have died under an
ordinary presumption at the end of the five, seven or
ten year period, as the case may be.
Presumption of death for all purposes
The following are presumed dead for all purposes
including the division of estate among heirs in case
of extraordinary presumption of death (NCC, Art.
391):
1. Person on board a vessel lost during a sea
voyage, or an airplane which is missing, who has
not been heard of for four (4) years since the
loss of the vessel or airplane;
2. Person in the armed forces who has taken at in
war, and has been missing for four (4) years;
3. Person who has been in danger of death under
other circumstances and his existence has not
been known for four (4) years.
Presumption of death of absentee under an
extraordinary presumption
The absentee presumed to have died under an
extraordinary presumption at the time of
disappearance. e.g. when the calamity took place.
Q: May a petition for the declaration of
presumptive death be the subject of a judicial
declaration, if it is the only question upon which
a competent court has to pass?
A: NO. Under the NCC, the presumption of death is
established by law and no court declaration is
needed for the presumption to arise. Moreover, it is
clear that a judicial declaration that a person is
presumptively dead, being a presumption juris
tantum only, subject to contrary proof, cannot
become final. If a judicial decree declaring a person
presumptively dead, cannot become final and
executory even after the lapse of the reglementary
period within which an appeal may be
taken, then a petition for such a declaration is
useless, unnecessary, superfluous and of no benefit
to the petitioner.
Q: Juana married Arturo in January 1973.
However, because the latter was unemployed the
spouses constantly argued. Thus, Arturo left the
conjugal dwelling on October 1975. Years passed
without any word from Arturo. Juana didn’t hear
131
any news of Arturo, his whereabouts or even if he
was alive or not. Believing that Arturo was
already dead, Juana married Dante on June 1986.
Subsequently, however, Dante's application for
naturalization filed with the United States
Government was denied because of the
subsisting marriage between Juana and Arturo.
Hence, on March, 2007, Juana filed a Petition for
declaration of presumptive death of Arturo with
the RTC. The RTC dismissed the petition on the
ground that Juana was not able to prove the
existence of a well-grounded belief that her
husband Arturo was already dead as required
under Article 41 of the Family Code.
b. Was the RTC correct in dismissing the
petition based on Article 41 of the Family
Code?
c. Will the petition for declaration of
presumptive death, therefore, prosper?
A:
a. NO. Since the marriages were both celebrated
under the auspices of the Civil Code, it is the Civil
Code that applies to this case not Art. 41 of the Family
Code. Under theCivil Code, proof of well-founded
belief is not required. Juana could not have been
expected to comply with the requirement of
proof of "well- founded belief" since the FC was
not yet in effect at the time of her marriage to
Dante. Moreover, the enactment of the FC in
1988 does not change this conclusion. The FC
shall have no retroactive effect if it impairs
vested rights. To retroactively apply the
provisions of the FC requiring Juana to exhibit
"well- founded belief" will, ultimately, result in
the invalidation of her second marriage, which
was valid at the time it was celebrated.
Such a situation would be untenable and would
go against the objectives that the Family Code
wishes to achieve.
b. NO. Under the NCC, the presumption of death is
established by law and no court declaration is
needed for the presumption to arise. For the
purposes of the civil marriage law, Art. 83 of the
Civil Code, it is not necessary to have the former
spouse judicially declared an absentee. The law
only requires that the former spouse has been
absent for seven consecutive years at the time of
the second marriage, that the spouse present
does not know his or her former spouse to be
living, that such former spouse is generally
reputed to be dead and the spouse present so
believes at the time of the celebration of the
marriage. Since death is presumed to have taken
place by the seventh year of absence, Arturo is to
 CIVIL LAW
be presumed dead starting October 1982.

Further, the presumption of death cannot be the

subject of court proceedings independent of the
settlement of the absentee’s estate. In case the
presumption of death is invoked independently
of such an action or special proceeding, there is
no right to be enforced nor is there a remedy
prayed for by the petitioner against her absent
husband. Neither is there a prayer for the final
determination of his right or status or for the
ascertainment of a particular fact, for the
petition does not pray for a declaration that the
petitioner's husband is dead, but merely asks for
a declaration that he be presumed dead because
he had been unheard of for seven years. In sum,
the petition for a declaration that the
petitioner's husband is presumptively dead,
even if judicially made, would not improve the
petitioner's situation, because such a
presumption is already established by law
(Valdez v. Republic, G.R. No. 180863, September 8,
2009).

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 132
 PERSONS AND FAMILY RELATIONS
Declaration of presumptive death for purpose of conrtacting subsequent marriage v. Opening succession
and declaration of absence under the Rules of Court
DECLARATION OF PRESUMPTIVE DEATH FOR THE PURPOSE OF:
OPENING OF SUCCESSION
NCC, Arts. 390-396
Absentee’s co-heirs,
heirs, assigns,
representative or
successors-in-interest
To open succession
GR: Absence of ten years.
XPN: If he disappeared after
the age of seventy-five years,
an absence of five years shall
be sufficient in order that his
succession may be opened
If the absentee appears, or
without appearing his
existence is proved, he shall
recover his property in the
condition in which it may be
found, and the price of any
property that may have been
alienated or the property
acquired therewith; but he
cannot claim either fruits or
rents. (Art. 392, Civil Code)
CONTRACTING SUBSEQUENT MARRIAGE DECLARATION OF ABSENCE
Applicable laws
Arts. 41-44, Family Code Rule 107, Rules of Court
Who may file petition
1. Spouse present;
2. Heirs instituted in the will;
Spouse present 3. Relatives who will succeed by
intestacy; or
4. Those who have over the property of
the absentee some right
subordinated to the
condition of his death (Sec. 2, Rule 107).
Purpose of petition
For the purpose of To appoint an administrator over
contracting subsequent the properties of the absentee. This
marriage by spouse present is proper only where the absentee
has properties to be administered
When to file petition
GR: 4 consecutive years absence of
spouse – and the spouse present After 2 years:
has a well-founded belief that the 1. From his disappearance and
absent spouse was already dead without any news about the
absentee; or
XPN: 2 consecutive years absence 2. From the last news about
of spouse – In case of the absentee.
disappearance where there is
danger of deathunder the After 5 years: If he left an administrator
circumstances set forth in the of his property (Sec. 2).
provisions of Article 391 of the
Civil Code (Art. 41, FC)
Effect of reappearance
It does not automatically The trustee or administrator shall cease
terminate the subsequent in the performance of his office, and the
marriage. To cause the property shall be placed at the disposal
termination of the subsequent of those who may have a right thereto.
marriage, the reappearance must
be made in an affidavit of
reappearance and the recording of
a sworn statement of the fact and
circumstances of such
reappearance in the civil registry.
If, however, there was previous
judgment annulling or declaring
the prior marriage void, then the
reappearance of the absent
spouse, the execution of the
affidavit, and the recording of the
sworn statement
shall not result to the termination
of the subsequent marriage.
133
 CIVIL LAW
PROPERTY
The human body is NOT a property

It is neither real nor personal property, whether

CHARACTERISTICS
alive or dead. It is not even property at all, in that
it generally cannot be appropriated.

Property While a human being is alive, he cannot, as such,

be the object of a contract, for he is considered
All things which are or may be the object of outside the commerce of man. He may donate part
appropriation considered as either real or of his blood, may even sell part of his hair, but he
personal property (NCC, Art. 414). cannot sell his body (Paras, 2008).

It is an object or a right which is appropriated or
susceptible of appropriation by man, with capacity
to satisfy human wants and needs (Pineda, 1999).
NOTE: Property does not only cover material
things because it mentions of rights which could
either be classified as real or personal right.
Under the R.A. 7170 or the Organ Donation Act of
1991, donation of all or a part of a human body
may only occur after a person’s “death” (i.e., the
irreversible cessation of circulatory and
respiratory functions or the irreversible cessation
of all functions of the entire brain, including the
brain system) [Sec. 2(j), RA 7170, as amended]

Q: Are the rights under the Bill of Rights

considered as property?
CLASSIFICATIONS OF PROPERTY
A: NO. They are not susceptible of appropriation.

Requisites for a thing to be considered as 1. As to mobility

property (USA) a. Immovable or real property; and
b. Movable or personal property.
1. Utility – Capacity to satisfy human wants; 2. As to ownership
2. Substantivity/ Individuality – It has a separate a. Public dominion; and
and autonomous existence. It can exist by b. Private ownership.
itself and not merely as a part of a whole 3. As to alienability
(Paras, 2008). a. Alienable; and
3. Appropriability - Susceptibility to b. Inalienable.
ownership/possession, even if not yet actually 4. As to individuality
appropriated. a. Specific property; and
b. Generic property.
Properties NOT susceptible of appropriation 5. As to susceptibility to touch
a. Tangible; and
1. Common things (res communes) – b. Intangible.
6. As to susceptibility to substitution
GR: Those properties belonging to everyone. a. Fungible; and
While in particular no one owns common b. Non fungible.
property, still in another sense, res communes 7. As to accession
are really owned by everybody in that their a. Principal; and
use and enjoyment are given to all of mankind b. Accessory.
(Paras, 2008). 8. As to existence
e.g. air, wind, sunlight a. Existing or present property (res
existentes); and
XPN: Those that may be appropriated under b. Future property (res futurae).
certain conditions in a limited way. 9. As to consumability
e.g. Electricity a. Consumable; and
b. Non-consumable.
2. Not susceptible due to physical impossibility 10. As to divisibility
e.g. Sun a. Divisible; and
b. Indivisible
3. Not susceptible due to legal impossibility
e.g. Human body

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 134
 PROPERTY
CLASSIFICATION OF PROPERTY BY MOBILITY
REAL OR IMMOVABLE PROPERTY
(1995, 1997, 2007 Bar)
Categories of immovable property:
Real properties are categorized by: (NIDA)
1. Nature – Those which cannot be carried from
place to place;
2. Incorporation – Those which are attached to
an immovable in a fixed manner and
considered as an integral part thereof,
irrespective of its ownership;
3. Destination – Things placed in buildings or on
lands by the owner of the immovable or his
agent in such a manner that it reveals the
intention to attach them permanently thereto;
and
4. Analogy – Classified by express provision of
law.
IMMOVABLE BY NATURE AND
INCORPORATION
Par. 1, Art. 415. Land, buildings, roads and
constructions of all kinds adhered to the soil.
Land
By its very nature is immovable property. In
whatever transaction land is involved, it is always
immovable.
A truckful of soil taken from the land (like garden
soil) becomes a personal property because it is no
longer adhered to the land. However, the moment
it is used to cover a land for ornamentation or
gardening, it becomes immovable again (Pineda,
2009).
Building
GR: A building is always immovable whether built
in one’s own land or rented.
XPN: When a building is merely superimposed on
the soil or is sold for immediate demolition, in
which case it may be considered as movable or
personal property.
e.g. Barong-barongs are not permanent structures
but mere superimpositions on land.
Effect of demolition of a house
135
Once a house is demolished, its character as an
immovable ceases because a house is classified as
an immovable property by reason of its adherence
to the soil on which it is built (Bicerra v. Teneza,
G.R. No. L-16218, November 29, 1962).
Mortgage of a building erected on a land
belonging to another
A building, by itself, may be mortgaged apart from
the land on which it was built even if a mortgage
of land necessarily includes, in the absence of
stipulation of the improvements thereon,
buildings. Such a mortgage would still be a real
estate mortgage (REM) for the building would still
be considered immovable property even if dealt
with separately and apart from the land (Yee v.
Strong Machinery Company, G.R. No. 11658,
February 15, 1918).
A building can be the subject of a chattel
mortgage
When the parties have so expressly designated,
especially when it is considered that the property
given as a security is a house of mixed materials
which by its very nature is considered as personal
property (Luna v. Encarnacion, G.R. No. L-4637,
June 30, 1952).
Requisites for a building to be the subject of a
chattel mortgage
1. Parties mutually agreed to consider the
house a personal property; and
2. That no innocent third party is
prejudiced.
NOTE: Under the doctrine of estoppel, parties to a
contract who agreed to treat as personal property
that which by nature would be real property are
prohibited from assuming inconsistent positions
and repudiating an obligation voluntarily
assumed.
A building, subjected to a chattel mortgage cannot
be sold extrajudicially (Pineda, 2009).
Par. 2, Art. 415. Trees, plants and growing
fruits, while they are attached to the land or
form an integral part of an immovable.
Trees and plants
Trees may be either be:
1. A real property; or
 CIVIL LAW
a. By nature - If they are spontaneous Assessment Appeals v. Meralco, G.R. No. L-15334,
products of the soil; or January 31, 1964).
b. By incorporation - If they have been
planted through cultivation or labor. IMMOVABLE BY INCORPORATION & BY
2. A personal property. DESTINATION

The moment trees are detached or
uprooted from the land it is considered as
personal property.
NOTE: In case of uprooted timber, they
are still not considered as personal
property because timber is an integral
part of the timber land.
Par. 4, Art. 415. 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.
“Placed by the owner”

Growing fruits This means that the objects must be placed by the
owner of the immovable and not necessarily the
GR: Growing fruits are considered as real owner of the object.
property so long as they are still attached to the
soil. Once removed from the soil, they become Requisites
personal properties.
1. Placed by the owner or (by the tenant) as
XPN: Growing fruits may be exceptionally treated agent of the owner; and
as personal property pursuant to the provisions of 2. With the intention of attaching them
Art. 416(2) of the New Civil Code (Rabuya, 2008). permanently even if adherence will not
involve breakage or injury.
E.g.
1. For the purposes of sale of the whole or part Par. 3 distinguished from Par. 4
of the crops
2. For purposes of attachment and execution; PAR. 3 PAR. 4
and Cannot be separated Can be separated from
3. For applying the provisions of the Chattel from the immovable the immovable without
Mortgage Law. without breaking or breaking or
deterioration. deterioration.
IMMOVABLE BY INCORPORATION Need not be placed by Must be placed by the
the owner. owner of the
immovable, or by his
Par. 3, Art. 415. Everything attached to an agent whether express
immovable in a fixed manner, in such a way or implied.
that it cannot be separated therefrom without Real property by Real property by
breaking the material or deterioration of the incorporation. incorporation and
object. destination.

Res vinta Par. 5, Art. 415. Machinery, receptacles,

These are immovables by incorporation, which
when separated from the immovable, regain their
condition as movable.
Steel towers are personal properties
They are not buildings adhered to the soil [(NCC,
Art. 415(1)]; they are not attached to an
immovable in a fixed manner; they can be
separated without substantial damage or
deterioration, and they are not machineries
intended for works on the land (Board of
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 & which tend directly to
meet the needs of the said industry or works.
Requisites for machinery to be considered real
property (COTE)
1. The industry or work must be Carried on
in a building or on a piece of land; and
2. The machinery must:
a. Be placed by the Owner of the
tenement or his agent;

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 136
 PROPERTY
b. Tend directly to meet the needs of the
said industry or work; and
c. Be Essential and principal to the
industry or work, and not merely
incidental thereto.
Machinery placed by a tenant or by a
usufructuary is NOT real property.
Since it is placed by a person having only a
temporary right, it does not become immobilized
(Valdez v. Central Altagracia, 225 U.S. 58, 1912).
Where a tenant places the machinery under the
express provision of lease that it shall become a
part of the land belonging to the owner upon the
termination of the lease without compensation to
the lessee, the tenant acts as an agent of the owner
and the immobilization of the machineries arises
from the act of the owner in giving by contract a
permanent destination to the machinery. (Ibid.)
Equipment and living quarters of the crew
permanently attached are immovable
properties
It is intended to meet the needs of the industry
being undertaken by MPC. The equipment
partakes of the nature of the immovable upon
which it has been placed.
The living quarters, if attached to the immovable
platform with permanence, becomes an
immovable as well. Permanence means they
cannot be separated without destroying the
platform or the quarters. If the attachment is not
permanent, or not merely superimposed on the
platform, then the living quarters are movable
properties (2007 Bar).
Equipment of a transportation business
classified as personal property
A transportation business is not carried on in a
building or on a specified land. Hence, equipment
destined only to repair or service a transportation
business may not be deemed real property, but
personal property.
Machines must be essential and principal
elements in the industry and must directly meet
the needs of said industry. It does not include
movables which are merely incidentals, without
which the business can still continue or carry on
their functions.
Cash registers, typewriters, etc. usually found and
used in hotels and restaurants are merely
137
incidentals not considered immobilized by
destination because these businesses can carry on
their functions without these equipments
(Mindanao Bus Co. v. City Assessor and Treasurer,
G.R. No. L-17870, September 29, 1962).
Machineries bolted or cemented on real
property mortgaged
It is NOT considered an immovable property. The
fact that machineries were bolted or cemented on
real property mortgaged does not make them ipso
facto immovable under Art. 415 (3) and (5) as the
parties intent has to be looked into.
When immovable property by nature may be
treated as a chattel
Even if the properties appear to be immovable by
nature, nothing detracts the parties from treating
them as chattels to secure an obligation under the
principle of estoppel (Tsai v. CA, G.R. No. 120098,
October 2, 2001).
Effect of temporary separation of movables
from the immovables to which they are
attached
There are two views:
1. They continue to be regarded as
immovables; and
2. Fact of separation determines the
condition of the objects thus recovering
their condition as movables.
Machines though essential and principal
elements of the industry are personal
properties when provided in the lease
agreement
The machines should be deemed personal
property pursuant to the Lease Agreement – is
good only insofar as the contracting persons are
concerned. Hence, while the parties are bound by
the Lease Agreement, third persons acting in good
faith are not affected by its stipulation
characterizing the subject machinery as personal
(Serg’s Products, Inc. v. PCI Leasing and Finance,
Inc., G.R. No. 137705, August 22, 2000).
Par. 6, Art. 415. Animal houses, pigeon-houses,
beehives, fish ponds or breeding places of
similar nature, in case their owner has placed
them or preserves them with the intention to
have them permanently attached to the land,
and forming a permanent part of it; the
animals in these places are included.
 CIVIL LAW
These are immovables by destination. They are
considered as real property if adhered to the soil
in a permanent manner. The animals in the houses
are considered part of the immovable.
Beehives, Fishponds Or Breeding Places of
Similar Nature Are Real Property; Animals
Contained Therein, Included
When purposely constructed or attached to the
ground or on another immovable (like a tree-
wall), fishponds and other similar breeding places,
like cemented container where breeding of fishes
or crustaceans is done, are considered immovable
property if the owner of the land or tenement
intended them to be permanent
The animals in the animal houses, the pigeons in
the pigeon houses, the bees in the beehives, the
fish in the fishponds are included and considered
part of the immovable property (Pineda, 2009).
Cages are not included
It will be considered as personal property since
they can be moved from one place to another.
Par. 7, Art. 415. Fertilizer actually used on a
piece of land.
Fertilizers in sacks are not included
Fertilizers which are still in the sacks, although
there is intention to place them or use them on
land, are movable. Only fertilizers actually used on
a piece of land are deemed immovable since it is
already placed in the land and can never be
separated from it.
Par. 8, Art. 415. Mines, quarries and slag
dumps, while the matter thereof forms part of
the bed, and waters either running or
stagnant.
By their nature, mines quarries and slag dumps
are immovable property.
Mines - These are mineral lands where
excavations are done to extract minerals such as
gold, ores etc.
Quarries - These are lands where stones are
chipped of or where sand is being extracted.
Slag dumps - They consist of waste and dirt taken
from a mine and mounted on the surface of the
ground under excavation
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Running or Stagnant Waters – These waters
refer to waters still running through the soil or
ground in mines and quarries (Pineada, 2009).
Par. 9, Art. 415. Docks and structure which,
though floating, are intended by their nature
and object to remain at a fixed place on a river,
lake or coast.
When power barges are classified as real
properties
Power barges are categorized as immovable
property by destination, being in the nature of
machinery and other implements intended by the
owner for an industry or work which may be
carried on in a building or on a piece of land and
which tend directly to meet the needs of said
industry or work (Fels Energy, Inc. v. Province of
Batangas, G.R. No. 168557, February 19, 2007).
Floating platform is an immovable property
The platform is an immovable property by
destination. It was intended by the owner to
remain at a fixed place on a river or coast. Art. 415
(9) of the NCC considers as real property “docks
and structures which, though floating are
intended by their nature and object to remain at a
fixed place on a river, lake, or coasts” (Fels Energy,
Inc. v. The Province of Batangas, G.R. No. 168557,
February 16, 2007).
Vessels are considered personal property under
the civil law and common law and occasionally
referred to as peculiar kind of personal property.
It is essential that a record of documents affecting
the title to a vessel be entered in the record of the
Collector of Customs at the port of entry (Code of
Commerce, Art. 585).
Par. 10, Art. 415. Contracts for public works
and servitudes and other real rights over
immovable property.
Immovable By Analogy
These properties refer to contracts for public
works, servitudes and real rights over immovable
property (like usufruct). They are inseparable
from their sources which are immovable, Hence,
for convenience, they are considered immovable
not by their nature, destination or incorporation
but by analogy. While no tangible, they have the
characteristics of real property (Pineda, 2009).
e.g. Contract over a construction of a bridge
138
 PROPERTY
Art. 416. The following things are deemed to
be personal property:
(1) Those movables susceptible of
appropriation which are not included in the
preceding article;
(2) Real property which by any special
provision of law is considered as personalty
(3) Forces of nature which are bought under
control by science; and
(4) In general, all things which can be
transported from place to place without
impairment of the real property to which they
are fixed.
Art. 417 The following are also considered as
personal property:
(1) Obligations and actions which have for
their object movables or demandable sums;
and
(2) Shares of stock of agricultural, commercial
and industrial entities, although they may have
real estate
PERSONAL OR MOVABLE PROPERTY
1995 Bar
Movable properties (SOFTSS)
1. Movables Susceptible of appropriation
which are not included in Art. 415;
2. Real property which by any Special
provision of law considers as personalty;
e.g. Growing crops under the Chattel
Mortgage Law
3. Forces of nature which are brought under
the control of science ;
e.g. Electricity generated by electric
powers, solar light for batteries power.
4. In general, all things which can be
Transported from place to place without
impairment of the real property to which
they are fixed (NCC, Art. 416);
5. Obligations and actions which have for
their object movables or demandable
sums; and
6. Shares of stock of agricultural,
commercial and industrial entities,
although they have real estate (NCC, Art.
417).
Special Kind of Personal Property
139
The author, composer, painter, sculptor, inventor
have rights over their works. These rights are
personal property (Pineda, 2009).
Interest in business is a personal property
With regard to the nature of the property
mortgaged which is one-half interest in the
business, such interest is a personal property
capable of appropriation and not included in the
enumeration of real properties in articles 335 of
the Civil Code, and may be the subject of mortgage
(Strochecker v. Ramirez, G.R. No. 18700, September
26, 1922).
The business of providing telecommunication
is a personal property
The business of providing telecommunication or
telephone service is likewise personal property
which can be the object of theft under Art. 308 of
the RPC.
Indeed, while it may be conceded that
international long distance calls, the matter
alleged to be stolen in the instant case, take the
form of electrical energy, it cannot be said that
such international long distance calls were
personal properties belonging to PLDT since the
latter could not have acquired ownership over
such calls. PLDT merely encodes, augments,
enhances, decodes and transmits said calls using
its complex communications infrastructure and
facilities (Laurel v. Abrogar, G.R. No. G.R. No.
155076, January 13, 2009).
Tests to determine whether a property is a
movable property (MES)
a. Test of Exclusion – Everything not included in
Art. 415 of NCC; e.g. ships or vessels or
interest in a business
b. By reason of a Special law – Immovable by
nature but movable for the purpose of the
special law; e.g. Growing crops for purposes
of the Chattel Mortgage Law
c. Test of Mobility – If the property is capable of
being carried from place to place without
injuring the real property to which it may in
the meantime be attached.
Art. 418. Movable property is either
consumable or non-consumable. To the first
class belong those movables which cannot be
used in a manner appropriate to their nature
without their being consumed; to the second
class belong all others.
CLASSIFICATION OF PROPERTY BY NATURE
 CIVIL LAW
Properties classified according to enter into co-production, joint ventures or
consumability production-sharing agreements with private
individuals or corporations for their exploration,
1. Consumable property – That which cannot development and utilization.
be used according to its nature without
being consumed or being eaten or used NOTE: In order to be classified as property of
up; and public dominion, an intention to devote it to
2. Non-consumable property – That which public use or to public service is sufficient and it is
can be used according to its nature not necessary that it must actually be used as
without being consumed or being eaten such.
or used up.
Art. 420. The following things are property of
Properties classified according to public dominion:
susceptibility to substitution
(1)Those intended for public use, such as
1. Fungible property – That property which roads, canals, rivers, torrents, ports and
belongs to a common genus permitting its bridges constructed by the State, banks,
substitution; and shores, roadsteads, and others of similar
2. Non- fungible property – That property character;
which is specified and not subject to
substitution. (2)Those which belong to the State, without
being for public use, and are intended for
NOTE: As to whether a property is fungible or some public service or for the development of
non-fungible is determined by the agreement the national wealth.
of the parties and not on the consumability of
the thing. Q: Iloc Bilag sold a sold to respondents
separately various portions of a 159,496-
Art. 419. Property is either of public dominion square meter parcel of land designated by the
or of private ownership Bureau of Lands as Approved Plan No. 544367,
Psu 189147 situated at Sitio Benin, Baguio City
CLASSIFICATION OF PROPERTY BY (subject lands), and that they registered
OWNERSHIP the corresponding Deeds of Sale with the
Register of Deeds of Baguio City. This land is
1. In relation to the State forms part of the Baguio Townsite Reservation
a. Public Dominion; and which is a public land. Respondents, alleged to
b. Patrimonial. have been harassed and threatened by
2. In relation to political subdivisions/local petitioners, filed a petition for Quieting of title
government unit with prayer of Preliminary Injunction before
a. Public use; and the RTC Br. 61 . Petitioners countered, among
b. Patrimonial. others, that RTC has no jurisdiction. Should the
3. In relation to private persons petition be granted?
a. Owned individually; and
b. Owned collectively. A: No. since the subject lands are untitled and
unregistered public lands, then petitioners
NOTE: Sacred and religious objects are considered correctly argued that it is the Director of Lands
outside the commerce of man. They are neither who has the authority to award their ownership.
public nor private party (Barlin v. Ramirez, G.R. No. Thus, the RTC Br. 61 correctly recognized its lack
L-2832, November 24, 1906). of power or authority to hear and resolve
respondents' action for quieting of title.
PUBLIC DOMINION
Kinds of property of public dominion (USD)
It means ownership by the public in general. It a. For public Use;
may also mean properties or things held by the b. Intended for public Service and not for
State by regalian right. public use; and
c. For the Development of the national
Properties classified as public dominion cannot be wealth (NCC, Art. 420).
alienated but are not totally outside the commerce
of man as the Constitution allows the State to

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 140
 PROPERTY
Characteristics of properties of public
dominion (ULEP-ROB)
1. In general, they can be Used by
everybody;
2. Cannot be Levied upon by execution or
attachment;
3. May Either be real or personal property;
4. Cannot be acquired by Prescription;
5. Cannot be Registered under Land
Registration Law and be the subject of
Torrens Title;
6. Outside the commerce of man – cannot be
alienated or leased or be subject of any
contract;
7. Cannot be Burdened by voluntary
easement.
Art. 421. All other property of the State, which
is not of the character stated in the preceding
article, is a patrimonial property.
Patrimonial Property
This is a property pertaining to the State which is
not intended for public use, public service, or for
the development of the national wealth. It is
intended rather for the attainment of the
economic ends of the State, that is, for its
subsistence.
Art. 422. Property of public dominion, when
no longer intended for public use or for public
service, shall form part of the patrimonial
property of the State.
Conversion From Property of Public Dominion
To Patrimonial Property, How Effected.
When no longer intended or operated for public
use or public service, a property of public
dominion shall form part of the State’s patrimonial
property as of the date the Government, through
the Executive or Legislative Departments, has
formally declared that it is no longer needed for
said purposes (Ignacio vs. Director of Land [S.C], 58
Off. Gaz. 2403 [1960]; Cebu Oxygen Acetylynne Co.
vs. Bercilles, 66 SCRA 481).
Art. 423. The property of provinces, cities, and
municipalities is divided into property for
public use and patrimonial property
Art. 424. Property for public use, in the
provinces, cities, and municipalities, consist of
the provincial roads, city streets, municipal
streets, the squares, fountains, public waters,
promenades, and public works for public
service paid by said provinces, cities, or
141
municipalities
All other property possessed by any of them is
patrimonial and shall be governed by this
Code, without prejudice to the provisions of
special laws.
Properties for public service and properties
for the development of national wealth
1. Public service – It depends on who pays
for the service. If paid for by the political
subdivision, public; if for profit,
patrimonial; and
2. National wealth – It is still property for
public use under the regalian doctrine.
Property of municipal corporations
1. Provincial roads;
2. City streets;
3. Municipal streets;
4. Squares;
5. Fountains;
6. Public waters;
7. Promenades; and
8. Public works for public service paid for by
said provinces, cities, or municipalities
(NCC, Art. 424).
NOTE: All other property possessed by any of
them are patrimonial.
Charging of fees does not remove property as
public dominion
The charging of fees to the public does not
determine the character of the property whether
it is of public dominion or not. The airport lands
and buildings are devoted to public use because
they are used by the public for international and
domestic travel and transportation. The terminal
fees MIAA charges to passengers, as well as the
landing fees MIAA charges to airlines, constitute
the bulk of the income that maintains the
operations of MIAA (Manila International Airport
Authority v. CA, G.R. No. 155650, July 20, 2006).
PRIVATE OWNERSHIP
Art. 425. Property of private ownership,
besides the patrimonial property of the State,
provinces, cities, and municipalities, consists
of all property belonging to private persons,
either individually or collectively.
 CIVIL LAW
Properties in private ownership of private
persons or entities
All properties not belonging to the State or its
political subdivision are properties of private
ownership pertaining to private persons, either
individually or collectively.
Patrimonial property of the State
It is the property intended for the attainment of
the economic ends of the State, that is, for
subsistence. It is owned by the State in its private
or proprietary capacity. It is the property not
devoted to public use, public service, or the
development of the national wealth.
An executive or legislative act is necessary to
reclassify property into patrimonial. The
conversion cannot be inferred from non-use.
NOTE: It may be disposed of by the State in the
same manner that private individuals dispose of
their own property subject, however, to
administrative laws and regulations.
The fact that the Roppongi site has not been used
for a long time for actual Embassy service does
not automatically convert it to patrimonial
property. An abandonment of the intention to use
the Roppongi property for public service and to
make it patrimonial property must be definite.
Abandonment cannot be inferred from the non-
use alone (Laurel vs Garcia, G.R. No. 92013, July 25,
1990).
Any such conversion happens only if the property
is withdrawn from public use. Accordingly, the
withdrawal of the property in question from
public use by the City of Cebu and its subsequent
sale to the petitioner is valid (Cebu Oxygen and
Acetylene Co. v. Bercilles, 66 SCRA 481, August 29,
1975).
Sewage system of a city is a patrimonial
property
It is property of the city, purchased with private
funds and not devoted to public use (it is for
profit). It is therefore patrimonial under the Civil
Code. Nor can the system be considered “public
works for public service” under Art. 424 because
such classification is qualified by ejusdem generis;
it must be of the same character as the preceding
items (City of Cebu v. NAWASA, G.R. No. 12892,
April 20, 1960).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Private ownership of land prohibited to Aliens;
KRIVENKO DOCTRINE
General Rule: Aliens have no right to acquire any
public or private agricultural, commercial or
residential lands in the Philippines.
XPN: Aliens may only acquire such lands by
hereditary succession (Krivenko vs Registry of
deeds, G.R. No. L-630, November 15, 1947).
Effect of a subsequent sale by the disqualified
alien vendee to a qualified Filipino citizen
If land is invalidly transferred to an alien who
subsequently becomes a citizen or transfers it to a
citizen, the flaw in the original transaction is
considered cured and the title of the transferee is
rendered valid.
Thus, the subsequent transfer of the property to
qualified Filipinos may no longer be impugned on
the basis of invalidity of the initial transfer. The
objective of the constitutional provision to keep
our lands in Filipino hands has been achieved (Lee
v. Republic of the Philippines, G.R. No. 12819,
October 3, 2001).
NOTE: The constitutional proscription on alien
ownership of lands of the public or private domain
was intended to protect lands from falling in the
hands of non-Filipinos (Lee v. Republic of the
Philippines, G.R. No. 12819, October 3, 2001).
Regalian Doctrine: All lands not otherwise
appearing to be clearly within private ownership
are presumed to be owned by the state (Pineda,
2009).
Reversion - An action where the ultimate relief
sought is to revert the land back to the
government under the Regalian Doctrine (Pineda,
2009).
Art. 426. Whenever by provision of the law, or
an individual declacration, the expression
“immovable things or property,” or “movable
things or property, “is used, it shall be deemed
to include, respectively, the things
enumerated in Chapter 1 and in Chapter 2.
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
collection, books medals, arms, clothing,
horses or carriages and their accessories,
142
 PROPERTY
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.
“Muebles” Or “Furniture” When Used Alone;
Effects.
If used alone in a contract or agreement, it will not
include things found therein like money, jewelry,
collections, books, medals, arms, clothing, etc.,
which do not have as their principal purpose the
furnishing or the ornamenting of the building
where the “muebles” or “furniture” is found.
XPN: When the law or the individual declaration
clearly provides that the aforesaid things are
included.
OWNERSHIP
Art. 427. Ownership may be exercised over
things or rights.
It is the juridical relation of a person over a thing
by virtue of which said person has the exclusive
power or authority to receive all the benefits and
advantages arising from said thing, save those
restricted by law or the recognized rights of
others.
Kinds of ownership
1. Full ownership – Includes all the rights of an
owner;
NOTE: Naked ownership + Usufruct
2. Naked ownership – Ownership where the
rights to the use and to the fruits have been
denied;
NOTE: Full ownership – Usufruct
3. Sole ownership – Ownership is vested in only
one person; and
4. Co-ownership– Ownership is vested in two or
more persons. There is Unity of the property,
and plurality of the subjects.
Characteristics of ownership
143
1. Elastic – Power/s may be reduced and
thereafter automatically recovered upon the
cessation of the limiting rights;
2. General – The right to make use of all the
possibilities or utility of the thing owned,
except those attached to other real rights
existing thereon.
3. Exclusive – There may be two or more owners,
but only one ownership;
4. Independent – Other rights are not necessary
for its existence; and
5. Perpetual – Ownership lasts as long as the
thing exists. It cannot be extinguished by non-
user but only by adverse possession.
Q: Respondents inherited the subject property
from Emiliana Bacalso, by virtue of Decree No.
98992. Sometime later, they found the heirs of
Alejandra Delfin to be occupying the said
property, to which they even constructed
houses there. The heirs argued they have
better right for it was inherited to them after it
was bought by the predecessor from Emiliana
Bacalso; also, they are the ones paying the
subject property’s realty taxes. Do the
respondents have the better right to the
ownership and possession of the subject
property?
A: Yes, respondents have the better right to the
ownership and possession of the subject property.
The basis is the LRA certification, daybook entry,
and Decree No. 98992 that was issued to Emiliana
Bacalso. The Decree bars all claims and rights
which arose as may have existed prior to the
decree of registration.
Art. 428. The owner has the right to enjoy and
dispose of a thing, without other limitations
than those established by law.
The owner has also a right of action against
the holder and possessor of the thing in order
to recover it.
Art. 429. The owner or lawful possessor of a
thing has the right to exclude any person from
the enjoyment and disposal thereof. For this
purpose, he may use such force as may be
reasonably necessary to repel or prevent an
actual or threatened unlawful physical
invasion or usurpation of his property
JUS UTENDI, FRUENDI, ABUTENDI, VINDICANDI,
DISPODENDI, POSSIDENDI, ACCESIONES
Attributes of ownership
 CIVIL LAW
1. Right to enjoy (jus utendi); (NCC, Art. 428)
2. Right to the fruits (jus fruendi);
3. Right to abuse (jus abutendi);
4. Right to dispose (jus dispodendi); (NCC Art.
428)
5. Right to recover (jus vindicandi); (NCC. Art.
428)
6. Right to accessories (jus accessiones); and
7. Right to possess (jus possidendi).
8. Right to exclude (NCC, Art. 429)
9. Right to enclose (NCC, Art. 430)
Lease merely follows the property as a lien or
encumbrance
Q: On April 15, 1991, Nicolasa authorized her
daughter, Carmelita, Artemio's sister, to
mortgage the subject property to Jose, the
predecessor-in-interest of Jose, Jose Jr. and
Virginia in order to secure a loan in the
amount of P112,000.00. As Nicolasa failed to
settle her loan obligation when it fell due, Jose,
led an application for extra-judicial
foreclosure of mortgage before the Regional
Trial Court of Olongapo City, Branch 72 (RTC),
docketed as Case No. 07-0-91. After the
requirements of posting, notices, and
publication were complied with, the subject
property was sold at a public auction, where
Jose emerged as the highest bidder. A
Certificate of Sale was thus issued in his favor.
The period of redemption expired without the
subject property being redeemed; hence, a
Final Bill of Sale was issued and registered in
Jose's name. Thereafter, the latter executed an
Affidavit of Consolidation of Ownership. This
notwithstanding, Nicolasa persisted in her
occupancy of the subject property and refused
to deliver possession to Jose. Is the Writ of
Possession and Notice to Vacate issued by the
RTC is valid?
A: Yes. "It is well-settled that the purchaser in an
extrajudicial foreclosure of real property becomes
the absolute owner of the property if no
redemption is made within one [(1)] year from the
registration of the certificate of sale by those
entitled to redeem. As absolute owner, he is
entitled to all the rights of ownership over a
property recognized in Article 428 of the New
Civil Code, not least of which is possession, or jus
possidendi[.]"
It should be clarified that the purpose of a petition
for the issuance of a writ of possession under Act
No. 3135, as amended by Act No. 4118, is to
expeditiously accord the mortgagee who has
already shown a prima facie right of ownership
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
over the subject property (based on his
consolidated title over the same) his incidental
right to possess the foreclosed property. To
reiterate, " [p]ossession being an essential right of
the owner with which he is able to exercise the
other attendant rights of ownership, after
consolidation of title[,] the purchaser in a
foreclosure sale may demand possession as a
matter of right."
Thus, it is only upon a credible showing by a third
party claimant of his independent right over the
foreclosed property that the law's prima facie
deference to the mortgagee's consolidated title
should not prevail. Verily, a mere claim of
ownership would not suffice. As jurisprudence
prescribes, the demonstration by the third party-
claimant should be made within the context of an
adversarial hearing, where the basic principles of
Evidence and Civil Procedure ought to be
followed, such as: (1) it is the claimant who has
the burden of proving his claim; (2) the claim
must be established through a preponderance of
evidence; and (3) evidence not presented or
formally offered cannot be admitted against the
opposing party. In this case, none of these
principles were followed for the CA considered
evidence that were not only submitted in a totally
different case against an entirely different party,
but are also innately inadequate to — at least —
prima facie show the source of the third party
claimant's independent title, all to the detriment
of the mortgagee who had already consolidated
his title to the contested property.(Heirs of
Peñaflor v. Dela Cruz, G.R. No. 197797, August 8,
2017)
REMEDIES TO RECOVER POSSESSION
Legal remedies to recover possession of one’s
property
1. Personal property – Replevin
2. Real property
a. Accion Interdictal;
i. Forcible entry; or
ii. Unlawful detainer.
b. Accion Publiciana; or
c. Accion Reinvindicatoria.
3. Ancillary remedies common to both
a. Writ of preliminary mandatory
injunction; or
b. Writ of possession.
Q: Spouses Gregorio and Rosario Centeno
previously owned the subject lots, which they
mortgaged in favor of Rural Bank of Sta.
144
 PROPERTY
Barbara, Inc. as security for a P1,753.65 loan.
Sps. Centeno, however, defaulted on the loan,
prompting the bank to cause the extrajudicial
foreclosure of the mortgage. Consequently, the
subject lots were sold to the bank, being the
highest bidder at the auction sale.Sps. Centeno
failed to redeem the subject lots within the
one-year redemption period pursuant to
Section 6 of Act No. 3135. Yet, they still
continued with the possession and cultivation
of the aforesaid properties.
Gerry Centeno, son of Sps. Centeno, later on
purchased the said lots from his parents.
Accordingly, Rosario paid the capital gains
taxes on the sale transaction and tax
declarations were eventually issued in the
name of Gerry.
On March 19, 1998, Rural Bank of Sta. Barbara,
Inc. filed a petition for the issuance of a writ of
possession before the trial court, claiming
entitlement to the said writ by virtue of the
Final Deed of Sale covering the subject lots.
Gerry opposed the petition, arguing that he
purchased and has, in fact, been in actual, open
and exclusive possession of the same
properties for at least 15 years. Is the Rural
Bank of Sta. Barbara, Inc. is entitled to a writ of
possession over the subject lots?
A: Yes. It is well-established that after
consolidation of title in the purchasers’ name for
failure of the mortgagor to redeem the property,
the purchasers right to possession ripens into the
absolute right of a confirmed owner. At that point,
the issuance of a writ of possession, upon proper
application and proof of title, to a purchaser in an
extrajudicial foreclosure sale becomes merely a
ministerial function, unless it appears that the
property is in possession of a third party claiming
a right adverse to that of the mortgagor.
Gerry Centeno acquired the subject lots from his
parents, Sps. Centeno, on March 14, 1988 after
they were purchased by Rural Bank of Sta.
Barbara, Inc. and its Certificate of Sale at Public
Auction was registered with the Register of Deeds
of Iloilo City in 1971. It cannot therefore be
disputed that Gerry is a mere successor-in-
interest of Sps. Centeno. Consequently, he cannot
be deemed as a third party who is actually holding
the property adversely to the judgment obligor
under legal contemplation.(Rural Bank of Sta.
Barbara, Inc. v. Gerry Centeno, G.R. 200667, March
11, 2013)
Q: On June 26, 2003, petitioner Teodorico A.
Zaragoza (petitioner) bought a 3,058-square
145
meter (sq. m.) parcel of land. His father leased
a 1,000-sq. m. portion of Lot 937-A (subject
land) to respondent Iloilo Santos Truckers, Inc.
(respondent. This notwithstanding, petitioner
allowed the lease to subsist and respondent
had been diligent in paying its monthly rent
amounting to P10,000.00 per month.
Petitioner claimed that when his father died,
respondent stopped paying rent. On the other
hand, respondent maintained that it was
willing to pay rent, but was uncertain as to
whom payment should be made. Respondent
made a consignation on the RTC br. 24 for the
amount of P521,396.89 equivalent for the rent
of February 2007 to March 2011. Petitioner
averred that the amount was insufficient to
cover the unpaid rentals plus interests from
February 2007 to May 2011. Petitioner
clarified that his earlier demand to pay was for
the period of February 2007 to May 2011.
Thus, petitioner posited that respondent had
continuously failed and refused to comply with
the terms and conditions of the lease contract
concerning the payment of monthly rental.
May petitioner eject respondent from the
subject land?
A: Yes. For an unlawful detainer suit to prosper,
the plaintiff-lessor must show that: first, initially,
the defendant-lessee legally possessed the leased
premises by virtue of a subsisting lease
contract; second, such possession eventually
became illegal, either due to the latter's violation
of the provisions of the said lease contract or the
termination thereof; third, the defendant-lessee
remained in possession of the leased premises,
thus, effectively depriving the plaintiff-lessor
enjoyment thereof; and fourth, there must be a
demand both to pay or to comply and vacate and
that the suit is brought within one (1) year from
the last demand.
In this case, all requisites have been indubitably
complied with, considering that at the time the
suit was instituted on June 21, 2011: (a) there was
a subsisting lease contract[46] between petitioner
and respondent; (b) , respondent was not updated
in its monthly rental payments, as there is no
evidence of such payment for the months of April,
May, and even June 2011-- said omission
constitutes a violation of the lease contract on the
part of respondent; (c) respondent was still in
possession of the subject land; and (d) the case
was filed within one (1) year from petitioner's
letter dated May 24, 2011 demanding that
respondent pay monthly rentals and at the same
time, vacate the subject land. (Teodorico Zaragoza
 CIVIL LAW
v. Iloilo Santos Truckers, Inc., G.R. No. 224022, June
28, 2017)
RECOVERY OF POSSESSION OF MOVABLE
PROPERTY
Replevin
It is the remedy when the complaint prays for the
recovery of the possession of personal property.
NOTE: A property validly deposited in custodia
legis cannot be subject of a replevin suit (Calub v.
CA, G.R. No. 115634, April 27, 2000).
RECOVERY OF POSSESSION OF IMMOVABLE
PROPERTY
Accion interdictal
It is a summary action to recover physical or
material possession only and it must be brought
within one year from the time the cause of action
arises. It may be:
1. Forcible Entry; or
2. Unlawful detainer.
Q: PTGWO-ITF (petitioner) is a duly registered
labor organization engaged in an on-going Shelter
Program, which offers residential lots and fully-
furnished houses to its members-seafarers under
a reimbursement scheme requiring no down
payment and no interest on the principal sum
advanced for the acquisition and development of
the land and the construction of the house.
Petitioner entered into a contract under the
Shelter Program with one of its members, Noriel
Decena, with the obligation to reimburse
petitioner the full amount thereof in 180 equal
monthly payments. It was stipulated in the
contract that if the respondent fails to pay 3
monthly reimbursements, he shall be given a 3-
month grace period to remit his arrears,
otherwise the contract will be cancelled.
Subsequently, the respondent failed to pay 25
monthly reimbursements, Hence the petitioner
cancelled the contract and treated it as rental
payments for his occupancy of the house and lot.
And thereafter file a case for unlawful detainer.
What was the contract entered into by the parties?
A: The contract entered into was a contract to sell.
A contract to sell is defined as a bilateral contract
whereby the prospective seller, while expressly
reserving the ownership of the subject property
despite delivery thereof to the prospective buyer,
binds itself to sell the said property exclusively to
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
the prospective buyer upon fulfillment of the
condition agreed upon, that is, full payment of the
purchase price. The Shelter Contract Award
granted to respondent expressly stipulates that
"upon completion of payment of the full payment,
the UNION shall execute a Deed of Transfer and
shall cause the issuance of the corresponding
Transfer Certificate of Title in favor of and in the
name of the AWARDEE." It cannot be denied,
therefore, that the parties herein entered into a
contract to sell in the guise of a reimbursement
scheme requiring respondent to make monthly
reimbursement payments which are, in actuality,
installment payments for the value of the subject
house and lot.
Accion publiciana
It refers to an ejectment suit filed within 10 years
after the expiration of one year from accrual of
cause of action or from the unlawful witholding of
possession of the realty (Gabriel Jr. v. Crisologo,
G.R. No. 204626, June 9, 2014).
It is an ordinary civil proceeding to recover the
better right of possession, except in cases of
forcible entry and unlawful detainer. What is
involved here is not possession de facto but
possession de jure.
Accion reinvindicatoria
It is an action to recover real property based on
ownership. Here, the object is the recovery of the
dominion over the property as owner.
NOTE: Where the facts averred in the complaint
reveals that the action is neither one of forcible
entry nor unlawful detainer but essentially
involves a boundary dispute, the same must be
resolved in an accion reinvindicatoria (Sarmiento
v. CA, G.R. No. 116192, November 16, 1995).
Requisites of accion reivindicatoria
1. Identity of property; and
2. Plaintiff’s title to the property.
Q. Eliza Zuñ iga-Santos, through her authorized
representative, Nympha Z. Sales, filed a
Complaint or annulment of sale and revocation
of title against respondents Maria Divina
Gracia Santos-Gran and the Register of Deeds
of Marikina City before the RTC. The said
complaint was later amended. Petitioner
alleged, among others, that: (a) she was the
registered owner of three (3) parcels of land
located in the Municipality of Montalban,
146
 PROPERTY
Province of Rizal, prior to their transfer in the
name of private respondent Gran; (b) she has a
second husband by the name of Lamberto C.
Santos, with whom she did not have any
children; (c) she was forced to take care of
Lamberto’s alleged daughter, Gran, whose
birth certificate was forged to make it appear
that the latter was petitioner’s daughter; (d)
pursuant to void and voidable documents Sale,
Lamberto succeeded in transferring the
subject properties in favor of and in the name
of Gran; (e) despite diligent efforts, said Deed
of Sale could not be located; and (f) she
discovered that the subject properties were
transferred to Gran. Accordingly, petitioner
prayed, inter alia, that Gran surrender to her
the subject properties and pay damages,
including costs of suit. Gran filed a Motion to
Dismiss, contending, inter alia, that (a) the
action filed by petitioner had prescribed since
an action upon a written contract must be
brought within ten (10) years from the time
the cause of action accrues, or in this case,
from the time of registration of the questioned
documents before the Registry of Deeds; and
(b) the Amended Complaint failed to state a
cause of action as the void and voidable
documents sought to be nullified were not
properly identified nor the substance thereof
set forth. Has the action for the reconveyance
of title already prescribed?
A. Yes. It is evident that petitioner ultimately
seeks for the reconveyance to her of the subject
properties through the nullification of their
supposed sale to Gran. An action for reconveyance
is one that seeks to transfer property, wrongfully
registered by another, to its rightful and legal
owner. Having alleged the commission of fraud by
Gran in the transfer and registration of the subject
properties in her name, there was, in effect, an
implied trust created by operation of law pursuant
to Article 1456 of the Civil Code which provides:
Art. 1456. If property is acquired through mistake
or fraud, the person obtaining it is, by force of law,
considered a trustee of an implied trust for the
benefit of the person from whom the property
comes. To determine when the prescriptive period
commenced in an action for reconveyance, the
plaintiff’s possession of the disputed property is
material. If there is an actual need to reconvey the
property as when the plaintiff is not in possession,
the action for reconveyance based on implied trust
prescribes in ten (10) years, the reference point
being the date of registration of the deed or the
issuance of the title. On the other hand, if the real
owner of the property remains in possession of
the property, the prescriptive period to recover
147
title and possession of the property does not run
against him and in such case, the action for
reconveyance would be in the nature of a suit for
quieting of title which is imprescriptible.(Zuñiga-
Santos v. Santos Gran, G.R. No. 197380, October 8,
2014)
Q: Felisa Buenaventura, the mother of the
Petitioner Bella and respondents
Resurreccion, Rhea and Regina, owned a
parcel of land with a three-storey building. In
1960, Felisa transferred the same to her
daughter Bella, married to Delfin, Sr., and
Felimon, Sr., the common-law husband of
Felisa, to assist them in procuring a loan
from the GSIS. In view thereof, her title over
the property was cancelled and a new one
was issued in the names of Bella, married
to Delfin, Sr., and Felimon, Sr. Upon Felisa's
death in 1994, the Bihis family, Felisa's other
heirs who have long been occupyi ng the
subject property, caused the annotation of
their adverse claim over the property.
However, the annotation was cancelled, and
thereafter a new TCT over the property was
issued in the names of Bella, et al. Finally, by
virtue of a Deed of Sale dated January 23,
1997, the subject property was sold to Wilson
and Peter, in whose names TCT No. 170475
currently exists. A complaint for reconveyance
was then filed. Was there a trust established
between Felisa and Bella, Delfin,Sr., and
Felimon, Sr.?
A: Yes. An express trust was created.
Trust is the right to the beneficial enjoyment of
property, the legal title to which is vested in
another. It is a fiduciary relationship that obliges
the trustee to deal with the property for the
benefit of the beneficiary. Trust relations between
parties may either be express or implied. An
express trust is created by the intention of the
trustor or of the parties, while an implied trust
comes into being by operation of law. Express
trusts are created by direct and positive acts of the
parties, by some writing or deed, or will, or by
words either expressly or impliedly evincing an
intention to create a trust.
From the letter executed by Felisa, it
unequivocally and absolutely declared her
intention of transferring the title over the subject
property to Bella, Delfin, Sr., and Felimon, Sr. in
order to merely accommodate them in securing a
loan from the GSIS. She likewise stated clearly
that she was retaining her ownership over the
subject property and articulated her wish to have
 CIVIL LAW
her heirs share equally therein. Hence, while in contract was for a period of three years. When
the beginning, an implied trust was merely the contract expired, Francisco asked the
created between Felisa, as trustor, and Bella, spouses to peacefully vacate the premises. The
Delfin, Sr., and Felimon, Sr., as both trustees and spouses ignored the demand and continued
beneficiaries, the execution of the September 21, with the operation of the gasoline station.
1970 letter settled, once and for all, the nature of
the trust established between them as an express One month after, Francisco, with the aid of a
one, their true intention irrefutably extant group of armed men, caused the closure of the
thereon.(Wilson Go and Peter Go v. The Estate of gasoline station by constructing fences around
The Late Felisa Tamio De Buenaventura, G.R. No. it.
211972, July 22, 2015)
Was the act of Francisco and his men lawful?
Q: A contract of lease executed by Alava Why? (2014 Bar)
(lessor) and Anita Lao (lessee) was not
registered with the Register of Deeds. Aside A: NO, the act was not lawful. Even if the lessee’s
from Anita, Rudy Lao also leased a portion of right to occupy the premises has expired, the
the same property where he put up his lessor cannot physically oust the lessee from the
business. At that time, Rudy knew that Anita leased premises if the latter refuses to vacate. The
and her husband were the owners of the said lessor must go through the proper channels by
building. He also knew that she had leased filing an appropriate case for unlawful detainer or
that portion of the property, and that Jaime recovery of possession. Every possessor has a
Lao, their son, managed and maintained the right to be respected in his possession (NCC, Art.
building, as well as the business thereon. Rudy 539) and in no case can possession be acquired
eventually purchased the entire property from through force or intimidation as long as there is a
Alava. Rudy then filed a complaint for unlawful possessor who objects thereto (NCC, Art. 536). The
detainer against Jaime alleging that the latter act of Francisco is an abuse of rights because even
had occupied a portion of his property without if he has the right to recover possession of his
any lease agreement and without paying any property, he must act with justice and give the
rentals, and prayed that an order be rendered lessees their day in court and observe honesty and
directing Jaime to vacate the premises. Should good faith.
the complaint be dismissed?
DISTINCTION BETWEEN FORCIBLE ENTRY AND
A: YES. The records in this case show that the UNLAWFUL DETAINER
respondent has been in possession of the property
in question, not by mere tolerance or generosity of Forcible Entry Unlawful Detainer
Rudy, but as the manager of his mother, who
As to when possession became unlawful
conducted her business in the building which
stood on a portion of the property leased from Possession of the Possession is
Alava. Jaime’s possession was in behalf of his defendant is unlawful inceptively lawful but
mother, and not in his own right (Lao v. Lao, G.R. from the beginning as becomes illegal from the
No. 149599, May 16, 2005). he acquired possession time defendant
by; (FISTS) unlawfully withholds
Effect of non-registration of the contract of possession after the
lease a)Force; expiration or
b)Intimidation ; termination of his right
Although the lease contract was not filed with the c)Strategy; thereto.
Register of Deeds, nevertheless, the buyer of the d)Threat; or NOTE: The question of
property was bound by the terms and conditions e)Stealth. possession is
of said contract. The lease, in effect became a part primordial, while the
of the contract of sale. He had no cause of action issue of ownership is
for unlawful detainer against the lessee because of generally unessential in
the subsisting contract of lease; hence, he could unlawful detainer (Rosa
not file the complaint against her (Lao v. Lao, G.R. Rica Sales Center v. Sps.
No. 149599, May 16, 2005). Ong, G.R. 132197, August
16, 2005).
Q: Spouses Magtanggol managed and operated As to necessity of demand
a gasoline station on a 1,000 sq.m. lot which No previous demand for Demand is jurisdictional
they leased from Francisco Bigla-awa. The the defendant to vacate if the ground is non-

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 148
 PROPERTY
is necessary. payment of rentals or 2. One in possession is presumed to be the
failure to comply with owner and he cannot be obliged to show or
the lease contract. prove a better title;
3. Possessor in the concept of an owner is
As to necessity of proof of prior physical
presumed to be in good faith and he cannot be
possession
expected to be carrying every now and then
Plaintiff must prove that Plaintiff need not have his proofs of ownership over the property;
he was in prior physical been in prior physical and
possession of the possession. 4. He who relies on the existence of a fact,
premises until he was should prove that fact. If he cannot prove, the
deprived thereof by the NOTE: The fact that defendant does not have to prove.
defendant. petitioners are in
possession of the lot REAL v. PERSONAL RIGHTS
does not automatically
entitle them to remain Real Right (Right of Personal Right (Right
in possession (Ganilla v. possession; to possess;
CA, G.R. No. 150755, June possessionis) possidendi)
28, 2005). Creation
As to when one year period is counted from Created by both title and Created by title alone.
One year period is One year period is mode directly over a It is not directly
generally counted from counted from the date of thing. created over a thing
the date of actual entry last demand or last but is exercised
of the land. letter of demand. through another
against whom the
REQUISITES FOR RECOVERY OF PROPERTY action is to be brought.
Object
1. Clearly identify the land he is claiming in Generally corporeal or Incorporeal or
accordance with the title/s on which he tangible. Object is intangible. Object
bases his right of ownership; and specific property or covers all the present
thing. and future property of
NOTE: Burden of proof lies on the party the debtor (NCC, Art.
who asserts the affirmative of an issue. 2236).
The description should be so definite that Subjects
an officer of the court might go to the a. One definite active a. An active subject
locality where the land is situated and subject (e.g. owner) (creditor); and
definitely locate it. b. One indefinite b. A definite passive
passive subject subject (debtor).
2. Prove that he has a better title than the which is the whole
defendant. world
a. Best proof is a Torrens certificate; Right of pursuit is
and therefore available.
b. Tax receipts, tax declarations are only Real right follows its
prima facie evidence of ownership; it object in the hands
is rebuttable. of any possessor.

NOTE: Plaintiff’s title must be founded on Enforceability

positive right or title and not merely on the Enforceable against the Enforceable only
lack or inefficiency of the defendant’s title. In whole world. against the original
other words, he shall not be permitted to rely debtor or his transferee
upon the defects of the defendant’s title (NCC, charged with notice of
Art. 434). the personal rights
Limit
Reasons why the plaintiff is NOT allowed to Limited by usefulness, No such limitation.
rely on the weakness of defendant’s title value or productivity of
1. Possibility that neither the plaintiff nor the the thing.
defendant is the true owner of the property.
In which case, the defendant who is in Extinguishment
possession will be preferred;

149
 CIVIL LAW
Extinguished by loss or Not so extinguished.
destruction of the thing Claim for damages may
still be pursued-in case
of loss or destruction of
the thing.
LIMITATIONS ON THE RIGHT OF OWNERSHIP
This principle authorizes an owner or lawful
possessor of a property to use reasonable force to
prevent or repel an actual or threatened unlawful
physical invasion or usurpation of property (NCC,
Art. 429). There must be no delay in the pursuit,
otherwise, his recourse will be to go to the court
for the recovery of property.

Those imposed by the: (SLOG-C2-SO) Requisites of the Principle of Self-Help

(RODA)
1. State in the exercise of:
a. Power of taxation; 1. Reasonable force used
b. Police power; and 2. Such force is used by the owner or lawful
c. Power of eminent domain possessor
3. There is no delay
2. Law; 4. Actual or threatened physical invasion or
a. Legal easements (i.e., easements of waters usurpation of the property.
and of right of way) and
b. The requirement of legitime in Right of self-help exercised by third person
succession;
A third person who is not a possessor may repel
3. Owner himself; unlawful possession on the property owned by
a. Voluntary easement another. In such an event, he is acting as a
b. Mortgage negotorium gestor. The owner must indemnify
c. Pledge him for injuries sustained (Pineda, 2009).
d. Lease;
Test of reasonableness
4. Grantor of the property on the grantee, either
by: The reasonableness of the defensive acts resorted
a. Contract to by a possessor is determined not by what he
b. Donation or imagined to exist but by the objective situation
c. Will; (Pineda, 2009).

5. Those arising from Conflicts of private rights -
Those which take place in accession continua;
6. Constitution - On the prohibition against the
acquisition of private lands by aliens;
7. Acts in state of necessity – The law permits
injury or destruction of things owned by
another provided this is necessary to avert a
greater danger (with right to indemnity v.
principle of unjust enrichment); and
8. True owner must resort to judicial process –
When thing is in possession of another; law
creates a disputable presumption of
ownership to those in actual possession.
(2008 Bar).
German Management's drastic action of
bulldozing and destroying the crops of private
respondents on the basis of the doctrine of self-
help was unavailing because the doctrine of self-
help can only be exercised at the time of actual or
threatened dispossession which is absent in the
case at bar (German Mgmt. Services Inc. v. CA, G.R.
No. 76216, September 14, 1989).
NOTE: The intruder must not have succeeded in
its entry, for otherwise, he must resort to court
action; self-help cannot apply. One cannot put the
law into his own hands. Art. 429 must be read in
relation to Art. 536.

Art. 429. The owner of lawful possessor of a
thing has the right to exclude any person from
yhe enjoyment and disposal thereof. For this
purpose, he may jse such force as may be
reasonably necessary to repel or prevent an
actual or threatened unlawful physical
invasion of usurpation of his property
PRINCIPLE OF SELF-HELP
“Sic utere tuo ut alienum non laedas”
The owner of a thing cannot make use thereof in
such manner as to injure the rights of a third
person (NCC, Art. 431).
Property owner can use his property in any
manner he desires provided he does not injure the
rights of others sic utere tuo ut alienum non
laedas (Pineda, 2009).

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 150
 PROPERTY
Art. 430. Every owner may enclose or fence
his land or tenements by means of walls,
ditches, live or dead hedges, or by any other
means without detriment to servitudes
constituted thereon.
Limitation on the right of the owner to enclose
or fence one’s land or tenement
Every owner may enclose or fence his land or
tenement by means of walls, ditches, live or dead
hedges or by any other means provided that in so
fencing the property, no servitude or easement
constituted thereon should be impaired (Pineda,
2009).
DOCTRINE OF STATE OF NECESSITY
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 (NCC, Art. 432).
This principle authorized the destruction of
property which is lesser in value to avert the
danger poised to another property of greater
value.
Requisites of Doctrine of State of Necessity
1. Interference necessary to avert an
imminent danger and the threatened
damage to the actor or a third person;
2. Damage to another is much greater than
the damage to the property.
Art. 433. Actual possession under claim of
ownership raises a disputable presumption of
ownership. The true owner must resort to
judicial process for the recovery of the
property.
Disputable presumption of ownership
There is disputable presumption of ownership
when a person is in actual possession of the
property under the claim of ownership (Pineda,
2009).
Resort of the owner rebutting the presumption
Under Art. 433 the remedy is judicial process to
recover the property of the person.
151
Requisites to prove claim of ownership
1. Proper identification of the property; and
2. Title must be clear, strong and credible
(Pineda, 2009).
Art. 434. In an action to recover, the property
must be identified, and the plaintiff must rely
on the strength of his title and not on the
weakness of the defendant’s claim.
Requisites For Action To Recover Property
1. To clearly identify the land he is claiming
in accordance with the title or titles on which
he bases his right of ownership; and,
2. To prove that he has a better title than the
defendant (Pineda, 2009).
Art. 435. No person shall be deprived of his
property except by competent authority and
for public use and always upon payment of
just compensation
Should this requirement be not first complied
with, the courts shall protect and, in a proper
case, restore the owner in his possession.
Emminent Domain
This is the superior right of the State to acquire
private property whether registered or not for
public use upon payment of just compensation.
It is one of the limitations on the right of
ownership in the pursuit of public interest.
(Pineda, 2009)
Elements of “Taking” Of Property For Purposes
Of Eminent Domain
1. The expropriator must enter a private
property;
2. The entrance into private property must be for
more than a momentary period;
3. The entry into the property should be under
warrant or color of legal authority
4. The property must be devoted to a public use
or otherwise informally appropriated or
injuriously affected; and,
5. The utilization of the property for public use
must be in such a way as to oust the owner and
deprive him of all beneficial enjoyment of the
property (National Power Corporation vs. Court of
Appeals, 254 SCRA 577)
 CIVIL LAW
Q: Alfredo Hababag, Sr. (Alfredo) was the
owner of several parcels of agricultural land
situated in the Municipality of Gubat,
Sorsogon. The aforesaid landholdings were
voluntarily offered for sale (VOS) to the
government under Republic Act No. (RA) 6657,
otherwise known as the "Comprehensive
Agrarian Reform Law of 1988,". The Land Bank
of the Philippines (LBP) initially valued the
subject lands at P1,237,850.00, but Alfredo
rejected the valuation. After summary
administrative proceedings for the
determination of the amount of just
compensation, the Office of the Provincial
Agrarian Reform Adjudicator (PARAD) of the
Department of Agrarian Reform (DAR)
Adjudication Board (DARAB) fixed the value of
the subject lands at
P1,292,553.20. Dissatisfied, Alfredo filed a
Complaint for the determination of the amount
of just compensation before the RTC. RTC
rendered a Decision fixing the amount of just
compensation of the subject lands at
P5,653,940.00. RTC applied the Income
Productivity Approach. CA set aside the RTC's
valuation for failure to give due consideration
to the factors enumerated in Section 17 of RA
6657 and the formula under DAR AO 6-92, as
amended by DAR AO 11-94. Moreover,
contrary to the limitation imposed by DAR AO
6-92 - i.e., that the computed value using the
applicable formula shall not exceed the
landowner's offer to sell - the CA found that the
amount as recomputed by the RTC was way
beyond the landowner's offer of
P1,750,000.00 as stated in the Claims
Valuation and Processing Form. Is the CA
correct in setting aside the computation of
RTC?
A: Yes. Just compensation is defined as the full
and fair equivalent of the property taken from its
owner by the expropriator. It has been repeatedly
-stressed by this Court that the measure is not the
taker's gain but the owner's loss. The word "just"
is used to intensify the meaning of the word
"compensation" to convey the idea that the
equivalent to be rendered for the property to be
taken shall be real, substantial, full [and] ample.
In this relation, the RTC, sitting as a Special
Agrarian Court, has been conferred with the
original and exclusive power to determine just
compensation for parcels of land acquired by the
State pursuant to the agrarian reform program. To
guide the RTC in this function, Section 17 of RA
6657 enumerates the factors which must be taken
into consideration to accurately determine the
amount of just compensation to be awarded in a
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
particular case. They are: (a) the acquisition cost
of the land; (b) the current value of like
properties; (c) the nature and actual use of the
property, and the income therefrom; (d) the
owner's sworn valuation; (e) the tax declarations;
(f) the assessment made by government
assessors; (g) the social and economic benefits
contributed by the farmers and the farmworkers,
and by the government to the property; and (h)
the nonpayment of taxes or loans secured from
any government financing institution on the said
land, if any. Corollarily, pursuant to its rule-
making power under Section 49 of the same law,
the DAR translated these factors into a basic
formula, which courts have often referred to and
applied, as the CA did in this case. It, however,
bears stressing that courts are not constrained to
adopt the said formula in every case since the
determination of the amount of just compensation
essentially partakes the nature of a judicial
function. In this accord, courts may either adopt
the DAR formula or proceed with its own
application for as long as the factors listed in
Section 17 of RA 6657 have been duly considered.
In keeping with these considerations, the Court
finds the CA's valuation - which made use of the
DAR formula - as reflective of the factors set forth
in Section 17 of RA 6657. Records disclose that the
CA's computation, as adopted from the LBP's own
computation, is based on: (a) actual production
data; (b) the appropriate industry selling prices of
the products from the Philippine Coconut
Authority and the Bureau of Agricultural Statistics
of Sorsogon; and (c) the actual uses of the
property. Likewise, the (a) income from the
coconut fruit-bearing trees, as well as the
unirrigated riceland, (b) cumulative cost of the
non-fruit-bearing trees; and (c) market value of
the cogonal land have been duly considered. The
Court observes that the holistic data gathered
therefrom adequately consider the factors set
forth in Section 17 of RA 6657, as well as the DAR
formula. As such, the CA's computation, which was
derived from the same, must be sustained. Lest it
be misunderstood, the ascertainment of just
compensation on the basis of the landholdings'
nature, location, and market value, as well as the
volume and value of the produce is valid and
accords with Section 17 of RA 6657 and the DAR
formula, as in this case.
On the contrary, the Court finds the RTC's
valuation to be improper, as it contradicts the
definition of "market value" as crafted by
established jurisprudence on expropriation. (Land
Bank of the Philippines v. Alfredo Hababag, Sr.,
Substituted by his wife, Consolacion, and children,
152
 PROPERTY
namely: Manuel, Salvador, Wilson, Jimmy, Alfredo,
Jr., and Judith, all surnamed Hababag, G.R. No.
171352, September 16, 2015)
Q: The Republic of the Philippines filed before
the RTC a complaint against an unknown
owner for the expropriation of a lot located in
Barangay Ugong, Valenzuela City for the
construction of the C-5 Northern Link Road
Project, otherwise known as North Luzon
Expressway (NLEX) Segment 8.1, traversing
from Mindanao Avenue in Quezon City to the
NLEX in Valenzuela City. Petitioner applied for
a writ of possession over the subject lot on May
5, 2008, which was granted, and was
required to deposit with the court the amount
of P550,000.00 (i.e., at P2,750.00/sq. m.) as
provisional deposit. However, respondent
Macabagdal was substituted as party-
defendant upon sufficient showing that the
subject lot is registered in her name under the
Transfer Certificate Title of the lot.
Respondent did not oppose the expropriation,
and received the provisional deposit. The RTC
appointed a board of commissioners to
determine the just compensation for the
subject lot, which thereafter submitted report
dated May 23, 2014, recommending a fair
market value of P9,000.00/sq. m. as the just
compensation for the subject lot, taking into
consideration its location, neighborhood and
land classification, utilities, amenities, physical
characteristics, occupancy and usage, highest
and best usage, current market value offerings,
as well as previously decided expropriation
cases of the same RTC involving properties
similarly situated in the same barangay. The
Court of Appeals affirmed this decision, which
brought up the that the CA did not rule on the
issue of the applicable rate of interest which,
in this case, should be at twelve percent (12%)
per annum. from the filing of the complaint
until June 30, 2013, and thereafter, at six
percent (6%) per annum until full payment. Is
the 12% per annum interest on the unpaid
balance, computed from the time of the taking
of the subject lot until full payment, valid?
A: No. The value of the landholdings should be
equivalent to the principal sum of the just
compensation due, and interest is due and should
be paid to compensate for the unpaid balance of
this principal sum after taking has been
completed. From the date of the taking of the
subject lot on May 5, 2008 when the RTC issued a
writ of possession in favor of petitioner, until the
just compensation therefor was finally fixed at
P9,000.00/sq. m., petitioner had only paid a
153
provisional deposit in the amount of P550,000.00
(i.e., at P2,750.00/sq. m.). Thus, this left an unpaid
balance of the "principal sum of the just
compensation," warranting the imposition of
interest. It is settled that the delay in the payment
of just compensation amounts to an effective
forbearance of money, entitling the landowner to
interest on the difference in the amount between
the final amount as adjudged by the court and the
initial payment made by the government. It bears
to clarify that legal interest shall run not from the
date of the filing of the complaint but from the
date of the issuance of the Writ of Possession on
May 5, 2008, since it is from this date that the fact
of the deprivation of property can be established.
As such, it is only proper that accrual of legal
interest should begin from this date. (Republic v.
Leonor Macabagdal, G.R. No. 227215, January 10,
2018)
Q: On February 12, 2013, DPWH, led before the
RTC a complaint against respondent Belly,
seeking to expropriate the lots registered in
the name of respondent under Transfer
Certificate of Title (TCT) Nos. V-92188 8 and V-
92191 9 with a total area of 1,671 sq. m.
(subject lots), together with the improvements
thereon with an aggregate surface area of
2,121.7 sq. m. (collectively, subject
properties), located in Kowloon Industrial
Compound, Tatalon Street, Brgy. Ugong,
Valenzuela City, for the construction of the
Mindanao Avenue Extension Project, Stage II-C
(Valenzuela City to Caloocan City). DPWH
manifested that it is able and ready to pay
Belly the amounts of P6,684,000.00 (i.e., at
P4,000.00/sq. m.) and P11,138,362.74,
representing the combined relevant zonal
value of the subject lots and the replacement
cost of the improvements thereon,
respectively.
In her answer, Belly contended that the offer
price is unreasonably low, and that she should
be compensated the fair market value of her
properties at the time of taking, estimated to
be at P25,000.00/sq. m. Moreover, the fair and
just replacement cost of the improvements on
the subject lots should be in the amount of
P22,276,724.00, pursuant to Section 10 of the
Implementing Rules and Regulations of
Republic Act No. (RA) 8974. DPWH was
eventually granted a Writ of Possession, after
Belly received the amount of P17,822,362.74,
representing 100% of the zonal value of the
subject properties.
 CIVIL LAW
The RTC appointed a board of commissioners
to determine the just compensation for the
properties which, thereafter, submitted its
Commissioner's Report dated June 10, 2013,
recommending the amounts of P7,000.00/sq.
m. and P12,000.00/sq. m. as the just
compensation for the subject lots and the
improvements thereon, respectively, and the
payment of six percent (6%) legal interest
therefor, reckoned from the time of taking.
A: No. The construction of the Mindanao Avenue
Extension Project, Stage II-C (Valenzuela City to
Caloocan City) involves the implementation of a
national infrastructure project. Thus, for purposes
of determining the just compensation, RA 8974
and its implementing rules and regulations (IRR),
which were effective at the time of the filing of the
complaint, shall govern
The replacement cost method is premised on the
principle of substitution, which means that "all
things being equal, a rational, informed purchaser
would pay no more for a property than the cost of
building an acceptable substitute with like utility."
The case of Republic v. Mupas (Mupas) instructs
that in using the replacement cost method to
ascertain the value of improvements, the courts
may also consider the relevant standards
provided under Section 5 of RA 8974, as well as
equity consistent with the principle that eminent
domain is a concept of equity and fairness that
attempts to make the landowner whole. Thus, it is
not the amount of the owner's investment, but the
"value of the interest" in land taken by eminent
domain, that is guaranteed to the owner.
While there are various methods of appraising a
property using the cost approach, Mupas declared
that the use of the depreciated replacement cost
method is consistent with the principle that the
property owner shall be compensated for his
actual loss, bearing in mind that the concept of
just compensation does not imply fairness to the
property owner alone, but must likewise be just to
the public which ultimately bears the cost of
expropriation. The property owner is entitled to
compensation only for what he actually loses, and
what he loses is only the actual value of the
property at the time of the taking. Hence, even as
undervaluation would deprive the owner of his
property without due process, so too would its
overvaluation unduly favor him to the prejudice of
the public.
It must be emphasized that in determining just
compensation, the courts must consider and apply
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
the parameters set by the law and its
implementing rules and regulations in order to
ensure that they do not arbitrarily fix an amount
as just compensation that is contradictory to the
objectives of the law. Be that as it may, when
acting within the parameters set by the law itself,
courts are not strictly bound to apply the formula
to its minutest detail, particularly when faced with
situations that do not warrant the formula's strict
application. Thus, the courts may, in the exercise
of their discretion, relax the formula's application,
subject to the jurisprudential limitation that the
factual situation calls for it and the courts clearly
explain the reason for such deviation.
In this case, the RTC and the CA upheld the
recommendation of the court-appointed
commissioners, fixing the just compensation for
the improvements on the expropriated properties
at P12,000.00/sq. m., which merely considered
their location, classification, value declared by the
owner, and the zonal valuation of the subject lots.
However, there is no competent evidence showing
that it took into account the prevailing
construction costs and all other attendant costs
associated with the acquisition and installation of
an acceptable substitute in place of the affected
improvements/structures as required by the IRR.
Consequently, the Court cannot uphold and must,
perforce, set aside the said valuation as the just
compensation for the subject improvements.
In relation thereto, the Court deems it proper to
correct the award of legal interest to be imposed
on the unpaid balance of the just compensation,
which shall be computed at the rate of twelve
percent (12%) p.a. from the date of taking, i.e.,
from April 10, 2013 when the RTC issued a writ of
possession in favor of petitioner, until June 30,
2013. Thereafter, or beginning July 1, 2013, until
fully paid, the just compensation due respondent
shall earn interest at the rate of six percent (6%)
p.a., in line with the amendment introduced by
BSP-MB Circular No. 799, Series of 2013. (Republic
v. Ng+, G.R. No. 229335, November 29, 2017)
Q: The Republic of the Philippines filed before
the RTC a complaint against an unknown
owner for the expropriation of a lot located in
Barangay Ugong, Valenzuela City for the
construction of the C-5 Northern Link Road
Project, otherwise known as North Luzon
Expressway (NLEX) Segment 8.1, traversing
from Mindanao Avenue in Quezon City to the
NLEX in Valenzuela City. Petitioner applied for
a writ of possession over the subject lot on May
5, 2008, which was granted, and was
required to deposit with the court the amount
154
 PROPERTY
of P550,000.00 (i.e., at P2,750.00/sq. m.) as
provisional deposit. However, respondent
Macabagdal was substituted as party-
defendant upon sufficient showing that the
subject lot is registered in her name under the
Transfer Certificate Title of the lot.
Respondent did not oppose the expropriation,
and received the provisional deposit. The RTC
appointed a board of commissioners to
determine the just compensation for the
subject lot, which thereafter submitted report
dated May 23, 2014, recommending a fair
market value of P9,000.00/sq. m. as the just
compensation for the subject lot, taking into
consideration its location, neighborhood and
land classification, utilities, amenities, physical
characteristics, occupancy and usage, highest
and best usage, current market value offerings,
as well as previously decided expropriation
cases of the same RTC involving properties
similarly situated in the same barangay. The
Court of Appeals affirmed this decision, which
brought up the that the CA did not rule on the
issue of the applicable rate of interest which,
in this case, should be at twelve percent (12%)
per annum. from the filing of the complaint
until June 30, 2013, and thereafter, at six
percent (6%) per annum until full payment. Is
the 12% per annum interest on the unpaid
balance, computed from the time of the taking
of the subject lot until full payment, valid?
A: No. The value of the landholdings should be
equivalent to the principal sum of the just
compensation due, and interest is due and should
be paid to compensate for the unpaid balance of
this principal sum after taking has been
completed. From the date of the taking of the
subject lot on May 5, 2008 when the RTC issued a
writ of possession in favor of petitioner, until the
just compensation therefor was finally fixed at
P9,000.00/sq. m., petitioner had only paid a
provisional deposit in the amount of P550,000.00
(i.e., at P2,750.00/sq. m.). Thus, this left an unpaid
balance of the "principal sum of the just
compensation," warranting the imposition of
interest. It is settled that the delay in the payment
of just compensation amounts to an effective
forbearance of money, entitling the landowner to
interest on the difference in the amount between
the final amount as adjudged by the court and the
initial payment made by the government. It bears
to clarify that legal interest shall run not from the
date of the filing of the complaint but from the
date of the issuance of the Writ of Possession on
May 5, 2008, since it is from this date that the fact
of the deprivation of property can be established.
As such, it is only proper that accrual of legal
155
interest should begin from this date. (Republoc v.
Leonor Macabagdal, G.R. No. 227215, January 10,
2018)
Art. 436. When any property is condemned or
seized by competent authority in the interest
of health, safety or security, the owner thereof
shall not be entitled to compensation, unless
he can show that such condemnation or
seizure is unjustified.
Extent of ownership of parcel of land
The owner of a parcel of land is the owner of its
surface and of everything under it, and he can
construct thereon any works or make any
plantations and excavations which he may deem
proper, without detriment to servitudes and
subject to special laws and ordinances. He cannot
complain of the reasonable requirements of aerial
navigation (NCC, Art. 437).
AD COLEUM
The owner of a land has rights not only to its
surface but also to everything underneath and the
airspace above it up to a reasonable height.
Presumably, the landowners’ right extends to such
height or depth where it is possible for them to
obtain some benefit or enjoyment, and it is
extinguished beyond such limit as there would be
no more interest protected by law (Napocor v.
Ibrahim, G.R. No. 168732, June 29, 2007).
Art. 438. Hidden treasure belongs to the
owner of the land, building, or other property
on which it is found.
Nevertheless, when the discovery is made on
the property of another, or of the State or any
of its subdivisions, and by chance, one-half
thereof shall be allowed to the finder. If the
finder is a trespasser, he shall not be entitled
to any share of the treasure.
If the things found be of interest to science or
the arts, the State may acquire them at their
just price, which shall be divided in
conformity with the rule stated.
Art. 439. By treasure is understood, for legal
purposes, any hidden and unknown deposit of
money, jewelry or other precious objects, the
lawful ownership of which does not appear.
HIDDEN TREASURE
 CIVIL LAW
Treasure is understood, for legal purposes, as any
hidden and unknown deposit of money, jewelry,
or other precious objects, the lawful ownership of
which does not appear (NCC, Art. 439) (1997,
2008, 2014 Bar).
“Other precious objects”
Under the ejusdem generis rule, the phrase should
be understood as being similar to money or
jewelry.
Oil or gold NOT considered as hidden treasure
These are natural resources. The Regalian
Doctrine applies and not the provisions on hidden
treasure.
Rule regarding discovery of hidden treasure
(NCC, Art. 438 in relation to Art. 718)
GR: If the finder is the owner of the land, building,
or other property where it is found, the entire
hidden treasure belongs to him.
XPN: If the finder is not the owner or is a stranger
(includes the lessee or usufructuary, he is entitled
to ½ thereof (NCC, Art. 566).
If the finder is married
If the finder is married, he or she gets one half of
the treasure or its value. His or her spouse is
entitled to share one-half of that share, it being a
conjugal property (NCC, Art. 117, par. 4, FC).
Requisites in order that the finder be entitled
to any share in the hidden treasure (ACTA)
1. Discovery was made on the property of
Another, or of the State or any of its political
subdivisions;
2. Made by Chance; and
3. He is not a Trespasser or Agent of the
landowner (NCC, Art. 438, par. 2).
NOTE: If the things found be of interest to science
or the arts, the State may acquire them at their
just price, which shall be divided in conformity
with the rule stated (NCC, Art. 438).
“By chance”
The finder had no intention to search for the
treasure. There is no agreement between the
owner of the property and the finder for the
search of the treasure.
Yamashita treasure
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
The State is entitled to 75% share and the finder
to 25% (PD 7056-A).
The finder is not entitled to the hidden
treasure if it was deliberately searched. (1976
Bar)
It was not found by chance (NCC, Art. 438).
Moreover, treasure is defined as hidden and
unknown deposit of precious objects, the lawful
ownership of which does not appear. There being
a tip, the deposit is known (NCC, Art. 439).
Nature and ownership of the old notes and
coins
The ownership of the vault, together with the
notes and coins can now legally be considered as
hidden treasure because its ownership is no
longer apparent. The contractor is not a
trespasser and therefore entitled to one-half of the
hidden treasure and the owner of the property is
entitled the other half (NCC, Art. 438). Since the
notes and coins have historical value, the
government may acquire them at their just price
which in turn will be divided equally between
them (NCC, Art. 438, par. 3). The vault has been
buried for about a century and the successor of
the bank which previously owned it cannot
succeed by inheritance to the property. (2008
Bar)
NOTE: Bills and notes found are not hidden
treasures. The owner can be traced through the
serial numbers.
Q: O, owner of Lot A, learning that Japanese
soldiers may have buried gold and other
treasures at the adjoining vacant Lot B,
belonging to Spouses X and Y, excavated in Lot
B where she succeeded in unearthing gold and
precious stones. How will the treasures found
by O to be divided – (1) 100% to O as finder,
(2) 50% to O and 50% to X and Y, (3) 50% to O
and 50% to the State (4) none of the above?
(2010 Bar)
A: NONE OF THE ABOVE. The finding of the
treasure was not by chance because O knew that
the treasure was in Lot B. While a trespasser is
also not entitled to any share and there is no
indication in the problem whether or not O was a
trespasser, O is not entitled to share because the
finding was not by chance.
ACCESSION
156
 PROPERTY
The right pertaining to the owner of a thing over
everything which is produced thereby, or which is
incorporated or attached thereto, either naturally
or artificially (NCC, Art. 440).
Right of accession
It is that right of ownership of which an owner of a
thing has over the products of said thing
(accession discreta), as well as to all things
inseparably attached or incorporated thereto
whether naturally or artificially (accession
continua) (Pineda, 2009).
Accession is NOT a mode of acquiring
ownership
It is not one of the modes enumerated under Art.
712 (different modes of acquiring ownership). It is,
therefore, safe to conclude that accession is not a
mode of acquiring ownership.
Reason: Accession presupposes a previously
existing ownership by the owner over the
principal. Fundamentally, accession is a right
implicitly included in ownership, without which it
will have no basis or existence (Paras, 2008).
NOTE: In general, the right to accession is
automatic (ipso jure), requiring no prior act on the
part of the owner or principal.
Art. 441. To the owner belongs:
(1) The natural fruits;
(2) The industrial fruits;
(3) The civil fruits.
ACCESSION DISCRETA
The right of accession with respect to what is
produced by the property.
To the owner belongs the:
1. Natural fruits - The spontaneous products
of the soil, and the young and other
products of animals;
2. Industrial fruits - Are those produced by
lands of any kind through cultivation or
labor;
3. 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 (NCC, Art. 441-442).
Obligation of the owner who receives the fruit
from a third person
157
He who receives the fruits has the obligation to
pay the expenses made by a third person in their
production, gathering and preservation (NCC, Art.
443) (2009 Bar).
Meaning of third person
One who is NOT the owner, builder, planter or
sower.
Art. 444. Only such as are manifest or born are
considered as natural or industrial fruits.
Which respect to animals, it is sufficient that
they are in the womb of the mother, although
unborn.
Existence of the fruit
It depends on the type of fruit:
1. Annual (must be planted every year/must
re-plant after harvest; rice, wheat, corn) –
deemed manifest the moment their
seedlings appear; and
2. Perennial (only planted once and bear
fruit for several seasons; mango and
coconut trees) – deemed to exist only
when they actually appear.
Animal young
They are considered existing even if still in the
maternal womb. They should be considered
existing only at the commencement of the
maximum ordinary period for gestation.
Pratus sequitor ventrem – offspring follows the
mother
This legal maxim means that the offspring follows
the dam (mother). The legal presumption, in the
absence of proof to the contrary, is that the calf, as
well as its mother belongs to the owner of the
latter, by the right of accretion (US v. Caballero,
G.R. No. 8608, September 26, 1913). Thus, when the
ownership over the offspring of the animal when
the male and female belongs to different owners,
the owner of the female was considered also the
owner of the young, unless there is a contrary
custom or speculation.
Art. 445. Whatever is built, planted or sown
on the land of another and the improvements
or repairs made thereon, belong to the owner
of the land, subject to the provisions of the
following articles.
When fruits are deemed to exist
 CIVIL LAW
1. Civil fruits accrue daily and are
considered personal property and may be
pro-rated; and Basic principles
2. Natural and industrial fruits, while still (BADONG-E)
growing, are considered as real property;
ordinarily, they cannot be pro-rated. 1.
Art. 446. All works, sowing, and planting are 2.
presumed made by the owner and at his 3.
expense, unless the contrary is proved.
Ownership of fruits
GR: Fruits belong to the owner (NCC, Art. 441). 4.
XPNS: If the thing is: (PULPA) 5.
1. In possession of a Possessor in good faith
(NCC, Art 546) (1992, 1996, 2000 Bar);
before the possession is legally 6.
interrupted;
2. Subject to a Usufruct (NCC, Art. 566); 7.
3. Lease of rural land;
4. Pledged [NCC, Art. 1680 and Art. 2102(7)];
pledge is entitled to the fruits but has the
obligation to compensate or set-off what
he receives with those which are owing to
him; or
5. In possession of an Antichretic creditor Three kinds of industrial endeavors (BPS)
(NCC, Art. 2132).
1.
GENERAL RULLES OF ACCESSION
Accession exists only if separation is not feasible.
Otherwise, separation may be demanded. 2.
ACCESSION CONTINUA
3.
It is the right pertaining to the owner of a thing
over everything incorporated or attached thereto
either naturally or artificially; by external forces.
c. Specification.
in accession continua
He who is in Bad faith is liable for
damages.
Accessory follows the principal;
Union or incorporation must generally be
effected in such a manner that to separate
the principal from the accessory would
result in substantial Damage to either or
diminish its value;
To the Owner of the thing belongs the
extension or increases to such thing;
Bad faith of one party Neutralizes the bad
faith of the other so that they shall be
considered in good faith;
He who is in Good faith may be held
responsible but not penalized; and
No one shall unjustly Enrich himself at the
expense of another.
FOR IMMOVABLES
ACCESSION INDUSTRIAL
Building – Erecting a structure or
construction of any kind, with roof for
residential, office, social, commercial or
other purposes;
Planting – Setting into the soil or land
seeds or seedlings of trees such as
mangoes, coconuts, etc;
Sowing – The act of scattering or
spreading of germinated seeds
indiscriminately or evenly through hand
or mechanical device.

1. Immovable Property Maxims in connection with accession industrial

a. Accession industrial (Art. 445-455)
i. Building; 1. The accessory follows the principal;
ii. Planting; and 2. The accessory follows the nature of that
iii. Sowing. to which it relates; and
3. What is built upon the land goes with it;
b. Accession natural or the land is the principal, and whatever
i. Alluvium; (Art. 457) is built on it becomes the accessory.
ii. Avulsion; ( Art. 459)
iii. Change of course of rivers; and Rule on ownership regarding accession
(Art. 461-462) industrial
iv. Formation of islands. (Art. 464-
465) GR: The owner of the land is the owner of
whatever is built, planted or sown on that land,
2. Movable property including the improvements or repairs made
a. Adjunction or Conjunction; thereon.
b. Mixture; and

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 158
 PROPERTY
XPNs:
1. When the doer is in good faith the rule is
modified; or
2. Improvements on the land of one of the
spouses at the expense of the conjugal
partnership will belong to the partnership
or to the spouse who owns the land
depending on which of the two properties
has a higher value (FC, Art. 120).

NOTE: If the doer is in bad faith, he is entitled only

to
necessary expenses for the preservation of the
land.

Art. 447. The owner of the land who makes

thereon, personally or through another,
plantings, constructions or works with the
materials of another, shall pay their value;
and, if he acted in bad faith, he shall also be
obliged to the reparation of damages. The
owner of the materials shall have the right to
remove them only in case he can do so
without injury to the work constructed, or
without the plantings, constructions or works
being destroyed. However, if the landowner
acted in bad faith, the owner of the materials
may remove them in any event, with a right to
be indemnified for damages.

Good faith and bad faith distinguished.

Good Faith - A person who is not aware that there

exists in his title or mode of acquisition any flaw
which invalidates it.

Bad Faith - A person who is aware that there

exists in his title or mode of acquisition any flaw
which invalidates it.

When Both Parties Are in Bad Faith

If both parties are in bad faith, the bad faith of one
cancels the bad faith of the other. Hence, both are
considered in good faith.

NOTE: Good faith is always presumed; and upon

him who alleges bad faith on the part of the
possessor rests the burden of proof.

159
 CIVIL LAW
Rule if the planter and owner of the land are different

Gathered Fruits
Planter in GF Planter in BF
Keeps fruits before possession is Reimbursed for expenses for
Planter legally interrupted (NCC, Art. 544, production, gathering and
par. 1) (2008 Bar). preservation (NCC, Art. 443).
No necessity to reimburse the Owns fruits provided he pays
planter of expenses since the planter expenses for production,
Landowner
planter retains the fruits (NCC, Art. gathering and preservation (NCC,
544, par. 1). Art. 443).
Standing Crops
Planter in GF Planter in BF
Reimbursed for expenses, for Loses what is built, planted or
production, gathering and sown without right to indemnity
preservation (NCC, Art.443). (NCC, Art 449).
Planter
Entitled to reimbursement for the
necessary expenses of
preservation of the land. (NCC, Art.
452).
Owns fruits provided he pays Owns fruits (NCC, Art. 449).
planter expenses for production,
Landowner
gathering and preservation (NCC,
Art. 443).

Rule when the land owner is the builder, planter or sower (1999 Bar)

Land Owner and Builder, Planter or Sower Owner of Materials

Good faith
Acquire building etc. after paying indemnity for value
of materials (NCC, Art. 447) (1999 Bar).
Bad faith
Acquire building etc. after paying value of materials
AND indemnity for damages, subject to the right of
the owner of materials to remove (NCC, Art. 447).
Good faith
1. Acquire w/o paying indemnity and right to
damages (NCC, Art 445 and 449, by analogy); and
2. Pay necessary expenses for preservation. (NCC,
Articles 452 and 546).
Bad faith
As though both acted in good faith (in pari delicto)( NCC, Art. 453) (1999 Bar).
Good faith
1. Receive indemnity for value of materials; or
2. Remove materials if w/o injury to works,
plantings or constructions (NCC, Art. 447).
Good faith
1. Be indemnified for value of materials and
damages; or
2. Remove materials, w/ or w/o injury and be
indemnified for damages (NCC, Art. 447).
Bad faith
1. Lose materials w/o being indemnified and pay
damages (NCC, Articles 445 and 449, by analogy);
ans
2. Recover necessary expenses for preservation of
land without the right to retain the thing until
the indemnity is paid. (NCC, Articles 452 and
546).
Bad faith

Rule when the land owner is NOT the builder, planter or sower

Land Owner Builder, Planter, Sower and Owner of Materials

Good faith Good faith
If the Land Owner:
He can either: (NCC, Art. 448) (1992, 1996, 2000, 1. Acquires the improvements after paying
2001 Bar). indemnity, Builder, Planter, or Sower has the right
1. Acquire improvements after paying indemnity to retain the thing (and cannot be required to pay

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 160
 PROPERTY
for:
a. Necessary expenses; and
b. Useful expenses which could either be:
a. Original costs of improvements; or
b. Increase in the value of the whole (NCC,
Articles 443 and 546).
2. Sell the land to builder or planter or collect rent
from sower unless the value of the land is
considerably greater than the building etc., in
which case, the builder and planter shall pay
rent.
The parties shall agree upon the terms of the
lease and in case of disagreement, the court shall
fix the terms thereof.
Good faith
1. The land owner can either:
a. Acquire improvements without paying
indemnity and collect damages (NCC, Articles
445, 449 and 451).
b. Order the demolition of work or restoration
to former condition and collect damages in
both cases (NCC, Art. 450); or
c. Sell the land to builder and planter or rent it
to the sower, and collect damages in both
cases (NCC, Art. 450) (2008 Bar).
rent) until indemnity is paid (NCC, Art. 546) .
If the useful improvements can be removed
without damage to the principal thing, the
Builder, Planter or Sower may remove them,
unless the person who recovers the possession
exercises the other (NCC, Articles 547 and 447).
2. Sells the land, Builder or Planter cannot be
obliged to buy the land if its value is considerably
more than that of the building or trees.
In such case, he shall pay reasonable rent.
The parties shall agree upon the terms of the lease
and in case of disagreement, the court shall fix the
terms thereof (NCC, Art. 448) (1992, 1996, 1999,
2000, 2001 Bar).
Bad faith
1. Lose improvements without right to be
indemnified unless the latter sells the land (NCC,
Art. 449) (1996, 2000 Bar).
2. Recover necessary expenses for preservation of
land without the right to retain the thing until
the indemnity is paid (NCC, Articles 452 and 546).
3. Pay damages to land owner (NCC, Art. 451).

2. Pay necessary expenses for preservation (NCC,

Articles 452 and 546).

Bad Faith Good Faith

Acquires improvements after paying indemnity and 1.
damages to builder, planter, sower, unless the latter
decides to remove (NCC, Articles 454 and 447). 2.
He cannot compel the builder planter or sower to buy
the land.
Receive indemnity for improvements and receive
damages; or
Remove them in any event and receive damages
(NCC, Aricles 454 and 447).

The reason why said article (NCC, Art. 447) applies

may be explained as follows:

That if the land owner knew that something was

being built, planted or sown on his land by
another and he did not interpose any objection
thereto, it is as if he was the one building,
planting or sowing in bad faith on his own land
with materials belonging to another, using the
owner of the materials as his worker (Rabuya,
2008).

Bad Faith Bad Faith

As though both acted in good faith (in pari delicto) (Art. 453).

161
 CIVIL LAW
Rule when the land owner, builder, planter, sower and owner of materials are different persons

Land Owner Builder, Planter, Sower Owner of Materials

Good faith
He shall answer subsidiarily for their
value and only in the event that the
one who made use of them has no
property with which to pay (NCC, Art.
455).
and
He can either: (NCC, Art. 448)
1. Acquire improvements after
paying indemnity for:
a. Necessary expenses; and
b. Useful expenses which could
either be:
a. Original costs of
improvements; or
b. Increase in the value of
the whole (NCC, Art. 546
& 443).
2. Sell the land to builder and
planter or collect rent from
sower unless the value of the
land is considerably greater than
the building etc., in which case,
the builder and planter shall pay
rent.
Good faith
Pay value of materials to its owner
without paying damages (NCC, Art. a.
455).
and
If the Land Owner:
1. Acquires the improvement, b.
Builder, Planter, or Sower may
demand from the landowner
the value of the materials and
labor (NCC, Art 455).
And he has the right to retain
the thing (and cannot be
required to pay rent) until
indemnity is paid (NCC, Art.
546).
If the useful improvements can
be removed without damage to
the principal thing, the
possessor in good faith may
remove them, unless the
person who recovers the
possession exercises the other
(NCC, Articles 547 and 447); or
Good faith
Collect value of materials
primarily from builder,
planter, sower, subsidiarily
from land owner (NCC, Art.
455); or
Remove the materials only if
w/o injury to the work
constructed, or without the
plantings, constructions or
works being destroyed
(NCC, Art. 447).
NOTE: Landowner is
subsidiarily liable only if he
appropriates/acquires the
improvements.

The parties shall agree upon the 2.
terms of the lease and in case of
disagreement, the court shall fix
the terms thereof.
Sells the land or rents it,
Builder or Planter cannot be
obliged to buy the land if its
value is considerably more
than that of the building or
trees.

In such case, he shall pay

reasonable rent.

The parties shall agree upon

the terms of the lease and in
case of disagreement, the court
shall fix the terms thereof
(NCC, Art. 448).
Good faith Good faith Bad faith
Land Owner can either: (NCC, Art. If the Land Owner:
448) 1. Loses materials without
1. Acquires the improvement, right to indemnity (NCC, Art.
1. Acquire improvements after Builder, Planter, or Sower has 449); and
paying indemnity for: the right to retain the thing
a. Necessary expenses; and (and cannot be required to 2. Pays damages (NCC, Art.
b. Useful expenses which could pay rent) until indemnity is 451)
either be: paid (NCC, Art. 546).
a. Original costs of The builder, planter or sower
improvements; or If the useful improvements would be considered merely an

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 162

b. Increase in the value of
the whole (NCC, Articles
546 and 443).
2. Sell the land to builder and
planter or collect rent from
sower unless the value of the
land is considerably greater than
the building etc., in which case, 2.
the builder and planter shall pay
rent.
The parties shall agree upon the
terms of the lease and in case of
disagreement, the court shall fix
the terms thereof.
PROPERTY
can be removed without agent of the owner of materials.
damage to the principal thing,
the possessor in good faith Therefore, the provisions of
may remove them, unless the Article 449 of the Civil Code will
person who recovers the apply by analogy. He is even
possession exercises the liable for damages (Rabuya,
other (NCC, Art. 547); or 2008).
Sells or rents it, Builder or
Planter cannot be obliged to
buy the land if its value is
considerably more than that
of the building or trees.
In such case, he shall pay
reasonable rent.

Without subsidiary liability for The parties shall agree upon

cost of materials. the terms of the lease and in
case of disagreement, the
court shall fix the terms
thereof (NCC, Art. 448).

Without indemnity to owner

of materials and collects
damages from him.

Good Faith Bad Faith Bad Faith

1. Recover value from Builder,
1. Option to:
1. Lose improvements without Planter, Sower (in pari
a. Acquire improvements
right to be indemnified delicto);
without paying indemnity
unless the landowner sells
and collect damages (NCC,
the land (NCC, Art. 449); 2. If Builder, Planter, Sower
Articles 445 and 449);
acquired improvements,
b. Order the demolition of work
2. Recover necessary expenses remove the materials only if
or restoration to former
for preservation of land without injury to the work
condition and collect
without the right to retain constructed, or without the
damages in both cases (NCC,
the thing until the indemnity plantings, constructions or
Art. 450); or
is paid (NCC, Articles 452 and works being destroyed
c. Sell the land to builder and
546); (NCC, Art. 447);
planter or rent it to the
sower, and collect damages
3. Pay the value of the materials 3. No action against land
in both cases (NCC, Art. 450);
to the owner of the owner; and
materials.; and
2. Has right to demand damages
4. May be liable to the land
from both (NCC, Art. 451);
Since both the owner of the owner for damages (NCC,
materials and the builder, etc. Art. 451).
3. Pay necessary expenses for
acted in bad faith, as between
preservation (NCC, Art. 452 &
them, they are treated as having
546); and
both acted in good faith (De Leon,
2006).
4. Not subsidiarily liable to the
owner of the materials because
4. Pay damages to land owner
as to him, the two acted in bad
(NCC, Art. 451).
faith (De Leon, 2006).
Bad faith Bad faith Bad faith
Same as though both acted in good faith (in pari delicto)( NCC, Art. 453).

163
 CIVIL LAW
Bad faith Good faith Good faith
1. Acquires improvements after If he pays the owner of the 1. Collect value of materials
paying indemnity and damages, materials, plants or seeds: primarily from builder, planter,
unless the latter decides to sower, subsidiarily from land
remove (NCC, Art. 454, 447 & 443); i. He may demand from the owner (NCC, Art. 455); or
and landowner the value of the 2. Remove the materials in any
materials and labor (NCC, Art event, with a right to be
2. Cannot compel builder, planter 455) and shall also be obliged indemnified for damages (NCC,
and sower to buy land. to the reparation of damages Art. 447).
(NCC, Art. 447); or
ii. Remove the materials in any
event, with a right to be
indemnified for damages (NCC,
Articles 454 and 447).
Bad faith Bad faith Good faith
The owner of the land shall answer Pay value of materials to its owner
subsidiarily for their value and only (NCC, Art. 455) 1. Collect value of materials
in the event that the one who made and primarily from builder,
use of them has no property with planter, sower, subsidiarily
which to pay (NCC, Art. 455). If the Land Owner: from land owner (NCC, Art.
455); or
and 1. Acquires the improvement,
Builder, Planter, or Sower may 2. Remove the materials in
Land Owner can either: (NCC, Art. demand from the landowner any event, with a right to be
448) the value of the materials and indemnified for damages
labor (NCC, Art 455). (NCC, Art. 447).
1. Acquire improvements after
paying indemnity for: And he has the right to retain the
a. Necessary expenses, and thing (and cannot be required to
b. Useful expenses which could pay rent) until indemnity is paid
either be: (Art. 546).
i. Original costs of
improvements If the useful improvements can be
ii. Increase in the value of removed without damage to the
the whole (NCC, Articles principal thing, the possessor in
546 and 443). good faith may remove them,
unless the person who recovers the
2. Sell the land to builder and planter or possession exercises option 2 (NCC,
collect rent from sower unless the Articles 547 and 447);
value of the land is considerably
greater than the building etc., 2. in Sells or rents it, Builder or Planter
which case, the builder and planter cannot be obliged to buy the land if
shall pay rent. its value is considerably more than
that of the building or trees.
The parties shall agree upon the
terms of the lease and in case of In such case, he shall pay
disagreement, the court shall fix the reasonable rent.
terms thereof.
The parties shall agree upon the
terms of the lease and in case of
disagreement, the court shall fix
the terms thereof (NCC, Art. 448).

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 164
 PROPERTY
Rule when the land owner, builder, planter, sower and owner of materials are different persons

Land Owner Builder, Planter, Sower Owner of Materials

Good faith
He shall answer subsidiarily for their
value and only in the event that the
one who made use of them has no
property with which to pay (NCC, Art.
455).
and
He can either: (NCC, Art. 448)
3. Acquire improvements after
paying indemnity for:
c. Necessary expenses; and
d. Useful expenses which could
either be:
a. Original costs of
improvements; or
b. Increase in the value of
the whole (NCC, Art. 546
& 443).
4. Sell the land to builder and
planter or collect rent from
sower unless the value of the
land is considerably greater than
the building etc., in which case,
the builder and planter shall pay
rent.
Good faith
Pay value of materials to its owner
without paying damages (NCC, Art. c.
455).
and
If the Land Owner:
3. Acquires the improvement, d.
Builder, Planter, or Sower may
demand from the landowner
the value of the materials and
labor (NCC, Art 455).
And he has the right to retain
the thing (and cannot be
required to pay rent) until
indemnity is paid (NCC, Art.
546).
If the useful improvements can
be removed without damage to
the principal thing, the
possessor in good faith may
remove them, unless the
person who recovers the
possession exercises the other
(NCC, Articles 547 and 447); or
Good faith
Collect value of materials
primarily from builder,
planter, sower, subsidiarily
from land owner (NCC, Art.
455); or
Remove the materials only if
w/o injury to the work
constructed, or without the
plantings, constructions or
works being destroyed
(NCC, Art. 447).
NOTE: Landowner is
subsidiarily liable only if he
appropriates/acquires the
improvements.

The parties shall agree upon the 4.
terms of the lease and in case of
disagreement, the court shall fix
the terms thereof.
Sells the land or rents it,
Builder or Planter cannot be
obliged to buy the land if its
value is considerably more
than that of the building or
trees.

In such case, he shall pay

reasonable rent.

The parties shall agree upon

the terms of the lease and in
case of disagreement, the court
shall fix the terms thereof
(NCC, Art. 448).
Good faith Good faith Bad faith
Land Owner can either: (NCC, Art. If the Land Owner:
448) 3. Loses materials without
3. Acquires the improvement, right to indemnity (NCC, Art.
3. Acquire improvements after Builder, Planter, or Sower has 449); and
paying indemnity for: the right to retain the thing
c. Necessary expenses; and (and cannot be required to 4. Pays damages (NCC, Art.
d. Useful expenses which could pay rent) until indemnity is 451)
either be: paid (NCC, Art. 546).
a. Original costs of The builder, planter or sower
improvements; or If the useful improvements would be considered merely an

165

b. Increase in the value of
the whole (NCC, Articles
546 and 443).
4. Sell the land to builder and
planter or collect rent from
sower unless the value of the
land is considerably greater than
the building etc., in which case, 4.
the builder and planter shall pay
rent.
The parties shall agree upon the
terms of the lease and in case of
disagreement, the court shall fix
the terms thereof.
CIVIL LAW
can be removed without agent of the owner of materials.
damage to the principal thing,
the possessor in good faith Therefore, the provisions of
may remove them, unless the Article 449 of the Civil Code will
person who recovers the apply by analogy. He is even
possession exercises the other liable for damages (Rabuya,
(NCC, Art. 547); or 2008).
Sells or rents it, Builder or
Planter cannot be obliged to
buy the land if its value is
considerably more than that
of the building or trees.
In such case, he shall pay
reasonable rent.

Without subsidiary liability for The parties shall agree upon

cost of materials. the terms of the lease and in
case of disagreement, the
court shall fix the terms
thereof (NCC, Art. 448).

Without indemnity to owner

of materials and collects
damages from him.

Good Faith Bad Faith Bad Faith

5. Recover value from Builder,
5. Option to:
5. Lose improvements without Planter, Sower (in pari
d. Acquire improvements
right to be indemnified delicto);
without paying indemnity
unless the landowner sells
and collect damages (NCC,
the land (NCC, Art. 449); 6. If Builder, Planter, Sower
Articles 445 and 449);
acquired improvements,
e. Order the demolition of work
6. Recover necessary expenses remove the materials only if
or restoration to former
for preservation of land without injury to the work
condition and collect
without the right to retain constructed, or without the
damages in both cases (NCC,
the thing until the indemnity plantings, constructions or
Art. 450); or
is paid (NCC, Articles 452 and works being destroyed
f. Sell the land to builder and
546); (NCC, Art. 447);
planter or rent it to the
sower, and collect damages
7. Pay the value of the materials 7. No action against land
in both cases (NCC, Art. 450);
to the owner of the owner; and
materials.; and
6. Has right to demand damages
8. May be liable to the land
from both (NCC, Art. 451);
Since both the owner of the owner for damages (NCC,
materials and the builder, etc. Art. 451).
7. Pay necessary expenses for
acted in bad faith, as between
preservation (NCC, Art. 452 &
them, they are treated as having
546); and
both acted in good faith (De Leon,
2006).
8. Not subsidiarily liable to the
owner of the materials because
8. Pay damages to land owner
as to him, the two acted in bad
(NCC, Art. 451).
faith (De Leon, 2006).
Bad faith Bad faith Bad faith
Same as though both acted in good faith (in pari delicto)( NCC, Art. 453).

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 166
 PROPERTY
Bad faith Good faith Good faith
3. Acquires improvements after If he pays the owner of the 1. Collect value of materials
paying indemnity and damages, materials, plants or seeds: primarily from builder, planter,
unless the latter decides to sower, subsidiarily from land
remove (NCC, Art. 454, 447 & 443); iii. He may demand from the owner (NCC, Art. 455); or
and landowner the value of the 2. Remove the materials in any
materials and labor (NCC, Art event, with a right to be
4. Cannot compel builder, planter 455) and shall also be obliged indemnified for damages (NCC,
and sower to buy land. to the reparation of damages Art. 447).
(NCC, Art. 447); or
iv. Remove the materials in any
event, with a right to be
indemnified for damages (NCC,
Articles 454 and 447).
Bad faith Bad faith Good faith
The owner of the land shall answer Pay value of materials to its owner
subsidiarily for their value and only (NCC, Art. 455) 3. Collect value of materials
in the event that the one who made and primarily from builder,
use of them has no property with planter, sower, subsidiarily
which to pay (NCC, Art. 455). If the Land Owner: from land owner (NCC, Art.
455); or
and 3. Acquires the improvement,
Builder, Planter, or Sower may 4. Remove the materials in
Land Owner can either: (NCC, Art. demand from the landowner any event, with a right to be
448) the value of the materials and indemnified for damages
labor (NCC, Art 455). (NCC, Art. 447).
3. Acquire improvements after
paying indemnity for: And he has the right to retain the
c. Necessary expenses, and thing (and cannot be required to
d. Useful expenses which could pay rent) until indemnity is paid
either be: (Art. 546).
iii. Original costs of
improvements If the useful improvements can be
iv. Increase in the value of removed without damage to the
the whole (NCC, Articles principal thing, the possessor in
546 and 443). good faith may remove them,
unless the person who recovers the
4. Sell the land to builder and planter or possession exercises option 2 (NCC,
collect rent from sower unless the Articles 547 and 447);
value of the land is considerably
greater than the building etc., 4. in Sells or rents it, Builder or Planter
which case, the builder and planter cannot be obliged to buy the land if
shall pay rent. its value is considerably more than
that of the building or trees.
The parties shall agree upon the
terms of the lease and in case of In such case, he shall pay
disagreement, the court shall fix the reasonable rent.
terms thereof.
The parties shall agree upon the
terms of the lease and in case of
disagreement, the court shall fix
the terms thereof (NCC, Art. 448).
Good faith Bad faith Good faith
1. Option to: 1. Collect value of materials
a. Acquire improvements 1. Lose improvements without primarily from builder,
without paying indemnity right to be indemnified unless planter, sower, subsidiarily
and collect damages (NCC, the landowner sells the land from land owner (NCC, Art.
Art. 445 & 449); (NCC, Art. 449); 455); or

167
 CIVIL LAW
b. Order the demolition of work
or restoration to former 2. Recover necessary expenses for 2. Remove materials in any
condition and collect preservation of land without event if builder, planter,
damages in both cases (NCC, the right to retain the thing sower acquired materials.
Art. 450); or until the indemnity is paid
c. Sell the land to builder and (NCC, Art. 452 & 546);
planter or rent it to the
sower, and collect damages in 3. Pay value of materials to its
both cases (NCC, Art. 450) owner plus damages (NCC, Art.
(2008 Bar). 455); and

2. Pay necessary expenses for 4. Pay damages to land owner

preservation (NCC, Articles 452 (NCC, Art. 451).
and 546); and

3. Subsidiarily liable to owner of

materials.
Bad faith Good faith
1. Acquires improvements after If he pays the owner of the
paying indemnity and damages, materials, plants or seeds:
unless the builder, planter or
sower decides to remove (NCC, 1. He may demand from the
Art. 454, 447 & 443); and landowner the value of the
materials and labor (NCC, Art.
2.
2. Cannot compel builder, planter 455) and shall also be obliged
and sower to buy land. to the reparation of damages
(NCC, Art. 447); or
2. Remove the materials in any
event, with a right to be
indemnified for damages (NCC,
Articles 454 and 447).
Bad faith
1. Loses materials without
right to indemnity (NCC,
Art. 449); and
Pays damages (NCC, Art. 451).
The builder, planter or sower
would be considered merely an
agent of the owner of materials.
Therefore, the provisions of
Article 449 of the Civil Code will
apply by analogy. He is even
liable for damages. (Rabuya,
2008).

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2019 GOLDEN NOTES 168
 PROPERTY
Q: Erlinda and Pedro borrowed the amount of
₱l00,000.00 from Teresita. They mortgaged
their property to secure the loan. After Pedro
died, Erlinda ended up being unable to pay the
loan. She sold the mortgaged property to
Teresita for ₱150,000.00. Teresita built a
three-storey building amounting to
₱2,000,000.00. Thereafter, the heirs of Pedro
contested the validity of the Deed of Sale,
alleging that the deed was executed three
years after Pedro died, as such his signature
was forged. For that reason, the deed of sale
was cancelled and Teresita asked for the
payment of ₱2,000,000.00 for the building and
₱150,000.00 for the consideration of the deed.
Who should pay for the amount asked for?
A: With respect to ₱150,000.00; a) As they were
married before the effectivity of the Family Code
of the Philippines and absent any showing of any
pre-nuptial agreement between Erlinda and
Pedro, it is safe to conclude that their property
relations were governed by the system of conjugal
partnership of gains. Hence, pursuant to Article
12125 of the Family Code, the ₱l00,000.00 loan
obligation, including interest, if any, is chargeable
to Erlinda and Pedro's conjugal partnership as it
was a debt contracted by the both of them during
their marriage; and b) the liability for the said
₱50,000.00 will not fall on all petitioners, but only
on Erlinda, as she was the only one among the
petitioners who was involved in the said sale.
However, with respect to ₱2,000,000.00, both
Teresita and Erlinda are in bad faith. Whenever
both the landowner and the
builder/planter/sower are in good faith (or in bad
faith, pursuant to the afore-cited provision), the
landowner is given two (2) options under Article
44836 of the Civil Code, namely: (a) he may
appropriate the improvements for himself after
reimbursing the buyer (the builder in good faith)
the necessary and useful expenses under Articles
54637 and 54838 of the Civil Code; or (b) he may
sell the land to the buyer, unless its value is
considerably more than that of the improvements,
in which case, the buyer shall pay reasonable rent.
Payment of ₱2,000,000.00 for the building is
subject at the option of the landowner. (Erlinda
Dinglasan Delos Santos et al. v. Alberto Abejon and
the estate of Teresita Dinglasan Abejon, G.R. No.
215820, March 20, 2017)
When there is good faith on the part of both
the owner of the land and the builder, planter
or sower
The owner of the land only has the options of
paying the value of the building or selling the land.
169
He cannot refuse either to pay or sell and compel
the owner of the building to remove it from the
land where it is erected. He is entitled to such
removal only when, after having chosen to sell the
land, the other party fails to pay for the same
(Ignacio v. Hilario, G.R. No. L-175, April 30, 1946).
The landowner upon demand for payment
CANNOT automatically become the owner of the
improvement for failure of the builder to pay for
the value of the land. There is nothing in Articles
448 and 546 which would justify the conclusion
that upon failure of the builder to pay the value of
the land, when such is demanded by the
landowner, the land owner becomes automatically
the owner of the improvement under Art. 445.
When the land’s value is considerably more than
the improvement, the landowner cannot compel
the builder to buy the land. In such event, a “forced
lease” is created and the court shall fix the terms
thereof in case the parties disagree thereon
(Depra v. Dumalo, G.R. No. L-57348, May 16, 1985).
Rule when landowner sells the land to a third
person who is in bad faith
Builder must go against the third person but if the
latter has paid the land owner, a case against such
land owner may still be filed by the builder and
the third person may file a third party complaint
against land owner.
Recourse left to the parties where the builder
fails to pay the value of the land
The Civil Code is silent on this point. Guidance
may be had from these decisions:
1. In Miranda v. Fadullon, G.R. No. L-8220,
October 29, 1955, the builder might be made
to pay rental only, leave things as they are,
and assume the relation of lessor and lessee;
2. In Ignacio v. Hilario, G.R. L-175, April 30, 1946,
owner of the land may have the improvement
removed; or
3. In Bernardo v. Bataclan, G.R. No. L-44606,
November 28, 1938, the land and
theimprovement may be sold in a public
auction, applying the proceeds first to the
payments of the value of the land, and the
excess if any, to be delivered to the owner of
the house in payment thereof.
Options available to the landowner if crops are
planted in good faith in his property (2000
Bar)
 CIVIL LAW
As to the pending crops planted in good faith, the
landowner has the option of allowing the planter
in good faith to continue the cultivation and to
harvest the crops, or to continue the cultivation
and harvest the crops himself. In the latter option,
however, the landowner shall have the right to a
part of the expenses of cultivation and to a part of
the net harvest, both in proportion to the time of
possession (NCC, Art. 545).
Q: Believing that a piece of land belonged to
him, A erected thereon a building, using
materials belonging to C. the owner of the land,
B was aware of the construction being made by
A, but did not do anything to stop it. What are
the rights of A, B, and C, with respect to the
building and as against each other? (1984 Bar)
A: B, regardless of his good or bad faith, becomes
the owner of the building (NCC, Arts. 445 and 448).
However, A, a builder in good faith will be entitled
to reimbursement of his necessary and useful
expenses, with right to retain the same until paid.
He may also remove the construction, since B
acted in bad faith in not stopping the construction
(NCC, Arts. 454 and 447). C shall have the right to
reimbursement and may also remove them but
only if he can do so without injury to the work
(NCC, Art. 447).
Q: Suppose X was in good faith but Y knew that
X was constructing on his (Y's) land but simply
kept quiet about it, thinking perhaps that he
could get X's house later. What are the
respective rights of the parties over X's house
in this case? (1999 Bar)
A: Since the lot owner Y is deemed to be in bad
faith (Art. 453), X as the party in good faith may
(a) remove the house and demand indemnification
for damages suffered by him, or (b) demand
payment of the value of the house plus reparation
for damages (Art. 447, in relation to Art. 454). Y
continues as owner of the lot and becomes, under
the second option, owner of the house as well,
after he pays the sums demanded.
Q: Bartolome constructed a chapel on the land
of Eric. What are Bartolome’s rights if he were:
(1) possessor of the land in good faith, or (2) in
bad faith? (1996 Bar)
A: (1) A chapel is a useful improvement,
Bartolome may remove the chapel if it can be
removed without damage to the land, unless Eric
chooses to acquire the chapel. In the latter case,
Bartolome has the right of reimbursement of the
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
value of the chapel with right of retention until he
is reimbursed (NCC, Arts. 448, 546 & 547).
(2) Bartolome loses whatever he built, without
any right to indemnify (NCC, Art. 449).
Q: Pecson owned a commercial lot on which he
built a building. For failure to pay realty taxes,
the lot was sold at public auction to
Nepomuceno, who in turn sold it to the
spouses Nuguid. The sale, however, does not
include the building. The spouses
subsequently moved for the delivery of
possession of the said lot and apartment.
Pecson filed a motion to restore possession
pending determination of the value of the
apartment.
May Pecson claim payment of rentals?
A: YES, Pecson is entitled to rentals by virtue of
his right of retention over the apartment. The
construction of the apartment was undertaken at
the time when Pecson was still the owner of the
lot. When the Nuguids became the uncontested
owner of the lot, the apartment was already in
existence and occupied by tenants.
NOTE: Art. 448 does not apply to cases where the
owner of the land is the builder but who later lost
the land; not being applicable, the indemnity that
should be paid to the buyer must be the fair
market value of the building and not just the cost
of construction thereof. To do otherwise would
unjustly enrich the new owner of the land.
Pending complete reimbursement, may the
spouses Nuguid benefit from the
improvement?
A: NO. Since spouses Nuguid opted to appropriate
the improvement for themselves when they
applied for a writ of execution despite knowledge
that the auction sale did not include the apartment
building, they could not benefit from the lot’s
improvement until they reimbursed the improver
in full, based on the current market value of the
property (Pecson v. CA, G.R. No. 115814, May 26,
1995).
The builder is entitled to a refund of the
expenses he incurred and not on the market
value of the improvement (2000 Bar)
Under Art. 448 in relation to Art. 546, the builder
in good faith is entitled to a refund of the
necessary and useful expenses incurred by him, or
the increase in value which the land may have
170
 PROPERTY
acquired by reason of the improvement, at the
option of the landowner. The builder is entitled to
a refund of the expenses he incurred, and not to
the market value of the improvement.
NOTE: The case of Pecson v. CA, G.R. No. 115814,
May 26, 1995 is not applicable.
The landowner is entitled to the rentals of the
building if he opted to appropriate it, subject
to the right of retention of the builder in good
faith (2000 Bar)
The landowner is entitled to the rentals of the
building. As the owner of the land, he is also the
owner of the building being an accession thereto.
However, the builder in good faith is entitled to
retain the building until indemnity is paid.
Consequently, he is also entitled to retain the
rentals. He, however, shall apply the rentals to the
indemnity payable to him after deducting
reasonable cost of repair and maintenance.
Q: The Church, despite knowledge that its
intended contract of sale with the National
Housing Authority (NHA) had not been
perfected, proceeded to introduce
improvements on the disputed land. On the
other hand, NHA knowingly granted the
Church temporary use of the subject
properties and did not prevent the Church
from making improvements thereon. Did the
Church and NHA act in bad faith?
A: YES. The Church and the NHA, both acted in
bad faith, hence, they shall be treated as if they
were both in good faith (National Housing
Authority v. Grace Baptist Church, G.R. No. 156437,
March 1, 2004).
Q: A squatter, X, is sought to be evicted by the
landowner Y, seeks reimbursement from the
latter for the improvements he made on the
property, while Y demands the value of all the
fruits X gathered from the land during the
occupancy thereof. Is X entitled to the
indemnity he prays for? Is he bound to pay for
the fruits he received? Why? (1983 Bar)
A: As a possessor in bad faith, X may recover only
the necessary expenses he may have incurred
while in possession and reimbursement for useful
improvements introduced by him if owner Y
chooses to retain them and X must pay Y the value
of all the fruits he received.
Q: Mr. and Mrs. X migrated to the US with all
their children. As they had no intention of
171
coming back, they offered their house and lot
for sale to their neighbors, Mr. and Mrs. A (the
buyers) who agreed to buy the property for
128 Million. Because Mr. and Mrs. A needed to
obtain a loan from a bank first, and since the
sellers were in a hurry to migrate, the latter
told the buyers that they could already occupy
the house, renovate it as it was already in a
state of disrepair, and pay only when their
loan is approved and released. While waiting
for the loan approval, the buyers spent Pl
Million in repairing the house. A month later, a
person carrying an authenticated special
power of attorney from the sellers demanded
that the buyers either immediately pay for the
property in full now or vacate it and pay
damages for having made improvements on
the property without a sale having been
perfected.
What are the buyers' options or legal rights
with respect to the they expenses incurred in
improving the property under circumstances?
(2015 Bar)
A: The buyers here may be deemed possessors
or builders in good faith because they were
made to believe that they were allowed to make
repairs or renovation by the sellers themselves.
As builders in good faith, they have the right to
seek reimbursement for the value of the
improvements in case the owner decides to
appropriate them. They cannot be asked to
remove the improvements because that is not one
of the options given by law to the landowner in
case the builder is in good faith.
When there is bad faith on the part of both the
owner of the land and the builder, planter or
sower
Q: The Municipality brought the action for the
recovery of a tract of land in the pueblo of Oas
claiming that it was a part of the public square.
Roa alleged that he was the owner of the
property and admitted in writing that he knew
that the land is owned by the Municipality and
that Castillo, whom he bought the property
from did not own the land. On the other hand,
when Roa constructed a substantial building
on the property in question the Municipality
did not oppose the construction. Is there bad
faith on both of the parties?
A: YES. Roa was not a purchaser in good faith. The
Municipality, having permitted the erection by the
defendant of a building on the land without
objection, acted in bad faith. The rights of the
 CIVIL LAW
parties must, therefore, be determined as if they
both had acted in good faith. When there has been
bad faith, not only on the part of the person who
built, sowed, or planted on another's land, but also
on the part of the owner of the latter, the rights of
both shall be the same as if they had acted in good
faith. Therefore, the owner of the land on which
the building, sowing, or planting is done in good
faith shall have a right to appropriate as his own
the work, sowing, or planting after the indemnity
mentioned in articles 453 and 454, or, to oblige
the person who has built or planted, to pay him
the value of the land and to force the person who
sowed to pay the proper rent (Art. 453);
(Municipality of Oas vs Roa, G.R. No. L-2017,
November 24, 1906).
ACCESSION NATURAL
ALLUVION
Alluvium or alluvion (2001, 2003, 2008, 2009
BAR)
It is the gradual deposit of sediment by natural
action of a current of fresh water (not sea water),
the original identity of the deposit being lost.
Where it is by sea water, it belongs to the State
(Government of Philippine Islands v. Cabangis, G.R.
No. L-28379, March 27, 1929).
NOTE: Art. 457 of NCC states “To the owners of
the lands adjoining the banks of the rivers belongs
the accretion which they gradually receive from
the effects of the current of the waters.
Riparian owner
He is the owner of the land adjoining rivers.
Accretion v. Alluvium
Accretion is the process whereby the soil is
deposited while alluvium is the soil deposited.
Requisites of accretion
1. Deposit be gradual and imperceptible;
2. Resulted from the effects of the current of
the water; and
3. The land where the accretion takes place
is adjacent to the banks of a river
If all the requisites are present, the riparian owner
is automatically entitled to the accretion.
NOTE: The alluvion starts to become the property
of the riparian owner from the time that the
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
deposit created by the current of water becomes
manifest (Heirs of Navarro v. IAC, G.R. No. 68166,
February 12, 1997).
Man-made or artificial accretions to lands NOT
included
The rule on alluvion does not apply to man-made
or artificial accretions to lands that adjoin canals
or esteros or artificial drainage system (Ronquillo
v. CA, G.R. No 43346, March 20, 1991).
NOTE: If the deposits accumulate, not through the
effects of the current of the water, but because of
the constructions made by the owner purely for
defensive purposes against the damaging action of
the water, the deposits are still deemed to be
alluvion and will belong to the riparian owner.
If the deposit is brought about by sea water
When the sea moves towards the estate and the
tide invades it, the same becomes a foreshore land
which consequently becomes part of the public
domain. Thus, it belongs to the state.
Registration
Alluvial deposits must be registered. Though,
automatically it is owned by the riparian owner
(Heirs of Navarro v. IAC, G.R. No. 68166, February
12, 1997), it is still subject to acquisitive
prescription which may divest the riparian owner
the ownership over the accretion.
Failure to register
If the riparian owner fails to register the deposits
within the prescriptive period of acquiring real
property (10 years if ordinary prescription or 30
years if extraordinary prescription), it subjects
said accretion to acquisition thru prescription by
third persons (Reynante v. CA, G.R. No. 95907, April
8, 1992).
However, registration under the Torrens System
does not protect the riparian owner against the
diminution of the area of his registered land
through gradual changes in the course of an
adjoining stream.
Reasons for granting a riparian owner the
right to alluvion deposited by a river
1. To compensate him for:
a. Danger of loss that he suffers due to
the location of his land; and
b. The encumbrances and other
easements on his land
172
 PROPERTY
2. To promote the interests of agriculture
as he is in the best position to utilize the
accretion.
The owners of estates adjoining ponds or lagoons
do not acquire the land left dry by the natural
decrease of the waters, or lose that inundated by
them in extraordinary floods (NCC, Art. 458).
NOTE: This rule does not apply to lakes.
Q: The First Accretion adjoined the southern
portion of the Motherland. Decades later, the
Second Accretion abutted the First Accretion
on its southern portion. OCT was issued in the
names of all the respondents covering the
Second Accretion. Petitioners alleged that
through deceit, fraud, falsehood, and
misrepresentation, respondent Victoriano,
with respect to the First Accretion, and the
respondents collectively, with regard to the
Second Accretion, had illegally registered the
said accretions in their names,
notwithstanding the fact that they were not the
riparian owners. Are the petitioners the
exclusive owners of the First and Second
Accretion?
A: No. Petitioners are not the riparian owners of
the Motherland to which the First Accretion had
attached, hence, they cannot assert ownership
over the First Accretion. Consequently, as the
Second Accretion had merely attached to the First
Accretion, they also have no right over the Second
Accretion. Neither were they able to show that
they acquired these properties through
prescription as it was ·not established that they
were in possession of any of them. Being the
owner of the land adjoining the foreshore area,
respondent is the riparian or littoral owner who
has preferential right to lease the foreshore area.
Accordingly, therefore, alluvial deposits along the
banks of a creek or a river do not form part of the
public domain as the alluvial property
automatically belongs to the owner of the estate to
which it may have been added. The only
restriction provided for by law is that the owner
of the adjoining property must register the same
under the Torrens system; otherwise, the alluvial
property may be subject to acquisition through
prescription by third persons.(Heirs of Francisco I.
Narvasa, Sr. et.al v. Emiliana Imbornal et.al, G.R. No.
182908, August 6, 2014)
Art. 459. Whenever the current of a river,
creek or torrent segregates from an estate on
its bank a known portion of land and
transfers it to another estate, the owner of the
173
land to which the segregated portion
belonged retains the ownership of it,
provided that he removes the same within
two years.
Art. 460. 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 six months.
If such owners claim them, they shall pay the
expenses incurred in gathering them or
putting them in a safe place.
CHANGE IN THE COURSE OF THE RIVER
Whenever a river, changing its course by natural
causes, opens a new bed through a private estate,
this bed shall become of public dominion (NCC,
Art. 462).
Requisites (NAPA)
1. There must be a Natural change in the
course of the waters of the river;
otherwise, the bed may be the subject of a
State grant;
2. The change must be Abrupt or sudden;
3. The change must be Permanent; and
NOTE: The rule does not apply to temporary
overflowing of the river.
4. There must be Abandonment by the
owner of the bed.
NOTE: Abandonment pertains to the decision not
to bring back the river to the old bed.
Effect when the river bed is abandoned
River beds which are abandoned through the
natural change in the course of the waters ipso
facto belong to the owners whose lands are
occupied by the new course in proportion to the
area lost. However, the owners of the lands
adjoining the old bed shall have the right to
acquire the same by paying the value thereof,
which value shall not exceed the value of the area
occupied by the new bed (NCC, Art. 461).
NOTE: The rule on abandoned river bed does not
apply to cases where the river simply dries up
because there are no persons whose lands are
occupied by the waters of the river.
Under the Water Code, the government or the
riparian owner may return the river back to the
original bed (P.D. 1067, Art. 58).
 CIVIL LAW
AVULSION Rule on avulsion of uprooted trees

It is the deposit of known (identifiable) portion of GR: The owner of the tree retains ownership.
land detached from the property of another which
is attached to the property of another as a result of XPN:
the effect of the current of a river, creek or torrent 1. The owner must claim them within a period of
(2001 Bar). six months; and

Whenever the current of a river, creek, or torrent NOTE: The claim does not require actual
segregates from an estate on its banks a known recovery. It can be recovered on the basis of
portion of land and transfers it to another estate, prescriptive period for acquiring movables
the owner of the land to which the segregated which is four years.
portion belonged retains the ownership of it,
provided that he removes the same within 2 years 2. If uprooted trees have been transplanted by
(NCC, Art. 459) (2001 Bar). the owner of the land which the trees may
have been cast and said trees have taken root
Alluvium v. Avulsion (2001 Bar) in said land, the owner of the trees, upon
making the claim, is required to refund the
ALLUVIUM AVULSION expenses incurred in gathering them or in
Gradual and Sudden or abrupt putting them in safe place, including the
imperceptible. process. expenses incurred by the owner of the land
Soil cannot be Identifiable and for the preservation of the trees (Rabuya,
identified. verifiable. 2008).
Belongs to the owner Belongs to the owner
of the property to from whose property Art. 463. Whenever the current of a river
which it is attached. it was detached. divides itself into branches, leaving a piece of
Merely an attachment. Detachment followed land or part thereof isolated, the owner of the
by attachment. land retains his ownership. He also retains it
if a portion of land is separated from the
Requisites of avulsion (CAI) estate by the current.

1. Transfer is caused by the Current of a Effects Of Ramifications Of A River

river, creek, or torrent;
2. Transfer is sudden or Abrupt; and
3. The portion of the land transported is
known or Identifiable.
NOTE: By analogy, land transferred from one
tenement to another by forces of nature other
than the river current can still be considered as an
avulsion.
Rule on acquisition of titles over an avulsion
1. Some parts of the original estate may be
isolated but remaining steady and secure on their
location;
2. Other parts may be separated and pushed away
from the original estate.
Art. 464. Islands which may be formed on the
seas within the jurisdiction of the Philippines,
on lakes, and on navigable or floatable rivers
belong to the State.

GR: Original owner retains title.
XPNs: The owner must remove (not merely claim)
the transported portion within two years to retain
ownership, otherwise, the land not removed shall
belong to the owner of the land to which it has
been adjudicated in case of:
1. Abandonment; or
2. Expiration of two years, whether the failure to
remove be voluntary or involuntary, and
irrespective of the area of the portion known
to have been transferred.
Art. 465. Islands which through successive
accumulation of alluvial deposits are formed
in non-navigable and non-floatable rivers,
belong to the owners of the margins or banks
nearest to each of them, or to the owners of
both margins if the island is in the middle of
the river, in which case it shall be divided
longitudinally in halves. If a single island thus
formed be more distant from one margin than
from the other, the owner of the nearer
margin shall be the sole owner thereof.
ISLANDS

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 174
 PROPERTY
Rules on ownership with regard to formation Different kinds of accession continua as regard
of islands movables

LOCATION OWNER 1. Adjunction or conjunction;

If formed on the sea 2. Mixture; and
Within territorial State 3. Specification.
waters.
Outside territorial First country to occupy. Adjunction
waters.
If formed on lakes or navigable/ floatable It is the process by virtue of which two movable
rivers things belonging to different owners are united in
State such a way that they form a single object and each
If formed on non-navigable/non-floatable of the things united preserves its own nature (NCC,
rivers Art. 466).
Nearer in margin to Owner of nearer
Requisites of adjunction (2BUS)
one bank. margin is the sole
owner.
There is adjunction when there are:
If equidistant. Island divided
longitudinally in halves.
1. Two (2) movables;
2. Belonging to different owners;
Q: Eduave is the owner of land forming part of
3. United forming a single object; and
an island in a non-navigable river. Said land 4. Separation would impair their nature or
was eroded due to a typhoon, destroying the
result in substantial injury to either thing.
bigger portion thereof and improvements
thereon. Due to the movements of the river Classes of adjunction or conjunction
deposits on the part of the land that was not
eroded, the area was increased. Later, Eduave 1. Painting (pintura);
allowed Dodong to introduce improvements
2. Engraftment or Inclusion - Like setting a
thereon and live there as a caretaker.
precious stone on a golden ring;
However, Dodong later denied Eduave’s claim
3. Writing (escritura);
of ownership so the latter filed action to quiet 4. Weaving; and
title over the property. Who has a better right
5. Soldering- Joining a piece of metal to
to the land? another metal
a. Ferruminacion - Principal and
A: EDUAVE has a better right to the land. The
accessory are of the same metal; or
land in question is an island that appears in a non-
b. Plumbatura – Different metals (NCC,
floatable and non-navigable river, and it is not
Art. 468)
disputed that Eduave is the owner of the parcel of
land. The island belongs to the owner of the parcel Ownership of the resulting object
of land nearer the margin (NCC, Art. 465). Because
the island is longer than the property of Eduave,
The owner of the principal by law becomes owner
he is deemed ipso jure the owner of that portion of the resulting object and should indemnify the
which corresponds to the length of his property owner of the accessories for the values thereof.
along the margin of the river (Jagualing v. CA, G.R.
No. 94283, March 4, 1991).
Art. 467. The principal thing, as between two
things incorporated, is deemed to be that to
NOTE: There is no accession when islands are
which the other has been united as an
formed by the branching of a river; the owner
ornament, or for its use or perfection.
retains ownership of the isolated piece of land.
Art. 468. If it cannot be determined by the
MOVABLES
rule given in the preceding article which of
the two things incorporated is the principal
Art. 466. Whenever two movable things
one, the thing of the greater value shall be so
belonging to different owners are, without
considered, and as between two things of
bad faith, united in such a way that they form
equal value, that of the greater volume.
a single object, the owner of the principal
Tests to determine the principal
thing acquires the accessory, indemnifying
the former owner thereof for its value.

175
 CIVIL LAW
1. That of greater value;
2. If two things are of equal value – That of
greater volume;
3. If two things are of equal volume – That to
which the other has been united as an
ornament, or for its use or perfection; and
4. That which has greater merits, utility and
volume if things (NCC, Art. 468).
NOTE: In painting and sculpture, writings,
printed matter, engraving and lithographs, the
board, metal, stone, canvas, paper or
parchment shall be deemed the accessory
thing (NCC, Art. 468).
accessory thing shall have a right to choose
between the former paying him its value or
that the thing belonging to him be separated,
even though for this purpose it be necessary
to destroy the principal thing; and in both
cases, furthermore, there shall be indemnity
for damages.
If either one of the owners has made the
incorporation with the knowledge and
without the objection of the other, their
respective rights shall be determined as
though both acted in good faith.

Ownership when the adjunction involves three Rights of owners over the thing in adjunction
or more things
OWNER OF THE
If the adjunction involves three or more things, PRINCIPAL
ACCESSORY
the court should first distinguish the principal and Good faith
apply Art. 466 in an equitable manner such that 1. Acquire accessory 1. Receive payment for
the principal acquires the accessory, indemnifying and pay owner of value of accessory; or
the former owner thereof for its value. the accessory for 2. GR: Demand
its value; or separation provided
Art. 469. Whenever the things united can be 2. Demand the thing suffers no
separated without injury, their respective separation injury.
owners may demand their separation. provided the thing
suffers no injury. XPN: If accessory is
Nevertheless, in case the thing united for the more precious than
use, embellishment or perfection of the other, principal, he may
is much more precious than the principal demand separation
thing, the owner of the former may demand with or without injury
its separation, even though the thing to which to the thing.
it has been incorporated may suffer some Good faith Bad faith
injury. Acquire accessory Lose accessory and pay
w/o paying the owner damages.
of accessory and
Separation of things is allowed in the following entitled to damages.
cases: Bad faith Good faith
1. Pay value of 1. Receive payment and
1. Separation without injury; accessory and pay damages; or
2. Separation with injury – Accessory is damages; or 2. Have accessory
much more precious than the principal, 2. Have the things separated with or
the owner of the former may demand its separated, even without injury to
separation even though the principal may though there is principal and receive
suffer injury; injury to the damages.
3. Owner of the principal acted in Bad faith principal and pay
(NCC, Art. 469). damages.
Bad faith
Art. 470. Whenever the owner of the Same as though both acted in good faith.
accessory thing has made the incorporation
in bad faith, he shall lose the thing Art. 471. Whenever the owner of the material
incorporated and shall have the obligation to employed without his consent has a right to
indemnify the owner of the principal thing for an indemnity, he may demand that this
the damages he may have suffered. consist in the delivery of a thing equal in kind
and value, and in all other respects, to that
If the one who has acted in bad faith is the
employed, or else in the price thereof,
owner of the principal thing, the owner of the according to expert appraisal.

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 176
 PROPERTY
Indemnity Good faith
It is made either by: 1. Right is subject to stipulations; or
2. Right is in proportion to the part belonging to
1. Delivery of a thing equal in kind and him (Co-ownership arises) (NCC, Art.422).
value; or By will of only one owner/ by chance
2. Payment of its price including the
sentimental value (NCC, Art. 471). Good faith
1. Have the things separated provided the thing
Art. 472. If by the will of their owners two suffers no injury; or
things of the same or different kinds are 2. If cannot be separated without injury, acquire
mixed, or if the mixture occurs by chance, and interest on mixture in proportion to his part
in the latter case the things are not separable (co-ownership).
without injury, each owner shall acquire a
right proportional to the part belonging to Bad faith
Good faith
him, bearing in mind the value of the things (caused the mixture)
mixed or confused.
First owner will lose his Second owner will
part on the mixture and acquire entire
Art. 473. If by the will of only one owner, but pay damages to the second mixture and entitled
in good faith, two things of the same or owner. to damages.
different kinds are mixed or confused, the
rights of the owners shall be determined by Good faith
Bad faith
the provisions of the preceding article. (caused the mixture)
As if both acted in GF, As if both acted in GF,
If the one who caused the mixture or
because the 2nd owner in since the first owner
confusion acted in bad faith, he shall lose the
GF was the one who is in BF and the
thing belonging to him thus mixed or
caused the ratification, second owner who
confused, besides being obliged to pay
because the first owner. caused the mixture in
indemnity for the damages caused to the
GF in a way ratifies
owner of the other thing with which his own
the BF of first owner.
was mixed.

Art. 474. One who in good faith employs the

Mixture
It is the combination of materials where the
respective identities of the component elements
are lost either voluntarily or by chance (NCC,
Articles. 472-473).
Kinds of mixtures (COM-CON)
1. Commixtion – mixture of solids; and
2. Confusion – mixture of liquids
Proportionate Ownership In Commixtion Or
Confusion
If the things mixed or confused are not separable
without injury, each owner shall have a right to
the resulting thing proportionate to the value of
the thing he owns. (Pineda, 2009)
Rules regarding mixtures
First Owner Second Owner
By Will of Both Owners or by Accident
material of another in whole or in part in
order to make a thing of a different kind, shall
appropriate the thing thus transformed as his
own, indemnifying the owner of the material
for its value.
If the material is more precious than the
transformed thing or is of more value, its
owner may, at his option, appropriate the new
thing to himself, after first paying indemnity
for the value of the work, or demand
indemnity for the material.
If in the making of the thing bad faith
intervened, the owner of the material shall
have the right to appropriate the work to
himself without paying anything to the maker,
or to demand of the latter that he indemnify
him for the value of the material and the
damages he may have suffered. However, the
owner of the material cannot appropriate the
work in case the value of the latter, for artistic
or scientific reasons, is considerably more
than that of the material.

177
 CIVIL LAW
Specification (NCC, Art. 474) ADJUNCTION MIXTURE SPECIFICATION
It is the giving of new form to another’s material Involves at Involves at May involve one
through application of labor. The material least two least two thing (or more)
undergoes a transformation or change of identity. things. things. but form is
The labor is the principal and the material used is changed,
the accessory.
Accessory Co-ownership Accessory
Respective rights of the maker and the owner follows the results. follows the
of the materials in specification principal. principal.

Owner of Materials Things joined Things mixed The new object

Maker (M) retain their or confused retains or
(OM)
nature. may either preserves the
Good faith retain or lose nature of the
GR: Appropriate the Receive payment for their original object.
thing transformed and value of materials. respective
pay the owner of the natures.
materials for its value.

XPN: If the material is Art. 475. In the preceding articles,

more precious than the sentimental value shall be duly appreciated.
thing transformed, the
owner of the materials Sentimental Value
has the option to:
1. Acquire the work The value placed by the owner on the property is
and indemnify the more than the actual value by reason of some
maker for his labor; sentiments like, love, affection, respect and honor.
or
2. Demand indemnity
for the material. QUIETING OF TITLE
Good faith
1. Receive payment for 1. Appropriate new
value of his work; or thing and pay the It is a proceeding in equity, the purpose of which
2. Appropriate the new maker for the work; is the declaration of the invalidity of a claim on a
thing and pay the or title or the invalidity of an interest in property
owner of materials 2. Receive payment for adverse to that of the plaintiff, and thereafter to
for its value. value of materials. free the plaintiff and all those claiming under him
from any hostile claim thereon (Pineda, 2009).
Bad faith Good faith
1. Lose the new thing 1. Appropriate the new Quieting of title is a common law remedy for the
and pay damages to thing without paying removal of any cloud upon, doubt, or uncertainty
owner of the and receive damages; affecting title to real property. Whenever there is a
materials; or or cloud on title to real property or any interest in
2. Pay value of NOTE: Not real property by reason of any instrument, record,
materials and available if the claim, encumbrance, or proceeding that is
damages to owner of new thing is more apparently valid or effective, but is, in truth and in
the materials. valuable than fact, invalid, ineffective, voidable, or
materials for unenforceable, and may be prejudicial to said title,
scientific or an action may be brought to remove such cloud or
artistic reasons. to quiet the title. In such action, the competent
court is tasked to determine the respective rights
2. Receive payment for of the complainant and the other claimants, not
the value of materials only to place things in their proper places, and
and damages. make the claimant, who has no rights to said
immovable, respect and not disturb the one so
Adjunction, mixture and specification entitled, but also for the benefit of both, so that
distinguished whoever has the right will see every cloud of

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 178
 PROPERTY
doubt over the property dissipated, and he can
thereafter fearlessly introduce any desired
improvements, as well as use, and even abuse the
property (Phil-Ville Development and Housing
Corporation v. Maximo Bonifacio, et al., G.R. No.
167391, June 8, 2011).
Nature of the action to quiet title
Actions for quieting of title are not suits in rem;
neither are they suits in personam. They are suits
against a particular person or persons in respect
to the res and the judgement will apply only to the
property in dispute.
Classifications of actions
1. Remedial action – one to remove cloud on
title; and
2. Preventive action – one to prevent the casting
of a (threatened) cloud on the title.
Scope of the action to quiet title
Only real properties can be subject of an action for
quieting of title (Pineda, 2009).
QUIETING OF TITLE : REQUIREMENTS
Requisites for an action to quiet title (LCDR)
1. Plaintiff must have a Legal or equitable
title to, or interest in the real property
which is the subject matter of the action;
NOTE: He need not be in possession of
said property (NCC, Art.477).
2. There must be Cloud in such title;
3. Such cloud must be Due to some (IRCEP)
a. Instrument;
b. Record;
c. Claim;
d. Encumbrance; or
e. Proceeding which is apparently valid
but is in truth invalid, ineffective,
voidable or unenforceable, and is
prejudicial to the plaintiff’s title; and
4. Plaintiff must
a. Return to the defendant all benefits
he may have received from the latter;
or
b. Reimburse him for expenses that may
have redounded to his benefit.
Reasons for quieting of title
179
1. Prevent future litigation on the
ownership of the property;
2. Protect true title & possession;
3. To protect the real interest of both
parties; and
4. To determine and make known the
precise state of title for the guidance of
all.
Persons who may file an action to quiet title
1. Registered owner;
2. A person who has an equitable right or
interest in the property; or
3. The State.
Q: Lim filed in the RTC in Cebu City a petition
for the reconstitution of the owner's duplicate
copy of OCT No. RO-9969-(O-20449), alleging
that said OCT had been lost during World War
II by his mother, Luisa, who acquired title to it
by virtue of a deed of sale, albeit unregistered.
On account of the Oños' opposition, and upon
order of the RTC, Lim converted the petition
for reconstitution into a complaint for quieting
of title. The Oños now contend that this action
for quieting of title should be disallowed
because it constituted a collateral attack on
OCT No. RO-9969-(O-20449). Is their
contention correct?
A: NO. The attack is direct when the objective is to
annul or set aside such judgment, or enjoin its
enforcement. On the other hand, the attack is
indirect or collateral when, in an action to obtain a
different relief, an attack on the judgment is
nevertheless made as an incident thereof. The
averments readily show that the action was
neither a direct nor a collateral attack for Lim was
asserting only that the existing title registered in
the name of the petitioners' predecessors had
become inoperative due to the conveyance in
favor of Lim's mother, and resultantly should be
cancelled (Oño vs Lim, G.R. No. 154270, March 09,
2010).
Art. 476. Whenever there is a cloud on title to
real property or any interest therein, by
reason of any instrument, record, claim,
encumbrance or proceeding which is
apparently valid or effective but is in truth and
in fact invalid, ineffective, voidable, or
unenforceable, and may be prejudicial to said
title, an action may be brought to remove such
cloud or to quiet the title.
An action may also be brought to prevent a
cloud from being cast upon title to real
 CIVIL LAW
property or any interest therein. ACTION TO ACTION TO REMOVE
QUIET TITLE CLOUD ON TITLE
As to purpose
Rules in actions for quieting of title To put an end to To procure the
vexatious litigation in cancellation; delivery;
1. These put an end to vexatious litigation in respect to the property release of an
respect to property involved; plaintiff involved. instrument,
asserts his own estate & generally encumbrance or claim,
declares that defendant’s claim is without which constitutes a
foundation; claim in plaintiff’s title,
2. Remedial in nature; and which may be used
3. Not suits in rem nor personam but suits to injure or to vex him
against a particular person or persons in in his enjoyment of his
respect to the res (quasi in rem); title.
4. May not be brought for the purpose of As to nature of the action
settling a boundary disputes. Remedial in nature, Preventive in nature, to
5. Applicable to real property or any interest involving a present remove a cloud which
therein; adverse claim. maybe used for future
6. An action to quiet title brought by the actions.
person in possession of the property is As to nature of claims
IMPRESCRIPTIBLE; and Plaintiff asserts own Plaintiff declares his
7. If he is not in possession, he must invoke claim and declares that own claim and title and
his remedy within the prescriptive the claim of the at the same time
period as follows; defendant is unfounded indicates the source
a) Ordinary prescription- 10 years and calls on the and nature of
b) Extraordinary prescription- 30 years. defendant to justify his defendant’s claim
claim on the property pointing its defect and
Requisites for existence of a cloud (ATP) that same may be prays for the
determined by the declaration of its
1. There is an Apparently valid or effective court. validity.
instrument; Filed against whom
Against people who Against defendant who
NOTE: They must appear valid or effective – have claims; claims are asserts claims based on
and extraneous evidence is needed to prove more general in nature an invalid instrument
their invalidity or ineffectivity. (but not apparent).
2. But such instrument is in Truth: Action to quiet title cannot be availed until the
a. Invalid;
donation has been first revoked
b. Ineffective;
c. Voidable; The barangay traces its claim of ownership over
d. Unenforceable; the disputed property to a valid contract of
e. Has been extinguished or terminated; or donation which is yet to be effectively revoked.
f. Has been barred by extinctive Such rightful claim does not constitute a cloud on
prescription. the supposed title of Edgardo over the same
3. Such instrument may be Prejudicial to the property removable by an action to quiet title
title. (Dolar v. Brgy. Lublub, G.R. No. 152663, November
18, 2005).
Purpose of an action to remove cloud on title
Art. 477. The plaintiff must have legal or
It is intended to procure the cancellation, or
equitable title to, or interest in the real
delivery of, release of an instrument,
property which is the subject matter of the
encumbrance, or claim constituting a claim on
action. He need not be in possession of said
plaintiff’s title, and which may be used to injure or
property.
vex him in the enjoyment of his title.
Indispensable Requirement For Action To
Action to quiet title v. Action to remove cloud
Quiet Title
on title

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 180
 PROPERTY
For an action to quiet title or remove cloud on a
title to stand, the plaintiff must have legal or
equitable title to or interest in the subject real
property. This requirement is indispensable, the
absence of which is fatal to the action. (Pineda,
2009)
Art. 478. There may also be an action to quiet
title or remove a cloud therefrom when the
contract, instrument or other obligation has
been extinguished or has terminated, or has
been barred by extinctive prescription.
PRESCRIPTION OR NON-PRESCRIPTION OF
ACTION
Prescriptive periods for bringing an action to
quiet title
1. Plaintiff in possession – Imprescriptible;
or
2. Plaintiff not in possession –
a. 10 years (ordinary) or
b. 30 years (extra-ordinary).
Imprescriptibility of action to quiet title
It is imprescriptible if plaintiff is in possession. If
not, it prescribes within period for filing accion
publiciana or accion reinvidicatoria.
Laches
It is the failure or neglect, for unreasonable and
unexplained length of time, to do that which by
exercising due diligence, could or should have
been done earlier.
The negligence or omission to assert a right within
a reasonable time, warranting a presumption that
the party entitled to assert it either has
abandoned it or declined to assert it (Tijam v
Sibonghanoy, G.R. No. L-21450, April 15, 1968).
An action filed within the period of limitations
may still be barred by laches (NCC, Articles 1431,
1433 and 1437).
Art. 482. If a building, wall, column, or any
other construction is in danger of falling, the
owner shall be obliged to demolish it or to
execute the necessary work in order to
prevent it from falling.
If the proprietor does not comply with this
obligation, the administrative authorities
may order the demolition of the structure at
the expense of the owner, or take measures to
181
insure public safety.
If a building, wall, column or any other
construction is in danger of falling, the owner
must demolish the same to forestall the possibility
of causing death or harm to anyone, or injury to
property. (Pineda, 2009)
Art. 483. Whenever a large tree threatens to
fall in such a way as to cause damage to the
land or tenement of another or to travelers
over a public or private road, the owner of the
tree shall be obliged to fell and remove it; and
should he not do so, it shall be done at his
expense by order of the administrative
authorities.
C0-OWNERSHIP
Art. 484. There is co-ownership whenever the
ownership of an undivided thing or right
belongs to different persons.
In default of contracts, or of special provisions,
co-ownership shall be governed by the
provisions of this Title.
There is co-ownership whenever the ownership of
an undivided thing or right belongs to different
persons (NCC, Art. 484). It is the right of common
dominion which two or more persons have in a
spiritual (or ideal) part of the thing which is not
physically divided.
CHARACTERISTICS OF CO-OWNERSHIP IN
GENERAL
1. Plurality of subjects or owners;
2. There is no mutual representation by the
co-owners;
3. It exists for the common enjoyment of the
co-owners;
4. There is a single object which is not
materially divided;
5. It has no distinct legal personality; and
6. It is governed first of all by the contract of
the parties; otherwise, by special legal
provisions, and in default of such
provisions, by the provisions of Title III of
the New Civil Code on co-ownership.
Legal effect of co-ownership
 CIVIL LAW
Co-ownership creates rights in favor of each one by accretion.
of the co-owners with respect to the property
owned in common.
As to minority or legal disability
The rights of a co-owner can be viewed in two
senses: In case of a minor who The legal disability of
is a co-owner, this does one joint owner benefits
1. His right over the thing owned in not benefit the others the others.
common is limited by the other co- for the purpose of
owner’s concomitant rights; or prescription.
2. His right over his ideal share or his Prescription
undivided interest over the same Prescription will
Prescription will not run
property; the individual co-owner has continue to run among
among them.
absolute control and ownership over his co-owners.
ideal share.
Co-ownership v. Partnership
Requisites of co-ownership (PUS)
ORDINARY
1. Plurality of owners; CO-OWNERSHIP
PARTNERSHIP
2. Unity of object, which is an undivided No legal personality Has legal personality.
thing or right; and
Can be created without Can be created only by
3. Each co-owner’s right must be limited
the formalities of a contract, express or
only to his ideal Share of the physical
contract implied
whole.
By contract or by will. By contract only.
NOTE: By the very nature of co-ownership, a Agreement to exist for No term limit is set by
co-owner cannot point to any specific portion more than 10 years is law.
of the property owned in common as his own void.
because his share remains intangible and ideal No mutual There is mutual
(Spouses Avila et al v. Spouses Barabat, GR. No. representation. representation.
141993, May 17, 2006). Not dissolved by the Dissolved by death or
death/incapacity of a co- incapacity of a partner.
Rules to govern in co-ownership owner.
A co-owner can dispose A partner cannot be
a. Contracts; of his share w/o the substituted without the
b. Special provision of law; and consent of the others consent of the others.
c. Provisions of the civil code. hence in a way a co-
owner is substituted.
Co-ownership v. Joint tenancy
Profits of a co-owner Profits may be
depend on his stipulated upon;
CO-OWNERSHIP JOINT OWNERSHIP proportionate share. (e.g., profit-sharing
Tenancy in common Joint Tenancy agreements).
As to the extent of ownership For collective For profit.
Each co-owner is the Each joint owner owns enjoyment.
owner of his own ideal the whole thing. No public instrument is May be made in any
share. needed even if the object form except when real
As to disposition of the co-ownership is property is contributed.
Each co-owner may Joint owner may not an immovable.
dispose of his undivided dispose of his own share
share without the other without the consent of Alienation of property co-owned
co-owners’ consent. all the rest, because he
really has no ideal When a co-owner sells the whole property as his,
share. the sale will affect only his own share but not
As to transfer of shares in case of death those of the other co-owners’ who did not consent
Upon the death of a co- Upon the death of a joint to the sale.
owner, his ideal share owner, his share goes to
goes to his heirs. the other joint owners A sale of the entire property by one co-owner
without the consent of the other co-owners is not
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES 182
 PROPERTY
null and void but affects only his undivided share
and the transferee gets only what would
correspond to his grantor in the partition of the
thing owned in common (Paulmitan v. CA, G.R. No.
51584, November 25, 1992).
Q: Is there such a thing as perpetual co-
ownership?
A: NO. Any of the co-owners may demand
partition any time.
No co-owner ought to be compelled to stay in a co-
ownership indefinitely. He may insist the partition
of the property any time. Such action to demand
for partition does not prescribe (Patricio v. Dario,
G.R. No. 170829, November 20, 2006).
A co-owner has a right to freely sell or dispose his
undivided share of interest but has no right to sell
a divided or definite part of a real estate owned in
common (Lopez v. Illustre,G.R. No. 2426, January
24, 1906).
In a property co-owned by the compulsory heirs,
any act tantamount to partition such as identifying
their shares and constructing their respective
houses automatically terminates co-ownership
(Avila v. Sps. Arabat, G.R. No.141993, March 17,
2006).
Duration of the co-ownership (2000, 2002,
2008 Bar)
An agreement to keep the thing undivided for a
certain period of time, not exceeding ten years,
shall be valid. This term may be extended by a
new agreement.
A donor or testator may prohibit partition for a
period which shall not exceed twenty years (in
relation to NCC, Art. 1083).
Neither shall there be any partition when it is
prohibited by law (NCC, Art. 494).
Share of the co-owners in the benefits and
charges arising from the co-ownership
The share of the co-owners in the benefits and
charges arising from the co-ownership shall be
proportional to their respective interests and any
stipulation in a contract to the contrary shall be
void (NCC, Art. 485, par. 1). Consequently, in order
to determine the share of the co-owners in the
benefits and charges, we must first determine
their respective interests in the co-ownership.
183
Interests are presumed equal, unless the contrary
is proved (NCC, Art. 485, par. 2).
Q: JM and Kris are siblings. Kris is engaged in
developing subdivisions and is frequently out
of the country. Kris opened a joint savings
account at BPI with JM as the other party in the
account. Kris executed a Special Power of
Attorney in favor of JM giving him the power to
manage and use the funds for his projects in
the country. JM withdrew P1,000,000 from the
joint savings account and deposited in his own
account for the reason that he is going to use it
for the subdivision project in Marikina. Upon
knowledge of this withdrawal, Kris demanded
the return of the withdrawn cash as there was
no project in Marikina that needs funding. Kris
claims that he has all the right to recover the
money. Is his contention correct?
A: YES. Under a joint account setup, the depositors
are joint owners or co-owners of the said
account, and their share in the deposits shall be
presumed equal, unless the contrary is proved,
pursuant to Art. 485 of NCC. Nevertheless, as
between the account holders, their right against
each other may depend on what they have agreed
upon, and the purpose for which the account was
opened and how it will be operated.
JM’s right to obtain funds from the subject account
was conditioned on the necessity of funds for Kris'
projects. Admittedly, at the time he withdrew the
amount of P1,000,000 from the subject account,
there was no project being undertaken for Kris.
While JM is a co-owner of the subject account as
far as the bank is concerned — and may, thus,
validly deposit and/or withdraw funds without
the consent of his co-depositor, Kris — as between
him and Kris, his authority to withdraw, as well as
the amount to be withdrawn, is circumscribed by
the purpose for which the subject account was
opened (Apique v. Fahnenstich, GR No 205705,
August 5, 2015).
SOURCES OF CO-OWNERSHIP (LOST-C²)
1. Law – e.g. Easement of party walls (NCC, Art.
658); co-ownership between a man and a
woman capacitated to marry each other (Art.
147, FC); between a man and a woman not
capacitated to marry each other (Art. 148, FC);
2. Occupancy – e.g. When two persons gather
forest products or catch a wild animal;
3. Succession – e.g. Heirs of undivided property
before partition;
4. Testamentary (or mortis causa) / Donation
inter vivos – e.g. Where the donor prohibits
 CIVIL LAW
partition of the property for a certain period
of time;
5. Contract; or
6. By Chance or fortuitous event – e.g. Hidden
treasure
NOTE: One who is merely related by affinity to the
decedent does not become a co-owner of the
latter’s property.
Q: Hilaria Bagayas, an adoptive child, filed a
complaint against her siblings who excluded
her from inheriting from the estate of their
parents. She asked to include her as a
registered owner to the extent of one-third of
the lands covered therein; citing Section 108 of
PD No. 1529 or the “Property Registration
Decree”. In an earlier complaint, she asked for
the annulment of a Deed of Absolute Sale in
favor of her brothers wherein the RTC found
otherwise. They found that the lands where
transferred to the brothers by the father’s
execution of the deed of sale before he died. Is
the dismissal of the earlier complaint on the
ground that it is in the nature of a collateral
attack on the certificates of title constitutes a
bar to a subsequent petition under Section 108
of PD No 1529?
A: It does not. Section 108 of PD No. 1529 in used
only for contemplating corrections or insertions of
mistakes which are only clerical but certainly not
controversial issues. Although Hilaria Bagayas
was able to prove that she is a legally adoptive
child, the action is not proper. As her petition was
of an annulment of sale and partition. She must
first prove that she is a co-owner of the estate and
conveyance of her lawful shares. However, she
failed to do so. As regards to her citing of Section
108 of PD No. 1529, it was improper; as her intent
for using it is as a mode of directly attacking the
certificates of title issued to the Bagayas brothers.
It was ruled that it was not a direct attack,
therefore cannot be used. The complaint is not
covered by the intention of the decree.
Art. 486. Each co-owner may use the thing
owned in common, provided he does so in
accordance with the purpose for which it is
intended and in such a way as not to injure the
interest of the co-ownership or prevent the
other co-owners from using it according to
their rights. The purpose of the co-ownership
may be changed by agreement, express or
implied.
RIGHT OF CO-OWNERS
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
General rights of each co-owner as to the thing
owned in common (USA-COPE-P)
1. To Use the thing according to the purpose
intended provided that:
a. It is without prejudice to the interest of
the co-ownership; and
b. Without preventing the use of other co-
owners (NCC, Art. 486).
NOTE: The purpose of the co-ownership may
be changed by an agreement, express or
implied.
2. To Share in the benefits in proportion to his
interest, provided the charges are borne in the
same proportion (NCC, Art. 485);
NOTE: A contrary stipulation is void. Hence,
benefits cannot be stipulated upon by the co-
owners.
3. Each co-owner may bring an Action for
ejectment (NCC, Art. 487);
NOTE: Action for ejectment covers; forcible
entry, unlawful detainer, accion publiciana,
quieting of title, accion reivindicatoria, and
replevin.
4. To Compel other co-owners to contribute to
expenses for preservation of the thing (NCC,
Art. 488) and to the taxes;
5. To Oppose to any act of alteration (NCC, Art.
491) even if beneficial to the co-owners;
6. To Protect against acts of majority which are
prejudicial to the minority (NCC, Art. 492, par.
3)
7. To Exercise legal redemption;
8. To ask for Partition (NCC, Art. 494);
9. Right to exempt himself from obligation of
paying necessary expenses and taxes by
renouncing his share in the pro-indiviso
interest; but cannot be made if prejudicial to
co-ownership (NCC, Art.488);
10. Right to make repairs for preservation of
things can be made at will of one co-owner;
receive reimbursement therefrom; notice of
necessity of such repairs must be given to co-
owners, if practicable (NCC, Art.489);
11. Right to full ownership of his part and fruits.
(NCC, Art. 493);
12. Right to alienate, assign or mortgage own
part; except personal rights like right to use
and habitation (NCC, Art.493);
13. Right of pre-emption;
14. Right to be adjudicated thing (subject to right
of others to be indemnified); and
184
 PROPERTY
15. Right to share in proceeds of sale of thing if
thing is indivisible and they cannot agree that
it be allotted to one of them (NCC, Art.498).
Duties/liabilities of co-owners
1. Share in charges proportional to respective
interest; stipulation to contrary is void;
2. Pay necessary expenses and taxes – May be
exercised by only one co-owner;
3. Pay useful and luxurious expenses – If
determined by majority;
4. Duty to obtain consent of all if thing is to be
altered even if beneficial; resort to court if
non-consent is manifestly prejudicial;
5. Duty to obtain consent of majority with
regards to administration and better
enjoyment of the thing; controlling interest;
court intervention if prejudicial – as unwilling plaintiffs.
Appointment of administrator;
6. No prescription to run in favor of a co-owner
as long as he recognizes co-ownership;
Requisites for acquisition through
prescription:
a. He has repudiated through unequivocal
acts
b. Such act of repudiation is made known to
other co-owners
c. Evidence must be clear and convincing;
7. Co-owners cannot ask for physical division if
it would render thing unserviceable; but can
terminate co-ownership;
8. After partition, duty to render mutual
accounting of benefits and reimbursements
for expenses.
Rights of a co-owner to third parties
1. Assignees or creditors of the co-owners may
take part in the division of the thing owned in
common and object to its being effected
without their concurrence, but they cannot
impugn any partition already executed; and
XPN: If there has been fraud or it was made
notwithstanding their formal opposition
presented to prevent it, without prejudice to
the right of the debtor or assignor to maintain
its validity (NCC, Art. 497).
2. Non-intervenors – Retain rights of mortgage
and servitude and other real rights and
personal rights belonging to them before
partition was made.
Any of the co owners may bring an action in
ejectment
185
One of the co-owner’s action for ejectment against
a defendant is deemed to be instituted for the
benefit of all co-owners of the property. (Resuena
v. CA, G.R. No. 128338, March 28, 2005).
Consent of the co-owners is not required to
bring an action for ejectment
The law does not require that consent of all the co-
owners must be first secured before one of them
can bring an action for ejectment.
If the case does not prosper:
GR: The other co-owners are NOT bound by the
judgment.
XPN: If they were also served with summons, even
A suit for ejectment CANNOT be brought by one
co-owner against another co-owner, since the
latter also has a right of possession; the only effect
of the action will be to obtain recognition of the
co-ownership.
RIGHT TO PROPERTY OWNED IN COMMON v.
FULL OWNERSHIP OVER HIS/HER IDEAL
SHARE
1. Right to property owned in common
NOTE: Each co-owner is granted the right to
use the property owned in common for the
purpose for which it is intended.
Two restrictions in the enjoyment of this
right:
a. The co- ownership shall not be injured;
and
b. The exercise of such right shall not
prevent the other co- owners from using
the property according to their own
rights.
2. Full ownership over his/her ideal share
NOTE: A co-owner has full ownership of his
share (undivided interest) and the fruits and
benefits arising therefrom. Being the full
owner thereof, he may alienate, assign or
mortgage it. He can also substitute another
person in the enjoyment of his share, except
only when personal rights are involved.
Q: Melecio Heirs inherited a residential lot,
ancestral house and two other structures
erected thereon, the administration and
 CIVIL LAW
management of which were left to the care of
Erna who was then residing in their ancestral
home. The Melecio Heirs purportedly executed
a notarized Special Power of Attorney (SPA)
authorizing Erna to apply for a loan with RBCI
and mortgage the subject properties. Erna
defaulted in the loan payment causing RBCI to
extrajudicially foreclose the mortgaged
properties. demanded RBCI to release the
subject properties from the coverage of Erna's
loan obligation to the extent of their shares
and refused to vacate the premises. RBCI
applied for and was issued a writ of
possession. The Melecio Heirs filed a
complaint in court alleging that the SPA
submitted by Erna was spurious and their
signatures appearing thereon were falsified. Is
the mortgage of the entire property valid?
A: No. Erna did not validly mortgage the entire
property. While Erna, as herself a co-owner, by
virtue of Article 493 of the Civil Code, had the
right to mortgage or even sell her undivided
interest in the said properties, she, could not,
however, dispose of or mortgage the subject
properties in their entirety without the consent of
the other co-owners. The settled rule is that
persons constituting a mortgage must be legally
authorized for the purpose. In the present case,
while Erna appears to be a co-owner of the
mortgaged properties, she made it appear that she
was duly authorized to sell the entire properties
by virtue of the notarized SPA . (Rural Bank of
Cabadbaran, Inc. v. Jorgita A. Melecio-Yap et. al,
G.R. No. 178451, July 30, 2014).
Q: Vda. Rosario is the registered owner of 4
parcels of land, which she mortgaged to and
foreclosed. Upon the expiration of the
redemption period, she asked the assistance of
Bobby Tan. Thereafter, she sold the lands to
him. The children of Vda. Rosario said they are
co-owners as they are inheritors of their
deceased father, whose approval was needed
to dispose the subject properties. Are the
subject properties of conjugal in nature, thus
making the children of Vda. Rosario co-
owners?
A: No. SC ruled that Vda. Rosario is the sole owner
of the parcel of lands. Conjugal partnership
terminates upon the death of one spouse. Vda.
Rosario was already a widow when she sold the
subjected lands to Bobby Tan. Therefore, at the
time of the sale, Vda. Rosario, a widow, can now
dispose the properties on her own volition (Bobby
Tan v. Grace Andrade, G.R. No. 171904, August 07,
2013).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Q: Spouses Roque Magsano and Susana Capelo
(Sps. Magsano), the parents of Norma, et. al.,
executed in favor of PSLB a Real Estate
Mortgage over their parcel of land as security
for their loan. Sps. Magsano defaulted in their
obligation, causing the extra-judicial foreclose
of the mortgaged property in which PSLB
emerged as the highest bidder. It subsequently
sold the subject land to Sps. Manuel.
Thereafter, Sps. Magsano refused to vacate the
premises despite PSLB’s demands; hence, the
latter applied for and was granted a writ of
possession and demolition. Norma et. al.
sought to annul the Real Estate Mortgage. They
averred that Roque Magsano passed away
prior to the execution of the Real Estate
Mortgage; hence, the mortgage was void, and
could not have conferred any right to PSLB
which it could pass to Sps. Manuel. PSLB and
the heirs of Sps. Manuel denied knowledge of
the death of Roque, and averred that
petitioners have no cause of action to seek the
annulment of the Real Estate Mortgage since
they were not parties thereto.
1. Is the Real Estate Mortgage void?
2. Are Sps. Manuel purchasers in
good faith?
A: 1. No. The validity of the Mortgage in favor of
PSLD should be limited only to the Susana’s
portion. At the time the Mortgage was constituted,
Roque was already deceased. Upon Roque’s death,
the conjugal partnership between him and Susana
was dissolved. Thus, an implied co-ownership
arose among Susana and the other heirs of Roque
with respect to his share in the assets of the
conjugal partnership pending liquidation.
While she herself as co-owner had the right to
mortgage or even sell her undivided interest in
the subject property, she could not mortgage or
otherwise dispose of the same in its entirety
without the consent of the other co-owners.
2. No. While the rule is that every person dealing
with registered land may safely rely on the
correctness of the certificate of title issued
therefor and the law will in no way oblige him to
go beyond the certificate to determine the
condition of the property, where the land sold is in
the possession of a person other than the vendor,
as in this case, the purchaser must go beyond the
certificate of title and make inquiries concerning
the actual possessor (Norma C. Magsano, et. al. v.
Pangasinan Savings & Loan Bank, G.R. No. 215038,
October 17, 2016).
186
 PROPERTY
Q: Dominador and Evangeline are siblings.
Respondent Evangeline then left the country to
work abroad. Evangeline executed General and
Special Powers of Attorney constituting
Dominador as her attorney-in-fact to purchase
real property for her, and to manage or
supervise her business affairs in the
Philippines. Because of such, they opened a
joint account at EPCIB. Dominador then
withdrew the amount of ₱980,000.00 from the
subject account and, thereafter, deposited the
money to his own savings account with the
same bank. This prompted Evangeline to
demand for the return of the amount, but to no
avail. Evangeline then filed a case against
Dominador impleading EPCIB as a party
defendant. In his answer, Dominador asserted,
among others, that he was authorized to
withdraw funds from the subject account to
answer for the expenses of Evangeline’s
projects, considering: (a) that it was a joint
account, and (b) the general and special
powers of attorney executed by Evangeline in
his favor. Can Dominador validly withdraw
from the joint account without Evangeline’s
consent?
A: Yes. A joint account is one that is held
jointly by two or more natural persons, or by
two or more juridical persons or entities. Under
such setup, the depositors are joint owners or co-
owners of the said account, and their share in the
deposits shall be presumed equal, unless the
contrary is proved, pursuant to Article 485 of the
Civil Code.
The common banking practice is that
regardless of who puts the money into the
account, each of the named account holder has
an undivided right to the entire balance, and
any of them may deposit and/or withdraw,
partially or wholly, the funds without the
need or consent of the other, during their
lifetime. Nevertheless, as between the account
holders, their right against each other may
depend on what they have agreed upon, and the
purpose for which the account was opened and
how it will be operated.
Since Evangeline and Dominador entered into a
joint account, Dominador is a co-owner of the
subject account as far as the bank is
concerned – and may, thus, validly deposit
and/or withdraw funds without the consent of
his co-depositor, Evangeline – as between him
and Evangeline, his authority to withdraw, as well
as the amount to be withdrawn, is circumscribed
by the purpose for which the subject account was
opened.
187
However, Dominador’s right to obtain funds
from the subject account was conditioned on the
necessity of funds for Evangeline’s projects.
Admittedly, at the time he withdrew the
amount of ₱980,000.00 from the subject
account, there was no project being
undertaken for Evangeline. Therefore,
Dominador must return the same to Evangeline
(Dominador Apique v. Evangeline Apique
Fahnenstich, G.R. No. 205705, August 5, 2015).
Co-owner’s right to use the property owned in
common
Each co-owner may use the thing owned in
common, provided he does so in accordance with
the purpose for which it is intended and in such a
way as not to injure the interest of the co-
ownership or prevent the other co-owners from
using it according to their rights.
NOTE: If one co-owner alone occupies the entire
house without opposition from the other co-
owners, and there is no lease agreement, the other
co-owners cannot demand the payment of rent.
Rules on determination of the purpose of the
property
1. Purpose stipulated in the agreement,
express or implied;
2. In default thereof, its puropose ordinarily
adapted based on its nature; or
3. In default thereof, the use for which it was
formerly intended.
ACTS OF ALTERATION
Alteration (2008 Bar)
It is a change which is more or less permanent,
which changes the use of the thing and which
prejudices the condition of the thing or its
enjoyment by the others (Paras, 2008).
Alteration includes the act by virtue of which a co-
owner changes the thing from the state in which
the others believe it should remain. It is not
limited to material charges.
Acts of administration v. Acts of alteration
ACTS OF ACTS OF
ADMINISTRATION ALTERATION
 CIVIL LAW
Refers to the Acts, by virtue of which, for which the property is given be directly to the
enjoyment, a co-owner, in advantage of the person misappropriating or
exploitation, opposition to the converting the property of another.
alteration of the thing expressed or tacit
which do not affect its agreement of all the co- RIGHT TO PARTITION
substance, form, or owners, and in
purpose. violation of their will, Rights of co-owners as to the ideal share of
changes the thing from each (FARTS)
the state in which the
others believe it would 1. Each has Full ownership of his part and of his
remain, or withdraws it share of the fruits and benefits;
from the use to which 2. Right to Alienate, dispose or encumber;
they believe it is 3. Right to Renounce part of his interest to
intended. reimburse necessary expenses incurred by
another co-owner;
Transitory in Permanent 4. Right to enter into Transaction affecting his
character. ideal share; and

Does not affect the Affects or relates to the NOTE: The transaction affects only his ideal
substance or form. substance or essence of share and not that of the other co-owners.
the thing.
5. Right to Substitute another person in its
enjoyment, except when personal rights are
In relation to the right Require the consent of involved.
of a co-owner, they all co-owners.
require the consent of NOTE: Personal rights or jus in personam is
the majority who the power belonging to one person to demand
represents the from another, as a definite passive subject-
controlling interest. debtor, the fulfillment of a prestation to give,
to do, or not to do (Paras, 2008).
Can be exercised by Must be exercised by
the co-owners the co-owners
Right to demand partition
through other themselves.
persons.
GR: Every co-owner has the right to demand
partition (NCC, Art. 494) (2000, 2002, 2008 Bar).
Effect of alteration without the express or
implied consent of co-owners XPNs: (EASI-PAUL)
1. When partition would render the thing
The co-owner who makes the alteration shall: Unserviceable;
2. When the thing is essentially Indivisible;
1. Lose what he has spent; 3. When partition is prohibited by Law by
2. Be obliged to demolish the improvements reason of their origin or juridical nature - e.g.
done; and party walls and fences;
3. Pay for the loss and damages the 4. When the co-owners Agree to keep the
community property or other co-owners property undivided for a period of time but
may have suffered. not more than 10 years;
5. When partition is Prohibited by the transferor
NOTE: Estoppel will operate against the co- (donor/testator) but not more than 20 years
owners who were aware of the execution of the (NCC, Art. 1083);
acts of alteration, but did not object thereto. They 6. When a co-owner possessed the property as
are deemed to have given their implied consent. an Exclusive owner for a period sufficient to
acquire it through prescription (acquisitive
Conversion prescription);

It is the act of using or disposing of another’s NOTE: 10 years ordinary prescription, 30

property without lawful authority to do so in a years extra-ordinary partition.
manner different from that with which a property
is held by the trustees to whom the owner had
entrusted the same. It is not necessary that the use
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES 188
 PROPERTY
7. When co-owners may agree that it be Allotted
to one of them reimbursing the others; and
8. If they cannot agree, they may Sell the thing
and distribute the proceeds.
NOTE: The right to ask for partition CANNOT be
waived or renounced permanently. Such waiver or
renunciation is void.
Q: X, Y, Z are siblings who inherited a 1O-
storey building from their parents. They
agreed in writing to maintain it as a co-owned
property for leasing out and to divide the net
profits among themselves equally for a period
of 20 years. On the 9th year, X wanted to get
out of the co-ownership so he could get his 1/3
share in the property. Y and Z refused, saying X
is bound by their agreement to keep the co-
ownership for 20 years. Are Y and Z correct?
Explain. (2015 Bar)
A: Y and Z ARE PARTLY CORRECT. If the co-
owners agree to keep the thing undivided, such
agreement shall govern provided the period shall
not exceed ten (10) years. In this case, the
agreement to keep the thing undivided shall be
valid at the most for 10 years (NCC, Art. 494).
Prescription
Q: May prescription run against a co-owner?
(2000, 2002, 2008 Bar)
GR: As long as the co-owner expressly or
impliedly recognizes the co-ownership,
prescription cannot run in favor of or against him.
Reason: Possession of a co-owner is like that of a
trustee and shall not be regarded as adverse to the
other co-owners but in fact is beneficial to all of
them. Acts considered adverse to strangers may
not be considered adverse insofar as co-owners
are concerned (Salvador v. CA, G.R. No. 109910,
April 5, 1995).
XPN: Co-owner's possession may be deemed
adverse to the cestui que trust or the other co-
owners provided the following elements must
concur:
1. That he has performed unequivocal acts
of repudiation amounting to an ouster of
the cestui que trust or the other co-
owners;
2. That such positive acts of repudiation
have been made known to the cestui que
trust or the other co-owners; and
189
3. That the evidence thereon must be clear
and convincing (Salvador v. CA, G.R. No.
109910, April 5, 1995).
NOTE: Prescription begins to run from
the time of repudiation.
Example of acts of repudiation: filing of an
action to:
1. Quiet title; or
2. Recovery of ownership.
XPN to XPN: Constructive trusts can
prescribe. Express trust cannot prescribe as
long as the relationship between trustor and
trustee is recognized (Paras, 2008).
Q: The two lots owned by Alipio were inherited
by his nine children, including Maria, upon his
death. Pastor, Maria’s husband, filed a
complaint for quieting of title and annulment
of documents against the spouses Yabo,
alleging that he owned a total of 8 shares of the
subject lots, having purchased the shares of
seven of Alipio's children and inherited the
share of his wife, Maria, and that he occupied,
cultivated, and possessed continuously,
openly, peacefully, and exclusively the parcels
of land. He prayed that he be declared the
absolute owner of 8/9 of the lots. His co-heirs
then instituted an action to partition the lots.
Did Pastor acquire by prescription the shares
of his other co-heirs or co-owners?
A: NO. The only act which may be deemed as
repudiation by Pastor of the co-ownership over
the lots is his filing of an action to quiet title. The
period of prescription started to run only from
this repudiation. However, this was tolled when
his co-heirs, instituted an action for partition of
the lots. Hence, the adverse possession by Pastor
being for only about six months would not vest in
him exclusive ownership of his wife's estate, and
absent acquisitive prescription of ownership,
laches and prescription of the action for partition
will not lie in favor of Pastor (Salvador v. CA, G.R.
No. 109910, April 5, 1995).
Notice of the proposed partition to creditors
and/or assignees
The law does not require that a notification be
given but:
1. If notice is given – it is their duty to appear
to concur /oppose, otherwise creditor’s
claims are deemed waived; and
 CIVIL LAW
2. If no notice is given – creditors and/or
assignees may still question the partition
madeon ground of fraud or for being
prejudicial to existing rights.
NOTE: Third persons who have rights attached to
the community property before its partition, shall
retain such rights even after the partition of the
property. The protection granted by law applies to
both real and personal rights (Pineda, 2009).
Impugning partition already implemented
Rights of third persons in case of partition
(NCC, Art. 499)
1. The partition of a thing owned in common
shall not prejudice third persons, who
shall retain the rights of mortgage,
servitude or any other real rights
belonging to them before the division was
made; and
2. Personal rights pertaining to them against
the co-ownership shall also remain in
force, notwithstanding the partition.

GR: A partition already executed or implemented RIGHT TO CONTRIBUTION FOR EXPENSES

CANNOT be impugned.
Expenses which the co-owners can be
XPNs: compelled to contribute
1. In case of fraud, regardless of notification
and opposition; or Only necessary expenses. Useful expenses and
2. In case partition was made over their those for pure luxury are not included.
objection even in absence of fraud (NCC,
Article 497). Necessary expenses, useful expenses, and
expenses of pure luxury defined
Remedies available to co-owners where the co-
owned property cannot be physically divided
without rendering it useless or unserviceable Are those made for the
(NCC, Art. 498) Necessary Expenses preservation of the
thing, or those without
1. Agree on the allotment of the entire which the thing would
property to one of them who in turn will deteriorate or be lost,
indemnify the others for their respective or those that augment
interests; or the income of the things
2. Sell the property and distribute the upon which are
proceeds to the co-owners (Pineda, 2009). expended, or those
incurred for cultivation,
Rights of third persons that are not affected by production, upkeep, etc.
partition (MRS-P) (Mendoza v. De Guzman,
G.R. No. L-28721,
1. Rights of: October 5, 1928).
a. Mortgage;
b. Servitude; and
c. Any other Real rights existing before Incurred for the
partition. preservation of the
realty in order that it
2. Personal rights pertaining to third Useful Expenses may produce the
persons against the co-ownership (NCC, natural, industrial, and
Art. 499). civil fruits it ordinarily
produce
Illustration: A, B and C where co-owners of parcel
of land mortgaged to M. If A, B, and C should
physically partition the property, the mortgage in Adds value to the thing
M’s favor still covers all the three lots, which, only for certain persons
together, formerly constituted one single parcel. If Ornamental Expenses in view of their
A alone had contracted an unsecured obligation, particular whims,
he would of course be the only one responsible neither essential for
(Paras, 2008). preservation nor useful
to everybody in
general.

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 190
 PROPERTY
Acts of preservation (NCC, Art.489)
Acts of preservation may be made in the property
of the co-owners at the will of one of the co-
owners, but he must, if practicable, first notify the
others of the necessity of such repairs.
Acts requiring the majority consent of the co-
owners
1. Management;
2. Enjoyment; and
3. Improvement or embellishment.
Remedy of the minority who opposes the
decision of the majority in co-ownership
Minority may appeal to the court against the
majority’s decision if the same is seriously
prejudicial.
There is no majority unless the resolution is
approved by the co-owners who represent the
controlling interest in the object of the co-
ownership [NCC, Art. 492(2)].
WAIVER
A co-owner may opt not to contribute to the
expenses for the preservation of the property
GR: YES, by renouncing his undivided interest
equal to the amount of contribution.
XPN: If the waiver or renunciation is prejudicial to
the co-ownership, otherwise he cannot exempt
himself from the contribution (NCC, Art. 488).
NOTE: The value of the property at the time of the
renunciation will be the basis of the portion to be
renounced.
Failure or refusal of a co-owner to contribute
pro rata to his share in expenses NOT
tantamount to renunciation
There must be an express renunciation, otherwise
he is required to reimburse the others for the
expenses they incurred.
Effect of renunciation
Since renunciation is intended as payment for
expenses already made, it is in nature of dacion en
pago - there is a change in the object of the
obligation (i.e. from sum of money to interest in
the co-ownership). Consequently, the consent of
the other co-owner who made the advances is
necessary (Tolentino, 2013).
191
Consent of unpaid creditor
Renunciation CANNOT be made without the
consent of any unpaid creditor. This is because it
is in effect a novation by substitution. It will
prejudice the rights of the unpaid creditor.
RIGHT OF REDEMPTION OF CO-OWNERS
SHARE
The shares of all or any other co-owner if sold to a
third person may be redeemed by a co-owner.
If two or more co-owners want to redeem, they
may do so in proportion to the shares they
respectively have.
Effect of redemption by a co-owner
Redemption of the whole property by a co-owner
does not vest in him sole ownership over said
property. Redemption within the period
prescribed by law will inure to the benefit of all
co-owners. Hence, it will not put an end to existing
co-ownership (Mariano v. CA, GR. No. 101522, May
28, 1993).
Right of legal redemption cannot be exercised
when there is no co-ownership
Once the property is subdivided and distributed
among the co-owners, the community ceases to
exist and there is no more reason to sustain any
right of legal redemption. The exercise of this right
presupposes the existence of a co-ownership at
the time the conveyance is made by a co-owner
and when it is demanded by the other co-owners
(Vda. de Ape v. CA, G.R. No. 133638, April 15, 2005).
A co-owner cannot alienate the shares of his
other co-owners
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-owners. The disposition made by Villaner
affects only his share pro indiviso, and the
transferee gets only what corresponds to his
grantor's share in the partition of the property
owned in common. The property being conjugal,
Villaner's interest in it is the undivided one-half
portion. When his wife died, her rights to the
other half was vested to her heirs including
Villaner and their 8 legitimate children (Acabal v.
Acabal, G.R. No. 148376, March 31, 2005).
Status of the sale by a co-owner
 CIVIL LAW
A sale of the entire property by one co-owner
without the consent of the other co-owners is
valid. However, it will only affect the interest or
share in the undivided property of the co-owner
who sold the same. The remedy is an action for
partition under Rule 69 of the Revised Rules of
Court, the division of the common property
(Acabal v. Acabal, G.R. No. 148376, March 31,
2005).
TERMINATION/EXTINGUISHMENT
Extinguishment of Co-ownership (CALSTEP)
1. Confusion or merger of the rights in one
co-owner;
2. Acquisitive prescription in favor of a third
person or a co-owner who repudiates;
3. Loss or destruction of thing co-owned;
4. Sale of thing co-owned;
5. Termination of period agreed upon;
6. Expropriation; or
7. Judicial or extra-judicial Partition.
EFFECT OF PARTITION
1. It confers upon the co-owner exclusive
title over the property adjudicated to him
(NCC, Art. 1091); and
2. Possession of the co-owner over the
property adjudicated to him shall be
deemed exclusive for the period during
which the co-possession lasted (NCC, Art.
543) In other words, it is deemed
continuous.
RIGHTS AGAINST INDIVIDUAL CO-OWNERS IN
CASE OF PARTITION
Obligations of co-owners upon partition
(WARD)
1. Mutual Accounting for benefits received,
fruits and other benefits (in relation to
Art. 1087 of NCC);
2. Mutual Reimbursements for expenses;
3. Indemnity for Damages caused by reason
of negligence/fraud; and
4. Reciprocal Warranty for defects of title
and quality of the portion assigned to the
co-owner (NCC, Articles. 500-501).
PARTITION IN CASE CO-OWNERS CANNOT
AGREE
Partition is effected either by (1998 Bar):
1. By agreement between the parties; or
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
2. By judicial proceedings (NCC, Art. 496).
Rule in case the co-owners cannot agree in the
partition
1. If realty is involved, an action for partition
(Rule 69, Rules of Court) against the co-
owners may be filed; and
2. In case of personalty and actual partition
could not be made, it may be sold under
the discretion of the court and the
proceeds be divided among the owners
after deducting the necessary expenses.
Rule in case the co-owners cannot agree as to
the partition of a thing which is essentially
indivisible
1. Firstly, the property may be allotted to
one of the co-owners, who shall
indemnify the other; or
2. Otherwise, it shall be sold, and the
proceeds distributed (NCC, Art. 498).
Acts of co-ownership
1. Ejectment – any of the co-owners may file
such action.
2. Administration – majority of the co-
owners shall decide.
3. Improvements – majority of the co-owners
shall take part.
4. Alteration – all of the co-owners must
agree.
5. Preservation – any of the co-owners can
do so.
POSSESSION
It refers to the holding of a thing or the enjoyment
of a right (NCC, Art. 523) (2007 Bar).
Requisites of possession (EPAV)
1. Existence of the thing or right;
2. Possession in fact or holding or control of
a thing or right;
3. Animus possidendi or the deliberate
intention to possess; and
4. Possession is by Virtue of one’s own right,
either as an owner or as a holder.
Right TO Possession v. Right OF Possession
Right TO Possession Right OF Possession
Jus possidendi Jus possessionis
192
 PROPERTY
An incident or attribute An independent right, i. Voluntary – by virtue of an
of ownership over a separate from agreement; e.g. possession of an
thing. ownership. agent.
e.g. The owner of a house e.g. The lessee of a ii. Legal – by virtue of law; e.g.
is entitled to possess it. property, who is not possession in behalf of incapacitated.
the owner thereof, is
entitled to possess it 2. According to the concept of possession
for the period of the
lease. a. In the concept of an owner (en concepto de
dueno) – possessor, by his actions, is
Object of possession believed by others as the owner, whether
he is in good or bad faith. (NCC, Art. 525).
GR: All things and rights susceptible of being Such possessor is presumed to possess
appropriated (NCC, Art. 530). just title (NCC, Art. 540);
b. In the concept of a holder – possessor
XPNs: holds it merely to keep or enjoy it, the
1. Res communes; ownership pertaining to another; e.g.
2. Property of public dominion; usufructuary with respect to the thing
3. Easement; and itself (NCC, Art. 525).
4. Prohibited by law.
NOTE: None of these holders may assert a
Degrees of possession claim of ownership for himself over the thing
but they may be considered as possessors in
1. Possession with no right or title (Grammatical the concept of an owner, or under a claim of
Degree) – Possessor knows that his ownership, with respect to the right they
possession is wrongful. respectively exercise over the thing.
e.g. possession by a thief.
There can be possession in concept of both
2. With Juridical title (Juridicial Possession) – owner and holder or in either.
Title is not one of ownership. Possession
peaceably acquired and will not ripen into full 3. According to the condition of the mind
ownership as long as there is no repudiation (2008 Bar)
of the concept under which property is held.
e.g. possession of a tenant, depositary. a. Possession in good faith – possessor is not
aware that there is in his title or mode of
3. With Just title sufficient to transfer ownership, acquisition a defect that invalidates it
but not from the true owner(Real Possessory (NCC, Art. 526); and
Right) – ripens to full ownership by the lapse b. Possession In bad faith – possessor is
of time. aware of the invalidating defect in his
e.g. Possession of a buyer of a car purchased own title (NCC, Art. 526).
from one who pretends to be the owner.
NOTE: Only personal knowledge of the flaw in
4. With a title in fee Simple (Dominium one’s title or mode of acquisition can make
Possession) – Arises from ownership; highest him possessor in bad faith. It is not
degree of possession; perfect possession. transmissible even to an heir. Possession in
good faith ceases from the moment defects in
CLASSES OF POSSESSION his title are made known to the possessor.

1. According to the name used as to its 4. According to extent of possession

existence
a. In one’s own name – possessor claims the
thing for himself (NCC, Art. 524).
b. In the name of another – held by the
possessor for another; agent, subject to
authority and ratification; if not
authorized, negotiorum gestio (NCC, Art.
524).
a. Actual possession – occupancy in fact of
the whole or at least substantially the
whole property; and
b. Constructive possession – occupancy of
part, in the name of the whole, under such
circumstances that the law extends the
occupancy to the possession of the whole.

193
 CIVIL LAW
Q: What is the doctrine of constructive
possession?
A: The possession of a part is a possession of
the whole. To be considered in possession, one
need not have actual or physical occupation of
every square inch of the property at all times
(Habagat Grill v. DMC-Urban Property Developer,
Inc., G.R. No. 155110, March 31, 2005).
Requisites of constructive possession
1. Possessor was in actual possession of a
portion or part of the property;
2. Claim of ownership of the whole area;
3. Remainder of the area must not be in the
adverse possession of another person; and
4. Area claimed must be reasonable.
Possession v. Occupation
POSSESSION OCCUPATION
Apply to properties Applies only to
whether with or without property without an
an owner. owner.
Possession does not Occupation confers
confer ownership. ownership.
There can be possession There can be no
without ownership. occupation without
ownership.
Person declared as the owner of a certain
property may still not be entitled to its
possession
Possession and ownership are distinct legal
concepts. Ownership confers certain rights to the
owner among which are the right to enjoy the
thing owned and the right to exclude other
persons from possession thereof. On the other
hand, possession is defined as the holding of a
thing or the enjoyment of a right. Literally, to
possess means to actually and physically occupy a
thing with or without a right. Thus a person may
be declared an owner but not entitled to
possession (Heirs of Roman Soriano v. CA, G.R. No.
128177, August 15, 2001).
Tax declarations are not conclusive evidence
of ownership
Although tax declarations or realty tax payment of
property are not conclusive evidence of
ownership, nevertheless, they are good indicia of
possession in the concept of owner for no one in
his right mind would be paying taxes for a
property that is not in his actual or at least
constructive possession. They constitute at least
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
proof that the holder has a claim of title over the
property. The voluntary declaration of a piece of
property for taxation purposes manifests not
only one’s sincere and honest desire to obtain
title to the property and announces his adverse
claim against the State and all other interested
parties, but also the intention to contribute
needed revenues to the Government. Such an act
strengthens one’s bona fide claim of acquisition of
ownership (Ganila v. CA, G.R. No. 150755, June 28,
2005).
ACQUISITION OF POSSESSION
Modes of acquiring possession
1. By Material occupation (detention) of a thing
or the exercise of a right (quasi-possession);
This includes:
a. Constitutum possessorium – when the
possessor who is the owner of the
property continues his possession no
longer under a title of ownership but
under a title less than ownership, i.e.
lessee, depositary, etc.
b. Traditio brevi manu – when the possessor
who is possessing the thing by a title
other than ownership, continues to
possess it under a new title, now of
ownership.
2. By Subjection of the thing/right to our will
which does not require actual physical
detention or seizure; and
This includes:
a. Traditio longa manu – delivery by consent
or mere pointing.
b. Traditio symbolica – delivery of a mere
symbol (e.g. key) placing the thing under
the control of the transferee.
3. By constructive possession or proper Acts
and legal Formalities established by law such
as succession, donation, execution of public
instruments (NCC, Art. 531).
Q: Respondents inherited the subject property
from Emiliana Bacalso, by virtue of Decree No.
98992. Sometime later, they found the heirs of
Alejandra Delfin to be occupying the said
property, to which they even constructed
houses there. The heirs argued they have
better right for it was inherited to them after it
was bought by the predecessor from Emiliana
Bacalso; also, they are the ones paying the
subject property’s realty taxes. Do the
194
 PROPERTY
respondents have the better right to the
ownership and possession of the subject
property?
A: Yes, respondents have the better right to the
ownership and possession of the subject property.
The basis is the LRA certification, daybook entry,
and Decree No. 98992 that was issued to Emiliana
Bacalso. The Decree bars all claims and rights
which arose as may have existed prior to the
decree of registration (Heirs of Alejandra Delfin v.
Alevina Rabadon, G.R. No. 165014, July 31, 2013).
Q: Spouses Gregorio and Rosario Centeno
previously owned the subject lots, which they
mortgaged in favor of Rural Bank of Sta.
Barbara, Inc. as security for a P1,753.65 loan.
Sps. Centeno, however, defaulted on the loan,
prompting the bank to cause the extrajudicial
foreclosure of the mortgage. Consequently, the
subject lots were sold to the bank, being the
highest bidder at the auction sale.Sps. Centeno
failed to redeem the subject lots within the
one-year redemption period pursuant to
Section 6 of Act No. 3135. Yet, they still
continued with the possession and cultivation
of the aforesaid properties.
Gerry Centeno, son of Sps. Centeno, later on
purchased the said lots from his parents.
Accordingly, Rosario paid the capital gains
taxes on the sale transaction and tax
declarations were eventually issued in the
name of Gerry.
On March 19, 1998, Rural Bank of Sta. Barbara,
Inc. filed a petition for the issuance of a writ of
possession before the trial court, claiming
entitlement to the said writ by virtue of the
Final Deed of Sale covering the subject lots.
Gerry opposed the petition, arguing that he
purchased and has, in fact, been in actual, open
and exclusive possession of the same
properties for at least 15 years. Is the Rural
Bank of Sta. Barbara, Inc. is entitled to a writ of
possession over the subject lots?
A: Yes. It is well-established that after
consolidation of title in the purchasers’ name for
failure of the mortgagor to redeem the property,
the purchasers right to possession ripens into the
absolute right of a confirmed owner. At that point,
the issuance of a writ of possession, upon proper
application and proof of title, to a purchaser in an
extrajudicial foreclosure sale becomes merely a
ministerial function, unless it appears that the
property is in possession of a third party claiming
a right adverse to that of the mortgagor.
195
Gerry Centeno acquired the subject lots from his
parents, Sps. Centeno, on March 14, 1988 after
they were purchased by Rural Bank of Sta.
Barbara, Inc. and its Certificate of Sale at Public
Auction was registered with the Register of Deeds
of Iloilo City in 1971. It cannot therefore be
disputed that Gerry is a mere successor-in-
interest of Sps. Centeno. Consequently, he cannot
be deemed as a third party who is holding the
property adversely to the judgment obligor under
legal contemplation (Rural Bank of Sta. Barbara,
Inc. v. Gerry Centeno, G.R. No. 200667, March 11,
2013).
Essential elements of acquiring possession
1. Corpus – Refers to the existence of the
thing and its holding; and
2. Animus – Refers to the intent to possess
the thing.
Actual possession distinguished from
constructive possession
Actual possession consists in the manifestation of
acts of dominion over property of such a nature as
a party would naturally exercise over his own;
Constructive possession may be had through
succession, donation, execution of public
instruments, or the possession by a sheriff by
virtue of a court order (Remington Industrial Sales
Corp v. CYMCAPI, G.R. No. 171858, January 22,
2007).
Acquisition of possession according to person
of possessor (NCC, Art. 532)
1. Personal – The possession acquired by the
same person who is to enjoy it, either the
owner or a mere holder.
Requisites:
a. Capacity to possess;
b. Intent to possess; and
c. Object must be capable of being
possessed.
2. Through an authorized person – Acquisition
of possession through a legal representative
as provided by law or by appointing an agent.
Requisites:
a. Capacity to possess of the representative
or agent;
b. Authority to possess (for another) of the
representative or agent;
c. Intent to possess for principal; and
 CIVIL LAW
d. Principal has intent and capacity to
possess
3. Through a person without authority (but only
if subsequently ratified) – acquisition of
possession through a person who is not
clothed with authority by the supposed
“principal.”
Requisites:
a. Intent to possess for another the
“principal”;
b. Capacity of the “principal” to possess; and
c. Ratification by “principal.”
NOTE: The ratification does not suppress the
consequences of negotiorum gestio (Art.
2144). The principal is deemed to have
acquired possession from the time the gestor
had voluntarily took the management of the
affairs of the former (Pineda, 2009). If the
stranger (gestor) had possessed it in his own
name, it is he who had possession, and not
the so-called “principal” (Paras, 2008).
Acquisition of possession thru succession
One who succeeds by hereditary title shall not
suffer the consequences of the wrongful
possession of the decedent, if it is not shown that
he was aware of the flaws affecting it; but the
effects of possession in good faith shall not benefit
him except from the date of death of the decedent
(NCC Art. 534).
Effects
If the father or decedent was in bad faith, it does
not necessarily mean that the son was also in bad
faith. The son is presumed to be in GOOD FAITH
(Arriola v. De la Serna, G.R. No. L-5397, December
17, 1909). However, since the father was in BAD
FAITH, the consequences of the GOOD FAITH of
the son should be counted only from the date of
the decedent’s death.
NOTE: If the father had been in GOOD FAITH, the
article is not applicable, for the son would not
‘‘suffer.” In such a case, the possession of the
father in GOOD FAITH is added to the possession
of the son in GOOD FAITH, and we cannot say that
the effects of possession in good faith shall
commence only from the decedent’s death (Paras,
2008).
Acquisition of minors or incapacitated persons
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Minors or incapacitated persons may acquire the
possession of things; but they need the assistance
of their legal representatives for them to be able
to exercise the rights arising from the possession
(NCC, Art. 535).
NOTE: Minors and incapacitated persons may
acquire property or rights by prescription, either
personally or thru their parents, guardians, or
legal representatives (NCC, Art. 1107).
Nature of minors or incapacitated persons’
possession
Possession is allowed only in those matters where
they have capacity to act (as in the case of
physical seizure of res nullius or donation of
personal property simultaneously delivered to
them) and NOT possession where juridical acts
are imperative like the possession of land the
ownership of which he desires to test in court, for
in such a case, and in similar ones, the
intervention of the legal representatives or
guardians is needed (Paras, 2008).
Acts which do not give rise to possession
(FATV)
1. Through Force or intimidation as long as
there is a possessor who objects thereto
(NCC, Art. 536); (2006 Bar)
2. Through Acts executed clandestinely and
without the knowledge of the possessor
which means that:
a. Acts are not public; and
b. Unknown to the owner or possessor
3. Acts merely Tolerated by the owner or
the lawful possessor; and
4. Acts executed by Violence (NCC, Art 537).
(2001, 2009 Bar)
Through Force or intimidation as long as there
is a possessor who objects thereto (NCC, Art.
536).
NOTE: Impliedly, if at first there was objection but
later on such objection ceases, the possession
begun by force or intimidation may be acquired
(Paras, 2008).
Through acts executed clandestinely and
without the knowledge of the possessor
NOTE: Clandestine possession by itself is hidden or
disguised possession
Acts merely tolerated by the owner or the
lawful possessor.
196
 PROPERTY
“Tolerance” is permission, as distinguished from
abandonment. If an owner abandons, as when
within the proper period for prescription, he
brings no action, the possession of another will
ripen into ownership. As a matter of fact, silence
or inaction is NEGLIGENCE, not tolerance. But
where a person occupies another’s land with the
latter’s permission (or tolerance), the occupier, no
matter how long he may remain, can never
acquire ownership, because he never had
possession. Whether there was permission, or
there has been an abandonment, is a question of
fact. Of course, it is possible that although there
was permission at first, the permission was
subsequently withdrawn, and abandonment has
resulted. But this must be proved by clear and
convincing evidence; (Paras, 2008).
How to recover possession
First, he should request the usurper to give up the
thing and if the latter refuses, the former should
invoke the aid of the proper and competent court
(that which has jurisdiction over the subject
matter and the parties) (Repide v. Astuar, G.R. No.
505, April 8, 1902). Otherwise, the owner can be
made the defendant in a forcible entry case with all
its repercussions (Santiago v. Cruz, G.R. No. 6276.
March 21, 1911) (Paras, 2008).
Possession by Force or Violence
The force may be:
1. Actual or merely threatened;
2. Done by possessor himself or by his
agent;
3. Done against the owner or against any
other possessor or against the owner’s
representative, such as a capataz; or
4. Done to oust possessor; or if occupied
during the latter’s absence, done to
prevent his getting back the premises
(Paras, 2008).
Rule when two or more persons claim
possession over the same property
GR: Possession as a fact cannot be recognized at
the same time in two different personalities.
XPN:
a. Co-possessors (since here, there is no
conflict of interest, both of them acting as
co-owners, as in the case of property
owned or possessed in common).
b. Possession in different concepts or
different degrees (e.g. both owner and
tenant are possessors as a fact at the
197
same time; the fi rst, in the concept of
owner; the second, in the concept of
holder; other examples: principal and
agent; depositor and depositary; owner
and administrator) (Paras, 2008).
Rules to follow in case there is a dispute of
possession of two or more persons
1. Present/actual possessor shall be
preferred;
2. If there are two possessors, the one
longer in possession; or
3. If the dates of possession are the same,
the one with a title.
4. If both claimants have titles, the
competent court will determine the
rightful possessor, and in the meantime,
the thing shall be placed in judicial
deposit (NCC, Art. 538).
Only the possession acquired and enjoyed in the
concept of owner can serve as a title for acquiring
dominion (NCC, Art. 540).
NOTE: Art. 538 applies to preference of
POSSESSION (whether real or personal property is
involved). It also applies whether the possession
was longer or shorter than one year. Art. 1544
applies to preference of OWNERSHIP in case of
DOUBLE SALE (Art. 1544) or a DOUBLE
DONATION (NCC, Art. 744); (Paras, 2008).
EFFECTS OF POSSESSION
POSSESSOR IN GOOD FAITH
One is a possessor is in good faith when he is not
aware that there exists in his title or mode of
acquisition any flaw which invalidates it (NCC, Art.
526) (2008 Bar).
Requisites in order to be considered a
possessor in good faith
1. Ostensible title or mode of acquisition;
2. Vice or defect in the title; and
3. Possessor is ignorant of the vice or defect
and must have an honest belief that the
thing belongs to him.
Cessation of possession in good faith
Possession in good faith ceases from the moment
defects in his title are made known to the
possessor by extraneous evidence or by suit for
recovery by the true owner.
This interruption of good faith may take place
 CIVIL LAW
1. At the date of summons; or
2. That of the answer if the date of summons
does not appear.
Effect of cessation of possession in good faith
Possessor is now considered as a possessor in bad
faith and he may be required to pay rent or vacate
the property. In both cases he is required to pay
damages to the lawful owner or possessor of the
property.
Q: A Deed of Sale was executed between Jose
(seller) and Rosario (buyer). However, later
on, Jose could not continue the sale because he
sold the lot to Emma with whom he executed a
formal deed of sale. Informed that the sale in
favor of Emma was not registered, Rosario
registered her adverse claim. Later, Emma
registered her deed of sale and a TCT was
issued to her but with Rosario’s adverse claim.
Emma then took possession of the lot.
a.) Who has a better right to the land?
b.) Is Emma entitled to the improvements she
introduced in the lot?
A:
a.) ROSARIO has a better right. Rosario’s prior
purchase of the land was made in good faith;
she was the only buyer at that time. Her good
faith did not cease after Jose told him of the
second sale to Emma. In order to protect her
right, Rosario registered her adverse claim.
Said recording is deemed to be in good faith
and emphasized Emma’s bad faith (Carbonell
v. CA G.R. No. L-29972, January 26, 1976).
b.) NO. The possessor in bad faith has neither the
right of retention of useful improvements nor
the right to demand refund for useful
expenses (Art. 546 & 547; Carbonell v. CA G.R.
No. L-29972, January 26, 1976).
Mistake upon a doubtful or difficult question
of law
Mistake upon a doubtful or difficult question of
law may be the basis of good faith provided that
such ignorance is not gross and therefore
inexcusable (NCC, Art. 526.) Ignorance of the law
may be based on an error of fact. (2008 Bar).
RIGHTS OF A POSSESSOR
Right to be respected in possession
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Every possessor has a right to be respected in his
possession; and should he be disturbed therein he
shall be protected in or restored to said
possession by the means established by the laws
and the Rules of Court.
A possessor deprived of his possession through
forcible entry may within ten days from the filing
of the complaint present a motion to secure from
the competent court, in the action for forcible
entry, a writ of preliminary mandatory injunction
to restore him in his possession. The court shall
decide the motion within thirty (30) days from the
fi ling thereof (NCC, Art. 539).
Rights of a possessor
1. To be respected in his possession;
2. To be protected in said possession by
legal means;
3. To secure in an action for forcible entry
the proper writ to restore him in his
possession; and
4. To secure from a competent court in an
action for forcible entry the Writ of
preliminary mandatory injunction to
restore him in his possession (NCC, Art.
539).
Possession contemplated by law is legal
possession– thief cannot exercise possession. Such
possession is exercised by every possessor–in
good faith or bad faith.
“Every possessor’’ is protected under Art. 539,
whether in the concept of owner or in the concept
of holder.
NOTE: An adverse possession of property by
another is not an encumbrance in law, and does not
contradict the condition that the property be free
from encumbrance. Likewise, the adverse
possession is not a lien for a lien signifies a
security for a claim (Ozaeta v. Palanca, L-17455,
August. 31, 1964).
Legal Means for Restoration of Possession
A. Reasons for requiring legal means;
1. To prevent spoliation or a disregard of
public order;
2. To prevent deprivation of property
without due process of law; and
3. To prevent a person from taking the law
into his own hand.
B. Thus,
198
 PROPERTY
1. The owner should go to court, and not
eject the unlawful possessor by force.
2. A tenant illegally forced out by the owner-
landlord may institute an action for
forcible entry even if he had not been
paying rent regularly.
3. The proper actions are forcible entry or
unlawful detainer (summary action or
accion interdictal), accion publiciana,
accion reivindicatoria; replevin;
injunction (to prevent further acts of
dispossession). However, injunction is
GENERALLY not the proper remedy to
recover possession, particularly when
there are conflicting claims of ownership.
An accion reivin-dicatoria would be
better. A final judgment in an unlawful
detainer case may be executed even if
there is still pending an accion
reivindicatoria, for the two actions can co-
exist. A mere trespasser, even if ejected,
has no right to institute an action of
forcible entry (Paras, 2008).
4. Writ of preliminary mandatory
injunction.
Writ of preliminary mandatory injunction
As a rule, injunction cannot substitute for the
other actions to recover possession. This is
because in the meantime, the possessor has in his
favor, the presumption of rightful possession, at
least, till the case is fi nally decided. The exception,
of course, is a very clear case of usurpation.
Similarly, a receiver should not ordinarily be
appointed to deprive a party who is in possession
of the property in litigation of such possession
(Paras, 2008).
Requisites for the issuance of the writ of
preliminary injunction:
1. In forcible entry cases (in the original
court) — file within 10 days from the
time the complaint for forcible entry is
filed (not from the time the dispossession
took place) (NCC. Art. 538);
2. In ejectment (unlawful detainer cases) in
the CFI (RTC) or appellate court (Court of
Appeals) — file within 10 days from the
time the appeal is perfected (that is, from
the time the attorneys are notifi ed by the
Court of the perfection of the appeal),
only if:
a. The lessee’s appeal is frivolous or
dilatory; or
199
b. The lessor’s appeal is prima facie
meritorious (NCC, Art. 1674).
Q: During his lifetime, Velasco acquired Lot A
from spouses Sacluti and Obial evidenced by a
deed of sale. In 1987, spouses Padilla entered
the said property as trustees by virtue of a
deed of sale executed by the Rural Bank. The
Padilla’s averred that the Solomon spouses
owned the property which was identified as
Lot B. However, it was proved during trial that
the land occupied by spouses Padilla was Lot A
in the name of Velasco, whereas the land sold
by the bank to the spouses Padilla was Lot B.
The heirs of Velasco demanded that spouses
Padilla vacate the property, but they refused.
Thus, the heirs filed a complaint for accion
publiciana.
a) Who has the better right of
possession?
b) Has the action already prescribed?
A:
a) The HEIRS OF VELASCO has the better
right. Accion publiciana, recovery of the right
to possess, is an action filed in the RTC to
determine the better right to possession of
realty independently of the title. The objective
of the plaintiffs in accion publiciana is to
recover possession only, not ownership. Lot A
was the subject of a cadastral case. The OCT
was issued to Sacluti and Obial who sold the
same to Artemio. From the date of sale, until
Artemio’s death, he was in continuous
possession of the land.
b) NO. The remedy of accion publiciana
prescribes after the lapse of ten years. The
action was filed with the RTC in 1991.
Spouses Padilla dispossessed the heirs of
Velasco of the property in 1987. At the time of
the filing of the complaint, only four years had
elapsed from the time of dispossession
(Spouses Padilla v. Velasco, G.R. No. 169956,
January 19, 2009).
Q: On June 26, 2003, petitioner Teodorico A.
Zaragoza (petitioner) bought a 3,058-square
meter (sq. m.) parcel of land. His father leased
a 1,000-sq. m. portion of Lot 937-A (subject
land) to respondent Iloilo Santos Truckers, Inc.
respondent. Notwithstanding this, petitioner
allowed the lease to subsist and respondent
had been diligent in paying its monthly rent
amounting to P10,000.00 per month.
Petitioner claimed that when his father died,
respondent stopped paying rent. On the other
 CIVIL LAW
hand, respondent maintained that it was
willing to pay rent, but was uncertain as to
whom payment should be made. Respondent
consigned the amount of P521,396.89
equivalent for the rent of February 2007 to
March 2011 in the RTC. Petitioner averred that
the amount was insufficient to cover the
unpaid rentals plus interests from February
2007 to May 2011. Petitioner clarified that his
earlier demand to pay was for the period of
February 2007 to May 2011. Thus, petitioner
posited that respondent had continuously
failed and refused to comply with the terms
and conditions of the lease contract
concerning the payment of monthly rental.
May petitioner eject respondent from the
subject land?
A: Yes. For an unlawful detainer suit to prosper,
the plaintiff-lessor must show that: first, initially,
the defendant-lessee legally possessed the leased
premises by virtue of a subsisting lease
contract; second, such possession eventually
became illegal, either due to the latter's violation
of the provisions of the said lease contract or the
termination thereof; third, the defendant-lessee
remained in possession of the leased premises,
thus, effectively depriving the plaintiff-lessor
enjoyment thereof; and fourth, there must be a
demand both to pay or to comply and vacate and
that the suit is brought within one (1) year from
the last demand.
In this case, all requisites have been indubitably
complied with, considering that at the time the
suit was instituted on June 21, 2011: (a) there was
a subsisting lease contract between petitioner and
respondent; (b) , respondent was not updated in
its monthly rental payments, as there is no
evidence of such payment for the months of April,
May, and even June 2011-- said omission
constitutes a violation of the lease contract on the
part of respondent; (c) respondent was still in
possession of the subject land; and (d) the case
was filed within one (1) year from petitioner's
letter dated May 24, 2011 demanding that
respondent pay monthly rentals and at the same
time, vacate the subject land (Teodorico Zaragoza
v. IloIlo Santos Truckers, Inc., G.R. No. 224022, June
28, 2017).
Acquisitive prescription
Only the possession acquired and enjoyed in the
concept of owner can serve as a title for acquiring
dominion (NCC, Art. 540).
Possession in the concept of an owner
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
a. If a person possesses en concepto de
dueño — he may eventually become the
owner by prescription; and
b. Thus, a possessor merely in the concept of
holder cannot acquire property by
acquisitive prescription. (This is because
here the possession, far from being
adverse, recognizes right of ownership in
others. One cannot recognize the right of
another and at the same time claim
adverse possession which can ripen to
ownership through acquisitive
prescription. For prescription to set in,
the possession must be adverse, public
and to the exclusion of all (Paras, 2008).
Possession in the concept of a holder
a. Lessees or those merely permitted to
occupy;
b. Trustees (including parents over the
properties of their unemancipated minor
children or insane children (NCC, Art.
1109); and husband and wife over each
other’s properties, as long as the marriage
lasts, and even if there be a separation of
property which had been agreed upon in
a marriage settlement or by judicial
decree (NCC, Art. 1109);
c. Antichretic creditors;
d. Agents;
e. Attorneys (regarding their client’s
properties)
f. Depositaries; and
g. Co-owners (unless the co-ownership is
clearly repudiated by unequivocal acts
communicated to the other co-owners).
Presumption that possessor has a just title
A possessor in the concept of owner has in his
favor the legal presumption that he possesses
with a just title and he cannot be obliged to show
or prove it (Art. 541).
Requirements under NCC, Art. 541 to raise the
disputable presumption of ownership (of a
thing or a right):
a. One must be in possession (actual or
constructive).
b. The possession must be in the concept of
owner (not mere holder).
NOTE: A tenant cannot avail himself of
the presumption of just title because he is
not a possessor in the concept of owner)
(Paras, 2008).
200
 PROPERTY
The Article can apply to both real and personal
property. Thus, if a person possesses the key to a
car over which he claims ownership, he can be
presumed to be the owner. But such presumption
may be overcome by documentary evidence
concerning the car’s ownership (Paras, 2008).
Presumptions in favor of a possessor (GCENCE)
1. Good faith;
2. Continuity of initial good faith;
3. Enjoyment in the same character in which
possession was acquired until the
contrary is proved;
4. Non-interruption in favor of the present
possessor;
5. Continuous possession by the one who
recovers possession of which he was
wrongfully deprived; and
6. Extension of possession of real property
to all movables contained therein.
KINDS OF TITLE
a. True and Valid Title
Here, there was a mode of transferring ownership
and the grantor was the owner. It is defined as a
title which by itself is suffi cient to transfer
ownership without the necessity of letting the
prescriptive period elapse.
e.g. B bought a Ford Expedition Limited from S, the
owner thereof. Then S delivered the car to B. B
now has a true and valid title.
b. Colorable Title
That title where, although there was a mode of
transferring ownership, still something is wrong,
because the grantor is NOT the owner.
e.g. B bought a BMW car from S. S then delivered
the car to B. But it turns out that S never owned
the car, and that somebody else was its owner.
Whether B was in good faith or in bad faith is
immaterial in deciding if he (B) is the owner; what
is important is that he is not the owner because he
did not acquire or purchase the property from the
owner, his title being merely “colorado’’ or
colorable.
NOTE: It must be remembered that:
1. Ordinary prescription needs good faith
and just title, hence in the example given,
if B is in good faith, he may become owner
201
of the car by prescription after four years
(the car being personal property).
2. Extraordinary prescription does not need
either good faith or just title, hence in the
example given, if B is in bad faith,
although there may be just title (titulo
colorado), B may get ownership by
prescription only after eight years.
In case of real properties, the prescriptive
periods are 10 years and 30 years
respectively for ordinary and
extraordinary prescription (Paras, 2008).
c. Putative Title
That title where although a person believes
himself to be the owner, he nonetheless is not,
because there was no mode of acquiring
ownership.
Presumption of Possession of Movables Found
in an Immovable
The possession of real property presumes that of
the movables therein, as long as it is not shown or
proved that they should be excluded (NCC, Art.
542) (2008 Bar).
Applicability of the Article:
a. Whether the possessor be in good faith or
bad faith;
b. Whether the possession be in one’s own
name or in another’s; and
c. Whether the possession be in concepto de
dueno or in the concept of holder. Thus,
the lessee of a building is presumed to be
the possessor of the movables found
therein, for he who needs them is
supposed to have been the one who
introduced the movables into the
building.
NOTE: By “real property’’ and “movables’’, the law
means only real or personal THINGS, not rights
(Paras, 2008).
Exclusive possession by a previous co-owner
Each one of the participants of a thing possessed
in common shall be deemed to have exclusively
possessed the part which may be allotted to him
upon the division thereof, for the entire period
during which the co-possession lasted.
Interruption in the possession of the whole or a
part of a thing possessed in common shall be to
the prejudice of all the possessors. However, in
 CIVIL LAW
case of civil interruption, the Rules of Court shall
apply (NCC, Art. 543).
Example of interruption in possession of the
WHOLE thing (NCC, Art. 543)
A, B, and C have been co-possessors of a piece of
land since 2002. If in 2006, A, B, and C lose
possession over the whole land, it can be said that
the three of them were in possession for only four
years.
Example of Interruption in possession of PART
of the thing (NCC, Art. 543)
A and B have been co-possessors of a piece of land
since 2002 thru a mutual agent X. In 2006, X lost
possession of one-fifth of the land. A’s and B’s
possession over the remaining four-fifth
continues, the interruption being limited only to
one-fifth.
NOTE: If A and B had co-possessed the land in
equal shares, the co-possession of the remaining
four-fifths will also be in equal shares. If A and B
had co-possessed in the proportion of 3 to 1, their
shares in the remaining four-fi fths would also be
in the proportion of 3 to 1. In other words, there is
a PROPORTIONATE losing in the area possessed
(Paras, 2008).
Rules to apply for civil interruption
The “Rules of Court” applies (NCC, Art. 543):
a. Civil interruption is produced by judicial
summons to the possessor (NCC, Art.
1123); and
b. Judicial summons shall be deemed not to
have been issued, and shall not give rise
to interruption:
1. If it should be void for lack of legal
solemnities;
2. If the plaintiff should desist from the
complaint or should allow the
proceedings to lapse; or
3. If the possessor should be absolved
from the complaint. In all these cases,
the period of the interruption shall be
counted FOR the prescription (NCC,
Art. 1124).
RIGHTS OF POSSESSOR TO FRUITS
Possessor in good faith is entitled to the fruits
received before the possession is legally
interrupted.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Natural and industrial fruits are considered
received from the time they are gathered or
severed.
Civil fruits are deemed to accrue daily and belong
to the possessor in good faith in that proportion
(NCC, Art. 544).
Right of a possessor in good faith to fruits
already received
First Paragraph: “A possessor in good faith is
entitled to the fruits received before the possession
is legally interrupted.’’
a. Reason for the law: Justice demands that
the fruits be retained by the possessor
who thought that he was really the owner
of the property, and who, because of such
thought had regulated his daily life,
income, and expenses by virtue of such
fruits. Moreover, the possessor should be
rewarded for having contributed to the
INDUSTRIAL WEALTH, unlike the owner,
who by his presumed negligence, had
virtually discarded his property.
b. Fruits refer to natural, industrial, and civil
fruits, not to other things. (If no actual
fruits are produced, reasonable rents—
civil fruits—must be given).
c. Legal interruption happens when a
complaint is filed against him and he
receives the proper judicial summons
(Art. 1123). All fruits accrued and
received since said date must be turned
over to the winner, that is, either the
owner or the lawful possessor adjudged
as such by the court. Before legal
interruption, the fruits received are his
own. After the receipt of the judicial
summons, the right to get the fruits not
yet gathered ceases.
d. The reason why fruits should be returned
from the TIME of legal interruption is that
it is ordinarily only from said date that the
possessor should be considered in BAD
FAITH. Therefore, should there be proof
that BAD FAITH had not set in even
BEFORE legal interruption, fruits should
be returned from that date of
CONVERSION are not entitled to the
fruits. As a matter of fact, the law provides
that “the possessor in bad faith shall
reimburse the fruits received and those
which the legitimate possessor (or
owner) could have received” (NCC, Art.
549). This is true whether the possession
in BAD faith was legally interrupted or
202
 PROPERTY
not. It is understood of course that he is
entitled to the fruitsreceived BEFORE the
conversion into BAD FAITH, for then, he
would still be in good faith (Paras, 2008).
When natural and industrial fruits are
considered
received
Second Paragraph: “Natural and industrial fruits
are considered received from the time they are
gathered or severed.”
a. If at the time of legal interruption, the
crops are still growing, the rule on
pending crops, not that on gathered crops,
should apply (NCC, Art. 545).
b. If at the time of legal interruption, the
crops have already been gathered, but are
sold only after such interruption, the sale
is immaterial, for the law requires only a
gathering or severance, so Art. 544
applies.
When civil fruits are deemed to accrue
Third Paragraph: “Civil fruits are deemed to
accrue daily and belong to the possessor in good
faith in that proportion.’’
a. If civil fruits (like rents) are accrued daily,
Art. 545 does not apply; and
b. Actual receipt of the rents is immaterial;
hence, even if received only, for example,
on the 30th of a month, all rents accrued
before the 21st of the month (date for
example of legal interruption) should
belong to the possessor in good faith.
RIGHT TO PENDING FRUITS
If at the time the good faith ceases, there should be
any natural or industrial fruits, the possessor shall
have a right to a part of the expenses of
cultivation, and to a part of the net harvest, both in
proportion to the time of the possession.
The charges shall be divided on the same basis by
the two possessors.
The owner of the thing may, should he so desires,
give the possessor in good faith the right to finish
the cultivation and gathering of the growing fruits,
as an indemnity for his part of the expenses of
cultivation and the net proceeds; the possessor in
good faith who for any reason whatever should
refuse to accept this concession, shall lose the
203
right to be indemnified in any other manner (NCC,
Art. 545).
NOTE: This article applies to PENDING fruits,
natural or industrial.
Q: What if there are natural or industrial fruits
at the time good faith ceases?
A: The possessor shall have the right to a part of
the expenses of cultivation, and to a part in the net
harvest both in proportion to the time of
possession (NCC, Art 545) (2000, 2008 Bar).
Q: A possessed in good faith a parcel of land. At
the time he received judicial summons to
answer a complaint filed by B, the crops still
growing had been there for two months.
Harvest was made only after 4 more months
(For his crop needed a total of 6 months from
planting to harvesting). How should said crops
be divided between A and B?
A: In the proportion of 2 to 4 (or 1 to 2), 2 for A
and 4 for B. This is what the law means when it
says that the net harvest shall be divided in
proportion to the time of possession (Paras, 2008).
Sharing of expenses and charges
a. The expenses for cultivation shall also be
divided pro rata (2 to 4). The law says
“the possessor shall have a RIGHT to a
part of the expenses for cultivation in
proportion to the time of possession (This
may in certain cases be UNFAIR because
although he may have spent MORE than
the owner, still he will be entitled to a
reimbursement of LESS since his
possession is shorter. The better rule
would be for the expenses to be borne in
proportion to what each receives from
the harvest) (NCC, Art. 443). Otherwise,
unjust enrichment would result.
b. The charges (those incurred because of
the land and the fruits, like TAXES, or
INTEREST on MORTGAGES are what are
referred to as CHARGES, and not those
incurred on or in them, such as
improvements) are also to be divided in
proportion to the time of possession (NCC,
Art. 545, 2nd par.);(Paras, 2008).
Options of the owner in case there are pending
fruits at the time good faith ceases
 CIVIL LAW
1. To pay the possessor in good faith
indemnity for his cultivation expenses
and charges and his share in the net
harvest; or
2. To allow the possessor in good faith to
FINISH the cultivation and gathering of
the growing crops, as an INDEMNITY for
his part of the expenses of cultivation and
the net proceeds (Paras, 2008).
NOTE: If the possessor refuses, for any reason, to
finish the cultivation and gathering, he forfeits the
right to be indemnified in any other manner [NCC,
Art. 545(3)].
Art. 545 applies only to a possessor in GOOD faith
for a possessor in bad faith has no right
whatsoever to fruits already gathered nor to fruits
still pending, except that in the former case
(gathered fruits), he gets back the necessary
expenses for production, gathering, and
preservation of fruits (Art. 443). In the case of
pending fruits, the principle of accession applies,
and the law clearly states that he who plants or
sows in BAD FAITH on the land of another, loses
whatever is planted or sown without right to
indemnity (Paras, 2008).
Crops not yet manifest
Art. 545 applies to pending crops. Suppose the
crops have already been planted but are not yet
manifest at the time there is a transfer of
possession, should the article also apply? It is
submitted that the answer is YES, by the
application of the general rules stated in Art. 443
(Paras, 2008).
RIGHT TO BE REIMBURSED
NECESSARY AND USEFUL EXPENSES
Necessary expenses shall be refunded to every
possessor; but only the possessor in good faith
may retain the thing until he has been reimbursed
therefor. Useful expenses shall be refunded only to
the possessor in good faith with the same right of
retention, the person who has defeated him in the
possession having the option of refunding the
amount of the expenses or of paying the increase
in value which the thing may have acquired by
reason thereof (NCC, Art. 546).
Necessary expenses (1992, 1996, 2000 Bar)
Necessary expenses are expenses incurred to
preserve the property, without which, said
property will physically deteriorate or be lost.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
These expenses are not improvements but are
incurred merely to protect the thing from
becoming useless.
Sample of necessary expenses
a. Those incurred for cultivation,
production, and upkeep; or
b. Those made for necessary repairs of a
house.
Ordinary repairs are understood such as are
required by the wear and tear due to the
natural use of the thing, and are indispensable
for its preservation (NCC, Art. 592). They do
not increase the thing’s value; rather, they
merely prevent the things from becoming
useless.
Urgent repairs — reparacion urgentisima —
are also necessary expenses.
The following are NOT Necessary Expenses
a. Those incurred for the filling up with soil
of a vacant or deep lot (This is not also a
repair since the term “repair” implies the
putting back into the condition in which it
was originally, and not an improvement
in the condition thereof by adding
something new thereto. The expenses are
indeed in the nature of USEFUL
improvements;
b. A house constructed on land possessed by
a stranger (not the owner), because the
house cannot be said to preserve the land
(the house is USEFUL);
c. Land taxes are, for the purposes of the
Article, not necessary expenses, for they
are needed, not for preservation of the
land itself; but for its continued
possession. Failure to pay said taxes
results not in destruction, but forfeiture,
therefore they should be merely
considered CHARGES. Consequently, Art.
545 regarding PRO RATING of charges
should apply; and
d. Unnecessary improvements on a parcel of
land purchased at a sheriff’s auction sale,
made just to prevent redemption from
taking place (Paras, 2008).
Rights of a possessor (in the concept of owner)
as to the necessary expenses
a. If in good faith — entitled to:
1. Refund; or
2. Retain premises until paid.
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 PROPERTY
b. If in bad faith — entitled ONLY to a refund
(no right of RETENTION, as penalty).
NOTE: If the owner sues the possessor for the
recovery of the property, the possessor in good
faith (who is thus entitled to a refund) must file a
counterclaim for the refund of necessary and
useful expenses, otherwise the judgment in the
case for possession will be a BAR to a subsequent
suit brought solely for the recovery of such
expenses. The purpose is clearly to avoid the
multiplicity of suits (Paras, 2008).
Right of removal of necessary expenses
There is NO right of removal of necessary
expenses whether in good faith or bad faith.
Necessary expenses affect the existence or
substance of the property itself.
NOTE: Improvements are so incorporated to the
principal thing that their separation must
necessarily reduce the value of the thing not
curable by ordinary repairs.
Useful expenses
Those which increase the value or productivity of
the property.
Examples of useful expenses
a. Those incurred for an irrigation system;
b. Those incurred for the erection of a
chapel, because aside from its possibility
of conversion into such materialistic
things as a warehouse or a residence, the
chapel satisfied spiritual and religious
aspirations and the attainment of man’s
higher destinies. “To uphold the opposite
view would be to reduce life to a mere
conglomeration of desires and lust, when,
as a matter of fact, life is also a beautiful
aggregate of noble impulses and lofty
ideals”;
c. Those incurred for the making of artificial
fishponds;
d. Those incurred for the construction of
additional rooms in a house, for use as
kitchen, bathroom, stable, etc;
e. Those incurred for clearing up land
formerly thickly covered with trees and
shrubbery (Paras, 2008).
Rights of a possessor (in the concept of owner)
as to the USEFUL expenses
A. If in GOOD faith.
205
1. Right to REIMBURSEMENT (of either
the amount spent or the increase in
value — “plus value” — at OWNER’S
OPTION) (NCC, Art. 546).
2. Right of RETENTION (until paid)
(NCC, Art. 546).
3. Right of REMOVAL (provided no
substantial damage or injury is
caused to the principal, reducing its
VALUE) — UNLESS the winner
(owner or lawful possessor) exercises
the option in (1) (NCC, Art. 547).
NOTE: The possessor in good faith is
entitled to both the fruits and
expenses (necessary or useful), hence
they do not compensate each other.
B. If in BAD faith.
The possessor in BAD faith is NOT
ENTITLED to any right regarding the
useful expenses [BUT IN Angeles v.
Guevara, L-15697, October. 31, 1960,
where the Supreme Court thru Justice
Gutierrez David made the statement that
although a possessor in bad faith is NOT
entitled to reimbursements for expenses
incurred, he may nevertheless REMOVE
the objects (repairs on buildings)
provided the things suffer NO INJURY
thereby, and that the lawful possessor
does not prefer to retain them by paying
the value they may have at the time he
enters into possession. Evidently, here,
the Court was thinking NOT of useful
improvement, but of expenses for PURE
LUXURY or MERE PLEASURE (NCC, Art.
549)].
Effect of voluntary surrender of property
The voluntary surrender of property is a waiver of
the possessor’s right of retention but his right to
be refunded may still be enforced.
XPN: He also waived the same.
Removal of useful improvements introduced
by the possessor
Only a possessor in good faith is allowed to
remove the useful improvements he introduced
provided that the useful improvements can be
removed without damage to the principal thing
(NCC, Art. 547).
“Damage’’ here means a substantial one that
reduces the value of the property, thus a slight
 CIVIL LAW
injury curable by an ordinary repair does not
defeat the right of removal, but the repairs should
be chargeable to the possessor, for it is he who
benefits by the removal and the object removed
(Paras, 2008).
NOTE: This right of removal is subordinate to the
owner’s right to keep the improvements himself
by paying the expenses incurred or the
concomitant increase in the value of the property
caused by the improvements.
EXPENSES FOR PURE LUXURY
Expenses for pure luxury or mere pleasure shall
not be refunded to the possessor in good faith; but
he may remove the ornaments with which he has
embellished the principal thing if it suffers no
injury thereby, and if his successor in the
possession does not prefer to refund the amount
expended (NCC, Art. 548).
Luxurious expenses or expenses for pure luxury or
mere pleasure (ornamental expenses) are expenses
incurred for improvements introduced for pure
luxury or mere pleasure.
Examples of ornamental expenses
a. Hand paintings on the wall of a house;
b. A garage made of platinum; and
c. Water fountains in gardens.
Rights of a Possessor (in the Concept of
Owner) as to Luxurious or Ornamental
Expenses
a. If in GOOD faith:
In general, no right of refund or retention
but can remove if no substantial injury is
caused. However, owner has OPTION to
allow:
1. Possessor to remove; or
2. Retain for himself (the owner)
the ornament by REFUNDING the
AMOUNT SPENT (NCC, Art. 548).
b. In BAD faith:
In general, no right of refund or retention
but can remove if no substantial injury is
caused. However, owner has OPTION to
allow:
1. Possessor to remove; or
2. Retain for himself (the owner)
the ornament by REFUNDING the
VALUE it has at the TIME owner
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
ENTERS INTO POSSESSION (NCC,
Art. 549).
POSSESSOR IN BAD FAITH
The possessor in bad faith shall reimburse the
fruits received and those which the legitimate
possessor could have received, and shall have a
right only to the expenses mentioned in paragraph
1 of Art. 546 and in Art. 443. The expenses
incurred in improvements for pure luxury or mere
pleasure shall not be refunded to the possessor in
bad faith; but he may remove the objects for
which such expenses have been incurred,
provided that the thing suffers no injury thereby,
and that the lawful possessor does not prefer to
retain them by paying the value they may have at
the time he enters into possession (NCC, Art. 549).
Q: Who is a possessor in bad faith?
A: A possessor in bad faith is one who is aware
that there exists in his title or mode of acquisition
any flaw which invalidates it. Only personal
knowledge of the flaw in one’s title or mode of
acquisition can make him a possessor in bad faith.
NOTE: No tacking of bad faith, unless the
successors in interest had learned of the defect in
the title and still purchased it.
Bad faith is not transmissible from a person to
another, even an heir is not affected by bad faith of
the deceased predecessor.
Right of the Possessor (in the Concept of
Owner) as to FRUITS
a. If in GOOD faith:
1. Gathered or severed or harvested fruits
are his own (NCC, Art. 544);
2. Pending or ungathered fruits — (pro-
rating between possessor and owner of
expenses, net harvest, and charges) (NCC,
Art. 545).
b. If in BAD faith:
1. Gathered fruits — must return value of
fruits already received as well as value of
fruits which the owner or legitimate
possessor (not the possessor in bad faith)
could HAVE received with due care or
diligence, MINUS necessary expenses for
cultivation, gathering, and harvesting, to
206
 PROPERTY
prevent the owner from being unjustly 1. Possessor has a title/mode of acquisition;
enriched (NCC, Arts. 549 and 443). 2. There is a flaw or defect in said
title/mode; and
2. Pending or ungathered fruits — no 3. The possessor is aware or unaware of the
rights at all, not even to expenses for flaw or defect.
cultivation because by accession, all
should belong to the owner, without Summary of rights of a possessor
indemnity (NCC, Art. 449).
GOOD FAITH BAD FAITH
NOTE: The costs of litigation over the property As to fruits received
shall be borne by every possessor (NCC, Art. 550). Entitled to the fruits Shall reimburse the
“Every possessor’’ refers to one in good faith or bad received before the fruits received and those
faith, in the concept of owner or in the concept of possession is legally which the legitimate
holder, in one’s own name or in that of another, interrupted (NCC, Art. possessor could have
and not to the owner or the person adjudged by 544). received and shall have
the court to be lawfully entitled to possess (Paras, the a right only to
2008). necessary expenses (Art.
546, par. 1) and
Improvements caused by nature or time expenses in the
production, gathering
Neither the possessor in good faith nor in bad faith and preservation of such
is entitled to: fruits (NCC, Art. 443).
As to pending fruits
a. Improvements caused by NATURE (like Liable with legitimate None.
alluvium, etc.) possessor for expenses
b. Improvements caused by TIME (like the of cultivation and shall
improved flavor of wine). share in the net harvest
in proportion to the
Liability for loss or deterioration time of their
possession (NCC, Art.
A possessor in good faith shall not be liable for the 545).
deterioration or loss of the thing possessed, As to expenses:
except in cases in which it is proved that he has (Necessary expenses)
acted with fraudulent intent or negligence, after Right of
the judicial summons. Right of reimbursement
reimbursement and
only.
retention.
A possessor in bad faith shall be liable for (Useful expenses)
deterioration or loss in every case, even if caused Right of None.
by a fortuitous event (NCC, Art. 552).
reimbursement,
retention and limited
Rules applicable:
right of removal.
A. Possessor in GOOD FAITH —
(Ornamental Expenses)
1. BEFORE receipt of judicial summons —
Shall not be refunded Shall not be refunded
NOT LIABLE.
but he has a limited but he has a limited
2. AFTER judicial summons
right of removal, i.e. he right of removal, i.e. he
i. Loss or deterioration thru
may remove if the may remove if the
fortuitous event — not liable.
principal thing suffers principal thing suffers
ii. Thru fraudulent intent or
no injury thereby, and if no injury thereby, and if
negligence — liable
the lawful possessor the lawful possessor
does not prefer to does not prefer to
B. Possessor in BAD FAITH —
refund the amount retain them by paying
Whether before or after judicial
expended. its value at the time he
summons, and whether due to
enters into possession.
fortuitous event or not, such
As to liability in case of deterioration or loss
possessor is LIABLE.
No liability Always liable.
Requisites to constitute possession whether in
good faith or in bad faith XPN: If due to his
fraudulent act or

207
 CIVIL LAW
negligence, or after
service of summons.
Possessor in good faith has the right of
retention until he has been fully reimbursed
A possessor in good faith has the right of retention
of the property until he has been fully reimbursed
for all the necessary and useful expenses made by
him on the property. Its object is to guarantee the
reimbursement for the expenses, such as those for
the preservation of the property, or for the
enhancement of its utility or productivity. It
permits the actual possessor to remain in
possession while he has not been reimbursed by
the person who defeated him in the possession for
those necessary expenses and useful
improvements made by him on the thing
possessed (Ortiz v. Kayanan, G.R. No. L-32974, July
30, 1979).
Presumption of Possession during the
intervening period
A present possessor who shows his possession at
some previous time is presumed to have held
possession also during the intermediate period, in
the absence of proof to the contrary (NCC, Art
554).
LOSS/TERMINATION OF POSSESSION
Possession is lost through (PRADA)
1. Possession of another;
2. Recovery of the thing by the legitimate owner;
3. Abandonment;
4. Destruction or total loss of the thing – a thing
is lost when it perishes or goes out of
commerce, or disappears in such a way that
its existence is unknown, or it cannot be
recovered (NCC, Art. 1189; Art. 555); or
5. Assignment – complete transmission of the
thing/right to another by any lawful manner
(NCC, Art. 555).
Possession of another
Possession of another subject to the provisions of
Art. 537, if a person is not in possession for more
than one year but less than 10 years he losses
possession de facto. He can no longer bring an
action of forcible entry or unlawful detainer, since
the prescriptive period is one year for such
actions. But he may still institute an accion
publiciana to recover possession de jure,
possession as a legal right or the real right of
possession (NCC, Art. 555; Paras, 2008).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
If a person loses possession for more than 10
years, he loses possession de jure, or the real right
of possession (NCC, Art. 555). An accion publiciana
or reivindicatoria is still possible unless
prescription, either ordinary or extraordinary, has
set in (Paras, 2008).
NOTE: Acts merely tolerated, and those executed
clandestinely and without the knowledge of the
possessor of a thing, or by violence, do not affect
possession (NCC, Art. 537) (2001, 2009 Bar).
Abandonment
Abandonment involves a voluntary renunciation
of all rights over a thing. There must be an
intention to lose the thing.
Requisites
1. The abandoner must have been a possessor in
the concept of owner (either an owner or
mere possessor may respectively abandon
either ownership or possession);
2. The abandoner must have the capacity to
renounce or to alienate (for abandonment is
the repudiation of property right);
3. There must be physical relinquishment of the
thing or object; and
4. There must be no spes recuperandi
(expectation to recover) and no more animus
revertendi (intention to return or get back)
(Paras, 2008).
Additional Doctrines:
A property owner cannot be held to have
abandoned the same until at least he has
some knowledge of the loss of its
possession or the thing.
There is no real intention to abandon
property when as in the case of a
shipwreck or a fire, things are thrown
into the sea or upon the highway.
An owner may abandon possession
merely, leaving ownership in force, but a
mere possessor cannot abandon
ownership since he never had the same.
If an owner has not lost possession
because there has been no abandonment,
it surely cannot be acquired by another
thru acquisitive prescription. Thus, the
mere fact that land is covered by the sea
completely during high tide for failure in
the meantime of the owner to dam the
water off, does not indicate an
abandonment of the land in favor of
public dominion. Moreover, abandonment
208
 PROPERTY
can hardly refer to land much less to
registered land.
There is no abandonment if an owner
merely tolerated (permitted) another’s
possession, nor if the latter was done by
stealth or effected thru force and
intimidation (NCC, Articles. 537 and 558).
There is no abandonment of movables
even if there is temporary ignorance of
their whereabouts, so long as they remain
under the control of the possessor (that
is, so long as another has not obtained
control of them) (NCC, Art. 556).
In true abandonment, both possession de
facto and de jure are lost.
Abandonment which converts the thing
into res nullius (ownership of which may
ordinarily be obtained by occupation),
does not apply to land (NCC, Art. 714, Civil
Code). Much less does abandonment apply
to registered land (Act, 496, Sec. 46)
(Paras, 2008).
Assignment
Refers to a total transfer of ownership of property
by the owner to another person either
gratuitously or onerously.
While in assignment, at no time did the thing not
have a possessor (for possession merely changed
hands or control); in abandonment, there was a
time, no matter how short, when the object did
not have any possessor at all. Moreover, while
assignment may in some cases be by onerous title,
abandonment is always gratuitous, otherwise it
becomes a virtual assignment. Moreover, in
assignment, both possession de facto and de jure
are lost, and no action will allow recovery (Paras,
2008).
Q: Does Art. 555 refer to both real and personal
property?
A: YES (for the law does not distinguish) except in
the case of paragraph 4, for it is evident that the
reference to possession of more than one year
concerns only real property, the rule as to movable
property being explicitly stated in Art. 556.
LOSS OR UNLAWFUL DEPRAVATION OF A
MOVABLE
A lost thing is one previously under the lawful
possession and control of a person but is now
without any possessor.
When possession of movables is lost or not lost
209
If the possessor has no idea at all about the
whereabouts of the movable, possession is lost,
but not when he more or less knows its general
location, though he may not know its precise or
definite location. In the former, he has lost juridical
control; in the latter, the object remains within his
patrimony (not in the patrimony of another)
(Paras, 2008).
NOTE: An abandoned property is not considered
as a lost thing (Pineda, 1999).
Loss of immovables with respect to third
person
The possession of immovables and of real rights is
not deemed lost, or transferred for purposes of
prescription to the prejudice of third persons,
except in accordance with the provisions of the
Mortgage Law and the Land Registration Laws
(NCC, Art. 557).
NOTE: Art. 557 refers to possession of real
property, and other real rights over real property
(like easement or usufruct).
Acts of mere holder
GR: Acts relating to possession, executed or
agreed to by one who possesses a thing belonging
to another as a mere holder to enjoy or keep it, in
any character, do not bind or prejudice the owner.
XPNS:
1. Unless he gave said holder express authority to
do such acts; or
2. Ratifies them subsequently (NCC, Art. 558).
FINDER OF LOST MOVABLE
Rule regarding the right of a possessor who
acquires a movable claimed by another
If the possessor is in:
1. Bad faith – He has no right.
2. Good faith – He has presumed ownership. It is
equivalent to title.
Requisites:
a. Owner has voluntarily parted
with the possession of the thing;
and
b. Subsequent possessor is in the
concept of an owner.
c. Possession in good faith;
Possession of movable property acquired in
good faith
 CIVIL LAW
GR: Doctrine of irrevindicability – The
possession of movable property acquired in good
faith is equivalent to title and the true owner
cannot recover such movable.
NOTE: This is merely presumptive as it can be
defeated by the true owner (NCC, Art. 559).
XPNs:
1. When the owner has lost a movable; or
2. Has been unlawfully deprived of a movable.
In which case the possessor cannot retain the
thing as against the owner, who may recover
it without paying any indemnity
XPN to the XPNs: Where the movable is
acquired in good faith at a public sale, the
owner must reimburse to recover [NCC, Art.
559(2)].
Duty of a finder of a lost movable (NCC, Art.
719)
Whoever finds a lost movable, which is not a
treasure, must return it to its previous possessor.
If the latter is unknown, the finder shall
immediately deposit it with the mayor of the city
or municipality where the finding has taken place.
The mayor in turn must publicly announce the
finding of the property for two consecutive weeks.
Authorized public auction of lost movable
If the movable cannot be kept without
deterioration, or without expenses which
considerably diminish its value, it shall be sold at
public auction eight days after the publication.
Awarding of the lost movable to the finder
If the owner or previous possessor did not appear
after 6 months from the publication, the thing
found or its value or proceeds if there was a sale,
shall be awarded to the finder. The finder,
however, shall pay for the expenses incurred for
the publication (NCC, Art. 719).
Duty of the owner who appeared
1. Give a reward to the finder equivalent to
one-tenth (1/10) of the sum or of the
price of the thing found (NCC, Art. 720);
2. Reimburse to the finder for the latter’s
expenses incurred for the preservation of
the thing (NCC, Art. 546) and expenses
spent for the location of the owner; and
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
3. Reimburse the expenses for publication if
there was a public auction sale (Pineda,
1999).
Summary of recovery or non-recovery
principle
A. Owner MAY RECOVER WITHOUT
REIMBURSEMENT:
1. From possessor in bad faith; or
2. From possessor in good faith (if owner
had LOST the property or been unlawfully
deprived of it) (the acquisition being from
a private person) (NCC, Art. 559).
B. Owner MAY RECOVER but should
REIMBURSE:
If possessor acquired the object in good
faith at a PUBLIC SALE or AUCTION (NCC,
Art. 559). Because the publicity attendant
to a public sale should have been
sufficient warning for the owner to come
forward and claim the property.
C. Owner CANNOT RECOVER, even if he offers to
REIMBURSE (whether or not the owner had
lost or been unlawfully deprived):
1. If possessor had acquired it in good faith
by purchase from a merchant’s store, or in
fairs, or markets in accordance with the
Code of Commerce and special laws (NCC,
Art. 1505 and Code of Commerce, Art. 85
and Art. 86);
2. If owner “is by his conduct precluded from
denying the seller’s authority to sell.”
(ESTOPPEL) (NCC, Art. 1505); and
3. If possessor had obtained the goods
because he was an innocent purchaser for
value and holder of a NEGOTIABLE
document of title to the goods (NCC, Art.
1518) (Paras, 2008).
Q: Suppose recently stolen property is found in
possession of A, is A presumed to be the thief?
A: YES, it is a disputable presumption “that a
person found in possession of a thing taken in the
doing of a recent wrongful act is the taker and
doer of the whole act.’’ (Rules of Court, Rule 131,
Sec. 3[j]). It is true that one who possesses a
movable, acquired in good faith, has what is called
an equivalent of title, but this is destroyed when it
is proved that said movable belongs to somebody
else who has lost it, or has been unlawfully
deprived of its possession (NCC, Art. 559) (Paras,
2008).
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 PROPERTY
Q: In order to contest the title of the possessor Wild animals are possessed only while they are
in good faith, what should the true owner do? under one’s control; domesticated or tamed
animals are considered domestic or tame, if they
A: The true owner should present suffi cient proof retain the habit of returning to the premises of the
of the identity of the object AND that he had either possessor (NCC, Art. 560).
lost it or has been illegally deprived of it. This
proof is an indispensable requisite a conditio sine Lawful recovery of possession that had been
qua non in order that the owner of the chattel may unjustly lost
contest the apparent title of its possessor. Without
adequate proof of such loss or illegal deprivation, One who recovers, according to law, possession
the present holder cannot be put on his defense, unjustly lost, shall be deemed for all purposes
even if as possessor he has no actual proprietary which may redound to his benefit, to have enjoyed
title to the movable property in question (Paras, it without interruption (NCC, Art. 561).
2008).
Requisites:
Rule when possessor has already become the a. Possession was lost unlawfully or unjustly;
owner b. Possessor lawfully recovers possession;
and
Art. 559 in fact assumes that the possessor is as c. Uninterrupted possession is beneficial to
yet not the owner, for it is obvious that where the him.
possessor has come to acquire indefeasible title,
let us say adverse possession for the necessary
period, no proof of loss, or illegal deprivation USUFRUCT
could avail the former owner of the chattel. He
would no longer be entitled to recover it under
any condition (Paras, 2008). Usufruct is the right of a person called
usufructuary, to enjoy the property of another
Estafa is considered as unlawful deprivation called the owner, with the obligation of returning
it at the designated time and preserving its form
Q: Using a falsified manager's check, Justine, as
and substance, unless the title constituting it or
the buyer, was able to take delivery of a second
the law provides otherwise (Pineda, 2009).
hand car which she had just bought from
United Car Sales Inc. The sale was registered NOTE: A usufruct can be constituted in favor of a
with the Land Transportation Office. A week
town, corporation or association, but it cannot be
later, the seller learned that the check had for more than 50 years (NCC, Art. 605).
been dishonored, but by that time, Justine was
nowhere to be seen. It turned out that Justine
Characteristics of usufruct (ENA)
had sold the car to Jerico, the present
possessor who knew nothing about the
1. Essential – Those without which it cannot be
falsified check. In a suit by United Car Sales, termed as usufruct:
Inc. against Jerico for recovery of the car,
plaintiff alleges it had been unlawfully
a. Real right (whether registered in the
deprived of its property through fraud and
registry of property or not);
should, consequently, be allowed to recover it
b. Constituted on property
without having to reimburse the defendant for
i. Real;
the price the latter had paid. Should the suit
ii. Personal;
prosper? (1998 Bar) iii. Consumable;
iv. Non-consumable;
A: The suit should prosper because the criminal
v. Tangible;
act of estafa should be deemed to come within the vi. Intangible.
meaning of unlawful deprivation under Art. 559 as
without it United Car Sales would not have parted c. Temporary duration;
with the possession of its car. Thus, it was d. Purpose: to enjoy the benefits and derive
allowed to recover the property without having to
all advantages from the object as a
reimburse the defendant. consequence of normal use or
exploitation.
Possession of wild animals

211
 CIVIL LAW
2. Natural – That which ordinarily is present, but
a contrary stipulation can eliminate it because
it is not essential;
a. The obligation of conserving or
preserving the form and substance
(value) of the thing.; and
b. It is transmissible.
3. Accidental – Those which may be present or
absent depending upon the stipulation of
parties
a. Whether it be pure or a conditional
usufruct;
b. The number of years it will exist;
c. Whether it is in favor of one person or
several, etc.
Obligation to preserve the form and substance
of the thing in usufruct
GR: The usufructuary is bound to preserve the
form and substance of the thing in usufruct. This is
to prevent extraordinary exploitation, prevent
abuse of property and prevent impairment.
XPN: In case of an abnormal usufruct, whereby
the law or the will of the parties may allow the
modification of the substance of the thing.
Q: Chayong owned a parcel of land which she
mortgaged to Michael. Upon the OCT was an
annotation of usufructuary rights in favor of
Cheddy. Is Michael obliged to investigate
Chayong’s title?
A: NO. The annotation is not sufficient cause to
require Michael to investigate Chayong’s title
because the latter’s ownership over the property
remains unimpaired despite such encumbrance.
Only the jus utendi and jus fruendi over the
property are transferred to the usufructuary. The
owner of the property maintains the jus
disponendi or the power to alienate, encumber,
transform, and even destroy the same (Hemedes v.
CA, G.R. Nos. 107132 & 108472, October 8, 1999).
KINDS OF USUFRUCT
1. As to origin:
a. Legal – Created by law such as usufruct of
the parents over the property of their
unemancipated children;
NOTE: The right of the parents over the
fruits and income of the child’s property
shall be limited primarily to the child’s
support and secondarily to the collective
daily needs of the family (FC, Art. 226).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
b. Voluntary – Created by will of the parties
either by act inter vivos (e.g. donation) or
by act mortis causa (e.g. in a last will and
testament);
c. Mixed– Created by both law and act of the
person (e.g. acquired by prescription: I
possessed in good faith a parcel of land
which really belonged to another. Still in
good faith, I gave in my will to X, the
naked ownership of land and to Y, the
usufruct. In due time, Y may acquire the
ownership of the usufruct by acquisitive
prescription) (Paras, 2008).
d. Prescriptive – acquired by third persons
through continuous use of the usufruct
for the period required by law.
2. As to the number of beneficiaries
a. Simple – If only one usufructuary enjoys
the usufruct;
b. Multiple – If several usufructuaries enjoy
the usufruct;
i. Simultaneous – at the same time
ii. Successive – one after the other
NOTE: In case usufructuary is created by
donation, apply Art. 756. If the usufruct is
testamentary, apply Rules on Fidei
Commisary substitution under Art. 863
and 869.
3. As to the extent of object:
a. Total – constituted on the whole thing
b. Partial – constituted only on a part
4. As to the subject matter:
a. Over things
i. Normal (or perfect or regular) –
involves non-consumable things
where the form and substance
are preserved; or
ii. Abnormal (or imperfect or
irregular) – Involves consumable
things – that which involves
things which would be useless to
the usufructuary unless they are
consumed or expanded.
b. Over rights – involves intangible
property; rights must not be personal or
intransmissible in character so present or
future support cannot be an object of
usufruct.
5. As to the effectivity or extinguishment:
a. Pure – no term or condition
212
 PROPERTY
b. With a term – there is a period which may a builder has
be either suspensive or resolutory built in good
i. Ex die – from a certain day faith on the land
ii. In diem – up to a certain day of another a
iii. Ex die in diem – from a certain building, when
day up to a certain day. the land is
considerably
c. Conditional – subject to a condition which worth more in
may be either suspensive or resolutory. value than the
building.
GR: No form is required in constituting a usufruct.
All fruits, uses Only those
Even an oral usufruct may be constituted. Extent of
and benefits. particular or
Enjoyment
specific use.
XPNs:
1. Usufruct over real property must be A passive owner An active owner
registered to bind third person who allows the who makes the
2. Statute of Frauds apply in case Real Property Cause usufructuary to lessee enjoy.
is involved. If Personal property, Statute of enjoy the object
Frauds will apply where the value is P 500 or of usufruct.
higher and in case the agreement is not to be Usufructuary Lessee is not
performed in one year; pays for ordinary obliged to pay
3. A usufruct by donation or by will must comply repairs and pays for
Repairs
with formalities of a donation or will for annual repairs/taxes
and Taxes
charges and unless agreed
Rules governing usufruct taxes on the upon.
fruits.
1. The agreement of the parties or the title Usufructuary The lessee
giving the usufruct. may lease the cannot
2. In case of deficiency, the provisions on Limitation
property to constitute a
Civil Code (NCC, Art. 565). on the use
another but usufruct on the
of property
cannot alienate property leased.
Usufruct v. Lease the thing itself.

BASIS USUFRUCT LEASE RIGHTS OF USUFRUCTUARY

Always a real Real right only
right. if, as in the case Rights of the usufructuary as to the thing and
of a lease over its fruits (RIRICRES)
real property,
Nature of the lease is 1. To Receive the fruits of the property in
the right registered, or is usufruct and half of the hidden treasure he
for more than accidentally finds on the property (NCC,
one year, Articles 566 and 438);
otherwise it is a
personal right. NOTE: The usufructuary is entitled to the
Owner or his May not be the natural, industrial, and civil fruits that will
agent. owner, as in the accrue during the existence of the usufruct.
Creator of
case of a sub-
Right 2. To enjoy any Increase which the thing in
lessor or a
usufructuary. usufruct may acquire through accession (NCC,
Art. 571);
By law, contract, By contract, by
3. To Retain the thing until he is reimbursed for
will of testator or way of
advances for extraordinary expenses and
by prescription. exception by
taxes on the capital (NCC, Art. 612);
law (as in the
Origin 4. To make such Improvements or expenses on
case of an
the property he may deem proper and to
implied new
remove the improvements provided no
lease under Art.
damage is caused to the property (NCC, Art.
1670), or when
579);

213
 CIVIL LAW
5. To Collect reimbursements from the owner
for indispensable extra ordinary repairs, taxes
on the capital he advanced, and damages
caused to him;
6. To Remove improvements made by him if the
same will not injure the property;
7. To personally Enjoy the thing or lease it to
another (NCC, Articles. 572-577) generally for
the same or shorter period as the usufruct;
NOTE: As to the thing itself, the usufructuary
may lease the thing to another, even without
the consent of the owner.
8. To Set-off the improvements he may have
made on the property against any damage to
the same (NCC, Art. 580).
Rule as to certain rights (rent, pension,
benefits, rtc.)
Whenever a usufruct is constituted on the right to
receive a rent or periodical pension, whether in
money or in fruits, or in the interest on bonds or
securities payable to bearer, each payment due
shall be considered as the proceeds of fruits of
such right. Whenever it consists in the enjoyment
of benefits accruing from a participation in any
industrial or commercial enterprise, the date of
the distribution of which is not fixed, such benefits
shall have the same character. In either case they
shall be distributed as civil fruits, and shall be
applied in the manner prescribed in the preceding
article (Paras, 2008).
The things referred to in Art. 570 are considered
civil fruits and shall be deemed to accrue
proportionately to the naked owner and
usufructuary, for the time the usufruct lasts.
Rules if the finder of a hidden treasure is a
usufructuary
If the finder is a usufructuary and he discovers it
by chance, the usufructuary shall be entitled to
one half of the value thereof. The other half
belongs to the naked owner.
If the finder is a third person and he found hidden
treasure by chance in the property under usufruct,
the usufructuary shall be considered a stranger.
The finder gets half and the other half shall belong
to the naked owner.(Paras, 2008)
Rights of a usufructuary on pending natural
and industrial fruits (NCC, Art. 567)
Fruits
Rights of the usufructuary
Growing:
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
a. Belong to the usufructuary;
b. Not bound to refund to the owner
the expenses of cultivation and
production but without prejudice to
At the the right of third persons.
beginning c. BUT without prejudice to the right
of the of third persons. (Thus, if the fruits
usufruct had been planted by a possessor in
good faith, the pending crop
expenses and charges shall be pro-
rated between said possessor and the
usufructuary).
Belong to the owner but he is bound
to reimburse the usufructuary of the
At the
ordinary cultivation expenses (NCC,
termination
Art. 545) out of the fruits received
of the
(NCC, Art. 443). The right of innocent
usufruct
third parties should not be
prejudiced.
NOTE: Civil fruits accrue daily; stock dividends
and cash dividends are considered civil fruits.
However, dividends declared from “capital stocks”
are not covered by usufruct because such are not
declared from profits of the corporation.
Aside from the right to the fruits, the usufructuary
has the right to the enjoyment (use, not
ownership) of:
a. Accessions (whether artificial or natural);
b. Servitudes and easements; and
c. All benefits inherent in the property (like
the right to hunt and fish therein, the
right to construct rain water receptacles,
etc.).
Reason:
The usufructuary, as a rule, is entitled to the:
a. ENTIRE jus fruendi (including fruits of
accessions); and
b. ENTIRE jus utendi (so he can make use for
example of an easement).
When the expenses of cultivation and
production exceeds the proceeds of the
growing fruits
If the expenses exceed the proceeds of the
growing fruits, the owner has no obligation to
reimburse the difference (NCC, Art. 567).
Limitations to Usufructuary Rights
The usufructuary cannot:
214
 PROPERTY
1. Sell, pledge or mortgage the property itself
because he is not the owner;
2. Sell future crops (growing crops at the
termination of the usufruct belong to the
owner); and
3. Lease the thing for a period longer than the
term of the usufruct without the consent of
owner
XPN: In lease of rural lands, it may exceed the
lifetime of the usufruct and shall subsist during
the agricultural year.
Q: Can a usufruct be constituted on an
encumbered or mortgaged land?
A: YES. The mortgage remains inactive until the
debt is not paid and the mortgage is not for the
purpose of limiting the use of the fruits.
Right of usufructuary to make useful or
luxurious improvements
1. The usufructuary may construct and make
improvements on the property as he may
deem proper;
XPN: If there is an express prohibition to that
effect.
2. Limitation: the usufructuary cannot alter its
form and substance;
3. Removal: usufructuary may generally remove
provided no injury is made on the principal
even against the will of the naked owner. If he
has chosen not to remove he cannot be
compelled to remove them; and
4. Indemnity: no right to be indemnified if the
improvements cannot be removed. He may
however set-off the value of the
improvements against the amount of damage
he had caused to the property (Pineda, 2009).
NOTE: If the right of the usufructuary to remove
improvements is not registered in the registration
proceedings of the land in usufruct, an innocent
purchaser for value of the property is not bound
to respect the right.
Offsetting of damages and improvements
introduced by the usufructuary
Requisites before set-off can be made:
1. Damage must have been caused by the
usufructuary;
2. Improvements must have augmented the
value of the property; and
215
3. Notice of intention to set-off.
If the damages exceed the value of the
improvements, the usufructuary is liable for the
difference as indemnity.
If the improvements exceed the amount of
damages, the usufructuary may remove the
portion of the improvements representing the
excess in value if it can be done without injury;
otherwise, the excess in value accrues to the
owner.
Q: Why do improvements accrue to the owner?
A: Because there is no indemnity for
improvements.
Rights of the usufructuary as to the usufruct
itself
1. To Alienate, pledge or mortgage the right
of usufruct, even by gratuitous title (NCC,
Art. 572);
2. In a usufruct to Recover property/real
right, to bring the action and to oblige the
owner thereof to give him the proper
authority and the necessary proof to
bring the action ( NCC, Art. 578); and
3. In a usufruct of part of a Common
property, to exercise all the rights
pertaining to the co-owner with respect
to the administration and collection of
fruits or interests.
Lease, alienation and encumbrance of the
property subject to usufruct
a. Rights with Reference to the THING ITSELF
(in Additionto the Usufruct)
The usufructuary, not being the owner of the thing
subject to usufruct, cannot alienate, pledge or
mortgage the thing itself.
However, the usufructuary may lease the thing to
another (This can be done even without the
owner’s consent; moreover, ordinarily the lease
must not extend to a period longer than that of the
usufruct, unless the owner consents. Thus, the
lease ends at the time the usufruct ends, except in
the case of rural leases.).
NOTE: If the lessee should damage the property,
the usufructuary shall answer to the owner (Art.
590). The relation between the owner and the
usufructuary, does not end just because a lease
has been made. The usufructuary, however, can
 CIVIL LAW
demand reimbursement from the lessee, because
of the latter’s breach of the contract of lease. If the
usufructuary cannot pay the damage to the naked
owner, his bond shall be liable. This is precisely
one reason for the requirement of a bond, NCC,
Art. 583).
b. Rights with Reference to the
USUFRUCTUARY RIGHT ITSELF
The usufructuary may alienate (sell, donate,
bequeath, or devise) the usufructuary right
(except a legal usufruct, i.e., the usufruct which
parents have over the properties of their
unemancipated children, because said usufruct is
to be used for certain obligations towards
children); or a usufruct granted a usufructuary in
consideration of his person; or a usufruct acquired
thru a caucion juratoria, for here, the need of the
usufructuary himself is the reason for the
enjoyment (NCC, Art. 587).
The usufructuary may pledge or mortgage the
usufructuary right (because he OWNS said right)
BUT he cannot pledge or mortgage the thing itself
because he does not own the thing [NCC, Art.
2085(2)]. Neither can he sell or in any way
alienate the thing itself, or future crops, for crops
pending at the termination of the usufruct belong
to the naked owner (NCC, ArtIcles 567 and 572
and Mortgage Law, Art. 106).
---
Q: 120 hectares of land from the NHA property
were reserved for the site of the National
Government Center. 7 hectares from which
were withdrawn from the operation. These
revoked lands were reserved (MSBF).
However, MSBF occupied approximately 16
hectares and leased a portion thereof to
Bulacan Garden Corporation (BGC). BGC
occupies 4,590 sqm. Implementing such
revocation, NHA ordered BGC to vacate its
occupied area. BGC then filed a complaint for
injunction. Has BGC any right over the leased
premises?
A: A usufructuary may lease the object held in
usufruct. The owner of the property must respect
the lease entered into by the usufructuary so long
as the usufruct exists. MSBF was given a usufruct
over only a 7-hectare area. NHA cannot evict BGC
if the 4,590 square meter portion MSBF leased to
BGC is within the 7-hectare area held in usufruct
by MSBF. However, the NHA has the right to evict
BGC if BGC occupied a portion outside of the 7-
hectare area covered by MSBF's usufructuary
rights (NHA v. CA, G.R. No. 148830, April 13, 2005).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Transfer of the usufruct
The transferee can enjoy the rights transferred to
him by the usufructuary until the expiration of the
usufruct. Transfer of usufructuary rights,
gratuitous or onerous, is co-terminous with the
term of usufruct.
Exercise of acts of ownership by a
usufructuary
GR: A usufructuary cannot exercise acts of
ownership such as alienation or conveyance.
XPNs: When what is to be alienated or conveyed is
a:
1. Consumable;
2. Property intended for sale; or
3. Property which has been appraised when
delivered (NCC, Art. 574).
NOTE: If it has not yet been appraised or if it is not
a consumable, return the same quality (mutuum).
Abnormal usufruct on consumable things
This is another instance of abnormal usufruct, and
is sometimes referred to as a “quasi-usufruct”
because the form and substance is not really
preserved. Thus, this is really a SIMPLE loan. It has
been included however in the title on usufructs
because in what are called UNIVERSAL
USUFRUCTS, both non-consumable and
consumable properties are included. While we
seldom find usufructs on consumable properties
alone, it is a fact that they indeed exist. Thus, the
Supreme Court has held that even money may be
the object of a usufruct (Paras, 2008).
RULES for this ‘QUASI-USUFRUCT’
a. The usufructuary (debtor-borrower) can
use them (as if he is the owner, with
complete right of pledge or alienation).
b. BUT at the end of the usufruct, he must:
1. Pay the APPRAISED value (if
appraised when fi rst delivered); or
2. If there was no appraisal, return same
kind, quality, and quantity OR pay the
price current at the termination of the
usufruct (therefore not at theoriginal
price or value).
Usufruct on fruit-bearing trees and shrubs
The usufructuary of fruit-bearing trees and shrubs
may make use of the dead trunks, and even of
216
 PROPERTY
those cut off or uprooted by accident, under the
obligation to replace them with new plants (NCC,
Art. 575).
NOTE: This is a SPECIAL usufruct.
Rights
The usufructuary can use (even for firewood,
though he is NOT the naked owner) the following:
a. Dead trunks; and
b. Those cut off or uprooted by accident.
BUT he must REPLACE them with new
plants (for indeed, he was not the naked
owner).
Other SPECIAL usufructs
a. Of periodical pension, income, dividends
(NCC, Art. 570);
b. Of woodland (NCC, Art. 577);
c. Of right of action to recover real property,
real right, or movable property (NCC, Art.
578);
d. Of part of property owned in common
(Art. 582);
e. Of the entire patrimony of a person (NCC,
Art. 598);
f. On a mortgaged immovable (NCC, Art.
600); and
g. On a fl ock or herd of livestock (NCC, Art.
591).
Special usufruct over a WOODLAND
This is not a common or frequent usufruct
because:
a. Natural resources (including forest or
timber lands) belong to the State
(Regalian Doctrine under Art. XII, Sec. 3 of
the 1987 Philippine Constitution);
b. A license is generally essential if one
desires to gather forest products (Revised
Administrative Code, Sec. 47).
Obligations of the usufructuary over a
woodland
In the enjoyment of the usufruct, the usufructuary:
a. Must bear in mind that he is not the owner,
and therefore, in the exercise of the
diligence in caring for the property
(required under Art. 589 he must see to it
that the woodland is preserved, either by
217
development or by replanting, thus he
cannot consume all, otherwise nothing
would be left for the owner.
b. In the cutting or felling of trees, he must —
1 Follow the owner’s habit or practices;
2. In default thereof, follow the customs
of the place (as to MANNER, AMOUNT
and SEASON) (NCC, Art. 577).
— All without prejudice to the
owner, for while he can USE, he
cannot ABUSE.
NOTE: The rule above is
applicable if the woodland:
i. Is a COPSE (thicket of small
trees); or
ii. Consists of timber for
BUILDING.
3. If there be no customs, the only time
the usufructuary can CUT DOWN
trees will be for REPAIR or
IMPROVEMENT, but here the owner
must fi rst be informed (the owner,
thus, does not need to consent).
c. Cannot alienate the trees (for the trees
are not considered fruits) unless he is
permitted, expressly or impliedly by the
owner (as when the purpose of the
usufruct was really to sell the timber) or
unless he needs the money to do some
repairs (but in the last case, the owner
must be informed).
Rights of usufructuary to recover the property
held in usufruct
To bring the action, the usufructuary can DEMAND
from the owner:
a. Authority to bring the action (usually a
special power of attorney); and
b. Proofs needed for a recovery.
The action may be instituted in the usufructuary’s
name, for being the owner of the usufruct, he is
properly deemed a real party in interest (Rules of
Court, Sec. 2, Rule 3).
a. If the purpose is the recovery of the
property or right, he is still required
under Art. 578 to obtain the naked
owner’s authority.
b. If the purpose is to object to or prevent
disturbance over the property (once the
property is given him), no special
authority from the naked owner is
needed.
 CIVIL LAW
Usufructuary of a part of common property
The usufructuary of a part of a thing held in
common shall exercise all the rights pertaining to
the owner thereof with respect to the
administration and the collection of fruits or
interest. Should the co-ownership cease by reason
of the division of the thing held in common, the
usufruct of the part allotted to the co-owner shall
belong to the usufructuary (NCC, Art. 582).
A co-owner may give the usufruct of his share to
another, even without the consent of the others,
unless personal considerations are present. (NCC,
Art. 493).
The usufructuary in such a case takes the owner’s
place as to:
a. Administration (management); and
b. Collection of fruits or interest (NCC, Art.
582). (BUT not as to alienation,
disposition, or creation of any real right
over the property, since these are strict
acts of ownership, unless of course he is
authorized by the naked owner) (Paras,
2008).
Rights of usufructuary at the expiration of the
usufruct
1. To collect reimbursement from the owner:
a. For indispensable extraordinary repairs
made by the usufructuary (NCC, Art. 593);
b. For taxes on the capital advanced by the
usufructuary (NCC, Art. 597);
c. For damages caused by the naked owner;
d. For payment of increase in value of the
immovable by reason of repairs provided
the owner is notified of the urgency of
such repairs but the latter failed to make
said repairs despite the notification, and
the repair is necessary for the
preservation of the property (NCC, Art.
594).
2. To retain the thing until reimbursement is
made (NCC, Art. 612).
OBLIGATIONS OF USUFRUCTUARY
The usufructuary has obligations:
1. Before the usufruct (like the making of
inventory);
2. During the usufruct (like taking due care
of property); and
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
3. After the usufruct (like the duty to return
and indemnify in the proper cases).
1. Before the usufruct (NCC, Art. 583)
a. Make an inventory; and
b. Give security
This article speaks of two obligations (inventory
and security). They are not necessary however
before the right to the usufruct begins; they are
merely necessary before physical possession and
enjoyment of the property can be had, thus if the
usufructuary fails to give security (unless exempt)
the usufruct still begins but the naked owner will
have the rights granted him under Art. 586 (Paras,
2008).
NOTE: The purpose of giving security is to insure
fulfillment by the usufruct of the obligation
imposed upon him.
After the security has been given by the
usufructuary, he shall have a right to all the
proceeds and benefits from the day on which, in
accordance with the title constituting the usufruct,
he should have commenced to receive them
(retroactive effect of security) (NCC, Art. 588).
Requirements for the inventory
1. The naked owner or representative must be
previously notified;
NOTE: The purpose is to enable him to correct
errors in the inventory if he desires. His absence is
a waiver for corrections. If there is non-
notification, the inventory can go on but the naked
owner may later on point out discrepancies and
omissions in the inventory.
2. Conditions of immovables must be described;
and
3. Movables must be appraised.
NOTE: As a rule, no form is required, except
when there are real properties. Expenses are
to be borne by the usufructuary (Paras, 2008).
When inventory is not required
a. Waived;
b. No one will be injured by the lack of
inventory (NCC, Art. 585);
c. When the donor has reserved to himself
the usufruct of the property donated; or
d. Agreement of both parties.
Effects of failure to post a bond or security
218
 PROPERTY
1. The owner shall have the following options previous state before the usufruct is
(NCC, Art. 586): constituted: and
a. Receivership of realty; b. The property subject to such cannot be
b. Sale of movables; alienated or encumbered or leased.
c. Deposit of securities;
d. Investment of money; or Caucion juratoria – “by virtue of a promise
e. Retention of the property as under oath”
administrator.
The usufructuary, being unable to file the required
2. The net product shall be delivered to the bond or security, may file a verified petition in the
usufructuary; proper court asking for the delivery of the house
3. The usufructuary cannot collect credit due or and furniture necessary for himself and his family
make investments of the capital without the so that he and his family be allowed to live in a
consent of the owner or of the court until the house included in the usufruct and retain it until
bond is given. the termination of the usufruct without any bond
or security.
Effects of failure to give security
The same rule shall be observed with respect to
1. On the rights of the naked owner: implements, tools and other movable property
a. May deliver the property to the necessary for an industry or vocation in which he
usufructuary; is engaged (NCC, Art. 587).
b. May choose retention of the property as
administrator; and Requisites before the caucion juratoria is
c. May demand receivership or allowed
administration of the real property, sale
of movable, conversion or deposit of a. Proper court petition;
credit instruments or investment of cash b. Necessity for delivery of furniture,
or profits. implements or house included in the
usufruct;
2. On the rights of the usufructuary: c. Approval of the court; and
a. Cannot possess the property until he d. Sworn promise.
gives security;
b. Cannot administer property; 2. During the usufruct
c. Cannot collect credits that have matured a. Take care of property;
nor invest them; and b. Replace the young of animals that die or
are lost or become prey when the
XPN: if the court or naked owner usufruct is constituted on a flock or herd
consents; of livestock;
c. Make ordinary repairs;
d. May alienate his right to usufruct. d. Notify the owner of urgent extraordinary
repairs;
Exemption of usufructuary from the obligation e. Permit works & improvements by the
to give security naked owner not prejudicial to the
usufruct;
Usufructuary may be exempt from the obligation f. Pay annual taxes and charges on the
to give security when: fruits;
g. Pay interest on taxes on capital paid by
1. No one will be injured by the lack of the bond the naked owner;
(NCC, Art. 585); h. Pay debts when usufruct is constituted on
2. The donor (or parent) reserved the usufruct the whole patrimony;
of the property donated (NCC, Art. 584); i. Secure the naked owner’s/court's
3. When there is waiver by the naked owner; approval to collect credits in certain
4. When there is parental usufruct (FC, Art. 225); cases;
5. The usufruct is subject to caucion juratoria j. Notify the owner of any prejudicial act
where: committed by third persons; and
a. The usufructuary takes an oath to take k. Pay for court expenses and costs.
care of the things and restore them to its
Usufructuary’s liability for ordinary repairs

219
 CIVIL LAW
The usufructuary is obliged to make the ordinary
repairs needed by the thing given in usufruct. It
includes such as are required by the wear and tear
due to the natural use of the thing and are
indispensable for its preservation (NCC, Art. 592).
NOTE: If the naked owner demanded the repair
and the usufructuary still fails to do so, the owner
may make them personally or thru another, at the
expense of the usufructuary (NCC, Art. 592).
Extraordinary repairs (NCC, Art. 593)
It includes:
1. Those required by the wear and tear due to
the natural use of the thing but not
indispensable for its preservation.
Liabilities:
a. The naked owner should be held liable,
whether or not he is notified by the
usufructuary; and
b. The law does not require the naked
owner to make them; what is important is
that he will bear the expenses made by
the usufructuary. (Paras, 2008)
2. Those caused by exceptional circumstances
and are indispensable for its preservation.
Liabilities:
a. The naked owner shall be held liable;
and
b. The usufructuary is allowed to make
them with the right to get the increase
in value and the right of retention at the
termination of usufruct, provided there
was notification by the usufructuary
and failure to repair by the naked
owner (Paras, 2008).
3. Those caused by exceptional circumstances
but are not needed for its preservation.
Liabilities:
a. The naked owner is liable; and
b. The usufructuary cannot compel the
naked owner to make such repairs and he
is not allowed to make them even if the
naked owner has failed to make them
(Paras, 2008).
NOTE: Extraordinary repairs shall be at the
expense of the owner. The usufructuary is obliged
to notify the owner when the need for such
repairs is urgent.
Right of retention of the usufructuary
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
The usufructuary has a right of retention even
after the termination of the usufruct until he is
reimbursed for the increase in value of the
property caused by extraordinary repairs for
preservation.
Charges or taxes which the usufructuary must
pay
1. The annual charges (in the fruits);
2. The annual taxes on the fruits; and
Taxes imposed directly on the capital
These shall be at the expense of the owner
provided they are not annual (Paras, 2008).
Rules:
a. If paid by the naked owner, he can
demand legal interest on the sum
paid; or
b. If advanced by the usufructuary, he
shall recover the amount thereof at
the termination of the usufruct [NCC,
Art. 597(2)].
3. After the usufruct/ at the termination
a. Return the thing in usufruct to the naked
owner unless there is a right of retention;
b. Pay legal interest for the time that the
usufruct lasts; and
c. Indemnify the naked owner for any losses
due to his negligence or of his transferees.
NOTE: The usufructuary may be liable
for the damages suffered by the naked
owner on account of fraud committed by
him or through his negligence.
XPN: the usufructuary is not liable for
deterioration due to:
1. Wear and tear; or
2. Fortuitous event.
RIGHTS OF THE OWNER
Rights of a naked owner and the limitations
imposed upon him
RIGHTS LIMITATIONS
Can alienate the thing in
Alienation
usufruct.
Cannot alter the form and
Alteration
substance.
Cannot do anything prejudicial
Enjoyment
to the usufructuary.
Construction Can construct any works and
220
 PROPERTY
and make any improvement
Improvement provided it does not diminish
the value or the usufruct or
prejudice the rights of the
usufructuary.
Alienation by naked owner
Since the jus disponendi and the title (dominium
directum) reside with the naked owner, he retains
the right to ALIENATE the property BUT —
a. He cannot alter its form or substance; or
b. Do anything prejudicial to the
usufructuary (as when he should illegally
lease the property to another, since this
right ordinarily pertains to the
usufructuary).
Improper use of the thing by the usufructuary
The owner may demand the delivery of and
administration of the thing with responsibility to
deliver net fruits to usufructuary.
Q: On 1 January 1980, Minerva, the owner of a
building granted Petronila a usufruct over the
property until 01 June 1998 when Manuel, a
son of Petronila, would have reached his 30th
birthday. Manuel, however, died on 1 June
1990 when he was only 26 years old.
Minerva notified Petronila that the usufruct
had been extinguished by the death of Manuel
and demanded that the latter vacate the
premises and deliver the same to the former.
Petronila refused to vacate the place on the
ground that the usufruct in her favor would
expire only on 1 June 1998 when Manuel
would have reached his 30th birthday and that
the death of Manuel before his 30th birthday
did not extinguish the usufruct. Whose
contention should be accepted? (1997 Bar)
A: Petronila’s contention should be accepted. A
usufruct granted for the time that may elapse
before a third person reaches a certain age shall
subsist for the number of years specified even if
the third person should die unless there is an
express stipulation in the contract that states
otherwise (NCC, Art. 606). There is no express
stipulation that the consideration for the usufruct
is the existence of Petronila’s son. Thus, the
general rule and not the exception should apply in
this case.
When buyer must respect the usufruct
221
A purchaser of the property must respect the
usufruct in case it is registered or known to him
(NCC, Art. 709), otherwise, he can oust the
usufructuary, who can then look to the naked
owner for damages (NCC, Art. 581).
Effect of the death of the naked owner on the
usufruct
The usufruct does not terminate the usufruct. The
naked owner’s rights are transmitted to his heirs.
OBLIGATIONS OF THE OWNER
1. To make reimbursement for advances of the
usufructuary (NCC, Art. 597);
2. To cancel the security, upon discharge of the
usufructuary’s obligations (NCC, Art. 612);
3. To respect leases of rural lands by the
usufructuary for the balance of the
agricultural year (NCC, Art. 572).
EXTINCTION/TERMINATION
Usufruct is extinguished by: (PLDT-ERM)
1. Acquisitive Prescription;
NOTE: The use by a third person and not the
non-use by the usufructuary. Mere non-use of
the usufructuary does not terminate the
usufruct
XPN: unless it is also a renunciation.
2. Total Loss of the thing;
NOTE: If the loss is only partial, the usufruct
continues with the remaining part.
3. Death of the usufructuary;
GR: Death of the usufructuary generally ends
the usufruct since a usufruct is constituted
essentially as a lifetime benefit for the
usufructuary or in consideration of his
person.
XPNs:
a. In the case of multiple usufructs, it ends
on the death of the last survivor (NCC, Art.
611);
b. In case there is a period fixed based on
the number of years that would elapse
before a person would reach a certain
age, unless the period was expressly
granted only in consideration of the
existence of such person, in which case it
 CIVIL LAW
ends at the death of said person (NCC, Art.
606); or
c. In case the contrary intention clearly
appears.
4. Termination of right of the person
constituting the usufruct;
5. Expiration of the period or fulfilment of the
resolutory condition;
NOTE: If the usufructuary is a juridical
person, the term should not exceed 50 years.
6. Renunciation by the usufructuary; and
NOTE: It partakes the nature of a condonation
or donation. It can be made expressly or
impliedly as long as done clearly. If done
expressly, it must conform with forms of
donation. Renunciation of usufructuary’s
rights is NOT an assignment of right. It is
really abandonment by the usufructuary of his
right and does not require the consent of the
naked owner but it is subject to the rights of
creditors. There can be a partial waiver except
if it is a universal usufruct.
7. Merger of the usufruct and ownership in the
same person who becomes the absolute
owner thereof (NCC, Art. 1275).
Other Causes of termination of usufruct
a. Annulment of the act or title constituting
the usufruct;
b. Rescission;
c. Expropriation;
d. Mutual withdrawal;
e. Legal causes for terminating legal
usufruct; or
f. Abandonment or dissolution of juridical
entity (e.g. corporation) granted with
usufruct before the lapse of the period.
Usufruct cannot be constituted in favor of a
town, corporation or association for more than
50 years
Any usufruct constituted in favor of a corporation
or association cannot be constituted for more than
fifty years (NCC, Art. 605). A usufruct is meant only
as a lifetime grant. Unlike a natural person, a
corporation or association's lifetime may be
extended indefinitely. The usufruct would then be
perpetual. This is especially invidious in cases
where the usufruct given to a corporation or
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
association covers public land (NHA v. CA, G.R. No.
148830, April 13, 2005).
Usufruct on a building and/or land concerned
Rules:
1. If the usufruct is both on the building and the
land but the building is destroyed in any
manner whatsoever before the expiration of
the period of usufruct:
a. The usufruct on the building ends, but the
usufruct on the land continues
(usufructuary is still entitled to the use of
the land and remaining materials of the
building);
b. If the naked owner wants to rebuild but
the usufructuary refuses, the latter
prevails but the use of the land is still his
for the remainder of the period (Paras,
2008).
2. The usufruct is on the building alone (but the
building is destroyed before the termination
of the period):
a. The usufruct on the building ends,
but the usufructuary can still make
use of whatever materials of the
building remain;
b. The usufructuary is entitled to the
use of the land but the naked owner
enjoys preferential right to its use
(Paras, 2008).
NOTE: While the usufruct on a building does not
expressly include the land on which it is
constructed, the land should be deemed included,
because there can be no building without land (De
Leon, 2006).
Payment of insurance on a building held in
usufruct (NCC, Art. 608)
1. If the naked owner and usufructuary share in the
premiums and the property is destroyed:
a. If the owner constructs a new building,
the usufruct continues on the new
building.
i. If the cost of the new building is less
than the insurance indemnity, the
usufructuary should get legal
interests on the difference.
ii. If the cost is more than the insurance
indemnity, the usufructuary enjoys
the new building completely with no
obligation to give interest on the
additional cost of the naked owner.
222
 PROPERTY
b. If the naked owner does not construct a
new building or rebuild, the naked owner
gets the insurance indemnity but he
should pay the interest thereon to the
usufructuary (Paras, 2008).
2. If the naked owner alone pays the insurance
indemnity and the usufructuary refused to share:
a. The naked owner gets the whole
indemnity (with no obligation to give the
interest thereon to the usufructuary).
b. If the usufruct was on the building and
the land, the usufruct continues on the
land and the material.
c. If the usufruct was on the building alone,
the naked owner may rebuild, with or
without the approval of the usufructuary,
but he must pay interest on the value of
the land and the old materials that may
have been used (NCC, Art. 607).
3. If the naked owner alone paid for the insurance
but there is failure or omission on the part of the
usufructuary to share:
The effect is the same as if there was a
sharing, but the usufructuary must
reimburse the owner of the
usufructuary’s share in the insurance
premium.
4. If the usufructuary alone pays the insurance
premium:
a. The insurance indemnity goes to the
usufructuary alone, with no obligation to
share it with, nor to give legal interest
thereon to, the naked owner.
b. The usufruct continues on the land for the
remaining period (unless usufruct has
been constituted on the building alone).
Rule in case of expropriation of the property
(NCC, Art. 609)
In case the property held in usufruct is
expropriated for public use:
1. If the naked owner alone was given the
indemnity, he has the option to:
a. Replace it with another thing of the same
value and of similar condition; or
b. Pay legal interest to usufructuary on the
amount of indemnity for the whole period
of the usufruct, not just the unexpired
period.
223
NOTE: If the owner chooses the latter
alternative, he shall give security for the
payment of interest (NCC, Art. 609).
2. If both the naked owner and the usufructuary
were separately given indemnity, each owns
the indemnity given to him, the usufruct being
totally extinguished.
3. If the usufructuary alone was given the
indemnity, he must give it to the naked owner
and compel the latter to return either the
interest or to replace the property. He may
deduct the interest himself if the naked owner
fails to object (Paras, 2008).
Effect of bad use of the property held in
usufruct
GR: Usufruct is not extinguished by bad use of the
thing in usufruct.
XPN: If the abuse should cause considerable injury
to the owner, the latter may demand delivery to
and administration by him, but he will be obliged
to pay net proceeds to the usufructuary (NCC, Art.
610).
Rules in case of multiple usufructs
1. If constituted simultaneously, all the
usufructuaries must be alive at the time of the
constitution. The death of the last survivor
extinguishes the usufruct (NCC, Art. 611);
2. If constituted successively by virtue of a
donation, all the donee-usufructuaries must
be living at the time of the constitution-
donation of the usufruct (NCC, Art. 756); and
3. If constituted successively by virtue of a last
will, there should only be two successive
usufructuaries, and both must have been alive
at the time of testator’s death.
EASEMENT OR SERVITUDE
It is an encumbrance imposed upon an immovable
for the benefit of:
1. Another immovable belonging to a different
owner; or
2. For the benefit of a community or one or more
persons to whom the encumbered estate does
not belong by virtue of which the owner is
obliged to abstain from doing or to permit a
certain thing to be done on his estate (NCC,
Articles 613 and 614).
 CIVIL LAW
Where the easement may be established on any of 5. Has two distinct tenements: dominant and
several tenements surrounding the dominant servient estate; and
estate, the one where the way is shortest and will 6. Cause must be perpetual.
cause the least damage should be chosen.
However, if these two circumstances do not Easement v. Usufruct
concur in a single tenement, the way which will
cause the least damage should be used, even if it BASIS EASEMENT USUFRUCT
will not be the shortest.
On real Real or
Constituted on
property personal
There can be no easement over another easement
for the reason that an easement may be Limited to a Includes all
constituted only on a corporeal immovable particular or uses and
property. An easement, although it is real right Use granted specific use of fruits.
over an immovable, is not a corporeal right. the servient
(1995 Bar) estate.
No possessory Involves a
Easement v. Servitude right over an right of
As to right of
immovable possession in
possession
EASEMENT SERVITUDE an immovable
An English law term. Used in civil law or movable.
countries. Not Extinguished
Real Real or personal extinguished by death of
As to effect of
by death of usufructuary.
The right enjoyed. Burden imposed upon death
dominant
another. owner.
Real right Real right
Characteristics of easement (NICE LIAR)
Nature of right whether or not whether or not
registered. registered.
1. A right limited by the Needs of the dominant
owner or estate, without possession; As to Transmissible Transmissible
2. Inseparable from the estate to which it is transmissibility
attached – cannot be alienated independently May be Cannot be
of the estate (NCC, Art. 617) (2001, 2010 constituted in constituted on
Bar); favor, or, an easement
3. Cannot consist in the doing of an act unless How it may be burdening, a but it may be
the act is accessory in relation to a real constituted piece of land constituted on
easement; held in the land
4. Involves two (2) neighboring Estates: the usufruct. burdened by
dominant estate to which the right belongs an easement.
and the servient estate upon which an
obligation rests; Q: Can there be an easement over a usufruct?
5. A Limitation on the servient owner’s rights of
ownership; A: There can be no easement over a usufruct.
6. Indivisible – not affected by the division of the Since an easement may be constituted only on a
estate between two or more persons (NCC, corporeal immovable property, no easement may
Art. 618); be constituted on a usufruct which is not a
7. It is enjoyed over Another immovable never corporeal right.
on one’s own property; and
8. A Real right but will affect third persons only Q: Can there be a usufruct over an easement?
when registered.
A: There can be no usufruct over an easement.
Essential qualities of easements While a usufruct may be created over a right, such
right must have an existence of its own
1. Incorporeal; independent of the property. A servitude cannot
2. Imposed upon corporeal property; be the object of a usufruct because it has no
3. Confers no right to a participation in the existence independent of the property to which it
profits arising from it; attaches.
4. Imposed for the benefit of corporeal property;

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 224
 PROPERTY
Q: Is there such thing as judicial easement?
A: NO. When the court says that an easement
exists, it is not creating one. For, even an
injunction cannot be used to create one as there is
no such thing as a judicial easement. The court
merely declares the existence of an easement
created by the parties (La Vista Association v. CA,
G.R. No. 95252, September 5, 1997).
PARTIES TO AN EASEMENT
1. Dominant estate – refers to the immovable for
which the easement was established; and
2. Servient estate – the estate which provides the
service or benefit.
Dominant Estate v. Servient Estate
DOMINANT ESTATE SERVIENT ESTATE
Immovable in favor of That property or estate
which, the easement is which is subject to the
established. dominant estate.
Which the right Upon which an
belongs. obligation rests.
RIGHTS AND OBLIGATION OF THE OWNERS OF
THE DOMINANT AND SERVIENT ESTATES
The owner of the dominant estate may make, at
his own expense, on the servient state any works
necessary for the use and preservation of the
servitude, but without altering it or rendering it
more burdensome.
For this purpose he shall notify the owner of the
servient estate, and shall choose the most
convenient time and manner so as to cause the
least inconvenience to the owner of the servient
estate (NCC, Art. 627)
NOTE: The necessity of the works for the use and
preservation of the easement is the basis and the
determining factor for the extent of such works.
The works must be executed in the manner least
inconvenient to the servient owner, who cannot
recover indemnity for the inevitable damages or
inconveniences which may be caused thereby.
But if the work is done badly, the dominant owner
will be liable for damages that may be suffered by
the servient owner.
Rights of the dominant owner (MARE)
1. Make on the servient estate all works
necessary for the use and preservation of the
servitude (NCC, Art. 627);
225
2. Ask for mandatory injunction to prevent
impairment of his right (Resolme v. Lazo, G.R.
No. L-8654, March 30, 1914);
3. Renounce the easement if he desires to be
exempt from contributing necessary expenses
(NCC, Art. 628); and
4. Exercise all rights necessary for the use of the
easement (NCC, Art. 625).
Obligations of the dominant owner (CANECO)
1. He cannot Exercise the easement in any other
manner than that previously established
(NCC, Art. 626);
2. He cannot Alter the easement or render it
more burdensome [NCC, Art. 627(1)];
3. He shall Notify the servient owner of works
necessary for the use and preservation of the
servitude [NCC, Art. 627(2)];
4. He must Choose the most convenient time and
manner of making the necessary works as to
cause the least inconvenience to the servient
owner; and
5. If there are several dominant estates he must
Contribute to the necessary expenses in
proportion to the benefits derived from the
works [NCC, Art. 628(1)].
6. He can may make, at his Own expense, on the
servient estate, any works necessary for the
use of servitute, Provided it will not alter or
make it more burdensome.(NCC,Art.627(1));
Servient owner
The owner of the immovable whose property is
subject to easement for the benefit of the
dominant owner.
Rights of the servient owner (RMC)
1. Retain the ownership of the portion of the
estate on which easement is imposed;
2. Make use of the easement unless there is an
agreement to the contrary [NCC, Art. 628(2)];
and
3. Change the place or manner of the use of the
easement, provided it be equally convenient
[NCC, Art. 629(2)].
Obligations or limitations imposed on the
servient owner (IC)
1. He cannot Impair the use of the easement.
XPN: (1) When the easement has become very
inconvenient to the said servient owner; and (2) If
it prevents him from making any important
works, repairs, or improvements thereon.
 CIVIL LAW
2. He must Contribute to the necessary expenses
in case he uses the easement, unless
otherwise agreed upon [NCC, Art. 628(2)].
CLASSIFICATIONS OF EASEMENT
1. As to recipient of the benefit
a. Real (or predial) – The easement is in
favor of another immovable (NCC, Art.
613); and
NOTE: It requires two distinct immovable
belonging to different owners to which it
relates.
b. Personal – The easement is in favor of a
community, or of one or more persons to
whom the encumbered estate does not
belong e.g. easement of right of way for
passage of livestock (NCC, Art. 614).
NOTE: In personal servitude the person
whose in favor the easement is
constituted need not to b ethe owner of
any estate and does not require a
dominant estate because the person in
whose favor the easement is constituted
need not to be the property owner.
2. As to the manner of exercise
a. Continuous – Their use may or may not be
incessant, without the intervention of any
act of man. Eg. Easement of drainage (NCC,
Art. 615); and
NOTE: For acquisitive prescription, the
easement of aqueduct and easement of
light and view are considered continuous.
b. Discontinuous – Used at intervals and
depend upon the acts of man. Eg.
Easement of right of way
3. As to whether their existence is indicated
a. Apparent – Made known and continually
kept in view by external signs that reveal
the use and enjoyment of the same (NCC,
Art. 615); and
NOTE: By way of exception the easement
of aqueduct is always apparent, whether
or not it can be seen (NCC, Art. 646).
b. Non-apparent – They show no external
indication of their existence (NCC, Art.
615).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
4. As to the right given
a. Right to partially use the servient estate;
b. Right to get specific materials or objects
from the servient estate;
c. Right to participate in ownership; and
d. Right to impede or prevent the
neighboring estate from performing a
specific act of ownership (Paras, 2008).
5. As to source
a. Legal – Those created by law for public
use or private interests;
b. Voluntary - constituted by will or
agreement of the parties or by testator;
and
NOTE: Like any other contract, a
voluntary easement (of right-of-way)
could be extinguished only by mutual
agreement or by renunciation of the
owner of the dominant estate (La Vista
Association v. CA, G.R. No. 95252,
September 5, 1997).
c. Mixed – Created partly by agreement and
partly by law.
6. As to the duty of the servient owner:
a. Positive – Imposes upon the owner of the
servient estate the obligation of allowing
something to be done or doing it himself;
and
e.g. Right of way – imposes the duty to
allow the use of said way.
b. Negative – Prohibits the owner of the
servient estate from doing something
which he could lawfully do if the
easement did not exist.
e.g. Easement of light and view – where
the owner is prohibited from obstructing
the passage of light.
MODES OF ACQUIRING EASEMENT
1. By Title – the following easements may be
acquired only by title:
a. Continuous non-apparent easements;
b. Discontinuous apparent easements;
and
c. Discontinuous non-apparent
easements (NCC, Art. 622) (2005 Bar).
NOTE: Title means:
226
 PROPERTY
It does not necessarily mean
document.
It means a juridical act or law
sufficient to create the encumbrance.
E.g. law, donation, testamentary
succession, contract.
a. Intestate succession does not
create an easement, for no act is
involved. Hence, instead of
creating an easement, it transmits
merely an easement already
existing.
b. Prescription is a mode of
acquisition, and is generally and
ordinarily a title, but is not
considered as such under Art. 620
which expressly makes it
DISTINCT from title.
2. By Prescription of 10 years (2009 Bar)
NOTE: Prescription runs irrespective of good
faith or bad faith of the possessor and
whether or not he has just title. The only
requirement is adverse possession. Only
continuous and apparent easements can be
acquired by prescription (NCC, Art. 620).
3. By deed of Recognition
4. By Final judgment
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 (La Vista Association, Inc. v. CA,
G.R. No. 95252, September 5, 1997).
NOTE: If the owner of the servient estate
refuses to execute the deed of recognition, the
court may, in its judgment, declare the
existence of the easement.
5. By Apparent sign established by the owner of
the two adjoining estates
XPN: unless at the time the ownership of the
two estates is divided:
a. There are contrary stipulations; or
b. The sign is removed before the execution
of the deed (NCC, Art. 624).
Computation of prescriptive period
227
a. Positive easement – The 10 year period is
counted from the day when the owner of the
dominant estate begins to exercise it; and
b. Negative easement – from the day a notarial
prohibition is made on the servient estate.
Negative easement cannot be acquired by
prescription since they are non-apparent.
However, for purposes of prescription, there
are negative easement that can be considered
“apparent”not because there are visible signs
or their existence but because of the making
of the NOTARIAL PROHIBITION which makes
it apparent.
NOTE: In negative easement there is a need
of a formal act.
Doctrine of Apparent Sign
Easements are inseparable from the estate to
which they actively or passively pertain. The
existence of apparent sign under Art. 624 is
equivalent to a title. It is as if there is an implied
contract between the two new owners that the
easement should be constituted, since no one
objected to the continued existence of the
windows.
NOTE: It is understood that there is an exterior
sign contrary to the easement of party wall
whenever:
1. There is a window or opening in the dividing
wall of buildings;
2. Entire wall is built within the boundaries of
one of the estates;
3. The dividing wall bears the burden of the
binding beams, floors and roof frame of one of
the buildings, but not those of the others; or
4. The lands enclosed by fences or live hedges
adjoin others which are not enclosed.
In all these cases, ownership is deemed to belong
exclusively to the owner of the property which has
in its favor the presumption based on any of these
signs.
Acknowledgement of an easement in one who
owns property
An acknowledgement of the easement is an
admission that the property belongs to another
(BOMEDCO v. Heirs of Valdez, G.R. No. 124669).
MODES OF EXTINGUISHMENT OF EASEMENTS
 CIVIL LAW
Easements are extinguished (MEN-CRR) (2001,
2010 Bar):
1. By Merger in the same person of the
ownership of the dominant and servient
estates;
2. By Non-user for 10 years; with respect to
discontinuous easements, this period
shall be computed from the day on which
they ceased to be used; and, with respect
to continuous easements from the day on
which an act contrary to the same took
place;
3. When either or both of the estates fall
into such condition that the easement
Cannot be used; but it shall revive if the
subsequent condition of the estates or
either of them should again permit its use,
unless when the use becomes possible,
sufficient time for prescription has
elapsed, in accordance with the
provisions of the preceding number;
4. By the Expiration of the term or the
fulfillment of the condition, if the
easement is temporary or conditional;
5. By the Renunciation of the owner of the
dominant estate; and
6. By the Redemption agreed upon between
the owners of the dominant and servient
estates (NCC, Art. 631).
NOTE: The grounds under Article 631 are not
exclusive
In addition to the foregoing causes enumerated in
Article 631 of the New Civil Code the following
may be added: (1) annulment or rescission of title
constituting easement; (2) termination of the right
of the grantor; and (3) abandonment of the
servient estate; and (4) eminent domain. (4
Manresa, 5th ed., 590)
Merger
It is enough that the merger be with respect to the
portion of the tenement that is affected by the
servitude, or the part for the benefit of which it
was established.
Where the merger is temporary or under
resolutory condition, there is at most a
suspension, but not an extinguishment of the
servitude.
Non-user
Non-use must be due to voluntary abstention by
the dominant owner, and not to fortuitous event,
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
because the basis of this cause of extinguishment
is a presumptive renunciation.
NOTE: Reckoning point:
1. Discontinuous – counted from the day
they ceased to be used.
2. Continuous – counted from the day an
act adverse to the exercise takes place.
Non-user presupposes that the easement has been
used before but it was abandoned for 10 years.
Thus it cannot apply to easements which have not
been used.
Impossibility of use
The impossibility of use only suspends the
servitude until such time when it can be used
again.
Expiration
e.g. An easement was agreed upon to last till the
owner of the dominant easement becomes a
lawyer. When the condition is fulfilled, the
easement ceases.
Renunciation
Renunciation must be express, definite, clear,
specific (otherwise it might be confused with non-
user). This is particularly true for discontinuous
easements. Renunciation of a real right must be
reflected in a public instrument.
Redemption
This is voluntary redemption, existing because of
an express stipulation. The stipulation may
provide conditions under which the easement
would be extinguished (Paras, 2008).
LEGAL EASEMENT
Legal easements are those imposed by law having
for their object either public use of the interest of
private persons. They shall be governed by the
special laws and regulations relating thereto, and
in the absence thereof, by the Civil Code.
Public legal easement
Public legal easement is for public or communal
use.
Private legal easement
Private legal easement is for the interest of private
persons or for private use. It shall be governed by:
228
 PROPERTY

1. Agreement of the parties provided they are

neither prohibited by law nor prejudicial to
third persons;
2. In default, general or local laws and
ordinances for the general welfare; or
3. In default, title VII of Articles 613-687 of the
NCC.

Kinds of legal easements (WIND – PLWS)

1. Easement relating to Waters; 6. Intermediate distances and works for certain

construction and plantings;
2. Easement relating to right of Way;

7. Easement against Nuisance; and

3. Easement of Party wall;

8. Easement relating to lateral and Subjacent

support.

4. Easement of Light and view; Lateral Support

Subjacent Support

5. Drainage of Building;
----------

PROP

229
 CIVIL LAW
EASEMENTS RELATING TO WATERS
Different easements relating to waters:
(NBREWAC)
A. Natural drainage (NCC, Art. 637);
Scope of easement of natural drainage
Lower estates are obliged to receive the
waters which naturally and without the
intervention of man descend from higher
estates, as well as the stones or earth which
they carry with them (NCC, Art. 637) (2002
Bar).
NOTE: Art. 637 has already been superseded
by Art. 50 of P.D. 1067 (Water Code of the
Philippines).
Duties of Servient Estate
The owner cannot construct works that would
impede the easement BUT he may regulate or
control the descent of water.
Duties of Dominant Estate
1. He cannot construct works which will increase
the burden, but he may construct works
preventing erosion;
2. They must compensate the owners of the
servient estates if the waters are result of an
overflow from irrigation dams, or the result of
artificial descent done by man and damages
caused by reason thereof,
Prescription of easement of natural drainage
The easement of natural drainage prescribes by
non-use for 10 years (Paras, 2008).
Indemnity in easement of natural drainage
Art. 637 of the New Civil Code, which provides for
the easement of natural drainage, does not speak
of any indemnity. It follows that no indemnity is
required as long as the conditions laid down in the
article are complied with (Paras, 2008).
B. Drainage of Buildings (NCC, Art. 674);
C. Easement on Riparian banks for navigation,
floatage, fishing, salvage, and tow path (NCC,
Art. 638);
Easement on Riparian Property
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
The banks of rivers and streams and the
shores of the seas and lakes throughout their
entire length and within a zone of three
meters in urban areas, 20 meters in
agricultural areas, and 40 meters in forest
areas along their margins are subject to the
easement of public use in the interest of
recreation, navigation, floatage, fishing and
salvage.
No person shall be allowed to stay in this zone
bigger than what is necessary for recreation,
navigation, floatage, fishing or salvage or to
build structures of any kind (Art. 51, PD 1067)
D. Easement of a Dam (NCC, Artsicles 639 and
647);
A person may establish the easement of
abutment or of a dam provided that:
1. The purpose is to divert or take water
from a river or brook, or to use any other
continuous or discontinuous stream;
2. It is necessary to build a dam;
3. The person to construct it is not the
owner of the banks or lots which must
support it; and
4. Payment of proper indemnity is made.
He must seek the permission of the owner
and in case of latter’s refusal, he must
secure authority from the proper
administrative agency.
E. Easement for drawing Water or for watering
animals (NCC, Arts. 640-641);
This is a combined easement for drawing of water
and right of way.
Requisites for easement for watering cattle
1. It must be imposed for reasons of public
use;
2. It must be in favor of a town or village;
and
3. Indemnity must be paid (NCC, Art. 640).
NOTE: The right to make the water flow
thru or under intervening or lower
estates.
Requisites for drawing water or for watering
of animals
1. Owner of the dominant estate has the
capacity to dispose of the water;
230
 PROPERTY
2. The water is sufficient for the use
intended;
3. Proposed right of way is the most
convenient and the least onerous to third
persons; and
4. Pay indemnity to the owner of the
servient estate (NCC, Art. 643).
F. Easement of Aqueduct (NCC, Articles 642- 646);
and
The easement of aqueduct, for legal purposes,
is considered continuous and apparent even
though the flow of water may not be
continuous or its use depends upon the needs
of the dominant estate or upon a schedule of
alternate days or hours (NCC, Art. 646).
NOTE: Easement of aqueduct is not
acquirable by prescription after 10 years
because although it is continuous and
apparent in character, under the Water Code
of the Philippines (P.D. 1067), all waters
belong to the State; therefore, they cannot be
the subject of acquisitive prescription (Jurado,
2011).
It is an easement which gives right to make
water flow thru intervening estates in order
that one may make use of said water.
However, unlike the easement for drawing
water or for watering animals, the existence
of the latter does not necessarily includes the
easement of aqueduct.
Requisites for easement of aqueduct
1. Indemnity must be paid to the owners of
intervening estates and to the owners of
lower estates upon which waters may
filter or descend.
NOTE: The amount usually depends on
duration and inconvenience caused.
2. If for private interests, the easement
cannot be imposed on existing buildings,
courtyards, annexes, out-houses, orchards
or gardens but can be on other things, like
road, provided no injury is caused to said
properties.
3. There must be a proof:
a. That the owner of the dominant estate
can dispose of the water ;
b. That the water is sufficient for the use
which it is intended ;
231
c. That the proposed course is the most
convenient and least onerous to third
persons and the servient estate; and
d. That a proper administrative
permission has been obtained (Paras,
2008).
Right of the owner of the servient estate to
fence
The easement of aqueduct does not prevent
the owner of the servient estate from closing
or fencing it, or from building over the
aqueduct in such manner as not to cause the
owner of the dominant estate any damage, or
render necessary repairs and cleanings
impossible (NCC, Art. 645).
G. Easement for the Construction of a Stop Lock or
Sluice Gate (NCC, Art. 647)
To make these structures in the bed of a
stream from which they needed water for
irrigation or improvement of the dominant
estate will be drawn, it is required that the
dominant owner pays the riparian owners
where the structures will be constructed for
the damages caused to the latter and to other
irrigators who may sustain damages also.
Q: The original developer of Happy Glen Loop
(HGL) loaned from T. P. Marcelo Realty
Corporation. HGL failed to settle its debts so he
assigned all his rights to Marcelo over several
parcels of land in the subdivision. Marcelo
represented to lot buyers that a water facility
is available in the subdivision. Marcelo sold
the lot to Liwag who subsequently died. The
wife of Liwag demanded the removal of the
overhead water tank over the parcel of land
contending that its existence is merely
tolerated. HGL Homeowners Association
refused the demand contending that they have
used continuously the facility for more than 30
years. Is there an established easement for
water facility in the lot?
A: YES. The water facility is an encumbrance on
the lot of the Subdivision for the benefit of the
community. It is continuous and apparent,
because it is used incessantly without human
intervention, and because it is continually kept in
view by the overhead water tank, which reveals its
use to the public. The easement of water facility
has been voluntarily established either by
Marcelo, the Subdivision owner and the original
developer of the Subdivision. For more than 30
years, the facility was continuously used as the
 CIVIL LAW
residents’ sole source of water (Liwag vs Happy
Glen Loop Homeowners Association, Inc., G.R. No.
136897, July 4, 2012).
EASEMENT OF RIGHT OF WAY
1996, 2005, 2010 Bar
Easement of right of way is the right granted to a
person or class of persons to pass over the land of
another by using a particular pathway therein, to
reach the former’s estates, which have no
adequate outlet to a public highway subject,
however to payment of indemnity to the owner of
the land burdened bu the right. (Pineda, 2009)
Right of way
It may refer either to the easement itself, or
simply, to the strip of land over which passage can
be done (Paras, 2008).
Q: May the easement of right of way be
acquired by prescription?
A: Easement of right of way cannot be acquired
by prescription because it is discontinuous or
intermittent (Ronquillo, et al. v. Roco, G.R. No. L-
10619, February 28, 1958).
Q: What kind of servitude in favor of the
government is a private owner required to
recognize?
A: The only servitude which he is required to
recognize in favor of the government are:
1. The easement of a public highway;
2. Private way established by law; or
3. Any government canal or lateral that has
been pre-existing at the time of the
registration of the land.
NOTE: If the easement is not pre-existing and is
sought to be imposed only after the land has been
registered under the Land Registration Act,
proper expropriation proceedings should be had,
and just compensation paid to the registered
owner (Eslaban v. Vda De Onorio, G.R. No. 146062,
June 28, 2001).
Requisites for easement on right of way
(POON-D) (1996, 2005, 2010 Bar)
1. The easement must be established at the
point least Prejudicial to the servient estate
(NCC, Art. 649);
2. Claimant must be an Owner of enclosed
immovable or with real right;
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
3. There must be no adequate Outlet to a public
highway [NCC, Art. 649, (1)];
4. The right of way must be absolutely
Necessary not mere convenience;
5. The isolation must not be Due to the
claimant’s own act (NCC, Art. 649); and
6. There must be payment of proper Indemnity.
Least prejudicial to the servient estate (1996,
2000, 2005, 2010 Bar)
“Least prejudicial” in determining the right of way
means it is the shortest way and the one which
will cause the least damage to the property to the
servient estate in favor of the dominant estate.
Q: Lots A and B are owned by Demit while Lot C
is owned by Dayum. Lot C has an existing right
of way. After inspection of the area, it has been
found out that a fence and portion of the
residential house owned by Demit have
encroached a part of Dayum’s right of way.
Dayum demanded that Demit pay for the area
encroached or demolish the wall fence and
portion of the house which have been
encroaching. Demit contends that as owner of
Lot A and B, he is equally entitled to the road of
right of way and proposed to buy the portion.
Is the contention of Demit correct?
A: NO. As the owner of the servient estate, Dayum
retained ownership of the road right of way even
assuming that said encumbrance was for the
benefit of Lots of Demit. The latter could not claim
to own even a portion of the road right of way
because Art. 630 of the Civil Code expressly
provides that "[t]he owner of the servient estate
retains ownership of the portion on which the
easement is established, and may use the same in
such manner as not to affect the exercise of the
easement." (Sps. Mercader v. Sps. Bardilas, G.R. No.
163157, June 27, 2016).
Q: What if the property is not the shortest way
but will cause the least damage to the servient
estate?
A: The way which will cause the least damage
should be used even if it will not be the shortest.
The easement of right of way shall be established
at the point least prejudicial to the servient estate
and where the distance from the dominant estate
to a public highway is the shortest. In case of
conflict, the criterion of least prejudice prevails
over the criterion of shortest distance.
232
 PROPERTY
Claimant must be an owner of enclosed
immovable or with real right
Adequate outlet
The convenience of the dominant estate has never
been the gauge for the grant of compulsory right
of way. To be sure, the true standard for the grant
of the legal right is "adequacy." Hence, when there
is already an existing adequate outlet from the
dominant estate to a public highway, as in this
case, even when the said outlet, for one reason or
another, be inconvenient, the need to open up
another servitude is entirely unjustified (Dichoso
v. Marcos, G.R. No. 180282, April 11, 2011; Alicia B.
Reyes v. Spouses Francisco S. Valentin and Anatalia
Ramos, G.R. No. 194488, February 11, 2015).
Q: The coconut farm of Federico is surrounded
by the lands of Romulo. Federico seeks a right
of way through a portion of the land of Romulo
to bring his coconut products to the market.
He has chosen a point where he will pass
through a housing project of Romulo. The
latter wants him to pass another way which is
1km longer. Who should prevail? (2000 Bar)
A: ROMULO will prevail. Under Art. 650, the
easement of right of way shall be established at
the point least prejudicial to the servient estate
and where the distance from the dominant estate
to a public highway is the shortest. In case of
conflict, the criterion of least prejudice prevails
over the criterion of shortest distance. Since the
route chosen by Federico will prejudice the
housing project of Romulo, Romulo has the right
to demand that Federico pass another way even
though it will be longer.
Q: Spouses dela Cruz are occupants of a parcel
of land located at the back of Ramiscal’s
property. They use as their pathway, to and
from the nearest public highway from their
property, a long strip of land owned by
Ramiscal. They also enclosed such strip of land
with a gate, fence, and roof. Ramiscal
demanded that the spouses demolish the
same. The spouses refused. Are the spouses
entitled to a right of way?
A: NO. There is no voluntary nor legal easement
established. The spouses failed to show that they
entered into an agreement with Ramiscal to use
the pathway. Art 649 provides that the easement
of right of way is not compulsory if the isolation of
the immovable is due to the proprietor’s own acts.
Mere convenience for the dominant estate is not
enough to serve as its basis. There should be no
233
other adequate outlet to a public highway. Also,
under Art. 649, it is the owner or any person who
by virtue of a real right may cultivate or use any
immovable surrounded by other immovable
pertaining to other persons, who is entitled to
demand a right of way through the neighboring
estates. Here, the spouses fell short of proving that
they are the owners of the supposed dominant
estate (Eslaban v. Vda De Onorio, G.R. No. 146062,
June 28, 2001).
Q: David owns a subdivision which does not
have an access to the highway. When he
applied for a license to establish the
subdivision, he represented that he will
purchase a rice field located between his land
and the highway, and develop it into an access
road. However, when the license was granted,
he did not buy the rice field, which remained
unutilized. Instead, he chose to connect his
subdivision with the neighboring subdivision
of Nestor, which has an access to the highway.
When Nestor and David failed to arrive at an
agreement as to compensation, Nestor built a
wall across the road connecting with David’s
subdivision. Is David entitled to an easement
of right of way through the subdivision of
Nestor which he claims to be the most
adequate and practical outlet to the highway?
A: NO, David is not entitled to the right of way
being claimed. The isolation of his subdivision was
due to his own act or omission because he did not
develop an access road to the rice fields which he
was supposed to purchase according to his own
representation when he applied for a license to
establish the subdivision (Floro v. Llenado, G.R. No.
75723, June 2, 1995).
Determination of proper indemnity to the
servient estate
If the passage is:
a. Continuous and permanent – The indemnity
consists of the value of the land occupied plus
the amount of damages caused to the servient
estate; and
b. Temporary – Indemnity consists in the
payment of the damage caused.
Two instances where indemnity is not
required
1. When a piece of land acquired by sale,
exchange or partition is surrounded by other
estates of the vendor, exchanger or co-owner.
In such case he shall be obliged to grant a
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right of way without indemnity (NCC, Art.
652); or
2. When a piece of land acquired by donation
surround the estate of the donor or grantor.
In such case, the donee or grantee shall be
obliged to grant a right of way without
indemnity (NCC, Art. 653).
NOTE: If it is the land donated that is
surrounded by the estate of the donor or
gantor, although the latter is obliged to grant
a right of way, he can demand the required
indemnity (NCC, Art. 652).
Measurement for the easement of right of way
The width of the easement shall be that which is
sufficient for the needs of the dominant estate
(NCC, Art. 651).
Q: Can a dominant owner demand a driveway
for his automobile?
A: YES, due to necessity of motor vehicles in the
present age.
Liability for repairs and taxes
1. As to repairs, the dominant owner is liable for
necessary repairs;
2. As to proportionate share of the taxes, it shall
be reimbursed by said owner to the
proprietor of the servient estate. This applies
only to permanent easements (NCC, Art. 654).
Special causes of extinguishment of right of
way
1. The opening of a public road giving access to
isolated estate; or
2. When the dominant estate is joined to another
estate (such as when the dominant owner
bought an adjacent estate) which is abutting a
public rode, the access being adequate and
convenient (NCC, Art. 655).
Both cases must substantially meet the needs
of the dominant estate. Otherwise, the
easement may not be extinguished.
NOTE: Said extinguishment is NOT automatic.
There must be a demand for extinguishment
coupled with tender of indemnity by the servient
owner.
Q: Emma bought a parcel of land from
Equitable-PCI Bank, which acquired the same
from Felisa, the original owner. Thereafter,
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Emma discovered that Felisa had granted a
right of way over the land in favor of the land
of Georgina, which had no outlet to a public
highway, but the easement was not annotated
when the servient estate was registered under
the Torrens system. Emma then filed a
complaint for cancellation of the right of way,
on the ground that it had been extinguished by
such failure to annotate. How would you
decide the controversy? (2001 Bar)
A: The complaint for cancellation of easement of
right of way must fail. The failure to annotate the
easement upon the title of the servient estate is
not among the grounds for extinguishing an
easement under Art. 631 of the NCC. Under Art.
617, easements are inseparable from the estate to
which they actively or passively belong. Once it
attaches, it can only be extinguished under Art.
631, and they exist even if they are not stated or
annotated as an encumbrance on the Torrens title
of the servient estate.
Temporary easement of right of way
If it be indispensable for the construction, repair,
improvement, alteration or beautification of a
building, to carry materials through the estate of
another, or to raise thereon scaffolding or other
objects necessary for the work, the owner of such
estate shall be obliged to permit the act, after
receiving payment of the proper indemnity for the
damage caused him (NCC, Art. 656).
Easement of right of way for the passage of
livestock or sevidumbres pecurias
Governed by the ordinances and regulations
relating thereto and in their absence, by the
usages and customs of the place.
Maximum width:
1. Animal path – 75 meters;
2. Animal trail – 37 meters and 50 centimeters;
and
3. Cattle – 10 meters (unless prior to the old
Civil Code, vested rights has been acquired to
a greater width) (Paras, 2008).
EASEMENTS OF PARTY WALL
Easement of party wall
The easement of party wall is also called
servidumbre de
medianera.
Party wall defined
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 PROPERTY
Is a wall erected on the line between the adjoining
properties belonging to different persons, for the
use of both estates. (Pineda, 2009)
Governed by:
1. The Civil Code;
2. Local ordinances and customs; and
3. The rules co-ownership.
Q: Is the easement of party wall really an
easement or is it a case of co-ownership?
A: While it is called an easement by the law, the
law in some articles refers to it as a case of co-
ownership or part-ownership (NCC, Articles 662,
665, 666). The truth is that, it is a compulsory kind
of co-ownership (FORGED INDIVISION) where the
shares of each owner cannot be separated
physically (otherwise the wall would be
destroyed), although said shares may in a sense be
materially pointed out. Thus, each co-owner owns
the half nearest to him (Paras, 2008).
The existence of an easement of party wall is
presumed, unless there is a title, or exterior sign,
or proof to the contrary:
1. In dividing walls of adjoining buildings up
to the point of common elevation;
2. In dividing walls of gardens or yards
situated in cities, towns, or in rural
communities; or
3. In fences, walls and live hedges dividing
rural lands (NCC, Art. 659).
It is understood that there is an exterior sign,
contrary to the easement of party wall
whenever:
1. There is a window or opening in the
dividing wall of the buildings;
2. Dividing wall is on one side straight and
plumb on all its facement, and on the
other, it has similar conditions on the
upper part but the lower part slants or
projects outward;
3. Entire wall is built within the boundaries
of one of the estates;
4. The dividing walls bears the burden of the
binding beams, floors and roof frame of
one of the buildings, but not those of the
others;
5. The dividing wall between courtyards,
gardens and tenements is constructed in
such a way that the coping sheds the
water upon only one of the estates;
6. The dividing wall, being built by masonry,
had stepping stones, which at certain
235
intervals project from the surface of one
side only, but not on the other; or
7. The lands enclosed by fences or live
hedges adjoin others which are not
enclosed.
In all these cases, the ownership is deemed to
belong exclusively to the owner of the
property which has in its favor the
presumption based on any of these signs.
Right to Increase Height of Party Wall
Every part-owner of a party has the right to
increase the height of the party wall subject to the
following conditions:
1. The same shall be done at his expense;
2. He shall pay for any damage which may be
caused by his work, even though such damage
may be temporary; and
3. If the party wall cannot bear the increased
height, the owner desiring to raise it shall be
obliged to reconstruct it at his own expense, If it
be necessary to make it thicker, he shall give space
required from his own land.
Repairs and Maintenance of a Party Wall
GR: The expenses for construction and repairs of
party walls shall be shouldered by all the owners
of the party wall.
XPN: If a part owner renounces his part
ownership on the party wall. The renunciation
must be absolute and total because the easement
of party wall is indivisible.
NOTE: The owner of the building or structure
supported by a party wall who desires to demolish
such building or structure, may RENOUNCE his
part ownership of the wall. Cost of all repairs and
works necessary to prevent any damage which the
demolition may cause to the party wall on this
occasion shall be borne by him.
Q: Petitioners-spouses Fernando Vergara and
Herminia Vergara (Sps. Vergara) and Spouses
Ronald Mark Sonkin and Erlinda Torrecampo
Sonkin (Sps. Sonkin) are adjoining
landowners. Sps. Vergara levelled the uneven
portion of the Vergara Property by filling it
with gravel, earth, and soil. As a result, the
level of the Vergara Property became even
higher than that of the Sonkin Property by a
third of a meter. Eventually, Sps. Sonkin began
to complain that water coming from the
Vergara Property was leaking into their
 CIVIL LAW
bedroom through the partition wall, causing
cracks, as well as damage, to the paint and the
wooden parquet floor. Sps. Sonkin repeatedly
demanded that Sps. Vergara build a retaining
wall on their property in order to contain the
landfill that they had dumped thereon, but the
same went unheeded. Should moral damages
and attorney’s fees be awarded?
A: No. It is undisputed that the Sonkin property is
lower in elevation than the Vergara property, and
thus, it is legally obliged to receive the waters that
flow from the latter, pursuant to Article 637 of the
Civil Code. The proximate cause of the damage
sustained by the house of Sps. Sonkin was the act
of Sps. Vergara in dumping gravel and soil onto
their property, thus, pushing the perimeter wall
back and causing cracks thereon, as well as water
seepage, the former is nevertheless guilty of
contributory negligence for not only failing to
observe the two (2)-meter setback rule under the
National Building Code, but also for disregarding
the legal easement constituted over their
property. As such, Sps. Sonkin must necessarily
and equally bear their own loss. In view of Sps.
Sonkin’s contributory negligence, the Court deems
it appropriate to delete the award of moral
damages in their favor. No attorney’s fees shall
also be awarded because there is no bad faith
involved herein(Sps. Sonkin v Erlinda Vergara, G.R.
No. 193659, June 15, 2015)
EASEMENT OF LIGHT AND VIEW
No part-owner may, without the consent of the
others, open through the party wall any window
or aperture of any kind (NCC, Art. 667).
A window or opening in the dividing wall of
buildings is an exterior sign which rebuts the
presumption that the wall is a party wall; one part
owner may not, therefore, make any window or
opening of any kind thru a party wall without the
consent of others.
The easement of LIGHT — “Jus luminum” The
opening is for the purpose of admitting light and
not for viewing.
(as in the case of small windows, not more than
30 cm. square, at the height of the ceiling joist, the
purpose of which is to admit light, and a little air,
but not VIEW) (Paras. 2008).
The easement of VIEW — “Servidumbre
prospectus” The opening is for the purpose of
viewing. (as in the case of full or regular windows
overlooking the adjoining estate) (Incidentally,
although the principal purpose here is VIEW, the
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
easement of light is necessarily included, as well as
the easement of altius non tollendi [not to build
higher for the purpose of obstruction (Paras,
2008).
When easement of light and view is positive
and when negative
Positive — If the window is thru a party wall (NCC,
Art. 668, par. 1). Therefore, the period of
prescription commences from the time the
window is opened.
NOTE: The mere opening of the window does
not create the easement; it is only when after
a sufficient lapse of time the window still
remains open, that the easement of light and
view is created (NCC, Art. 668, par. 1).
Moreover, even if the window is on one’s own
wall, still the easement would be positive if
the window is on a balcony or projection
extending over into the adjoining land (Paras,
2008).
Negative — If the window is thru one’s own wall,
that is, thru a wall of the dominant estate (NCC,
Art. 668, par. 2). Therefore, the time for the period
of prescription should begin from the time of
notarial prohibition upon the adjoining owner.
“Formal prohibition’’ or “formal act’’ (under the
old Civil Code, Art. 538) means not merely any
writing, but one executed in due form and/or with
solemnity — a public instrument (Laureana A. Cid
v. Irene P. Javier, et al., L-14116, June 30, 1960).
XPN: Even if the window is on the wall of the
dominant estate, still easement of light and view
would be POSITIVE if the window is on the
balcony or extension extending over the land of
the servient estate.
Thus, the period of prescription for the
acquisition shall be counted from the time of:
1. Opening of the window, if through a party
wall; or
2. The formal prohibition upon the
proprietor of the adjoining land, if window
is through a wall on the dominant estate.
Openings at height of ceiling joints to admit
light (NCC, Art. 669)
When the distances in Art. 670 are not observed,
the owner of a wall which is not a party wall can
make an opening for the purpose of admitting
light and air, but NOT for view.
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 PROPERTY
Restrictions for making an opening for light
and air
1. The size must not exceed 30 centimeter
square;
2. The opening must be at the height of the
ceiling joists or immediately under the
ceiling;
3. There must be an iron grating imbedded
in the wall; and
4. There must be a wire screen.
If the wall becomes a party wall – A part owner can
order the closure of the opening because no part
owner may make an opening through a party wall
without the consent of the others; it can also
obstruct the opening unless an easement.
The openings allowed by Art. 669 are for the
purpose of admitting light; hence they can be
made only in the walls of buildings.
NOTE: Art. 669 refers to restricted windows.
Direct and oblique views (NCC, Articles 670-
671)
Articles 670 and 671 deal with regular, full
windows.
Direct view - It is that which is obtained from a
wall parallel to the boundary line, such that from
the opening in such wall it is possible to see the
adjoining tenement without the necessity of
putting out or turning one's head side.
Oblique view - It is obtained from a wall at an
angle with the boundary line; in order to see the
adjoining tenement, it is necessary to turn one's
head to the left or to the right.
Restrictions as to easement of views
1. Direct Views: The distance of two (2)
meters between the wall and the
boundary must be observed; and
2. Oblique Views: (Walls perpendicular or
at an angle to the boundary line) must not
be 60 cm to the nearest edge of the
window (NCC, Art. 670).
Any stipulation to the contrary is void (NCC,
Art. 673).
NOTE: When windows are opened at a distance
less than that prescribed by Art. 670 from the
boundary lines, they constitute unlawful openings,
237
and the owner who opened them may be ordered
by the court to close them.
Prescription may still be acquired as a negative
easement after ten years from the time of notarial
prohibition.
The distance referred to in Art. 670 shall be
measured in cases of direct views from the outer
line of the wall when the openings do not project,
from the outer line of the latter when they do, and
in cases of oblique view from the dividing line
between the two properties (NCC, Art. 671).
Where buildings are separated by a public way
or alley (NCC, Art. 672)
The distance provided in Art. 670 is not
compulsory where there is a public way or alley
provided that it is not less than three meters wide,
the minimum width is necessary for the sake of
privacy and safety.
NOTE: The width of the alley is subject to special
regulations and ordinances.
A private alley opened to the use of the general
public falls within the provision of Art. 672.
Where easement of direct view had been
acquired (NCC, Art. 673)
Whenever the easement of direct view has been
acquired by any such title, there is created a true
easement. The owner of the servient estate cannot
build thereon at less than a distance of three
meters from the boundary line.
NOTE: The title used in Art. 673 refers to any
modes of acquiring easements:
1. Contract;
2. Will;
3. Donation; or
4. Prescription.
The distance may be increased or decreased by
stipulation of the parties provided that in case of
decrease, the minimum distance of two meters or
sixty centimeters prescribed in Art. 670 must be
observed, otherwise it is void. The said distances
involve considerations of public policy and the
general welfare; hence, they should not be
rendered ineffective by stipulation.
EASEMENT OF DRAINAGE OF BUILDINGS
The owner of a building shall be obliged to
construct its roof or covering in such manner that
the rain water shall fall on his own land or on a
 CIVIL LAW
street or public place, and not on the land of his
neighbor, even though the adjacent land may
belong to two or more persons, one of whom is
the owner of the roof. Even if it should fall on his
own land, the owner shall be obliged to collect the
water in such a way as not to cause damage to the
adjacent land or tenement (NCC, Art. 674).
NOTE: Art. 674 does not establish servitude but
merely regulates the use of one's property.
Easement to receive falling rain waters (NCC,
Art. 675)
The owner of a tenement or a piece of land,
subject to the easement of receiving water falling
from roofs, may build in such manner as to receive
the water upon his own roof or give it another
outlet in accordance with local ordinances or
customs, and in such a way as not to cause any
nuisance or damage whatever to the dominant
estate.
Easement giving outlet to rain water where
house surrounded by other houses
Requisites:
1. There must be no adequate outlet to the
rain water because the yard or court of a
house is surrounded by other houses;
2. The outlet to the water must be at the
point where egress is easiest, and
establishing a conduit for drainage; and
3. There must be payment of proper
indemnity (NCC, Art. 676).
Ownership of Rain Water
Pursuant to the provision of the Water Code of the
Philippines, the, rain waters falling on private
lands shall belong to the State.
INTERMEDIATE DISTANCES AND WORKS FOR
CERTAIN CONSTRUCTIONS AND PLANTINGS
Construction and plantings near fortified
places
No constructions can be built or plantings made
near fortified places or fortresses without
compliance with the conditions required in special
laws, ordinances, and regulations relating thereto
(NCC, Art. 677).
NOTE: Art. 677 establishes an easement in favor
of the State. The general prohibition is dictated by
the demands of national security.
Construction of aqueduct, well, sewer, etc.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
No person shall build any aqueduct, well, sewer,
furnace, forge, chimney, stable, depository of
corrosive substances, machinery, or factory which
by reason of its nature or products is dangerous or
noxious, without observing the distances
prescribed by the regulations and customs of the
place, and without making the necessary
protective works, subject, in regard to the manner
thereof, to the conditions prescribed by such
regulations. These prohibitions cannot be altered
or renounced by stipulation on the part of the
adjoining proprietors (NCC, Art. 678).
NOTE: The owner must take necessary protective
works or other neighboring estates.
Planting of trees
Art. 679 establishes a negative easement. It
provides the minimum distances of trees and
shrubs from the boundary line. They shall be
regulated by the local ordinances and in the
absence thereof, by the customs of the place, and
in default thereof, by art, 679.
Distance in Planting of Trees under Article 679
of the New Civil Code.
1. The distance authorized by local ordinaces or
customs of the place, if any; or
2. If there are no ordinance or custom:
(a.) Atleast two (2) meters from the dividing line
of the estate in case of tall trees; and
(b.) At a distance of atleast 50 centimeters in case
of shrubs or small trees.
Intrusions of branches or roots into
neighboring estate
Q: Can the adjoining estate cut the roots and
the branches without the consent of the owner
of the tree?
A: Right to cut roots can be exercised without
notice to the owner of the trees. BUT as to the
branches, it is necessary to ask that they be cut,
and if the owner of the tree does not do so
voluntarily, the court may authorize the
neighboring owner to cut them.
Q: Does this right prescribe?
A: The right to cut does not prescribe so long as
the owner tolerates the branches and roots
invading his tenement. BUT the moment the
owner of the tenement demanded that the
238
 PROPERTY
branches be cut off and the owner of the tree
refuses to do so, the prescription starts to run.
Fruits naturally falling upon adjacent land
Q: Who owns the fruits which fall from the
adjacent land?
A: Such fruits belong to the owner of the adjacent
land to compensate him for the inconvenience
causes by the branches of trees extending over his
land. Note however that for the adjacent owner to
be entitled to the fruits they must not only fall
upon his land but the falling must occur naturally.
NOTE: If the fruits fall on public property, the
owner of the tree retains ownership.
EASEMENT AGAINST NUISANCE
Easement against nuisance is a negative easement
because the proprietor or possessor is prohibited
to do something which he could lawfully do were
it not for the existence of the easement. However,
a nuisance involves any act or omission which is
unlawful.
NOTE: The easement against nuisance is not an
easement at all but a restriction upon the
ownership and not every limitation on the right of
ownership is an easement.
LATERAL AND SUBJACENT SUPPORT
Proprietor prohibited from making dangerous
excavations
No proprietor shall make such excavations upon
his land as to deprive any adjacent land or
building of sufficient lateral or subjacent support
(NCC, Art. 684).
Lateral Support
This is the support on the vertical side of a land,
the removal of which may cause the land to
crumble or slide.
Subjacent Support
This is the horizontal support underneath a land
or building the removal of which may cause the
sinking or crumbling of the land or building.
‘Lateral’ Distinguished from ‘Subjacent’
The support is lateral when both the land being
supported and the supporting land are on the
239
SAME PLANE; when the supported land is ABOVE
the supporting land, the support is subjacent
(Paras, 2008).
Remedies for violation of Art. 684
1. Claim for damages for injuries sustained;
or
2. Injunction.
NOTE: Any stipulation or testamentary provision
allowing excavations that cause danger to an
adjacent land or building shall be void (NCC, Art.
685).
Notice to owners of adjacent lands
Any proprietor intending to make any excavation
contemplated in Articles 684-686 shall notify all
owners of adjacent lands.
The notice is mandatory except where there is
actual knowledge of the proposed excavation.
NOTE: The legal easement of lateral and subjacent
support are NOT only applicable for buildings
already constructed at the time of the excavations
but also to future buildings that may be
constructed on the adjoining lands.
VOLUNTARY EASEMENT
An easement is voluntary when it is established by
the will of the owners.
Persons who may constitute voluntary
easement
Voluntary easements may be constituted by the
owner possessing capacity to encumber property.
If there are various owners, all must consent; but
consent once given is not revocable.
NOTE: Third persons are not bound by a
voluntary easement unless the same is duly
recorded with the proper authorities.
Q: For whose favor are voluntary easements
established?
A:
1. Predial servitudes:
a. For the owner of the dominant estate; and
b. For any other person having any juridical
relation with the dominant estate, if the
owner ratifies it.
 CIVIL LAW
2. Personal servitudes: for anyone capacitated to
accept.
Q: How are voluntary easements created and
what are the governing rules for such?
A:
1. If created by title (contract, will, etc.), the title
governs; and
2. If acquired by prescription, it is governed by
the manner or form of possession.
NOTE: In both cases, the Civil Code will only
apply suppletorily.
When consent is necessary
The owner of a property in usufruct may create
easements thereon without the consent of the
usufructuary provided the rights of the latter are
not impaired (NCC, Art. 689).
NOTE: Consent of both the naked owner and the
beneficial owner is necessary for the creation of
perpetual voluntary easement (NCC, Art. 690).
Expenses for work reuired for use and
preservation of the easement.
If the owner of the servient estate has bound
himself to pay for the cost of the work needed for
the use and preservation of he easement, and
wants to free himself from such obligations, he
may simply renounce or abandon his property in
favor of the owner of the dominant state.
Q: Mr. Bong owns several properties in Pasig
City. He decided to build a condominium
named Flores de Manila in one of his lots. To
fund the project, he obtained a loan from the
National Bank (NB) secured by a real estate
mortgage over the adjoining property which
he also owned.
During construction, he built three pumps on
the mortgaged property to supply water to the
condominium. After one year, the project was
completed and the condominium was turned
over to the buyers. However, Mr. Bong failed to
pay his loan obligation to NB. Thus, NB
foreclosed the mortgaged property where the
pumps were installed. During the sale on
public auction of the mortgaged property, Mr.
Simon won in the bidding. When Mr. Simon
attempted to take possession of the property,
the condominium owners, who in the
meantime constituted themselves into Flores
de Manila Inc. (FMI), claimed that they have
earlier filed a case for the declaration of the
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
existence of an easement before the Regional
Trial Court (RTC) of Pasig City and prayed that
the easement be annotated in the title of the
property foreclosed by NB. FMI further
claimed that when Mr. Bong installed the
pumps in his adjoining property, a voluntary
easement was constituted in favor of FMI.
Will the action prosper? (2014 Bar)
A: NO, the action will not prosper. The essence of
a mortgage is that it immediately subjects the
property upon which it is imposed, and whoever
the possessor may be, to the fulfillment of the
obligation for whose security it was constituted.
There was no voluntary easement in this case
because at the time the water pumps were
constructed, the subject lot where the water
pumps were constructed and the condominium
belong to the same person. No one can have an
easement over his own property (Bogo- Medellin v.
CA, G.R. No. 124699, July 31, 2003). Even of the
assumption that an easement was created in favor
of FMI that alone will not defeat the right of the
mortgagee to enforce the security if the debtor
defaults.
NUISANCE
A nuisance is any act, omission, establishment,
business, condition of property, or anything else
which:
1. Injures or endangers the health or safety of
others;
2. Annoys or offends the senses;
3. Shocks, defies or disregards decency or
morality;
4. Obstructs or interferes with the free passage
of any public highway or street, or any body of
water; or
5. Hinders or impairs the use of property (NCC,
Art. 694) (2005, 2006 Bar)
Nuisance v. Trespass
Nuisance Trespass
Use of one’s own Direct infringement of
property which causes another’s right or
injury to another. property.
Injury is consequential. Injury is direct and
immediate.
Nuisance v. Negligence
Negligence Nuisance
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 PROPERTY
Liability is based Liability f. Intermittent – That kind which recurs off
on lack of attaches and on and may be discontinued anytime;
proper care or regardless of g. Attractive Nuisance – One who maintains
diligence. the degree of on his premises dangerous
Basis
care or skill instrumentalities or appliances of a
exercised to character likely to attract children in play,
avoid the and who fails to exercise ordinary care to
injury. prevent children from playing therewith
Act complained There is a or resorting thereto, is liable to a child of
of is already continuing tender years who is injured thereby, even
done which harm being if the child is technically a trespasser in
caused the suffered by the the premises.
injury to the aggrieved party
Condition
plaintiff. by the Nuisance per se v. Nuisance per accidens
of the act
maintenance of
the act or thing PER SE PER ACCIDENS
which As a matter of law. As a matter of fact.
constitutes the
nuisance. Need only be proved in Depends upon its
Abatement is Abatement any locality. location and
not available as without judicial surroundings, the
a remedy. The proceedings is manner of its conduct
Abatement
remedy is action allowed to or other circumstances.
for damages. suppress the
nuisance. May be summarily May be abated only
abated under the law of with reasonable notice
Kinds of Nuisance necessity. to the person alleged to
be maintaining or doing
1. As to the number of persons affected: such nuisance.
(2005 Bar)
a. Public (or common) – One that affects a Q: Boracay West Cove, applied for a zoning
community or neighborhood or any compliance covering the construction of a
considerable number of persons although three-storey hotel over a parcel of land in
the extent of the annoyance, danger or Malay. The Zoning Administrator denied the
damage upon individuals may be unequal application on the ground that the proposed
(Suarez, 2011); and construction site was within the “no build
b. Private – one which affects an individual zone”. The Office of the Mayor issued EO 10,
or few persons only. ordering the closure and demolition of
Boracay West Cove’s hotel. Boracay West Cove
2. Other classification: countered that the hotel cannot summarily be
a. Nuisance per se – That kind of nuisance abated because it is not a nuisance per se. Is
which is always a nuisance. By its nature, the hotel classified as a nuisance per se?
it is always a nuisance all the time under
any circumstances regardless of location A: NO. The litmus test in determining if it’s a
or surroundings; nuisance is the property’s nature and conditions.
b. Nuisance per accidens – That kind of The hotel cannot be considered as a nuisance per
nuisance by reason of location, se since this type of nuisance is generally defined
surrounding or in a manner it is as an act, occupation, or structure, which is a
conducted or managed; nuisance at all times and under any
c. Temporary – That kind which if properly circumstances, regardless of location or
attended does not constitute a nuisance; surrounding. Here, it is merely the hotel’s
d. Permanent – That kind which by nature of particular incident––its location––and not its
structure creates a permanent inherent qualities that rendered it a nuisance.
inconvenience; Otherwise stated, had it not been constructed in
e. Continuing – That kind which by its the no build zone, Boracay West Cove could have
nature will continue to exist indefinitely secured the necessary permits without issue
unless abated; (Aquino v. Mun.of Malay Aklan, G.R. No. 211356,
September 29, 2014).

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 CIVIL LAW
ATTRACTIVE NUISANCE
One who maintains on his premises dangerous
instrumentalities or appliances of a character
likely to attract children in play, and who fails to
exercise ordinary care to prevent children from
playing therewith or resorting thereto, is liable to
a child of tender years who is injured thereby,
even if the child is technically a trespasser in the
premises (Jarco Marketing Corp. v. CA, G.R. No.
129792, December 21, 1999).
Basis for liability
The attractiveness is an invitation to children.
Safeguards to prevent danger must therefore be
set up.
Elements of attractive nuisance
1. It must be attractive;
2. Dangerous to children of tender years.
Q: Is a swimming pool an attractive nuisance?
A:
GR: A swimming pool or water tank is not an
attractive nuisance, for while it is attractive, it is
merely an imitation of the work of nature. Hence,
if small children are drowned in an attractive
water tank of another, the owner is not liable even
if there be no guards in the premises (Hidalgo
Enterprises v. Balandan, et. al, G.R. No. L-3422 June
13, 1952).
XPN: Swimming pool with dangerous slide
characteristics
NOTE: The doctrine of attractive nuisance does
not generally apply to bodies of water, artificial as
well as natural in the absence of some unusual
condition or artificial feature other than the mere
water and its location.
PUBLIC NUISANCE AND PRIVATE NUISANCE
Remedies against public nuisances
1. Prosecution under the RPC or any local
ordinance;
2. Civil action; or
3. Abatement, without judicial proceeding (NCC,
Art. 699)
Remedies against private nuisances
1. Civil action; or
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
2. Abatement, without judicial proceedings
(NCC, Art. 705).
NOTE: Any person injured by a private nuisance
may abate it by removing, or if necessary, by
destroying the thing which constitutes the
nuisance, without committing a breach of the
peace or doing unnecessary injury. However, it is
indispensable that the procedure for extra-judicial
abatement of a public nuisance by a private
person be followed (NCC, Art. 706).
Every successive owner or possessor of property
who fails or refuses to abate a nuisance in that
property started by a former owner or possessor
is liable therefor in the same manner as the one
who created it (NCC, Art. 696).
Extra-judicial abatement (2002 Bar)
Requisites of extra-judicial abatement (BAR VID)
1. The nuisance must be specially Injurious to
the person affected;
2. No Breach of peace or unnecessary injury
must be committed;
3. Demand must first be made upon the owner
or possessor of the property to abate the
nuisance;
4. Demand is Rejected;
5. Abatement is Approved by the district health
officer and executed with the assistance of the
local police; and
6. Value of destruction does not exceed P3,000
NOTE: An extra-judicial abatement can only be
applied for if what is abated is a nuisance per se
and not nuisance per accidens.
Liability for damages in case of extrajudicial
abatement of nuisance
The private person or a public official
extrajudicially abating a nuisance is liable for
damages to the owner of the thing abated, if he
causes unnecessary injury or if an alleged
nuisance is later declared by courts to be not a
real nuisance (NCC, Art. 707).
The right to question the existence of a nuisance
DOES NOT prescribe; it is imprescriptible.
Q: Respondent Ernesto Lardizabal (Ernesto)
filed a complaint for demolition, before the
City Engineer's Office of Baguio City (City
Engineer's Office), questioning the ongoing
construction of a residential structure and
garage extension by petitioners on a parcel of
land. Upon investigation, the City Engineer's
242
 PROPERTY
Office found out that the construction had no 2. Law;
building permit. Consequently, the City Mayor 3. Donation;
issued Demolition Order No. 5. Aggrieved, 4. Tradition;
petitioners moved for a reconsideration of DO 5. Intellectual creation;
No. 05, but was denied by the City Mayor. Thus, 6. Prescription; or
they were prompted to file a complaint for 7. Succession;
injunction and prohibition with the RTC. Shall
DO No. 5 be enjoined? NOTE: Registration of a property does is not a
mode of acquiring ownership. It merely confirms
A: Yes. The following shall be subject for summary the existence of one’s ownership over a property
Eviction: (1) New squatter families whose with notice to the whole world. (Bautista v Dy Bun
structures were built after the affectivity of RA Chin, 49 O.G. 179)
7279; and (2) Squatter families identified by the
LGU in cooperation with the Presidential Classification of modes of acquiring ownership
Commission of the Urban Poor (PCUP), Philippine
National Police (PNP) and accredited Urban Poor 1. Original – Those which do not arise or depend
Organization (UPO) as professional squatters or upon any pre-existing right or title of another
members of squatting syndicates as defined in the person:
Act. In this case, petitioners cannot be considered a. Occupation (NCC, Art. 713);
as new squatters, since, although their structures b. Intellectual Creation (NCC, Art. 721);
were built after March 28, 1992, they or their and
predecessors-in-interest had occupied, and were c. Acquisitive Prescription (NCC, Art.
claimants of the subject property long before the 1106).
said date. Neither have they been identified by the
LGU as professional squatters nor members of a 2. Derivative – Are those which arise or depend
squatting syndicate. Thus, since petitioners do not upon a pre-existing or preceding right or title
fall under the coverage of the said IRR, the of another person:
issuance of DO No. 05 had no legal basis at the a. Law; e.g. hidden treasure (NCC, Art.
onset. 438), improvements on the land of
another (NCC, Art. 445), alluvium
(NCC, Art. 447), abandoned river beds
MODES OF ACQUIRING OWNERSHIP (NCC, Art. 461), falling fruits into the
tenement of another (NCC, Art. 681)
b. Donation (Art. 725)
Mode v. Title c. Succession mortis causa (NCC, Art.
774); and
d. “Tradition (delivery) as a
MODE TITLE consequence of certain contracts” like
Directly and Serves merely to give sale, agency, partnership, mutuum,
immediately produces a the occasion for its assignment barter. Pure tradition
real right. acquisition or existence. does not transfer ownership such as
Cause Means in deposit or commodatum (Pineda,
2009).
Proximate cause Remote cause
Essence of the right Means whereby that OCCUPATION
which is to be created or essence is transmitted.
transmitted. Occupation is the acquisition of ownership by
seizing corporeal thing that have no owner, made
Mode – it is a way or process of acquiring or with the intention of acquiring them, and
transferring ownership. The process may either accomplished according to legal rules (Paras,
be original or derivative. 2008) (1997, 2007 Bar).
Requisites of occupation
Title – is a jural act or deed which is not sufficient
by itself to transfer ownership. 1. There must be Seizure of a thing;
2. Which must be a Corporeal personal property;
Modes of acquiring ownership (OLD TIPS) 3. Which must be Susceptible of appropriation
(2007 Bar) by nature;
4. The thing must be Without an owner; and
1. Occupation;

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 CIVIL LAW
5. There must be an Intention to acquire 5. Swarm of bees that has escaped from its
ownership. owner, under certain conditions (NCC, Art.
716);
Occupation v. Possession 6. Domesticated animals that have escaped from
their owners, under certain conditions (NCC,
BASIS OCCUPATION POSSESSION Art. 716);
7. Transfer of pigeons to another breeding place
Mode of Merely raises
without fraud or artifice (NCC, Art. 717); and
acquiring the
As regards 8. Transfer of fish to another breeding place
ownership. presumption of
acquisition without fraud or artifice (NCC, Art. 717).
ownership
of
when exercised
ownership Acquisition of ownership over a wild animal by
in the concept
occupation
of owner.
Involves only Any kind of Wild animals are considered res nullius when not
As to
corporeal property. yet captured. After its capture, animals that
property
personal escaped become res nullius again.
involved
property.
As regards Requires that the The property Straying Domesticated Animals
ownership object be without may be owned
of the thing an owner. by somebody. Domesticated animals, if they got strayed and
by another were caught by another, the owner may still claim
As regards There must be an May be had in them from the captor within 20 days reckoned
the intent to intent to acquire the concept of a from the date of occupation by the latter. Failure
acquire ownership. mere holder. to do so, they shall belong to the captor who kept
them.
May not take May exist w/o
As regards place w/o some occupation. Domesticated as distinguish from Domestic
possession form of Animals
possession.
Short duration. Generally Domesticated animals are wild animals but after
As to period
longer. capture had been tamed and become accustomed
As to Cannot lead to May lead to and friendly to people. On the other hand,
leading to another mode of another mode- Domestic Animals or tame animals are those born,
another acquisition. prescription. bred and raised under the care of men.
mode of
acquisition Q: When can land be the object of occupation?

Things susceptible of occupation A: It depends.

1. If without an owner, it pertains to the State
1. Things that are without an owner – Res (Regalian Doctrine).
nullius; abandoned; 2. If abandoned and the property is private, it
can be the object of occupation.
NOTE: Stolen property cannot be subject of 3. And if the land does not belong to anyone, it is
occupation. presumed to be public.

2. Animals that are the object of hunting and
fishing (NCC, Art. 715);
3. Hidden treasures – Only if the there is no
known owner thereof. This is possible only if
the treasure is found in places or things
without owners (NCC, Art 718)
4. Abandoned movables – A thing is abandoned
when:
a. The expectation to recover is gone (spes
recuperandi); and
b. The intent to return or have it returned is
given up (spes rivertandi).
Ownership of land cannot be acquired by
occupation
When the land is without owner, it pertains to the
State. The State need not acquire abandoned lands
by occupation because once the requisites of
abandonment had been fulfilled; automatically,
the reversion operates (Pineda, 2009).
Abandoned land (one with an owner before)
becomes patrimonial land of the State susceptible

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 244
 PROPERTY
of acquisition thru acquisitive prescription (Paras, Future properties as subject of donation (2003
2008). Bar)

Prescription v. Occupation Future properties cannot be subject of donations.

Donations cannot comprehend future properties.
PRESCRIPTION OCCUPATION
Derivative mode – Original mode – no NOTE: Future property means anything which the
somebody else was previous owner. donor cannot dispose of at the time of the
the owner. donation (NCC, Art. 751) (2009 Bar).
Longer period of Shorter period.
possession is required. XPN: In donation propter nuptias, however, the
Family Code allows a donation of future property
between future spouses.
DONATION
Donation of future inheritance or the inchoate
right to inherit
Donation is an act of pure liberality whereby a Future inheritance or the inchoate right to inherit
person disposes gratuitously of a thing or right in cannot be donated because it is future property.
favor of another who accepts it (NCC, Art. 725).
Q: May a property, the acquisition of which is
Requisites of donation (ACID) subject to suspensive condition, be donated?
1. Donor must have Capacity to make the A: YES, because once the condition is fulfilled, it
donation; retroacts to the day the contract is constituted
2. He must have donative Intent (animus [NCC, Art. 1187(1)].
donandi);
3. There must be Delivery in certain cases; and Donation of ownership and usufruct
4. Donee must Accept or consent to the donation
during the lifetime of the donor and of the Ownership and usufruct of a property may be
donee in case of donation inter vivos (NCC, Art. donated to different persons separately. However,
746); whereas in case of donation mortis all the donees are however required to be living at
causa, acceptance is made after donor’s death the time of donation (NCC, Art. 756).
because they partake of a will (NCC, Art. 728).
Limitation on the amount that can be donated
Essential features or elements of a true
donation 1. If the donor has forced heirs, he cannot give
or receive by donation more than what he can
1. Alienation of property by the donor during his give or receive by will;
lifetime, which is accepted; 2. If the donor has no forced heirs, donation may
2. Irrevocability by the donor of the donation; include all present property provided he
3. Animus Donandi (donative intent); and reserves in full ownership or in usufruct:
4. Consequent impoverishment of the donor a. The amount necessary to support him
(diminution of his assets). and those relatives entitled to support
from him;
CHARACTERISTICS b. Property sufficient to pay the donor’s
debt contracted prior to the donation.
EXTENT TO WHICH DONOR MAY DONATE
PROPERTY NOTE: The limitation applies only to simple,
remunerative, and modal donations but not to
It may comprehend all the present property of the onerous ones, which are governed by the law on
donor, or part thereof, provided he reserves, in contracts (De Leon, 2006).
full ownership or in usufruct, sufficient means for
the support of himself, and of all relatives who, at RESERVATIONS AND REVERSIONS
the time of the acceptance of the donation, are by
law entitled to be supported by the donor (NCC, Effect if the donor violates the requirement for
Art. 750). reservation under NCC, Art. 750

245
 CIVIL LAW
A donation where the donor did not reserve certain conditions, 2. Gratuitous – Same
property or assets for himself in full ownership or limitations or charges form of that of
in usufruct sufficient for his support and all upon the donee, donations.
relatives legally dependent upon him is not void. It whose value is
is merely reducible to the extent that the support inferior to the
to himself and his relatives is impaired or donation given.
prejudiced (Pineda, 1999). Onerous
Imposes upon the Same as that of
Reversion in donation donee a reciprocal contracts.
obligation; Burdens,
It is a condition established in the deed of charges or services are
donation which has for its effect the restoration or equal or greater in
return of the property donated to the donor or his value to that of the
estate or in favor of other persons who must be donation.
living at the time of the donation for any cause or
circumstances (NCC, Art. 757). Kinds of donation according to perfection or
extinguishment
NOTE: If the reversion is in favor of other persons
who are not all living at the time of the donation, 1. Pure donation – It is one which is not subject
the reversion stipulated shall be void, but the to any condition;
donation shall remain valid. 2. Conditional –It is one wherein the donor
imposes on the donee a condition dependent
KINDS OF DONATION on the happening of a future event or past
event unknown to the parties; and
1. According to motive or cause: 3. With a Term – It is one wherein the donor
a. Simple; imposes on the donee a condition dependent
b. Remuneratory (1st kind); upon the happening of a future and certain
c. Remuneratory (2nd kind): Conditional or event.
Modal donations; or
d. Onerous donations. Effect of illegal or impossible conditions

2. As to perfection or extinguishment: Like in testamentary dispositions (Art. 873), only

1. Pure; the illegal or impossible conditions are
2. With a condition; or disregarded. The donation itself remains valid.
3. With a term.
DONATION INTERVIVOS
3. According to effectivity:
a. Inter vivos ( NCC, Art. 729); It is a donation which takes effect during the
b. Mortis causa (NCC, Art. 728); or lifetime of the donor.
c. Propter nuptials.
Limitations imposed by law in making
Kinds of donation according to motive or cause donations inter vivos

PURPOSE FORM 1. Donor must Reserve sufficient means for his

Simple (2007 Bar) support and for his relatives who are entitled
Pure liberality Same to that of forms in to be supported by him (NCC, Art. 750);
donations. 2. Donation cannot comprehend Future
Remuneratory (First kind) (2007 Bar) property except donations between future
To reward past merits, Same to that of forms in husband and wife (FC, Art. 84); and
services rendered by donations. 3. No person may give by way of donation More
the donee to the donor than he may give by will.
provided the same do
not constitute a Some inter vivos donations
demandable debt.
Remuneratory (Second kind) The following donations have been held to be inter
1. Consideration for 1. Onerous – Same vivos:
future services; or form of that of
2. Donor imposes contracts.

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 246
 PROPERTY
a. A donation where the causes of officer or court that the deed or act is his own. On
revocation have been specified; the other hand, the attestation of a will refers to
b. A donation where the donor reserved for the act of the instrumental witnesses themselves
himself a lifetime usufruct of the who certify to the execution of the instrument
property, for if he were still the owner, before them and to the manner of its execution
there would be no need of said (Echavez v. DCDC, G.R. No. 192916, October 11,
reservation; 2010).
c. A donation where the donor warrants the
title to the thing which he is donating — Some mortis causa Donations
there would be no need of warranty were
he not be transferring the title; The following have been held to be mortis causa:
d. Where the donor immediately transferred a. Where the donor has reserved (expressly
the ownership, possession and or impliedly) the option to revoke the
administration of the property to the donation at any time before death, even
donee, but stipulated that the right of the without the consent of the done;
donee to harvest and alienate the fruits b. Where the donation will be void if the
would begin only after the donor’s death. transferee dies ahead of the transferor.
(But if what had been transferred in the c. If before the donor’s death, it is revocable
meantime was only the administration of at his will;
the property, the donation is mortis d. If the donor retains full or naked
causa); ownership and control over the property
e. Where the donor stated that while he is while he is still alive;
alive he would not dispose of the property e. If what was in the meantime transferred
or take away the land “because I am to the done was merely the
reserving it to him (the donee) upon my administration of the property; and
death.” (The Court held this to be inter f. If title will pass only after donor’s death.
vivos because in effect, he had already
renounced the right to dispose of his Donation inter vivos v. Donation mortis causa
property); and
f. A donation where the donees “should not BASIS MORTIS
INTER VIVOS
as yet get the possession until our CAUSA
demise,” the administration remaining Takes effect Takes effect
with the donor spouses, or either one during the upon donor’s
surviving. lifetime of the death.
As to when it
takes effect donor,
DONATION MORTIS CAUSA independently
of his death.
These are donations which are to take effect upon
the death of the donor. Cause is In
donor’s pure contemplation
NOTE: It partakes of the nature of testamentary generosity. of donor’s
provisions and governed by the rules on As to cause or death without
succession (NCC, Art. 728). consideration intention to
dispose of the
Donation mortis causa must comply with the thing in case
formalities prescribed by law for the validity of survival.
of wills Valid if donor Void if donor
On
survives the survives.
predecease
Donation mortis causa must comply with the done.
formalities prescribed by law for the validity of Generally Always
wills, otherwise, the donation is void and would irrevocable revocable at
produce no effect. That the requirements of On except for any time and
attestation and acknowledgment are embodied in revocability grounds for any reason
two separate provisions of the Civil Code (Articles provided for before the
805 and 806, respectively) indicates that the law by law. donor’s death.
contemplates two distinct acts that serve different
purposes. An acknowledgment is made by one
executing a deed, declaring before a competent

247
 CIVIL LAW
Must comply Must comply 2. Partially onerous – When the burden is lesser
On with the with the than the value of the donation (Pineda, 1999).
formalities formalities of formalities of
donations. a will. Laws that apply to onerous donations
On when Acceptance After donor’s 1. Totally onerous – Rules on contracts.
acceptance is during donor’s death. 2. Partially onerous
made lifetime. a. Portion exceeding the value of the burden
Property Property – simple donations; and
On when
completely retained by b. Portion equivalent to the burden – law on
property is
conveyed to the donor contracts (Pineda, 1999).
conveyed to
the done. while he is still
the done
alive. Rules of contract govern the onerous portion of
On tax Donor’s tax Estate tax donation; rules of donation only apply to the
payable excess, if any. Since the donation imposed on the
donee the burden of redeeming the property
Test in Determining Whether the Donation is for value, the donation was onerous. As an
Mortis Cuasa or Inter Vivos endowment for a valuable consideration, it
partakes of the nature of an ordinary contract;
What is controlling is the nature of the act and its hence, the rules of contract will govern and Art.
effectivity. If the act is one of disposition, and 765 of the New Civil Code finds no application
effective independently of the donor’s death, it is a with respect to the onerous portion of the
donation inter vivos. If it is one of deposition, but donation. Insofar as the value of the land exceeds
its effectivity is dependent upon the death of the the redemption price paid for by the donee, a
donor, it is a mortis causa donation. donation exists, and the legal provisions on
donation apply (Calanasan v. Sps. Dolorito, G.R. No.
NOTE: The title given to a deed of donation is NOT 171937, November 15, 2013).
a determinative factor which makes the donation
inter vivos or mortis causa what is controlling is HOW MADE AND ACCEPTED
the provision stated in the deed and must be read
in its entirety. Persons who must accept the donation

If there is doubt on the nature of the donation, the
doubt should be resolved in favour of donation
inter vivos, rather than mortis causa to avoid
uncertainty as to the ownership of the property
subject of the deedof donation.
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 donation shall be
void (NCC, Art. 745) (2010 Bar).

ONEROUS DONATIONS (2007 Bar) Reason for the need for an acceptance

Onerous donation is a donation given for which
the donor received a valuable consideration which
is the equivalent of the property so donated.
(Pineda, 2009)
Samples of Onerous Donations
Where the condition is to take care of the donor’s
family in the future (Carlos v. Ramil, G.R. No.
6736, September 5, 1911); or where the done must
take care of the donor’s funeral expenses. Thus,
even if real property is involved, it is not essential
to have a public instrument (Manalo v. De Mesa,
G.R. No. L-9449, February 12, 1915).
Kinds of onerous donations
1. Totally onerous – When the burden is equal to
or greater than the value of the property
donated; and
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Because the donee may not want to accept the
donor’s liberality or if donation is onerous, he may
not agree with the burden imposed.
Rule prior to knowledge of acceptance
Prior to learning of the acceptance, there is as yet
no perfected donation (no donation at all), hence,
the donor may give the property to somebody
else, for he has not really parted with the
disposition of the property.
When the donation and the acceptance are in
the same instrument
If the donation and the acceptance are in the same
instrument, containing the signatures of both
donor and donee, it is understood that there is
248
 PROPERTY
already knowledge of the acceptance, hence, the
donation is already perfected.
Donations made to incapacitated persons
Donations made to incapacitated persons shall be
void, though simulated under the guise of another
contract or through a person who is interposed
(NCC, Art. 743).
Persons who must accept the donation made
in favor of a minor
If the donation is pure and simple and does not
require written acceptance, the minors can accept
the donation by themselves.
If the donation needs written acceptance, it may
be accepted by their guardian or legal
representatives.
PERFECTION OF DONATION
Donation is perfected from the moment the donor
knows of the acceptance by the donee (NCC, Art.
734).
The donation is perfected, not from the time of
acceptance but from the time of knowledge by the
donor that the donee has accepted (the knowledge
may of course be actual or constructive). If there is
no acceptance, the donation will be null and void.
FORMALITIES FOR DONATION OF
REAL/PERSONAL PROPERTIES
Formalities required for donation
1. As regards movable property: (1998, 2000,
2007 Bar)
a. With simultaneous delivery of property
donated:
i. For P5,000 or less – May be
oral/written
ii. For more than P5,000 – Written in
public or private document
b. Without simultaneous delivery:
i. The donation and acceptance must be
written in a public or private
instrument (Statute of Frauds),
regardless of value. Otherwise,
donation is unenforceable.
2. As regards immovable property: (1993,
2000, 2010 Bar)
a. Must be in a public instrument specifying
i. The property donated; and
249
ii. The burdens assumed by the done.
b. Acceptance may be made:
i. In the same instrument; or
ii. In another public instrument, notified
to the donor in authentic form, and
noted in both deeds. Otherwise,
donation is void.
Q: The Roman Catholic Church accepted a
donation of a real property located in Lipa
City. A deed of donation was executed, signed
by the donor, Don Mariano, and the donee, the
Church, as represented by Fr. Damian. Before
the deed could be notarized, Don Mariano
died. Is the donation valid? (2014 Bar)
A: The donation is VOID. The donation of an
immovable property must be in a public
instrument in order for it to be valid. In this case,
the donor died even before the notarization of the
deed of donation. Hence, it does not satisfy the
requirement of being in a public instrument for
the donation to be valid.
QUALIFICATIONS OF DONOR/DONEE
DONOR
Any person who has capacity to contract and
capacity to dispose of his property may make a
donation (NCC, Art. 735). His capacity shall be
determined as of the time of the making of
donation (NCC, Art. 737).
The term “person” who could make donations
refers to natural and artificial persons with legal
personalities. With respect to artificial persons,
they must be authorized by their Articles to
donate.
NOTE: “Making of donation” shall be construed to
mean perfection of the donation, otherwise if
“making” means “giving,” Art. 737 would in some
cases be inconsistent with Art. 734 which states
that “the donation is perfected from the moment
the donor knows of the acceptance by the donee.”
To avoid a contradiction, the rule may be stated
thus: “at the time the donation is perfected, both
the donor and the donee must be capacitated.”
Status of a donation made by an incapacitated
person
Following the laws in contracts (which are of
suppletory application to simple donations) said
donations should be merely considered voidable.
The same answer should be given in case there
 CIVIL LAW
was vitiated consent (as in the case of fraud or
intimidation).
Q: May an emancipated minor by himself
make donation mortis causa?
A: YES, because at the age of 17, a person of sound
mind can already make a valid will.
Donation by a guardian or trustee
Guardians and trustees may of course donate their
own properties, unless they are otherwise
disqualified by the law, but not the property
entrusted to them, for the simple reason that they
are not the owners thereof.
Status of a donation of ward’s property by a
guardian
It is believed that such a donation, if made in the
guardian’s name is null and void. On the other
hand, if made by the guardian in the name of, and
with the consent of the ward, it would be valid
provided judicial permission is obtained. This is
particularly true if the donation benefits, in some
way, the ward.
NOTE: When the donation is clearly in the interest
of the beneficiaries, it would be contrary to the
spirit and intent of the law to say it cannot be
done.
DONEE
All those who are not specially disqualified by law.
Q: May an unborn child be a donee or a donor?
A: An unborn child may be a donee but not a
donor.
As a donee, donations made to conceived and
unborn children may be accepted by those
persons who would legally represent them if they
were already born (NCC, Art. 742).
NOTE: If the conceived child did not become a
person, the donation is null and void. An unborn
child cannot be a donor because it is essential for a
person to be able to make a donation, he must
have full civil capacity.
When a person is “specially disqualified’’ to
accept a donation
“Specially disqualified’’ does not refer to those
incapacitated to contract like minors or those of
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
unsound mind, but to people such as those
mentioned in Art. 739 and husbands and wives
with respect to immoderate donations from each
other (donations of spouses inter se).
Natural and juridical persons may be donees
Since the law does not distinguish, both natural
and juridical persons may become donees. An
unregistered partnership may become a donee
because it is a juridical or artificial person despite
its non-registration. But the conjugal partnership
itself, not being natural or juridical, cannot be a
donee. Instead, the donation should be given by
the stranger to the husband and wife, the share of
the husband being credited to his capital, and that
of the wife being considered part of her
paraphernal property.
EFFECT OF DONATION/LIMITATIONS
IN GENERAL
Rights and actions the donee acquires
The donee is subrogated to the rights and actions
which in case of eviction would pertain to the
donor.
Liability of donors for eviction of hidden
defects
1. If the donation is simple or remunerative,
donor is not liable for eviction or hidden
defects because the donation is gratuitous,
unless the donor acted in bad faith; and
2. If the donation is onerous, the donor is liable
on his warranty against eviction and hidden
defects but only to the extent of the burden.
Rules regarding the liability of the donee to
pay the debts of donor
1. Where donor imposes obligation upon the
donee, (NCC, Art. 758) the donee is liable:
a. To pay only debts previously contracted;
and
b. For debts subsequently contracted only
when there is an agreement to that effect.
NOTE: But he is not liable for debts in excess
of the value of donation received, unless the
contrary is intended.
2. Where there is no stipulation regarding the
payment of debts (NCC, Art. 759):
a. Donee is generally not liable to pay
donor’s debts;
250
 PROPERTY
b. Donee is responsible only if donation has
been made in fraud of creditors; and
NOTE: The presumption that the
donations was made in fraud of creditors
arises when the donor has not left
sufficient assets to pay his debts, at the
time of donation.
c. The donee shall not be liable beyond the
value of donation received.
DOUBLE DONATIONS
There is double donation when the same thing has
been donated to two or more persons.
The rule on double sale under Art. 1544 of NCC
shall be applicable.
Rule: First in time, stronger in right
1. If movable, one who first take possession in
good faith.
2. If immovable, one who recorded in registry of
property in good faith.
If no inscription, one who first took
possession in good faith.
In absence thereof, one who can present
oldest title.
EXCESSIVE/INOFFICIOUS
Rule in case of an excessive or inofficious
donation
1. A donor may not donate more than what he
can give by will. If he donates more than what
he cannot give by will, the donation will
become excessive and to insist on it, the
legitime of the compulsory heirs will be
impaired. Legitime is reserved for the
compulsory heirs and the same cannot be
impaired or disposed of by the testator; and
2. The donee cannot receive by way of donation
more than what he may receive by will. If the
donee can receive by donation (devise or
legacy) more than what the testator is allowed
by law to give, the donation is inofficious and
it may be suppressed totally or reduced as to
its excess.
IN FRAUD OF CREDITORS
Remedy in case of donations executed in fraud
of creditors
251
The creditors may rescind the donation to the
extent of their credits. The action is known as
accion pauliana (NCC, Art. 381).
NOTE: If the donor did not reserve enough assets
to pay his creditors whom he owed before the
donation, the donation is presumed to be in fraud
of creditors.
VOID DONATIONS
Donations prohibited by law (1990, 2000 Bar)
(LAW SCRA POP)
Prohibition on donation inter vivos
1. By persons guilty of Adultery or concubinage
at the time of donation (NCC, Art. 739);
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
proved by preponderance of evidence. (NCC,
Art. 739)
2. Those made between persons found guilty of
the same Criminal offense, in consideration
thereof (NCC, Art. 739);
NOTE: The phrase “found guilty of same
offense” does NOT refer only to concubinage
and adultery.
3. Those made to a public Officer or his wife,
descendants and ascendants, by reason of his
office;
Relative Incapacity to Succeed:
4. By individuals, associations or corporations
not permitted by Law to make donations
(NCC, Art. 1027);
5. By a Ward to the guardian before the
approval of accounts (NCC, Art. 1027);
6. By Spouses to each other during the marriage
or to persons of whom the other spouse is a
presumptive heir (FC, Art. 87);
7. To Relatives of such priest, etc. within the
fourth degree, or to the church to which such
priest belongs (NCC, Art. 1027);
8. To an Attesting witness to the execution of
donation, if there is any, or to the spouse,
parents or children or anyone claiming under
them (NCC, Art. 1027);
9. To the Priest who heard the confession of the
donor during the latter’s last illness, or the
minister of the gospel who extended spiritual
aid to him during the same period (NCC, Art.
1027); or
 CIVIL LAW
10. To a Physician, surgeon, nurse, health officer
or druggist who took care of the donor during
his/her last illness (NCC, Art. 1027).
REVOCATION OR REDUCTION
(1991, 2003, 2006 Bar)
GROUNDS FOR REVOCATION AND REDUCTION
Grounds for revocation of donation
1. Under Art. 760
a. Birth of a donor’s child or children
(legitimate, legitimated, or illegitimate)
after the donation, even though born after
his death;
b. Appearance of a donor’s child who is
missing and thought to be dead by the
donor; or
c. Subsequent adoption by the donor of a
minor child.
2. Under Art. 764 – When the donee fails to
comply with any of the conditions which the
donor imposed upon the donee.
3. Under Art. 765 – By reason of ingratitude
a. If the donee should commit some offense
against the person, the honor or the
property of the donor, or of his wife or
children under his parental authority;
b. 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; or
c. If he unduly refuses him support when
the donee is legally or morally bound to
give support to the donor.
NOTE: The list of grounds for revocation by
reason of ingratitude under Art. 765 is
exclusive.
Grounds for reduction of donation
The same grounds for revocation under Art. 760.
The donation shall be 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 (NCC, Art. 761).
Revocation of perfected donations
Once a donation is perfected, it cannot be revoked
without the consent of the donee except on
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
grounds provided by law (NCC, Articles 760, 764
and 765).
Revocation or reduction is NOT automatic.
The emergence of the circumstances enumerated
in Art. 760 do not automatically revoke or reduce
the donation. The revocation or reduction is
authorized only if the amount or value of the
property donated exceeds the disposable free
portion.
Q: For purposes of prescription of action, what
is the rule in case of concurrence of two or
more grounds for revocation or reduction?
A: In the event that two or more causes are
present, the earliest among them shall be the
starting point in the reckoning of the period of
prescription of the action.
Execution of a donation subject to a condition
A donor may execute a donation subject to a
condition, the non-fulfilment of which authorizes
the donor to go to court to seek its revocation (not
reduction).
Revocation of donation in a conditional
donation
A donor cannot revoke a conditional donation
unilaterally, that is, without going to court, even if
the donee had breached any of the obligations
imposed in the donation. A judicial action is
essential if the donee refuses to return the
property, or pay its value to the donor, or to
latter’s heirs or assigns. However, the action must
be filed within the prescriptive period fixed by
law, otherwise, it will be barred (Ongsiako v.
Ongsiako, G.R. No. 7510, March 30, 1957).
Q: Can the creditors of the deceased file an
action for reduction of inofficious donation?
A: NO. Only compulsory heirs or their heirs and
successors in interest may sue for reduction of
inofficious donations. The remedy of the creditor
is to sue, during the lifetime of the donor, for the
annulment of inofficious donation made in fraud
of creditors (NCC, Art. 1387); or they can go
against the estate of the deceased and not against
the donees.
EFFECTS OF REVOCATION OR REDUCTION OF
DONATION
252
 PROPERTY
Obligations of the donee upon the revocation From the date
or reduction of donation an information
Appearance of was received as
1. Return the thing or the object of the donation; a child to the existence
Four years
2. If the property had already been alienated and believed to be or survival of
could not be recovered anymore, its value dead the child
shall be paid to the donor. The value shall be believed to be
the price of the property estimated at the time dead.
of the perfection of the donation; Non- From the non-
3. If the property had been mortgaged, the compliance compliance
donor may pay the mortgage obligations, with any Four years with the
subject to reimbursement by the done (NCC, condition condition.
Art. 762). imposed
From the time
Obligation of the donee to return the fruits the donor had
learned of the
1. If due to non-compliance with any condition donee’s act of
imposed on the donation – Fruits acquired Act of
One year ingratitude,
after non-compliance shall be returned; and ingratitude
provided it was
2. If due to causes stated under Art. 760, possible for
ingratitude, or inofficious donations – fruits him to file an
acquired from the time the complaint is filed action.
shall be returned (NCC, Art. 768).
Q: What if the donor dies within the four-year
PRESCRIPTION prescriptive period?

Period of prescription of action for revocation A: The right of action to revoke or reduce is
or reduction of donation transmitted to his heirs (Pineda, 1999).

BASIS PRESCIPTIVE RECKONING Q: Jose, single, donated a house and lot to his
PERIOD PERIOD only niece, Maria, who was of legal age and
From the birth who accepted the donation. The donation and
Birth of child Four years of the first Maria's acceptance thereof were evidenced by
child. a Deed of Donation. Maria then lived in the
From birth of house and lot donated to her, religiously
the legitimated paying real estate taxes thereon. Twelve years
child, not from later, when Jose had already passed away, a
Legitimation Four years
the date of woman claiming to be an illegitimate daughter
marriage of the of Jose filed a complaint against Maria.
parents. Claiming rights as an heir, the woman prayed
From the date that Maria be ordered to reconvey the house
the recognition and lot to Jose's estate. In her complaint she
Recognition of
of the child by alleged that the notary public who notarized
an
Four years any means the Deed of Donation had an expired notarial
illegitimate
enumerated in commission when the Deed of Donation was
child
Art. 712 of the executed by Jose. Can Maria be made to
Family Code. reconvey the property? What can she put up as
From the date a defense? (2015 Bar)
of filing of the
original A: NO. Maria cannot be compelled to reconvey the
petition for property. The Deed of Donation was void because
adoption, it was not considered a public document.
Adoption Four years
provided a However, a void donation can trigger acquisitive
decree of prescription (Solis v. CA, G.R. Nos. 46753-54, August
adoption is 25, 1989; Doliendo v. Biarnesa, G.R. No. 2765,
issued December 27, 1906). The void donation has a
thereafter. quality of titulo colorado enough for acquisitive

253
 CIVIL LAW
prescription especially since 12 years had lapsed
from the deed of donation.
Maria can set up the defense that the action has
prescribed. An action for revocation of the
donation on the ground that it impaired the
legitime of a compulsory heir may only be filed
within ten (10) years from the time the cause of
action accrues which is at the time of the death of
Jose. The facts are not clear as to when Jose died
but on the assumption that he died ten years prior
to the filing of the action, the same has clearly
prescribed.
INGRATITUDE
Q: Are there any other grounds for revocation
of donation by reason of ingratitude other
than those enumerated under Art. 765 of NCC?
A: NONE. The grounds under Art. 765 are
exclusive.
NOTE: The rationale behind the article is that a
person who has been favoured with kindness and
generosity has the moral obligation to be and
remain grateful to the befactor. It is a matter of
tradition that generosoity must not be
reciprocated with ungratefulness.
Q: Suppose the husband of the donee had
maligned the donor, is there a ground for
revocation by reason of ingratitude?
A: None. The act must be imputable to the donee
himself and not to another (Pineda, 1999).
Mortgages and alienations effected before the
notation of the action for revocation
If there are mortgages and alienations effected
before the notation of the complaint for
revocation in the Registry of Property, such
alienations and mortgages shall remain valid and
must be respected (NCC, Art. 766).
NOTE: Alienations and mortgages after the
registration of the pendency of the complaint shall
be void.
Remedy of the donor
If the property is already transferred in the name
of the buyer or mortgagee, the remedy of the
donor is to recover the value of the property
determined as of the time of the donation (NCC,
Art. 767).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Waiver of actions to revoke donations
The donor CANNOT make a renunciation of
actions to revoke in advance. Such waiver is void.
However, the donor may renounce an action to
revoke if the act of ingratitude had already been
done.
PRESCRIPTION
DEFINITION
It is the means of acquiring ownership and other
real rights or losing rights or action to enforce
such rights through lapse of time in the manner
and under the conditions laid down by law.
NOTE: The applicability of prescription is a
question of fact. It is evidentiary and has to be
established by clear and convincing evidence.
Two concepts of prescription
1. Acquisitive prescription/ Adverse Possession -
It is the acquisition of ownership and other
real rights through possession of a thing in
the manner and under the conditions
provided for by law.
a. Ordinary acquisitive prescription- requires
possession of things in good faith and
with just title for the time fixed by law
which is 10 years; and
b. Extraordinary acquisitive prescription- the
acquisition of ownership and other real
rights without the need of title or of good
faith or any other condition and would
prescribe in 30 years (De Leon, 2011).
Requisites of prescription as a mode of
acquiring ownership
1. Capacity to acquire by prescription;
2. A thing capable of acquisition by
prescription;
3. Possession of the thing under certain
conditions; and
4. Lapse of time provided by law.
Mere possession with a juridical title, such as
by a usufructuary, a trustee, a lessee, an
agent, or a pledge, not being in the concept of
an owner cannot ripern into ownership by
acquisitive prescription unless the juridical
relation is just expressly repudiated ans such
repudiation hase been communicated to the
254
 PROPERTY
other party. (Esguerra v Manantan, G.R. No.
158328, February 23, 2007)

NOTE: The first two requisites apply to both

ordinary and extraordinary prescription, but
the last two requisites vary for each kind.
2. Extinctive prescription or limitation of actions
– It involves loss of property rights or actions
through the possession by another of a thing
for the period provided by law or failure to
bring the necessary action to enforce one’s
right with in the period fixed by law. Rights
and actions are lost by the lapse of time
(NCC, Articles 1106 and 1139).

NOTE: It is also referred to as prescription of

actions, statute of limitations, and statute of
repose.

255
 CIVIL LAW

TIME OF FILING OF TRANSMISSIBILITY OF EXTENT OF RIGHTS TO THE

THE ACTION ACTION REDUCTION FRUITS
1. Failure of the donor to reserve sufficient means for support (Art. 750)
Any time by the donor Not transmissible. Donation reduced to Donee is entitled to the
or by relatives entitled NOTE: the duty to give extent necessary to fruits as owner of the
to support during the and right to receive provide support (NCC, property donated (NCC,
donor’s lifetime (NCC, support are personal (FC, Art. 750). Art. 441)
Art. 750). Art. 195).

2. Inofficiousness for being in excess of what the donor can give by will (NCC, Art. 750, 771)
Within five years after Transmissible to donor’s Donation effective Donee appropriates
the donor’s death (NCC, heirs as donation shall during the donor’s fruits (NCC, Art. 441).
Articles 771 and 1149) be reduced as regards lifetime subject to
the excess at donor’s reduction only upon his
death (NCC, Art. 771). death with regard to the
excess (NCC, Art. 771).
3. Birth, appearance or adoption of a child (NCC, Art. 760)
[Same as in no. 1 [Same as in no. 1 [Same as in no. 1 Donee appropriates
Revocation] Revocation] Reduction] fruits not affected by
reduction (NCC, Art.
Within four years from To children & Donation reduced to 441). When donation is
birth of first child, descendants of donor extent necessary to revoked for any of the
legitimation upon his death provide support (NCC, cause mentioned in Art.
(recognition), adoption, [NCC, Art. 763(2)]. Art. 750). 760, the donee shall not
judicial declaration of return the fruits except
filiation or receipt of info from the filing of the
of existence of the child complaint (NCC, Art.
believed to be dead 768).
(NCC, Art. 763).
4. Fraud against creditors (NCC, Art. 759)
Within four years from To creditor’s heirs or Property returned for Fruits shall be returned
perfection of donation successors-in-interest the benefit of creditors in case donee acted in
or from knowledge by (NCC, Art. 1178). subject to the rights of bad faith; if impossible
the creditor of the innocent third persons to return, indemnify the
donation (NCC, Art. (NCC, Art. 1387). donor’s creditor for
1389). damages (NCC, Art.
1388).

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 256
 PROPERTY
Acquisitive prescription v. Extinctive it either has
prescription abandoned it or
declined to assert it. It
ACQUISITIVE EXTINCTIVE applies even to
PRESCRIPTION PRESCRIPTION imprescriptible actions
Applicable to Applicable to all e.g. an action to annul a
ownership and kinds of rights, void contract may be
Applicability barred by laches.
other real rights. whether real or
personal. As to creation
Prescription is purely A creation of equity
Expressly vests Produces statutory in origin and is which, as such, is
the property extinction of founded on ground of applied not really to
and raised a rights or bars a public policy. Time limit penalize neglect or
new title in the right of action. is imposed for a party to sleeping upon one's
occupant. Results in the enforce his claim so that right, but rather to
The relationship loss of a real or title to property and avoid recognizing a
between the personal right other rights will be right when to do so
occupant and he or bars the stabilized. It protects would result in a
Legal effect
land in terms of cause of action the person who is clearly inequitable
possession is to enforce said diligent and vigilant in situation (Chavez v.
capable of right. One does asserting his right, and Bonto-Perez, G.R. No.
producing legal not look to the conversely punishes the 109808, March 1,
consequences. It act of the person who sleeps on 1995).
is the possessor possessor but to his right (Fernandez v.
who is the actor. the neglect of Cuerva, G.R. No. L-
the owner. 21114 November 28,
Possession of a Inaction by the 1967).
claimant who is owner or As a defense
As to
not the owner. neglect of one GR: Evidentiary in Evidentiary in nature
requisite
with a right to nature and requires full and cannot be
bring his action. blown trial. established by mere
Can be proven Should be allegations in the
under the affirmatively XPNs: pleadings. The party
general issue pleaded and 1) When the plaintiff’s alleging laches must
As a defense without its proved to bar complaint on its adduce in court
being the action or face or the evidence evidence proving such
affirmatively claim of the he presented shows allegation (Apo v. Sps.
pleaded. adverse party. clearly that indeed Roberto, G.R. No.
the action has 198356, April 20,
Prescription v. Laches prescribed at the 2015).
time it was filed; or
PRESCRIPTION LACHES 2) If, before trial, a
Concept party has no means
One acquires ownership The failure or neglect, of knowing that
and other real rights for an unreasonable opponent’s claim
through the lapse of and unexplained has already lapsed,
time in the manner and length of time, to do prescription as a
under the action laid that which by defense may be
down by law. exercising due pleaded later as
diligence could or soon as the true
should have been done nature of the claim
earlier; it is negligence is discovered (De
or omission to assert a Leon, 2011).
right within a
reasonable time, The burden of proof
warranting a rests on the part
presumption that the claiming it. Failure to
party entitled to assert plead constitutes as a

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 CIVIL LAW
waiver of defense and 1. Demand right of way;
cannot be raised for the 2. Abate public /private nuisance;
first time on trial or 3. Declare contract void;
appeal. 4. Recover property subject to expressed trust;
5. Probate of a will; and
Who may acquire by prescription (PSM) 6. Quiet title.

1. Persons who are capable of acquiring property

by other legal modes;
2. State; and
3. Minors – through guardians of personally.
Persons against whom prescription may run
1. Minors and other incapacitated persons who
have parents, guardians or other
legal representatives;
2. Absentees who have administrators, either
appointed by them before their
disappearance, or appointed by the courts;
3. Persons living abroad, who have managers or
administrators;
4. Juridical persons, except the State and its
subdivisions (NCC, Art. 1108); and
5. Prescription, acquisitive and extinctive, runs
in favor of, or against a married woman (NCC,
Art. 1110). This presupposes a situation
where the parties involved are a married
woman and another person not her husband.
Prescription may be in favor of or against the
married woman. Persons who are disqualified
from administering their property have a
right to claim damages from their legal
representatives whose negligence has been
the cause of prescription.
Things subject to prescription
All things within the commerce of men;
a. Private property; and
b. Patrimonial property of the state
Note: Patrimonial property of the state is the
property it owns but which is not devoted to
public use, public service, or the development of
national wealth. It is wealth owned by the state in
its private, as distinguished from its public,
capacity (Paras, 2008).
Things not subject to prescription
1. Public domain;
2. Intransmissible rights;
3. Movables possessed through a crime; and
4. Registered land.
Rights not extinguished by prescription
ACQUISITIVE PRESCRIPTION
CHARACTERISTICS
Basis of acquisitive prescription
It 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).
Q: What are the basic requirements of
prescription as a mode of acquiring
ownership?
A:
1. Actual possession of a property, which is
susceptible of prescription;
2. Possession must be in the concept of an
owner and not that of a mere holder (NCC, Art.
1118);
3. Possession must be public or open (NCC, Art.
1118);
4. Possession must be peaceful (NCC, Art. 1118);
5. Possession must be continuous and not
interrupted (NCC, Art. 1118);
6. Possession must be adverse, that is, exclusive
and not merely tolerated;
7. Possession must satisfy the full period
required by law (Pineda Succession and
Prescription, p. 606, 2009);
ORDINARY PRESCRIPTION
It requires possession of things in good faith and
with just title for the time fixed by law.
Good faith
Q: When is a possessor in good faith?
A: If he is not aware of the existence of any flaw or
defect in his title or mode of acquisition which
invalidates it (NCC, Art. 526 in relation to Art.
1128) and has reasonable belief that the person
from whom he received the thing was the owner

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 258
 PROPERTY
thereof, and could transmit his ownership (NCC, 5. Good faith of possessor or proof of just title.
Art. 1127).
PERIOD
Q: When must good faith exist?
Q: What are the periods as regards
A: It must exist not only from the beginning but prescription as a mode of acquisition of
throughout the entire period of possession fixed ownership?
by law (Pineda Succession and Prescription, p. 643,
2009 ed). A:
1. Movables
Just title a. 4 years ‐ If in good faith; and
b. 8 years ‐ If in bad faith.
It means that the possessor obtained the
possession of the property through one of the 2. Immovables
modes recognized by law for acquiring ownership a. 10 years ‐ If in good faith; and
but the transferor or grantor was not the owner of b. 30 years ‐ If in bad faith.
the property or he has no power to transmit the Q: How does ownership of personal property
right (NCC, Art. 1129). prescribe?
A: Through uninterrupted possession for 8 years,
Note: Just title is never presumed, it must be without need of any other condition (NCC, Art.
proved (NCC, Art. 1130). 1132).

Note: The title for prescription must be true and Q: How about ownership and other real rights
valid (NCC, Art. 1130). over immovables?

True title A: They prescribe through uninterrupted adverse

possession for 30 years, without need of title or of
One which actually exists and is not just a good faith (NCC, Art. 1137).
pretended one.
Q: What are the rules for the computation of
Note: An absolutely simulated or fictitious title is time necessary for prescription?
void and cannot be a basis for ordinary A:
prescription (Pineda Succession and Prescription, 1. The present possessor may complete the
p. 646, 2009). period necessary for prescription by tacking
his possession to that of his grantor or
Valid title predecessor in interest;
2. It is presumed that the present possessor who
A title which is sufficient to transmit ownership of was also the possessor at a previous time, has
the property or right being conveyed had the continued to be in possession during the
transferor or grantor been the real owner thereof. intervening time, unless there is proof to the
contrary; and
EXTRAORDINARY PRESCRIPTION 3. The first day shall be excluded and and the
last day included (NCC, Art 1138).
Prescription where the possessor is in bad faith. It
does not require good faith or just title but Q: Emilio died, leaving 8 children. In 1960, His
possession for a period longer than ordinary eldest child, Flores, took possession of and
acquisitive prescription (Pineda Succession and cultivated the land, caused the cancellation of
Prescription, p. 607, 2009). the tax declaration in Emilio’s name covering a
parcel of land and caused the issuance of
Requisites of extraordinary prescription another in his own name. The co‐heirs of
(CLAS-G) Flores discovered the cancellation. Upon
Flores’ death, the heirs of his sisters together
1. Capacity of the possessor to acquire by with his surviving sisters filed a complaint in
prescription; 1999 against the heirs of Flores for partition of
2. Susceptibility of object to prescription; the lot and declaration of nullity of the
3. Adverse possession of the character documents. Did the heirs of Flores acquire
prescribed by law; ownership over the lot by extraordinary
4. Lapse of time required by law; and acquisitive prescription?

259
 CIVIL LAW
A: YES. While the action to demand partition of a
co‐owned property does not prescribe, a co‐owner
may acquire ownership thereof by prescription,
where there exists a clear repudiation of the co‐
ownership, and the co‐owners are apprised of the
claim of adverse and exclusive ownership. In this
case, the respondents never possessed the lot,
much less asserted their claim thereto until 1999
when they filed the complaint for partition. In
contrast, Flores took possession of the lot after
Emilio’s death and exercised acts of dominion
thereon‐ tilling and cultivating the land,
introducing improvements, and enjoying the
produce thereof. The statutory period of
prescription commenced in 1960 when Flores,
who had neither title nor good faith, secured a tax
declaration in his name and may, therefore, be
said to have adversely claimed ownership of the
lot. On said date, respondents were also deemed
to have become aware of the adverse claim.
Flores’s possession thus ripened into ownership
through acquisitive prescription after the lapse of
30 years (Heirs of Restar v. Heirs of Cichon, G.R. No.
161720, November. 22, 2005).
Q: Sixto, owner of a parcel of land, died. He was
survived by his wife and three children. The
subject land was donated by his wife to
Silverio, who immediately entered into
possession of the land, built a fence around it,
constructed a residential house, declared it for
tax purposes and paid the taxes thereon, and
resided there until his death. After 45 years
from the time of donation, Soledad, one of
Sixto’s children, filed a complaint for recovery
of ownership, and possession against Silverio.
Who is the rightful owner of the land?
A: Silverio became the rightful owner of the land
by extraordinary acquisitive prescription. In
extraordinary prescription ownership and other
real rights over immovable property are acquired
through uninterrupted adverse possession thereof
for 30 years without need of title or of good faith.
When Soledad filed the case, Silverio was in
possession of the land for 45 years counted from
the time of the donation. This is more than the
required 30 years of uninterrupted adverse
possession without just title and good faith. Such
possession was public, adverse and in the concept
of an owner. He declared the land for taxation
purposes and religiously paid the realty taxes
thereon. Together with his actual possession of
the land, these tax declarations constitute strong
evidence of ownership of the land occupied by
him (Calicdan v. Cendeña, G.R. No. 155080,
February. 5, 2004).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Q: Anthony bought a piece of untitled
agricultural land from Bert. Bert, in turn,
acquired the property by forging Carlo’s
signature in a deed of sale over the property.
Carlo had been in possession of the property
for eight years, declared it for tax purposes,
and religiously paid all taxes due on the
property. Anthony is not aware of the defect in
Bert’s title, but has been in actual physical
possession of the property from the time he
bought it from Bert, who had never been in
possession. Anthony has since then been in
possession of the property for one year.
Can Anthony acquire ownership of the
property by acquisitive prescription? How
many more years does he have to possess it to
acquire ownership?
A: YES Anthony can acquire ownership of the
property by ordinary acquisitive prescription
which requires just title and good faith (NCC, Art.
1117). There was just title because a deed of sale
was issued in his favor even though it was forged,
which fact he was not aware of. He needs to
possess the land in good faith and in the concept
of owner for a total of ten years in order to acquire
ownership. Since Anthony possessed the land for
only one year, he has not completed the ten‐year
period. Even if Anthony tacks the 8‐year period of
possession by Carlo who in the deed of sale is
supposed to be his grantor or predecessor in
interest [NCC, Art. 1138(1)], the period is still short
of ten years.
If Carlo is able to legally recover his property,
can he require Anthony to account for all the
fruits he has harvested from the property
while in possession?
A: Since Anthony is a possessor in good faith,
Anthony cannot be made to account for the fruits
he gathered before he was served with summons.
A possessor in good faith is entitled to the fruits
received before the possession was legally
interrupted by the service of summons (NCC, Art.
544). After Anthony was served with summons, he
became a possessor in bad faith and a builder,
planter, sower in bad faith. He can also be made to
account for the fruits but he may deduct expenses
for the production gathering and preservation of
the fruits (NCC, Art. 443).
Q: If there are standing crops on the property
when Carlo recovers possession, can Carlo
appropriate them? (2008 Bar)
A: The value of the standing crops must be
prorated depending upon the period of possession
260
 PROPERTY
and the period of growing and producing the a crime such as robbery, theft,
fruits. Anthony is entitled to a part of the net or estafa.
harvest and a part of the expenses of cultivation in
proportion to his period of possession. However, NOTE: The person who
Carlo may allow Anthony to gather these growing cannot invoke the right of
fruits as an indemnity for the expenses of By Offender prescription is the offender or
cultivation. If Anthony refuses to accept this person who committed the
concession, he shall lose the right to indemnity crime or offense, not a
under Art. 443 (NCC, Art. 545, par. 3). subsequent transferee who
did not participate in the
crime or offense, unless the
EXTINCTIVE PRESCRIPTION latter knew the criminal
nature of the acquisition of
the property by the transferor
CHARACTERISTICS (NCC, Art. 1133, Pineda
Succession and Prescription, p.
Basis of extinctive prescription 651, 2009).
1. An action to recover a
It based on the probability, born of experience, registered land by the
that the alleged right which accrued in the past owner; and
never existed or has already been extinguished; or 2. Right to petition for the
if it exists, the inconvenience caused by the lapse Registered issuance for the issuance of
of time should be borne by the party negligent in Lands (P.D. a Writ of Possession filed
the assertion of his right (Tolentino, Civil Code of 1529) by the applicant for
the Philippines, Vol. IV, p. 2). registered land.

Requisites: NOTE: Similarly, an action to

recover possession of a
1. Capacity to acquire by prescription; registered land never
2. A thing capable of acquisition by prescription; prescribes.
3. Possession of the thing under certain 1. Action legal
conditions; and to demand a Imprescriptible
4. Lapse of time provided by law. right of way
2. To abate a
PERIODS nuisance
Action to quiet
Q: What are the periods as regards title if plaintiff Imprescriptible
prescription of actions to recover movables in possession
and immovables?
Applies to both action and
A: defense.
1. Movables
a. 4 years ‐ If in good faith; and Void contracts Note: However, an action to
b. 8 years ‐ If in bad faith (NCC, Art. 1140 in annul a voidable contract
relation to Art. 1132). prescribes after four years.
Action to As long as the co‐ownership is
2. Immovables demand recognized expressly or
a. 10 years ‐ If in good faith partition impliedly (NCC, Art. 494).
b. 30 years ‐ If in bad faith
Note:
Distinguished
INSTANCES WHEN PRESCRIPTION IS NOT from laches
ALLOWED Right of reversion or
reconveyance to the State of
the public properties
NO PRESCRIPTION registered and which are not
APPLICABLE capable of private
When it is possessed through Property of appropriation or private

261
 CIVIL LAW
public dominion acquisition does not
prescribe.
NOTE: In contrast, where
private property is taken by
the Government for public use
without first acquiring title
thereto either through
expropriation or negotiated
sale , the owner’s action to
recover the land or the value
thereof does not prescribe.
Prescription and laches cannot apply to registered
land covered by the Torrens system" because
"under the Property Registration Decree, no title
to registered land in derogation to that of the
registered owner shall be acquired by
prescription or adverse possession" (Jakosalem vs.
Barangan, G.R. No. 175025, February 15, 2012)
(Del Castillo, J.)
PRESCRIPTION OR LIMITATION OF ACTIONS
ACTIONS PRESCRIPTIVE
PERIOD
Recover Movables Eight years (good
faith)or Four years
(bad faith) from the
time the possession is
lost (NCC, Art. 1140,
Pineda Succession and
Prescription, p. 666,
2009).
Recover Immovables 30 years (Recover
ownership) (NCC, Art.
1141).
10 years (Recover real
right of possession)
(NCC, Art. 555(4); and
Pineda Succession and
Prescription, p. 667,
2009).
Mortgage Action 10 years from default of
mortgagor (NCC, Art.
1142).
Based on written 10 years
contract
Note: If contract is oral
or quasi, prescriptive
period is six years (NCC,
Art. 1145)
Based on obligation 10 years from the time
created by law the right of action
accrues
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
10 years from the day
Based on judgment judgment became final
and executory (NCC,
Art. 1144)
Based upon an injury Four years
to the rights of
plaintiff
Based on quasi‐ Four years (NCC, Art.
delicts 1146)
Forcible entry and One year
detainer
Defamation One year (NCC, Art.
1147)
All other actions not Five years (NCC, Art.
specified 1149)
INTERRUPTION
Q: What are the grounds for interruption of
prescriptive period?
A:
1. When they are filed before the court;
2. When there is a written extrajudicial demand
by the creditors; or
3. When there is any written acknowledgment of
the debt by the debtor (NCC, Art. 1155)
Prescription where possession in Good Faith is
converted into possession in Bad Faith.
If the possession in good faith is later converted in
to bad faith the prescriptibve period shall be
computed in the following manner:
Movables – The period of ordinary period is four
(4) years, while that of extraordinary prescription
is eight (8) years. Since the period of
extraordinary prescription is two (2) times longer
than the ordinary prescription, the number of
years in ordinary period will be multiplied by 2 to
get the period for extraordinary prescription.
Eg. If after two (2) years of possession in good faith
of a movable property, the possession was
converted in bad faith. The 2 years would be
equivalent to 4 years possession in bad faith.
Immovable – The period for ordinary
prescription in good faith is 10 years and 30 years
for extraordinary or in bad faith. Since the
extraordinary prescription is three (3) times
longer than the ordinary prescription it shall be
multiplied by 3.
262
 PROPERTY

Eg. If after six (6) years of possession in good faith

of a real property, the possession was converted in
bad faith, the six (6) years of possession in good
faith would be equivalent to 18 years possession in
bad faith.

263
 CIVIL LAW
SUCCESSION Rules on properties acquired after the
execution of a will
GENERAL PROVISIONS
GR: Property acquired during the period between
the execution of the will and the death of the
Succession is a mode of acquisition by virtue of
testator will not pass under the provisions of the
which the property, rights and obligations to the
will but by the rules on legal succession.
extent of the value of the inheritance of a person,
Otherwise stated, the property will NOT form part
are transmitted through his death to another or
of the estate of the testator that will pass on to his
others either by his will or by operation of law
instituted heirs.
(NCC, Art. 774).
XPNs:
Requisites of succession (DATE)
1. When a contrary intention expressly appears
in the will (NCC, Art. 793), in which case the
1. Death of decedent;
property will be included in that portion of
2. Acceptance of the inheritance by the
the estate that will pass to the instituted heirs
successor;
by way of testamentary succession; and
3. Transmissible estate; and
2. If the property acquired after the execution of
4. Existence and capacity of successor,
the will is one which the testator has disposed
designated by decedent or law.
of under his will as a legacy or device, i.e., the
property did not belong to the testator at the
A decedent is a person whose property is
time he disposed of it as a device or as a
transmitted through succession whether or not he
legacy and he only acquired the same after
left a will. If the decedent left a will, he is also
making his will (NCC, Art. 930). In this case,
called a testator (NCC, Art. 775).
the legacy or device will be given effect even if
the will is silent with regard to such an
Inheritance includes all the property, rights and
intention on the part of the testator.
obligations of a person which are not extinguished
by his death (NCC, Art. 776).
Liability of the heirs for the obligations of the
decedent
The inheritance of a person includes not only the
property and the transmissible rights and
The heirs CANNOT be held personally liable with
obligations existing at the time of his death, but
their own individual properties for the debts or
also those which have accrued thereto since the
obligations left by the decedent. The responsibility
opening of the succession (NCC, Art. 781).
of the heirs for the debts of their decedent cannot
exceed the value of the inheritance they receive
Purely personal rights are extinguished by death.
from him. (Estate of K.H. Hemady v. Luzon Surety
Hence, they are not transmitted to the heirs.
Co., G.R. No. L-8437, November 28, 1956) It is only
after the debts are paid that the residue of the
The heirs succeed not only to the rights of the
estate is distributed among the successors.
deceased but also to his obligations.
Q: Before his death, A borrowed from X P1, 000
GR: Rights and obligations arising from contracts
as evidenced by a promissory note. A died
are binding upon the heirs.
without paying the debt. A left no property but
he is survived by his son, B, who is making
XPNs: When the rights and obligations arising are
good in the buy and sell business.
not transmissible by:
Subsequently, X brought an action against B
1. Their nature
for the collection of P1,000 plus legal interest
2. Stipulation
thereon on the ground that, since B is the only
3. Provision of law. (NCC, Art. 1311)
heir of A, he inherited from the latter not only
the latter’s property, but also all his rights and
Inheritance Succession obligations. Will the action prosper? Reason.
It is the objective A: NO. The heirs are not personally liable with
element of succession, It is the legal mode by their own individual properties for the monetary
to the mass or totality of which inheritance is obligations/debts left by the decedent. As a rule,
the estate of a deceased transmitted. the party’s contractual rights and obligations are
person. transmissible to the successors except when the

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 264
 SUCCESSION
nature of the obligation, stipulation of the parties,
or by operation of law prevents transmissibility.
(Art. 1311 of Civil Code as explained in the Estate of
K.H. Hemady v. Luzon Surety Co., G.R. No. L-8437,
November 28, 1956)
A contract of guaranty is NOT extinguished by
death
It is not extinguished by death because a contract
of guaranty is not one of the exceptions under Art.
1311 of NCC (Relativity of Contracts). A
guarantor’s obligation is basically to pay the
creditor if the principal debtor cannot pay.
Payment does not require any personal
qualifications. The personal qualifications become
relevant only at the time the obligation is incurred
but not so at the time of discharge or fulfillment of
the obligation (Estate of K.H. Hemady v. Luzon
Surety Co., Inc., G.R. No. L-8437, November 28,
1956).
Q: Fortunata died while her action for quieting
of title of parcels of land was pending. Does
her death result in the extinguishment of the
action or may her heirs substitute her in the
case?
A: Her heirs may substitute her because the action
is not extinguished by her death. Since the rights
to the succession are transmitted from the
moment of the deathof the decedent, the heirs
become the absolute owners of his property,
subject to the rights and obligations of the
decedent, and they cannot be deprived of their
rights thereto except by the methods provided for
by law. The right of the heirs to the property of the
deceased vests in them upon such death even before
judicial declaration of their being heirs in the
testate or intestate proceedings.
When she died, her claim or right to the parcels of
land in litigation was not extinguished by her
death but was transmitted to her heirs upon her
death. Her heirs have thus acquired interest in the
properties in litigation and became parties in
interest in the case (Bonilla v. Barcena, et al., G.R.
No. L-41715, June 18, 1976).
Q: Can the heir enter into a contract of sale,
conveyance or any disposition pertaining to
his interest in the inheritance even pending
the settlement of the estate?
A: YES, because his hereditary share/interest in
the decedent’s estate is transmitted or vested
immediately from the moment of decedent’s
death. This is, however, subject to the outcome of
265
the settlement proceedings to determine the
rights and definite portions of the estate
pertaining to the vendees, assignees, or creditors.
Future inheritance
GR: No contract may be entered into upon future
inheritance [NCC, Art. 1347, (2)].
XPNs:
1. Partition inter vivos (NCC, Art. 1080)
2. Donations propter nuptias by future spouses
to each other of future property
Requisites for the contract to be classified as
one upon future inheritance:
1. The succession has not yet been opened.
2. The object of the contract forms part of the
inheritance.
3. The promissory has an expectancy of a right
which is purely hereditary in nature with
respect to the object.
An heir CANNOT enter into a compromise
agreement to renounce his rights over a future
inheritance. (NCC, Art. 2035 par. 6)
Every renunciation or compromise as regards a
future legitime between the person owing it and
his compulsory heirs is void, and the latter may
claim the same upon the death of the former; but
they must bring to collation whatever they may
have received by virtue of the renunciation or
compromise (NCC, Art. 905).
A future legitime is merely an expectancy, and the
heir does not acquire any right over the same until
the death of the testator. Hence, juridically, there
is nothing on which to compromise. Furthermore,
Art. 1347 of NCC expressly provides that, “no
contract may be entered into upon future
inheritance except in cases expressly authorized
by law.”
Actual delivery is NOT necessary for an heir to
acquire ownership over an inherited property
The possession of hereditary property is deemed
transmitted to the heir without interruption and
from the moment of the death of the decedent, in
case the inheritance is transmitted.
Pending a proceeding determining the rightful
heirs, the prospective heirs can demand delivery
of their supposed inheritance because ownership
passes to the heir at the very moment of death.
 CIVIL LAW
This is the basis of the heirs’ rights to the fruits is
the Right of Accession.
SUCCESSION OCCURS AT THE MOMENT OF
DEATH
The rights to the succession are transmitted from
the moment of the death of the decedent (NCC, Art.
777). (2000 BAR)
The moment of death is the determining point
when the heirs acquire a definite right to the
inheritance, whether such right is pure or
conditional. The possession of hereditary property
is therefore deemed transmitted to the heir
without interruption and from the moment of
death of the decedent.
The interest of the heir over the inheritance prior
to the death of the decedent is merely inchoate or
a mere expectancy.
It is immaterial whether a short or long period of
time elapses between the death of the predecessor
and the entry in the possession of the properties
of the inheritance, because the right is always
deemed to retroact to the moment of death.
The law in force at the time of the decedent’s
death will determine who the heirs should be
(Uson v. Del Rosario, G.R. No. L-4963, January 29,
1953).
Presumptive Death
The absentee shall not be presumed dead for the
purpose of opening his succession till after an
absence of ten years. If he disappeared after the
age of seventy-five years, an absence of five years
shall be sufficient in order that his succession may
be opened (NCC, Art. 390).
The following shall be presumed dead for all
purposes, including the division of the estate
among the heirs:
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 (NCC, Art.
391).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
NOTE: If there is a doubt, as between two or more
persons who are called to succeed each other, as
to which of them died first, whoever alleges the
death of one prior to the other, shall prove the
same; in the absence of proof, it is presumed that
they died at the same time and there shall be no
transmission of rights from one to the other (NCC,
Art. 43).
KINDS OF SUCCESSION AND SUCCESSORS
Kinds of succession
a. Testamentary Succession - that which results
from the designation of an heir, made in a will
executed in the form prescribed by law (NCC,
Art. 779).
b. Legal or Intestate Succession - that which
takes place if a person dies without a will, or
with a void will, or one which has
subsequently lost its validity.
c. Mixed Succession - that effected partly by will
and partly by operation of law (NCC, Art. 780).
Kinds of Heirs
1. Voluntary or Testamentary Heirs – called to
succeed by virtue of the will of the testator:
a. Devisee - persons to whom gifts of real
property are given by virtue of a will
b. Legatee - persons to whom gifts of
personal property are given by virtue of a
will
NOTE: An heir is one who succeeds to the
whole (universal) or aliquot part of the estate.
Devisee or legatee is one who succeeds to
definite, specific, and individualized
properties.
2. Compulsory Heir – called by law to succeed to a
portion of the testator’s estate known as legitime.
They succeed by force of law to some portion of
the inheritance, in an amount predetermined by
law, of which they cannot be deprived by the
testator, except by a valid disinheritance.
3. Legal or Intestate Heir – those who succeed by
operation of law through intestate succession.
Those who succeed to the estate of the decedent
who dies without a valid will, or to the portion of
such estate not disposed of by will.
Distinctions between heirs and
legatees/devisees
BASIS HEIRS DEVISEES OR
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 SUCCESSION
LEGATEES a. to annul entirely the institution of heirs,
but
Represent the b. the legacies and devises shall be valid
juridical Never insofar as they are not inofficious.
As to personality of represent the
representation the deceased personality of 2. Imperfect/defective disinheritance (NCC, Art.
of decedent’s and acquire the deceased 918)
juridical their rights, no matter how
person with certain big the legacy The effect is:
exceptions to or the devise a. to annul the institution of heirs insofar
his is. as it may prejudice the person
obligations. disinherited, but
b. the devises and legacies and other
Inherit an testamentary dispositions shall be valid
undetermined to such extent as will not impair the
quantity legitime.
Determination whose exact
Are always
of amount of amount TESTAMENTARY SUCCESSION
given a
inheritance cannot be
determinate
known and A will is an act whereby a person is permitted,
thing or a fixed
which cannot with the formalities prescribed by law, to control
amount
be fixed until to a certain degree the disposition of his estate, to
the
take effect after his death (NCC, Art. 783).
inheritance is
liquidated.
A will has been defined as “a personal, solemn,
Succeed to the revocable and free act by which a capacitated
Only succeed person disposes of his property and rights and
remainder of
to the declares or complies with duties to take effect
Extent of the properties
determinate after his death” (Vitug v. Court of Appeals, G.R. No.
successional after all the
thing or 82027, March 29, 1990).
right debts and all
quantity which
the legacies
is mentioned Characteristics of a Will
and devices
in the legacy or
have been
devise 1. Statutory right – The making of a will is only
paid or given
a statutory not a natural right. The testator
Can exist must comply with the provisions of law
As to when they whether the Only in establishing the formalities of a will.
exist succession be testamentary 2. Unilateral act – No acceptance by the
testate or succession transferees is needed during the lifetime of
intestate the testator.
3. Strictly personal act – The disposition of
Q: Suppose a person is named to succeed to an property is solely dependent upon the
entire estate. The estate, however, consists of testator.
only one parcel of land. Is he an heir or a 4. Ambulatory – A will is essentially revocable
devisee? during the lifetime of the testator. The
testator can alter, revise, or revoke it at any
A: It depends on the manner of his designation in time before his death.
the will. Here, because he is called to inherit the 5. Free from vices of consent – It must be
entire estate, he is an heir. executed freely, knowingly and voluntarily,
otherwise, it will be disallowed.
Instances where the distinctions between 6. Individual act – A will must be executed only
heirs and devisees/legatees become by one person. A joint will executed by
significant Filipinos even abroad is not allowed in the
Philippines.
1. Preterition (NCC, Art. 854)
NOTE: Mutual wills – Separate wills although
The effect is: containing reciprocal provisions are not

267
 CIVIL LAW
prohibited, subject to the rule on disposicion
captatoria.
7. Solemn or formal act – A will is executed in
accordance with formalities prescribed by
law.
8. Dispositive of property – disposition of the
testator’s estate mortis causa.
Q: The document, a holographic one, contained
only a clause of disinheritance of one of the
testator’s son. Does the document meet the
definition of the will under Art. 783 of NCC
although it does not contain any disposition of
the estate of the deceased?
A: The document, although it may initially come
across as mere disinheritance instrument,
conforms to the formalities of holographic will.
The disinheritance results in the disposition of the
property of the testator in favor of those who
would succeed in the absence of the disinherited
heir (Seangio v. Reyes, G.R. Nos. 140371–72,
November 27, 2006).
PERSONAL ACT;
NON-DELEGABILITY OF WILL-MAKING
The making of a will 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 (NCC, Art.
784).
Rule on non-delegability of will-making
The exercise of the disposing power is the act that
cannot be delegated. But the mere mechanical act
of drafting the will may be done by a third person
as it does not constitute a delegation of the will or
disposition.
Doctrine of Prohibited Designation
The following cannot be left to the discretion of a
third person:
1. Duration or efficacy of designation of heirs,
legatees, or devisees.
2. Determination of the portions which the heirs,
legatees or devisees are to receive when
referred to by name.
3. Determination as to whether or not a
disposition is to be operative (NCC, Art. 785
and 787).
NOTE: It is not only the delegation which is void;
the testamentary disposition whose effectivity will
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
depend upon the determination of the third
person is the one that cannot be made. Hence, the
disposition itself is void.
The following, however may be entrusted to a
third person:
1. Distribution of specific property or sums of
money that the testator may leave in general
to specified classes or causes.
2. Designation of the persons, institutions or
establishments to which such property or
sums are to be given or applied (NCC, Art.
786).
NOTE: Should the testator dispose of the whole or
part of his property for prayers and pious works
for the benefit of his soul, in general terms and
without specifying its application, the executor,
with the court's approval shall deliver one-half
thereof or its proceeds to the church or
denomination to which the testator may belong, to
be used for such prayers and pious works, and the
other half to the State, for the purposes mentioned
in article 1013 (NCC, Art. 1029).
Testamentary provisions in favor of the poor in
general, without designation of particular persons
or of any community, shall be deemed limited to
the poor living in the domicile of the testator at
the time of his death, unless it should clearly
appear that his intention was otherwise (NCC, Art.
1030).
Construction of a Will’s Provision
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 (NCC, Art. 788).
Construing the provisions of a will, substance
rather than form must be regarded, and the
instrument should receive the most favorable
construction to accomplish the purpose intended
by the testator.
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 (NCC, Art. 791).
Reason: Testacy is preferred over intestacy
because testacy is the express will of the decedent
whereas intestacy is only his implied will.
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 SUCCESSION
The invalidity of one of several dispositions
contained in a will does not result in the invalidity
of the other dispositions 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 (NCC, Art. 792).
declarations of the testator as to his
intention); and
3. In the case of patent ambiguities, the
extrinsic evidence acceptable is limited to
those pertaining to the circumstances
under which the will was executed.

Every devise or legacy shall cover all the interest Law governing the validity of wills
which the testator could devise or bequeath in the
property disposed of, unless it clearly appears BASIS AS TO TIME AS TO PLACE
from the will that he intended to convey a less Extrinsic the law in the will can be
interest (NCC, Art. 794). Validity - force at the executed in
refers to time of the accordance with the
Parol Evidence Rule in the interpretation of the forms making of formalities of the
wills and the will testator’s
solemnities nationality,
1. When there is an imperfect description, or when required by domicile, residence
no person or property exactly answers the law or the place where
description – mistakes and omissions must be the will was
corrected. executed depending
on the place where it
2. If the error appears from the context of the will is executed and the
or from extrinsic evidence, excluding the oral nationality of the
declarations of the testator as to his intention; and testator
when an uncertainty arises upon the face of the will, Intrinsic the law in the national law of
as to the application of any of its provisions – the Validity - force at the the testator
testator's intention is to be ascertained from the refers to time of the governs the intrinsic
words of the will, taking into consideration the the legality decedent’s validity of the will
circumstances under which it was made, of death regardless of the
excluding such oral declarations (NCC, Art.789). provisions place of execution.
in the will
Kinds of Ambiguities in a Will
PLACE OF APPLICABLE LAW(as
1. Latent (Intrinsic) – Ambiguities which are BASIS
EXECUTION to form)
not apparent on the face of a will but to
circumstances outside the will at the time the Philippines NCC
will was made. E.g. If it contains an imperfect Testator
description of person or property; No person is a 1. Law of the place of
Foreign
or property exactly answers the description. Filipino country execution
2. NCC
Example: Testator gives a legacy “to my cousin
Anna” and it will turn out that the testator has 1. NCC; or
Philippines
three cousins named “Anna” 2. National law
Testator
is an 1. National law;
2. Patent (Extrinsic) – when an uncertainty
alien Foreign 2. Law of the place of
arises upon the face of the will as to the
country residence;
application of any of its provisions (NCC, Art.
3. NCC
789).

Example: Testator gives a devise “to some of TESTAMENTARY CAPACITY AND INTENT
the eleven children of my only brother"
Testamentary capacity refers to the ability as
Steps in Resolving Ambiguities well as the power to make a will (2008 BAR).

1. Examine the will itself; In American law, testamentary capacity is

2. Refer to extrinsic evidence or the concerned with the ability of the testator while the
surrounding circumstances, (except oral testamentary power involves a privilege under the
law. Hence, although a person may have

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 CIVIL LAW
testamentary capacity, it does not necessarily
follow that he has testamentary power.
In the Philippines, such distinction is lost
altogether. The term testamentary power is
sometimes understood to refer to the power of the
testator to designate the person or persons who
are to succeed him in his property and
transmissible rights and obligations.
Requisites of Testamentary Capacity
1. All persons not expressly prohibited by law
(NCC, Art. 796)
2. At least 18 years of age; (NCC, Art. 797) and
3. Of sound mind (NCC, Art. 798)
NOTE: The ability as well as the power to make
a will must be present at the time of the execution
of the will.
It is not necessary that the testator be in full
possession of all his reasoning faculties or that his
mind be wholly unbroken, unimpaired or
unshattered by disease, injury or other cause.
To be of sound mind, it shall be sufficient if the
testator was able at the time of making the will to
know the:
a. nature of the estate to be disposed of;
b. proper objects of his bounty; and
c. character of the testamentary act
(NCC, Art. 799)
The requirement that the testator be of sound
mind is essential only at the time of the making of
the will (or execution).
If he is not of sound mind at that time, the will is
invalid regardless of the state of mind before or
after such execution.
NOTE: 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. Supervening incapacity does
not invalidate an effective will, nor is the will of an
incapable validated by the supervening capacity
(NCC, Art. 801).
GR: The law presumes that every person is of
sound mind, in the absence of proof to the
contrary (NCC, Art. 800, par. 1).
XPNs: If the testator was:
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
1. Publicly known to be insane, one
month or less, before making his
will; (NCC, Art. 800, par. 2)
2. Under guardianship at the time of
the making of the will (Torres v.
Lopez, G.R. No. L-25966, November 1,
1926).
NOTE: Mere weakness of mind or partial
imbecility from disease of body or from age does
not necessarily render a person incapable of
making a will.
SOUNDNESS OF MIND
It is not necessary that the testator be in full
possession of all his reasoning faculties, or that his
mind be wholly unbroken, unimpaired, or
unshattered by disease, injury or other cause.
It is sufficient if the testator was able to know at
the time of making the will to know the ff.:
1. Nature of the estate to be disposed of;
2. Proper objects of his bounty; and
3. Character of testamentary act. (NCC, Art.
799)
A person suffering from civil interdiction is
qualified to make a will. He is deprived of the
power to dispose of his properties through acts
inter vivos but not through acts mortis causa (RPC,
Art. 34).
The burden of proving that the testator acted in
lucid interval lies on the person who maintains the
validity of the will (NCC, Art. 800, par. 2).
Married woman
A married woman may make a will without the
consent of her husband, and without the authority
of the court (NCC, Art 802).
A married woman may dispose by will all her
separate property as well as her share of the
conjugal partnership or absolute community
property (NCC, Art 803).
FORMAL VALIDITY OF WILLS
Kinds of Wills allowed under the NCC:
(1) Ordinary or Notarial will - requires an
attestation clause, an acknowledgement before a
notary public;
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 SUCCESSION
(2) Holographic will - must be entirely written,
dated and signed in the handwriting of the
testator.
Time criterion - law at the time of execution;
subsequent laws cannot apply retroactively.
Place criterion - Under Art 815-817 of NCC, five
(5) choices are available to the testator; the law of:
1. The testator's citizenship
2. Testator's domicile
3. Place of execution
4. Testator's residence
5. Philippines (Balane, 1996)
The will of an alien who is abroad produces
effect in the Philippines if:
a. made with the formalities prescribed by the
law of the place in which he resides, or
b. b. according to the formalities observed in
his country, or
c. in conformity with those which the Civil
Code prescribes (NCC, Art. 816). (1990,
1998, 2009 BAR)
A will made in the Philippines by a citizen or
subject of another country, which is executed in
accordance with the law of the country of which
he is a citizen or subject, and which might be
proved and allowed by the law of his own country,
shall have the same effect as if executed
according to the laws of the Philippines (NCC,
Art. 817). (2002 BAR)
A joint will executed by Filipinos in a foreign
country shall not be valid in the Philippines,
even though authorized by the laws of the country
where they may have been executed (NCC, Art.
819). A joint will is against the public policy of the
Philippines particularly the policy that the
execution of a will is a strictly personal act.
GOVERNING LAW AS TO SUBSTANTIVE
VALIDITY
Laws relating to family rights and duties, or to the
status, condition and legal capacity of persons are
binding upon citizens of the Philippines even
though living abroad (NCC, Art. 15).
Matters pertaining to intestate and
testamentary successions which are regulated
by the national law of the deceased: (CIAO)
1. Capacity to succeed
2. Intrinsic validity of testamentary provisions
271
3. Amount of successional rights
4. Order of succession (NCC, Art. 16; NCC, Art.
1039).
Formal requirements common to both Notarial
and Holographic wills (2008 BAR)
1. Law governing extrinsic validity of wills;
2. In writing;
Noncupative wills are oral wills declared or
dictated by the testator and dependent merely
on oral testimony. Philippine laws do not
recognize the validity of “noncupative wills.”
3. In a language or dialect known to the testator.
The object of the solemnities surrounding the
execution of a will:
1. to close the door against bad faith and fraud,
2. to avoid substitution of wills and testaments
and
3. to guarantee their truth and authenticity.
NOTARIAL WILLS (1994, 2007, 2008 BAR)
Formalities in the Execution of a Notarial Will
(LaW-SPA2N2)
1. In Writing;
Executed in a language or dialect known to
the testator;
This rule is mandatory. Otherwise, the will is
void (Suroza v. Honrado, Adm. Matter No.
2026-CFI, December 19, 1981). It is also
applicable even if the provisions of the will
are interpreted or explained to the testator.
The fact that the will was executed in a
language known to the testator NEED NOT be
stated in the attestation clause. This fact can
be established by extrinsic evidence or
evidence aliunde (Lopez v. Liboro, G.R. No. L-
1787, August 27, 1948).
This rule does NOT apply to witnesses in a
notarial or attested will because the witnesses
do not need to know the contents of the will.
The attestation clause, on the other hand,
must be understood by the witnesses even if it
is in a language not known to them. (Art. 805
of NCC states that the attestation clause need
not be in a language known to the witnesses).
 CIVIL LAW
Presumption that the testator knew the
language in which the will was written is
present when:
a. the will must be in a language or dialect
generally spoken in the place of execution
b. the testator must be a native or resident
of said locality (Abangan v. Abangan, G.R.
No. 13431, Nov. 12, 1919).
3. Subscribed at the end thereof by the testator
himself or by the testator’s name written by
some other person in his presence, and by his
express direction;
The signature of the testator of the will must be at
the end of the will, which may be at the logical end
(last testamentary disposition) or physical end
(non dispositive provisions).
NOTE: In notarial wills, subscription by
fingerprint is allowed as long as it is voluntarily
made (Matias v. Salud, G.R. No. L-10751) but not in
holographic wills given the explicit requirement
for a holographic will to be entirely written, dated
and signed with the hand of the testator.
Cross as signature
GR: A cross is not a sufficient signature
XPNs: The cross appearing on the will is:
a. the customary, habitual signature of the
testator or
b. one of the ways the testator signs his
signature.
The one who alleges that it is the customary,
habitual or one of the ways he sign his signature
has the burden of proof (Garcia v. Lacuesta, G.R.
No. L-4067, November 29, 1951).
Signing by an Agent of the testator
a. must sign in testator’s presence, and
b. by the testator’s express direction
The important thing is that it should clearly
appear that the name of the testator was signed at
his express direction, in the presence of three
witnesses, and in the presence of the testator and
of each other (Barut v. Cabacungan, G.R. No. 6285,
February 15, 1912).
4. Attested and subscribed by three or more
credible witnesses in the presence of the
testator and of one another;
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Two Requirements:
a. Attesting – an act of witnessing
b. Subscribing–an act of signing their
names in the proper places of the will
Test for the Determination of the Presence
of Witnesses
In order that the witnessese be deemed
present at the time of the execution of thewill,
it suffices that the witnesses were so situated
in a manner that they had the opportunity to
see the testator sign the will. It is not
necessary that they actually saw the testator
affix his/her signature o the will.
The true test of presence of the testator and
the witnesses in the execution of a will is not
whether they actually saw each other sign, but
whether they might have seen each other sign
had they chosen to do so considering their
mental and physical condition and position
with relation to each other at the moment of
inscription of each signature.
The question whether the testator and the
subscribing witnesses to an alleged will sign
the instrument in the presence of each other
does not depend upon proof of the fact that
their eyes were actually cast upon the paper
at the moment of its subscription by each of
them, but whether at that moment existing
conditions and the position of the parties,
with relation to each other, were such that by
merely casting their eyes in the proper
direction they could have seen each other sign
(Nera v. Rimando, G.R. No. L-5971, February 27,
1911).
Actual seeing is not required, but the ability to
see each other by merely casting their eyes in
the proper direction and without any physical
obstruction to prevent his doing so (Jaboneta
v. Gustilo, G.R. No. 1641, January 19, 1906).
An attestation must state all the details the
third paragraph of Article 805 of NCC
requires. In the absence of the required
avowal by the witnesses themselves, no
attestation clause can be deemed embodied in
the Acknowledgement of the Deed of
Donation Mortis Causa (Echavez v. Dozen
Cons, G.R. No. 192916, October 11, 2010).
The law is clear that the attestation must state
the number of pages used upon which the will
is written. The purpose of the law is to
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 SUCCESSION
safeguard against possible interpolation or
omission of one or some of its pages and
prevent any increase or decrease in the pages
(Lopez v. Lopez, G.R. No. 189984, November 12,
2012).
Q: Clara, thinking of her mortality, drafted a
will and asked Roberta, Hannah, Luisa and
Benjamin to be witnesses. During the day of
the signing of the will, Clara fell down the
stairs and broke both her arms. Coming from
the hospital, Clara, insisted on signing her will
by thumbmark. Later Clara was run over by a
drunk driver while crossing the street in
Greenbelt. May the will of Clara be admitted to
probate? Give your reason briefly. (2007 BAR)
A: YES. Clara’s thumbmark in this case has all the
hallmarks of a valid signature. Clara clearly
intended to use her thumbmark as her signature
and the circumstances justified her use of her
thumbmark (Garcia v. La Cuesta, G.R. No. L-4067,
November 29, 1951).
5. The testator or the person requested by him to
write his name must also sign every page,
except the last, on the left margin in the
presence of the witnesses;
PURPOSE: to prevent the disappearance of the
pages.
a. Mandatory – the signing on every page in
the witnesses’ presence
b. Directory – the place of the signing (on
the left margin). The signature can be
affixed anywhere on the page (Balane,
2016).
If the entire document consists only of two sheets,
the first containing the will and the second, the
attestation clause, there need not be any marginal
signatures at all (Abangan v. Abangan, G.R. No.
13431, November 12, 1919).
A will was declared void which contained the
necessary signatures on the margin of each leaf
(folio), but not in the margin of each page
containing written matter (In the Matter of the
Estate of Saguinsin. In the Matter of the Estate of
Saguinsin., G.R. No. L-15025, March 15, 1920).
The signatures on the left-hand corner of every
page signify, among others, that the witnesses are
aware that the page they are signing forms part of
the will. On the other hand, the signatures to the
attestation clause establish that the witnesses
are referring to the statements contained in the
273
attestation clause itself (Azuela v. CA, G.R. No.
122880, April 12, 2006).
6. All the pages shall be Numbered correlatively in
letters on the upper part of each page;
a. Mandatory – pagination by means of a
conventional system purpose of which is
to prevent insertion or removal of pages.
b. Directory – pagination in letters on the
upper part of each page (Balane, 2010).
The pages may be expressed either in
words (e.g. “Page One of Seven”) or in
figures (e.g. “Page 1 of 7”)
7. Must contain an Attestation clause which
expressly states the following:
a. The number of pages used upon which
the will is written;
b. The fact that the testator signed the will
and every page thereof, or caused some
other person to write his name, under
his express direction, 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 (NCC, Art. 805, par.
3).
The signature of the witnesses must be at the
bottom of the attestation clause. An unsigned
attestation clause cannot be considered as an act
of the witnesses, since the omission of their
signatures at the bottom thereof negatives their
participation (Cagro v. Cagro, G.R. No. L-5826, April
29, 1953).
Inasmuch as the signatures of the three witnesses
to the will do not appear at the bottom of the
attestation clause, although the page containing
the same is signed by the witnesses on the left
hand margin, the will is fatally defective. The
attestation clause is "a memorandum of the facts
attending the execution of the will" required by
law to be made by the attesting witnesses, and it
must necessarily bear their signatures.
The petitioner and appellee contends that
signatures of the three witnesses on the left hand
margin conform substantially to the law and may
be deemed as their signatures to the attestation
clause. This is untenable, because said signatures
are in compliance with the legal mandate that the
will be signed on the left hand margin of all its
pages. If an attestation clause not signed by the
three witnesses at the bottom thereof, be
admitted as sufficient, it would be easy to add
such clause to a will on a subsequent occasion
 CIVIL LAW
and in the absence of the testator and any or
all of the witnesses (Cagro vs. Cagro, GR. No. L-
5826 April 29, 1953).
NOTE: An attested will need not be dated, but a
holographic will must be dated (NCC, Art. 810).
8. Must be acknowledged before a Notary public
by the testator and the witnesses (NCC, Art.
806). (2008 BAR)
The certification of acknowledgement need not be
signed by the notary public in the presence of the
testator and the witnesses (Javellana v. Ledesma,
G.R. No. L-7179, June 30, 1955).
A jurat is insufficient as the law requires an
acknowledgment executed by the party before a
notary public, not a declaration of the notary
public.
The notary public before whom the will was
acknowledged cannot be considered as the third
instrumental witness since he cannot
acknowledge before himself having signed the
will. He cannot split his personality into two so
that one will appear before the other to
acknowledge his participation in the making of the
will. To permit such a situation to obtain would be
sanctioning a sheer absurdity (Cruz v. Villasor, G.R.
No. L-32213, November 26, 1973).
An acknowledgment is the act of one who has
executed a deed in going before some competent
officer or court and declaring it to be his act or
deed. It involves an extra step undertaken
whereby the signatory actually declares to the
notary public that the same is his or her own free
act and deed. The acknowledgment in a notarial
will has a two-fold purpose: (1) to safeguard the
testator’s wishes long after his demise and (2) to
assure that his estate is administered in the
manner that he intends it to be done (Lee v.
Tambago, A.C. No. 5281, 12 February 2008).
The issue in this case is whether or not the will
“acknowledged” by the testatrix and the
instrumental witnesses before a notary public
acting outside the place of his commission
satisfies the requirement under Article 806 of the
NCC. Outside the place of his commission, he is
bereft of power to perform any notarial act; he is
not notary public. Any notarial act outside the
limits of his jurisdiction has no force and effect
(Guerrero v. Bihis, G.R. No. 174144, April 17, 2007).
The absence of the documentary stamp does not
affect the validity of the will. It merely prevent it
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
from being presented as evidence (Gabucan v.
Manta, G.R. No. L-51546, January 28, 1980).
SPECIAL RULES FOR HANDICAPPED
TESTATORS
Rules if the Testator is Deaf or Mute
1. If the testator is able to read, he must
personally read the will; or
2. If the testator is unable to read, he must
designate two persons to read it and
communicate to him, in some practicable
manner, the contents thereof (NCC, Art. 807).
Rules if the testator is blind
The will shall be read to him twice, once by one of
the subscribing witnesses, and another time by
the notary public before whom the will is
acknowledged (NCC, Art. 808). (2008 BAR)
Purpose: The reading is mandatory for the
purpose of making known to the testator the
provision of the will so that he may object if it is
not in accordance with his wishes.
Art. 808 of the NCC applies not only to blind
testators but also to those who, for one reason or
another, are incapable of reading their wills, either
because of poor or defective eye sight or because
of illiteracy.
SUBSTANTIAL COMPLIANCE
A will is not rendered invalid by reason of
defects or imperfections in the form of
attestation or in the language used therein. In
the absence of bad faith, forgery, or fraud, or
undue and improper pressure and influence,
defects and imperfections in the form of
attestation or in the language used therein shall
not render the will invalid if it is proved that the
will was in fact executed and attested in
substantial compliance with all the requirements
of Article 805 (NCC, Art 809).
In cases of omissions in the will, if it can be
supplied by an examination of the will itself,
without the need of resorting to extrinsic evidence
it will not be fatal and, correspondingly, would be
allowed for probate.
However, evidence aliunde are not allowed to fill a
void in any part of the document or supply
missing details that should appear in the will
itself. Those omissions which cannot be supplied
except by evidence aliunde would result in the
274
 SUCCESSION
invalidation of the will itself (Cañeda v. CA, G.R. No.
103554, May 28, 1993).
WITNESSES
Qualifications of witnesses (S18-ABCD) (2008
BAR)
1. Of Sound mind.
2. At least 18 years of age.
3. Able to read and write
4. Not Blind, deaf or dumb
NOTE: While a blind or deaf may not be a
witness, he could be a testator in a notarial
will
5. Not have been Convicted by final judgment of
falsification of a document, perjury or false
testimony.
6. Domiciled in the Philippines – his habitual
residence must be in the Philippines (NCC, Art.
50).
Determination of qualifications of witnesses
The presence of the qualifications of witnesses is
determined at the time of the attestation of the
will. If the witnesses attesting the execution of a
will are competent at the time of attesting, their
becoming subsequently incompetent shall not
prevent the allowance of the will.
Instrumental witness as beneficiary in a will
The fact that a person acts as a witness to a will
does not disqualify him to be a beneficiary.
However, it renders void any legacy or device
given under said will to such person or to his
spouse, or parent or child, unless there are three
other competent witnesses to the will (NCC, Art
823) (2010 BAR). Such person so attesting shall
be admitted as a witness as if such devise or
legacy had not been made or given.
Q: Stevie was born blind. He went to school for
the blind, and learned to read in Braille
language. He speaks English fluently. Can he:
a. Make a will?
b. Act as a witness to a will?
c. In either of the instances, must the will be
read to him? (2008 BAR)
A:
a. YES. Stevie may make a notarial will. A blind
man is not expressly prohibited from
executing a will. In fact, Art. 808 of NCC
275
provides for an additional formality when the
testator is blind. Stevie however, may not
make a holographic will in Braille because the
writing in Braille is not handwriting. A
holographic will to be valid must be entirely
written, signed and dated by the testator in
his own handwriting.
b. NO. A blind man is disqualified by law to be a
witness to a notarial will.
c. In case Stevie executes a notarial will, it
has to be read to him twice. First by one of
the instrumental witnesses and second by the
notary public before whom the will was
acknowledged (NCC, Art. 808).
The person signing the testator’s name must NOT
be one of the 3 instrumental witnesses because he
must sign in the presence of the testator and of
three other instrumental witnesses.
It is an established rule that “a testament may not
be disallowed just because the attesting witness
declare against its due execution; neither does it
have to be necessarily allowed just because all the
attesting witness declare in favor of its
legalisation; what is decisive is that the court is
convinced by evidence before it, not necessarily
from the attesting witnesses, although they must
testify, that the will was or was not duly executed
in the manner required by law” (Baltazar v. Laxa,
G.R. No. 174489, April 11, 2012).
This Court has held in a number of occasions that
substantial compliance is acceptable where the
purpose of the law has been satisfied, the reason
being that the solemnities surrounding the
execution of a will are intended to protect the
testator from all kinds of fraud and trickery but
are never intended to be so rigid and inflexible as
to destroy the testamentary privilege (Alvarado v.
Gaviola, Jr., G.R. No. 74695, September 14, 1993).
HOLOGRAPHIC WILLS
A holographic will is one entirely written, dated,
and signed by the hand of the testator himself. It is
subject to no other form, and may be made in or
out of the Philippines, and need not be witnessed
(NCC, Art. 810)
Formalities Required in the Execution of
Holographic Wills: (EDS)
1. Entirely handwritten by the testator
An illiterate cannot make a holographic will
because it is required to be in writing by the
testator. However, he can make an ordinary or
 CIVIL LAW
notarial will because the law allows a notarial will
to be written by someone else and in certain cases,
for the will to be read by someone else not the
testator.
NOTE: A will handwritten by a person other than
the testator is a not a valid holographic will, but it
may nonetheless be made valid by complying with
the requirements of a notarial will.
Effects of Insertions or Interpolations
GR: When a number of erasures, corrections,
cancellation, or insertions are made by the
testator in the will but the same have not been
noted or authenticated with his full signature, only
the particular words erased, corrected, altered
will be invalidated, not the entirety of the will.
XPNs:
a. Where the change affects the essence of
the will of the testator such as where the
alteration partakes the effect of revoking
a will;
NOTE: When the holographic will had only
one substantial provision, which was altered
by substituting the original heir with another,
and the same did not carry the requisite full
signature of the testator, the entirety of the
will is voided or revoked.
Reason: What was cancelled here was the
very essence of the will; it amounted to the
revocation of the will. Therefore, neither the
altered text nor the original unaltered text can
be given effect (Kalaw v. Relova, G.R. No. L-
40207, Sept. 28, 1984).
Thus, unless the unauthenticated alterations,
cancellations, or insertions were made on the
date of the holographic will or on testator’s
signature, their presence does not invalidate
the will itself. The lack of authentication will
only result in disallowance of such changes
(Ajero v. CA, G.R. No. 106720, September 15,
1994).
b. Where the alteration affects the date of
the will or the signature of the testator,
the whole will is void.
c. If the words written by a 3rd person were
contemporaneous with the execution of
the will, even though authenticated by the
testator, the entire will is void for
violation of the requisite that the
holographic will must be entirely in the
testator’s handwriting.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
2. Dated
GR: The "date" in a holographic will should
include the day, month, and year of its
execution.
XPN: When there is no appearance of fraud,
bad faith, undue influence and pressure and
the authenticity of the will is established and
the only issue is whether or not the date
appearing eg. “FEB. ‘61” on the holographic
will is a valid compliance with Art. 810 of NCC,
probate of the holographic will should be
allowed under the principle of substantial
compliance (Roxas v. De Jesus, G.R. No. L-
38338, January 28, 1985).
The law does not specify a particular location
where the date should be placed in the will.
The only requirements are the date be in the
will itself and executed in the hand of the
testator (Labrador v. CA, G.R. Nos. 83843-44,
April 5, 1990). Thus, it may be placed either at
the beginning, in the middle, or at the end of
the will.
3. Signed by the hand of the testator himself
In a holographic will, the signature must be at
the end of the will. This can be inferred from
Art. 812 of the NCC by the reference to
dispositions “written below his signature.”
This phrase implies that the signature is at the
end of the will, and any disposition below it
must further be signed and dated.
In a holographic will, the dispositions of the
testator written below his signature must be
dated and signed by him in order to make
them valid as testamentary dispositions (NCC,
Art. 812). If one disposition below the
signature of the testator is not dated, even if
signed, that particular disposition is void,
without affecting the validity of the others or
of the will itself.
When a number of dispositions appearing in a
holographic will are signed without being
dated, and the last disposition has a signature
and a date, such date validates the
dispositions preceding it, whatever be the
time of prior dispositions (NCC, Art. 813).
NOTE: It is not required that the will be
executed on a single day, at one time and in
the same ink. The unity of the act is not
required in holographic wills.
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 SUCCESSION
Rules for the Probate of Holographic Wills
In the post mortem probate of holographic wills,
the following rules are to be observed as to the
number of witnesses to be presented:
a. If the will is not contested, 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.
b. If the will is contested, at least three of such
witnesses shall be required to explicitly
declare that the signature in the will is the
genuine signature of the testator.
c. In the absence of any competent witness and
if the court deems it necessary, expert
testimony may be resorted to (NCC, Art. 811).
Presentation of the will is necessary
The contents and due execution of a lost
holographic will CANNOT be established
merely through oral testimonies of witness
who allegedly seen the same. It may not be
proved by the bare testimony of witnesses who
have seen or read such will. The will itself must be
presented; otherwise, it shall produce no effect
(Gan v. Yap, G.R. No. L-12190, August 30, 1958).
By its very nature, a holographic will can only be
proven authentic by establishing that the
handwriting in which it is written belongs to the
testator himself and this can only be done through
an examination of the will.
A holographic will which was lost or could not
be found can be proved by means of a
photostatic copy (photocopy).
A photostatic copy or xerox copy of the
holographic will may be allowed because
comparison can be made with the standard
writings of the testator (Rodelas v. Aranza, G.R. No.
L-58509, December 7, 1982).
REQUIREMENTS IN CASE OF ALTERATIONS
In case of insertion, cancellation, erasure or
alteration in a holographic will, the testator must
authenticate the same by his full signature
(NCC, Art. 814).
Full signature refers to the testator’s habitual,
usual and customary signature.
277
GR: If not authenticated with the testator’s full
signature, it is considered as not made, but the
will is not invalidated. It does not affect the
validity of the will itself. The will is not thereby
invalidated as a whole, but at most only as regards
the particular words erased, corrected or inserted
(Kalaw v. Relova, G.R. No. L-40207, September 28,
1984citing Velasco v. Lopez, G.R. No. 905, February
12, 1903).
XPN: Unless the portion involved is an essential
part of the will, such as the date.
Crossing-out of name of heir
Where the testator himself crossed out the name
of the original heir, and substituted the name of
another, without proper authentication, it was
held that this did not result in making the person
whose name was crossed as heir. The cancellation
should not have also been given effect. The
Supreme Court, however, ruled that neither the
original heir nor the substituted heir can receive
the estate on the ground that it could not ignore
what appeared to be a change of heart on the part
of the testator. One way to justify the ruling of the
Supreme Court is to consider the cancellation as
tantamount to a revocation of the will. It amounts
to a revocation even though the cancellation only
pertained to the name of the original heir because
without the said name, there remains no other
disposition in the will (Kalaw v. Relova, G.R. No. L-
40207, Sept. 28, 1984).
JOINT WILLS (2000, 2008 BAR)
Joint wills are NOT allowed in the Philippines.
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 (NCC, Art. 818).
Wills prohibited by Art. 818 of the NCC executed
by Filipinos in a foreign country shall not be valid
in the Philippines, even though authorized by the
laws of the country where they may have been
executed (NCC, Art. 819) (2000 BAR).
Reason: Whether in the Philippines or in foreign
country, Filipino citizens are prohibited from
executing joint wills because it is a matter against
public policy. There is danger of undue influence
and of one testator killing the other (Dacanay v.
Florendo 87 Phil 324).
NOTE: Mutual wills – Separate wills although
containing reciprocal provisions are not
 CIVIL LAW
prohibited, subject to the rule on disposition
captatoria.
What the law expressly prohibits is the making of
joint wills either for the testator’s reciprocal
benefit or for the benefit of a third person (NCC,
Art. 818). In the case at bench, the Cunanan
spouses executed separate wills. Since the two
wills contain essentially the same provisions and
pertain to properties which in all probability are
conjugal in nature, practical considerations dictate
their joint probate (Vda. de Perez v. Tolete, G.R. No.
76714, June 2, 1994).
NOTE: While the execution of joint wills is
absolutely prohibited under Philippine laws, the
filing of a joint petition for the probate of two or
more wills is allowed. Multiple wills may be
submitted for probate in a single proceeding.
Q: John and Paula, British citizens at birth,
acquired Philippine citizenship by
naturalization after their marriage. During
their marriage the couple acquired substantial
landholdings in London and in Makati. Paula
bore John three children, Peter, Paul and Mary.
In one of their trips to London, the couple
executed a joint will appointing each other as
their heirs and providing that upon the death
of the survivor between them the entire estate
would go to Peter and Paul only but the two
could not dispose of nor divide the London
estate as long as they live. John and Paula died
tragically in the London Subway terrorist
attack in 2005. Peter and Paul filed a petition
for probate of their parents’ will before a
Makati Regional Trial Court.
a. Should the will be admitted to probate?
b. Are the testamentary dispositions valid?
c. Is the testamentary prohibition against the
division of the London estate valid? (2008
BAR)
A:
a. NO, the will cannot be admitted to probate.
Joint wills are void under the Art. 818 of NCC.
Even if the joint will executed by Filipinos
abroad were valid where it was executed, the
joint will is still not valid in the Philippines.
executed (NCC, Art. 819).
b. If a will is void, all testamentary dispositions
contained therein are also void. Hence, all
testamentary provisions contained in the void
joint will are also void.
c. NO, the testamentary prohibition against the
division by Peter and Paul of the London
estate for as long as they live, is not valid. Art.
494 of NCC provides that a donor or testator
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
may prohibit partition for a period which
shall not exceed twenty (20) years.
Q: Alden and Stela were both former Filipino
citizens. They were married in the Philippines
but they later migrated to the United States
where they were naturalized as American
citizens. In their union they were able to
accumulate several real properties both in the
US and in the Philippines. Unfortunately, they
were not blessed with children. In the US, they
executed a joint will instituting as their
common heirs to divide their combined estate
in equal shares, the five siblingsof Alden and
the seven siblings of Stela. Alden passed away
in 2013 and a year later, Stela also died. The
siblings of Alden who were all citizens of the
US instituted probate proceedings in a US
court impleading the siblings of Stela who
were all in the Philippines.
a. Was the joint will executed by Alden and
Stela who were both former Filipinos
valid? Explain with legal basis.
b. Can the joint will produce legal effect in
the Philippines with respect to the
properties and of Alden Stela found here?
If so, how?
c. Is the situation presented an example of
depecage? (2015 BAR)
A:
a) YES, the joint will of Alden and Stela is
considered valid. Being no longer Filipino
citizens at the time they executed their joint
will, the prohibition under our Civil Code on
joint wills will no longer apply to Alden and
Stela. For as long as their will was executed in
accordance with the law of the place where
they reside, or the law of the country of which
they are citizens or even in accordance with
the Civil Code, a will executed by an alien is
considered valid in the Philippines (NCC, Art.
816).
b) YES, the joint will of Alden and Stela can take
effect even with respect to the properties
located in the Philippines because what
governs the distribution of their estate is no
longer Philippine law but their national law at
the time of their demise. Hence, the joint will
produces legal effect even with respect to the
properties situated in the Philippines.
c) NO, because depecage is a process of applying
rules of different states on the basis of the
precise issue involved. It is a conflict of laws
where different issues within a case may be
governed by the laws of different states. In
this case, no conflict of laws will arise because
278
 SUCCESSION
Alden and Stela are no longer Filipino citizens Requisites of Incorporation by Reference
at the time of the execution of their joint will (EDIS)
and the place of execution is not the
Philippines. 1. The document or paper referred to in the will
must be in Existence at the time of the
CODICILS execution of the will;
2. The will must clearly Describe and identify
A codicil is a supplement or addition to a will, the same, stating among other things the
made after the execution of a will and annexed to number of pages thereof;
be taken as part thereof, by which any disposition 3. It must be Identified by clear and satisfactory
made in the original will is explained, added to, or proof as the document or paper referred to
altered (NCC, Art. 825). therein; and
4. It must be Signed by the testator and the
The formalities which are required in the witnesses on each and every page, except in
execution of the codicil are the same as those case of voluminous books of account or
required in the execution of the will. inventories.
(NCC, Art. 827)
CODICIL SUBSEQUENT WILL
The documents or papers incorporated in a will be
Forms a part of the It is a new or a separate considered part of the will even though the same
original will. will. are not executed in the form of a will. The doctrine
of incorporation by reference is not applicable in a
Supplements the holographic will unless, of course, the testator
Makes dispositions executes a holographic will and, superfluously,
original will,
without reference to and had it witnessed (Balane, 2010).
explaining, adding to,
independent of the
or altering any of its
original will. REVOCATION OF WILLS (1997, 2003 BAR)
dispositions.

If it provides for a full A will may be revoked by the testator at any time
disposition of the before his death. Any waiver or restriction of this
Does not, as a rule, testator’s estate, may right is void (NCC, Art. 828).
revoke entirely the revoke the whole prior
prior will. will by substituting a The testator’s right to revoke during his lifetime is
new and last disposition absolute because a will is ambulatory. It can
for the same. neither be waived nor restricted. As a matter of
fact, even if the will has already been admitted to
A prior will and a probate during the testator’s lifetime, it may still
A will and a codicil,
subsequent will, being be revoked. This necessarily follows from the
being regarded as a
two separate wills, may principle that “a testament is of force after men
single instrument are
be construed are dead; otherwise it is of no strength at all while
to be construed
independently of each the testator lives.”
together.
other.
Governing Law in case of Revocation
If the former will is a notarial will, it is not
required that the codicil be notarial in form as 1. If the revocation takes place in the
well. The law only requires that a codicil be in the Philippines, whether the testator is domiciled
form of a will. It does not require that it be of the in the Philippines or in some other country –
same kind as the will it is supplementing. What Philippine laws
matters is that the codicil complies with the 2. If the revocation takes place outside the
formalities required of a notarial will or Philippines:
holographic will, as the case may be. a. by a testator who is domiciled in the
Philippines – Philippine laws
INCORPORATION BY REFERENCE b. by a testator who is not domiciled in this
country:
Incorporation by reference is the incorporation i. Laws of the place where the will was
of an extrinsic document or paper into a will by made, or
reference so as to become a part thereof.

279
 CIVIL LAW
ii. Laws of the place in which the testator
had his domicile at the time of
revocation (NCC, Art. 829).
Revocation based on a false or illegal cause is
null and void.
Requisites:
a. The cause must be concrete, factual and not
purely subjective.
b. It must be false.
c. The testator must not know of its falsity.
d. It must appear from the will that the testator
is revoking because of the cause which is
false.
If the revocation is based on a false or illegal
cause, it is null and void (NCC, Art. 833).
Institution of heir based on false cause as a
general rule does not affect the validity or efficacy
of the institution and shall be considered as not
written, unless it appears from the will that the
testator would not have made such institution if
he had known the falsity of such cause (NCC, Art.
850).
Modes of Revoking a Will
1. By implication of law;
2. By some will, codicil, or other writing
executed as provided in case of wills; or
3. By physical destruction through burning,
cancelation or obliteration (NCC, Art. 830).
Revocation by Implication of law
It takes place when certain acts or events take
place subsequent to the making of a will, which
nullify or render inoperative either the will itself
or some testamentary disposition therein.
Instances when revocation by implication of
law takes place
1. Upon the termination of the subsequent
marriage in Article 41 of the FC through the
filing of the affidavit of reappearance, the
spouse who contracted the marriage in bad
faith shall be disqualified to inherit from the
innocent spouse by testate and intestate
succession. Hence, any testamentary
disposition in the will of the innocent spouse
in favor of the guilty spouse shall be revoked
by implication of law (FC, Art. 43, par. 5).
2. If both spouses of the subsequent marriage
referred in Art. 41 of the FC acted in bad faith,
testamentary dispositions by one in favor of
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
the other are revoked by operation of law (FC,
Art. 44).
3. In case of annulment, the spouse who
contracted the marriage in bad faith shall be
disqualified to inherit from the innocent
spouse by testate and intestate succession.
Hence, any disposition in the will of the
innocent spouse in favor of the guilty spouse
shall be revoked by operation of law [FC, Art.
50 in relation to Art. 43(5)].
4. Upon issuance of the decree of legal
separation, provisions in favor of the
offending spouse made in the will of the
innocent spouse shall be revoked by
operation of law [FC, Art. 63 (4)].
5. In case of preterition of 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. In such case, the
preterition shall annul the institution of heir;
but the devises and legacies shall be valid
insofar as they are not inofficious (NCC, Art.
854).
6. When the heir, devisee or legatee commits
any of the acts of unworthiness which by
express provision of law will incapacitate him
to succeed. In such case, any testamentary
disposition in favor of such heir, devisee or
legatee is revoked (NCC, Art. 1032).
7. When in the testator’s will there is a legacy of
a credit against a third person or of the
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
case, the legacy is revoked (NCC, Art. 935 and
936).
8. When the testator (a) transforms the thing
bequeathed in such a manner that it does not
retain either the form or denomination it had,
or (b) when he alienates by any title or for
any cause the thing bequeathed or any part
thereof, or (c) 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 (NCC, Art. 957;
Rabuya, 2009).
Requisites of Revocation by Subsequent will or
codicil
1. The subsequent instrument must comply with
the formal requirements of a will;
2. The testator must possess testamentary
capacity;
3. The subsequent instrument must either
contain a revocatory clause or be
280
 SUCCESSION
incompatible with the prior will (totally or
partially); and
4. The revoking will must be admitted to
probate.
Ways of Making a Revocation by a Subsequent
Will
1. Express - by providing for a revocatory clause;
2. Implied - provisions are completely
inconsistent with previous will.
The will containing the revocatory clause must
itself be valid, and admitted to probate, otherwise,
there is no revocation.
Principle of Instanter
1. The express revocation of the 1st will renders it
void because the revocatory clause of the 2nd will,
not being testamentary in character, operates to
revoke the 1st will instantly upon the execution of
the will containing it.
2. In implied revocation, the first will is not
instantly revoked by the second will because the
inconsistent testamentary dispositions of the
latter do not take effect immediately but only after
the death of the testator.
The fact that the subsequent will is posterior and
incompatible with the first does not mean that the
first is entirely revoked because the revocation
may be total or partial. Therefore it is possible for
a prior will to subsist with a subsequent will even
if they are incompatible.
NOTE: In case of inconsistent wills, the
subsequent will prevails over the prior will
because it is the latest expression of testamentary
intent of the testator.
A revocation made in a subsequent will shall take
effect even if the new will should become
inoperative by reason of the incapacity of the
heirs, devisees or legatees designated therein, or
by their renunciation (NCC, Art. 832).
Ways of Revocation by Physically Destroying a
Will (BTCO)
1. Burning
2. Tearing
3. Cancelling
4. Obliterating
Requisites of Revocation by Physical Act of
Destruction (OTAP)
281
1. Overt act of physical destruction;
2. Testamentary capacity of the testator at the
time of performing the act of revocation;
3. Animus Revocandi - intention to revoke;
4. Performed by testator himself or other person
in the presence and express direction of the
testator.
NOTE: It is not necessary that the will be totally
destroyed. It is sufficient if on the face of the will,
there is shown some sign of the physical act of
destruction. (Maloto v. CA, G.R. No. 76464,
February 29, 1988).
Revocation by physical destruction must be
coupled with animus revocandi.
The physical act of destruction of a will, like
burning, does not per se constitute an effective
revocation, unless the destruction is coupled with
animus revocandi on the part of the testator
(Maloto v. CA, G.R. No. 76464, February 29, 1988).
The physical destruction NEED NOT be done by
the testator himself.
It may be performed by another person under his
express direction and in his presence. If the
destruction done by a person other than the
testator is made not in his presence or not upon
his express direction, there is no revocation.
Q: In 1919, Miguel executed a will. In the post
mortem probate, there was a testimony to the
effect that the will was in the testator’s
possession in 1919, but it can no longer be
found. Is the will revoked?
A: YES, the Doctrine of Presumed Revocation
applies. 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 (Gago v. Mamuyac G.R. No.
26317, January 29, 1927).
NOTE: The presumption is not conclusive and
anyone may prove the contrary to rebut the
presumption.
Doctrine of Dependent Relative Revocation
Where the testator’s act of destruction is
connected with the making of another will, so as
fairly to raise the inference that the testator meant
 CIVIL LAW
the revocation of the old to depend upon the
efficacy of the new disposition, the revocation will
be conditional and dependent upon the efficacy of
the new disposition; and if, for any reason, the
new will intended to be made as a substitute is
inoperative, the revocation fails and the original
will remains in full force.
But a mere intent to make at some time a will in
place of that which is destroyed will not render
the destruction conditional. It must appear that
the revocation is dependent upon the valid
execution of a new will.
The theory on which this principle is predicated is
that the testator did not intend to die intestate.
And this intention is clearly manifest when he
executed two wills on two different occasions and
instituted his wife as his universal heir. There can
therefore be no mistake as to his intention of
dying testate (Molo v. Molo, G.R. No. L-2538,
September 21, 1951).
NOTE: Failure of the new testamentary
disposition upon whose validity the revocation
depends is equivalent to the non-fulfillment of a
suspensive condition and thus prevents the
revocation of the original will.
Q: Mr. Reyes executed a will completely valid
as to form. A week later, however, he executed
another will which expressly revoked his first
will, upon which he tore his first will to pieces.
Upon the death of Mr. Reyes, his second will
was presented for probate by his heirs, but it
was denied due to formal defects. Assuming
that a copy of the first will is available, may it
now be admitted to probate and given effect?
Why? (2003 BAR)
A: YES, the first will may be admitted to probate
and given effect because the will that was
supposed to revoke the same was never admitted
to probate on account of formal defects.
Admission to probate of the subsequent revoking
will is one of the requisites for express revocation
to take place.
REPUBLICATION AND REVIVAL OF WILLS
Republication of wills is the re-execution or the
re-establishment by a testator of a will which is
void or a will which the testator had once revoked.
Two ways of Republishing Wills
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
1. By Reproduction - the contents of a previous
will are reproduced in a subsequent will (NCC,
Art. 835)
2. By Execution of a Codicil - such codicil
referring to the previous will to be
republished (NCC, Art. 836)
NOTE: There can be NO republication by
execution of a codicil if the previous will is void as
to its form. If the previous will is void as to its
form, it can only be republished by reproducing
the provisions thereof in a subsequent will.
Revival of Wills is the process of renewing the
operative force of a will which had once been
revoked by the testator.
Rule on revival of wills
1. If there is an EXPRESS REVOCATION - If after
making a will, the testator makes a second
will expressly revoking the first, the
revocation of the second will does not
revive the first will, which can be revived
only by another will or codicil (NCC, Art. 837).
2. If there is an IMPLIED REVOCATION - The
revocation of the second will which
impliedly revoked the first will revives the
latter.
INSTITUTION OF HEIRS
Institution of heirs is an act by virtue of which a
testator designates in his will the person or
persons who are to succeed him in his property
and transmissible rights and obligations (NCC, Art.
840).
Institution of heirs cannot be allowed to affect the
legitimes of the compulsory heirs.
There can be an instituted heir only in
testamentary succession.
There can be a valid will even if it contains only a
provision for disinheritance or if only legacies and
devises are contained in the will even though it
does 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 (NCC, Art. 841).
Requisites of a Valid Institution
1. The will must be extrinsically valid;
282
 SUCCESSION
NOTE: The testator must have the
testamentary capacity to make the institution.
2. The institution must be intrinsically valid;
and
NOTE: The legitime must not be impaired, the
person instituted must be identified or
identifiable, and there is no preterition.
3. The institution must be effective.
NOTE: No repudiation by the heir; testator is
not predeceased by the heir.
Three Principles in the Institution of Heirs
1. Equality – heirs who are instituted without a
designation of shares inherit in equal parts.
NOTE: Applies only when the heirs are of the
same class or same juridical condition and
involves only the free portion.
As between a compulsory heir and a
voluntary heir and they are instituted without
any designation of shares, the legitime must
first be respected and the free portion shall
then be equally divided between them.
2. Individuality – heirs collectively instituted
are deemed individually instituted unless
contrary intent is proven.
NOTE: Art. 847 of the NCC provides that when
the testator institutes some heirs individually
and others collectively as when he says, “I
designate my heirs A and B, and the children
or C,” those collectively designated shall be
considered as individually instituted, unless it
clearly appears that the intention of the
testator was otherwise.
3. Simultaneity – when several heirs are
instituted, they are instituted simultaneously
and not successively, unless the contrary is
proved.
Designation of Heir
Generally, an heir must be designated by his name
and surname. This rule, however, is not
mandatory. Even when the name of the heir has
been omitted but the 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.
283
If two or more persons have the same names, the
testator must indicate some circumstance by
which the instituted heir may be known.
If the testator fails to mention any circumstance
regarding the heir instituted and there appears to
be several persons bearing the same name, there
is latent ambiguity and extrinsic evidence other
than the oral declaration of the testator as to his
intention is admissible to resolve the ambiguity.
A conceived child may be instituted, provided the
conditions in Arts. 40 and 41 of NCC are present.
(Conceptus pro nato habetur)
NOTE: A conceived child, although as yet unborn,
has a limited and provisional personality
(Quimiguing v. Icao, G.R. No. 26795, July 31, 1970).
Its personality is essentially limited because it is
only for purposes favorable to the child (NCC, Art.
40). Its personality is provisional because it
depends upon the child being born alive later
under the following conditions:
1. The child must be alive for at least 24
hours from complete delivery, if it had an
intra-uterine life of less than 7 months.
2. If the child had an intra-uterine life of at
least 7 months, it is enough that the child
is alive upon delivery (NCC, Art. 41).
Disposition in favor of an Unknown Person
GR: Every disposition in favor of an unknown
person shall be void.
XPNs:
1. If the identity can become certain by some
event or circumstance, the disposition is valid.
It is important, however, that the event or
circumstance must appear in the will itself; it
cannot be shown by extrinsic evidence, either
oral or documentary.
2. A disposition in favor of a definite class or
group of persons shall be valid.
Evidence aliunde CANNOT be presented to
identify the unknown person. The determinate
event or circumstance, sufficient to indicate with
certainty the person whom the testator wants to
favor, must appear in the will itself; it cannot be
shown by extrinsic evidence, either oral or
documentary.
If there is merely a latent ambiguity as to the
identity of the heir, extrinsic evidence other than
the oral declaration of the testator may be used,
 CIVIL LAW
but if his identity is unknown, extrinsic evidence is
not allowed.
Effect if the institution of heir is based on a
false cause
GR: The institution of heir is valid. The false cause
shall be considered simply as not written.
GR: The testator CANNOT impose any charge,
condition or substitution whatsoever upon the
legitimes. If a charge condition or substitution is
imposed, it shall be considered as not imposed.
XPN: Testator can validly impose a prohibition
against the partition of the legitimes for a period
not exceeding 20 years.

XPN: If from the will itself, it appears that the
testator would not have made the institution if he
had known the falsity of the cause, the institution
shall be void.
NOTE: The rule is, if the revocation is based on a
false or illegal cause, it is null and void (NCC, Art.
833) while institution of heir based on false cause
as a general rule does not affect the validity or
efficacy of the institution (NCC, Art. 850).
Kinds of institution
1. With a condition
2. With a term
3. For a certain purpose or cause (modal
Institution)
Conditional Institution of heirs
Condition is a future or uncertain event or a past
event unknown to the parties, upon which the
performance of an obligation depends.
NOTE: The legitime passes by strict operation of
law, independently of the testator’s will. As such,
any condition, burden, or substitution upon the
same is merely considered by law as not imposed
(NCC, Art. 872).
Conditions on the Prohibition to Marry
GR: An absolute condition not to contract a first or
subsequent marriage is not a valid condition and
shall be considered as not written (NCC, Art. 874).
However, the validity of the disposition itself shall
not be affected.
XPN: If such condition was imposed on the widow
or widower by the deceased spouse or by the
latter’s ascendants or descendants, in which case,
the condition is valid (NCC, Art. 874).
If the prohibition is relative with respect to
persons, time or place, such conditions is valid and
must be complied with unless the testator renders
it impossible for the heir to marry at all.

Conditions, terms and modes are not presumed, Disposition Captatoria is any disposition made
they must be clearly expressed in the will. The upon the condition that the heir shall make some
condition must fairly appear from the language of provision in his will in favor of the testator or of
the will. Otherwise, it shall be considered pure. any other person shall be void (NCC, Art. 875).
Here, both the condition and the disposition are
Kinds of Condition void but the validity of the other provisions,
including the will itself, shall not be affected.
RESOLUTORY SUSPENSIVE
CONDITION CONDITION Reason for the prohibition: Disposition captatoria is
incompatible with good faith and with the nature
The disposition becomes of testaments; it is immoral and contrary to the
The effectivity f the freedom to make wills.
effective upon the death
disposition is
of the testator but is
suspended until the Effect of a Suspensive Condition
extinguished upon the
fulfillment of the
happening of the
condition. 1. Heir, Devisee, or legatee acquires no rights
condition.
until the condition is fulfilled.
2. If he dies before the condition is fulfilled, he
Effect of Impossible Condition on the
transmits no rights to his heirs, even though
Testamentary Disposition
he survived the testator.
3. Once the condition is fulfilled, its effects
Impossible conditions and those contrary to law
retroact to the moment of the death of the
or good customs shall be considered as not
testator.
imposed and shall in no manner prejudice the
heir, even if the testator should otherwise provide
(NCC, Art. 873).

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 SUCCESSION
Reason: Capacity to succeed by the
conditional heir must be determined both at
the time of the death of the testator and at the
time of the fulfillment of the condition.
4. If the suspensive condition is not fulfilled, the
estate will be placed under administration
until:
a. The condition is fulfilled, in which case
the estate should be given to the
instituted heir;
b. It becomes obvious that it cannot be
fulfilled, in which case, the estate should
be given to the intestate heirs.
Negative potestative condition consists in the
non-performance of an act or not giving
something and he shall comply by giving a
security that he will not do or give that which has
been prohibited by the testator (NCC, Art. 879). In
this case, the heir instituted has a right to receive
his share in the inheritance upon the death of the
testator and loses his right only when he violates
the condition.
Institution of heir with a term
A term is any future and certain event upon the
arrival of which the validity or efficacy of a
testamentary disposition subject to it depends.
A disposition with a suspensive term does not
prevent the instituted heir from acquiring his
rights and transmitting them to his heirs even
before the arrival of the term.
Reason: The right of the heir instituted subject to
a term is vested at the time of the testator's death
- he will just wait for the term to expire.
If the heir dies after the testator but before the
term expires, he transmits his rights to his own
heirs because of the vested right.
SUSPENSIVE
SUSPENSIVE TERM
CONDITION
The instituted heir does
The right of the heir not acquire any
instituted subject to a successional right upon
term is vested at the the death of the testator
time of the testator’s as long as the condition
death. Hence, if he dies is not yet fulfilled.
after the testator but Hence, upon the death
before the term expires, of the instituted heir,
he can transmit his prior to the fulfillment
rights to his own heirs. of the condition, no
right is transmitted to
285
his heirs.
Q: When the disposition is subject to a term,
what should be done by the instituted heirs or
legal heirs so that they can enjoy possession of
the property?
A: If the disposition is subject to a:
1. Suspensive term - The legal heirs can enjoy
possession of the property until the expiration
of the period but they must put up a bond
(caucion muciana) in order to protect the
right of the instituted heir.
2. Resolutory term - The legal heirs can enjoy
possession of the property but when the term
arrives, he must give it to the legal heirs. The
instituted heir does not have to file a bond.
A “Caucion Muciana” is a security or bond
required from the conditional heir in order to
secure the rights of those who would succeed to
the property upon violation of the condition.
Instances when caucion muciana is needed
1. Suspensive term - the legal heir shall be
considered as called to the succession until the
arrival of the period. But he shall not enter into
possession of the property until after having
given sufficient security, with the intervention
of the instituted heir [NCC, Art. 885 (2)].
2. Negative potestative condition - If the
potestative condition imposed upon the heir is
negative, or consists in not doing or not giving
something, he shall comply by giving a security
that he will not do or give that which has been
prohibited by the testator, and that in case of
contravention he will return whatever he may
have received, together with its fruits and
interests (NCC, Art. 879)
NOTE: If the heirs do not post the required bond
in case of a suspensive term or a negative
potestative condition, the estate shall be placed
under administration (NCC, Art. 880).
3. Mode - That which has been left in this manner
may be claimed at once provided that the
instituted heir or his heirs give security for
compliance with the wishes of the testator and
for the return of anything he or they may
 CIVIL LAW
receive, together with its fruits and interests, if In a modal institution, the testator states the
he or they should disregard this obligation (NCC, object of the institution, the purpose or
Art. 882). (2002 BAR) application of the property left by the testator, or
the charge imposed by the testator upon the heir.
Modal Institution of heirs A mode imposes an obligation upon the heir or
legatee but it does not affect the efficacy of his
A mode is an obligation imposed upon the heir to rights to the succession. The condition suspends
do or to give something but does not obligate; and the mode obligates but
does not suspend (Rabadilla v. CA, G.R. No. 113725,
Modal institution – statement of: June 29, 2000).

1. Object of the institution, PRETERITION

2. Application of the property left by the
testator, Preterition is the omission in testator’s will of
3. Charge imposed by him. one, some or all of the compulsory heirs in the
direct line, whether living at the time of execution
Modal disposition of the will or born after the death of the testator
(NCC, Art. 854). (1999, 2000, 2001, 2008 BAR)
A “mode” imposes an obligation upon the heir,
devisee or legatee, but it does not affect the Meaning of “born after the death of the
efficacy of his rights to the succession. The mode testator”
obligates but does not suspend.
It simply means that the omitted heir must have
Mode distinguished from a Condition already been conceived at the time of death of the
testator, but was born only after the death of the
MODE CONDITION testator.

Imposes an obligation Requisites of Preterition

The condition must
upon the heir, devisee
happen or be fulfilled
or legatee, but it does
in order for the heir to
not affect the efficacy
be entitled to succeed
of his rights to the
the testator.
succession.
Obligates but does not Suspends but does not
suspend obligate
In case of doubt, the institution should be
considered as modal not conditional.
Q: The testatrix devised a parcel of land to Dr.
Rabadilla. It was provided that Dr. Rabadilla
will acquire the property subject to the
obligation, until he dies, to give Maria 100
piculs of sugar, and in the event of non-
fulfillment, the property will pass to the
nearest descendants of the testatrix.
When Dr. Rabadilla died, Maria filed a
complaint to reconvey the land alleging that
the heirs of Dr. Rabadilla violated the
condition. Is the institution of Dr. Rabadilla, a
modal institution?
A: YES, because it imposes a charge upon the
instituted heir without, however, affecting the
efficacy of such institution.
1. There is a total omission in the inheritance;
2. The person omitted is a compulsory heir in
the direct line;
3. The omitted compulsory heir must survive
the testator, or in case the compulsory heir
predeceased the testator, there is a right of
representation;
4. Nothing must have been received by the heir
by gratuitous title.
A spouse CANNOT be preterited. While a spouse is
a compulsory heir, he/she is not in the direct line
(ascending or descending).
NOTE: The surviving spouse shall only be entitled
to recover his legitime but the institution of heirs
shall not be annulled.
There is Total Omission when the heir:
1. Receives nothing under the will whether as
heir, legatee, or devisee;
NOTE: If a compulsory heir is given a share in
the inheritance, no matter how small, there is
no preterition.
However, if a compulsory heir gets less than
his legitime, while this is not a case of

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 SUCCESSION
preterition, he is entitled to a completion of
his legitime under Art. 906 of the NCC.
2. Has received nothing by way of donation inter
vivos or propter nuptias; and
NOTE: If a compulsory heir has already
received a donation from the testator, there is
no preterition.
Reason: A donation to a compulsory heir is
considered an advance of the inheritance.
3. The heir will receive nothing by way of
intestate succession. (e.g. if the heir is not
mentioned in the will nor a recipient of a
donation inter vivos and all of the estate is
disposed by will)
To constitute preterition, the omission must be
total and complete, such that nothing must be
given to the compulsory heir (Aznar v. Duncan,
G.R. No. L-24365, June 30, 1966).
Effects of Preterition
1. Preterition annuls the institution of heirs;
2. Devices and legacies are valid insofar as they
are not inofficious;
3. If the omitted compulsory heir dies before the
testator, the institution shall be effectual,
without prejudice to the right of
representation.
Example: X has two legitimate children: A
and B. X makes a will which results in the
preterition of A. A predeceases X but leaves a
legitimate child A-1, who is himself
completely omitted from the inheritance (A-1
being entitled to succeed X by
representation). There is preterition, not
because A was preterited but because A-1 was
preterited (Balane, 2010). In such case, the
descendant of A, A-1, can now file an action to
annul the institution of heirs.
Preterition annuls the institution of an heir and
annulment throws open to intestate succession
the entire inheritance. The only provisions which
do not result in intestacy are the legacies and
devises made in the will for they should stand
valid and respected, except insofar as the
legitimes are concerned (Acain v. IAC, G.R. No.
72706, October 27, 1987).
Omission of an illegitimate child in a will
amounts to preterition
287
Art. 854 of the NCC do not distinguish. It is
immaterial whether the heir omitted in the
testator’s will is legitimate or illegitimate
provided that he is a compulsory heir in the direct
line.
Omission of an adopted child in a will also
amount to preterition
An adopted child is by legal fiction considered a
compulsory heir in the direct line. An adopted
person is given the same rights and duties as if he
is a legitimate child of the adopter and makes the
adopted person a legal heir of the adopter (Acain
v. IAC, G.R. No. 72706, October 27, 1987).
Compulsory Heirs in the Direct Line
1. Legitimate children and descendants with
respect to their legitimate parents or
ascendants;
2. Legitimate parents of ascendants, with
respect to their legitimate children and
descendants;
3. Illegitimate children;
4. The father or mother of illegitimate children.
Where the deceased left no descendants,
legitimate or illegitimate, but she left forced heirs
in the direct ascending line— her parents, and
her holographic will does not explicitly
disinherit them but simply omits their names
altogether, the case is one of preterition of the
parents, not a case of ineffective disinheritance
(Nuguid vs. Nuguid, et al., GR No. L-23445 June 23,
1966).
Exclusion of an Heir in the Extrajudicial
Settlement of Estate
Q: Virginia P. Viado died intestate in 1982. Her
part in the conjugal property was transmitted
to her heirs—her husband Julian and their
children Nilo Viado, Rebecca Viado, Leah Viado
and Delia Viado. The inheritance, which vested
from the moment of death of the decedent,
remained under a co-ownership regime among
the heirs until partition. The heirs later on
executed a deed of extrajudicial settlement to
the exclusion of Delia Viado, alleged to be a
retardate. Can Delia Viado rescind the
extrajudicial settlement among other heirs?
A: No. The exclusion of petitioner Delia Viado
from the deed of extrajudicial settlement verily
has the effect of preterition. This kind of
preterition, however, in the absence of proof of
fraud and bad faith, does not justify a collateral
 CIVIL LAW
attack on Transfer Certificate of Title. The relief
instead rests on Article 1104 of the NCC to the
effect that where the preterition is not attended
by bad faith and fraud, the partition shall not be
rescinded but the preterited heir shall be paid
the value of the share pertaining to her. (Non
vs. Court of Appeals, G.R. No. 137287 February 15,
2000)
a) If by mistake or inadvertence, there is true
preterition and total intestacy results.
b) If the omission is intentional, the effect
would be a defective disinheritance
covered by Art. 918 of the NCC in which
case the institution of heir is not wholly
void but only in so far as it prejudices the
legitime of the person disinherited.

Preterition and Defective Disinheritance Effect of Preterition on the Will Itself

DEFECTIVE GR: The effect of annulling the institution of heirs

PRETERITION will be, necessarily, the opening of a total intestacy
DISINHERITANCE
except that proper legacies and devises must be
Distinctions respected. Here, the will is not abrogated.

A testamentary XPN: If the will contains a universal institution of

disposition depriving Omission in the heirs to the entire inheritance of the testator, the
any compulsory heir of testator’s will of the will is totally abrogated.
his share in the legitime forced heirs or any of
for a cause authorized them. Reason: The nullification of such institution of the
by law. universal heirs without any other testamentary
disposition in the will amounts to a declaration
The institution of heirs
The institution remains that nothing at all was written.
is completely annulled.
valid, but must be
Hence, the annulment is
reduced insofar as the PREDECEASE, INCAPACITY
in toto, unless there are
legitime has been & REPUDIATION
in addition,
impaired. Such nullity
testamentary
of institution is limited Effect if the Heir Predeceases the Testator
dispositions in the form
only to that portion of
of legacies and devices
which, the disinherited If the heir who predeceases the testator is a
which shall remain valid
heir has been voluntary heir, a devisee or a legatee, he shall
so long as they are not
unlawfully deprived of. transmit no right to his own heirs. Death prevents
inofficious.
him from acquiring any rights.
The omission is
By mere mistake or NOTE: The rule is absolute with respect to a
intentional in which
inadvertence resulting voluntary heir and a devisee or legatee.
case the institution of
in the fact that the
heir is not wholly void
compulsory heir Effect if the Heir Repudiated or Renounced his
but only in so far as it
receives nothing at all. Inheritance
prejudices the legitime
There is total
of the person
deprivation. An heir who renounced his inheritance, whether
disinherited.
as compulsory or as voluntary heir, does not
Similarities transmit any right to his own heirs.

In both cases, the omitted heir and the imperfectly
disinherited heir get at least their legitimes.
Both legacies and devises remain valid insofar as
the legitime has not been impaired.
The mere fact that an heir was omitted in a
will, does NOT automatically equate to
preterition.
NOTE: An heir who repudiated his inheritance,
may represent the person whose inheritance he
has renounced (NCC, Art. 976). The reason for this
is found under Art. 971 of the NCC: “the
representative does not succeed the person
represented but the one whom the person
represented would have succeeded. “
RIGHT OF REPRESENTATION

One must distinguish whether the omission of a Right of representation is the right created by
forced heir in the will of the testator is by mistake fiction of law, by virtue of which, the
or in advertence or voluntary or intentional: representative is raised to the place and degree of

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 SUCCESSION
the person represented, and acquires the rights 1. TN 1. TN 1. TN Not
which the latter would have if he were living or if 2. R 2. R 2. No R applicable
he could have inherited (NCC, Art. 970).

The representative thereby steps into the shoes of TN = Transmit Nothing

the person he represents and succeeds, not from R = Representation
the latter, but from the person whose estate the
person represented would have succeeded. COMPLETION OF THE LEGITIME

The right of representation is allowed
compulsory succession with respect to
legitime, in case the compulsory heir in
descending line dies before the testator
becomes incapacitated to succeed.
Heirs who repudiated their share MAY NOT be
represented. A voluntary heir MAY NOT also be
represented.
in Any compulsory heir to whom the testator has left
the by any title less than the legitime belonging to him
the may demand that the same be fully satisfied (NCC,
or Art. 906). (2001, 2010 BAR)
NOTE: Testamentary dispositions that impair or
diminish the legitime of the compulsory heirs shall
be reduced on petition of the same, insofar as they
may be inofficious or excessive (NCC, Art. 907).

Rules in case of representation If the testator has instituted only one heir, and the
institution is limited to an aliquot part of the
It shall take place in cases of: inheritance - legal succession takes place with
respect to the remainder of the estate (NCC, Art.
a. Death 851).
b. Incapacity
c. Disinheritance If the testator instituted several heirs as sole heirs
but allotted only an aliquot part of the inheritance
Representation applies only to those acquired by and together they do not cover the whole
virtue of the law (legitime, intestate share, in case inheritance, or the whole free portion - each part
of reserva troncal). shall be increased proportionately (NCC, Art. 852).

No representation in cases of repudiation.
Representation only occurs in the direct
descending line and never in the ascending.
In the direct collateral line, the right of
representation only takes place in favor of
children of brothers or sisters, whether full or
half-blood.
The representation obtains degree by degree, and
no jump is made.
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 proportionately (NCC, Art. 853).
SUBSTITUTION OF HEIRS
Substitution is the appointment of another heir
so that he may enter into the inheritance in
default of the heir originally instituted (NCC, Art
857). (2002 BAR)

Outline of Rules (Balane, 2010) The concept of substitution applies in cases if the
heir or heirs instituted should die before the
Death Incapacity Renunciation Disinheritance
testator or should not wish, or should be
incapacitated to accept the inheritance.
Compulsory Heir
If the Substitute Dies Ahead of the Testator
1. TN 1. TN 1. TN 1. TN
2. R 2. R 2. No R 2. R The substitute who dies ahead of the testator
prevents him from acquiring any rights, since
Voluntary Heir there is no substitution to speak of.
1. TN 1. TN 1. TN Not
2. No R 2. No R 2. No R applicable Kinds of substitution

Legal Heir 1. Simple/common (2002 BAR) – takes place

when the heir instituted:

289
 CIVIL LAW
a. Predeceases the testator; 1. There must be a first heir or fiduciary who
b. repudiates the inheritance; or takes the property upon the testator’s death;
c. is incapacitated to succeed 2. An absolute obligation is imposed upon the
fiduciary to preserve and to transmit to a
NOTE: Simple substitution without a second heir the property at a given time;
statement of the causes, to which it refers, 3. There is a second heir who takes the
shall comprise the 3 above mentioned property subsequently from the fiduciary
situations unless the testator has provided and must be one degree from the first heir;
otherwise. and
4. The first and second heir must both be living
2. Brief/compendious – when two or more and qualified at the time of the death of the
persons are substituted for one; and one testator.
person for two or more heirs.
NOTE: It should be imposed on the free portion
3. Reciprocal – one heir is designated as a and not on the legitime. Fideicommissary
substitute for an instituted heir while the substitution can never burden the legitime
latter is simultaneously instituted as a (NCC, Art. 864).
substitute for the former.
Meaning of "One degree"
GR: The substitute shall be subject to the
same charges and conditions imposed upon It refers to the degree of relationship; it means
the instituted heir. “one generation”. As such, the fideicommissary
can only be either a parent or child of the first heir
XPNs: (Palacios v. Ramirez, G.R. No. L-27952, February 15,
1. If the testator has expressly provided 1982).
the contrary
2. If the charges or conditions are The relationship is always counted from the first
personally applicable only to the heir heir. However, fideicommissary substitutions are
instituted (NCC, Art 862). also limited to one transmission. There can only
be one fideicommissary transmission such that
4. Fideicommissary Substitution (Indirect after the first, there can be no second
Substitution)– It is a substitution by virtue of fideicommissary substitution.
which the fiduciary or first heir instituted is
entrusted with the obligation to preserve and Both the first and second heir must be living
to transmit to a second heir the whole or part and qualified at the time of the death of the
of the inheritance. It shall be valid provided testator
such substitution does not go beyond one
degree from the heir originally instituted, and The fideicommissary inherits not from the first
provided further, that the fiduciary or first heir but from the testator, thus, the requirement
heir and the second heir are living at the time that the fideicommissary be alive or at least
of the death of the testator (NCC, Art. 863). conceived at the time of the testator’s death.
(2002, 2008 BAR)
Effect if the fideicommissary predeceases the
Parties to a Fideicommissary Substitution and fiduciary
their Obligations
If the fideicommissary predeceases the fiduciary,
PARTIES OBLIGATIONS but survives the testator, his rights pass to his
own heirs.
He has the obligation to
First heir or NOTE: The first heir receives property, either
preserve and transmit the
fiduciary upon the death of the testator or upon the
inheritance.
fulfillment of any suspensive condition imposed
Second heir or by the will.
He eventually receives the
fideicommissar
property from the fiduciary.
y The first heir is almost like a usufructuary with
right to enjoy the property. Thus, like a
Elements of Fideicommissary Substitution usufructuary, he cannot alienate the property. The

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 290
 SUCCESSION
first heir is also obliged to make an inventory but mortis causa or
he is not required to furnish a bond. impliedly by operation
of law
Alienation of the property subject to the
fideicommissary substitution by the first heir Has no usufructuary
Entitled to all of the
right over the property
Alienation of the property subject to the rights of a usufructuary
which he holds in trust
fideicommissary substitution by the first heir is
not valid. The fiduciary cannot alienate the May alienate his right
property either by an act inter vivos or mortis of usufruct but always
causa. He is bound to preserve the property and subject to his
Cannot alienate
transmit it to the second heir or fideicommissary. obligation of
anything whatsoever
preserving and
NOTE: transmitting the object
a. If the fiduciary registers the property in his to a second heir
name without the fideicommissary
substitution, innocent parties are protected. Fiduciary carries out
not another’s wishes
However, if the property is unregistered, the
but his own and he
buyer acquires only the seller’s right; i.e., Obligation is broader
enjoys the use and the
subject to the fideicommissary substitution because it extends not
fruits unlike a trustee
b. The fideicommissary is a sort of naked owner; only to the properties
(he is like a
ownership is consolidated in him upon but also to the fruits
transmission of the property to him. usufructuary) (Perez v.
Gachitorena, G.R. No. L-
31703, 1930).
Fiduciary’s Tenure

1. Primary rule – the period indicated by the Express obligation to preserve and transmit
testator the property
2. Secondary rule – if the testator did not
indicate a period, then the fiduciary’s lifetime The obligation to preserve and transmit must be
given clearly and expressly:
Delivery of the property to the fideicommissary 1. by giving it a name “fideicommissary
heir substitution” or
2. by imposing upon the first heir the absolute
GR: The fiduciary should deliver the property obligation to preserve and deliver the
intact and undiminished to the property to the second heir.
fideicommissary heir upon arrival of the
period. Remedy of the fideicommissary to protect
himself against alienation to an innocent third
XPN: The only deductions allowed, in the absence person
of a contrary provision in the will are:
1. Legitimate expenses If the first heir was able to register the property in
2. Credits his name, the fideicommissary should annotate his
3. Improvements claim on the land on the title to protect himself
against any alienation in favor of innocent third
The coverage of legitimate expenses and parties.
improvements are limited to necessary and
usefulexpenses, but not to ornamental expenses. When the property passes to the fideicommissary,
there is no more prohibition to alienate.
Distinctions between a fiduciary in
fideicommissary substitution and a trustee in If the testator gives the usufruct to different
a trust persons successively, the provisions on
fideicommissary substitution also apply.
FIDUCIARY TRUSTEE
Different dispositions related or analogous to
Can only be designated May be designated fideicommissary substitutions which the law
expressly by means of either expressly by considers as void (NCC, Art. 867)
a will acts inter vivos or

291
 CIVIL LAW
1. Fideicommissary substitutions which are not
made in an express manner, either by giving
them this name, or imposing upon the
fiduciary the absolute obligation to deliver the
property to a second heir.
2. Provisions which contain a perpetual
prohibition to alienate and even a temporary
one, beyond the limit fixed in Art. 863 of the
NCC (20 years) (NCC, Art.870)
3. Those which impose upon the heir the charge
of paying to various persons successively,
beyond the limit prescribed in Art. 863 of the
NCC, 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 nullity of the fideicommissary substitution
DOES NOT prejudice the validity of the institution
of the heirs first designated; the fideicommissary
clause shall simply be considered as not written
(NCC, Art. 868).
Q: Raymond, single, named his sister Ruffa in
his will as a devisee of a parcel of land which
he owned. The will imposed upon Ruffa the
obligation of preserving the land and
transferring it, upon her death, to her
illegitimate daughter Scarlet who was then
only one year old. Raymond later died, leaving
behind his widowed mother, Ruffa and Scarlet.
a. Is the condition imposed upon Ruffa to
preserve the property and to transmit it
upon her death to Scarlet, valid?
b. If Scarlet predeceases Ruffa, who inherits
the property?
c. If Ruffa predeceases Raymond, can Scarlet
inherit the property directly from
Raymond? (2008 BAR)
A:
a.) When an obligation to preserve and transmit
the property to Scarlet was imposed on
Ruffa, the testator Raymond intended to
create a fideicommissary substitution where
Ruffa is the fiduciary and Scarlet is the
fideicommissary. Having complied with the
requirements of Art. 863 and 869 of the NCC,
the fideicommissary substitution is valid.
b.) If Scarlet predeceases Ruffa, the latter as the
former’s heir, will be entitled to the property.
But since it is also Ruffa’s death which will
trigger the fideicommissary substitution, the
practical effect of her death would be to
allow her (Ruffa’s) mother to inherit the
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
property as Ruffa’s heir. The transfer of the
property from Scarlet to Ruffa (as Scarlet’s
heir) is what allows Ruffa’s mother to inherit
the property which she would otherwise be
disqualified to inherit under Article 992 of
the NCC.
c.) One requirement of a valid fideicommissary
substitution is that both heirs should be alive
at the time of the testator’s death. Ruffa
predeceasing Raymond means that the
fideicommissary substitution is no longer
valid. In this regard, the only way by which
Scarlet can inherit the property directly from
Raymond is by legal succession. Her right to
do so, however, is negated by (1) the
presence of Raymond and Ruffa’s mother
who necessarily excludes her; and (2) the
provisions of Art. 992 of the NCC.
LEGITIME
Legitime is that part of the testator's property
which he cannot dispose of because the law has
reserved it for certain heirs who are, therefore,
called compulsory heirs. (NCC, Art. 886). (2003
BAR)
It is mandatory on the part of the testator to
reserve that part of the estate to the legitime.
Determination of the Legitime
To determine the legitime, the value of the
property left at the death of the testator shall be
considered, deducting all debts and charges,
which shall not include those imposed in the will.
Donations given to children shall be charged to
the legitime (NCC, Art. 908).
Kinds of Legitime
1. Fixed – If the amount (fractional part) does
not vary or change regardless of whether
there are concurring compulsory heirs or
not.
a. legitimate children and descendants
(legitimate children’s legitime is always ½)
(2003, 2005, 2010 BAR)
b. legitimate parents and ascendants (When
there are no legitimate children and
descendants [NCC, Art. 887 (1)].
2. Variable – If the amount changes or varies in
accordance with whom the compulsory heir
concur.
292
 SUCCESSION
After the legitime has been determined in
accordance with Articles 908 to 910 of the NCC,
the reduction shall be made as follows:
1. Donations shall be respected as long as the
legitime can be covered, reducing or
annulling, if necessary, the devises or legacies
made in the will; (NCC, Art. 911 par. 2)
2. The reduction of the devises or legacies shall
be pro rata, without any distinction whatever
(NCC, Art. 911 par. 3).
If the testator has directed that a certain
devise or legacy be paid in preference to
others, it shall not suffer any reduction until
the latter have been applied in full to the
payment of the legitime (NCC, Art. 911 par. 4).
3. If the devise or legacy consists of a usufruct or
life annuity, whose value may be considered
greater than that of the disposable portion,
the compulsory heirs may choose between
complying with the testamentary provision
and delivering to the devisee or legatee the
part of the inheritance of which the testator
could freely dispose (NCC, Art. 911 par. 5).
4. If the devise subject to reduction should
consist of real property, which cannot be
conveniently divided, it shall go to the devisee
if the reduction does not absorb one-half of its
value; and in a contrary case, to the
compulsory heirs; but the former and the
latter shall reimburse each other in cash for
what respectively belongs to them (NCC, Art.
912 par. 1).
The devisee entitled to a legitime may retain
the entire property, provided its value does
not exceed that of the disposable portion and
of the share pertaining to him as legitime
(NCC, Art. 912 par. 2)
NOTE: If the heirs or devisees do not choose
to avail themselves of the right granted by the
preceding article, any heir or devisee who did
not have such right may exercise it; should the
latter not make use of it, the property shall be
sold at public auction at the instance of any
one of the interested parties (NCC, Art. 913).
The testator may devise and bequeath the free
portion as he may deem fit (NCC, Art. 914).
RULES ON LEGITIME
There is no obligation on the compulsory heirs to
accept their legitimes.
293
GR: The testator cannot deprive the compulsory
heirs of their legitimes.
XPN:
1. When the testator validly disinherited his
heir. (NCC, Art. 915)
2. When the partition of the hereditary estate for
a period not exceeding twenty (20) years is
expressly forbidden by the testator (NCC, Art.
1083).
NOTE: Only the legitime is reserved. The free
portion may be disposed of by will.
Q: Crispin died testate and was survived by
Alex and Josine, his children from his first
wife; Rene and Ruby, his children from his
second wife; and Allan, Bea, and Cheska, his
children from his third wife.
One important provision in his will reads as
follows:
"Ang lupa at bahay-sa-Lungsod ng Maynila ay
ililipat at ilalagay sa pangalan nila Alex at Rene
hindi bilang pamana ko sa kanila kundi upang
pamahalaan at pangalagaan lamang nila at
nang ang sinuman sa aking mga anak,
sampung apo at kaapuapuhan ko sa habang
panahon, ay may tutuluyan kung magnanais na
mag-aral sa Maynila o sa kalapit na mga
lungsod."
Is the provision valid? (2008, 2014 BAR)
A: NO, the provision is not valid. At first glance,
the provision may appear valid as it provides for
the transfer of title in favor of Alex and Rene over
the parcel of land. A legacy or devise is to be
construed as a donation effective mortis causa,
and it is intended to transfer ownership to the
legatee or devisee. Since the ownership is legally
transferred to the Alex and Rene, they cannot be
prohibited by the testator from alienating or
partitioning the same perpetually. The
dispositions of the testator declaring all or part of
the estate inalienable for more than twenty years
are void (NCC, Art. 870).
Rules governing succession in the direct
descending line
1. Rule on preference between lines– descending
line is preferred over the ascending line
2. Rule on proximity– the nearer excludes the
more remote
3. Right on representation, in case of
predecease, incapacity and disinheritance
 CIVIL LAW
4. If all the legitimate children repudiate their The renunciation or compromise of future
legitimes, the next generation of legitimate legitime is prohibited and considered null and
descendants, succeed in their own right. void.

Rules governing succession in the ascending Effect of Donations to the Inheritance of an

line Heir

1. Rule of proximity– the nearer excludes the Donations given to children shall be charged to
more remote their legitimes (NCC, Art. 909). (2000 BAR)
2. Division by line
3. Equal division within the line Reason: Donations to the compulsory heirs are
advances to the legitimes.
Limitations on the Testator’s Rights of
Ownership NOTE: Donations inter vivos to strangers shall be
charged to the free portion.
The testator CANNOT make donations inter vivos
which upon the legitime or which are inofficious. TABLE OF LEGITIMES

NOTE: The prohibition does not cover an onerous WHEN SURVIVING SPOUSE ALONE
disposition (sale) because this involves an
exchange of values. ½ of the hereditary estate (Free portion = ½)

Rules on the donations made by the testator in Surviving spouse where the
favor of his children, legitimate and marriage was solemnized under
illegitimate, and strangers and those which are articulo mortis and the deceased
inofficious: died within 3 months from the 1/3 of the
time of marriage. hereditary
1. Donations given to children shall be charged estate (Free
to their legitimes (NCC, Art. 909 par. 1). NOTE: The deceased was the portion =2/3)
2. Donations made to strangers shall be charged spouse who was at the point of
to that part of the estate of which the testator death at the time of marriage
could have disposed by his last will (NCC, Art. (Tolentino, Civil Code, 1992 ed.)
909 par. 2).
Surviving spouse where the
3. Insofar as they may be inofficious or may
marriage was solemnized under
exceed the disposable portion, they shall be
articulo mortis and the deceased ½ of the
reduced according to the rules established by
died within 3 months from the hereditary
this Code (NCC, Art. 909 par. 3).
time of marriage but the parties estate (Free
4. Donations which an illegitimate child may
have been living as husband portion = ½)
have received during the lifetime of his father
and wife for more than 5 years
or mother shall be charged to his legitime.
prior to the marriage.
Should they exceed the portion that can be
freely disposed of, they shall be reduced in the PRIMARY HEIRS CONCUR WITH CONCURRING
manner prescribed by this Code (NCC, Art. COMPULSORY HEIRS (2005, 2010 BAR)
910).
Legitimate child = ½ of the
Remedies of a compulsory heir whose legitime hereditary
One
has been impaired estate
legitimate
child and
1. In case of preterition – annulment of Surviving spouse = ¼ of the
the
institution of heir and reduction of devises hereditary
surviving
and legacies estate
spouse
2. In case of partial impairment – completion of
legitime Free portion =¼
3. In case of inofficious donation – collation
Two or Legitimate children = ½ of the
more hereditary
legitimate estatein

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2019 GOLDEN NOTES 294
 SUCCESSION
children equal portions spouse shall have preference over
and the those of the illegitimate children
surviving Surviving spouse = a share equal to whose share may suffer reduction
spouse that of each child pro rata because there is no
preference as among themselves.
Free portion = whatever remains

Legitimate child = ½ of the

hereditary estate
(if there are Legitimate children = ½ of the
several, they shall hereditary
divide the ½ share estate in equal
in equal portions) portions
Surviving spouse = a share equal to
Illegitimate children = ½ of the that
One
share of each of each
legitimate
legitimate child (if legitimate
child and
the free portion is child
illegitimate
insufficient, the Illegitimate children = ½ of the
children Two or
illegitimate share of
more
children shall each
legitimate
divide the free legitimate
children,
portion equally child
surviving
among themselves)
spouse and
Free portion = whatever
Free portion = whatever illegitimate
remains
children
remains
NOTE: The share of the surviving
spouse shall have preference over
CONCURRENCE AMONG CONCURRING those of the illegitimate children
COMPULSORY HEIRS whose share may suffer reduction
pro rata because there is no
Surviving spouse = 1/3 of the preference as among themselves.
Surviving
hereditary
spouse and
estate
illegitimate
children
Illegitimate children = 1/3 of the
hereditary estate (Rabuya, 2009). SECONDARY HEIRS CONCUR WITH
COMPULSORY HEIRS
Legitimate child = ½ of the
hereditary Legitimate parents = ½ of
estate the

Surviving spouse = ¼ of the hereditary

hereditary estate
One Legitimate parents
estate and surviving
legitimate Surviving spouse = ¼ of
child, the spouse (1999
Illegitimate children = ½ of the the
surviving BAR)
share of
spouse, and hereditary
each
illegitimate estate
legitimate
children
child
Free portion =¼
Free portion = whatever
Legitimate parents = ½ of
remains Legitimate parents
the
and illegitimate
NOTE: The share of the surviving children
hereditary

295
 CIVIL LAW
1. the total legitime of the illegitimate children
estate shall not exceed the free portion.
2. the legitime of the surviving spouse must be
Illegitimate children = ¼ of first fully satisfied (NCC, Art. 895)
the
hereditary estate in equal COLLATION
shares
Collation is the process of adding the value of the
Free portion =¼ thing donated to the net value of hereditary estate.
(2001, 2010 BAR)
Legitimate parents = ½ of
the hereditary To collate is to bring back or return to the
estate hereditary mass, in fact or fiction, property which
came from the estate of the decedent, during his
Illegitimate children = ¼ of lifetime, but which the law considers as an
Legitimate the hereditary advance from the inheritance.
parents, surviving estate in equal
spouse, and shares Collation is applicable to both donations to
illegitimate compulsory heirs and donations to strangers.
children Surviving spouse = 1/8
of the GR: Compulsory heirs are obliged to collate.
hereditary
estate XPNs:
1. When testator should have so expressly
Free portion = 1/8 provided;
2. When compulsory heir repudiates his
Parents = excluded inheritance

Children = ½ if Properties that are to be collated

legitimate
and ½ of the 1. Any property/right received by gratuitous
Parents and share of title during testator’s lifetime.
children of the each 2. All that may have been received from
Illegitimate legitimate decedent during his lifetime.
Decedent child if 3. All that their parents have brought to
illegitimate collation if alive.
children
Properties not subject to collation
Free portion = whatever
remains 1. Absolutely no collation – expenses for
support, education (elementary and
Parents = ¼ of the
secondary only), medical attendance, even in
hereditary estate extra-ordinary illness, apprenticeship,
Parents and
surviving spouse ordinary equipment or customary gifts.
Surviving spouse = ¼ of the
of the Illegitimate 2. Generally not imputed to legitime:
hereditary estate
Decedent a. Expenses incurred by parents in giving
their children professional, vocational, or
Free portion =½
other career unless the parents so
provide, or unless they impair the
Legitime of Illegitimate Children legitimes.
b. Wedding gifts by parents and ascendants
The legitime of each illegitimate child shall consist consisting of jewelry, clothing and outfit
of one-half of the legitime of a legitimate child (FC, except when they exceed 1/10 of the sum
Art. 176, 2nd sentence). disposable by will.

The legitime of the illegitimate children shall be NOTE: Only the value of the thing donated shall be
taken from the portion of the estate at the free brought to collation. This value must be the value
disposal of the testator, provided: of the thing at the time of the donation.

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2019 GOLDEN NOTES 296
 SUCCESSION
Property left by will (like a legacy or devise) is
not deemed subject to collation if the testator has
not otherwise provided, but the legitime shall in
any case remain unimpaired. The legacy or devise
should be imputed to the free portion, not to the
legitime.
Steps in Determining the Legitime of
Compulsory Heirs
1. Determination of the gross value of the estate
at the time of the death of the testator.
2. Deduct all the debts and charges which are
chargeable against the estate.
3. Collate or add the value of all donations inter
vivos to arrive at the net hereditary estate
which will serve as the basis of determining
the legitime.
4. Impute all the value of donations inter vivos
made to compulsory heirs against their
legitime and of the value of all donations inter
vivos made to strangers against the
disposable free portion.
5. If the legitime is impaired, the following
reductions shall be made:
a. First, reduce pro rata non-preferred
legacies and devices, and the
testamentary dispositions.
b. Second, reduce pro rata the preferred
legacies and devises.
c. Third, reduce the donations inter vivos
according to the inverse order of their
dates.
Order of preference in reducing
testamentary dispositions and
donations
1. Reduce pro rata the non-preferred
legacies and devises (NCC, Art.911, par.2),
and the testamentary dispositions that
impairs or diminish the legitime of the
compolsury heirs (NCC, Art. 907). Among
these legacies, devises, and testamentary
dispositions, there is no preference.
NOTE: Preferred legacies and devises are
those directed by testator to be preferred
than the others.
2. Reduce pro rata the preferred legacies
and devises (NCC, Art. 911, last par.).
3. Reduce the donations inter vivos
according to the inverse order of their
dates (i.e., the oldest is the most
preferred) (NCC, Art. 773).
297
NOTE: These reductions shall be to the
extent required to complete the legitimes,
even if in the process the disposition is
reduced to nothing.
6. If there are remaining portion of the estate, it
shall be distributed to the devisees and
legatees, if there are any, and according to the
provisions of the will.
COMPULSORY HEIRS
The following are Compulsory Heirs (2003,
2005, 2006, 2008 BAR)
1. Legitimate children and descendants, with
respect to their legitimate parents and
ascendants;
2. In default of the foregoing, legitimate parents
and ascendants, with respect to their
legitimate children and descendants;
3. The widow or widower;
4. Acknowledged natural children, and natural
children by legal fiction;
5. Other illegitimate children referred to in
Article 287.
Compulsory heirs mentioned in Nos. 3, 4, and 5
are not excluded by those in Nos. 1 and 2; neither
do they exclude one another.
In all cases of illegitimate children, their filiation
must be duly proved.
The father or mother of illegitimate children of the
three classes mentioned shall inherit from them in
the manner and to the extent established by this
Code (NCC, Art. 887).
Classifications of Compulsory Heirs
1. Primary – They are not excluded by the
presence of other compulsory heirs and have
precedence over and exclude other
compulsory heirs. E.g. legitimate children
and / or descendants.
2. Secondary – Those who succeed only in
default of the primary compulsory heirs. E.g.
legitimate parents and/ or legitimate
ascendants; illegitimate parents.
3. Concurring – Those who succeed
together with the primary or secondary
compulsory heirs. E.g. Surviving spouse and
illegitimate children and descendants.
Table of Compulsory Heirs
PRIMARY SECONDARY
 CIVIL LAW
COMPULSORY HEIRS COMPULSORY HEIRS
(1) Legitimate and their (4) Legitimate parents
descendants; and ascendants; NOTE:
Inherit only in default
(2)Surviving of No. (1);
Spouse(Legitimate);
(5) Illegitimate Parents
(3)Illegitimate Children (no other descandants)
and their descendants
NOTE: They inherit
NOTE: Nos. 2 and 3 are only in default of Nos.
concurring compulsory (1) and (3)
heirs.
Compulsory Heirs Inherit Either:
1. in their own right; or
2. by right of representation
Adopted Child is a Compulsory Heir
Legitimate children include adopted children and
legitimated children.
Under R.A. 8552 or the Domestic Adoption Law,
adopted children have the same rights granted to
the legitimate children. Adopted children, for all
intents and purposes are considered as legitimate
children. The relationship, however, does not
extend to other relatives of the adopter, thus,
disqualifying the adopted from directly inheriting
from the adopter’s ascendants.
Since the adopted child enjoys successional rights
as a legitimate child, then he excludes the
adopter’s parents and ascendants.
Formal or judicial adoption is necessary
before the adopted child can inherit from the
adopter because adoption is a juridical act, a
proceeding in rem, which creates between two
persons a relationship similar to that which
results from legitimate paternity and filiation.
Without the benefit of formal (judicial) adoption,
the adopted child is neither a compulsory nor a
legal heir. Hence, he is not entitled to inherit.
Rule on Legitimated Children
Prior to the marriage of the parents of the child, he
is an illegitimate child since he is born outside a
valid marriage.
Legitimation takes place upon the marriage of
the child’s parents, the marriage being valid or at
least voidable, the child is automatically raised to
the status of legitimacy, without need of any
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
additional act on the part of either the child or the
parents.
Children conceived and born outside of wedlock of
parents who, at the time of the conception of the
former, were not disqualified by any impediment
to marry each other, or were so disqualified only
because either or both of them were below
eighteen (18) years of age, may be legitimated (FC,
Art. 177 as amended by R.A. 9858). For purposes of
succession, the opening of succession must
happen after the effectivity of R.A. 9858;
otherwise, the child will be considered as
illegitimate.
NOTE: Under the Family Code, there is no more
distinction between acknowledged natural
children and illegitimate children. They are all
considered as illegitimate.
Compulsory heirs of a person who is illegitimate:
1. Legitimate children and descendants;
2. Illegitimate children and descendants;
3. In default of the foregoing, parents only;
4. Surviving spouse.
Parents and ascendants are secondary
compulsory heirs. They inherit in default of
legitimate children and descendants.
GR: The presence of the illegitimate children of
the decedent DOES NOT exclude parents and
ascendants.Parents and ascendants concur
with the illegitimate children of the decedent.
XPN: If the decedent is illegitimate, his illegitimate
children exclude the illegitimate parents and
ascendants.
Common law spouse NOT a compulsory heir
A common law spouse CANNOT be a compulsory
heir. There must be a valid marriage between the
decedent and the surviving spouse. If the marriage
is null and void, the surviving spouse cannot
inherit.
Surviving spouse NOT a compulsory heir of her
parent-in-law
Neither is a widow (surviving spouse) a
compulsory heir of her parent-in-law in
accordance with the provisions of Article 887 of
the Civil Code.—The aforesaid provision of law
refers to the estate of the deceased spouse in
which case the surviving spouse (widow or
widower) is a compulsory heir. It does not apply
298
 SUCCESSION
to the estate of a parent in law. Indeed, the
surviving spouse is considered a third person as
regards the estate of the parent-in-law (Rosales vs.
Rosales, GR No. L-40789 February 27, 1987).
Q : Ramon Mayaman died intestate, leaving a
net estate of P10, 000, 000.00. Determine how
much each heir will receive from the estate :
(a) If Ramon is survived by his wife, three full-
blood brothers, two half-brothers, and one
nephew (the son of a deceased full-blooad
brother) ? Explain.
A : Having died intestate, the estate of Ramon shall
be inherited by his wife and his full and half blood
siblings or their respective representatives. In
intestacy, if the wife concurs with no one but the
sibling of the husband, all of them are the intestate
heirs of the deceased husband. The wife will
receive half of the intestate estate, while the
siblings or their respective representatives, will
inherit the other half to be divided among them
equally. If some siblings are of the full-blood and
the others of the half-blood, a half blood sibling
will receive half of the share of a full-blood sibling.
1. The wife of Ramon will, therefore, receive one
half of the estate or the amount of P5, 000,
000.00;
2. The three (3) full-blood brothers, will,
therefore, receive P1, 000, 000.00 each;
3. The nephew will receive P1, 000, 000.00 by
right of representation;
4. The two (2) half-brothers will receive P500,
000.00 each.
(b) If Ramon is survived by his wife, a half-
sister, and three nephews (sons of a
deceased full-blood brother) ? Explain.
(2009 BAR)
A : The wife will receive one half of the estate or
P5, 000, 000.00. The other half shall be inherited
by (1) the full-blood brother, represented by his 3
children, and (2) the half-sister. They will divide
that other half between them such that the share
of the half-sister is just half of the share of the full-
blood brother. The share of the full-blood brother
shall in turn be inherited by the three (3) nephews
in equal shares by right of representation.
Therefore, the three (3) nephews will receive P1,
111, 111.10 each and the half-sister will receive
the sum of P1, 666, 666.60 (UPLC pg. 39).
Q : Emil, the testator, has three legitimate
children. Tom, Henry and Warlito ; a wife
named Adette ; parents named Pepe and Pilar ;
299
an illegitimate child, Ramon ; brother, Mark ;
and a sister, Nanette. Since his wife Adette is
well-off, he wants to leave to his illegitimate
child as much of his estate as he can legally do.
His estate has an aggregate net amount of P1,
200, 000.00, and all the above-named relatives
are still living. Emil now comes to you for
advice in making a will. How will you
distribute his estate according to his wishes
without violating the law on testamentary
succession ? (2005 BAR)
A : In his will, Emil should give his compulsory
heirs just their respective legitimes and give all of
the free portion to his illegitimate child in addition
to the said child’s legitime. He should divide his
estate in his will as follows :
Tom – P200, 000 (legitime)
Henry – P200, 000 (legitime)
Warlito – P200, 000 (legitime)
Adette – P200, 000 (legitime)
Ramon – P400, 000 (P100, 000 as legitime and
P300, 000 as free portion) (UPLC, pg. 139).
RESERVA TRONCAL
Reserva Troncal
The ascendant who inherits from his descendant
any property which the latter may have acquired
by gratuitous title from another ascendant, or a
brother or sister, is obliged to reserve such
property as he may have acquired by operation of
law for the benefit of relatives who are within the
third degree and who belong to the line from
which said property came (NCC, Art. 891).
Purposes:
1. To prevent persons who are outsiders to the
family from acquiring, by chance or accident,
property which otherwise would have
remained with the said family.
2. To put back the property to the line from
which it originally came.
3. To keep the property within the family to
which such property belongs (Velayo
Bernardo v. Siojo, G.R. No. L-36078, March 11,
1933).
Requisites that must exist in order that a
property may be impressed with a reservable
character
1. That the property was acquired by a
descendant (called “praepositus” or
propositus) from an ascendant or from a
 CIVIL LAW
brother or sister by gratuitous title when the
recipient does not give anything in return;
2. That said descendant (praepositus) died
without an issue;
3. That the same property (called “reserva”) is
inherited by another ascendant (called
“reservista”) by operation of law (either
through intestate or compulsory succession)
from the praepositus; and
4. That there are living relatives within the third
degree counted from the praepositus and
belonging to the same line from where the
property originally came (called
“reservatarios”) (NCC, Art. 891; Chua v. CFI of
Negros Occidental, G.R. No. L-29901, August 31,
1977; Rabuya, 2009).
Graphical Example of Art. 891 of NCC
Before his death in 1950, GF donated a parcel of
land to his grandson, P, the only child of his
deceased son, F. P died intestate in 1960 without
any heir in the direct descending line, as a
consequence of which the land passed to his
mother, M, in accordance with the laws of
intestate succession.
This reservable character of the property will, as a
rule, terminate upon the death of the ascendant-
reservista. Thus, if we extend the example by
presupposing that M died in 1977, A and B, uncles
of the propositus, P, in the paternal line, can claim
the property as their own in accordance with the
provision of Art. 891 of the Code (Jurado, 2009).
Reserva troncal DOES NOT exist in an
illegitimate or adoptive relationship. It only
exists in the legitimate family (Centeno v. Centeno,
G.R. No. 28265, November 5, 1928; id, p. 635).
Causes for the extinguishment of the reserva
(LD2R2 PC)
1. Death of the reservista
2. Death of all the relatives within the third
degree prior to the death of the reservista
3. Accidental Loss of all the reservable
properties
4. Renunciation or waiver by all the
reservatatios provided that no other
reservatario is born subsequently
5. Registration under Act 496 without the
reservable character being annotated if it falls
into the hands of a buyer in good faith for
value
6. By Prescription – reservista seeks to acquire
(30 years – immovable; 8 years- movable)
7. Confusion or merger of rights, as when the
reservatarios acquire the reservista’s right by
a contract inter vivos.
Reserva Minima distinguished from Reserva
Maxima

Is the property reservable? It is evident that the RESERVA MINIMA RESERVA MAXIMA
property in this particular case is reservable,
because all of the requisites for reservation are All of the properties
present. In the first place, M, who is the ascendant All of the properties
which the descendant
reservista, had acquired the property by operation which the descendant
had previously acquired
of law from her descendant, P; in the second place, had previously
by gratuitous title from
P, who is the descendant-propositus, had acquired by gratuitous
another ascendant or
previously acquired the property by gratuitous title from another
from a brother or sister
title from another ascendant, his grandfather, GF, ascendant or from a
must be considered as
who is the origin of the said property; and in the brother or sister must
passing to the
third place, the descendant had died without any be included in the
ascendant- reservista
legitimate issue in the direct descending line who ascendants legitime
partly by operation of
could inherit from him. Consequently, from the insofar as such legitime
law and partly by force
time of the death of the descendant-propositus, P, can contain.
of the descendant’s will.
in 1960, the ascendant, M, who acquired the
property, is obliged to reserve it for the benefit of
Q: A son received from his mother P200,000 by
relatives of the propositus who are within the
virtue of a will. The son had properties of his
third degree and who belong to the line from
own amounting to P400,000. When the son
which the said property came.
died without issue, he left a will giving all his
estate to his father. How much is the
reservable property?

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2019 GOLDEN NOTES 300
 SUCCESSION
A: Since the father’s legitime is only ½, he
received the P600,000 in two capacities: P300,000
as a compulsory heir – and which was received
therefore as a legitime or by operation of law and
P300,000 as a voluntary heir. According to the
theory of reserva minima, the reservable property
is only P 100,000on the theory that half of the
P200,000 received from the origin (mother in this
case) was given to the father as his legitime or by
operation of law. Therefore, the reservable
property is only P100,000 (Paras, 2008).
NOTE: According to Manresa, in view of the
silence of the law on the matter, the principle of
reserve minima should be followed. This seems
also the opinion of Scaevola (Paras, 2008).
Q: Esteban and Martha had four (4) children:
Rolando, Jun, Mark, and Hector. Rolando had a
daughter, Edith, while Mark had a son, Philip.
After the death of Esteban and Martha, their
three (3) parcels of land were adjudicated to
Jun. After the death of Jun, the properties
passed to his surviving spouse Anita, and son
Cesar. When Anita died, her share went to her
son Cesar. Ten (10) years after, Cesar died
intestate without any issue. Peachy, Anita’s
sister, adjudicated to herself the properties as
the only surviving heir of Anita and Cesar.
Edith and Philip would like to recover the
properties claiming that they should have
been reserved by Peachy in their behalf and
must now revert back to them.
Is the contention of Edith and Philip valid?
(2014 BAR)
A: NO, the contention is not valid. The property
adjudicated to Jun from the estate of his parents
which he in turn left to Anita and Cesar is not
subject to reservation in favor of Edith and Philip.
In Mendoza et. al. v. Policarpio, et. al. (G.R. NO.
176422, March 20, 2013) the court ruled that lineal
character of the reservable property is reckoned
from the ascendant from whom the propositus
received the property by gratuitous title. The
ownership should be reckoned only from Jun, as
he is the ascendant from where the first
transmission occurred or from whom Cesar
inherited the properties.
Moreover, Article 891 provides that the person
obliged to reserve the property should be an
ascendant. Peachy is not Cesar’s ascendant but a
mere collateral relative. On the assumption that
the property is reservable, Edith and Philip being
first cousins of Cesar who is the propositus are
301
disqualified to be reservatarios as they are not
third degree relatives of Cesar.
Parties in Reserva Troncal
1. Origin
The origin of the property must be an
ascendant, brother or sister of the propositus.
The transmission from the origin to the
propositus must be by gratuitous title.
NOTE: The origin must be a legitimate
relative because reserva troncal exists only in
the legitimate family.
The origin can alienate the property. While
the origin owns the property, there is no
reserva yet, and therefore, he has the perfect
right to dispose of it, in any way he wants,
subject, however to the rule on inofficious
donations.
2. Propositus
The propositus must be a legitimate
descendant or half-brother/sister of the
origin of the property.
NOTE: To give rise to reserva troncal, the
propositus must not have any legitimate child;
otherwise, the reservable property will be
inherited by the latter.
The presence of illegitimate children of the
propositus will not prevent his legitimate
parents or ascendants from inheriting the
reserved property.
The propositus is the descendant whose death
gives rise to the reserva troncal, and from
whom therefore the third degree is counted.
The propositus can alienate the property.
While propositus is still alive, there is no
reserva yet, therefore, he is the absolute
owner of the property, with full freedom to
alienate or dispose or encumber.
NOTE: The propositus is referred to as the
“arbiter of the reserva.”
3. Reservista
The reservista is the ascendant who inherits
from the propositus by operation of law. He
has the obligation to reserve.
 CIVIL LAW
NOTE: The relationship between the
reservista and the propositus must be
legitimate.
If he inherited the property from the
propositus, not by legal succession or by
virtue of legitime, there is no obligation to
reserve.
The reservista owns the reservable property.
The reservista is an absolute or full owner,
subject to a resolutory condition. If the
resolutory condition is fulfilled, the
reservista’s ownership of the property is
terminated.
Resolutory condition: If at the time of the
reservista’s death, there still exist relatives
within the third degree (reservatarios) of the
propositus and belonging to the line from
which the property came.
NOTE: The reservable property is not part of
the estate of the reservista.
The reservista can alienate the property.
Unlike in fideicommissary substitution where
the fiduciary heir cannot alienate the property
because he is merely considered a usufruct,
the reservista can alienate the property being
the owner thereof but subject to the
reservation.
GR: The reservista is required to furnish a
bond, security or mortgage to guarantee the
safe delivery later on to the reservatarios of
the properties concerned, in the proper cases.
XPN: The bond, security or mortgage is not
needed when the property has been
registered or annotated in the certificate of
title as subject to reserva troncal.
NOTE: Upon the reservista’s death the
ownership of the reserved properties is
automatically vested to the reservatarios who
are alive. Hence, the reservista cannot dispose
the reserved property by will if there are
reservatarios existing at the time of his death.
4. Reservatario
The reservatarios are relatives within the
third degree of the propositus, who belong to
the same line from which the property
originally came from who will become the full
owners of the property the moment the
reservista dies, because by such death, the
reserva is extinguished.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
NOTE: It is further required that the
reservatario should be related by blood not
only from the propositus but also to the other
descendant, or brother, or sister, from whom
the property came. Only then can he be
considered as belonging to the “line from
which the property came.”
Persons Qualified as Reservatarios
(1) First degree relatives — This can only
refer to the legitimate father or mother of the
descendant-propositus, since it is evident that
when an ascendant inherits from a
descendant either as a compulsory heir or as
an intestate heir, it is because the descendant
has no legitimate descendants of his own, or,
if he has, they cannot inherit from him
because of disinheritance, incapacity or
repudiation.
(2) Second degree relatives — This can only
refer to the grandparents as well as to the
brothers and sisters of the full or half blood of
the descendant-propositus belonging to the
line from which the reservable property came.
(3) Third degree relatives – This can only
refer to the greatgrandparents, uncles or
aunts (brothers and sisters of the full or half
blood of the propositus’ father or mother), and
nephews or nieces (children of the propositus’
brothers or sisters of the full or half blood)
belonging to the line from which the
reservable property came (Jurado, 2009).
Q : Does the reserva mentioned in Art. 891 of
the Civil Code apply in favor of all the relatives
within the 3rd degree belonging to the line
from which the property came, whether they
be legitimate or illegitimate ?
A : The reserva favors only the legitimate relatives
(Nieva v Alcala, G.R. No. L-13386 October 27,
1920) and even then, preference is given to the
direct line as against the collateral lines and the
rule of nearer excludes farther also applies
(Florentino v Florentino, G.R. No. L-
14856 November 15, 1919).
Relatives within the third degree from the
propositus
1. Parents;
2. Grandparents;
3. Full and half blood brothers and sisters;
4. Great grandparents,
5. Nephews and nieces.
302
 SUCCESSION
Q: Placido and Dominga had four children:
Antonio, Exequiel, married to Leonor,
Apolonio and Valentin. Herein petitioners are
children of Antonio, Apolonio and Valentin.
Petitioners alleged that the properties in
dispute were part of Placido and Dominga’s
properties that were subject of an oral
partition and subsequently adjudicated to
Exequiel. After Exequiel’s death, it passed on to
his spouse Leonor and only daughter,
Gregoria. After Leonor’s death, her share went
to Gregoria. In 1992, Gregoria died intestate
and without issue. They claimed that after
Gregoria’s death, respondent Julia, who is
Leonor’s sister, adjudicated unto herself all
these properties as the sole surviving heir of
Leonor and Gregoria. Hence, petitioners claim
that the properties should have been reserved
by respondent in their behalf and must now
revert back to them, applying Article 891 of
the Civil Code on reserva troncal. Decide.
A: The properties are not reservable in favour of
the petitioners. Reserva troncal does not apply in
this case.
It should be pointed out that the ownership of the
properties should be reckoned only from
Exequiel’s as he is the ascendant from where the
first transmission occurred, or from whom
Gregoria inherited the properties in dispute. The
law does not go farther than such
ascendant/brother/sister in determining the
lineal character of the property. Gregoria, on the
other hand, is the descendant who received the
properties from Exequiel by gratuitous title. It
must further be emphasized that Leonor, the
mother of Gregoria, predeceased the latter.
In reserve troncal, the reservista must be an
ascendant. In this case, the property in dispute
was adjudicated to Julia who is a collateral
relative within the 3rd degree of relationship from
Gregoria.
Furthermore, even assuming that the properties
are reservable, it cannot be reserved in favour of
the petitioners because they are not qualified
reservatarios. Petitioners are not relatives
within the third degree of Gregoria from whom
the properties came. The person from whom the
degree should be reckoned is the
descendant/prepositus — the one at the end of
the line from which the property came and upon
whom the property last revolved by descent. It is
Gregoria in this case. Petitioners are Gregoria’s
fourth degree relatives, being her first cousins.
First cousins of the prepositus are fourth
303
degree relatives and are not reservees or
reservatarios (Mendoza vs. Delos Santos, G.R. No.
176422 March 20, 2013)
Property Subject to Reservation
The reservation established in Art. 891of the NCC
must be the same property which the ascendant-
reservista had acquired by operation of law from
the descendant-propositus upon the death of the
latter and which the latter, in turn, had acquired
by gratuitous title during his lifetime from another
ascendant or from a brother or sister.
Consequently, the ascendant-reservista cannot
substitute another property for that which he is
obliged by law to reserve. This consequence is
deducible not only from the object and purpose of
the reserva, but also from the obligations imposed
upon the reservista, such as the obligation to make
an inventory of all reservable property and the
obligation to annotate in the Registry of Property
the reservable character of all reservable
immovable property (Jurado, 2009).
XPN : There would have to be substitution of the
reservable property through unavoidable
necessity, such as when the property is
consumable, or when it is lost or destroyed
through the fault of the reservista, or when it has
deteriorated through the same cause, or when it
has been alienated. In such cases, the remedy of
the reservatarios or persons entitled to the
reservable property would be to recover the value
of the property or to seek the ownership and
return thereof depending upon the circumstances
of each particular case. These remedies are
available regardless of whether or not the
required inventory has been made and the
mortgage has been constituted, although
undoubtedly, restitution or recovery would be
rendered much more difficult or even impossible
if these requirements are not complied with.
(Jurado, 2009)
NOTE: If the reservista has no cash when he dies,
and the reservable property is money the reserves
can either:
1) select equivalent property from the estate; or
2) demand the sale of sufficient property so that
cash may be obtained (Paras, 2016).
Requisites for passing of title to the
reservatarios
1. Death of the reservista; and
 CIVIL LAW
2. The fact that the reservatarios survived the
reservista.
The reservatario acquires the right over the
reservable property upon the death of the
reservista. The reservatario nearest the decedent
propositus becomes, automatically and by
operation of law, the absolute owner of the
reservable property (Cano v. Director of Lands, G.R.
No. L-10701, January 16, 1959).
There is right of representation in reserva troncal
but the representative must also be within the
third degree from the propositus (Florentino v.
Florentino, G.R. No. 14856, November 15, 1919).
Total exclusion to the inheritance, means loss of
the legitime, right to intestate succession and of
any disposition in a prior will.
Disinheritance, however, is without prejudice to
the right of representation of the children and
descendants of the person disinherited.
But the disinherited parent shall not have the
usufruct or administration of the property which
constitutes the legitime.
NOTE: Parents no longer enjoy the right of
usufruct over the properties of their children
under the Family Code.

NOTE: The reservatarios inherit the property Requisites of a Valid Disinheritance

from the propositus, not from the reservista.
1.
Reserva troncal is governed by the following rules 2.
on intestate succession: (Applicable when there are 3.
concurring relatives within the third degree) 4.
5.
1. Proximity - “The nearer excludes the farther” 6.
2. “The direct line is preferred over the collateral 7.
line” 8.
“The descending line is preferred over the
ascending line”
Grounds for Disinheritance
DISINHERITANCE
1.
Disinheritance is the process or act, thru a
testamentary disposition of depriving a
compulsory heir of his legitime for causes
expressly stated by law (NCC, Art. 915).
The only way in which a compulsory heir can be
deprived of his legitime is through valid
disinheritance. It can be effected only through a
will wherein the legal cause therefor shall be
specified (NCC, Art. 916).
Disinheritance is not automatic
There must be evidence presented to substantiate
the disinheritance and must be for a valid and
sound cause.
Burden of Proof
2.
The burden of proving the truth of the cause for
disinheritance shall rest upon the other heirs of a.
the testator, if the disinherited heir should deny it
(NCC, Art. 917).
Effect of disinheritance
Made in a valid will
Identity of the heir is clearly established
For a legal cause
Expressly made
Cause stated in the will
Absolute or unconditional
Total
Cause must be true and if challenged by the
heir, it must be proved to be true.
Common causes for disinheritance of children
or descendants, parents or ascendants, and
spouse:
a. When the heir has been found guilty of an
attempt against the life of the testator,
his/her descendants or ascendants, and
spouse, in case of children or parents.
b. When the heir by fraud, violence,
intimidation, or undue influence causes
the testator to make a will or to change
one already made.
c. When the heir has accused the testator of
a crime for which the law prescribes
imprisonment of six years or more, if the
accusation has been found groundless.
d. Refusal without justifiable cause to
support the testator who disinherits such
heir.
Peculiar Causes for Disinheritance
Children and Descendants:
i. Conviction of a crime which carries with
it a penalty of civil interdiction
ii. Maltreatment of the testator by word or
deed by the children or descendant
iii. When the children or descendant has
been convicted of adultery or

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2019 GOLDEN NOTES 304
 SUCCESSION
concubinage with the spouse of the to such extent as will not impair the legitime (NCC,
testator Art. 918).
iv. When the children or descendant leads a
dishonorable or disgraceful life LEGACIES AND DEVISES
b. Parents or Ascendants:
i. When the parent or ascendant has been All things and rights which are within the
convicted of adultery or concubinage with commerce of man may be bequeathed or devised
the spouse of the testator (NCC, Art. 924).
ii. When the parents have abandoned their
children or induced their daughters to Testator can bequeath or devise a thing or
live a corrupt or immoral life, or property belonging to someone else
attempted against their virtue
iii. Loss of parental authority for causes It occurs when:
specified in the Code 1. The testator thought that he owned it
iv. Attempt by one of the parents against the
life of the other, unless there has been GR: A legacy or devise of a thing belonging to
reconciliation between them someone else when the testator thought that
he owned it is a void legacy or devise because
c. Spouse: it is vitiated by mistake.
i. When the spouse has given cause for legal
separation XPN: If subsequent to the making of the
ii. When the spouse has given grounds for disposition, the thing is acquire by the
the loss of parental authority testator onerously or gratuitously, such
disposition is validated.
Reconciliation exists when two persons who are at
odds decide to set aside their differences and to 2. The testator knows that he does not own but
resume their relations. They need not go back to ordered its acquisition
their old relation.
If the thing given as devise or legacy is not
In order to be effective, the testator must pardon owned by the testator at the time he made the
the disinherited heir. The pardon whether express will but he orders his estate to acquire it, it is
or tacit, must refer specifically to the heir a valid legacy or devise. The testator knew
disinherited and to the acts he has committed, and that he did not own it. There is no mistake.
must be accepted by such heir.
GR : If the thing already belonged to the
In disinheritance, reconciliation need not be in legatee/devisee at the time of the execution of the
writing. will, the legacy/devise is void. It is not validated
by an alienation by the legatee/devisee
Right of representation in case of subsequent to the making of the will.
disinheritance
XPN : Unless the acquirer is the testator himself.
The causes of disinheritance are personal to the
disinherited heir. Hence, in case of valid Applicability of ART. Applicability of ART.
disinheritance, only the disinherited heir is 911 950
deprived of his right to the legitime. But the Art. 911 will apply if Art. 950 will apply if
children or descendants of the disinherited heir reductions have to be the reason for the
can take his place and preserve the disinherited made because the reduction is not the
heir’s share to the legitime. legitimes have been impairment of
impaired ; i.e., if the legitimees ; e.g., there
Effect of Disinheritance without cause legacies/devises have are no legitimes
exceeded the because there are no
Disinheritance without a specification of the disposable portion. compulsory heirs or
cause, or for a cause the truth of which, if the legitimes have
contradicted, is not proved, or which is not one of already been satisfied
those set forth in this Code, shall annul the through donations
institution of heirs insofar as it may prejudice the inter vivos.
person disinherited; but the devises and legacies
and other testamentary dispositions shall be valid

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 CIVIL LAW
Suppose the legatee or devisee acquired the NOTE: The order of preference mentioned above
property after the will has been executed is applicable when :

1. If he acquired it by gratuitous title, then the
legacy or devise is void.
Reason: The purpose of the testator that the
property would go to the devisee or legatee
has already been accomplished with no
expense to the legatee or devisee.
1. The estate is insufficient to cover all devises or
legacies ; and
2. When the reason for the reduction is not the
impairment of legitimes ; e.g., there are no
legitimes because there are no compulsory heirs
or the legitimes have already been satisfie through
donations inter vivos.

2. If he acquired it by onerous title, the legacy or Distinction between Art. 911 and Art. 950 of
devise is valid and the estate may be required NCC
to reimburse the amount.
ORDER OF
Suppose the property bequeathed or devised ORDER OF PREFERENCE
PREFERENCE UNDER
has been pledged or mortgaged UNDER ART. 950
ART. 911
GR: The pledge or mortgage must be paid by the 1. Remuneratory
estate. LDPO:
legacies or devises;
1. Legitime of
2. Preferential legacies
XPN: If the testator provides otherwise. However, compulsory heirs;
or devises;
any other charge such as easements and 2. Donations inter
3. Legacy for support;
usufruct, with which the thing bequeathed is vivos;
4. Legacy for education;
burdened, shall be respected by the legatee or 3. Preferential
5. Legacies or devises of
devisee. legacies or devises;
a specific, determinate
4. All Other legacies
thing which forms a
A legacy of credit takes place when the testator or devises pro rata
part of the estate;
bequeaths to another a credit against a third 5.
6. All others pro rata
person. In effect, it is a novation of the credit by
the subrogation of the legatee in the place of the
NOTE: Article 911 will apply if the reductions
original creditor.
have to be made because the legitimes have been
impaired. Article 950 will apply if the reason for
A legacy of remission is a testamentary
reduction is not the impairment of legitimes.
disposition of a debt in favor of the debtor. The
legacy is valid only to the extent of the amount of
Grounds for the revocation of legacy or devise
the credit existing at the time of the testator's
death. In effect, the debt is extinguished.
1. Transformation of the thing in such a manner
that it does not retain either the form or the
GR: A legacy or devise to a creditor will not be
denomination it had.
imputed to the debt.
2. Alienation of the thing bequeathed.
XPN: It will be imputed to the debt if the testator
so provides, and if the debt exceeds the legacy or
GR: The alienation revokes the legacy/devise
devise, the excess may be demanded as an
even if for any reason the thing reverts to the
obligation of the estate.
testator.
Order of Payment of Legacies and Devises
XPNS:
a. If the reversion is caused by the
1. Remuneratory legacies or devises
annulment of the alienation and the cause
2. Legacies or devises declared by testator to be
for the annulment was vitiation of
preferential
consent on the grantor’s part, either by
3. Legacies for support
reason of incapacity or of duress.
4. Legacies for education
(Fernandez vs Dimagiba, 21 SCRA 428)
5. Legacies or devises of a specific determinate
thing which forms part of the estate
3. Total loss of the thing bequeathed.
6. All others pro rata

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 SUCCESSION
This will be a cause for revocation only if it Rules on Exclusion and Concurrence in
takes place before the testator’s death. A Intestate Succession
fortuitous loss after the testator’s death will
simply be an instance of “res perit domino” 1. Legitimate children
and will be borne by the legatee/devisee. a. Exclude parents, collaterals and State
b. Concur with surviving spouse and
4. If the legacy is a credit against a third person illegitimate children
or the remission of a debt, and the testator, c. Excluded by no one
subsequent to the making of the will, brings
an action against the debtor for payment. 2. Illegitimate children
a. Exclude illegitimate parents, collaterals
and State
LEGAL OR INTESTATE SUCCESSION b. Concur with surviving spouse, legitimate
children, and legitimate parents
c. Excluded by no one
Legal or intestate succession is that which is
effected by operation of law in default of a will. 3. Legitimate parents
a. Exclude collaterals and the State
It is legal because it takes place by operation of b. Concur with illegitimate children and
law; it is intestate because it takes place in the surviving spouse
absence or in default of a last will of the decedent. c. Excluded by legitimate children

Application of inheritance 4. Illegitimate parents

a. Exclude collaterals and State
The following are applied successively (ISRAI): b. Concur with surviving spouse
c. Excluded by legitimate children and
1. Institution of an heir (Bequest, in case of illegitimate children
legacies or devises)
2. Substitution, if proper 5. Surviving spouse
3. Representation, if applicable a. Excludes collaterals other than brothers,
4. Accretion, if applicable sister, nephews and nieces, and State
5. Intestacy, if all of the above are not applicable b. Concurs with legitimate children,
illegitimate children, legitimate parents,
Legal or Intestate succession takes place when: illegitimate parents, brothers, sisters,
nephews and nieces
1. There is no will; the will is void, or the will is c. Excluded by no one
revoked;
2. The will does not dispose all the property of 6. Brothers and Sister, nephews and nieces
the testator (partial intestacy); a. Exclude all other collaterals and the State
3. The suspensive condition attached to the b. Concur with surviving spouse
inheritance is not fulfilled; c. Excluded by legitimate children,
4. The heir predeceased the testator or illegitimate children, legitimate parents
repudiates the inheritance and no and illegitimate parents
substitution and no right of accretion take
place. 7. Other collaterals
5. The heir instituted is incapacitated to succeed. a. Exclude collaterals in remoter degrees
and the State
NOTE: The enumeration is not exclusive; there are b. Concur with collaterals in the same
other causes for intestacy which are not included degree
in the enumeration. c. Excluded by legitimate children,
illegitimate children, legitimate parents,
Example: illegitimate parents, surviving spouse,
1. Preterition; brothers and sisters, and nephews and
2. Arrival of the resolutory term or period; nieces
3. Fulfillment of a resolutory condition attached
to the inheritance; 8. State
4. Non-compliance or impossibility of complying a. Excludes no one
with the will of the testator. b. Concurs with no one

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 CIVIL LAW
c. Excluded by everyone
(Balane, 2010)
ORDER OF INTESTATE SUCCESSION
Order of Preference between lines in legal or
intestate succession
FIRST, succession takes place in the direct
descending line;
SECOND, in the direct ascending line; and
FINALLY, in the collateral line.
Order of intestate succession to a legitimate
child
In general, and without prejudice to the
concurrent right of other heirs in proper cases, the
order of intestate succession to a legitimate child
is as follows:
1. legitimate children and descendants;
2. legitimate parents and ascendants;
3. illegitimate children;
4. the surviving spouse;
5. collaterals up to the fifth degree; and
6. State (Rabuya, 2009)
Order of intestate succession to an illegitimate
child
1. The legitimate children and descendants of a
person who is an illegitimate child are
preferred over other intestate heirs, without
prejudice to the right of concurrence of
illegitimate children and the surviving spouse.
2. In the absence of legitimate children and
descendants, the illegitimate children (of the
illegitimate child) and their descendants
succeed to the entire estate, without prejudice
to the concurrent right of the surviving
spouse.
3. In the absence of children and descendants,
whether legitimate or illegitimate, the third in
the order of succession to the estate of the
illegitimate child is his illegitimate parents. If
both parents survive and are entitled to
succeed, they divide the estate share and
share alike. Although the law is silent, if the
surviving spouse of the illegitimate child
concurs with the illegitimate parents, the
surviving spouse shall be entitled to one-half
of the estate while the illegitimate parents get
the other half.
NOTE: In the ascending line, only the
illegitimate parents are entitled to inherit
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
from the illegitimate child; the other
illegitimate descendants are not so entitled.
4. In default of children or descendants,
legitimate or illegitimate, and illegitimate
parents, the surviving spouse shall inherit the
entire estate. But if the surviving spouse
should survive with brothers and sisters,
nephews and nieces, the surviving spouse
shall inherit one-half of the estate, and the
latter the other half. The brothers and sisters
must be by illegitimate filiation; otherwise,
the Iron Curtain Rule shall apply.
5. Although the law is silent, illegitimate
brothers and sisters who survive alone shall
get the entire inheritance. The legitimate
children of the illegitimate parents are not
entitled to inherit from the illegitimate child
by virtue of Article 992 of the NCC.
6. The State. (id., pp. 691-692)
Q: Bert and Joe, both male and single, lived
together as common law spouses and agreed
to raise a son of Bert's living brother as their
child without legally adopting him. Bert
worked while Joe took care of their home and
the boy. In their 20 years of cohabitation they
were able to acquire real estate assets
registered in their names as co-owners.
Unfortunately, Bert died of cardiac arrest,
leaving no will. Bert was survived by his
biological siblings, Joe, and the boy.
Q: What are the successional rights of the boy
Bert Joe and raised as their son? (2015 BAR)
A : Neither of the two will inherit from Bert. Joe
cannot inherit because the law does not recognize
the right of a stranger to inherit from the decedent
in the absence of a will. Their cohabitation will
not vest Joe with the right to inherit from Bert.
The child will likewise not inherit from Bert
because of the lack of formal adoption of the child.
A mere ward or “ampon” has no right to inherit
from the adopting parents (Manuel v. Ferrer, G.R.
No. 117246, August 21, 1995).
TABLE OF INTESTATE SHARES
Legitimate Children The whole estate divided
alone equally
The whole estate, each
Legitimate children
illegitimate child getting ½
and Illegitimate
share of one legitimate
children
child
Legitimate children The whole estate, divided
308
 SUCCESSION
and surviving equally (the surviving representation in proper
spouse spouse counted as one cases)
legitimate child)
The whole estate, the
Legitimate
surviving spouse being Surviving spouse = ½ of
Children, surviving
counted as one legitimate the estate
spouse and
child and each illegitimate Illegitimate brothers,
illegitimate
child getting ½ share of sisters, nephews and
children
one legitimate child nieces = ½ of the estate
Legitimate parents The whole estate, divided (the nephews and nieces
alone equally inheriting by
representation in proper
Legitimate The whole estate, cases)
ascendants (other observing in proper cases, Surviving spouse
than parents) alone the rule of division by line and illegitimate NOTE: When the law
brothers and speaks of brothers and
Legitimate parents = ½ of sisters, nephews sisters, nephews and
Legitimate parents
the estate and nieces nieces as legal heirs of an
and illegitimate
Illegitimate children = ½ illegitimate child, it refers
children
of the estate to illegitimate brothers
and sisters as well as to
Legitimate parents = ½ of
Legitimate parents the children, whether
the estate
and surviving legitimate or illegitimate,
Surviving spouse = ½ of
spouse of such brothers and
the estate
sisters. (Manuel v. Ferrer,
Legitimate parents = ½ of G.R. No. 117246, August 21,
Legitimate parents, the estate 1995)
surviving spouse Surviving spouse = ¼ of
Illegitimate parents
and illegitimate the estate The whole estate
alone
children Illegitimate children = ¼
of the estate Illegitimate parents
=excluded
Illegitimate The whole estate, divided
Children
children alone equally
a. Child alone (legitimate
Illegitimate children = ½ Illegitimate parents or illegitimate) = whole
Illegitimate and children of any estate
of the estate
children and kind b. Legitimate and
Surviving spouse = ½ of
surviving spouse illegitimate children =
the estate
each illegitimate gets ½
Surviving spouse share of one legitimate
The whole estate
alone child
No article governing, but The whole estate, with a
Art. 997 may be applied by brother/sister of the half-
Legitimate brothers
Surviving spouse analogy, thus: blood inheriting ½ the
and sister alone
and illegitimate Surviving spouse = ½ of share of a brother/sister
parents the estate of the full blood
Illegitimate parents = ½ of
the estate The whole estate,
observing the 2:1
Surviving spouse = ½ of proportion of full and half-
Legitimate brothers
Surviving spouse the estate blood fraternity and the
and sisters,
and legitimate Legitimate brothers, nephews and nieces
nephews and nieces
brothers and sisters, nephews, nieces = inheriting by
sisters, nephews ½ of the estate (the representation in the
and nieces nephews and nieces proper cases
inheriting by

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 CIVIL LAW
Uncles and Aunts = instance of an interested
excluded party, or motu propio,
Nephews and Nephews and nieces = court may order creation
nieces with Uncles whole estate per capita, of a permanent trust for
and aunts but observing the 2:1 the benefit of the
proportion for the full and institutions concerned
half blood

The whole estate,

Illegitimate brothers observing the 2:1
and sisters alone proportion of full and half-
blood fraternity

No article governing, but

Illegitimate Arts. 1005 and 1008 may
brothers, sisters, be applied by analogy,
nephews and nieces hence, they acquire the
whole estate

The whole estate per

Nephews and capita, but observing the
nieces alone 2:1 proportion for the full
and half blood
The whole estate, per
capita, the nearer in
Other collaterals
degree excluding the more
remote RIGHT OF REPRESENTATION

The whole estate Representation is a right created by fiction of

law, by virtue of which the representative is raised
Assignment and to the place and degree of the person represented,
disposition and acquires the rights which the latter would
have if he were living or could have inherited
1. If decedent was a (NCC, Art. 970).
resident of the Philippines
at any time: In order that representation may take place, it is
a. Personal property – necessary that the representative himself be
to municipality of last capable of succeeding the decedent (NCC, Art.
residence 973).
b. Real property –
where situated Effect of Representation

2. If decedent was never a Whenever there is succession by representation,

State
resident of the Philippines
Personal and real property
– where respectively
situated
How property is to be
used:
1. For the benefit of public
educational and charitable
institutions in the
respective
municipalities/cities
2. Alternatively, at the
the division of the estate shall be made per stirpes,
in such manner that the representative or
representatives shall not inherit more than what
the person they represent would inherit, if he
were living or could inherit (NCC, Art. 974).
NOTE: Per stirpes means inheritance by group, all
those within the group inheriting in equal shares.
Right of representation arise either because of:
1. Predecease
2. Incapacity
3. Disinheritance

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2019 GOLDEN NOTES 310
 SUCCESSION
When Right of Representation is NOT
AVAILABLE:
1. As to compulsory heirs: In case of repudiation,
the one who repudiates his inheritance cannot
be represented. Their own heirs inherit in
their own right.
2. As to voluntary heirs: Voluntary heirs, legatees
and devisees who either:
a. Predecease the testator, or
b. Renounce the inheritance cannot be
represented by their own heirs, with respect
to their supposed inheritance.
In representation, the representative does NOT
inherit from the person represented but from the
decedent.
The right of representation takes place in the
direct descending line, but never in the ascending.
In the collateral line, it takes place only in favor
of the children of brothers or sisters, whether they
are full or half blood (NCC, Art. 972).
NOTE: This rule applies only when the decedent
does not have descendants. Also, an illegitimate
child can represent his father, provided that the
father was also illegitimate.
XPNs:
a. In the ascending line, the rule of division by
line is ½ to the maternal line and ½ to the
paternal line, and within each line, the
division is per capita.
b. In the collateral line, the full-blood
brothers/sisters will get double that of the
half-blood.
c. The division in representation, where division
is per stirpes – the representative divide only
the share pertaining to the person
represented.
NOTE: Compulsory heirs shall, in no case, inherit
ab intestato less than their legitimes as provided
in testamentary succession.
When Children of One or More Brothers or
Sisters of the Deceased Survived
1. When children of one or more brothers or
sisters of the deceased survive, they shall
inherit from the latter by representation, if
they survive with their uncles or aunts.
2. But if they alone survive, they shall inherit in
equal portions (division not per stirpes) (NCC,
Art. 975).
IRON CURTAIN RULE

An illegitimate sibling of the decedent can be An illegitimate child has no right to inherit ab
represented. An illegitimate brother or sister of intestato from the legitimate children and
the deceased can be represented by his children, relatives of his father or mother; nor shall such
without prejudice to the application of the Iron children or relatives inherit in the same manner
Curtain Rule (Tolentino, Civil Code, 1992 ed., p. from the illegitimate child (NCC, Art. 992)
451)
RATIO: There is a barrier recognized by law
The right of representation does NOT apply to between the legitimate relatives and the
adopted children. The right of representation illegitimate child so that one cannot inherit from
cannot be invoked by adopted children because the other.
they cannot represent their adopting parents to
the inheritance of the latter’s parents. NOTE: The iron curtain rule only applies in
intestate succession.
Reason: The right of representation cannot be
invoked by adopted children because the legal Application of iron curtain rule and right of
relationship created by adoption is strictly representation distinguished
between the adopter and the adopted. It does not
extend to the relatives of either party. RIGHT OF
IRON CURTAIN RULE
REPRESENTATION
NOTE: Under R.A. 8552 or the Domestic
Adoption Law, the adopted child and the Prohibits absolutely a Right created by fiction
adopting parents have reciprocal successional succession ab intestato of law where the
rights. between the representative is raised
illegitimate child and to the place and degree
Rule on Equal Division of Lines the legitimate children of the person
and relatives of the represented, and
GR: Intestate heirs equal in degree inherit in equal father or mother of said acquires the rights
shares. illegitimate child. which the latter would

311
 CIVIL LAW
have if he were living
NOTE: Iron curtain rule or could have inherited.
imposes a limitation on
right of representation.

Applies to both
Applies only in
intestate and testate
intestate succession
succession

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2019 GOLDEN NOTES 312
 SUCCESSION
Right of Representation and Iron Curtain Rule

If the child to be represented is (D)† If the child to be represented is

If the child to be represented is LEGITIMATE
LEGITIMATE- only legitimate If ILLEGITIMATE- bothislegitimate
the child to be represented ILLEGITIMATE
– only legitimate children/ descendants can – both legitimate & illegitimate children/
children/
represent him descendants can & illegitimate children/
descendants can represent him
represent him descendants can represent him

Legit X† Illegit Y†
Predeceased D Predeceased D

legit illegit legit illegit

(X1) (X2) (Y2) (Y1)

Iron Curtain Rule applies

Since X and Y both predeceased D, only X1 can represent X. X2 cannot by virtue of the iron curtain rule. Both Y1
and Y2 can represent Y

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 CIVIL LAW
The right of representation is not available to
illegitimate descendants of legitimate children in
the inheritance of a legitimate grandparent. It may
be argued, as done by petitioners, that the
illegitimate descendant of a legitimate child is
entitled to represent by virtue of the provisions of
Article 982, which provides that “the grand
children and other descendants shall inherit by
right of representation.” Such a conclusion is
erroneous. It would allow intestate succession by
an illegitimate child to the legitimate parent of his
father or mother, a situation which would set at
naught the provisions of Article 992 of the NCC.
Article 982 of the NCC is inapplicable to instant
case because Article 992 prohibits absolutely a
succession ab intestato between the illegitimate
child and the legitimate children and relatives of
the father or mother (Diaz vs. Intermediate
Appellate Court, No. L-66574 June 17, 1987).
Law on succession is animated by a uniform
general intent, and no part should be rendered
inoperative by, but must be construed in relation
to, any other part as to produce a harmonious
whole.— The rule in Art. 992 of the NCC has
consistently been applied by the Court in several
other cases. Thus, it has ruled that
a. where the illegitimate child had half
brothers who were legitimate, the latter
had no right to the former’s inheritance;
b. the legitimate collateral relatives of the
mother cannot succeed from her
illegitimate child;
c. a natural child cannot represent his
natural father in the succession to the
estate of the legitimate grandparent;
d. the natural daughter cannot succeed to
the estate of her deceased uncle who is a
legitimate brother of her natural father;
and
e. an illegitimate child has no right to inherit
ab intestato from the legitimate children
and relatives of his father (Manuel vs.
Ferrer, 247 SCRA 476, G.R. No. 117246
August 21, 1995).
share, or who died before the testator, is added or
incorporated to that of his co-heir, co-devisees, or
co-legatees (NCC, Art. 1015).
Basis: Accretion is a right based on the presumed
will of the deceased that he prefers to give certain
properties to certain individuals rather than to his
legal heirs. Accretion is preferred over intestacy.
Requisites of Accretion
In order that the right of accretion may take place
in a testamentary succession, it shall be necessary:
1. That two or more persons be called to the same
inheritance, or to the same portion thereof, pro
indiviso; and
2. That one of the persons thus called die before
the testator, or renounce the inheritance, or be
incapacitated to receive it (NCC, Art. 1016)
In testamentary succession, accretion takes
place in case of:
1. Predecease ;
2. Incapacity ;
3. Renunciation;
4. Non-fulfillment of the suspensive condition
imposed upon instituted heir ; and
5. Ineffective testamentary disposition
In intestate succession, accretion takes place
in case of:
1. Predecease of legal heir;
2. Incapacity of legal heir ; and
3. Repudiation by legal heir
NOTE: Accretion takes place only if there is no
representation. In renunciation, there is always
accretion.
Reason: No representation in renunciation.
Substitution, representation and accretion in
testate and intestate succession distinguished:

TESTAMENTARY
PROVISIONS COMMON TO TESTATE AND INTESTATE SUCCESSION
SUCCESSION
INTESTATE SUCCESSION
In case of predecease and incapacity

With respect to the 1. If the right of

RIGHT OF ACCRETION
legitime: representation takes
place, then the
Accretion is a right by virtue of which, when two
1. If the right of representative
or more persons are called to the same
representation succeeds to the
inheritance, devise or legacy, the part assigned to
takes place, then vacant portion.
the one who renounces or cannot receive his

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 314
 SUCCESSION
the representative With respect to the FREE PORTION in case of
succeeds to the NOTE: predecease, incapacity or renunciation
vacant portion. Representation
takes place in 1. Substitution shall
2. If representation case of take place if
is not available, predecease and provided for by
then the co-heirs incapacity with the testator
of the same degree respect to
shall succeed to it inheritance 2. If no substitution
in their own right conferred by is provided, the
and not by law. Hence, it vacant share shall
accretion since takes place in go to the co-heir
there is no legal or intestate by right of
accretion with succession. accretion if the
respect to the requisites are
legitime. 2. If representation is present and the
not available, then testator has not
3. In default of the the vacant portion provided the
above, the vacant shall go to the co- contrary
portion shall go to heirs in their own
the other right. 3. If the requisites of
secondary and/or accretion are not
other compulsory 3. In default thereof, present or when
heirs. then the vacant the testator
share shall go to the provides that no
NOTE: Substitution heirs in the next accretion shall
cannot take place with order of intestacy. take place, the
respect to legitime. vacant portion
shall pass to the
In case of repudiation legal heirs if no
substitute has
With respect to the been designated
legitime:
NOTE: In
1. The other co-heirs testamentary
shall succeed to it succession,
in their own right The vacant portion shall representation takes
and not by right of go to the other co-heirs place only with respect
accretion since by right of accretion. In to the legitime; it does
there is no legal succession, the not take place with
accretion with share of the person who respect to what is
respect to repudiates the voluntarily given by
legitime. inheritance always will.
accrues to his co-heirs.
2. In default thereof,
the vacant portion In default thereof, the CAPACITY TO SUCCEED BY WILL OR
shall go to the vacant share shall go to INTESTACY
other secondary the heirs of next degree
and/or in their own right. The provisions relating to incapacity by will are
compulsory heirs. equally applicable to intestate succession (NCC,
In default thereof, it shall Art. 1024).
NOTE: Representation go to the heirs in the next
does not take place in order of intestacy. In order to be capacitated to inherit, the heir,
repudiation. devisee or legatee must be living at the moment
the succession opens, except in case of
NOTE: Substitution representation, when it is proper.
cannot take place with
respect to legitime. A child already conceived at the time of the death
of the decedent is capable of succeeding provided

315
 CIVIL LAW
it be born later under the conditions prescribed in
Article 41 of the NCC (NCC, Art. 1025). (2007
BAR)
PERSONS INCAPABLE OF SUCCEEDING
Absolute incapacity to succeed means that the
person is incapacitated to succeed in any form,
whether by testate or intestate succession.
Persons who are absolutely incapacitated to
succeed:
1. Those not living at the time of death of the
testator
2. Those who cannot be identified (NCC, Art.
845).
3. Those who are not permitted by law to
inherit. (NCC, Art. 1027)
Determination of the Capacity to Succeed
GR: In order to judge the capacity of the heir,
devisee, or legatee, his qualification at the time of
the death of the decedent shall be the criterion.
XPN: If the institution, devise or legacy should be
conditional (suspensive condition), the capacity is
to be determined not only at the time of the death
of the decedent but also at the time of the
fulfillment of the condition.
The governing law in determining the capacity to
succeed of the heir, devisee, legatee is the law of
the nation of the decedent. (1998, 2004 BAR)
RELATIVE INCAPACITY TO SUCCEED
Relative incapacity to succeed means the person
is incapacitated to succeed because of some
special relation to the testator.
Grounds for Relative Incapacity to Succeed
(UMA)
1. Undue influence or interest (NCC, Art. 1027)
2. Morality or public policy (NCC, Art. 739)
3. Acts of unworthiness (NCC, Art. 1032)
The following are incapacitated to succeed
based on undue influence or interest (PRG-
WPI)
1. The Priest who heard the confession of the
testator during his last illness, or the minister
of the gospel who extended spiritual aid to
him during the same period;
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
2. The Relatives of such priest or minister of the
gospel within the fourth degree, the church,
order, chapter, community, organization, or
institution to which such priest or minister
may belong;
3. A Guardian with respect to testamentary
dispositions given by a ward in his favor
before the final accounts of the guardianship
have been approved, even if the testator
should die after the approval thereof;
nevertheless, any provision made by the ward
in favor of the guardian when the latter is his
ascendants, descendant, brother, sister, or
spouse, shall be valid;
4. Any attesting Witness to the execution of a
will, the spouse, parents, or children, or any
one claiming under such witness, spouse,
parents, or children;
NOTE: Numbers 1 to 4 do not apply to
legitimes.
5. Any Physician, surgeon, nurse, health officer
or druggist who took care of the testator
during his last illness;
NOTE: Number 5 is an absolute
disqualification.
6. Individuals, associations and corporations not
permitted by law to inherit (NCC, Art. 1027).
Requisites for a priest to be disqualified from
inheriting
1. The will was made during the last illness of
the testator;
2. The spiritual ministration must have been
extended during the last illness;
3. The will was executed during or after the
spiritual ministration.
Q: If the confession was made before the will
was made, can the priest inherit upon the
death of the sick person, if:
a. The priest is the son of the sick
person?
b. The priest was the sick person’s
brother?
A:
a. YES.He can get the legitime.
NOTE: A priest is incapacitated to succeed
when the confession is made prior to or
simultaneously with the making of a will.
The disqualification applies only to testamentary
dispositions.
316
 SUCCESSION
b. YES. Hecan inherit by intestacy. 2.
NOTE: Despite this apparent restriction to
Christian ministers, this applies to all spiritual 3.
ministers, e.g., Buddhist monks.
Reason: It is conclusively presumed that the
spiritual minister used his moral influence to 4.
induce or influence the sick person to make a
testamentary disposition in his favor.
Q: When is a guardian disqualified from
inheriting by testate succession?
A:
GR: The disqualification applies when the
disposition is made before the approval of final
accounts or lifting of guardianship. 5.
XPN: It does not apply even when the disposition 6.
is made after the guardianship began or before it
is terminated when the guardian is an: ADBS2
7.
1. Ascendant
2. Descendant
3. Brother
4. Sister 8.
5. Spouse
Requisites for the disqualification of physician NOTE: Grounds 1, 2, 3, 5 and 6 are the same
grounds as in disinheritance.Numbers 6, 7 and 8
1. The will was made during the last illness cover six (6) acts which relate to wills:
2. The sick person must have been taken cared of
during his last illness
3. Medical attendance was made
4. The will was executed during or after he was
being cared of.
The following are incapacitated to succeed
based on morality or public policy (ACO)
1. Persons guilty of Adultery or concubinage
with the testator at the time of the making of
the will
2. Persons guilty of the same Criminal offense, in
consideration thereof
3. A publicofficer or his wife, descendants and
ascendants, by reason of his Office (Art. 1028
in relation to Art. 739 of NCC). (2000 BAR)
The following are incapacitated to succeed by
reason of unworthiness (P-CAV-AFP-F)
Effects on
1. Parents who have abandoned their children the
or induced their daughters to lead a corrupt inheritance
or immoral life, or attempted against their
virtues
317
Persons Convicted of an attempt against the
life of the testator, his or her spouse,
descendants or ascendants
Persons who Accused the testator of a crime
for which the law prescribes imprisonment
for six years or more, if the accusation has
been found to be groundless
Heir of full age who, having knowledge of the
Violent death of the testator, should fail to
report it to an officer of the law within a
month unless the authorities have already
taken action.
NOTE: This prohibition shall not apply to
cases wherein, according to law, there is no
obligation to make an accusation.
Person convicted of Adultery or concubinage
with the spouse of the testator
Person who by Fraud, violence, intimidation,
or undue influence should cause the testator
to make a will or to change one already made
Person who by the same means Prevents
another from making a will, or from revoking
one already made, or who supplants, conceals,
or alters the latter's will
Person who Falsifies or forges a supposed will
of the decedent (NCC, Art. 1032).
1. Causing the testator to make a will
2. Causing the testator to change an existing
will
3. Preventing the decedent from making a
will
4. Preventing the testator from revoking his
will
5. Supplanting, concealing, or altering the
testator's will.
6. Falsifying or forging a supposed will of
the decedent.
UNWORTHINESS vs. DISINHERITANCE
DISINHERITAN UNWORTHINE
CE SS
Exclusion from
the entire
Deprivation of a inheritance.
compulsory heir However,
of his legitime. donations inter
vivos are not
affected.
 CIVIL LAW
Reconciliation 3. When renunciation is in favor of all heirs
between the indiscriminately for consideration
offender and the 4. Other tacit acts of acceptance:
If the testator a. Heir demands partition of the inheritance
offended party
pardons the act b. Heir alienates some objects of the
deprives the
Effects of of inheritance
latter of the
pardon or unworthiness, c. Acts of preservation or administration if,
right to
reconciliatio the cause of through such acts, the title or capacity of
disinherit and
n unworthiness the heir has been assumed
renders
shall be without d. Under Art. 1057 of the NCC, failure to
ineffectual any
effect. signify acceptance or repudiation within
disinheritance
that may have 30 days after an order of distribution by
been made. the probate court.

Manner of Ways by which the repudiation of the

reconciliatio Express or implied inheritance, legacy or devise may be made
n or pardon
1. By means of a public instrument
There are grounds for 2. By means of an authentic instrument
disinheritance which are also 3. By means of a petition presented to the court
Grounds
causes for incapacity by reason of having jurisdiction over the testamentary or
unworthiness. intestate proceedings.
Effect of
Effect of repudiation if an heir is both a testate
subsequent
and legal heir
reconciliatio
n if
If an heir is both a testate and legal heir and he
disinheritan
repudiated the inheritance as a testate heir, he is
ce has The moment the testator uses one
understood to have repudiated in both capacities.
already been of the causes for unworthiness as a
However, should he repudiate as a legal heir,
made on any ground for disinheritance, he
without knowledge of being a testate heir, he may
of the thereby submits it to the rule on
still accept the inheritance as a testate heir.
grounds disinheritance (Rabuya, 2009).
which are
Remedy if the heir repudiates the inheritance
also causes
to the prejudice of his creditors
for
unworthines
If the heir repudiates the inheritance to the
s
prejudice of his own creditors, the latter may
petition the court to authorize them to accept it in
ACCEPTANCE AND REPUDIATION OF THE the name of the heir.
INHERITANCE
Requisites:
The acceptance or repudiation of the inheritance
is a purely voluntary and free act (NCC, Art. 1041). 1. The heir who repudiated his inheritance must
have been indebted at the time when the
Principal characteristics of acceptance and repudiation is made.
repudiation 2. The heir-debtor must have repudiated his
inheritance according to the formalities
1. It is voluntary and free prescribed by law.
2. It is retroactive 3. Such act of repudiation must be prejudicial to
3. Once made, it is irrevocable the creditor or creditors.
4. There must be judicial authorization (NCC,
Inheritance is deemed accepted Art. 1052).

1. When the heir sells, donates, or assigns his PARTITION AND DISTRIBUTION OF ESTATE
rights
2. When the heir renounces it for the benefit of Partition, in general, is the separation, division
one or more heirs and assignment of a thing held in common among

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 318
 SUCCESSION
those to whom it may belong. The thing itself may
be divided or its value (NCC, Art. 1079).
Every act which is intended to put an end to
indivision among co-heirs and legatees or
devisees is deemed to be a partition, although it
should purport to be a sale, an exchange, a
compromise, or any other transaction (NCC, Art.
1082).
The partition may be effected either
1. By the decedent himself during his lifetime by
an act
2. inter vivos or by will
3. By a third person designated by the decedent or
by the heirs themselves
4. By a competent court in accordance with the
New Rules of Court
Partition may be demanded by:
1. Compulsory heir
2. Voluntary heir
3. Legatee or devisee
4. Person who has acquired an interest in the
estate
Partition cannot be demanded when (PAPU)
1. Expressly Prohibited by testator for a period
not more than 20 years
2. Co-heirs Agreed that estate not be divided for
period not more than 10 years, renewable for
another 10 years
3. Prohibited by law
4. To partition estate would render it
Unserviceable for use for which it was intended
An estate can be partitioned inter vivos. Such
partition shall be respected, insofar as it does not
prejudice the legitime of compulsory heirs. (See
Art. 1080)
Effects of the Inclusion of an Intruder in
Partition
1. Between a true heir and several mistaken heirs
– partition is void.
2. Between several true heirs and a mistaken heir
– transmission to mistaken heir is void.
3. Through the error or mistake; share of true
heir is allotted to mistaken heir – partition
shall not be rescinded unless there is bad faith
or fraud on the part of the other persons
interested, but the latter shall be
proportionately obliged to pay the true heir of
his share.
319
In the partition of the estate, equality shall be
observed as far as possible, dividing the property
into lots, or assigning to each of the co-heirs things
of the same nature, quality and kind. (NCC, Art.
1085)
Indivisible thing
Should a thing be indivisible, or would be much
impaired by its being divided, it may be
adjudicated to one of the heirs, provided he shall
pay the others the excess in case.
Nevertheless, if any of the heirs should demand
that the thing be sold at public auction and that
strangers be allowed to bid, this must be done
(NCC, Art. 1086).
Heir selling his hereditary rights to a stranger
Should any of the heirs sell his hereditary rights to
a stranger before the partition, any or all of the co-
heirs may be subrogated to the rights of the
purchaser by reimbursing him for the price of the
sale, provided they do so within the period of one
(1) month from the time they were notified in
writing of the sale by the vendor (NCC, Art. 1088).
Rescission and Nullity of Partition
A partition may be rescinded or annulled for the
same causes as contracts (NCC, Art. 1097).
It may also be rescinded on account of lesion,
when any one of the co-heirs received things
whose value is less, by at least 1/4, than the share
to which he is entitled, considering the value of
the things at the time they were adjudicated (NCC,
Art. 1098).
Prescriptive Period
The action for rescission on account of lesion shall
prescribe after 4 years from the time the partition
was made (NCC, Art. 1100).
 CIVIL LAW
OBLIGATIONS
GENERAL PRINCIPLES
An obligation is a juridical necessity to give, to do,
or not to do (Art. 1156).
It is a juridical relation or a juridical necessity
whereby a person (creditor) may demand from
another (debtor) the observance of a
determinative conduct (giving, doing, or not
doing), and in case of breach, may demand
satisfaction from the assets of the latter (Makati
Stock Exchange v. Campos, G.R. No. 138814, April
16, 2009).
It is a juridical necessity because in case of non-
compliance, the courts of justice may be called
upon by the aggrieved party to enforce its
fulfillment or, in default thereof, the economic
value that it represents.
Art. 1156 refers only to civil obligations which are
enforceable in court when breached. It does not
cover natural obligations (Arts. 1423 -1430)
because the latter are obligations that cannot be
enforced in court on equity and natural law and
not on positive law (Pineda, 2000).
When there is a right, there is a corresponding
obligation. Right is the active aspect while
obligation is the passive aspect. Thus, the concepts
of credit and debt are two distinct aspects of
unitary concept of obligation (Pineda, 2000).
GR: The law does not require any form in
obligations arising from contracts for their validity
or binding force (Art. 1356).
XPNs:
1) When the form is essential to the validity
of the contract as required by law (Art.
1346);
2) When the contract is unenforceable
unless it is in a certain form, such as those
under the Statute of Frauds as formulated
in Art. 1403.
Obligations arising from other sources (Art. 1157)
do not have any form at all (De Leon, 2010).
ELEMENTS OF AN OBLIGATION
The following are the elements of an obligation
(JAPO):
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
1. Juridical tie or vinculum juris or efficient cause
- the efficient cause by virtue of which the
debtor becomes bound to perform the
prestation (Pineda, 2000).
NOTE: The vinculum juris is established by:
a. Law;
b. Bilateral acts;
c. Unilateral acts (Tolentino, 2002).
2. Active subject [creditor (CR) or obligee] - The
person demanding the performance of the
obligation. It is he in whose favor the
obligation is constituted, established, or
created (Pineda, 2000).
3. Passive subject [debtor (DR) or obligor] - The
person bound to perform the prestation to
give, to do, or not to do (Pineda, 2000).
4. Object or prestation - The subject matter of the
obligation which has a corresponding
economic value or susceptible of pecuniary
substitution in case of noncompliance. It is a
conduct that may consist of giving, doing, or
not doing something (Pineda, 2000).
NOTE: In order to be valid, the object or
prestation must be:
1. Licit or lawful;
2. Possible, physically, & judicially;
3. Determinate or determinable; and
4. Pecuniary value or possible equivalent in
money.
Absence of any of the first three makes the object
void.
NOTE: Some writers add a fifth one: the form in
which the obligation is manifested. This element,
however, cannot be considered as essential. There
is no particular form required to make obligations
binding, except in certain rare cases (Tolentino,
1991).
320
 OBLIGATIONS AND CONTRACTS
DIFFERENT KINDS OF PRESTATION obligations are those which arise from the
same cause, wherein each party is a
debtor and a creditor of the other, such
OBLIGATI OBLIGATI
OBLIGATI that the performance of one is
BASIS ON TO ON NOT
ON TO DO conditioned upon the simultaneous
GIVE TO DO
fulfillment of the other.
Covers the
As to 6. Existence of burden or condition
rendering
what the Consists in a. Pure – not burdened with any condition
of works or Refraining
obligatio the delivery or term. It is immediately demandable
services from doing
n of a thing to (Art. 1179);
whether certain acts
consists the creditor b. Conditional – subject to a condition which
physical or
of may be suspensive (happening of which
mental
shall give rise to the obligation) or
Contract resolutory (happening of which
for Negative terminates the obligation) (NCC. 1181).
Sale, profession easement,
deposit, al services restraining 7. Character of responsibility or liability
Example
pledge, like order or a. Joint – each debtor is liable only for a part
s
donation, painting, injunction of the whole liability and to each creditor
antichresis modeling, (Pineda, shall belong only a part of the correlative
singing, 2000) rights (8 Manresa 194 ; NCC. 1207);
etc. b. Solidary – debtor is answerable for the
whole of the obligation without prejudice
CLASSIFICATION OF OBLIGATIONS to his right to collect from his co-debtors
the latter’s shares in the obligation (NCC.
From the viewpoint of: 1207).
1. Creation
a. Legal – imposed by law (Art. 1158); 8. Susceptibility of partial fulfillment
b. Conventional – established by the a. Divisible – obligation is susceptible of
agreement of the parties (eg. Contracts). partial performance (NCC. 1223; and
1224);
2. Nature b. Indivisible – obligation is not susceptible
a. Personal – to do; not to do; of partial performance (NCC. 1225).
b. Real – to give.
9. Right to choose and substitution
3. Object a. Alternative – obligor may choose to
a. Determinate / specific - particularly completely perform one out of the several
designated or physically segregated from prestations
all others of the same class; (NCC. 1199);
b. Generic – designated merely by its class or b. Facultative – only one prestation has been
genus; agreed upon, but the obligor may render
c. Limited generic – generic objects confined one in substitution of the first one (NCC.
to a particular class or source (Tolentino, 1206).
2002). (e.g. An obligation to deliver one of
my horses). 10. Imposition of penalty
a. Simple – there is no penalty imposed for
4. Performance violation of the terms thereof (NCC. 1226);
a. Positive - to give; to do; b. Obligations with a penal clause –
b. Negative – not to do (ex. an obligation not obligation which imposes a penalty for
to run for an elective post). violation of the terms thereof (NCC. 1226;
Pineda, 2000).
5. Person obliged
a. Unilateral – only one party is bound; 11. Sanction
b. Bilateral – both parties are bound. a. Civil – gives a right of action to compel
their performance;
NOTE : A bilateral obligation may be b. Natural– not based on positive law, but
reciprocal or non-reciprocal. Reciprocal on equity and natural law; does not grant

321
 CIVIL LAW
a right of action to enforce their Obligations derived from law are not presumed.
performance, but after voluntary Only those expressly determined in the Code or in
fulfillment by the obligor, they authorize special laws are demandable and shall be
retention of what has been delivered regulated by the precepts of the law which
rendered by reason thereof. establishes them and as to what has not been
foreseen by the provisions of Book IV of NCC (NCC,
Moral – cannot be enforced by action but are Art. 1158).
binding on the party who makes it in conscience
and natural law. NOTE: If there is conflict between the NCC and a
special law, the latter prevails unless the contrary
has been expressly stipulated in the NCC (NCC, Art.
SOURCES OF OBLIGATIONS 18; Paras, 2008).

Characteristics of a legal obligation

1. Law;
1. Does not need the consent of the obligor;
2. Contracts;
2. Quasi-contracts; 2. Must be expressly set forth in the law creating it
3. Delict; and not merely presumed; and
3. In order that the law may be a source of
4. Quasi-delict.
obligation, it should be the creator of the
This enumeration is exclusive. No obligation obligation itself (NCC, Art. 1158).
exists if its source is not one of those enumerated
Determining whether an obligation arises
in Art. 1157 of the NCC (Navales v. Rias, G.R. No. L-
3489, September 7, 1907). from law or from some other source

Note: Actually, there are only two sources (i.e., law
and contracts) because obligations arising from
quasi-contracts, delicts, and quasi-delicts are
imposed by law (Leung Ben v. O’Brien, 38 Phil.
182).
Time of perfection
GR:
3. Law – from the time designated by the law
creating or regulating them;
4. Contracts –from the time of the perfection of
the contract.
e.g. meeting of the minds
XPNs:
a. When the parties made a stipulation on
the right of the creditor to the fruits of the
thing;
b. When the obligation is subject to a
suspensive condition, from which it arises
upon fulfillment of the condition;
c. When the obligation is with a period;
there is already an existing obligation, but
it is only demandable when the period
expires or becomes due.
5. Quasi Contracts, delicts, quasi-delicts – from
the time designated by the law creating or
regulating them.
OBLIGATION EX LEGE
1. Arises from law if it establishes obligation;
2. Arises from the act itself if the law merely
recognizes the existence of an obligation
generated by an act (Manresa).
e.g.
1. According to Art. 2014 of the NCC, a loser in a
game of chance may recover his loss from the
winner, with legal interest from the time he
paid the amount lost (Leung Ben v. O’Brien,
G.R. No. L-13602, April 6, 1918);
2. The obligation of the spouses to support each
other;
3. The obligation of the employers under the
Worker’s Compensation Act;
4. The obligations of the owners of the dominant
and servient estates in legal easements and
others scattered in the NCC and in special
laws (Jurado, 2009);
5. The obligation to pay taxes (Rabuya, 2017).
OBLIGATION EX CONTRACTU
Requisites of a contractual obligation
1. It must contain all the essential requisites of a
contract (NCC, Art. 1318); and
2. It must not be contrary to law, morals, good
customs, public order, and public policy (NCC,
Art. 1306).
Rules governing the obligations arising from
contracts

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 322
 OBLIGATIONS AND CONTRACTS
GR: These obligations arising from contracts shall
be governed primarily by the stipulations, clauses,
terms, and conditions of the parties’ agreements.
XPN: Contracts with prestations that are
unconscionable or unreasonable (Pineda, 2009).
Binding force of obligation ex contractu
Obligations arising from contracts have the force
of law between the parties and should be
complied with in good faith (NCC, Art. 1159). This
is known as the “principle of obligatory force of
contracts” (Rabuya, 2017).
Good faith is performance in accordance with the
stipulation, clauses, terms, and conditions of the
contract (Pineda, 2000).
GR: Neither party may unilaterally evade his
obligation in the contract.
XPNs: Unilateral evasion is allowed when the:
1. Contract authorizes such evasion; or
2. Other party assents thereto.
Q: FBDC entered into a Trade Contract with MS
Maxco Company, Inc. (MS Maxco) for the
execution of the structural and partial
architectural works of one of its condominium
projects. The Trade Contract likewise
provided that MS Maxco is prohibited from
assigning or transferrings any of its rights,
obligations, or liabilities under the said
Contract without the written consent of FBDC.
FBDC received a letter from the counsel of
Fong informing it that MS Maxco had already
assigned its receivables from FBDC to him.
Despite Fong’s repeated requests, FBDC
refused to deliver to Fong the amount assigned
by MS Maxco. Is FBDC bound by the assignment
between MS Maxco and Fong?
A: No. Obligations arising from contracts have the
force of law between the contracting parties and
should be complied with in good faith. The Court
finds that MS Maxco, as the Trade Contractor,
cannot assign or transfer any of its rights,
obligations, or liabilities under the Trade Contract
without the written consent of FBDC (Fort
Bonifacio Development Corporation vs. Valentin L.
Fong, G.R. No. 209370, March 25, 2015).
OBLIGATION EX QUASI – CONTRACTU
Quasi-contract
323
A juridical relation arising from lawful, voluntary,
and unilateral acts based on the principle that no
one shall be unjustly enriched or benefited at the
expense of another (NCC, Art. 2142).
Distinguished from “implied contracts”
An implied contract, in the proper sense, is a
contract which arises when the intention of the
parties is not expressed, but an agreement in fact,
creating an obligation, is implied or presumed
from their acts, or where there are circumstances
which show a mutual intent to contract.
An implied contract requires consent while a
quasi-contract, being a unilateral contract, does
not. The basis of an implied contract is the will of
the parties while the basis of a quasi-contract is
law, to the end that there be no unjust enrichment
(Rabuya, 2017).
Characteristics of a quasi-contract (LUV)
1. It must be Lawful;
2. It must be Unilateral; and
3. It must be Voluntary (Pineda, 2000).
Presumptive consent
Since a quasi-contract is a unilateral contract
created by the sole act(s) of the gestor, there is no
express consent given by the other party. The
consent needed in a contract is provided by law
through presumption (Pineda, 2000).
Principal forms of quasi-contracts
1. Negotiorum gestio (inofficious manager) – Arises
when a person voluntarily takes charge of the
management of the business or property of
another without any power from the latter (NCC,
Art. 2144);
2. Solutio indebiti (unjust enrichment) – Takes
place when a person received something from
another without any right to demand for it, and
the thing was unduly delivered to him through
mistake (NCC, Art. 2154).
NOTE: The delivery must not be through liberality
or some other cause.
Solutio indebiti (SI) v. Accion in rem verso
(AIRV)
1. Mistake is an essential element in SI which is
not necessary in AIRV;
2. An AIRV is merely an auxilliary action, available
only when there is no other remedy on contract,
 CIVIL LAW
quasi-contract, crime or quasi-delict (Rabuya, XPNs: When the offended party:
2017).
1. Waives the civil action;
Rule in case of excess of payment of interest 2. Reserves the right to institute it separately;
and
If the borrower pays interest when there has been 3. Institutes the civil action prior to the criminal
no stipulation therefor, the provisions of the Code action (Rule 111, Sec. 1, Rules of Court).
concerning solutio indebiti, or natural obligations,
shall be applied, as the case may be. Scope of civil liability (IRR)

If the payment of interest is made out of mistake, 1. Restitution;

solutio indebiti applies; hence, the amount must be 2. Reparation for damage caused; and
returned to the debtor. If the payment was made 3. Indemnity for consequential damages (Art.
after the obligation to pay interest has already 104, RPC).
prescribed, natural obligation applies; hence, the
creditor is authorized to retain the amount paid. Acquittal in criminal case

Contract v. Quasi-contract GR: The acquittal of the accused in criminal case

on the ground of reasonable doubt does not
CONTRACT QUASI-CONTRACT preclude the filing of a subsequent civil action and
only preponderance of evidence is required to
There is a meeting of prove the latter.
There is no consent, but
the
the XPNs: When the acquittal is on the basis that:
minds or consent; the
same is supplied by 1. The accused did not commit the crime
parties must have
fiction of law; to charged; or
deliberately entered
prevent injustice 2. There is a declaration in the decision of
into a formal agreement
acquittal that no negligence can be attributed
to the accused and that the fact from which
*For further discussion on quasi contracts, please
the civil action might arise did not exist (NCC,
see the discussion of quasi contract on Credit
Art. 29).
Transactions.
Q: Petitioner was charged with estafa.
OBLIGATIONS EX DELICTO
Respondent averred that on February 20,
1996, she entrusted merchandise worth
Delict
P35,300.00 to petitioner as evidenced by an
acknowledgment receipt. However, petitioner
An act or omission punishable under the law.
was only able to remit the amount of
P3,300.00 and thereafter, failed to make
Basis
further remittances and ignored respondent's
demands to remit the proceeds or return the
GR: Art. 100 of the RPC provides: “Every person
goods. As a defense, petitioner admitted
criminally liable for a felony is also civilly liable.”
having previous business dealings with
respondent not as an agent but as a client who
XPNs: Crimes of treason, rebellion, espionage,
used to buy purchase order cards (POCs) and
contempt and others wherein no civil liability
gift checks (GCs) from respondent on
arises on the part of the offender either because
installment basis. The RTC acquitted
there are no damages to be compensated or there
petitioner of the charge of estafa but held her
is no private person injured by the crime (Reyes,
civilly liable to pay respondent the amount of
2008).
P32,000.00, with interest from the filing of the
Information on March 11, 1999 until fully paid,
Implied institution of the civil action in a
and to pay the costs. The RTC adjudged
criminal case
petitioner civilly liable "having admitted that
she received the [GCs] in the amount of
GR: When a criminal action is instituted, the civil
P32,000.00." In this relation, it further
action for the recovery of the civil liability arising
considered the relationship of respondent and
from the offense charged shall be deemed
petitioner as in the nature of a principal-agent
instituted with the criminal action (Sec. 1, Rule
which renders the agent civilly liable only for
111, Rules of Court).

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2019 GOLDEN NOTES 324
 OBLIGATIONS AND CONTRACTS
damages which the principal may suffer due to
the non-performance of his duty under the
agency. CA upheld petitioner's civil liability.
Should the petitioner be held civilly liable? If
yes, what is the rate of interest?
A: Yes. Respondent was able to prove by
preponderance of evidence the fact of the
transaction, as well as petitioner's failure to remit
the proceeds of the sale of the merchandise worth
P32,000.00, or to return the same to respondent
in case such merchandise were not sold. This was
established through the presentation of the
acknowledgment receipt which, as the document's
name connotes, shows that petitioner
acknowledged receipt from respondent of the
listed items with their corresponding values, and
assumed the obligation to return the same on
March 20, 1996 if not sold
With the amendment introduced by the Bangko
Sentral ng Pilipinas Monetary Board in BSP-MB
Circular No. 799, series of 2013, there is a need to
partially modify the same in that the interest
accruing from the time of the finality of this
Decision should be imposed at the lower rate of
six percent (6%) p.a., and not twelve percent
(12%) p.a. as imposed by the CA. (Dolores Diaz v.
People, GR No. 208113, December 2, 2015)
OBLIGATIONS EX QUASI – DELICTO
Instances when Art. 2176 is inapplicable
a) When there was a pre-existing
contractual relation because the breach of
contract is the source of the obligation
(Robles v. Yap Wing, 41 SCRA 267, G.R. No.
L-20442, October 4, 1971);
NOTE: However, if the act that breaches
the contract is tortuous, the pre-existing
contractual relation will not bar the
recovery of damages (Singson v. BPI, G.R.
No. L-24837, June 27, 1968);
b) When the fault or negligence is punished
by law as a crime, Art. 100 of RPC shall be
applicable;
c) If the action for quasi-delict is instituted
after four years, it is deemed prescribed
(Afialda v. Hisole, G.R. No. L-2075,
November 29, 1949);
d) When the injury suffered by a person is
the result of a fortuitous event without
human intervention;
e) If there is no damage or injury caused to
another (Walter A. Smith & Co., Inc. v.
Cadwallader Gibson Lumber Company, G.R.
No. L-32640, December 29, 1930).

Quasi-delict or tort Delict v. Quasi-delict

An act or omission arising from fault or negligence BASIS DELICT QUASI-DELICT

which causes damage to another, there being no
pre-existing contractual relations between the Presence of
parties (NCC, Art. 2176). criminal or
As to the kind
malicious Only
NOTE: A single act or omission may give rise to of intent
intent or negligence
two or more causes of action. Thus, an act or present
criminal
omission may give rise to an action based on negligence.
delict, quasi-delict, or contract.
As to the
In negligence cases, prior conduct should be whether Concerned Concerned
examined, that is, conduct prior to the injury that private or with public with private
resulted, or in proper case, the aggravation public interest interest. interest.
thereof. is concerned

Elements of a quasi-delict Generally, the

act or omission The act or
As to the kind
gives rise to omission gives
1. Negligent or wrongful act or omission; of liability
two liabilities: rise only to a
2. Damage or injury caused to another; arises
3. Causal relation between such negligence or criminal and civil liability.
civil liability.
fault and damage; and
4. No pre-exisitng contractual relationship
between the parties (NCC, Art. 2176).

325
 CIVIL LAW
Criminal Take care of
As to The civil
liability is not the thing with
availability of liability can be
subject to a the proper
a compromise compromised.
compromise. diligence of a If the object is
good father of generic, but the
As to the Guilt must be Guilt may be a family unless source is
quantum of proved beyond proved by Required
the law specified or
evidence is reasonable preponderance diligence to be
requires or delimited, the
required doubt. of evidence. observed
parties obligation is to
stipulate preserve the
NOTE: Inasmuch as civil liability co-exists with another source.
criminal responsibility in negligence cases, the standard of
offended party has the option between an action care (NCC,
for enforcement of civil liability based on culpa Art.1163).
criminal under Art. 100 of the RPC and an action
for recovery of damages based on culpa aquiliana Delivery of
Deliver all
under NCC, Art. 2177. another thing
accessions,
within the
accessories,
same genus as
and fruits of
the thing
NATURE AND EFFECTS OF OBLIGATIONS the thing even
What delivery promised if
though they
comprises of such thing is
may not have
damaged due
Types of real obligations been
to lack of care
mentioned
or a general
1. Determinate/specific – Particularly designated (NCC, Art.
breach is
or physically segregated from all others of the 1166).
committed.
same class;
2. Indeterminate/Generic – Is designated merely Pay damages in Pay damages in
by its class or genus; case of breach case of breach
3. Delimited generic – Generic objects confined of obligation by of obligation by
to a particular class (Tolentino, 2002); reason of reason of
e.g. An obligation to deliver one of my horses. Effect of delay, fraud, delay, fraud,
breach of negligence, negligence,
Obligations of a debtor in an obligation to obligation contravention contravention
deliver of the tenor of the tenor
thereof thereof
The obligations of the debtor (in an obligation to (NCC, Art. (NCC, Art.
deliver) depends upon the kind thing involved: 1170). 1170).
Obligation is
BASIS SPECIFIC GENERIC not
Fortuitous extinguished
Deliver the Effect of
event (genus
thing which is fortuitous
extinguishes nunquam
neither of event
the obligation. peruit – genus
superior nor
Deliver the never
inferior quality
What the thing agreed perishes).
if quality and
obligation upon
circumstances
consists of (NCC, Art. Remedies of the creditor in case of failure to
have not been
1165). deliver the thing due
stated by the
parties.
(NCC, Art. The following are the remedies of the creditor in
1246). case of failure to deliver the thing due (Pineda,
2000)

SPECIFIC GENERIC

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2019 GOLDEN NOTES 326
 OBLIGATIONS AND CONTRACTS
Specific performance
(delivery of anything
Specific performance.
belonging to the same
species).
Ask that the obligation
Rescission (action to be complied with at the
rescind under NCC, Art. debtor’s expense with a
1380). right to recover
damages.
Resolution or specific
Resolution (action for
performance, with
cancellation under
damages in either case
NCC, Art. 1191).
(NCC, Art. 1191).
Damages, in both cases (NCC, Art. 1170).
NOTE: May be exclusive or in addition to the
above-mentioned remedies
Personal right v. Real right
PERSONAL RIGHT REAL RIGHT
The right or interest of
The right or power of a a
person (creditor) to person over a specific
demand from another thing
(debtor), as a definite (i.e. ownership,
passive subject, the possession,
fulfillment of the latter’s mortgage), without a
obligation to give, to do, definite subject against
or not to do. whom the right may be
personally enforced.
There is a definite There is only a definite
active active
subject and a definite subject without any
passive passive
subject. subject.

NOTE: In an obligation to deliver a specific thing, Binding and enforceable Directed against the
the creditor has the right to demand preservation only against a particular whole
of the thing, its accessions, accessories, and the person. World.
fruits. The creditor is entitled to the fruits and
interests from the time the obligation to deliver Principle of “balancing of equities” in actions
the thing arise. for specific performance

Right of the creditor to the fruits In decreeing specific performance, equity requires
not only that the contract be just and equitable in
The creditor has a right to the fruits of the thing its provisions, but that the consequences of
from the time the obligation to deliver it arises. specific performance likewise be just and
However, he shall acquire no real right over it equitable. The general rule is that this equitable
until the same has been delivered to him (NCC, Art. relief will not be granted if, under the
1164). circumstances of the case, the result of the specific
performance of the contract would be harsh,
SOURCE OF WHEN OBLIGATION inequitable, and oppressive or result in an
OBLIGATION ARISES unconscionable advantage to the plaintiff (Agcaoili
v. GSIS, G.R. No. 30056, August 30, 1988).
Based on specific
Law, quasi-delict, quasi- Types of personal obligations
provisions of applicable
contract, or crime.
law.
1. Positive - To do;
Subject to a suspensive From the happening of 2. Negative - Not to do.
condition. the condition.
Remedies in personal obligations
From the constitution,
Subject to a supensive
creation or perfection of
term/period. 1. Positive personal obligations
obligation. a. Not purely personal act – To have obligation
From the constitution, executed at debtor's expense plus damages;
Pure creation or perfection of b. Purely personal act - Damages only.
the obligation.
When positive personal obligations
considered breached:
Nature of the right of the creditor with respect a. If the debtor fails to perform the
to fruits obligation; or
b. Even in case of performance but the same
1. Before delivery – Personal right; is done either in a poor manner or in
2. After delivery – Real right.

327
 CIVIL LAW
contravention of the tenor of the obligation
(NCC, Art. 1167).
2. Negative personal obligation – To have the
prohibited thing undone at the expense of the
debtor plus damages. However, if thing cannot
be physically or legally undone, only damages
may be demanded (8 Manresa 58).
Specific performance is not a remedy in
positive personal obligations
If specific performance will be allowed, it will
amount to involuntary servitude which is
prohibited by the Constitution (Pineda, 2000).
BREACHES OF OBLIGATIONS
Degree of diligence required
1. That agreed upon;
2. In the absence of such, that which is required
by the law;
GR: In the absence of the foregoing, diligence
of a good father of a family
XPNs:
a. Common carriers requiring
extraordinary diligence (NCC, Arts.
1998-2002);
b. Banks require the highest degree of
deligence, being imbued with public
interest.
Diligence of a good father of a family
That reasonable diligence which an ordinary
prudent person would have done under the same
circumstances.
Forms of breach of obligations
1. Voluntary – Debtor is liable for damages if he
is guilty of:
a. Default (mora)
b. Fraud (dolo)
c. Negligence (culpa)
d. Breach through contravention of the
tenor thereof (NCC, Art. 1170).
2. Involuntary – Debtor is unable to perform the
obligation due to fortuitous event thus not
liable for damages.
Effects of breach of obligation
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
If a person obliged to do something fails to do it,
or if he does it in contravention of the tenor of the
obligation or what has been poorly done be
undone, the same shall be executed at his cost
(NCC, Art. 1167).
When the obligation consists in not doing, and the
obligor does what has been forbidden him, it shall
also be undone at his expense (NCC, Art.1168).
Instances where the remedy under Art. 1168 is
not available
1. Where the effects of the act which is forbidden
are definite in character – Even if it is possible
for the creditor to ask that the act be undone
at the expense of the debtor, consequences
contrary to the object of the obligation will
have been produced which are permanent in
character.
2. Where it would be physically or legally
impossible to undo what has been undone –
Because of:
a. The very nature of the act itself;
b. A provision of law; or
c. Conflicting rights of third persons.
NOTE: In either case, the remedy is to seek
recovery for damages (NCC, Art. 1168).
DELAY (MORA) OR DEBTOR’S DEFAULT
Those obliged to deliver or to do something incur
in delay from the time the obligee (creditor)
judicially or extrajudicially demands from them
the fulfillment of their obligation.
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 obligations, delay by the other
begins (NCC, Art. 1169). (2002 Bar)
Kinds of delay
2. Ordinary delay – This is the mere failure to
perform an obligation at the stipulated time.
3. Extraordinary delay or legal delay – This delay
already equates to non-fulfillment of the
obligation and arises after the extrajudicial or
judicial demand has been made upon the
debtor (Pineda, 2000).
Kinds of legal delay or default
1 Mora solvendi – Default on the part of the
debtor/obligor
328
 OBLIGATIONS AND CONTRACTS
a. Ex re – Default in real obligations (to
give);
b. Ex personae – Default in personal
obligations (to do);
2. Mora accipiendi – Default on the part of the
creditor/oblige;
4. Compensatio morae – Default on the part of
both the debtor and creditor in reciprocal
obligations.
Causes of cessation of the effects of mora
1. Renunciation (express/implied); or
2. Prescription.
Q: American Express Card (AMEX) failed to
approve Pantaleon’s credit card purchases
which urged the latter to commence a
complaint for moral and exemplary damages
against AMEX. He said that he and his family
experienced inconvenience and humiliation
due to the delays in credit authorization
during his vacation trip in Amsterdam and in
the United States. Did AMEX commit a breach
of its obligations to Pantaleon?
A: YES. Generally, the relationship between a
credit card provider and its cardholders is that of
creditor-debtor, with the card company as the
creditor extending loans and credit to the
cardholder, who as debtor is obliged to repay the
creditor. One hour appears to be patently
unreasonable length of time to approve or
disapprove a credit card purchase. The culpable
failure of AmEx herein is not the failure to timely
approve petitioner’s purchase, but the more
elemental failure to timely act on the same,
whether favorably or unfavorably (Pantaleon v.
American Express International, Inc., G.R. No.
174269, May 8, 2009).
MORA SOLVENDI
Requisites (PDF-MJ)
1. Obligation Pertains to the debtor;
2. Obligation is Determinate, due and
demandable, and liquidated;
3. Obligation has not been performed on its
Maturity date;
4. There is Judicial or extrajudicial demand by the
creditor; and
5. Failure of the debtor to comply with such
demand.
Non-applicability of mora solvendi
329
Mora solvendi does not apply in natural
obligations because performance is optional or
voluntary on the debtor’s part. One can never be
late in not giving or doing something.
Instances when demand by the creditor is not
necessary in order that delay may exist
GR: No demand = no default [NCC, Art. 1169 (2)].
XPNs: Demand by the creditor shall not be
necessary in order that delay may exist when:
1. The obligation or the law expressly so
declares; or
2. From the nature and the circumstances of the
obligation it appears that the designation of
time when the thing is to be delivered or the
service is to be rendered was a controlling
motive for the establishment of the contract;
or
3. Demand would be useless, as when the
obligor has rendered it beyond his power to
perform [Art. 1169 (2)].
Q: “A” borrowed P2,000 from “B” on December
1, 1956. He executed a promissory note
promising to pay the indebtedness on
December 1, 1958. Upon the arrival of the
designated date for payment, is demand
necessary in order that “A” shall incur in
delay?
A: YES. In order that the first exception provided
for in Art. 1169 of the NCC can be applied, it is
indispensable that the obligation or the law
should expressly add that the obligor shall incur in
delay if he fails to fulfill the obligation upon the
arrival of the designated date or that upon the
arrival of such date demand shall not be necessary
(Bayla, et al. v. Silang Traffic Co., G.R. Nos. L-48195
and 48196, May 1, 1942).
Effects of mora solvendi
1. Debtor may be liable for damages (NCC, Art.
1155) or interests; and
NOTE: The interest begins to run from the
filing of the complaint when there is no
extrajudicial demand.
2. When the obligation has for its object a
determinate thing, the debtor may bear the
risk of loss of the thing even if the loss is due
to fortuitous event;
3. Rescission or resolution.
 CIVIL LAW
Debtor’s liability may be mitigated even if he is If neither party complies with his prestation,
guilty of delay default of one compensates for the default of the
other.
If the debtor can prove that loss would
nevertheless transpire even if he had not been in Rules on compensatio morae
default, the court may equitably mitigate his
liability [NCC, Art. 2215(4); Pineda, 2000] Unilateral Reciprocal
Obligations Obligations
MORA ACCIPIENDI
Default or delay
Requisites begins from
extrajudicial or Delay by the other
1. Offer of Performance by a capacitated debtor; Time judicial demand – party begins from
2. Offer must be to Comply with the prestation of mere expiration of the moment one of
as it should be performed; and delay the period fixed is the parties fulfills
3. Refusal of the creditor without just cause not enough in his obligation.
(Pantaleon v. Amex, supra). order that debtor
may incur delay.
Effects of mora accipiendi
a. The obligation
1 Responsibility of debtor is limited to fraud or the law
and gross negligence; expressly so
2 Debtor is exempted from risk of loss of thing; dictates;
creditor bears risk of loss;
3 Expenses by debtor for preservation of thing b. Time is of the
after delay is chargeable to creditor; essence;
4 If the obligation bears interest, debtor does When different
not have to pay it from time of delay; c.Demand would dates for the
5 Creditor liable for damages; and XPNs be useless, as performance of
6 Debtor may relieve himself of obligation by debtor has obligation is fixed
consigning the thing. rendered it by the parties.
beyond his power
COMPENSATIO MORAE to perform; or

Reciprocal obligations d. Debtor

has acknowledged
Reciprocal obligations are those which arise from that he is in
the same cause, wherein each party is a debtor default.
and a creditor of the other, such that performance
of one is conditioned upon the simultaneous FRAUD (Deceit or Dolo)
fulfillment of the other from the moment one of
the parties fulfills his obligation, delay by the It is an intentional evasion of the faithful
other party begins (ASJ Corporation v. Evangelista, performance of the obligation (8 Manresa 72).
G.R. No. 158086, February 14, 2008).
Kinds of fraud
Delay in reciprocal obligations

One party incurs in delay from the moment the Basis Fraud in the Fraud in the
other party fulfills his obligation, while he himself performance perfection
does not comply or is not ready to comply in a It occurs after
proper manner with what is incumbent upon him. the valid
execution of It occurs before or
Demand is only necessary in order for a party to the contract. It simultaneous with
incur delay when the respective obligations are to Time of
is employed in the creation or
be performed on separate dates. occurrence
the perfection of the
performance obligation.
Effect of non-compliance of both parties in of a pre-
reciprocal obligations existing

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 330
 OBLIGATIONS AND CONTRACTS
obligation. It is incidental fraud or fraud in the performance
of the obligation and not the fraud in the execution
of the contract or causal fraud. It is the intentional
evasion of the normal fulfillment of the obligation
(Pineda, 2000).

Waiver of action arising from future fraud

Consent is vitiated
Consent is free With respect to fraud that has already been
by serious
Consent and not committed (past fraud), the law does not prohibit
deception or
vitiated. renunciation of the action for damages based on
misrepresentation.
the same since such can be deemed an act of
It is not a generosity. What is renounced is the effect of
It is a ground for
ground for fraud, particularly the right to indemnity.
Effect annulment of the
annulment of However, the law prohibits any waiver of an
contract.
the contract. action for future fraud since the same is contrary
to law and public policy. Waiver for future fraud is
Action for
Action for void (NCC, Art. 1171).
Remedy annulment with
damages only.
damages.
Remedies of the defrauded party

2. Specific performance (NCC, Art. 1233); or

Dolo causante v. Dolo incidente 3. Resolution of the contract (Art. 1191); and
4. Damages, in either case.
Basis Dolo causante Dolo incidente
(causal (incidental CULPA OR NEGLIGENCE
fraud) fraud)
The fault or negligence of the obligor consists in
This is the kind the omission of that diligence which is required by
of fraud which the nature of the obligation and corresponds with
is not the the circumstances of the persons, of the time and
efficient cause the place. When negligence shows bad faith, the
This is the
for the giving provisions of Art. 1171 and 2201, paragraph 2,
essential cause
of the consent shall apply. If the law or contract does not state
of the consent
to the contract, the diligence which is to be observed in the
without which
as it refers performance, that which expected of a good father
the party
merely to an of a family shall be required (NCC, Art. 1173).
Nature would not
incident
have agreed to
therein and, Test of negligence
enter into the
which even if
contract
not present, Did the defendant in doing the alleged negligent
(NCC, Art.
the contracting act use the reasonable care and caution which an
1338).
party would ordinarily prudent person would have used in the
have still same situation? If not, then he is guilty of
agreed to the negligence. (Picart v. Smith, G.R. No. L-12219,
contract. March 15, 1918).

It does not Fraud v. Negligence

It renders the
affect the
Effect contract
validity of the
voidable.
contract.
Contract
remains valid.
Annulment
Remedy Remedy is
with damages.
claim for
damages only.

Fraud as mentioned in Art. 1171

331
 CIVIL LAW
BASIS FRAUD NEGLIGENCE Q: Wenifredo Salvaña was driving the bus
owned by Bachelor Express, Inc./Ceres Liner,
There is no Inc. along the national highway when he
deliberate overtook a PUJ jeepney while negotiating a
There is intention to blind curve in a descending road causing him
As to the to intrude into the opposite lane and bump the
deliberate cause damage
intention to 10-wheeler Hino dump truck of petitioner
intention to or injury even
cause damage Cresencio Baño running uphill from the
cause damage. if the act was
done opposite direction. The collision resulted in
voluntarily. damage to both vehicles, the subsequent death
of the truck driver, Amancio Asumbrado, and
As to the Liability serious physical injuries to bus driver Salvaña.
Liability may
mitigation of cannot be A complaint for quasi-delict was filed against
be mitigated.
liability mitigated. Salvaña for negligently driving the bus causing
it to collide with the dump truck. Respondents
GR: Waiver for denied liability, claiming that prior to the
future collision the bus was running out of control
negligence may
because of a problem in the steering wheel
be allowed in system which could not have been avoided
certain cases.
despite their maintenance efforts. Instead,
As to the Waiver for they claimed that Asumbrado had the last
XPN: Nature of
waiver of future fraud is clear chance to avoid the collision had he not
the obligation driven the dump truck at a very fast speed.
future fraud void.
or public policy
Was Salvaña grossly negligent?
requires
extraordinary A: Yes. When bus driver Salvaña overtook the
diligence. (e.g.
jeepney in front of him, he was rounding a blind
common
curve along a descending road. Considering the
carrier).
road condition and that there was only one lane
on each side of the center line for the movement of
NOTE: When negligence is so gross that it traffic in opposite directions, it would have been
amounts to wanton attitude on the part of the more prudent for him to confine his bus to its
debtor or such negligence shows bad faith, the proper place. Having thus encroached on the
laws in case of fraud shall apply. opposite lane in the process of overtaking the
jeepney, without ascertaining that it was clear of
Effect of good faith or bad faith of the obligor oncoming traffic that resulted in the collision with
the approaching dump truck driven by deceased
If the obligor acted in good faith, he is responsible Asumbrado, Salvaña was grossly negligent in
for the natural and probable consequences of the driving his bus. He was remiss in his duty to
breach of contract and which the parties have determine that the road was clear and not to
reasonably foreseen at the time of the constitution proceed if he could not do so in safety (Cresencio
of the obligation. Baño v. Bachelor Express, GR No. 191703, March 12,
2012).
If the obligor is guilty of fraud, bad faith, malice or
wanton attitude, he shall be responsible for all Kinds of negligence or culpa
damages which may be reasonably attributed to
the non-performance of the obligation. 1. Culpa contractual (contractual negligence) -
Negligence which results from the breach of
Contributory negligence of the creditor contract;
2. Culpa aquiliana (civil negligence or tort or
GR: It reduces or mitigates the damages which he quasi-delict) Acts or omissions that cause
can recover. damage to another, there being no contractual
relation between the parties (NCC, Art. 2176);
XPN: If the negligent act or omission of the and
creditor is the proximate cause of the event which 3. Culpa criminal (criminal negligence) – Those
led to the damage or injury complained of, he which results in the commission of a crime or
cannot recover. a delict.

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2019 GOLDEN NOTES 332
 OBLIGATIONS AND CONTRACTS
CULPA CONTRACTUAL
(CONTRACT)
Negligence is merely an
Existence of negligence incident in the performance
of an obligation.
There is always a pre-
Contractual relations existing contractual relation. existing contractual relation.
The source of
obligation of defendant to
Source of obligation pay damages is the breach or
non-fulfillment of the
contract.
Proof of the existence
of the contract and of its
Proof of negligence breach or non-fulfillment is
sufficient prima facie to
warrant recovery.
Defense of “good father
of a family” in the selection
& supervision of the
employees is not a proper
complete defense though it
Defense available
may mitigate damages.
Respondeat superior or
command responsibility or
the master and servant rule.
Preponderance of
Proof needed
evidence.
CONTRAVENTION OF TENOR OF OBLIGATION
(VIOLATIO)
The act of contravening the tenor or terms or
conditions of the contract is also known as
“violatio,” i.e. failure of common carrier to take its
passenger to their destination safely (Pineda,
2000).
Under NCC, Art. 1170, 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. Such violation of the terms
of contract is excused in proper cases by
fortuitous events.
FORTUITOUS EVENT / CASO FORTUITO
333
CULPA AQUILIANA/ CULPA CULPA CRIMINAL
EXTRA-CONTRACTUAL (DELICT)
(QUASI-DELICT)
Negligence is Negligence is
substantive and substantive and
independent. independent.
GR: There is no pre- There is no pre-
existing contractual
relation.
The source of The source of
obligation is defendant’s obligation is an act or
negligence itself. omission punishable by
law.
The negligence of the Accused shall be
defendant must be proved. presumed innocent until
the contrary is proved
beyond reasonable doubt.
Defense of “good father Defense of “good
of a family” in the selection father of a family” in the
& supervision of the selection & supervision of
employees is a proper and the employees is not a
complete defense. proper defense.
The employee’s guilt is
automatically the
employer’s civil guilt, if
the former is insolvent.
Preponderance of Proof of guilt
evidence. beyond reasonable doubt.
An occurrence or happening which could not be
foreseen, or even if foreseen, is inevitable (NCC,
Art. 1174). (2002, 2008 Bar)
Requisites: (CODE)
1. Cause of breach is independent of the will of
the debtor;
2. The Event is unforeseeable or unavoidable;
3. Occurrence renders it absolutely impossible
for the debtor to fulfill his obligation in a
normal manner - impossibility must be
absolute not partial, otherwise not force
majeure; and
4. Debtor is free from any participation in the
aggravation of the injury to the creditor.
NOTE: The fortuitous event must not only be the
proximate cause but it must also be the only and
sole cause. Contributory negligence of the debtor
 CIVIL LAW
renders him liable despite the fortuitous event Q: MIAA entered into a compromise agreement
(Pineda, 2000). with ALA. MIAA failed to pay within the period
stipulated. Thus, ALA filed a motion for
If the negligence was the proximate cause, the execution to enforce its claim. MIAA filed a
obligation is not extinguished. It is converted into comment and attributed the delays to its being
a monetary obligation for damages. a government agency and the Christmas rush.
Is the delay of payment a fortuitous event?
Difficulty to foresee
A: NO. The act-of-God doctrine requires all human
The mere difficulty to foresee the happening is not agencies to be excluded from creating the cause of
impossibility to foresee the same (Republic v. the mischief. Such doctrine cannot be invoked to
Luzon Stevedoring Corp., G.R. No. L-21749, protect a person who has failed to take steps to
September 29, 1967). forestall the possible adverse consequences of loss
or injury. Since the delay in payment in the
Liability for loss due to fortuitous event present case was partly a result of human
participation - whether from active intervention
GR: There is no liability for loss in case of or neglect - the whole occurrence was humanized
fortuitous event. and was therefore outside the ambit of a caso
fortuito.
XPNs: (LaNS-PC-BaG)
First, processing claims against the government
1. Law; are certainly not only foreseeable and expectable,
2. Nature of the obligation requires the but also dependent upon the human will. Second,
assumption of risk; the Christmas season is not a caso fortuito, but a
3. Stipulation; regularly occurring event. Third, the occurrence of
4. The debtor is guilty of dolo, malice or bad the Christmas season did not at all render
faith, has Promised the same thing to two or impossible the normal fulfillment of the
more persons who does not have the same obligation. Fourth, MIAA cannot argue that it is
interest (NCC, Art. 1165); free from any participation in the delay. It should
5. The debtor Contributed to the loss (Tan v. have laid out on the compromise table the
Inchausti & Co., G.R. No. 6092, March 8, 1912); problems that would be caused by a deadline
6. The possessor is in Bad faith (NCC, Art. 552); falling during the Christmas season. Furthermore,
or it should have explained to ALA the process
7. The obligor is Guilty of fraud, negligence or involved for the payment of ALA’s claim (MIAA v.
delay or if he contravened the tenor of the Ala Industries Corp., G.R. No. 147349, February 13,
obligation (Juan Nakpil v. United Construction 2004).
Co., Inc. v. CA, G.R. No. L-47851, April 15, 1988).
Effects of fortuitous events
Act of God v. Act of Man
1. On determinate obligation – The obligation is
ACT OF GOD ACT OF MAN extinguished.
2. On generic obligation – The obligation is not
Fortuitous event Force majeure extinguished (genus nun quam peruit – genus
never perishes).
Event caused by the
Event which is legitimate or Q. Kristina brought her diamond ring for
absolutely independent illegitimate acts of cleaning to a jewelry shop which failed to
of human intervention persons other than the fuilfill its promise to return such ring in
obligor February 1, 1999. Kristina went back to the
shop on February 6, 1999 but she was
e.g. Earthquakes, e.g. Armed invasion,
informed that the ring was stolen by a thief the
storms, floods, robbery, war (Pineda,
night before. Kristina filed an action for
epidemics 2000).
damages against the jewelry shop which put
up the defense of force majeure. Will the action
NOTE: There is no essential difference between prosper or not? (2000 Bar)
fortuitous event and force majuere; they both
refer to causes independent of the will of the A : YES. The action will prosper. Since the
obligor (Tolentino, 2002). defendant was already in default for not having

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 OBLIGATIONS AND CONTRACTS
delivered the ring when delivery was demanded
by plaintiff at due date, the defendant is liable for
the loss of the thing and even when the loss was
due to force majeure.
The defendant who is obliged to deliver incurred
delay from the time the plaintiff extrajudicially
demands the fulfillment of the obligation (NCC,
Art. 1169). The defendant shall be held liable for
the loss of the thing even it was due to fortuitous
event.
Q. AB Corp entered into a contract with XY
Corp for the construction of the research and
laboratory facilities of the XY Corp. XY Corp
paid 50% of the 10M contract price on the
other hand AB agreed to complete the work for
18 months. After 17 months, work was only
45% completed as AB Corp experienced work
slippage due to labor unrest.
(a) Can the labor unrest be considered a
fortuitous event?
(b) Can XY Corp. unilaterally and
immediately cancel the contract?
(c) Must AB Corp. return the 50% down
payment? (2008 Bar)
A:
a.) NO. Labor unrest is not a fortuitous event that
will excuse AB Corp. from complying with its
obligation of constructing the research and
laboratory facilities of XY Corp. The labor unrest,
which may even be attributed in large part to AB
Corp. itself, is not the direct cause of non-
compliance by AB Corp. It is independent of its
obligation. It is similar to the failure of a DBP
borrower to pay her loan just because her
plantation suffered losses due to the cadang-
cadang disease. It does not excuse compliance
with the obligation (DBP v. Vda. De Moll, G.R. No. L-
25802, January 31, 1972). AB Corp. could have
anticipated the labor unrest which was caused by
delays in paying the laborer’s wages. The company
could have hired additional laborers to make up
for the work slowdown.
b.) YES, XY Corp. may unilaterally cancel the
obligation but this is subject to the risk that the
cancellation of the reciprocal obligation being
challenged in court and if AB Corp. succeeds, then
XY Corp. will be declared in default and be liable
for damages.
c.) NO, under the principle of quantum meruit, AB
Corp. had the right to retain payment
corresponding to his percentage of
accomplishment less the amount of damages
335
suffered by XY Corp. because of the delay or
default.
Q: X, a dressmaker, accepted clothing
materials from Karla to make two dresses for
her. On the day X was supposed to deliver
Karla’s dresses, X had an urgent matter to
attend to and told Karla to deliver those the
next day. That night, however, a robber broke
into her shop and took everything including
Karla’s dresses. X claims she is not liable to
deliver Karla’s dresses or to pay for the
clothing materials considering she herself was
a victim of the robbery which was a fortuitous
event and over which she had no control. Do
you agree? Why? (2015 Bar)
A: NO. The law provides that except when it is
otherwise declared by stipulation or when the law
provides or the nature of the obligation requires
the assumption of risk, no person shall be liable
for those events which could not be foreseen or
which though foreseen were inevitable (NCC, Art.
1174).
In this case, X cannot invoke fortuitous event as a
defense because she had already incurred delay at
the time of the occurrence of the loss (NCC, Art.
1165).
REMEDIES
In case of breach of obligation, the following are
the remedies available:
1. Specific performance, or substituted
performance by a third person in case of an
obligation to deliver a generic thing, and in
obligations to do, unless it is a purely personal
act;
2. Rescission (or resolution in reciprocal
obligations);
3. Damages, in any case; or
4. Subsidiary remedies of creditors:
a. Accion subrogatoria
b. Accion pauliana
c. Accion directa
SPECIFIC PERFORMANCE
Remedies in connection with specific
performance
1. Exhaustion of the properties of the debtor
(not exempt from attachment under the law);
2. Accion subrogatoria (subrogatory action) – An
indirect action brought in the name of the
 CIVIL LAW
debtor by the creditor to enforce the former’s
rights except:
a. Personal rights of the debtor;
b. Rights inherent in the person of the
debtor;
c. Properties exempt from execution.
e.g. family home
3. Accion pauliana (rescissory action) – An
action to impugn or assail the acts done or
contracts entered into by the debtor in fraud
of his creditor.
NOTE: Resort to the remedies must be in the
order stated above (NCC, Art. 1177).
Q: Sacramento Steel Corporation (SSC)
executed 5 separate deeds of chattel mortgage
constituted over various equipment for
International Exchange Bank (IEB) which
subsequently, SSC defaulted in the payment of
its obligations. IEB’s demand for payment went
unheeded. Meanwhile, Metropolitan Bank and
Trust Company (Metro Bank) filed a motion
for intervention as a creditor of SSC.which it
contends that the mortgage contracts between
IEB and SSC were entered into to defraud the
latter’s creditors. Thus, it prayed for the
rescission of the chattel mortgaged executed
by SSC in favor of IEB. Will the action to rescind
the mortgage prosper?
A: NO. Jurisprudence is clear that the following
successive measures must be taken by a creditor
before he may bring an action for rescission of an
allegedly fraudulent contract: (1) exhaust the
properties of the debtor through levying by
attachment and execution upon all the property of
the debtor, except such as are exempt by law from
execution; (2) exercise all the rights and actions of
the debtor, save those personal to him (acción
subrogatoria); and (3) seek rescission of the
contracts executed by the debtor in fraud of their
rights (acción pauliana). It is thus apparent that an
action to rescind, or an acción pauliana, must be of
last resort, availed of only after the creditor has
exhausted all the properties of the debtor not
exempt from execution or after all other legal
remedies have been exhausted and have been
proven futile (Metropolitan Bank and Trust
Company v. International Exchange Bank, G.R. No.
176008, August 10, 2011).
Q: Jebson entered into a Joint Venture
Agreement (JVA) with Sps. Salonga which
obligated the former to construct ten (10)
residential units on the latter’s three parcels of
land. Out of the ten (10) units, seven (7) units
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
will belong to Jebson. It was also allowed to
sell its allocated units under such terms as it
may deem fit, subject to the condition that the
price agreed upon was with the conformity of
Sps. Salonga. Thereafter, Jebson entered into a
Contract to Sell with Buenviaje over one of its
units without the conformity of Sps. Salonga.
Buenviaje was able to fully pay for Jebson’s
unit through a swapping arrangement which
allows the vendee to convey certain properties
as consideration for the sale. Despite this full
payment, Jebson was unable to complete said
unit. This prompted Buenviaje to demand the
unit’s immediate completion and delivery.
Jebson having failed to comply with the
demand, Buenviaje filed an action before the
HLURB against Jebson and Sps. Salonga for
specific performance praying for the unit’s
completion and delivery and rescission in the
alternative. Jebson, in its defense, claimed that
they were not able to secure the necessary
permits because Sps. Salonga stubbornly
refused to cause the consolidation and
partition of the parcels of land. Sps. Salonga
averred that they were not liable to the
complainants since there was no privity of
contract between them, adding that the
contracts to sell were unenforceable against
them as they were entered into by Jebson
without their conformity, in violation of the
JVA. HLURB rescinded the Contract to Sell and
held Sps. Salonga Solidarily liable with Jebson.
HLURB-BOC reversed the former ruling and
instead rescinded the swapping arrangement
and maintaining the validity of the Contract to
Sell, thereby granting specific performance
instead. Is the grant of the remedy of specific
performance in Buenviaje's favor proper?
A: Yes. As between the two remedies made
available to him, Buenviaje, had, in fact, chosen the
remedy of specific performance and therefore,
ought to be bound by the choice he had made. To
add, the fundamental rule is that reliefs granted a
litigant are limited to those specifically prayed for
in the complaint. Buenviaje's alternative prayer
for resolution is textually consistent with that
portion of Article 1191 of the Civil Code which
states that an injured party "may also seek
rescission, even after he has chosen fulfillment, if
the latter should become impossible."
Nevertheless, the impossibility of fulfillment was
not sufficiently demonstrated in the proceedings
conducted in this case.
Besides, mutual restitution is the proper
consequence of the remedy of resolution. It cannot
arise - as it is, in fact, theoretically incompatible -
336
 OBLIGATIONS AND CONTRACTS
with the remedy of specific performance, which is
the relief prayed for and consequently, granted to
the injured party herein (Dr. Restituto C. Buenviaje
vs. Spouses Jovito R. & Lydia B. Salonga, GR No.
216023, October 05, 2016).
Q: While the case was pending, Felix donated
his parcels of land in favor of his children.
Judgment was rendered against Felix. Four
years after the said donation, the sheriff
sought to enforce the alias writ of execution
and discovered that Felix no longer had any
property and had conveyed the subject
properties to his children. Thus, Philam filed
an accion pauliana for rescission of the
donations. Felix countered that an action for
rescission of the donation had already
prescribed since the time of prescription has
to run from the date of registration. Has the
action filed by Philam prescribed?
A: NO. Philam only learned about the unlawful
conveyances made by Felix more than four years
after the donations were effected, when its
counsel accompanied the sheriff to Butuan City to
attach the properties. There they found that he no
longer had any properties in his name. It was only
then that Philam's action for rescission of the
deeds of donation accrued because then it could
be said that Philam had exhausted all legal means
to satisfy the trial court's judgment in its favor.
Since Philam filed its complaint for accion
pauliana against petitioners barely a month from
its discovery that Felix had no other property to
satisfy the judgment award against him, its action
for rescission of the subject deeds clearly had not
yet prescribed (Khe Hong Cheng v. CA, G.R. No.
144169, March 28, 2001).
- and defendant is not;
NOTE: The debtor is liable with all his property,
present and future, for the fulfillment of his
obligations, subject to the exemptions provided by
law (De Leon, 2003).
Substitute performance
It is a remedy of the creditor in case of non-
performance by the debtor where another party
performs the obligation or the same is performed
at the expense of the debtor.
Applicability of substitute performance
1. Positive personal obligation:
a. If not purely personal – Substitute
performance; the obligation shall be
executed at debtor’s cost if he fails to do it
(NCC, Art. 1167).
337
b. Purely personal – No substitute
performance may be demanded because
of the personal qualifications taken into
consideration. The only remedy is
damages.
2. Real obligation:
a. Generic thing – Substitute performance;
delivery may be made by a person other
than the debtor since the object is merely
designated by its class or genus. The
creditor may ask that the obligation be
complied with at the expense of the
debtor (NCC, Art. 1165).
b. Specific thing – Specific performance may
be demanded, that is, the creditor may
compel the debtor to make the delivery.
RESCISSION (RESOLUTION) (NCC, ART. 1191)
It refers to the cancellation of the contract or
reciprocal obligation in case of breach on the part
of one, which breach is violative of the reciprocity
between the parties. This is properly called
resolution. (2005, 2008 Bar)
NOTE: The rescission under Art. 1380 is
rescission based on lesion or fraud upon creditors.
Applicability
Rescission or resolution is applicable in reciprocal
obligations, since it is implied therein.
Characteristics of the right to rescind
1. Can be demanded only if plaintiff is ready,
willing and able to comply with his own obligation
2. Not absolute;
3. Needs judicial approval in the absence of a
stipulation allowing for extra-judicial
rescission, in cases of non-reciprocal
obligations;
4. Subject to judicial review if availed of extra-
judicially;
5. May be waived expressly or impliedly; and
6. Implied to exist in reciprocal obligations
therefore need not be expressly stipulated
upon.
Fulfillment or rescission of the obligation
GR: The injured party can only choose either
fulfillment or rescission of the obligation, and not
both.
 CIVIL LAW
XPN: If fulfillment has become impossible, Art.
1191 allows the injured party to seek rescission
even after he has chosen fulfillment (Ayson-Simon
v. Adamos and Feria, G.R. No. L-39378, August 28,
1984).
Q: Pikian Mining Company (PMI) entered into
an Operating Agreement (OA) with Golden
Valley Exploration, Inc. (GVEI), granting the
latter "full, exclusive and irrevocable
possession, use, occupancy, and control over
the mining claims and the processing and
marketing of the products for a period of 25
years.” Later, PMC extra-judicially rescinded
the OA upon GVEI’s violation of Section 5.01,
Article V thereof. GVEI contested PMC’s extra-
judicial rescission of the OA averring therein
that its obligation to pay royalties to PMC
arises only when the mining claims are placed
in commercial production which condition has
not yet taken place. PMC no longer responded
to GVEI’s letter. Is the rescission of the
Operating Agreement valid?
A: Yes. The rescission is valid. As a general rule,
the power to rescind an obligation must be
invoked judicially and cannot be exercised solely
on a party’s own judgment that the other has
committed a breach of the obligation. This is so
because rescission of a contract will not be
permitted for a slight or casual breach, but only
for such substantial and fundamental violations as
would defeat the very object of the parties in
making the agreement. As a well-established
exception, however, an injured party need not
resort to court action in order to rescind a
contract when the contract itself provides that it
may be revoked or cancelled upon violation of its
terms and conditions. PMC’s unilateral rescission
of the Operating Agreement (OA) due to GVEI’s
non-payment of royalties considering the parties’
express stipulation in the OA that said agreement
may be cancelled on such ground. (Golden Valley
Exploration, Inc. v. Pinkian Mining Company, G.R.
No. 190080, June 11, 2014)
Q: Vermen and Seneca entered into an
"offsetting agreement", where Seneca is
obliged to deliver construction materials to
Vermen, who is obliged to pay Seneca and to
deliver possession of 2 condominium units to
Seneca upon its completion. Seneca filed a
complaint for rescission of the offsetting
against Vermen alleging that the latter had
stopped issuing purchase orders of
construction materials without valid reason,
thus resulting in the stoppage of deliveries of
construction materials on its part, in violation
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
of the Offsetting Agreement. Can the
agreement be rescinded?
A: YES, because the provisions of the offsetting
agreement are reciprocal in nature. Art. 1191 of
the Civil Code provides the remedy of rescission
(more appropriately, the term is "resolution") in
case of reciprocal obligations, where one of the
obligors fails to comply with that is incumbent
upon him (Vermen Realty Development Corp. v. CA
and Seneca Hardware Co., Inc., G.R. No. 101762, July
6, 1993).
Q: Ong and spouses Robles executed an
"agreement of purchase and sale" of two
parcels of land. Ong partially paid the spouses
by depositing sums of money with the BPI in
accordance with their stipulation that Ong pay
the loan of the spouse with BPI. To answer for
Ong’s balance, he issued 4 post-dated checks
which were dishonored. Ong failed to replace
the checks and to pay the loan in full. Can the
contract entered into by Ong and the spouses
be rescinded?
A: NO. The agreement of the parties in this case
may be set aside, but not because of a breach on
the part of Ong for failure to complete payment of
the purchase price. Rather, his failure to do so
brought about a situation which prevented the
obligation of the spouses to convey title from
acquiring an obligatory force.
The agreement of purchase and sale shows that it
is in the nature of a contract to sell. Ong’s failure
to complete payment of the purchase price is a
non-fulfillment of the condition of full payment
which rendered the contract to sell ineffective and
without force and effect. The breach contemplated
in Art. 1191 is the obligor’s failure to comply with
an obligation. In this case, Ong’s failure to pay is
not even a breach but merely an event which
prevents the vendor’s obligation to convey title
from acquiring binding force. (Jaime G. Ong vs. The
Honorable Court Of Appeals, Spouses Miguel K.
Robles And Alejandro M. Robles, G.R. No. 97347, July
6, 1999).
Q: Petitioners and respondents entered into a
Contract to Sell (subject contract) over the
subject land. The subject contract
provides, inter alia, that: (a) the consideration
for the sale is P33,155,000.00 payable as
follows: down payment in the amount of
P11,604,250.00 inclusive of the amount of
P2,000,000.00 previously paid by respondents
as earnest money/reservation fee, and the
remaining balance of P21,550,750.00 payable
338
 OBLIGATIONS AND CONTRACTS
in 36 monthly installments, each in the amount
of P598,632.00 through post-dated checks; (b)
in case any of the checks is dishonored, the
amounts already paid shall be forfeited in
petitioners' favor, and the latter shall be
entitled to cancel the subject contract without
judicial recourse in addition to other
appropriate legal action; (c) respondents are
not entitled to possess the subject land until
full payment of the purchase price; (d)
petitioners shall transfer the title over the
subject land from a certain Edilberta N. Santos
to petitioners' names, and, should they fail to
do so, respondents may cause the said transfer
and charge the costs incurred against the
monthly amortizations; and (e) upon full
payment of the purchase price, petitioners
shall transfer title over the subject land to
respondents. However, respondents sent
petitioners a letter seeking to rescind the
subject contract on the ground of financial
difficulties. They also sought the return of the
amount they had paid.. As their letter went
unheeded, respondents filed complaint for
rescission. Petitioners countered that
respondents' act is a unilateral cancellation of
the subject contract as the former did not
consent to it. Moreover, the ground of financial
difficulties is not a ground to effect a valid
rescission. The RTC ruled in favor of
respondents and, accordingly, ordered the
rescission of the subject contract; and the
return of the amounts already paid as well as
the remaining post-dated checks issued by
respondent representing the remaining
monthly amortizations. The CA affirmed. Is the
CA correct?
A: No. It cannot be said that petitioners' failure to
undertake their obligation under paragraph 7 (to
cause the transfer of the property to their names
from one Edilberta N. Santos within 90 days from
the execution of said contract) defeats the object
of the parties in entering into the subject contract,
considering that the same paragraph provides
respondents contractual recourse in the event of
petitioners' non-performance of the aforesaid
obligation, that is, to cause such transfer
themselves in behalf and at the expense of
petitioners. Indubitably, there is no substantial
breach of paragraph 7 on the part of petitioners
that would necessitate a rescission (or resolution)
of the subject contract.
The foregoing notwithstanding, the Court cannot
grant petitioners' prayer to order the cancellation
of the subject contract and the forfeiture of the
amounts already paid by respondents on account
339
of the latter's failure to pay its monthly
amortizations, simply because petitioners neither
prayed for this specific relief nor argued that they
were entitled to the same. Worse, petitioners were
declared "as in default" for failure to file the
required pre-trial brief and, thus, failed to present
any evidence in support of their defense (Rogelio
S. Nolasco v. Celerino S. Cuerpo, GR No. 210215,
December 9, 2015).
NOTE: In a contract to sell, the payment of the
purchase price is a positive suspensive condition,
the failure of which is not a breach, casual or
serious, but a situation that prevents the
obligation of the vendor to convey title from
acquiring an obligatory force (Ong v. CA, G.R. No.
97347, July 6, 1999).
Q: Can a contract be rescinded extra-judicially
despite the absence of a special contractual
obligation therefore?
A: YES. An extrajudicial rescission based on
grounds not specified in the contract would not
preclude a party to treat the same as rescinded.
The rescinding party, however, by such course of
action, subjects himself to the risk of being held
liable for damages when the extrajudicial
rescission is questioned by the opposing party in
court. In other words, the party who deems the
contract violated may consider it resolved or
rescinded, and accordingly, without previous
court action, but it proceeds at its own risk. For it
is only the final judgment of the corresponding
court that will conclusively and finally settle
whether the action taken was or was not correct
in law (Nissan Car Lease Phils, Inc., v. LICA
Management and Proton Pilipinas, Inc., G.R. No.
176986, January 13, 2016).
DAMAGES
Liability for damages
Those liable under Art. 1170 shall pay damages
only if aside from the breach of contract, prejudice
or damage was caused (Berg v. Teus, G.R. No. L-
6450, October 30, 1954).
NOTE: If action is brought for specific
performance, damages sought must be asked in
the same action; otherwise the damages are
deemed waived (Daywalt v. La Corporacion, G.R.
No. L-13505, February 4, 1919).
Kinds of damages (MENTAL)
3. Moral;
 CIVIL LAW
4. Exemplary; An action where the creditor files in court for the
5. Nominal; rescission of acts or contracts entered into by the
6. Temperate; debtor designed to defraud the former (NCC, Art.
7. Actual; 1177).
8. Liquidated.
NOTE: When the creditor could not collect in any
SUBSIDIARY REMEDIES manner, accion pauliana may be resorted by him
to rescind a fraudulent alienation of property
ACCION SUBROGATORIA (Regalado, v. Luchsinger and Co., 5 Phil 625, GR L-
2250, February 17, 1906).
An action whereby the creditor, whose claim has
not been fully satisfied, may go after the defendant Requisites (PAPIL)
debtor’s debtor (third person) (NCC, Art. 1177).
1. Defendant must be Indebted to plaintiff;
Accion subrogatoria is different and distinct from 2. The fraudulent act performed by the debtor
active subjective subrogation governed by Articles subsequent to the contract gives Advantage to
1300 to 1304. In the latter, there is change of another;
creditors whereas in the former there is no change 3. The creditor is Prejudiced by such act;
of creditors; the creditor merely acts in the name 4. The creditor must have Pursued all properties
and for the account of the debtor after exhausting of the debtor subject to execution; and
the assets of the latter but not enough to satisfy 5. The creditor has no other Legal remedy.
the claims of the creditor.
e.g. Alienations of property, payment of debts
Requisites (IPIN) which are not due, renunciation of rights such as
the right of usufruct or an inheritance, assignment
1. The debtor’s assets must be Insufficient to of credit, and remission of debts.
satisfy claims against him;
2. The creditor must have Pursued all properties ACCION DIRECTA
of the debtor subject to execution;
3. The right of action must Not be purely Accion directa
personal; and
4. The debtor whose right of action is exercised The right of a person to go directly against
must be Indebted to the creditor. another who is not a privy to the contract (NCC,
Articles 1652, 1608, 1729 and 1893).
Effects of subrogatory action
NOTE:
1. The creditor may exercise the subrogatory 1. Subsidiary liability of sublessee for the rent
action in behalf of the debtor not only up to (NCC, Art. 1652);
the amount of his credit but in its totality. 2. Right of sellers a retro to redeem property
from persons other than the buyer a retro
NOTE: The excess (if any) must be returned to (NCC, Art. 1608);
the debtor. 3. Subsidiary liability of owners to laborers and
material men (NCC, Art. 1729); and
2. The bringing of action does not entitle the 4. The principal may sue the substitute of the
creditor to preference. agent with respect to the obligations which
the substitute has contracted under the
3. The defendant (the debtor of the debtor) may substitution (NCC, Art. 1893).
avail himself of all defenses available against
the creditor.
KINDS OF CIVIL OBLIGATIONS
NOTE: In order to exercise action subrogatoria, a
previous approval of the court is not necessary
(Tolentino, 1991). PURE AND CONDITIONAL OBLIGATION
ACCION PAULIANA Pure obligation
Accion pauliana An obligation whose performance does not
depend upon a future or uncertain event, or upon

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2019 GOLDEN NOTES 340
 OBLIGATIONS AND CONTRACTS
a past event or upon a past event unknown to the
parties, demandable at once (NCC, Art. 1179).
NOTE: Other obligations which are demandable at
once are:
1. Obligations with a resolutory condition; and
2. Obligations with a resolutory term or period
[NCC, Arts. 1179 (2) and 1193 (2)].
The most distinctive characteristic of a pure
obligation is its immediate demandability. This
quality, however, must not be understood in such
a way as to lead to absurd interpretations which
would literally require the obligor or debtor to
comply immediately with his obligation. A
distinction must be made between:
1. The immediate demandability of the
obligation; and
2. Its performance or fulfillment by the obligor
or debtor. Although the obligee or creditor
can demand the performance of the obligation
immediately, the quality of immediate
demandability is not infringed or violated
when a reasonable period is granted for
performance (Jurado, 2009).
Conditional obligation
An obligation subject to a condition and the
effectivity of which is subordinated to the
fulfillment or non-fulfillment of a future and
uncertain event, or upon a past event unknown to
the parties (Pineda, 2000).
Condition
A condition is an event which is future and
uncertain, upon which the efficacy or
extinguishment of an obligation depends.
Constructive fulfillment of a condition
The condition shall be deemed fulfilled when the
obligor voluntarily prevents its fulfillment (NCC,
Art. 1186).
Q: Ramon, the judicial administrator of the
estate of Juan, found out that Rodriguez had
enlarged the area of the land which he
purchased from Juan before his death. Thus,
Ramon demanded Rodriguez to vacate the
portion allegedly encroached by him.
Rodriguez refused and contested there was
indeed a conditional sale with the balance of
the purchase price payable within five years
from the execution of the deed of sale. Ramon
then filed an action for recovery of possession
of the disputed lot. Is the contract of sale a
conditional one?
A: NO. The stipulation that the "payment of the
full consideration based on a survey shall be due
and payable in five years from the execution of a
formal deed of sale" is not a condition which
affects the efficacy of the contract of sale. It merely
provides the manner by which the full
consideration is to be computed and the time
within which the same is to be paid. But it does
not affect in any manner the effectivity of the
contract (Heirs of San Andres v. Rodriguez, G.R. No.
135634, May 31, 2000).
Period v. Condition
BASIS PERIOD CONDITION
Refers to the May refer to
future. past event
As to time
unknown to
the parties.

It has two requisites: first, futurity; and second, It will happen at May or may
uncertainty. an exact date or not happen.
As to at an indefinite
Uncertain but past event as a condition fulfillment time but is
definite to
An uncertain but past event itself can never arrive.
constitute a condition because in order to be
Futurity and Futurity and
classified as a condition, the requisites of futurity
and uncertainty are required. Neither can it Characteristic certainty. uncertainty.
constitute a term or period because in order to be
classified as a term or period, the requisites of
futurity and certainty are required. But the proof No effect upon May give rise
or ascertainment of the fact or event, as the existence of to an
The effect of its
distinguished from the fact or event itself may the obligation obligation
happening to
either constitute a condition or a term depending but only in its (suspensive)
the obligation
upon the circumstances of each case (Jurado, demandability. or the
2009). cessation of

341
 CIVIL LAW
one already condition unless contrary to the intention
existing of the parties (NCC, Art. 1187).
(resolutory).
2. Personal obligations – the court determines
the retroactive effect of the condition fulfilled
(NCC, Art. 1187).

Valid. But the Annulled Rights of the parties before the fulfillment of
If fulfillment is the condition
court is
dependent
empowered to
upon the sole
fix the duration 1. Creditor – May bring the appropriate actions
will of the for the preservation of his right (NCC, Art.
of the period.
debtor
1188), such as:

No The moment a. Action for prohibition/restraining the

retroactivity. the condition alienation of the thing pending the
is fulfilled, the happening of the suspensive condition;
effects will b. Petition for the annotation of the
Retroactivity retroact on creditor’s right with the proper registry;
the day of the c. Action to demand security if the debtor
constitution has become insolvent;
of the d. Action to set aside alienations made by
obligation. the debtor in fraud of creditors; or
e. Action against adverse possessors to
Suspensive condition interrupt the running of prescriptive
period.
A condition the fulfillment of which will give rise
to the acquisition of a right. While the condition 2. Debtor – May recover what, during the same
has not arrived yet, in the meantime, the rights time, he has paid by mistake in case of a
and obligations of the parties are suspended. suspensive condition (NCC, Art. 1188).

NOTE: In suspensive condition or condition Effect of loss, deterioration and improvement

precedent, the efficacy or the obligatory force is in an obligation to deliver a determinate thing
subordinated to the happening of a “future and subject to a suspensive condition
uncertain event”; if the suspensive condition does
not take place, the parties would stand as if the WITH WITHOUT
conditional obligation never existed (Gaite v. BASIS DEBTOR’S DEBTOR’S
Fonacier, GR L-11827, July 31, 1961; Cheng v. FAULT FAULT
Genato, 300 SCRA 722, GR 129760, December 29,
1998; Pineda, 2000). Obligation is Obligation
not extinguished.
Effects of fulfillment of the suspensive extinguished.
Loss
condition (1999 Bar)
Debtor pays
1. Real obligations damages.
GR: Retroacts to the day of the constitution of
the obligation. Creditor may Impairment
choose borne by
XPNs: There is no retroactive effect with between creditor.
respect to the fruits and interest: rescission of
obligation or
Deterioration
4. In reciprocal obligations, the fruits and fulfillment
interests shall be deemed to have been (with
mutually compensated; and indemnity for
5. In unilateral obligations, the debtor damages in
appropriates the fruits and interest either case).
received before the fulfillment of the

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2019 GOLDEN NOTES 342
 OBLIGATIONS AND CONTRACTS
3. By the thing’s nature or
through time – Inure to the
benefit of the creditor;
Improvement 4. At the debtor’s expense –
Debtor shall have no right
other than that granted to a
usufructuary.
NOTE: The abovementioned do not apply to
indeterminate or generic things on the basis of the
maxim “genus nun quam peruit” (genus never
perishes). It will only apply when the object or
thing to be given is specific or determinate.
b. The parties shall return to each other
what they have received (mutual
restitution);
c. Obligation is extinguished;
d. In case of loss, deterioration or
improvement of the thing, NCC, Art. 1189,
with respect to the debtor, shall be
applied to the party who is bound to
return (NCC, Art. 1190).
2. Personal obligations – The courts shall
determine, in each case, the retroactive effect
of the condition that has been complied with.
(NCC, Art. 1187; NCC, Art. 1190).

Requisites for the application of Art. 1189 Suspensive conditionv. Resolutory condition
(SuRF LIDS)

1. Must be a Real obligation; SUSPENSIVE RESOLUTORY

BASIS
2. Object of the obligation is a Specific thing; CONDITION CONDITION
3. Obligation is subject to a Suspensive Obligation Obligation is
condition. Effect of arises or extinguished.
4. The condition is Fulfilled; and fulfilment becomes
5. There is Loss, Deterioration or Improvement effective.
of the thing during the pendency of the
happening of the condition. If not fulfilled, If not fulfilled,
Effect of non- no juridical juridical
NOTE: The same conditions apply to an obligor in fulfillment relation is relation is
obligations subject to a resolutory condition. In created. consolidated.
such cases, the third requisite must read, “subject
to a resolutory condition.” Rights are not Rights are
yet acquired, already vested,
Positive suspensive condition but there is but subject to
When rights hope or the threat or
A condition which requires a positive act on the are acquired expectancy danger of
part of the obligor that gives rise to the acquisition that they will extinction.
of rights. soon be
acquired.
A contract to sell, the obligation to deliver the
subject properties becomes demandable only Q: The late Don Lopez, Sr., who was then a
upon the happening of the positive suspensive member of the Board of Trustees of CPU,
condition (payment of full purchase price). executed a deed of donation in favor of the
Without full payment, there can be no breach of latter involving a parcel of land subject to the
contract to speak of because the seller has no condition that it shall be utilized for the
obligation yet to turn over the title (Reyes v. establishment and use of a medical college.
Tuparan, G.R. No. 188064, June 1, 2011). However, the heirs of Don Lopez, Sr., filed an
action for annulment of the donation,
Resolutory condition (1999 Bar) reconveyance and damages against CPU
alleging that CPU did not comply with the
A condition where the rights already acquired are conditions of the donation. Are the conditions
lost upon fulfillment of the condition. It is also imposed resolutory or suspensive?
known as condition subsequent.
A: Under Art. 1181 of the CC, on conditional
Effects of fulfillment of resolutory condition obligations, the acquisition of rights, as well as the
extinguishment or loss of those already acquired,
1. Real obligations: shall depend upon the happening of the event
which constitutes the condition. Thus, when a
person donates land to another on the condition

343
 CIVIL LAW
that the latter would build upon the land a school,
the condition imposed was not a condition
precedent or a suspensive condition but
resolutory. It is not correct to say that the school
house (or the establishment and use of a medical
college in this case) had to be constructed before
the donation became effective, that is, before the
donee could become the owner of the land,
otherwise, it would be invading the property
rights of the donor. The donation had to be valid
before the fulfillment of the condition. If there was
no fulfillment or compliance with the condition,
the donation may now be revoked and all rights
which the donee may have acquired under it shall
be deemed lost and extinguished (Central
Philippine University v. CA, G.R. No. 112127, July 17,
1995).
Negative resolutory condition
An act, which if not done, would give rise to a
cause of action against the obligor. It contemplates
a situation where rights are already acquired but
subject to an obligation, the non-fulfillment of
which does not affect the rights already acquired
but merely gives a cause of action in favor of the
other party. In a contract of sale, the buyer’s non-
payment of the price is a negative resolutory
condition. In such case, the seller has lost and
cannot recover the ownership of the property
unless he takes action to set aside the contract of
sale (Heirs of Atienza v. Espidol, G.R. No. 180665,
August 11, 2010).
Potestative Condition (1997, 2000, 2003 Bar)
A condition which depends upon the will of one of
the contracting parties (NCC, Art. 1182).
Effects of potestative conditions upon the
obligation
If the condition is potestative in the sense that its
fulfillment depends exclusively upon the will of
the debtor, and the same is suspensive, both the
condition and obligation are VOID.
However, if the condition is a pre-existing one or
the condition is resolutory, only the condition is
void, leaving the obligation itself valid because
what is left to the sole will of the debtor is not the
existence or the fulfillment of the obligation but
merely its extinguishment.
If the condition is potestative in the sense that its
fulfillment depends exclusively upon the will of
the creditor, the obligation shall be valid. This is so
because the provision of the first sentence of Art.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
1182 extends only to conditions which are
potestative to the obligor or debtor. Besides, the
creditor is naturally interested in the fulfillment of
the condition since it is only by such fulfillment
that the obligation arises or becomes effective
(Jurado, 2009 citing NCC, Art. 1181 and Manresa).
Causal condition
It is the performance or the fulfillment of the
condition which depends upon chance and/or the
will of a third person.
Mixed condition
It is the performance or fulfillment of the
condition which depends partly upon the will of a
party to the obligation and partly upon chance
and/or the will of a third person.
NOTE: Casual and mixed conditions are valid,
unlike purely potestative conditions.
Q: Suppose that the debtor executed a
promissory note promising to pay his
obligation to the creditor as soon as he has
received funds derived from the sale of his
property in a certain place, is the condition
potestative or mixed?
A: In the case of Hermosa v. Longara (93 Phil. 971,
G.R. L-5267, October 27, 1953), the condition is
mixed because its fulfillment depends not only
upon the will of the debtor but also upon the
concurrence of other factors, such as the
acceptability of the price and other conditions of
the sale, as well as the presence of a buyer, ready,
able, and willing to purchase the property.
Impossible conditions (1997, 2007 Bar)
GR: Impossible conditions annul the obligation
which depends upon the parties but not of a third
person.
XPNs:
1. Pre-existing obligation;
2. Obligation is divisible;
3. In simple or remuneratory donations;
4. In case of conditions not to do an impossible
thing; and
5. In testamentary dispositions.
NOTE: In the foregoing, the obligations remain
valid, only the condition is void and deemed to
have not been imposed. It is applicable only to
obligations not to do and gratuitous obligations.
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 OBLIGATIONS AND CONTRACTS
Other types of conditions
1. Positive – It involves the doing of an act;
2. Negative –It involves the omission of an act;
3. Divisible – It is susceptible of partial
performance;
4. Indivisible – It is not susceptible of partial
performance;
5. Conjunctive – There are several conditions in
an obligation all of which must be performed;
6. Alternative – There are several conditions in
an obligation but only one must be
performed;
7. Possible – It is capable of fulfillment according
to the nature, law, public policy or good
customs; and
8. Impossible – It is not capable of fulfillment
according to nature, law, public policy or good
customs (NCC, Art. 1183).
OBLIGATIONS WITH A PERIOD
Obligation with a period or a term
Obligations for whose fulfillment a day certain has
been fixed, shall be demandable only when that
day comes (NCC, Art. 1193).
Term or period
A certain length of time which determines the
effectivity or the extinguishment of the
obligations.
Requisites of a valid period or term
1. Future;
2. Certain; and
3. Possible, legally, and physically (Paras, 2008).
“Day certain”
It is understood to be that which must necessarily
come, although it may not be known when.
Kinds of terms or periods
1. Ex die – This is a term or period with
suspensive effect. The obligation begins only
from a day certain, in other words upon the
arrival of the period.
2. In diem – A period or term with a resolutory
effect. Up to a certain extent, the obligation
remains valid, but upon the arrival of said
period, the obligation terminates.
3. Legal – A period granted under the provisions
of the law.
345
4. Conventional or voluntary – The period agreed
upon or stipulated by the parties.
5. Judicial – The period or term fixed by the
courts for the performance of an obligation or
for its termination.
6. Definite – The exact date or time is known and
given.
7. Indefinite – It is something that will surely
happen but the date of happening is unknown.
e.g. “I will pay when my means permit me to
do so.”
When the debtor binds himself to pay when his
means permit him to do so, the obligation is
deemed with a period (NCC, Art. 1180). This is
valid because it is not the payment itself that is
dependent upon the will of the debtor, but the
moment of payment.
As the time of payment is not fixed, the court must
fix the same before any action for collection may
be entertained, unless, the prior action of fixing the
term or period will only be a formality and will
serve no purpose but delay (Tiglao v. Manila
Railroad Co., 98 Phil. 181, GR. L-7900, January 12,
1956).
Benefit of the period
GR: Whenever in an obligation a period is
designated, it is presumed to have been
established for the benefit of both the creditor and
the debtor
XPN: When it appears from the tenor of the period
or other circumstances that it was established for
the benefit of one of the parties (NCC, Art.1196).
Effect of the term or period
2. When it is for the benefit of the creditor –
Creditor may demand the performance of
the obligation at any time but the debtor
cannot compel him to accept payment
before the expiration of the period.
e.g. “on demand”
3. When it is for the benefit of the debtor –
Debtor may oppose any premature demand
on the part of the creditor for performance
of the obligation, or if he so desires, he may
renounce the benefit of the period by
performing his obligation in advance.
Effect of a fortuitous event to an obligation
with a period
 CIVIL LAW
It only relieves the contracting parties from the prestations due or to deliver a thing as a
fulfillment of their respective obligation during substitute for the principal.
the term or period.
Conjunctive obligation
Instances where the court may fix the period
(1991, 1997, 2003 Bar) An obligation where the debtor has to perform
several prestations; it is extinguished only by the
1. If the obligation does not fix a period, but performance of all of them.
from its nature and circumstances it can be
inferred that a period was intended by the
parties;
2. If the duration of the period depends upon the
will of the debtor (1997, 2003 Bar);
3. In case of reciprocal obligations, when there is
a just cause for fixing the period; or
4. If the debtor binds himself when his means
permit him to do so.

NOTE: Once fixed by the courts, the period cannot

be changed by the parties (NCC, Art. 1197).

Instances where the debtor loses his right to

make use of the period

1. When after the obligation has been contracted

he becomes insolvent, unless he gives a
guaranty or security for the debt;
2. When he does not furnish to the creditor the
guaranties or securities which he has
promised;
3. When by his own acts he has impaired said
guaranties or securities after their
establishment;
4. When through a fortuitous event they
disappear, unless he immediately gives new
ones or equally satisfactory;
5. When the debtor violates any undertaking, in
consideration of which the creditor agreed to
the period; and
6. When the debtor attempts to abscond (NCC,
Art. 1198).

ALTERNATIVE, FACULTATIVE, CONJUNCTIVE

OBLIGATIONS

Alternative obligation

It is an obligation where the debtor is alternatively

bound by different prestations but the complete
performance of one is sufficient to extinguish the
obligation.

Facultative obligation

It is an obligation where the debtor, who has a

reserved right to choose another prestation or
thing, is bound to perform one of the several

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 OBLIGATIONS AND CONTRACTS
Facultative obligations v. Alternative obligations

BASIS FACULTATIVE OBLIGATIONS ALTERNATIVE OBLIGATIONS

Number of prestation Only one object is due. Several objects are due.

May be complied with by substitution of May be complied with by fulfilling any

Manner of compliance
one that is due. of those alternately due.

Choice pertains only to debtor. GR: Choice pertain to debtor.

Right to choose
XPN: Expressly granted to creditor or
third person.

Fortuitous loss extinguishes the Fortuitous loss of all prestations will

Effect of fortuitous loss
obligation. extinguish the obligation.

Culpable loss obliges the debtor to Culpable loss of any object due will give
Effect of culpable loss deliver a substitute prestation without rise to liability to the debtor.
liability to the debtor.

When substitution has been made and
communicated to the creditor, the
obligor is liable for the loss of the thing
Liability of the debtor on account of delay, negligence, or fraud.
The creditor shall have the right of
indemnity for damages when, through
the fault of the debtor only, all things
which are alternatively the object of the
obligation have been lost, or the
compliance of the obligation has
become impossible.

If the principal obligation is void, the If one prestation is void, the others that
Void prestation creditor cannot compel delivery of the are free from any vices of consent
substitute. preserve the validity of the obligation.

If there is impossibility to perform or to If some prestations are impossible to

deliver the principal thing or prestation, perform or to deliver except for one -
Impossibility of the obligation is extinguished, even if the this one must be delivered.
prestation substitute obligation is valid.
If all prestations are impossible to
perform, the obligation is extinguished.
Loss of the substitute before the When the choice is given to the creditor,
substitution is made through the fault of the loss of the alternative through the
Loss of substitute
the debtor doesn’t make him liable. fault of the debtor renders him liable
for damages.

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 CIVIL LAW
Right to choose prestation in an alternative When choice the choice is rendered impossible
obligation through the creditor’s fault, the debtor may bring
an action to rescind the contract with damages
GR: The right of choice belongs to the debtor. (NCC, Art. 1203).

XPN: Unless it has been expressly given to the Plurality of parties

creditor (NCC, Art. 1200).
When there are various debtors or creditors and
Limitations on debtor’s right to choose the obligation is joint, the consent of all is
necessary to make the selection effective, because
1. The debtor must absolutely perform the chosen none of them can extinguish the entire obligation.
prestation. He cannot compel the creditor to
receive part of one and part of the other If the obligation is solidary and there is no
undertaking; stipulation to the contrary, the choice by one will
2. The debtor shall have no right to choose those binding personally upon him, the choice of one
prestations which are impossible, unlawful, or will be personally binding to him, but not as to the
which could not have been the object of the others. Thus, if A and B solidarily bind themselves
obligation (NCC, Art. 1200); to deliver a horse or a carabao to C, the selection
3. The debtor shall lose the right of choice when of A of the horse, when communicated to C, will
among the prestation whereby he is bind him and he cannot later on deliver the
alternatively bound, only one is practicable carabao. It is, however, not binding on B, who may
(NCC, Art. 1202); extinguish the obligation by delivering the
4. The selection made by the debtor (or the carabao (Tolentino, 2002).
creditor when it has been expressly granted
to him) cannot be subjected by him to a Effects of loss of objects in alternative
condition or a term unless the creditor (or obligations
debtor in case the choice is with the creditor)
consents thereto (Tolentino, 2002). DUE TO
DUE TO DEBTOR’S
FORTUITOUS
Effectivity of the choice in alternative FAULT
EVENT
obligations
Choice Belongs to Debtor
The choice made takes effect only upon its
communication to the other party, and from such Debtor released Creditor shall have
time, the obligation ceases to be alternative. (NCC, Debtor is a right to be
Art. 1201; NCC, Art. 1205). released from the indemnified for
obligation. damages based on
All are
NOTE: The notice of selection or choice may be in the value of the last
lost
any form provided it is sufficient to make the thing which
other party know that the election has been made disappeared or last
(Tolentino,2002). service which
became impossible.
When alternative obligation becomes a simple
Debtor shall Debtor shall deliver
obligation
deliver that that which he shall
Some which he shall choose from among
1. When the debtor has communicated the
but not choose from the remainder
choice to the creditor;
all are among the without damages.
2. When debtor loses the right of choice among
lost remainder.
the prestations whereby the debtor is
alternatively bound, only one is practicable
(NCC, Art. 1202).
Only Deliver that which remains.
NOTE: The choice made by the debtor does not one
require the concurrence of the creditor. remains
Otherwise, it would destroy the very nature of the
right to select given to the debtor. Choice Belongs to Creditor

Impossibility of choice due to creditor’s acts

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 OBLIGATIONS AND CONTRACTS
Debtor is Creditor may claim Presumed by Not presumed.
released from the the price or value of law. Must be
All are
obligation. any of them with (NCC, Art. 1208). expressly
lost
indemnity for stipulated by
damages. the parties, or
Presumption
when the law or
Creditor may Creditor may claim by law
the nature of
choose from any of those the obligation
among the subsisting OR he requires
Some remainder or may choose any of solidarity (NCC,
but not that which those which were Art. 1207).
all are remains if only lost, but it is the
lost one subsists. price or value of Proportionate Obliged to pay
Liability of
with right to part of the the entire
each debtor
damages that can entire debt. obligation.
be claimed.
Each creditor, if Each creditor
Only Deliver that which remains. In case of there are has the right to
one fault of debtor, creditor has a right to several, is demand from
Right of the
remains indemnity for damages. entitled only to any of the
creditor to
a proportionate debtors, the
the
JOINT AND SOLIDARY OBLIGATIONS part of the payment or
fulfillment
(1992, 2001, 2008 BAR) credit. fulfillment of
of the
the entire
obligation
Joint obligations obligation
(Tolentino,
One where the credit or debt shall be presumed to 1999).
be divided into as many equal shares as there are
creditors or debtors, the credits or debts being Character of an obligation
considered distinct from one another (NCC, Art.
1208). Each debtor is liable only for a GR: When two or more creditors or two or more
proportionate part of the debt and each creditor debtors concur in one and the same obligation, the
to his proportionate share to the credit. presumption is that the obligation is joint.

Other terms for joint obligations are: (a) joint XPNs: The obligation shall only be solidary when:
simply; (b) mancomunada; or (c) pro rata. (LEN-CJ)

Solidary obligations 1. Law requires solidarity;

2. Expressly stipulated that there is solidarity;
It is where each of the debtors obliges to pay the 3. Nature of the obligation requires solidarity;
entire obligation, while each one of the creditors e.g. Civil liability arising from crime.
has the right to demand from any of the debtors, 4. Charge or condition is imposed upon heirs or
the payment or fulfillment of the entire obligation legatees and the will expressly makes the
(NCC, Art. 1207; Pineda, 2000). charge or condition in solidum (Manresa); or
5. Solidary responsibility is imputed by a final
Other terms for solidary obligations are: Judgment upon several defendants (Gutierrez
(a) Joint solidarily; v. Gutierrez, 56 Phil 177, GR 34840, September
(b) Jointly and severally; or 23, 1931).
(c) In solidum.
Q: Chua bought and imported to the
Joint obligation v. Solidary obligation Philippines dicalcium phosphate. When the
cargo arrived at the Port of Manila, it was
JOINT SOLIDARY discovered that some were in apparent bad
OBLIGATION OBLIGATION condition. Thus, Chua filed with Smith Bell,
and Co., Inc. (claiming agent of First Insurance
Co.), a formal statement of claim for the loss.
No settlement of the claim having been made,
Chua then filed an action. Is Smith, Bell, and

349
 CIVIL LAW
Co., solidarily liable upon a marine insurance
policy with its disclosed foreign principal?
A: NO. Art. 1207 of the Civil Code clearly provides
that "there is a solidary liability only when the
obligation expressly so states, or when the law or
the nature of the obligation requires solidarity."
The well-entrenched rule is that solidary
obligation cannot lightly be inferred. It must be
positively and clearly expressed (Smith, Bell & Co.,
Inc. v. CA, G.R. No. 110668, February 6, 1997).
Q: The labor arbiter rendered a decision, the
fallo of which states the following respondents
as liable, namely: FCMC, Sicat, Gonzales, Chiu
Chin Gin, Lo Kuan Chin, and INIMACO. INIMACO
questions the execution, alleging that the alias
writ of execution altered and changed the
tenor of the decision by changing their liability
from joint to solidary, by the insertion of the
words "AND/OR". Is the liability of INIMACO
pursuant to the decision of the labor arbiter
solidary or not?
A: INIMACO's liability is not solidary but
merely joint. Well-entrenched is the rule that
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).
Q: Mactan Rock Industries, through its
President and Chief Executive Officer Tompar,
entered into a Technical Consultancy
Agreement (TCA) with Germo, whereby the
parties agreed, inter alia, that: (a) Germo shall
stand as MRII's marketing consultant who
shall take charge of negotiating, perfecting
sales, orders, contracts, or services of MRII, but
there shall be no employer-employee
relationship between them; and (b) Germo
shall be paid on a purely commission basis,
including a monthly allowance of P5,000.00.
During the effectivity of the TCA, Germo
successfully negotiated and closed with
International Container Terminal Services, Inc.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
(ICTSI) a supply contract of 700 cubic meters
of purified water per day. Accordingly, MRII
commenced supplying water to ICTSI on
February 22, 2007, and in tum, the latter
religiously paid MRII the corresponding
monthly fees. Despite the foregoing, MRII
allegedly never paid Germo his rightful
commissions amounting to P2,225,969.56 as of
December 2009, inclusive of interest. Initially,
Germo filed a complaint before the National
Labor Relations Commission (NLRC), but the
same was dismissed for lack of jurisdiction
due to the absence of employer-employee
relationship between him and MRII. Germo
filed the instant complaint praying that MRII
and Tompar be made to pay him for unpaid
commissions with legal interest from the time
they were due until fully paid, moral damages,
exemplary damages, and the costs of suit.
MRII and Tompar averred, among others,
that: (a) there was no employer-employee
relationship between MRII and Germo as the
latter was hired as a mere
consultant; (b) Germo failed to prove that the
ICTSI account materialized through his efforts
as he did not submit the required periodic
reports of his negotiations with prospective
clients; and (c) ICTSI became MRII's client
through the efforts of a certain Ed Fornes. Are
MRII and Tompar, as the CEO and President,
solidarily liable to pay Germo?
A: No. It is a basic rule that a corporation is a
juridical entity which is vested with legal and
personality separate and distinct from those
acting for and in behalf of, and from the people
comprising it. As a general rule, directors, officers,
or employees of a corporation cannot be held
personally liable for the obligations incurred by
the corporation, unless it can be shown that such
director/officer/employee is guilty of negligence
or bad faith, and that the same was clearly and
convincingly proven.
Before a director or officer of a corporation can be
held personally liable for corporate obligations,
the following requisites must concur: (1) the
complainant must allege in the complaint that the
director or officer assented to patently unlawful
acts of the corporation, or that the officer was
guilty of gross negligence or bad faith; and (2) the
complainant must clearly and convincingly prove
such unlawful acts, negligence or bad faith. In this
case, Tompar's assent to patently unlawful acts of
the MRII or that his acts were tainted by gross
negligence or bad faith was not alleged in Germo's
complaint, much less proven in the course of trial.
350
 OBLIGATIONS AND CONTRACTS
Therefore, the deletion of Tompar's solidary
liability with MRII is in order. (Mactan Rock
Industries v. Benfrei S. Germo, G.R. No. 228799,
January 10, 2018)
Q: Petitioner was the main contractor of the
FOC Network Project of Globe Telecom in
Mindanao. In connection with the project,
petitioner entered into a Sub-Contract
Agreement with DMI, under which the latter
was tasked to undertake an underground
open-trench work. Petitioner required DMI to
give a bond, in the event that DMI fails to
perform its obligations under the Agreement.
Under the bonds, respondent bound itself
jointly and severally liable with DMI. During
the course of excavation and restoration
works, the DPWH issued a work-stoppage
order against DMI after finding the latter's
work unsatisfactory. Notwithstanding the said
order, however, DMI still failed to adopt
corrective measures, prompting petitioner to
terminate the Agreement and seek
indemnification from respondent. However,
respondent effectively denied petitioner's
claim on the ground that the liability of its
principal, DMI, should first be ascertained
before its own liability as a surety attaches.
Respondent claimed that DMI is an
indispensable party that should be impleaded
and whose liability should first be determined
before respondent can be held liable. On the
other hand, petitioner asserted that
respondent is a surety who is directly and
primarily liable to indemnify petitioner, and
that the bond is "callable on demand" in the
event DMI fails to perform its obligations
under the Agreement. The RTC dismissed the
complaint without prejudice, for failure to
implead DMI as a party defendant. It ruled that
before respondent could be held liable on the
surety and performance bonds, it must first be
established that DMI, with whom petitioner
had originally contracted, had indeed violated
the Agreement. DMI, therefore, is an
indispensable party that must be impleaded in
the instant suit. Is DMI an indispensable party
in this case?
A: NO. The nature of the solidary obligation under
the surety does not make one an indispensable
party. An indispensable party is a party-in-interest
without whom no final determination can be had
of an action, and who shall be joined mandatorily
either as plaintiffs or defendants.
In this case, DMI is not an indispensable party
because petitioner can claim indemnity directly
351
from respondent, having made itself jointly and
severally liable with DMI for the obligation under
the bonds. Therefore, the failure to implead DMI is
not a ground to dismiss the case, even if the same
was without prejudice. (Living v. Malayan
Insurance Company, GR No. 193753, September 26,
2012)
Consequences of a joint obligation
1. Each debtor is liable only for a proportionate
part of the entire debt;
2. Each creditor, if there are several, is entitled
only to a proportionate part of the credit;
2. The demand made by one creditor upon one
debtor, produces effects of default only as
between them;
3. Interruption of prescription caused by the
demand made by one creditor upon one
debtor, will NOT benefit the co-creditors or
the co-debtors;
4. Insolvency of a debtor will not increase the
liability of his co-debtor;
5. Vices of each obligation emanating from a
particular debtor or creditor will not affect
the others;
6. In indivisible or joint obligation, the defense
of
res judicata of one does not extend to the
others (8 Manresa, 200-201);
7. The delay on the part of only one of the joint
debtors does not produce effects with respect
to the others, and if the delay is produced
through the acts of only one of the joint
creditors, the others cannot take advantage
thereof.
JOINT INDIVISIBLE OBLIGATIONS
The obligation is joint because the parties are
merely proportionately liable. It is indivisible
because the object or subject matter is not
physically divisible into different parts. In other
words, it is joint as to liabilities of the debtors or
rights of the creditors but indivisible as to
compliance (De Leon, 2010).
A joint indivisible obligation gives rise to
indemnity for damages from the time anyone of
the debtors does not comply with his undertaking.
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 consists (NCC, Art. 1224).
Effects of different permutations of joint
indivisible obligations
 CIVIL LAW
1. If there are two or more debtors, compliance
with the obligation requires the concurrence
of all the debtors, although each for his own
share. The obligation can be enforced only by
preceding against all of the debtors;
2. If there are two or more creditors, the
concurrence or collective act of all the
creditors, although each of his own share, is
also necessary for the enforcement of the
obligation;
3. Each credit is distinct from one another;
therefore a joint debtor cannot be required to
pay for the share of another with debtor,
although he may pay if he wants to.
In case of insolvency of one of the debtors, the
others shall not be liable for his shares. To hold
otherwise would destroy the joint character of the
obligation (NCC, Art. 1209).
Effect of breach of a joint indivisible obligation
by one debtor
If one of the joint debtors fails to comply with his
undertaking, and the obligation can no longer be
fulfilled or performed, it will then be converted
into one of indemnity for damages. Innocent joint
debtor shall not contribute to the indemnity
beyond his corresponding share of the obligation.
SOLIDARY OBLIGATIONS
Each one of the debtors is obliged to pay the entire
obligation, and each one of the creditors has the
right to demand from any of the debtors the
payment or fulfillment of the entire obligation.
Kinds of solidary obligation
1. Passive – Solidarity on the part of the debtors;
2. Active – Solidarity on the part of the
creditors ;
3. Mixed – Solidarity on both sides.
JUDICIAL EFFECTS OF ACTIVE AND PASSIVE
SOLIDARITY
(TOLENTINO, 2002)
Active solidarity
The essence of active solidarity consists in the
authority of each creditor to claim and enforce the
rights of all, with the resulting obligation of paying
every one what belongs to him; there is no
merger, much less a renunciation of rights, but
only mutual representation. It is thus essentially a
mutual agency. Its juridical effects may be
summarized as follows:
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
1. Since it is a reciprocal agency, the death of a
solidary creditor does not transmit the
solidarity to each of his heirs but to all of them
taken together;
2. Each creditor represents the others in the act
of receiving payment, and in all other acts
which tend to secure the credit or make it
more advantageous. Hence, if he receives only
a partial payment, he must divide it among the
other creditors. He can interrupt the period of
prescription or render the debtor in default,
for the benefit of all other creditors;
3. One creditor, however, does not represent the
others in such acts as novation (even if the
credit becomes more advantageous),
compensation and remission. In these cases,
even if the debtor is released, the other
creditors can still enforce their rights against
the creditor who made the novation,
compensation or remission;
4. The creditor and its benefits are divided
equally among the creditors, unless there is an
agreement among them to divide differently.
Hence, once the credit is collected, an
accounting and a distribution of the amount
collected should follow ;
5. The debtor may pay to any solidary creditor,
but if a judicial demand is made on him, he
must pay only to the plaintiff; and
6. Each creditor may renounce his right even
against the will of the debtor, and the latter
need not thereafter pay the obligation to the
former.
Passive solidarity
In passive solidarity, the essence is that each
debtor can be made to answer for the others, with
the right on the part of the debtor-payor to
recover from the others their respective shares. In
so far as the payment is concerned, this kind of
solidarity is similar to a mutual guaranty. Its
effects are as follows:
1. Each debtor can be required to pay the entire
obligation; but after the payment, he can
recover from the co-debtors their respective
shares;
2. The debtor who is required to pay may set up
by way of compensation his own claim against
the creditor, in this case, the effect is the same
as that of payment;
3. The total remission of a debt in favor of a
debtor releases all the debtors; but when this
remission affects only the share of one debtor,
the other debtors are still liable for the
balance of the obligation;
352
 OBLIGATIONS AND CONTRACTS
4. All the debtors are liable for the loss of the Death of
thing due, even if such loss is caused by only solidary debtor Heirs of the
one of them, or by fortuitous event after one As to the terminates the debtor remain
of the debtors has incurred in delay; effect of solidarity, the bound to
5. The interruption of prescription as to one death of a tie, or perform the
debtor affects all the others; but the party vinculum being same
renunciation by one debtor of the prescription intransmissible prestation.
already had does not prejudice the others, to the heirs.
because the extinguishment of the obligation
by prescription extinguishes also the mutual
representation among the solidary debtors; Rules in solidary obligations (1998, 2003 Bar)
and
6. The interest due by reason of the delay by one 1. Anyone of the solidary creditors may collect or
of the debtors are borne by all of them. demand payment of the whole obligation;
there is mutual agency among solidary
NOTE: Example of words that connote solidary debtors (NCC, Arts. 1214 and 1215) ;
obligation: a) joint and several; b) in solidum; c) 2. Any of the solidary debtor may be required to
individually and collectively; d) each will pay the pay the whole obligation; there is mutual
whole value; e) “I promise to pay” and there are guaranty among solidary debtors (NCC,
two or more signatures; and f) juntos o Articles 1216, 1217 & 1222);
separadamente. 3. Each one of solidary creditors may do
whatever may be useful to the others, but not
Solidarity v. Indivisibility anything prejudicial to them (NCC, Article.
1212) ; however, any novation, compensation,
confusion, or remission of debt made by any
BASIS SOLIDARITY INDIVISIBILITY solidary creditors or with any of the solidary
debtors shall extinguish the obligation
Refers to the without prejudice to his liability for the shares
vinculum Refers to the of other solidary creditors (NCC, Articles. 1215
As to the kind
existing prestation or and 1219).
of unity it
between the object of the
refers to
subjects or contract. Q: Joey, Jovy, and Jojo are solidary debtors
parties. under a loan obligation of P300,000.00 which
As to the has fallen due. The creditor has, however,
Requires the Does not condoned Jojo's entire share in the debt. Since
requirement
plurality of require plurality Jovy has become insolvent, the creditor makes
of plurality of
parties or of subjects or a demand on Joey to pay the debt.
parties or
subjects. parties.
subjects
a. How much, if any, may Joey be compelled
In case of to pay?
In case of breach, it is b. To what extent, if at all, can Jojo be
breach, the converted to compelled by Joey to contribute to such
liability of the one of payment? (1998 BAR)
solidary indemnity for
debtors damages and A:
As to the a. Joey can be compelled to pay only the
although the indivisibility
effect of remaining balance of P200,000, in view of
converted into of the obligation
breach
one of the is terminated the remission of Jojo’s share by the creditor
indemnity for and so each (NCC, Art. 1219).
damages debtor is liable
remains only for his part b. Jojo can be compelled by Joey to contribute
solidary. of the P50,000. When one of the solidary debtors
indemnity. cannot, because of his insolvency, reimburse
his share to the debtor paying the obligation,
such share shall be borne by all his co-
debtors, in proportion to the debt of each
[NCC, Art. 1217(3)].

353
 CIVIL LAW
Since the insolvent debtor's share which Joey
paid was P100,000, and there are only two
remaining debtors - namely Joey and Jojo -
these two shall share equally the burden of
reimbursement. Jojo may thus be compelled
by Joey to contribute P50,000.
Q: Iya and Betty owed Jun P500,000 for
advancing their equity in a corporation they
joined as incorporators. Iya and Betty bound
themselves solidarily liable for the debt. Later,
Iya and Jun became sweethearts so Jun
condoned the debt of P500,000. May Iya
demand from Betty P250,000 as her share in
the debt? Explain with legal basis? (2015 Bar)
A: NO. Iya may not demand the P250,000 from
Betty because the entire obligation has been
condoned by the creditor Jun. In a solidary
obligation, the remission of the whole obligation
obtained by one of the solidary debtors does not
entitle him to reimbursement from his co-debtors.
(NCC, Art. 1220).
Q: Juancho, Don, and Pedro borrowed
P150,000 from their friend Cita to put up an
internet café, orally promising to pay her the
full amount after one year. Because of their
lack of business know-how, their business
collapsed. Juancho and Don ended up
penniless but Pedro was able to borrow money
and put up a restaurant which did well. Can
Cita demand that Pedro pay the entire
obligation since he, together with the two
others, promised to pay the full amount after
one year? Defend your answer (2015 BAR).
A: NO. The obligation in this case is presumed to
be joint. The concurrence of two or more creditors
or two or more debtors in one and the same
obligation does not imply that each one of the
former has the right to demand, or that each one
of the latter is bound to render the entire
compliance of the prestation (NCC, Art. 1207). In a
joint obligation, there is no mutual agency among
the joint debtors such that if one of them is
insolvent the others shall not be liable for his
share.
To whom payment should be made in a
solidary obligation
GR: To any of the solidary creditors.
XPN: If demand, judicial or extra-judicial, has been
made by one of the creditors, payment should be
made to him (NCC, Art. 1214).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
In cases of solidary creditors, one may act for
all
Each one of the solidary creditors may execute
acts which may be useful or beneficial to the
others, but he may not do anything which may be
prejudicial to them (NCC, Art. 1212).
NOTE: Prejudicial acts may still have valid legal
effects, but the performing creditor shall be liable
to his co-creditors (Pineda, 2000).
Effects of assignment of rights in a solidary
obligation
GR: A solidary creditor cannot assign his right
because it is predicated upon mutual confidence,
meaning personal qualification of each creditor
had been taken into consideration when the
obligation was constituted (NCC, Art. 1213).
XPNs:
1. Assignment to co-creditor; or
2. Assignment is with consent of co-creditor.
DIVISIBLE AND INDIVISIBLE OBLIGATIONS
Divisible obligations
Those which have as their object a prestation
which is susceptible of partial performance with
the essence of the obligation being changed.
Indivisible obligations
Those which have as their object a prestation
which is not susceptible of partial performance,
because otherwise the essence of the obligation
will be changed. The obligation is clearly
indivisible because the performance of the
contract cannot be done in parts, otherwise, the
value of what is transferred is diminished
(Nazareno v. CA, G.R. No. 138842, October 18,
2000).
Divisible v. Indivisible obligations
DIVISIBLE INDIVISIBLE
Susceptibility of an Non-susceptibility to be
obligation to be performed partially.
performed partially. Partial performance is
tantamount to non-
performance.
NOTE: The divisibility of the object does not
necessarily determine the divisibility of the
354
 OBLIGATIONS AND CONTRACTS
obligation; while the indivisibility of the object
carries with it the indivisibility of the obligation.
Test of divisibility
Whether or not the prestation is susceptible of
partial performance, not in the sense of
performance in separate or divided parts, but in
the sense of the possibility of realizing the
purpose which the obligation seeks to obtain. It is
indivisible, if a thing which could be divided into
parts and as divided, its value is impaired
disproportionately (Pineda, 2000).
Obligations that are deemed indivisible
1. Obligations to give definite things;
2. Those which are not susceptible of partial
performance;
3. Even the object or service may be physically
divisible, an obligation is indivisible if so
provided (i) by law or (ii) intended by the
parties (NCC, Art. 1225).
NOTE: A pledge or mortgage is one and indivisible
by provision of law, and the rules apply even if the
obligation is joint and not solidary (NCC, Art.
2089).
Obligations that are deemed divisible
When the object of the obligation involves:
1.Certain number of days of work;
2.Accomplishment of work by metrical unit;
3.Analogous things which are by their nature
susceptible of partial performance (NCC, Art.
1225).
Factors to determine whether an obligation is
divisible of indivisible
a) The will or intention of the parties (express or
implied);
b) The objective or purpose of the stipulated
prestation;
c) The nature of the thing; and
d) The provisions of law affecting the prestation.
OBLIGATIONS TO
OBLIGATIONS TO DO
GIVE
In obligations to give, In obligations to do,
those for the delivery of indivisibility is also
certain objects such as presumed, and it is only
an animal or a chair are when they are under
indivisible [NCC, 1225 the exceptional cases
(1)]. mentioned in NCC, Art.
355
1225 (2) that they are
divisible.
Effect of illegality of a part of a contract
1. Divisible contract – the illegal part is void and
unenforceable, meawhile, the legal part is
valid and enforceable (NCC, Art. 1420).
2. Indivisible contract – the entire contract is
void and unenforceable.
Partial performance in indivisible obligation
GR : In indivisible obligations, partial performance
is equivalent to non-performance.
XPNs : (NCC, Articles 1234 and 1235).
1. Where the obligation has been substantially
performed in good faith, the debtor may
recover as if there had been complete
performance, minus the damages suffered by
the creditor; and
2. Where the creditor accepts performance
knowing its incompleteness and without
protest, the obligation is deemed fully
performed.
OBLIGATIONS WITH A PENAL CLAUSE
An obligation with a penal clause is one with an
accessory undertaking by virtue of which the
obligor assumes a greater liability in case of
breach of the obligations (Jurado, 2009).
Penal clause
A penal clause is an accessory undertaking to
asume greater liability in case of breach. It is
attached to an obligation in order to insure
performance. The penalty is generally a sum of
money. But it can also be any othe thing stipulated
by the parties, inlcuding an act or abstention.
Double functions:
1. To provide for liquidated damages; and
2. To strengthen the coercive force of the
obligation by the threat of greater
responsibility in case of breach.
Kinds of penalties
1. As to origin
 CIVIL LAW
a. Legal - it is legal when it is constituted by
law.
b. Conventional - it is constituted by
agreement of the parties.
2. As to purpose
a. Compensatory - it is compensatory when
it is established for the purpose of
indemnifying the damages suffered by the
obligee or creditor in case of breach of the
obligation.
b. Punitive - it is punitive when it is
established for the purpose of punishing
the obligor or debtor in case of breach of
the obligation.
3. As to effect
a. Subsidiary - it is subsidiary when only the
penalty may be demanded in case of
breach of the obligation;
b. Joint - it is joint when the injured party
may demand the enforcement of both the
penalty and the principal obligation.
Q: Can the debtor just choose penalty over
non-fulfillment?
A: GR: The debtor cannot exempt himself from the
performance of the obligation by paying the
penalty (NCC, Art. 1227).
XPN: When the right has been expressly reserved
to the debtor (NCC, Art. 1227).
Creditor cannot demand both the fulfillment of
the principal obligation and the penalty
GR: The creditor cannot demand the fulfillment of
the obligation and the satisfaction of the penalty at
the same time (NCC, Art. 1227).
XPNs:
1. When the right has been clearly granted to
him;
2. If 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 (NCC, Art.
1227).
NOTE: The creditor need not present proof of
actual damages suffered by him in order that the
penalty may be demanded (NCC, Art. 1228). In this
jurisdiction, there is no difference between a
penalty and liquidated damages, so far as the
results are concerned. Whatever differences exist
between them, as a matter of language, they are
legally treated the same (Rabuya, 2017).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Effect of incorporating a penal clause in an
obligation
GR: The penalty fixed by the parties is a
compensation or substitute for damages in case of
breach.
XPNs: Damages shall still be paid even if there is a
penal clause if:
1. There is a stipulation to the contrary;
2. The debtor refuses to pay the agreed penalty;
or
3. The debtor is guilty of fraud in the fulfillment
of the obligation (NCC, Art. 1126).
NOTE: The nullity of the penal clause does not
carry with it that of the principal obligation. For
example, the penal clause may be void because it
is contrary to law, morals, good custom, public
order, or public policy. In such case, the principal
obligation subsists if valid.
GR: The nullity of the principal obligation carries
with it that of the penal clause (NCC, Art. 1230).
XPNs: The penal clause subsists even if the
principal obligation cannot be enforced:
1. When the penalty if undertaken by a third
person precisely for an obligation which is
unenforceable, voidable, or natural, in which
case, it assumes the form of a guaranty which is
valid, under Art. 2052 of the NCC; and
2. When the nullity of the principal obligation
itself gives rise to the liability of the debtor for
damages.
Instances where penalty may be reduced by
the courts (PIU)
1. Partial performance of the obligation;
2. Irregular performance of the obligation;
3. Penalty is Unconscionable even if there has
been no performance.
Q: When can the creditor demand the
enforcement of the penalty?
A: Only when the non-performance is due to the
fault or fraud of the debtor. But the creditor does
not have to prove that there was fault or fraud of
the debtor. The non-performance gives rise to the
presumption of fault; and in order to avoid the
payment of penalty, the debtor has the burden of
proving an excuse – either that the failure of the
356
 OBLIGATIONS AND CONTRACTS
performance was due to force majeure or to the
acts of the creditor himself.
NOTE: When there are several debtors in an
obligation with a penal clause, the divisibility of
the principal obligation among the debtors does
not necessarily carry with it the divisibility of the
penalty among them.
EXTINGUISHMENT OF OBLIGATIONS
Modes of extinguishment of an obligation
Principal modes (PaLoCo3N)
1. Payment or performance;
2. Loss of the thing due;
3. Condonation or remission of debt;
4. Confusion or merger;
5. Compensation;
6. Novation (NCC, Art. 1231).
Other Modes (PARF)
7. Annulment;
8. Rescission;
9. Fulfillment of a resolutory condition;
10. Prescription (NCC, Art. 1231).
NOTE: The enumeration is not exclusive.
Other causes not expressly mentioned (Rabuya,
2017)
11. Death – in obligations which are of purely
personal character;
12. Arrival of resolutory period;
13. Mutual dissent;
14. Change of civil status;
15. Happening of unforseen events.
Mutual desistance as another mode
extinguishing obligations
It is a concept derived from the principle that
since mutual agreement can create a contract,
mutual disagreement by the parties can likewise
cause its extinguishment (Saura v. Development
Bank of the Phils., G.R. No. L-24968, April 27, 1972).
PAYMENT OR PERFORMANCE
Payment is the fulfillment of the obligation by the
realization of the purposes for which it was
constituted (Jurado, 2010) - (1998, 2009 Bar)
Payment may consist not only in the delivery of
money but also the giving of a thing (other than
money), the doing of an act, or not doing of an act
(NCC, Art. 1232).
Characteristics of payment
1. Integrity – The payment of the obligation must
be completely made;
2. Identity – The payment of the obligation must
consist the performance of the very thing due;
3. Indivisibility – The payment of the obligation
must be in its entirety.
Integrity
GR: Payment or performance must be complete
(NCC, Art. 1233).
XPNs:
1. Substantial performance performed in good
faith (NCC, Art. 1234);
2. When the obligee accepts the performance,
knowing its incompleteness or irregularity
and without expressing any protest or
objection; (NCC, Art. 1235); or
3. Debt is partly liquidated and partly
unliquidated, but the liquidated part of the
debt must be paid in full.
Substantial Performance Doctrine
It provides the rule that if a good-faith attempt to
perform does not precisely meet the terms of an
agreement or statutory requirements, the
performance will still be considered complete if
the essential purpose is accomplished (Black’s
Law Dictionary, 2009).
Requisites
of
1. Attempt in good-faith to comply with
obligation;
2. Slight deviation from the obligation; and the
omission or defect of the performance is
technical and unimportant; and does not
pervade the whole, or is not material that the
object which the parties intended to
accomplish is not attained (Tolentino, 2002).
Identity of the thing
GR: Thing paid must be the very thing due and
cannot be another thing even if of the same or
more quality and value.
XPNs:
1. Dation in payment;
357
 CIVIL LAW
2. Novation of the obligation; and
3. Obligation is facultative.
NOTE: In an obligation to do or not to do, an act or
forbearance cannot be substituted by another act
or forbearance against the obligee’s will.
Indivisibility
GR: Debtor cannot be compelled by the creditor to
perform obligation in parts and neither can the
debtor compel the creditor to accept obligation in
parts.
XPNs :
When:
1. Partial performance has been agreed upon;
2. Part of the obligation is liquidated and part is
unliquidated; or
3. To require the debtor to perform in full is
impractical.
Acceptance by a creditor of a partial payment
NOT an abandonment of its demand for full
payment
When creditors receive partial payment, they are
not ipso facto deemed to have abandoned their
prior demand for full payment.
To imply that creditors accept partial payment as
complete performance of their obligation, their
acceptance must be made under circumstances
that indicate their intention to consider the
performance complete and to renounce their
claim arising from the defect.
NOTE: While Art. 1248 of the Civil Code states
that creditors cannot be compelled to accept
partial payments, it does not prohibit them from
accepting such payments (Selegna Management
and Development Corp. v. UCPB, G.R. No. 165662,
May 3, 2006).
Requisites of a valid payment
1. The person who pays the debt must be
the debtor;
2. The person to whom payment is made
must be the creditor;
3. The thing to be paid or to be delivered
must be the precise thing or the thing
required to be delivered by the creditor;
4. The manner (if expreslly agreed upon),
time, and place of payment, etc.; and
5. Acceptance by the creditor.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Kinds of payment
1. Normal - When the debtor voluntarily performs
the prestation stipulated;
2. Abnormal - When he is forced by means of a
judicial proceeding, either to comply with the
prestation or to pay the indemnity (Tolentino,
1991).
Person who pays
The following persons may effect payment and
compel the creditor to accept the payment:
1. Debtor himself;
2. His heirs and assigns;
3. His agents and representatives; or
4. Third persons who have a material interest in
the fulfilment of the obligation ([NCC, Art.
1236 (1)].
PAYMENT MADE BY THIRD PERSONS
GR: The creditor is not bound to accept payment
or performance by a third person.
XPNs:
1. When made by a third person who has
interest in the fulfillment of the obligation;
and
2. Contrary stipulation (NCC, Art. 1236).
NOTE: The rules on payment by a third person
(NCC, Article. 1236 to 1238) cannot be applied to
the case of a third person who pays the
redemption price in sales with right of repurchase.
This is so because the vendor a retro is not a
debtor within the meaning of the law (Jurado,
2010).
Rights of a third person who made the
payment
1. If the payment was made with knowledge and
consent of the debtor:
a. Can recover entire amount paid (absolute
reimbursement); or
b. Can be subrogated to all rights of the
creditor.
2. If the payment was made without knowledge or
against the will of the debtor – Can recover
only insofar as payment has been beneficial to
the debtor (right of conditional
reimbursement).
NOTE: Payment made by a third person who does
not intend to be reimbursed by the debtor is
358
 OBLIGATIONS AND CONTRACTS
deemed to be a donation, which requires the
debtor's consent. But the payment is in any case
valid as to the creditor who has accepted it (NCC,
Art. 1238).
Person to whom payment is made
Persons entitled to receive the payment:
1. The person in whose favor the obligation has
been constituted;
2. His successor in interest; or
3. Any person authorized to receive it (NCC, Art.
1240).
NOTE: Payment made to one having apparent
authority to receive the money will, as a rule, be
treated as though actual authority had been given
for its receipt. Likewise, if payment is made to one
who by law is authorized to act for the creditor, it
will work a discharge (Sps. Miniano v. Concepcion,
G.R. No. 172825, October 11, 2012).
Payment to an unauthorized person
GR: Payment to an unauthorized person is not a
valid payment (NCC, Art. 1241).
XPNs:
1. Payment to an incapacitated person if:
a. He kept the thing delivered; or
b. It has been beneficial to him (NCC, Art.
1241);
2. Payment to a third person insofar as it
redounded to the benefit of the creditor; and
Benefit to the creditor need not be proved:
(RRE)
a. If after the payment, the third person
acquires the creditor’s Rights;
b. If the creditor Ratifies the payment to
the third person; or
c. If by the creditor’s conduct, the debtor
has been led to believe that the third
person had authority to receive the
payment (Estoppel) (NCC, Art. 1241).
3. Payment in good faith to the possessor of
credit (NCC, Art. 1242).
NOTE : Payment made to the creditor by the
debtor after the latter has been judicially
ordered to retain the debt shall not be valid.
(NCC, Art. 1243).
SPECIAL FORMS OF PAYMENT
Dation in Payment
359
Alienation by the debtor of a particular property
in favor of his creditor, with the latter’s consent,
for the satisfaction of the former’s money
obligation to the latter, with the effect of
extinguishing the said money obligation.
Application of Payment
Designation of the particular debt being paid by
the debtor who has two or more debts or
obligations of the same kind in favor of the same
creditor to whom the payment is made .
Payment by Cession
Debtor cedes his property to his creditors so the
latter may sell the same and the proceeds realized
applied to the debts of the debtor.
Tender of Payment
Voluntary act of the debtor whereby he offers to
the creditor for acceptance the immediate
performance of the former’s obligation to the
latter.
Consignation
Act of depositing the object of the obligation with
the court or competent authority after the creditor
has unjustifiably refused to accept the same or is
not in a position to accept it due to certain reasons
or circumstances.
DATION IN PAYMENT
(dacion en pago)
The delivery and transmission of ownership of a
thing by the debtor to the creditor as an accepted
equivalent of the performance of the obligation.
The property given may consist not only of a thing
but also of a real right (Tolentino, 2002) (2009
Bar)
NOTE: The undertaking partakes 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.
The requisites for dacion en pago are:
1. There must be a performance of the
prestation in lieu of payment (animo solvendi)
which may consist in the delivery of a
corporeal thing or a real right or a credit
against the third person;
 CIVIL LAW
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 (Caltex Philippines, Inc. v. IAC, G.R. No.
72703, November 13, 1992).
Q: Lopez obtained a loan in the amount of
P20,000.00 from the Prudential Bank. He
executed a surety bond in which he, as
principal, and PHILAMGEN as surety, bound
themselves jointly and severally for the
payment of the sum. He also executed a deed of
assignment of 4,000 shares of the Baguio
Military Institution in favor of PHILAMGEN. Is
the stock assignment made by Lopez dation in
payment or pledge?
A: The stock assignment constitutes a pledge and
not a dacion en pago. Dation in payment is the
delivery and transmission of ownership of a thing
by the debtor to the creditor as an accepted
equivalent of the performance of the obligation.
Lopez’s loan has not yet matured when he
"alienated" his 4,000 shares of stock to Philamgen.
Lopez's obligation would arise only when he
would default in the payment of the principal
obligation which is the loan and Philamgen had to
pay for it. Since it is contrary to the nature and
concept of dation in payment, the same could not
have been constituted when the stock assignment
was executed. In case of doubt as to whether a
transaction is a pledge or a dation in payment, the
presumption is in favor of pledge, the latter being
the lesser transmission of rights and interests
(Lopez v. CA, G.R. No. L-33157, June 29, 1982).
Q: Cebu Asiancars Inc., with the conformity of
the lessor, used the leased premises as a
collateral to secure payment of a loan which
Asiancars may obtain from any bank, provided
that the proceeds of the loan shall be used
solely for the construction of a building which,
upon the termination of the lease or the
voluntary surrender of the leased premises
before the expiration of the contract, shall
automatically become the property of the
lessor. Meeting financial difficulties and
incurring an outstanding balance on the loan,
Asiancars conveyed ownership of the building
on the leased premises to MBTC, by way of
"dacion en pago."Is the dacion en pago by
Asiancars in favor of MBTC valid?
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
A: YES. MBTC was a purchaser in good faith.
MBTC had no knowledge of the stipulation in the
lease contract. Although the same lease was
registered and duly annotated, MBTC was charged
with constructive knowledge only of the fact of
lease of the land and not of the specific provision
stipulating transfer of ownership of the building to
the Jaymes upon termination of the lease. While
the alienation was in violation of the stipulation in
the lease contract between the Jaymes and
Asiancars, MBTC’s own rights could not be
prejudiced by Asiancars’ actions unknown to
MBTC. Thus, the transfer of the building in favor of
MBTC was valid and binding (Jayme v. CA, G.R. No.
128669, October 4, 2002).
Assignment of credit
An agreement by virtue of which the owner of a
credit, known as the assignor, by a legal cause,
such as sale, dation in payment, exchange or
donation, and without the consent of the debtor,
transfers his credit and accessory rights to
another, known as the assignee. The assignee
acquires the power to enforce it to the same
extent as the assignor could enforce it against the
debtor. It may be in the form of a sale, but at times
it may constitute a dation in payment, such as
when a debtor, in order to obtain a release from
his debt, assigns to his creditor a credit he has
against a third person. As a dation in payment, the
assignment of credit operates as a mode of
extinguishing the obligation; the delivery and
transmission of ownership of a thing (in this case,
the credit due from a third person) by the debtor
to the creditor is accepted as the equivalent of the
performance of the obligation.
FORM OF PAYMENT
1. Payment in cash – all monetary obligations
shall be settled in Philippine currency.
However, the parties may agree that the
obligation be settled in another currency at
the time of payment (R.A. 8183, Sec. 1).
2. Payment in check or other negotiable
instrument – not considered payment, they
are not considered legal tender and may be
refused by the creditor except when:
a. the document has been encashed; or
b. it has been impaired through the fault of
the creditor (NCC, Art. 1249).
PAYMENT IN CASH
(2008 Bar)
Legal tender
360
 OBLIGATIONS AND CONTRACTS
Legal tender means such currency which in a
given jurisdiction can be used for the payment of
debts, public and private, and which cannot be
refused by the creditor (Tolentino, 2002).
The legal tender covers all notes and coins issued
by the Bangko Sentral ng Pilipinas and guaranteed
by the Republic of the Philippines. The amount of
coins that may be accepted as legal tender are:
1. One-Peso, Five-Pesos, 10-Pesos coins in
amount not exceeding P1,000.00
2. 25 centavos or less – in amount not exceeding
P100. 00 (BSP Circular No. 537, Series of 2006,
July 18, 2006).
Q: Northwest Airlines, through its Japan
Branch, entered into an International
Passenger Sales Agency Agreement with CF
Sharp, authorizing the latter to sell its air
transport tickets. CF Sharp failed to remit the
proceeds of the ticket sales, thus, Northwest
Airlines filed a collection suit before the Tokyo
District Court which rendered judgment
ordering CF Sharp to pay 83,158,195 Yen and
damages for the delay at the rate of 6% per
annum. Unable to execute the decision in
Japan, Northwest Airlines filed a case to
enforce said foreign judgment with the RTC of
Manila. What is the rate of exchange that
should be applied for the payment of the
amount?
A: The repeal of R.A.529 by R.A. 8183 has the
effect of removing the prohibition on the
stipulation of currency other than Philippine
currency, such that obligations or transactions
may now be paid in the currency agreed upon by
the parties. Just like R.A. 529, however, the new
law does not provide for the applicable rate of
exchange for the conversion of foreign currency-
incurred obligations in their peso equivalent. It
follows, therefore, that the jurisprudence
established in R.A. 529 regarding the rate of
conversion remains applicable. Thus, in Asia
World Recruitment, Inc. v. National Labor Relations
Commission(GR 113363, August 24, 1999), the SC,
applying RA 8183, sustained the ruling of the
NLRC that obligations in foreign currency may be
discharged in Philippine currency based on the
prevailing rate at the time of payment. It is just and
fair to preserve the real value of the foreign
exchange-incurred obligation to the date of its
payment (C.F. Sharp & Cp., Inc. v. Northwest
Airlines, Inc., G.R. No. 133498, April 18, 2002).
PAYMENT BY NEGOTIABLE INSTRUMENT
(2008 BAR)
361
Rule on tender payment as to checks
Q: When does payment by a negotiable
instrument produce the effect of payment?
A: (1) Only when it is cashed, or (2) when through
the fault of the creditor, they have been impaired
[NCC, Art. 1249 (2)].
A check does not constitute a legal tender, thus a
creditor may validly refuse it. However, this does
not prevent a creditor from accepting a check as
payment – the creditor has the option and the
discretion of refusing or accepting it (Far East
Bank & Trust Company v. Diaz Realty, Inc., G.R. No.
138588, August 23, 2001).
NOTE: While it is true that the delivery of a check
produces the effect of payment only when it is
cashed, pursuant to Art. 1249 of the CC, the rule is
otherwise if the debtor is prejudiced by the
creditor's unreasonable delay in presentment.
The payee of a check would be a creditor under
this provision and if its non-payment is caused by
his negligence, payment will be deemed effected
and the obligation for which the check was given
as conditional payment will be discharged (Papa v.
Valencia & Co., Inc., G.R. No. 105188, January 23,
1998).
Q: Diaz & Company obtained a loan from
Pacific Banking Corp which was secured by a
real estate mortgage. ABC rented an office
space in the building constructed on the
properties covered by the mortgage contract.
The parties then agreed that the monthly
rentals shall be paid directly to the mortgagee
for the lessor's account. Thereafter, FEBTC
purchased the credit of Diaz & Company in
favor of PaBC, but it was only after two years
that Diaz was informed about it. Diaz asked the
FEBTC to make an accounting of the monthly
rental payments made by Allied Bank. Diaz
tendered to FEBTC the amount of P1, 450, 000.
00 through an Interbank check, in order to
prevent the imposition of additional interests,
penalties and surcharges on its loan but FEBTC
did not accept it as payment, instead, Diaz was
asked to deposit the amount with the FEBTC’s
Davao City Branch Office. Was there a valid
tender of payment?
A: YES. True, jurisprudence holds that, in general,
a check does not constitute legal tender, and that a
creditor may validly refuse it. It must be
emphasized, however, that this dictum does not
prevent a creditor from accepting a check as
payment. In other words, the creditor has the
 CIVIL LAW
option and the discretion of refusing or accepting it
(FEBTC v. Diaz Realty Inc., G.R. No. 138588, August
23, 2001).
Burden of proving payment in an action for
sum of money
The party who pleads payment as a defense has
the burden of proving that such payment has, in
fact, been made.
EXTRAORDINARY INFLATION OR DEFLATION
(2001 Bar)
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
decrease or increase could not have been
reasonably foreseen or was manifestly beyond the
contemplation of the parties at the time of the
establishment of the obligation (Tolentino, 2002).
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 shall be the basis
of payment, unless there is an agreement to the
contrary (NCC, Art. 1250).
When the currency is devaluated in terms beyond
what could have been reasonably forseen by the
parties, the doctrine of unforseen risks can be
applied, and the effects of the devaluation should
not be borne by the creditor alone. The
revaluation of the credit in such cases must be
made according to the principles of good faith and
in view of the circumstances of each particular
case, recognizing the real value of the credit as in
consonance with the intent of the parties.
NOTE: Requisites for application of Art. 1250, NCC
(Rabuya, 2017).
1. That there was an official declaration of extra-
ordinary inflation or deflation from the BSP;
2. That the obligation was contractual in nature;
and
3. That the parties expressly agreed to consider
the effects of the extraordinary inflation or
deflation.
PLACE OF PAYMENT
GR: Payment must be made in the place
designated in the obligation (NCC, Art. 1251).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
XPN: If there is no express designation or
stipulation in the obligation:
1. At the place where the thing might be at the
time the obligation was constituted – If the
obligation is to deliver a determinate thing;
2. At the domicile of the debtor – In any other case
(NCC, Art. 1251).
NOTE: Governs only unilateral obligations since
reciprocal obligations are governed by special
rules (Jurado, 2010).
Moreover, if the debtor changes his domicile in
bad faith or after he has incurred in delay, the
additional expenses shall be borne by him.
The foregoing are without prejudice, however, to
the venue under the Rules of Court.
APPLICATION OF PAYMENTS
It is the designation of the debt to which the
payment must be applied when the debtor has
several obligations of the same kind in favor of the
same creditor (NCC, Art. 1252).
Requisites:
1. There is only one debtor and creditor;
2. The debtor owes the creditor two or more
debts;
3. Debts are of the same kind or identical
nature;
e.g. both debts are money obligations
obtained on different dates;
4. All debts are due and demandable, except:
a. When there is mutual agreement
between the parties (Tolentino,
2002);
b. The application is made by the
party for whose benefit the term
has been constituted [NCC, Art.
1252(1]).
5. The payment made is not sufficient to
cover all obligations. Right of the debtor
in the application of payments.
GR: The law grants the debtor a preferential right
to choose the debt to which his payment is to be
applied. But the right of the debtor is not absolute;
he cannot impair the rights granted by law to the
creditor (Tolentino, 2002).
XPN: Debtor’s failure to ascertain which debt his
payment is to be applied. – The right of the debtor
to choose to which debt his payment will be
362
 OBLIGATIONS AND CONTRACTS
applied against may be transferred to the creditor
when he fails to make the application and
subsequently he accepts a receipt from the
creditor evidencing the latter’s choice of
application. Under this circumstance, the debtor
cannot complain of the application made by the
creditor unless there be a cause for invalidating
such act.
As far as the debtor is concerned, the right to
make an application of payment must be exercised
at the time payment is made (Bachrach Garage
and Taxicab Co., v. Golingco, G.R. No. 13761, July 12,
1919).
Limitation upon right to apply payment
If the debt produces interests, payment of the
principal shall not be deemed to have been made
until the interest have been covered (NCC, Art.
1253).
NOTE: This applies only in the absence of a verbal
or written agreement to the contrary; in other
words, it is merely directory, and not mandatory
(Magdalena Estates, Inc. v. Rodriguez, G.R. No. L-
18411, December 17, 1966).
Legal application of payment
If both the creditor and the debtor failed to
exercise the right of application of payment or
legal application (the law makes the application)
of payment will be now govern.
Rules on legal application of payment
The payment should be applied to the more
onerous debts:
1. When a person is bound as principal in one
obligation and as surety in another, the
former is more onerous.
2. When there are various debts, the oldest ones
are more burdensome.
3. Where one bears interest and the other does
not, even if the latter is the older obligation,
the former is considered more onerous.
4. Where there is an encumbrance, the debt with
a guaranty is more onerous than that without
security.
5. With respect to indemnity for damages, the
debt which is subject to the general rules on
damages is less burdensome than that in
which there is a penal clause.
6. The liquidated debt is more burdensome than
the unliquidated one.
363
7. An obligation in which the debtor is in default
is more onerous than one in which he is not
(Tolentino, 2002).
NOTE: If the debts happen to be of same
nature and burden, the payment shall be
applied proportionately.
Effect of creditor’s refusal
If the debtor makes a proper application of
payment, but the creditor refuses to accept it
because he wants to apply it to another debt, such
creditor will incur in delay (Tolentino, 1991).
PAYMENT BY CESSION
Cession
The assignment or cession contemplated here is
the abandonment of the universality of the
property of the debtor for the benefit of his
creditors in order that such property may be
applied to the payment of the credits.
The initiative comes from the debtor, but it must
be accepted by the creditors in order to become
effective. A voluntary assignment cannot be
imposed upon a creditor who is not willing to
accept it.
If the offer is not accepted by the creditors, the
same end may be attained by a proceeding in
insolvency instituted in accordance with
Insolvency Law.
Circumstances evidencing payment by cession
Debtor abandons all of his property for the benefit
of his creditors in order that from the proceeds
thereof, the latter may obtain payment of credits.
Requisites:
1. Plurality of debts;
2. Partial or relative insolvency of the debtor;
and
3. Acceptance of the cession by the creditors
Dation in payment v. Payment in cession
DATION IN PAYMENT PAYMENT IN CESSION
Number of creditors
Maybe one creditor. Plurality of creditors.
Financial condition of the debtor
 CIVIL LAW
Not necessarily in state Debtor must be partially Tender of payment is a preparatory act which
of financial difficulty. or relatively insolvent. precedes consignation. The tender of payment by
itself does not cause the extinguishment of the
obligation unless completed by consignation.
Object (Tolentino, 1991).
Thing delivered is Universality or property
considered as equivalent of debtor is what is Consignation
of performance. ceded.
Act of depositing the object of the obligation with
the court or competent authority after the creditor
Extent of the extinguishment
has unjustifiably refused to accept the same or is
Payment extinguishes Merely releases debtor not in a position to accept it due to certain reasons
obligation to the extent of for net proceeds of or circumstances (Pineda, 2000).
the value of the thing things ceded or assigned,
delivered as agreed upon, unless there is contrary NOTE: Once the consignation has been duly made,
proved or implied from intention. the debtor may ask the judge to order the
the conduct of the cancellation of the obligation (NCC, Art. 1260).
creditor.
Requisites of consignation
Ownership
1. There was a debt due ;
Ownership is transferred Ownership is not 2. The consignation of due obligation was made
to CR upon delivery. transferred. because of some legal cause provided under
NCC, Art. 1256;
Novation 3. The previous notice of the consignation had
been given to the person interested in the
An act of novation. Not an act of novation. performance of the obligation;
4. The amount or thing due was placed at the
Presumption of insolvency disposal of the court; and
5. That after the consignation had been made
Does not presuppose Presupposes insolvency. the persons interested were notified thereof.
insolvency.
TENDER OF PAYMENT AND CONSIGNATION NOTE: Requirement No. 5 may be complied
Tender of payment with by the service of summons upon the
defendant creditor together with a copy of teh
The definitive act of offering to the creditor what complaint.
is due to him together with the demand that the
creditor accepts the same (FEBTC v. Diaz Realty After this notice, the creditor may:
Inc., G.R. No. 138588, August 23, 2001). (a) Accept the thing or amount deposited, in
which case the matter of the payment is
Tender of payment is the manifestation by debtors terminated;
of their desire to comply with or to pay their (b) Refuse to accept the thing or amount, in
obligation (Sps. Benos v. Sps. Lawilao, G.R. No. which case a trial must be held to determine
172259, December 5, 2006). the validity of consignation.

NOTE: If the creditor refuses the tender of
payment without just cause, the debtors are
discharged from the obligation by the
consignation of the sum due (Sps. Benos v. Sps.
Lawilao, G.R. No. 172259, December 5, 2006).
The creditor may neither accept nor refuse in
which case the debtor may ask the court to
cancel the obligation after showing that the
requisites of consignation have been complied
with (NCC, Art. 1260).

There must be a fusion of intent, ability, and
capability to make good such offer, which must be
absolute and must cover the amount due (FEBTC
v. Diaz RealtyInc., G.R. No. 138588, August 23,
2001).
NOTE: Tender of payment must be valid and
unconditional (Sps. Rayos v. Reyes, G.R. No.
150913, February 20, 2003).
Substantial compliance is not enough. The
giving of notice to the persons interested in
the performance of the obligation is

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 364
 OBLIGATIONS AND CONTRACTS
mandatory. Failure to notify the persons 3.
interested in the performance of the 4.
obligation will render the consignation void
(Dalton v. FGR Realty and Development Corp., 5.
G.R. No. 172577, January 19, 2011).
Title of the obligation has been lost;
Creditor is Incapacitated to receive payment
at the time it is due; or
Two or more persons claim the right to
collect (NCC, Art. 1256).

Consignation is necessarily judicial. Art. 1258 NOTE: The expenses of consignation, when
of the CC specifically provides that properly made, shall be charged against the
consignation shall be made by depositing the creditor (NCC, Art. 1259).
thing or things due at the disposal of judicial
authority. The said provision clearly Right of the debtor to withdraw the thing
precludes consignation in venues other than deposited
the courts (Sps. Oscar and Thelma Cacayorin v.
Armed Forces and Police Mutual Benefit Before the creditor has accepted the consignation,
Association, Inc., G.R. No. 171298, April 15, or before a judicial declaration that the
2013). consignation has been properly made, the debtor
may withdraw the thing or the sum deposited,
Consignation and tender of payment must not allowing the obligation to remain in force (NCC,
be encumbered by conditions (Sps. Rayos v. Art.1260).
Reyes, G.R. No. 150913, February 20, 2003).
NOTE: If, the consignation having been made, the
Q: Dorotea leased portions of her 2,000 sq. m. creditor should authorize the debtor to withdraw
lot to Monet, Kathy, Celia and Ruth for five (5) the same, he shall lose every preference which he
years. Two (2) years before the expiration of may have over the thing. The co-debtors,
the lease contract, Dorotea sold the property guarantors and sureties shall be released (NCC,
to PM Realty and Development Corp. The Art. 1261).
following month, Dorotea and PM Realty
stopped accepting rental payments from all Tender of Payment v. Consignation
the lessees because they wanted to terminate
the lease contracts. Due to the refusal to accept TENDER OF PAYMENT CONSIGNATION
rental payments, the lessees, Ruth, et al., filed a
complaint for consignation of the rentals Nature
before the RTC of Manila without notifying
Dorotea. Is the consignation valid? (2014 Bar) Antecedent of Principal or
consignation or consummating act for
A: NO. Art. 1257 of the Civil Code provides that in preliminary act to the extinguishment of
order that the consignation of the thing due may consignation. the obligation.
release the obligor, it must first be announced to
Effect
the persons interested in the fulfillment of the
obligation. Moreover, Art. 1258 of the same code It does not by itself It extinguishes the
provides that consignation having been made, the extinguish the obligation when
interested parties shall also be notified thereof. In obligation. declared valid.
this case Dorotea, an interested party, was not
notified of the consignation. The consignation is Character
therefore not valid for non-compliance with NCC,
Art. 1257. Extrajudicial. Judicial for it requires
the filing of a complaint
Effectivity of consignation as payment in court (Pineda, 2000).

GR: Consignation shall produce effects of payment
only if there is a valid tender of payment.
XPNs: It shall, however, not produce the same
effect in the following cases. When: (ARTIT)
1. Creditor is Absent or unknown, or doesn’t
appear at place of payment;
2. Creditor Refuses to issue a receipt without
just cause;
Q: In an ejectment case, X refused to vacate the
land alleging that Y had sold to him the
additional area, the payment of which would
be effected five years after the execution of a
formal deed of sale. However, the parties failed
to execute a deed of sale. During the pendency
of the action, X deposited the payment for the
additional area with the court. Is there a valid
consignation?

365
 CIVIL LAW
A: NO. Under Art. 1257 of the CC, consignation is
proper only in cases where an existing obligation
is due. In this case, the contracting parties agreed
that full payment of purchase price shall be due
and payable within five years from the execution
of a formal deed of sale. At the time Rodriguez
deposited the amount in court, no formal deed of
sale had yet been executed by the parties, and,
therefore, the five-year period during which the
purchase price should be paid had not
commenced. In short, the purchase price was not
yet due and payable (Heirs of San Andres v.
Rodriguez, G.R. No. 135634, May 31, 2000).
Q: Under a pacto de retro sale, X sold to Y his
lot and the building erected thereon. They
agreed that half of the consideration shall be
paid to the bank to pay off the loan of X. After
paying the first installment, Y, instead of
paying the loan to the bank, restructured it
twice. Eventually, the loan became due and
demandable. Thus, X paid the bank. On the
same day, Y also went to the bank and offered
to pay the loan, but the bank refused to accept
the payment. Y then filed an action for
consignation without notifying X. Is there a
valid consignation by Y of the balance of the
contract price?
A: NO. Y filed the petition for consignation against
the bank without notifying X, resulting to the
former’s failure to prove the payment of the
balance of the purchase price and consignation. In
fact, even before the filing of the consignation
case, Y never notified X of their offer to pay (Sps.
Benos v. Sps. Lawilao, G.R. No. 172259, December 5,
2006).
LOSS OF THE THING DUE
Loss here is not contemplated in its strict and
legal meaning and is not limited to obligations to
give, but extends to those which are personal,
embracing therefore all causes which may render
impossible the performance of the prestation. In
some Codes, this is designated as impossibility of
performance.
NOTE: The impossibility of performance must be
subsequent to the execution of the contract in
order to extinguish the obligation; if the
impossibility already existed when the contract
was made, the result is not extinguishment but
inefficacy of the obligation under NCC, Articles
1348 and 1493.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
When a thing is considered lost (DOPE)
1. It Disappears in such a way that its existence
is unknown;
2. It goes Out of commerce;
3. It Perishes; or
4. Its Existence is unknown or if known, it
cannot be recovered.
Effect of loss of the thing/object of the
obligation
If the obligation is a:
1. Determinate obligation to give:
Requisites
a. The thing lost must be determinate;
b. The thing lost is without fault of the
debtor; and
c. The thing is lost before the debtor has
incurred delay (NCC, Art. 1262)
GR: The obligation is extinguished when the
object of the obligation is lost or destroyed
(NCC, Art. 1262).
XPNs: (LAS-CD-PCG)
a. Law provides otherwise (NCC, Art. 1262);
b. Nature of the obligation requires the
Assumption of risk;
c. Stipulation to the contrary;
d. Debtor Contributed to the loss;
e. Loss the of the thing occurs after the
debtor incurred in Delay;
f. When debtor Promised to deliver the
same thing to two or more persons who
do not have the same interest (NCC, Art.
1165);
g. When the debt of a certain and
determinate thing proceeds from a
Criminal offense (NCC, Art. 1268); and
h. When the obligation is Generic (NCC, Art.
1263).
2. Generic obligation to give:
GR: The obligation is not extinguished because
a generic thing never perishes (genus nun
guam perit (NCC, Art. 1263).
XPNs:
a. In case of generic obligations whose
object is a particular class or group with
specific or determinate qualities
(delimited generic obligation);
b. In case the generic thing has already been
segregated or set aside, in which case, it
has become specific.
366
 OBLIGATIONS AND CONTRACTS
3. An obligation to do – The obligation is
extinguished when the prestation becomes
legally or physically impossible without the
fault of the obligor (NCC, Art. 1266).
Types of impossibility to perform an
obligation to do
1. Legal impossibility – Act stipulated to be
performed is subsequently prohibited by law.
2. Physical impossibility – Act stipulated could
not be physically performed by the obligor
due to reasons subsequent to the execution of
the contract (Pineda, 2000).
NOTE: The impossibility must be after the
constitution of the obligation. If it was before,
there is nothing to extinguish.
Effect of partial loss
1. Due to the fault or negligence of the debtor –
Creditor has the right to demand the
rescission of the obligation or to demand
specific performance, plus damages, in either
case.
2. Due to fortuitous event:
a. Substantial loss – Obligation is
extinguished.
b. Unsubstantial loss – The debtor shall
deliver the thing promised in its impaired
condition (NCC, Art. 1264).
Effect when the thing is lost in the possession
of the debtor
GR: It is presumed that loss is due to debtor’s
fault. The obligation is not extinguished.
XPN: Presumption shall not apply in case loss is
due to earthquake, flood, storm, or other natural
calamity (NCC, Art. 1262).
XPN to the XPN: Debtor still liable even if loss
is due to fortuitous event when:
1. Debtor incurred in delay; or
2. Debtor promised to deliver the thing to
two or more persons with different
interests [NCC, Art. 1165(3)].
Effect of unforeseen difficulty of fulfilment
When the service has become so difficult as to be
manifestly beyond the contemplation of the
parties, the obligor may also be released
therefrom, in whole or in part (NCC, Art. 1267).
The impossibility of performance of an obligation
to do shall release the obligor.
367
Rebus sic stantibus
A principle in international law which means that
an agreement is valid only if the same conditions
prevailing at the time of contracting continues to
exist at the time of performance. It is the basis of
the principle of unforeseen difficulty of service
(NCC, Art. 1267).
NOTE: Principle of unforeseen events applies
when the service has become so difficult as to be
manifestly beyond the contemplation of the
parties, the obligor may also be released
therefrom in whole or in part (NCC, Art. 1267).
However, this principle cannot be applied
absolutely in contractual relations since parties
are presumed to have assumed the risk of
unfavorable developments (Pineda, 2000). This
rule also does not apply to obligations for the
payment of a sum of money when there is a
change in the value of the stipulated currency. In
such case, Art. 1250 will apply (Tolentino, 2002).
Requisites in order to relieve the debtor from
his obligation, in whole or in part, based on
unforeseen difficulty of fulfilment
1. Event or change in circumstance could not
have been foreseen at the time of the
execution of the contract;
2. Such event makes the performance extremely
difficult but not impossible;
3. The event must not be due to the act of any of
the parties; and
4. The contract is for a future prestation
(Tolentino, 2002).
Q: The parties entered into a lease agreement
whereby Santos Car Check Center agreed to
lease a property to Comglasco Corp. for five (5)
years. However, a year after, Comglasco
advised Santos Car Check Center that it will be
pre-terminating the contract, to which the
latter refused. Despite refusal, Comglasco
vacated the property and stopped paying
rentals. Santos Car Check then filed a suit for
breach of contract. Comglasco rely on the
provision of the lease contract whereby pre-
termination is allowed with cause in the first
three years. Citing business reverses which it
ascribed to the 1997 Asian Financial Crisis,
Comglasco insists that under Article 1267 of
the NCC, it is exempted from its obligation,
because its business setback is the “cause”
contemplated in their lease. Is Comglasco
correct?
 CIVIL LAW
A: NO. The payment of lease rentals does not
involve a prestation “to do” envisaged in Articles
1266 and 1267. Art. 1267 speaks of a prestation
involving service which has been rendered
difficult by unforeseen subsequent events as to be
manifestly beyond the contemplation of the
parties. Additionally, the Asian Currency Crisis
befell from July 1997 and for some time
thereafter, but Comglasco cannot be permitted to
blame its difficulties on the said regional economic
phenomenon because it entered into the subject
lease only on August 2000, more than three years
after it began, and by then Comglasco had known
what business risks it assumed when it opened a
new shop in Iloilo City (Comglasco Corp. v. Santos
Car Check Center Corp., G.R. No. 202989, March 25,
2015).
Debt which proceeds from a criminal offense
GR: Debtor shall not be exempted from the
payment of his obligation regardless of the cause
of the loss.
XPN: The thing having been offered by debtor to
the person who should receive it, the latter
refused without justification to accept it (NCC, Art.
1268).
NOTE: Offer referred in Art. 1268 is different from
consignation; the former refers to extinguishment
of obligation through loss while the latter refers to
the payment of the obligation.
Creditor’s right of action
The obligation, having been extinguished by
the loss of the thing, the creditor shall have all the
rights of action which the debtor may have against
third persons by reason of the loss (NCC, Art.
1269).
This refers not only the rights and actions which
the debtor may have against third persons, but
also to any indemnity which the debtor may have
already received.
CONDONATION OR REMISSION OF DEBT
(2000 Bar)
(BAR 2000)
An act of liberality by virtue of which the creditor,
without receiving any price or equivalent,
renounces the enforcement of the obligation, as a
result of which it is extinguished in its entirety or
in that part or aspect of the same to which the
condonation or remission refers (Pineda, 2000).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Requisites of condonation (GAIDE)
1. Must be Gratuitous;
2. Acceptance by the debtor;
3. Must not be Inofficious;
4. Formalities provided by law on Donations
must be complied with if condonation is
express; and
5. An Existing demandable debt at the time the
remission is made.
NOTE: Remission or condonation of a debt is in
reality a donation (Jurado, 2010).
Form of express remission
It must comply with the forms of donation (NCC,
Art. 1270).
Form of implied remission
The Code is silent with respect to the form of
implied remission. There must be acceptance by
the obligor or debtor (Jurado, 2010).
Manner and kinds of remission:
1. Total – Refers to the remission of the whole of
the obligation;
2. Partial – Remission of the part of the
obligation: to the amount of indebtedness or
to an accessory obligation only (such as
pledge or interest), or to some other aspect of
the obligation (such as solidary);
3. Inter vivos - Effective during the lifetime of the
creditor;
4. Mortis causa - Effective upon death of the
creditor. In this case, the remission must be
contained in a will or testament (Tolentino,
1991);
5. Express – When it is made formally, it should
be in accordance with the forms of ordinary
donations with regard to acceptance, amount,
and revocation; and
6. Implied – When it can be inferred from the
acts of the parties
Effect of delivery of evidence of credit to
debtor
If the creditor voluntarily delivers the private
document evidencing the credit to the debtor,
there is a presumption that he renounces his right
of action against the latter for the collection of the
said credit (Jurado, 2010).
NOTE: The presumption here is only prima facie
and may be overcome by contrary evidence
(Tolentino, 1991).
368
 OBLIGATIONS AND CONTRACTS
Requisites
1. The document evidencing the credit must have
been delivered by the creditor to the debtor;
2. The document must be a private document;
and
3. The delivery must be voluntary (NCC, Art.
1271).
NOTE: If the document is public, the
presumption does not arise considering the fact
that the public character of the document would
always protect the interest of the creditor
(Jurado, 2010).
Effect of remission in general
It extinguishes the obligation in its entirety or in
the part or aspect thereof to which the remission
refers (Jurado, 2010).
Effect of the remission of the principal debt
with respect to the accessory obligation and
vice versa
The renunciation of the principal debt shall
extinguish the accessory but the waiver of the
latter shall leave the former in force (NCC, Art.
1273).
NOTE: It is presumed that the accessory
obligation of pledge has been remitted 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 (NCC, Art. 1274).
Effect of inofficious condonation
It may be totally revoked or reduced depending on
whether or not it is totally or only partly
inofficious (Pineda, 2000).
The obligation remitted is considered inofficious if
it impairs the legitime of the compulsory heirs
(NCC, Art. 752).
Acceptance by the debtor
The acceptance by the debtor is required. There
can be no unilateral condonation. This is because
condonation or remission is an act of liberality. It
is a donation of an existing credit, considered a
property right, in favor of the debtor, it is required
that the debtor gives his consent thereto by
making an acceptance. If there is no acceptance,
there is no condonation (Pineda, 2009).
369
CONFUSION OR MERGER OF RIGHTS
There is a confusion when there is a meeting in
one person of the qualities of a creditor and
debtor of the same obligation (4 Sanchez Roman
421).
Requisites of confusion or merger of rights
1. It must take place between the creditor and
the principal debtor (NCC, Art. 1276);
2. The very same obligation must be involved
(for if the debtor acquires rights from the
creditor, but not the particular obligation in
question, there will be no merger);
3. The confusion must be total or as regards
with the entire obligation.
Effect of confusion or merger of rights
The creditor and debtor becomes the same person
involving the same obligation. Hence, the
obligation is extinguished (NCC, Art. 1275).
There can be partial confusion
It will be definite and complete up to the extent of
the concurrent amount or value, but the
remaining obligation subsists (Pineda, 2000).
Effect of confusion or merger in relation to the
guarantors
1. Merger which takes place in the person of the
principal debtor or principal creditor benefits
the guarantors. The contract of guaranty is
extinguished;
2. Confusion which takes place in the person of
any of the guarantors does not extinguish the
obligation (NCC, Art. 1276).
Effect of confusion or merger in one debtor or
creditor in a joint obligation
GR: Joint obligation is not extinguished since
confusion is not definite and complete with regard
to the entire obligation. A part of the obligation
still remains outstanding.
XPN: Obligation is extinguished with respect only
to the share corresponding to the debtor or
creditor concerned. In effect, there is only partial
extinguishment of the entire obligation (NCC, Art.
1277; Pineda, 2000).
 CIVIL LAW
Effect of confusion or merger in one debtor or
creditor in a solidary obligation
If a solidary debtor had paid the entire obligation,
the obligation is totally extinguished without
prejudice to the rights of the solidary debtor who
paid, to proceed against his solidary co-debtors
for the latter’s individual contribution or liability
(NCC, Art. 1215).
Revocation of confusion or merger of rights
If the act which created the confusion is revoked
for some causes such as rescission of contracts or
nullity of the will or contract, the confusion or
merger is also revoked. The subject obligation is
revived in the same condition as it was before the
confusion.
NOTE: During such interregnum, the running of
the period of prescription of the obligation is
suspended. (Pineda, 2000)
COMPENSATION
It is a mode of extinguishing obligations that take
place when two persons, in their own right, are
creditors and debtors of each other (NCC, Art.
1278).
It is the offsetting of the respective obligation of
two persons who stand as principal creditors and
debtors of each other, with the effect of
extinguishing their obligations to their concurrent
amount.
Requisites of compensation (1998, 2002, 2008,
2009 BAR)
For the compensation to be proper, it is necessary
that (NCC, Art. 1279):
1. Each one of the obligors must be bound
principally, and that he be at the same time a
principal creditor of the other except
guarantor who may set up compensation as
regards what the creditor may owe the
principal (NCC, Articles. 1279-1280);
2. Both debts consist in 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;
3. Both debts are due;
4. Both debts are liquidated and demandable;
5. Neither debt must be retained in a
controversy commenced by third person and
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
communicated in due time to the debtor
(neither debt is garnished) (NCC, Art. 1279);
and
6. Compensation must not be prohibited by law.
(NCC, Art. 1290).
NOTE: When all the requisites mentioned in Art.
1279 of the CC 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 (NCC, Art. 1290).
Effects of compensation:
1. Both debts are extinguished;
2. Interests stop accruing on the extinguished
obligation or the part extinguished;
3. The period of prescription stops with respect
to the obligation or part extinguished; and
4. All accessory obligations of the principal
obligation which has been extinguished are
alsoextinguished (4 Salvat 353).
Q: X, who has a savings deposit with Y Bank in
the sum of P1,000,000.00, incurs a loan
obligation with the said bank in the sum of
P800,000.00 which has become due. When X
tried to withdraw his deposit, Y Bank allowed
only P200,000.00 to be withdrawn, less service
charges, claiming that compensation has
extinguished its obligation under the savings
account to the concurrent amount of X's debt.
X contends that compensation is improper
when one of the debts, as here, arises from a
contract of deposit. Assuming that the
promissory note signed by X to evidence the
loan does not provide for compensation
between said loan and his savings deposit, who
is correct? (1998 Bar)
A: Y Bank is correct. All the requisites of Art.
1279, Civil Code are present. Compensation shall
take place when two persons are reciprocally
creditor and debtor of each other. In this
connection, it has been held that the relation
existing between a depositor and a bank is that of
creditor and debtor. As a general rule, a bank has a
right of set off of the deposits in its hands for the
payment of any indebtedness to it on the part of a
depositor (Gullas v. PNB, G.R. No. L-43191,
November 13, 1935). Hence, compensation took
place between the mutual obligations of X and Y
Bank.
Q: Foodmasters, Inc. (FI) had outstanding loan
obligations to both Union Bank’s predecessor-
in-interest, Bancom Development Corporation
(Bancom), and to DBP.On May 21, 1979, FI and
370
 OBLIGATIONS AND CONTRACTS
DBP, among others, entered into a Deed of
Cession of Property In Payment of Debt
(dacion en pago) whereby the former ceded in
favor of the latter certain properties (including
a processing plant in Marilao, Bulacan
[processing plant]) in consideration of the
following: (a) the full and complete
satisfaction of FI’s loan obligations to DBP; and
(b) the direct assumption by DBP of FI’s
obligations to Bancom in the amount of
₱17,000,000.00 (assumed obligations). On the
same day, DBP, as the new owner of the
processing plant, leased back for 20 years the
said property to FI (Lease Agreement) which
was, in turn, obliged to pay monthly rentals to
be shared by DBP and Bancom. DBP also
entered into a separate agreement with
Bancom (Assumption Agreement) whereby the
former: (a) confirmed its assumption of FI’s
obligations to Bancom; and (b) undertook to
remit up to 30% of any and all rentals due
from FI to Bancom (subject rentals) which
would serve as payment of the assumed
obligations, to be paid in monthly installments.
Claiming that the subject rentals have not been
duly remitted despite its repeated demands,
Union Bank filed, on June 20, 1984, a collection
case against DBP before the RTC, docketed as
Civil Case No. 7648. In opposition, DBP
countered, among others, that the obligations
it assumed were payable only out of the rental
payments made by FI. Thus, since FI had yet to
pay the same, DBP’s obligation to Union Bank
had not arisen. In addition, DBP sought to
implead FW as third party-defendant in its
capacity as FI’s assignee and, thus, should be
held liable to Union Bank. Was there legal
compensation?
A: NONE. The rule on legal compensation is stated
in Article 1290 of the Civil Code which provides
that "when all the requisites mentioned in Article
1279 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."
Therefore, compensation could not have taken
place between these debts for the apparent reason
that requisites 3 and 4 under Article 1279 of the
Civil Code are not present. Since DBP’s assumed
obligations to Union Bank for remittance of the
lease payments are – in the Court’s words –
"contingent on the prior payment thereof by FW
to DBP," it cannot be said that both debts are due
(requisite 3 of Article 1279 of the Civil Code). Also,
the Court observed that any deficiency that DBP
had to make up for the full satisfaction of the
371
assumed obligations "cannot be determined until
after the satisfaction of FW’s obligation to DBP." In
this regard, it cannot be concluded that the same
debt had already been liquidated, and thereby
became demandable (requisite 4 of Article 1279 of
the Civil Code). Thus, CA correctly upheld the
denial of Union Bank’s motion to affirm legal
compensation (Union Bank Of The Philippines vs.
Development Bank Of The Philippines, G.R. No.
191555, January 20, 2014).
Q: May the parties agree upon the
compensation of debts which are not due?
A: YES. Under Art. 1282, conventional or
voluntary compensation is not limited to
obligations which are not yet due. The parties may
compensate by agreement any obligations, in
which the objective requisites provided for legal
compensation are not present. It is necessary,
however, that the parties should have the capacity
to dispose of credits which they compensate,
because the extinguishment of the obligations in
this case arises from their wills and not from law.
Q: May rescissible or voidable debts which are
already compensated be rescinded or
annulled? What are its effects?
A: YES. Although a rescissible or voidable debt can
be compensated before it is rescinded or annulled,
the degree of rescission or annulment is
retroactive, and the compensation must be
considered as cancelled. And as rescission or
annulment requires mutual restitution, the party
whose obligation is annulled or rescinded can thus
recover to the extent that his credit was
extinguished by the compensation; because to that
extent, he is deemed to have made a payment.
Compensation v. Payment
BASIS COMPENSATIO
PAYMENT
N
A mode of Payment
extinguishing to means not
the concurrent only
amount, the delivery of
obligations of money but
those persons also
Definition
who in their own performanc
right are e of an
reciprocally obligation.
debtors and
creditors of each
other.
 CIVIL LAW
Capacity of Debtor must Need not to be pleaded; It must be pleaded to be
parties not have takes place by effectual.
necessary capacity to operation of law and
Reason: dispose of extinguishes
As to the
Compensation the thing reciprocally the two
necessity of the
operates by law, paid; debts as soon as they
capacity of the
not by the act of creditor exist simultaneously, to
parties
the parties. must have the amount of their
capacity to respective sums.
receive
payment. Generally, both debts Does not require that
must be liquidated. debts are liquidated.
There can be The
partial performanc Legal or conventional Judicial compensation
As the extinguishment e must be compensation governed provided that the
susceptibility of the obligation. complete by the Civil Code. requirements of Rules
of partial and of Court, particularly on
extinguishmen indivisible Counterclaims and/or
t unless Cross-claims are
waived by observed.
the creditor.
Debts or obligations not subject to
Legal Takes effect compensation
compensation by the act of
As to the
takes place by the parties 1. Debts or obligations arising from contracts of
operation of
operation of law and involves depositum (NCC, Art. 1287);
extinguishing
without delivery or 2. Debts arising from obligations of a depositary;
the obligation
simultaneous action. 3. Debts arising from obligations of a bailee in
delivery. commodatum;
Parties must be It is not 4. Claims for support due by gratuitous title;
mutually debtors necessary 5. Obligations arising from criminal offenses
and creditors of that the (NCC, Art. 1288); and
As to the 6. Certain obligations in favor of government.
each other. parties be
relationship of
mutually
the parties e.g. Taxes, fees, duties, and others of a similar
debtors and
creditors of nature.
each other.
There can be no off-setting of taxes against the
claims that the taxpayer may have against the
Compensation v. Confusion government. A person cannot refuse to pay a tax
on the ground that the government owes him an
COMPENSATION CONFUSION amount equal to or greater than the tax being
(NCC, Articles. 1278- (NCC, Articles. 1275- collected. Internal revenue taxes cannot be the
1279) 1277) subject of compensation because government and
taxpayer are not mutually creditors and debtors of
Two persons who are One person where each other. Taxes are not in the nature of
mutual debtors and qualities of debtor and contracts between parties (Francia v. IAC, G.R. No.
creditors of each other. creditor are merged. L-67649, June 28, 1988).
At least two obligations. One obligation.
NOTE: Compensation takes place by operation of
law, even though the debts may be payable at
Compensation v. Counterclaim or Set-off different places, but there shall be an indemnity
for expenses of exchange or transportation to the
COUNTERCLAIM / place of payment (NCC, Art. 1286).
COMPENSATION
SET-OFF
Q: When is compensation not proper?

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 372
 OBLIGATIONS AND CONTRACTS
A: Under Art. 1287, compensation shall not be
proper when one of the debts arises from a
depositum or from the obligations of a depositary
or of a bailee in commodatum. Neither can
compensatin be set up against a creditor who has
a claim for support due by gratuitous title without
prejudice to the provisions of Art. 301 (2).
NOTE: Only the depositary and the borrower in
commodatum cannot set up compensation. The
depositor can set up his deposit against the
depositary, and the lender can set up his loan
against a credit of the borrower.
Neither shall there be compensation if one of the
debts consists in civil liability arising from a penal
offense.
NOTE: The person who has the civil liability
arising from crime is the only party who cannot
set up the compensation; but the offended party is
entitled to indemnity can set up his claim in
compensation of his debt.
KINDS OF COMPENSATION
1. Legal compensation – by operation of law;
2. Conventional – by agreement of the parties;
3. Judicial (set-off) – by judgment of the court
when there is a counterclaim duly pleaded,
and the compensation decreed; and
4. Facultative – may be claimed or opposed by
one of the parties.
Q: De Leon sold and delivered to Silahis
various merchandise. Due to Silahis' default,
De Leon filed a complaint for the collection of
said accounts. Silahis asserts, as affirmative
defense, a debit memo as unrealized profit for
a supposed commission that Silahis should
have received from De Leon from the sale
made directly to DOLE Philippines, Inc.
(DOLE). Was there legal compensation?
A: NONE. Silahis admits the validity of his
outstanding accounts with De Leon. But whether
De Leon is liable to pay Silahis a commission on
the subject sale to DOLE is disputed. This
circumstance prevents legal compensation from
taking place (Silahis Marketing Corp. v. IAC, G. R.
No. L-74027, December 7, 1989).
NOTE: Compensation is not proper where the
claim of the person asserting the set-off against
the other is not clear or liquidated; compensation
cannot extend to unliquidated, disputed claim
existing from breach of contract (Silahis Marketing
Corp. v. IAC, G.R. No. L-74027, December 7, 1989).
373
Q: Atty. Laquihon, in behalf of Pacweld, filed a
pleading addressed to MPCC titled “motion to
direct payment of attorney's fee”, invoking a
decision wherein MPCC was adjudged to pay
Pacweld the sum of P10, 000. 00 as attorney's
fees. MPCC filed an opposition stating that the
said amount is set-off by a like sum of P10,
000. 00, collectible in its favor from Pacweld
also by way of attorney's fees which MPCC
recovered from the same CFI of Manila in
another civil case. Was there legal
compensation?
A: YES. MPCC and Pacweld were creditors and
debtors of each other, their debts to each other
consisting in final and executory judgments of the
CFI in two separate cases. The two obligations,
therefore, respectively offset each other,
compensation having taken effect by operation of
law and extinguished both debts to the concurrent
amount of P10,000.00, pursuant to the provisions
of Articles. 1278, 1279 and 1290 of the Civil Code,
since all the requisites provided in Art. 1279 of the
said Code for automatic compensation "even
though the creditors and debtors are not aware of
the compensation" were present (Mindanao
Portland Cement Corp. v. CA, G.R. No. L-62169,
February 28, 1983).
Conventional compensation
It is one that takes place by agreement of the
parties.
Effectivity of conventional compensation
For compensation to become effective:
GR: The mutual debts must be both due (NCC, Art.
1279).
XPN: The parties may agree that their mutual
debts be compensated even if the same are not yet
due. (NCC, Art. 1282).
Judicial compensation
If one of the parties to a suit over an obligation has
a claim for damages against the other, the former
may set it off by proving his right to said damages
and the amount thereof (NCC, Art. 1283).
All the requisites mentioned in Art. 1279 must be
present, except that at the time of filing the
pleading, the claim need not be liquidated. The
liquidation must be made in the proceedings.
Facultative compensation
 CIVIL LAW
One of the parties has a choice of claiming or
opposing the compensation but waives his
objection thereto such as an obligation of such
party is with a period for his benefit alone and he
renounces the period to make the obligation
become due.
Facultative compensation is unilateral and does
not require mutual agreement; voluntary or
conventional compensation requires mutual
consent.
e.g. X owes Y P100,000 demandable and due on
April 1, 2012. Y owes X P100, 000 demandable
and due on or before April 15, 2012. Y, who was
given the benefit of the term, may claim
compensation on April 1, 2012. On the other hand,
X, who demands compensation, can be properly
opposed by Y because Y could not be made to pay
until April 15, 2012.
NOTE: Compensation can be renounced either at
the time an obligation is contracted or afterwards
(Tolentino, 1991). It can be renounced expressly or
impliedly.
Examples of implied renunciation:
1. By not setting it up in the litigation;
2. By consenting to the assignment of credit
under NCC,Art. 1285; or
3. By paying debt voluntarily, with knowledge
that it has been extinguished by compensation
(Tolentino, 1991).
Q: Eduardo was granted a loan by XYZ Bank for
the purpose of improving a building which XYZ
leased from him. Eduardo executed the
promissory note in favor of the bank, with his
friend Ricardo as cosignatory. In the PN, they
both acknowledged that they are “individually
and collectively” liable and waived the need
for prior demand. To secure the PN, Ricardo
executed a real estate mortgage on his own
property. When Eduardo defaulted on the PN,
XYZ stopped payment of rentals on the
building on the ground that legal
compensation had set in. Since there was still a
balance due on the PN after applying the
rentals, XYZ foreclosed the real estate
mortgage over Ricardo’s property. Ricardo
opposed the foreclosure on the ground that he
is only a co-signatory; that no demand was
made upon him for payment, and assuming he
is liable, his liability should not go beyond half
of the balance of the loan. Further, Ricardo
said that when the bank invoked
compensation between the rentals and the
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
amount of the loan, it amounted to a new
contract or novation, and had the effect of
extinguishing the security since he did not give
his consent (as owner of the property under
the real estate mortgage) thereto.
a. Can XYZ Bank validly assert legal
compensation?
b. Can Ricardo’s property be foreclosed to
pay the full balance of the loan?
c. Does Ricardo have basis under the Civil
Code for claiming that the original
contract was novated? (2008 Bar)
A:
a. NO. XYZ Bank may validly assert the partial
compensation of both debts, but it should be
facultative compensation because not all of
the five requisites of legal compensation are
present (NCC, Art. 1279). The payment of the
rentals by XYZ Bank is not yet due, but the
principal obligation of loan where both
Eduardo and Ricardo are bound solidarily and
therefore any of them is bound principally to
pay the entire loan, is due and demandable
without need of demand. XYZ Bank may
declare its obligation to pay rentals as already
due and demand payment from any of the two
debtors.
b. NO, because there was no prior demand on
Ricardo, depriving him of the right to
reasonably block the foreclosure by payment.
The waiver of prior demand in the PN is
against public policy and violates the right to
due process. Without demand, there is no
default and the foreclosure is null and void.
Since the mortgage, insofar as Ricardo is
concerned is not violated, a requirement
under Act 3135 for a valid foreclosure of real
estate mortgage is absent.
In the case of DBP v. Licuanan (, February 26,
2007), it was held that: “the issue of whether
demand was made before the foreclosure was
effected is essential. If demand was made and
duly received by the respondents and the
latter still did not pay, then they were already
in default and foreclosure was proper.
However, if demand was not made, then the
loans had not yet become due and
demandable. This meant that the respondents
had not defaulted in their payment and the
foreclosure was premature.”
c. NO. Since none of the three kinds of novation
is applicable. There is no objective novation,
whether express or implied, because there is
no change in the object or principal conditions
of the obligation. There is no substitution of
374
 OBLIGATIONS AND CONTRACTS
debtors, either. Compensation is considered
as abbreviated or simplified payment and
since Ricardo bound himself solidarily with
Eduardo, any facultative compensation which
occurs does not result in partial legal
subrogation. Neither Eduardo nor Ricardo is a
third person interested in the obligation
under NCC, Art. 1302.
Obligations subject to facultative
compensation
When one of the debts arises from:
1. Depositum;
2. Obligations of a depositary;
3. Obligations in commodatum;
4. Support; and
GR: Claim of support due to gratuitous title
XPN: Future support.
5. Civil liability from a crime.
NOTE: NCC, Art. 1288 prohibits compensation if
one of the debts consists in civil liability arising
from a penal offense. However, the victim is
allowed to claim compensation.
If one or both debts are rescissible or voidable
When one or both debts are rescissible or
voidable, they may be compensated against each
other before they are judicially rescinded or
avoided (NCC, Art. 1284).
If the prescriptive period had already lapsed,
there is automatic compensation and the same
will not be disturbed anymore. Whereas, if the
debt is rescinded or annulled, compensation shall
be restitution of what each party had received
before the rescission or annulment.
Effects of assignment on compensation of
debts
1. After the compensation took place
GR: Ineffectual; useless act since there is
nothing more to assign
XPN: When the assignment was made with
the consent of the debtor.
NOTE: Such consent operates as a waiver of
the rights to compensation.
375
XPN to the XPN: At the time he gave his
consent, he reserved his right to the
compensation.
2. Before compensation took place
a. With the consent of the debtor –
Compensation cannot be set up except
when the right to compensation is
reserved.
b. With the knowledge but without consent
of the debtor – Compensation can be set
up regarding debts previous to the
cession or assignment but not
subsequent ones.
c. Without the knowledge of debtor - Can set
up compensation as a defense for all
debts maturing prior to his knowledge of
the assignment.
Renunciation of compensation
Compensation can be renounced expressly or
impliedly. It can also be renounced either at the
time an obligation is contracted or afterwards. It
rests upon a potestative right, and a unilateral
declaration of the debtor would be sufficient
renunciation.
NOVATION
(1994, 2008 Bar)
It is the substitution or change of an obligation by
another, resulting in its extinguishment or
modification, either by changing the object or
principal conditions, or by substituting another in
the place of the debtor or by subrogating a third
person to the rights of the creditor (Pineda, 2000).
Requisites of novation (OIC –SN)
1. Valid Old obligation;
XPNs:
a. When the annulment may be claimed only
by the debtor and he consented to the
novation; and
b. When ratification validates acts which are
voidable.
2. Intent to extinguish or to modify the old
obligation;
3. Capacity and consent of all the parties to the
new obligation (except in case of expromission
where the old debtor does not participate);
 CIVIL LAW
4. Substantial difference of the old and new
obligation – on every point incompatible with
each other (implied novation); and
5. Valid New obligation.
NOTE: If the new obligation is void, the
original one shall subsist as there is no
novation. However, even if the new obligation
turns out to be void, the original obligation
does not subsist if the parties clearly intended
that the former relation should be
extinguished in any event (NCC, Art. 1297).
Presumption of novation
Novation is never presumed; it must be proven as
a fact either by:
1. Explicit declaration – If it be so declared in
unequivocal terms; or
2. Material incompatibility – That the old and the
new obligations be on every point
incompatible with each other (NCC, Art. 1292).
Express novation
Takes place only when the intention to effect a
novation clearly results from the terms of the
agreement or is shown by a full discharge of the
original debt (Jurado, 2010).
Implied novation
It is imperative that the old and new obligations
must be incompatible with each other.
The test of incompatibility between the old and
the new obligations is to determine whether or
not both of them can stand together, each having
its own independence. If they can stand together,
there is no incompatibility; consequently, there is
no novation. If they cannot stand together, there is
incompatibility; consequently, there is novation
(Borja v. Mariano, G.R. No. L-44041,
October 28, 1938).
NOTE: Novation is never presumed and the
animus novandi (intent to make a new obligation)
whether totally or partially, must appear by
express agreement of the parties or by their acts
that are too clear and unequivocal to be mistaken.
Two-fold functions of novation
1. It extinguishes the old obligation; and
2. Creates a new obligation in lieu of the old one.
Kinds of novation
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
1. As to essence
a. Objective or real novation – Changing the
object or principal conditions of the
obligation (NCC, Art. 1291).
NOTE: In payment of sum of money, the
first obligation is not novated by a second
obligation that:
(1) Expressly recognizes the first
obligation;
(2) Changes only the terms of payment;
(3) Adds other obligation not
incompatible with the old ones; or
(4) Merely supplements the first one.
b. Subjective or personal novation – Change
of the parties.
i. Substituting the person of the debtor
(passive novation) – may be made
without the knowledge of or against
the will of the latter, but not without
the consent of the creditor.
a) Delegacion – The substitution is
initiated by the old debtor
himself (delegante) by
convincing another person
(delegado) to take his place and
to pay his obligation to the
creditor (1996, 2001 Bar).
b) Expromission – The substitution
of the old debtor by a new
debtor is upon the initiative or
proposal of a third person
(1996, 2001 Bar).
NOTE: If it is the creditor who initiated
the change of debtor, it is considered
expromission
ii. Subrogating a third person to the
rights of the creditor (active
novation)
c. Mixed – Combination of the objective and
subjective novation.
3. As to form of their constitution
a. Express – The parties declared in
unequivocal terms that the obligation is
extinguished by the new obligation.
b. Implied – No express declaration that the
old obligation is extinguished by the new
one. The old and new obligation is
incompatible on every material point
(NCC, Art. 1292).
4. As to extent of their effects
376
 OBLIGATIONS AND CONTRACTS
a. Total or extinctive – Obligation is
originally extinguished.
NOTE: Four requisites of extinctive
novation:
(1) A previous valid obligation;
(2) An agreement of all parties
concerned to a new contract;
(3) The extinguishment of the old
obligation; and
(4) The birth of a valid new obligation
(Iloilo Traders Finance, Inc., v. Heirs
of Soriano,
G.R. No. 149683, June 16, 2003).
The extinctive novation would thus have
the twin effects of first, extinguishing an
existing obligation and second, creating a
new one in its stead.
b. Partial or modificatory – Original
obligation is not extinguished but merely
modified.
5. As to their origin
a. Legal novation – By operation of law
(NCC, Art. 1300 & 1302).
b. Conventional novation – By agreement of
the parties (NCC, Arts. 1300-1301).
6. As to presence of absence of condition
a. Pure – New obligation is not subject to a
condition.
b. Conditional – When the creation of the
new obligation is subject to a condition.
Rights of the new debtor
1. With the debtor’s consent – Right of
reimbursement and subrogation.
2. Without the consent of the old debtor or
against his will – Right to beneficial
reimbursement.
Novation by substitution of debtor
The consent of the creditor is mandatory both in
delegacion and expromission (NCC, Art. 1293). It
may be express or implied from his acts but not
from his mere acceptance of payment by a third
party, for there is no true transfer of debt.
NOTE: Creditor’s consent or acceptance of the
substitution of the old debtor by a new one may
be given at anytime and in any form while the
agreement of the debtor subsists (Asia Banking
Corp. v. Elser, G.R. No. L-30266, March 25, 1929).
377
Requisites of delegacion
1. Substitution is upon the initiative or proposal
of the old debtor himself by proposing to the
creditor the entry of another (third person) as
the new debtor who will replace him in
payment of the obligation;
2. The creditor accepts and the new debtor
agrees to the proposal of the old debtor; and
3. The old debtor is released from the obligation
with the consent of the creditor.
Insolvency of the new debtor in delegacion
GR: Insolvency of the new debtor (delegado), who
has been proposed by the original debtor
(delegante) and accepted by the creditor
(delegatario), shall not revive the action of the
latter against the original obligor (NCC, Art. 1295).
XPNs: Original debtor shall be held liable; if:
1. Insolvency was already existing and of public
knowledge, or known to the debtor; - (NCC,
Art. 1295); or
2. Insolvency of the new debtor was already
existing and known to the original debtor at
the time of the delegation of the debt to the
new debtor (NCC, Art. 1295).
Requisites of expromission
1. Substitution is upon the initiative or proposal
of a third person who will step into the shoes
of the debtor;
2. Creditor must give his consent to the proposal
of the third person; and
3. Old debtor must be released from the
obligation with the consent of the creditor.
Insolvency of the new debtor in expromission
If substitution is without the knowledge or against
the will of the debtor, the new debtor’s insolvency
or non-fulfillment of the obligation shall not give
rise to any liability on the part of the original
debtor. (NCC, Art. 1294).
NOTE: If the old debtor gave his consent and the
new debtor could not fulfill the obligation, the old
debtor should be liable for the payment of his
original obligation.
SUMMARY
EXPROMISSIO
DELEGACION
N
 CIVIL LAW
Person who the new debtor – the new
initiated the Old debtor Third person was already debtor’s
substitution existing and insolvency or
known to the non-fulfillment
It may be express or implied original debtor of the
Consent of the from his acts but not from his at the time of obligation shall
creditor mere acceptance of payment by a the delegation not give rise to
third party. of the debt to any liability on
the new the part of the
With the With or without
debtor. original debtor.
consent of the the knowledge
Consent of the old debtor of the debtor or
old debtor (since he against the will Q: Metro Corporation obtained a loan from
initiated the of the old Allied Bank covered by promissory notes,
substitution). debtor. letters of credit, and trust receipts. By way of
security, Metro’s officers individually executed
Consent is a continuing guaranty in favor of Allied Bank.
needed but it Metro’s officers failed to settle their
Consent of need not be Consent is obligations prompting Allied Bank to demand
third person given needed. for payment to no avail. In order to settle their
simultaneously debts, they offered the sale of Metro’s
. remaining assets (machines and equipment) to
the Bank which the latter refused. Meanwhile,
Intention of Released from the obligation
Starpeak Corporation, acting through Allied
substitution with the consent of the creditor.
Bank’s counsel, entered into an agreement
With the with Metro to buy the machines that were
debtor’s consent reduced to mere scraps of metals. Starpeak,
– right of unfortunately, reneged on its obligation to
reimbursement Metro. In this regard, Metro asseverates that
With the their failure to pay their outstanding loan
and
debtor’s obligations to Allied Bank must be considered
subrogation.
consent – right as force majeure, and since Allied Bank was the
Rights of the
of party, through their counsel, that accepted the
new debtor Without the
reimbursement terms and conditions of payment proposed by
consent of the
and Starpeak, petitioners must therefore be
old debtor or
subrogation. deemed to have settled their obligations to
against his will
– right to Allied Bank.
beneficial
reimbursement. Were the loan obligations under the
promissory notes, letters of credit, and trust
Shall not revive With the receipts have already been extinguished?
the action of debtor’s consent
the latter - If the old A: No. Article 1231 of the New Civil Code states
against the debtor gave his that obligations are extinguished either by
original consent and the payment or performance, the loss of the thing due,
obligor. new debtor the condonation or remission of the debt, the
Insolvency or could not fulfill confusion or merger of the rights of creditor and
nonfulfillmen Original debtor the obligation, debtor, compensation or novation.
t of the shall be held the old debtor
obligation of liable: should be liable Starpeak and Metro’s agreement is a sale of assets
the new 1. Insolvency for the payment contract, while Metro’s obligations to Allied Bank
debtor was already of his original arose from various loan transactions. Absent any
existing and obligation. showing that the terms and conditions of the
of public latter transactions have been, in any way,
knowledge, Without the modified or novated by the terms and conditions
or known to consent of the in the Starpeak-Metro agreement, said contracts
the debtor. old debtor or should be treated separately and distinctly from
Insolvency of against his will each other, such that the existence, performance

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 378
 OBLIGATIONS AND CONTRACTS
or breach of one would not depend on the
existence, performance or breach of the other.
The performance or breach of the agreement
bears no relation to the performance or breach of
the subject loan transactions, they being separate
and distinct sources of obligations. Metro’s loan
obligations to Allied Bank remain subsisting for
the basic reason that the former has not been able
to prove that the same had already been paid or,
in any way, extinguished (Metro Concast Steel
Corporation, Spouses Jose S. Dychiao And Tiuoh
Yan, Spouses Guillermo And Mercedes Dychiao, And
Spouses Vicente And Filomena Dychiao vs. Allied
Bank Corporation, G.R. No. 177921, December 4,
2013).
Q: SDIC issued to Danilo a Diners Card (credit
card) with Jeannete as his surety. Danilo used
this card and initially paid his obligations to
SDIC. Thereafter, Danilo wrote SDIC a letter
requesting it to upgrade his Regular Diners
Club Card to a Diamond (Edition) one. As a
requirement of SDIC, Danilo secured from
Jeanette her approval and the latter obliged.
Danilo's request was granted and he was
issued a Diamond (Edition) Diners Club Card.
Danilo had incurred credit charged plus
appropriate interest and service charge.
However, he defaulted in the payment of this
obligation. Was the upgrading a novation of
the original agreement governing the use of
Danilo Alto's first credit card, as to extinguish
that obligation?
A: YES. Novation, as a mode of extinguishing
obligations, may be done in two ways: by explicit
declaration, or by material incompatibility.
There is no doubt that the upgrading was a
novation of the original agreement covering the
first credit card issued to Danilo Alto, basically
since it was committed with the intent of
cancelling and replacing the said card. However,
the novation did not serve to release Jeanette from
her surety obligations because in the surety
undertaking she expressly waived discharge in
case of change or novation in the agreement
governing the use of the first credit card (Molino v.
Security Diners International Corp., G.R. No.
136780, August 16, 2001).
Q: J. C. Construction bought steel bars from
Matibay Steel Industries (MSI) which is owned
by Buddy Batungbacal. J.C. failed to pay the
purchased materials worth P500,000 on due
date. J.C. persuaded its client Amoroso with
whom it had receivables to pay its obligation
to MSI. Amoroso agreed and paid MSI the
379
amount of P50,000. After 2 other payments,
Amoroso stopped making further payments.
Buddy filed a complaint for collection of the
balance of the obligation and damages against
J.C. JC denied any liability claiming that its
obligation was extinguished by reason of
novation which took place when MSI accepted
partial payments from Amoroso on its behalf.
Was the obligation of JC to MSI extinguished by
novation? Why? (2014 Bar)
A: NO. Under Art. 1292 of the NCC, in order that
an obligation may be extinguished by another
which substitute the same, it is imperative that it
be so declared in unequivocal terms, or that the
old and the new obligations be on every point be
incompatible with each other. Novation by
substitution of the debtor requires the consent of
the creditor as provided in Art. 1293. This
requirement is not present in this case.
In Magdalena Estates Inc., vs. Rodriguez (G.R. No.
L-18411, December 17, 1966) it was ruled that the
mere fact that the creditor received payment from
a third person does not constitute novation and
does not extinguish the obligation of the original
debtor. Thus, the obligation of JC to MSI subsists.
Effects of novation
1. Extinguishment of principal also extinguishes
the accessory, except:
a. Mortgagor, pledgor, surety or guarantor
agrees to be bound by the new obligation
(Tolentino, 1999); or
b. Stipulation made in favor of a third
person such as stipulation pour atrui
(NCC, Art. 1311) unless beneficiary
consents to the novation (NCC, Art. 1296).
2. If old obligation is:
a. Void – Novation is void (NCC, Art. 1298)
b. Voidable – Novation is valid provided that
the annulment may be claimed only by
the debtor or when ratification validates
acts (NCC, Art. 1298).
c. If the old obligation was subject to a
suspensive or resolutory condition, the
new obligation shall be under the same
condition, unless it is otherwise
stipulated. (NCC, Art. 1299).
3. If old obligation is conditional and the new
obligation is pure:
 CIVIL LAW
a. If resolutory and it occurred – Old
obligation already extinguished; no new
obligation since nothing to novate.
b. If suspensive and it did not occur – It is as
if there is no obligation; thus, there is
nothing to novate.
4. If the new obligation is:
a. Void – Original one shall subsist, unless
the parties intended that the former
relation should be extinguished in any
event (NCC, Art. 1297).
b. Voidable – Novation can take place, except
when such new obligation is annulled. In
such case, old obligation shall subsist.
c. Pure obligation – Conditions of old
obligation deemed attached to the new,
unless otherwise stipulated (Tolentino,
1999).
d. Conditional Obligation:
i. If resolutory – Valid until the
happening of the condition (NCC, Art.
1181).
ii. If suspensive and did not materialize –
No novation, old obligation is
enforced.
(NCC, Art. 1181).
NOTE: Novation does not extinguish criminal
liability (PNB v. Soriano, G.R. No. 164051, October
3, 2012)
Q: Will a contract of suretyship, which is
secondary to a principal obligation, be
extinguished when novation occurs?
A: It depends. A surety is released from its
obligation when there is a material alteration of
the principal contract in connection with which
the bond is given, such as a change which imposes
a new obligation on the promising party, or which
takes away some obligation already imposed, or
one which changes the legal effect of the original
contract and not merely its form (Philippine
Charter Insurance Corporation v. Petroleum
Distributors & Service Corporation, G.R. No. 180898,
April 18, 2012). Furthermore, a surety is not
released by a change in the contract, which does
not have the effect of making its obligation more
onerous (Stronghold Insurance Company, Inc. v.
Tokyu Construction Company, G.R. Nos. 158820-21,
June 5, 2009). As such, a contract is only
extinguished by novation when there is a material
alteration in the principal contract or if it has the
effect of making the obligation more onerous.
Subrogation
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
It is the active subjective novation characterized
by the transfer to a third person of all rights
appertaining to the creditor in the transaction
concerned including the right to proceed against
the guarantors or possessors of mortgages and
similar others subject to any applicable legal
provision or any stipulation agreed upon by the
parties in conventional subrogation.
NOTE: Whoever pays on behalf of the debtor
without the knowledge or against the will of the
latter cannot compel the creditor to subrogate him
in his rights, such as those arising from a
mortgage, guaranty, or penalty (NCC, Art. 1237).
Kinds of subrogation
1. As to their creation
a. Legal subrogation – Constituted by virtue
of a law (NCC, Articles 1300 and 1302);
b. Voluntary or conventional subrogation –
Created by the parties by their voluntary
agreement (NCC, Art. 1300);
NOTE: Conventional subrogation of a third
person requires the consent of the original
parties and of the third person (NCC, Art.
1301);
2. As to their extent
a. Total subrogation – Credits or rights of
the creditor in the transaction are totally
transferred to the third person.
b. Partial subrogation – Only part of the
credit or rights of the creditor in the
transaction are transferred to the third
person.
NOTE: A creditor, to whom partial payment
has been made, may exercise his right for the
remainder and he shall be preferred to the
person who has been subrogated in his place
in virtue of the partial payment of the same
credit (NCC, Art. 1304).
Presumption of legal subrogation
GR: Legal subrogation is not presumed (NCC, Art.
1300).
XPN: In cases expressly mentioned in the law:
1. When a creditor pays another creditor who is
preferred, even without the debtor’s
knowledge;
2. When a third person, not interested in the
obligation, pays with the express or tacit
approval of the debtor;
380
 OBLIGATIONS AND CONTRACTS
3. When, even without the knowledge of the
debtor, a person interested in the fulfillment
of the obligation pays, without prejudice to
the effects of confusion as to the latter’s share.
(NCC, Art. 1302).
NOTE: In the law of subrogation, active subjective
novation is stricter than passive subjective
novation. In the latter, the consent of the old
debtor is not even required in expromission.

Conventional subrogation v. Assignment of CONTRACTS

credit

ASSIGNMENT
CONVENTIONAL GENERAL PROVISIONS
BASIS OF CREDITS
SUBROGATION
OR RIGHTS

Governing Article 1300- Article 1624- A contract is a meeting of minds between two
law 1304 1627 persons whereby one binds himself, with respect
to the other, to give something or to render some
It extinguishes The transfer
service (NCC, Art. 1305).
the original of the credit
obligation and or right does
A contract is a meeting of the minds between two
creates a new not extinguish
or more parties, whereby one party binds himself
one. or modify the
with respect to the other, or where both parties
Effect obligation.
bind themselves reciprocally, in favor of one
The transferee
another, to fulfill a prestation to give, to do or not
becomes the
to do. (Pineda, 2009)
new creditor
for the same
Meeting of minds
obligation.

The consent of The consent of Speaks of the intention of the parties in entering
the debtor is the debtor is into the contract respecting the subject matter and
necessary (NCC, not necessary. the consideration thereof. As a rule therefore, a
Need for Art. 1301). Notification is contract is perfected by mere consent. It does not
consent of enough for the require any special form, as a rule, and is binding
debtor validity of the from the moment that the essential requisites are
assignment present. Thus, the meeting of the minds between
(NCC, Art. the parties rise to the binding contract althought
1626). they have not affixed their signature to its written
form (Rabuya, 2017).
Begins from the Begins from Obligation v. Contract
Effectivity moment of notification of
subrogation. the debtor. While a contract is one of the sources of
obligations, an obligation is the legal tie or
The defect in the The defect in relations itself that exists after a contract has been
old obligation the credit or entered into.
may be cured rights is not
Curability of
such that the cured by its Hence, there can be no contract if there is no
defect or vice
new obligation mere obligation. But an obligation may exist without a
becomes valid. assignment to contract (De Leon, 2010).
a third person.

Debtor cannot The debtor Duty of courts in interpreting contracts

set up a defense can still set up
against the new the defense It is not the province of the court to alter a
creditor which (available contract by construction or to make a new
Defense contract for the parties. Its duty is confined to the
he could have against the old
availed himself creditor) interpretation of the one which they have made
of against the old against the for themselves without regard to its wisdom or
creditor. new creditor. folly as the court cannot supply material
stipulations or red into the contract words which

381
 CIVIL LAW
it does not contain (Cuizon v. CA, G.R. No. 102096,
August 22, 1996).
STAGES IN THE MAKING OF A CONTRACT
Three stages in the making of a contract (CPC) :
1. Conception or Generation – the first stage
where the parties begin their initial negotiation
and bargaining for the formation of the contract
ending at the moment of agreement of the parties.
2. Perfection or Birth – Here, the parties had a
meeting of minds as to the object, cause or
consideration and other terms and conditions of
the contract.
3. Consumation or fulfillment – This the last
stage which consists in their performance or
fulfillment by the parties of their obligations
under the term of the perfected contract.
CHARACTERISTICS OF A CONTRACT
The following are the characteristics of a contract
(AMOR):
1. Autonomy (NCC, Art. 1306);
2. Mutuality (NCC, Art. 1308);
3. Obligatoriness and consensuality (NCC, Art.
1315);
4. Relativity (NCC, Art. 1311)
5. Consensuality (NCC, Art. 1315)
RELATIVITY OF CONTRACTS
(1991, 1996, 2002 BAR)
Principle of relativity or Principle of limited
effectivity of contracts (2011 BAR)
GR: Contracts take effect only between the parties
or their assigns and heirs.
Res inter alios acta aliis neque nocit prodest (a
thing done between others does not harm or
benefit others) – a contract can only obligate the
parties who entered into it, or their successors
who assumed their personalities, and that,
concomitantly, a contract can neither favor nor
prejudice third persons (Vitug, 2006).
NOTE: With respect to the heir, he shall not be
liable beyond the value of the property he
received from the decedent (NCC, Art. 1311).
XPNs:
1. Rights and obligations that are not
transmissible by their nature, or by the
stipulation or by provisions of law (NCC,
Art. 1311);
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
NOTE : Determine whether a contract
terminates upon the death of one of the
parties
2. Stipulation pour autrui (stipulation in
favor of a third person) – benefits clearly
and deliberately conferred by parties to a
contract upon third persons (NCC, Art.
1311) and which stipulation is merely
part of a contract entered into by the
parties, neither of whom acted as agents
of the third person and which favor can
be demanded by the third person if duly
accepted by him before it could be
revoked;
Requisites of stipulation pour atrui:
a. Stipulation in favor of a third person;
b. Stipulation is just part and not the
whole obligations of the contract;
c. Contracting parties must have clearly
and deliberately conferred a favor
upon third person;
d. Favor or benefit conferred is not just
an incidental benefit or interest;
e. Third person must have
communicated his acceptance; and
f. Neither of the contracting parties
bears the legal representation of the
third person (Young v. Court of
Appeals, G.R. No. 79518, January 13,
1989).
NOTE: The fairest test to determine whether
the interest of third person in a contract is a
stipulation pour autrui or merely an
incidental interest, is to rely upon the
intention of the parties as disclosed by their
contract. In applying this test, it matters not
whether the stipulation is in the nature of a
gift or whether there is an obligation owing
from the promise to the third person (Rabuya,
2017).
3. Third persons coming into possession of the
object of the contract creating real rights
subject to the provisions of Mortgage Law and
the Land Registration Law (NCC, Art. 1312);
4. Contracts entered into in fraud of creditors;
(NCC, Art. 1313);
5. When a third person induces a party to violate
the contract (NCC, Art. 1314). (1991, 1998
BAR)
NOTE: This tort or wrongful conduct is known
as “interference with contractual relations.”
382
 OBLIGATIONS AND CONTRACTS
Requisites:
a. Existence of a valid contract;
b. Third person has knowledge of such
contract;
c. Third person interferes without legal
justification or excuse (De Leon, 2010).
Thus, third person and the breaching party is
liable for damages. It is based on quasi-delict
and their liability is solidary.
NOTE: A third person can be held liable for
tort intereference even if he does not know
the identity of one of the contracting parties.
The interference with lawful contracts by
strangers thereto gives rise to an action for
damage in favor of the injured person. The
law does not require that the responsible
person shall have known the identity of the
injured person (Rabuya, 2017).
Q: PCGG filed a complaint for reconveyance,
reversion, accounting, restitution, and
damages before the Sandigan Bayan against
Ferdinand and Imelda Marcos, and several of
their cronies including Benedicto and Africa.
PCGG, through its Chairman, David M. Castro,
entered into a Compromise Agreement with
Benedicto where the latter undertook to cede
to the government properties listed in the
agreement and transfer to the government
whatever rights he may have in the assets of
the corporations listed in the same agreement.
The SB dismissed the case against Africa and
ruled that since that act being complained of
constituted a quasi-delict or tort and the
obligation of the defendants were solidary
therefore the obligation of Africa has been
extinguished by the Compromise Agreement.
Did the Compromise Agreement between PCGG
and Benedicto extinguish the liability of
Africa?
A: NO. A stipulation pour autrui to be appreciated,
it is indispensable that there be a stipulation
deliberately conferring a benefit or favor to a third
person. The requisites of a stipulation pour autrui
are the following:
1. There is a stipulation in favor of a third
person;
2. The stipulation is a part, not the whole, of the
contract;
3. The contracting parties clearly and
deliberately conferred a favor to the third
person — the favor is not an incidental
benefit;
383
4. The favor is unconditional and
uncompensated;
5. The third person communicated his or her
acceptance of the favor before its revocation;
and
6. The contracting parties do not represent, or
are not authorized by, the third party.
The Compromise Agreement executed between
Benedicto and PCGG do not contain any express
stipulation that confers the benefit of absolute
immunity to Africa. Absent any express stipulation
in favor of a third person, the rule on relativity of
contract must be applied i.e., that the contract only
takes effect between the parties, their assigns or
heirs (Republic of the Philippines v. Legal Heirs of
Jose L. Africa, G.R. No. 205722, August 19, 2015).
Q: Fieldmen's Insurance issued, in favor of
MYT, a common carrier, accident insurance
policy. 50% of the premium was paid by the
driver. The policy indicated that the Company
will indemnify the driver of the vehicle or his
representatives upon his death. While the
policy was in force, the taxicab driven by
Carlito, met with an accident. Carlito died. MYT
and Carlito's parents filed a complaint against
the company to collect the proceeds of the
policy. Fieldmen’s admitted the existence
thereof, but pleaded lack of cause of action on
the part of the parents. Decide.
A: Carlito’s parents who, admittedly, are his
sole heirs have a direct cause of action against
the Company. This is so because pursuant to the
stipulations, the Company will also indemnify
third parties. The policy under consideration is
typical of contracts pour autrui, this character
being made more manifest by the fact that the
deceased driver paid 50% of the premiums
(Coquia v. Fieldmen’s Insurance Co., Inc.,G.R. No. L-
23276, November 29, 1968).
OBLIGATORY FORCE OF CONTRACTS
Contracts shall be obligatory, in whatever form
they may have been entered into, provided all the
essential requisites for validity are present (NCC,
Art. 1356).
Obligations arising from contracts have the force
of law between the contracting parties and should
be complied with in good faith. (NCC, Art. 1159)
This provision must fall within the other
characteristic of a contract
 CIVIL LAW
NOTE: Obligations arising from contracts have the
force of law between the contracting parties and
should be complied with in good faith (NCC, Art.
1159).
Requisites for the application of the principle
Before a contract may be considered obligatory, it
is necessary that:
1. It is perfected;
2. It is valid; and
3. It is enforceable (Rabuya, 2017).
Q: Villamor borrowed a large amount from
Borromeo, for which he mortgaged his
property but subsequently defaulted.
Borromeo pressed him for settlement. The
latter instead offered to execute a promissory
note containing a promise to pay his debt as
soon as he is able, even after 10 years and that
he waives his right to prescription. What are
the effects of said the stipulation to the action
for collection filed by Borromeo?
A: NONE. The rule is that a lawful promise made
for a lawful consideration is not invalid merely
because an unlawful promise was made at the
same time and for the same consideration. This
rule applies although the invalidity is due to
violation of a statutory provision, unless the
statute expressly or by necessary implication
declares the entire contract void. Thus, even with
such waiver of prescription, considering that it
was the intent of the parties to effectuate the
terms of the promissory note, there is no legal
obstacle to the action for collection filed by
Borromeo (Borromeo v. CA, G.R. No. L-22962,
September 28, 1972).
NOTE: Where an agreement founded on a legal
consideration contains several promises, or a
promise to do several things, and a part only of the
things to be done are illegal, the promises which
can be separated, or the promise, so far as it can
be separated, from the illegality, may be valid
(Borromeo v. CA, G.R. No. L-22962,
September 28, 1972).
Q: FBDC entered into a Trade Contract with MS
Maxco Company, Inc. (MS Maxco) for the
execution of the structural and partial
architectural works of one of its condominium
projects. The Trade Contract likewise
provided that MS Maxco is prohibited from
assigning or transferring any of its rights,
obligations, or liabilities under the said
Contract without the written consent of FBDC.
FBDC received a letter from the counsel of
Fong informing it that MS Maxco had already
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
assigned its receivables from FBDC to him.
Despite Fong’s repeated requests, FBDC
refused to deliver to Fong the amount assigned
by MS Maxco. Is FBDC bound by the assignment
between MS Maxco and Fong?
A: No. Obligations arising from contracts have the
force of law between the contracting parties and
should be complied with in good faith. The Court
finds that MS Maxco, as the Trade Contractor,
cannot assign or transfer any of its rights,
obligations, or liabilities under the Trade Contract
without the written consent of FBDC. ( Dort
Bonifacio Dev’t Corp., vs. Valentin L. Fong, G.R. No.
209370, March 25, 2015) (Perlas-Bernabe,J.)
Q: Sps. Tanchuling and Cantela executed the
subject deed covering two (2) parcels of land.
On the face of the subject deed, the sum of
F400,000.00 appears as the consideration for
Cantela's purported purchase. After the
subject deed's execution, Vicente delivered the
owner's copies of the TCTs to Cantela, although
it is undisputed that none of the parties are in
actual physical possession of the properties.
When Sps. Tanchuling tried to recover the
TCTs from Cantela, the latter refused,
prompting them to file a Complaint for
Annulment of Deed of Sale and Delivery of the
[Owner's] Duplicate Copy of the [TCTs] with
Preliminary Prohibitory and Mandatory
Injunction before the RTC. They alleged that
the subject deed was absolutely simulated,
hence, null and void, given that: there was no
actual consideration paid by Cantela to them;
and the subject deed was executed to merely
show to their neighbors that they are the true
owners of the properties. However, Cantela
insisted that the sale of the properties to him
was valid as he bought the same for the price
of P400,000.00. He further averred that the
undated deed was surreptitiously inserted by
Sps. Tanchuling in the copies of the subject
deed presented to him for signing. Is the
subject deed simulated?
A: Yes. In this case, the subject deed was
absolutely simulated. The parties never intended
to be bound by any sale agreement. Instead, the
subject deed was executed merely as a front to
show the public that Sps. Tanchuling were the
owners of the properties in order to deter the
group of John Mercado from illegally selling the
same. Moreover, there was actually no exchange
of money between the parties. (Renee B.
Tangchuling vs. Sotero C. Cantela, G.R. No. 209284,
November 20, 2015) (Perlas-Bernabe,J.)
384
 OBLIGATIONS AND CONTRACTS
MUTUALITY OF CONTRACTS
The contract must bind both contracting parties
and its validity or compliance cannot be left to the
will of one of them (NCC, Art. 1308). (2001, 2004,
2008 BAR)
If a party alleges defects in the contract so that it
could be set aside, he must prove conclusively the
existence of the defects because the validity and
fulfillment of the contract cannot be left to the will
of one of the contracting parties. (Pineda, 2009)
The binding effect of any agreement between
parties to a contract is premised on two settled
principles: (1) that any obligation arising from
contract has the force of law between the parties;
and (2) that there must be mutuality between the
parties based on their essential equality. Any
contract which appears to be heavily weighed in
favor of one of the parties so as to lead to an
unconscionable result is void. Any stipulation
regarding the validity or compliance of the
contract which is left solely to the will of one of
the parties, is likewise, invalid. (Sps. Juico vs. China
Banking Corp., G.R. 187678, April 10, 2013)
NOTE: A contract containing a condition whose
efficacy or fulfillment is dependent solely on the
uncontrolled will of one of the parties is void
(Garcia v. Rita, G.R. No. L-20175, October 30, 1967;
PNB v. CA, G.R. No. 88880, April 30, 1991).
However, the termination of the contract does not
necessarily require mutuality, and it can even be
validly left to one party by agreement or under a
resolutory facultative condition (Vitug, 2006; see
also PNB v. CA, 1994).
Contract of Adhesion (2018 BAR)
It is a contract in which one of the parties
prepares the stipulations in the form of a ready-
made contract, which the other party must accept
or reject, but not modify, by affixing his signature
or his “adhesion” thereto; leaving no room for
negotiation and depriving the latter of the
opportunity to bargain on equal footing (Norton
Resources and Development Corporation v. All Asia
Bank Corporation, G.R. No. 162523, November 25,
2009).
Validity of contract of adhesion
It is not entirely prohibited since the one who
adheres to the contract is, in reality, free to reject
it entirely, and if he adheres, he gives his consent
(Premiere Development Bank v. Central Surety &
Insurance Company, Inc., G.R. No. 176246, February
385
13, 2009). However, it is void when the weaker
party is imposed upon in dealing with the
dominant bargaining party, and its option is
reduced to the alternative of “taking or leaving it,”
completely depriving such party of the
opportunity to bargain on equal footing (Keppel
Cebu Shipyard, Inc. v. Pioneer Insurance and Surety
Corporation, G.R. Nos. 180880-81, September 25,
2009).
Note: Such contracts are not void in themselves.
They are as binding as ordinary contracts. Parties
who enter into such contracts are free to reject the
stipulations entirely. (Ermitao vs. CA, G.R. No.
127246, April 21, 1999)
Interpretation of contract of adhesion
In interpreting such contracts, however, courts
are expected to observe greater vigilance in order
to shield the unwary or weaker party from
deceptive schemes contained in ready-made
covenants (Premiere Development Bank v. Central
Surety Insurance Company, Inc., G.R. No. 176246,
February 13, 2009). In case of doubt, which will
cause a great imbalance of rights against one of
the parties, the contract shall be construed against
the party who drafted the same (Magis Young
Achiever’s Learning Center v. Manalo, G.R. No.
178835, February 13, 2009).
Third person may determine the performance
of a contract
The determination of the performance may be left
to a third person. However, his decision shall not
be binding until it has been known to both the
contracting parties (NCC, Art. 1309). Moreover, the
determination made shall not be obligatory if it is
evidently inequitable. In such case, the courts shall
decide what is equitable under the circumstances
(NCC, Art. 1310).
Unilateral increase of interest rate
Even assuming that the loan agreement between
the creditor and the debtor gave the former a
license to increase the interest rate at will during
the term of the loan, that license would have been
null and void for being violative of the principle of
mutuality essential in contracts (Rabuya, 2017).
AUTONOMY OF CONTRACTS / LIBERTY OF
CONTRACTS (1996, 2004 BAR)
It is the freedom of the parties to contract and to
stipulate provided the stipulations are not
 CIVIL LAW
contrary to law, morals, good customs, public
order or public policy (NCC, Art. 1306).
NOTE: Courts cannot make for the parties better
or more equitable agreements than they
themselves have been satisfied to make, or
rewrite contracts because they operate harshly or
inequitably as to one of the parties, or alter them
for the benefit of one party and to the detriment of
the other, or by construction, relieve one of the
parties from terms which he voluntarily
consented to, or impose on him those which he
did not (Angel Bautista v. Court of Appeals, G.R. No.
123655, January 19, 2000).
An agreement to pay unconscionable interests on
a loan is against morals. (Medel, et al. vs. Ca, 299
SCRA 481)
PERFECTION BY MERE CONSENT
Contracts are perfected by mere consent, and
from that moment the parties are bound not only
to the fulfillment of what has been expressly
stipulated but also to all the consequences which,
according to their nature, may be in keeping with
good faith, usage and law. (NCC, Art. 1315)
Note: This refers to consensual contracts.
However, real contracts are perfected by delivery
and formal contracts are perfected upon
compliance.
EFFECT OF CONTRACTS
Contracts take effect only between the parties, and
their assigns and heirs, the latter being liable only
to the extent of the property received from the
decedent (NCC, Art. 1311).
Persons affected by a contract
GR:
4. Parties to the contract; and their
5. Corresponding successors.
XPNs:
1. Contracts containing a stipulation in favor of a
third person (pour autrui) [NCC, Art. 1311
(2)];
2. Contracts containing real rights (NCC, Art.
1312);
3. Contracts entered into to defraud creditors
(NCC, Art. 1313);
4. Contracts which have been violated at the
inducement of 3rd persons (NCC, Art. 1314);
5. Quasi-contract of negotiorum gestio (NCC, Art.
2150).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Liability of heirs for the obligation contracted
by the decedent
The heirs are liable for the obligation contracted
by the decedent when the rights and obligations
arising from the contract are transmissible:
2. By their nature;
3. By stipulation; or
4. By provision of law (NCC, Art. 1311).
Requisites in order that a third person may
demand the fulfillment of the contract
1. The contracting parties must have clearly and
deliberately conferred a favor upon the third
person;
2. The third person’s interest or benefit in such
fulfillment must not be merely incidental; and
3. Such third person communicated his
acceptance to the obligor before the
stipulations in his favor are revoked.
ESSENTIAL REQUISITES OF A CONTRACT
ELEMENTS OF A CONTRACT
1. Natural Elements – Those which are derived
from the very nature of the contract, and as a
consequence, ordinarily accompany the same.
2. Essential Elements – Those without which
there can be no contract.
3. Accidental Elements – those which exist only
when the contracting parties expressly
provide for them (De Leon, 2010).
ESSENTIAL REQUISITES OF A CONTRACT (2005
BAR)
The following are the essential requisites of
contracts (COC):
1. Consent;
2. Object or subject matter; and
3. Cause or consideration (NCC, Art 1318). (See
Cathay Pacific v. Vasquez, 2003)
NOTE: These three requisites are, therefore, the
essential elements of a consensual contract. In real
contracts, however, in addition to the above, the
delivery of the object of the contract is required as
a further requisite.
CONSENT (2005 BAR)
Consent is manifested by the meeting of the offer
and the acceptance upon the thing and the cause
386
 OBLIGATIONS AND CONTRACTS
which are to constitute the contract. The offer
must be certain and the acceptance absolute. A
qualified acceptance constiturtes a counter-offer.
(NCC, Art. 1319)
It is the concurrence of the wills of the contracting
parties with respect to the object and cause, which
shall constitute the contract (De Leon, 2010).
NOTE: Consent is essential to the existence of a
contract; and where it is wanting, the contract is
non-existent.
Requisites of consent (LM-CR)
1. Legal capacity of the contracting parties;
NOTE: The parties must have full civil
capacity. Hence, if any one party to a
supposed contract was already dead at the
time of its execution, such contract is
undoubtedly simulated and false and,
therefore, null and void by reason of its
having been made after the death of the party
who appears as one of the contracting parties
therein. The death of a person terminates
contractual capacity (Milagros De Belen Vda.
De Cabalu, et. al. v. Sps. Renato Dolores Tabu
and Laxamana, G.R. No. 188417, September 24,
2012).
2. Manifestation of the conformity of the
contracting parties;
Note: Manifestation may be in writing bearing
the signature or marks of the parties, or it
may be implied from the conduct of the
parties like the acceptance of payment.
3. Parties’ Conformity to the object, cause, terms
and condition of the contract must be
intelligent, spontaneous and free from all
vices of consent; and
NOTE: Intelligence in consent is vitiated by
error; freedom by violence, intimidation or
undue influence; and spontaneity by fraud.
4. The conformity must be Real.
Offer
An offer is defined as an expression of willingness
to contract on certain terms, made with the
intention that it shall become binding as soon as it
is accepted by the person to whom it is addressed
(Rabuya, 2017 citing G. H. Treitel, The Law of
Contract, 10th Ed., p.8).
387
Elements of a valid offer and acceptance
1. Definite – unequivocal
2. Intentional
3. Complete – unconditional
NOTE: We follow the cognitive theory and NOT the
mailbox theory. Under our Civil Law, the offer and
acceptance concur only when the acceptance has
reached the knowledge of the offeror (actual
knowledge), and not at the time of sending the
acceptance.
Requisites of an effective offer
1. The one offering must have a serious
intention to become bound by his offer;
2. The terms of the offer must be reasonably
certain, definite and complete, so that the
parties and the court can ascertain the terms
of the offer; and
3. The offer must be communicated by the
offeror to the offeree, resulting in the offeree’s
knowledge of the offer (Rabuya, 2017).
Q: The husband assumed sole administration
of the family’s mango plantation since his wife
worked abroad. Subsequently, without his
wife’s knowledge, the husband entered into an
antichretic transaction with a company, giving
it possession and management of the
plantation with power to harvest and sell the
fruits and to apply the proceeds to the
payment of a loan he got. What is the standing
of the contract? (2011 BAR)
A: It is considered a continuing offer by the
parties; perfected only upon the wife’s acceptance
or the court’s authorization.
NOTE: The person making the offer may fix the
time, place and manner of acceptance, all of which
must be complied with (NCC, Art. 1321).
Rules on complex offer
1. Offers are interrelated – contract is perfected
if all the offers are accepted
2. Offers are not interrelated – single acceptance
of each offer results in a perfected contract
unless the offeror has made it clear that one is
dependent upon the other and acceptance of
both is necessary.
Rules on advertisements as offers
1. Business advertisements – not a definite offer,
but mere invitation to make an offer, unless it
appears otherwise (NCC, Art. 1325).
 CIVIL LAW
Note: If the advertisement contains all the
necessary date need in a contract, its a definite
offer for the sale of the thing advertised.
Otherwise, it is not a definite offer, it is a mere
invitation to make offer.
2. Advertisement for bidders – simply invitation
to make proposals and advertiser is not
bound to accept the highest or lowest bidder,
unless the contrary appears (NCC, Art. 1326).
Grounds that would render the offer
ineffective
1. Death, civil interdiction, insanity or
insolvency of either party before acceptance is
conveyed;
2. Express or implied revocation of the offer by
the offeree;
3. Qualified or conditional acceptance of the
offer, which becomes counter-offer;
4. Subject matter becomes illegal or impossible
before acceptance is communicated;
5. Period given to the offeree to signify his
acceptance has already lapsed.
Requisites of a valid acceptance
1. Must be absolute; a qualified acceptance
constitutes a counter-offer (NCC, Art. 1319).
2. No specified form but when the offeror
specifies a particular form, such must be
complied with.
NOTE: Offer or acceptance, or both, expressed in
electronic form, is valid, unless otherwise agreed
by the parties (electronic contracts).
A conditional acceptance is a counter-offer which
extinguishes the offer. If not accepted by the
offeror there is no contract.
An acceptance may be express or implied (NCC,
Art. 1320).
Mirror Image Rule in law on contracts
This is a common law concept which states that in
order for there to be an acceptance, the offeree
must accept the terms as stated in the offer. Our
courts also adhere to the “mirror-image rule.”
Thus, it has been ruled that acceptance must be
identical in all respects with that of the offer so as
to produce consent of meeting of the minds
(Rabuya, 2017 citing ABS-CBN v. CA. 301 SCRA 592-
593, 1999).
Period for acceptance
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
1. Stated fixed period in the offer
a. Must be made within the period given by
the offeror.
b. As to withdrawal of the offer:
GR: It can be made by communicating
such withdrawal at any time before the
acceptance is made
XPN: When the option is founded upon a
consideration (something paid or
promised since partial payment of the
purchase price is considered as proof of
the perfection of the contract). (NCC, Art
1324)
2. No stated period
a. Offer is made to a person present –
acceptance must be made immediately.
b. Offer is made to a person absent –
acceptance may be made within such time
that, under normal circumstances, an
answer can be expected from him.
Note: If there was an acceptance already, the
offeror cannot just withdraw his offer unilaterally.
He will be liable for damages. (Pineda, 2009)
Option contract
It is a contract between the offeror and the offeree
whereby the former grants the latter, for a
valuable consideration, the privilege to buy or not
to buy certain objects at anytime within a
specified period and for a fixed price.
Note: The privilege granted to the offeree must be
supported by a considereation, the option is just
considered an “offer to sell” to the offeree which is
not binding until accepted. (Pineda,2009 citing
Sanchez vs. Rigos, 45 scra 368)
Persons incapacitated to give consent (DIM)
1. Deaf-mutes who do not know how to read
and write (illiterates);
2. Insane or demented persons, unless the
contract was entered into during a lucid
interval;
3. Minors (NCC, Art. 1327) except:
a. Contracts for necessaries (NCC, Art.
1489);
b. Contracts by guardians or legal
representatives and the court having
jurisdiction had approved the same;
388
 OBLIGATIONS AND CONTRACTS
c. When there is active misrepresentation
on the part of the minor (minor is
estopped);
d. Contracts of deposit with the Postal
Savings Bank provided that the minor is
over 7 years of age;
e. Contract of an insurance for life, health
and the accident on the minor’s life.
f. Upon reaching age of majority – they
ratify the same.
NOTE: Because the law incapacitates them to give
their consent to a contract, the only way by which
any one of those enumerated above can enter into
a contract is to act through a parent or guardian. If
this requirement is not complied with, the result is
a defective contract. If only one of the contracting
parties is incapacitated to give his consent, the
contract is voidable. If both of them are
incapacitated to give their consent, the contract is
unenforceable [NCC, Art. 1390(1), NCC, Art.
1403(3)].
Vices of consent (MI-VUF)
1. Mistake
2. Intimidation
3. Violence
4. Undue influence
5. Fraud
NOTE: A threat to enforce a just or legal claim
through a competent authority does not amount
to intimidation nor vitiate consent (NCC, Art.
1335).
Mistake
GR: Mistake as a vice of consent refers to mistake
of facts and not of law, thus rendering the contract
voidable (Jurado, 2010).
XPN: When mistake of law involves mutual error
as to the legal effect of an agreement when the
real purpose of the parties is frustrate (NCC, Art.
1334).
Mistake Distinguished from Ignorance
Mistake is a false impression on something, while
Ignorance is absence of any notion or impression
about a particular thing.
Requisites:
1. Mistake must be with respect to the legal effect
of the agreement;
389
2. It must be mutual; and
3. Real purpose of the parties must have been
frustrated.
Kinds of mistakes of fact which vitiate consent
1. Mistake as to the nature of the contract ;
2 Mistake as to object of the contract ;
3. Mistake as to the quality or principal conditions
of the thing ;
4. Mistake or error in quantity ;
5. Mistake as to identy of the person ;
Mistake as to the identity or qualifications of one
of the parties will vitiate consent only when such
identity or qualifications have been the principal
cause of the contract.
For mistake (as to the qualification of one of the
parties) to vitiate consent, two requisites must
concur:
a. The mistake must be either with regard to
the identity or with regard to the
qualification of one of the contracting
parties; and
b. The identity or qualification must have been
the principal consideration for the
celebration of the contract (The Roman
Catholic Church v. Regino Pante, G.R. No.
174118, April 11, 2012).
Q: Leonardo is the only legitimate child of the
late spouses Tomasina and Balbino. She only
finished Grade three and did not understand
English. The Sebastians, on the other hand, are
illegitimate children. She filed an action to
declare the nullity of the extrajudicial
settlement of the estate of her parents, which
she was made to sign without the contents
thereof, which were in English, explained to
her. She claims that her consent was vitiated
because she was deceived into signing the
extrajudicial settlement. Is the extra-judicial
settlement of estate of Tomasina valid?
A: NO. When one of the parties is unable to read,
or if the contract is in a language not understood
by him, and mistake or fraud is alleged, the person
enforcing the contract must show that the terms
thereof have been fully explained to the former
(Art. 1332). Leonardo was not in a position to give
her free, voluntary and spontaneous consent
without having the document, which was in
English, explained to her. Therefore, the consent
of Leonardo was invalidated by a substantial
mistake or error, rendering the agreement
voidable. The extrajudicial partition between the
Sebastians and Leonardo should be annulled and
 CIVIL LAW
set aside on the ground of mistake (Leonardo v.
CA, G.R. No. 125485, September 13, 2004).
Note: Burden rests upon the party who seeks to
enforce the contract to show that the other party
fully understood the contents of the document.
(Mayor vs. Belen, 430 SCRA 561)
Mutual Error
Mutual Error as to the legal effect of an agreement
when the real purpose of the parties is frustrated,
may vititate consent. (NCC, Art. 1334)
Legal effect refers to the rights of the parties as
stated in legal provisions.
Intimidation
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 [NCC, Art. 1335(2)].
Requisites of intimidation (CICU)
1. One of the parties is compelled to give his
Consent by a reasonable and well-grounded
fear of an evil;
2. The evil must be Imminent and grave;
3. It must be Unjust; and
4. The evil must be the determining Cause for
the party upon whom it is employed in
entering into the contract (NCC, Art. 1335).
NOTE: To determine the degree of the
intimidation, the age, sex and condition of the
person shall be borne in mind (NCC, Art. 1335).
Validity of a contract if consent is reluctant
A contract is valid even though one of the parties
entered into it against his wishes and desires or
even against his better judgment. Contracts are
also valid even though they are entered into by
one of the parties without hope of advantage or
profit (Martinez v. Hongkong and Shanghai
Banking Corp., G.R. No. L-5496, February 19, 1910).
Violence
There is violence when in order to wrest consent,
serious or irresistible force is employed. (Art.
1335)
Requisites of violence
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
1. Physical force employed must be serious or
irresistible; and
2. The determining cause for the party upon
whom it is employed in entering into the
contract.
A threat to enforce one’s claim through competent
authority, if the claim is just or legal, does not
vititate consent. [NCC, Art. 1335(4)]
NOTE: Violence or intimidation shall annul the
obligation, although it may have been employed
by a third person who did not take part in the
contract (NCC, Art. 1336).
Undue influence
There is undue influence when a person takes
improper advantage of his power over the will of
another, depriving the latter of a reasonable
freedom of choice (NCC, Art. 1337).
It must in some measure destroy the free agency if
a party and interfere with the exercise of that
independent discretion. (4 Tolentino 501)
Circumstances to be considered for the
existence of undue influence
1. Confidential, family, spiritual and other
relations between the parties;
2. Mental weakness;
3. Ignorance;
4. Financial distress (NCC, Art. 1337).
NOTE: The enumeration is NOT exclusive. Moral
dependence, indigence, mental weakness, tender
age or other handicap are some of the
circumstances to consider undue influence.
Determination of undue influence
The test to determine whether or not there is
undue influence which will invalidate a contract is
to determine whether or not the influence exerted
has so overpowered and subjugated the mind of
the contracting party as to destroy his free agency,
making him express the will of another rather
than his own (Jurado, 2011).
Due influence does not vitiate consent
When influence consists in persuasive arguments
or in appeals to the affections which are nort
prohibited by law or morals, the consent is not
vitiated at all. (Pineda, 2009)
Reverential Fear
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 OBLIGATIONS AND CONTRACTS
The fear of displeasing persons to whom respect
and obedience are due does not vitiate consent.
Fraud
There is fraud when through the insidious words
or machinations of one of the contracting parties
the other is induce to enter into a contract which,
without them, he would not have agreed to (NCC,
Art. 1338).
NOTE: Insidious words refers to a deceitful
scheme or plot with an evil design, or a fraudulent
purpose (Pineda, 2000).
Failure to disclose facts, when there is a duty to
reveal them, as when the parties are bound by
confidential relations, constitutes fraud (NCC, Art.
1339).
Requisites of Fraud to vitiate consent
Dolo
Contract voidable the contract
Remedies Annulment Contract
with damages remains valid.
Remedy is
claim for
damages.
Q: Santos’ lease contract was about to expire
but it was extended and he continued to
occupy the leased premises beyond the
extended term. Samson offered to buy Santos’
store and his right to the lease. Santos stated
that the lease contract between him and the
lessor was impliedly renewed and that formal
renewal thereof would be made upon the
arrival of a certain Tanya Madrigal, based on
the letter to him given by the lessor. When
Samson occupied the premises, he was forced
to vacate for Santos’ failure to renew his lease.
He filed an action for damages against Santos
for fraud and bad faith claiming that the
misrepresentation induced him to purchase
the store and the leasehold right. Decide.

1. it was applied or utilized by one A: Santos was not guilty of fraud nor bad faith in
contracting party upon the other claiming that there was implied renewal of his
2. it must be serious deception contract of lease with his lessor. The letter given
3. it must have induced the victim to enter by the lessor led Santos to believe and conclude
the contract without which he would not that his lease contract was impliedly renewed and
have agreed to. that formal renewal thereof would be made upon
4. It must have resulted in damage or injury. the arrival of Tanya Madrigal. Thus, from the start,
it was known to both parties that, insofar as the
Kinds of Fraud agreement regarding the transfer of Santos’
leasehold right to Samson was concerned, the
1. Fraud in the perfection of the contract object thereof relates to a future right. It is a
a. Causal fraud (dolo causante) conditional contract, the efficacy of which depends
b. Incidental fraud (dolo incidente) upon an expectancy the formal renewal of the
lease contract between Santos and lessor. The
2. Fraud in the performance of an obligation efficacy of the contract between the parties was
(NCC, Art. 1170). thus made dependent upon the happening of this
Requisites: suspensive condition (Samson v. CA, G.R. No.
108245, November 25, 1994).
(ALREADY MENTIONED ABOVE)
Acts considered not fraudulent
Dolo Causante v. Dolo Incidente
1. The usual exaggerations in trade and the
BASIS DOLO DOLO other party had an opportunity to know the
CAUSANTE INCIDENTE facts are not themselves fraudulent (NCC, Art.
(Art. 1338) (Art 1344) 1340). Principle of Tolerated Fraud ;
Gravity of Serious in Not serious 2. A mere expression of an opinion does not
Fraud character signify fraud, unless made by an expert and
Efficient Efficient cause Not the the other party had relied on the former’s
Cause which induces efficient cause special knowledge (NCC, Art. 1341. Expert
the party to Opinion);
enter into a 3. Misrepresentation by a third person does not
contract vitiate consent, unless such misrepresentation
Effect on the Renders the Does not affect has created substantial mistake and the same
Status of the contract the validity of is mutual (NCC, Art. 1342);

391
 CIVIL LAW
4. Misrepresentation made in good faith is not
fraudulent but may constitute error (NCC, Art.
1343).
Note: The contract just the same is voidable, not
because of the misrepresentation but because of
substantial error.
Note: in order that frud may make a contract
voidable, it should be serious and should not gave
been employer by both cotracting parties. (NCC, Art
1344)
Simulation of contract
It is the declaration of a fictitious will, deliberately
made by agreement of the parties, in order to
produce, for the purposes of deception, the
appearance of a juridical act which does not exist
or is different from that which was executed
(Tolentino, 2002).
Kinds of simulation of contract
1. Absolute (simulados) – The contracting parties
do not intend to be bound by the contract at
all, thus the contract is void (NCC, Arts. 1345-
1346). In absolute simulation, there is a
colorable contract but it has no substance as
the parties have no intention to be bound by
it. The main characteristic of an absolute
simulation is that the apparent contract is not
really desired or intended to produce legal
effect or in any way alter the juridical
situation of the parties. As a result, an
absolutely simulated or fictitious contract is
void, and the parties may recover from each
other what they may have given under the
contract (Heirs of Dr. Mario S. Intac and
Angelina Mendoza-Intac v. CA, G.R. No. 173211,
October 11, 2012).
They lack the element of true consent.
2. Relative (disimulados) – The contracting
parties conceal their true agreement (NCC,
Art. 1345); binds the parties to their real
agreement when it does not prejudice third
persons or is not intended for any purpose
contrary to law, morals, good customs, public
order or public policy (NCC, Art. 1346). If the
concealed contract is lawful, it is absolutely
enforceable, provided it has all the essential
requisites: consent, object, and cause (NCC,
Arts. 1345-1346).
As to third persons without notice, the
apparent contract is valid for purposes
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
beneficial to them. As to third persons with
notice of the simulation, they acquire no
better right to the simulated contract than the
original parties to the same.
The primary consideration in determining the
true nature of a contract is the intention of the
parties. Such intention is determined from the
express terms of their agreement as well as from
their contemporaneous and subsequent acts
(Tating v. Tating Marcella, et al., G.R. No. 155208,
March 27, 2007).
NOTE: If the parties state a false cause in the
contract to conceal their real agreement, the
contract is only relatively simulated and the
parties are still bound by their real agreement.
Hence, where the essential requisites of a contract
are present and the simulation refers only to the
content or terms of the contract, the agreement is
absolutely binding and enforceable between the
parties and their successors in interest.
Q: Gilbert averred that sometime in 1999, he,
through an undated contract of lease, leased a
portion of a 541 square-meter property
situated in Poblacion, Nabunturan, Compostela
Valley Province, registered in his name, to
Robert, which the latter intended to use as a
lottery outlet. Gilbert claimed that Robert and
Gil failed to pay their rental arrears to him and
refused to vacate the subject property, despite
repeated demands. Thus, he filed an ejectment
complaint. In their defense, Robert and Gil
posited that the aforementioned lease contract
was simulated and, hence, not binding on the
parties as there was no demand to pay the
rentals on the part of the complainants and
that such contract was only executed as a
requirement to be able to put up a lottery stall.
Is the contract involved absolutely simulated?
A: Yes. Simulation of a contract may be absolute
or relative. The former takes place when the
parties do not intend to be bound at all; the latter,
when the parties conceal their true agreement.
The fact of executing the contract to comply with
the requirement to put up a lottery stall makes the
contract absolutely simulated as there was no
intention between the parties to enter into the
contract of lease (Robert and Nenita De Leon vs.
Gilbert and Analyn Dela Llana, G.R. No. 21227,
February 11, 2015). (Perlas-Bernabe,J.)
May the owner-simulator recover ?
If the absolutely simulated contract does not have
any illegal purpose, the interested party may
392
 OBLIGATIONS AND CONTRACTS
prove the simulation to recover whatever he
might have given under the fictitious contracts. In
the event intednded for an illegal purpose, the
contract is void and the parties have no cause of
action. (Pineda, 2009)
Q: Tiro is a holder of an ordinary timber
license issued by the Bureau of Forestry. He
executed a deed of assignment in favor of the
Javiers. At the time the said deed of
assignment was executed, Tiro had a pending
application for an additional forest concession.
Hence, they entered into another agreement.
Afterwards, the Javiers, now acting as timber
license holders by virtue of the deed of
assignment entered into a forest consolidation
agreement with other ordinary timber license
holders. For failure of the Javiers to pay the
balance due under the two deeds of
assignment, Tiro filed an action against them.
Are the deeds of assignment null and void for
total absence of consideration and non-
fulfillment of the conditions?
A: NO, they are not null and void per se. The
parties are to be bound by their real agreement.
The true cause or consideration of said deed was
the transfer of the forest concession of private
respondent to petitioners for P120,000.00. This
finding is supported by the following
considerations, viz:
1. Both parties, at the time of the execution of the
deed of assignment knew that the Timberwealth
Corporation stated therein was non-existent;
2. In their subsequent agreement, private
respondent conveyed to petitioners his inchoate
right over a forest concession covering an
additional area for his existing forest concession,
which area he had applied for, and his application
was then pending in the Bureau of Forestry for
approval;
3. Petitioners, after the execution of the deed of
assignment, assumed the operation of the logging
concessions of private respondent ;
4. The statement of advances to respondent
prepared by petitioners stated: "P55,186.39
advances to L.A. Tiro be applied to succeeding
shipments. Based on the agreement, we pay
P10,000.00 every after (sic) shipment. We had
only 2 shipments’; and
5. Petitioners entered into a Forest Consolidation
Agreement with other holders of forest
393
concessions on the strength of the questioned
deed of assignment.
The contemporaneous and subsequent acts of Tiro
and the Javiers reveal that the cause stated in the
first deed of assignment is false. It is settled that
the previous and simultaneous and subsequent
acts of the parties are properly cognizable indicia
of their true intention. Where the parties to a
contract have given it a practical construction by
their conduct as by acts in partial performance,
such construction may be considered by the court
in construing the contract, determining its
meaning and ascertaining the mutual intention of
the parties at the time of contracting. The first
deed of assignment is a relatively simulated
contract which states a false cause or
consideration, or one where the parties conceal
their true agreement. A contract with a false
consideration is not null and void per se. Under
Article 1346 of the Civil Code, a relatively
simulated contract, when it does not prejudice a
third person and is not intended for any purpose
contrary to law, morals, good customs, public
order or public policy binds the parties to their
real agreement (Javier v. CA, G.R. No. L-48194,
March 15, 1990).
Q: On 02 July 1990, by virtue of an Order of
Branch 62 of the RTC of Makati City, notice of
levy on attachment of real property and writ of
attachment were inscribed on TCTs No. 31444
(452448) and No. 45926 (452452). Edmundo
alleged that as early as 11 September 1989, the
properties, subject matter of the case, were
already sold to him by Ricardo, Sr. As such,
these properties could not be levied upon on
02 July 1990 to answer for the debt of Ricardo,
Sr. who was no longer the owner thereof.
TMBC alleged, among other things, that the
sale in favor of Edmundo was void for being an
absolutely simulated contract, therefore, the
properties levied upon were still owned by
Ricardo, Sr. Discuss the nature of an absolutely
simulated contract.
A: An absolutely simulated contract, under Article
1346 of the Civil Code, is void. It takes place when
the parties do not intend to be bound at all. The
characteristic of simulation is the fact that the
apparent contract is not really desired or intended
to produce legal effects or in any way alter the
juridical situation of the parties. Thus, where a
person, in order to place his property beyond the
reach of his creditors, simulates a transfer of it to
another, he does not really intend to divest
himself of his title and control of the property;
hence, the deed of transfer is but a sham. Lacking,
 CIVIL LAW
therefore, in a fictitious and simulated contract is
consent which is essential to a valid and
enforceable contract (The Manila Banking
Corporation v. Edmundo Silverio, G.R. No. 132887,
August 11, 2005).
OBJECTS, CAUSE AND FORM OF CONTRACTS
OBJECT
It is the subject matter of the contract. It can be a
thing, right or service arising from a contract.
Note: rights which are not intransmissible can
only be the object of the contract. (NCC, Art. 1347)
Requisites of an object (DELiCT)
1. Determinate as to kind (even if not
determinate, provided it is possible to
determine the same without the need of a new
contract);
2. Existing or the potentiality to exist
subsequent to the contract;
3. Must be LIcit;
4. Within the Commerce of man; and
5. Transmissible.
NOTE: The most evident and fundamental
requisite in order that a thing, right or service may
be the object of a contract, is that it should be in
existence at the moment of the celebration of the
contract, or at least, it can exist subsequently or in
the future (De Leon, 2010).
Object of contracts
GR: All things or services may be the object of
contracts.
XPNs:
1. Things outside the commerce of men (NCC,
Art. 1347);
2. Intransmissible rights;
3. Future inheritance, except in cases expressly
authorized by law;
4. Services which are contrary to law, morals,
good customs, public order or public policy;
5. Impossible things or services; and
6. Objects which are not possible of
determination as to their kind.
Exceptions to the rule that no person can enter
into a contract with regard to future
inheritance
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
1. Under Art. 130 of the Family Code, which
allows the future spouses to give or donate to
each other in their marriage settlement 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; and
2. Under Art. 1080 of the Code, which allows a
person to make a partition of his estate among
his heirs by an act inter vivos, provided that
the legitime of the compulsory heirs is not
prejudiced (Jurado,2009; De Leon 2010).
NOTE: Except in cases authorized by law, future
inheritance cannot be an object of contract
because its extent, amount or quantity is not
determinable (Sta. Maria, 2003).
CAUSE
Cause is the essential reason which moves the
parties to enter into the contract It is the
immediate, direct and proximate reason which
justifies the creation of an obligation through the
will of the contracting parties.
Requisites of a cause
It must:
1. Exist;
2. Be true; and
3. Be licit.
NOTE: Although the cause is not stated in the
contract, it is presumed that it exists and is lawful
unless the debtor proves the contrary. (NCC, art.
1354)
Kinds of cause
1. Cause of onerous contracts – the prestation or
promise of a thing or service by the other.
e. g. Contract of Sale.
2. Cause of remuneratory contracts– the service
or benefit remunerated.
e. g. Donation in consideration of a past
service which does not constitute a
demandable debt.
3. Cause of gratuitous contracts – the mere
liberality of the donor or benefactor.
4. Accessory – identical with cause of principal
contract, the loan which it derived its life and
existence
e.g. mortgage or pledge.
(This must be included in Interpretation of
Contracts)
394
 OBLIGATIONS AND CONTRACTS
Cause v. Motive no approval, the contract is void
regardless of the amount of lesion.
BASIS CAUSE MOTIVE
Q: May a moral obligation constitute a
Direct and Indirect or sufficient cause to support an onerous
As to contract?
most remote
proximate
proximate reasons.
reason in a A: Where the moral obligation arises wholly from
reason of a
contract ethical considerations, unconnected with any civil
contract.
obligation, and as such is demandable only in
Objective and Psychological conscience, and not in law, it cannot constitute a
As to the kind
juridical or purely cause to support an onerous contract. Where such
of reason in
reason of personal moral obligation, however, is based upon a
the contract
contract. reason. previous civil obligation which has already been
barred by the statute of limitations at the time
Legality or Legality or when the contract is entered into, it constitutes a
illegality of illegality of sufficient cause or consideration to support said
(As to the cause affects motive does
contract (Villaroel v. Estrada, 71 Phil. 14, GR L-
legal effect to the existence not affect the
47362, December 19, 1940).
the contract or validity of existence or
the contract. validity of
FORMALITY
contract.
Cause is Motive differs Rules on the form of contracts
always the for each
As to the GR: Form is not required in consensual contracts.
same for each contracting
parties (Provided, all the essential requisites for their
contracting party.
party. validity are present.)

As to its Always known May be known XPNs: When the law requires a contract be in
knowability to the other writing for its:

1. Validity (formal contracts);

NOTE: The motive may be regarded as the cause 2. Enforceability (under Statute of Frauds);
when the realization of such motive or particular or
purpose has been made a condition upon which 3. For the convenience of the parties
the contract is made to depend (Phil. National
Construction Corp. v. CA, 272 SCRA 183, 1997). NOTE: The parties may compel each other to
reduce the verbal agreement into writing (2006
Rules relating to cause on contracts BAR)

1. Absence of cause – confers no right and
produces no legal effect.
2. Failure of cause – does not render the contract
void.
3. Illegality of cause – contract is null and void.
4. Falsity of cause – contract is void; unless the
parties show that there is another cause
which is true and lawful.
5. Lesion or inadequacy of cause – does not
invalidate the contract, unless:
a. there is fraud, mistake, or undue
influence;
b. when the parties intended a donation or
some other contract; or
c. in cases specified by law
e.g. contracts entered by guardian when
ward suffers lesion of more than 25% and
with court approval, otherwise, if there is
The parties may required to observe the form
required for their convenience
The contracting parties may compel each other to
observe the required form once the contract has
been perfected and is enforceable under the
statute of frauds.
This one of the rights of the creditor.
The right to demand the execute of the document
required under Art.1358 is not imprescriptible. It
is subject to prescription. It must be pursued
within the period prescribed by law which is five
(5) years. (Pineda, 2009)
NOTE : the right must be exercised once the
contract has been perfected, otherwise, the
exercise will be considered as premature.

395
 CIVIL LAW
Q: On March 3, 2003, Aguinaldo led a
complaint for annulment of sale, cancellation
of title, and damages against Torres before the
RTC. They claimed that they are the registered
owners of three lots situated in Tanza, Cavite
(subject properties). Sometime in December
2000, they discovered that the titles to the
subject properties were transferred to Torres
who, in bad faith, and through fraud, deceit,
and stealth, caused the execution of a Deed of
Absolute Sale dated July 21, 1979 (1979 deed
of sale), purportedly selling the subject
properties to him.
Torres led his Answer with Counterclaim,
denying participation in the execution of the
1979 deed of sale, and averring that the
subject properties were validly sold by
Aguinaldo to him through a Deed of Absolute
Sale dated March 10, 1991 (1991 deed of sale).
He claimed that Aguinaldo caused the
registration of the 1979 deed of sale with the
Register of Deeds of Trece Martires City, and
the transfer of title in his name, hence, they are
estopped from impugning the validity of his
title. Moreover, the action has prescribed,
having been led beyond four (4) years from
discovery of the averred fraud, reckoned from
the registration of the said deed on March 26,
1991. He further alleged that Aguinaldo only
led the instant baseless suit to harass him in
view of their acrimonious relationship, and
thus, interposed a counterclaim for moral
damages and attorney's fees. Is there a valid
conveyance of the subject properties to Torres
and directing Aguinaldo to execute a
registrable deed of conveyance in his favor
within thirty (30) days from the finality of the
decision.
A: Yes. Although the improper notarization of the
1991 deed of sale did not affect the validity of the
sale of the subject properties to respondent, the
same, however, rendered the said deed
unregistrable, since notarization is essential to the
registrability of deeds and conveyances. Bearing
in mind that the legal requirement that the sale of
real property must appear in a public instrument
is merely a coercive means granted to the
contracting parties to enable them to reciprocally
compel the observance of the prescribed form,
and considering that the existence of the sale of
the subject properties in respondent's favor had
been duly established, the Court upholds the CA's
directive for petitioners to execute a registrable
deed of conveyance in respondent's favor within
thirty (30) days from finality of the decision, in
accordance with the prescribed form under
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Articles 1357 and 1358 (1) of the Civil Code (Sps.
Aguinaldo vs. Torres Jr., G.R. No. 225808, September
11, 2017). (Perlas-Bernabe, J.)
Formalities required in specific contracts
1. Donations
a. Personal property – if value exceeds
5,000, the donation and acceptance must
both be written (NCC, Art. 748).
b. Real property:
i. Donation must be in a public
instrument, specifying therein the
property donated and value of charges
which donee must satisfy.
ii. Acceptance must be written, either in
the same deed of donation or in a
separate instrument.
iii. If acceptance is in a separate
instrument, the donor shall be notified
thereof in authentic form, and this step
shall be noted in both instruments
(NCC, Art. 749).
2. Partnership where real property
contributed
a. There must be a public instrument
regarding the partnership;
b. The inventory of the realty must be
made, signed by the parties and attached
to the public instrument (NCC, Art. 1773).
Antichresis - the amount of the principal and
interest must be in writing (NCC, Art. 2134).
3. Agency to sell real property or an interest
therein - authority of the agent must be in
writing (NCC, Art. 1874).
4. Stipulation to charge interest - interest
must be stipulated in writing (NCC, Art. 1956).
5. Stipulation limiting common carrier's duty
of extraordinary diligence to ordinary
diligence:
a. Must be in writing, signed by shipper or
owner;
b. Supported by valuable consideration
other than the service rendered by the
common carrier;
c. Reasonable, just and not contrary to
public policy (NCC, Art. 1744).
6. Chattel mortgage - personal property must
be recorded in the Chattel Mortgage Register.
(NCC, Art. 2140).
Contracts which must be in writing to be valid
396
 OBLIGATIONS AND CONTRACTS
1. Donation of personal property whose value
exceeds five thousand pesos (NCC, Art. 748). –
the donation and acceptance must be in
writing.
2. Sale of a piece of land or any interest therein
through an agent (NCC, Art. 1874). – the
authority of the agent shall appear in writing.
3. Agreements regarding payment of interest in
contracts of loan (NCC, Art. 1956).
4. Antichresis – the amount of the principal and
the interest shall be specified in writing (NCC,
Art. 2134; Jurado, 2011).
Contracts which must appear in a public
document
1. Donation of real properties (NCC, Art. 719);
2. Partnership where immovable property or
real rights are contributed to the common
fund (NCC, Arts. 1171 & 1773);
3. Acts and contracts which have for their object
the creation, transmission, modification or
extinguishment of real rights over immovable
property; sale of real property or of an
interest therein is governed by Arts. 1403, No.
2, and 1405 [NCC, Art. 1358(1)];
4. The cession, repudiation or renunciation of
hereditary rights or of those of the conjugal
partnership of gains [NCC, Art. 1358(2)];
5. 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;
[NCC, Art. 1358(3)];
6. The cession of actions or rights proceeding
from an act appearing in a public document
[NCC, Art. 1358(4)].
NOTE : Article 1358 of the Civil Code which
requres the embodiement of certain contracts in a
public instrament is only for convenience, and
registration of the instrument only adversely,
afficts third parties. Formal requirements are,
therefore, for the benefit of third parties. Non-
compliance therewith does adversely affect the
validity of the contract nor the contractual rights
and obligations of the parties (Fule vs. CA, 286 CRA
700)
Contracts that must be registered
1. Chattel mortgages (NCC, Art. 2140).
NOTE: In accordance with Article 2125 of the
Civil Code, an unregistered chattel mortgage
is binding between the parties because
registration is necessary only for the purpose
of binding third persons (Filipinas Marble
397
Corporation v. Intermediate Appellate Court,
G.R. No. L-68010, May 30, 1986).
2. Sale or transfer of large cattle (Cattle
Registration Act).
ELECTRONIC COMMERCE ACT of 2000
(RA No. 8792)
Legal Recognition of Electronic Documents
Under Section 7 of the Act, electronic documents
shall have the legal effect, validity or
enforceability as any other document or legal
writing, and —
(a) Where the law requires a document to be in
writing, that requirement is met by an
electronic document if the said electronic
document maintains its integrity and
reliability and can be authenticated so as to be
usable for subsequent reference, in that;
(i) The electronic document has
remained complete and unaltered,
apart from the addition of any
endorsement and any authorized
change, or any change which arises in
the normal course of communication,
storage and display; and
(ii) The electronic document is reliable in
the light of the purpose for which it
was generated and in the light of all
relevant circumstances.
(b) Paragraph (a) applies whether the
requirement therein is in the form of an
obligation or whether the law simply provides
consequences for the document not being
presented or retained in its original form.
(c) Where the law requires that a document be
presented or retained in its original form, that
requirement is met by an electronic document
if —
(i) There exists a reliable assurance as to
the integrity of the document from
the time when it was fi rst generated
in its final form; and
That document is capable of being displayed to the
person to whom it is to be presented. It is
expressly provided, that no provision of the Act
shall apply to vary any and all requirements of
existing laws on formalities required in the
execution of documents for their validity.
 CIVIL LAW
According to their relation to other contracts:

KINDS OF CONTRACTS 1. Preparatory Contracts – are those which have

According to perfection or formation:
1. Consensual contracts which are perfected by
the mere meeting of the minds of the parties
(NCC, Art. 1305). (2005 BAR)
e.g. Sale, Lease.
for their object the establishment of a
condition in law which is necessary as a
preliminary step towards the celebration of
another subsequent contract.
e.g. Partnership, Agency.
2. Principal Contracts – are those which can
subsist independently from other contracts.
e.g. Sale, Lease.

2. Real contracts are those which require for 3. Accessory Contracts – those which can exist
their perfection both the consent of the only as a consequence of, or in relation with,
another prior contract.
parties and the delivery of the object by one
party to the other. e.g. Pledge, Mortgage.

According to their form:

e.g. creation of real rights over immovable
property must be written, deposit and pledge.
1. Common or Informal Contracts – are those
3. Solemn contracts – contracts which must which require no particular form.
e.g. Loan.
appear in writing, such as:
2. Special or Formal Contracts – are those which
a. Donations of real estate or of movables if
the value exceeds P5,000; require a particular form.
b. Partnership to which immovables are e.g. Donations, Chattel Mortgage.
contributed;
According to their purpose:
c. Contract of antichresis – requires the
1. Transfer of Ownership
amount of principal and interest be
e.g. Sale.
specified;
d. Sale of piece of land or interest therein is
through an agent; 2. Conveyance of Use
e.g. Usufruct, Commodatum.
e. Stipulation to charge interest;
f. Stipulation limiting common carrier's
duty of extraordinary diligence to 3. Rendition of Services
e.g. Agency.
ordinary diligence;
g. Chattel mortgage; or
According to the nature of the vinculum which
h. Transfer of large cattle (Sec. 22,
Act No. 1147; NCC, Art. 1581). they produce:
1. Unilateral Contracts – are those which give
rise to an obligation only to one of the parties.
According to the degree of dependence:
e.g. Commodatum.
2. Bilateral Contracts – are those which give rise
1. Principal – that which can exist independently
to reciprocal obligations for both parties.
of ther contracts;
e.g. Sale.
e. g. contract of loan.

2. Accessory – that which cannot exist without a According to their cause:

1. Onerous
valid principal contract;
e. g. guaranty, surety, pledge, mortgage. e. g. Sale.
3. Preparatory – that which is not an end by
itself but only a means for the execution of 2. Gratuitous
another contract. e. g. commodatum

e. g. contract of agency as agency does not 3. Remuneratory

stop with the agency because the purpose is
to enter into other contracts (Rabuya, 2017). According to the risks involved:

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 398
 OBLIGATIONS AND CONTRACTS
1. Commutative Contracts – are those where Distinction between Reformation and
each of the parties acquire an equivalent of his Annulment
prestation and such equivalent is pecuniarily
appreciable and already determined from the Reformation Annulment
moment of the perfection of the contract. There is meeting of the There is no meeting of
e.g. Lease. minds between the the minds. Consent is
parties as to the object, vitiated.
2. Aleatory Contracts – are those which are cause of the contract
dependent upon the happening of an The instrument failed The meeting of the
uncertain event, thus, charging the parties to express the true mids was prevented by
with the risk of loss or gain. intention of the parties reason of mistake,
e.g. Insurance. due to mistake, fraud, fraud, inequitable
inequitable conduct or conduct or accident
According to their names or norms regulating accident. perpetrated by one
them: party against the other
1. Nominate Contracts – are those which have Thepurpose of The purpose of
their own name and individuality, and are reformation is to annulment is to render
regulated by provisions of law. establish the true inefficacious the
e.g. Sale (2003 BAR). agreement of the contract in question.
parties and not to
2. Innominate Contracts – are those which lack create a new one
name or individuality, and are not regulated
by special provisions of law. NOTE: When there is no meeting of the minds, the
proper remedy is annulment and not reformation
(Pineda, 2000).
REFORMATION OF INSTRUMENTS
The fundamental distinction between reformation
of an instrument and annulment of a contract is
It is a remedy to conform to the real intention of that the first presupposes a perfectly valid
the parties due to mistake, fraud, inequitable contract in which there has been a valid meeting
conduct, accident (NCC, Art. 1359). of the minds of the contracting parties while the
second is based on a defective contract in which
Reformation is a remedy in quity by means of there has been no meeting of the minds because
which a written instrument is made or construed the consent is vitiated (Jurado, 2010).
so as to express or confirm the real intention of
the parties when some error or mistake is Operation and effect of reformation
committed. (Pineda, 2009)
It relates back to, and takes effect from the time of
Rationale : It would be unjust and inequitable to its original execution, especially as between the
allow the enforcement of a written instrument parties (Tolentino, 2002).
which does not reflect or disclose the real meeting
of the minds of the parties. Reformation of instruments may be availed of
judicially or extrajudicially.
Requisites in reformation of instruments
Basis and nature of the remedy of reformation
1. Meeting of the minds to the contract; of instrument
2. True intention is not expressed in the
instrument; The remedy of reformation of an instrument is
3. By reason of: (MARFI) based on the principle of equity where, to express
a. Mistake; the true intention of the contracting parties, an
b. Accident; instrument already executed is allowed by law to
c. Relative simulation; be reformed. The right of reformation is
d. Fraud; or necessarily an invasion or limitation of the parol
e. Inequitable conduct evidence rule, since, when a writing is reformed,
the result is that an oral agreement is by court
4. Strong, clear and convincing proof of MARFI. decree made legally effective. The remedy, being
an extraordinary one, must be subject to the
limitations as may be provided by law. A suit for

399
 CIVIL LAW
for reformation of an instrument must be brought
within the period prescribed by law, otherwise, it
will be barred by the mere lapse of time (Bentir v.
Leanda, G.R. 128991, April 12, 2000).
Reformation of instruments; when allowed
1. Mutual mistake. – When the mutual mistake of
the parties causes the failure of the
instrument to disclose their agreement (NCC,
Art. 1361);
Requisites:
a. The mistake should be of fact;
b. The same should be proved by clear and
convincing evidence; and
c. the mistake should be common to both
parties to the instrument (BPI v. Fidelity
Surety, Co. 51 Phil 57).
2. Mistake on one party and fraud on the other. –
In such a way that the instrument does not
show their true intention, the party mistaken
or defrauded may ask for the reformation of
the instrument (NCC, Art. 1362);
3. Mistake on one party and concealment on the
other. – 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 (NCC, Art.
1363);
4. Ignorance, lack of skill, negligence or bad faith.
– When through the ignorance, lack of skill,
negligence or bad faith on the part of the
person drafting the instrument or of the clerk
or typist, the instrument does not express the
true intention of the parties (NCC, Art. 1364);
5. Right of repurchase. – 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 a right of
repurchase (NCC, Art. 1365).
Reformation of instruments; when not allowed
1. Simple, unconditional donations inter vivos;
2. Wills;
3. When the agreement is void (NCC, Art. 1366);
4. When an action to enforce the instrument is
filed (estoppel);
5. If mistake, fraud, inequitable conduct, or
accident has prevented a meeting of the
minds of the parties;
NOTE: The remedy here is annulment of
contract.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
6. When the contract is unenforceable because
of failure to comply with the statute of frauds.
Prescriptive period in reformation of
instruments
10 years from the date of the execution of the
instrument
NOTE:The prescriptive period within which to
bring an action to set aside or reform a simulated
or fictitious written deed of pacto de retro sale
starts only when the alleged vendees made known
their intention by overt acts not to abide by the
true agreement, and not from the date of
execution of contract (Conde v. Cuenca, G.R. No. L-
643, 1956).
Persons who can ask for the reformation of the
instrument
It may be ordered at the instance of:
1. Either party or his successors in interest
(if the mistake is mutual);
2. Upon petition of the injured party; or
3. His heirs and assigns.
NOTE: In reformation of contracts, what is
reformed is not the contract itself, but the
instrument embodying the contract. 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 theaction to reform (Pineda, 2000).
An action for reformation of an instrument may be
brought under Rule 63 (Declaratory Relief and
Similar Remedies) of the New Rules of Court.
INTERPRETATION OF CONTRACTS
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 to be contrary to the evident
intention of the parties, the latter shall prevail
over the former (NCC, Art. 1370).
In order to judge the intention of the contracting
parties, their contemporaneous and subsequent
acts shall be principally considered (NCC, Art.
1371).
However the general terms of a contract may be,
they shall not be understood to comprehend
things that are distinct and cases that are different
400
 OBLIGATIONS AND CONTRACTS
from those upon which the parties intended to
agree (NCC, Art. 1372).
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 (NCC, Art. 1373).
Principle of effectiveness in contract
interpretation
Pursuant to this principle, where two
interpretations of the same contract language are
possible, one interpretation having the effect of
rendering the contract meaningless while the
other would give effect to the contract as a whole,
the latter interpretation must be adopted (PNB v.
Utility Assurance & Surety, Co., Inc., 177 SCRA 393,
1989).
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 (NCC, Art. 1374).
Complementary-contracts-construed-together
doctrine
The variious stipulations of a contract shall be
interpreted together, attributing to the doubtful
ones that sense which may result from all of them
taken jointly. (NCC, Art. 1374)
When there are several provisions in a contract,
the construction to be adopted shoud be that one
which will give effect to all provisions. A contract
must be read in its entirety. (Bank of P.I. vs. Ty
Canco Sabrino, 57 Phil. 804) Piecemeal
interpratation must be avoided.
Under this doctrine, an accessory contract must be
read in its entirety and together with the principal
agreement (Rabuya, 2017). Thus, a promissory
note and a deed of chattel mortgage must be
contrued together (Rigor v. Consolidated Orix
Leasing and Finance Corp., 387 SCRA 270, 2002);
and the surety contract, being an accessory
contract, must be interpreted with its principal
contract, for instance, a loan agreement (Rabuya,
2017).
Words which may have different significations
shall be understood in that which is most in
keeping with the nature and object of the contract
(NCC, Art. 1375).
The usage or custom of the place shall be borne in
mind in the interpretation of the ambiguities of a
401
contract, and shall fill the omission of stipulations
which are ordinarily established (NCC, Art. 1376).
The interpretation of obscure words or
stipulations in a contract shall not favor the party
who caused the obscurity (NCC, Art. 1377).
When it is absolutely impossible to settle doubts
by the rules established in the preceding articles,
and the doubts refer to incidental circumstances
of a gratuitous contract, the least transmission of
rights and interest shall prevail. If the contract is
onerous, the doubt shall be settled in favor of the
greatest reciprocity of interests.
If the doubts are cast upon the principal object of
the contract in such a way that it cannot be known
what may have been the intention or will of the
parties, the contract shall be null and void (NCC,
Art. 1378).
The principles of interpretation stated in Rule 123
of the Rules of Court shall likewise be observed in
the construction of contracts (NCC, Art. 1378).
NOTE: The provisions of Rule 123 of the Rules of
Court referred to are Secs. 58-67, now Secs. 8-17,
Rule 130, New Rules of Court.
Q: Gloria dela Cruz was granted by respondent
Planters Products, Inc. (PPI) a regular credit
line of P200,000.00 for a 60- day term, with
trust receipts as collaterals. The spouses Dela
Cruz submitted a list of their assets in support
of her credit application for participation in
the Special Credit Scheme (SCS) of PPI. Gloria
signed two documents labelled "Trust
Receipt/Special Credit Scheme". The products
were thereafter released to Gloria. The 60-day
credit term lapsed without Gloria paying her
obligation under the Trust Receipt/SCS. Hence,
PPI wrote collection letters to her. PPI brought
against the spouses a complaint for the
recovery of a sum of money with prayer for a
writ of preliminary attachment. PPI alleged
that Gloria had violated the fiduciary
undertaking and therefore, she is guilty of
fraudulently misapplying or converting to her
own use the items delivered to her as
contained in the invoices. It charged that
Gloria did not return the goods indicated in
the invoices and did not remit the proceeds of
sales. Spouses Dela Cruz alleged that Gloria
was only a marketing outlet of PPI under its
SCS Program, not a dealer primarily obligated
to PPI for the products delivered to her. Did
the two transaction documents signed by
Gloria express the intent of the parties to
 CIVIL LAW
establish a creditor-debtor relationship A: NO. With the execution of separate mortgage
between them? contracts for the two (2) loans, it is clear that the
intention of the parties was to limit the mortgage
A: YES. Gloria signed the application for credit to the loan for which it was constituted. The mere
facilities indicating that a trust receipt would fact that the mortgage constituted on the property
serve as collateral for the credit line. Gloria, as covered by TCT No. T-66139 made no mention of
"dealer," signed together with Quirino the list of the pre-existing loan could only strongly indicate
their assets that they tendered to PPI "to support that each of the loans of the Spouses Alonday had
our credit application in connection with our been treated separately by the parties themselves,
participation to your Special Credit and this sufficiently explained why the loans had
Scheme." Gloria further signed the Trust been secured by different mortgages. Another
Receipt/SCS documents defining her obligations indication that the second mortgage did not
under the agreement, and also the invoices extend to the agricultural loan was the fact that
pursuant to the agreement with PPI, indicating her the second mortgage was entered into in
having received PPI products on various dates. connection only with the commercial loan (PNB v.
These established circumstances comprised by the Heirs of Alonday, G.R. No. 171865, October 12,
contemporaneous and subsequent acts of Gloria 2016) (Bersamin, J.).
and Quirino that manifested their intention to
enter into the creditor-debtor relationship with
PPI show that the Spouses Dela Cruz are fully
liable to PPI. The law of contracts provides that in
determining the intention of the parties, their
contemporaneous and subsequent acts shall be
principally considered. Consequently, the written
terms of their contract with PPI, being clear upon
the intention of the contracting parties, should be
literally applied. Her act of signing the application
signified her agreement to be bound by the terms
of the application (Spouses Dela Cruz v. Planters
Planters Products, Inc., G.R. No. 158649, February
18, 2013) (Bersamin, J.).
Q: The spouses Alonday obtained an
agricultural loan of P28, 000. 00 from the PNB
Digos branch and secured the obligation by
constituting a real estate mortgage on their
parcel of land. Thereafter, spouses Alonday
again obtained a commercial loan from the
petitioner and constituted a real estate
mortgage over their 598 square meter
residential lot. After paying in full their
commercial loan, the children of the Spouses
Alonday demanded the release of the
mortgage over the property. The PNB
informed them, however, that the mortgage
could not be released because the agricultural
loan had not yet been fully paid, and that as the
consequence of the failure to pay, it had
foreclosed the mortgage over the property.
According to PNB, the deed of mortgage
relating to the property covered included an
"all-embracing clause" whereby the mortgage
secured not only the commercial loan
contracted with its Davao City Branch but also
the earlier agricultural loan contracted with
its Digos Branch. Does the “all-embracing
clause” cover both loans?

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 402
 OBLIGATIONS AND CONTRACTS

DEFECTIVE CONTRACTS

VOID
BASIS RESCISSIBLE VOIDABLE UNENFORCEABLE
/INEXISTENT

Economic Incapacity of one Entered without authority or in Illegality (void)

damage or lesion of parties to give excess thereof; non-compliance or absence of
to either one of consent or with Statute of Frauds; any of essential
Origin of the
the parties or to vitiated consent. incapacity of both parties to give requisites of a
defect
3rd persons; consent. contract
declaration by (inexistent).
law.

Suffered by – As to the other Not necessary Not necessary

Necessity of
either one of contracting party
Damage/
parties or 3rd - not necessary.
prejudice
person.
Curable by Curable Curable Not curable Not Curable
Prescripiton

Valid & legally Valid & legally Inoperative until ratified; not None
enforceable until enforceable until enforceable in court without
Legal effect
judicially judicially proper ratification.
rescinded. annulled.
Rescission or Annulment of Only personal defense Declaration of
Remedy rescissory action. contract. nullity of
contract.

Must be a direct Direct action Indirect attack allowed Can be attacked

Nature of
action. needed. directly or
action
indirectly.

GR: Contracting Contracting party Contracting party 3rd persons

Who can file party; cannot file unless
the action XPN: Defrauded their interest are
Creditors directly affected.

Susceptibility Susceptible but Susceptible Susceptible Not Susceptible

of not of ratification
ratification proper.

Action for Action for Action for recovery; specific Action for
rescission annulment performance or damages declaration of
Susceptibility prescribes after 4 prescribes after 4 prescribes nullity or putting
prescription years. years. (10 years if based on a written of defense of
contract; 6 years if unwritten). nullity does not
prescribe.

403
 CIVIL LAW
RESCISSIBLE CONTRACTS
These are contracts validly constituted but
nevertheless maybe set aside due to a particular
economic damage or lesion caused to either to one
of the parties or to a third person. It may be set
aside in whole or in part, or up to the extent of the
damage caused (NCC, Art. 1381).
Contracts that may be rescinded
1. Under Art. 1381, those
2.
a. Entered into by guardians whenever the
wards whom they represent suffer lesion
by more than ¼ of value of the property
[NCC, Art. 1381(1)];
If a guardian alienates properties of the
ward without judicial approval, the
contract is ”unenforceable” for lack of
authority. (NCC, Art. 1403,par. 1)
b. Agreed upon in representation of
absentees, if absentee suffers lesion by
more than ¼ of value of property [NCC,
Art. 1381(2)];
c. Contracts where rescission is based on
fraud committed on creditor and cannot
collect the claim due (accion pauliana)
[NCC, Art. 1381(3)];
NOTE: Contracts which are rescissible
under the third paragraph of Art. 1381
are valid contracts, although undertaken
in fraud of creditors. If the contract is
‘‘absolutely simulated’’, the contract is not
merely rescissible but inexistent,
although undertaken as well in fraud of
creditors (MBC v. Silverio, 466 SCRA 438,
August 11, 2005). In the former, the
remedy is rescission; in the latter, the
remedy is an action to declare the
contract inexistent which action is
imprescriptible (Rabuya, 2017).
d. Contracts where the object involved is the
subject of litigation; contract entered into
by defendant without knowledge or
approval of litigants or judicial authority
[NCC, Art. 1381(4)];
e. Payment by an insolvent – on debts which
are not yet due; prejudices the claim of
others (NCC, Art. 1382);
f. Provided for by law (NCC, Arts. 1526,
1534, 1538, 1539, 1542, 1556, 1560, 1567
& 1659).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
NOTE: C, D and E are contracts which are
not necessarily entered into by persons
exercising fiduciary capacity. In Art. 1381
(1 & 2), the contract must be of
administration and representation.
3. Payments made in state of insolvency (NCC,
Art. 1382):
a. Plaintiff has no other means to maintain
reparation;
b. Plaintiff must be able to return whatever
he may be obliged to return due to
rescission;
c. The things must not have been passed to
third persons in good faith;
d. It must be made within 4 years (NCC, Art
1382).
Characteristics of rescissible contract
1. It has all the elements of a valid contract.
2. It has a defect consisting of an injury
(generally in the form of economic damage or
lesion, fraud, and alienation of the property)
to one of the contracting parties or to a third
person.
3. It is valid and effective until rescinded.
4. It can be attacked only directly.
5. It is susceptible of convalidation only by
prescription (De Leon, 2010).
Nature of an action for rescission
The action for rescission is subsidiary. It cannot be
instituted except when the party suffering damage
has no other legal means to obtain reparation for
the same (NCC, Art. 1383). Hence, it must be
availed of as the last resort, availed only after all
legal remedies have been exhausted and proven
futile (Khe Hong Cheng v. CA, G.R. No. 144169,
March 28, 2001).
Rationale: In order not to disturb other contracts
and to comply with the principle of relativity of
contracts.
However, if it can be proven that the property
alienated was the only property of the debtor at
the time of the transaction, the action for
rescission is certainly maintainable because it is
clear that the creditor has no other remedy under
the circumstances. (Pineda,2009 citing Regalado
vs. Luchsinger, 5 Phil. 625)
NOTE: Rescission shall be only to the extent
necessary to cover the damages (NCC, Art. 1384).
404
 OBLIGATIONS AND CONTRACTS
Persons who may institute an action for the
rescission of a rescissible contract
The action for rescission may be instituted by the
following:
1. Injured party;
2. Contracts entered into by guardians – by
ward, or by guardian ad litem of ward during
the latter’s incapacity in an action against the
original guardian;
3. Contracts in representation of absentees – by
the absentee;
4. Contracts defrauding creditors – by the
creditors;
5. Contracts referring to things in litigation – by
the party litigant;
6. Their representatives;
7. Their heirs;
8. Their creditors by virtue of subrogatory
action defined in Art. 1177, NCC (Jurado,
2009).
Q: Jebson entered into a Joint Venture
Agreement (JVA) with Sps. Salonga which
obligated the former to construct ten (10)
residential units on the latter’s three parcels of
land. Out of the ten (10) units, seven (7) units
will belong to Jebson. It was also allowed to
sell its allocated units under such terms as it
may deem fit, subject to the condition that the
price agreed upon was with the conformity of
Sps. Salonga. Thereafter, Jebson entered into a
Contract to Sell with Buenviaje over one of its
units without the conformity of Sps. Salonga.
Buenviaje was able to fully pay for Jebson’s
unit through a swapping arrangement which
allows the vendee to convey certain properties
as consideration for the sale. Despite this full
payment, Jebson was unable to complete said
unit. This prompted Buenviaje to demand the
unit’s immediate completion and delivery.
Jebson having failed to comply with the
demand, Buenviaje filed an action before the
HLURB against Jebson and Sps. Salonga for
specific performance praying for the unit’s
completion and delivery and rescission in the
alternative. Jebson, in its defense, claimed that
they were not able to secure the necessary
permits because Sps. Salonga stubbornly
refused to cause the consolidation and
partition of the parcels of land. Sps. Salonga
averred that they were not liable to the
complainants since there was no privity of
contract between them, adding that the
contracts to sell were unenforceable against
them as they were entered into by Jebson
without their conformity, in violation of the
405
JVA. HLURB rescinded the Contract to Sell and
held Sps. Salonga Solidarily liable with Jebson.
HLURB-BOC reversed the former ruling and
instead rescinded the swapping arrangement
and maintaining the validity of the Contract to
Sell, thereby granting specific performance
instead.
Is "swapping arrangement" invalid entitling it
to be rescinded?
A: NO, there is no basis to rescind the aforesaid
swapping arrangement. In Union Bank Philippines
v. Sps. Ong (G.R. No. 152347, June 21, 2006), Article
1381 of the Civil Code which lists as among the
rescissible contracts: “those undertaken in fraud
of creditors when the latter cannot in any other
manner collect the claim due them”. Contracts in
fraud of creditors are those executed with the
intention to prejudice the rights of creditors. In
determining whether or not a certain conveying
contract is fraudulent, what comes to mind first is
the question of whether the conveyance was a
bona fide transaction or a trick and contrivance to
defeat creditors. To creditors seeking contract
rescission on the ground of fraudulent conveyance
rest the onus of proving by competent evidence
the existence of such fraudulent intent on the part
of the debtor
Here, the onus of proving that the "swapping
arrangement" was a fraudulent conveyance, or a
trick and contrivance to defeat creditor rights, was
not sufficiently discharged by Sps. Salonga. Thus,
absent such proof of fraud, the Court concludes
that the "swapping arrangement" was a bona fide
transaction freely entered into between Jebson
and Buenviaje (Dr. Buenviaje vs. Sps. Salonga, G.R.
No. 216023, October 05, 2016). (Perlas-Bernabe,
J.)
Prescriptive period of action for rescission
1. Under Art. 1381, no.1 – within 4 years from the
time the termination of the incapacity of the
ward;
2. Under Art. 1381, no. 2- within 4 years from the
time the domicile of the absentee is known; or
3. Under Art. 1381, nos. 3 & 4 & Art. 1382 – within
4 years from the time of the discovery of
fraud.
Requisites that must concur before a contract
may be rescinded on the ground of lesion
Whether the contract is entered into by a guardian
in behalf of his ward or by a legal representative
in behalf of an absentee, before it can be rescinded
 CIVIL LAW
on the ground of lesion, it is indispensable that the
following requisites must concur:
1. The contract must be entered into by the
guardian in behalf of his ward or by the
legal representative in behalf of an
absentee.
2. The ward or absentee suffered lesion of
more than 1/4 of the value of the
property which is object of the contract.
3. The contract must be entered into
without judicial approval.
4. There must be no other legal means for
obtaining reparation for the lesion.
5. The person bringing the action must be
able to return whatever he may be
obliged to restore.
6. The object of the contract must not be
legally in the possession of a third person
who did not act in bad faith.
Statutory presumptions of Fraud in Article
1387
1. Alienation by gratuitous title.
When a debtor donates his property
without reserving sufficient property to
pay all his pre-existing debts, the law
presumes that the gratuitous dispositions
are made in fraud of creditors.
2. Alienation by onerous title.
The contract is presumed fraudulent if at
the time of alienation, some judgement
has been rendred against him, whether it
is on appeal or has already become final
and executory; or some writ of
attachment has been issued against him
in any case.
NOTE: The decision or writ of attachment need
not refer to the very property subject of
alienation. The person who obtained the
judgement or writ of attachment need not be the
same person seeking the rescission.
These presumptions are rebuttable, which means,
they may be overcome by clear, strong and
convincing evidence.
Requisites before a contract entered into in
fraud of the creditors may be rescinded
1. There must be a credit existing prior to the
constitution of the said fraudulent
contract;
2. There must be fraud, or at least, the intent
to commit fraud to the prejudice of the
creditor seeking rescission;
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
3. The creditor cannot in any legal manner
collect his credit (subsidiary character of
rescission);
4. The object of the contract must not be
legally in possession of a third person in
good faith.
NOTE: If the object of the contract is legally in the
possession of a third person who did not act in
bad faith, the remedy available to the creditor is to
proceed against the person causing the loss for
damages. Such person is solidarily liable with that
of transferring creditor as both of them are guilty
of fraud.
The action to rescind contracts in fraud of
creditors is known as accion pauliana. For this
action to prosper, the following requisites must be
present:
a) The plaintiff asking for rescission has a
credit prior to the alienation;
b) The debtor has made a subsequent
contract conveying a patrimonial benefit to
a third person;
c) The creditor has no other legal remedy to
satisfy his claim;
d) The act being impugned is fraudulent;
e) The third person who received the
property conveyed, if it is by onerous title,
has been an accomplice in fraud (Siguan vs
Lim, G.R. No. 134685, November 19, 1999).
Badges of fraud
1. Consideration for the conveyance of the
property is inadequate or fictitious;
2. Transfer was made by the debtor after a suit
has commenced and during its pending against
him;
3. Sale upon credit by an insolvent debtor;
4. The presence of evidence of large indebtedness
or complete insolvency of the debtor;
5. Transfer of all his property by a debtor when
he is financially embarrassed or insolvent;
6. Transfer is made between father and son,
where there are present some or any of the
above circumstances; and
7. Failure of the vendee to take exclusive
possession of the property (Oria v. McMicking,
21 Phil. 243, G. R. No. 7003, January 18, 1912).
Resolution v. Rescission
RESOLUTION RESCISSION
(NCC, ART. 1191) (NCC, ART. 1381)
406
 OBLIGATIONS AND CONTRACTS
Both presuppose contracts validly entered into based, was “resolution” (Ong v. CA, G.R. No. 97347,
and subsisting and both require mutual restitution July 6, 1999).
when proper.
Effect of rescission
Nature
1. Obligation of mutual restitution (but not
Principal action; Subsidiary remedy absolute);
Retaliatory in character 2. Abrogation of contract (Absolute);
3. Obligation of third person to restore (if third
Grounds person has nothing to restore, Article does not
Non-performance of 5 grounds under Art. apply) (De Leon, 2016).
obligation (only 1381. (lesions or fraud
ground) of creditors); Mutual Restitution

Non-performance is not Rescission of contract creates an obligation of

important mutual restitution of the objects of the contract,
their fruits, and the price with interest.
Applicability
NOTE: Rescission is possible only when the
Only to reciprocal Applies to both person demanding rescission can return whatever
obligations unilateral and he may be obliged to restore. A court of equity will
reciprocal obligations not rescind a contract unless there is restitution,
that is, the parties are restored to the status quo
Prescriptive Period
ante (NCC, Art. 1385).
10 years from accrual of 4 years (NCC, Art. 1389)
right of action for Mutual restitution is not applicable when:
written contracts;
1. Creditor did not receive anything from
6 years for verbal contract; or
contracts [NCC, Arts. 2. Thing already in possession of third
1144 (2) and 1145 (1)] persons in good faith; subject to
indemnity only, if there are two or more
Person who can Initiate the Action alienations – liability of first infractor.
Only the injured party Even third persons Q: Reyes (seller) and Lim (buyer) entered into
to the contract prejudiced by the a contract to sell a parcel of land. Harrison
contract Lumber occupied the property as lessee. Reyes
Fixing of Period by the Court offered to return the P10 million
downpayment to Lim because Reyes was
Court may fix a period Court cannot grant having problems in removing the lessee from
or grant extension of extension of time the property. Lim rejected Reyes’ offer. Lim
time for the fulfillment learned that Reyes had already sold the
of the obligation when property to another.
there is sufficient
reason to justify such Both Reyes and Lim are now seeking
extension rescission of the contract to sell. However,
Reyes does not want to deposit the 10M to the
Purpose court because according to him, he has the
“right to use, possess and enjoy” of the money
Cancellation of the Reparation for
as its owner before the contract to sell is
contract damage or injury,
rescinded. Is Reyes’ contention correct?
allowing partial
rescission of
A: NO. There is also no plausible or justifiable
contract (Pineda,
reason for Reyes to object to the deposit of the
2000)
P10 million down payment in court. The contract
to sell can no longer be enforced because Reyes
NOTE: While Article 1191 uses the term himself subsequently sold the property. Both Lim
“rescission,” the original term which was used in and Reyes are seeking for rescission of the
the old Civil Code, from which the article was

407
 CIVIL LAW
contract. By seeking rescission, a seller necessarily allowed to retain the money at the same time
offers to return what he has received from the appropriate the proceeds of the second sale made
buyer. Such a seller may not take back his offer if to another (Goldenrod, Inc. v. CA, G.R. No. 126812,
the court deems it equitable, to prevent unjust November 24, 1998).
enrichment and ensure restitution, to put the
money in judicial deposit.
VOIDABLE CONTRACTS (BAR 2004)
NOTE: In this case, it was just, equitable and
proper for the trial court to order the deposit of
the down payment to prevent unjust enrichment Voidable contracts are those where consent is
by Reyes at the expense of Lim. Depositing the vitiated either by the incapacity of one of the
down payment in court ensure its restitution to its
contracting parties or by mistake, violence,
rightful owner. Lim, on the other hand, has intimidation, undue influence or fraud. These
nothing to refund, as he has not received anything contracts are binding, unless they are annulled by
under the contract to sell (Reyes v. Lim, Keng and a proper action in court. It is susceptible of
Harrison Lumber, Inc., G.R. No. 134241, August 11,
ratification (NCC, Art. 1390).
2003).
--- NOTE: Annulment may be had even if there be no
Q: Goldenrod offered to buy a mortgaged
damage to the contracting parties.
property owned by Barreto Realty to which it
paid an earnest money amounting to P1 Characteristics of a voidable contract
million. It was agreed upon that Goldenrod
would pay the outstanding obligations of
1. Effective until set aside;
Barreto Realty with UCPB. However, 2. Can be; and
Goldenrod did not pay UCPB because of the
(the word should be ”ratified ”)
bank’s denial of its request for the extension to 3. Can be assailed only by the party whose
pay the obligation. Thereafter, Goldenrod, consent was defective or his heirs or assigns.
through its broker, informed Barreto Realty
that it could not go through with the purchase
NOTE: Third persons may assail if they are
of the property and also demanded the refund
prejudiced. (Development Bank vs. CA, 96 SCRA
of the earnest money it paid. In the absence of
342)
a specific stipulation, may the seller of real
estate unilaterally rescind the contract and as 4. A voidable contract, unlike an unenforceable
a consequence keep the earnest money to
and void contracts may be attacked indirectly
answer for damages in the event the sale fails or collaterally, by way of defense to an action
due to the fault of the prospective buyer? under the contract by way of a counterclaim
(De Leon, 2016).
A: NO. Goldenrod and Barretto Realty did not
intend that the earnest money or advance
Classes of voidable contracts
payment would be forfeited when the buyer
should fail to pay the balance of the price,
1. Those where one of the parties is incapable of
especially in the absence of a clear and express
giving consent; and
agreement thereon.
NOTE: If both parties are incapacitated to give
Moreover, Goldenrod resorted to extrajudicial
consent, the contract is unenforceable and not
rescission of its agreement with Barretto Realty.
merely voidable.
Under Article 1385, rescission creates the 2. Those where the consent is vitiated by
obligation to return the things which were the mistake, violence, intimidation, undue
object of the contract together with their fruits
influence or fraud (NCC, Art. 1390).
and interest. Therefore, by virtue of the
extrajudicial rescission of the contract to sell by Who may institute an action for annulment
Goldenrod without opposition from Barretto
Realty, which in turn, sold the property to other 1. Real party in interest. – All who are
persons, Barretto Realty, had the obligation to
principally or subsidiarily liable ; and
return the earnest money which formed part of 2. One not responsible for the defect of the
the purchase price plus legal interest from the
contract.
date it received notice of rescission. It would be
most inequitable if Barretto Realty would be

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 408
 OBLIGATIONS AND CONTRACTS
NOTE: An action for annulment may be instituted
by all who are thereby obliged principally or
subsidiarily.He who has capacity to contract may
not invoke the incapacity of the party with whom
he has contracted nor can those who exerted
intimidation, violence or undue influence or
employed fraud or caused mistake base their
action upon these flaws of the contract.
Effects of annulment of a contract
1. If contract not yet consummated – parties shall
be released from the obligations arising
therefrom.
2. If contract has already been consummated –
rules provided in Arts. 1398-1402 shall
govern.
a. Restitution
GR: Mutual restitution. – the contracting
parties shall restore to each other things
which have been the subject matter of the
contract, with their fruits and the price
with its interest except in case provided
by law. In an obligation to render
services, the value thereof shall be the
basis for damages (NCC, Art. 1398).
Note: No restitution. – The party
incapacitated is not obliged to make any
restitution except insofar as he has been
benefited by the thing or the price
received by him (NCC, Art. 1399).
XPN : If and when the application of
mutual restitution will result in unjust
enrichment of one party at the expense of
another. (4 Tolentino, 607, [1991])
b. Whenever the person obliged by the
decree of annulment to return the thing
cannot do so because it has been lost
through his fault, he shall return the fruits
received and the value of the thing at the
time of the loss, with interest from the
same date (NCC, Art. 1400).
Causes of extinction of action to annul
1. Prescription – the action for annulment must
be commenced within 4 years depending on
the ground stated.
NOTE: If the action has prescribed, the
contract can no longer be set aside (Villanueva
v. Villanueva, 91 Phil 43).
409
2. Ratification – cleanses the contract of its
defects from the moment it was constituted.
(NCC, Art. 1396).
3. By loss of the thing which is the object of the
contract through fraud or fault of the person
who is entitled to annul the contract (NCC, Art.
1401).
4. If the minor is guilty of active
misrepresentation of his age (Braganza v. De
Villa Abrille, 1959).
NOTE: If the right of action is based upon the
incapacity of any one of the contracting parties, the
loss of the thing shall not be an obstacle to the
success of the action, unless it took place through
the fraud or fault of the plaintiff (NCC, Art. 1401).
Prescriptive period for an annulment of a
voidable contract
The action for annulment shall be brought within
4 years, reckoned from:
1. In cases of intimidation, violence or undue
influence, from the time the defect of the
consent ceases;
2. In case of mistake or fraud, from the time of
the discovery of the same;
3. And when the action refers to contracts
entered into by minors or other incapacitated
persons, from the time the guardianship
ceases (NCC, Art. 1391).
Ratification
It is the act or means by virtue of which, efficacy is
given to a contract which suffers from a vice of
curable nullity (Manresa).
NOTE: Ratification extinguishes the action to
annul a voidable contract (NCC, Art. 1392).
Requisites of ratification
1. The contract involved must be voidable;
2. Person ratifying must know the reason for the
voidability;
3. The cause for the voidability must
immediately cease after the ratification; and
4. Ratification must be express or through an act
implying a waiver of the action to annul;
NOTE: Ratification entered into by the
incapacitated person may be effected by the
guardian of the incapacitated person (NCC,
Art. 1394). However, this rule does not pertain
to a rescissible contract entered into by the
guardian in behalf of his ward.
 CIVIL LAW
The right to ratify is transmitted to the heirs of the Confirmation v. Recognition
party entitled to such right (Tolentino, 2002).
CONFIRMATION RECOGNITION
Party who may ratify
It is an act by which It is an act whereby a defect
1. In contracts entered into by incapacitated a voidable contract is of proof is cured such as
persons. cured of its vice or when an oral contract is
(a) guardian ; defect. put into writing or when a
(b) injured party himself, provided he is private instrument is
already capacitated. converted into a public
2. In contracts voidable on the ground of instrument (Luna v.
mistake. – party whose consent was vitiated Linatoc, G.R. No. L-48403,
(De Leon, 2016). October 28, 1942).

Kinds of ratification
Voidable contract v. Rescissible contract
1. Express –the desire of the innocent party to
BASIS VOIDABLE RESCISSIBLE
convalidate the contract, or his waiver or
As to the kind Defect is Defect is
renunciation of his right to annul the contract
of defect intrinsic external
is clearly manifested verbally or formally in
present
writing (Pineda, 2000).
2. Implied (tacit) – it is the knowledge of the As to the Vitiated The damage or
reason which renders the contract voidable source of consent makes prejudice
defect the contract suffered by
and such reason having ceased, the person
who has a right to invoke it should execute an voidable one of the
act which necessarily implies an intention to contracting
parties or a
waive his right (NCC, Art. 1393).
third person
makes the
Effects of ratification
contract
rescissible
Ratification cleanses the contract from all its
defects from the moment it was constituted, As to the Damage is Damage /
thereby extinguishing the action to annul a necessity of immaterial prejudice is
voidable contract. It results therefore that after a damage material
contract is validly ratified, no action to annul the As to the Annulability of Rescissibility
same can be maintained based upon defects source of the contract is of the contract
relating to its original validity (Rabuya, 2017). remedy based on law is based on
equity
Retroactivity in ratification of contracts As to the kind Public interest Private
of interest the predominates interest
GR: Retroactivity applies in ratification of predominates predominates
contracts. As to the Susceptible of Not
susceptibility ratification susceptible of
XPN: When the rights of innocent third persons of ratification ratification
will be prejudiced, ratification will not take effect. As to whether It is a sanction It is a remedy
a sanction or
NOTE: Ratification does not require the a remedy
conformity of the contracting party who has no As to who can Only parties to Third persons
right to bring the action for annulment. avail the the contract who are
remedies can assail it affected may
file the action
As to the kind It is a principal It is a
of action action subsidiary
action

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 410
 OBLIGATIONS AND CONTRACTS
UNENFORCEABLE CONTRACTS
Those contracts which cannot be enforced by
action or complaint, unless they have been ratified
by the party or parties who did not give consent
thereto (Jurado, 2009).
Characteristics of unenforceable contract
a. It cannot be enforced by a proper action in
court;
b. It may be ratified;
c. It cannot be assailed by third person; and
d. May only be assailed as a way of defense, not
by direct action.
e. The defect of an unenforceable contract is of a
permanent nature and it will exist as long as
the contract is not duly ratified. The mere
lapse of time cannot give efficacy to the
contract (Rabuya, 2017).
NOTE: An unenforceable contract is valid
although it produces no legal effect (Tolentino,
2002).
Kinds of unenforceable contracts
The following contracts are unenforceable unless
they are ratified:
1. Those entered into the name of another
person by one who has been given no
authority/legal representation or acted
beyond his powers; “Unauthorized
contracts”;
NOTE: A contract of sale over a piece of land
entered by an agent whose authority is not in
writing, even if he acted beyond the scope of
his authority is void, not merely
unenforceable (NCC, Art. 1874).
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 (NCC, Art.
1403).
Q: Julian Cuizon executed a Deed of
Extrajudicial Settlement and Sale (Deed)
covering Lot No. 4539 (subject lot) in favor of
the Civil Aeronautics Administration (CAA),
the predecessor-in-interest of petitioner
Mactan Cebu International Airport Authority
(MCIAA). The subject lot was transferred and
conveyed to MCIAA. However, the heirs of
411
Gavina Ijordan claims ownership over the lot
asserting that they had not authorized Julian
to sell their shares to MCIAA’s predecessor-in-
interest. Was the subject lot validly conveyed
in its entirety to the petitioner?
A: NO. New Civil Code provides that no person
could contract in the name of another without
being authorized by the latter, or unless he had by
law a right to represent him; the contract entered
into in the name of another by one who has no
authority or legal representation, or who has
acted beyond his powers, is unenforceable, unless
it is ratified, expressly or impliedly, by the person
on whose behalf it has been executed, before it is
revoked by the other contracting party. Verily, the
Deed, being null and void, had no adverse effect on
the rights of the the heirs of Ijordan in the subject
lot. However, the conveyance by Julian through
the Deed had full force and effect with respect to
his share of 1/22 of the entire property. A sale of
jointly owned real property by a co-owner
without the express authority of the others is
unenforceable against the latter, but valid and
enforceable against the seller (Mactan Cebu
International Airport Authority v. Heirs of Gavina
Ijordan, G.R. No. 173140, January 11, 2016)
(Bersamin, J.).
Statute of Frauds (2009 BAR)
The term "Statute of Frauds" [Article 1403, (2)] is
descriptive of statutes which require certain
classes of contracts to be in writing. It requires
certain contracts enumerated therein to be
evidenced by some note or memorandum
subscribed by the party charged or by his agent in
order to be enforceable. The Statute does not
deprive the parties of the right to contract with
respect to the matters therein involved, but
merely regulates the formalities of the contract
necessary to render it enforceable. Evidence of the
agreement cannot be received without the writing
or a secondary evidence of its contents (Swedish
Match, AB v. CA, G.R. No. 128120, October 20, 2004).
The Statute of Frauds applies only to executory
contracts, not to those that are partially or
completely fulfilled. Where a contract of sale is
alleged to be consummated, it matters not that
neither the receipt for the consideration nor the
sale itself was in writing. Oral evidence of the
alleged consummated sale is not forbidden by the
Statute of Frauds and may not be excluded in
court (Victoriano v. CA, G.R. No. 87550, February
11, 1991).
Purpose of the Statute of Frauds
 CIVIL LAW
It is to prevent fraud and perjury in the
enforcement of obligations depending for their
evidence on the unassisted memory of witnesses,
by requiring certain enumerated contracts and
transactions to be evidenced by a writing signed
by the party to be charged (Swedish Match, AB v.
CA, G.R. No. 128120, October 20, 2004).
NOTE: The statute of Frauds simply provides the
method by which the contracts enumerated
therein may be proved. It does not declare the said
contracts are invalid because they are not reduced
to writing. A contract exists and is valid even
though it is not clothed with the necessary form
(De Leon, 2010).
Contracts or agreements covered by the
Statute of Frauds
1. An agreement that by its terms is not to be
performed within a year from the making
thereof;
2. A special promise to answer for the debt,
default or miscarriage of another;
3. An agreement made in consideration of
marriage, other than a mutual promise to
marry;
4. An agreement for the sale of goods, chattels or
things in action, at a price not less than 500
pesos, unless the buyer accepts and receives
part of such goods and chattels, or the
evidences, or some of them, of such things in
action, or pay at the time some part of the
purchase money; but when a sale is made by
an auction and entry is made by the
auctioneer in his sales book, at the time of the
sale, of the amount and kind of property sold,
terms of sale, price, names of the purchasers
and person on whose account the sale is
made, it is a sufficient memorandum;
5. An agreement for the leasing for a longer
period than one (1) year, or for the sale of real
property or of an interest therein;
6. A representation as to the credit of a third
person (NCC, Art. 1403).
NOTE: The enumeration is EXCLUSIVE.
Fundamental principles governing Statute of
Frauds
1. It only applies to executory contracts and not
partially or completely executed.
2. It cannot apply if the action is neither for
damages because of violation of an agreement
nor for the specific performance of said
agreement.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
3. It is exclusive as it applies only to the
agreements or contracts enumerated in Art.
1403.
4. The defense of Statute of Frauds may be
waived.
5. It is a personal defense; it cannot be assailed
by third persons.
6. Contracts infringing the Statute of Frauds are
not void; they are merely unenforceable.
7. It is a Rule of Exclusion as it excludes oral
testimony.
8. It does not determine the credibility or weight
of evidence. It merely concerns itself with the
admissibility.
9. It does not apply if the claim is that the
contract does not express the true agreement
of the parties (Paras, 2008).
Q: Cenido, as an heir of Aparato and claiming
to be the owner of a house and lot, filed a
complaint for ejectment against spouses
Apacionado. On the other hand, spouses
Apacionado alleged that they are the owners of
the house and lot which are unregistered
purchased by them from its previous owner,
Aparato. Their claim is anchored on a 1-page
typewritten document entitled
"Pagpapatunay," executed by Aparato. Is the
“Pagpapatunay” entered into by Bonifacio and
spouse Apacionado valid and enforceable?
A: YES, it is valid and enforceable. Generally,
contracts are obligatory, in whatever form such
contracts may have been entered into, provided
all the essential requisites for their validity are
present. When, however, the law requires that a
contract be in some form for it to be valid or
enforceable, that requirement must be complied
with.
The sale of real property should be in writing and
subscribed by the party charged for it to be
enforceable. The "Pagpapatunay" is in writing and
subscribed by Aparato, hence, it is enforceable
under the Statute of Frauds. Not having been
subscribed and sworn to before a notary public,
however, the "Pagpapatunay" is not a public
document, and therefore does not comply with
par. 1, Art. 1358.
Moreover, the requirement of a public document
in Article 1358 is not for the validity of the
instrument but for its efficacy. Although a
conveyance of land is not made in a public
document, it does not affect the validity of such
conveyance. The private conveyance of the house
and lot is therefore valid between Aparato and the
spouses. For greater efficacy of the contract,
412
 OBLIGATIONS AND CONTRACTS
convenience of the parties and to bind third
persons, respondent spouses have the right to
compel the vendor or his heirs to execute the
necessary document to properly convey the
property (Cenidon v. Spouses Apacionado, G.R.No.
132474, November 19, 1999).
Enforceability of Electronic Transactions (RA.
No. 8792)
The Electronic Commerce Act of 2000 hsd given
legal recognition to the following:
a. Electronic Data Message
b. Electronic Documents
c. Electronic Signatures
Unenforceable contract is ratifiable
1. A contract entered into in the name of another
by one who has no authority, legal
representation or who acted beyond his
powers shall be unenforceable, unless it is
ratified expressly or impliedly, by the person
on whose behalf it has been executed, before
it is revoked by the other contracting party
(NCC, Art. 1317).
2. Contracts infringing the Statute of Frauds are
ratified:
a. By failure to object to the
representation of oral evidence to
prove the same; or
b. By the acceptance of benefits under
them; the contract is already
executed. (NCC, Art. 1317).
c. By cross-examining the witness who
is testifying on the oral contract.
(Pineda, 2009 citing Abrenica vs.
Gonda, 24 Phil. 739)
3. In a contract where both parties are incapable
of giving consent, express or implied
ratification by the parents or guardian, as the
case may be, of one of the contracting parties,
or one of the contracting parties upon
attaining capacity, shall give the contract the
same effect as if only one of them is
incapacitated. Hence, the contract becomes
voidable and the rules on voidable contracts
should govern.
If the ratification is made by the parents or
guardians as the case may be, of both
contracting parties, or both of the contracting
parties upon attaining capacity, the contract
shall be validated from the inception (Jurado,
2011).
413
Contracts enforceable under Statute of Frauds
If the contract is enforceable under Statute of
Frauds because it is duly evidenced by writing,
nore, or memorandum, but it cannot be registered
because it not in a pblic instrument, the party
concerned may compel the opposite party to
formalize it in the proper form required by law. If
the latter refuses, the court will issue necessary
oreder to that effect. (Art. 1406; Pineda, 2009)
Note: The article applies only when the contract
involved is both valid and enforceable.
VOID AND INEXISTENT CONTRACTS (2004
BAR)
In general, void and inexistent contracts may be
defined as those which lack absolutely either in
fact and or in law one or some or all of those
elements which are essential for its validity.
Void contracts are those which have no force and
effect from the beginning and which cannot be
ratified or validated by lapse of time (Pineda,
2000).
NOTE: The principle of in pari delicto is applicable
in cases of void contracts but not in inexistent
contracts. Consequently, void contracts may
produce effects (NCC, Arts. 1411-1412), but
inexistent contracts do not produce any effect
whatsoever (Jurado, 2009).
Characteristics of void/inexistent contracts
1. It produces no legal force and effect;
2. It cannot be cured or validated by
prescription or ratification (NCC, Art. 1409);
3. The right to set up the defense of illegality
cannot be waived (NCC, Art. 1409).
4. The defense of illegality of contracts is not
available to third persons whose interests are
not directly affected (NCC, Art. 1421).
5. Cannot give rise to a valid contract (NCC, Art.
1422).
6. Can be assailed either directly or collaterally.
7. Parties to a void agreement cannot expect the
aid of the law. (in pari delicto)
NOTE : In case of a divisible contract, if the illegal
terms can be separated from the legal ones, the
latter may be enforced. (Art. 1420)
Reiteration
 CIVIL LAW
GR: They produce no legal effect whatsoever in
accordance with the principle quod nullum est
nullum producit effectum (Jurado, 2011).
XPN: In case of pari delicto since it will refuse legal
remedy to either party to an illegal agreement and
leaves them to where they were. Hence, if a void
contract is already executed, neither of the parties
can recover from each other.
NOTE: A party has a right to unilaterally cancel
and treat as avoided a void contract. However, an
action to declare its inexistence is necessary to
allow restitution of what has been given under it
(Fuentes v. Roca, 618 SCRA 702, [2010]).
Effect of Laches.
GR: The action or defense for the declaration of
the ineistnce of a contract does not prescribe. (Art.
1410)
XPN : When there is laches on the part of the
party assailing this contract.
Lache is neglignece or ommission to assert a right
within the reasonable time, warranting a
presmption that the party entitled to assert it
either has abandoned it or declined to assert it.
(Lim Tay vs. Court of Appeals, 293 SCRA 634)
The prevailing doctrine is that the right to have a
contract declared void ab initio may be barred by
laches although not barred by prescription.
(Jurado, 2009)
Kinds of void contracts
Those lacking in essential elements:
a. Those whose cause, object or purpose is
contrary to law, morals, good customs, public
order or public policy: illicit cause, or object;
b. Those which are absolutely simulated or
fictitious: no cause;
c. Those whose cause or object did not exist at
the time of the transaction: no cause or
object;
d. Those whose object is outside the commerce
of man: no object;
e. Those which contemplate an impossible
service: no object;
f. Those where the intention of parties relative
to principal object of the contract cannot be
ascertained.
Contracts prohibited by law
a. Pactum commisorium – the creditor
appropriates to himself the things given by
way of pledge or mortgage to fulfill the debt.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
b. Pactum de non alienando – an agreement
prohibiting the owner from alienating the
mortgaged immovable.
c. Pactum leonina – a stipulation in a
partnership agreement which excludes one or
more partners from any share in the profits or
losses.
d. Illegal or illicit contracts (e.g. contract to sell
marijuana)
Q: Judie sold one-half of their lot to Guiang
under a deed of transfer of rights without the
consent and over the objection of his wife,
Gilda and just after the latter left for abroad.
When Gilda returned home and found that
only her son, Junie, was staying in their house.
She then gathered her other children, Joji and
Harriet and went to stay in their house. For
staying in their alleged property, the spouses
Guiang complained before the barangay
authorities for trespassing.
Is the deed of transfer of rights executed by
Judie Corpuz and the spouses Guiang void or
voidable?
A: It is void. Gilda’s consent to the contract of sale
of their conjugal property was totally inexistent or
absent. Thus, said contract properly falls within
the ambit of Article 124 of the FC.
The particular provision in the old Civil Code
which provides a remedy for the wife within 10
years during the marriage to annul the
encumbrance made by the husband was not
carried over to the Family Code. It is thus clear
that any alienation or encumbrance made after
the Family Code took effect by the husband of the
conjugal partnership property without the
consent of the wife is null and void (Spouses
Guiang v. CA, G.R. No. 125172, June 26, 1998).
Q: On July 6, 1976, Honorio and Vicente
executed a deed of exchange. Under this
instrument, Vicente agreed to convey his
64.22-square-meter lot to Honorio, in
exchange for a 500-square-meter property.
The contract was entered into without the
consent of Honorio’s wife. Is the deed of
exchange null and void?
A: The deed is valid until and unless annulled.
The deed was entered into on July 6, 1976, while
the Family Code took effect only on August 3,
1998. Laws should be applied prospectively only,
unless a legislative intent to give them retroactive
effect is expressly declared or is necessarily
implied from the language used. Hence, the
414
 OBLIGATIONS AND CONTRACTS
provisions of the NCC, not the FC are applicable. fixed by law. In such case, the buyer may
According to Art. 166 of the NCC, the husband recover the excess (NCC, Art. 1417).
cannot alienate or encumber any real property of 6. Contract whereby a laborer undertakes to
the conjugal partnership without the wife’s work longer than the maximum number of
consent. This provision, however, must be read in hours fixed law. In such case, the laborer may
conjunction with Art. 173 of the same Code. The demand for overtime pay (NCC, Art. 1417).
latter states that an action to annul an alienation 7. Contract whereby a laborer accepts a wage
or encumbrance may be instituted by the wife lower than the minimum wage fixed by law. In
during the marriage and within ten years from the such case the laborer may demand for the
transaction questioned. Hence, the lack of consent deficiency (NCC, Art. 1418).
on her part will not make the husband’s alienation
or encumbrance of real property of the conjugal When in pari delicto rule not applicable
partnership void, but merely voidable (Villaranda
v. Villaranda, G.R. No. 153447, February 23, 2004). 1. Breach of warranty cases;
2. Simulated contracts;
Principle of in pari delicto 3. When parties are not equally guilty;
4. Against the government;
When the defect of a void contract consists in the 5. Prohibted conveyances under the law;
illegality of the cause or object of the contract, and 6. Constitutional prohibition against alien
both of the parties are at fault or in pari delicto, landholding.
the law refuses them every remedy and leaves
them where they are. This rule which is embodied Void contract v. Inexistent contract
in Arts. 1141 & 1142 of the NCC is what is
commonly known as the principle in pari delicto. BASIS VOID INEXISTENT
Exceptions to the principle of in pari delicto Those where
all the
The exceptions to the principles of pari delicto are requisites of a
the following: contract are
present, but
1. Interest paid in excess of the interest allowed Those where
the cause,
by usury laws may be recovered by the one or some of
object or
debtor, with interest thereon from the date of As to the the requisites
purpose is
payment (NCC, Art. 1413). presence of which are
contrary to law,
2. Payment of money or delivery of property for requisites of a essential for
morals, good
an illegal purpose, where the party who paid contract validity are
customs, public
or delivered repudiates the contract before absolutely
order or public
the purpose has been accomplished, or before lacking.
policy or the
any damage has been caused to a third contract itself
person. In such case, the courts may allow is prohibited or
such party to recover what he has paid or declared
delivered, if the public interest will thus be prohibited.
subserved (NCC, Art. 1414).
3. Payment of money or delivery of property by As to the
an incapacitated person. In such case, the applicability Principle of in Principle of in
courts may allow such person to recover what of the pari delicto is pari delicto is
he has paid or delivered, if the interest of principle of in applicable. not applicable.
justice so demands (NCC, Art. 1415). pari delicto
4. Agreement or contract which is not illegal per
se but is merely prohibited by law, and the Void contract v. Unenforceable contract
prohibition is designed for the protection of
the plaintiff. In such case, such plaintiff, if
public policy is thereby enhanced, may BASIS VOID UNENFORCEABLE
recover what he has paid or delivered (NCC,
Art. 1416). As to the There is contract
No contract
5. Payment of any amount in excess of the effect of the but which cannot
at all.
maximum price of any article or commodity contract be enforced.

415
 CIVIL LAW
As to the Defense may
It is not
susceptibility It is subject to be invoked
subject to Defense may be
to ratification. only by the
ratification. availed of by
ratification parties
anybody,
(those
It can be whether he is a
principally
As to the easily As to the set-up party to the
and
capacity of assailed by of defense contract or not
It cannot be subsidiarily
third third persons as long as his
assailed by third liable) or
persons to whose interest is
persons. their
assail the interests are directly affected
successors in
contract directly (NCC, Art. 1421).
interest and
affected. privies.

Void contract v. Voidable contract (2004 BAR) Void contract v. Rescissible contract

BASIS VOID VOIDABLE BASIS VOID RESCISSIBLE

Consent is
Absence of
vitiated or Defect is in
As to the defect essential
there is its effects,
of the contract element/s of a
incapacity to Defect is either
contract. As to the defect
give consent. inherent in the against one
of the contract
contract itself. of the parties
Valid or a third
As to the status No effect even if
contract until person.
of the contract not set aside.
set aside.
Based on
As to the Nullity is a
Cannot be Can be equity and
susceptibility of As to the source matter of law
ratified. ratified. matter of
ratification of the defect and public
private
interest.
interest.
Nullity can be
set up against Produces
any person No legal effects legal effects
Nullity can
asserting right As to effect of even if no action and remains
be set up
As to the effect arising from it, the contract is filed to set it valid if no
only against
of the nullity and his aside. action is
a party
successors in filed.
thereto.
interest not
protected by Action to
law. rescind
Action to
prescribes
Action to As to the declare its
within 4
Action to annul prescription of nullity does not
years (NCC,
As to the declare nullity contract the action prescribe
Art. 1389;
prescription of does not prescribes in (NCC, Art. 1410).
Pineda,
the contract prescribe 4 years 2000).
(1999 BAR). (Pineda,
2000).

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 416
 OBLIGATIONS AND CONTRACTS
NATURAL OBLIGATIONS
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 (NCC, Art. 1423).
NOTE: They are real obligations to which the law
denies an action, but which the debtor may
perform voluntarily.
Requisites for natural obligations to arise
1. The obligation is not prohibited by law or
contrary to morals and good customs.
2. There must be a previous juridical
relationship between two persons but due to
certain intervening circumstances, it lost its
legal enforceability leaving its fulfillment
entirely to the free will or discretion of the
supposed debtor (Pineda, 2000).
Examples of natural obligations
1. Performance even after the civil obligation
has prescribed (NCC, Art. 1424);
2. Reimbursement of a third person for a debt
that has prescribed (NCC, Art. 1425);
3. Restitution by minor of the thing or price after
annulment of contract (NCC, Art. 1426);
4. Delivery by minor of money or fungible thing
in fulfillment of obligation (NCC, Art. 1427);
5. Performance after action to enforce civil
obligation has failed (NCC, Art. 1428);
6. Payment by the heir of a debt exceeding the
value of property he inherited (NCC, Art.
1429); and
7. Payment of legacy after will has been declared
void (NCC, Art. 1430).
NOTE: The enumeration is not exclusive.
Voluntary payment of debt which has already
prescribed
The obligor who voluntarily performs the contract
cannot recover what he has delivered or the value
of the service he has rendered. Because of
extinctive prescription, the obligation of the
debtor to pay his debt became a natural
obligation. While it is true that a natural obligation
cannot be enforced by court action, nevertheless,
after voluntary fulfillment by the debtor, under
the law, the creditor is authorized to retain what
417
has been paid by reason thereof (Jurado, 2009).
Fulfillment puts the debtor into estoppel from
recovering what had been paid or delivered
(Pineda, 2009).
Q: Sara borrowed P50,000.00 from Julia and
orally promised to pay it within six months.
When Sara tried to pay her debt on the 8th
month, Julia demanded the payment of
interest of 12% per annum because of Sara's
delay in payment. Sara paid her debt and the
interest claimed by Julia. After rethinking, Sara
demanded back from Julia the amount she had
paid as interest. Julia claims she has no
obligation to return the interest paid by Sara
because it was a natural obligation which Sara
voluntarily performed and can no longer
recover. Do you agree? Explain (2015 BAR).
A: No. The case is not one of a natural obligation
because even if the contract of loan is verbal, the
delay of Julia made her liable for interest upon
demand by Sara. This is not a case of a natural
obligation but a civil obligation to pay interest by
way of damages by reason of delay (NCC, Articles
1956; 1169; 2209).
Effect of partial performance
If only a part of the natural obligation has been
fulfilled, such cannot be later on recovered. The
obligation is converted into a civil one (if it is
legally susceptible of confirmation or ratification).
However, if the fulfilled portion is not susceptible
of confirmation or ratification, this portion can be
the basis of a cause of action for recovery of what
has been delivered because it has not been
converted into legal obligation (Pineda, 2000).
Natural obligation v. Civil obligation (2004
BAR)
BASIS NATURAL CIVIL
OBLIGATION OBLIGATION
Based on law,
contracts,
As to the Based on
quasi-
source of the equity and
contracts,
obligation natural law
delicts, and
quasi-delicts
 CIVIL LAW
Cannot be legal effect relation or
enforced in affection
court because
the obligee has
no right of
action to
compel its As to the Within the Within the
As to the performance Can be applicability domain of the domain of
availability of but after enforced in of the law law morals
enforcement voluntary court because
of the fulfilment by the obligee has As to the effect
Performance
of the When fulfilled
obligation in the obligor, a right of does not
courts they authorize action performance produces mora
produce legal
the retention of of the legal effects
effects
what may have obigation
been delivered As to
or rendered by Cannot be
susceptibility Can be ratified
reason thereof ratified
to ratification
(Ncc, Art.
1423).
NOTE: A natural obligation can be guaranteed
(Rabuya, 2017 citing NCC, Art. 2052).
Conversion of natural obligation to civil
obligation
ESTOPPEL
Natural obligations may be converted into civil
obligations by acts of novation. Thus, a prescribed
debt is turned into civil obligation when the
debtor renounces the defense of prescription or An admission or representation rendered
by signing a document recognizing such with a conclusive upon the person making it, and cannot
promise to pay the debt at some future time. The be denied or disproved as against the person
natural obligation becomes a valid cause for a civil relying thereon (NCC, Art. 1431).
obligation after it has been affirmed or ratified
anew by the debtor (Pineda, 2009). Estoppel is effective only between the parties
thereto or their successors in interest (NCC, Art.
Natural obligation v. Moral obligation 1439).

NOTE: The admission or representation must be

BASIS NATURAL MORAL plain and clear. Estoppel cannot be sustained on
OBLIGATION OBLIGATION doubtful or ambiguous inferences.
Juridical tie
Basis and purpose of estoppel
previously
existed
Estoppel is based on public policy, fair dealing,
between the
good faith and justice and its purpose is to forbid
parties but
As to the one to speak against his own act, representation
because of
presence of No juridical tie or commitments to the injury of one who
certain
juridical tie reasonably relied thereon (Pineda, 2000).
intervening
causes they
Kinds of Estoppel
cannot be
enforced in
1. Estoppel in pais – a person is considered in
courts
estoppel if by his conduct, representations,
Voluntary Performance is admissions or silence when he ought to speak
As to the out, whether intentionally or through culpable
fulfillment by a pure act of
performance negligence, "causes another to believe certain
the debtor is a liberality
of the facts to exist and such other rightfully relies
legal which springs
obligation and acts on such belief, as a consequence of
fulfillment with from blood

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 418
 OBLIGATIONS AND CONTRACTS
which he would be prejudiced if the former is
permitted to deny the existence of such facts.
2. Estoppel by deed – a party to a deed and his
privies are precluded from denying any
material fact stated in the deed as against the
other party and his privies.
3. Estoppel by laches – an equitable estoppel, a
person who has failed or neglected to assert a
right for an unreasonable and unexplained
length of time is presumed to have abandoned
or otherwise declined to assert such right and
cannot later on seek to enforce the same, to
the prejudice of the other party, who has no
notice or knowledge that the former would
assert such rights and whose condition has so
changed that the latter cannot, without injury
or prejudice, be restored to his former state.
Estoppel by judgment
Estoppel by judgment is a type of estoppel by
record. It is the preclusion of a party to a case
from denying the facts adjudicated by a court of
competent jurisdiction. It must not be confused
with res judicata. Estoppel by judgment bars the
parties from raising any question that might have
been put in issue and decided in a previous
litigation whereas, res judicata makes a judgment
conclusive between the same parties as to the
matter directly adjudged (Philippine National
Bank v. Barreto, G. R. No. L-30073, February 21,
1929).
Estoppel by acceptance of benefits
It refers to a type of estoppel in pais which arises
when a party, by accepting benefits derived from a
certain act or transaction, intentionally or through
culpable negligence, induces another to believe
certain facts to exist and such other relies and act
on such belief, as a consequence of which he
would be prejudiced if the former is permitted to
deny the existence of such facts (Jurado, 2009).
Illustration:
Article 1438 provides that one who has allowed
another to assume apparent ownership of
personal property for the purpose of making any
transfer of it, cannot, if he received the sum for
which a pledge has been constituted, set up his
own title to defeat the pledge of the property,
made by the other to a pledgee who received the
same in good faith and for value.
Estoppel by silence or inaction
419
It refers to a type of estoppel in pais which arises
when a party, who has a right and opportunity to
speak or act as well as a duty to do so under the
circumstances, intentionally or through culpable
negligence, induces another to believe certain
facts to exist and such other 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.
Illustration:
Article 1437 provides that:
When in a contract between third persons
concerning immovable property, one of them is
misled by a person, with respect to the ownership
of real right over the real estate, the latter is
precluded from asserting his legal title or interest
therein, provided all these requisites are present:
1. There must be fraudulent representation or
wrongful concealment of facts known to the
party estopped;
2. The party precluded must intend that the
other should act upon the facts as
misrepresented;
3. The party misled must have been aware of the
true facts; and
4. The party defrauded must have acted in
accordance with the misrepresentation.
Q: Discuss the three kinds of estoppel.
A: There are three kinds of estoppels, to wit: (1)
estoppel in pais; (2) estoppel by deed; and (3)
estoppel by laches. Under the first kind, a person
is considered in estoppel if by his conduct,
representations, 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." Under estoppel by deed, a party to a
deed and his privies are precluded from denying
any material fact stated in the deed as against the
other party and his privies. Under estoppel by
laches, an equitable estoppel, a person who has
failed or neglected to assert a right for an
unreasonable and unexplained length of time is
presumed to have abandoned or otherwise
declined to assert such right and cannot later on
seek to enforce the same, to the prejudice of the
other party, who has no notice or knowledge that
the former would assert such rights and whose
condition has so changed that the latter cannot,
without injury or prejudice, be restored to his
 CIVIL LAW
former state (Jose Go et al., v. BSP, G.R. No. 202262, Not statutory Statutory
July 8, 2015) (Bersamin, J.).
Applies in equity Applies at law
LACHES (2000, 2002 BAR
(Stale Demands) Not based on fixed of
Based on fixed of time
time
The failure or neglect, for an unreasonable length
of time, to do that which by exercising due NOTE: The doctrine of laches is inapplicable when
diligence could or should have been done earlier; the claim was filed within the prescriptive period
it is negligence or omission to assert a right within set forth under the law (Pineda, 2000).
a reasonable time, warranting a presumption that
the party entitled to assert it either has
abandoned it or declined to assert it. It is also
known as stale demands (Lim Tay v. CA, 293 SCRA
34, G.R. No. 126891, August 5, 1998; Pineda, 2000).

Basis of the doctrine of laches

It is based upon grounds of public policy which

requires for the peace of society, discouragement
of stale claims.

Elements of Laches (DILC)

1. Delay in asserting complainant’s right after he

had knowledge of the defendant’s conduct
and after he has opportunity to exercise it;
2. Injury or prejudice to the defendant in the
event relief is accorded to the complainant;
(Pineda, 2000)
3. Lack of knowledge or notice on the part of the
defendant that the complainant would assert
the right on which he bases his suit; and
4. Conduct on the part of the defendant or one
under whom he claims, giving rise to the
situation complained of.

Inaction and passivity to recover land subject

to an invalid sale for more than 34 years

Action to recover will not prosper. The passivity

and inaction for more than 34 years justify the
defense of laches. All of the four (4) elements are
present. As a result, the action of plaintiffs must be
considered barred (Miguel v. Catalino, G.R. No. L-
23072, November 29, 1968).

Laches v. Prescription

LACHES PRESCRIPTION

Concerned with the Concerned with the fact

effect of delay of delay
Principally a question of
inequity of permitting a It is a matter of time
claimed to be enforced

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 420
 TRUST
TRUST TRUST CONTRACT
A trust always involves Legal obligation based
DEFINITION an ownership, on an undertaking
embracing a set of supported by a
rights and duties consideration, which
It is the legal relationship between one person
fiduciary in character obligation may or may
having an equitable ownership in a certain
which may be created not be fiduciary in
property and another person owning the legal title
by a declaration character (De Leon,
to such property (Jurado).
without a consideration 2014).
(De Leon, 2014).
NOTE: Trust is founded in equity and can never
A trust always involves Legal obligation based
result from acts violative of law (Deluao vs
an ownership, on an undertaking
Casteel, 26 SCRA 415, 1968 and 29 SCRA 350,
embracing a set of supported by a
1969).
rights and duties consideration, which
fiduciary in character obligation may or may
Three persons involved in the creation of a
which may be created not be fiduciary in
trust
by a declaration character (De Leon,
without a consideration 2014).
1. Trustor – the person who establishes the
(De Leon, 2014).
trust.
TRUST v. DEBT
2. Trustee – one in whom confidence is
reposed as regards property for the TRUST DEBT
benefit of another person. A debt implies merely A duty to deal with a
3. Beneficiary or cesti que trust – person an obligation to pay a specific property for
for whose benefit the trust has been certain sum of money. the benefit of another.
created (NCC, Art. 1440). A creditor has merely a
personal claim against
Trust property the debtor.
There is a fiduciary There is no fiduciary
The subject-matter of trust may be any property relation between a relation between a
of value- real, personal, funds or money, or choses trustee and a debtor and creditor.
in action (De Leon, 2014). beneficiary.
The beneficiary of a A creditor has merely a
TRUST DISTINGUISHED FROM OTHER trust has a beneficial personal claim against
RELATIONS interest in the trust the debtor. (De Leon,
property. (De Leon, 2014)
TRUST v. DONATION 2014)
TRUST DONATION TRUST v. BAILMENT
An existing legal Transfer of property TRUST BAILMENT
relationship and which involves a A delivery of a property The bailee has
involves separation of disposition of both in trust necessarily possession of without
legal and equitable title. legal and equitable involves a transfer of legal title to the
ownership except gift legal title, or at least a property subject to the
in trust. separation of legal title bailment. (De Leon,
The beneficiary of a Must comply with the and equitable interest, 2014)
trust may legal requirements
demand in with the legal title in
performance of the accepting donations. the trustee. (De Leon,
obligation without 2014)
having formally DONATIO
accepted the trust in a CLASSIFICATION OF TRUST
public document, upon
mere acquiescence in 1. As to Creation- From the viewpoint of the
the formation of the creative force bringing them into existence,
trust and acceptance they may be either:
under Art. 1132(2) of
the Civil Code. a. Express trust (NCC, Arts. 1443-1446.)
(De Leon, 2014) or one which can come into existence
TRUST v. CONTRACT only by the execution of an intention
to create it by the trustor or the

421
 CIVIL LAW
parties (De Leon, 2014); or positive acts expressed, are
b. Implied trust, or one which comes of the parties, deducible from
into being by operation of law (NCC, by some the nature of
Arts. 1447-1457) (De Leon, 2014); this writing or the transaction
latter trust being either: deed or will or by operation of
1) resulting trust; and by words law as matters
2) constructive trust evidencing an of equity,
intention to independently
2. As to Effectivity- From the viewpoint of whether create a trust. of the particular
they become effective after the death of the trustor intention of the
or during his life, they may be either (De Leon, parties.
2014): Parole An express An implied
evidence trust trust
a. testamentary trust- one which is to take concerning an concerning an
effect upon the trustor's death. It is immovable or immovable or
usually included as part of the will and any interest any interest
does not have a separate trust deed therein therein may be
(Lorenzo vs. Posadas, 64 Phil. 353, 1937), cannot be proved by
(De Leon, 2014). proved by parole
b. inter vivos trust or "living trust"- one parole evidence. (NCC,
established effective during the owner's evidence Art. 1457)
life. The grantor executes a "trust deed," (NCC, Art.
and once the trust is created, legal title to 1443).
the trust property passes to the named Laches or An action to An action to
trustee with duty to administer the extinctive enforce an enforce an
property for the benefit of the prescription express trust, implied trust
beneficiary (De Leon, 2014). so long as even when
there is no there is no
3. As to Revocability- From the viewpoint of whether express express
they may be revoked by the trustor, they may be repudiation of repudiation of
either: the trust by the trust by the
a. Revocable trust- one which can be the trustee trustee and
revoked or cancelled by the trustor or and made made known to
another individual given the power; or known to the the beneficiary,
b. Irrevocable trust- one which may not be beneficiary, may be barred
terminated during the specified term of cannot be by laches or by
the trust. barred by extinctive
laches or prescription.
NOTE: Whether a trust is revocable or irrevocable extinctive
depends on the wordings or language used in the prescription.
creation of the trust. It will be presumed revocable
unless the creator has expressed a contrary EXPRESS TRUST
intention in the trust deed (De Leon, 2014).
One which come into existence only by the
KINDS OF TRUST execution of an intention to create it by the trustor
or the parties (De Leon, 2014).
Express trust v. Implied trust
Elements of express trust
BASIS EXPRESS IMPLIED
TRUST TRUST 1. A competent trustor and trustee;
Definition Created by the Comes into 2. An ascertainable trust res; and
(NCC, Art. intention of being by 3. Sufficiently certain beneficiaries
1441) the trustor or operation of
of the parties. law. It may be NOTE: All of the above elements are required to
either resulting be established (De Leon, 2014).
or constructive.
Manner of Created by the Those which, Evidence to prove express trust
creation direct and without being

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 422
 TRUST
No express trust concerning an immovable or any
interest therein may be proved by parol evidence
(NCC, Art. 1443).
NOTE: The defense that express trusts cannot be
proved by parol evidence may be waived,
either by failure to interpose timely objections
against presentation of oral evidence not
admissible under the law or by cross- examining
the adverse party and his witnesses along the
prohibited lines (Sinaon v. Sorongan, 136 SCRA
407, 1985).
An express trust over personal property or any
interest therein, and an implied trust, whether the
property subject to the trust is real or personal,
may be proved by oral evidence (NCC. Art. 1457).
NOTE: The general rule is that the burden of
proving the existence of a trust is on the party
alleging its existence; and to discharge the burden,
it is generally required that his proof be clear and
satisfactory and convincing (Ramos v. Ramos, 61
SCRA 284, 1974).
NOTE: To affect third persons, a trust concerning
an immovable or any interest therein must be
embodied in a public instrument and registered in
the Registry of Property (De Leon, 2014).
Creation of express trust
Express trust are those trust voluntarily and
intentionally, created by direct and positive act of
the trustor, by some writing, deed, will, or oral
declaration evincing an intention to create trust
(NCC, Art. 1444), (De Leon, 2014).
NOTE: Technical or particular form of words or
phrases are not essential to the manifestation of
an intention to create a trust. It is possible to
create a trust without using the word “trust” or
“trustee” (De Leon, 2014).
No trust shall fail because the trustee appointed
declines the designation, unless the contrary
should appear in the instrument constituting the
trust (NCC, Art. 1445).
Acceptance by the beneficiary is necessary.
Nevertheless, if the trust imposes no onerous
condition upon the beneficiary, his acceptance
shall be presumed, if there is no proof to the
contrary (NCC, Art. 1446).
Kinds of express trust
1. Eleemosynary or Charitable trust- one
423
designed for the benefit of a segment of the
public or of the public in general. Created
for charitable, educational, social, religious,
or scientific purposes, or for the general
benefit of the humanity (De Leon, 2014).
2. Accumulation trust- one that will
accumulate income to be reinvested by the
trustee in the trust for the period of time
specified (De Leon, 2014).
3. Spendthrift trust- one established when the
beneficiary need to be protected because of
his inexperience or immaturity from his
imprudent, spending habits or simply
because the beneficiary is spendthrift (De
Leon, 2014).
4. Sprinkling trust- one that gives the trustee
the right to determine the income of the
beneficiaries who should receive income
each year and the amount thereof (De Leon,
2014).
Termination of express trust
1. Destruction of the Corpus
2. Revocation by the trustor (De Leon v. Molo
Peckson, 6 SCRA 978 (1962)
3. Achievement of the objective, or happening of
the condition, provided for in the trust
instrument
4. Death or legal incapacity of the trustee
5. Confusion or merger of legal title and
beneficial title in the same person
6. Breach of trust.
Requisites for acquisition of property by
trustee through prescription
1. The trustee must expressly repudiate the
right of the beneficiary;
2. Such act of repudiation must be brought to
the knowledge of the beneficiary;
3. The evidence thereon must be clear and
conclusive; and
4. Expiration of the period prescribed by law.
(Ramos v. Ramos, 61 SCRA 284)
IMPLIED TRUST
Those which, without being express, are deducible
from the nature of the transaction as matters of
intent, or which are superinduced on the
transaction by operation of law, as matters of
equity, independently of the particular intention
of the parties (Phil. National Bank v. CA, 217 SCRA
347, 1993).
Kinds of implied trust
 CIVIL LAW
1. Resulting trust – broadly defined as a trust
which is raised or created by the act or
construction of law, but in its more restricted
sense, it is a trust raised by implication of law
and presumed always to have been
contemplated by the parties, the intention as to
which is to be found in the nature of their
transaction, but not expressed in the deed or
instrument of conveyance (Ramos v. Ramos, 61
SCRA 284).
Examples of resulting trust
a. There is an implied trust when property is
sold, and the legal estate is granted to one
party but the price is by another for the
purpose of having the beneficial interest of
the property. The former is the trustee,
while the latter is the beneficiary. However,
if the person to whom the title is conveyed is
a child, legitimate or illegitimate, of the one
paying the price of the sale, no trust is
implied by law, it being disputably
presumed that there is a gift in favor of the
child (NCC, Art. 1448).
b. There is also an implied trust when a
donation is made to a person but it appears
that although the legal estate is transmitted
to the done, he nevertheless is either to have
no beneficial interest or only a part thereof
(NCC, Art. 1449).
c. If the price of a sale of property is loaned or
paid by one person for the benefit of another
and the conveyance is made to the lender or
payor to secure the payment of the debt, a
trust arises by operation of law in favor of
the person to whom the money is loaned or
for whom it is paid. The latter may redeem
the property and compel a conveyance
thereof to him (NCC, Art. 1450).
Q: “X” being unable to pay the purchase price
of a house and lot for his residence has
requested “Y,” and “Y” agreed to lend him the
money under one condition, that the
Certificate of Title be transferred to him, in Y’s
own name for his protection and as security of
the loan. Later on “Y” mortgaged the property
to the bank without the knowledge of “X.”
When the mortgage became due, “Y” did not
redeem the mortgage and the property was
advertised for sale. “X” retained you as his
lawyer. What advise would you give your client
and what legal ground provided by the Code
would you assert to defend his rights? Give
reasons. (1959 BAR)
A: It is clear that in the instant problem, the
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
provision of Art. 1450 of the Civil Code is
applicable. It must be observed, however, that the
mortgage of the property by “Y” to the bank is
perfectly valid inasmuch as the bank was not
aware of any flaw or defect in the title or mode of
acquisition by “Y” since the right of “X” has not
been annotated in the Certificate of Title.
Consequently, the only way by which I would be
able to help “X” would be to advice him to redeem
the mortgaged property from the bank. After this
is done, “X” can then institute an action to compel
“Y’ to reconvey the property to him pursuant to
Art. 1450 of the Civil Code. In this action for
reconveyance, the amount paid by “X” to the bank
in redeeming the property can then be applied to
the payment of his debt to “Y.” If there is an excess,
he can recover the amount from “Y” (Jurado,
Comments and Jurisprudence on Obligations and
Contracts, pg. 662).
d. If two or more persons agree to purchase
property and by common consent the legal
title is taken in the name of one of them for
the benefit of all, a trust is created by force
of law in favor of the others in proportion to
the interest of each (NCC, Art. 1452).
e. When property is conveyed to a person in
reliance upon his declared intention to hold
it for, or transfer it to another or the grantor,
there is an implied trust in favor of the
person whose benefit contemplated (NCC.
Art. 1453).
2. Constructive trust – a trust raised by
construction of law or arising by operation of
law. It is a trust not created by any words,
either expressly or impliedly evincing a direct
intention to create a trust, but by the
construction of equity in order to satisfy the
demands of justice. It does not arise by
agreement or intention but by operation of
law (Ramos v. Ramos, 61 SCRA 284).
NOTE: A constructive trust is not a trust in a
technical sense (Ramos v. Ramos, 61 SCRA 284). It
is substantially an equitable remedy against unjust
enrichment (Sumaoang v. Judge, RTC, 215 SCRA
136, 1992).
NOTE: It is otherwise known in American law as a
trust ex maleficio, trust ex delicto, and de son tort
(Sumaoang vs. Judge, RTC, 215 SCRA 136, 1992).
Q: Explain the following concepts and
doctrines and give an example of each:
a. Concept of trust de son tort
(Constructive trust) (2007 BAR)
424
 TRUST
A: A constructive trust is a trust not created by
any word or phrase, either expressly or impliedly,
evincing a direct intention to create a trust, but is
one that arises in order to satisfy the demands of
justice. It does not come about by agreement or
intention but mainly by operation of law and
constructed as a trust against one who, by fraud,
duress or abuse of confidence, obtains or holds the
legal right to property which he ought not, in
equity and good conscience, to hold [Heirs of
Lorenzo Yap v. Court of Appeals, 371 Phils. 523
(1999)].
The following are examples of constructive trust:
1. When land passes by succession to any
person and he causes the legal title to be put
in the name of another, a trust is established
by implication of law for the benefit of the
true owner (NCC, Art. 1451).
2. If an absolute conveyance of property is
made in order to secure the performance of
an obligation of the grantor toward the
grantee, a trust by virtue of law is
established. If the fulfillment of the obligation
is offered by the grantor when it becomes
due, he may demand the reconveyance of the
property to him (NCC, Art. 1454).
3. When any trustee, guardian or other person
holding a fiduciary relationship uses trust
funds for the purchase of property and
causes the conveyance to be made to him or
to a third person, a trust is established by
operation of law in favor of the person to
whom the funds belong. (NCC, Art. 1455).
4. If property is acquired through mistake or
fraud, the person obtaining it is, by force of
law considered a trustee of an implied trust
for the benefit of the person from whom the
property comes (NCC, Art. 1456) (UP Law
Complex, pg. 96).
Prescriptibility of actions to enforce trust
under Art. 1456
An action for reconveyance of real property based
upon a constructive or implied trust, resulting from
fraud, may be barred by the statute of limitations.
An action may be filed from the discovery of the
fraud. In some cases, the discovery is deemed to
have taken place when new certificates of title
were issued exclusively in the name of another
person. (Gerona v. De Guzman, 11 SCRA 153, May
29, 1964)
Period of prescription
BASIS PRESCRIPTIVE PERIOD
425
Annulment of voidable Four (4) years from the
contract based on discovery of the fraud.
fraudulent registration [Art. 1391 (4) Civil Code]
of the subject property.
Declaration of nullity or Imprescriptible. (Art.
inexistence of a void or 1410, Civil Code)
inexistent contract based
on fraudulent
registration of the
subject property.
Based on fraudulent Ten (10) years from the
egistration of the subject discovery of the fraud.
property but the action [Art. 1144 (2) Civil Code]
does not involve
annulment of contract.
If the legitimate owner An action to quiet title.
of the subject property Therefore,
which was fraudulently imprescriptible.
registered in the name of (Caragay
another had always been Layno v. Court of Appeals,
in possession thereof 133 SCRA 718)
Laches may bar action
The express trusts disable the trustee from
acquiring for his own benefit the property
committed to his management or custody, at least
while he does not openly repudiate the trust and
make such repudiation known to the beneficiary.
But in constructive trusts, the rule is that laches
constitutes a bar to actions to enforce the trust, and
repudiation is not required, unless there is a
concealment of the facts giving rise to the trust
(Fabian v. Fabian, 22 SCRA 231, January 29, 1968).
Acquisition of property by trustee through
prescription in implied trusts
Express repudiation of the trust by the trustee is
not required. All that is required is that he must
set up a title which is adverse to that of the
beneficiary. In other words, the normal requisites
for extraordinary acquisitive prescription must be
present (Jurado, Comments and Jurisprudence on
Obligations and Contracts, pg. 666).
Conversion of implied trust to express trust
An implied trust may converted to an express
trust through recognition by the implied trustee of
the right to the property of the owner
 CIVIL LAW
SALES
GENERAL PRINCIPLES
Sale
Sale is a contract where one party (seller or
vendor) obligates himself to transfer the
ownership of and to deliver a determinate thing,
while the other party (buyer or vendee) obligates
himself to pay for said thing a price certain in
money or its equivalent (NCC, Art. 1458). (2001
BAR)
The primary consideration in determining the
true nature of a contract is the intention of the
parties. If the words of a contract appear to
contravene the evident intention of the parties,
the latter shall prevail. Such intention is
determined not only from the express terms of
thei agreement, but also from
contemporaneous and subsequent acts of the
parties (Heirs of Dela Rosa v. Tongbacal, et. al., G.R.
No. 179205, July 30, 2014).
ELEMENTS OF A CONTRACT OF SALE
1. Essential elements – for validity:
a. Consent – meeting of the minds to
transfer ownership in exchange for the
price;
b. Determinate subject matter –
determinate thing which is the object of
the contract; and
c. Consideration – price certain in money
or its equivalent.
2. Natural elements – those which are inherent
in the contract, and which in the absence of
any contrary provision, are deemed to exist in
the contract.
Examples:
a. Warranty against eviction; and
b. Warranty against hidden defects.
3. Accidental elements – dependent on parties’
stipulations;
Examples:
a. Conditions;
b. Interest;
c. Time & Place of payment; and
d. Penalty.
Effect of absence of any of the essential
elements
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
The contract of sale is void.
Absent proof of the concurrence of all the
essential elements of a contract of sale, the giving
of earnest money cannot establish the existence of
a perfected contract of sale (Manila Metal
Container Corp. v. PNB, G.R. No. 166862, December
20, 2006).
STAGES OF A CONTRACT OF SALE
1. Negotiation – 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 – takes place when the
parties agree upon the essential elements of
the contract; and
3. Consummation – occurs when the parties
fulfill or perform the terms agreed upon in the
contract culminating in the extinguishment
thereof (Swedish Match vs. CA, G.R. No. 128120,
October 20, 2004).
the
CHARACTERISTICS OF A CONTRACT OF SALE
1. Consensual – A sale is perfected by mere
consent, manifested by the meeting of the
minds as to the offer and acceptance on the
subject matter, price and terms of payment.
NOTE: Delivery of the thing bought or
payment of the price is not necessary for the
protection of the contract; and failure of the
vendee to pay the price after the execution of
the contract does not make the sale null and
void for lack of consideration but results at
most in default on the part of the vendee, for
which the vendor may exercise his legal
remedies (Rabuya, 2017).
2. Bilateral – The seller will deliver and transfer
a determinate thing to the buyer and the
latter will pay an ascertained price (or its
equivalent).
3. GR: Commutative – The thing sold is
considered the equivalent of the price paid
and the price paid is the equivalent of the
thing sold.
XPN: Aleatory – The consideration is not
equivalent of what has been received in the
case of purchase of a lotto ticket. If the ticket
wins, the prize is much more than the price of
the ticket.
4. Principal – Its existence does not depend
upon the existence and validity of another
contract.
426
 SALES
5. Onerous – The thing sold is conveyed in
consideration of the purchase price, and vice
versa.
6. Nominate – It has a specific name given by
law (Pineda, 2010).
NATURE AND FORM OF CONTRACT
(2002, 2006 BAR)
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, parties may reciprocally
demand performance, subject to the provisions of
the law governing the forms of contracts.
Formal requirement for the validity of a
contract of sale
GR: A contract of sale may be made in writing, or
by word of mouth, or partly in writing and partly
by word of mouth, or may be inferred from the
conduct of the parties (NCC, Art. 1483). Contracts
shall be obligatory, in whatever form they have
been entered into, provided all the essential
requisites for their validity are present.
XPNs:
a) If the law requires a document or other special
form, the contracting parties may compel each
other to observe that form (NCC, Art. 1357).
b) Under Statute of Frauds, the following
contracts must be in writing; otherwise, they
shall be unenforceable:
1. Sale of personal property at a price not less
than P500;
2. Sale of a real property or an interest
therein;
3. Sale of property not to be performed
within a year from the date thereof; or
4. When an applicable statute requires that
the contract of sale be in a certain form
[NCC, Art. 1403(2)].
c) Sale of large cattle which requires that the
same be recorded with the city/municipal
treasurer and that a certificate of transfer be
issued. Otherwise, the sale is not valid (NCC,
Art. 1581).
NOTE: The contract of sale of REAL PROPERTIES
even if not complete in form, so long as the
essential requisites of consent of the contracting
parties, object, and cause of the obligation concur
427
and they were clearly established to be present, is
valid and effective between the parties.
Under Art. 1357 of the NCC, its enforceability is
recognized as each contracting party is granted
the right to compel the other to execute the
proper public instrument so that the valid
contract of sale of registered land can be truly
registered and can bind third persons (Rabuya,
2017).
Instances where the Statute of Frauds is not
essential for the enforceability of a contract of
sale
1. When there is a note or memorandum in
writing and subscribed to by the party or his
agent (contains essential terms of the contract);
2. When there has been partial
performance/execution (seller delivers with the
intent to transfer title/receives price);
3. When there has been failure to object to
presentation of evidence aliunde as to the
existence of a contract without being in writing
and which is covered by the Statute of Frauds;
4. When sales are effected through electronic
commerce (Villanueva, 2014).
NOTE: Rules on forms, and of validity and
enforceability of contracts of sale, are strictly kept
within the contractual relationship of the seller
and buyer pursuant to the characteristic of
relativity of every contract, and do not necessarily
apply to third parties whose rights may be
affected by the terms of a sale.
KINDS OF CONTRACT OF SALE
As to:
1. Nature of the subject matter:
a. Sale of real property; and
b. Sale of personal property.
c.
2. Value of the things exchanged:
a. Commutative sale; and
b. Aleatory sale.
3. Tangibility of the object:
a. Sale of property (tangible or corporeal);
NOTE: A tangible object is also called
chose in possession
b. Sale of a right (assignment of a right, or a
credit or other intangibles such as
copyright, trademark, or good will);
 CIVIL LAW
NOTE: An intangible object is a chose in It is conditional where the sale contemplates a
action. contingency, and in general, where the contract is
subject to certain conditions, usually in the case of
4. Validity or defect of the transaction: the vendee, the full payment of the agreed
a. Valid; purchase price and in the case of the vendor, the
b. Rescissible; fulfillment of certain warranties (De Leon, 2013).
c. Voidable;
d. Unenforceable; and Conditional sale v. Absolute sale (2001 BAR)
e. Void.
BASIS CONDITIONAL ABSOLUTE
5. Legality of the object: SALE SALE
a. Licit object; and The seller is The title to the
b. Illicit object. granted the right property is not
to unilaterally reserved to the
6. Presence or absence of conditions: rescind the seller or if the
a. Absolute; and contract seller is not
b. Conditional. Definition predicated on the granted the
fulfillment or non- right to rescind
7. Wholesale or retail: fulfillment, as the the contract
a. Wholesale; or case may be, of the based on the
b. Retail. prescribed fulfillment or
condition. non-fulfillment,
8. Proximate inducement for the sale: as the case may
a. Sale by description; be, of the
b. Sale by sample; and prescribed
c. Sale by description and sample. condition.

9. When the price is tendered: Effect of the non-performance of the condition

a. Cash sale; and or if the condition did not take place
b. Sale on installment plan.
Where the obligation of either party to a contract
A contract of sale may be absolute or of sale is subject to any condition which is not
conditional. performed, such party may:

Absolute Sale 1. Refuse to proceed with the contract; or

A sale is absolute when no condition is imposed
and ownership passes to the vendee upon delivery
of the thing subject of the sale (NCC, Art. 1497).
A contract of sale is absolute when the title to the
property passes to the vendee upon delivery of
the thing sold (Rabuya, 2017).
Instance when a deed of sale considered
absolute in nature
A deed of sale is considered absolute in nature
where there is neither a stipulation in the deed
that title to the property sold is reserved in the
seller until the full payment of the price, nor one
giving the vendor the right to unilaterally resolve
the contract the moment the buyer fails to pay
within a fixed period.
Conditional Sale
2. Waive performance of the condition.
Unlike in a non-fulfillment of a warranty which
would constitute a breach of the contract, the non-
happening of the condition, although it may
extinguish the obligation upon which it is based,
generally does not amount to a breach of a
contract of sale.
Instance when a conditional sale considered
an absolute sale
A deed of sale is absolute in nature although
denominated a “conditional sale” absent such
stipulations reserving title to the vendor until full
payment of the purchase price, nor any stipulation
giving them the right to unilaterally rescind the
contract in case of non-payment.
Q: A contract of sale of a lot stipulates that the
"payment of the full consideration based on a
survey shall be due and payable in 5 years
from the execution of a formal deed of sale". Is
this a conditional contract of sale?

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 428
 SALES
A: NO, it is not. The stipulation is not a condition Law on Sales Law on Donation
which affects the efficacy of the contract of sale. It
merely provides the manner by which the full 2. Sale v. Barter
consideration is to be computed and the time
within which the same is to be paid. But it does BASIS SALE BARTER
not affect in any manner the effectivity of the A thing is A thing is
contract (Heirs of San Andres v. Rodriguez, G.R. No. given in given in
135634, May 31, 2000). Nature exchange of a exchange of
price certain another thing.
Q: MTCL sent a letter-proposal for the delivery in money or
and sale of the machines to be installed at its equivalent.
various offices of ACE Company to which the
latter agreed for a purchase price of ₱ The transaction is
5,000,000. Thereafter, it delivered several characterized by the manifest
machineries at ACE Company’s premises and If intention of the parties.
installed the same. MTCL Company demanded consideration
payment from ACE Company. However, they is partly in If If intention
have sent a letter to MTCL Company stating money and intention is is not clear, and
that they have been returning the machines to partly in not clear, and the value of
them thru one of their sales representatives another thing the value of thing is more
who has agreed to pull the machines out but thing is equal than amount of
failed to do so. ACE Company filed a complaint or less than money = Barter
against MTCL Company praying that the latter amount of
pull out from its premises the subject money = Sale
machines. In defense, MTCL Company posits
that ACE Company refused to pay the purchase Applicable Both are governed by law
price therefor despite the latter’s use of the Law on sales.
machines. As such, MTCL Company prays that
ACE Company be compelled to pay the
3. Sale v. Agency to Sell
purchase price. Should ACE Company pay
MTCL for the purchase price of the machines?
BASIS AGENCY TO
SALE
SELL
A: YES. Considering its consensual nature, a
Buyer Agent not
contract of sale had been perfected at the precise
pays for price obliged to pay for
moment ACE Company accepted the latter’s Obligation
of object. price; must
proposal to sell the machines in consideration of as Regards
account for the
the purchase price of ₱ 5,000,000. From that point the Price
proceeds of the
in time, the reciprocal obligations of the parties –
sale.
i.e., on the one hand, of MTCL to deliver the said
Buyer Principal
machines to ACE Company, and, on the other
hand, of ACE Company to pay the purchase price becomes remains the
Transfer of owner of owner even if the
therefor after delivery – already arose and
Ownership thing. object delivered
consequently may be demanded. From that
to agent.
moment, the parties may reciprocally demand
performance, subject to the provisions of the law
governing the form of contracts (Ace Foods, Inc. v. Seller Agent
Micro Pacific Technologies, G.R. No. 200602, warrants. assumes no
December 11, 2013) Warranty personal liability
as long as within
DISTINCTIONS OF THE CONTRACT OF SALE authority given.
WITH OTHER CONTRACTS
Not May be
1. Sale v. Donation Revocability unilaterally revoked
revocable. unilaterally even
w/o ground.
SALE DONATION
Gratuitous/onerou
Onerous Seller Agent not
s
As to profit receives allowed to profit.
Consensual Formal contract
profit.

429
 CIVIL LAW
Seller needs to be owner Lessor need not
As to of thing to transfer be owner.
Real contract Personal contract ownership.
Contract

4. Sale v. Dacion en Pago NOTE: Lease with option

to buy – really a contract
BASIS DACION EN of sale but designated as
SALE lease in name.
PAGO
No pre- Contract
existing where property 6. Contract for piece-of-work
credit. is alienated to
Existence of BASIS SALE CONTRACT
extinguish pre-
Credit FOR PIECE-OF-
existing
credit/debt. WORK
Manufact Manufactu
Buyer- Novates uring in the ring upon
seller creditor-debtor ordinary special order of
Existence
relationship. relationship into course of a customer.
Relationship business.
seller-buyer.

Obligat Obligations For the Not for the

ions are are extinguished. general general market,
Obligation To Whom market. but especially
created.
Made for the
On the On the part customer.
part of the of the debtor:
seller: Price Extinguishment Governe Not within
of the debt Applicability d by the the Statute of
On the part of Statute of Statute of Frauds.
of the On the part of Frauds Frauds.
Consideration buyer: the creditor:
Acquisition The acquisition Borne by Borne by
of the of the object the buyer. the worker or
object. offered in lieu of Risk of Loss contractor, not
the original by the
credit. employer.

Greate Limited Rules in determining if the contract is one of

Determination sale or a piece of work
r freedom. freedom.
of the Price
Buyer still The debtor 1. Sale – if ordered or manufactured in the
has to pay receives the ordinary course of business (NCC, Art. 1467).
Payment of – It involves the sale of a thing or right; and
the price. payment before
Price
the contract is – The obligation of seller is a real obligation
perfected. or an obligation to give

5. Sale v. Lease 2. Piece of work – if manufactured especially

for the customer and upon his special order,
SALE LEASE and not for the general market (NCC, Art.
Obligation to absolutely Use of thing is 1467).
transfer ownership of for specified period – It involves lease of service; and
thing. only with obligation – The obligation of seller is personal or
to return. obligation to do

Consideration is the price. Consideration is CONTRACT TO SELL

the rental.
A bilateral contract whereby the prospective
seller, while expressly reserving the ownership of

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 430
 SALES
the subject property despite delivery thereof to
the prospective buyer, binds himself to sell the
said property exclusively to the prospective buyer
upon fulfillment of the condition agreed upon, that
is, full payment of the purchase price (Coronel v.
CA, G.R. No. 103577, October 7, 1996).
NOTE: Here, payment of the price is a positive
suspensive condition. Failure of which is not a
breach but an event that prevents the obligation of
the vendor to convey title from becoming effective
(Rabuya, 2017).
fulfillment of the conditions agreed upon, i.e., the
full payment of the purchase price and/or
compliance with the other obligations stated in
the contract to sell. Given its contingent nature,
the failure of the prospective buyer to make full
payment and/or abide by his commitments stated
in the contract to sell prevents the obligation of
the prospective seller to execute the
corresponding deed of sale to effect the transfer of
ownership to the buyer from arising (Ventura v.
Heirs of Endaya, G.R. No. 190016, October 2, 2013).

Q: Dolores Ventura entered into a Contract to Instances when a contract to sell may be
Sell with spouses Eustacio and Trinidad resorted to:
Endaya for the purchase of two parcels of land
located in Marian Road II, Marian Park, 1. Where subject matter is indeterminate (NCC,
Parañaque City. The contract to sell provides Arts. 1458 & 1460);
that the purchase price of P347,760.00 shall be 2. Sale of future goods except future inheritance
paid by Dolores through: (a) down payment of (NCC, Art. 1462);
P103,284.00 upon execution of the contract; 3. Stipulation that deed of sale & corresponding
and (b) the balance of P244,476.00 within a certificate of sale would be issued only after
15-year period, plus 12% interest per annum full payment (David v. Tiongson, G.R. No.
on the outstanding balance and 12% interest 108169, August 25, 1999).
per annum on arrearages.
Contract to Sell v. Conditional Contract of Sale
Dolores’ children, Frederick Ventura, Marites
Ventura-Roxas, and Philip Ventura filed a BASIS CONTRACT TO CONDITIONAL
Complaint and, thereafter, an Amended SELL CONTRACT OF
Complaint for specific performance, seeking to SALE
compel Sps. Endaya to execute a deed of sale The prospective The first element
over the subject properties. They argued that seller does not of consent is
their parents’ close friendship with Sps. as yet agree or present,
Endaya, allowed widowed Dolores to pay the consent to although it is
downpayment stated in the contract to sell transfer conditioned
and, instead, allowed her to pay amounts as ownership of upon the
her means would permit. The total payments the property happening of a
made by Dolores and petitioners amounted to subject of the contingent
P952,152.00, more than the agreed purchase contract to sell event, which
price of P347,760.00, including the 12% until the may or may not
interest p.a. thereon computed on the As to happening of an occur.
outstanding balance. consent event, which
may be the full
When Dolores’ children demanded the payment of the
execution of the corresponding deed of sale, purchase price.
Sps. Endaya refused. Should Sps. Endaya What the seller
execute a deed of sale over the subject agrees or
properties in favor of Dolores’ children? obliges himself
to do is to fulfill
his promise to
A: No. Spouses Endaya had no obligation to sell the subject
petitioners to execute a deed of sale over the property when
subject properties. A contract to sell is defined as a the entire
bilateral contract whereby the prospective seller, amount of the
while expressly reserving the ownership of the purchase price
subject property despite delivery thereof to the is delivered to
prospective buyer, binds himself to sell the said him.
property exclusively to the latter upon his

431
 CIVIL LAW
Upon the If the suspensive intending buyer. reconveyance of
fulfillment of condition is the property
the suspensive fulfilled, the subject of the
condition, contract of sale sale.
which is the full is thereby
payment of the perfected, such (Reyes v. Tuparan, G.R. No. 188064, June 1, 2011;
purchase price, that if there had Coronel v. CA, G.R. No. 103577, October 7, 1996).
ownership will already been
not previous Contract of sale v. Contract to sell (2001 BAR,
automatically delivery of the 2017 BAR)
As to effect transfer to the property subject
of buyer although of the sale to the BASIS CONTRACT OF CONTRACT
fulfillment the property buyer, SALE TO SELL
of may have been ownership
suspensive previously thereto Ownership is Ownership is
condition delivered to automatically transferred to transferred
him. The transfers to the the buyer upon upon full
prospective buyer by delivery of the payment of
seller still has to operation of law object to him. the purchase
convey title to without any price.
the prospective further act As regards
NOTE: Vendor
buyer by having to be transfer of
has lost and NOTE: Prior
entering into a performed by ownership
cannot recover to full
contract of the seller. ownership until payment,
absolute sale. and unless the ownership is
contract is retained by
There being no Upon the resolved or the seller.
previous sale of fulfillment of the rescinded.
the property, a suspensive
third person condition, the There are two
buying such sale becomes contracts:
property absolute and this
despite the will definitely 1. The
fulfillment of affect the seller’s contract to sell
the suspensive title thereto. The
condition such second buyer of NOTE:
as the full the property Preparatory
payment of the who may have There is only sale
purchase price, had actual or As to one contract
cannot be constructive numbers of executed 2. The deed of
As to effect
deemed a buyer knowledge of contracts between the absolute sale
of sale of
in bad such defect in involved seller and the
property
faith. There is the seller’s title, buyer. NOTE: The
to third
no double sale or at least was principal
persons
in such charged with the contract is
case. Title to obligation to executed after
the property discover such full payment
will transfer to defect, cannot be of the
the buyer after a registrant in purchase
registration good faith. Such price.
because there is second buyer
no defect in the cannot defeat Non-payment of
owner-seller’s the first buyer’s the price is a Full payment
title per se, but title. In case a resolutory of the price is
the latter, of title is issued to Payment as a
condition. a positive
course, may be the second condition
suspensive
sued for buyer, the first Vendor loses condition.
damages by the buyer may seek ownership over

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 432
 SALES
the property NOTE: Failure P2,500,000.00, who, in turn, caused
and cannot to fully pay the the cancellation of the OCT and the issuance of
recover it until price is not a a TCT. Aguado obtained an P8,000,000.00 loan
and unless the breach but an from the Land Bank secured by a mortgage
contract is event that over the lot. When she failed to pay her loan
resolved or prevents the obligation, Land Bank commenced extra-
rescinded. obligation of judicial foreclosure proceedings and
the vendor to eventually tendered the highest bid in the
convey title auction sale. Upon Aguado’s failure to redeem
from the subject property, Land Bank consolidated
becoming its ownership and a TCT was issued in its
effective. name. Spouses Roque then filed an action for
reconveyance before the RTC. Will the action
for reconveyance prosper?

1. Rescission; A: No. This case involves a contract to sell. The

1. Specific
Remedies or Court held that where the seller promises to
Performance
available 2. Damages execute a deed of absolute sale upon the
2. Rescission; or
3. Damages completion by the buyer of the payment of the
purchase price, the contract is only a contract to
sell even if their agreement is denominated as
a Deed of Conditional Sale, as in this case. In a
Q: Project Movers Realty and Development contract to sell, there being no previous sale of the
Corporation (PMRDC) was indebted to Keppel property, a third person buying such property
Bank for P200M. To pay the debt, PMRDC despite the fulfillment of the suspensive condition
conveyed to the bank 25 properties. Adao such as the full payment of the purchase price, for
occupies one of the properties conveyed. The instance, cannot be deemed a buyer in bad faith
bank demanded Adao to vacate the property and the prospective buyer cannot seek the relief of
but he refused. Hence, an ejectment case was reconveyance of the property. The action for
filed against Adao. In his defense, Adao reconveyance shall fail (Roque v. Aguado, G.R. No.
assailed that he had a Contract to Sell entered 193787, April 7, 2014).
between PMRDC and Adao. To prove full
payment of the property, he presented an PARTIES TO A CONTRACT OF SALE
affidavit. Is Keppel bank bound by the contract
to sell between PMRDC and Adao? 1. Seller – one who sells and transfers the thing
and ownership to the buyer; and
A: NO. The contract to sell does not by itself give 2. Buyer – one who buys the thing upon payment
Adao the right to possess the property. Unlike in a of the consideration agreed upon.
contract of sale, here in a contract to sell, there is
yet no actual sale nor any transfer of title, until
and unless, full payment is made. The payment of CAPACITY OF PARTIES
the purchase price is a positive suspensive
condition. Adao’s lone affidavit is self-serving, and
cannot be considered as substantial evidence to
Persons who may enter into a contract of sale
prove that there was full payment made (Kepel
Bank Phils. Inc., v. Adao, G.R. No. 158227, October
GR: All persons, whether natural or juridical, who
19, 2005).
can bind themselves, have legal capacity to buy
and sell [NCC, Art. 1489(1)].
Q: Spouses Roque and the original owners of
an unregistered lot executed a 1997 Deed of
XPNs:
Conditional Sale over a portion of a lot for
1. Minors, insane and demented persons and
P30,775.00. After the deed’s execution,
deaf-mutes who do not know how to write;
Spouses Roque took possession and
2. Persons under a state of drunkenness or
introduced improvements on the subject
during hypnotic spell;
portion which they utilized as a balut factory.
3. Husband and wife - sale by and between
Sabug, Jr, applied for a free patent over the
spouses.
entire lot and was eventually issued an OCT in
his name. Sabug, Jr., through the 1999 Deed of
Rationale for the prohibition:
Absolute Sale, sold the lot to Aguado for

433
 CIVIL LAW
a. To prevent a spouse from defrauding his RELATIVE INCAPACITY
creditors by transferring his properties to
the other spouse; Persons who are relatively incapacitated to
b. To avoid a situation where the dominant enter into a contract of sale
spouse would unduly take advantage of the
weaker spouse; 1. Spouses (NCC, Art. 1490);
c. To avoid an indirect violation of the 2. Agents, Guardians, Executors and
prohibition against donations between Administrators;
spouses under Article 133 of the Civil Code 3. Public Officers and Employees;
(Medina v. Collector of Internal Revenue, G.R. 4. Court Officers and Employees, and
No. L-15113, January 28, 1961). 5. Others specially disqualified by law (NCC, Art.
1491).
4. Sale between guardians and wards – the
contract is void and not merely voidable. The RELATIVELY
PROPERTY STATUS RATIFICAT
prohibition exists only when the guardianship INCAPACITA
INVOLVED OF SALE ION
TED TO BUY
exists.
5. Sale between agents and principals
Property Can be
GR: Art. 1491 (2) of NCC entrusted ratified
to them for after the
XPN: The prohibition does not apply if the administrat inhibition
principal consents to the sale of the property in ion or sale. has
Un-
the hands of the agent or administrator. Agents ceased.
enforcea
XPN: When
ble
Also, after the termination of the affairs of the principal Reason:
agency, the prohibition no longer applies. The gave his the only
transaction may be ratified by way of a new consent. wrong
contract which will become valid only from its that
execution and will not retroact to the date of subsists is
the first contract. Property of the
the ward private
6. Sale between executors and administrators of during wrong to
estate of the deceased [NCC, Art. 1491 (3)]. Guardian period of the ward,
But hereditary rights are not included in the guardiansh principal
prohibition. ip or estate;
7. Sale involving property of the government and can
[NCC, Art. 1491(4)]. be
The nullity of such prohibited contracts is condoned
definite and permanent and cannot be cured by by the
ratification. The public interest and public private
policy remain paramount and do not permit of parties
compromise or ratification. themselve
8. Sale of property in litigation [NCC, Art. 1491(5)] s.
Nullity is permanent. Prohibition applies only Voidable
to a sale or assignment to the lawyer by a client NOTE:
of the property which is the object of litigation Property of Contracts
Executors
(Rabuya, 2017). the estate entered
and
under by
administra-
ABSOLUTE INCAPACITY administrat guardian
tors
ion. in behalf
Persons who are absolutely incapacitated to of ward
enter into a contract of sale are
rescissibl
1. Unemancipated minors (NCC, Art. 1327); and e if ward
2. Insane or demented persons, and deaf-mutes suffers
who do not know how to write (NCC, Art. lesion by
1327). more than
¼ of
value of

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 434
 SALES
property. 1. Sale entered into by minors
Sale by
guardian GR: It is voidable, subject to annulment or
of ratification.
property XPN: Where necessaries are sold and
belonging delivered to a minor or other person without
to a ward capacity to act, he must pay a reasonable price
without [NCC, Art. 1489(2)].
Court
approval 2. Sale by & between spouses (NCC, Art. 1490)
is void
regardles a. Status of prohibited sales between
s of the spouses:
lesion,
hence, GR: Null and void
cannot be
ratified. XPN: In case of sale between spouses:
1. When a separation of property was
Property agreed upon in the marriage
and rights settlements; or
in litigation 2. When there has been a judicial
or levied separation of property agreed upon
Court upon on between them
Cannot be
officers and execution
ratified.
employees before the b. Contract of sale with 3rd parties:
court
Reason: It
under their GR: Under the law on sales, it would seem
is not only
jurisdiction that a spouse may, without the consent of
Void a private
the other spouse, enter into sales
wrong,
Others transactions in the regular or normal
but also a
specially pursuit of their profession, vocation or
public
disqualifie trade (in relation to Art. 73, Family Code).
wrong
d by law
(Villanuev
Property of XPN: Even when the property regime
a, 2014).
the State prevailing was the conjugal partnership of
Public
entrusted gains, the Supreme Court held the sale by
officers and
to them for the husband of a conjugal property without
employees
administrat the consent of the wife is void, not merely
ion. voidable under Art. 124 of the Family Code
since the resulting contract lacks one of the
NOTE: The permanent disqualification of public essential elements of full consent (Guiang v.
and judicial officers and lawyers grounded CA, G.R. No. 125172, June 26, 1998).
on public policy differs from the first three cases of
guardians, agents and administrators (NCC, Art c. Between common law spouses - also null
1491), as to whose transactions it had been opined and void.
that they may be "ratified" by means of and in "the
form of a new contact, in which cases its validity Sale between common law spouses is null and
shall be determined only by the circumstances at void to prevent the exercise of undue
the time the execution of such new contract. The influence by one spouse over the other. The
causes of nullity which have ceased to exist cannot prohibition also applies to a couple living as
impair the validity of the new contract (Rubias v. husband and wife without the benefit of
Batiller, G.R. No. L-35702, May 29, 1973). marriage (Calimlim-Canullas v. Fortun, et. al.,
G.R. No. L-57499, June 22, 1984).
NOTE: Prohibitions are applicable to sales in legal
redemption, compromises and renunciations. REASON: The condition of those who
incurred guilt would turn out to be better
Status of the following contracts of sale than those in legal union.

435
 CIVIL LAW
Persons who has the right to assail the validity 1. Perfection stage: valid – buyer acquires title
of the transaction between spouses of goods.
2. Consummation stage: valid – If the title has
The following are the only persons who can not yet been avoided at the time of sale and
question the sale between spouses: the buyer must buy the goods under the
following conditions:
1. The heirs of either of the spouses who have a. In good faith;
been prejudiced; b. For Value;
2. Prior creditors; and c. Without notice of seller’s defect of
3. The State when it comes to the payment of the title (NCC, Art. 1506).
proper taxes due on the transaction.
NOTE: Art. 1506 is predicated on the
Q: The stipulation between the lawyer and principle that where loss has happened
counsel is as follows, “the attorney’s fees of the which must fall on one of two innocent
Atty. X will be ½ of whatever the client might persons, it should be borne by him, who is
recover from his share in the property subject the occasion of the loss (De Leon, 2005).
of the litigation.” Is the stipulation valid?
SUBJECT MATTER
A: YES. The stipulation made is one of a
contingent fee which is allowed by the CPE and Requisites of a proper objects of sale
the CPR. It does not violate the prohibition of
acquisition of property subject of the litigation by 1. THINGS
the lawyer provided for in the Civil Code since the a. Determinate or determinable
prohibition applies only to a sale or assignment to b. Lawful or licit
the lawyer by his client during the pendency of the c. Should not be impossible (within the
litigation. The transfer actually takes effect after commerce of men)
the finality of the judgment and not during the
pendency of the case. As such it is valid stipulation 2. RIGHTS
between the lawyer and client.
GR: Must be transmissible.
SPECIAL DISQUALIFICATIONS e.g. right of redemption, right of usufruct, sale
of credit, right to inheritance already
Persons specially disqualified by law to enter assigned, etc.
into contracts of sale (ALIEN-UnOS)
XPNs:
1. ALIENs who are disqualified to purchase a. FUTURE INHERITANCE – cannot be
private agricultural lands (Art. XII Secs. 3&7, the subject of sale;
1987 Constitution).
2. Unpaid seller having a right of lien or having b. SERVICE
stopped the goods in transit is prohibited Reason: They are not determinate
from buying the goods either directly or things and no transfer of ownership
indirectly in the resale of the same at is available but it can be the object of
public/private sale which he may make [NCC, certain contracts such as contract for
Art. 1533(5); Art. 1476(4)]. a piece of work (Pineda, 2010).
3. The Officer holding the execution or deputy
cannot become a purchaser or be interested The subject matter of sale must be
directly or indirectly on any purchase at an determinate or at least determinable.
execution (Sec. 21 Rule 39, Rules of Court).
4. In Sale by auction, seller cannot bid unless A. When a thing is determinate
notice has been given that such sale is subject
to a right to bid in behalf of the seller (NCC, A thing is determinate when it is particularly
Art. 1476). designated or physically segregated from all
others of the same class.
SALE BY A PERSON HAVING A VOIDABLE TITLE
The requisite that a thing be determinate is
Effect of a sale made by the seller with satisfied if at the time the contract is entered into,
voidable title over the object the thing is capable of being made determinate

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 436
 SALES
without the necessity of a new or further
agreement between the parties (NCC, Art. 1460).
B. When a thing is determinable
Even if the subject matter of the sale was generic,
the performance of the seller’s obligation would
require necessarily its physical segregation or
particular designation, making the subject matter
determinate at the point of performance.
Determinable subject matter of sale are not
subject to risk of loss until they are physically
segregated or particularly designated (Yu Tek &
Co. v. Gonzales, G.R. No. L-9935, February 1, 1915).
NOTE: The thing may be existing or not at the
time of the perfection of the contract. So long as it
has the possibility of existence at some future
time. The law says things that having a potential
existence may be the object of the contract of sale
[NCC, Art. 1461(1)] (Rabuya, 2017).
Sale for a lump sum
a. Sole owner may sell an undivided interest
(NCC, Art. 1463).
e.g. A fraction or percentage of such
property.
b. Sale of an undivided share in a specific
mass of fungible goods makes the buyer a
co-owner of the entire mass in proportion
to the amount he bought (Art. 1464).
NOTE: A co-owner cannot sell more than
his share (Yturralde v. CA, G.R. No. L-31586,
February 28, 1972).
4. Sale of Things in Litigation
a. Sale of things under litigation is
rescissible if entered into by the
defendant, without the approval of the
litigants or the court (NCC, Art. 1381).
NOTE: If the property involved belongs to
a ward and the guardian enters into a
contract involving such property without
court approval, the contract is void, not
merely rescissible.

The boundaries of the land stated in the contract b. No rescission is allowed where the thing is
determine the effects and scope of the sale, NOT legally in the possession of a 3rd person
the area. who did not act in bad faith.

The vendors are obligated to deliver all the land 5. Things subject to Resolutory Condition
included within the boundaries, regardless of e.g. Things acquired under legal or
whether the real area should be greater or smaller conventional right of redemption, or subject
than that recited in the deed. This is particularly to reserva truncal (NCC, Art. 1465).
true where the area is described as "humigit 6. Indeterminate Quantity of Subject Matter
kumulang," that is, more or less (Semira v. CA, G.R.
No. 76031, March 2, 1994). NOTE: The fact that the quantity is not
determinate shall not be an obstacle to the
Q: Lino entered into a contract to sell with existence of the contract provided it is
Ramon, undertaking to convey to the latter possible to determine the same without need
one of the five lots he owns, without specifying of a new contract (NCC, Art. 1349).
which lot it was, for the price of P1 million.
Later, the parties could not agree which of five Emptio Rei Speratae v. Emptio Spei
lots he owned Lino undertook to sell to Ramon.
What is the standing of the contract? (2011 EMPTIO REI
BASIS EMPTIO SPEI
BAR) SPERATAE
Sale of thing Sale of mere
A: It is a void contract since the particular lot having hope or
sold cannot be determined. Definition potential expectancy.
existence.
KINDS OF OBJECT OF SALE
Uncertainty is Uncertainty is
1. Existing Goods - Owned or possessed by w/ regard to w/ regard to
seller at the time of perfection. Uncertainty quantity & existence of
2. Future Goods - Goods to be manufactured, quality. thing.
raised, acquired by seller after perfection of
the contract or whose acquisition by seller Contract deals Contract deals
depends upon a contingency (NCC, Art. 1462). Object of the
w/ future w/ present
3. Sale of Undivided Interest or Share Sale
thing. thing – hope or

437
 CIVIL LAW
expectancy. This rule is in accord with a well-known principle
of law that one cannot transmit or dispose of that
Sale is valid Sale is valid which he does not have — nemo dat quod non-
only if the even though habet.
expected thing expected thing
will exist. So does not come NOTE: Future inheritance cannot be the subject of
that if the into existence sale.
condition is as long as the
not fulfilled, if hope itself Legal effect of sale by a non-owner
the thing does validly existed
not come into e.g. lotto GR: The buyer acquires no better title to the goods
existence, the than the seller had; caveat emptor (buyer beware).
contract NOTE: Sale of
cannot have a vain hope or XPNs:
the effect for expectancy 1. Estoppel or when the owner of the goods is by
lack of an however, is his conduct precluded from denying the
essential void (NCC, Art. seller’s authority to sell;
requisite. 1461). 2. When the contrary is provided for in recording
Effectivity laws;
Although the
vendee may 3. When the sale is made under statutory power
have reserve of sale or under the order of a court of
his right to competent jurisdiction;
claim 4. When the sale is made in a merchant’s store in
indemnity accordance with the Code of Commerce and
from the special laws;
vendor in the 5. When a person who is not the owner sells and
event that the delivers a thing, and subsequently acquired
latter knew title thereto;
that the thing 6. When the seller has a voidable title which has
could not not been avoided at the time of the sale;
come into 7. Sale by co-owner of the whole property or a
existence definite portion thereof;
(Rabuya, 8. Special rights of unpaid seller.
2017).
Instances when the Civil Code recognizes sale
NOTE: The presumption is emptio rei speratae. of things not actually or already owned by the
seller at the time of sale
SALE BY A PERSON WHO DOES NOT OWN THE
THING SOLD 1. Sale of a thing having potential existence (NCC,
Art.1461);
Ownership is not required at the time of 2. Sale of future goods (NCC, Art. 1462);
perfection in order for the sale to be valid. 3. Contract for the delivery at a certain price of an
Ownership is material only at the time of delivery article, which the seller in the ordinary course
but only for the purpose of transferring ownership of business manufactures/ procures for the
and does not affect the validity of the contract of general market, whether the same is on hand
sale. at the time or not (NCC, Art. 1467).

Right to transfer ownership

OBLIGATIONS OF THE BUYER
It is during the delivery that the law requires the
seller to have the right to transfer ownership of
the thing sold. In general, a perfected contract of Obligations of the Buyer (PAE)
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 (Alcantara- 1. Payment of the price
Daus v. De Leon, G.R. No. 149750, June 16, 2003). GR: Seller is not bound to deliver unless the
purchase price is paid

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 438
 SALES
XPN: A period of payment has been fixed
2. Accept delivery of thing sold
NOTE: A grace period granted the buyer in
case of failure to pay is a right not an
obligation. Non-payment would still generally
require judicial or extrajudicial demand
before default can arise.
3. Bear expenses for the execution and
registration of the sale and putting the goods
in a deliverable state, if such is the stipulation.
Other Obligations of the Buyer
1. To take care of the goods without the
obligation to return, where the goods are
delivered to the buyer and he rightfully refuses
to accept (NCC, Art. 1587);
NOTE: The goods in the buyer’s possession are
at the seller’s risk.
2. To be liable as a depositary if he voluntarily
constituted himself as such (NCC, Art. 1587);
3. To pay interest for the period between
delivery of the thing and the payment of the
price in the following cases (NCC, Art. 1589):
a. should it have been stipulated;
b. should the thing sold and delivered
produces fruits or income; or
c. should he be in default, from the time of
judicial or extra-judicial demand for the
payment of the price.
OBLIGATIONS OF THE SELLER
Obligations of the seller (DDTWTP)
1. Deliver the thing sold (NCC, Arts.
1458&1459);
2. Deliver fruits & accessions/accessories
accruing from perfection of sale;
3. Transfer the ownership;
4. Warranties;
5. Take care of the thing, pending delivery, with
proper diligence;
6. Pay for the expenses of the deed of sale
unless there is a stipulation to the contrary.
Obligation of the seller in terms of the nature
of the subject matter of the sale
When the subject matter of the sale is a
DETERMINATE or SPECIFIC THING, the seller
439
must deliver the thing to the buyer when
compelled by the latter.
When the subject matter is an INDETERMINATE
OR GENERIC THING, the seller may be asked that
the obligation be complied with at his expense
(NCC, Art. 1165).
Seller’s obligation in case of delay or promise
to deliver the thing to two or more persons
who do not have the same interest
The seller shall be responsible for any fortuitous
event that may occur until he has delivered the
thing (Art. 1165 in relation to Art. 1174 of the NCC).
PRICE
The sum stipulated as the equivalent of the thing
sold and also every incident taken into
consideration for the fixing of the price put to the
debit of the buyer and agreed to by him
(Villanueva, 2004).
NOTE: A definite agreement on the manner of
payment of the price is an essential element in the
formation of a binding and enforceable contract of
sale (Co v. CA, G.R. No. 123908, February 9, 1998).
Requisites of price
It must be:
1. Real, not fictitious;
2. Paid in money or its equivalent;
3. For valuable consideration;
4. Certain or ascertainable at the time of the
perfection of the contract; and
5. In some cases, must not be grossly inferior to
the value of the thing sold.
NOTE: There is NO effect on the contract of sale in
case of breach in the agreed manner of payment.
Payment of the price has nothing to do with the
perfection of the contract (Sps. Bernardo
Buenaventura and Consolacion Joaqui v. CA, GR No.
126376, November 20, 2003).
When price is certain
1. If there is a stipulation;
2. If it be with reference to another thing certain;
3. If the determination of the price is left to the
judgment of specified person(s) (NCC,Art.
1469);
or
4. By reference to certain fact(s) as referred to in
Art. 1472.
 CIVIL LAW
NOTE: If the price is based on estimates, it is
uncertain.
Simulated Price
The price is simulated when neither party had the
intention that the amount will be paid (Yu Bun
Guan v. Ong, G.R. No. 144735, October 18, 2001).
Effect if price is simulated
GR: The sale is void.
XPN: If it can be shown to be a donation or
another contract (NCC, Art. 1471).
Admission by the vendee that he did not pay any
centavo for the property makes the sale void
(Labagala v. Santiago, G.R. No. 132305, December
4, 2001).
When price of securities, grains, liquids and
things is considered certain
1. When the price fixed is that which the thing
would have on a definite day, or in a particular
exchange or market;
2. When the amount is fixed above or below the
price of such day, or in such exchange or
market, provided said amount be certain (NCC,
Art. 1472).
3. When it is by reference to another certain
thing (NCC, Art. 1469).
NOTE: Art. 1469 is not allowed for the
determination of the subject matter of the sale.
Fixing of the price CANNOT be left to the
discretion of one of the contracting parties
GR: The price cannot be fixed unilaterally by one
of the contracting parties.
XPN: If the price fixed by one of the parties is
accepted by the other, the sale is perfected.
Effect when the price is unilaterally fixed by
one of the contracting parties without consent
of the other party
There is no meeting of the minds. The sale is
inefficacious (Pineda, 2010).
Effect when the price is fixed by the third
person designated
GR: Price fixed by a third person designated by
the parties is binding upon them.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
XPNs:
1. When the third person acts in bad faith or
by mistake; and
2. When the third person disregards the
specific instructions or the procedure
marked out by the parties.
Gross inadequacy of price
The price is grossly inadequate if a reasonable
man will not agree to dispose of his property at
that amount.
Effect of Gross Inadequacy of Price (NCC, Art.
1470)
GR: It does not affect the validity of the sale.
XPN: (CoRDS)
1. If Consent is vitiated (may be annulled or
presumed to be equitable mortgage);
2. If the parties intended a Donation or
some other act/ contract;
3. If the price is so low as to be “Shocking to
the conscience”; and
4. If in the event of Resale, a better price can
be obtained.
Annulment of sale NOT the remedy in a
simulated sale
Where the deed of sale states that the purchase
price has been paid but in fact has never been
paid, the deed of sale is null and void ab initio for
lack of consideration. Moreover, Art. 1471 of the
Civil Code, provides that “if the price is simulated,
the sale is void” (Catindig v. Vda. de Meneses, Roxas
v. CA, G.R. No. 165851& G.R. No. 165851, February
2, 2011).
WHEN NO PRICE IS AGREED UPON BY THE
PARTIES
Effect of failure to determine the price
1. Where contract is executory – ineffective.
2. Where the thing has been delivered to and
appropriated by the buyer – the buyer must
pay a reasonable price therefore.
Q: Nante, a registered owner of a parcel of land
in Quezon City, sold the property to Monica
under a deed of sale which reads as follows:
“That for and in consideration of the sum of
P500,000, value to be paid and delivered to
me, and receipt of which shall be
440
 SALES
acknowledged by me to the full satisfaction of
Monica, referred to as a vendee, I hereby sell,
transfer, cede, convey, and assign, as by
presents, I do have sold, transferred, ceded,
conveyed and assigned a parcel of land
covered by TCT No. 2468 in favor of the
Vendee.”
After delivery of the initial payment of
P100,000, Monica immediately took
possession of the property. Five months after,
Monica failed to pay the remaining balance of
the purchase price. Nante filed an action for
the recovery of the possession of the property.
Nante allege that the agreement was one to
sell, which was not consummated as the full
contract price was not paid. Is the contention
of Nante tenable? (2014 BAR)
2. If there is no stipulation, the court may fix the
term.
Exercise of an option
In an option to buy, the party who has an option
may validly and effectively exercise his right by
merely notifying the owner of the former’s
decision to buy and expressing his readiness to
pay the stipulated price (De Leon, 2011).
A notice of acceptance must be communicated to
offeror even without actual payment as long as
payment is delivered in the consummation stage
provided it still within the period provided.
Effect of the presence and absence of a
separate consideration in an option contract

A: NO. The deed itself states that for consideration
received, he sells, transfers, and conveys the land
to Monica an there was delivery of the property to
the latter. The contract is clearly one of sale as
there was no reservation of ownership on the part
of the seller Nante. The non-payment of the price
in a contract of sale would only entitle the seller to
rescind the contract but it does not thereby
prevent the transfer of ownership particularly so
as in this case, where there was already delivery
to the buyer.
OPTION CONTRACT (2002, 2005 BAR)
A contract by which the owner of the property
agrees with another person that he shall have the
right to buy his property at a fixed price within a
certain time. It is binding upon the promissor if
the promise is supported by a consideration
distinct from the price. An option contract is
likewise a separate and distinct contract from a
contract of sale.
1. With separate consideration:
a. Contract is valid;
b. Offeror cannot withdraw offer until after
expiration of the option; and
c. Is subject to rescission and damages but
not specific performance.
2. Without separate consideration:
a. The option contract is not deemed
perfected; and
b. Offer may be withdrawn at any time prior
to acceptance.
NOTE: Even though the option was not supported
by a consideration, the moment it was accepted,
contract of sale is perfected (NCC, Art. 1324).
An option imposes no binding obligation on the
person holding the option aside from the
consideration for the offer. Until accepted, it is not
treated as a sale (Tayag v. Lacson, G.R. No. 134971,
March 25, 2004).

Nature of an option contract Contract of Sale v. Option Contract

It is a preparatory contract in which one party BASIS CONTRACT OPTION

grants to another, for a fixed period and at a OF SALE CONTRACT
determined price, the privilege to buy or sell, or to Must May be
decide whether or not to enter into a principal be a price anything of
contract. Consideration certain in value.
money.
NOTE: If the option is perfected, it does not result
in the perfection or consummation of the sale Bilater Unilate
(Diaz, 2006). Bilateral/Unilateral al Contract. ral Contract.

Period within which to exercise the option Subjec The

t matter if “option to
1. Within the term stipulated; and Subject Matter
the purchase” is
contract of the subject

441
 CIVIL LAW
sale itself. matter.
Elements of a Valid Option Contract
3. Consent;
2. Subject Matter - An option right to an
unaccepted unilateral offer to sell/ accepted
unilateral promise to sell or an unaccepted
unilateral offer to buy/ accepted unilateral
promise to buy a determinate or determinable
object for a price certain including the manner
of payment (Villanueva, 2009); and
3. Prestation – A consideration separate and
distinct from the purchase price for the option
given. (Villanueva, 2009).
Obligations of the offeror
3. Not to offer to any third party the sale of the
object of the option during the option period;
4. Not to withdraw the offer or option during the
option period;
5. To hold the subject matter for sale to the
offeree in the event that the latter exercises his
option during the option period.
Effect of acceptance and withdrawal of the
offer
If the offer had already been accepted and such
acceptance has been communicated before the
withdrawal is communicated, the acceptance
creates a perfected contract, even if no
consideration was as yet paid for the option. In
which case, if the offeror does not perform his
obligations under the perfected contract, he shall
be liable for all consequences arising from the
breach thereof based on any of the available
remedies such as specific performance, or
rescission with damages in both cases.
Right of first refusal
It is a contractual grant, not of the sale of a
property, but of the first priority to buy the
property in the event the owner sells the same.
NOTE: Where a time is stated in an offer for its
acceptance, the offer is terminated at the
expiration of the time given for its acceptance
(Pineda, 2010).
Basis of the right of first refusal
It is based on the current offer to sell of the seller
or offer to purchase of any prospective buyer.
Only after the optionee fails to exercise its right of
first priority under the same terms and within the
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
period contemplated could the owner validly offer
to sell the property to a third person, again, under
the same terms as offered to the optionee
(Paranaque Kings Enterprises, Inc. vs. CA GR No.
111538, February 26, 1997).
Effect of sale of a property in violation of the
right of first refusal
The resulting contract is RESCISSIBLE by the
person in whose favor the right of first refusal was
given and even though no particular price is stated
in the covenant granting the right of first refusal,
the same price by which the third-party buyer
bought the property shall be deemed to be the
price by which the right of first refusal shall
therefore be exercisable (Equitorial Realty
Development, Inc. v. Mayfair Theater, Inc., G.R. No.
106063, November 21, 1996).
Q: Dux leased his house to Iris for a period of 2
years, at the rate of P25,000.00 monthly,
payable annually in advance. The contract
stipulated that it may be renewed for another
2-year period upon mutual agreement of the
parties.
The contract also granted Iris the right of first
refusal to purchase the property at any time
during the lease, if Dux decides to sell the
property at the same price that the property is
offered for sale to a third party.
23 months after execution of the lease
contract, Dux sold breach of her right of first
refusal. Dux said there was no breach because
the property was sold to his mother who is not
a third party. Iris filed an action to rescind the
sale and to compel Dux to sell the property to
her at the same price. Alternatively, she asked
the court to extend the lease for another 2
years on the same terms. Can Iris seek
rescission of the sale of the property to Dux's
mother? (2008 BAR)
A: YES. The right of first refusal is included in the
contract signed by the parties. Only if the lessee
failed to exercise the right of first refusal could the
lessor lawfully sell the subject property to others,
under no less than the same terms and conditions
previously offered to the lessee. Granting that the
mother is not a third party, this would make her
privy to the agreement of Dux and Iris, aware of
the right of first refusal. This makes the mother a
buyer in bad faith, hence giving more ground for
rescission of the sale to her (Equitorial Realty
Development, Inc. v. Mayfair Theater, Inc., G.R. No.
106063, November 21, 1996).
442
 SALES
Option contract v. Right of first refusal with the bidding of the second power plant’s
fly ash. Pozzolanic filed a complaint, but
RIGHT OF during the pendency of the case NPC decided
OPTION
BASIS FIRST to likewise dispose the fly ash from the first
CONTRACT
REFUSAL power plant without allowing Pozzolanic to
Principal Accessory; exercise its right of first refusal. Can
contract; stands cannot stand Pozzolanic exercise its right of first refusal?
Nature
on its own. on its own.
A: NO. The right of first refusal granted in favor of
Needs separate Does not Pozzolanic is invalid for being contrary to public
consideration. need policy as the same violates the requirement of
separate competitive public bidding in the award of
Consideration government contracts. In this jurisdiction, public
consideratio
n bidding is the established procedure in the grant
of government contracts (PSALM Corp., v.
Subject matter There must Pozzolanic, G.R. No. 183789, August 24, 2011).
and price must be subject
Subject Right of first refusal may be waived
be valid. matter but
matter and
price not
price Like other rights, the right of first refusal may be
important.
waived or when a party entered into a
Not conditional Conditional compromise agreement (Diaz, 2006).
Condition
There is no offer There is an Availment of sublessee of the right of first
to sell, but only offer to sell. refusal of the lessee
an opportunity
Offer to sell for the buyer to GR: The sublessee is a stranger to the lessor who
enter into a is bound to respect the right of first refusal in
contract of sale. favor of the lessee only.

Subjectivity Not subject to Subject to
to Specific specific specific
Performance performance. performance.
Right of first refusal must be contained in a
written contract
The right of first refusal be embodied in a written
contract and the grant of such right must be clear
and express.
NOTE: It is applicable only to executory contracts
and not to contracts which are totally or partially
performed.
Q: Pozzolanic entered a long-term contract
with the National Power Corporation (NPC) for
the purchase of all fly ash to be produced by
the latter’s future power plants. In the
contract, NPC granted Pozzolanic a right of
first refusal to purchase the fly ash that may be
generated in the future. When NPC’s two new
power plants started operation, it published
an invitation to interested buyers for the
purchase of the fly ash. Pozzolanic sent letters
to NPC reminding its right of first refusal. NPC
deferred its public bidding with the first power
plant’s fly ash but it nevertheless continued
XPN: When the contract of lease granted the
lessee the right to assign the lease, the assignee
would be entitled to exercise such right as he
steps into the shoes of the original assignee
(Villanueva, 2009).
Q: Tess leased her 1,500 sq. m. Lot in Antipolo
City to Ruth for a period of three (3) years to
February 2013.
On March 19, 2011, Tess sent a letter to Ruth,
part of which read as follows:
“I am offering you to buy the property you are
presently leasing at P5,000.00 per sq.m. or of
total of P7,500,00.00. You can pay the contract
price by installment for two (2) years without
interest.
I will give you a period of one (1) year from the
receipt of this letter to decide whether you will
buy the property.”
After the expiration of the lease contract, Tess
sold the property to her niece for a total
consideration of P4 Million. Ruth filed a
complaint for the annulment of the sale,
reconveyance and damages against Tess and

443
 CIVIL LAW
her niece. Ruth alleged that the sale of the 1.
leased property violated her right to buy
under the principle of right of first refusal. Is 2.
the allegation of Ruth tenable? (2014 BAR)
Part of the purchase price – earnest money is
deducted from the total price; and
Proof of perfection of the contract (NCC, Art.
1482).

A: NO, the allegation of Ruth is not tenable. The Effect of rescission on earnest money received
letter written by Tess did not grant a right of first
refusal to Ruth. At most, it is to be construed as an When the seller seeks to rescind the sale, he is
option contract whereby Ruth was given the right obliged to return the thing which was the object of
to buy or not to buy the leased property. An option the contract along with fruits and interest (NCC,
is itself not a purchase but it merely secures the Art. 1385).
privilege to buy. However, the option is not valid
because it was not supported by cause or Option money v. Earnest money
consideration distinct from the price of the
property (Art. 1479). Also, Ruth does not appear to BASIS EARNEST
OPTION MONEY
have exercised her option before the offer was MONEY
withdrawn by the subsequent sale of the property Money given as Forms part of
to the niece of Tess. distinct the purchase
As to Money consideration price.
OPTION MONEY vis-a-vis EARNEST MONEY Given for an option
contract.
Option money
Applies to a sale Given only
It is the distinct consideration in case of an option As to not yet when there is
contract. It does not form part of the purchase Perfection perfected. already a
price hence, it cannot be recovered if the buyer sale.
did not continue with the sale (NCC, Art. 1479). Obligation of Prospective When given,
the buyer buyer is not the buyer is
NOTE: Option contract’s distinguishing upon required to buy. bound to pay
characteristic is that it imposes no binding payment of the balance.
obligation on the person holding the option, aside consideration
from the consideration for the offer (Limson v. CA, If buyer does not If sale did not
G.R. No. 135929, April 20, 2001). decide to buy, it materialize, it
cannot be must be
Consideration of payment as option money As to recovered. returned.
Recovery (Villanueva,
Payment is considered option money when it is 2014; Pineda,
given as a separate and distinct consideration 2010).
from the purchase price.
Ownership is Title passes
Earnest money or “arras” (2002 BAR) reserved to the to the buyer
As to
seller and is not upon
This is the money given to the seller by the Transfer of
to pass until full delivery of
prospective buyer to show that the latter is truly Ownership
payment. the thing
interested in buying the property, and its aim is to sold.
bind the bargain (Pineda, 2010). Specific Specific
Effect of Non- performance. performance
It is actually a partial payment of the purchase payment and
price and is considered as proof of the perfection rescission.
of the contract (De Leon, 2011)
Remedy when seller refuses to complete the
NOTE: Option money may become earnest money sale transaction despite down payment of the
if the parties agree (De Leon, 2011). buyer
Significance of giving an earnest money The action for specific performance will lie. There
is a perfected contract of sale because there was a
It is considered as: binding agreement of sale, not just an option

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 444
 SALES
contract. The sale was perfected upon acceptance XPN: When the sale is subject to a suspensive
by the seller of the down payment from the buyer. condition by virtue of law or stipulation.

Seller’s refusal to proceed with the sale despite
down payment of buyer on the ground that the
transaction is disadvantageous to him (seller)
Seller cannot justify his refusal to proceed with
the sale by the fact that the deal is financially
disadvantageous to him. Having made a bad
bargain is not a legal ground for pulling out of a
binding contract of sale, in the absence of some
actionable wrong by the other party (Vales v. Villa,
G.R. No. 10028, December 16, 1916).
The buyer is deemed to have accepted the
goods
1. When he communicates to the seller that he
has accepted them;
2. When the goods have been delivered and he
does any act inconsistent with the ownership
of the seller; and
3. When, after the lapse of reasonable time, he
retains the goods without intimating to the
seller that he rejected them (NCC, Art. 1585).

FORMATION OF CONTRACT OF SALE Rule on refusal to accept the goods by the

buyer
Rules in the conception stage about the offer
The buyer is not bound to return the goods to the
RULE seller and it is sufficient that he notifies the seller
Prior to acceptance, may be of his refusal in the absence of a contrary
Offer is withdrawn at will by offeror but no stipulation (NCC, Art. 1587).
floated authority to modify it.
NOTE: If the refusal is without just cause, the title
Must be accepted within the passes to the buyer from the moment the goods
period, otherwise, extinguished at are placed at his disposal (NCC, Art. 1588).
the end of period and may be
With a Effect of a qualified acceptance
withdrawn at will by offeror but
period
must not be arbitrary, otherwise,
liable for damages. It constitutes merely a counter-offer which must
in turn be accepted to give rise to a valid and
Extinguished by happening/ binding contract (Villanueva, 2009).
With a
non-happening of condition.
condition Q: Licup, through a letter, offered to buy
Continues to be valid parcels of land to The Holy See and Philippine
Without Realty Corporation (PRC). He enclosed a check
depending upon circumstances of
period/ for P100,000.00 to “close the transaction” and
time, place and person.
condition accepted the responsibility of removing
With a Original offer is extinguished. informal settlers. Msgr. Cirilos, representative
counter- of the Holy See and PRC signed the conforme
offer portion of the letter and accepted the check. A
stop-payment order was issued by Licup and
PERFECTION OF CONTRACT OF SALE the latter requested that the titles to the land
instead be given to SSE. Msgr. Cirilos wrote SSE
GR: It is deemed perfected at the moment there is requesting to remove the informal settlers,
meeting of minds upon the thing which is the otherwise, the P100,000.00 would be
object of the contract and upon the price [NCC, Art. returned. SSE replied with an “updated
1475(1)]. (2002, 2006 BAR) proposal” that they will comply provided that
the purchase price is lowered. The proposal
NOTE: The acceptance of the offer must be was rejected. The parcel of land was sold to
absolute. It must be plain, unequivocal, another third person. Is there a perfected
unconditional and without variance of any sort contract of sale between the two parties?
from the proposal.
A: NO. When Msgr. Cirilos affixed his signature on
Upon the perfection of the contract, the parties that letter, he expressed his conformity to the
may reciprocally demand performance (Rabuya, terms of Licup’s offer appearing on it. There was
2017). meeting of the minds as to the object and
consideration of the contract. But when Licup

445
 CIVIL LAW
ordered a stop-payment on his deposit and
proposed in his April 26, 1988 letter to Msgr.
Cirilos that the property be instead transferred to
SSE, a subjective novation took place. The
proposed substitution of Licup by SSE opened the
negotiation stage for a new contract of sale as
between SSE and the owners (Starbright Sales v.
Phil. Realty Corp., et. al, G.R. No. 177936, January
18, 2012).
Q: Spouses Biong and Linda wanted to sell
their house. They found a prospective buyer,
Ray. Linda negotiated with Ray for the sale of
the property. They agreed on a fair price of P2
Million. Ray sent Linda a letter confirming his
intention to buy the property. Later, another
couple, Bernie and Elena, offered a similar
house at a lower price of P 1.5 Million. But Ray
insisted on buying the house of Biong and
Linda for sentimental reasons. Ray prepared a
deed of sale to be signed by the couple and a
manager's check for P2 Million. After receiving
the P2 Million, Biong signed the deed of sale.
However, Linda was not able to sign it because
she was abroad. On her return, she refused to
sign the document saying she changed her
mind. Linda filed suit for nullification of the
deed of sale and for moral and exemplary
damages against Ray. Will the suit prosper?
(2006 BAR)
A: NO, the suit will not prosper. The contract of
sale was perfected when Linda and Ray agreed on
the object of the sale and the price (Art. 1475).
There is therefore consent on her part as the
consent need not be given in any specific form.
Hence, her consent may be given by implication,
especially since she was aware of, and
participated in the sale of the property (Pelayo v.
CA, G.R. No. 141323, June 8, 2005). Her action for
moral and exemplary damages will also not
prosper because the case does not fall under any
of those mentioned in Art. 2219 and 2232 of the
Civil Code.
CONSUMMATION STAGE IN A CONTRACT OF
SALE
Consummation stage in a contract of sale takes
place by the delivery of the thing together with the
payment of the price.
NOTE: The ownership of the thing is acquired by
the buyer in any of the ways specified by law or in
any manner agreed upon by the parties.
PERFECTION CONSUMMATION
From the moment From the time of
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
there is a MEETING OF MUTUAL DELIVERY by
MINDS upon the things the contracting parties
promised by each of the things promised
party in consideration
of the other
Q: When is ownership deemed transferred?
A: The thing shall be understood as delivered
when it is placed in the control and possession of
the vendee.
NOTE: The most that a sale does is to create the
obligation to transfer ownership. It is only the title
while the mode of transferring ownership is
delivery.
Effect of Delivery
GR: Title /ownership is transferred
XPN: When the contrary is stipulated as in the
case of:
1. Pactum reservatii in domini – Agreement that
ownership will remain with seller until full
payment of price (contract to sell);
2. Sale on acceptance/approval;
3. Sale on return; or
4. There is implied reservation of ownership
NOTE: Seller bears expenses of delivery.
Kinds of Delivery
1. ACTUAL or REAL – Thing sold is placed under
the control and possession of buyer/agent;
2. CONSTRUCTIVE or LEGAL – Does not confer
physical possession of the thing, but by
construction of law, is equivalent to acts of
real delivery.
Requisites:
a. The seller must have control over the
thing;
b. The buyer must be put under control;
c. There must be intention to deliver the
thing for purposes of ownership.
i. Tradicion Symbolica – delivery of
certain symbols representing the
thing;
ii. Tradicion Instrumental – delivery of
the instrument of conveyance;
iii. Traditio Longa Manu – Delivery of
thing by mere agreement; when seller
points to the property without need
of actually delivering;
446
 SALES
NOTE: The thing to be transferred
must be within sight at that time
(Rabuya, 2017).
iv. Tradicion Brevi Manu – the buyer,
being already in possession of the
thing sold due to some other cause,
merely remains in possession after
the sale is effected, but now in
concept of owner. e.g. From lessee to
becoming an owner;
v. Constitutum Possessorium– the seller
remains in possession of the property
in a different capacity. e.g. From
owner to lessee
3. QUASI-TRADITION – delivery of rights,
credits or incorporeal property, made by:
a. Placing titles of ownership in the hands of
the buyer; and
b. Allowing buyer to make use of rights.
4. TRADITION BY OPERATION OF LAW –
Execution of a public instrument is equivalent
to delivery. But to be effective, it is necessary
that the seller have such control over the
thing sold that, at the moment of sale, its
material delivery could have been made.
GR: There is presumption of delivery.
XPN:
a. Contrary stipulation;
b. When at the time of execution, subject
matter was not subject to the control
of seller;
c. Seller has no capacity to deliver at
time of execution; and
d. Such capacity should subsist for a
reasonable time after execution of
instrument.
Delivery deemed effective
Delivery should be coupled with intention of
delivering the thing, and acceptance on the part of
the buyer to give legal effect of the act. Without
such intention, there is no such tradition.
Delivery of incorporeal property
1. When sale is made through a public
instrument (NCC, Art. 1498);
2. By placing the titles of ownership in the
possession of the buyer;
3. When buyer uses and enjoys the rights
pertaining to the incorporeal property with
the consent of the seller (NCC, Art. 1501).
447
Sale made through a public instrument
Article 1498 of the Civil Code provides that when
the sale is made through a public instrument, the
execution thereof shall be equivalent to the
delivery of the thing which is the object of the
contract, if from the deed the contrary does not
appear or cannot clearly be inferred. In the
absence of stipulation to the contrary, the
ownership of the property sold passes to the
vendee upon the actual or constructive
delivery thereof (Boy v. CA, et. al, G.R. No. 125088,
April 14, 2004).
Kinds of delivery to carrier
1. FAS (Free along Side) – when goods are
delivered alongside the ship, there is already
delivery to the buyer. The seller pays all
charges and is subject to risk until the goods
are placed alongside the vessel (Villanueva,
2009).
2. FOB (Free on Board) – when goods are
delivered at the point of shipment, delivery to
carrier by placing the goods on vessel is
delivery to buyer. The seller shall bear all
expenses until the goods are delivered,
depending on whether the goods are to be
delivered “f.o.b.” at the point of shipment or at
the point of destination (Villanueva,2009).
3. CIF (Cost, Insurance, Freight)
a. When buyer pays for services of carrier,
delivery to carrier is delivery to buyer,
carrier acts as an agent of the buyer;
b. When buyer pays seller the price – from
the moment the vessel is at the port of
destination, there is already delivery to
buyer.
4. COD (Collect on Delivery) – the carrier acts
for the seller in collecting the purchase price,
which the buyer must pay to obtain
possession of the goods.
Seller’s duties after delivery to the carrier
1. To enter on behalf of the buyer into such
contract reasonable under the circumstances;
and
2. To give notice to the buyer regarding
necessity of insuring the goods.
Effect of delivery through a carrier
GR: If the seller is authorized, delivery to carrier is
considered delivery to the buyer. The premise
being that the carrier acts as an agent of the buyer
(Villanueva, 2009).
 CIVIL LAW
NOTE: Here, the carrier is deemed the bailee of 3. Disturbance or danger is caused by the seller;
the buyer and the seller is deemed the agent of the 4. If the disturbance is a mere act of trespass; or
buyer in employing the carrier (Rabuya, 2017). 5. Upon full payment of the price.

XPN: Necessity of payment of the purchase price to

1. A contrary intention appears; and
2. Implied reservation of ownership [NCC, Art.
1503 (1) (2) (3)].
When the object should be delivered
transfer ownership
GR: Ownership of the thing sold shall be
transferred to the vendee upon the actual or
constructive delivery.

1. Stipulated time; or XPN: Unless the contract contains a stipulation

2. If there is none, at a reasonable hour. that ownership of the thing sold shall not pass to
the purchaser until he has fully paid the price.
Place of delivery (Art. 1521 in relation to Art.
1582 of NCC) Acceptance of delivery by the buyer of the
thing sold
The place of delivery shall be: (AUBRI)
1. Express – he communicates or intimates to
1. That agreed upon; the seller that he has accepted (NCC, Art.
2. Place determined by usage of trade; 1585).
3. Seller’s place of business; 2. Implied (NCC, Art. 1585)
4. Seller’s residence; a. Buyer does not act inconsistently with
5. In case of specific goods, where they can be ownership of seller after delivery; and
found. b. Retains the thing without communicating
to seller that he has rejected.
Effects of a sale of goods on installment
Effect if the buyer refuses to accept despite
1. Goods must be delivered in full except when delivery of the object of the sale
stipulated; and
2. When not examined by the buyer – it is not Delivery is completed. Since delivery of the subject
accepted until examined or at least had matter of the sale is an obligation on the part of
reasonable time to examine the seller, the acceptance thereof by the buyer is
not a condition for the completeness of the
Seller not bound to deliver the thing sold delivery (Villanueva, 2009).

1. If the buyer has not paid the price;
2. No period for payment has been fixed in the
contract;
3. A period for payment has been fixed in the
contract but the buyer has lost the right to
make use of the time.
Suspension of payment by the buyer (NCC,
Art.1590)
GR:
1. If he is disturbed in the possession or
ownership of the thing bought; or
2. If he has well-grounded fear that his
possession or ownership would be disturbed
by a vindicatory action or foreclosure of
mortgage.
XPNs:
1. Seller gives security for the return of the price
in a proper case;
2. A stipulation that notwithstanding any such
contingency, the buyer must make payment;
NOTE: Thus, even with such refusal of acceptance,
delivery (actual/constructive), will produce its
legal effects (e.g. transferring the risk of loss of the
subject matter to the buyer who has become the
owner thereof) (Villanueva, 2004).
Under Art. 1588 of the Civil Code, when the
buyer’s refusal to accept the goods is without just
cause, the title thereto passes to him from the
moment they are placed at his disposal
(Villanueva, 2004).
WHEN DELIVERY DOES NOT TRANSFER TITLE
1. Sale on TRIAL, APPROVAL, OR SATISFACTION
(NCC, Art. 1502);
2. When there is an EXPRESS RESERVATION;
a. If it was stipulated that ownership shall
not pass to the purchaser until he has
fully paid the price (NCC, Art. 1478).
3. When there is an IMPLIED RESERVATION;

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 448
 SALES
a. When goods are shipped, but the bill of GR: Buyer must give
lading states that goods are deliverable to goods a trial
the seller or his agent, or to the order of
the seller or his agent (NCC, Art. 1503). As to trial XPN: Buyer need not do
b. When the bill of lading is retained by the so if it is evident that it
seller or his agent (NCC, Art. 1503). cannot perform the
c. When the seller of the goods draws on the work.
buyer for the price and transmits the bill It runs only when
of exchange and the bill of lading to the When period within all the parts essential
buyer, and the latter does not honor the which buyer must for the operation of the
bill of exchange by returning the bill of signify his acceptance object has been
lading to the sell (NCC, Art. 1503). runs delivered.

4. When sale is NOT VALID; Validity of stipulation Valid, provided the

5. When the seller is NOT THE OWNER of the that a 3rd person must 3rd person is in good
goods subject to the exceptions in Art. 1505 of satisfy approval or faith.
NCC satisfaction
6. GR: When goods are HELD BY A THIRD If the sale is made to a Generally, it
PARTY buyer who is an cannot be considered a
expert on the object sale on approval.
XPN: Third person acknowledges to the buyer purchased
that he holds the goods in behalf of the buyer
(NCC, Art. 1521). DOUBLE SALE (2001, 2004, 2008 BAR)

7. ON SALE or RETURN – The ownership passes
to buyer upon delivery, but he may revest
ownership in the seller by returning or
tendering the goods within the time fixed in
the contract or within reasonable time (NCC,
Art. 1502).
Sale on trial, approval or satisfaction
Requisites:
1. When buyer signifies approval or acceptance
to the seller or does any act adopting the
transaction;
2. If buyer did not signify approval or
acceptance, but retains the goods without
giving notice of rejection after the expiration
of the period fixed or of reasonable time
(NCC, Art. 1502).
There is double sale when the same object of the
sale is sold to different vendees (NCC, Art. 1544).
Requisites of Double Sales (NCC, Art. 1544)
1. 2 or more sales transactions must constitute
valid sales transactions;
2. 2 or more sales transactions must pertain to
exactly the same subject matter;
3. 2 or more buyers at odds over the rightful
ownership of the subject matter must each
represent conflicting interests; and
4. 2 or more buyers at odds over the rightful
ownership of the subject matter must have
bought from the very same seller (Rabuya,
2017 citing Cheng v Genato, 1998).
Rules on preference (NCC, Art. 1544)

Rules in case of sale on trial, approval or 1. MOVABLE – Owner who is first to possess in
satisfaction good faith;

TITLE WHO BEARS THE LOSS 2. IMMOVABLE –

GR: Borne by seller a. First to register in good faith
b. No registration – first to possess in good
XPN: faith
Risk of Loss 1. Buyer is at fault c. No registration & no possession in good
2. Buyer agreed to faith – person who presents oldest title in
bear the loss good faith.

NOTE: Article 1544 of the Civil Code has no

application to lands not registered with the
Torrens system. If the sale is not registered, it is
binding only as between the seller and the buyer;

449
 CIVIL LAW
it does not affect innocent third persons (De Leon,
2011). Article 1544 of the Civil Code does not
apply to contract to sell.
Purchaser in good faith
1. Buys the property without notice that some
other person has a right to, or interest in such
property; and
2. Pays a full and fair price for the same at the
time of such purchase, or before he has notice
of the claim or interest of some other person
in the property (Agricultural and Home
Extension Development Group v. CA, G.R. No.
92319, September 3, 1992).
NOTE: Partial payment is not enough. Full
payment is a requirement for purposes of
acquiring right over the rules of double sale.
NOTE: This principle applies in a situation where
not all the requisites are present which would
warrant the application of Art. 1544 of NCC. The
only requisite of this rule is priority in time. In
other words, the only one who can invoke this is
the first vendee. Undisputedly, he is a purchaser in
good faith because at the time he brought the real
property, there was still no sale to a second
vendee (Rabuya, 2017).
Rule on double sale regarding immovable
GR: Apply Art.1544 of NCC or the rule on
preference
XPN: Sale of registered lands – apply Torrens
System
Principle of prius tempore, potior jure - first in
time, stronger in right
Knowledge by the first buyer of the second sale
cannot defeat the first buyer’s rights except when
the second buyer first registers in good faith the
second sale. Conversely, knowledge gained by the
second buyer of the first sale defeats his rights
even if he is first to register, since such knowledge
taints his registration with bad faith to merit the
protection of Art. 1544 (2nd par.) of NCC, the
second realty buyer must act in good faith in
registering his deed of sale (Diaz, 2006).
NOTE: Where one sale is absolute and the other is
a pacto de retro transaction where the period to
redeem has not yet expired, Art. 1544 of NCC will
not apply (Pineda, 2010).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Q: Does prior registration by the second buyer
of a property subject of a double sale confer
ownership or preferred right in his favor over
that of the first buyer?
A: Principle of caveat emptor – buyer beware
It literally means, ‘Let the buyer beware’. The rule
requires the purchaser to be aware of the
supposed title of the vendor and one who buys
without checking the vendor’s title takes all the
risks and losses consequent to such failure
(Agcaoili, 2015).
Application of caveat emptor in particular sale
transactions
1. Sales of animals (NCC, Art. 1574);
2. Double sales (NCC, Art. 1544);
3. In sheriff’s sales; and
4. Tax sales.
NOTE: In the above sales, there is no warranty of
title or quality on the part of the seller. The
purchaser who buys without checking the title of
the vendor is assuming all risks of eviction.
In sheriff’s sales, the sheriff does not guarantee
the title to real property and it is not incumbent
upon him to place the buyer in possession of such
property (Pineda, 2010).
Caveat emptor NOT applicable in sales of
registered land
The purchaser of a registered land under the
Torrens system is merely charged with notice of
the burdens and claims on the property which are
inscribed on the face of certificate of title (Pineda,
2010).
Application of caveat emptor in judicial sales
Caveat emptor is applicable in judicial sales. The
purchaser in a judicial sale acquires no higher or
better title or right than that of the judgment
debtor. If it happens that the judgment debtor has
no right, interest, or lien on and to the property
sold, the purchaser acquires none (Pineda, 2010).
Effect of subsequent foreclosure to a prior
purchaser in good faith (2008 BAR)
The purchaser in good faith has better title to the
property sold even if subsequently foreclosed by a
mortgagor. Under the Torrens System, a buyer of
registered lands is not required by law to inquire
further than what the Torrens certificate indicates
450
 SALES
on its face. If a person proceeds to buy it relying
on the title, that person is considered a buyer in
good faith.
EFFECTS OF THE CONTRACT WHEN THE THING
SOLD HAS BEEN LOST
RISK OF LOSS
A thing is considered as lost
GR: It is understood that the thing is lost when it:
1. Perishes;
2. Goes out of commerce; or
3. Disappears in such a way that its existence is
unknown or cannot be recovered [NCC, Art.
1189(2)].
XPN: In an obligation to deliver a generic thing,
the loss or destruction of anything of the same
kind does not extinguish the obligation (NCC, Art.
1263).
Effect when the loss occurred before
perfection
GR: The thing perishes with the owner – Res perit
domino (NCC, Art. 1504). (1999 BAR)
XPNs:
1. Art. 1504(1) of the NCC;
2. Art. 1504(2) of the NCC; and
3. Art. 1523(3) of the NCC.
NOTE: The seller still owns the thing because
there is no delivery or transfer of ownership yet.
Hence, the seller bears the risk of loss (Villanueva,
2004).
Effect when the loss occurred at the time of
perfection of the contract of sale
GR: Contract is considered void or inexistent
because the object did not exist at the time of the
transaction. (Pineda, 2010)
XPN: In case of partial loss, the buyer may choose
between withdrawing from the contract and
demanding the remaining part. If he chooses the
latter, he shall pay the remaining part’s
corresponding price in proportion to the total sum
agreed upon (NCC, Art. 1493).
Options of the buyer with regard to the sale in
the total or partial loss or deterioration of a
451
mass of specific goods without the knowledge
of the seller
1. He may treat the sale as avoided or cancelled;
or
2. He may continue with the sale with respect to
the available or remaining goods (NCC, Art.
1494).
Effect if the buyer chooses to continue with the
sale of the remaining goods
The remaining goods shall pass in ownership to
the buyer but subject to proportionate reduction
of the price. But this is applicable only if the goods
are divisible or capable of being divided (Pineda,
2010). If indivisible, the only option available is
the avoidance of the sale.
Effect when the loss occurred after perfection
but before delivery
GR: Who bears the risk of loss is governed by the
stipulations in the contract.
In the absence of stipulation: there are two
conflicting views:
First view: Res perit creditori or buyer bears the
risk of loss (Paras, Vitug, Padilla and De Leon).
Article 1504 of the Civil Code, which embodies res
perit domino, only covers goods. The obligation to
pay on the part of the buyer is not extinguished
(Villanueva, 2004).
NOTE: Pursuant to Article 1537 of the Civil Code,
the vendee must also bear the resulting
disadvantages before the delivery but after the
contract has been perfected. This theory is an
exception to the rule of resperit domino. On the
other hand, pursuant to Article 1262 of the Civil
Code, if the thing is lost or destroyed without the
fault of the seller, the obligation to deliver is
extinguished but the obligation to pay subsist
(Pineda, 2010).
Second view: Res perit domino or seller bears the
risk of loss (Tolentino, Jurado, Baviera, and
Villanueva).
In reciprocal obligations, the extinguishment of
the obligation due to loss of the thing affects both
debtor and creditor; the entire juridical relation is
extinguished. Under this view, the rule on loss
under Article 1189 of the Civil Code would be
different from the rule on deterioration – the loss
would be for the account of the seller, while
 CIVIL LAW
deterioration would be for the account of the
buyer (Tolentino, 2002).
This view would make Articles 1480 and 1538 of
the Civil Code consistent with the provisions of
Article 1504 of the Civil Code (Villanueva, 2009).
Ownership is transferred only after delivery,
further, the contract is reciprocal. If the vendee
cannot have the thing, it is illogical and unjust to
make him pay the price (Pineda, 2010).
Effect when loss occurred after delivery
GR: Res perit domino applies – the buyer is now
the owner, hence, the buyer bears the risk of loss
(NCC, Art. 1504).
XPNs:
1. Where the delivery has been made either to
the buyer or to the bailee for the buyer, but
ownership in the goods has been retained by
the seller merely to secure performance by
the buyer of his obligations under the
contract; and
2. Where actual delivery has been delayed
through the fault of either the buyer or seller,
the goods are at the risk of the party at fault
[NCC, Art. 1504 (1) (2)].
Person who bears the risk of loss or
deterioration
SELLER is the owner so seller
BEFORE
bears risk of loss.
PERFECTION
Contract shall be without any
AT effect – the SELLER bears the loss
PERFECTION since the buyer is relieved of his
obligation under the contract.
AFTER 2 CONFLICTING VIEWS
PERFECTION Deterioration & fruits – Buyer
BUT BEFORE bears loss (Tolentino, 2002).
DELIVERY
Buyer becomes the owner so
BUYER bears risk of loss.
AFTER
DELIVERY Delivery extinguish ownership
vis-a-vis the seller & creates a new
one in favor of the buyer.
BREACH OF CONTRACT OF SALE
REMEDIES OF THE PARTIES
REMEDIES OF THE SELLER
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
INSTALLMENT SALES LAW or “RECTO LAW”
(1999, 2000 BAR)
Installment Sales Law
Commonly known as the “RECTO LAW”. It is
embodied in Art. 1484 of the NCC, which provides
for the remedies of a seller in the contracts of sale
of personal property by installments.
NOTE: Art. 1484 of the NCC incorporates the
provisions of Act No. 4122 passed by the
Philippine Legislature on Dec. 9, 1939, known as
the "Installment Sales Law" or the "Recto Law,"
which then amended Art. 1454 of the Civil Code of
1889.
Application of Recto Law
This law covers contracts of sale of personal
property by installment (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).
NOTE: Recto Law applies only to sale payable in
installments and not to a sale where there is an
initial payment and the balance is payable in the
future, because such is a straight sale, not a sale by
installments.
Requisites of Recto Law
1. Valid contract of sale;
2. Subject matter is personal property;
3. Payable in installments; and
4. In the case of the second and third remedies,
that there has been a failure to pay two or
more installments (NCC, Art. 1484).
Alternative remedies in case of sale of
personal property in installments
1. Specific Performance: Exact fulfillment
should the buyer fail to pay
GR: If availed of, the unpaid seller cannot
anymore choose other remedies.
XPN: If after choosing specific performance, it
has become impossible to perform it,
rescission may be pursued.
NOTE: If vendor elected fulfillment or specific
performance
452
 SALES
a. The filing of collection suit barred the
foreclosure of the mortgage. A mortgagee who
files a suit for collection abandons the remedy
of foreclosure of the chattel mortgage
constituted over the personal properties or
security for the debt or value of the
promissory note which he seeks to recover in
the said suit.
b. Filing of B.P. 22 does not bar foreclosure of
mortgage (Spouses Torres v. Medina).
However, in Chieng v. Spouses Santos, it was
held that the filing of the B.P. 22 case is
equivalent to the filing of a collection suit for
the recovery of the mortgage-loan. The Court
explained that the civil action for the recovery
of the amount of the dishonored checks is
impliedly instituted in the criminal action.
Hence, the impliedly instituted civil action in
the criminal case for violation of B.P. 22 is, in
effect, a collection suit or suit for recovery of
mortgage debt.
c. Action for recovery of possession with
replevin as provisional remedy preparatory to
extrajudicial foreclosure is not an action for
collection much less for foreclosure.
But if the action for replevin culminated in the
foreclosure of the chattel mortgage and the
sale of the personal property at the public
auction, then Article 1484 now applies
(Rabuya, 2017).
2. Rescission: Cancel the sale if buyer fails to pay
2 or more installments. Deemed chosen when:
a. Notice of rescission is sent;
b. Takes possession of subject matter of
sale;
c. Files action for rescission.
NOTE: The stipulation that the installments or
rents already paid shall not be returned to the
vendee shall be valid insofar as the same may
not be unconscionable under the
circumstances.
3. Foreclosure: Foreclose on chattel mortgage if
buyer fails to pay 2 or more installments. He
shall have no further action against the
purchaser to recover any unpaid balance of
the price. Any agreement to the contrary shall
be void.
NOTE: Of the three remedies, only this third
remedy bars the recovery of unpaid balance.
453
Moreover, payment of damages, attorney’s
fees, and etc are also barred.
GR: Actual foreclosure is necessary to bar
recovery of balance.
XPN: Mortgagor refuses to deliver property to
effect foreclosure; expenses incurred in
attorney’s fees, etc. in obtaining the property
may be recovered by the vendor.
The remedies are alternative, not cumulative.
This means that the availment of one is a bar to
the other remedies.
NOTE: In ordinary alternative obligations, a mere
choice categorically and unequivocally made and
then communicated by the person entitled to
exercise his option concludes the parties. The
creditor may not thereafter exercise any other
option unless the chosen alternative proves to be
ineffectual or unavailing due to no fault on his part
(Rabuya, 2017).
Rationale of Recto Law
To remedy the abuses committed in connection
with the foreclosure of chattel mortgages and to
prevent mortgagees from seizing the mortgaged
property, buying it at a foreclosure sale for a low
price and then bringing suit against the mortgagor
for a deficiency judgment. (Villanueva, 2009)
Effect of filing an action for specific
performance in case of default in the payment
of an installment sale secured by a chattel
mortgage on the subject of the sale
The seller can collect from the buyer for the sum
of money the buyer failed to pay. In case the sum
collected is insufficient, the court can still order
for the levy of the property subject of the sale
transaction to cover the balance. Moreover, if the
action instituted is for specific performance and
the mortgaged property is subsequently attached
and sold, the sale thereof does not amount to a
foreclosure of the mortgage; the seller-creditor is
entitled to a deficiency judgment (Industrial
Finance Corporation v. Ramirez, G.R. No. L-43821,
May 26, 1977).
Q: A mortgaged a diamond ring to M as a
security for a loan which was to be paid 2
years thereafter. Since A failed to pay M, she
then foreclosed the mortgaged property.
However, it turned out that the proceeds of the
sale were insufficient, thus, M filed an action
 CIVIL LAW
for specific performance. A contends that this
is a violation of the Recto law since the
foreclosure of the chattel bars subsequent
recovery. Is this correct?
A: NO. A is not correct in invoking the Recto law
since it is only applicable in case of sale of
personal property through installment. In the
given case, the amount being claimed by A was to
be paid 2 years thereafter as a lump sum, not
through installments. Moreover, the transaction is
a loan not a sale.
Recto Law does NOT cover a contract to sell of
movables
There will be nothing to rescind if the suspensive
condition (payment of full purchase price) upon
which the contract is based fails to materialize
(Villanueva, 2009).
Q: Palces purchased a Hyundai Starex through
a loan granted by Equitable Savings Bank
(ESB). In connection therewith, Palces
executed a Promissory' Note with Chattel
Mortgage in favor of the ESB. Eventually,
Palces failed to pay the monthly installments
prompting ESB to demand for the payment of
the entire balance which remained unheeded.
Thus, ESB filed a case for Recovery of
Possession with Replevin with Alternative
Prayer for Sum of Money. In order to update
her installment payments, Palces paid ESB
P70,000 on March 8, 2007 and P33,000 on
March 20, 2007 (March 2007 payments).
Despite the aforesaid payments, ESB filed the
instant complaint, resulting in the sheriff
taking possession of the subject vehicle. The
RTC ruled in favor of ESB. The CA affirmed the
RTC ruling; however, it ordered ESB to return
the amounts paid on March 2007 by Palces. It
ruled that, under Article 1484 of the Civil Code,
ESB had already waived its right to recover any
unpaid installments when it sought a writ of
replevin in order to regain possession of the
subject vehicle. As such, petitioner is no longer
entitled to receive respondent's late partial
payments. Is the CA’s ruling correct?
A: No. In this case, there was no vendor-vendee
relationship between respondent and petitioner. A
judicious perusal of the records would reveal that
respondent never bought the subject vehicle from
petitioner but from a third party, and merely
sought financing from petitioner for its full
purchase price. Indubitably, a loan contract with
the accessory chattel mortgage contract - and not
a contract of sale of personal property in
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
installments - was entered into by the parties with
respondent standing as the debtor-mortgagor and
petitioner as the creditor-mortgagee.
Thus, ESB is justified in filing his Complaint before
the RTC seeking for either the recovery of
possession of the subject vehicle so that it can
exercise its rights as a mortgagee, i.e., to conduct
foreclosure proceedings over said vehicle; or in
the event that the subject vehicle cannot be
recovered, to compel respondent to pay the
outstanding balance of her loan. Since it is
undisputed that ESB had regained possession of
the subject vehicle, it is only appropriate that
foreclosure proceedings be commenced in
accordance with the provisions of "The Chattel
Mortgage Law," as intended. Otherwise, Palces
will be placed in an unjust position where she is
deprived of possession of the subject vehicle while
her outstanding debt remains unpaid, either in full
or in part, all to the undue advantage of petitioner
- a situation which law and equity will never
permit (Equitable Savings Bank v. Palces, G.R. No.
214752, March 9, 2016).
REALTY INSTALLMENT BUYER ACT or
“MACEDA LAW” (2000, 2002 BAR)
Realty Installment Buyer Act
Commonly known as the “MACEDA LAW.” It is
embodied in R.A. 6552 which provides for certain
protection to particular buyers of real estate
payable on installments. The law declares as
"public policy to protect buyers of real estate on
installment payments against onerous and
oppressive conditions.
NOTE: The purpose of the law is to protect buyers
in installment against oppressive conditions.
Transactions/sale covered by the Maceda Law
The law involves the sale of immovables on
installment (Maceda Law, RA 6552).
1. Coverage: Residential Real Estate (Villanueva,
2009).
2. Excluded:
a. Industrial lots;
b. Commercial buildings (and commercial lots
by implication);
c. Sale to tenants under agrarian laws; and
d. Sale of lands payable in straight terms (Sec. 3,
RA 6552).
NOTE: The list is not exclusive (Villanueva, 2009).
454
 SALES
Q: What are the so-called “Maceda” and “Recto”
laws in connection with sales on installments?
Give the most important features on each law.
(1999 BAR)
A: The Maceda Law is applicable to sales of
immovable property on installments. The most
important features are:
a. After having paid installments for at least
two years, the buyer is entitled to a
mandatory grace period of one month for
every year of installment payments made,
to pay the unpaid installments without
interest.
If the contract is cancelled, the seller shall
refund to the buyer the cash surrender
value equivalent to fifty percent (50%) of
the total payments made, and after five
years of installments, an additional five
percent (5%) every year but not to exceed
ninety percent (90%) of the total
payments made.
NOTE: This requires a notarial act of
rescission and the refund to the buyer of
the full payment of the cash surrender
value of the payments on the property.
Failure to comply with the mandatory
twin requirement shall result into the
contract remaining to be valid and
subsisting (Rabuya, 2017).
b. In case the installments paid were less
than 2 years, the seller shall give the
buyer a grace period of not less than 60
days. If the buyer fails to pay the
installments due at the expiration of the
grace period, the seller may cancel the
contract after 30 days from receipt by
the buyer of the notice of cancellation or
demand for rescission by notarial act
(Rillo v. CA, G.R. No. 125347, June 19,
1997).
NOTE: According to the Supreme Court,
the vendor could go to the court and
demand judicial rescission in lieu of a
notarial act of rescission. An action for
annulment of contract which is a kindred
concept of rescission by notarial act will
also suffice (Rabuya, 2017).
Other rights granted to a buyer under the
Maceda Law
1. Sell or assign rights to another;
455
2. Reinstate contract by updating within 30 days
before and cancellation;
3. Deed of Sale to be done by notarial act;
4. Pay full installment in advance the balance of
price anytime w/o interest; and
5. Have full payment annotated in certificate of
title.
NOTE: Applies to contracts even before the law
was enacted. Stipulation to the contrary is void.
Q: Spouses Dakila entered into a contract to
sell with Honorio Cruz over a parcel of
industrial land in Valenzuela, Bulacan for a
price of P3,500,000.00. The spouses would
give a downpayment of P500,000.00 upon the
signing of the contract, while the balance
would be paid for the next 3 consecutive
months in the amount of P1,000,000.00 per
month. The spouses paid the first 2
installments but not the last installment. After
one year, the spouses offered to pay the unpaid
balance which Honorio refused to accept.
The spouses filed a complaint for specific
performance against Honorio invoking the
application of the Maceda Law. If you are the
judge, how will you decide the case? (2014
BAR)
A: I will rule in favor of Honorio. The invocation
of the Maceda Law is misplaced. The law applies
only to sale or financing of realty on installment
payments including residential units or residential
condominium apartments and does not apply to
sales of industrial units or industrial lands like in
the case presented.
The sale to the Spouses Dakila is not a sale on
installment but more of a straight sale where a
down payment is to be made and the balance to be
paid in a relatively short period of three months.
Q: Priscilla purchased a condominium unit in
Makati City from the Citiland Corporation for a
price of P10 Million, payable P3 Million down
and the balance with interest thereon at 14%
per annum payable in 60 equal monthly
installments of P198,333.33.
They executed a Deed of Conditional Sale in
which it is stipulated that should the vendee
fail to pay three successive installments, the
sale shall be deemed automatically
rescinded without the necessity of judicial
action and all payments made by the vendee
shall be forfeited in favor of the vendor by
way of rental for the use and occupancy of the
unit and as liquidated damages.
 CIVIL LAW
For 46 months, Priscilla paid the monthly
installments religiously, but on the 47th and
48th months, she failed to pay. On the 49th
month, she tried to pay the installments due
but the vendor refused to receive the
payments tendered by her.
The following month, the vendor sent her a
notice that it was rescinding the Deed off
Conditional Sale pursuant to the stipulation
for automatic rescission, and demanded that
she vacate the premises. She replied that the
contract cannot be rescinded without judicial
demand or notarial act pursuant to Article
1592 of the Civil Code. (2000, 2014 BAR)
a) Is Article 1592 applicable?
b) Can the vendor rescind the contract?
A:
a) NO. Article 1592 of the Civil Code does not
apply to a conditional sale. Article1592 of
NCC applies only to a contract of sale and
not to a Deed of Conditional Sale where the
seller has reserved title to the property until
full payment of the purchase price. The law
applicable is the Maceda Law (Valarao v. CA,
G.R. No. 130347, March 3, 1999).
b) NO, the vendor cannot rescind the contract
under the circumstances. Under the Maceda
Law, which is the law applicable, the seller
on installment may not rescind the contract
till after the lapse of the mandatory grace
period of 30 days for every one year of
installment payments, and only after 30 days
from notice of cancellation or demand for
rescission by a notarial act. In this case, the
refusal of the seller to accept payment from
the buyer on the 49th month was not justified
because the buyer was entitled to 60 days
grace period and the payment was
tendered within that period. Moreover, the
notice of rescission served by the seller on
the buyer was not effective because the notice
was not by a notarial act. Besides, the seller
may still pay within 30 days from such
notarial notice before rescission may be
effected. All these requirements for a valid
rescission were not complied with by the
seller. Hence, the rescission is invalid.
Q: Spouses Jovellanos entered into a Contract
to Sell with Palmera Homes for the purchase
of a residential house and lot payable for a
period of 10 years. Later, Palmera Homes
assigned all its rights, title, and interest in
favor of Optimum Bank. After some time,
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Optimum issued a Notice of Delinquency and
Cancellation of the Contract to Sell on April
10, 2006 for the spouses’ failure to pay their
monthly payments. Thereafter, a final
Demand Letter dated May 25, 2006 was
issued by Optimum requesting the Sps.
Jovellanos to vacate and deliver the
properties which, however, remained
unheeded. This prompted Optimum to file an
unlawful detainer case against the spouses.
Was the cancellation of the contract to sell
valid?
A: Yes. The Maceda Law, R.A. No. 6552,
recognizes in conditional sales of all kinds of
real estate (industrial, commercial, residential)
the right of the seller to cancel the contract upon
non-payment of an installment by the buyer,
which is simply an event that prevents the
obligation of the vendor to convey title from
acquiring binding force. It also provides the
right of the buyer on installments in case he
defaults in the payment of succeeding
installments. Three (3) requisites before the
seller may actually cancel the contract must
exist: first, the seller shall give the buyer a 60-
day grace period to be reckoned from the date
the installment became due; second, the seller
must give the buyer a notice of
cancellation/demand for rescission by notarial
act if the buyer fails to pay the installments due
at the expiration of the said grace period; and
third, the seller may actually cancel the contract
only after thirty (30) days from the buyer’s
receipt of the said notice of
cancellation/demand for rescission by notarial
act.
It was only after the expiration of the thirty-day
(30) period did Optimum treat the contract to
sell as effectively cancelled – making as it did a
final demand upon Sps. Jovellanos to vacate the
subject property only on May 25, 2006. Thus,
based on the foregoing, there was a valid and
effective cancellation of the Contract to Sell and
since Sps. Jovellanos had already lost their right
to retain possession of the subject property as a
consequence of such cancellation, their refusal
to vacate and turn over possession to Optimum
makes out a valid case for unlawful detainer
(Optimum Development Bank v. Jovellanos, G.R.
No. 189145, December 4, 2013).
REMEDIES OF AN UNPAID SELLER
Unpaid Seller
One is considered as unpaid seller when:
456
 SALES
1. The whole of the price has not been paid
or tendered; or
2. A bill of exchange or other negotiable
instrument has been received as
conditional payment, and the condition
on which it was received has been broken
by reason of the dishonor of the
instrument, the insolvency of the buyer,
or otherwise (NCC, Art. 1525).
NOTE: The mere delivery of a negotiable
instrument does not ipso facto extinguish the
obligation of the buyer to pay because the
instrument which has been delivered may be
dishonored. In which case, the seller is still an
unpaid seller (US v. Bedoya, 14 Phil. 398).
Moreover, bills of exchange or mercantile
documents shall produce the effect of
payment only when they have been cashed or
when through the fault of the creditor, they
have been impaired.
It includes an agent of the seller to whom the bill
of lading has been indorsed, or consignor or agent
who has himself paid, or is directly responsible for
the price, or any other person who is in the
position of a seller (Pineda, 2010).
Q: When is a seller considered unpaid despite
the title of the goods passing to the buyer?
A: Whenever the seller was only paid partially, he
remains an unpaid seller (Pineda, 2010).
Remedies of an Unpaid Seller
I. Ordinary
1. Action for Price (NCC, Art. 1595)
Exercised when:
a. Ownership has passed to buyer;
b. Price is payable on a day certain; or
c. Goods cannot readily be resold for
reasonable price and Art. 1596 of
NCC is inapplicable.
2. Action for Damages – In case of
wrongful neglect or refusal by the
buyer to accept or pay for the thing
sold.
NOTE: The measure of damages is the
estimated loss directly and naturally
resulting in the ordinary course of
events from the buyer’s breach of
contract.
457
Where there is an available market for
the goods in question, the measure of
damages is, in the absence of special
circumstances showing proximate
damage of a different amount, the
difference between the contract price
and the market or current price at the
time or times when the goods ought to
have been accepted, or, if no time was
fixed for acceptance, then at the time of
the refusal to accept.
II. Special (NCC, Art. 1596)
1. Possessory Lien (NCC, Art. 1527) –
seller not bound to deliver the object of
the contract of sale if buyer has not
paid him the price. This remedy
presupposes that the sale is on credit. It
is exercisable only in following
circumstances:
a. goods sold without stipulation as to
credit;
b. goods sold on credit but term of
credit has expired; or
c. buyer becomes insolvent.
NOTE: When part of goods delivered, may
still exercise right on goods undelivered.
Moreover, when title to the property has
passed to the buyer, but possession
remains in the hands of the seller, the
latter is necessarily holding the goods for
the buyer. For his protection, the seller is
entitled to possess the same until he has
been fully paid, or a tender of the price
has been made.
Loss of Lien:
a. When he delivers the goods to the
carrier or other bailee for purpose of
transmission to the buyer which
reserving the ownership in the goods or
the right to the possession thereof;
b. When the buyer or his agent lawfully
obtains possession of the goods; or
c. By waiver thereof (Rabuya, 2017).
2. Stoppage in Transitu (NCC, Art. 1530)
Requisites: (I-SCENT-U)
a. Insolvent buyer;
b. The sale of goods must be on Credit;
c. Seller must Surrender the negotiable
document of title, if any;
 CIVIL LAW
d. Seller must bear the Expenses of
delivery of the goods after the
exercise of the right;
e. Seller must either actually take
possession of the goods sold or give
Notice of his claim to the carrier or
other person in possession;
f. Goods must be in Transit; and
g. Unpaid seller.
NOTE: Buyer’s insolvency need not be
judicially declared. A person is insolvent
who either has ceased to pay his debts
in the ordinary course of business or
cannot pay his debts as they become
due, whether insolvency proceedings
have been commenced or not. [NCC, Art.
1636(2)].
3. Special Right to Resell the Goods
(NCC, Art. 1533)
Exercised when:
a. Goods are perishable,
b. Stipulated the right of resale in case
of default, or
c. Buyer in default for unreasonable
time.
4. Special Right to Rescind (NCC, Art.
1597)
Requisites:
a. Goods have not been delivered to
the buyer;
b. Buyer has repudiated the contract
of sale; or
c. Has manifested his inability to
perform his obligations
thereunder; or
d. Has committed a breach thereof,
which must be substantial.
NOTE: Here, the seller may thereafter
totally rescind the contract of sale by
giving notice of his election to do so to the
buyer.
Q: Nante, a registered owner of a parcel of land
in Quezon City, sold the property to Monica
under a deed of sale which reads as follows:
"That for and in consideration of the sum of
P500,000.00, value to be paid and delivered to
me, and receipt of which shall be
acknowledged by me to the full satisfaction of
Monica, referred to as Vendee, I hereby sell,
transfer, cede, convey, and assign, as by these
presents, I do have sold, transferred, ceded,
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
conveyed and assigned a parcel of land
covered by TCT No. 2468 in favor of the
Vendee."
After delivery of the initial payment of
P100,000.00, Monica immediately took
possession of the property. Five (5) months
after, Monica failed to pay the remaining
balance of the purchase price. Nante filed an
action for the recovery of possession of the
property. Nante alleged that the agreement
was one to sell, which was not consummated
as the full contract price was not paid. Is the
contention of Nante tenable? (2014 BAR)
A: NO. The contention of Nante is not tenable. The
deed itself states that for consideration received,
he sells, transfers, and conveys the land to Monica
and there was delivery of the property to the
latter. The contract is clearly one of sale as there
was no reservation of ownership on the part of the
seller Nante. The non-payment of the price in a
contract of sale would only entitle the seller to
rescind the contract but it does not thereby
prevent the transfer of ownership particularly so
as in this case, where there was already delivery
to the buyer.
Instances when possessory lien is lost
1. Seller delivers without reserving ownership
in goods or right to possess them;
2. Buyer or agent lawfully obtains possession of
goods; or
3. Waiver (NCC, Art. 1529).
NOTE: Seller loses lien when he parts with good
(but still, stoppage in transitu can be exercised).
Right of stoppage in transitu
The seller may resume possession of the goods at
any time while they are in transit, and he will then
become entitled to the same rights in regard to the
goods as he would have had if he had never parted
with the possession (NCC, Art. 1530).
Thereafter, the seller may exercise the following
rights:
a. Right of lien; NCC, Art. 1527
b. Right to resell; NCC, Art. 1533; and
c. Right to rescind the transfer of title (NCC,
Art. 1534).
Goods considered to be in transit
458
 SALES
1. After delivery to a carrier or other bailee and
before the buyer or his agent takes delivery of
them; and
2. If the goods are rejected by the buyer, and the
carrier or other bailee continues in possession
of them, even if the seller has refused to
receive them back [NCC, Art. 1531(1)].
Goods deemed to be no longer in transit
1. After delivery to the buyer or his agent;
2. If the buyer/agent obtains possession of the
goods at a point before the destination
originally fixed;
3. If the carrier or the bailee acknowledges that
he holds the goods in behalf of the buyer/ his
agent;
4. If the carrier or bailee wrongfully refuses to
deliver the goods to the buyer or his agent
(Villanueva, 2009).
Enforcement of right to stoppage in transitu
The seller may:
1. Take actual possession of the goods; and
2. Give notice of his claim to the carrier or other
bailee who is in possession of the goods (NCC,
Art. 1532).
Effect of the exercise of this right
1. The goods are no longer in transit;
2. Contract of carriage end. The carrier now
becomes a mere bailee, and will be liable as
such; and
3. Seller would have the same rights to the
goods as if he had never had never parted
possession with it (NCC, Arts. 1530 & 1531).
Seller’s knowledge of the buyer’s insolvency
The seller cannot exercise the right to stoppage in
transit because he is under estoppel. He assumed
the risk.
Rationale behind the right of stoppage in
transitu
To prevent injustice of allowing the buyer to
acquire ownership and possession of the goods
when owing to his insolvency, he cannot pay the
price (Pineda, 2010).
Effect of exercising the special right of resale
The unpaid seller shall not be liable to the original
buyer upon the sale or for any profit made by such
resale, but may recover from the buyer damages
459
for any loss occasioned by the breach of the sale
(NCC, Art. 1533).
NOTE: The seller cannot, however, directly or
indirectly buy the goods.
Cases in which it is allowed:
1. Where the goods are of perishable in nature;
2. Where the seller has expressly reserves the
right of resale in case the buyer should make
default; or
3. Where the buyer has been in default in payment
of the price for unreasonable time [NCC, Art.
1533(1)].
Notice to the defaulting buyer
GR: Notice to the defaulting buyer NOT required
in the resale of goods
XPN: Where the right to resell is not based on the
perishable nature of the goods or upon an express
provision of the sale.
NOTE: Notice of time and place of resale is not
essential to the validity of such resale (NCC, Art.
1533).
Effect of exercising the special right to rescind
The unpaid seller shall not be liable to the buyer
upon the sale, but may recover from the buyer
damages for any loss occasioned by the breach of
the sale (NCC, Art. 1534).
Cases in which it is allowed:
1. Where the seller has expressly reserved the
right to rescind in case the buyer should make
default; or
2. Where the buyer has been in default in the
payment of the price for unreasonable length of
time [NCC, Art. 1534(1)].
Buyer deemed as insolvent
One is deemed insolvent when he either ceased to
pay his debts in the ordinary course of business or
cannot pay his debts as they become due, whether
insolvency proceedings have been commenced or
not (Villanueva, 2009).
REMEDIES OF THE BUYER
I. Immovables in general
 CIVIL LAW
1. Disturbed in possession or with
reasonable grounds to fear disturbance
– Suspend payment.
2. In case of subdivision or condominium
projects – If real estate developer fails
to comply with obligation according to
approved plan:
a. Rescind; or
b. Suspend payment until seller
complies.
II. Movables
1. Failure of seller to deliver – Action for
specific performance without giving the
seller the option of retaining the goods
on payments of damages.
2. Breach of seller’s warranty – The buyer
may, at his election, avail of the
following remedies:
a. Accept goods & set up breach of
warranty by way of recoupment in
diminution or extinction of the
price;
b. Accept goods & maintain action
against seller for damages;
c. Refuse to accept goods & maintain
action against seller for damages;
d. Rescind contract of sale & refuse to
receive goods/return them when
already received and recover the
price or any part which has been
paid.
3. Disturbed in possession or with
reasonable grounds to fear disturbance
– Suspend payment.
NOTE: When the buyer has claimed and been
granted a remedy in any of these ways, no
other remedy can thereafter be granted,
without prejudice to the buyer’s right to
rescind, even if previously he has chosen
specific performance when fulfillment has
become impossible [Villanueva, 2011; in
relation to NCC, Art. 1191(2)].
PERFORMANCE OF CONTRACT
Rule when the seller delivers goods lesser than
what he has contracted to sell
1. The buyer may reject the goods delivered and
he shall have no liability;
2. The buyer may accept the goods delivered,
but he will pay the contract rate, if he has
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
knowledge that the seller is not going to
deliver all the goods contracted for; and
3. If, however, the buyer has used or disposed of
the goods delivered before he knows that the
seller is not going to perform his contract in
full, the buyer shall not be liable for more than
the fair value to him of the goods so received
(NCC, Art. 1522).
Rule when the seller delivers goods greater
than what he has contracted to sell
1. The buyer may accept only the goods which
were included in the contract and reject the
excess; or
2. The buyer may accept the entire goods
delivered and he shall pay for them at the
contract rate (NCC, Art. 1522).
Rule when the seller delivers goods which are
mixed with other goods of different
description not included in the contract
1. The buyer may accept the goods which are in
accordance with the contract and reject the
rest (NCC, Art. 1522); or
2. The buyer may also accept them all if he so
desires, but he must pay for them all.
Rule if the subject matter is indivisible
The buyer may reject the whole of the goods (NCC,
Art. 1522).
Duty of the seller with regard to accessions
and accessories
The seller has the duty to preserve the thing and
its accessions and accessories from the time of the
perfection of the contract of sale (NCC, Art. 1537).
But all the fruits shall pertain to the vendee from
the day on which the contract was perfected.
NOTE: In case of loss or deterioration, the seller is
liable for damages or the buyer may seek
rescission with damages. However, if loss or
deterioration is due to a fortuitous event, the
seller is not liable (NCC, Art. 1538).
Rule when the sale of immovable is by unit of
measure or number
GR: The seller must deliver all that may have been
stated in the contract.
XPN: If impossible to deliver all, the buyer may
choose between:
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 SALES
d. Proportional reduction of the price; or
e. Rescission of the contract provided the
deficiency is not less than 1/10 of the area
stated in the contract (NCC, Art. 1539).
Prescription period for the action of rescission
of contract
6 months from the day of delivery (NCC, Art.
1543).
How payment is made by the buyer
Price is paid at the time and place stipulated in the
contract. It is made to the person in whose favor
the obligation has been constituted or his
successor in interest, or any person authorized to
receive (Villanueva, 2009).
WARRANTIES
Warranty
A statement or representation made by the seller
of goods, as part of the contract of sale, having
reference to the character, quality, or title, of the
goods, and by which he promises or undertakes to
insure that certain facts are or shall be as he then
represents (De Leon, 2011).
Effect of a breach of warranty
Buyer may:
1. Refuse to proceed with the contract; or
2. Proceed with the contract and waive the
condition.
NOTE: If the condition is in the nature of a
promise that it should happen or be performed,
the non-performance may be treated as a breach
of warranty.
Kinds of warranties
1. Express; or
2. Implied
NOTE: Prescriptive period of actions based on
express warranty:
1. That specified in the contract and in the
absence thereof; or
2. 4 years (Rabuya, 2017)
Express warranties
Any affirmation of fact or any promise by the
seller relating to the thing if the natural tendency
461
of such affirmation or promise is to induce the
buyer to purchase the same, and if the buyer
purchases the thing relying thereon (Art. 1546).
Requisites: (AIR)
1. It must be an Affirmation of fact relating to
the subject matter of sale;
2. Natural tendency is to Induce buyer to
purchase subject matter; and
3. Buyer purchases the subject matter Relying
thereon
Liability of the seller for breach of express
warranties
The seller is liable for damages (Villanueva, 2009).
Implied warranties
Warranties deemed included in all contracts of sale
by operation of law (NCC, Art. 1547).
1. Warranty that seller has right to sell – refers to
consummation stage. Not applicable to sheriff,
auctioneer, mortgagee, pledgee (NCC, Art.
1547); and
2. Warranty against eviction (Art. 1548).
Requisites: (JPENS)
a. Final Judgment;
b. Buyer is Evicted in whole or in part from
the subject matter of sale;
c. Basis of eviction is a right Prior to sale or
act imputable to seller;
d. Seller has been Summoned in the suit for
eviction at the instance of buyer; or
made 3rd party defendant through 3rd
party complaint brought by buyer; and
e. No waiver on the part of the buyer.
NOTE: For eviction – disturbance in law is
required and not just trespass in fact.
3. GR: Warranty against non-apparent burden or
servitude (NCC, Art. 1560).
Requisites:
a. Immovable sold is encumbered with non-
apparent burden or servitude not
mentioned in the agreement; and
b. Nature of non-apparent servitude or
burden is such that it must be presumed
that the buyer would not have acquired it
had he been aware thereof.
XPN: Warranty not applicable when non-
apparent burden or servitude is recorded in
the Registry of Property – unless there is
 CIVIL LAW
expressed warranty that the thing is free from
all burdens and encumbrances
4. Warranty against Hidden Defects (NCC, Art.
1561)
Requisites: (HENNAS)
a. Defect is important or Serious;
i. The thing sold is unfit for the use
which it is intended; and
ii. Diminishes its fitness for such use or
to such an extent that the buyer
would not have acquired it had he
been aware thereof.
b. Defect is Hidden;
c. Defect Exists at the time of the sale;
d. Buyer gives Notice of the defect to the
seller within reasonable time;
e. Action for rescission or reduction of the
price is brought within the proper period;
i. 6 months – from delivery of the thing
sold(NCC, Art. 1571); and
ii. Within 40 days – from the delivery in
case of animals (NCC, Art. 1577).
f. There must be No waiver of warranty on
the part of the buyer.
NOTE: Hidden faults or defects pertain only to
those that make the object of sale unfit for the use
for which it was intended at the time of the sale.
Non-applicability of implied warranty (ASAP)
1. “As is and where is” sale;
2. Sale of second hand articles;
3. Sale by virtue of authority in fact or law; and
4. Sale at public auction for tax delinquency.
Where the cause of action is to hold the seller
of a vehicle for breach of implied warranty
Under Article 1599 of the Civil Code, once an
express warranty is breached, the buyer can
accept or keep the goods and maintain an action
against the seller for damages. In the absence of
an existing express warranty a complaint for
damages may be anchored on the enforcement of
an implied warranty against hidden defects.
However, this right must be exercised within six
(6) months from the delivery of the thing sold, else
his cause of action had become time-barred
(De Guzman v. Toyota Cubao, G.R. No. 141480,
November 29, 2006).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Effects of waiver of an implied warranty
1. Seller in bad faith and there is waiver against
eviction –void.
2. When buyer without knowledge of a
particular risk, made general renunciation of
warranty – is not a waiver but merely limits
liability of seller in case of eviction.
3. When buyer with knowledge of risk of
eviction assumed its consequences and made
a waiver – seller not liable (applicable only to
waiver of warranty against eviction).
WARRANTY AGAINST EVICTION
In a contract of sale, unless a contrary intention
appears, there is an implied warranty on the part
of the seller that he has the right to sell the thing
at the time when the ownership is to pass, and
that the buyer shall from that time have and enjoy
the legal and peaceful possession of the thing
[NCC, Art. 1547(1)].
Coverage of a warranty against eviction
It covers eviction by a final judgment based on a
right prior to the sale or an act imputable to the
vendor, the vendee is deprived of the whole or of a
part of the thing purchased.
The vendor shall answer for the eviction even
though nothing has been said in the contract on
the subject.
NOTE: The contracting parties, however, may
increase, diminish, or suppress this legal
obligation of the vendor (Art. 1548).
Effect of a breach of warranty against eviction
The buyer shall have the right to demand the R-I-
C-E with damages from seller:
1. The Return of the value which the thing sold
had at the time of the eviction, be it greater or
lesser than the price of the sale;
2. The Income or fruits, if he has been ordered to
deliver them to the party who won the suit
against him;
3. The Costs of suit which caused the eviction,
and, in a proper case, those of suit brought
against the vendor for the warranty;
4. The Expenses of contract if buyer has paid
them; and
5. The damages, interests and ornamental
expenses if sale was made in bad faith (NCC,
Art. 1555).
462
 SALES
NOTE: Vendor is liable for any hidden defect even
if he is not aware (Caveat Venditor).
Purchaser must be aware of the title of the vendor
(Caveat Emptor).
Rights of buyer in case of partial eviction
1. Restitution (with obligation to return the
thing w/o other encumbrances than those
which it had when he acquired it); and
2. Enforcement of warranty against eviction
(Paras, 2013 and NCC, Art. 1556).
Inapplicability of rescission
GR: Rescission is not a remedy in case of eviction
because rescission contemplates that the one
demanding it is able to return whatever he has
received under the contract. Since the vendee can
no longer restore the subject matter of the sale to
the vendor, rescission cannot be carried out (NCC,
Art. 1385).
XPN: The buyer may demand rescission in case of
partial eviction, because there still remains a
portion of the thing sold (De Leon, 2009).
WARRANTY AGAINST HIDDEN DEFECT
Hidden defect (NCC, Art.1561)
One which is unknown or could not have been
known to the buyer (Diaz, 2006.)
NOTE: Seller does not warrant patent defect.
Reason: caveat emptor (buyer beware).
Application
The seller shall be responsible for warranty
against “hidden defect” only when:
1. The nature of the hidden defect is such
that it should render the subject matter
unfit for the use for which it is intended;
or
2. Should diminish its fitness for such use to
such an extent that, had the buyer been
aware thereof, he would not have
acquired it or would have given a lower
price for it.
Redhibitory defect
It is a defect in the article sold against which
defect the seller is bound to warrant. The vice
must constitute an imperfection, a defect in its
463
nature, of certain importance; and a minor defect
does not give rise to redhibition (De Leon, 2005).
Redhibitory defect on animals (NCC, Art. 1576)
If the hidden defect of animals, even in case a
professional inspection has been made, should be
of such a nature that expert knowledge is not
sufficient to discover it, the defect shall be
considered as redhibitory.
Void sale of animal (NCC, Art. 1575)
The sale is void if animal is:
1. Suffering from contagious diseases; or
2. Unfit for the use or service for which they
were purchased as indicated in the
contract.
Responsibility of a vendor for hidden defects
If the hidden defects which the thing sold may
have:
1. Render it unfit for the use for which it is
intended; or
2. Diminish its fitness for such use to such
an extent that had the vendee been aware
thereof, he would not have acquired it or
would have given a lower price for it
(NCC, Art. 1561).
Extent of warranty by the seller against hidden
defects
The seller is responsible to the vendee for any
hidden faults or defects in the thing sold, even
though he was not aware thereof.
When the seller is not answerable for the
defects of the thing sold
1. For patent defects or those which are visible;
2. Even for those which are not visible if the
buyer is an expert who, by reason of his
trade or profession, should have known them
(NCC, Art. 1561);
3. If the contrary has been stipulated, and the
vendor was not aware of the hidden faults or
defects in the thing sold (NCC, Art. 1566).
Effect of a breach of warranty against hidden
defects
It would depend on whether the seller had
knowledge of such defect and whether there has
been a waiver of the warranty.
 CIVIL LAW
1. If the thing should be lost in consequence of the
hidden faults, and seller was aware of them –
he shall:
a. bear the loss;
b. return the price; and
c. refund the expenses of the contract
with damages.
2. If the thing is lost and seller was not aware of
the hidden faults – he shall:
a. return the price and interest; and
b. reimburse the expenses of the
contract which the buyer might have
paid, but not for damages (Villanueva,
2004).
Prescriptive period: six (6) months from date of
the delivery of the thing sold (NCC, Art. 1571).
Remedies of the buyer in case of sale of things
with hidden defects (NCC, Art. 1567)
The vendee may elect between:
1. Withdrawing from the contract, or
2. Demanding a proportionate reduction of
the price, with damages in either case.
Waiver of warranty against eviction
There is waiver of warranty against eviction when
the lessee has inspected the premises and decides
to consummate the contract based on such
inspection. Under Arts. 1561 and 1653 of the Civil
Code, the lessor is responsible for warranty
against hidden defects, but he is not answerable
for patent defects or those, which are visible, and
which can be seen upon inspection (Jon and
Marissa De Ysasi v. Arturo and Estela Arceo, G.R.
No. 136586, November 22, 2001).
Specific implied warranties in sale of goods
(NCC, Art. 1562)
1. Warranty of fitness
GR: No implied warranty
XPN:
a. Buyer manifests to the seller the
particular purpose for which the goods
are required; and
b. Buyer relies upon the seller’s skill or
judgment
2. Warranty of merchantability
That goods are reasonably fit for the general
purpose for which they are sold.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
REMEDIES IN CASE OF BREACH OF WARRANTY
Remedies of the buyer in case of breach of
warranty
1. Accept goods and set up breach of warranty
by way of recoupment in diminution or
extinction or the price;
2. Accept goods and maintain action against
seller for damages;
3. Refuse to accept goods and maintain action
against seller for damages; or
4. Rescind contract of sale and refuse to receive
goods/return them when already received.
Remedies of the buyer in case of breach of
warranty NOT absolute
The vendee's remedies against a vendor with
respect to the warranties against hidden defects
or encumbrances upon the thing sold, in the case
of Arts. 1561, 1562, 1564, 1565 and 1566 of the
Civil Code, may either be to withdraw from the
contract or demand a proportionate reduction of
the price, with damages in either case.
The vendee may also ask for the annulment of the
contract upon proof of error or fraud, in which
case the ordinary rule on obligations shall be
applicable; responsibility arising from fraud is
demandable in all obligations and any waiver of
an action for future fraud is void. Responsibility
arising from negligence is also demandable in any
obligation, but such liability may be regulated by
the courts, according to the circumstances.
The vendor could likewise be liable for quasi-delict
under Article 2176 of the Civil Code, and an action
based thereon may be brought by the vendee
(Coca-Cola Bottlers Philippines, Inc. v. CA, G.R. No.
110295, October 18, 1993).
Instances when the buyer cannot rescind the
sale in case there is a breach of warranty
1. If he knew of the breach of warranty;
2. If he fails to return or offer to return goods to
seller in substantially as good condition as
they were at time ownership was transferred;
or
3. If he fails to notify the seller within a
reasonable time of his election to rescind.
Q: Goodyear Philippines sold a car to Anthony
Sy. Later on, Sy sold the car to Jose Lee. When
Lee tried to register the car in his name, he
failed to have it registered because it turned
out that the car was stolen before and was only
464
 SALES
subsequently recovered by Goodyear. As to nature
However, PNP did not lift the alert alarm over Purports to the Purports to the
the said car. Due to this, the car was existence of obligation. performance of
impounded and Lee was sued by PNP. This obligation.
problem was relayed by Lee to Sy. It led to Sy
filing a case against Goodyear for breach of As to the need for stipulation
warranty. It is Sy’s argument that it is Must be stipulated to Need not be
Goodyear’s duty to convey the vehicle to Sy form part of the stipulated; may form
free from all liens, encumbrances and legal obligation. part of obligation by
impediments. Was there a breach of warranty provision of law.
by Goodyear?
As to subject matter
A: NO. Upon the execution of the Deed of Sale, May attach itself to Relates to the
Goodyear did transfer ownership of and deliver obligation of seller to subject matter itself or
the vehicle to Sy. The impoundment of the vehicle deliver possession and to obligation of the
and the failure to register it were clearly acts that transfer. seller as to the subject
were not deliberately caused by Goodyear, but matter of the sale.
that resulted solely from the failure of the PNP to
lift the latter’s own alarm over the vehicle.
EXTINGUISHMENT OF SALE
Assuming there was a breach of the implied
warranty against hidden encumbrances, notice of
breach was not given to the Goodyear within a Causes for extinguishment of sale
reasonable time. Article 1586 of the Civil Code
requires that notice be given after the breach, of A contract of sale is extinguished by:
which Sy ought to have known. (Goodyear 1. Same causes as how an obligation is
Philippines, Inc. v. Sy and Lee, G.R. No. 154554, extinguished, namely:
November 9, 2005). a. Payment or performance;
b. Loss of the thing due;
CONDITION vis-à-vis WARRANTY c. Condonation or remission of the debt;
d. Confusion or merger of the rights of
Condition creditor and debtor;
e. Compensation;
An uncertain event or contingency upon the f. Novation;
happening of which the obligation or right of the g. Annulment;
contract depends. In such case, the obligation of h. Rescission;
the contract does not attach until the condition is i. Fulfillment of resolutory condition; or
performed (De Leon, 2011). j. Prescription

NOTE: There may be a contract of sale of goods, 2. Conventional Redemption

whose acquisition by the seller depends upon a 3. Legal redemption
contingency, which may or may not happen [NCC,
Art. 1462(2)]. Redemption

Effect of non-fulfillment of a condition It is a mode of extinguishment wherein the seller

has the right to redeem or repurchase the thing
If imposed on the perfection of contract – prevents sold upon return of the price paid.
the juridical relation itself from coming into
existence. Kinds of redemption

The other party may: 1. Legal; and

1. Refuse to proceed with the contract; or 2. Conventional
2. Proceed w/ contract, waiving the
performance of the condition. Incorporation of right to redeem in every
contract of sale
Condition v. Warranty
The right of the vendor to redeem/repurchase
CONDITION WARRANTY must appear in the same instrument. However,

465
 CIVIL LAW
parties may stipulate on the right of repurchase in
a separate document but in this case, it is valid
only between the parties and not against third
persons. (Pineda, 2010).
Pre-emption v. Redemption
PRE-EMPTION REDEMPTION
As to when it arises
Arises before sale Arises after sale
As to availability of rescission
Rescission inapplicable. There can be
rescission of original
sale.
As to whom the action is directed
Action is directed Action is directed
against prospective against buyer.
seller.
CONVENTIONAL REDEMPTION
Seller reserves the right to repurchase thing sold
coupled with obligation to return the purchase
price of the sale, expenses incurred under the
contract, other legitimate payments and,
necessary & useful expenses made on the thing
sold (Art. 1601 in relation to Art. 1616 of the Civil
Code).
Other person can exercise the right to
repurchase
The right to repurchase may be exercised by any
person to whom the right of repurchase may be
transferred, or in case of legal redemption, by the
person so entitled by law (Villanueva, 2009).
NOTE: Right to repurchase must be reserved at
the time of perfection of sale (Pineda, 2010).
Reservation of right to repurchase
The right to repurchase is reserved by a
stipulation to that effect in the contract of sale.
Because it is not a right granted to the vendor by
the vendee, but is a right reserved by the vendor.
Reservation CANNOT be made in an instrument
different from that of the contract of sale. Once the
instrument of absolute sale is executed, and any
right thereafter granted the vendor in a separate
instrument cannot be a right of repurchase but
some other right like the option to buy in the
instant case (Villanueva, 2009).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Parole evidence in proving right of repurchase
The right of repurchase may be proved by parole
evidence when the contract of sale has been
reduced in writing (Mactan Cebu International
Airport Authority v. CA, G.R. No. 121506, October
30, 1996).
Effect on the reserved right to repurchase if
the principal contract of sale is void
Since the underlying contract of sale was
inoperative and consequently void, then the right
of repurchase reserved would also be void
(Villanueva, 2009).
EQUITABLE MORTGAGE
One which lacks the proper formalities, form or
words or other requisites prescribed by law for a
mortgage, but shows the intention of the parties to
make the property subject of the contract as
security for a debt and contains nothing
impossible or contrary to law (Cachola v. CA, G.R.
No. 97822, May 7, 1992; NCC, Art. 1602).
Essential requisites of equitable mortgage
1. Parties entered into a contract of sale;
2. Their intention was to secure an existing debt
by way of a mortgage.
Presumption of an equitable mortgage (2005
BAR)
A sale with conventional redemption is deemed to
be an equitable mortgage in any of the following
cases (NCC, Art. 1602) (AIR-STAR)
1. Price of the sale with right to repurchase is
unusually Inadequate;
2. Seller Remains in possession as lessee or
otherwise;
3. Upon or after the expiration of the right to
repurchase Another instrument extending the
period of redemption or granting a new
period is executed;
4. Purchaser Retains for himself a part of the
purchase price;
5. Seller binds himself to pay the Taxes on the
thing sold;
6. In any other case where the real intention of
the parties is that the transaction shall Secure
the payment of a debt or the performance of
any other obligation; or
7. Art. 1602 shall also apply to a contract
purporting to be an Absolute sale (Art. 1604).
(2005 BAR)
466
 SALES
NOTE: In case of doubt in determining whether it
is equitable mortgage or sale a retro (with right of
repurchase); it shall be construed as equitable
mortgage. The remedy is reformation.
Q: Subject of the instant case agricultural land
situated Bukidnon covered by Certificate of
Land Transfer in the name of Prisco Quirino,
Sr. issued by the Ministry (now Department) of
Agrarian Prisco executed a Deed of Conditional
Sale (deed) covering the subject landholding to
Ernesto Bayagna (Ernesto) under the
condition that the former has the right to
repurchase the land. Ernesto thereupon
possessed and cultivated the subject land for
more than 10 years before Prisco offered to
redeem the same, which was refused.
Respondent Gertrudes Quirino, Prisco's
widow, represented by their son, Elmer, filed
before the Office of the Agrarian Reform
Regional Adjudicator (RARAD) a Complaint for
Specific Performance, Redemption,
Reinstatement and Damages with Application
for Writ of Preliminary Injunction and TRO
against Ernesto and petitioners. Is the Priscos
entitled to redeem the property?
A: No. The fact that Prisco surrendered possession
and cultivation of the subject land to Ernesto, not
for a mere temporary period, but for a period of
11 years without any justifiable reason. Such act
constituted abandonment despite his avowed
intent to resume possession of the land upon
payment of the loan. It is a ground for cancellation
by the DARAB of an award to the agrarian reform
beneficiary. Consequently, respondent and/or
Prisco's heirs had lost any right to redeem the
subject landholding (Gua-An v. Quirino, G.R. No.
198770, November 12, 2012).
Inadequacy of price and Equitable Mortgage
Inadequacy of price does NOT constitute proof
sufficient to declare a contract as one of equitable
mortgage. Mere inadequacy of the price is not
sufficient. The price must be grossly inadequate,
or purely shocking to the conscience (Diaz, 2010).
The decisive factor in evaluating whether a
deed absolute in form is a mortgage
The intention of the parties, such as the relative
situation of the parties at that time, the attitude
acts, conduct, declarations of the parties, the
negotiations between them leading to the deed,
and generally, all pertinent facts having a
tendency to fix and determine the real nature of
their design and understanding is the decisive
467
factor in evaluation if the deed is a mortgage (Sps.
Raymundo, et al. v. Sps. Bandong, G.R. No. 171250,
July 4, 2007).
Effects when sale is adjudged as an equitable
mortgage
1. The apparent seller may ask for the
reformation of the instrument (NCC, Art.
1605) (2005 BAR);
2. Money, fruit or other benefit to be received by
the buyer as rent or otherwise shall be
considered as interest (NCC, Art. 1602);
3. The court may decree that “vendor” pay his
outstanding loan to the “vendee” (Banga v.
Bello, G.R. No. 156705, September 30, 2005);
and
4. A remand of the case to the trial court where
the latter did not pass upon the mortgagor’s
claim that he had paid his mortgage obligation
for the purpose of the determining whether
said obligation has been paid, and if not, how
much should still be paid. (Banga v. Bello, G.R.
No. 156705, September 30, 2005).
Pactum Commissorium
A stipulation for automatic vesting of title over the
security in the creditor in case of debtor’s default
(Villanueva, 2009).
The creditor cannot appropriate the things given
by way of pledge or mortgage or dispose of them,
otherwise that would result in pactum
commissorium. The proper remedy is foreclosure
of the mortgage. If there is no foreclosure, the
debtors retain the ownership (Vasquez v. CA, G.R.
No. 144882, February 4, 2005).
Elements of pactum commissorium
1. There should be a pledge or mortgage
wherein property is pledged or mortgaged by
way of security for the payment of the
principal obligation; and
2. There should be a stipulation for an automatic
appropriation by the creditor of the thing
pledged or mortgaged in the event of
nonpayment of the principal obligation within
the stipulated period (Sps. Pen v. Sps. Julian,
G.R. No. 160408, January 11, 2016) (Bersamin,
J.).
NOTE: Article 2088 of the Civil Code prohibits the
creditor from appropriating the things given by
way of pledge or mortgage, or from disposing of
them; any stipulation to the contrary is null and
void.
 CIVIL LAW
REDEMPTION v. OPTION TO BUY judgment on the basis that contract was a sale
with pacto de retro; and
REDEMPTION OPTION TO BUY
As to nature Rationale: No redemption due to erroneous
Forms part of the contract Principal and belief that it is equitable mortgage which can
of sale. preparatory be extinguished by paying the loan.
contract.
The right must be 4. When period has expired & seller allowed the
imbedded in a contract of May exist prior to period of redemption to expire – seller is at
sale upon its perfection. or after the fault for not having exercised his rights so
perfection of the should not be granted a new period.
sale, or be
imbedded in NOTE: Tender of payment is sufficient but it is not
another contract in itself a payment that relieves the seller from his
upon perfection. liability to pay the redemption price.

As to necessity of separate consideration Running of period of redemption

Does not need a separate Separate
consideration to be valid consideration is 1. Right of legal pre-emption or redemption
and effective. needed for it to be shall be exercised within 30 days from written
valid and effective. notice by the buyer – deed of sale not to be
recorded in Registry of Property unless
As to period accompanied by affidavit that buyer has given
Redemption period cannot Period for an notice to redemptioners; or
exceed 10 years. option right may 2. When there is actual knowledge, no need to
exceed 10 years. give written notice; period of redemption
begins to run from actual knowledge.
As to requirement of notice
Notice is required for its Only notice is Extension of the time to redeem
exercise accompanied with required.
tender of Parties may extend the period to redeem as long
payment/consignment. as the total period shall not exceed ten years.
However, such extension can only be granted
when the original period has not yet expired.
As to effect
Otherwise, there exists only a promise to sell on
Its exercise extinguishes an Its exercise
the buyer’s part (Pineda, 2010).
existing contract of sale. results into the
perfection of a
EXERCISE OF THE RIGHT TO REDEEM
contract of sale
(Villanueva, 2009).
Obligations the vendor a retro if he desires to
redeem (NCC, Art. 1616)
NOTE: Also, once the instrument of absolute sale
is executed, the seller can no longer reserve the
The vendor a retro must pay or reimburse the
right of repurchase and any right thereafter
vendee a retro the following:
granted the seller by the buyer cannot be a right of
repurchase but some other rights, like that of an
1. Price of the sale;
option to buy.
2. Expenses of the contract;
3. Other legitimate expenses; and
PERIOD OF REDEMPTION
4. Necessary and useful expenses (Pineda, 2010).
1. No period agreed upon – 4 years from date of
Written notice mandatory for the right of
contract;
redemption to commence
2. When there is agreement – should not exceed
10 years; but if it exceeded, valid only for the
Written notice is mandatory for the right of
first 10 years (NCC, Art. 1606);
redemption to commence and the notice must be
3. When period to redeem has expired & there
in writing stating the execution of the sale and its
has been a previous suit on the nature of the
particulars. It may be made in a private or public
contract – seller still has 30 days from final
document (Pineda, 2010).

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 468
 SALES
Prescribed form for an offer to redeem
There is no prescribed form for an offer to redeem
to be properly effected. Hence, it can either be
through a formal tender with consignation of the
redemption price within the prescribed period.
What is paramount is the availment of the fixed
and definite period within which to exercise the
right of legal redemption.
NOTE: Art. 1623 of the Civil Code does not
prescribe any distinctive method for notifying the
redemptioner.
Tender of payment NOT necessary for
redemption to take effect
Tender of payment is not necessary and offer to
redeem is enough only when the amount of
repurchase is uncertain and depends upon an
accounting of the vendee who has not yet made
such accounting (Tolentino, 1999).
Effect of failure to redeem
There must be judicial order before ownership of
real property is consolidated to the buyer a retro.
Vendor a retro CANNOT be compelled to
redeem
There is no obligation on the part of the vendor a
retro to repurchase. He may or may not exercise
the right to repurchase (Pineda, 2010).
LEGAL REDEMPTION
It is the right to be subrogated upon the same
terms and conditions stipulated in the contract, in
the place of one who acquires the thing by
purchase or by dation en pago or by other
transaction whereby ownership is transmitted by
onerous title (NCC, Art. 1619).
Instances of legal redemption
1. Sale of a co-owner of his share to a stranger
(NCC, Art. 1620) (2000, 2002 BAR);
2. When a credit or other incorporeal right in
litigation is sold (NCC, Art. 1634);
3. Sale of an heir of his hereditary rights to a
stranger (NCC, Art. 1088);
4. Sale of adjacent rural lands not exceeding 1
hectare (NCC, Art. 1621);
5. Sale of adjacent small urban lands bought
merely for speculation (NCC, Art. 1622).
469
Other instances when the right of legal
redemption is also granted
1. Redemption of homesteads;
2. Redemption in tax sales;
3. Redemption by judgment debtor;
4. Redemption in extrajudicial foreclosure; or
5. Redemption in judicial foreclosure of
mortgage.
Basis of legal redemption
It is created partly for reason of public policy and
partly for the benefit and convenience of the
redemptioner to afford him a way out of what
might be a disagreeable or inconvenient
association into which he has been in trust. It is
intended to minimize co-ownership (Pineda,
2010).
Running of period of legal redemption
The right of legal redemption shall not be
exercised except within 30 days from the notice in
writing by the prospective seller, or seller, as the
case may be. The deed of sale shall not be
recorded in the Registry of Property unless
accompanied by an affidavit of the seller that he
has given written notice thereof to all possible
redemptioners (NCC, Art. 1623).
Written notice indispensable
The right of legal pre-emption or redemption shall
not be exercised except within 30 days from the
notice in writing by the prospective vendor, or by
the vendor, as the case may be (NCC, Art. 1623).
(2001, 2002 BAR)
NOTE: Knowledge is insufficient – the mere fact
that the redemptioner – the person who has the
right to redeem – is already aware of the existence
of the sale will not excuse the written notice. Mere
knowledge does not satisfy the requirement; there
must still be written notice despite such
knowledge (Barcellano v. Banas, et al., G.R. No.
165287, September 14, 2011).
The right of redemption of co-owners excludes
that of adjoining owners (NCC, Art. 1623).
This means that co-owners are preferred if the
property is to be redeemed by a co-owner and an
adjoining owner.
Pre-emption
 CIVIL LAW
Redemption presupposes that the property was
already sold or transferred to another. In pre-
emption, the right is present before the sale; there
is a right to purchase ahead of or before it can be
sold or transferred to other persons.
e.g. Whenever a piece of urban land which is so
small and so situated that a major portion thereof
cannot be used for any practical purpose within a
reasonable time, having been bought merely for
speculation, is about to be re-sold, the owner of
any adjoining land has a right of pre-emption at a
reasonable price (NCC, Art. 1620).
Pre-emption v. Redemption
PRE-EMPTION REDEMPTION
Arises before sale Arises after sale
No rescission because There can be rescission
no sale yet exists. of the original sale.
Action Is directed Action is directed against
against the the buyer.
prospective seller.
ASSIGNMENT OF CREDITS
Assignment is the process of transferring
gratuitously or onerously the right of the assignor
to the assignee, who would then be allowed to
proceed against the debtor (Paras, 2008).
The assignment involves no transfer of ownership
but merely effects the transfer of rights which the
assignor has at the time to the assignee.
It is an agreement by virtue of which the owner of
a credit, known as the assignor, by a legal cause,
such as sale, dacion en pago, exchange or donation,
and without the consent of the debtor, transfers
his credit and accessory rights to another, known
as the assignee, who acquires the power to
enforce it to the same extent as the assignor could
enforce it against the debtor (South City Homes,
Inc. v. BA Finance Corp, G. R. No. 135462, December
7, 2001).
NOTE: In assignments, a consideration is not
always a requisite, unlike in sale. Thus, an
assignee may maintain an action based on his title
and it is immaterial whether or not he paid any
consideration therefor. Furthermore, in an
assignment, title is transferred but possession
need not be delivered.
Perfection of contract for assignment of credit
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
The contract for the assignment or transfer of
credit and other incorporeal rights is perfected
from the moment the parties agree upon the
credit or right assigned and upon the price even if
neither has been delivered (NCC, Art. 1475).
However, the assignee will acquire ownership
only upon delivery (De Leon, 2011).
Effects of Assignment
1. Transfers the right to collect the full value of
the credit, even if he paid a price less than
such value;
2. Transfers all accessory rights;
3. Debtor can set up against the assignee all the
defenses he could have set up against the
assignor.
Effectivity against Third Persons
If personal property is involved — a public
instrument is needed to make the assignment
effective against third persons.
If real property is involved –– registration in the
Registry of Property would be needed.
NOTE: The assignee merely steps into the shoes of
the assignor, the former acquiring the credit
subject to defenses (e.g. fraud, prescription, etc.)
available to the debtor against the assignor. The
assignee is deemed subrogated to the rights as
well as to the obligations of the seller. He cannot
acquire greater rights than those pertaining to the
assignor (De Leon, 2011).
Accessory Rights included in the Assignment of
a Credit (NCC, Art. 1627)
1. Guaranty;
2. Mortgage;
3. Pledge; and
4. Preference.
Effect of Assignment of Credit on Debtor
The “meeting of the minds” in assignment
contemplates that between the assignor of the
credit and his assignee, there being no necessity
for the consent of the debtor. It is sufficient that
the assignment be brought to the debtor’s
knowledge in order to be binding upon him (C & C
Commercial Corp. v. Philippine National Bank, G.R.
No. L-42449 July 5, 1989).
Effect of payment by the debtor after
assignment of credit
470
 SALES
1. Before Notice
Payment to the original creditor is valid and
debtor shall be released from his obligation.
NOTE: Assignment is effective as to the
debtor only from the time he has knowledge
of it.
2. After Notice
Payment to the original creditor is not valid as
against the assignee. He can be made to pay
again by the assignee.
Warranties
In assignment, the assignor shall be responsible
for the existence and legality of the credit at the
time of sale, unless it has been expressly sold as a
doubtful account, in which case the assignee takes
the credit at his own risk. Consequently, the
invalidity of the credit assigned makes the
assignor-vendor liable for breach of such
warranty.
In addition, assignment does not make the
assignor warrant the solvency of the debtor to the
credit, unless:
a. There is a stipulation to that effect; or
b. The insolvency of the debtor was prior to the
assignment and of common knowledge.
But even when the assignor warrants the solvency
of the debtor, the warranty should last for one
year only, from the time of the assignment if the
credit is already due; otherwise, the warranty
shall cease only one year after the maturity of the
credit (NCC, Art. 1629).
Reason: First, to prevent fraud which may be
committed by feigning the solvency of the debtor
at the time of the assignment when in fact he is
insolvent. Second, to oblige the assignee to exert
efforts in the recovery of the credit and thereby
avoid that by his oversight, the assignor may
suffer (De Leon, 2011).
If the assignor in good faith is liable for a
warranty, he is liable only for the expenses of the
contract, and any other legitimate payments made
by reason of the assignment. On the other hand, an
assignor in bad faith who breaches such
warranties, shall in addition be liable to pay for
the necessary and useful expenses, plus damages
(NCC, Art. 1628).
Liabilities of the assignor of credit
471
The liability of the vendor (assignor) in good faith
is limited only to the price received and to the
expenses of the contract, and any other legitimate
payments by reason of the assignment [NCC, Art.
1616 (1)].
The assignor in bad faith is liable not only for the
payment of the price and all expenses, but also for
damages. An assignor in bad faith is one who has
knowledge of any of the circumstances (Paras,
2011).
Legal Redemption in Sale or Credit or other
incorporeal right in litigation (NCC, Art. 1634)
Requisites:
1. There must be a sale or assignment of credit;
2. There must be a pending litigation at the time
of the assignment;
3. The debtor must pay the assignee:
a. price paid by him;
b. judicial cost incurred by him; and
c. interest on the price from the date of
payment
4. The right must be exercised by the debtor
within 30 days from the date the assignee
demands (judicially or extra-judicially)
payment from him.
GR: Debtor has the right of legal redemption in
sale of credit or incorporeal rights in litigation
XPNs:
1. Sale to a co-heir or co-owner;
2. Sale to a co-owner; and
3. Sale to the possessor of property in
question
THE SUBDIVISION AND CONDOMINIUM
BUYER’S PROTECTIVE DECREE (PD 957)
Date of Approval: July 12, 1976
The purpose is to afford its inhabitants the
requirements of a decent human settlement and to
provide them with ample opportunities for
improving their quality of life (De Leon, 2011).
PD 957
P.D. No. 957 was promulgated to encompass all
questions regarding subdivisions and
condominiums. It is aimed at providing for an
appropriate government agency, the HLURB, to
which all parties aggrieved in the implementation
of its provisions and the enforcement of
contractual rights with respect to said category of
 CIVIL LAW
real estate may take recourse (Arranza vs. B.F.
Homes, Inc., G.R. No. 131683, June 19, 2000).
The regulatory functions of the NHA are now
transferred to the Housing and Land Use
Regulatory Board (HLURB).
NOTE: Under E.O. 648 of 1981, the
implementation of P.D. 957 was transferred from
the National Housing Authority (NHA) to the
Housing and Land Regulatory Board (HLURB).
The law recognized that subdivision and
condominium development involves public
interest and welfare and should be brought to a
body, like the HLURB, that has technical
expertise. In the exercise of its powers, the HLURB
is empowered to interpret and apply contracts,
and determine the rights of private parties under
these contracts. This ancillary power, generally
judicial, is now no longer with the regular courts
(Chua v. Ang, G.R. No. 156164, September 4, 2009).
NOTE: Not every case involving buyers and sellers
of real estate may be filed with the HLURB. Its
jurisdiction is limited to those cases filed by the
buyer or owner of a subdivision or condominium
and based on any of the causes of action
enumerated under Section 1 of P.D. No. 1344, and
which jurisdictional facts must be clearly alleged
in the complaint (Delos Santos v. Sarmiento, G.R.
No. 154877, March 27, 2007).
Quasi-judicial authority of HLURB (Sec. 1, P.D.
1344)
(URS)
1. Unsound real estate business practices;
2. Claims involving refund and any other
claims filed by subdivision lot or
condominium unit buyer against the project
owner, developer, dealer, broker, or
salesman; and
3. Cases involving specific performance of
contractual and statutory obligations filed
by buyers of subdivision lots or
condominium units against the owner,
developer, dealer, broker or salesman.
HLURB has no jurisdiction to impose criminal
penalties
What the Decree provides is the authority of the
HLURB to impose administrative fines under
Section 38, as implemented by the Rules
Implementing the Subdivision and Condominium
Buyer’s Protective Decree (Chua v. Ang, G.R. No.
156164, September 4, 2009).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
“Sale” or “Sell” defined under the Decree
It shall include:
1. Every disposition, or attempt to dispose, for a
valuable consideration, of a subdivision lot,
including the building and other improvements
thereof, if any, in a subdivision project or a
condominium unit in a condominium project;
2. Contract to sell;
3. Contract of purchase and sale;
4. Exchange;
5. Attempt to sell;
6. Option of sale or purchase;
7. Solicitation of a sale;
8. Offer to sell, directly or by an agent, or by a
circular, letter, advertisement or otherwise;
and
9. A. privilege given to a member of a cooperative,
corporation, partnership, or any association
and/or
B. the issuance of a certificate or receipt
evidencing or giving the right of participation
in, or right to, any land in consideration of
payment of the membership fee or dues
(Deemed sale).
“Buy” and “purchase” defined under the
Decree
It shall include any contract to buy, purchase, or
otherwise acquire for a valuable consideration a
subdivision lot, including the building and other
improvements, if any, in a subdivision project or a
condominium unit in a condominium project.
Subdivision project
A tract or a parcel of land registered under Act No.
496 which is partitioned primarily for residential
purposes into individual lots with or without
improvements thereon, and offered to the public
for sale, in cash or in installment terms.
NOTE: It shall include all residential, commercial,
industrial and recreational areas as well as open
spaces and other community and public areas in
the project.
Subdivision lot
Any of the lots, whether residential, commercial,
industrial, or recreational, in a subdivision project.
Complex subdivision plan
A subdivision plan of a registered land wherein a
street, passageway or open space is delineated on
the plan.
472
 SALES
Condominium project
The entire parcel of real property divided or to be
divided primarily for residential purposes into
condominium units, including all structures
thereon.
Condominium unit
A part of the condominium project intended for
any type of independent use or ownership,
including one or more rooms or spaces located in
one or more floors (or part of parts of floors) in a
building or buildings and such accessories as may
be appended thereto.
Definition of Terms
a. Owner - registered owner of the land subject
of a subdivision or a condominium project.
b. Developer - person who develops or
improves the subdivision project or
condominium project for and in behalf of the
owner thereof.
c. Dealer - any person directly engaged as
principal in the business of buying, selling or
exchanging real estate whether on a full-time
or part-time basis.
d. Broker - any person who, for commission or
other compensation, undertakes to sell or
negotiate the sale of a real estate belonging to
another.
e. Salesman - person regularly employed by a
broker to perform, for and in his behalf, any
or all functions of a real estate broker.
Procedure for converting of a parcel of land
into a subdivision or condominium project by
the Registered Owner
He shall:
1. Submit his subdivision plan to the HLURB
which shall act upon and approve the same,
upon a finding that the plan complies with the
Subdivision Standards' and Regulations
enforceable at the time the plan is submitted;
2. If the conversion desired involves a
condominium project, the same procedure
shall be followed except that, in addition, the
HLURB shall act upon and approve the plan
with respect to the building or buildings
included in the condominium project in
accordance with the National Building Code
(RA 6541);
3. The subdivision plan, as so approved, shall
then be submitted to the Director of Lands for
approval.
473
4. In case of complex subdivision plans, court
approval shall no longer be required;
5. The condominium plan as likewise so
approved, shall be submitted to the Register of
Deeds of the province or city in which the
property lies and the same shall be acted upon
subject to the conditions and in accordance
with the procedure prescribed in Section 4 of
the Condominium Act (RA 4726).
Requirements for registration
1. Name of the owner;
2. The location of the owner's principal business
office, and if the owner is a non-resident
Filipino, the name and address of his agent or
representative in the Philippines is authorized
to receive notice;
3. The names and addresses of all the directors
and officers of the business firm, if the owner
be a corporation, association, trust, or other
entity, and of all the partners, if it be a
partnership;
4. The general character of the business actually
transacted or to be transacted by the owner;
and
5. A statement of the capitalization of the owner,
including the authorized and outstanding
amounts of its capital stock and the
proportion thereof which is paid-up.
Q: When is a subdivision or condominium
project deemed to be registered?
A: Upon completion of the publication
requirement
NOTE: The fact of such registration shall be
evidenced by a registration certificate to be issued
to the applicant-owner or dealer.
Q: Part of the required documentary
attachments to the application is a certificate
of title to the property which is free from all
liens and encumbrances. Does this bar an
owner of mortgaged property from engaging in
subdivision or condominium project while the
mortgage is in force?
A: NO. In case any subdivision lot or condominium
unit is mortgaged, it is sufficient if the instrument
of mortgage contains a stipulation that the
mortgagee shall release the mortgage on any
subdivision lot or condominium unit as soon as
the full purchase price for the same is paid by the
buyer.
 CIVIL LAW
Q: After issuance of the registration certificate,
may the owner or dealer already sell
subdivision lots or condominium units?
A: NO. He must first obtain a license to sell the
project within two weeks from the registration of
such project.
Issuance of license to sell
After an examination of the registration statement
filed by said owner or dealer and all the pertinent
documents attached thereto, the HLURB is
convinced that the owner or dealer is of good
repute, that his business is financially stable, and
that the proposed sale of the subdivision lots or
condominium units to the public would not be
fraudulent.
Purpose of the requirement of posting of a
performance bonds before a license to sell may
be issued
It is to guarantee the construction and
maintenance of the roads, gutters, drainage,
sewerage, water system, lighting systems, and full
development of the subdivision project or the
condominium project and the compliance by the
owner or dealer with the applicable laws and
rules and regulations.
The performance bond shall be executed in
favor of the Republic of the Philippines and
shall authorize the HLURB to use the proceeds
for the purposes of its undertaking in case of
forfeiture
Exempt transactions
1. Sale of a subdivision lot resulting from the
partition of land among co-owners and co-
heirs.
2. Sale or transfer of a subdivision lot by the
original purchaser thereof and any
subsequent sale of the same lot.
3. Sale of a subdivision lot or a condominium
unit by or for the account of a mortgagee in
the ordinary course of business when
necessary to liquidate a bona fide debt.
Suspension of a license to sell
1. Upon verified complaint by a buyer of a
subdivision lot or a condominium unit in any
interested party, the HLURB may, in its
discretion, immediately suspend the owner's
or dealer's license to sell pending
investigation and hearing of the case.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
2. The HLURB may motu proprio suspend the
license to sell if, in its opinion, any
information in the registration statement filed
by the owner or dealer is or has become
misleading, incorrect, inadequate or
incomplete or the sale or offering for a sale of
the subdivision or condominium project may
work or tend to work a fraud upon
prospective buyers.
Revocation of license to sell or registration of a
subdivision or condominium project
The HLURB may, motu proprio or upon verified
complaint filed by a buyer of a subdivision lot or
condominium unit, revoke the registration by
issuing an order to this effect, with his findings in
respect thereto, if upon examination into the
affairs of the owner or dealer during a hearing, it
shall appear there is satisfactory evidence that the
said owner or dealer:
1. Is insolvent; or
2. Has violated any of the provisions of this
Decree or any applicable rule or regulation of
the HLURB, or any undertaking of his/its
performance bond; or
3. Has been or is engaged or is about to engage
in fraudulent transactions; or
4. Has made any misrepresentation in any
prospectus, brochure, circular or other
literature about the subdivision project or
condominium project that has been
distributed to prospective buyers; or
5. Is of bad business repute; or
6. Does not conduct his business in accordance
with law or sound business principles.
NOTE: Where the owner or dealer is a partnership
or corporation or an unincorporated association,
it shall be sufficient cause for cancellation of its
registration certificate and its license to sell, if any
member of such partnership or any officer or
director of such corporation or association has
been guilty of any act or omission which would be
cause for refusing or revoking the registration of
an individual dealer, broker or salesman.
Registration needed after the execution of a
contract to sell relevant to the sale or
conveyance of subdivision lots and
condominium units
All contracts to sell, deeds of sale and other
similar instruments relative to the sale or
conveyance of the subdivision lots and
condominium units, whether or not the purchase
price is paid in full, shall be registered by the seller
474
 SALES
in the Office of the Register of Deeds of the
province or city where the property is situated.
Mortgage CANNOT be made by the owner or
developer without permission
There must be prior written approval of the
HLURB.
When approval by the HLURB is given
When it is shown that the proceeds of the
mortgage loan shall be used for the development
of the condominium or subdivision project and
effective measures have been provided to ensure
such utilization.
Rule if the owner desires to make alterations
in the approved subdivision plan
GR: No owner or developer shall change or alter
the roads, open spaces, infrastructures, facilities
for public use and/or other form of subdivision
development as contained in the approved
subdivision plan and/or represented in its
advertisements
XPN: If he has obtained the permission of the
HLURB and the written conformity or consent of
the duly organized homeowners association, or in
the absence of the latter, by the majority of the lot
buyers in the subdivision.
Q: May payment made by a buyer be forfeited
in favor of the owner or developer in case the
buyer desists from further payment due to the
failure of the owner or developer to develop
the subdivision or condominium project
according to the approved plan within the time
limit provided for such? What is the buyer’s
remedy in this case?
A: NO, such forfeiture is not allowed. Such buyer
may, at his option, be reimbursed the total amount
paid including amortization interests but
excluding delinquency interests, with interest
thereon at the legal rate.
NOTE: Sections 23 and 24 of Pres. Decree 957,
provide that no installment payments made by the
buyer in a subdivision or condominium project for
the lot or unit he contracts to buy shall be
forfeited in favor of the owner or developer when
the buyer, after due notice to the owner or
developer desists from further payment due to the
failure of the owner or developer to develop the
subdivision or condominium project according to
the approved plans and within the time limit for
475
complying with the same. The sections also grant
to the buyer the option to be reimbursed the total
amount paid (Villanueva, 2009).
Defaulting buyers have rights under the
Decree
The rights of the buyer in the event of this failure
to pay the installments due for reasons other than
the failure of the owner or developer to develop
the project shall be governed by RA 6552 or the
Maceda Law.
Where the transaction or contract was entered
into prior to the effectivity of RA 6552 on August
26, 1972, the defaulting buyer shall be entitled to
the corresponding refund based on the
installments paid after the effectivity of the law in
the absence of any provision in the contract to the
contrary.
Owner or developer’s obligation in case the lot
bought and fully-paid by the buyer is
mortgaged
In the event a mortgage over the lot or unit is
outstanding at the time of the issuance of the title
to the buyer, the owner or developer shall redeem
the mortgage or the corresponding portion
thereof within six months from such issuance in
order that the title over any fully paid lot or unit
may be secured and delivered to the buyer in
accordance herewith.
Parties CANNOT waive compliance with the
decree
Any condition, stipulation, or provision in contract
of sale whereby any person waives compliance
with any provision of the Decree or of any rule or
regulation issued thereunder shall be void.
Notice NOT required in the demand of refund
Section 23 of PD 957 does not require that a
notice be given first by the buyer to the seller
before a demand for refund can be made as the
notice and demand can be made in the same letter
or communication (Villanueva, 2009).
Q: Ernesto Marcelo sold the lot where the
water tank of the subdivision, Happy Glen
Loop, is located for almost 30 years to
Hermogenes Liwag, president of the
Homeowner’s association of the said
subdivision. Is the sale of the lot where the
water tank was located valid?
 CIVIL LAW
A: NO. Taking into consideration the intention of
the law to create and maintain a healthy
environment in human settlements, the location of
the water facility in the Subdivision must form
part of the area reserved for open space.
The law expressly provides that open spaces in
subdivisions are reserved for public use and are
beyond the commerce of man. The sale of the
subject parcel of land by the subdivision owner or
developer to Hermogenes was contrary to law
(Liwag v. Happy Glen Loop Homeowners
Association, Inc., G.R. No. 189755, July 4, 2012).
THE CONDOMINIUM ACT (RA 4726)
Date of Approval: June 18, 1966
Condominium
It is an interest in real property consisting of
separate interest in a unit in a 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.
It may include, in addition, a separate interest in
other portions of such real property (Sec. 2, RA
4726).
Q: When is ownership acquired?
A: A purchaser of a unit who has not paid the full
purchase price thereof is not the owner of the unit
and consequently is not a shareholder of the
Condominium Corporation.
“Separate Interest”
The ownership of a condominium unit is the
“separate interest’’ of the owner which makes him
automatically a shareholder in the condominium.
Nobody can be a shareholder unless he is the
owner of a unit and when he ceases to be the
owner, he also ceases automatically to be a
shareholder (Sunset View Condominium
Corporation v. Campos, Jr., G.R. No. L-52361, April
27, 1981).
Nature of ownership in condominium projects
As to the condominium unit- the same is owned
separately and individually by the unit owner.
As to the land and to the common areas in the
condominium project- there are two situations
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
contemplated in Sections 2 and 5 of the
Condominium Act:
1. Where the land and other common areas in
the condominium project are held by the
owners of separate units as co-owners
thereof; or
In such a situation, there is co-ownership
among the unit owners, with respect to the
undivided interest in the land and common
areas.
2. Where the land and other common areas are
to be held by the condominium corporation.
In which case, the owners of the individual
units are automatically considered members
or shareholders of the corporation. Under the
provisions of the Condominium Act, the
undivided interest in the common areas or the
shareholding in the common areas is
inseparable from the unit to which it is only
an appurtenant (Rabuya, 2008).
Restrictions as regards ownership of
condominium units
1. As regards individuals:
No condominium unit shall be conveyed or
transferred to the persons other than:
a. Filipino citizens; or
b. Corporations at least 60% of capital
stock of which belong to Filipino citizens.
XPN: In cases of hereditary succession.
2. As regards corporations:
No transfer or conveyance of a unit shall be
valid if the concomitant transfer of the
appurtenant membership or stockholding in
the corporation will cause the alien interest in
such corporation to exceed the limits imposed
by existing laws.
NOTE: The law provides that no condominium
unit can be sold without at the same time selling
the corresponding amount of rights, shares or
other interests in the condominium management
body, the Condominium Corporation; and no one
can buy shares in a Condominium Corporation
without at the same time buying a condominium
unit.
It expressly allows foreigners to acquire
condominium units and shares in condominium
476
 SALES
corporations up to not more than 40% of the total
and outstanding capital stock of a Filipino-owned
or controlled corporation. Under this set up, the
ownership of the land is legally separated from
the unit itself. The land is owned by a
Condominium Corporation and the unit owner is
simply a member in this Condominium
Corporation. As long as 60% of the members of
this Condominium Corporation are Filipino, the
remaining members can be foreigners (Hulst v. PR
Builders, Inc., G.R. No. 156364, September 25, 2008).
Incidents of Condominium Grant (Sec. 6, RA
4726)
Unless otherwise provided in the enabling law or
master deed or the declaration of restrictions:
1. The boundary of the unit granted are the
interior surfaces of the perimeter walls, floors,
ceilings, windows and doors;
2. There shall pass with the unit, as an
appurtenance, an exclusive easement for the
use of the air space encompassed by the
boundaries of the unit as it exists at any
particular time and as the unit may lawfully
be altered or reconstructed from time to time;
NOTE: Such easement shall be automatically
terminated in any air space upon destruction
of the unit as to render it untenable.
3. Unless otherwise, provided, the common
areas are held in common by the holders of
units, in equal shares, one for each unit;
4. A non-exclusive easement for ingress, egress
and support through the common areas is
appurtenant to each unit and the common
areas are subject to such easements.
Rights of Condominium Owner [Sec. 6 (e)(f) (g),
RA 4726]
1. Exclusive right to paint, repaint, tile, wax,
paper or otherwise refinish and decorate the
inner surfaces of the walls, ceilings, floors,
windows and doors bounding his own unit;
2. Exclusive right to mortgage, pledge or
encumber his condominium and to have the
same appraised independently of the other
condominiums;
NOTE: Any obligation incurred by such
condominium owner is personal to him.
3. Absolute right to sell or dispose of his
condominium.
477
XPN: Unless the master deed contains a
requirement that the property be first
offered to the condominium owners within a
reasonable period of time before the same is
offered to outside parties.
Partition (Sec. 7, RA 4726)
GR: Common areas shall remain undivided, and
there shall be no judicial partition thereof.
XPN: Where several persons own condominiums
in a condominium project, an action may be
brought by one or more such persons for partition
thereof by sale of the entire project, as if the
owners of all of the condominiums in such project
were co-owners of the entire project in the same
proportion as their interests in the common areas:
NOTE: However, a partition shall be made
only upon a showing that:
1. Three (3) years after damage or
destruction to the project which renders
material part thereof unit 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. Damage or destruction to the project has
rendered one-half or more of the units
therein untenable and that condominium
owners holding in aggregate more than
thirty percent interest in the common
areas are opposed to repair or restoration
of the project; or
3. The project has been in existence in
excess of fifty (50) years, that it is
obsolete and uneconomic, and that
condominium owners holding in
aggregate more than fifty percent (50%)
interest in the common areas are opposed
to repair or restoration or remodeling or
modernizing of the project;
4. The project or a material part thereof has
been condemned or expropriated and
that the project is no longer viable, or that
the condominium owners holding in
aggregate more than seventy percent
interest in the common areas are opposed
to continuation of the condominium
regime after expropriation or
condemnation of a material portion
thereof; or
5. The conditions for such partition by sale
set forth in the declaration of restrictions,
duly registered in accordance with the
terms of the Act, have been met.
 CIVIL LAW
Registration of declaration of restrictions and
its effect
The owner of a project shall, prior to the
conveyance of any condominium therein, register
a declaration of restrictions relating to such
project.
Such restrictions shall constitute a lien upon each
condominium in the project, and shall insure to
and bind all condominium owners in the project.
NOTE: Such liens, unless otherwise provided, may
be enforced by any condominium owner in the
project or by the management body of such
project.
Q: May the management body acquire and
hold, for the benefit of the condominium
owners, tangible and intangible personal
property and dispose of the same by sale or
otherwise?
A: YES, unless otherwise provided for by the
declaration of restrictions.
NOTE: The beneficial interest in such personal
property shall be owned by the condominium
owners in the same proportion as their respective
interests in the common areas.
A transfer of a condominium shall transfer to the
transferee ownership of the transferor's beneficial
interest in such personal property.
Condominium Corporation
A corporation specially formed for the purpose, in
which the holders of separate interest shall
automatically be members or shareholders, to the
exclusion of others, in proportion to the
appurtenant interest of their respective units in
the common areas.
NOTE: As regards title to the common areas,
including the land, or the appurtenant interests in
such areas, these may be held by a condominium
corporation.
Term of a condominium corporation
Co-terminus with the duration of the
condominium project, the provisions of the
Corporation Law to the contrary notwithstanding.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Q: May a condominium corporation sell,
exchange, lease or otherwise dispose of the
common areas owned or held by it in the
condominium project?
A:
GR: During its existence, it cannot do so, especially
when the master deed contains a requirement that
the property should first be offered to the other
condominium owners within a reasonable time
before offering it to third parties, then it may not.
XPN: If authorized by the affirmative vote of a
simple majority of the register owners, subject to
prior notifications to all registered owners and
only upon the final approval of the Housing and
Land Use Regulatory Board (Sec. 2, Republic Act
No. 7899).
Assessment as lien upon unit (Sec. 20, RA 4726)
An assessment upon any condominium made in
accordance with a duly registered declaration of
restrictions shall be an obligation of the owner
thereof at the time the assessment is made. The
amount of any such assessment plus any other
charges thereon, such as interests, cost (including
attorney’s fees) and penalties, as such as may be
provided for in the declaration of restrictions,
shall be and become a lien upon the condominium
assessed when the management body causes a
notice of assessment to be registered with the
Registered of Deeds of the city or province where
such condominium project is located. Such lien
shall be superior to all other liens registered
subsequent to the registration of said notice of
assessment except real property tax liens and may
be enforced in the same manner provided for by
law for the judicial or extra-judicial foreclosure of
mortgages of real property (Rabuya, 2008).
Rule as regards enforcement of the lien
Such liens may be enforced in the same manner
provided for by law for the judicial or extra-
judicial foreclosure of mortgages of real property.
Q: Can the management body bid in the
foreclosure sale based on the lien for unpaid
assessments?
A: GR: YES, the management body shall have
power to bid at foreclosure sale (Sec. 20, par. 3, RA
4726).
XPN: Unless otherwise provided for in the
declaration of restrictions.
478
 LEASE
NOTE: The condominium owner shall have the
same right of redemption as in cases of judicial or
extra-judicial foreclosure of mortgages.
LEASE
2. Lease of work – which refers to a contract for
a piece of work, involving an obligation on the
part of the contractor (lessor) to execute a
piece of work for the employer (lessee) in
consideration of a certain price or
compensation (NCC, Art. 1713).

NOTE: Duties of a contractor who furnishes work

and materials:
GENERAL PRINCIPLES
a. To deliver
b. To transfer ownership; and
c. To warrant eviction and hidden defects
Lease
3. Lease of service – involving an obligation on
A lease is a contract where one of the parties binds
the part of the housekeeper, laborer or
himself to give to another the enjoyment or use of
employee, or common carrier to do or
a thing for a certain price and for a period which
perform a service for the head of a family, or
may be definite or indefinite but not longer than
master, employer, or passenger or shipper of
99 years (NCC, Art. 1643). (1997 BAR)
goods, respectively, in consideration of
compensation.
It is a consensual, bilateral, onerous and
commutative contract by which the owner
NOTE: Since lease is consensual and is not
temporarily grants the use of his property or the
imposed by law, only the lessor has the right to fix
rendering of some service to another who
the rents. However, the increasing of the rent is
undertakes to pay some rent, compensation or
not an absolute right on the part of the lessor.
price (Rabuya, 2017).
Characteristics or Requisites for Lease of
Essential Elements of Lease
Things
1. Consent
1. Consensual;
a. On part of owner – nobody can force
2. Principal;
an owner to lease out his property if
3. Nominate;
he is not willing.
4. Purpose is to allow enjoyment or use of a
b. On part of lessee
thing;
GR: No person can be compelled to become a
NOTE: The person to enjoy is the lessee; the
lessee against his will.
person allowing the enjoyment by another is
the lessor.
XPN: In industrial accession where both the
landowner and the builder, planter or sower
Subject matter must be within the commerce
acted in good faith, the builder or planter can
of man;
be compelled to pay reasonable rent if they
cannot be obliged by the landowner to buy the
5. Purpose to which the thing will be devoted
land because its value is considerably more
should not be immoral;
than that of the building or trees. In case of
a. Onerous;
the sower, he can also be compelled to pay
proper rent by the landowner (NCC, Art. 448).
NOTE: There must rent or price certain.
3. Object of subject matter
4. Rent (Rabuya, 2017)
6. Period is Temporary;
Kinds of Lease according to subject matter
NOTE: Not perpetual, hence, the longest
period is 99 years.
1. Lease of things – whether real or personal,
involving an obligation on the part of the
7. Period is either definite or indefinite; and
lessor to deliver the thing which is the object
If no term is fixed, we should apply
thereof and the correlative right of the lessee
Art.1682 of NCC (for rural leases) and Art.
to the peaceful and adequate enjoyment
1687 of NCC (for urban leases)
thereof for a price certain (NCC, Art. 1654); or

479
 CIVIL LAW
If the term is fixed but indefinite, the NOTE: In lease of
court will fix the term under the law of things, the transfer
obligations and contracts; and which one of the parties
obligates himself to
8. Lessor need not be the owner. make is not one of
ownership over the
NOTE: A usufructuary may thus lease the thing but merely the
premises in favor of a stranger, such lease to end enjoyment or use
at the time that the usufruct itself ends. thereof (Rabuya, 2017).
Transfer is temporary. Transfer is permanent,
Consideration of Lease unless subject to a
resolutory condition.
The cause of a contract of lease of things must be a
price certain generally called “rent” in money or The lessor need not be The seller must be the
its equivalent, or some other prestation which the the owner. owner or at least
lessee binds himself to undertake. The important authorized by the
thing is that what is given by the lessee has value owner to transfer
(De Leon, 2005). ownership, of the thing
sold at the time it is
Rent delivered.

The compensation either in money, provisions, The price of the subject The price of the thing is
chattels, or labor, received by the lessor from the matter is usually not usually fixed in the
lessee (Tolentino and Manio v. Gonzalez Sy Chiam, mentioned, being contract.
G.R. No. 26085, August 12, 1927). immaterial.

Rent under Rent Control Act
It is the amount paid for the use or occupancy of a
residential unit whether payment is made on a
monthly or other basis (Sec. 4, RA 934, Rent
Control Act).
NOTE: A lease of personal property with option to
buy (at a nominal amount) (Art. 1485 of NCC) at
the end of the lease can be considered a sale
(Abella v. Gonzaga, 56 Phil. 132; U.S. Com. Co. v.
Halili, 49 O.G. 2281; Viuda de Jose v. Barrueco, 67
Phil. 191)

Owner has the right to fix the rent because the Lease v. Usufruct
contract is consensual and not imposed by law,
but increasing the rent is not an absolute right of LEASE USUFRUCT
the lessor. The new rate must be reasonable and Real right only in the Always a real right.
in no case shall the lessor be allowed to increase case of the lease of real
the rental when the term has not yet expired, property where the
unless, the tenant consents (Paras, 2008). lease is registered.

Form of Lease Contract The lessor may or may The creator of the right
not be the owner. must be the owner or
GR: Lease may be made orally. one duly authorized by
him.
XPN: If the lease of real property is made for more
than one year, it must be in writing, in compliance The lessor has the The owner has the
with the Statute of Frauds [NCC, Art. 1403 (2)(e)]. active obligation to passive duty to allow
maintain the lessee in the usufructuary to
Distinctions between ‘Lease of Things’ and the enjoyment or use of enjoy or use the same.
‘Other Contracts’ the property.
Lease v. Sale The lessee generally The usufructuary pays
pays no taxes. the annual charges and
LEASE SALE taxes on the fruits.
Only the enjoyment or Ownership is
use is transferred. transferred. The lessee generally The usufructuary is
has no obligation to pay obliged to make the

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 480
 LEASE
for repairs. ordinary repairs Lease of Services v. Contract for a Piece of
needed by the thing Work
given in usufruct.
LEASE OF SERVICES CONTRACT FOR A
The lessee cannot The usufructuary may (Locatio Operatum) PIECE OF WORK
constitute a usufruct on lease the thing in (Locatio Operas)
the property. usufruct to another. The object of the The object of the
contract is the labor or contract is the work
As a rule, may be May be created by law, service itself done (the result of the
created only by contract, last will and performed by the labor) without
contract. testament or lessor. considering the labor
prescription. that produced it.

Generally covers As a rule covers all The result is generally The result is generally
particular uses limited possible uses of the not important, hence important; the price is
by the contract. property. the laborer is entitled not payable until the
to be paid even if there work is completed, and
Lease v. Commodatum is destruction of the said price cannot be
work through lawfully demanded if
LEASE COMMODATUM fortuitous event or the the work is destroyed
Onerous contract, Essentially gratuitous. result intended not before it is finished and
although the rent may attained. accepted.
subsequently be
condoned or remitted. There is a price certain (compensation);
The relation of principal and agent does not exist
Not essentially Purely personal in between the lessor and lessee.
personal in character character, and
and, therefore, the right consequently, the death Lease of Services v. Agency
may be transmitted to of either the bailor or
the heirs. the bailee extinguishes LEASE OF SERVICES AGENCY
the contract.
The basis is It is representation.
employment.
Consensual contract. Real contract as it is
perfected only upon
The lessor performs a The agent executes a
delivery of the object
material act for the juridical act for and in
thereof.
benefit of his employer behalf of his principal.
without representation
Both contracts consist in the transmission of the
of the latter.
enjoyment or use of a thing to another.
The work or service It is presumed for a
Lease of Work v. Lease of Service
must be for a price or compensation.
compensation.
LEASE OF WORK LEASE OF SERVICE
The object is the It is the performance of The will of both parties The will of one is
execution of a piece of some service or an is necessary for the sufficient.
work for an employer employer by a extinguishment of the
by an independent househelper or laborer relationship.
contractor. or for a passenger or
owner of goods by
Only two persons are Three persons: the
common carrier.
involved: the lessor principal, the agent and
and lessee. the third person with
In both kinds of lease, the employer or passenger whom the agent has
or owner of goods binds himself to pay some contracted.
remuneration or compensation in favor of the
independent contractor, employee, or common
The risk of loss before The risk is borne by the
carrier and the relation of principal and agent
delivery is borne by principal since the agent
does not exist between the parties.
the independent acts merely as his

481
 CIVIL LAW
contractor, esp. in the representative. NOTE: A price certain exists when the same can
lease of work for a be ascertained according to the customs and
fixed price. usages of the place.

In the lease of work, The agent is not, unless Lease of Consumable Goods
the independent he expressly binds
contractor is himself or exceeds the GR: Consumable goods cannot be the subject
personally liable for limits of his authority. matter of a contract of lease of things (NCC, Art.
his contracts with third 1648, 1st part).
persons.
In the lease of service, The agent exercises Reason: To use or enjoy them, they will have to
the lessor ordinarily discretionary powers. be consumed. This cannot be done by the
performs only lessee since ownership over them is NOT
ministerial duties. transferred to him by the contract of lease.

Lease of Things v. Lease of Services XPNs: They may be leased:

LEASE OF THINGS LEASE OF SERVICES a. If they are merely to be exhibited as for

Object of contract is a Object is some work or display purposes; (lease ad pompan et
thing. service. ostentationem);
b. If they are accessory to an industrial
Lessor has to deliver Lessor has to perform establishment (e.g. oil in an industrial
the thing leased. some work or service. firm)

In case of breach, there In case of breach, no Persons Disqualified to Be Lessees

can be an action for action for specific
specific performance. performance.
Compensation in lease of work or service
1. When there is an agreement
The lessee must be compelled to pay the
agreed price unless it is found to be iniquitous
or unreasonable in which case the courts may
fix a reasonable and just remuneration. Where
the compensation is renounced or waived
after the service has been rendered, there is
still a lease of service although it has become
gratuitous.
1. Husband and wife cannot lease to each other
their separate properties except:
a. If a separation of property was agreed
upon in the marriage settlement;
b. If there has been a judicial separation
under Art. 135 of the Family Code; (NCC,
Art. 1490)
Reasons for the disqualification:
1. To prevent prejudice to creditors;
2. To prevent the stronger spouse from
influencing unduly the weaker
spouse.

2. Where the agreement may be implied
One who performs work or service in favor of
another who impliedly consents thereto and
who benefits thereby, is entitled to
compensation by virtue of an innominate
contract of facio ut des (I give that you may
do) or of the case of services tacitly contracted
in which case the courts will fix the
reasonable worth of the services rendered.
3. Where no rate or amount is fixed in the
contract
The contract is nevertheless valid if the
amount can be ascertained in the light of the
customs and usages of the place, or by
findings of fact on the basis of evidence
submitted in case of disagreement.
NOTE: The prohibition applies even to
common law spouses. For otherwise said
spouses would be placed in a better position
than legitimate spouses.
2. Persons referred to under Art. 1491 of NCC
are disqualified because of fiduciary
relationships.
NOTE: While foreigners in general cannot buy
rural or urban lands, they may become lessees
thereof since the reason for the law —
fiduciary relationship — does not exist in this
case (Smith, Bell and Co. v. Reg. of Deeds, G.R.
No. L-7084, October 27, 1954).
Hence, foreigners may lease land from others
(NCC, Art. 1643).

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 482
 LEASE
Lease of private lands by foreigners
a. Foreigner investing in the Philippines
Any foreigner investing in the Philippines is
allowed to lease private lands but the lease
contract shall be for a period not exceeding 50
years renewable once for a period of not more
than 25 years and the lease area shall be used
solely for the purpose of investment upon the
mutual agreement of the parties (Sec. 4, RA
7652).
b. Foreigner not investing
Allowed to lease private lands in the
Philippines but for a maximum period of 25
years, renewable for another 25 years upon
mutual agreement of both parties (Sec 1, PD
471).
Estoppel against lessee
A lessee is stopped from asserting title to the thing
leased as against the lessor (NCC, Art. 1436), or to
deny the lessor’s title, or to assert a better title not
only in himself, but also in some third person,
including the State while he remains in possession
of the leased property and until he surrenders
possession to the lessor (VSC Commercial
Enterprises, Inc. v. CA, G.R. No. 121159, December
16, 2002).
This estoppel applies even though the lessor had
no title at the time the relation of lessor and lessee
was created. It may be asserted not only by the
original lessor, but also by those who succeed to
his title (Geminiano v. CA, G.R. No. 120303, July 24,
1996).
Q: Fred sold to Juan a parcel of land, belonging
to his minor son, Lino, then under his
guardianship, without judicial approval. After
the sale, Juan immediately took possession of
the land, built a house and religiously paid the
taxes thereon. Nine years thereafter, Lino, no
longer a minor, rented the ground floor of the
house built by Juan. Lino paid the rent for the
first month, then stopped paying. Two years
thereafter, when pressed for payment of the
accrued rent, Lino refused, claiming
ownership over the property, alleging that the
sale of the property to Juan while he was a
minor without the approval of the
guardianship court rendered the sale null and
void. Is the claim of Lino valid and
meritorious? Explain. (1987 BAR)
A: NO. Lino’s claim is not valid and not
meritorious because Lino is in estoppel. A lessee
cannot assail the right and title of the lessor and
483
cannot claim ownership as against the lessor. The
fact that the sale was made while Lino was a
minor is of no moment because he recognized and
ratified the contract after he was already of
majority age.
Purpose in Recording a Lease
A lease DOES NOT have to be recorded in the
Registry of Property to be binding between the
parties.
Registration is useful only for the purposes of
notifying strangers to the transaction (NCC, Art.
1648). Registration is not essential for the validity
of the contract but is needed to make it effective
regarding third persons (Rabuya, 2017).
Proper Authority Required
If a lease is to be recorded, the following persons
must have special power of attorney to constitute
the lease:
1. Husband – with respect to the paraphernal
real estate of the wife;
2. Father or guardian – with respect to the
property of the minor or the ward;
3. Manager or administrator – with respect to
the property under his administration.
NOTE: The “manager” here may be:
a. The administrator of conjugal property
(Rodriguez v. Borromeo, G.R. No. L-17772,
June 9, 1922);
b. The administrator of a co-ownership
(Melencio v. Dy Tiao Lay, G.R. No. L-
32047, November 1, 1930); or
c. The administrator of state patrimonial
property (Tipton v. Andueza, G.R. No. L-
2220, April 4, 1906).
Q: A husband was properly given by his wife
the authority to administer her paraphernal
real property. Does this necessarily mean that
just because the husband is now the
administrator, he can lease said property
without any further authority?
A: It depends.
1. If the lease will be for one year or less, no other
authority is required;
2. If the lease on the real property will be for
more than a year, then a special power of
attorney (aside from the public instrument
transferring administration) is required (NCC,
Art.1878); or
 CIVIL LAW
3. Furthermore, whether it be a) or b), if the lease
is to be recorded, there must be a special
power of attorney (NCC, Art. 1647).
NOTE: If it is the wife who is administering her
paraphernal real property, the husband has no
authority whatsoever, to lease, in any way, or
administer the property.
Q: If a father, who is administering the real
estate of his minor son, wants to record the
lease, should he ask for judicial permission?
A: YES. A father who is administering the real
estate of his minor son should ask for judicial
permission if he wants to record the lease (Art.
1647). But even if no judicial authorization is
asked, such defect cannot be invoked by a lessee
who has dealt with him (Summers v. Mahinay, [CA]
40 O.G. [11th S] No. 18). Only the son or his own
heirs may question the validity of the transaction.
Q: Is lease a real or a personal right?
A: Generally, it is a personal right. But it partakes
of the nature of a real right if:
a. the lease of real property is for more than
one year;
b. the lease of real property is registered
regardless of duration.
NOTE: In both cases a special power of
attorney is required because these are
acts of strict dominion, and not merely of
administration [NCC, Arts. 1647 &
1878(8)].
Effects if the lease of real property is not
registered
1. The lease is not binding on innocent third
persons such as a purchaser (Salonga, et al. v.
Acuña, C.A., 54 O.G. 2943);
2. Naturally, such an innocent third person is
allowed to terminate the lease in case he buys
the property from the owner-lessor. (NCC, Art.
1676) (2009 BAR);
3. When a third person already knows of the
existence and duration of the lease, he is bound
by such lease even if it has not been recorded.
The reason is simple: actual knowledge is, for
this purpose, equivalent to registration
(Quimson v. Suarez, G.R. No. L-21381, April 5,
1924; and Gustilo v. Maravilla, G.R. No. L-23386,
December 12, 1925); and
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
NOTE: But if the sale is fictitious and was only
resorted to for the purpose of extinguishing the
lease, the supposed vendee cannot terminate
the lease. The sale is presumed fictitious if at
that time the supposed vendee demands the
termination of the lease, the sale is not
recorded in the Registry of Property (Art. 1676,
3rd paragraph, NCC).
4. If the stranger knows of the existence of the
lease, but has been led to believe that the
lease would expire very soon, or before the
new lease in favor of him begins (when in fact
this was not true), the stranger can still be
considered innocent (Quimson v. Suarez, G.R.
No. L-21381, April 5, 1924).
Rules on lease of things when lessee is an alien
1. Personal property – 99 year limit applies;
2. Aliens cannot lease public lands, and cannot
acquire private lands except through
succession;
3. If lease of real property (private lands),
maximum of 25 years renewable for another
25 years (PD 713).; and
4. Under the Investor’s Lease Act of 1995 (ILA),
the 25 year period was extended to 50 years
provided the following conditions are met:
a. Lessee must make investments;
b. Lease is approved by DTI; and
c. If terms are violated, DTI can terminate it.
NOTE: The Investor’s Lease Act of 1995 (ILA) did
not do away with P.D. 713, under ILA the consent
of DTI is required, while in P.D. 713 no consent is
required.
Right of a purchaser of a leased property
GR: Purchaser of thing leased can terminate the
lease.
XPNs:
1. Lease is recorded in Registry of Property;
2. There is a stipulation in the contract of sale
that the purchaser shall respect the lease;
3. Purchaser knows the existence of the lease;
4. Sale is fictitious; or
5. Sale is made with a right of repurchase.
Term of lease contract
GR: The law does not allow perpetual lease. There
must be a period which may either be definite or
indefinite.
When no period is fixed:
484
 LEASE
1. In case of lease of rural lands (NCC, Art. 1682);
2. In case of lease of urban lands (NCC, Art.
1687); or
3. Lease during the lifetime of one of the parties
A lease of things during the lifetime of one of
the parties is valid, which is considered one
for life, ending upon the death of the party
who could have terminated the contract
(Rabuya, 2017).
ASSIGNMENT OF LEASE (1990, 1994, 2005
BAR)
Assignment of lease by lessee
Lessee cannot assign the lease contract without
the consent of the lessor, unless there is a
stipulation to the contrary (NCC, Art. 1649).
In an assignment of lease, the personality of the
lessee (assignor/debtor) disappears. The lessee
makes an absolute transfer of his lease, involving
not only his rights but also obligations as such
lessee and thus, dissociates himself from the
original contract of lease. There arises the new
juridical relation between the lessor and the
assignee who is converted into a new lessee.
There is in effect, a novation by substituting the
person of the debtor [NCC, Art. 1291 (2)] and
novation cannot take place without the consent of
the creditor (NCC, Art. 1293). Hence, the lessee
cannot assign the lease without the consent of the
lessor (creditor), unless there is a stipulation
granting him that right.
Objective: to protect the lessor or owner of the
leased property. An assignment of lease without
the consent of the lessor is a ground for rescission
of the lease.
SUBLEASE
It is a separate and distinct contract of lease
wherein the original lessee becomes a sublessor o
a sublessee of the thing, in whole or in part,
without prejudice to his responsibility for the
performance of the contract toward the lessor
(NCC, Art. 1650).
The lessee may sublet the thing leased, in whole or
in part, unless expressly prohibited in the contract
of lease (NCC, Art. 1650).
Nature of Sublease
It is a separate and distinct contract of lease
wherein the original lessee becomes a sublessor to
a sublessee.
485
The reason why assignment is generally
prohibited while subleasing is generally allowed is
because the assignment of the lease contract is a
novation where the personality of the lessee
disappears. In sublease, on the other hand, the
lessee remains to be a party to the lease contract
and he remains liable to the lessor (Rabuya, 2017).
Right of Lessee to Sublease (1990, 1999, 2005
BAR)
Unlike in assignment, a lessee may generally
sublease the property in the absence of express
prohibition because he lessee remains a party to
the lease even if he has already created a sublease
thereon. Hence, for example, he still must pay
rents to the lessor (Paras, 2008).
Note: Art. 1650 of NCC says “express prohibition.”
Hence, if the prohibition is merely implied, a
sublease will still be allowed (Susana Realty v.
Fernandez, et al., CA, 54 O.G. 2206).
In sublease, the lessee remains a party to the
contract.
There are two leases and two distinct juridical
relations:
1. Between the lessor and the lessee, and
2. Between the sublessor (lessee) and the
sublessee.
The lessee is still responsible for the performance
of his obligations toward the lessor.
A judgment of eviction against the lessee affects
the sublessee even if the latter is not sued in the
ejectment case.
Reason: The sublesee can invoke no right
superior to that of the sublessor from which his
own right is derived, and the moment the
sublessor is duly ousted from the premises, the
sublessee has no leg to stand on.
Parties to a Sublease
1. Lessor;
2. Sublessor (original lessee in the contract of
lease); and
3. Sublessee
Juridical relationships in a sublease
arrangement
1. Principal lease; and
2. Sublease
 CIVIL LAW
These relationships co-exist and are intimately thing leased in accordance with the agreement
related to each other but are distinct from one between the lessor and the lessee or with the
another (Albano, 2013). nature of the property. It is not necessary that the
sublessor be joined as a defendant (NCC, Art.
Q: Alfonso was the owner of a building being 1651).
leased to Beatriz. The contract allowed
subleasing of the building, thus, Beatriz This is true, notwithstanding the fact that the
subleased it to Charlie. Charlie directly paid sublessee is not a party to the lease contract
his rent to Alfonso after the lease expired. Was (Paras, 2008).
Charlie correct?
Subsidiary liability of sublessee to lessor
A: NO. There are two (2) distinct leases involved, (1999 BAR)
the principal lease and the sublease. In such
agreement, the personality of the lessee does not 1. Remedy to collect rents from the sublessee
pass on to or is acquired by the sublessee. Thus, The law grants the lessor the right to demand
the payment to the lessor was not payment to the payment from the sublessee the rents which the
sublessor. Alfonso was a stranger to the sublease sublessor failed to pay the lessor. The demand
agreement (Blas v. CA, G.R. No. 82813, December to pay rents made by the lessor on the sublessee
14, 1989). does not exempt the latter from his obligation to
pay the sublessor the rents which said sublessee
Sublease v. Assignment (1990, 1994, 2005 failed to pay the lessor.
BAR)
Purpose: To prevent a situation where the
SUBLEASE ASSIGNMENT lessee collects rents from the sublessee but does
The lessee retains an The lessee makes an not pay his rents to the lessor.
interest in the lease; absolute transfer of his
he remains a party to interest as lessee; thus, 2. Amount of rent recoverable
the contract. he dissociates himself The liability of the sublessee is limited to the
from the original amount of rent due from him to the sublessor
contract of lease. under the terms of the sublease at the time of
the extrajudicial demand by the lessor. Future
The sublessee does The assignee has a rents cannot be recovered. He is liable to the
not have any direct direct action against lessor only for rents the lessee failed to pay the
action against the the lessor. lessor.
lessor.
NOTE: The liability of the sublessee is
Can be done even Cannot be done unless subsidiary.
without the the lessor consents.
permission of the 3. Liability for rents paid in advance
lessor unless there be The sublessee continues to be subsidiarily liable
an express to the lessor for any rent unpaid by the lessee.
prohibition. The rule is to avoid collusion between the lessee
and the sublessee.
Liability of Sublessee towards Lessor (1999,
2000 BAR) Warranty of the lessor

Although the sublessee is not a party to the
contract of lease, the sublessee is still directly
liable to the lessor for acts appertaining to the use
and preservation of the property. This is of course
in addition to the sublessee’s obligation to the
sublessor. Note also that the liability for rent is
given in Art. 1652 of NCC (Paras, 2008).
1. That he has a right to lease the thing;
2. That the lessee shall enjoy the legal and
peaceful possession of the thing;
3. That the thing is fit for the use for which it is
intended;
4. That the thing is free from any hidden fault or
defect (De Leon, 2005).

Direct Action by the Lessor (Accion Directa) In case of eviction of the lessee, and the return of
the rents paid is required, a reduction shall be
The lessor may bring an action directly against the made taking into account the period during which
sublessee if he does not use and preserve the the lessee enjoyed the thing.

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 486
 LEASE
The lessee has also the right of proportionate
reduction of the rents agreed upon where the area
or number of the object of the lease is less than
that stated in the contract (NCC, Art. 1542).
Lessor’s warranty is distinct from his liability
for damages
Liability for the warranty is not equivalent to
liability in damages, as the latter is an obligation
distinct from the former.
The lessor’s obligation to warrant the thing leased,
whether or not he knew of the existence therein of
defects that rendered it unsuitable for the use for
which the lessee intended it, is distinct from his
liability for damages, which only attaches when he
knew about such defects and failed to reveal them
to the lessee or concealed them, in which case
fraud and bad faith may be presumed on his part
(Yap Kim Chuan v. Tiaoqui, G.R. No. 10006,
September 18, 1915).
RIGHTS AND OBLIGATIONS OF THE LESSOR
AND THE LESSEE
Rights and obligations arising from lease
contract are transmissible to the heirs
3. Duty of the lessee to notify lessor (NCC, Art.
1. A lease contract is not essentially personal in
character;
2. The rights and obligations are transmissible to
the heirs; and
3. The death of the party does not excuse
nonperformance of contract which involves a
property right and the rights and obligations
pass to the successors or representatives of
the deceased.
OBLIGATIONS OF THE LESSOR
(1996, 2010 BAR)
1. Delivery of the property
The thing leased must be delivered in order
that the lessee may enjoy or use the same.
Delivery may, of course, be actual or
constructive (NCC, Art. 1496, first part).
The thing must be delivered, without delivery
there could be no lease because delivery goes
to the essence of the contract. Delivery cannot
be waived.
2. Making of necessary repairs
Includes all the repairs needed, whether the
damage be caused by nature, fortuitous event
487
or lapse of time, but not those brought about
by the fault of the lessee himself or by his
privies or his servants whether the defect was
caused prior to or after the delivery of the
object (Rabuya, 2017).
Article 1654 of NCC speaks of necessary
repairs to keep the thing leased suitable for
the use to which it has been devoted unless
there is a stipulation to the contrary. In
default of a special stipulation, the custom of
the place shall be observed as to the kind of
repairs (NCC, Art. 1686). In case, the lessor
fails in the performance of this duty, the
lessee may suspend the payment of rent (NCC,
Art. 1658) or avail himself of the other
remedies provided in the law. The lessor is
not liable for repairs for damages or
deterioration caused by the lessee himself.
NOTE: The word “repairs’’ implies the putting
back of something in the condition in which it
was originally, while an “improvement’’ is the
adding of something new thereto; hence, the
filling of a vacant lot is not a repair (Albano v.
Villanueva, 7 Phil. 277 [1906]) nor the
construction of a house [Valencia v. Ayala de
Roxas, 13 Phil. 45 (1909)].
1663)
Peaceful and adequate enjoyment refers to
legal, not physical possession. Hence, a lessor
is not, for instance, liable for physical
disturbances in the neighborhood, but is liable
if the lessee is evicted due to non-payment of
taxes by the lessor (Paras, 2008).
The lessor’s obligation to maintain the lessee
arises when acts termed “legal trespass’’
disturb, dispute, or place difficulties in the
lessee’s peaceful and adequate enjoyment of
the leased premises that in some manner or
other cast doubt upon the right of the lessor
to execute the lease. The lessor must answer
for such legal trespass (Liwayway
Publications, Inc. v. Permanent Concrete
Workers Union, G.R. No. L-25003 October 23,
1981).
There is mere act of trespass when third
person claims no right whatsoever. In
trespass in law, the third person claims a legal
right to enjoy the premises (Rabuya, 2017).
NOTE: When it is merely trespass in fact, the
lessor cannot be faulted for any breach. The
 CIVIL LAW
lessee can file a direct action against the
trespasser such as forcible entry or illegal
detainer.
4. Duty not to Alter Form
The lessor has also the duty not to alter the
form of the thing leased as to impair the use of
the said thing to which it is devoted under the
terms of the lease (NCC, Art. 1661).
Rules if urgent repairs are necessary (NCC, Art.
1662)
1. If repairs last for NOT MORE THAN 40 days
Lessee is obligated to tolerate the work,
although it may be annoying to him and
although during the same time he may be
deprived of a part of the premise.
2. If repairs last for 40 DAYS OR MORE
Lessee can ask for reduction of the rent in
proportion to the time (including the 1st 40
days and the part of the property of which he is
deprived).
NOTE: In either case, rescission may be availed
of if the main purpose of the lease is to provide
a dwelling place and the property becomes
uninhabitable.
Effects if the lessor fails to make urgent repairs
The lessee may:
1. Order repairs at the lessor’s cost;
2. Sue for damages;
3. Suspend the payment of the rent; or
4. Ask for rescission, in case of substantial
damage to him
If the contract of lease is silent as to who will
pay for repair expenses
1. Major repairs – Shouldered by the lessor; and
2. Minor repairs – Shouldered by the lessee.
Remedy of the lessee if the lessor fails to make
major or necessary repairs
Lessee may ask for:
1. Rescission of contract and indemnification for
damages; or
2. Indemnification only, while the contract
remains in force (NCC, Art. 1659).
Effect of destruction of thing leased by
fortuitous event (1993 BAR)
Total destruction
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
1. The lease is extinguished if the thing is totally
destroyed;
2. The lessee cannot compel the lessor to
reconstruct the destroyed property;
3. The lessee of the lot and building which has
been totally destroyed by fortuitous event
cannot be considered as lessee of the land after
the building had been totally destroyed by the
fortuitous event (Roces v. Rickards, [C.A.] 45
O.G. [Supp.] 97); and
4. While the land has not been affected,
consideration should be taken of the fact that
generally the land was leased only as an
incident to the lease of the building (Rohde
Shotwell v. Manila Motors Co., Inc., G.R. No. L-
7637, December 29, 1956).
Partial Destruction
Lease is not extinguished. The lessee is given the
option to choose between a proportionate
reduction of the rent and rescission of the lease.
Once the choice of the lessee has been
communicated to the lessor, the former cannot
change it (NCC, Art.1201).
If reduction of rent is chosen, the same shall be
retroactive to the date the partial destruction
occurred. In case of rescission, the general rule is
that it will not be granted for slight or trivial
causes. The partial destruction, under the
circumstances, should be important or substantial
as to defeat the purpose of the lessee in entering
into the contract of lease.
NOTE: The choice is on the LESSEE and not to the
lessor.
When lessee may suspend payment of rent
1. When lessor fails to undertake necessary
repairs.
2. When lessor fails to maintain the lessee in
peaceful and adequate enjoyment of the
property leased.
Effectivity of the suspension
1. In the case of repairs, from the time he made
the demand for said repairs, and the demand
went unheeded; or
2. In the case of eviction, from the time the final
judgment for eviction becomes effective.
OBLIGATIONS OF THE LESSEE
Principal Obligations of the Lessee (NCC, Art.
1657)
488
 LEASE
1. Payment of agreed price of lease
The obligation of the lessee to pay the rent
agreed upon arises only when the thing leased
has been delivered to the lessee for the
purposes stipulated in the contract.
2. Proper use of the thing leased
The lessee must exercise the diligence of a
good father of a family. He must devote the
thing to the use stipulated, and if none was
stipulated, to that which may be inferred from
the nature of the thing leased according to the
custom of the place.
NOTE: The use of the thing for an illegal
purpose entitles the lessor to terminate the
contract.
3. Payment of expenses for deed of lease
In lease, the law imposes the obligation to pay
expenses for the deed of lease on the lessee. By
agreement, the obligation may be assumed by
the lessor.
Other Obligations of the Lessee
1. To make urgent repairs even if annoying to him
(NCC, Art. 1662, par. 1);
2. To notify the lessor of every usurpation by a
third person or persons on the property and of
the urgent repairs needed (NCC, Art. 1663); and
NOTE: If the lessee fails to comply, he would be
liable for damages which the lessor would
suffer and which could have been avoided by
lessee’s diligence.
3. To return the property leased upon termination
of the lease in the same condition as he
received it save what has been lost or impaired
by:
- Lapse of time
- Ordinary wear and tear; or
- Inevitable cause/ fortuitous event (NCC,
Art. 1665).
Responsibility for deterioration or loss of the
thing leased
GR: Presumption that the lessee is responsible for
the deterioration or loss of the thing leased unless
he proves that it took place without his fault. Such
liability extends to deterioration caused by the
members of his household and by guests and
visitors.
XPN: When destruction is due to earthquake,
flood, storm or other natural calamity (Rabuya,
2017).
489
Q: Jude owned a building which he had leased
to several tenants. Without informing his
tenants, Jude sold the building to Ildefonso.
Thereafter, the latter notified all the tenants
that he is the new owner of the building.
Ildefonso ordered the tenants to vacate the
premises within thirty (30) days from notice
because he had other plans for the building.
The tenants refused to vacate, insisting that
they will only do so when the term of their
lease shall have expired. Is Ildefonso bound to
respect the lease contracts between Jude and
his tenant? Explain your answer. (2009 BAR)
A: YES. Ildefonso must respect the lease contracts
between Jude and his tenants. While it is true that
the said lease contracts were not registered and
annotated on the title to the property, Ildefonso is
still not an innocent purchaser for value. He ought
to know the existence of the lease because the
building was already occupied by the tenants at
the time he bought it. Applying the principle of
caveat emptor, he should have checked and known
the status of the occupants or their right to occupy
the building before buying it.
REMEDIES
Accion Directa
A direct action which the lessor may bring against
a sublessee who misuses the subleased property.
Alternative remedies of aggrieved party
1. Rescission of the contract with damages
Failure of lessor to place the lessee in
possession of the premises leased is a case of
lessor’s non-compliance with his obligation.
(1999, 2001 BAR)
Restrictions to Rescission
a. Requires judicial action;
b. Can be brought only by the aggrieved
party; and
c. Must be substantial, not slight or
minor breach.
2. Action for damages only allowing the lease to
remain subsisting
Q: Under a written contract dated December 1,
1989, Victor leased his land to Joel for a period
of five (5) years at a monthly rental of
P1,000.00, to be increased to P1,200.00 and
P1,500.00 on the third and fifth year,
respectively. On January 1, 1991, Joel
 CIVIL LAW
subleased the land to Conrad for a period of 2
years at a monthly rental of P1,500.00. On
December 31, 1992, Joel assigned the lease to
his compadre, Ernie, who acted on the belief
that Joel was the rightful owner and possessor
of the said lot. Joel has been faithfully paying
the stipulated rentals to Victor. When Victor
learned on May 15, 1992 about the sublease
and assignment, he sued Joel, Conrad and
Ernie for rescission of the contract of lease and
for damages.
1. Will the action prosper? If so, against
whom? Explain.
2. In case of rescission, discuss the rights and
obligations of the parties. (2005 BAR)
A:
1. YES, the action for rescission of the lease will
prosper because Joel cannot assign the lease to
Ernie without the consent of Victor. (NCC, Art.
1649) But Joel may sublet to Conrad because
there is no express prohibition (NCC, Art. 1650;
Alipio v. CA, G.R. No. 134100, September 29,
2000).
Victor can rescind the contract of lease with Joel,
and the assignment of the lease to Ernie, on the
ground of violation of law and of contract. The
sub-lease to Conrad remained valid for 2 years
from January 1, 1991, and had not yet lapsed
when the action was filed on May 15, 1992.
2. In case of rescission, the rights and obligations
of the parties should be as follows: At the time
that Victor filed suit on May 15, 1992, the
assignment had not yet lapsed. It would lapse on
December 1, 1994, the very same date that the
5-year basic lease would expire. Since the
assignment is void, Victor can get the property
back because of the violation of the lease. Both
Joel and Ernie have to surrender possession and
are liable for damages. But Conrad has not yet
incurred any liability on the sublease which still
subsisted at the time of the filing of the action
on May 15, 1992.
Ernie can file a cross-claim against Joel for
damages on account of the rescission of the
contract of assignment. Conrad can file a
counter-claim against Victor for damages for
lack of causes of action at the time of the filing of
the suit.
Q: A is the owner of a lot on which he
constructed a building in the total cost of P10,
000,000. Of that amount B contributed
P5,000,000 provided that the building as a
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
whole would be leased to him (B) for a period
of ten years from January 1, 1985 to December
31, 1995 at a rental of P100,000 a year. To
such condition, A agreed. On December 20,
1990, the building was totally burned. Soon
thereafter, A’s workers cleared the debris and
started construction of a new building. B then
served notice upon A that he would occupy the
building being constructed upon completion,
for the unexpired portion of the lease term,
explaining that he had spent partly for the
construction of the building that was burned. A
rejected B’s demand. Did A do right in rejecting
B’s demand? (1993 BAR)
A: YES. A was correct in rejecting the demand of B.
As a result of the total destruction of the building
by fortuitous event, the lease was extinguished
(NCC, Art. 1655).
Grounds for judicial ejectment under the
Rental Reform Act of 2002
1. Assignment of lease or subleasing of residential
units in whole or in part, including the
acceptance of boarders or bedspacers, without
the written consent of the lessor; or
2. Rental payment in arrears for 3 months;
Provided, that in case of refusal by the lessor to
accept the payment of the rent, the lessee may
deposit the amount in court or with the city or
municipal treasurer, as the case may be, or in
the bank in the name of and with notice to the
lessor, within one month after the refusal of the
lessor to accept payment.
Q: Jane leased a truck to Ed for 2 years. After 1
year from delivery, the truck was destroyed by
a strong typhoon. What is the effect of the
destruction of the truck with respect to the
lease?
A: It depends. If the thing leased is totally
destroyed by a fortuitous event, the lease is
extinguished. If the destruction is partial, the
lessee may choose between: proportional
reduction of rent or, rescission of lease (NCC, Art.
1655).
NOTE: On the part of the lessor, instead of
rescinding the contract, he may directly file an
action for ejectment against the lessee.
If the aggrieved party has chosen the option of
rescission under Art. 1659 of NCC, the court has
no discretion to grant the non-fulfillment in an
ordinary obligation under Art. 1191 of NCC.
490
 LEASE
Q: What are the damages recoverable in
ejectment cases?
A: Only the rents or the fair rental value of the
premises.
The following cannot be successfully claimed:
1. Profits plaintiff could have earned were it not
for the possible entry or unlawful detainer;
2. Material injury to the premises; and
3. Actual, moral, or exemplary damages (Baens
v. Ca, G.R. no. L-57091, November 23, 1983).
When lessee may immediately terminate the
lease (NCC, Art. 1660)
1. By notice to the lessor in case the dwelling place
or building is unfit for human habitation and is
dangerous to life or health; or
2. Even if at the time the contract was perfected,
the lessee KNEW of the dangerous condition or
WAIVED the right to rescind.
Reason: Public safety cannot be stipulated
against.
Two Kinds of trespass with Respect to the
Property Leased
1. Mere act of trespass (disturbance in fact)
The physical enjoyment is reduced and may
take place in a case of forcible entry. The third
person claims no right whatever (Paras,
2008).
NOTE: If the leased premises are
expropriated and the tenant is evicted from
the premises, the lessor is not liable for
damages. The lessee must look to the
expropriator for his compensation (Sayo v.
Manila Railroad Co., G.R. No. 17357, June 21,
1922).
2. Trespass in law (disturbance in law)
A third person claims a LEGAL right to enjoy
the premises. The lessor is responsible for
trespass in law (Paras, 2008).
Lessee is presumed at fault in case of loss or
deterioration of the property
This presumption is rebuttable. The burden of
proof is on the LESSEE to show that the loss or
deterioration is not due to his own fault, such as
when the deterioration resulted from lapse of
time, ordinary wear and tear, or from inevitable
cause (NCC, Art. 1665).
491
Non-applicability of presumption when the loss or
destruction is due to:
1. Earthquake;
2. Flood ;
3. Storm; and
4. Other natural calamities.
Reason: It is unjust to impose upon the lessee the
burden of proving due diligence. It is more
probable that in such cases he was not negligent
(Code Commission).
NOTE: Ordinarily, fire is NOT a natural calamity.
But if the tenant can prove that he had no fault in
the case of fire, and that it was impossible for him
to stop its spread, he will not be liable (Lizares v.
Hernaez and Alunan, 40 Phil. 981).
Deterioration caused by others
Although the deterioration was not caused by the
lessee himself, he is still liable under the law if the
deterioration was made by his household, guests
and visitors (NCC, Art. 1668). His liability is akin to
civil liability in quasi-delict (NCC, Art. 2180).
DURATION AND TERMINATION OF LEASE
When lease is supposed to end
1. When the lease was made for a DETERMINATE
TIME, the lease ends on the DAY FIXED,
without need of a demand (NCC, Art. 1669); or
2. If the understanding between the parties as to
the term of the lease was vague and uncertain,
it cannot be said that a definite period was
agreed upon; hence the proper Article to
apply would be Art. 1687 of NCC (Guitarte v.
Sabaco, et al., G.R. No. L-3688-91, March 28,
1960).
NOTE: Under Article 1687 of NCC, if the period for
the lease has not been fixed, it is understood to be
from year to year, if the rent agreed upon is
annual; from month to month, if it is monthly;
from week to week, if the rent is weekly; and from
day to day, if the rent is to be paid daily.
Q: May the courts fix a different period for the
lease?
A: YES. Even though a monthly rent is paid, and no
period for the lease has been set, the courts may
fix a longer term for the lease after the lessee has
occupied the premises for over one year. If the
rent is weekly, the courts may likewise determine
a longer period after the lessee has been in
 CIVIL LAW
possession for over six months. In case of daily
rent, the courts may also fix a longer period after
the lessee has stayed in the place for over one
month (NCC, Art. 1687).
When demand is necessary as a procedural
requirement
For purposes of an action for unlawful detainer on
the ground of the lessee’s failure to pay rents or
violation of the terms of the lease, Rule 70 (Rules of
Court) requires that demand be made upon the
lessee giving him 5 days (in case of buildings) and
15 days (in case of land), within which to pay the
unpaid rentals and to vacate the premises.
The demand to vacate must be definite and must
not provide an alternative.
The demand required under Rule 70 is only a
procedural requirement and does not, if not
complied with, change the fact that the lease
contract has ended upon the termination of the
period fixed for its existence (Paras, 2008).
When demand to vacate is unnecessary
When the action is to terminate the lease, demand
is not necessary. The expiration of the term of the
lease immediately gives rise to a cause of action
for unlawful detainer in which case, demand to
vacate is no longer necessary. (Paras, 2008).
Extinguishment of Lease
1. By the expiration of the period (NCC, Art.
1673);
2. Total loss or destruction of the thing leased
(NCC, Art. 1655);
3. Rescission due to non-performance of the
obligations of a party;
4. Mutual agreement to terminate the lease
contract;
5. By action of the purchaser or transferee of the
property leased in good faith against the
lessee whose lease contract is not duly
recorded;
6. In case the dwelling place or any other
building is unfit for human habitation and is
dangerous to life or health (NCC, Art. 1660);
7. By resolution of the right of the lessor; or
8. By will of the purchaser or transferee of the
thing (Rabuya, 2017).
Extension or renewal of lease
1. Authority of Court
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
When the parties have stipulated on the
period of the lease, upon its expiration the
Court cannot extend the period since it has no
authority to do so.
2. Lease not to be deemed extended or
renewed by implication
Where a lease contract expressly stipulates
that the lease shall not be deemed extended or
renewed by implication beyond the
contractual period for any cause or reason
whatsoever but only by negotiations, the mere
fact that the lessee was willing to pay what he
claimed to be a reasonable rent – which was
less than that demanded by the lessor – did
not operate in any sense to extend the lease.
3. Lease extendible for a similar period
A stipulation that a lease is “extendible” for a
further similar period is to be understood as
giving the lessee the right to the additional
period or to quit upon the expiration of the
first term.
4. Lease renewable at the option of both
parties
A stipulation that the lease of a parcel of land
will be “renewable for another 10 years at the
option of both parties under such terms,
conditions and rentals reasonable at the
time,” means that there should be mutual
agreement as to the renewal of the lease.
5. Option to renew given to lessor
If the option is given to the lessor, the lessee
cannot renew the lease against the former’s
refusal. The lease is deemed terminated.
6. Extension exclusively for the benefit of the
lessor
The stipulation in a lease contract extending
the lease term beyond that originally agreed
upon, in order to save the lessor the trouble of
reimbursing the lessee in cash for the
expenses incurred on the leased premises was
exclusively for the benefit of the lessor; hence,
the latter has the right to terminate the lease
upon the expiration of the original period, or
at any other time thereafter, by tendering to
the lessee, or consigning to the court, the
outstanding balance of his expenditures. The
lessor should be given the option to either
reimburse the balance of the expenditures or
demand that the lessee should account for and
credit the lessor for the fruits of the
properties since the expiration of the lease
against the balance due to the lessee, turning
over any excess to the lessor.
492
 LEASE
7. Option to renew given to lessee
Where a lessee is given the option to continue
or renew the contract of lease and is silent
upon the rentals, the old terms are to be
followed in the renewed lease.
Implied New Lease or Tacita Reconduccion
(1990, 1999, 2001 BAR)
Tacita Reconduccion refers to the right of the
lessee to continue enjoying the material or de
facto possession of the thing leased within a
period of time fixed by law (Rabuya, 2017).
Arises if at the end of the contract, the lessee
should continue enjoying the thing leased for at
least 15 DAYS with the acquiescence of the lessor
— unless of course a notice to the contrary had
previously been given by EITHER PARTY.
Effects of the implied new lease
1. The period of the new lease is not that stated in
the original contract, but the time in Arts. 1682
and 1687 of NCC (month to month, year to
year, etc.); and
2. Other terms of the original contract are revived
(Paras, 2008).
Terms which are revived
The original terms of the original contract which
are revived are only those which are germane to
the lessee’s right of continued enjoyment of the
property leased or related to such possession,
such as the amount of rental, the date when it
must be paid, the care of the property, the
responsibility for repairs, etc.
NOTE: No such presumption may be indulged in
with respect to special agreements which by their
nature are foreign to the right of occupation or
enjoyment inherent in a contract of lease.
e.g. preferential right given to the lessee to
purchase the leased property.
Requisites for an implied renewal of lease
1. The term of the original contract of lease must
have already expired;
2. The lessee continues enjoying the thing leased
for at least 15 days;
3. The continuation of the occupation by the
lessee is with the acquiescence of the lessor;
and
4. The lessor or lessee has not previously given a
notice to vacate.
493
NOTE: The notice required under Article 1670 is
the one given after the expiration of the lease
period for the purpose of aborting an implied
renewal of lease. The 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 leased property (Tagbilaran
Integrated Settlers Assoc. v. CA, G.R. No. 148562,
November 25, 2004).
Instances when implied renewal NOT
applicable
1. Stipulation against implied renewal;
2. Invalidity of original lease;
3. Acceptance of rentals beyond original term;
4. Acceptance of rentals less than amounts
stipulated; and
5. Non-payment of rentals.
Rule if lessor objects to lessee’s continued
possession
Note that under Art. 1671 of NCC, there are three
requisites:
1. The contract has expired;
2. The lessee continues enjoying the thing; and
3. The lessor has objected to this enjoyment.
If the three requisites are present, the lessee shall
be considered a possessor in BAD FAITH.
If the lessee still makes a construction after he has
become a possessor in bad faith, he may be
compelled:
1. To forfeit the construction without indemnity;
2. To buy the land regardless of whether or not
its value is considerably more than the value
of the construction; or
3. To demolish the construction at his expense.
NOTE: In any of the 3 cases hereinabove referred
to, he will still be subject to the payment of
damages (Arts. 449-451 of NCC).
Judicial Grounds for Ejectment of Lessees
(1994, 2004 BAR) (ENVI)
1. Expiration of period of the lease
The period of the lease contract may be:
a. Conventional – when the period is by
agreement of the parties; or
b. Legal – when the period is fixed by law
under Arts. 1682 and 1687 of NCC;
 CIVIL LAW
GR: Upon the expiration of the period, the lease
contract is terminated. If a determinate time
was stipulated, the lease ceases without need of
a demand (NCC, Art. 1669).
XPN: In case of implied new lease. After
termination of the lease, the lessor is free to
dispose of the property in favor of another
lessee. The payment of all rents then due will be
immaterial. As long as the period has expired,
the lessee can be ejected.
2. Non-payment of the rentals agreed upon
One of the principal obligations of the lessee is
to pay the rentals agreed upon (NCC, Art. 1657
par. 1). It is the cause or consideration for the
use and enjoyment of the property leased. Non-
payment of the rentals after a demand therefor
is a justifiable ground for the lessor to rescind
the contract and eject the lessee.
3. Violation of any condition
Any violation of the terms and conditions of a
contract of lease, whether it is essential or
accidental in nature, will constitute a violation
of the lease contract and will justify the filing of
an ejectment case against the lessee.
The theory that a lease could continue for an
indefinite term as long as the lessee pays the
rentals had already been rejected by the SC
because the validity or compliance of contracts
cannot be left to the will of one of the parties
(NCC, Art. 1308).
Where the contract of lease prohibits the lessee
from introducing improvements and making
repairs and the lessee did so, he violated this
condition. This violation is a basis for
ejectment.
4. Improper use or enjoyment of the property
leased
The lessee is obliged to use the thing leased as
a diligent good father of a family. If due to
improper use of the property, the same is lost,
destroyed or deteriorated, the lessor may
immediately file a suit for restitution or
ejectment. He need not wait for the expiration
of the period of the lease.
Preliminary mandatory injunction to restore
possession pending appeal (NCC, Art. 1674)
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
The LESSOR is entitled to a writ of preliminary
injunction to restore him in his possession in case
the higher court is satisfied that the lessee’s
appeal is frivolous or dilatory (i.e., without merit)
or the lessor’s appeal is prima facie meritorious.
Reason: The remedy is intended “to put an end to
the present state of the law which unjustly allows
the lessee to continue in possession during an
appeal’’ (Report of the Code Commission).
Use by lessee of legal period
The lessee is entitled to periods agreed upon in
the lease contract (conventional) or those
established in Articles 1682 and 1687 of NCC
(implied new lease).
However, these rights are restricted if there are
grounds or causes for the ejectment of the lessee
under Art. 1673 of NCC. To enjoy peace, the lessee
must be faithful to his obligations as such.
When the lessee is guilty of a cause of ejectment
under Art. 1673 of NCC, he is also deprived of the
right to enjoy the period of grace under Art. 1687
of NCC.
Effect of Sale of Leased Property on the Lease
Contract
1. The purchaser shall respect the lease in the
following situations:
a. When the lease is registered with the
proper Register of Deeds;
b. When the deed of sale provides for the
recognition and respect of the lease by the
purchaser until termination of the period;
c. When the purchaser has actual knowledge
of the existence of the lease.; or
d. The lease cannot also be terminated by the
purchaser in a fictitious sale and by the
purchaser in a sale with pacto de retro until
the expiration of the period to redeem. Only
a purchaser in good faith of the leased
property is granted protection by the law.
2. In any other case, the purchaser is not obliged
to respect the lease contract. He has the
option to continue or discontinue the lease.
The sale of a leased property places the
vendee into the shoes of the original lessor to
whom the lessee bound himself to pay.
Right of lessee if new owner terminates the
unrecorded lease
494
 LEASE
The lessee may demand that he be allowed to
gather the fruits of the harvest which corresponds
to the current agricultural year and that the
vendor indemnify him for damages suffered [NCC,
Art. 1676 (2)].
Fictitious sale of leased property
1. If at the time the supposed buyer demands the
termination of the lease, the deed of sale is not
yet registered in the appropriate Registry of
Property [NCC, Art. 1676 (3)].
2. If it is a simulated sale intended merely to
extinguish the existing lease. In the eyes of the
law, it does not exist (NCC, Art. 1409).
A lessee who builds on the property leased is not a
possessor in good faith, thus, he has no right of
retention until reimbursed for the value of the
improvement.
The lessor and lessee may stipulate that all
improvements introduced by the lessee shall
pertain to the lessor. However, if the value of the
improvement is considerably more than the value
of the leased premises, merely creating prejudice
to the lessee instead of enforcing the contract
literally, Art. 1678 of the Civil Code may be
applied.
Ornamental Expenses

Effect: The false “vendee” cannot terminate the
lease even if the same is unrecorded.
Reason: To discourage the practice which has
developed in recent years of fictitiously selling the
premises in order to oust the lessee before the
termination of the lease (Code Commission).
Rights of the lessee who introduced
improvements (1990, 1996 BAR)
Expenses incurred which cater only to the
personal comfort, convenience or enjoyment of a
person.
The lessee has no right of reimbursement for
ornamental expenses. He may remove them
provided he does not cause any damage to the
thing leased. The lessor, if he so desires, may
retain them after paying their value to the lessee
at the time the lease is extinguish

Introduction of valuable improvement on the

leased premises does not give the lessee the right
of retention and reimbursement which rightfully
belongs to the builder in good faith. Otherwise,
such a situation would allow the lessee to easily
“improve” the lessor out of its property (Rabuya,
2017).

The lessor shall pay the lessee one-half of the

value of the improvements computed at the time
of the termination of the lease if the following
conditions are fulfilled:

1. That the lessee should have made the useful

improvements in good faith;
2. The improvements are suitable to the
purpose or use for which the lease is
intended; and
3. That the form and substance of the thing
leased are not altered or modified.

These requisites will prevent the lessee from

making such valuable improvements that the
lessor may never recover the property leased. It is
the lessor who has the option to appropriate the
useful improvements and reimburse the lessee
therefor. It is discretionary with the lessor to
retain the useful improvements by paying one-half
of their value. The lessee cannot compel the lessor
to appropriate and reimburse him for the
improvements.

495
 CIVIL LAW
PARTNERSHIP
CONTRACT OF PARTNERSHIP
Partnership
It is a contract whereby two or more persons bind
themselves to contribute money, property, or
industry to a common fund, with the intention of
dividing the profits among themselves (NCC, Art.
1767).
NOTE: Two or more persons may also form a
partnership for the exercise of a profession (NCC,
Art. 1767).
Essential elements of partnership
1. Agreement to contribute money, property or
industry to a common fund (mutual
contribution to a common stock); and
2. Intention to divide the profits among the
contracting parties (joint interest in the
profits) (Evangelista v. Collector of Internal
Revenue, G.R. No. L-9996, October 15, 1987).
1957
Characteristics of partnership
1. Bilateral – It is entered into by two or more
persons and the rights and obligations
arising therefrom are always reciprocal;
2. Onerous – Each of the parties aspires to
procure for himself a benefit through the
giving of something;
3. Nominate – It has a special name or
designation in our law;
4. Consensual – Perfected by mere consent,
upon the express or implied agreement of
two or more persons;
5. Commutative – The undertaking of each of
the partners is considered as the equivalent
of that of the others;
6. Principal – It does not depend for its
existence or validity upon some other
contracts;
7. Preparatory – Because it is entered into as a
means to an end, i.e. to engage in business or
specific venture for the realization of profits
with the view of dividing them among the
contracting parties; and
8. Profit-oriented (NCC, Art. 1770).
Typical incidents of partnership
1. The partners share in profits and losses (NCC,
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Arts. 1767, 1797-98);
2. The partnership has a juridical personality
separate and distinct from that of each of the
partners. Such juridical personality shall be
automatically acquired despite the failure to
register in the SEC (NCC, Art. 1768);
3. Partners have equal rights in the
management and conduct of the partnership
business (NCC, Art. 1803);
4. Every partner is an agent of the partnership,
and entitled to bind the other partners by his
acts, for the purpose of its business (NCC, Art.
1818). He may also be liable for the entire
partnership obligations;
5. All partners are personally liable for the
debts of the partnership with their separate
property (NCC, Arts. 1816, 1822-24) except
limited partners are not bound beyond the
amount of their investment (NCC, Art. 1843);
6. A fiduciary relation exists between the
partners
(NCC, Art. 1807); and
7. On dissolution, the partnership is not
terminated, but continues until the winding
up of partnership is completed (NCC, Art.
1829).
NOTE: These incidents may be modified by
stipulation of the partners subject to the rights of
third persons dealing with the partnership.
Q: TRUE or FALSE. An oral partnership is valid
(2009 BAR).
A: TRUE. An oral contract of partnership is valid
even though not in writing. However, if it involves
contribution of an immovable property or a real
right, an oral contract of partnership is void. In
such a case, the contract of partnership to be valid,
must be in a public instrument (NCC, Art. 1771),
and the inventory of said property signed by the
parties must be attached to said public instrument
(NCC, Art. 1773; Litonjua, Jr. v. Litonjua, Sr., G.R.
Nos. 166299-300, December 13, 2005)
496
 PARTNERSHIP
Partnership, Co-ownership and Corporation

BASIS PARTNERSHIP CO-OWNERSHIP CORPORATION

By contract or by mere
agreement of the parties.
Creation
Has separate and distinct
Juridical juridical personality from
Personality that of each partner.
Realization of profits.
Purpose
Generally created by By law.
law and can exist
without a contract
(Albano, 2013).
No separate and Has separate and distinct
distinct juridical juridical personality from
personality. that of each corporator.
Common enjoyment Depends in the Articles of
of a thing or right. Incorporation (AOI).

No limitation. 10 years maximum A corporation shall have

Duration/ Term of (May be extended by perpetual existence
Existence new agreement) unless its articles of
(NCC, Art. 494). incorporation provides
otherwise.
(Section 11 of RA 11232 or
the Revised Corporation
Code of the Philippines)

Minimum of two persons. Minimum of two GR: Minimum of one

Number of persons. person
incorporators (Section 10 of RA 11232 or
the Revised Corporation
Code of the Philippines)

Commencement of From the moment of Not From the date of issuance

Juridical execution of the contract applicab of
Personality of partnership. le; no the certificate of
juridical personality. incorporation.
Partner may not dispose of Co-owner may freely Stockholder has a right to
Disposal/ his individual interest do so (NCC, Art. 495). transfer shares without
Transferability of unless agreed upon by all prior consent of other
Interest partners. stockholders.
In the absence of Co-owner cannot Management is vested
stipulation to contrary, a represent the co- with the BOD.
partner may bind ownership (NCC, Art.
Power to Act with partnership. Each partner 491-492).
3rd Persons is agent of partnership.

NOTE: Except as provided

by Art. 1825, persons who
are not partners as to each
other are not partners as
to third persons [NCC, Art.
1769(1); Albano, 201].
Death of a partner results Death of co-owner Death of stockholder does
Effect of Death in dissolution of does not necessarily not dissolve the
partnership. dissolve co- corporation.
ownership.
Dissolution May be dissolved at any May be dissolved Can only be dissolved
time by the will anytime by the will with
of any or all of the of any or all of the co- the consent of the State.
partners. owners.

497
 CIVIL LAW

NOTE: If an unlawful
partnership is dissolved
by a judicial decree, the
profits shall be
confiscated in favor of the
State.
Liability In case of a general GR: The obligation to
partner, his separate and third persons is limited to
personal property shall the assets of the
also be liable if the assets corporation.
of the partnership is not XPN: Partner binds
sufficient to satisfy the himself solidarily liable
obligation to third
persons.

Partnership v. Joint Venture (2015 BAR)

BASIS Partnership Joint Venture

Contemplates the undertaking of a Ordinarily limited to a single
Coverage general and continuous business of a transaction and not intended
particular kind. to pursue a continuous
business.
Required to operate under a firm name. Has no firm name.
Firm name

The property used becomes the property
Transfer of property of the business entity and hence of all
the
Partners.
A partner acting in pursuance of the firm
business, binds not only himself as a
Power principal, but as their agent as well, also
the partnership and the partners.
A partnership acquires personality after
following the requisites required by law.
The property used remains
undivided property of its
contributor.
None of the co-venturers can
bind the joint venture or his
co-venturers.
A joint venture has no legal
personality.

Firm Name and NOTE: SEC registration is not required

Liabilities before a partnership acquires legal
personality (NCC, Art. 1768).

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 498
 PARTNERSHIP
Joint venture
It is an association of persons or companies jointly
undertaking some commercial enterprise.
Generally, all 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 by agreement to
share both in profits and losses.
NOTE: Section 36(h) of RA 11232 or the Revised
Corporation Code of the Philippines provides for
the power of a corporation, “to enter into a
partnership, joint venture, merger,
consolidation or other commercial agreement
with natural or juridical persons.”
ESSENTIAL FEATURES OF PARTNERSHIP
1. There must be a valid contract;
2. The parties (two or more persons) must have
legal capacity to enter into the contract;
3. There must be a mutual contribution of
money, property, or industry to a common
fund;
4. The object must be lawful; and
5. The primary purpose must be to obtain
profits and to divide the same among the
parties (De Leon, 2010).
Valid contract
Partnership is a voluntary relation created by
agreement of the parties. It excludes from its
concept all other associations which do not have
their origin in a contract, express or implied (De
Leon, 2010).
Legal capacity of the parties to contract
Before there can be a valid contract of
partnership, it is essential that the contracting
parties have the necessary legal capacity to enter
into the contract. Consequently, any person who
cannot give consent to a contract cannot be a
partner.
Persons qualified to be a partner
GR: Any person capacitated to contract may enter
into a contract of partnership.
XPNs:
1. Persons who are prohibited from giving each
other any donation or advantage cannot enter
into a universal partnership (NCC, Art. 1782,
1994 BAR);
499
NOTE: A husband and wife, however, may enter
into a particular partnership or be members
thereof (De Leon, 2010).
2. Persons suffering from civil interdiction; and
3. Persons who cannot give consent to a
contract:
a. Minors
b. Insane persons
c. Deaf-mutes who do not know how to
write
Kinds of partners
1. As to the extent of liability
a. Capitalist- contributes either money or
property to the common fund; he can also
contribute an intangible like credit, such as
promissory note or other evidence of
obligation, or even a goodwill (Rabuya,
2017); and
b. Industrial- contributes only his industry
2. As to the time of entry
a. Original- one who became a partner at the
time of the constitution of the partnership
b. Incoming- one who became a partner as a
new member of an existing partnership.
3. Other kinds:
a. Managing- one entrusted with the
management of the partnership. (Arts.
1800 and 1801, NCC)
b. Liquidating- one who takes charge of the
liquidation and winding up of the
partnership affairs (Art. 1836, NCC)
c. Retiring- those who cease to be part of the
partnership
d. Continuing- one who continues the
business of a partnership after it has been
dissolved by reason of the admission of a
new partner, or the retirement, death, or
expulsion of one or more partners
e. Dormant, Silent, Secret- one whose
connection to the partnership is concealed
and who does not take any active part in it
f. Partner by Estoppel- although not an actual
partner, he has made himself liable as such
by holding himself out as a partner of
allowing himself to be so held out (Art.
1815, NCC)
NOTE: A corporation cannot become a member of
a partnership in the absence of express
authorization by statute or charter. This doctrine
is based on the following considerations: (1)
Mutual agency between the partners and, (2) Such
arrangement would improperly allow corporate
 CIVIL LAW
property to become subject to risks not
contemplated by the stockholders when they
originally invested in the corporation (Mendiola vs
CA, GR.No.159333, July 31, 2006).
Principle of delectus personae
No one can become a member of the partnership
association without the consent of all the partners.
This rule is inherent in every partnership.
RATIO: This is because of the mutual trust among
the partners and that this is a case of subjective
novation. There is subjective novation when there
is a change in the parties to a contract. Their
consent thereto is necessary in order to bind them
(Albano, 2013).
NOTE: Even if a partner will associate another
person in his share in the partnership, the
associate shall not be admitted into the
partnership without the consent of all the
partners, even if the partner having an associate
should be a manager (NCC, Art. 1804). This
element of delectus personae, however, is true only
in the case of a general partner, but not as regards
a limited partner.
A partnership may be formed even if the
common fund is comprised entirely of
borrowed or loaned money
A partnership may be deemed to exist among
parties who agree to borrow money to pursue a
business and to divide the profits or losses that
may arise therefrom, even if it is shown that they
have not contributed any capital of their own to a
"common fund." Their contribution may be in the
form of credit or industry, not necessarily cash or
fixed assets. Being partners, they are all liable for
debts incurred by or on behalf of the partnership.
(Lim Tong Lim v. Philippine Fishing Gear Industries,
Inc., G.R. No. 136448, November 3, 1999)
Consequences of a partnership formed for an
unlawful purpose
1. The contract is void ab initio and the
partnership never existed in the eyes of the
law;
2. The profits shall be confiscated in favor of
the government;
3. The instruments or tools and proceeds of
the crime shall also be forfeited in favor of
the government; and
4. The contributions of the partners shall not
be confiscated unless they fall under No. 3
(De Leon, 2010).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Necessity of judicial decree to dissolve an
unlawful partnership
Judicial decree is not necessary to dissolve an
unlawful partnership; however, it may sometimes
be advisable that a judicial decree of dissolution be
secured for the convenience and peace of mind of
the parties (De Leon, 2010).
Intention to divide the profits
The sharing in profits is merely presumptive and
not conclusive evidence of partnership. There are
numerous instances of parties who have a
common interest in the profits and losses of an
enterprise but who are not partners. Thus, if the
division of profits is merely used as guide to
determine the compensation due to one of the
parties, such is not a partner (De Leon, 2010).
Q: To form a lending business, it was verbally
agreed that Noynoy would act as financier
while Cory and Kris would take charge of
solicitation of members and collection of loan
payments. The parties executed the 'Articles of
Agreement' where Noynoy would receive 70%
of the profits while Cory and Kris would earn
15% each. Later, Noynoy filed a complaint
against Cory and Kris for misappropriation of
funds allegedly in their capacities as Noynoy’s
employees. In their answer, Cory and Kris
asserted that they were partners and not mere
employees of Noynoy. What kind of
relationship existed between the parties?
A: A partnership was formed among the parties.
The "Articles of Agreement" stipulated that the
signatories shall share in the profits of the
business in a 70-15-15 manner, with Noynoy
getting the lion's share. This stipulation clearly
proved the establishment of a partnership (Santos
v. Spouses Reyes, G.R. No.135813, October 25, 2001).
Q: Jose conveyed his lots in favor of his four
sons in order for them to build their
residences. His sons sold the lots since they
found the respective lots impractical for
residential purposes because of high costs of
construction. They derived profits from the
sale and paid income tax. The sons were
required to pay corporate income tax and
income tax deficiency, on the theory that they
formed an unregistered partnership or joint
venture taxable as a corporation. Did the
siblings form a partnership?
A: NO. The original purpose was to divide the lots
for residential purposes. If later, they found out
500
 PARTNERSHIP
that it is not feasible to build their residences on
the lots, they can dissolve the co-ownership by
reselling said lots. The division on the profit was
merely incidental to the dissolution of the co-
ownership which was in the nature of things a
temporary state (Obillos, Jr. v. CIR, G.R. No. L-
68118, October 29, 1985).
Distribution of losses
Agreeing upon a system of sharing losses is not
necessary for the obligation is implied in the
partnership relation. If only the share of each
partner in the profits has been agreed upon, the
share of each in the losses shall be in the same
proportion.
The definition of partnership under Art. 1767
refers to “profits” only and is silent as to “losses.”
The reason is that the object of partnership is
primarily the sharing of profits, while the
distribution of losses is but a “consequence of the
same.” The right to share in the profits carries
with it the duty to contribute to the losses, of any.
NOTE: The partnership relation is not the contract
itself, but the result of the contract. The relation is
evidenced by the terms of the contract which may
be oral or written, express or implied from the
acts and declarations of the parties, subject to the
provisions of Articles 1771-1773 and to the
Statute of Frauds (De Leon, 2010).
FORMATION OF PARTNERSHIP
It is created by agreement of the parties
(consensual). There is no such thing as a
partnership created by law or by operation or
implication of law alone (De Leon, 2010).
Articles of partnership
While partnership relation may be informally
created and its existence proved by manifestations
of the parties, it is customary to embody the terms
of the association in a written document known as
“Articles of Partnership” stating the name, nature
or purpose and location of the firm, and defining,
among others, the powers, rights, duties, and
liabilities of the partners among themselves, their
contributions, the manner by which the profits
and losses are to be shared, and the procedure for
dissolving the partnership (De Leon, 2010).
Effect of the“Articles of Partnership”
Ordinarily, the best evidence of the existence is
the contract of partnership or the articles of
501
partnership itself. However, the execution of such
contract is not a guarantee that a partnership
indeed exists. (Rabuya, 2017)
Commencement of contract of partnership
A partnership begins from the moment of the
execution of the contract, unless it is otherwise
stipulated (NCC, Art 1784). If there is no contrary
stipulation as to the date of effectivity of the same,
its registration in the Securities and Exchange
Commission is not essential to give it juridical
personality (De Leon, 2010).
Formalities needed for the creation of a
partnership
GR: No special form is required for its validity or
existence. (NCC, Art. 1771) The contract may be
made orally or in writing regardless of the value of
the contributions. (2009 Bar)
NOTE: An agreement to enter in a partnership at a
future time, which “by its terms is not performed
within a year from the making thereof” is covered
by the Statute of Frauds [NCC, Art. 1403(2)(a)].
Such agreement is unenforceable unless the same
be in writing or at least evidenced by some note or
memorandum thereof subscribed by the parties.
(De Leon, 2010)
XPN: If property or real rights have been
contributed to the partnership:
1. Personal property
a. Less than P3,000 – may be oral
b. P 3,000 or more – must be:
i. In a public instrument; and
ii. Registered with Securities and
Exchange Commission (NCC, Art.
1772).
2. Real property or real rights – must be:
a. In a public instrument (NCC. Art. 1771)
(2009 Bar)
b. With an inventory of said property
i. Signed by the parties
ii. Attached to the public instrument
(NCC, Art. 1773)
iii. Registered in the Registry of
Property of the province, where the
real property is found to bind third
persons (Paras, 1969).
3. Limited partnership – Must be registered as
such with the SEC, otherwise, it is not valid as
a limited partnership but may still be
considered a general partnership with
 CIVIL LAW
juridical personality (Paras, 1969).
Where capital of the partnership consists of
money or personal property amounting to Php
3000 or more
The failure to register the contract of partnership
does not invalidate the same as among the
partners, so long as the contract has the essential
requisites, because the main purpose of
registration is to give notice to third parties, and it
can be assumed that the members themselves
knew of the contents of their contract. Non-
compliance with this directory provision of the
law will not invalidate the
partnership.
Registration is merely for administration and
licensing purposes; hence, it shall not affect the
liability of the partnership and the members
thereof to third persons [NCC, Art. 1772(2)].
A void partnership under Art.1773, in relation to
Art. 1771, may still be considered by the courts as
an ordinary contract as regards the parties thereto
from which rights and obligations to each other
may be inferred and enforced (Torres v. CA, G.R. No.
134559, December 9, 1999).
Q: A and B are co-owners of an inherited
property. They agreed to use the said common
properties and the income derived therefrom
as a common fund with the intention to
produce profits for them in proportion to their
respective shares in the inheritance as
determined in a project of partition. What is
the effect of such agreement on the existing co-
ownership?
A: The co-ownership is automatically converted
into a partnership. From the moment of partition,
A and B, as heirs, are entitled already to their
respective definite shares of the estate and the
income thereof, for each of them to manage and
dispose of as exclusively his own without the
intervention of the other heirs, and, accordingly,
he becomes liable individually for all the taxes in
connection therewith.
If, after such partition, an heir allows his shares to
be held in common with his co-heirs under a
single management to be used with the intent of
making profit thereby in proportion to his share,
there can be no doubt that, even if no document or
instrument were executed for the purpose, for tax
purposes, at least, an unregistered partnership is
formed (Oña v. Commissioner of Internal Revenue,
G.R. No. L-19342, May 25, 1972).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Meaning of “cuentas en participacion”
Under the Code of Commerce, “cuentas en
participacion” means a sort of an accidental
partnership constituted in such a manner that its
existence was only known to those who had an
interest in the same, there being no mutual
agreement between the partners, and without a
corporate name indicating to the public in some
way that there were other people besides the one
who ostensibly managed and conducted the
business, governed under Art. 239 of the Code of
Commerce (Bourns v. Carman, G.R. No. L- 2880,
December 4, 1906).
Q: Henry and Lyons are engaged in real estate
business and are co-owners of a parcel of land.
Henry, with the consent of Lyons, mortgaged
the property to raise the funds sufficient to
buy and develop the San Juan Estate. Lyons
expressed his desire not to be part of the
development project, but Henry, pursued the
business alone. When the business prospered,
Lyons demanded for a share in the business. Is
Lyons entitled to the shares in San Juan Estate?
A: NO. Lyons himself manifested his desire not to
be part of the development project. Thus, no
partnership was formed. The mortgage of the land
was immaterial to the existence of the
partnership. It is clear that Henry, in buying the
San Juan Estate, was not acting for any
partnership composed of himself and Lyons, and
the law cannot be distorted into a proposition
which would make Lyons a participant in this
deal contrary to his express determination
(Lyons v. Rosenstock, G.R. No. 35469, March 17,
1932).
Q: Catalino and Ceferino acquired a joint
tenancy over a parcel of land under a verbal
contract of partnership. It was stipulated that
each of the said purchasers should pay one-
half of the price and that an equal division
should be made between them of the land thus
purchased. Despite Catalino’s demand for an
equal division between them, Ceferino refused
to do so and even profited from the fruits of
the land. Are they partners or co-owners?
A: They are co-owners because it does not
appear that they entered into any contract of
partnership but only for the sole purpose of
acquiring jointly or by mutual agreement of the
land under the condition that they would pay ½ of
the price of the land and that it be divided equally
between them (Gallemit v. Tabiliran, G.R. No. 5837,
September 15, 1911).
502
 PARTNERSHIP
Future partnership
It is a kind of partnership where the partners may
stipulate some other date for the commencement
of the partnership. Persons who enter into a
future partnership do not become partners until
or unless the agreed time has arrived or the
contingency has happened (De Leon, 2010).
As long as the agreement for a partnership
remains inchoate or unperformed, the partnership
is not consummated (De Leon, 2010).
RULES TO DETERMINE EXISTENCE OF
PARTNERSHIP
1. Except as provided by Art. 1825 of the NCC
(partnership by estoppel), persons who are
not partners as to each other are not
partners as to third persons;
2. 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;
3. 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;
4. The 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, but no
such inference shall be drawn if such profits
were received in payment:
a. As a debt by installments or otherwise;
b. As wages of an employee or rent to a
landlord;
c. As an annuity to a widow or
representative of a deceased partner;
d. As interest on a loan, though the
amount of payment varies with the
profits of the business;
e. As the consideration for the sale for the
sale of a goodwill of a business or other
property by instalments or otherwise
(NCC, Art. 1769).
NOTE: In sub-paragraphs a–e, the profits in the
business are not shared as profits of a partner as a
partner, but in some other respects or for some
other purpose.
Burden of proving the existence of a
partnership
It rests on the party having the affirmative of that
issue. The existence of a partnership must be
503
proved and will not be presumed.
However, when a partnership is shown to exist,
the presumption is that it continues in the absence
of evidence to the contrary, and the burden of
proof is on the person asserting its termination
(De Leon, 2014).
NOTE: The use of the term “partner” in popular
sense, or as a matter of business convenience, will
not necessarily import an intention that a legal
partnership should result. But while the use of
“partnership” or “partners” in an alleged oral
agreement claimed to have constituted
partnership is not conclusive that partnership did
not exist, non-use of such terms is entitled to
weight. Legal intention is the crux of partnership.
(De Leon, 2014).
CLASSIFICATIONS OF PARTNERSHIP
1. Object
a. Universal partnership
i. Of all present property (NCC, Art.
1778) – 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
profits they may acquire therewith.
The following become the common
fund of all the partners:
Property which belonged to
each of the partners at the time
of the constitution of the
partnership
Profits which they may acquire
from all property contributed
ii. Of all profits (NCC, Art. 1780) –
Comprises all that the partners may
acquire by their industry or work
during the existence of the
partnership as well as the usufruct
of all movable or immovable
property which each of the partner
may possess at the time of the
celebration of the contract of
partnership.
b. Particular partnership – It is one which
has for its object, determinate things,
their use and fruits, or a specific
undertaking or the exercise of a
profession or a vocation (NCC, Art. 1783).
2. Liability of partners
 CIVIL LAW
a. General partnership – One where all
partners are general partners who are
liable even with respect to their
individual properties, after the assets of
the partnership have been exhausted
(Paras, 1969).
b. Limited partnership – One formed by two
or more persons having as members one
or more general partners and one or
more limited partners, the latter not
being personally liable for the obligations
of the partnership (NCC, Art. 1843).
3. Duration
a. Partnership at will – the partnership has an
indefinite term and it would dissolved
only when an act or cause of dissolution
happens or arises.
b. Partnership with a fixed period or
Partnership for a Particular Undertaking
– the partnerships are automatically
dissolved upon the expiration of the
stipulated term or the achievement of
the particular undertaking stipulated in
the contract of partnership.
When two or more persons attempt to
create a partnership but fail to comply
with the legal personalities essential for
juridical personality, the law considers
them as partners, and the association is a
partnership insofar as it is favorable to
third persons, by reason of the equitable
principle of estoppel (MacDonald et. al. v.
Nat’l. City Bank of New York, G.R. No. L-
7991, May 21, 1956).
6. Publicity
a. Secret partnership – Partnership that is
not known to many but only as to its
partners.
b. Notorious or open partnership – It is
known not only to the partners, but to
the public as well.
7. Purpose
a. Commercial or trading – One formed for
the transaction of business.
b. Professional or non-trading – One formed
for the exercise of a profession (De Leon,
2014).

NOTE: When a partnership for a fixed term or UNIVERSAL v. PARTICULAR

particular undertaking is continued after it has
terminated without any express agreement, Classes of universal partnership
partnership then become one at will (Art. 1785,
NCC), and the rights and duties of the partners ALL PROFITS ALL PRESENT PROPERTY
remain the same as they were at such What constitutes common property
termination. Only usufruct of All properties actually
the properties of belonging
NOTE: The presence of a period, duration or the partners to the partners are
statement of a particular purpose for its creation become common contributed –
may not prevent the dissolution of any Property. they become common
partnership by an act or will of a partner. The property
“mutual agency” and the “doctrine of delectus (owned by all of the partners
personae” allows them to dissolve the and the partnership).
partnership. However, an unjustified dissolution As to profits as common property
by a partner can subject him to a possible action All profits As to profits from other
for damages. (Ortega v. Court of Appeals, 245 acquired by the sources:
SCRA 529 (1995)) industry of the GR: Aside from the
partners become contributed properties, the
4. Legality of existence common property profits of said property
a. De jure partnership – One which has (whether or not become common property.
complied with all the requirements for they were
its establishment. obtained through XPN: Profits from other
b. De facto partnership – One which has the usufruct sources may become common
failed to comply with all the legal contributed) if there is a stipulation to such
requirements for its establishment. effect.
As to properties
5. Representation to others subsequently acquired:
a. Ordinary or real partnership – One which
actually exists among the partners and
also as to third person.
b. Ostensible or partnership by estoppel –

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 504
 PARTNERSHIP
GR: Properties subsequently
acquired by inheritance,
legacy or donation, cannot be
included in the stipulation
XPN: Only fruits thereof can
be included in the stipulation
(NCC, Art. 1779).
Presumption of universal partnership of
profits
When the Articles of Universal Partnership fail to
specify whether it is one of all present property or
of profits, it only constitutes a universal
partnership of profits (NCC, Art. 1781), because it
imposes lesser obligations on the partners since
they preserve the ownership of their separate
property.
Persons disqualified from entering into
universal partnership
a. Legally married spouses (Family Code,
Art. 87). However they can enter into particular
partnership. (Commissioner of Internal Revenue vs.
Suter, 27 SCRA 152)
b. Common law spouses.
c. Parties guilty of adultery or concubinage.
d. Criminals convicted for the same offense in
consideration of the same [NCC, Art. 739 (2)].
e. A person and a public officer (or his wife,
ascendant or descendants) by reason of his
office [NCC, Art. 739 (3)].
Contribution of future properties
As a general rule, future properties cannot be
contributed. The very essence of the contract of
partnership that the properties contributed be
included in the partnership requires the
contribution of things determinate (De Leon,
2010).
Particular partnership
It is one which has for its object determinate
things, their use or fruits, or a specific undertaking,
or the exercise of a profession or vocation (NCC,
Art. 1783).
The fundamental difference between a universal
partnership and a particular partnership lies in
the scope of their subject matter or object. In the
former, the object is vague and indefinite,
contemplating a general business with some
degree of continuity, while in the latter, it is
limited and well-defined, being confined to an
505
undertaking of a single, temporary, or ad hoc
nature (De Leon, 2010).
Q: J, P and B formed a limited partnership
called Suter Co., with P as the general partner
and J and B as limited partners. J and B
contributed Php 18,000 and Php 20,000
respectively. Later, J and B got married and P
sold his share of the partnership to the
spouses which was recorded in the SEC. Has
the limited partnership been dissolved by
reason of the marriage between the limited
partners?
A: NO. The partnership is not a universal but a
particular one. A universal partnership requires
either that the object of the association must be all
present property of the partners as contributed by
them to a common fund, or all else that the
partners may acquire by their industry or work.
Here, the contributions were fixed sums of money
and neither one of them were industrial partners.
Thus, the firm is not a partnership which the
spouses are forbidden to enter into. The
subsequent marriage cannot operate to dissolve it
because it is not one of the causes provided by
law. The capital contributions were owned
separately by them before their marriage and
shall remain to be separate under the Spanish
Civil Code. Their individual interest did not
become common property after their marriage
(Commissioner of Internal Revenue v. Suter, G.R. No.
L-25532, February 28, 1969).
GENERAL v. LIMITED
General partnership
It is a partnership where all partners are general
partners who are liable even with respect to their
individual properties, after the assets of the
partnership have been exhausted (Paras, 1969).
General or real partner
He is a partner whose liability to third persons
extends to his separate property; he may be either
a capitalist or an industrial partner (De Leon,
2014).
General v. Limited partner/Partnership
BASIS GENERAL LIMITED
Personally Liability extends
Liability liable for only to his capital
partnership contributions.
obligations.
 CIVIL LAW
When manner No participation firm name, surname of a
of management in management. shall be subject general partner;
has not agreed to the liability2. Prior to the time
Right in upon, all of a partner when the limited
Management general (NCC, Art. partner became
partners have 1815). such, the business
an equal right had been
in the carried on
management of under a name in
the business. which his
surname
Contribution Money, Cash or property appeared.
property or only, not NOTE: A limited
industry. services. partner whose
surname appears
in a partnership
name is liable as a
general partner to
partnership
creditors who
Proper party to Not proper party extend credit to
If Proper proceedings to proceedings the partnership
Party to by/against by/against without actual
Proceedings partnership. partnership, knowledge that
By or Against unless: he is not a general
Partnership 1. He is also a partner (NCC, Art.
general partner; 1846).
or Prohibition a. The No prohibition
2. Where the object to Engage capitalist against
of the proceeding in Other partner engaging in
is to enforce a Business cannot business.
limited engage for
partner’s right or their own
liability to the account in
partnership. any
Assignment of Interest is not Interest is freely operation
interest assignable assignable. which is of
without the kind
consent of o
other partners. f
business
i
n
which
Firm Name It must operate It must also
t
under a firmoperate under a
he
name, whichfirm name,
partnership
may or mayfollowed by the
is engaged,
not include the word “Limited.”
unless
name of one or
there is a
more of the GR: The surname
stipulation
partners. of a limited
to the
partner shall not
contrary.
NOTE: Those, appear in the
who, not being partnership
b. If he is an
members of the name.
industrial
partnership,
partner- in
include their XPNs:
any
names in the 1. It is also the

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 506
 PARTNERSHIP
business Expiration of the partnership contract
for
himself. The expiration of the term fixed or the
accomplishment of the particular undertaking
specified will cause the automatic dissolution of
the partnership.

Partnership at will
Retirement, Does not have One in which no fixed term is specified and is not
Effect of death, sameeffect; formed for a particular undertaking or venture
Death, insolvency, Rights are which may be terminated anytime by mutual
Insolvency, insanity of Transferred to agreement of the partners, or by the will of any
Retirement, general legal one partner alone; or one for a fixed term or
Insanity partner representative particular undertaking which is continued by the
dissolves . partners after the termination of such term or
partnership particular undertaking without express
. agreement (De Leon, 2014).
Creation As a rule, it Created by the
Maybe members after Termination or dissolution of partnership at
constituted substantial will
in any form, compliance in
by contract good faith of A partnership at will may be lawfully terminated
or the or dissolved at any time by the express will of all
conduct of requirements or any of the partners.
the parties. set forth by
law. The partner who wants the partnership dissolved
Compositio/ Composed Composed of must do so in good faith, not that the attendance of
Membershi only of at least one bad faith can prevent the dissolution of the
p general general partnership, but to avoid the liability for damages
partners. partner and to other partners.
one limited
partner. Q: A, B, and C entered into a partnership to
operate a restaurant business. When the
restaurant had gone past break-even stage and
started to garner considerable profits, C died.
A and B continued the business without
PARTNERSHIP WITH A FIXED TERM v.
dissolving the partnership. They in fact opened
PARTNERSHIP AT WILL
a branch of the restaurant, incurring
obligations in the process. Creditors started
Partnership with a fixed term demanding for the payment of their
obligations.
It is one in which the term of its existence has been
agreed upon by the partners either: a. Who are liable for the settlement of the
partnership’s obligations? Explain.
1. Expressly – There is a definite period b. What are the creditors’ recourse/s?
2. Impliedly – A particular enterprise or Explain. (2010 Bar)
transaction is undertaken
A:
The mere expectation that the business would be a. The two remaining partners, A and B,
successful and that the partners would be able to are liable. When any partner dies and the business
recoup their investment is not sufficient to create is continued without any settlement of accounts as
a partnership for a term. between him or his estate, the surviving partners
are held liable for continuing the business despite
Fixing the term of the partnership contract the death of C. (Arts. 1841, 1785(2) & 1833)
The partners may fix in their contract any term b. Creditors can file the appropriate
and they shall be bound to remain under such a actions, for instance, an action for the collection of
relation for the duration of the term.

507
 CIVIL LAW
sum of money against the “partnership at will”
and if there are no sufficient funds, the creditors
may go after the private properties of A and B.
(NCC, Art. 816) Creditors may also sue the estate of
C. The estate is not excused from the liabilities of
the partnership even if C is dead already but only
up to the time that he remained a partner. (NCC,
Arts. 1829, 1835(2), Testate Estate of Mota v.
Serra, G.R. No. L-22825, February 14, 1925)
However, the liability of C’s individual property
shall be subject first to the payment of his
separate debts. (NCC, Article 1835)
PARTNERSHIP BY ESTOPPEL
It is one who, by words or conduct does any of the
following:
1. Directly represents himself to anyone as a
partner in an existing partnership or in a
non-existing partnership.
2. Indirectly represents himself by consenting
to another representing him as a partner in
an existing partnership or in a non-existing
partnership.
Elements before a partner can be held liable
on the ground of estoppel
1. Defendant represented himself as partner or
is represented by others as such, and did not
deny/refute such representation.
2. Plaintiff relied on such representation.
3. Statement of defendant is not refuted.
Liabilities in case of estoppel
When Partnership is Liable
If all actual partners consented to the
representation, then the liability of the person who
represented himself to be a partner or who
consented to such representation and the actual
partner is considered a partnership liability (De
Leon, 2014).
When Liability is PRO RATA
When there is no existing partnership and all
those represented as partners consented to the
representation, then the liability of the person
who represented himself to be a partner, and all
who made and consented to such representation,
is joint or pro- rata (De Leon, 2014).
When Liability is SEPARATE
When there is no existing partnership and not all
but only some of those represented as partners
consented to the representation, or none of the
partnership in an existing partnership consented
to such representation, then the liability will be
separate. (De Leon, 2014)
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Partnership Tort
There is a partnership tort where:
1. By any wrongful act or omission of any
partner, acting in the ordinary course of
business of the partnership or with authority
of his co-partners, loss or injury is caused to
any person, not being a partner in the
partnership;
2. One partner, acting within the scope of his
apparent authority, receives money or
property from a third person, and misapplies
it; or
3. The partnership, in the course of its business,
receives money or property, and it is
misapplied by any partner while it is in the
custody of the partnership.
NOTE: Partners are solidarily liable with the
partnership for any penalty or damage arising
from a partnership tort.
PROFESSIONAL PARTNERSHIP
It is a partnership formed by persons for the sole
purpose of exercising their common profession,
no part of the income of which is derived from
engaging in any trade or business.
In a professional partnership, it is the individual
partners who are deemed engaged in the practice
of profession and not the partnership. Thus, they
are responsible for their own acts.
Prohibition in the formation of a professional
partnership
Partnership between lawyers and members of
other profession or non-professional persons
should not be formed or permitted where any part
of the partnership’s employment consists of the
practice of law (Canon 9 of the Code of
Professional Responsibility).
Prohibition in the firm name of a partnership
for the practice of law
In the selection and use of firm name, no false,
misleading, assumed, or trade names should be
used (Canon 3 of the Code of Professional
Responsibility Professional Ethics).
MANAGEMENT OF THE PARTNERSHIP
Modes of appointment of a manager
Appointment through Appointment other
the Articles of than in the articles
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 PARTNERSHIP
Partnership GR: Unanimous consent of all the managing
partners shall be necessary for the validity of the
acts and absence or inability of any managing
Power is irrevocable Power to act is partner cannot be alleged.
without just or revocable anytime,
lawful cause. with or without cause XPN: Where there is an imminent danger of grave
(should be done by or irreparable injury to the partnership.
the controlling
interest).
Rule when the manner of management has not
NOTE: Vote required
been agreed upon
for removal of
manager:
1. All partners shall be considered agents and
1. For just cause – Vote
whatever any one of them may do alone shall
of the controlling
bind the partnership, without prejudice to the
partners (controlling
provisions of Art. 1801 of the NCC. This right is
financial interest).
not dependent on the amount or size of the
2. Without cause or for
partner’s capital contribution or services to
unjust cause –
the business.
Unanimous vote.
Extent of Power
NOTE: If two or more partners have been
1. If he acts in good As long as he is a entrusted with the management of the
faith, he may do all manager, he can partnership without specification of their
acts of administration perform all acts of respective duties, or without a stipulation that
(despite opposition administration (if one of them shall not act without the consent
of his partners); others oppose, he can of all the others, each one may separately
be removed). execute all acts of administration, but if any of
2. If he acts in bad faith, them should oppose the acts of the others, the
he cannot. decision of the majority shall prevail. In case
of a tie, the matter shall be decided by the
Scope of the power of a managing partner partners owning the controlling interest (NCC,
Art. 1801). (1992 Bar)
As a general rule, a partner appointed as manager
has all the powers of a general agent as well as all 2. None of the partners may, without the
the incidental powers necessary to carry out the consent of the others, make any important
object of the partnership in the transaction of its alteration in the immovable property even if it
business. The exception is when the powers of the may be useful to the partnership (NCC, Art.
manager are specifically restricted (De Leon, 1802-Art. 1803).
2010).
Rule in case where unanimity of action is
Rule where there are two or more managers stipulated

Without specification of their respective duties
and without stipulation requiring unanimity of
action
GR: Each may separately execute all acts of
administration (unlimited power to administer).
XPN: If any of the managers opposes, decision of
the majority prevails.
NOTE: In case of tie– Decision of the controlling
interest (who are also managers) shall prevail.
With stipulation that none of the managing
partners shall act without the consent of the
others
Q: Azucena and Pedro acquired a parcel of land
and a building. Azucena obtained a loan from
Tai Tong Co., secured by a mortgage which was
executed over the land and building. Arsenio,
representative of Tai Tong, insured it with
Travellers Multi Indemnity Corporation. The
building and the contents thereof were razed
by fire. Travellers failed to pay the insurance.
Hence, Azucena and Pedro filed a case against
Travellers wherein Tai Tong intervened
claiming entitlement to the proceeds from
Travellers. Who is entitled to the proceeds of
the policy?
A: Tai Tong is entitled to the insurance proceeds.
Arsenio contracted the insurance policy on behalf
of Tai Tong. As the managing partner of the

509
 CIVIL LAW
partnership, he may execute all acts of
administration including the right to sue debtors
of the partnership in case of their failure to pay
their obligations when it became due and
demandable. Or at the very least, Arsenio is an
agent of the partnership. Being an agent, it is
understood that he acted for and in behalf of the
firm (Tai Tong Chuache & Co. v. Insurance
Commissioner, G.R. No. L-55397, February 29,
1988).
NOTE: If refusal of partner is manifestly
prejudicial to the interest of partnership, the
court’s intervention may be sought.
COMPENSATION
GR: In the absence of an agreement to the
contrary, each member of the partnership
assumes the duty to give his time, attention, and
skill to the management of its affairs, so far, at
least, as may be reasonably necessary to the
success of the common enterprise; and for this
service a share of the profits is his only
compensation.
XPN:
1. A partner engaged by his co-partners to
perform services not required of him in
fulfillment of the duties which the
partnership relation imposes and in a
capacity other than that of a partner;
2. A contract for compensation may be implied
if there is extraordinary neglect on the part
of one partner to perform his duties toward
the firm’s business, thereby imposing the
entire burden on the remaining partner;
3. One partner may employ his co-partner to
do work for him outside of and independent
of the co- partnership, and become
personally liable therefor;
4. Where the services rendered are extra-
ordinary;
5. Where one partner is entrusted with the
management of the partnership business
and devotes his whole time and attention
thereto, at the instance of the other partners
who are attending to their individual
business and giving no time or attention to
the business of the firm (De Leon, 2010).
RIGHTS AND OBLIGATIONS OF PARTNERSHIP
1. Refund the amounts disbursed by partner in
behalf of the partnership plus corresponding
interest from the time the expenses are
made, not from the date of demand (e.g.
loans and advances made by a partner to the
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
partnership aside from capital
contribution);
2. Answer for obligations the partner may have
contracted in good faith in the interest of the
partnership business;
3. Answer for risks in consequence of its
management (NCC, Art. 1796).
RIGHTS AND OBLIGATIONS OF PARTNERS
AMONG THEMSELVES
Obligations of partners among themselves
1. Contribution of property (NCC, Art. 1786)
2. Contribution of money and money converted
to personal use (NCC, Art. 1788)
3. Prohibition in engaging in business for
himself (NCC, Art. 1789)
4. Contribute additional capital (NCC, Art. 1791)
5. Managing partner who collects debt (NCC,
Art. 1792)
6. Partner who receives share of partnership
credit
(NCC, Art. 1793)
7. Damages to partnership (NCC, Art. 1794)
8. Keep the partnership books (NCC, Art. 1805)
9. Render information (NCC, Art. 1806)
10. Accountable as fiduciary (NCC, Art. 1807)
Withdrawal or disposal of money or property
by a contributing partner
Money or property contributed by a partner
cannot be withdrawn or disposed of by the
contributing partner without the consent or
approval of the partnership or of the other
partners because the money or property
contributed by a partner becomes the property of
the partnership (De Leon, 2010).
Q: Who bears the risk of loss of things
contributed?
A:
WHO BEARS THE
KIND OF PROPERTY / THING
RISK?
Specific and determinate things
which are not fungible where only
Partners
the use is contributed
Specific and determinate things
the ownership of which is
transferred to the partnership
Fungible things (Consumable) Partnership
Things brought and appraised in
the inventory
Effect if a partner fails to contribute the
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 PARTNERSHIP
property which he promised to deliver to the
partnership
1. Partner becomes ipso jure a debtor of the
partnership even in the absence of any
demand (NCC, Art. 1786);
2. Remedy of the other partner is not
rescission but specific performance with
damages and interest from defaulting
partner from the time he should have
complied with his obligation.
When the capital or a part hereof which a partner is
bound to contribute consists of goods, their
appraisal must be made in the manner prescribed
in the contract of partnership, and in the absence
of stipulation, it shall be current prices, the
subsequent changes thereof being for the account
of the partnership (NCC, Art. 1787).
Rules regarding contribution of money to the
partnership
1. To contribute on the date fixed the amount
the partner has undertaken to contribute to
the partnership;
2. To reimburse any amount the partner may
have taken from the partnership coffers and
converted to his own use;
3. To indemnify the partnership for the
damages caused to it by delay in the
contribution or conversion of any sum for
the partner’s personal benefit;
4. To pay the agreed or legal interest, if the
partner fails to pay his contribution on time
or in case he takes any amount from the
common fund and converts it to his own use.
Rule regarding obligation to
contribute to partnership capital
Unless there is a stipulation to the contrary, the
partners shall contribute equal shares to the
capital of the partnership (NCC, Art. 1790). It is not
applicable to an industrial partner unless, besides
his services, he has contributed capital pursuant
to an agreement.
Liability of a capitalist partner to contribute
additional capital
GR: A capitalist partner is not bound to contribute
to the partnership more than what he agreed to
contribute.
XPNs:
1. In case of imminent loss of the business; and
2. There is no agreement to the contrary.
511
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
to the other partners.
Requisites before capitalist partners are
compelled to contribute additional capital
1. Imminent loss of the business of the
partnership;
2. Majority of the capitalist partners are of the
opinion that an additional contribution to
the common fund would save the business;
3. Capitalist partner refuses deliberately to
contribute (not due to financial inability);
4. There is no agreement to the contrary.
NOTE: The refusal of the partner to contribute his
additional share reflects his lack of interest in the
continuance of the partnership (De Leon, 2010). It
shall be obliged to sell his interest to the other
partners except if there is an agreement to the
contrary (NCC, Art. 1791).
It is to be noted that the industrial partner is
exempted from the requirement to contribute an
additional share. Having contributed his entire
industry, he can do nothing further (De Leon,
2010).
Obligations of managing partners who collect
his personal receivable from a person who
also owes the partnership
1. Apply sum collected to 2 credits in
proportion to their amounts
2. If he received it for the account of
partnership, the whole sum shall be applied
to partnership credit
Requisites:
At least 2 debts, one where the collecting partner
is creditor and the other, where the partnership is
the creditor;
1. Both debts are demandable;
2. Partner who collects is authorized to
manage and actually manages the
partnership.
NOTE: The debtor is given the right to prefer
payment of the credit of the partner if it should be
more onerous to him in accordance with his right
to application of payment (NCC, Art. 1252; De Leon,
2014).
Reason for applying payment to partnership
credit
 CIVIL LAW
The law safeguards the interests of the
partnership by preventing the possibility of their
being subordinated by the managing partner to
his own interest to the prejudice of the other
partners (De Leon, 2010).
Obligation of a partner who receives share of
partnership credit
Q: Joe and Rudy formed a partnership to
operate a car repair shop in Quezon City. Joe
provided the capital while Rudy contributed
his labor and industry. On one side of their
shop, Joe opened and operated a coffee shop,
while on the other side, Rudy put up a car
accessories store. May they engage in such
separate businesses? Why? (2001 Bar)

To bring to the partnership capital what he has
received even though he may have given receipt
for his share only.
Requisites:
1. A partner has received in whole or in part, his
share of the partnership credit;
2. Other partners have not collected their
shares;
3. Partnership debtor has become insolvent.
Liability of a person who has not directly
transacted in behalf of an unincorporated
association for a contract entered into by such
association
The liability for a contract entered into on behalf
of an unincorporated association or ostensible
corporation may lie in a person who may not have
directly transacted on its behalf, but reaped
benefits from that contract (Lim Tong Lim v.
Philippine Fishing Gear Industries Inc., G.R. No.
136448, November 3, 1999).
Rules regarding the prohibition to engage in
another business
A: Joe, the capitalist partner, may engage in the
restaurant business because it is not the same
kind of business the partnership is engaged in. On
the other hand, Rudy may not engage in any other
business unless their partnership expressly
permits him to do so because as an industrial
partner, he has to devote his full time to the
business of the partnership (NCC, Art. 1789).
Rule with regard to the obligation of a partner
as to damages suffered by the partnership
through his fault
GR: Every partner is responsible to the
partnership for damages suffered by it through his
fault and he cannot compensate them with the
profits and benefits which he may have earned for
the partnership by his industry.
XPN: The courts may equitably lessen this
responsibility if through the partner’s
extraordinary efforts in other activities of the
partnership, unusual profit has been realized
(NCC, Art. 1794).
Set-off of damages caused by a partner

INDUSTRIAL PARTNER CAPITALIST PARTNER GR: The damages caused by a partner to the
Prohibition partnership cannot be offset by the profits of
benefits which he may have earned for the
Relative: Cannot
partnership by his industry.
Absolute: Cannot engage in business
engage in business (with same kind of
Ratio: The partner has the obligation to secure
for himself unless the business with the
benefits for the partnership. Hence, the profits
partnership partnership) for his
which he may have earned pertain as a matter of
expressly permits own account, unless
law or right, to the partnership
him to do so. there is a stipulation
to the contrary.
XPN: If unusual profits are realized through the
Remedy
extraordinary efforts of the partner at fault, the
Capitalist partners Capitalist partner, courts may equitably mitigate or lessen his
may: who violated shall: liability for damages. This rule rests on equity.
1. Exclude him from the 1. Bring to the common
firm, or fund any profits Note that even in this case, the partner at fault is
2. Avail themselves of accruing to him from not allowed to compensate such damages with the
the benefits which he said transaction; and profits earned. The law does not specify as to
may have obtained; Personally bears all when profits may be considered “unusual.” The
Damages, in either losses (NCC, Art. question depends upon the circumstances of the
case (NCC, Art. 1789). 1808). (2001 Bar) particular case.
(2001 Bar)

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 512
 PARTNERSHIP
Duty of the partners with respect to keeping
the partnership books
The partnership books shall be kept, subject to
any agreement between partners, at the principal
place of business of the partnership (NCC, Art.
1805).
Duty to keep partnership book belongs to
managing or active partner
The duty to keep true and correct books showing
the firm’s accounts, such books being at all times
open to inspection of all members of the firm,
primarily rests on the managing or active partner
or the particular partner given record-keeping
duties (Art. 1805 NCC, De Leon, 2014).
Duty of the partners with respect to
information affecting the partnership
Partners shall render on demand true and full
information of all things affecting the partnership
to:
1. Any partner; or
2. Legal representative of any deceased or any
partner under legal disability (NCC, Art.
1806).
NOTE: Under the same principle of mutual trust
and confidence among partners, there must be no
concealment between them in all matters affecting
the partnership. The information, to be sure, must
be used only for a partnership purpose (De Leon,
2014).
Q: P and G are partners engaged in real estate
business. P received information that someone
is interested to buy a parcel of land owned by
the partnership. P did not disclose this
material fact to G. Instead, he induced G to sell
to him his share in nominal price. Thereafter,
P sold the entire property to the buyer and
made huge profit. G sued P seeking damages
alleging deceit by P. The latter, as defense,
countered that G did not ask him about any
interested purchaser of the lot. Is P liable for
damages? Decide.
A: YES. P should not have concealed the fact that
there was a buyer interested to purchase the
firm’s property. Good faith not only requires that a
partner should not make any false concealment to
his partner, but also abstain from concealment
(Poss v. Gottlieb, 193 NYS 418, 421).
Accountability of partners to each other as
fiduciary
Every partner must account to the partnership for
513
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
(NCC, Art. 1807).
Duty of a partner to act with utmost good faith
towards co-partners continues even after
dissolution
The duty of a partner to act with utmost good faith
towards his co-partners continues throughout the
entire life of the partnership even after dissolution
for whatever reason or whatever means, until the
relationship is terminated, i.e., the winding up of
partnership affairs is completed (De Leon, 2014).
Failure to disclose facts, when there is a duty to
reveal them, as when parties are bound by
confidential relations, constitutes fraud (Art.
1339).
RIGHTS OF PARTNERS
1. Right to reimbursement for amounts advanced
to the partnership and to indemnification for
risks in consequence of management (NCC,
Art. 1796);
2. Right on the distribution of profits and losses
(NCC, Art. 1797);
3. Right to associate another person with him in
his share without the consent of the other
partners (NCC, Art. 1804);
NOTE: Such partnership formed between a
member of a partnership and a third person for a
division of the profits coming to him from the
partnership enterprise is termed subpartnership
(De Leon, 2010).
4. Right to free access and to inspect and copy at
any reasonable hour the partnership books
(NCC, Art. 1805);
5. Right to formal account as to partnership
affairs:
a. If he is wrongfully excluded from the
partnership business or possession of its
property by his co-partners;
b. If the right exist under the terms of any
agreement;
c. Duty to account as provided by Art.
1807;
d. Whenever there are circumstances
render it just and reasonable;
6. Right to have the partnership dissolved; and
7. Property rights of a partner (NCC, Art. 1810).
 CIVIL LAW
Rule as to formal accounting during the
existence of the partnership
GR: During the existence of the partnership, a
partner is not entitled to a formal account of
partnership affairs.
XPN: However, in special and unusual situations
enumerated under Art. 1809, the justification for a
formal accounting even before dissolution of the
partnership cannot be doubted. An example under
No. (4) of Art. 1809 is where a partner has been
assigned abroad for a long period of time in
connection with the partnership business and the
partnership books during such period being in the
possession of the other partners.
Partners’ inspection rights
The partners’ inspection rights are not absolute. He
can be restrained from using the information
gathered for other than partnership purpose.
“Any reasonable hour”
The rights of the partners with respect to
partnership books can be exercised at “any
reasonable hour” (Art. 1805). This phrase has been
interpreted to mean reasonable hours on business
days throughout the year and not merely during
some arbitrary period of a few days chosen by the
managing partners (Pardo v. The Hercules Lumber
Co. Inc., G.R. No. L-22442, August 1, 1924).
Action for accounting
An action for accounting, asking that the assets of
the partnership be accounted for, sold and
distributed according to the agreement of the
partners is a personal action which under the
Rules of Court, may be commenced and tried
where the defendant resides or may be found or
where the plaintiffs reside, at the election of the
latter.
NOTE: The fact that some of the assets of the
partnership are real property does not materially
change the nature of the action. It is an action in
personam because it is an action against a person
for the performance of a personal duty on his part,
and not an action in rem where the action is against
the thing itself. It is only incidental that part of the
assets of the partnership subject to accounting or
under liquidation happen to be real property
(Emnace v. CA, G.R. No. 126334, November 23,
2001).
Rules regarding distribution of profits and
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
losses
a. Distribution of profits
The partners share in the profits
according to their agreement.
In the absence of such:
• Capitalist partner – in proportion to his
contribution
• Industrial partner – what is just and
equitable under the circumstances
NOTE: If the industrial partner has contributed
capital other than his services, he shall also
receive a share in the profits in proportion to his
capital.
b. Distribution of losses
The partners share in the losses
according to their agreement.
In the absence of such, according to their
agreement as to profits.
In the absence of profit agreement, in
proportion to his capital contribution.
Q: “X” used his savings from his salaries
amounting to a little more than P2,000 as
capital in establishing a restaurant. “Y” gave
the amount of P4,000 to “X” as “financial
assistance” with the understanding that “Y”
would be entitled to 22% of the annual profits
derived from the operation of the restaurant.
After the lapse of 22 years, “Y” filed a case
demanding his share in the said profits. “X”
denied that there was a partnership and raised
the issue of prescription as “Y” did not assert
his rights anytime within ten (10) years from
the start of the operation of the restaurant. Is
“Y” a partner of “X” in the business? Why?
What is the nature of the right to demand one’s
share in the profits of a partnership? Does this
right prescribe? (1989 Bar)
A: YES, because there is an agreement to
contribute to a common fund and intent to divide
profits. It is founded upon an express trust. It is
imprescriptible unless repudiated.
Rule regarding a stipulation excluding a
partner in the sharing of profits and losses
GR: Such stipulation is void (NCC, Art. 1799).
XPN: Industrial partner is not liable for losses
(NCC, Art. 1797(2)). However, he is not exempted
from liability insofar as third persons are
concerned.
NOTE: Loss is different from liability.
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 PARTNERSHIP
Property rights of a partner
1. Right in specific partnership property;
2. Interest in the partnership (share in the
profits and surplus);
3. Right to participate in the management
(NCC, Art. 1803).
Related rights to the property rights of a
partner
1. Right to the partnership and to
indemnification for risks in consequence of
management (NCC, Art. 1796);
2. The right of access and inspection of
partnership books (NCC, Art. 1805);
3. The right to true and full information of all
things affecting the partnership (NCC, Art.
1806);
4. The right to a formal account of partnership
affairs under certain circumstances (NCC,
Art. 1809); and
5. The right to have the partnership dissolved
also under certain conditions (NCC Arts.
1830-1831; De Leon, 2010).
Nature of a partner's right in specific
partnership property
1. Equal right to possession for partnership
purposes;
2. Right is not assignable, except in connection
with assignment of rights of all partners in
the same property;
3. Right is limited to his share of what remains
after partnership debts have been paid;
4. Right is not subject to attachment or
execution except on a claim against the
partnership;
5. Right is not subject to legal support
Effects of assignment of partner’s whole
interest in the partnership
1. Rights withheld from the assignee:
Such assignment does not grant the assignee the
right to:
a. To interfere in the management
b. To require any information or account
c. To inspect partnership books
2. Rights of assignee on partner’s interest:
a. To receive in accordance with his contract
the profits accruing to the assigning
partner
b. To avail himself of the usual remedies
provided by law in the event of fraud in
the management
515
c. To receive the assignor’s interest in case of
dissolution
d. To require an account of partnership
affairs, but only in case the partnership is
dissolved, and such account shall cover the
period from the date only of the last
account agreed to by all the partners
Q: Rosa received from Jois money, with the
express obligation to act as Jois’ agent in
purchasing local cigarettes, to resell them to
several stores, and to give Jois the commission
corresponding to the profits received.
However, Rosa misappropriated and
converted the said amount due to Jois to her
personal use and benefit. Jois filed a case of
estafa against Rosa. Can Rosa deny liability on
the ground that a partnership was formed
between her and Rosa?
A: NO. Even assuming that a contract of
partnership was indeed entered into by and
between the parties, when a partner receives any
money or property for a specific purpose (such as
that obtaining in the instant case) and he later
misappropriates the same, he is guilty of estafa
(Liwanag v. CA, G.R. No. 114398, October 24, 1997).
OBLIGATIONS OF PARTNERSHIP/ PARTNERS
TO THIRD PERSONS
1. Every partnership shall operate under a firm
name (NCC, Art. 1815).
2. All partners shall be liable for contractual
obligations of the partnership with their
property, after all partnership assets have
been exhausted:
a. Pro rata
b. Subsidiary (NCC, Art. 1816) (1993, 2010
Bar)
XPN: All partners shall be liable
solidarily with the partnership for
everything chargeable to the
partnership under Art. 1822 and
1823 (NCC, Art. 1824).
NOTE: Any stipulation against the liability
laid down in Art. 1816 shall be void except as
among the partners (NCC, Art. 1817).
3. Partner as an agent of the partnership (NCC,
Art. 1818) (1994 Bar)
4. Conveyance of real property belonging to the
partnership (NCC, Art. 1819)
5. Admission or representation made by any
partner concerning partnership affairs
within the scope of his authority is evidence
against the partnership (NCC, Art. 1820)
 CIVIL LAW
6. Notice to partner of any matter relating to
partnership affairs operates as notice to
partnership except in case of fraud:
a. Knowledge of partner acting in the
particular matter acquired while a
partner
b. Knowledge of the partner acting in the
particular matter then present to his
mind
c. Knowledge of any other partner who
reasonably could and should have
communicated it to the acting partner
(NCC, Art. 1821)
7. Partners and the partnership are solidarily
liable to 3rd persons for the partner's tort or
breach of trust (NCC, Art. 1822-24)
8. Liability of incoming partner is limited to:
a. His share in the partnership property
for existing obligations
b. His separate property for subsequent
obligations (NCC, Art. 1826)
9. Creditors of partnership are preferred in
partnership property & may attach partner's
share in partnership assets (NCC, Art. 1827)
NOTE: On solidary liability, Art. 1816 should be
construed together with Art. 1824 (in connection
with Arts. 1822 & 1823). While the liability of the
partners is merely joint in transactions entered
into by the partnership, a third person who
transacted with said partnership may hold the
partners solidarily liable for the whole obligation
if the case of the third person falls under Articles
1822 and 1823 (Munasque v. CA, G.R. No. L-39780,
November 11, 1985).
Q: A, B and C formed a partnership for the
purpose of contracting with the Government in
the construction of one of its bridges. On June
30, 1992, after completion of the project, the
bridge was turned over by the partners to the
Government. On August 30, 1992, D, a supplier
of materials used in the project sued A for
collection of the indebtedness to him. A moved
to dismiss the complaint against him on the
ground that it was the ABC partnership that is
liable for the debt. D replied that ABC
partnership was dissolved upon completion of
the project for which purpose the partnership
was formed. Will you dismiss the complaint
against B if you were the judge? (1993 Bar)
A: NO. As Judge, I would not dismiss the complaint
against A because A is still liable as a general
partner for his pro rata share of 1/3 (Art. 1816).
Dissolution of a partnership caused by the
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
termination of the particular undertaking
specified in the agreement does not extinguish
obligations, which must be liquidated during the
“winding up" of the partnership affairs (Art. 1829
& 1830, par. 1-a).
Importance of having a firm name
A partnership must have a firm name under which
it will operate. It is necessary to distinguish the
partnership which has a distinct and separate
juridical personality from the individuals
composing the partnership and from other
partnerships and entities (De Leon, 2010).
Liability for the inclusion of name in the firm
name
Persons who, not being partners, include their
names in the firm name do not acquire the rights
of a partner but under Art. 1815, they shall be
subject to the liability of a partner (Art. 1816)
insofar as third persons without notice are
concerned (De Leon, 2010).
Remedies available to the creditors of a
partner
1. Separate or individual creditors should first
secure a judgment on their credit; and
2. Apply to the proper court for a charging order
subjecting the interest of the debtor-partner
in the partnership for the payment of the
unsatisfied amount of the judgment debt with
interest thereon (De Leon, 2014).
NOTE: The court may resort to other courses of
action provided in Art. 1814 of the NCC, (i.e.,
appointment of receiver, sale of the interest, etc.)
if the judgment debt remains unsatisfied,
notwithstanding the issuance of charging order
(De Leon, 2014).
516
 PARTNERSHIP
Effects of the acts of partners acting as an Effect of conveyance of a real property
agent of the partnership
TYPE OF EFFECT
ACTS OF A PARTNER EFFECT CONVEYANCE
With bindingeffect Title in the Conveyance passes title
except: partnership’s name; but partnership can
1. When the partner so Conveyance in recover unless:
acting has in fact no partnership name 1.
Acts for apparently authority to act for the a. Conveyance was done
partnership in the in the usual way of
carrying on in the
particular matter, and business, and
usual way the business
2. The person with whom b. The partner so acting
of the partnership
he is dealing has has the authority to act
knowledge of the fact for the partnership; or
that he has no such
authority 2. The property which
[NCC, Art. 1818(1)]. has been conveyed by
Do not bind partnership the grantee or a person
Acts not in the unless authorized by claiming through such
ordinary course of other partners (NCC, Art. grantee to a holder for
business 1818). value without
knowledge that the
Acts of strict dominion or GR: One or more but less partner, in making the
ownership: than all the partners conveyance, has
have no authority exceeded his authority
1. Assigning partnership (De Leon, 2014).
property in trust for XPNs: Title in the Conveyance does not
creditors ; 1. Authorized by the other partnership’s name; pass title but only
2. Disposing of goodwill of partners; or Conveyance in equitable interest,
business; 2. Partners have abandoned partner's name provided:
3. Doing an act which the business [Art. 1. Conveyance was done
would make it 1818(3)]. in the usual way of
impossible to carry on business, or
the ordinary business of 2. The partner so acting
partnership; has the authority to act
4. Confessing a for the partnership (De
judgment; Leon, 2014).
5. Entering into a Title in the name of 1 Conveyance passes title
compromise concerning or more partners, and but the partnership
a the record does not may recover such
partnership claim or disclose the right of property if the
liability; the partnership; partners’ act does not
6. Submitting partnership Conveyance in name bind the partnership:
claim or liability to of partner/s in whose1. The partner so acting
arbitration; name title stands has no authority to act
7. Renouncing claim of
for the partnership, and
partnership 2. The person with whom
Acts in contravention Partnership is not liable he is dealing has
of a restriction on to 3rd persons having knowledge of the fact
authority actual or presumptive unless the purchaser of
knowledge of the his assignee, is a holder
restriction [NCC, Art. for value, without
1818(4)]. knowledge (De Leon,
2014).

517
 CIVIL LAW
Title in name of 1 Conveyance will only is dissolved.
or more or all pass
partners or 3rd equitable interest,
person in trust for provided: Causes of dissolution (NCC, Art. 1830)
partnership; 1. The act is one within
Conveyance executed the authority of the 1. Without violating the agreement:
in partnership name partner, and a. Termination of the definite term or
or in name of 2. Conveyance was done specific undertaking
partners in the usual way of the b. Express will of any partner in good faith,
business (De Leon, when there is no definite term and no
2014). specified undertaking
Title in the names Conveyance will pass c. Express will of all partners (except those
of all the partners; all the who have assigned their interests or
Conveyance rights in such property suffered them to be charged for their
executed by all the (De separate debts) either before or after the
partners Leon, 2014). termination of any specified term or
particular undertaking
d. Expulsion of any partner in good faith of
DISSOLUTION AND WINDING UP
a member
DISSOLUTION (2010 Bar) 2. Violating the agreement
3. Unlawfulness of the business
Final stages of partnership 4. Loss
a. Specific thing promised as contribution is
1. Dissolution; lost or perished before delivery
2. Winding up; and b. Loss of a specific thing contributed
3. Termination before or after delivery, if only the use of
such is contributed
Dissolution, winding-up, and termination
NOTE: The partnership shall not be dissolved by
Dissolution Winding the loss of the thing when it occurs after the
Termination
up partnership has acquired the ownership thereof.
A change in the Settling the Point in time
relation of partnership When all 5. Death of any of the partners
the business or partnership 6. Insolvency of any partner or of the
partners caused affairs after affairs are partnership
by dissolution. wound up or 7. Civil interdiction of any partner
any partner completed; the 8. By decree of court under Art. 1831
ceasing end of the a. . A partner has been declared insane or
to be associated partnership life. of unsound mind
in b. A partner becomes in any other way
carrying on incapable of performing his part of the
the partnership contract
business. c. A partner has been guilty of such
It is that point It is the final It signifies the conduct as tends to affect prejudicially
in time when step after end of the the carrying on of the business
the partners dissolution partnership life. d. A partner wilfully or persistently
cease to carry in the It takes place commits a breach of the partnership
on the termination After both agreement
business of the dissolution and e. . The business of the partnership can
together. It partnership. winding up have only be carried on at a loss
represents the occurred. f. Other circumstances render a
demise of a dissolution equitable
partnership.
Thus, any time Effects of dissolution (2010 BAR)
a partner leaves
the business, 1. Partnership is not terminated;
the partnership 2. Partnership continues for a limited purpose;

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 518
 PARTNERSHIP
3. Transaction of new business is prohibited (De
Leon, 2005).
As to previous obligations, the dissolution of
partnership does not mean that the partners can
evade previous obligations entered into (Testate of
Motta v. Serra, G.R. No. L-22825, February 14,
1925).
As to new obligations, the dissolution spares the
former partners from new obligations entered
into by the partnership without their consent,
implied or express, unless the obligation are
essential for the winding up of partnership affairs
(Ibid.).
NOTE: The dissolution of a partnership must not
be understood in the absolute and strict sense so
that at the termination of the object for which it
was created the partnership is extinguished,
pending the winding up of some incidents and
obligations of the partnership, but in such case, the
partnership will be reputed as existing until the
juridical relations arising out of the contract are
dissolved (Testate of Motta v. Serra, G.R. No. L-
22825, February 14, 1925).
Dissolution does not automatically result in the
termination of the legal personality of the
partnership, nor the relations of the partners
among themselves who remain as co-partners
until the partnership is terminated (De Leon,
2005).
A partner cannot be expelled from the
partnership without agreement thereto.
In the absence of an express agreement to that
effect, there exists no right or power of any
member, or even a majority of the members, to
expel all other members of the firm at will. Nor
can they at will forfeit the share or interest of a
member or members and compel him or them to
quit the firm, even paying what is due him.
The expulsion has the effect of decreasing the
number of the partners, hence, the dissolution.
The expulsion must be made in good faith. The
partner expelled in bad faith can claim damages.
(De Leon, 2010).
Effect of dissolution on the authority of a
partner
GR: The partnership ceases to be a going concern.
XPN: The partner’s power of representation is
confined only to acts incident to winding up or
519
completing transactions begun but not then
finished (NCC, Art. 1832).
NOTE: Subject to the qualifications set forth in
Articles 1833 and 1834 in relation to Article 1832:
1. In so far as the partners themselves are
concerned– The authority of any partner to
bind the partnership by a new contract is
immediately terminated when the dissolution
is not by the act, insolvency, or death of a
partner.
2. When the dissolution is by the act, insolvency,
or death, the termination of authority
depends upon whether or not the partner had
knowledge or notice of dissolution (NCC, Art.
1833) (2010 Bar).
Q: Tomas, Rene and Jose entered into a
partnership under the firm name “Manila
Lumber.” Subsequently, upon mutual
agreement, Tomas withdrew from the
partnership and the partnership was
dissolved. However, the remaining partners,
Rene and Jose, did not terminate the business
of “Manila Lumber.” Instead of winding up the
business of the partnership and liquidating its
assets, Rene and Jose continued the business
in the name of “Manila Lumber” apparently
without objection from Tomas. The
withdrawal of Tomas from the partnership
was not published in the newspapers. Could
Tomas be held liable for any obligation or
indebtedness Rene and Jose might incur while
doing business in the name of “Manila Lumber”
after his withdrawal from the partnership?
Explain. (1987 Bar)
A: YES. Tomas can be held liable under the
doctrine of estoppel. But as regards the parties
among themselves, only Rene and Jose are liable.
Tomas cannot be held liable since there was no
proper notification or publication. In the event
that Tomas is made to pay the liability to third
person, he has the right to seek reimbursement
from Rene and Jose.
Q: The articles of co-partnership provide that
in case of death of one partner, the partnership
shall not be dissolved but shall be continued
by the deceased partner’s heirs. When H, a
partner, died, his wife, W, took over the
management of some of the real properties
with permission of the surviving partner, X,
but her name was not included in the
partnership name. She eventually sold these
real properties after a few years. X now claims
that W did not have the authority to manage
 CIVIL LAW
and sell those properties as she was not a
partner. Is the sale valid?
A: YES. The widow was not a mere agent, because
she had become a partner upon her husband's
death, as expressly provided by the articles of co-
partnership, and by authorizing the widow to
manage partnership property, X recognized her as
a general partner with authority to administer and
alienate partnership property. It is immaterial that
W's name was not included in the firm name, since
no conversion of status is involved, and the
articles of co-partnership expressly contemplated
the admission of the partner's heirs into the
partnership (Goquiolay v. Sycip, G.R. No. L-11840,
December 16, 1963).
Liability of a partner where the dissolution is
caused by the act, death or insolvency of a
partner
GR: Each partner is liable to his co-partners for his
share of any liability created by any partner for the
partnership, as if the partnership had not been
dissolved.
XPNs: Partners shall not be liable when:
1. The dissolution, being by act of any
partner, the partner acting for the partnership
had knowledge of the dissolution; or
2. The dissolution, being by the death or
insolvency of a partner, the partner acting for
the partnership had knowledge or notice of the
death or insolvency (NCC, Art. 1833). (2010
Bar)
Q: After the dissolution of a partnership, can a
partner still bind the partnership?
A:
GR: A partner continues to bind partnership even
after dissolution in the following cases:
1. Transactions to wind up partnership
affairs or to complete transactions
unfinished at dissolution;
2. Transactions which would bind
partnership if dissolution had not taken
place, provided the other party/obligee:
a. Had extended credit to partnership
prior to dissolution; and had no
knowledge/notice of dissolution; or
b. Did not extend credit to partnership;
Had known partnership prior to
dissolution; AND Had no
knowledge/notice of dissolution/fact
of dissolution not advertised in a
newspaper of general circulation in
the place where partnership is
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
regularly carried on (Art. 1834, par 1
nos. 1-2).
XPNs: Partner cannot bind the partnership
anymore after dissolution:
1. Where dissolution is due to unlawfulness to
carry on business; or
2. Where partner has become insolvent; or
3. Act is not appropriate for winding up or for
completing unfinished transactions; or
4. Partner is unauthorized to wind up
partnership affairs, except by transaction with
one who:
a. Had extended credit to partnership prior
to dissolution; AND Had no knowledge or
notice of dissolution; or
b. Did not extend credit to partnership prior
to dissolution; Had known partnership
prior to dissolution; AND Had no
knowledge/notice of dissolution/fact of
dissolution not advertised in a
newspaper of general circulation in the
place where partnership is regularly
carried on (Art. 1834(3)); or
5. Completely new transactions which would
bind the partnership if dissolution had not
taken place with third persons in bad faith.
Q: Does the dissolution of a partnership
discharge existing liability of a partner?
A:
GR: Dissolution does not discharge the existing
liability of a partner (Art. 1835(1)).
XPN: Said liability is discharged when there is an
agreement between:
1. Partner himself;
2. Person/s continuing the business; and
3. Partnership creditors [NCC, Art. 1835(2)].
Liability of the estate of a deceased partner.
In accordance with Article 1816, the individual
property of a deceased partner shall be liable for
all obligations of the partnership incurred while
he was a partner. Note that the individual
creditors of the deceased partner are to be
preferred over partnership creditors with respect
to the separate property of said deceased partner
(De Leon, 2010).
Order of priority in the distribution of assets
during the dissolution of a limited partnership
In setting accounts after dissolution, the liabilities
520
 PARTNERSHIP
of the partnership shall be entitled to payment in
the following order:
1. Those to creditors, in the order of priority as
provided by law, except those to limited
partners on account of their contributions,
and to general partners;
2. Those to limited partners in respect to their
share of the profits and other compensation
by way of income on their contributions;
3. Those to limited partners in respect to the
capital of their contributions;
4. Those to general partners other than for
capital and profits;
5. Those to general partners in respect to
profits;
6. Those to general partners in respect to
capital (NCC, Art. 1863).
NOTE: Subject to any statement in the certificate
or to subsequent agreement, limited partners
share in the partnership assets in respect to their
claims for capital, and in respect to their claims for
profits or for compensation by way of income on
their contribution respectively, in proportion to
the respective amounts of such claims (NCC, Art.
1863).
WINDING UP OF THE PARTNERSHIP
It is during this time after dissolution that
partnership business or affairs are being settled
(De Leon, 2005).
Ways of winding up
The winding up of the dissolved partnership may
be done either:
1. Judicially, under the control and direction of
the proper court upon cause shown by any
partner, his legal representative, or his
assignee; or
2. Extrajudicially, by the partners themselves
without intervention of the court (De Leon,
2014).
Action for liquidation
An action for the liquidation of a partnership is a
personal one; hence, it may be brought in the
place of residence of either the plaintiff or the
defendant (De Leon, 2014).
Persons authorized to wind up
1. Partners designated by the agreement;
2. In the absence of such, all partners who
have not wrongfully dissolved the partnership;
and,
521
3. Legal representative of last surviving
partner who is not insolvent (De Leon, 2014).
NOTE: The court may, in its discretion, after
considering all the facts and circumstances of the
particular case, appoint a receiver to wind up the
partnership affairs where such step is shown to be
to the best interests of all persons concerned.
An insolvent partner does not have the right to
wind up partnership affairs (De Leon, 2014).
Powers of liquidating partner
1. Make new contracts;
2. Raise money to pay partnership debts;
3. Incur obligations to complete existing
contracts or preserve partnership assets;
and,
4. Incur expenses necessary in the conduct of
litigation (De Leon, 2014).
Order of payment in winding up
a. In a general partnership:
1. Those owing to creditors other than
partners
2. Those owing to partners other than for
capital or profits
3. Those owing to partners in respect of
capital
4. Those owing to partners in respect to
profits [NCC, Art. 1839(2)].
b. In a limited partnership
1. Those to creditors, in the order of
priority as provided by law, except
those to limited partners on account of
their contributions, and to general
partners.
2. Those to limited partners in respect to
their share of the profits and other
compensation by way of income on
their contributions.
3. Those to limited partners in respect to
the capital of their contributions.
4. Those to general partners other than
for capital and profits.
5. Those to general partners in respect to
profits.
6. Those to general partners in respect to
capital. (Art. 1863, NCC)
“Doctrine of marshalling of assets”
The doctrine of marshalling of assets provides
 CIVIL LAW
that:
1. Partnership creditors have preference in
partnership assets.
2. Separate or individual creditors have
preference in separate or individual
properties.
3. Anything left from either goes to the other.
NOTE: The doctrine of marshalling of assets
involves the ranking of assets in a certain order
toward the payment of outstanding debts (De
Leon, 2010).
Rights of a partner where dissolution is not in
contravention of the agreement
Unless otherwise agreed, the rights of each partner
are as follows:
1. To have the partnership property
applied to discharge the liabilities of partnership;
and
2. To have the surplus, if any, applied, to
pay in cash the net amount owing to the respective
partners (De Leon, 2014).
Rights of a partner where dissolution is in
contravention of the agreement
The rights of a partner vary depending upon
whether he is the innocent or guilty partner.
1. Rights of partner who has not caused the
dissolution wrongfully:
a. To have partnership property
applied for the payment of its liabilities and
to receive in cash his share of the surplus
b. To be indemnified for the damages
caused by the partner guilty of wrongful
dissolution
c. To continue the business in the
same name during the agreed term of the
partnership, by themselves or jointly with
others
d. To possess partnership property
should they decide to continue the business
2. Rights of partner who has wrongfully caused
the dissolution:
a. If the business is not continued by
the other partners, to have the partnership
property applied to discharge its liabilities
and to receive in cash his share of the
surplus less damages caused by his
wrongful dissolution
b. If the business is continued:
To have the value of his
interest in the partnership at
the time of the dissolution,
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
less any damage caused by
the dissolution to his co-
partners, ascertained and
paid in cash, or secured by
bond approved by the court;
and
To be released from all
existing and future liabilities
of the partnership (De Leon,
2014).
Rights of injured partner where partnership
contract is rescinded
1. Right of a lien on, or retention of, the surplus of
partnership property after satisfying
partnership liabilities for any sum of money
paid or contributed by him;
2. Right of subrogation in place of partnership
creditors after payment of partnership
liabilities; and
3. Right of indemnification by the guilty partner
against all debts and liabilities of the
partnership (De Leon, 2014).
Settlement of accounts between partners
1. Assets of the partnership include:
a. Partnership property (including
goodwill)
b. Contributions of the partners
2. Order of application of the assets:
a. First, those owing to partnership
creditors
b. Second, those owing to partners
other than for capital and profits such as
loans given by the partners or advances for
business expenses
c. Third, those owing for the return of
the capital contributed by the partners
d. Fourth, the share of the profits, if
any, due to each partner (De Leon, 2014).
Q: A partnership was formed with Magdusa as
the manager. During the existence of the
partnership, two partners expressed their
desire to withdraw from the firm. Magdusa
determined the value of the partners share
which were embodied in the document drawn
in the handwriting of Magdusa but was not
signed by all of the partners. Later, the
withdrawing partners demanded for payment
but were refused. Considering that not all
partners intervened in the distribution of all
or part of the partnership assets, should the
action prosper?
522
 PARTNERSHIP
A: NO. A partner’s share cannot be returned
without first dissolving and liquidating the
partnership, for the return is dependent on the
discharge of creditors, whose claims enjoy
preference over those of the partner, and it is self-
evident that all members of the partnership are
interested in its assets and business, and are
entitled to be heard in the matter of the firm’s
liquidation and distribution of its property. The
liquidation prepared by Magdusa not signed by
the other partners is not binding on them
(Magdusa v. Albaran, G.R. No. L-17526, June 30,
1962).
Since the capital was contributed to the
partnership, not to partners, it is the partnership
that must refund the equity of the retiring
partners. Since it is the partnership, as a separate
and distinct entity that must refund the shares of
the partners, the amount to be refunded is
necessarily limited to its total resources. In other
words, it can only pay out what it has in its coffers,
which consists of all its assets (Villareal v. Ramirez,
G.R. No. 144214, July 14, 2003).
Partner’s lien
It is the right of every partner to have the
partnership property applied, to discharge
partnership liabilities and surplus assets, if any,
distributed in cash to the respective partners, after
deducting what may be due to the partnership
from them as partners.
Effects when the business of a dissolved
partnership is continued
1. Creditors of old partnership are also creditors
of the new partnership who continues the
business of the old one without liquidation of
the partnership affairs.
2. Creditors have an equitable lien on the
consideration paid to the retiring/deceased
partner by the purchaser when
retiring/deceased partner sold his interest
without final settlement with creditors.
3. Rights of retiring/estate of deceased partner:
a. To have the value of his interest
ascertained as of the date of dissolution;
and
b. To receive as ordinary creditor the value
of his share in the dissolved partnership
with interest or profits attributable to
use of his right, at his option.
NOTE: The right to demand on accounting of the
value of his interest accrues to any partner or his
legal representative after dissolution in the
523
absence of an agreement to the contrary.
Continuation of partnership by a corporation
If a corporation is formed consisted of the
members of the partnership, whose business and
properties are transferred to the corporation for
continuing its business, in payment of which
corporate capital stock was issued, such
corporation is presumed to have assumed the
partnership debts and is prima facie liable
therefor. The rationale of the rule is that members
of the partnership may be said to have simply put
on new coat or taken a corporate cloak and the
corporation is a mere continuation of the
partnership (Laguna Transportation Co., Inc. v. SSS,
G.R. No. L-14606, April 28, 1960).
Persons that are required to render an account
1. Winding up partner;
2. Surviving partner; and
3. Person or partnership continuing the
business.
Q: Emnace and Tabanao decided to dissolve
their partnership in 1986. Emnace failed to
submit the statement of assets and liabilities of
the partnership, and to render an accounting
of the partnership's finances. Tabanao’s heirs
filed against Emnace an action for accounting,
etc. Emnace counters, contending that
prescription has set in. Decide.
A: Prescription has not yet set in. Prescription of
the said right starts to run only upon the
dissolution of the partnership when the final
accounting is done. Contrary to Emnace’s
protestations, prescription had not even begun to
run in the absence of a final accounting. The right to
demand an accounting accrues at the date of
dissolution in the absence of any agreement to the
contrary. When a final accounting is made, it is
only then that prescription begins to run (Emnace
v. CA, G.R. No. 126334, November 23, 2001).
LIMITED PARTNERSHIP
It is one formed by two or more persons having as
members one or more general partners and one or
more limited partners, the latter not being
personally liable for partnership debts (NCC, Art.
1843).
Characteristics of limited partnership
1. It is formed by compliance with the
statutory requirements.
 CIVIL LAW
2. One or more general partners control the
business and are personally liable to
creditors.
3. One or more limited partners contribute to
the capital and share in the profits but do not
participate in the management of the
business and are not personally liable for
partnership obligations beyond their capital
contributions.
4. The limited partners may ask for the return
of their capital contributions under
conditions prescribed by law.
5. Partnership debts are paid out of common
fund and the individual properties of general
partners (De Leon, 2014).
Consequences of separate personality of
limited partnership
The personality of a limited partnership being
different from that of its members, it must, on
general principle, answer for, and suffer,
the consequence of its acts as such an entity
capable of being the subject of rights and
obligations. If the limited partnership failed to pay
its obligations, this partnership must suffer the
consequences of such a failure, and must be
adjudged insolvent (Campos Rueda & Co. v. Pacific
Commercial Co., et. al, G.R. No. L- 18703, August 28,
1922).
FORMATION AND AMENDMENT OF LIMITED
PARTNERSHIP
Essential requirements for the formation of
limited partnership
1. Certificate of articles of limited partnership
which states the matters enumerated in Art.
1844, must be signed and sworn; and
NOTE: Among the contents of the Certificate of
Articles of Partnership should be the name of the
partnership, adding thereto the word “limited”.
2. Certificate must be filed for record in the
office of the SEC (De Leon, 2014).
NOTE: Strict compliance with legal requirements
is not necessary. It is sufficient that there is
substantial compliance in good faith. If there is no
substantial compliance, the partnership becomes
general partnership as far as third persons are
concerned, in which the member are liable as
general partners (Jo Chun v. Pacific Commercial
Co., G.R. No. 19892, September 6, 1923).
Cancellation of certificate or articles of limited
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
partnership
1. When the partnership is dissolved
2. When all the limited partners ceased to be
such (NCC, Art. 1864).
Instances when a certificate or articles of
limited partnership can be amended
1. It must fall under the following changes and
conditions:
a. There is a change in the name of the
partnership or in the amount or character of
the contribution of any limited partner;
b. A person is substituted as a limited
partner;
c. An additional limited partner is admitted;
d. A person is admitted as a general partner;
e. A general partner retires, dies, becomes
insolvent or insane, or is sentenced to
civil interdiction and the business is
continued under Article 1860;
f. There is a change in the character of the
business of the partnership;
g. There is a false or erroneous statement in
the certificate;
h. 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;
i. A time is fixed for the dissolution of the
partnership, or the return of a
contribution, no time having been
specified in the certificate;
j. 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 (NCC, Art. 1864).
2. Must be signed and sworn to by all of the
members including the new members if some
added; in case of substitution, the assigning
limited partner must also sign.
3. Must be recorded in the SEC.
Instances when a general partner needs
consent or ratification of all the limited
partners
When he:
1. Does any act in contravention of the
certificate;
2. Does any act which would make it
impossible to carry on the ordinary business
of the partnership;
3. Confesses judgment against partnership;
4. Possesses partnership property / assigns
rights in specific partnership property other
524
 PARTNERSHIP
than for partnership purpose;
5. Admits person as general partner;
6. Admits person as limited partner – unless
authorized in certificate; or
7. Continues business with partnership
property on death, retirement, civil
interdiction, insanity or insolvency of
general partner unless authorized in the
certificate (NCC, Art. 1850).
Effective date of amendment or cancellation
As a general rule, a certificate is deemed amended
or cancelled when the amended certificate or the
certified copy of the court order in case of judicial
cancellation or amendment is filed for record in th
SEC.
RIGHTS AND OBLIGATIONS OF A LIMITED
PARTNER
Rights of a limited partner (NCC, Art. 1851)
1. To have partnership books kept at principal
place of business;
2. To inspect/copy books at reasonable hours;
3. To have on demand true and full
information of all things affecting
partnership;
4. To have 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 share of profits/other
compensation by way of income; and
7. To receive return of contributions provided
the partnership assets are in excess of all its
liabilities (De Leon, 2014).
Transactions allowed or prohibited in a
limited partnership
1. Allowed
a. Granting loans to partnership
b. Transacting business with partnership
c. Receiving pro rata share of partnership
assets with general creditors if he is
not also a general partner
2. Prohibited
a. Receiving/holding partnership
property as collateral security
b. Receiving any payment, conveyance,
release from liability if it will prejudice
right of 3rd persons
NOTE: The prohibition is not absolute because
525
there is no prohibition if the partnership assets
are sufficient to discharge partnership liabilities to
persons not claiming as general or limited
partners.
Substituted limited partner
It is a person admitted to all the rights of a limited
partner who has died or assigned his interest in
the partnership.
Rights and liabilities of a substituted limited
partner
(NCC, Art. 1859)
GR: He has all the rights and powers and is subject
to all the restrictions and liabilities of his assignor.
XPN: Those liabilities which he was ignorant of at
the time that he became a limited partner and
which could not be ascertained from the
certificate
Requirements for the admission of a
substituted limited partner
1. All the members must consent to the
assignee becoming a substituted limited
partner or the limited partner, being
empowered by the certificate must give the
assignee the right to become a limited
partner;
2. The certificate must be amended in
accordance with Art. 1865 of the NCC; and
3. The certificate as amended must be
registered in the SEC.
Basis of preference given to limited partners
over other limited partners
Priority or preference may be given to some
limited partners over other limited partners as to
the:
1. Return of their contributions;
2. Their compensation by way of income; or
3. Any other matter.
NOTE: In the absence of such statement in the
certificate, even if there is an agreement, all
limited partners shall stand on equal footing in
respect of these matters.
Requisites for return of contribution of a
limited partner (NCC, Art. 1857)
1. All liabilities of the partnership have been
paid or if they have not yet been paid, the
 CIVIL LAW
assets of the partnership are sufficient to pay
such liabilities;
2. The consent of all the members (general and
limited partners) has been obtained except
when the return may be rightfully demanded;
and
3. The certificate of limited partnership is
cancelled or amended.
When return of contribution is a matter of
right
When all liabilities of the partnership, except
liabilities to general partners and to limited
partners on account of their contributions, have
been paid or there remains property of the
partnership sufficient to pay them and the
certificate is cancelled or so amended as to set
forth the withdrawal or reduction:
1. On the dissolution of the partnership;
2. Upon the arrival of the date specified in the
certificate for the return; or
3. After the expiration of 6- month notice in
writing given by him to the other partners if
no time is fixed in the certificate for the
return of the contribution or for the
dissolution of the partnership.
NOTE: Even if a limited partner has contributed
property, he has only the right to demand and
receive cash for his contribution. The exceptions
are:
1. When there is stipulation to the contrary in
the certificate; or
2. When all the partners (general and limited
partners) consent to the return other than in
the form of cash (De Leon 2014).
Liabilities of a limited partner
1. To the partnership
Since limited partners are not principals in the
transaction of a partnership, their liability as a
rule, is to the partnership, not to the creditors of
the partnership. The general partners cannot,
however waive any liability of the limited partners
to the prejudice of such creditors.
2. To the partnership creditors and other
partners
a. A limited partner is liable for
partnership obligations when he
contributed services instead of only
money or property to the partnership;
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
b. When he allows his surname to appear
in the firm name;
c. When he fails to have a false statement
in the certificate corrected, knowing it
to be false;
d. When he takes part in the control of the
business;
e. When he receives partnership property
as collateral security, payment,
conveyance, or release in fraud of
partnership creditors;
f. When there is failure to substantially
comply with the legal requirements
governing the formation of limited
partnerships.
3. To separate creditors
As in a general partnership, the creditor of a
limited partner may, in addition to other remedies
allowed under existing laws, apply to the proper
court for a charging order subjecting the interest
in the partnership of the debtor partner for the
payment of his obligation (De Leon, 2014).
Requisites for waiver or compromise of
liabilities
The waiver or compromise:
1. Is made with the consent of all partners; and
2. Does not prejudice partnership creditors
who extended credit or whose claims arose
before the cancellation or amendment of the
certificate.
When may a limited partner have the
partnership dissolved
1. When his demand for the return of his
contribution is denied although he has a
right to such return; or
2. When his contribution is not paid although
he is entitled to its return because the other
liabilities of the partnership have not been
paid or the partnership property is
insufficient for their payment.
Effect of retirement, death, civil interdiction,
insanity or insolvency of a partner
1. General partner - The partnership is
dissolved (NCC, Art. 1860) unless the
business is continued by the remaining
general partners:
a. Under the right stated in the certificate;
or
b. With the consent of all the partners.
526
 PARTNERSHIP
2. Limited partner - The partnership is not and surplus).
dissolved except all limited partners cease 3. Right to participate in the management.
to be such. 4. Right to associate another person with him in his
share without the consent of other partners (sub-
Rights of the executor/administrator on the partnership).
death of the limited partner 5. Right to inspect and copy partnership books at
any reasonable hour.
1. All the rights of a limited partner for the 6. Right to a formal account as to partnership affairs
purpose of settling his estate (even during existence of partnership).
2. To have the same power as the deceased had a. If he is wrongfully excluded from partnership
to constitute his assignee as substituted business or possession of its property by his co-
limited partner. partners.
b. If right exists under the terms of any agreement.
In setting accounts after dissolution, the c. As provided in Art. 1807 of the NCC.
liabilities of the partnership shall be entitled d. Whenever the circumstances render it just and
to payment in the following order reasonable.
Obligations
1. Those to creditors, in the order of priority as Obligations of partners among themselves
provided by law, except those to limited 1. Contribution of property.
partners on account of their contributions, 2. Contribution of money and money converted to
and to general partners personal use.
2. Those to limited partners in respect to their 3. Prohibition in engaging in business for himself.
share of the profits and other compensation 4. Contribute additional capital.
by way of income on their contributions 5. Managing partner who collects debt.
3. Those to limited partners in respect to the 6. Partner who receives share of partnership credit.
capital of their contributions 7. Damages to partnership.
4. Those to general partners other than for 8. Render information.
capital and profits 9. Accountable as fiduciary.
5. Those to general partners in respect to profits
Obligations of partners to 3rd persons
6. Those to general partners in respect to capital
1. Every partnership shall operate under a firm
(NCC, Art. 1863).
name. Persons who include their names in the
partnership name even if they are not members
NOTE: Subject to any statement in the certificate shall be liable as a partner.
or to subsequent agreement, limited partners
2. All partners shall be liable for contractual
share in the partnership assets in respect to their
obligations of the partnership with their property,
claims for capital, and in respect to their claims for
after all partnership assets have been exhausted:
profits or for compensation by way of income on
b. Pro rata
their contribution respectively, in proportion to
c. Subsidiary
the respective amounts of such claims.
3. Admission or representation made by any partner
concerning partnership affairs within the scope of
GR: A limited partner is not a proper party to
his authority is evidence against the partnership.
proceedings:
4. Notice to partner of any matter relating to
1. By a partnership; or
partnership affairs operates as notice to
2. Against a partnership.
partnership except in case of fraud:
b. Knowledge of partner acting in the particular
XPNs:
matter acquired while a partner.
1. If he is also a general partner.
c. Knowledge of the partner acting in the particular
2. Where the object is to enforce a limited
matter then present to his mind.
partner’s right against or liability to the
d. Knowledge of any other partner who reasonably
partnership (NCC, Art. 1866).
could and should have communicated it to the
acting partner.
SUMMARY OF RIGHTS AND OBLIGATIONS OF
5. Partners and the partnership are solidarily liable
PARTNERS
to 3rd persons for the partner's tort or breach of
GENERAL PARTNER trust.
6. Liability of incoming partner is limited to:
Rights
a. His share in the partnership property for existing
1. Right in specific partnership property. obligations.
2. Interest in the partnership (share in the profits b. His separate property for subsequent obligations.

527
 CIVIL LAW
7. Creditors of partnership are preferred in
partnership property & may attach partner's
share in partnership assets.
Other obligations
1. Duty to render on demand true and full
information affecting partnership to any partner
or legal representative of any deceased partner or
of any partner under legal disability.
2. Duty to account to the partnership as fiduciary.
LIMITED PARTNER
Rights
1. To have partnership books kept at principal place
of business.
2. To inspect/copy books at reasonable hours.
3. To have on demand true and full information of all
things affecting partnership.
4. To have 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 share of profits/other compensation by
way of income.
7. To receive return of contributions, provided the
partnership assets are in excess of all its liabilities.
Obligations
To the partnership
Since limited partners are not principals in the
transaction of a partnership, their liability as a
rule, is to the partnership, not to the creditors of
the partnership. The general partners cannot,
however waive any liability of the limited partners
to the prejudice of such creditors.
To the partnership creditors and other
partners
1. A limited partner is liable for partnership
obligations when he contributed services instead
of only money or property to the partnership.
2. When he allows his surname to appear in the firm
name.
3. When he fails to have a false statement in the
certificate corrected, knowing it to be false.
4. When he takes part in the control of the business
5. When he receives partnership property as
collateral security, payment, conveyance, or
release in fraud of partnership creditors.
6. When there is failure to substantially comply with
the legal requirements governing the formation of
limited partnerships.
To separate creditors
As in a general partnership, the creditor of a
limited partner may, in addition to other remedies
allowed under existing laws, apply to the proper
court for a charging order subjecting the interest
in the partnership of the debtor partner for the
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
payment of his obligation.
AGENCY
DEFINITION OF AGENCY
Contract of agency (2000, 2003 BAR)
By the contract of agency, a person binds himself
to render some service or to do something in
representation or on behalf of another, with the
consent or authority of the latter (NCC, Art. 1868).
NOTE: The essence of agency is representation.
For a Contract of Agency to exist, it is essential that
the principal consents that the agent shall act on
the former’s behalf and the agent consents so as to
act (Rabuya, 2017).
NATURE, FORMS AND KINDS OF AGENCY
Characteristics of a contract of agency
1. Bilateral – If it is for compensation, it gives
rise to reciprocal rights and obligations.
2. Unilateral – If gratuitous, it creates
obligations for only one of the parties.
3. Nominate – It has its own name.
4. Consensual – It is perfected by mere consent.
5. Principal – It can stand by itself without need
of another contract.
6. Preparatory and Progressive – It is entered
into as a means for other purposes that deal
with the public in a particular manner: for
the agent to enter into juridical acts with the
public in the name of the principal.
(Villanueva and Villanueva-Tiansay, 2015).
7. Generally onerous
8. Representative relation- the agent acts for
and on behalf of the principal on matters
within the scope of his authority and said
acts have the same legal effect as if they were
personally executed by the principal
(Rabuya, 2017).
9. Fiduciary and Revocable- for the creation of
legal relationship of representation by the
agent on behalf of the principal, the powers
of the former are essentially derived from the
latter. Neither the principal nor the agent can
be legally made to remain in the relationship
when they choose to have it terminated.
Classifications of Agency
528
 AGENCY
1. As to manner of creation
a. Express – Agent has been actually
authorized by the principal, either orally
or in writing (NCC, Art. 1869).
b. Implied– Agency is implied from the acts
of the principal, from his silence or lack of
action or his failure to repudiate the
agency, knowing that another person is
acting on his behalf without authority
(NCC, Art. 1869).
2. As to character
a. Gratuitous – Agent receives no
compensation for his services (Art.
1875).
b. Onerous– Agent receives compensation
for his services (NCC, Art. 1875).
3. As to extent of business of the principal
a. General – Agency comprises all the
business of the principal (NCC, Art. 1876).
b. Special– Agency comprises one or more
specific transactions (NCC, Art. 1876).
4. As to authority conferred
a. Couched in general terms – Agency is
created in general terms comprises only
acts of administration (NCC, Art. 1877).
b. Couched in specific terms – Agency
authorizing only the performance of a
specific act or acts (NCC, Art. 1876).
5. As to nature and effects
b. Ostensible or representative – Agent acts
in the name and representation of the
principal (NCC, Art. 1868).
c. Simple or commission – Agent acts in his
own name but for the account of the
principal (De Leon, 2010).
Parties to a contract of agency
1. Principal (Mandante) – One whom the agent
represents and from whom he derives his
authority; he is the person represented.
2. Agent (Mandatario) – One who acts for and
represents another; he is the person acting in
a representative capacity (De Leon, 2010).
Essential elements of an agency
1. Consent (express or implied) of the parties to
establish the relationship.
NOTE: A person may express his consent:
a. by contract (NCC, Art. 1868), orally or in
writing;
529
b. by conduct (NCC, Art. 1869);
c. by ratification (NCC, Art. 1910); or
d. the consent may arise by presumption or
operation of law (De Leon, 2010).
2. The object is the execution of a juridical act in
relation to third persons.
3. The agent acts as a representative and not for
himself.
4. The agent acts within the scope of his
authority (Yu Eng Cho vs. Pan American World
Airways, Inc., 328 SCRA 717)
Appointment of an agent
GR: There are no formal requirements governing
the appointment of an agent.
XPN: When the law requires a specific form. i.e. –
when sale of land or any interest therein is through
an agent, the authority of the latter must be in
writing; otherwise, the sale shall be void (NCC, Art.
1874). (2010 BAR).
Rules on implied acceptance of agency
1. Between persons who are present – The
acceptance of the agency may also be implied
if the principal delivers his power of attorney
to the agent and the latter receives it without
any objection (NCC, Art. 1871).
2. Between persons who are absent – The
acceptance of the agency cannot be implied
from the silence of the agent except:
a. When the principal transmits his power
of attorney to the agent, who receives it
without any objection;
b. When the principal entrusts to him by
letter or telegram a power of attorney with
respect to the business in which he is
habitually engaged as an agent and he did not
reply to the letter or telegram (NCC, Art.
1872).
NOTE: Acceptance by the agent may also be
express or implied from his acts which carry out
the agency, or from his silence or inaction
according to the circumstances (NCC, Art. 1870).
Nature of the relationship between principal
and agent
It is fiduciary in nature that is based on trust and
confidence. The agent is estopped from asserting
or acquiring an interest adverse to that of his
principal. (De Leon, 2010).
Qualifications of a Principal
 CIVIL LAW
1. Natural or juridical person; and
2. He must have capacity to act.
NOTE: If a person is capacitated to act for himself
or his own right, he can act through an agent.
Insofar as third persons are concerned, it is
enough that the principal is capacitated. But
insofar as his obligations to his principal are
concerned, the agent must be able to bind himself.
Kinds of principal
1. Disclosed principal – At the time of the
transaction contracted by the agent, the
other party knows that the agent is
acting for a principal and of the
principal’s identity.
2. Partially disclosed principal – The other
party knows or has reason to know that
the agent is or may be acting for a
principal but is unaware of the
principal’s identity.
3. Undisclosed principal – The party has no
notice of the fact that the agent is acting
as such for a principal (De Leon, 2010).
Joint principals
Two or more persons appoint an agent for a
common transaction or undertaking (NCC, Art.
1915).
Requisites for solidary liability of joint
principals
1. There are two or more principals.
2. They have all concurred in the appointment
of the same agent.
3. Agent is appointed for a common
transaction or undertaking (De Leon, 2010).
Theory of imputed knowledge
The importance of the duty to give information of
material facts becomes readily apparent when it is
borne in mind that knowledge of the agent is
imputed to the principal even though the agent
never communicated such knowledge to the
principal (De Leon, 2010).
Exceptions to the theory of imputed
knowledge
1. The agent’s interests are adverse to those of
the
principal.
2. The agent’s duty is not to disclose the
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
information, as where he is informed by way
of confidential information.
3. The person claiming the benefit of the rule
colludes with the agent to defraud the
principal (De Leon, 2010).
NOTE: The theory of imputed knowledge ascribes
the knowledge of the agent to the principal, not the
other way around. The knowledge of the principal
cannot be imputed to his agent (Sunace
International Management Services, Inc. v. NLRC,
G.R. No. 161757, January 25, 2006).
Kinds of agents
1. Universal agent – employed to do all acts
which the principal may personally do, and
which he can lawfully delegate to another the
power of doing.
2. General agent – employed to transact all
business of the principal, or all the business of
a particular kind or in a particular place, do all
acts connected with a particular trade,
business or employment.
3. Special or particular agent – authorized to do
act in one or more specific transactions or to
do one or more specific acts or to act upon a
particular occasion (De Leon, 2010).
Rule with regard to the execution of the agency
GR: The agent is bound by his acceptance to carry
out the agency, in accordance with the instruction
of the principal and is liable for damages which,
through his non- performance, the principal may
suffer (NCC, Arts. 1884 & 1887).
XPN: If its execution could manifestly result in
loss or damage to the principal (NCC, Art. 1888).
Responsibility of two or more agents
appointed simultaneously
GR: They are jointly liable.
XPN: Solidarity has been expressly stipulated.
Each of the agents becomes solidarily liable for:
1. The non-fulfilment of the agency
2. Fault or negligence of his fellow agent
XPNs to the XPN:
1. When one of the other agents acts beyond
the scope of his authority – Innocent agent
is not liable.
2. When the fault or negligence of his fellow
agents acted beyond the scope of their
authority – Innocent agent is not liable
530
 AGENCY
(NCC, Art. 1895).
Instances when the agent may incur personal
liability
1. Agent expressly bound himself;
2. Agent exceeds his authority;
3. Acts of the agent prevent the performance on
the part of the principal;
4. When a person acts as agent without
authority or without a principal; and
5. A person who acts as an agent of an
incapacitated principal unless the third
person was aware of the incapacity at the
time of the making of the contract (De Leon,
2010).
Presumption of contract of agency
GR: Agency is not presumed.
The relation between principal and agent must
exist as a fact. Thus, it is held that where the
relation of agency is dependent upon the acts of
the parties, the law makes no presumption of
agency, and it is always a fact to be proved, with
the burden of proof resting upon the person
alleging the agency to show, not only the fact of its
existence, but also its nature and extent.
XPNs:
1. Operation of law; and
2. To prevent unjust enrichment (De Leon,
2010).
Agency by necessity
Agency cannot be created by necessity. What is
created instead is additional authority in an agent
appointed and authorized before the emergency
arose. 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 (De Leon, 2010).
Requisites for the additional authority of agent
in cases of necessity
1. Real existence of emergency;
2. Inability of the agent to communicate with
the principal;
3. Exercise of additional authority is for the
principal’s protection; and
4. Adoption of fairly reasonable means,
premises duly considered.
Rule regarding double agency
GR: It is disapproved by law for being against
public policy and sound morality.
XPN: Where the agent acted with full knowledge
and consent of the principals.
Acts that a principal may delegate to his agent
GR: What a man may do in person, he may do thru
another.
XPNs:
1. Personal acts; and
2. Criminal acts or acts not allowed by law (De
Leon, 2014).
Q: A granted B the exclusive right to sell his
brand of Maong pants in Isabela, the price for
his merchandise payable within 60 days from
delivery, and promising B a commission of
20% on all sales. After the delivery of the
merchandise to B but before he could sell any
of them, B’s store in Isabela was completely
burned without his fault, together with all of
A's pants. Must B pay A for the lost pants? Why?
(1999 BAR)
A: The contract between A and B is a sale not an
agency to sell because the price is payable by B
upon 60 days from delivery even if B is unable to
resell it. If B were an agent, he is not bound to pay
the price if he is unable to resell it. As a buyer,
ownership passed to B upon delivery and, under
Art. 1504, the thing perishes for the owner. Hence,
B must still pay the price.
Proving the existence of principal-agent
relationship through mere representation
Mere representation of an alleged agent is not
sufficient to prove the existence of a principal-
agent relationship. The declarations of the agent
alone are generally insufficient to establish the
fact or extent of agency. It is a settled rule that the
persons dealing with the assumed agent are
bound at their peril, if they would hold the
principals liable, to ascertain not only the fact of
agency but also the nature and extent of authority,
and in case either is controverted, the burden of
proof is upon them to establish it (Sps. Yu v. Pan
American World Airways, Inc., G.R. No. 123560,
March 27, 2000).
Q: A foreign manufacturer of computers and a
Philippine distributor entered into a contract
whereby the distributor agreed to order 1,000
units of the manufacturer's computers every
month and to resell them in the Philippines at

531
 CIVIL LAW
the manufacturer's suggested prices plus 10%. represent ts the only the court
All unsold units at the end of the year shall be principal but also the
bought back by the manufacturer at the same heirs and
price they were ordered. The manufacturer creditors of the
shall hold the distributor free and harmless estate.
from any claim for defects in the units. Is the As to the Agent Judicial
agreement one for sale or agency? (2000 BAR) requirement of does not Administrator
bond file a files a bond
A: The contract is one of agency not sale. The bond
notion of sale is negated by the following indicia: As to control of Agent is His acts are
(1) the price is fixed by the manufacturer with the the controlle subject to
10% mark-up constituting the commission; (2) agent/Administr d by the specific orders
the manufacturer reacquires the unsold units at ator principal from the court.
exactly the same price; and through
(2)warranty for the units was borne by the the
manufacturer. The foregoing indicia negate sale agreeme
because they indicate that ownership over the nt
units was never intended to transfer to the
distributor. Agency v. Lease of Services

Agency v. Guardianship BASIS AGENCY LEASE OF

SERVICES
BASIS AGENCY GUARDIANSHIP As to Agent Worker or
As to who Agent Guardian representation represents the lessor of
they represents a represents an by the agent or principal services does
represent capacitated incapacitated worker not represent
person. person. his employer
As to the Agent derives Guardian As to Relationship Generally,
source of authority from derives termination of can be relationship
authority the principal. authority from relationship terminated at can be
the court. the will of terminated
As to the Agent is Guardian is either only at the
appointing appointed by the appointed by the principal or will of both
authority principal and court, and agent
can be removed stands in loco As to the kind Agent Employee has
by the parentis. of function he exercises ministerial
latter. exercises discretionary functions.
As to being Agent is subject Guardian is not powers,
subject to to directions of subject to the
the the principal. directions of the Agency v. Trust
person ward, but must
they act for the BASIS AGENCY TRUST
represent ward’s benefit. As to the Agent Trustee may hold
As to Agent can make Guardian has no capacity to usually legal title to the
liability the principal power to impose hold title holds no property.
personally personal liability over the title at all.
liable. on the ward. property
As to his Agent Trustee may act
Agency v. Judicial Administration actions usually acts in his own name.
in the name
BASIS AGENCY JUDICIAL of the
ADMINSITRATI principal.
ON As to the Agency Trust usually
As to the source of Agent is Judicial termination usually may ends by the
authority appointe administrator is of the be accomplishment
d by the appointed by relationship terminated of the purposes
principal the court or revoked for which it was
As to whom they Represen Represents not any time. formed.

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 532
 AGENCY
As to the Agency may Trust involves belonging to the principal or when the
scope of not be control over principal ratifies the contract or derives
authority connected at property benefit there from.
over all with 2. Without authority
property property. a. In principal’s name – Unenforceable but
As to the Agent has Trustee does not may be ratified, in which case, may be
binding effect authority to necessarily or validated retroactively from the
of the make even possess such beginning.
contracts contracts authority to bind b. In his own name – Valid on the agent, but
entered by which will the trustor. not on the principal.
them be binding
on his Rule as to when the principal is not bound by
principal. the act of the agent
As to its Agency is Trust may be the
creation really a result of a 1. GR: When the act is without or beyond the
contractual contract; it may scope of his authority in the principal’s name.
relation also be created by
law. XPNs:
a. Where the acts of the principal have
POWERS contributed to deceive a 3rd person in
good faith.
Kinds of agency as to extent of powers b. Where the limitation upon the power
conferred created by the principal could not have
been known by the 3rd person.
An agency may be couched in: c. Where the principal has placed in the
1. General terms – It is one which is created in hands of the agent instruments signed by
general terms and is deemed to comprise him in blank.
only acts of administration (NCC, Art. 1877). d. Where the principal has ratified the acts
2. Specific terms – It is necessary to perform of the agent.
any act of strict ownership (De Leon, 2010).
2. GR: When the act is within the scope of the
Instances when the act of an agent is binding to agent’s authority but in his own name.
the principal
XPN: When the transaction involves things
1. When the agent acts as such without belonging to the principal (NCC, Art. 1883).
expressly binding himself or does not
exceed the limits of his authority (NCC, Art. NOTE: The limits of the agent’s authority
1897). shall not be considered exceeded should it
2. If principal ratifies the act of the agent have been performed in a manner more
which exceeded his authority (NCC, Art. advantageous to the principal than that
1898). specified by him.
3. Circumstances where the principal himself
was, or ought to have been aware (NCC, Art. RIGHTS OF AGENTS
1899).
4. If such act is within the terms of the power Instances when the agent may retain in pledge
of attorney, as written (NCC, Arts. the object of the agency (Legal Pledge)
1900&1902).
5. Principal has ratified, or has signified his 1. If principal fails to reimburse the agent the
willingness to ratify the agent’s act (NCC, necessary sums, including interest, which the
Art 1901). latter advanced for the execution of the agency
(NCC, Art. 1912).
Effects of the acts of an agent 2. If principal fails to indemnify the agent for all
damages which the execution of the agency may
1. With authority have caused the latter, without fault or
a. In principal’s name – Valid negligence on his part (NCC, Art. 1913).
b. In his own name – Not binding on the
principal; agent and stranger are the Rule where two persons deal separately with
only parties, except regarding things the agent and the principal

533
 CIVIL LAW
If the two contracts are incompatible with each
other, the one of prior date shall be preferred. This
is subject however to the rule on double sale
under Art. 1544 of the NCC.
NOTE: Rules of preference in double sale:
1. Personal property – possessor in good
faith
2. Real property
a. Registrant in good faith
b. Possessor in good faith
c. Person with the oldest title in good faith
(NCC, Art. 1544).
If agent acted in good faith, the principal shall be
liable for damages to the third person whose
contract must be rejected. If agent is in bad faith,
he alone shall be liable (NCC, Art. 1917).
A person acting as an agent cannot escape
criminal liability by virtue of the contract of
agency
The law on agency has no application in criminal
cases. When a person participates in the
commission of a crime, he cannot escape
punishment on the ground that he simply acted as
an agent of another party (Ong v. CA, G.R. No.
119858, April 29, 2003).
An agent cannot maintain an action against
persons with whom they contracted on behalf
of his principal.
Agents are not a party with respect to that
contract between his principal and third persons.
As agents, they only render some service or do
something in representation or on behalf of
their principals. The rendering of such service did
not make them parties to the contracts of sale
executed in behalf of the latter.
The fact that an agent who makes a contract for
his principal will gain or suffer loss by the
performance or non-performance of the contract
by the principal or by the other party thereto does
not entitle him to maintain an action on his own
behalf against the other party for its breach.
An agent entitled to receive a commission from his
principal upon the performance of a contract which
he has made on his principal's account does not,
from this fact alone, have any claim against the
other party for breach of the contract, either in an
action on the contract or otherwise.
An agent who is not a promisee cannot maintain an
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
action at law against a purchaser merely because
he is entitled to have his compensation or
advances paid out of the purchase price before
payment to the principal (Uy v. CA,
G.R. No. 120465, September 9, 1999).
OBLIGATIONS OF AGENT
RESPONSIBILITIES AND OBLIGATIONS OF AN
AGENT
Specific obligations of an agent to the principal
1. Carry out the agency (NCC, Art. 1884);
2. Answer for damages which through his non-
performance the principal may suffer (Ibid.);
3. Finish the business already begun on the death
of the principal (Ibid.);
4. Observe the diligence of a good father of a
family in the custody and preservation of the
goods forwarded to him by the owner in case
he declines an agency, until an agent is
appointed (NCC, Art. 1885);
NOTE: The owner shall as soon as practicable
either appoint an agent or take charge of the
goods (NCC, Art. 1885).
5. Advance the necessary funds should there be
a stipulation to do so except when the
principal is insolvent (NCC, Art. 1886);
6. Act in accordance with the instructions of the
principal (NCC, Art. 1887);
7. Not to carry out the agency if its execution
would manifestly result in loss or damage to
the principal (NCC, Art. 1888);
8. Answer for damages if there being a conflict
between his interests and those of the
principal, he should prefer his own (NCC, Art.
1889);
9. Not to loan to himself if he has been
authorized to lend money at interest (NCC,
Art. 1890);
10. Render an account of his transactions and to
deliver to the principal whatever he may have
received by virtue of the agency, even though
it may not be owing to the principal (NCC, Art.
1891);
NOTE: Every stipulation exempting the agent
from the obligation to render an account shall be
void [NCC, Art. 1891(2]).
11. Distinguish goods by countermarks and
designate the merchandise respectively
belonging to each principal, in the case of a
commission agent who handles goods of the
same kind and mark, which belong to
534
 AGENCY
different owners (NCC, Art. 1904); As to the Relates to the Refers to the
12. Be responsible in certain cases for the acts of relationship subject/business manner or
the substitute appointed by him (NCC, Art. to the agent with which the mode of agent’s
1892); (1999 BAR) agent is action.
13. Pay interest on funds he has applied to his empowered to
own use (NCC, Art. 1896); deal or act.
14. Inform the principal, where an authorized sale
of credit has been made, of such sale (NCC, Art. As to third Limitations of Without
1906); persons authority are significance as
15. Bear the risk of collection and pay the operative as against those
principal the proceeds of the sale on the same against those with neither
terms agreed upon with the purchaser, should who knowledge
he receive also on sale, a guarantee have/charged nor notice
commission (NCC, Art. 1907); with knowledge of them.
16. Indemnify the principal for damages for his of them.
failure to collect the credits of his principal at
the time that they become due (NCC, Art. As to Contemplated to Not expected
1908); purpose be made to
17. Be responsible for fraud or negligence (NCC, known to be made
Art. 1909; De Leon, 2014). third persons known to
dealing those with
NOTE: The court shall judge with more or less whom the
rigor, the fault or negligence of the agent, agent deals.
according to whether the agency was or was not (De Leon,
for compensation. 2010)

Instructions Breach of loyalty of the agent

Private directions which the principal may give
the agent in regard to the manner of performing
his duties as such agent but of which a third party
is ignorant. They are said to be secret if the
principal intended them not to be made known to
such party (De Leon, 2010).
Obligation of a person who declines an agency
A person who declines an agency is till bound to
observe the diligence of a good father of the family
in the custody and preservation of goods
forwarded to him by the owner. This is based on
equity. (De Leon, 2010).
Authority v. Principal’s instructions
In case of breach of loyalty, the agent is NOT
entitled to commission
The forfeiture of the commission will take place
regardless of whether the principal suffers any
injury by reason of such breach of loyalty. It does
not even matter if the agency is for a gratuitous
one, or that the principal obtained better results,
or that usage and customs allow a receipt of such a
bonus.
NOTE: An agent has an absolute duty to make a
full disclosure or accounting to his principal of all
transactions and material facts that may have
some relevance with the agency (Domingo v.
Domingo, G.R. No. L-30573, October 29, 1971).

BASIS AUTHORITY INSTRUCTIONS When the obligation to account not applicable

As to the Sum total Contemplates
scope of the only a private 1. If the agent acted only as a middleman with
powers rule of the task of merely bringing together the
committed guidance to vendor and vendees.
to the the agent; 2. If the agent informed the principal of the
agent by independent gift/bonus/profit he received from the
the and distinct purchaser and his principal did not object
principal. in character. thereto.
3. Where a right of lien exists in favor of the
agent (De Leon, 2014).

SUMMARY OF RULES : ACTS OF AN AGENT

535
 CIVIL LAW
In behalf of the principal, within the scope of Principal is liable for damages.
authority
1. Binds principal;
2. Agent not personally liable EXPRESS v. IMPLIED AGENCY
Without or beyond scope of authority
Contract is unenforceable as against the principal BASIS EXPRESS AGENCY IMPLIED
but binds the agent to the third person. AGENCY
One where the One which is
Binding on the principal when: agent has been implied from the
1. Ratified or actually acts of the
2. The principal allowed the agent to act as As to authorized by the principal.
though he had full powers. definition principal, either
Within the scope of authority but in the agent’s orally or in
name writing.
1. Not binding on the principal;
2. Principal has no cause of action against the When it is directly When it is
conferred by incidental
3rd parties and vice versa
to the
words. transaction or
When the transaction involves things belonging to
reasonably
the principal, his remedy is to sue the agent for
necessary to
damages because of failure to comply with the
accomplish the
agency.
As to purpose of the
Within the scope of the written power of
authority agency, and
attorney but agent has actually exceeded his
therefore, the
authority according to an understanding
principal is
between him and the principal
deemed to have
1. Insofar as 3rd persons are concerned (not actually intended
required to inquire further than the terms of the the agent to
written power), agent acted within scope of his possess.
authority;
2. Principal is estopped. Scope of the agent’s authority as to third
With improper motives persons
Motive is immaterial; as long as within the scope
of authority, valid. It includes not only the actual authorization
With misrepresentations by the agent conferred upon the agent by his principal but also
that which is apparent or impliedly delegated to
1. Authorized – principal still liable him (De Leon, 2010).
2. Beyond the scope of the agent’s authority
Q: When is a third person required to inquire
GR: Principal not liable into the authority of the agent?

XPN: Principal takes advantage of a contract or A:

receives benefits made under false representation
of his agent.
Mismanagement of the business by the agent
1. Principal still responsible for the acts
contracted by the agent with respect to 3rd
persons;
2. Principal, however, may seek recourse from
the agent.
Tort committed by the agent
Principal civilly liable so long as the tort is
committed by the agent while performing his
duties in furtherance of the principal’s business.
Agent in good faith but prejudices 3rd parties
1. Where authority is not in writing– Every
person dealing with an assumed agent must
discover upon his peril, if he would hold the
principal liable, not only the fact of the agency
but the nature and extent of the authority of
the agent.
2. Where authority is in writing – 3rd person is
not required to inquire further than the terms
of the written power of attorney.
NOTE: 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 (NCC, Art. 1902).

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2019 GOLDEN NOTES 536
 AGENCY
Q: When may the actual or apparent authority (Paras, 1969).
of the agent bind the principal?
Rules regarding estoppel in agency
A: The principal is bound by the acts of the agent
on his behalf, whether or not the third person 1. Estoppel of agent –One professing to act as
dealing with the agent believes that the agent agent for another may be estopped to deny his
has actual authority, so long as the agent has agency both as against his asserted principal
actual authority, express or implied. and the third persons interested in the
transaction in which he engaged.
Doctrine of Apparent Authority 2. Estoppel of principal
a. As to agent – One who knows that another
The principal is liable only as to third persons who is acting as his agent and fails to repudiate
have been led reasonably to believe by the his acts, or accepts the benefits, will be
conduct of the principal that such actual authority estopped to deny the agency as against the
exists, although none has been given (De Leon, other.
2014). b. As to sub-agent – To estop the principal
from denying his liability to a third
Apparent authority v. Authority by estoppel person, he must have known or be
charged with knowledge of the fact of the
BASIS Apparent Authority by transaction and the terms of the
Authority Estoppel agreement between the agent and sub-
As to the That which is Arises when agent.
knowledge of though not the principal, c. As to third persons – One who knows that
the principal actually by his another is acting as his agent or permitted
of the granted, the culpable another to appear as his agent, to the
authority of principal negligence, injury of third persons who have dealt
the agent knowingly permits his with the apparent agent as such in good
permits the agent to faith and in the exercise of reasonable
agent to exercise prudence, is estopped to deny the agency.
exercise or powers not
holds him out granted to 3. Estoppel of third persons – A third person,
as possessing. him, even having dealt with one as agent may be
though the estopped to deny the agency as against the
principal may principal, agent, or third persons in
have no interest.
notice or 4. Estoppel of the government – The
knowledge of government is not estopped by the mistake
the agent’s or error on the part of its agents.
conduct.
Q: In an expropriation case between RP and
As to the Founded in Founded on several property owners in Mandaluyong for
establishment conscious the construction of the EDSA-Shaw Boulevard
of the permission of principal’s Overpass Project, decision was rendered
authority acts beyond negligence in against the RP. The RP through the OSG
the powers failing received the decision on October 7, 2002 but it
granted. properly to was only October 20, 2003 that RP filed a
supervise the petition for certiorari. It resorted to an
affairs of independent civil action because it failed to
the agent. file within the 15-day reglementary period. Is
the Republic bound and put in estoppel by the
gross negligence/mistake of its agent/former
AGENCY BY ESTOPPEL counsel?

It is when one leads another to believe that a A: While the Republic or the government is
certain person is his agent, when as a matter of usually not estopped by the mistake or error on the
fact such is not true, and the latter acts on such part of its officials or agents, the Republic cannot
misrepresentation, the former cannot disclaim now take refuge in the rule as it does not afford a
liability, for he has created an agency by estoppel blanket or absolute immunity. Our

537
 CIVIL LAW
pronouncement in Republic v. CA is instructive: the the paries (Pacific Commercial Co. v. Yatco, 68 Phil.
Solicitor-General may not be excused from its 398, 1939).
shortcomings by invoking the doctrine as if it
were some magic incantation that could benignly, Rules
if arbitrarily, condone and erase its errors.
1. Efficient and procuring cause – a principle in
The rule on non-estoppel of the government is not the law on agency whereby the broker, to be
designed to perpetrate an injustice. In general, the entitled to compensation, must be the efficient
rules on appeal are created and enforced to agent or procuring cause of the sale;
ensure the orderly administration of justice. The 2. Ready-willing-and-able Rule – a principle which
judicial machinery would run aground if late states that for a broker to be entitled to
petitions, like the present one, are allowed on the commission, he must provide a person who is
flimsy excuse that the attending lawyer was ready, willing and able both to accept and live
grossly lacking in vigilance (Leca Realty Corp. v. up to the terms offered by his principal
Republic, G.R. Nos. 155605 & 160179, September 27, (Albano, 2013).
2006). 3. Procuring Cause - Procuring cause is meant to
be the proximate cause. The term procuring
Implied agency v. Agency by estoppel cause, in describing a brokers activity,
refers to a cause originating a series of
BASIS IMPLIED AGENCY BY events which, without break in their continuity,
AGENCY ESTOPPEL result in accomplishment of prime objective of
As to Agent is a If caused by the the employment of the broker producing a
liability true agent, “agent”, he is not purchaser ready, willing and able to buy real
between with rights considered a true estate on the owners terms. A broker will be
principal and duties of agent, hence, he regarded as the procuring cause of a sale, so as
and agent an agent. has no rights as to be entitled to commission, if his efforts are
such. the foundation on which the negotiations
As to The principal 1. If caused by the resulting in a sale are begun. The broker must
liability to is always principal, he is be the efficient agent or the procuring cause of
third liable; liable, but only if the sale. The means employed by him and his
persons The agent is the 3rd person efforts must result in the sale. He must find the
never acted on the purchaser, and the sale must proceed from his
personally misrepresenta efforts acting as broker (Medrano, et. al. v. CA,
liable. tion; et. al., G.R. No. 150678, February 18, 2005).
2. If caused by the
agent alone, only Factorage
the agent
is liable. It is the compensation of a factor or commission
agent.
Commission agent
Ordinary commission
He is one engaged in the purchase and sale of
personal property for a principal, which, for this It is the compensation for the sale of goods which
purpose, has to be placed in his possession and at are placed in the agent’s possession or at his
his disposal. disposal.

Broker Guarantee commission (2004 BAR)

He is a middleman or intermediary who in behalf of
others and for a commission or fee negotiates
contracts/transactions relating to real or personal
property.
NOTE: Distinguished from an agent: An agent is
authorized to enter into judicial acts in behalf of
the principal but a true broker is merely an
intermediary between the parties and he has no
power to enter into a contract in behalf od any of
It is the fee which is given in return for the risk
that the agent has to bear in the collection of
credits.
The purpose of the guarantee commission is to
compensate the agent for the risks he will have to
bear in the collection of the credit due the
principal (De, Leon, 2014).
Del credere agent

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 538
 AGENCY
He is the agent who guarantees payment of the
customer’s account in consideration of the
commission (De Leon, 2014).
A del credere agent may sue in his name for the
purchase price in the event of non-performance
by the buyer (De Leon, 2014).
AGENCY COUCHED IN GENERAL TERMS
It is one which is created in general terms and is
deemed to comprise only acts of administration
(NCC, Art. 1877).
Acts of administration
Refers to those acts which do not imply the
authority to alienate for the exercise of which an
express power is necessary (De Leon, 2014).
NOTE: Payment is an act of administration when
it is made in the ordinary course of management
(Art. 1878; De Leon, 2014).
The making of customary gifts for charity, or those
made to employees in the business managed by
the agent are considered acts of administration
(NCC, Art. 1878; De Leon, 2014).
Q: P granted to A a special power to mortgage
the former’s real estate. By virtue of said
power, A secured a loan from C secured by a
mortgage on said real estate. Is P personally
liable for said loan?
A: NO. A special power to mortgage property is
limited to such authority to mortgage and does not
bind the grantor personally to other obligations
contracted by the grantee in the absence of any
ratification or other similar act that would estop
the grantor from questioning or disowning such
other obligations contracted by the grantee.
AGENCY REQUIRING SPECIAL POWER OF
ATTORNEY
Special power of attorney (SPA)
It is an instrument in writing by which one person,
as principal, appoints another as his agent and
confers upon him the authority to perform certain
specified acts or kinds of acts on behalf of the
principal with a primary purpose to evidence
agent’s authority to third parties with whom the
agent deals (De Leon, 2014).
Intervention of a notary public in the validity
of an SPA
539
GR: A power of attorney is valid although no notary
public intervened in its execution (Barretto v.
Tuason, G.R. Nos. L- 36811, 36827, 36840, 36872,
March 31, 1934).
XPN: When SPA is executed in a foreign country, it
must be certified and authenticated (Sec. 24, Rule
132, Rules of Court).
NOTE: The failure to have the special power of
attorney (executed in a foreign country)
authenticated is not merely a technicality – it is a
question of jurisdiction. Jurisdiction over the
person of the real party-in-interest was never
acquired by the courts (Ibid.).
A special power of attorney is required (1992,
2004 BAR)
1. To create or convey real rights over
immovable property;
2. To enter into any contract by which the
ownership of an immovable is transmitted or
acquired either gratuitously or for a valuable
consideration;
3. To loan or borrow money, unless the latter act
be urgent and indispensable for the
preservation of the things which are under
administration;
4. To lease any real property to another person
for more than one year;
5. To make such payments as are not usually
considered as acts of administration;
6. To obligate principal as guarantor or surety;
7. To bind the principal to render some service
without compensation;
8. To bind the principal in a contract of
partnership;
9. To ratify obligations contracted before the
agency;
10. To accept or repudiate an inheritance;
11. To effect novation which put an end to
obligations already in existence at the time
the agency was constituted;
12. To make gifts, except customary ones for
charity or those made to employees in the
business managed by the agent;
13. 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;
14. Any other act of strict dominion; and
15. To waive an obligation gratuitously (NCC, Art.
1878).
Limitations to a special power of attorney
 CIVIL LAW
1. A special power to sell excludes the power to
mortgage (NCC, Art. 1879);
2. A special power to mortgage does not include
the power to sell (Ibid); and
3. A special power to compromise does not
authorize submission to arbitration (NCC, Art.
1880).
NOTE: The scope of the agent’s authority is what
appears in the written terms of the power of
attorney. While third persons are bound to inquire
into the extent or scope of the agent’s authority,
they are not required to go beyond the terms of
the written power of attorney. Third persons
cannot be adversely affected by an understanding
between the principal and his agent as to the limit
of the latter’s authority. In the same way, third
persons need not concern themselves with
instruction given by the principal to his agent
outside of the written power of attorney (Siredy
Enterprises, Inc. v. CA, G.R. No. 129039, September
27, 2002).
Q: X was the owner of an unregistered parcel
of land in Cabanatuan City. As she was abroad,
she advised her sister Y via overseas call to sell
the land and sign a contract of sale on her
behalf. Y thus sold the land to B1 on March 31,
2001 and executed a deed of absolute sale on
behalf of X. B1 fully paid the purchase price. B2,
unaware of the sale of the land to B1, signified
to Y his interest to buy it but asked Y for her
authority from X. Without informing X that she
had sold the land to B1, Y sought X for a
written authority to sell. X e-mailed Y an
authority to sell the land. Y thereafter sold the
land on May 1, 2001 to B2 on monthly
installment basis for two years, the first
installment to be paid at the end of May 2001.
Who between B1 and B2 has a better right
over the land? Explain. (2010 BAR)
A: B-2 has a better title. This is not a case of
double sale since the first sale was void. The law
provides that when a sale of a piece of land or any
interest therein is through an agent, the authority
of the latter shall be in writing; otherwise, the sale
shall be void (NCC, Art. 1874). The property was
sold by Y to B1 without any written authority
from the owner X. Hence, the sale to B1 was void.
AGENCY BY OPERATION OF LAW
Instances where an agency is created by
operation of law
When the agent withdraws from the agency for a
valid reason, he must continue to act until the
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
principal has had a reasonable opportunity to take
the necessary steps like the appointment of a new
agent to remedy the situation caused by the
withdrawal (NCC, Art. 1929); and
In case a person declines an agency, he is bound to
observe the diligence of good father of the family
in the custody and preservation of the goods
forwarded to him by the owner until the latter
should appoint an agent (NCC, Art. 1885).
NOTE: The law reconciles the interests of the
agent with those of the principal, and if it permits
the withdrawal of the agent, it is on the condition
that no damage results to the principal, and if the
agent desires to be relieved of the obligation of
making reparation when he withdraws for a just
cause, he must continue to act so that no injury
may be caused to the principal (De Leon, 2010).
OBLIGATIONS OF THE PRINCIPAL
RIGHTS AND OBLIGATIONS OF THE PRINCIPAL
(2004 Bar)
Obligations of the principal to the agent
1. Comply with all obligations which the agent
may have contracted within the scope of his
authority [NCC, Art. 1910(1)].
2. Advance to the agent, should the latter so
request, the sums necessary for the
execution of the agency (NCC, Art. 1912).
3. Reimburse the agent for all advances made
by him, even if the business or undertaking
was not successful, provided the agent is
free from fault (Ibid.).
4. Indemnify the agent for all damages which
the execution of the agency may have caused
the latter without fault or negligence on his
part (NCC, Art. 1913).
5. Pay the agent the compensation agreed
upon, or if no compensation was specified,
the reasonable value of the agent’s services
(De Leon, 2014).
Liability for the expenses incurred by the
agent
GR: Principal is liable for the expenses incurred by
the agents.
XPNs:
1. If the agent acted in contravention of the
principal's instructions, unless principal
should wish to avail himself of the benefits
derived from the contract;
2. When the expenses were due to the fault of the
540
 AGENCY
agent;
3. When the agent incurred them with
knowledge that an unfavorable result would
ensue, if the principal was not aware thereof;
or
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 (NCC,
Art. 1918).
Liability for the contracts entered by the agent
GR: The principal must comply with all the
obligations which the agent may have contracted
within the scope of his authority.
XPN: Where the agent exceeded his authority.
XPN to the XPN: When the principal ratifies it
expressly or tacitly (NCC, Art. 1910).
NOTE: Even if the agent has exceeded his
authority, the principal is solidarily liable with the
agent if the former allowed the latter to act as
though he had full powers (NCC, Art. 1911).
Liability for tort committed by the agent
GR: Where the fault or crime committed by the
agent is not in the performance of an obligation of
the principal, the latter is not bound by the illicit
acts of the agent, even if it is done in connection
with the agency.
XPNs:
1. Where the tort was committed by the agent
because of defective instructions from the
principal or due to lack of necessary
vigilance or supervision on his part; or
2. When the tort consists in the performance of
an act which is within the powers of an
agent but becomes criminal only because of
the manner in which the agent has
performed it; the principal is civilly liable to
3rd persons who acted in good faith.
Q: CX executed a special power of attorney
authorizing DY to secure a loan from any bank
and to mortgage his property covered by the
owner’s certificate of title. In securing a loan
from bank, DY did not specify that he was
acting for CX in the transaction with said bank.
Is CX liable for the bank loan? Why or why not?
Justify your answer. (2004 BAR)
A: While as a general rule the principal is not liable
for the contract entered into by his agent in case
the agent acted in his own name without
541
disclosing his principal, such rule does not apply if
the contract involves a thing belonging to the
principal. In such case, the principal is liable under
Article 1883 of the Civil Code. The contract is
deemed made on his behalf (Sy-Juco v. Sy-Juco, G.R.
No. L- 13471, January 12, 1920).
Ratification
Ratification is the adoption or affirmance by a
person of a prior act which did not bind him, but
which has done or professed to be done on his
account thus giving effecr to the acts as if
originally authorized. (Art, 1393).
Conditions for Ratification
• The principal must have the capacity and
power to ratify;
• He must have had knowledge or had reason
to know of material or essential facts about
the transaction;
• He must ratify the acts in its entirety;
• The act must be capable pf ratification; and
• The act must be done in behalf of the
principal
Acts that may be ratified
1. Void acts
2. Voidable acts
3. Unrevoked acts – a principal must ratify his
agent’s unauthorized contact before it is
revoked by the other contracting party
4. Criminal acts
5. Tortious acts
IRREVOCABLE AGENCY
GR: Agency is revocable at will by the principal
(NCC, Art. 1919).
XPNs: An agency is irrevocable:
1. If a bilateral contract depends upon it.
2. If it is the means of fulfilling an obligation
already contracted.
3. If partner is appointed manager and his
removal from the management is unjustifiable
(NCC, Art 1927); (2010 BAR)
4. If it has been constituted in the common
interest of the principal and the agent, or in
the interest of a third person who has
accepted the stipulation in his favor (NCC, Art.
1930).
5. Stipulation pour atrui (NCC, Art. 1311).
XPN to the XPN: When the agent acts to defraud
the principal.
 CIVIL LAW
NOTE: The agent may withdraw from the agency
by giving due notice to the principal. If the latter
should suffer any damage by reason of the
withdrawal, the agent must indemnify him
therefor, unless the agent should base his
withdrawal upon the impossibility of continuing
the performance of the agency without grave
detriment to himself (NCC, Art. 1928).
The agent, even if he should withdraw from the
agency for a valid reason, must continue to act
until the principal has had reasonable opportunity
to take the necessary steps to meet the situation
(NCC, Art. 1929).
MODES OF EXTINGUISHMENT
1. By its revocation;
2. By the withdrawal of the agent;
3. By the death, civil interdiction, insanity or
insolvency of the principal or of the agent;
4. By the dissolution of the firm or corporation
which entrusted or accepted the agency;
5. By the accomplishment of the object or
purpose of the agency;
6. By the expiration of the period for which the
agency was constituted. (Art. 1919, NCC)
NOTE: The list is not exclusive; May also be
extinguished by the modes of extinguishment of
obligations in general whenever they are
applicable, like loss of the thing and novation.
Agency may be terminated:
1. by agreement (Nos. 1 and 4);
2. by the subsequent acts of the parties which
may be either:
a. by the act of both parties or by mutual
consent; or
b. by unilateral act of one of them (Nos. 3
and 5);
3. by operation of law (Nos. 2 and 6) (De Leon,
2014).
Heirs continuing the contract of agency
GR: Heirs cannot continue the contract of agency.
Ratio: The agency calls for personal services on the
part of the agent since it is founded on a fiduciary
relationship; rights and obligations
intransmissible.
XPNs:
1. Agency by operation of law, or a presumed or
tacit agency;
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
2. Agency is coupled with an interest in the
subject matter of the agency (e.g. power of
sale in a mortgage).
Kinds of revocation
Revocation may either be express or implied (De
Leon, 2010; NCC, Art. 1920)
A contract of agency is impliedly revoked
when the principal:
1. Appoints a new agent for the same business
or transaction (NCC, Art. 1923);
2. Directly manages the business entrusted to
the agent (NCC, Art. 1924); or
3. After granting general power of attorney to
an agent, grants a special one to another
agent which results in the revocation of the
former as regards the special matter
involved in the latter (NCC, Art.1926).
NOTE: A special power of attorney is not revoked
by a subsequent general power of attorney given
to another agent, unless that the latter refers also
to the act authorized under the special power
(Tolentino, 1992).
Revocation of agency when the agent is
appointed by two or more principals
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 (NCC, Art. 1925).
Necessity of notice of revocation
1. As to the agent – Express notice is not
always necessary; sufficient notice if the
party to be notified actually knows, or has
reason to know, a fact indicating that his
authority has been terminated/suspended;
revocation without notice to the agent will
not render invalid an act done in pursuance
of the authority (De Leon 2014).
2. As to 3rd persons – Express notice is
necessary.
a. As to former customers – Actual notice
must be given to them because they
always assume the continuance of the
agency relationship (NCC, Art. 1873).
b. As to other persons – Notice by
publication is enough (NCC, Art. 1922).
NOTE: There is implied revocation of the previous
agency when the principal appoints a new agent
for the same business or transaction, provided
542
 AGENCY
there is incompatibility. But the revocation does
not become effective as between the principal and
the agent until it is in some way communicated to
the latter.
Effect of the direct management by the
principal
GR: The agency is revoked for there would no
longer be any basis for the representation
previously conferred. But the principal must act in
good faith and not merely to avoid his obligation
to the agent.
XPN: The only desire of the principal is for him
and the agent to manage the business together.
Q: Richard sold a large parcel of land in Cebu
to Leo for P100 million payable in annual
installments over a period of ten years, but
title will remain with Richard until the
purchase price is fully paid. To enable Leo to
pay the price, Richard gave him a power-of-
attorney authorizing him to subdivide the
land, sell the individual lots, and deliver the
proceeds to Richard, to be applied to the
purchase price. Five years later, Richard
revoked the power of attorney and took over
the sale of the subdivision lots himself. Is the
revocation valid or not? Why? (2001 BAR)
A: The revocation is not valid. The power of
attorney given to the buyer is irrevocable because
it is coupled with an interest – the agency is the
means of fulfilling the obligation of the buyer to
pay the price of the land (NCC, Art. 1927). In other
words, a bilateral contract (contract to buy and sell
the land) is dependent on the agency.
Q: Eduardo executed a SPA authorizing
Zenaida to participate in the pre-qualification
and bidding of a NIA project and to represent
him in all transactions related thereto. It was
granted to them. Zenaida leased Manuel’s
heavy equipment to be used for the NIA
project. Manuel interposed no objection to
Zenaida’s actuations. Eduardo later revoked
the SPA alleging that Zenaida acted beyond her
authority in contracting with Manuel under the
SPA. Records show that Eduardo and Zenaida
entered into a partnership in regard to the NIA
project. Decide.
A: Under Art. 1818 of the NCC, every partner is an
agent of the partnership for the purpose of its
business and each one may separately execute all
acts of administration, unless, under Art. 1801, a
specification of their respective duties has been
agreed upon, or else it is stipulated that any one of
543
them shall not act without the consent of all the
others. As such, even granting that Zenaida
exceeded the authority granted by the SPA, being
a partner in the constituted partnership
between her and Eduardo, she can still execute
acts of administration absent any agreement
that one cannot act without the consent of all
others (Mendoza v. Paule, G.R. No. 175885,
February 13, 2009).
When the agent can withdraw from the agency
The agent may renounce or withdraw from the
agency at any time, without the consent of the
principal, even in violation of the latter’s
contractual rights; subject to liability for breach of
contract or for tort (Art. 1928, NCC)
NOTE: Duties and responsibilities of the
withdrawing agent:
1. If the principal should suffer damage by
reason of the withdrawal by the agent, the latter
must indemnify the principal therefor, unless the
agent should base his withdrawal upon the
impossibility of continuing the performance of the
agency without grave detriment to himself (NCC,
1928).
2. The agent must continue to act until
the principal has had reasonable opportunity to
take the necessary steps to meet the situation,
even if he should withdraw from the agency (NCC,
Art. 1929).
Kinds of withdrawal by the agent
1. Without just cause – The law imposes upon
the agent the duty to give due notice to the
principal and to indemnify the principal should
the latter suffer damage by reason of such
withdrawal (NCC, Art. 1928).
2. With just cause – If the agent withdraws
from the agency for a valid reasons (NCC, Art.
1929) as when the withdrawal is based on the
impossibility of continuing with the agency
without grave detriment to himself (NCC, Art.
1928) or is due to a fortuitous event (NCC, Art.
1174), the agent cannot be held liable (De Leon,
2014).
NOTE: Even if the agent withdraws from the
agency for a valid reason, he must continue to act
until the principal has had reasonable opportunity
to take the necessary steps to meet the situation
(NCC, Art. 1929).
Death of Principal to the contract of agency
 CIVIL LAW
GR: The agency is terminated by the death of the
principal even if the
agency is for a definite period (NCC, Art. 1919).
XPN:
1. If it has been constituted in common
interest of the principal and the agent or in the
interest of the third person who accepted the
stipulation in his favour (NCC, Art. 1930); and
2. Anything done by the agent, without the
knowledge of the death of the principal or on any
other cause which extinguishes the agency is valid
and shall be fully effective with respect to third
persons who may have contracted with him in
good faith (NCC, Art. 1931).
NOTE: The death of the principal extinguishes the
agency; but in the same way that revocation of the
agency does not prejudice third persons who have
dealt with the agent in good faith without notice of
the revocation (NCC, Arts. 1921 & 1922) such third
persons are protected where it is not shown that
the agent had knowledge of the termination of the
agency because of the death of the principal or of
any other cause which extinguishes the agency
(Hererra v. Luy Kim Guan, G.R. No. L-17043,
January 31, 1961).
Go Chan, G.R. No. L-24332, January 31, 1978).
Change of circumstance surrounding the
transaction
GR: The authority of the agent is terminated.
XPNs:
1. If the original circumstances are restored
within a reasonable period of time, the agent's
authority may be revived;
2. Where the agent has reasonable doubts as
to whether the principal would desire him to
act, his authority will not be terminated if he
acts reasonably; or
3. Where the principal and agent are in close
daily contact, the agent's authority to act will
not terminate upon a change of circumstances
if the agent knows the principal is aware of the
change and does not give him new instructions
(De Leon, 2010).

3. The agent is bound by his acceptance to

carry out the agency and is liable for the damages
which, through his non-performance, the principal
may suffer. He must also finish the business
already began on the death of the principal, should
delay entail any danger (NCC, Art. 1884).

Death of Agent

If the agent dies, his heirs must notify the

principal thereof, and in the meantime adopt such
measures as the circumstances may demand in
the interest of the latter (NCC, Art. 1932)

Q: Is the sale of the land by the agent after the

death of the principal valid?

A: Article 1931 provides that an act done by the

agent after the death of the principal is valid and
effective if these two requisites concur:

1. that the agent acted without the

knowledge of the death of the principal; and
2. that the third person who contracted with
the agent himself acted in good faith.

Good faith here means that the third person was

not aware of the death of the principal at the time
that he contracted with said agent (Rallos v. Felix

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 544
 CREDIT TRANSACTIONS
CREDIT TRANSACTIONS
GENERAL PRINCIPLES
Credit
It is a person’s ability to borrow money by virtue
of confidence or trust reposed in him by the
lender that he will pay what he may promise
(People v. Concepcion, G.R. No. L-19190, November
29, 1922).
Significance of Credit
By virtue of the use of credit, more exchanges are
possible: persons are able to enjoy a thing today
but pay it for later, and through the banking
system, the transfer of actual money is eliminated
by cancellation of debts and credits (Ibid.).
Credit transaction
It refers to an agreement based on trust or belief
of someone on the ability of another person to
comply with his obligations.
It includes all transactions involving the purchase
or loan of goods, service, or money in the present
with a promise to pay or deliver in the future.
Kinds of credit transactions
1. As contracts of security
a. Contracts of real security – These are
contracts supported by collateral/s or
burdened by an encumbrance on
property such as mortgage and pledge;
and
b. Contracts of personal security – These are
contracts where performance by the
principal debtor is not supported by
collateral/s but only by a promise to pay
or by the personal undertaking or
commitment of another person such as in
surety or guaranty.
2. As to their existence
a. Principal contracts – They can exist alone.
Their existence do not depend on the
existence of another contract; and
(e.g. commodatum and mutuum)
b. Accessory contracts – they have to depend
on another contract. These accessory
contracts depend on the existence of a
principal contract of loan;
(e.g. guaranty proper, suretyship, pledge,
mortgage and antichresis).
545
3. As to their consideration
a. Onerous – This is a contract where there
is consideration or burden imposed like
interest; and
b. Gratuitous – This is a contract where
there is no consideration or burden
imposed.
(e.g. commodatum)
Security
It is something given, deposited, or serving as a
means to ensure the fulfillment or enforcement of
an obligation or of protecting some interest in the
property.
Bailment
It is the delivery of a personal property for some
particular use, or on mere deposit, upon a
contract, express or implied, that after the
purpose has been fulfilled, it shall be redelivered
to the person who delivered it, or otherwise dealt
with according to his directions, or kept until he
reclaims it, as the case may be.
Generally, no fiduciary relationship is created by
bailment. No trustee-beneficiary relationship is
created.
Parties in a contract of bailment
1. Bailor – The giver; the party who delivers the
possession or custody of the thing bailed; and
2. Bailee – The recipient; the party who receives
the possession or custody of the thing thus
delivered.
Contractual bailments with reference to
compensation
1. For the sole benefit of the bailor (gratuitous)
e.g. gratuitous deposit
2. For the sole benefit of the bailee (gratuitous)
e.g. commodatum, mutuum
3. For the benefit of both parties (mutual-benefit
bailments)
e.g. deposit for compensation, involuntary
deposit, pledge and bailments for hire:
a. Hire of things – for temporary use of the
hirer
b. Hire of service – for some work or labor
upon it by the bailee
c. Hire of carriage of goods – for carriage
d. Hire of custody – for storage
 CIVIL LAW
LOAN
GENERAL PROVISIONS
Art. 1933. By the contract of loan, one of the
parties delivers to another, either something
not consumable so that the latter may use the
same for a certain time and return it, in which
case the contract is called a commodatum; or
money or other consumable thing, upon the
condition that the same amount of the same
kind and quality shall be paid, in which case
the contract is simply called a loan or mutuum.
Commodatum is essentially gratuitous.
Simple loan may be gratuitous or with a
stipulation to pay interest.
In commodatum the bailor retains the
ownership of the thing loaned, while in simple
loan, ownership passes to the borrower.
Loan
It is a contract where one of the parties delivers to
another, either something not consumable so that
the latter may use the same for a certain time and
return it, in which case is called a commodatum; or
money or other consumable things, upon the
condition that the same amount of the same kind
and quality shall be paid, in which case the
contract is simply called a loan or mutuum (NCC,
Art. 1933) (1993, 2004, 2005 Bar).
Kinds of loan
1. Commodatum – where the bailor (lender)
delivers to the bailee (borrower) a non-
consumable thing so that the latter may use it
for a given time and return the same thing (i.e.
identical thing); and
2. Mutuum or Simple Loan – where the lender
delivers to the borrower money or other
consumable thing upon the condition that the
latter shall pay same amount of the same kind
and quality.
Commodatum is a loan of use (because there is a
transfer of the use of the thing borrowed) while
mutuum is a loan of consumption (because there is
a transfer of the ownership of the thing, which is
generaly received for consumption).
Cause or Consideration in a contract of loan
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
1. As to the borrower, the acquisition of the
thing; and
2. As to the lender, the right to demand its return
or its equivalent.
Object of a contract of loan
1. Commodatum – The object is generally not
consumable; and
2. Mutuum – The object is consumable.
Consumable things and Non-consumable
things
A thing is consumable when it cannot be used in a
manner appropriate to its nature without being
consumed (NCC, Art. 418).
e.g. food, firewood, gasoline
On the other hand, a non-consumable thing is a
movable thing which can be used in a manner
appropriate to its nature without it being
consumed (NCC, Art. 418).
e.g. car, television, radio
Fungible and non-fungible things
1. Fungible thing is one where the parties have
agreed to allow the substitution of the thing
given or delivered with an equivalent thing (3
Manresa 58).
2. Non-fungible thing is one where the parties
have the intention of having the same identical
thing returned after the intended use (Ibid.).
NOTE: As to whether a thing is consumable or not,
it depends upon the nature of the thing. As to
whether it is fungible or not, it depends upon the
intention of the parties.
Fungibles are usually determined by number,
weight, or measure.
Irreplaceability of non-fungible thing
GR: Non-fungible things are irreplaceable. They
must be returned to the lender after the purpose
of the loan had been accomplished.
XPN: Non-fungible things may be replaced by
agreement of the parties. In such case, the contract
is barter and not loan.
EFFECTS OF GUARANTY BETWEEN THE
GUARANTOR AND THE CREDITOR
Action of the creditor against the debtor
546
 CREDIT TRANSACTIONS
GR: In an action of the creditor against the debtor,
only the principal debtor should be sued alone.
XPN: If the benefit of excussion is not available,
the guarantor can be sued jointly with the debtor.
The guarantor entitled to be notified of the
complaint against the debtor. If the guarantor
desires to set up defenses as are granted him by
law, he may have the opportunity to do so (NCC,
Art. 2062)
NOTE: A debtor and a guarantor can be sued
together in one complaint, as permitted by the
Rules of Court on permissive joinder. However, if
the creditor obtains favorable judgment, the latter
is entitled to the deferment of judgment, Before a
writ of execution can be implemented against a
guarantor, the creditor must first establish that
the debtor cannot pay.
The consequences of the guarantor’s appearance
or non-appearance in the case against the debtor:
1. If he does not appear and judgment is
rendered against the debtor, he cannot set up
defenses which he could have set up had he
appeared. Moreover, he cannot question the
decision anymore;
2. If he appears such as by filing an answer in
intervention, he may lose or may win the case.
If he losses, he is still entitled to the benefit of
excussion; and
3. There is no waiver of his benefit of excussion
by his appearance in the case.
Compromise agreement between the creditor
and the principal debtor
Compromise is a contract whereby the parties, by
making reciprocal concessions, avoid litigation or
put an end to one already commenced.
A compromise between the creditor and the
principal debtor is valid if the compromise is
beneficial to the guarantor; otherwise, it is not
bindin1qqqg upon him (NCC, first sentence, Art.
2063).
In a compromise between the creditor and the
guarantor to the principal debtor, if compromise
is beneficial to the principal debtor, it is valid;
otherwise, it is not binding upon him (NCC, second
sentence, Art. 2063). To be binding, it must benefit
both the guarantor and the debtor.
EFFECTS OF GUARANTY BETWEEN THE
DEBTOR AND GUARANTOR
547
Right of indemnity and reimbursement of the
guarantor who paid the debt
GR: The guarantor who pays for a debtor must be
indemnified by the latter.
The guarantor is entitled to be reimbursed by
debtor for:
1. Total amount of the debt paid;
2. Legal interest from the time payment was
made known to the debtor (even though it
did not earn interest for the creditor);
3. Expenses incurred after notifying debtor
that demand to pay was made upon him;
and
4. Damages in accordance with law, if they are
due (NCC, Art. 2066).
XPNs:
1. Guaranty is constituted without the
knowledge or against the will of the debtor;
Effect: Guarantor may only recover so much
as was beneficial to the debtor. If payment has
not benefitted the debtor at all, the guarantor
does not acquire any claim for
reimbursement.
The remedy of the guarantor would be to go
against the creditor for the amount paid, if
there is still a legal basis for the claim. I fthe
guarantors suffers, it is due to his own fault.
2. Payment by third persons who does not
intend to be reimbursed; and
Effect: It is deemed a donation and as such
requires the consent of debtor.
3. If the guarantor has paid without notifying the
debtor and the latter not being aware of the
payment, repeats it, the guarantor has no
remedy whatever against the debtor, but only
against the creditor (NCC, Art. 2076).
XPN: (a) In case of gratuitous guaranty; (b) if
the guarantor was prevented by the fortuitous
event from advising the debtor of the
payment; and (c) the creditor becomes
insolvent, the debtor shall reimburse the
guarantor for the amount paid.
Right of subrogation
The guarantor has the right of subrogation after
the payment of the debt is made to the creditor.
The guarantor is subrogated to all the rights which
 CIVIL LAW
the creditor had against the debtor [NCC, Art.
2067(1)].
If the guarantor pays without notice to the debtor,
the debtor may interpose against the guarantor
defenses available to the debtor as against the
creditor at the time payment was made.
Notification of payment made by the guarantor
GR: Guarantor must first notify the debtor before
paying, otherwise, if the debtor pays again, the
guarantor can only collect from the creditor and
the guarantor will have no cause of action against
the debtor even if the creditor becomes insolvent
(NCC, Art. 2070).
XPN: Guarantor may still recover from debtor if
the following circumstances concur:
1. Guaranty is gratuitous;
2. Guarantor was prevented by fortuitous
event from notifying the debtor of the
payment; and
3. Creditor becomes insolvent.
Payment of the guarantor before maturity
GR: The guarantor cannot seek reimbursement
from the debtor until expiration of the period
stipulated. The guarantor must wait. For being
subsidiary in character, the guaranty is not
enforceable until the debt has become due (NCC,
Art. 2069).
NOTE: A guarantor cannot exercise the right of
subrogation until the principal obligation has been
fully extinguished (Rabuya, 2017).
XPN: If the premature payment was ratified by the
debtor. he can now be compelled to reimburse.
Right of the guarantor to proceed against
debtor before payment
GR: Guarantor cannot proceed against the
principal debtor even before having paid the
creditor.
XPNs:
1. When he is sued for 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.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
4. When the debt has become demandable by
reason of the expiration of the period of
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; or
7. If the principal debtor is in imminent
danger of becoming insolvent.
NOTE: In all these cases, the cause of action of the
guarantor is either 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
(NCC, Art. 2071).
Purpose of the right of guarantor to proceed
against debtor before payment
The purpose of this right is to enable the
guarantor to take measures for the protection of
his interest in view of the probability that he
would be called upon to pay the debt (De Leon,
2013).
NOTE: The guarantor cannot demand
reimbursement or indemnify because he has not
paid the obligation. His remedy is to obtain release
from the guaranty or to demand a security.
Remedy of a guarantor of a third person at
request of another
The remedy of a person who becomes a guarantor
at the request of another for the debt of a third
person who is not present is the option of suing
either the principal debtor or the requesting party
(NCC, Art. 2072).
NOTE: The provision applies when the guarantor
has actually paid the debt.
SUB-GUARANTY
Double or sub-guaranty is one constituted to
guarantee the obligation of the guarantor.
NOTE: In case of insolvency of the guarantor for
whom he bound himself, he is responsible to the
co-guarantors in the same terms as the guarantors
(NCC, Art. 2075).
Entitlement to right of excussion
548
 CREDIT TRANSACTIONS
A sub-guarantor is entitled to the right of
excussion both with respect to the guarantor and
to the principal debtor (NCC, Art. 2064).
CONTINUING GUARANTY
A continuing guaranty or suretyship is one which
covers all transactions, including those arising in
the future, which are within the description or
contemplation of the contract of guaranty until the
expiration or termination thereof.
A guaranty may be given to secure even future
debts, the amount of which may not be known at
the time the guaranty is executed. This is the basis
for contracts denominated as continuing guaranty
or suretyship. It is one which covers all
transactions, including those arising in the future,
which are within the description or contemplation
of the contract of guaranty, until the expiration or
termination thereof (Dino v. CA, G.R. No. 89775,
November 26, 1995).
Guaranty of Future Debts
Future debts, even if the amount is no yet known,
may be secured by a guarantee, However there
can be no claim against the guarantor until the
amount of the debt is ascertained or fixed and
demandable. The reason is that a contract of
guaranty is subsidiary. (De Leon, 2016)
GR: It is not limited to a single transaction but
contemplates a future course of dealings, covering
a series of transactions generally for an indefinite
time or until revoked.
XPN: A chattel mortgage can only cover
obligations existing at the time the mortgage is
constituted and not to obligations subsequent to
the execution of the mortgage.
XPN to the XPN: In case of stocks in department
stores, drug stores, etc.
Q: PAGRICO submitted a Surety Bond issued by
R&B Surety to secure an increase in its credit
line with PNB. For consideration of the Surety
Bond, Cochingyan and Villanueva entered into
an Indemnity Agreement with R&B Surety and
bound themselves jointly and severally to the
terms and conditions of the Surety Bond. When
PAGRICO defaulted, PNB demanded payment
to R&B Surety; R&B Surety, in turn, demanded
payment to Cochingyan and Villanueva. R&B
sued them. Villanueva argued that the
complaint was premature because PNB had
not yet proceeded against R&B Surety to
549
enforce the latter's liability under the Surety
Bond. Is the contention correct?
A: NO. 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).
EXTINGUISHMENT OF GUARANTY
Two causes for extinguishment of the guaranty
(a) Direct - when the guaranty itself is
extinguished, independently of the principal
obligation; or
(b) Indirect - when the principal obligation ends,
the accessory obligation of guaranty naturally
ends. (Manresa); (Shannon v. Phil. Lumber &
Trans. Co., 61 Phil. 876). (SIMPLIFY KO LANG)
(a) Direct – extinguishment of the guaranty
independently of the principal obligation.
(b) Indirect – extinguishment which arises from
the extinction of the principal obligation.
Grounds for extinguishing a contract of
guaranty:
1. Principal obligation is extinguished;
2. Same causes as all other obligations;
a. Payment or performance;
b. Loss of the thing due;
c. By condonation or remission of the
debt;
d. By confusion or merger of the rights of
the creditor and debtor;
e. By compensation;
f. By novation;
Other causes such as annulment,
rescission, fulfillment of a resolutory
condition and prescription.
3. Release by acceptance of property by the
creditor;
 CIVIL LAW
If the creditor accepts payment in form of
immovable or immovable property, there is a
novation on the subject matter.
NOTE: Eviction revives the principal obligation,
but not the guaranty, for the creditor here took the
risk (Paras, 2008)
3. Release in favor of one of the guarantors,
without consent of the others, benefits all to
the extent of the share of the guarantor to
whom it has been granted (NCC, Art. 2078);
4. Extension granted to debtor by creditor
without consent of guarantor (NCC, Art.
2079); or
5. When the guarantors through some act of
the creditor cannot be subrogated to the
rights, mortgages and preferences of the
latter.
MATERIAL ALTERATION OF CONTRACT
An alteration is considered material when there is
a change which imposes an obligation or added
burden on the party promising or which takes
away some obligation already imposed, changing
the legal effect of the original contract and not
merely the form thereof.
NOTE:
a. The increase in the interest rates without
the guarantor’s consent does not release
the guarantor where the creditor is
demanding only the original and not the
increased rate of interest rate;
b. Assignment of the creditor without the
knowledge or consent of surety is not
material alteration of the contract; and
c. Change in the technical specifications of the
items to be purchased but their amount,
length, and quality remained unchanged,
and the period for payment and the amount
of liability of principal debtor and surety
were untouched is not material.
Effect of material alteration of contract
Any agreement between the creditor and the
principal debtor which essentially varies the
terms of the principal contract without the
consent of the surety will release the surety from
liability. Material alteration would constitute a
novation or change of the principal contract and
which is consequently extinguished.
LEGAL AND JUDICIAL BONDS
Bond
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
A bond, when required by law, is commonly
understood to mean an undertaking that is
sufficiently secured, and not cash or currency.
(Comm. of Customs v. Alikpula, G.R. No. L-32542,
November 26, 1970).
Bondsman
A bondsman is a surety offered in virtue of a
provision of law or a judicial order. He must have
the qualifications required of a guarantor (NCC,
Art. 2056) and in special laws like the Rules of
Court (Rules of Court, Sec. 12- 13, Rule 114; De
Leon, 2013).
The necessary qualifications of sureties to a
property bond shall be as follows:
a. Each of them must be a resident owner of
real estate within the Philippines;
b. Where there is only one surety, his real
estate must be worth at least the amount of
the undertaking; and
c. In case there are two or more sureties, they
may justify severally in amounts less than
that expressed in the undertaking, if the
entire sum justified is equivalent to the
whole amount of bail demanded (Rules of
Court, Sec. 12, Rule
d. 114).
Nature of bond
All bonds including “judicial bonds” are
contractual in nature. Bonds exist only in
consequence of a meeting of minds under the
conditions essential to a contract.
Judicial bond
Judicial bonds constitute merely as a special class
of contracts of guaranty, characterized by the fact
that they are given in virtue of a judicial order
(Gerardo v. Plaridel Surety and Ins., Co., G.R. No. L-
7807, October 31, 1956).
e.g. A bond to stay execution of an appealed
judgment of a lower court is a judicial bond.
Liability of the surety if the creditor was
negligent in collecting the debt
A surety is still liable even if the creditor was
negligent in collecting from the debtor. The
contract of suretyship is not about the obligee will
seeing to it that the principal pays the debt or
fulfills the contract, but that the surety will see
that the principal pay or perform (PNB v. Manila
550
 CREDIT TRANSACTIONS
Surety & Fidelity Co., Inc., G.R. No. L-20567, July 30,
1965).

Violation by the creditor of the terms of the

surety agreement

A violation by the creditor of the terms of the

surety entitles the surety to be released therefrom
(Associated Ins. & Surety Co. v. Bacolod Murcia
Milling Co., G.R. No. L-12334, May 22, 1959).

When the performance of a bond is rendered

impossible

If the performance of a bond is rendered

impossible, it is the surety’s duty to inform the
court of the happening of the event so that it may
take action or decree in the discharge of the surety
when the performance of the bond is rendered
impossible by an act of God, or the obligee, or the
law (People v. OtiakOmal& Luzon Co., Inc., G.R. No.
L-14457, June 30, 1961).

Remedy if unable to give a bond

A pledgee or mortgage considered sufficient to

cover his obligation shall be admitted in case a
person bound to give a legal or judicial bond
should not be able to do so.

NOTE:
A judicial bondsman cannot demand the
exhaustion of the property of the principal debtor.
This is to ensure that the fulfillment of the
obligation by the guarantor be not delayed or
hindered (Rabuya, 2017).

551
 CIVIL LAW

PLEDGE, MORTGAGE, AND ANTICHRESIS

CHATTEL REAL ESTATE

PLEDGE
An accessory contract
whereby a debtor delivers to
the creditor or a third person
a movable or personal
property, or document
evidencing incorporeal
rights, to secure the
fulfillment of a principal
obligation with the condition
that when the obligation is
satisfied, the thing delivered
shall be returned to the
pledgor with all its fruits and
accessions, if any.
MORTGAGE MORTGAGE
Definition
Chattel mortgage is It is a contract whereby
a contract by virtue the debtor secures to the
of which a personal creditor the fulfillment of
property is recorded a principal obligation,
in the Chattel specially subjecting to
Mortgage Register such security, immovable
as a security for the property or real rights
performance of an over immovable property,
obligation. in case the principal
obligation is not paid or
complied with at the time
stipulated.
ANTICHRESIS
A contract whereby the
creditor acquires the
right to receive the fruits
of an immovable of the
debtor, with the
obligation to apply them
to the payment of
interest, if owing, and
thereafter to the
principal of his credit.

Object of the contract

Movable or personal
property, or document
evidencing incorporeal
rights.
Movable properties which
are within the commerece of
men provided it is
susceptible of possession.
And incorporeal rights
evidenced by proper
documents may be pledge,
Property must be delivered.
Personal property Immovable property or Fruits of an immovable.
real rights over
XPN: A real property immovable property.
may be a subject of
chattel mortgage as
long as the parties
to the contract so
agree and no
innocent third party
will be prejudiced
thereby
(Makati Leasing and
Finance Corporation
v Weaver Textile
Mills, Inc., G.R. No L-
58469, May 17,
1983)
Necessity of delivery
Delivery is not Delivery is not necessary Property is delivered to
necessary. the creditor.

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 552
 CREDIT TRANSACTIONS
NOTE: The pledger can sell the thing pledged with XPN: If the third party pledgor or mortgagor
the consent of the pledgee (NCC, Art. 2097), while expressly agreed to be bound solidarily with the
the mortgagor can sell the property mortgaged principal debtor.
even without the consent of the mortgagee (NCC,
Art. 2130). Property acquirable in the future cannot be
mortgaged
Similarities of pledge and mortgage
Where the mortgagor mortgaged a property and
1. Both are constituted to secure a principal in the contract he agreed to mortgage additional
obligation; they are only accessory contracts properties which he may acquire in the future,
(NCC, Arts. 2086, 2052); there was no valid mortgage as to the latter
2. Both pledgor and mortgagor must be the because he was not yet the owner of the
absolute owner of the property (NCC, Arts. properties at the time of the mortgage (Dilag v.
2085, par. 2); Heirs of Ressurrecion, G.R. No. 48941, May 6, 1946).
3. Both pledgor and mortgagor must have the
free disposal of their property or be Mortgage constituted to secure future
authorized to do so; and advances
4. In both, the thing proffered as security may be
sold at public auction, when the principal Mortgage constituted to secure future advances is
obligation becomes due and no payment is valid. It is a continuing security and not
made by the debtor. discharged by repayment of the amount named in
the mortgage, until the full amount of the
Indivisibility of pledge, mortgage and advances is paid. However, a chattel mortgage can
antichresis only cover obligations existing at the time the
mortgage is constituted and not to obligations
GR: A pledge, mortgage or antichresis is subsequent to the execution of the mortgage.
indivisible.
Mortgage constituted to secure future
NOTE: The mortgage is indivisible even if the advances
obligation of the debtor is joint and not solidary.
Generally, the divisibility of the principal Mortgage constituted to secure future advances is
obligation is not affected by the indivisibility of valid. It is a continuing security and not
the pledge or mortgage (NCC, Art. 2089). discharged by repayment of the amount named in
the mortgage, until the full amount of the
XPNs: advances is paid. However, a chattel mortgage can
only cover obligations existing at the time the
1. Where each one of several things guarantees mortgage is constituted and not to obligations
determinate portion of the credit (NCC, Art. subsequent to the execution of the mortgage.
2089);
2. Where only a portion of the loan was Nature of an assignment of rights to guarantee
released; or an obligation of a debtor
3. Where there was failure of consideration.
An assignment of rights to guarantee an obligation
Obligations that can be secured by pledge, of a debtor is in effect a mortgage and not an
mortgage and antichresis absolute conveyance of title which confers
ownership on the assignee (Manila Banking Corp.
1. Valid obligations; v. Teodoro, Jr., G.R. No. 53955, January 13, 1989).
2. Voidable obligations;
3. Unenforceable obligations; ACCOMMODATION MORTGAGE
4. Natural obligations; and
5. Conditional obligations. An accommodation mortgagor is a third person
who is not a party to a principal obligation and
Limited liability of a third person as a pledgor secures the latter by mortgaging or pledging his
or mortgagor own property (NCC, Art. 2085).

GR: A third person who pledged and mortgaged The liability of an accommodation mortgagor
his property is not liable for any deficiency. extends up to the loan value of their mortgaged
property and not to the entire loan itself. Should

553
 CIVIL LAW
there be any deficiency, the creditor has recourse
on the principal debtor, not against
accommodation mortgage (Rabuya, 2017).
NOTE: Accommodation is also applicable to
pledge since the law provides that “third parties
who are not parties to the principal obligation
may secure the latter by pledging or mortgaging
their own property” (NCC, Art. 2085). It is also
applicable to antichresis since Art. 2139 of the
New Civil Code states that the last paragraph of
Art. 2085 shall be applicable to a contract of
antichresis.
PACTUM COMMISSORIUM
(1999, 2001, 2004, 2009 Bar)
Pactum commissorium is a stipulation whereby the
thing pledged or mortgaged or subject of
antichresis shall automatically become the
property of the creditor in the event of non-
payment of the debt within the term fixed. Such
stipulation is null and void (NCC, Art. 2085).
Elements of pactum commissorium
1. There is a pledge, mortgage or antichresis
of a propert y by way of security; and
2. There is an express stipulation for the
automatic appropriation by the creditor of
the property in case of non-payment.
NOTE: What are prohibited are those stipulations
executed or made simultaneously with the
original contract, and not those subsequently
entered into.
Pactum Commissorium when allowed
The law on pledge allows an exception to the
prohibition against pactum commissorium. Under
Article 2112, If at the first auction, the thing is not
sold, there will be anothere setting for the second
auction followung the same formalities. If there is
still no sale effected, the pledgee is now allowed to
appropriate the thing pledge. The act of
appropriation ipso jure transfers ownership of the
thing to the pledgee. (PINEDA)
This is not against the law, since what the law
prohibits is only the acquisition by the creditor of
the property mortgaged after non-payment of
debt, and the above stated article simply
authorizes him to sel lit with the aforesaid
consitions, which authorization is inherent in the
ownership and not against morals and public
order. (PARAS)
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Q: ABC loaned to MNO P40,000 for which the
latter pledged 400 shares of stock in XYZ Inc.
It was agreed that if the pledgor failed to pay
the loan with 10% yearly interest within four
years, the pledgee is authorized to foreclose on
the shares of stock. As required, MNO
delivered possession of the shares to ABC with
the understanding that the shares would be
returned to MNO upon the payment of the
loan. However, the loan was not paid on time.
A month after 4 years, may the shares of stock
pledged be deemed owned by ABC or not?
Reason. (2004 Bar)
A: The shares of stock cannot be deemed owned
by ABC upon default of MNO. They have to be
foreclosed. Under Article 2088, NCC, the creditor
cannot appropriate the things given by way of
pledge. And even if the parties have stipulated that
ABC becomes the owner of the shares in case MNO
defaults on the loan, such stipulation is void for
being a pactum commissorium.
Q: X borrowed money from Y and gave a piece
of land as security by way of mortgage. It was
expressly agreed between the parties in the
mortgage contract that upon nonpayment of
the debt on time by X, the mortgaged land
would already belong to Y. If X defaulted in
paying, would Y now become the owner of the
mortgaged land? Why?
A: NO, Y would not become the owner of the land.
The stipulation is in the nature of Pactum
commissorium which is prohibited by law. The
property should be sold at public auction and the
proceeds thereof applied to the indebtedness. Any
excess shall be given to the mortgagor.
Q: Suppose in the preceding question, the
agreement between X and Y was that if X failed
to pay the mortgage debt on time, the debt
shall be paid with the land mortgaged by X to
Y. Would your answer be the same as in the
preceding question? Explain. (1999 Bar)
A: NO, the answer would not be the same. This is a
valid stipulation and does not constitute pactum
commissorium. In pactum commissorium, the
acquisition is automatic without need of any
further action. In the instant problem another act
is required to be performed, namely, the
conveyance of the property as payment (dacion en
pago).
PLEDGE
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 CREDIT TRANSACTIONS
Pledge is a contract whereby the debtor delivers bind third
to a creditor or third person a movable or persons.
document evidencing incorporeal right for the
purpose of securing fulfillment of a principal
obligation with the understanding that when the
obligation is fulfilled, the thing delivered shall be
returned with all its fruits and accessions, Not valid unless Not valid
a description of against third
Pledge v. Chattel Mortgage Validity the thing and persons unless
against the date of registered
CHATTEL third pledge appear (although
BASIS PLEDGE persons in a public binding
MORTGAGE
instrument between the
Delivery is Delivery is not
parties).
Delivery necessary. necessary.
Pledge v. Real Estate Mortgage
NCC, Art. 2112 Procedure for
the sale of the
thing given as REAL
Governing security is BASIS PLEDGE ESTATE
Law governed by MORTGAGE
Act No. 1508, Real Consensual
Sec. 14. Contract contract contract

If the property If the property Subject Subject

is sold, the is foreclosed, matter is matter is
debtor is not the excess goes Kind of Property personal real
Excess entitled to the to the debtor. property. property.
excess unless
otherwise Property Not
agreed. delivered necessary
The creditor is The creditor is to pledgee
not entitled to entitled to or by
Delivery
recover the recover the consent to
deficiency deficiency from a third
notwithstanding the debtor person.
Recovery of any stipulation except if the
the to the contrary. chattel Possession Possession
deficiency mortgage is a of the thing of the thing
security for the pledged is mortgaged
Possession of thing
purchase of vested in remains
pledged/mortgaged
property in the with the
installments. creditor. debtor.
Pledgee Mortgagee
Possession Possession is has the does not
remains with vested in the right to possess
Possession receive the such right.
the creditor. debtor.
fruits of the
Real contract Formal thing
Contract contract pledged,
with the
Right to receive the
Must be in a Must be obligation
fruits
public recorded in a of applying
instrument public the same to
containing instrument to the interest
Registration of the debt,
description of bind third
the thing persons. if owing,
pledged and the and the
date thereof to balance, if

555
 CIVIL LAW
any, to the 3. Persons constituting the pledge have the
principal. free disposal of their property, and in the
Pledgor can Mortgagor absence thereof, that they be legally
sell the can sell the authorized for the purpose (NCC, Art. 2085);
thing property and
pledged mortgaged 4. That the thing pledged be placed in the
Authority to Sell only with even possession of the creditor, or of a third
the consent without the person by common agreement (NCC, Art.
of the consent of 2093).
pledgee. the
mortgagee. NOTE: If Art. 2093 is not complied with, the
pledge is void.
Nature of pledge
Continuous possession is required in pledge
It is a real contract which are not perfected until
delivery of the object of the obligation (NCC, Art. The mere taking of the property is not enough in
1316). pledge. There must be continuous possession of
the thing. However, the pledgee is allowed to
NOTE: A promise to constitute a pledge or temporarily entrust the physical possession of the
mortgage, if accepted, gives rise only to a personal thing pledged to the pledgor without invalidating
right binding upon the parties and creates no real the contract. But here, the pledgor would be in
right in the property (NCC, Art. 2092). What exists possession as a mere trustee and his possession is
is only a right of action to compel the fulfillment of subject to the order of the pledgee.
the promise but there is no pledge yet.
When possession or delivery of the thing
Characteristics: pledged was not made

1. Real Contract – It is perfected by delivery of An agreement to constitute a pledge only gives

the thing pledged; rise to a personal action between the contracting
2. Accessory Contract – it has no independent parties. Unless the movable given as a security by
existence of its own; cannot exist without a way of pledge be delivered to and placed in the
valid contract; possession of the creditor or of a third person
3. Unilateral Contract – The obligation is solely designated by common agreement, the crheditor
on the part of the creditor to return the thing acquires no right to the property because pledge
pledged upon fulfillment of obligation; is merely a lien and possession is indispensable to
4. Subsidiary Contract – The obligation incurred the right of a lien.
does not arise until the fulfillment of the
principal obligation. When the pledge fails to take the property
pledged into his possession
Kinds of pledge
If a pledgee fails or neglects to take the property
1. Conventional - By agreement of parties; pledged into his possession, he is presumed to
2. Legal - By operation of law (NCC, Arts. 546, have waived the right granted him by the contract
612, 1731, 1914 & 2004). (U.S. v. Terrel, G.R. No. 1227, May 13, 1903).

NOTE: A thing lawfully pledged to one creditor,
cannot be pledged to another as long as the first
pledge subsists (Mission de San Vicente v. Reyes,
G.R. No. 5508, August 14, 1911).
Requisites of a contract of pledge (1991, 1994,
1996, 1999, 2001 Bar)
1. Constituted to secure the fulfillment of a
principal obligation (NCC, Art. 2085);
2. Pledgor is the absolute owner of the thing
pledged; (NCC, Art. 2085);
Pledge must be embodied in a public
instrument to affect third persons
The requisite in Art. 2096 that the pledge must be
in a public instrument does not affect its validity.
It is still valid between the parties, but it will not
bind third person if the said provision is not
complied with.
Requisites to bind third persons in a contract
of pledge

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 556
 CREDIT TRANSACTIONS
The following must appear in the public
instrument in order to affect third persons:
1. A description of the thing pledged; and
2. Statement of date when the pledge was
executed (NCC, Art. 2096).
Effect if no public instrument is made
When the contarct of pledge is not recorded in a
public instrument, it is void as against third
person; the buyer of the thing pledged is a third
person within the meaning of this article.
Q: Juniat, et al. executed a Chattel Mortgage
over several motorized sewing machines and
other equipment in favor of Union Bank to
secure its obligation but the loan remains
unpaid so the bank filed before the RTC the
issuance of writs of preliminary attachment
and replevin. Nonwoven, the possessor of the
mortgaged properties, contends that the
unnotarized Chattel Mortgage executed has no
binding effect on it and it has a better title
over the properties because these were
assigned/pledged by Juniat pursuant to their
Agreement. Thereafter, Union Bank sold the
mortgaged properties. Both the Chattel
Mortgage in favor of Union Bank and the
Agreement in favor of Nonwoven were not
notarized. Can Nonwoven claim that it has the
better right over the proceeds of the sale of the
subject properties?
A: NO. Nonwoven is not entitled to the proceeds of
the sale of the attached properties because it
failed to show that it has a better title over the
same. Under Article 2096 of the Civil Code, a
pledge shall not take effect against third persons if
a description of the thing pledged and the date of
the pledge do not appear in a public instrument.
Hence, just like the chattel mortgage executed in
favor of Union Bank, the pledge executed by Juniat
in favor of Nonwoven cannot bind Union Bank.
However, since the Chattel Mortgage in favor of
Union Bank was executed earlier, it has a better
right over the motorized sewing machines and
equipment under the doctrine of "first in time,
stronger in right" (prius tempore, potior jure).
(Union Bank of the Philippines v. Alain, G.R. No.
171569, August 1, 2011) (Del Castillo, J.).
Effect of undated instrument of pledge
An undated instrument of pledge cannot ripen
into a valid pledge (Betita v. Ganzon, G.R. No. L-
24137, March 29, 1926).
557
Constructive or symbolic delivery in a contract
of pledge
GR: Constructive or symbolic delivery of the thing
is not sufficient to constitute pledge.
XPN: If the pledge consists of goods stored in a
warehouse for purposes, of showing the pledgee’s
control over the goods, the delivery to him of the
keys to the warehouse is sufficient delivery of
possession (constructive or symbolic delivery).
The type of delivery will depend upon the nature
and peculiar circumstances of each case
(Yuliongsiu v. PNB, G.R. No. L-19227, February 17,
1968).
Pledge of incorporeal rights
Incorporeal rights evidenced by proper document
can be pledged. It is, however, required that the
actual instrument be delivered to the pledgee.
More, if the instrument is a negotiable document,
it must be endorsed (NCC, Art. 2095).
A pledge certificate by itself is not a negotiable
instrument, and therefore even if delevired and
endorsed to an assignee, he would have no right to
redeem the property, ubless the creditor-pledgee
consents.
Q: Pablo owns a tractor which he left with his
son Mike for safekeeping. Mike then offered
the said tractor to Calibo as security for the
payment of his debt. When Pablo came back
and learned that the tractor was in the custody
of Calibo, he demanded its return. Calibo,
however, refused. Calibo alleged that the
tractor was pledged to him, and in the
alternative, the tractor was left with him in the
concept of deposit and he may validly hold on
to it until Mike pays his obligation. Is Calibo
correct?
A: NO. There is no valid pledge because Mike is
not the absolute owner of the property pledged.
He who is not the owner or proprietor of the
property pledged or mortgaged to guarantee the
fulfillment of a principal obligation, cannot legally
constitute such a guaranty as may validly bind the
property in favor of his creditor, and the pledgee
or mortgagee in such a case acquires no right
whatsoever in the property pledged or mortgaged.
There is likewise no valid deposit, in this case,
where the principal purpose for receiving the
object is not safekeeping (Calibo Jr. v. CA, G.R. No.
120528, January 29, 2001).
 CIVIL LAW
Right of an owner of personal property
pledged without authority
An owner of personal property pledged without
authority may invoke Art. 559 of the New Civil
Code. The defense that pawnshop owner acquired
ownership of the thing in good faith is not
available.
Art. 559 reads:
“The possession of movable property acquired in
good faith is equivalent to a title. Nevertheless, one
who has lost any movable or has been unlawfully
deprived thereof, may recover it from the person in
possession of the same.
If the possessor of a movable lost or of which the
owner has been unlawfully deprived, has acquired it
in good faith at a public sale, the owner cannot
obtain its return without reimbursing the price paid
therefore”
NOTE: A pledge or mortgage executed by one who
is not the owner of the property pledged or
mortgaged is without legal existence and
registration cannot validate it (Philippine National
Bank v. Rocha G.R. No. L-32260, December 29,
1930).
When two or more things are pledged
When two or more things are pledged, the pledgee
may choose which he will cause to be sold, unless
there is a stipulation to the contrary (NCC, first
sentence, Art. 2119).
The restriction on the right of the pledgee under
the 1st sentence of Art. 2119 is that he may only
demand the sale of only as many of the things as
are necessary for the payment of the debt (NCC,
second sentence, Art. 2119).
Prohibition on double pledge
A property already pledged cannot be pledged
again while the first pledge is still subsisting
(Mission de San Vicente v. Reyes, G.R. No. L-
5508, August 14, 1911).
NOTE: A property which has been lawfully pledge
to a creditor cannot be pledge to another so long
as the first one subsits, because the thing pledged
cannot be delivered to the second creditor since it
will remain in the possession of the first creditor.
Q: Donna pledged a set of diamond ring and
earrings to Jane for P200,000.00 She was
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
made to sign an agreement that if she cannot
pay her debt within six months, Jane could
immediately appropriate the jewelry for
herself. After six months, Donna failed to pay.
Jane then displayed the earrings and ring set
in her jewelry shop located in a mall. A buyer,
Juana, bought the jewelry set for P300,000.00.
a. Was the agreement which Donna signed
with Jane valid? Explain with legal basis.
b. Can Donna redeem the jewelry set from
Juana by paying the amount she owed Jane
to Juana? Explain with legal basis.
c. Give an example of a pledge created by
operation of law.
A:
a. NO. To appropriate the jewelry upon default
of Donna is considered Pactum commissorium
and it is considered void by law (NCC, Art.
2088).
b. NO, Donna cannot redeem it from Juana
because the pledge contract is between her
and Jane. Juana is not a party to the pledge
contract (NCC, Art. 1311).
c. One example of a pledge created by operation
of law is the right of the depositary to retain
the thing deposited until the depositor shall
have paid him whatever may be due to the
depositary by reason of the deposit. Another
is the right of the agent to retain the thing
which is the object of the agency until the
principal reimburses him the expenses
incurred in the execution of the agency (NCC,
Art. 1914).
RIGHTS AND OBLIGATIONS OF PLEDGOR AND
PLEDGEE
Parties in a contract of pledge
1. Pledgor – The debtor; the one who delivers
the thing pledged to the creditor; and
2. Pledgee – The creditor; the one who
receives the thing pledged.
Rights of a pledgee
1. To retain the thing until debt is paid (NCC,
Art. 2098);
2. To possess the thing (NCC, Art. 2098);
3. To be reimbursed for the expenses made for
the preservation of the thing pledged (NCC,
Art. 2099);
4. To apply fruits, interests, or earnings of the
pledge to the interest, if any then to the
principal of the credit [NCC, Art. 2102(2)];
558
 CREDIT TRANSACTIONS
5. To bring any action pertaining to the pledgor
in order to recover it from or defend it
against a third person (legal subrogation)
(NCC, Art. 2103);
6. To sell at public auction in case of reasonable
grounds to fear destruction or impairment of
the thing without his fault (NCC, Art. 2108);
7. Option to demand replacement or immediate
payment of debt in case of deception as to
substance and quality (NCC, Art. 2109);
8. To appropriate the thing in case of failure of
second public auction (NCC, Art. 2112);
(2009 Bar)
NOTE: This is an exception to Pactum
commissorium.
9. To bid at public auction, unless he is only the
bidder (NCC, Art. 2113);
10. To collect and receive amount due on credit
pledged (NCC, Art. 2118);
11. To choose which of several things pledged
will be sold (NCC, Art. 2119);
12. To retain excess value in the public sale;
13. To retain thing until after full payment of the
debt; and
14. To object the alienation of the thing.
NOTE: The pledgee cannot deposit the thing
pledged with a third person unless there is a
stipulation authorizing him to do so. If deposit
with a third person is allowed, the pledgee is liable
for the loss if he deposited the thing with a person
who is manifestly careless or unfit. The pledgee is
also responsible for the acts of his agents or
employees with respect to the thing pledged
(Rabuya, 2017).
Obligations of a pledgee
1. Take care of the thing pledged with the
diligence of a good father of a family (NCC, Art.
2099);
NOTE: The pledgee is liable for the loss or
deterioration of the thing by reason of fraud,
negligence, delay, or violation of the terms of
the contract.
2. GR: The pledgee cannot deposit the thing
pledged to a third person.
XPN: Unless there is stipulation to the
contract (NCC, Art. 2100).
NOTE: Pledgee is liable for the loss or
deterioration of the thing pledged caused by
559
the acts or negligence of the agents or
employees of the pledgee.
3. Apply the fruits, income, dividends, or
interests produced or earned by the
property, to interests or expenses first, then
to the principal (NCC, Art. 210 2);
4. GR: Cannot use the thing pledged without
authority (NCC, Art. 2104);
XPNs:
a. If the pledgor had given him authority or
permission to use it; or
b. If the use of the thing is necessary for its
preservation but only for that purpose.
5. To advise pledgor of the result of the public
auction (NCC, Art. 2116);
6. Return the thing pledged upon payment of
debt; and
7. Advise pledgor of danger to the thing.
When the thing pledged is expropriated by the
State
The debtor is no longer the owner of the thing in
case the same is expropriated by the State as
ownership is transferred to the expropriating
authority.
The price paid for the expropriated property shall
be applied to the payment of the principal
obligation, the interests and other expenses due to
the pledgee. If there is any excess, the same shall
be delivered to the pledger.
Legal Subrogation – The pledgee is under the
obligation to protect the thing pledge thus the
pledgee may bring actions pertaining to the owner
of the thing pledged in order to recover it from, or
defend it against a third person (NCC, Art. 2103).
Return of the pledge, when demandable
GR: A debtor cannot ask for the return of the thing
pledged against the will of the creditor (NCC, Art.
2105).
XPNs:
1. If the debtor has paid the debt and its
interest, with expenses in a proper case (NCC,
Art. 2105); and
2. If there are reasonable grounds to fear the
destruction or impairment of the thing
pledged, without the fault of the pledgee, the
pledgor may demand the return of the thing,
 CIVIL LAW
upon offering another thing in pledge,
provided the latter is of the same kind as the
former and not of inferior quality, and
without prejudice to the right of the pledgee
under the provisions of the following article.
The pledgee is bound to advise the pledgor,
without delay, of any danger to the thing
pledged (NCC, Art. 2107).
NOTE: If the obligation is with a term, there can
be no demand of the property until after the term
had arrived. The prescriptive period for the
recovery of the property begins from the time the
debt is extinguished by payment and demand for
return of the property is made (Sarmiento v.
Javellana, G.R. No. L-18500, October 2, 1922).
When the pledgee may cause the sale of the
thing even if the obligation is not yet due
If, without the fault of the pledgee, there is a
danger of destruction, impairment, or diminution
in value of the thing pledged, he may cause the
same to be sold at public auction. The proceeds of
the auction shall be security for the principal
obligation in the same manner as the thing
originally pledged (NCC, Art. 2108).
NOTE: The sale contemplated in this article is a
“public sale”
Rights of the creditor who is deceived on the
substance or quality of the thing pledged
To demand:
1. From the pledgor an acceptable substitute
of the thing; or
2. The immediate payment of the principal
obligation (NCC, Art. 2109).
NOTE: The remedies are alternative and not
cumulative. Only one may be chosen. The law used
the conjunctive “or”. Either one is more
convenient than annulment.
Return of the thing pledged
The return of the thing pledged to the pledgor by
the pledgee shall extinguish the pledge. Any
stipulation to the contrary shall be void (NCC, Art.
2110).
Presumption of return to the pledgor/owner
by the pledgee
There is a prima facie presumption that the thing
pledged has been returned by the pledgee to the
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
pledgor or owner, in any of the following
circumstances:
1. If the thing is found in the possession of the
pledgor or owner after the pledge had been
perfected; or
2. If the thing is found in the possession of a
third person who received it from the
pledgor or owner after the perfection of the
pledge [NCC, Art. 2110(2)].
NOTE: It is presumed that the accessory
obligation of pledge has been remitted 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 (NCC, Art. 1274).
Renunciation of the pledge by the pledgee
The renunciation or abandonment of the pledge
by the pledgee requires a statement in writing to
that effect (NCC, first sentence, Art. 2111).
An oral waiver is not sufficient. But if the pledgee
orally renounces the pledge, and returnd the thing
pledged to the pledger, the pledge is thereby
extinguish not because of Article 2111, but
because of Article 2110, first paragraph.
NOTE: The renunciation of the pledge is not
contrary to law, public order, public policy, morals
or good customs. Further, Art. 1356 of the NCC,
which speaks of the form of contracts, must be
complied with.
Necessity of acceptance in renunciation
Acceptance or return of the thing is not necessary
for the validity of the renunciation under Art.
2111 of the NCC. It is not a case of donation where
acceptance is necessary to make the donation
valid.
Necessity of return in extinguishment of
pledge
Even if the thing was not returned, as long as
there is an effective renunciation, abandonment or
waiver, the pledge is already extinguished even if
the thing is not returned. The pledgor will be
considered as a depositor and the pledgee shall
become a depositary of the thing. Accordingly, the
law on deposit will apply.
Q: Santos made time deposits with OBM. IRC,
through its president Santos, applied for a loan
with PNB. To secure the loan, Santos executed
a Deed of Assignment of the time deposits in
560
 CREDIT TRANSACTIONS
favor of PNB. When PNB tried to collect from
OBM, the latter did not pay the CTDs. PNB then
demanded payment from Santos and IRC, but
the latter refused payment alleging that the
obligation was deemed paid with the
irrevocable assignment of the CTDs.
a. Is the liability of IRC deemed paid by virtue
of the deed of assignment?
b. Is OBM liable for damages
A:
a. NO. For all intents and purposes, the deed of
assignment in this case is actually a pledge.
Where a CTD in a bank, payable at a future
time, was handed over by a debtor to his
creditor, it was not payment, unless there was
an express agreement on the part of the
creditor to receive it as such.
b. YES. While it is true that no interest shall be
due unless it has been expressly stipulated in
writing, this applies only to interest for the
use of money. It does not comprehend
interest paid as damages. Santos has the right
to recover damages resulting from the default
of OBM and the measure of such damages is
interest at the legal rate of 6% per annum on
the amounts due and unpaid at the expiration
of the periods respectively provided in the
contracts (Integrated Realty Corp. v. PNB, G.R.
No. 60705, June 28, 1989).
Rights of the pledger
1. Right to dispose the thing pledged, provided
there is consent of the pledgee (NCC, Art.
2097);
NOTE: The pledge however, shall continue in
possession.
2. Right to ask that the thing pledged be
deposited in one of the following instances:
a. If the creditor uses the thing without
authority (NCC, Art. 2104);
b. Misuses the thing, he may deposit the
thing judicially or extrajudicially (NCC,
Art. 2104); or
c. If the thing is in danger of being lost or
impaired because of negligence or willful
act of the pledge, he may deposit the thing
with a third person (NCC, Art. 2106).
3. Right to demand the return of the thing
pledged in case of reasonable grounds to fear
destruction or impairment of the thing
without the pledgee’s fault, subject to the duty
of replacement (NCC, Art. 2107);
561
Requisites for the application of Art. 2107:
a. The pledger has reasonable grounds to
fear the destruction or impairment of the
thing pledged;
b. There is no fault on the part of the
pledgee;
c. The pledgee is offering in place of the
thing, another thing in pledge which is of
the same kind and quality as the former;
and
d. The pledgee does not choose to exercise
his right to cause the thing pledged to be
sold at public auction.
4. To bid and be preferred at the public auction
(NCC, Art. 2113).
Obligations of pledgor
1. To advise the pledge of the flaws of the thing
(NCC, Arts. 2101 and 1951);
2. Not to demand the return of the thing until
after full payment of the debt, including
interest due thereon and expenses incurred
for its preservation (NCC, Art. 2105).
NOTE: Pledgor may be allowed to substitute
the thing pledged which is in danger of
destruction or impairment with another
thing of the same kind and quality, subject to
provisions of NCC, Art. 2107.
FORECLOSURE OF THE THING PLEDGED
Foreclosure of the thing pledged
A pledgee can foreclose the thing pledged when
there is no payment of the debt on time, the object
of the pledge may be alienated for the purpose of
satisfying the claims of the pledgee.
XPNS:
1. If a credit which has been pledged becomes
due before it is redeemed, the pledgee may
collect and receive the amount due. He shall
apply the same to the payment of his claim,
and deliver the surplus, should there be any,
to the pledgor (NCC, Art. 2118); or
2. In Yau Chu v CA, the collateral was money or
an exchange of “peso for peso.” In such case
all that has to be done to convert the pledgor’s
time deposit certificates into cash is to
present them to the bank for encashment
after due notice to the debtor (Rabuya, 2017).
Right of the pledge or mortgagor to foreclose
 CIVIL LAW
If the debtor failed to pay on maturity date, the
thing pledged or mortgaged may be sold at public
auction as provided by law so that the proceeds
may be used for payment of the obligation.
Options of an unpaid creditor
1. Foreclose the thing pledged; or
2. Abandon the pledge and file a claim for
collection (NCC, Art. 2087).
Procedure for the public sale of a thing
pledged
1. The obligation must be due and unpaid;
2. The sale of the thing pledged must be at
public auction;
3. There must be notice to the pledgor and
owner, stating the amount for which the
sale is to be held; and
4. The sale must be conducted by Notary
Public (De Leon, 2013).
Who can bid in a public auction
The following can bid in the public auction
1. The public;
2. Pledgor/owner/debtor – They shall be
preferred if same terms as the highest bidder
is offered; and
3. Pledgee/creditor – He must not be the only
bidder, otherwise, his bid is invalid and void.
Nature of the bids at the public auction
All bids at the public auction shall offer to pay the
purchase price at once. If any other bid is
accepted, the pledgee is deemed to have been
received the purchase price, as far as the pledgor
or owner is concerned (NCC, Art. 2114).
The bids must be for CASH for the said bids “shall
offer to pay the purchase price at once”. Checks
cannot be accepted as payment for the purchase
price because they are not legal tenders. They
produce the effect of payment ONLY after they
have been encashed.
Third person paying pledgor’s debt
. in a second auction.
Any third person who has any right in or to the
thing pledged may satisfy the principal obligation
as soon as the latter becomes due and demandable
(NCC, Art. 2117).
Effect of sale of the thing pledged
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
1. It extinguishes the principal obligation;
NOTE: The extinction is automatic regardless
of whether or not the proceeds realized from
the public auction sale are more or less than
the amounts of the principal obligation and
other incidental expenses.
2. If the price of the sale is more than the
amount of the debt, the excess will go the
pledgee; and
NOTE: This is to compensate him for the
eventuality where the purchase price is
lesser than the amount of the debt, wherein
he cannot retrieve any deficiency unless
there is a contrary agreement.
3. If the price of the sale is less than the amount
of the debt, the pledgee is not entitled to
recover the deficiency in all cases even if there
is a stipulation to that effect (NCC, Art. 2115).
NOTE: By electing to sell the thing pledged
instead of suing on the principal obligation,
the creditor waives any other remedy and
must abide by the results of the sale.
Effect when the thing pledged was not sold at
the first public auction
When the property was not sold at the first
auction (such as when there are no participating
bidders), there will be another setting for the
second auction following the same formalities.
If no sale was effected in the second public
auction, the pledge is allowed to appropriate the
thing pledged.
NOTE: This is an exception to the prohibition
against Pactum commissorium.
Deed of acquittance
A deed of acquittance is a document of the release
or discharge of the pledgor from the entire
obligation including interests and expenses. This
shall be executed by 1the pledgee after
appropriating the thing in case a no sale was made
Application of the proceeds of the sale
The pledgee may collect and receive the amount
due when what has been pledged is a “credit.” He
shall apply the same to the payment of his claim,
562
 CREDIT TRANSACTIONS
and deliver the surplus, should there be any, to the
pledgor (NCC, Art. 2118).
Extinguishment of pledge
1. The same cause of extinguishment of all
other obligation;
2. If the thing pledged is returned by the
pledgee to the pledgor or owner, the
pledge is extinguished (NCC, Art. 2110);
NOTE: If subsequent to the perfection of
the pledge, the thing is in the possession
of the pledgor or owner, there is a prima
facie presumption that the same has been
returned by the pledgee. This same
presumption exists if the thing pledged is
in the possession of a third person who
has received it from the pledgor or owner
after the constitution of the pledge (NCC,
Art. 2110, par. 2).
3. A statement in writing by the pledgee that
he renounces or abandons the pledge
(NCC, Art. 2111);
NOTE: Renunciation or the abandonment
must be in writing. An oral waiver is not
sufficient. But if the pledgee orally
renounces the pledge, and returns the
thing pledged to the pledgor, the pledge is
thereby extinguished, not because of Art.
2111 but because of Art. 2110, first
paragraph (Paras, 2008).The renunciation
of the principal debt shall extinguish the
accessory obligations; but the waiver of
the latter shall leave the former in force
(NCC, Art. 1273).
4. Payment of the debt;
5. Sale of thing pledge at public auction
(NCC, Art. 2112); or
6. Appropriation of the thing in case of
failure of second public auction (NCC, Art.
2112).
PLEDGE BY OPERATION OF LAW
Legal pledge
Pledge by operation of law or legal pledges are
those constituted or created by operation of law.
In this case, the right of retention exists.
Instances of legal pledges where there is right
of retention
563
1. Art. 546 – Right of the possessor in good faith
to retain the thing until refunded of necessary
expenses;
2. Art. 1707 – Lien on the goods manufactured or
work done by a laborer until his wages had
been paid;
3. Art. 1731 – Right to retain of a worker who
executed work upon a movable until he is
paid;
4. Art. 1914 – Right of an agent to retain the
thing subject of the agency until reimbursed
of his advances and damages (NCC, Arts. 1912
and 1913);
5. Art. 1994 – Right of retention of a depositary
until full payment of what is due him by
reason of the deposit; and
6. Art. 2004 – Right of the hotel-keeper to retain
things of the guest which are brought into the
hotel, until his hotel bills had been paid.
Sale of the thing pledged in legal pledge
A thing under a pledge by operation of law may be
sold only after demand of the amount for which
the thing is retained. The public auction shall take
place within one month after such demand.
NOTE: If, without just grounds, the creditor does
not cause the public sale to be held within such
period, the debtor may require the return of the
thing (NCC, Art. 2122).
The remainder of the price of sale shall be
delivered to the obligor (NCC, Art. 2121).
REAL MORTGAGE
Real estate mortgage (REM) is a contract whereby
the debtor secures to the creditor the fulfillment
of the principal obligation, specially subjecting to
such security immovable property or real rights
over immovable property in case the principal
obligation is not fulfilled at the time stipulated (12
Manresa 467).
Characteristics of real mortgage
1. It is a real right;
2. It is an accessory contract;
NOTE: If the principal obligation is VOID, the
mortgage is also VOID (Reyes v. Gonzales, [C.A.]
45 O.G. No. 2, p. 831). But if a mortgage is void
because it was not made by the owner of the
property, the principal contract of loan may
still be valid (PNB v. Rocha, G.R. No. L-32260,
December 29, 1930).
3. It is indivisible;
 CIVIL LAW
4. It is inseparable; Requisites for a valid constitution of a real
mortgage (1991, 1994, 1996, 1999, 2001 Bar)
NOTE: The mortgage adheres to the property,
regardless of who its owner may The following requisites are essential to the
subsequently be (McCullough v. Veloso, 46Phil. contract of mortgage:
1).
1. That they be constituted to secure the
5. It is real property; fulfillment of a principal olbligation;
6. It is subsidiary;
2. That the pledger or mortgagor be the absolute
NOTE: Once the obligation has been paid or owner of the thing pledge;
satisfied, the property must be released from
the encumbrance imposed.The mortagage is 3. That the person constituting the mortgage have
answerable only if the principal obligation is the free disposal of their property, and in the
not paid. absence thereof, that they be legally authorized
for the purpose;
7. It is a limitation on ownership;
8. It can secure all kinds of obligations; 4. It must appear in a public instrument (NCC, Art.
9. The property cannot be appropriated; and 2125); and
10. The mortgage is a lien.
5. Recording in the Registry of Property is
Laws that govern contract of real mortgage necessary to bind third persons.

1. NCC; NOTE: A recorded Real Estate Mortgage is a

2. Mortgage Law; right in rem, a lien on the property whoever
3. Property Registration Decree (PD 1529); its owner maybe (Rabuya, 2017).
4. Sec. 194, as amended by Act No. 3344, Revised
Administrative Code (Phil. Bank of Commerce Registration operates as a notice of the
v. De Vera, G.R. No. L-18816, December 29, mortgage to others, but neither adds to its
1962); validity nor converts an invalid mortgage
5. R.A. 4882 – law governing aliens who become into a valid one between the parties.
mortgagees.
The person in whose favor the law
Kinds of real mortgages establishes a mortgage has the right to
demand the execution and the recording of
Voluntary or Conventional mortgage – It is the document in which the mortgage is
constituted voluntarily by the contracting formalized [NCC, Art. 2152(2)].
parties;
Real estate mortgage v. Contract of sale with
Legal mortgage – It is required by law to be right of repurchase
executed in favor of certain persons (NCC,
Arts. 2125, par. 2; 2082 and 2083); and SALE WITH
REAL ESTATE
BASIS RIGHT OF
MORTGAGE
Equitable mortgage – The intention of the parties REPURCHASE
is to make the immovable as a security for the Accessory Principal and
performance of the obligation but the Nature of contract independent
formalities of a real mortgage are not Contract contract.
complied with.
Indivisible Redemption can
Consideration in mortgage be partial
Divisibility
(NCC, Articles
Its consideration is the same as of the principal of Contract
1612-1613)
contract from which it receives its life, and
without which it cannot exist as an independent Only to real Real and
contract (China Banking Corp. v. Lichauco, G.R. No. Subject property. personal
L-22001, November 4, 1924). Matter property.

There is no There is

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 564
 CREDIT TRANSACTIONS
Transfer of transfer of title transfer of title To claim from a third person in possession of the
ownership and possession and possession mortgaged property the payment of the part of the
of the property. of the property, credit secured by the property which said third
although person possesses (NCC, Art. 2129).
conditional.
Prior demand must have been made on the debtor
Creditor has no The vendee a and the latter failed to pay (Bank of the Philippine
right to the retro is entitled Islands v. V. Concepcion E. Hijos, G.R. No. 27701, July
fruits of the to the fruits 21, 1928).
Entitlement property during even during the
to fruits the pendency of period of Right to possession
the mortgage. redemption.
The mortgagee has no right or claim to the
If the debtor As soon as there possession of the property. Such possession is
fails to pay his is a only a security for the payment of the sum
debt, the consolidation of borrowed. The debtor merely subjects the
Appropria- property to a lien but the ownership thereof is not
creditor cannot title in the
tion of parted (De Leon, 2013).
appropriate the vendee a retro,
Property
property he may dispose
mortgaged nor of it as an One’s status as a mortgagee cannot be the basis of
dispose of it. absolute owner. possession (Recebido v. People GR No. 141931,
December 4, 2000).
Rights of mortagor
Registration of mortgage
To alienate the mortgaged property but the
mortgage shall remain attached to the property Registration of mortgage is a matter of right. By
(NCC, Art. 2130). executing the mortgage, the mortgagor is
understood to have given his consent to its
Q: Bucton alleged that Concepcion borrowed registration, and he cannot be permitted to revoke
the title to her house and lot on the pretext it unilaterally.
that she was going to show it to an interested
buyer. However Concepcion, instead, obtained Registration operates as a notice of the mortgage
a loan in the amount of P30,000.00 from Rural to others, but neither adds to its validity nor
Bank of El Salvador (Rural Bank) that as converts an invalid mortgage into a valid one
security for the loan, Concepcion mortgaged between the parties.
Bucton’s house and lot to Rural Bank in her
personal capacity, using a forged SPA. Would Mortgage as a real and inseparable right
Bucton be bound by such real estate mortgage
if the Rural Bank later on forecloses the Mortgage is a real and inseparable right. The
property, after Concepcion defaults in mortgage directly and immediately subjects the
payment? property upon which it is imposed, whoever the
possessor may be, to the fulfillment of the
A: NO. The mere fact that the agent was obligation for whose security it was constituted
authorized to mortgage the property is not (NCC, Art. 2126).
sufficient to bind the principal, unless the deed
was executed and signed by the agent for and on Effect of registration as to better right of third
behalf of his principal. The authorized agent failed parties
to indicate in the mortgage that she was acting for
and on behalf of her principal. The Real Estate A registered mortgage right over property
Mortgage, explicitly shows on its face, that it was previously sold is inferior to the buyer’s
signed by Concepcion in her own name and in her unregistered right.
own personal capacity. Thus, Bucton cannot be
bound by the acts of Concepcion. (Bucton v. Rural Reason: If the original owner had sold the thing,
Bank of El Salvador, G.R. No. 179625, February 24, then he no longer had ownership and free disposal
2014) (Del Castillo, J.). of it so as to be able to mortgage it (State
Investment House, Inc. v. CA, G.R. No. 115548,
Rights of a mortgagee March 5, 1996).

565
 CIVIL LAW
Prohibition against encumbrance of
mortgaged land, without mortgagors’ consent
In this case, rights over the property, which came
into existence after the execution of the deed,
cannot be annotated as an adverse claim on the
title of the land over the mortgagee’s opposition
(Rivera v. Peña, G.R. No. L-11781, March 24, 1961).
Subsequent registration of an adverse claim
A prior registration of a lien creates a preference.
Hence, the subsequent annotation of an adverse
claim cannot defeat the rights of the mortgagee or
the purchase at the auction sale whose rights are
derived from a prior mortgage validly registered.
Extent of Mortgage
GR: Mortgage extends to the following:
1. Natural accessions;
2. Improvements;
3. Growing fruits;
4. Rents or income not yet received when the
obligation becomes due; and
5. Amount of indemnity granted or owing to the
proprietor from:
a. Insurance proceeds; or
b. Expropriation price (NCC, Art. 2127).
Reason: Ownership of such accessions and
accessories and improvements subsequently
introduced also belongs to the mortgagor who is
the owner of the principal (Castro, Jr. v. Court of
Appeals, G.R. No. 97401, December 6, 1995).
XPNS:
1. Express stipulation excluding them; or
2. Evidence sufficiently overthrowing the
presumption that the mortgagor owns the
mortgaged property.
Effects of Mortgage
1. It creates a real right; and
2. It creates merely an encumbrance.
Mortgagee in Good Faith
A mortgagee has a right to rely in good faith on the
certificate of title of the mortgagor of the property
given as security and in the absence of any sign
that might arouse suspicion, has no obligation to
undertake further investigation. Hence, even if the
mortgagor is not the rightful owner of, or does not
have a valid title to, the mortgaged property, the
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
mortgagee in good faith is nonetheless entitled to
protection” (De Leon, 2013).
The doctrine does not apply to a situation where
the title is still in the name of the rightful owner
and the mortgagor is a different person
pretending to be the owner. In such a case, the
mortgagee is not an innocent mortgagee for value
and the registered owner will generally not lose
his title (Ereña vs. Querrer-Kauffman, G.R. No.
16585, June 22, 2006).
Alienation or assignment of mortgage credit
The mortgage credit may be alienated or assigned
to a third person, in whole or in part, with the
formalities required by law (NCC, Art. 2128).
NOTE: Even if the alienation is not registered, it
would still be valid as between the parties (Lopez
v. Alvarez, GR No. L-3438, October 12, 1907).
Stipulations on mortgage contract
1. Including after-acquired properties
Status: Valid
Purpose: To maintain, to the extent of the
allowed by the circumstances, the original
value of the property given as a security.
Such stipulation is common where the
properties given as collateral are perishable
or subject of inevitable wear and tear.
2. Blanket or Dragnet Clause
Status: Valid
A dragnet clause is a mortgage provision
which is specifically phrased to subsume all
debts of past or future origin. It is a valid and
legal undertaking, and the amounts specified
as consideration in the contracts do not limit
the amount for which the pledge or mortgage
stands as security, if from the four corners of
the instrument, the intent to secure future
and other indebtedness can be gathered. A
pledge or mortgage given to secure future
advancements is a continuing security and is
not discharged by the repayment of the
amount named in the mortgage until the full
amount of all advancements shall have been
paid (Premiere Development Bank v. Central
Surety & Insurance, Inc., G.R. No. 17624,
February 13, 2009).
NOTE: It is a clause which operates as a
convenience and accommodation to the
566
 CREDIT TRANSACTIONS
borrowers as it makes available additional
funds without their having to execute
additional security documents, thereby
saving time, travel, loan closing costs, costs of
extra legal services, recording fees. etc.
Interpretation:
Dragnet clause must be carefully scrutinized
and strictly construed particularly where the
mortgage contract is one of adhesion.
NOTE:
a. A mortgage must sufficiently describe
the debt sought to be secured, and an
obligation is not secured by a
mortgage unless it comes fairly
within the terms of the mortgage;
b. Where the intention of the mortgagor
is to secure a larger amount, the
action to foreclose may be for the
larger amount;
c. But where the obligation is not a
series of indeterminate sums
incurred over a period of time but 2
specific amounts procured in a single
instance, what applies is the general
rule state above that an action to
foreclose a mortgage must be limited
to the amount mentioned in the
mortgage; and
d. A mortgage given to secure future
advancements is a continuing
security and is not discharged by the
repayment of the amount named in
the mortgage, until the full amount of
the advancements is paid. It
permitted the mortgagor to take the
money as it is needed and thus avoid
the necessity of paying interest until
the necessity for its use actually
arises.
Statement of the amount in a mortgage
contract in a dragnet clause
The amount stated in the contract is not
controlling in case of mortgage securing
future advancements. The amount named in
the contract does not limit the amount for
which the mortgage stand as a security, if,
from the four corners of the instrument the
intent to secure future and other
indebtedness can be gathered.
Q: Petitioner obtained a loan of P20K from
defendant Rural Bank of Kawit. The loan
was secured by a REM over a parcel of
567
land. The mortgage contract states that
the mortgage will cover the payment of
the loan of P20K and such other loans or
other advances already obtained or to be
obtained by the mortgagors from the
bank. The loan of P20k was fully paid.
Thereafter they again obtained a loan of
P18K, secured by the same mortgage. The
spouses defaulted. The bank extra-
judicially foreclosed the mortgage. Was
the foreclosure sale valid?
A: YES. It has long been settled that
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, September 11,
1991).
3. Forbidding of alienation or assignment of
mortgage credit
Status: Void (NCC, Art. 2130)
NOTE: In case of alienation, the transferee is
bound to respect the encumbrance because
being a real right, the property remains to the
fulfillment of the obligation for whose
guaranty it was constituted.
Assignment of credit, right or action shall be in
a public instrument in order to affect third
persons
An assignment of a credit, right or action
shall produce no effect as against third
persons, unless it appears in a public
instrument, or the instrument is recorded in
the Registry of Property in case the
assignment involves real property (NCC, Art.
1625).
4. Stipulation requiring mortgagee’s consent
before alienation
Status: Valid and binding but only in the
sense that the mortgagee cannot be
compelled to recognize the sale while the
loan is unpaid.
 CIVIL LAW
The sale of the property does not affect the 2.
Institute a real action to foreclose on the
right of the registered mortgagee to foreclose mortgaged property.
on the same even if the ownership has been NOTE: The remedies are alternative, not
transferred to another. cumulative.

NOTE: Such stipulation nonetheless Foreclosure

contravenes public policy, being an undue
impediment or interference on the
transmission of property.
5. Grant of first refusal
Status: Valid
The consideration for the loan-mortgage may
be said to include the consideration for the
right of first refusal.
6. Acceleration Clause
Status: Valid (Luzon Development Bank v.
Conquilla, G.R. No. 163338, September 21,
2005)
Foreclosure is a remedy available to the
mortgagee by which he subjects the mortgaged
property to the satisfaction of the obligation.
NOTE: If he chooses foreclosure of mortgage, he
enforces his lien by the sale on foreclosure of the
mortgage property. The proceeds of the sale will
be applied to the satisfaction of the debt. With this
remedy, he has a prior lien on the property. In
case of deficiency, the mortgagee has the right to
claim for deficiency resulting from the price
obtained in the sale of real property at public
auction and the outstanding obligation at the time
of the foreclosure proceedings (Rabuya, 2017).
Kinds of foreclosure

A stipulation stating that on the occasion of
the mortgagor’s default, the whole sum
remaining unpaid automatically becomes due
and payable.
7. Stipulation of Upset Price or TIPO
1. Judicial – Governed by Rule 68, Rules of Court;
2. Extrajudicial – The mortgagee is given a SPA
to sell the mortgaged property (Act No. 3135).
Judicial foreclosure v. Extrajudicial foreclosure
(1999 Bar)

Status: Void (property should be sold to the

JUDICIAL EXTRAJUDICIAL
highest bidder) BASIS
FORECLOSURE FORECLOSURE
Upset Price or TIPO is the minimum price at Court With court Without court
which the property shall be sold at a public Intervention intervention intervention
auction. Decisions not
appealable;
Possession by third person of the property Decisions are
Right of immediately
mortgaged appealable
Appeal executory

The creditor may claim from the third person in Order of the Foreclosure does
possession of the mortgaged property, the court cuts off not cut off the
payment of the part of the credit secured by the Cutting off
all rights of the rights of all
property which the third party possesses, in terms of rights
parties parties involved
and with the formalities which the law establishes impleaded
(NCC, Art. 2129). GR: No right of
redemption
FORECLOSURE OF REAL ESTATE MORTGAGE XPN: If
Right of mortgagee is a There is right of
Causes of Action of Mortgage-Creditor Redemption bank, quasi- redemption
bank, or trust
Mortgage-creditor has a single cause of action entity
against the mortgage-debtor, which is to recover
the debt, but he has the option to either:
Equity of There is equity No equity of
1. File a personal action for collection of Redemption of redemption redemption
sum of money; or

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 568
 CREDIT TRANSACTIONS
Redemption Nature of judicial foreclosure
starts from Redemption
finality of the starts from the A judicial foreclosure is an action quasi in rem
Period of judgment until date of (Ocampo v. Domalanta, G.R. No. L-21011, August
Redemption order of registration of 30, 1967).
confirmation the certificate of
(90-120 days) sale (1 year) Steps in judicial foreclosure

SPA in favor of 1. Judicial action brought to the proper court

Necessity of No need for mortgagee
SPA SPA essential
Governing Rule 68 of Rules
Act No. 3135
Rule of Court
Essentials of contract of mortgage
1. When to exercise
a. When the principal obligation is not paid
when due; or
b. When the debtor has violated the terms
and conditions of the mortgage.
Premature Foreclosure
Status: Void and ineffectual
The application for foreclosure is premature
where the debtors have not yet defaulted on
the payment of either the principal or the
interest of their loans.
The mortgagee who has been meanwhile
given the possession of the mortgaged
property by virtue of a writ of possession
issued to it as the purchaser at the
foreclosure sale may be required to restore
the possession of the property to the
mortgagor and to pay reasonable rent for the
use of the property during the intervening
period (DBP v. Guariña Agricultural and
Realty Development Corp., G.R. No. 160758,
January 15, 2014).
2. Who may exercise
The right of foreclosure cannot be exercised
by any person other than the creditor-
mortgagor or his assigns (Borromeo v. Court
of Appeals, G.R. No. 133079, August 9, 2005).
3. What is the extent
Foreclosure must be limited to the amount
mentioned in the mortgage document
(Landrio, Jr. v. Court of Appeals, G.R. No.
133079, August 9, 2005).
JUDICIAL FORECLOSURE
having jurisdiction;
2. Order by the court for mortgagor to pay
mortgage debt if the court finds the complaint
to be well-founded, within a period of not less
than 90 days nor more than 120 days from
the entry of judgment;
3. Sale to the highest bidder at a public auction if
the mortgagor fails to pay at the time directed
in the court order;
4. Confirmation of the sale, which operates to
divest the rights of all parties to the action and
vest their rights to the purchaser;
5. Execution of judgment in the manner provided
by law on mortgages, the parties not being
authorized to change the procedure
prescribed (Piano v. Cayanong, G,R, No. L-
18603, February 28, 1963);
NOTE: The proper remedy to seek reversal of
a judgment in an action for foreclosure is an
appeal from the judgment itself or from the
order confirming the sale of the foreclosed
real estate (Sps. Agbada v. Inter-Urban
Developers, Inc., G.R. No. 144029, September
19, 2002).
6. Application of the proceeds of the sale; and
a. Costs of sale;
b. Amount due the mortgagee;
c. Claims of junior encumbrancers or
persons holding subsequent mortgages in
the order of priority; and
d. The balance, if any, shall be paid to the
mortgagor, or his duly authorized agent,
or the person entitled to it.
7. Execution of sheriff’s certificate.
NOTE: In the absence of a certificate of sale,
no title is passed by the foreclosure
proceedings to the vendee.
Action for foreclosure of mortgage survive the
death of mortgagor
An action for foreclosure of mortgage survives the
death of mortgagor because the claim is not a pure
money claim but an action to enforce a mortgage

569
 CIVIL LAW
lien. Being so, the judgment rendered therein may
be enforced by a writ of execution. The action may
be prosecuted by the interested person against
the executor or administrator independently of
the testate or intestate proceedings of the
settlement of the mortgagor’s estate “for the
reason that such claims cannot in any just sense
be considered claims against the estate, but the
right to subject specific property to the claim
arises from the contract of the debtor whereby he
has during life set aside certain property for its
payment, and such property does not, except in so
far as its value may exceed the debt, belong to the
estate” (Testamentaria de Don Amadeo Matute
Olave v. Canlas, G.R. No. L-12709, February 28,
1962).
Remedies of the mortgagee in case of death of
the debtor
1. To waive the mortgage and claim the entire
debt from the estate of the mortgagor as an
ordinary claim;
2. To foreclose the mortgage judicially and
prove any deficiency as an ordinary claim;
or
3. To rely on the mortgage exclusively,
foreclosing the same at any time before it is
barred by prescription, without right to file
claim for any deficiency (Maglaque v.
Planters Development Bank, G.R. No. 109472,
May 18, 1999).
Necessity for confirmation of court in
foreclosure sale (Judicial Foreclosure)
A foreclosure sale (in judicial foreclosure) 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, November 10,
1980).
There can be no redemption of the property after
confirmation. Such confirmation retroacts to the
date of the auction sale. After the confirmation, the
previous owners lose any right they may have had
over the property, which rights in turn vested on
the Purchaser of the property (Lonzame v. Amores,
G.R. No. L-53620, January 31, 1985).
Right to recover deficiency
GR: Mortgagee has the right to recover deficiency
by way of mere motion.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
XPN: When the mortgage was executed by a third
person to secure the obligation of a debtor, such
third person not having assumed personal liability
for the payment of the debt, the extent of recovery
in the judgment foreclosure shall be limited to the
purchase price at the foreclosure sale. The remedy
of the mortgagee in such case is to proceed against
the debtor in an ordinary action for sum of money
to recover the balance of debt due (Rabuya, 2017).
EXTRAJUDICIAL FORECLOSURE
An extrajudicial foreclosure may only be effected
if in the mortgage contract covering a real estate, a
clause is incorporated therein giving the
mortgagee the power, upon default of the debtor,
to foreclose the mortgage by an extrajudicial sale
of the mortgage property (Act No. 3135, Sec. 1, as
amended by Act No. 4148).
Authority to sell
The authority to sell may be done in a separate
document but annexed to the contract of
mortgage. The authority 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).
Steps in extrajudicial foreclosure of real estate
mortgage under chattel mortgage (AM No. 99-
10-05-0, January 15, 2000, further amended on
August 7, 2001)
1. Filing of an application before the Executive
Judge through the Clerk of Court;
In extrajudicial foreclosure of real mortgages
in different locations covering a single
indebtedness, only one filing fee
corresponding to such debt shall be collected.
2. Clerk of court will examine whether the
following requirements of the law have been
complied with:
a. Posting of notice in not less than 20 days
in at least three public places of the
municipality or city where the property is
situated. Notices are given to secure
bidders and to prevent a sacrifice of the
property (Sps. Suico v. Philippine National
Bank, G.R. No. 170215, August 28, 2007).
b. Publication (if property is worth more
than P400.00) once a week for atleast
three consecutive weeks in a newspaper
of general circulation in the city or
municipality. The notice shall be
570
 CREDIT TRANSACTIONS
published in a newspaper of general
circulation pursuant to Section 1, P.D.
1079.
3. The application shall be raffled among
different sheriffs;
4. An auction sale may be had even with just one
(1) participating bidder. The name/s of the
bidder/s shall be reported by the Sheriff or
the Notary Public, who conducted the sale to
the Clerk of Court before the issuance of the
certificate of sale (As amended by the January
30, 2001 Resolution paragraph 5 of A.M. No.
99-10-05-0; Sps. Certeza et.al. v. Phil. Savings
Bank, G.R. No. 190078, March 5, 2010);
The indivisibility of a real estate mortgage is
not violated by conducting two separate
proceedings on mortgaged properties located
in different cities or municipalities as long as
each parcel of land is answerable for the
entire debt (Sps. Yu v. Philippine Commercial
International Bank, G.R. No. 147902, March 17,
2006).
No sale can be legally made outside the
province in which the property sold is
situated, such sale shall be made in said place
or in the municipal building of the
municipality in which the property or part
thereof is situated (Act No. 3135, Sec. 2).
5. The clerk of court shall issue a certificate of
payment indicating the amount of
indebtedness, the filing fees collected, the
mortgages sought to be foreclosed, the
description of the real estates and their
respective locations;
6. The certificate of sale must be approved by the
Executive Judge; and
7. After the redemption has expired, the clerk of
court shall archive the records.
NOTE: The law covers only real estate
mortgages. It is intended merely to regulate
the extrajudicial sale of the property
mortgaged if and when the mortgagee is given
a special power or express authority to do so
in the deed itself or in a document annexed
thereto (Luna v. Encarnacion, G.R. No. L-4637,
June 30, 1952; Ponce de Leon v. Rehabilitation
Finance Corp., G.R. No. L-24571, December 18,
1970).
The authority to sell, is not extinguished by
the death of either mortgagor or mortgagee. It
is an essential and insparable part of a
571
bilateral agreement (Perez v. PNB, G.R. No. L-
21813, July 30, 1996).
Notes on posting and publication under Act No.
3135:
1. Nature
Publication and posting requirements cannot
be waived because they are imbued with
public policy considerations and any waiver
thereon would be inconsistent with the
intent and letter of the law. It would thus be
converting into a private sale what ought to
be a public auction.
NOTE: The failure to post notice is not per se
a ground for invalidating a foreclosure sale
provided that the notice thereof is duly
published in a newspaper of general
circulation (Development Bank of the
Philippines v. Aguirre, G.R. No. 144877,
September 7, 2007).
2. No requirement of personal notice
NOTE: Unless the parties stipulate, personal
notice to the mortgagor in extrajudicial
proceedings is not necessary because Sec. 3 of Act
No. 3135 only requires the posting of notice of the
sale in three public places and the publication of
that notice in a newspaper of general circulation
(Ramirez v. The Manila Banking Corp., G.R. No.
198800, December 11, 2013).
Requisites for a newspaper to be deemed of
general circulation
a. It must be published for the
dissemination of local news and general
information;
b. It must have a bona fide subscription list
of paying subscribers;
c. It must be published at regular intervals;
b. It must be available to the public in
general and not just to a select few chosen
by the publisher, otherwise, the precise
objective of publication of notice of sale
will not be realized; and
c. It must not be devoted to the interests or
published for the entertainment of a
particular profession, trade, calling, race
or religion.
Q: MBTC granted a loan to spouses Peñafiel,
who mortgaged their two parcels of land in
Mandaluyong. The spouses defaulted in the
payment. MBTC instituted an extrajudicial
foreclosure proceeding under Act No. 3135.
 CIVIL LAW
The Notice of Sale was published in Maharlika
Pilipinas, which has no business permit in
Mandaluyong and its list of subscribers shows
that there were no subscribers from
Mandaluyong. Did MBTC comply with the
publication requirement under Section 3, Act
No. 3135?
A: NO. Maharlika Pilipinas is not a newspaper of
general circulation in Mandaluyong where the
property is located. 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. The newspaper must be
available to the public in general, and not just to a
select few chosen by the publisher. Otherwise, the
precise objective of publishing the notice of sale in
the newspaper will not be realized (Metropolitan
Bank and Trust Company, Inc. v. Eugenio Peñafiel,
G.R. No. 173976, February 27, 2009).
3. No certificate of posting is required
GR: A certificate of posting is not required, much
less considered indispensable for the validity of a
foreclosure sale under Act No. 3135.
XPN: Such certificate is significant only when it
becomes necessary to prove compliance with the
required notice of posting.
The fact alone that there is no certificate of
posting attached to the sheriffs records is not
sufficient to prove lack of posting (Rabuya, 2017).
Burden of proving non-compliance with the
publication and posting requirements
Foreclosure proceedings have in their favor the
presumption of regularity (Union Bank of the
Philippines v. CA, G.R. No. 164910, September 30,
2005).
Enjoining the implementation of writ
possession
As a rule, any question regarding the validity of
the mortgage or its foreclosure cannot be a legal
ground for refusing the issuance of a writ of
possession. Regardless of whether or not there is a
pending suit for annulment of the mortgage or the
foreclosure itself, the purchaser is entitled to a
writ of possession, without prejudice to the
outcome of the case. Hence, an injunction to
prohibit the issuance of writ of possession is
entirely out of place. Prohibition does not lie to
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
enjoin the implementation of a writ of possession.
Once the writ of possession has been issued, the
trial court has no alternative but to enforce the
writ without delay (Sps. Ong v. CA, G.R. No. 121494,
June 8, 2000).
Effect of inadequacy of price in foreclosure
sale
GR: When there is a right to redeem, inadequacy
of price is immaterial because the judgment
debtor may reacquire the property easier at a low
price or sell his right to redeem (PNB v. CA, G.R.
No. 121739, June 14, 1999).
XPN: When the price is so inadequate as to shock
the conscience of the court taking into
consideration the peculiarly circumstances
attendant thereto (United Coconut Planters Bank v.
CA, G.R. No. 155912, August 17, 2007).
RECOVERY OF DEFICIENCY
Judicial foreclosure
The mortgagee is specifically given the right to
claim for the deficiency (Rules of Court, Sec. 6, Rule
68).
Extrajudicial Foreclosure
The plain result of adopting extrajudicial
foreclosure under Act No. 3135 is that the creditor
waives his right to recover any deficiency (Heirs of
Sps. Flaviano v. Manila Banking Corporation, G.R.
No. 171206, September 23, 2013).
While Act No. 3135 governing extrajudicial
foreclosures of mortgage does not give a
mortgagee the right to recover deficiency after the
public auction sale, neither does it expressly or
impliedly prohibit such recovery.
NOTE: In both judicial and extrajudicial
foreclosure, when a third person is the mortgagor,
he is not liable for any deficiency in the absence of
a contrary stipulation.
Action for recovery of deficiency
If the deficiency is embodied in a judgment, it is
referred to as deficiency judgment.
NOTE: The action prescribes ten (10) years from
the time the right of action accrues (NCC, Art.
1142(2)).
REDEMPTION OF MORTGAGE
572
 CREDIT TRANSACTIONS
Redemption is a transaction by which the
mortgagor reacquires or buys back the property
which may have passed under the mortgage or
divests the property of the lien which the
mortgage may have created.
Persons entitled to exercise right of
redemption
2. Mortgagor or one in privity of title with the
mortgagor;
3. Successors-in-interest under Sec. 29, Rule 39,
Rules of Court.
Kinds of redemption
1. Equity of redemption – Right of mortgagor to
redeem the mortgaged property after his
default in the performance of the conditions
of the mortgage but before the sale of the
mortgaged property or confirmation of sale.
The mortgagor pays the secured debt within
the period specified.
Where applicable:
Judicial foreclosure of real estate mortgage;
and Chattel mortgage foreclosure
XPN: There is no right of redemption from a
judicial foreclosure sale after the confirmation
of the sale, except those granted by banks and
financial institution as provided by the
General Banking Act (GSIS v. CFI of Iloilo, G.R.
No. 45322, July 5, 1989).
If the mortgagee is a bank, the mortgagor may
exercise a right of redemption and this rule
applies even if the foreclosure is judicial in
accordance with Rule 68 of the Rules of Court.
Period to exercise: within 90-120 days from
the date of the service of the order of
foreclosure or even thereafter but before the
order of confirmation of the sale
2. Right of redemption – Right of the mortgagor
to redeem the mortgaged property within one
year from the date of registration of the
certificate of sale. It applies in case of
extrajudicial foreclosure.
Where applicable: Extrajudicial foreclosure
Period to exercise: within 1 year from the
date of registration of the certificate of sale
(Rules of Court Sec. 6, Act No. 3135; Sec. 28,
Rule 39).
573
The right of redemption, as long as within the
period prescribed, may be exercised
regardless of whether or not the mortgagee
has subsequently conveyed the property to
some other party (Sta. Ignacia Rural Bank v.
CA, G.R. No. 97812, March 1, 1994).
NOTE: Notwithstanding Act No 3135, juridical
persons whose property is being sold
pursuant to an extrajudicial foreclosure, shall
have the right to redeem the property in
accordance with Section 47 of the General
Banking Act until, but not after, the
registration of the certificate of sale with the
applicable Register of Deeds which in no case
shall be more than three (3) months after
foreclosure, whichever is earlier. Owners of
property that has been sold in a foreclosure
sale prior to the effectivity of this General
Banking Act shall retain their redemption
rights until their expiration (RA 8791, Sec. 47).
Q: X and Y, judgment creditors of A, obtained
the transfer of the title of the mortgaged
property in their names. Earlier, A executed a
mortgage over the same property in favor of
FGU Insurance. The latter mortgage was
registered. When A defaulted, FGU foreclosed
the property. A certificate of sale was
thereafter issued in FGU’s favor, which was
confirmed by the RTC. However, before the
new TCT could be issued, X and Y filed their
respective motion for intervention and to set
aside the judgment alleging that they are the
new owners of the property and the failure of
FGU to implead X and Y in the action for
foreclosure deprived the latter of due process.
Is the contention of X and Y correct?
A: NO. Subordinate lien holders acquire only a lien
upon the equity of redemption vested in the
mortgagor, and their rights are strictly
subordinate to the superior lien of the mortgagee.
Such equity of redemption does not constitute a
bar to the registration of the property in the name
of the mortgagee. Registration may be granted in
the name of the mortgagee but subject to the
subordinate lien holders’ equity of redemption,
which should be exercised within ninety (90) days
from the date the decision becomes final. This
registration is merely a necessary consequence of
the execution of the final deed of sale in the
foreclosure proceedings (Looyuko v. CA, G.R. No.
102696, July 12, 2001).
Requisites for valid right of redemption
 CIVIL LAW
1. Must be made within twelve (12) months
from the time of the registration of the sale in
the Office of the Registry of Property;
2. Payment of the purchase price of the property
plus 1% interest per month together with the
taxes thereon, if any, paid by the purchaser
with the same rate of interest computed from
the date of registration of the sale;
3. Written notice of the redemption must be
served on the officer who made the sale and a
duplicate filed with the proper Register of
Deeds (Rosales v. Yboa, G.R. No. L-42282,
February 28, 1983); and
4. Tender of payment within the prescribed
period to make the redemption for future
enforcement (Sec. 26, Act No. 3135; Sec. 8, Rule
39, Rules of Court).
NOTE: The filing of a court action to enforce
redemption, being equivalent to a formal offer to
redeem, would have the effect of “freezing” the
expiration of the one-year period (Heirs of
Quisumbing v. PNB, G.R. No. 178242, January 20,
2009).
Summary of Redemption Period
1. Extrajudicial
d. Natural Person- one (1) year from
registration of the certificate of sale with
the Registry of Deeds.
NOTE: The statutory period of
redemption is only directory and can be
extended by agreement of the parties
provided:
i. The agreement to extend is
voluntary; and
ii. The debtor commits to pay the
redemption price on a fixed date
(Gojudo v. Traders Royal Bank, G.R.
No. 151098, March 21, 2006).
e. Juridical Person – same rule as natural
person.
f. Juridical Person (mortgagor) and Bank
(mortgagee) – three (3) months after
foreclosure or before registration of
certificate of foreclosure whichever is
earlier (RA 8791, Sec. 47).
NOTE: By an amendment by the General
Banking Law of 2000, juridical
mortgagors like partnerships and
corporations are barred from the right of
redemption of mortgaged property sold
pursuant to an extrajudicial foreclosure,
after the registration of the certificate of
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
foreclosure with the applicable Register of
Deeds.
For purposes of reckoning the one-year
redemption period in case of individual
mortgagors, or the three-month
reckoning period for juridical
persons/mortgagors the same shall be
reckoned from the date of confirmation of
the auction sale which is the date when
the certificate of title is issued (BIR RMC
No. 15-2008, August 15, 2008).
2. Judicial – within the period of 90-120 days
from the date of the service of the order of
foreclosure or even thereafter but before the
order of the confirmation of the sale (Rules of
Court, Secs. 2 &3, Rule 28)
NOTE: Allowing redemption after the lapse
of the statutory period, when the buyer at the
foreclosure sale does not object but even
consents to the redemption, will uphold the
policy of the law which is to aid rather than
defeat the right of redemption (Ramirez v. CA,
G.R. No. 98147, March 5, 1993)
Payment of Redemption
To whom: The purchaser or redemptioner or for
him to the officer who made the sale (Rules of
Court, Sec. 29, Rule 39).
Medium of Payment: In cash or in check
NOTE: In accepting a check, he undoubtedly
places himself in a position where he can be held
liable to the purchaser at a public auction if any
damage has been suffered by the latter as a result
of the medium by which payment was made (Co v.
PNB, G.R. No. L-51767, June 29, 1982)
Amount of Redemption Price
1. When mortgagee is not a bank (Act 3135 in
relation to Rules of Court, Sec. 28, Rule 39)
a. Purchase price of the property;
b. 1% interest per month on the purchase
price from the date of registration of the
certificate up to the time of redemption;
c. Necessary expenses incurred by the
purchase for the improvements made by
him to preserve the property during the
period of redemption; and,
d. Taxes paid and amount of purchaser’s
prior lien, if any, with the same rate of
interest computed from the date of
574
 CREDIT TRANSACTIONS
registration of sale, up to the time of
redemption.
2. When mortgagee is a bank (General Banking
Law, 2000):
a. Amount fixed by the court or amount due
under the mortgage deed;
b. Interest;
c. Cost and expenses.
Redemption price in this case is reduced by the
income received from the property.
Rentals received by the Purchaser
The purchaser or redemptioner shall not be
entitled to receive the rents, earnings and income
of the property sold on execution or the value of
the use and occupation thereof while the property
is in the possession of the tenant. It shall belong to
the judgment obligor until the expiration of the
period of redemption.
Rights of persons with subordinate interest
1. Mortgagor’s equity of redemption before
foreclosure – a second mortgagee acquires
only the equity of redemption vested in the
mortgagor and his rights are strictly
subordinate to the superior lien of the first
mortgagee (Sun Life Assurance Co. of Canada v.
Diez, G.R. No. L-29027, October 25, 1928);
2. Mortgagor’s right of redemption after
foreclosure – his remedy is limited to the right
to redeem by paying off the debt secured by
the first mortgage (Tizon v. Valdez and
Morales, G.R. No. L-24797, March 16, 1926);
3. The second mortgagee is entitled, under the
mortgage constituted in his favor to the
payment of his credit the excess of the
proceeds of the auction sale, after covering
the mortgagor’s obligations to the first
mortgagee;
4. To be made defendant in an action for
foreclosure of the mortgage; and,
NOTE: The effect of the failure of the
mortgagee to implead a subordinate lien-
holder or subsequent purchase or both is to
render the foreclosure ineffective against
them.
5. To question the legality of the foreclosure
proceedings or the effect of the alleged lack of
notice to them of such foreclosure (G. Puyat &
Sons v. PNC, G.R. No. L-16843, April 30, 1962).
575
Right to possession of third persons as
purchaser:
A writ of possession is an order whereby a sheriff
is commanded to place in possession of real or
personal property, the person entitled thereto
such as when the property is extrajudicially
foreclosed.
NOTE: The right of the applicant or subsequent
purchased for the issuance of a writ of possession
never prescribes (Ching v. Family Savings Bank,
G.R. No. 167835, November 15, 2010).
1. Before expiration of redemption period –
possession can be availed of as long as an ex
parte motion under oath is filed and a bond in
accordance with Sec. 7 of Act No. 3135 is
posted (Philippine Bank of Communications v.
Yeung, G.R. No. 179691, December 4, 2013).
2. After lapse of redemption period – purchaser
is not obliged to bring a separate suit for
possession. He must invoke the aid of the
courts and ask a writ of possession (Javelosa v.
CA, G.R. No. 124292, December 10, 1996).
No bond is required of the purchaser after
the redemption period if the property is not
redeemed.
Suspension of the implementation of the writ
of possession is not allowed after the
redemption period.
NOTE: After consolidation of title in the
purchaser’s name for failure of the mortgagor
to redeem the property, the purchaser’s right
to possession ripens into absolute right of a
confirmed owner
When writ of possession not available:
1. Where mortgaged property under lease
previously registered in the Registry of
Property or despite non-registration, the
mortgagee has prior knowledge of the
existence and duration of the lease (Ibasco v.
Caguioa, G.R. No. L62619, August 19, 1986);
2. Where the mortgagor refuses to surrender
property sold. The remedy is to file an
ordinary action for the recovery of possession
in order that the mortgagor may be given
opportunity to be heard; and
3. When third party is in actual possession
adverse to the judgment debtor (Rules of
Court, Sec. 36, Rule 39; Act No. 3135, Sec. 6).
 CIVIL LAW
Period of redemption is not a prescriptive
period
The period of redemption is not a prescriptive
period but a condition precedent provided by law
to restrict the right of the person exercising
redemption.
If a person exercising the right of redemption has
offered to redeem the property within the period
fixed, he is considered to have complied with the
condition precedent prescribed by law and may
thereafter bring an action to enforce redemption.
If, on the other hand, the period is allowed to lapse
before the right of redemption is exercised, then
the action to enforce redemption will not prosper,
even if the action is brought within the ordinary
prescriptive period.
Effect of Failure to Redeem
Act No. 3135 provides that if the mortgagor or
successors-in-interest fail to redeem within the
redemption period, the title over the property
consolidates in the purchaser.
The consolidation confirms the purchaser as the
owner entitled to the possession of the property.
The mortgagor, by failing to redeem loses all
interest in the property (United Coconut Planters
Bank v. Lumbo, GR. No. 162757, December 11,
2013).
Q: D obtained a loan from C secured by a REM
over a parcel of land. When D defaulted, C
extrajudicially foreclosed the property. C was
declared the highest bidder in the auction. On
October 29, 1993, C caused the registration of
the certificate of sale. On November 9, 1994 D
filed a complaint for annulment of the
extrajudicial foreclosure and auction sale. Can
D redeem the property beyond the one year
redemption period?
A: NO. D lost any right or interest over the subject
property primarily because of his failure to
redeem the same in the manner and within the
period prescribed by law. His belated attempt to
question the legality and validity of the
foreclosure proceedings and public auction must
accordingly fail (Sps. Landrito v. CA, G.R. No.
133079, August 9, 2005).
A mortgagor, whose property has been
extrajudicially foreclosed and sold, can validly
execute a mortgage contract over the same
property in favor of a third party during the
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
period of redemption. The purchaser at the
foreclosure sale merely acquires 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).
Q: DBP guaranteed LCD’s loan. When LCD
defaulted, DBP paid it and sought
reimbursement. LCD failed to reimburse DBP,
hence DBP extrajudicially foreclosed the REM,
where it was the highest bidder. The Sheriff’s
certificate of sale was annotated in the
certificate of titles on April 30, 1976. La
Campana failed to redeem the properties. The
court, among others, ordered LCD to pay such
sums of money unlawfully collected or
received by way of rentals and/or fruits from
the subject properties to DBP. When should
the period for the remittance of
collected/received rentals/fruits from the
properties, of LCD to DBP start?
A: In foreclosure proceedings, the buyer becomes
the absolute owner of the property purchased if it
is not redeemed during the prescribed period of
redemption, which is one year from the date of
registration of the sale. The Sheriff’s certificate of
sale was annotated in the certificate of titles on
April 30, 1976. DBP became the absolute owner of
the properties on May 1, 1977. Thus, the period to
be considered in determining the amount of
collection should start from May 1, 1997 up to the
time when the possession of the properties are
actually and completely surrendered to DBP (La
Campana Development Corporation v. DBP, G.R. No.
146157, February 13, 2009).
Options in case of death of debtor
A secured creditor holding a real estate mortgage
has three distinct, independent, and mutually
exclusive remedies that can be alternatively
pursuer in case the mortgagor dies:
1. To waive the mortgage and claim the entire
debt from the estate of the mortgagor as an
ordinary claim;
2. To foreclose the mortgage judicially and prove
any deficiency as an ordinary claim; and
576
 CREDIT TRANSACTIONS
3. To rely on the mortgage exclusively,
foreclosing the same at any time before it is
barred by prescription without a right to file a
claim for any bank deficiency (Perez v. PNB,
G.R. No. L-21813, July 30, 1966)
Petition for Annulment of Foreclosure
Proceedings
This petition contests the presumed right of
ownership of the buyer in a foreclosure sale and
puts in issue such presumed right of ownership
while an ex parte petition for issuance of a writ of
possession is a non-litigious proceeding.
Filing of a petition for nullification of foreclosure
proceedings with motion for consolidation is not
allowed as it will render nugatory the presumed
right of ownership, as well as the right of
possession, of a buyer in a foreclosure sale.
ANTICHRESIS
Antichresis is a contract whereby the creditor
acquires the right to receive the fruits of an
immovable of the debtor, with the obligation to
apply them to the payment of interest, if owing,
and thereafter to the principal of his credit (NCC,
Art. 2132). (1995, 1996, 2007 BAR)
Characteristics of antichresis
1. Accessory contract;
2. Formal contract – the amount of the principal
and of the interest must both be in writing
(NCC, Art. 2134);
NOTE: Delivery of possession of the
immovable is not essential to the perfection of
the contract of antichresis so that this
contract is classified as consensual contract.
Nevertheless, the creditor takes and retains
possession of the property until payment of
debt (Rabuya, 2017).
3. It deals only with immovable property;
4. It is a real right;
5. The creditor has the right to receive the fruits
of the immovable;
6. It can guarantee all kinds of valid obligations
(NCC, Arts. 2091 & 2139);and
7. Indivisible in nature (NCC, Art. 2090).
NOTE: It is not essential that the loan should earn
interest in order that it can be guaranteed with a
contract of antichresis. Antichresis is susceptible
of guaranteeing all kinds of obligations, pure or
577
conditional (Javier v. Valliser, (CA) N. 2648-R, April
29, 1950; Sta. Rosa v. Noble, 35 O.G. 27241).
Stipulation authorizing for appropriation of
property upon non-payment of the debt
A stipulation authorizing the antichretic creditor
to appropriate the property upon the non-
payment of the debt within the period agreed
upon is void (NCC, Art. 2038).
Form of a contract of antichresis and its
contents
1. Covers only the fruits of real property but not
the immovable itself;
NOTE: Art. 1306 of the Civil Code gives the
parties the freedom to stipulate otherwise.
The reduction of the amount of the fruits
available to the creditor does not vary the
nature of the contract.
2. Delivery of the immovable is necessary for the
creditor to receive the fruits and not that the
contract shall be binding;
3. Amount of principal and interest must be
specified in writing (NCC, Art. 2134); (1995,
2007 BAR)
4. Express agreement that debtor will give
possession to the creditor and that the
creditor will apply the fruits to the interest
and then to the principal (NCC, Art. 2134).
NOTE: The fruits of the immovable which is
the object of the antichresis must be
appraised at their actual market value at the
time of the application (NCC, Art. 2138). The
property delivered stands as a security for the
payment of the obligation of the debtor in
antichresis. Hence, the debtor cannot demand
its return until the debt is totally paid.
Q: The spouses Adolfo were the original
registered owners of a lot. This property was
mortgaged to the then Rehabilitation Finance
Corporation (now Development Bank of the
Philippines or DBP) and upon default in the
payment of the loan obligation, was foreclosed
and ownership was consolidated in DBP's
name Serafin Adolfo, Sr., however,
repurchased the same on December 1, 1971, a
year after his wife died in 1970. Sometime in
1975, Adolfo allegedly mortgaged the subject
property for the sum of P12,500.00 to Aniceto
Bangis who immediately took possession of
the land. The said transaction was, however,
not reduced into writing. When Adolfo died,
his heirs executed a Deed of Extrajudicial
 CIVIL LAW
Partition covering the subject property. The property; does creates real
Heirs of Adolfo expressed their intention to not produce a right against
redeem the mortgaged property from Bangis real right unless the property.
but the latter refused, claiming that the registered in the
transaction between him and Adolfo was one Registry
of sale. The RTC and CA ruled that the contract Property.
between the plaintiffs and defendants as a
mere mortgage or antichresis and since the Creditor obliged Creditor has no
defendants have been in the possession of the to pay the taxes such obligation.
property in 1975 up to the present time Obligation and charges
enjoying all its fruits or income. Was the to pay upon the estate
transaction one of sale, or a mortgage or taxes unless stipulated
antichresis? otherwise.

A: THERE WAS NEITHER AN ANTICHRESIS NOR There is an There is no

SALE. For the contract of antichresis to be valid, express such obligation
Article 2134 of the Civil Code requires that "the stipulation that on the part of
amount of the principal and of the interest shall be the creditor shall the mortgagee
specified in writing; otherwise the contract of Obligation
apply the fruits
antichresis shall be void." In this case, the Heirs of to apply
to the payment
Adolfo were indisputably unable to produce any fruits to the
of the interest, if
document in support of their claim that the interest
owing, and
contract between Adolfo and Bangis was an thereafter to the
antichresis, hence, the CA properly held that no principal of the
such relationship existed between the parties. On debt.
the other hand, the Heirs of Bangis presented an Subject Real Property
Extra-Judicial Settlement with Absolute Deed of Matter
Sale to justify their claimed ownership and
possession of the subject land. However, Antichresis v. Pledge
notwithstanding that the subject of inquiry is the
very contents of the said document, only its BASIS ANTICHRESIS PLEDGE
photocopy was presented at the trial without Refers to real Personal
providing sufficient justification for the Kind of
property property
production of secondary evidence, in violation of Property
the best evidence rule embodied under Section 3 By mere By delivery
in relation to Section 5 of Rule 130 of the Rules of consent (Real)
Court. In sum, the Heirs of Bangis failed to perfected
(Consensual)
establish the existence and due execution of the
subject deed on which their claim of ownership Principal and Need not be in
was founded. Consequently, the RTC and CA were interest must writing, oral
correct in affording no probative value to the said Necessity of be specified in evidence may be
document (ANICETO BANGIS SUBSTITUTED BY HIS Putting writing, allowed to prove
HEIRS v. ADOLFO, GR No. 190875, June 13, 2012, J. into otherwise the same.
PERLAS-BERNABE) Writing contract is
void.
Antichresis v. Real Estate Mortgage
Effect in the Debtor loses control of the subject
REAL ESTATE Debtor’s matter of the contract.
BASIS ANTICHRESIS
MORTGAGE Control
Delivery or Property is Debtor usually
non- delivered to retains Determination of the amount paid in
delivery of creditor. possession of antichresis
the the property.
property The amount of payment in antichresis is
Creditor Creditor has no determined the actual market value of the fruits at
Right to acquires only the right to receive the time of the application thereof to the interest
fruits right to receive fruits, but and the principal shall be the measure of such
the fruits of the mortgage application (NCC, Art. 2133).

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 578
 CREDIT TRANSACTIONS
Parties to a contract of antichresis
1. Antichretic creditor – one who receives the
fruits on the immovable property of the
debtor.
2. Antichretic debtor – one who pays his debt
through the application of the fruits of his
immovable property.
Rights of antichretic creditor
1. Right to fruits and income of the thing (NCC,
Art. 2132);
2. Retain the thing until debt is paid (NCC, Art.
2136);
NOTE: The property delivered stands as
security for the payment of the obligation of
the debtor in antichresis. Hence, the debtor
cannot demand its return until indebtedness
is satisfied and the property is redeemed
(Macapinlac v. Gutierrez Repide, G.R. No.
18574, September 20, 1992).
3. Have the thing sold upon non-payment at
maturity (NCC, Art. 2137);
NOTE: In this case, the Rules of Court on the
rules on foreclosure of mortgages shall apply
4. Preference to the proceeds of the sale of the
thing; and
5. To be reimbursed for his expense for
machinery and other improvements on the
land, and for the sums paid as land taxes.
Obligations of an antichretic creditor
1. Pay the taxes and charges assessable against
the property like real estate taxes and others
(NCC, Art. 2136), unless there is stipulation to
the contrary;
NOTE: The creditor has to pay the taxes even
if the fruits be insufficient. If he does not pay
taxes, he is, by law, required to pay indemnity
for damages to the debtor (Pando v. Gimenez,
G.R. No. 31816, February 15, 1930). Creditor
may avoid such obligation by compelling the
debtor to reacquire enjoyment of the
property, unless there is a stipulation to the
contrary [NCC, Art. 2136(2)].
2. Bear the necessary expenses for the
preservation and repair of the property;
3. Apply the fruits received for payment of the
outstanding interests, if any, and thereafter of
the principal (NCC, Art. 2132);
579
4. To render an account of the fruits to the
debtor (Diaz v. De Mendezona, G.R. No. L-
24824, January 30, 1926).
Rule on the application of the fruit upon the
debt
The application of the fruit upon the debt must be
expressly agreed between the creditor and the
debtor that the former, having been given
possession of the properties given as security, is to
apply their fruits to the payment of interest, if
owing, and thereafter to the principal of his credit
(NCC, Art. 2132).
Return of the property of the antichretic
debtor
The antichretic debtor can only demand the
return of the property after having fully paid his
obligations to the creditor. It is not fair for the
debtor to regain the possession of the property
when his debt has not been fully paid. Until there
is full payment of the obligation, the property shall
stand as security therefor (Macapinlac v. Gutierrez
Repide, G.R. No. 18574, September 20, 1922).
Remedy of the creditor in case of nonpayment
of his credit
Creditor does not acquire ownership of the real
estate since what was transferred is not the
ownership but merely the right to receive fruits
(NCC, Art. 2132).
1. File an action for specific performance; or
2. File a petition for the public sale of the
property (Barretto v. Barretto, G.R. No. 11933,
December 1, 1917).
NOTE: Parties may agree on an extrajudicial
foreclosure in the same manner as they are
allowed in contracts of mortgage and pledge
(Tavera v. El Hogar Filipino, Inc., G.R. No. L-45963,
October 12, 1939).
A stipulation authorizing the antichretic creditor
to appropriate the property upon non-payment of
the debt within the period agreed upon is void
(NCC, Art. 2088).
Availability of acquisitive prescription to the
antichretic creditor
The creditor in an antichresis and his successors-
in-interest cannot ordinarily acquire by
prescription (Valencia v. Valencia, 42 Phil. 177,
1921). Possession of the property is not in the
 CIVIL LAW
concept of an owner but that of a mere holder Right of purchaser at the auction sale over the
during the existence of the contract (Ramirez v. foreclosed property
CA, G.R. No. L-38185, September 24, 1986).
The purchaser at the auction sale concerned
REDEMPTION UNDER SEC. 47 OF R.A. NO. 8791 whether in a judicial or extrajudicial foreclosure
or THE GENERAL BANKING ACT OF 2000 shall have the right to enter upon and take
possession of such property immediately after the
When applicable date of the confirmation of the auction sale and
administer the same in accordance with law.
In the event of foreclosure, judicial or
extrajudicial, of any mortgage on real estate which Loan distinguished from credit, discount, rent,
is security for any loan or other credit barter and deposit
accommodation granted .
CREDIT LOAN
NOTE: Any petition in court to enjoin or restrain Ability to borrow money Delivery by one party
the conduct of the foreclosure proceedings by virtue of the and the receipt by the
instituted pursuant to Sec. 47 of the General confidence reposed by other party of a given
Banking Act shall be given due course only upon the lender unto him that sum of money, upon an
the filing by petitioner of a bond in the amount he will pay what he has agreement, expressed
fixed by the court conditioned that he will pay all promised. or implied, to repay the
damages which the bank may suffer by the sum loaned, with or
enjoining or the restraint of the foreclosure The concession of without interest.
proceeding. “credit” necessarily
involves the granting of
Who may exercise the right of redemption “loans” up to the time
limit of the amount fixed
The mortgagor or debtor whose real property has in the “credit”(People v.
been sold for the full or partial payment of his Concepcion, G.R. No. L-
obligation. 18535, August 15, 1922).
DISCOUNT LOAN
When redemption is made Interest is deducted in Interest is taken at the
advance. expiration of a credit.
It must be made within one year after the sale of Always on double-name Generally on a single-
the real estate. paper. name paper.
RENT LOAN
NOTE: Notwithstanding Act 3135, juridical The owner of property The thing loaned
persons whose property is being sold pursuant to does not lose the becomes the property
an extrajudicial foreclosure, shall have the right to ownership; he loses his of the obligor.
redeem the property in accordance with Sec. 47 of control over the
the General Banking Act until, but not after, the property rented during
registration of the certificate of foreclosure sale the period of contract.
with the applicable Register of Deeds which in no
case shall be more than three months after Landlord-tenant Obligor-obligee
foreclosure, whichever is earlier. Owners of relationship. relationship.
property that has been sold in a foreclosure sale BARTER LOAN
prior to the effectivity of the General Banking Act
Subject matter are non- Subject matter is
shall retain their redemption rights until their fungible things. money or other
expiration. fungible things.
Always onerous. May be gratuitous or
How redemption is made
onerous.
By paying the amount due under the mortgage
There is a mutual sale In mutuum, there is
deed, with interest thereon at rate specified in the
resulting in the transfer transfer of ownership,
mortgage, and all the costs and expenses incurred
of ownership on both there is no sale.
by the bank or institution from the sale and
sides.
custody of said property less the income derived
therefrom.
The parties do not In commodatum, the
return the things subject bailee returns the

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 580
 CREDIT TRANSACTIONS
of the exchange. thing after the Kinds of commodatum
expiration of the
period agreed upon. 1. Ordinary commodatum – The bailor cannot
DEPOSIT LOAN just demand the return of the thing at will,
Safekeeping of the thing Lender grants the because there is a period agreed upon by the
deposited. Generally, borrower the use of parties.
the depositary cannot the thing learned. 2. Precarium – One whereby the bailor may
use the thing deposited. demand the thing loaned at will in the
following cases:
Depositor can demand Lender cannot demand a. If the duration of the contract had not
the return of the thing the thing loaned at will been stipulated;
deposited at will. but must await for the b. If the use to which the thing loaned
expiration of the should be devoted had not been
period stipulated. stipulated; or
Compensation not Compensation of c. If the use of the thing is merely by
applicable to things credits applicable. tolerance of the owner (NCC, Art. 1947).
deposited.
(except by mutual NOTE: The word “owner” in Art. 1947(2) is
agreement) (Paras, not proper because the bailor need not be
2008). the owner of the thing (Pineda, 2006; NCC,
Both movable and Only money and any Art. 1938).
immovable property other fungible thing.
may be the object. Reason of the law: The contract of
Relationship is one of Relationship is one of commodatum does not transfer
depositor and lender and borrower; ownership.
depositary. or creditor and debtor.
Characteristics of a contract of commodatum

Perfection of contract of loan 1. Real contract – The delivery of the thing

An accepted promise to deliver something by way
of mutuum or simple loan is binding upon the
parties, but the mutuum or simple loan itself shall
not be perfected until the delivery of the object of
the contract (NCC, Art. 1934).
Unlawful purpose of the contract of loan
If the loan is executed for illegal or immoral or
unlawful purpose or use, the contract is void. The
bailor may immediately recover the thing before
any illegal act is committed and provided he is
innocent or in good faith (NCC, Articles. 1411 and
1412).
loaned is necessary for the perfection of the
contract;
2. Unilateral contract – once subject matter is
delivered, it creates obligations on the part of
only one of the parties (the borrower);
3. Essentially gratuitous; otherwise, contract of
lease;
4. Purpose is to transfer the temporary use of
the thing loaned;
5. Principal contract;
6. Purely personal contract (because of the
trust) (NCC, Art. 1939)(2006, 2007 Bar); and
7. It contemplates use by the borrower of the
subject matter and its return in specie
(Rabuya, 2017).

COMMODATUM Consequence of purely personal character of

commodatum
Art. 1935. The bailee in commodatum acquires
the used of the thing loaned but not its fruits; if 1. As to death of a party
any compensation is to be paid by him who
acquires the use, the contract ceases to be a GR: Commodatum is purely personal in
commodatum character hence death of either bailor or
bailee extinguishes the contract (NCC, Art.
1939) (Bar).
It is a contract where one of the parties (bailor)
delivers to another (bailee) something not
XPN: By stipulation, the commodatum is
consumable so that the latter may use the same
for a certain time and thereafter returns the transmitted to the heirs of either or both
identical thing. party.

581
 CIVIL LAW
2. As to Lease of the thing subject of
commodatum
GR: The bailee can neither lend nor lease the
object of the contract to a third person.
XPN: Members of the bailee’s household may
make use of the thing loaned because
members of the bailee’s household are not
considered as third persons.
NOTE: Household members are those
permanently living or residing within the
same residence including the household
helpers.
XPN to the XPN: Contrary stipulation; or
when the nature of the thing forbids such use.
3. As to right of retention
GR: The bailee cannot exercise the right of
retention against the bailor.
XPN: However, he can exercise the right of
retention on the account of damages suffered
by the bailee because of flaws that the bailor
knew of but did not disclose to the bailee.
Use of fruits of the property by the bailee
The bailee in commodatum acquires only the use
of the thing loaned but not its fruits (NCC, Art.
1935) (Bar).
A stipulation that the bailee may make use of the
fruits of the thing loaned is valid. It is understood
that the enjoyment of the fruits must only be
incidental to the use of the thing. It should not be
the main cause; otherwise, the contract is not a
commodatum but a usufruct (NCC, Art. 1940)
(Bar).
The stipulation that the bailee may make use of
the fruits of the thing loaned will not impair the
essence of commodatum because the actual cause
or consideration therefore is still the liberality of
the bailor or lender.
Elements of commodatum
1. There must be a bailor and bailee;
2. The bailee acquires the use of the thing; and
3. It must be gratuitous.
Parties to a commodatum
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
1. Bailor/Comodatario/Commodans – The
giver/ lender – the party who delivers the
possession or custody of the thing bailed;
and
2. Bailee/Comodante/Commodatarius – The
recipient/ borrower; the party who
receives the possession or custody of the
thing thus delivered.
Liability when there are two or more bailees
When there are two or more bailees to whom a
thing is loaned in the same contract, they are
liable solidarily (NCC, Art. 1945). Their liability is
solidary in order to protect the bailor’s rights over
the thing loaned. The law presumes that the bailor
takes into account the personal integrity and
responsibility of all the bailees, therefore, he could
not have constituted commodatum if there was
only one bailee.
Q: Following the principle of autonomy of
contracts, may the parties to a contract of
commodatum validly stipulate that the liability
of the bailees shall be joint?
A: NO. Article 1245 of the New Civil Code
expressly provides that in a contract of
commodatum, when there are two or more bailees
to whom a thing is loaned in the same contract,
they are liable solidarily. It constitutes as an
exception to the general rule of “joint obligations”
where there are two or more debtors, who concur
in one and same obligation under Articles 1207
and 1208. Solidarity is provided to safeguard
effectively the rights of the bailor over the thing
loaned.
Art. 1936. Consumable goods may be the
subject of commodatum if the purpose of the
contract is not the consumption of the object,
as when it is merely for exhibition.
Subject matter of commodatum
GR: Under Art. 1933 of the New Civil Code, the
subject matter of commodatum must be non-
consumable because the thing must be returned.
XPN: Consumable goods may be the subject 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 (NCC, Art. 1936)
(Bar).
Art. 1937. Movable or immovable property
582
 CREDIT TRANSACTIONS
may be the object of commodatum.
Object of commodatum
Both movable and immovable property may be
the object of commodatum (NCC, Art. 1937).
Example of commodatum involving land
A borrowed B’s land so that he can erect thereon a
small barong-barong to be used for the time that A
works in B’s province. If there is no rental this is a
case of commodatum, but if rental is paid, this
would be a lease (Paras, 2008).
NOTE: In Producers Bank of the Philippines v CA,
the loan involving money was classified as
commodatum instead of mutuum because the
lender agreed to deposit his money in the savings
account of the borrower especially for the purpose
of making it appear that the latter had sufficient
capitalization for incorporation, with the promise
that the amount shall not be removed and shall be
returned within a specific period (Rabuya, 2017).
Contracts must be interpreted by their
constitutive elements as defined and denominated
by the law and not by the name given by the
parties (Mina v. Pascual G.R. No. L-8321, October
14, 1913).
Art. 1938. The bailor in commodatum need not
be the owner of the thing loaned.
Art. 1939. Commodatum is purely personal in
character. Consequently:
(1) The death of either the bailor or the
bailee extinguishes the contract;
(2) The bailee can neither lend nor lease the
object of the contract to a third person.
However, the members of the bailee's
household may make use of the thing loaned,
unless there is a stipulation to the contrary, or
unless the nature of the thing forbids such use.
GR: Being personal to the borrower or bailee, the
use of the object cannot be ceded to a third
person.
XPN: Members of the household of the bailee
subject to the following conditions:
1. There is no agreement or stipulation to
the contrary, and
2. The nature of the object forbids such use
583
Art. 1940. A stipulation that the bailee may
make use of the fruits of the thing loaned is
valid.
GR: the bailee is not entitled to the use or
enjoyment of the fruits of the thing loaned. The
fruits belong to the owner.
XPN: If there is a stipulation to that effect, the
bailee may make use of the fruits of the thing.
OBLIGATIONS OF THE BAILOR
1. To allow the bailee the use of the thing
loaned for the duration of the period
stipulated or until the accomplishment of the
purpose (NCC, Art. 1946);
2. To refund the extraordinary expenses the
bailee incurred for the preservation of the
thing;
GR: The bailee must bring to the knowledge
of the bailor such expenses before incurring
the same.
XPN: In case there is urgency and delay
would cause imminent danger.
If the extraordinary expenses arise on the
occasion of the actual use of the thing loaned
by the bailee, the expenses shall be borne by
the bailor and bailee equally, even though the
bailee is without fault (NCC, Art. 1949).
3. To be liable for damages for known hidden
defects (NCC, Art 1951); and
4. Cannot exempt himself from payment of
expenses or damages by abandonment of the
thing to bailee (NCC, Art. 1952).
Liability of the bailor for hidden defects
Requisites:
1. There was a flaw or defect in the thing
loaned;
2. The flaw or defect is hidden;
3. The bailor is aware thereof;
4. He does not advise the bailee of the same;
and
5. The bailee suffers damages by reason of said
flaw or defect (NCC, Art. 1951).
NOTE: If the bailor is not aware of such flaws,
then he is not liable. If the defect is known to the
bailee or the same is patent and obvious, the
bailor is not liable (Rabuya, 2017).
 CIVIL LAW
The obligation of the gratuitous lender goes no
further than this, and he cannot be made liable for
not communicating anything which he did not
know, whether he ought to have known it or not.
Cause of action against bailor who did not
disclose flaw or defect
The cause of action against the bailor who did not
disclose the flaw or defect is action for recovery of
damages on the ground of quasi-delict because of
negligence or bad faith.
Q: Before he left for Riyadh to work, Pedro left
his Adventure van to Tito, with the
understanding that the latter could use it for
one year for his own use while Pedro works in
Riyadh. He did not tell Tito that the brakes of
the van were faulty. Tito had the van tuned up
and the brakes repaired spending a total
amount of P15,000.00. Tito later discovered
that the van consumed too much fuel. To make
up for the expenses, he leased it to Annabelle.
Two months later, Pedro returned to the
Philippines and asked Tito to return the van.
Unfortunately, while being driven by Tito, the
van was accidentally damaged by a cargo truck
without his fault.
Who shall bear the P15,000.00 spent for the
repair of the van? (Bar 2005)
A: Tito must bear the P15,000.00 expenses for the
van. Generally, extraordinary expenses for the
preservation of the thing loaned are paid by the
bailor, he being the owner of the thing loaned. In
this case however, Tito should bear the expenses
because he incurred the expenses without first
informing Pedro about it. Neither was the repair
shown to be urgent. Under Art. 1949, bailor
generally bears the extraordinary expenses for the
preservation of the thing and should refund the
said expenses if made by the bailee, provided, the
bailee brings the same to the attention of the
bailor before incurring them, except only if the
repair is urgent that reply cannot be awaited.
Effect if both parties know the defect
The effect if both parties are aware of the flaws or
defects is that the bailee is deemed to have
assumed a risk. The bailor is not liable for the
damages suffered by the bailee by reason thereof.
RIGHTS OF THE BAILOR
Demand the return of the thing loaned (2005
Bar)
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
GR: The return of the thing loaned may be
demanded by the bailor only (1) after the
expiration of the period stipulated or (2) after the
accomplishment of the use for which it is
constituted.
XPNs:
1. In case of urgent need by the bailor;
2. In case of precarium – the bailor may demand
the thing at will, and the contractual relation
is called a precarium, in the following cases:
(1) If neither the duration of the contract nor
the use to which the thing loaned should be
devoted, has been stipulated; or (2) If the use
of the thing is merely tolerated by the owner
(NCC, Art. 1947); and
3. If the bailee commits an act of ingratitude
specified in Article 765 to the bailor (NCC,
Art. 1948), to wit:
a. If the bailee should commit some offenses
against the person, honor or the property of
the bailor, or his wife or children under his
parental authority;
b. If the bailee imputes to the bailor any
criminal offense, or any act involving moral
turpitude, even though he should prove it,
unless the crime or the act has been
committed against the bailee, his wife or
children under his authority; or
c. If the bailee unduly refuses the bailor
support when the bailee is legally or morally
bound to give support to the bailor.
NOTE: The rationale for the application of
Art. 765 of the New Civil Code which
refers to donations is the fact that
commodatum, like donation, is gratuitous
in nature. The bailee who commits any of
the acts of ingratitude makes himself
unworthy of the trust reposed upon him
by the bailor.
Q: If the contract of commodatum is a
precarium, will Art. 1942 (1) and (2) of the
New Civil Code still apply?
A: IT DEPENDS. If there has been a demand on
the part of the bailor before the loss of the thing
under the circumstances set forth under Article
1942 (1) and (2) and the bailee did not return the
thing, then the latter is liable. However, if there
has been no demand on the part of the bailor and
the thing was lost, the bailor is estopped and
cannot hold the bailee liable for under a contract
of precarium, the use of the thing by the bailee
depends on the pleasure of the bailor and no time
is fixed for such use. Hence, demand on the part of
584
 CREDIT TRANSACTIONS
the bailor is needed for the return of the thing.
Without such, loss of the thing on the hands of the
bailee will not make him liable.
Bailor and ownership of the thing loaned
The bailor in commodatum need not be the owner
of the thing loaned. It is sufficient that he has
possessory interest over subject matter (Art.
1938). All that is required is that the bailor has the
right to the use of the property which he is
lending, and that be allowed to alienate this right
to use.
The rationale for this is the fact that commodatum
does not involve transmission of ownership
(Rabuya, 2017).
NOTE: A mere lessee or usufructuary may
gratuitously give the use of the thing leased or in
usufruct, provided there is no prohibition against
such.
OBLIGATIONS OF THE BAILEE
Pay for the ordinary expenses for
As to
the use and preservation of the
ordinary
thing (NCC, Art. 1941).
expenses
Liable for loss even through
fortuitous event when: (2000
Bar)
When being able to save either of
the thing borrowed or his own
thing, he chose to save the latter;
Reason: bailee’s ingratitude
He keeps it longer than the
period stipulated, or after the
accomplishment of its use (in
As to the loss default);
of the thing Reason: Bailee incurs delay (NCC,
in case of Art. 1169)
fortuitous
event The thing loaned has been
delivered with appraisal of its
value;
Reason: Otherwise, the parties
would not have appraised the
thing
When he lends or leases it to
third persons who are not
members of his household;
Reason: Commodatum is a purely
personal contract
585
There is deviation from the
purpose (NCC, Art. 1942).
Reason: Bailee acts in bad faith
Bailee is not liable for the
deterioration of the thing loaned
As to the caused by the ordinary wear and
deterioration tear of the same (NCC, Art. 1943).
of the thing
loaned NOTE: When there are two or
more bailees, their liability is
solidary.
RIGHTS OF A BAILEE
1. Use of the thing;
2. Make use of the fruits of the thing when
such right is stipulated in the contract;
3. Not answerable for the deterioration of the
thing loaned due to the use thereof and
without his fault; and
4. Right of retention for damages due to
hidden defects or flaws of the thing of
which he was not advised by the bailor.
Q: Art. 1178 of the NCC provides that all rights
acquired by virtue of an obligation are
transmissible. Is the right to use the thing by
virtue of a contract of commodatum
transmissible?
A: NO, it is not transmissible for two reasons:
1. Art. 1178 of the New Civil Code provides
that the transmissibility of said acquired
rights are either subject to the laws or to a
contrary stipulation; and
2. Art. 1939 of the New Civil Code provides
that a contract of commodatum is purely
personal in character. (Bar)
To rule otherwise would be to run counter to the
purely personal character of the commodatum and
to the proviso that transmissibility is subject to
the law governing such obligations.
Commodatum v. Lease
COMMODATUM LEASE
Real contract Consensual
Object is a non- Object may even be
consumable and non work or service.
fungible thing.
Essentially gratuitous Onerous
If the bailor is not Provisions governing
aware of the flaws, he warranty are made
is not liable for the applicable.
 CIVIL LAW
resulting danger
caused by such.
Art. 1943. The bailee does not answer for the
deterioration of the thing loaned due only to
the use thereof and without his fault.
Deterioration
The lowering of the value or character of a thing. It
normally occurs b reason of ordinary wear and
tear.
Right of retention in commodatum
GR: There is no right of retention in commodatum.
The bailee cannot retain the thing loaned on the
ground that the bailor owes the bailee (NCC, Art.
1944).
XPN: The bailee has the right of retention for
claims of damages which the bailee incurred or
suffered by reason of the hidden defects or flaws
of the thing loaned, of which he was not informed
or advised by the bailor (NCC, Art. 1951).
The reason for the general rule that there is no
right of retention is that “bailment implies a trust
that as soon as the time has expired or the
purpose accomplished, the bailed property must
be returned to the bailor”. Also, Art. 1287 provides
that compensation shall not be proper when one
of the debts arises from the obligations of a bailee
in commodatum.
Q: Suppose during the said retention of the
bailee by reason of hidden defects, the thing is
lost due to a fortuitous event. Can the bailor
hold the bailee liable for said loss based on Art.
1942(2) of the New Civil Code?
A: NO. The bailee cannot be held liable for the loss.
Art. 1942(2) of the NCC contemplates wrongful
retention or a situation where the bailee is not
entitled to retain the thing loaned.
NOTE: Article 1942(2) of the NCC provides that
the bailee is liable for the loss of the thing, even if
it should be through a fortuitous event if he keeps
it longer than the period stipulated, or after the
accomplishment of the use for which the
commodatum has been constituted.
Art. 1945. When there are two or more bailees
to whom a thing is loaned in the same contract,
they are liable solidarily.
Solidary Obligatiion
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Each one of the debtors is obliged to pay the entire
obligation, and where each one of the creditors
has the right to demand from any of the debtors,
the payment or fulfillment of the entire obligation
(Art. 1207)
Kinds of Solidary Obligation:
1. Passive Obligation – which is the
solidarity on the part of the debtors;
2. Active Solidarity – which is the solidarity
on the part of the creditors
EXPENSES
Rules on who shall pay ordinary,
extraordinary expenses and other expenses
1. Ordinary expenses – For both the use and
preservation of the thing, it shall be paid or
shouldered by the bailee (NCC, Art. 194)
(2005 Bar).
2. Extraordinary expenses (2005 Bar)
a. Preservation – The bailor, 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 (NCC, Art. 1949).
b. Incurred during actual use –
GR: Borne equally by the bailor and
bailee.
XPN: Stipulation to the contrary (NCC, Art.
1949).
3. Other expenses – The bailee (NCC, Art. 1950).
Q: What if the bailee is entitled to payment or
reimbursement of expenses incurred or
damages suffered and the bailor offers the
thing loaned as payment for said expenses or
damages, would such offer be valid or not, in
view of the prohibition under Art. 1952 which
states that the bailor cannot exempt himself
from the payment of expenses or damages by
abandoning the thing to the bailee?
A: The offer is not valid. It may be considered as
dation in payment. In this case, the abandonment
done by the bailor was made in favor of the bailee
for the payment of the expenses incurred by the
latter, hence, a violation of what the law has
expressly prohibited under Art. 1952 of the NCC.
Entitlement for reimbursement
The bailee is not entitled to reimbursement for the
expenses he incurred if, for the purpose of making
586
 CREDIT TRANSACTIONS
use and preservation of the thing, the bailee incurs
expenses other than those ordinary and
extraordinary expenses.
MUTUUM
It is a contract whereby one of the parties called
the “lender” delivers to another called the
“borrower”, money or other consumable thing
subject to the condition that the same amount of
the same kind and quantity shall be paid (Art.
1933, New Civil Code).
It involves the return of the equivalent only and
not the identical thing because the borrower
acquires ownership thereof (NCC, Art. 1953). A
loan of money, however, may be payable in kind
(De Leon, 2013).
Characteristics of a contract of mutuum
1. Borrower acquires ownership of the thing
(NCC, Art 1953);
2. If the thing loaned is money, payment must
be made in the currency which is legal tender
in the Philippines and in case of
extraordinary deflation or inflation, the basis
of payment shall be the value of the currency
at the time of the creation of the obligation
(NCC, Arts. 1249 and 1250); and
3. If fungible thing was loaned, the borrower is
obliged to pay the lender another thing of the
same kind, quality and quantity even if it
should change in value.
Nature of a contract of mutuum
1. The purpose of the contract is consumption;
2. The subject-matter is either money or
consumable;
3. Ownership passes to the borrower;
4. It is a real contract;
5. It may be gratuitous or with stipulation to
pay interest; and
6. It is a unilateral contract (Rabuya, 2017).
Perfection of the contract of mutuum
Real contracts, such as deposit, pledge and
commodatum, are not perfected until the delivery
of the object of the obligation (NCC, Art. 1316).
While mutuum or simple loan is not mentioned, it
has the same character as commodatum. Hence,
mutuum is also a real contract which cannot be
perfected until the delivery of the object.
An accepted promise to make a future loan is a
consensual contract and therefore, binding upon
587
the parties but it is only after delivery, will the real
contract of loan arise.
Mere issuance of checks does not perfect the
contract of loan. It is only after the checks have
been encashed that the contact may be deemed
perfected.
Consideration in a simple loan
1. As to the borrower – The acquisition of money
or any other fungible thing; and
2. As to the lender – the right to demand the
return of the money or any other fungible
thing or its equivalent.
Object of mutuum
Its object is money or fungible and consumable
things.
Governing rules on payment of loan
If the object of loan is:
1. Money – Governed by Articles 1249 and 1250
(NCC).
GR: Payment shall be made in the currency
stipulated.
XPN: If not, that currency which is legal
tender in the Philippines.
In case of extraordinary inflation – payment
shall be made at the value of the currency at
the time of the creation of the obligation.
Loan of money can be payable in kind if there
is an agreement between the parties
2. Consumable or fungible thing – Debtor or
borrower shall pay another thing of the same
kind, quality and quantity even if it should
change in value. If cannot be done, the value of
the thing at the time of its perfection
(delivery) shall be the basis of the payment of
the loan (NCC, Art. 1955).
Q: Can estafa be committed by a person who
refuses to pay his debt or denies its existence?
A: NO, because the debtor in mutuum becomes the
owner of the thing delivered to him. If he
consumed or disposed of the thing, the act which
is an act of ownership is not misappropriation.
Hence, there is no basis for a criminal prosecution.
 CIVIL LAW
Destruction of the thing loaned risk of loss
In case of urgent Only after the
The destruction of the thing loaned does not need even before expiration of
extinguish one’s obligation in a simple loan the expiration of the term.
because his obligation is not to return the thing When to term (the
loaned but to pay a generic thing. return contract is in the
meantime
Commodatum v. Mutuum (1996, 2004 Bar) suspended).

BASIS COMMODATUM MUTUUM Contract of use Contract of

Contract
Non-consumable Money or consumption
and Non- consumable
Object
fungible. thing. Mutuum v. Lease and Barter

Gratuitous, May or may not MUTUUM LEASE

otherwise it is a be gratuitous. Object is money or any Object may be any thing,
Cause
lease. consumable (fungible) whether movable or
thing. immovable, fungible or
Use or temporary Consumption non-fungible.
possession of the
thing loaned. There is transfer of No transfer of
ownership. ownership.
GR: Not its fruit
because the Creditor-debtor Lessor-lessee
bailor remains relationship. relationship.
the owner.
Unilateral Bilateral
XPNs:
Purpose
Use of the fruits MUTUUM BARTER
is stipulated; Subject matter is Subject matter are non-
enjoyment of the money or other fungible things.
fruits is fungible things.
stipulated; or
enjoyment of the May be gratuitous or Always onerous.
fruits is onerous.
incidental to its
use.
While in mutuum, there There is a mutual sale
is transfer of resulting in the transfer
Real or personal Only personal ownership, there is no of ownership on both
property. property. sale. sides.
Generally non- The money or The parties do not
consumable consumable thing return the things
Subject things but may
loaned is not returned subject of the exchange.
Matter cover
but the same amount of
consumables if
the same kind and
the purpose of quantity shall be paid.
the contract is for
exhibition.
INTEREST AND THE SUSPENSION OF USURY
LAW
Ownership Retained by the Passes to the
of the thing bailor. debtor.
Interest
Exact thing Equal amount
loaned of the same It is the compensation to be paid by the borrower
Thing to be
kind and for the use of the money lent to him by the lender.
returned
quality.
Classes of interest
Who bears Bailor Debtor

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 588
 CREDIT TRANSACTIONS
1. Simple/Monetary – The interest which is paid
for the use of the money, at a certain rate
stipulated in writing by the parties (NCC, Art.
2209);
2. Compound – The interest which is imposed
upon accrued interest, that is, the interest due
and unpaid (NCC, Arts. 1959 and 2212);
3. Legal – That interest which the law directs to
be paid in the absence of any agreement as to
the rate (NCC, Art. 2209); and
4. Compensatory – The interest paid by virtue of
damages for delay or failure to pay principal
on which interest is demanded (Barretto v.
Santa Marina, G.R. No. L-11908, Feburary 4,
1918).
Requisites for recovery of interest
1. The payment of interest must be expressly
stipulated (Tan v. Valdehueza, 66 SCRA 61;
Jardenil v. Salas, 73 Phil. 636);
2. The agreement to pay interest must bee in
writing (NCC, Art. 1956); and
3. The interest must be lawful.
Rules on interest
GR: No interest shall be due unless it is stipulated
in writing (NCC, Art. 1956) (2004 Bar).
XPN:
1. In case of interest on damages or
indemnity for damages, it need not be in
writing (NCC, Art. 2209); or
2. Interest accruing from unpaid interest
(NCC, Art. 2212).
NOTE: Art. 1956 applies only to interest for the
use of money and not to interest imposed as items
of damages.
Stipulation of a particular interest rate
If a particular rate of interest has been expressly
stipulated by the parties, that interest, not the
legal rate of interest shall be applied (Casa Filipina
Development Corporation v Deputy Executive
Secretary, G.R. No. 96494, May 28, 1992).
Liability for interest even in the absence of
stipulation (exceptions to Art. 1956, NCC)
(1) Indemnity for damages — The debtor in delay
is liable to pay legal interest as indemnity for
damages even in the absence of stipulation for the
payment of interest (De Leon, 2013). The
“obligation consisting of the payment of a sum of
money’’ referred to in Article 2209 is not confined
589
to a loan or forbearance of money. It has also been
applied by the Supreme Court in cases involving
default in the payment of price or consideration
under a contract of sale and an action or damages
for injury to persons and loss of property and an
action for damages arising from unpaid insurance
claims (Castelo vs. Court of Appeals, G.R. No. 96372,
May 22, 1995). Interest as indemnity for damages
is payable only in case of default or non-
performance of the contract. As they are distinct
claims, they may be demanded separately
(Sentinel Insurance Co. Inc. vs. Court of Appeals, G.R.
No. L-52482, February 23, 1990).
(2) Interest accruing from unpaid interest —
Interest due shall earn interest from the time it is
judicially demanded although the obligation may
be silent upon this point (NCC, Art. 2212; see Sec. 5,
Usury Law). Both Art. 2212 of the Civil Code and
Sec. 5 of the Usury Law are applicable only where
interest has been stipulated by the parties. Art.
1212 contemplates the presence of stipulated or
conventional interest which has accrued when
demand was judicially made. In cases where no
interest had been stipulated by the parties, no
accrued conventional interest could further earn
interest upon judicial demand (Phil.-American
Accident Insurance Co. Inc. vs. Flores, G.R. No. L-
47180 May 19, 1980; David vs. Court of Appeals,
G.R. No. 115821, October 13, 1999).
NOTE: Where the court’s judgment which did not
provide for the payment of interest has already
become final, no interest may be awarded
(Santuban vs. Fule, G.R. No. L-59664, December 26,
1984; Ruiz vs. Caneba, G.R. No. 84884, December 3,
1990; Solidbank Corporation vs. Court of Appeals,
G.R. No. 138131, March 12, 2002).
Q: Province of Cebu was chosen by former
President Gloria Macapagal-Arroyo to host the
12th ASEAN Summit. To cater to the event, it
decided to construct the Cebu International
Convention Center (CICC or the project) which
would serve as venue for the ASEAN Summit.
Province of Cebu conducted a public bidding
for the project and WTCI emerged as the
winning bidder for the construction of Phase I.
After completing Phase I, WTCI again won the
bidding for Phase II of the project involving the
adjacent works on CICC. As Phase II neared
completion, the Province of Cebu caused WTCI
to perform additional works on the project,
WTCI agreed to perform the additional works
notwithstanding the lack of public bidding.
Weeks before the scheduled ASEAN Summit,
WTCI completed the project, including the
additional works and, accordingly, demanded
 CIVIL LAW
payment therefor. WTCI demanded for
payment but the Province of Cebu still refused
to pay. Thus, it filed a complaint for collection
of sum of money before the RTC. RTC ruled in
favor of WTCI. CA affirmed the RTC's Order but
reduced the interest rate to 6% per annum.
What is the nature of Province of Cebu’s
liability?
A: The liability of the Province of Cebu to WTCI is
not in the nature of a forbearance of money as it
does not involve an acquiescence to the
temporary use of WTCI's money, goods or credits.
Rather, this case involves WTCI's performance of a
particular service, i.e., the performance of
additional works on CICC, consisting of site
development, additional structural, architectural,
plumbing, and electrical works thereon.
Verily, the Court has repeatedly recognized that
liabilities arising from construction contracts do
not partake of loans or forbearance of money but
are in the nature of contracts of service. In Federal
Builders, Inc. v. Foundation Specialists, Inc., the
Court ruled that the liability arising from the non-
payment for the construction works, specifically
the construction of a diaphragm wall, capping
beam, and guide walls of the Trafalgar Plaza in
Makati City, do not partake of a loan or
forbearance of money but is more in the nature of
a contract of service. The Court, therefore,
sustains the CA's ruling that the rate of legal
interest imposable on the liability of the Province
of Cebu to WTCI is 6% per annum. (WT
Construction, Inc. v. The Province of Cebu, G.R. No.
208984, September 16, 2015)
Q: Petitioners Isla obtained a loan in the
amount of P100,000.00 from respondent,
payable anytime from six (6) months to one
(1) year and subject to interest at the rate of
ten percent (10%) per month, payable on or
before the end of each month. When
petitioners failed to pay the said loan,
respondent sought assistance from the
barangay, and consequently, a Kasulatan ng
Pautang dated December 8, 2005 was
executed. Petitioners, however, failed to
comply with its terms, prompting respondent
to send a demand letter dated November 16,
2006. Once more, petitioners failed to comply
with the demand, causing respondent to file a
Petition for Judicial Foreclosure against them
before the RTC. Petitioners maintained that
the stipulated interest of ten percent (10%)
per month was exorbitant and grossly
unconscionable. The RTC directed petitioners
to pay respondent the amounts of P100,000.00
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
with twelve percent (12%) interest per annum
from December 2007 until fully paid and
P20,000.00 as attorney's fees. Is the 12%
interest imposed by the Court valid?
A: Yes. Anent monetary interest, the parties are
free to stipulate their preferred rate. However,
courts are allowed to equitably temper interest
rates that are found to be excessive, iniquitous,
unconscionable, and/or exorbitant, such as
stipulated interest rates of three percent (3%) per
month or higher. In such instances, it is well to
clarify that only the unconscionable interest rate
is nullified and deemed not written in the
contract; whereas the parties' agreement on the
payment of interest on the principal loan
obligation subsists. It is as if the parties failed to
specify the interest rate to be imposed on the
principal amount, in which case the legal rate of
interest prevailing at the time the agreement was
entered into is applied by the Court. This is
because, according to jurisprudence, the legal rate
of interest is the presumptive reasonable
compensation for borrowed money.
In this case, petitioners and respondent entered
into a loan obligation and clearly stipulated for the
payment of monetary interest. However, the
stipulated interest of ten percent (10%) per
month was found to be unconscionable, and thus,
the courts a quo struck down the same and pegged
a new monetary interest of twelve percent (12%)
per annum, which was the prevailing legal rate of
interest for loans and forbearances of money at
the time the loan was contracted on December 6,
2004. (Catalina F. Isla, Elizabeth Isla, and Gilbert F.
Isla v. Genevira P. Estorga, G.R. No. 233974, July 2,
2018)
Q: Santos owned three (3) parcels of
agricultural land devoted to corn. In 1984, the
subject lands were placed under the
government's Operation Land Transfer
Program pursuant to Presidential Decree (PD)
No. 27, and distributed to the farmer-
beneficiaries who were issued the
corresponding Emancipation Patents. The
Department of Agrarian Reform (DAR) fixed
the just compensation using the formula
provided under Executive Order No. (EO) 228.
The LBP allowed Santos to collect the initial
valuation for Land 3. It withheld the release of
the valuation for Lands 1 and 2 until the
submission of the certificates of title. Santos
was then issued Agrarian Reform (AR) Bonds
representing the initial valuation of Land 3
and the six percent (6%) increment. Finding
the valuation unreasonable, Santos filed three
590
 CREDIT TRANSACTIONS
(3) petitions for summary administrative
proceedings for the determination of just
compensation of the subject lands before the
Office of the Provincial Adjudicator (PARAD).
The LBP also instituted two (2) separate
complaints f the determination of just
compensation before the RTC. The RTC
adopted the LBP’s uncontested valuation for
Land 3 and also awarded 12% interest
reckoned from January 1, 2010 until full
payment since the revaluation of Land 3
already included the required six percent
(6%) annual incremental interest from the
time of taking until December 31, 2009. The CA
affirmed. Is the reckoning point of interest
correct?
A: No. In expropriation cases, interest is imposed
if there is delay in the payment of just
compensation to the landowner since the
obligation is deemed to be an effective
forbearance on the part of the State. Such interest
shall be pegged at the rate of 12% per annum on
the unpaid balance of the just compensation,
reckoned from the time of taking or the time when
the landowner was deprived of the use and benefit
of his property such as when title is transferred to
the Republic, or emancipation patents are issued by
the government, until full payment Accordingly,
the award of twelve percent (12%) annual
interest on the unpaid balance of the just
compensation for Land 3 should be
computed from the time of taking and not from
January 1, 2010 as ruled by the RTC and the
CA, until full payment on October 12, 2011. (Land
Bank of the Philippines v. Edgardo L. Santos, G.R.
No. 213863, January 27, 2016)
Payment of interest when there is no
stipulation
(a) A borrower borrowed money. No interest was
stipulated. If by mistake he pays, then this will
be a question of undue payment or solutio
indebiti. We should then apply the rules on the
subject.
(b) If a borrower borrows money and orally
agrees to pay legal interest at 10% per annum,
there is really no obligation to pay since the
interest was not agreed upon in writing. If he
nevertheless pays because he considers it his
moral obligation to pay said interest, he
cannot recover the interest that he has given
voluntarily. This will now be a natural
obligation, and the provisions on said subject
should apply (Paras, 2008).
591
Q: The court ordered petitioner Nympha S.
Odiamar to pay respondent the amount of
P1,010,049.00 representing the remaining
balance of petitioner's debt to the latter in the
original amount of P1,400,000.00. In said
motion, respondent prays for the imposition of
legal interest on the monetary award due her.
She likewise insists that petitioner's loan
obligation to her is not just P1,400,000.00 but
P2,100,000.00 and, as such, she should be
made to pay the latter amount. Whether a
prayer for the imposition of legal interest on
the monetary award due is proper?
A: YES, in the absence of an express stipulation as
to the rate of interest that would govern the
parties, the rate of legal interest for loans or
forbearance of any money, goods or credits and
the rate allowed in judgments shall no longer be
twelve percent (12%) per annum but will now be
six percent (6%) per annum effective July 1, 2013.
It should be noted, nonetheless, that the new rate
could only be applied prospectively and not
retroactively. Consequently, the twelve percent
(12%) per annum legal interest shall apply only
until June 30, 2013. Come July 1, 2013 the new
rate of six percent (6%) per annum shall be the
prevailing rate of interest when applicable.
Applying the foregoing parameters to this case,
petitioner's loan obligation to respondent shall be
subjected to compensatory interest at the legal
rate of twelve percent (12%) per annum from the
date of judicial demand, i.e., August 20, 2003, until
June 30, 2013, and thereafter at the legal rate of
six percent (6%) per annum from July 1, 2013
until finality of this ruling. Moreover, all monetary
awards14due to respondent shall earn legal
interest of six percent (6%) per annum from
finality of this ruling until fully paid. (Nympha S.
Odiamar v. Linda Odiamar Valencia, G.R. No.
213582, September 12, 2018)
Basis of the right to interest
The basis of the right to interest is it only arises by
reason of the contract (stipulation in writing) for
the use of money or by reason of delay or failure
to pay principal on which interest is demanded
due to a breach of an obligation (Baretto v. Santa
Marina, G.R. No. 11908, February 4, 1918).
Equitable mortgage
Equitable mortgage is one which, although it lacks
the proper formalities or other requisites of a
mortgage required by law, nevertheless reveals
the intention of the parties to burden real
 CIVIL LAW
property as a security for a debt, and contains
nothing impossible or contrary to law.
Interest in equitable mortgage
There can be no interest to be collected in
equitable mortgage because the same is not
stipulated in writing (Tan v. Valdehueza, G.R. No. L-
38745, August 6, 1975).
Recovery of unstipulated interest
A payment for unstipulated interest can be
recovered if paid by mistake, the debtor may
recover as in the case of solutio indebiti or undue
payment. However if payment is made voluntarily,
no recovery can be made as in the case of natural
obligation (NCC, Art. 1960).
Q: Siga-an granted a loan to Villanueva in
the amount of P540,000.00. Such agreement
was not reduced to writing. Siga-an demanded
interest which was paid by Villanueva in cash
and checks. The total amount Villanueva paid
accumulated to P1,200,000.00. Upon advice of
her lawyer, Villanueva demanded for the
return of the excess amount of P660,000.00
which was ignored by Siga-an.
a. Is the payment of interest valid?
b. Is solutio indebiti applicable? Explain.
(2012 Bar)
A:
a. NO. Payment of monetary interest is allowed
only if:
a. There was an express stipulation for the
payment of interest; and
b. 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.
b. YES. The quasi-contract of solutio
indebiti harks back to the ancient principle
that no one shall enrich himself unjustly at the
expense of another. The principle of solutio
indebiti applies where (1) a payment is made
when there exists no binding relation
between the payor, who has no duty to pay,
and the person who received the payment;
and (2) the payment is made through mistake,
and not through liberality or some other
cause. The Supreme Court has held that the
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
principle of solution indebiti applies in case of
erroneous payment of undue interest (Siga-an
v. Villanueva, G.R. No. 173227, January 20,
2009).
Interest on unliquidated claims
GR: Interest may not be adjudged on unliquidated
claims.
XPN: Unless the same can be established with
reasonable certainty (Atlantic Gulf and Pacific
Company of Manila, Inc. v. CA, G.R. Nos. 114841-42,
August 23, 1995).
Running of interest on unliquidated claims
If the interest is adjudged on unliquidated claim
but the pleadings in court did not spell out said
amount with certitude, the legal interest thereon
shall run only from the promulgation of judgment
of said court, it being at that stage that the
quantification of damages may be deemed to have
been reasonably ascertained (Ibid.).
The actual base for computing legal interest shall
be the amount as finally adjudged by the Supreme
Court (Ibid.).
Monetary interest and compensatory interest
Monetary interest must be expressly stipulated in
writing and it must be lawful (NCC, Art. 1956).
The ruling in Eastern Shipping Lines has now
been modified by Bangko Sentral ng Pilipinas
Monetary Board Circular No. 799 Series of
2013, providing that:
The rate of interest for the loan or forbearance of
any money, goods or credits and the rate allowed
in judgments, in the absence of an express
contract as to such rate of interest, shall be six
percent (6%) per annum (BSP Circular No. 799,
July 1, 2013).
Prospective application of BSP Circular No.
799
It should be noted, nonetheless, that the new rate
could only be applied prospectively and not
retroactively. Consequently, the twelve percent
(12%) per annum legal interest shall apply only
until June 30, 2013. Come July 1, 2013 the new
rate of six percent (6%) per annum shall be the
prevailing rate of interest when applicable (Nacar
v. Gallery Frames, G.R. No. 189871, August 13,
2013).
592
 CREDIT TRANSACTIONS
The new guidelines on the application of legal
Interest
1. When an obligation, regardless of its source
(i.e.; law, contracts, quasi-contracts, delicts or
quasi-delicts) is breached, the contravenor
can be held liable for damages and the
provisions under Title XVIII on Damages of
the Civil Code govern in determining the
measure of recoverable damages; and
2. For the award of interest in the concept of
actual and compensatory damages, the rate
of interest and its accrual is imposed as
follows:
a. For breach of obligations consisting of loan
or forbearance of money, interest due
shall be that stipulated in writing. Interest
due shall itself earn legal interest from the
time it is judicially demanded;
b. In the absence of stipulation, the rate of
interest shall
be 6% per annum, computed from default
(i.e. judicial or extrajudicial demand)
subject to provisions of Art.1169 of the
Civil Code;
c. 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. No interest, however, shall be
adjudged on unliquidated claims or
damages except when or until the
demand can be established with
reasonable certainty.
i. Where the demand is established with
reasonable certainty, the interest shall
begin to run from the time the claim is
made judicially or extrajudicially (NCC,
Art. 1169); and
ii. When such certainty cannot be so
reasonably established at the time the
demand is made, the interest shall begin
to run only from the date the judgment
of the court is made (at which time the
quantification of damages may be
deemed to have been reasonably
ascertained. The actual base for the
computation of legal interest shall, in
any case, be on the amount finally
adjudged.
d. When the judgment of the court awarding
a sum of money becomes final and
executory, whether the case falls under
593
forbearance or on forbearance of money,
the rate shall be 6% per annum from such
finality until its satisfaction, this interim
period being deemed to be by then an
equivalent to a forbearance of credit
(Nacar v. Gallery Frames, G.R. No. 189871,
August 13, 2013).
NOTE: Judgments that have become final and
executory prior to July 1, 2013, shall not be
disturbed and shall continue to be implemented
(Ibid).
Authority of BSP Monetary Board to set
interest rates
The Supreme Court affirmed the authority of BSP
Monetary Board (BSP-MB) to prescribe the
maximum rate or rates of interest for all loans or
renewals thereof or the forbearance of any money,
goods or credits, including those for loans of low
priority such as consumer loans, as well as such
loans made by pawnshops, finance companies and
similar credit institutions (Advocates for Truth in
Lending Inc. v. Bangko Sentral Monetary Board,
G.R. No. 192986, January 15, 2013).
Basis for the interest rate for compensatory
interest
1. Central Bank Circular No. 799 – 6% per annum
in cases of:
a. Loans;
b. Forbearance of money, goods and
credits; and
c. Judgment involving such loan or
forbearance
2. Art. 2209 – 6% per annum in cases of:
a. Other sources (i.e. sale);
b. Damages arising from injury from
person; and
c. Loss of property which does not involve
a loan.
3. Interest accruing from unpaid interest
(compound interest) – There must first be a
stipulation for payment of interest due and
this shall earn interest from the time it is
judicially demanded although the obligation
may be silent upon this point.
Forbearance
Forbearance signifies the contractual obligation of
the creditor to forbear during a given period of
time to require the debtor payment of an existing
debt then due and payable. Such forbearance of
 CIVIL LAW
giving time for the payment of a debt is, in
substance, a loan.
Compounding of interest
There must first be a stipulation of payment of
interest and this interest may earn interest only
when it is judicially demanded, although the
obligation is silent upon this point (NCC, Art.
2212).
Rule on compounding of interest
GR: Accrued interest (interest due and unpaid)
shall not earn interest.
XPNS: When:
1. There is 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 (Art. 1959); or
2. Judicial demand has been made upon the
borrower (NCC, Art. 2212).
NOTE: Such accrued interest will bear interest at
the legal rate (NCC, Art. 2212) unless, a different
rate is stipulated (Hodges v. Regalado, 69 Phil.
588).
Increase in Interest Rates
No increase in interest shall be due unless such
increase has also been expressly stipulated
(Security Bank &Trust Co. v RTC, G.R. No. 113926,
October 23, 1996; Spouses Toring v. Ganzon-Olan
G.R. No. 168782, October 10, 2008).
The unilateral determination and imposition of
increased rates is violative of the principle of
mutuality of contracts ordained in Article 1308 of
the Civil Code. One-sided impositions do not have
the force of law between the parties, because such
impositions are not based on the parties’ essential
equality (NSBCI v. PNB, G.R. No. 148753, July 30,
2004).
Governing rule on usurious transactions
CB Circular No. 905 has expressly removed the
interest ceilings prescribed by Usury Law, thus,
the said law has become legally non-existent.
NOTE: It did not repeal or amend the usury law
but merely suspended its effectivity.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
The Supreme Court said nothing in Circular 905
suspending Usury Law that grants the lender the
authority to raise interest rates to levels which
will either enslave their borrowers or lead to a
hemorrhaging of their assets (Almeda v. CA, G.R.
No. 113412, April 17, 1996).
When Usury Law does not apply
1. A contract for the lease of property is not a
loan; hence, the rental paid is not governed by
the Usury Law (Tolentino v. Gonzales, 50 Phil. 5,
G.R. No. 26085, August 12, 1927); or
2. The increase of the price of a thing sold on
credit over its cash sale price is not interest
within the purview of the Usury Law, if the sale
is made in good faith and not as a mere pretext
to cover a usurious loan (Manila Trading v.
Tamaraw, G.R. No. L-22995, February 28, 1925).
Such price is the selling price for a sale made
on the installment plan. Rationale behind the
invalidity of unconscionable interest rate in a
loan despite the suspension of the Usury law.
Courts may simply reduce unreasonable
interests
Interest stipulated by the contracting parties is
valid however if the interest rate agreed upon is
iniquitous and unconscionable, the courts may
reduce the same as reason and equity demand
(Imperial v. Jaucian, G.R No. 149004, April 14,
2004).
In the case of Medel v. CA, G.R. No. 131622,
November 27, 1998, the court ruled that while
stipulated interest of 5.5% per month on a loan is
usurious pursuant to CBC No. 905, the same must
be equitably reduced for being iniquitous,
unconscionable and exorbitant. It is contrary to
morals. It was reduced to 12% per annum in
consonant with justice and fair play.
Floating interest
Floating interest is the interest stipulated by
banks which is not fixed and made to depend upon
the prevailing market conditions, considering the
fluctuating economic conditions.
A stipulation for floating interest is not valid. A
stipulation for a floating rate of interest in a letter
of credit in which there is no reference rate set
either by it or by the Central Bank, leaving the
determination thereof to the sole will and control
of the lender bank is invalid. While it may be
acceptable for practical reasons given the
594
 CREDIT TRANSACTIONS
fluctuating economic conditions for banks to
stipulate that interest rates on a loan not be fixed
and instead be made dependent on prevailing
market conditions, there should be a reference
rate upon which to peg such variable interest
rates [Consolidated Bank and Trust Corp. (Solid
Bank) v. CA, G.R. No. 114672, April 19, 2001].
Q: Samuel borrowed P300,000.00 housing loan
from the bank at 18% per annum interest.
However, the promissory note contained a
proviso that the bank "reserves the right to
increase interest within the limits allowed by
law." By virtue of such proviso, over the
objections of Samuel, the bank increased the
interest rate periodically until it reached 48%
per annum. Finally, Samuel filed an action
questioning the right of the bank to increase
the interest rate up to 48%. The bank raised
the defense that the Central Bank of the
Philippines had already suspended the Usury
Law. Will the action prosper or not? Why?
(2001 Bar)
A: THE ACTION WILL PROSPER. While it is true
that the interest ceilings set by the Usury Law are
no longer in force, it has been held that P.D. No.
1684 and CB Circular No. 905 merely allow
contracting parties to stipulate freely on any
adjustment in the interest rate on a loan or
forbearance of money but do not authorize a
unilateral increase of the interest rate by one
party without the other's consent (PNB v. CA, G.R.
No. 107569, November 8, 1994). To say otherwise
will violate the principle of mutuality of contracts
under Article 1308 of the Civil Code. To be valid,
therefore, any change of interest must be mutually
agreed upon by the parties (Dizon v. Magsaysay,
G.R. No. L-23399, May 31, 1974). In the present
problem, the debtor not having given his consent
to the increase in interest, the increase is void.
Escalation Clauses
Escalation clauses refer to stipulations allowing an
increase in the interest rate agreed upon by the
contracting parties (Juico v. China Banking
Corporation, G.R. No. 187678, April 10, 2013).
Escalation Clause must have de-escalation
clause
An escalation clause can be valid only if it also
includes a de-escalation clause or a stipulation
that the rate of interest agreed upon shall be
reduced in the event that the maximum rate of
interest is reduced by law or by the Monetary
595
Board (Philippine National Bank vs. Intermediate
Appellate Court, G.R. No. 75223, March 14, 1990).
The presence of escalation clause without the
corresponding de-escalation clause in the event of
a reduction of interest as ordered by law makes
the clause one-sided as to make it unreasonable.
Any increase in the interest rate pursuant to an
escalation clause must be the result of an
agreement between two parties. Increases
unilaterally imposed by a bank are in violation of
the principle of mutuality of contracts (PNB v. CA,
G.R. No. 109563, July 9, 1996; Equitable PCI Bank v.
Ng SheungNgor, G.R. No. 171545, December 19,
2007).
DEPOSIT
Deposit is a contract whereby a person
(depositor) delivers a thing to another
(depositary), for the principal purpose of
safekeeping it, with the obligation of returning it
when demanded (Pineda, 2006).
A contract of deposit is constituted from the
moment a person receives a thing belonging to
another, with the obligation of safely keeping it
and returning the same upon demand (NCC, Art.
1962).
When contract of deposit is perfected
A deposit, being a real contract, is perfected by
delivery (NCC, Art. 1316), but an agreement to
constitute a deposit is merely consensual, and is
therefore binding upon mere consent (NCC, Art.
1963).
Characteristics of contract of deposit
1. Real contract – Because it can only be
perfected by the delivery of the object of the
contract (NCC, Art. 1316). However, an
agreement to constitute a future deposit is a
consensual contract and is therefore binding
Such agreement shall give rise to an
obligation to do and to an action for damages
in case of breach (Rabuya, 2017); or
NOTE: There is no consensual contract of
deposit; there is only a consensual promise to
deliver which is binding if such is accepted.
2. Object of the contract must be a movable
property. This rule applies only to extra-
judicial deposit. Thus, in cases of judicial
 CIVIL LAW
deposit, the subject matter may be a real things deposited with pay interest. There can
property; or each other (except by be compensation of
mutual agreement). credits.
3. Purpose is for the safekeeping of the thing
deposited (NCC, Art. 1962). This must be the DEPOSIT COMMODATUM
principal purpose and not only secondary; Principal Purpose
Safekeeping Transfer of use
NOTE: If safekeeping is merely secondary,
Use of the thing.
the contract is not a deposit but some other
contract.
Nature
May be gratuitous or Always gratuitous by its
4. It is gratuitous, unless there is a:
onerous. essence.
a. Contrary agreement;
b. The depositary is engaged in the business of Object
storing goods, like a warehouseman (NCC, In extra-judicial Both movable and
Art. 1965); or deposit, only movables immovable property
c. Where the property is saved from may be objects thereof. may be objects thereof.
destruction without knowledge of the owner,
the latter is bound to pay the other person Demandability
just compensation (as in case of involuntary Depositor can demand Return of the thing
deposit). the thing at will. cannot be demanded
until the lapse of the
NOTE: Deposit shall be considered as a loan period.
if there is a stipulation for the payment of
interest (Aquino v. Deala, 63 Phil. 582, October DEPOSIT LEASE
21, 1936). The reason is that interest can only Principal Purpose
arise from a contract of loan (mutuum). Safekeeping. Use of the thing.

5. The depositary cannot use the thing deposited, When to return

unless: Upon demand of the Upon termination of
a. Expressly permitted by the depositor; or depositor. the lease contract.
b. Preservation of the thing requires its use, but
only for said purpose (NCC, Art. 1977). Kinds of deposit
Deposit v. mutuum, commodatum, Agency, 1. Judicial (sequestration) (NCC, Articles 1964
lease and sale and 2005) – It takes place when an attachment
or seizure of the property in litigation is
DEPOSIT MUTUUM ordered.
Purpose 2. Extra-judicial (NCC, Arts. 1968 and 2004)
Safekeeping/custody Consumption a. Voluntary – The delivery is made by the
will of the depositor (NCC, Art. 1968); or
When to return b. Necessary – Made in compliance with a
Upon demand of the Upon expiration of the legal obligation, or on the occasion of any
depositor. term granted to the calamity, or by travelers in hotels and
borrower. inns, or by travelers with common
carriers (NCC, Art. 1996).
Subject Matter
Movable (extrajudicial) Money or other Judicial v. extra-judicial deposit
or may be immovable fungible thing.
(judicial). BASIS EXTRA-
JUDICIAL
JUDICIAL
Relationship Will of the court; Will of the
Depositor-depositary Lender-borrower takes place contracting
when an parties.
Creation
Compensation attachment or
Generally gratuitous. May be gratuitous or seizure of
No compensation of with a stipulation to property in

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 596
 CREDIT TRANSACTIONS
litigation is entitled to the thing deposited with a third person,
ordered, thus it who shall deliver it in a proper case to the one to
is the court whom it belongs.
order that gives
rise to this kind Rent of safety deposit boxes
of deposit.
The The depositary The rent of safety deposit boxes is an ordinary
sequestrator holds the thing contract of lease of things and not a special kind of
possesses the by will of the deposit because the General Banking Law of 2000
thing in virtual depositor has excluded the renting out of safety deposit box
representation (Rabuya, 2017). where the bank shall act as agent or depositary
As to of the person with the obligation to keep the funds, securities
Possession who by the and other effects which it receives duly separate
of Thing decision of the from the bank’s own assets and liabilities.
court should
turn out to be its The case of Sia v. CA (G.R. No. 102970, May 13,
owner and 1993) enunciating that a rent of a safety deposit
proprietor box is a special kind of deposit, was decided under
(Rabuya, 2017). the former General Banking Act. However, SC has
No contract There is a not yet decided a case abandoning the ruling in Sia
Status v. CA, making it conform with the General Banking
contract
Security or to Custody and Law of 2000.
ensure the right safekeeping.
of a party to Fixed, savings and current deposits in banks
property or to
Purpose Fixed, savings and current deposits in banks and
recover in case
of favorable other similar institutions are not true deposits but
judgment. are considered simple loans because they earn
interest (NCC, Art. 1980). Bank deposits are in the
Movables or Movables only nature of irregular deposit but they are really
immovables but loans governed by the law on loans (De Leon,
Subject 2013) (1997, 1998, 2009 Bar).
generally
Matter
immovable.
NOTE: An irregular deposit is a deposit in which
Always onerous Generally the depositary is not to return the specific money
gratuitous but deposited, but he is to return an equal sum to the
Cause may be depositor.
compensated.
Nature of advance payment in a contract of
When must Upon order of Upon demand of sale
the thing the court or depositor.
be when litigation A so called deposit of an advance payment in the
returned is ended. case of a sale is not the deposit contemplated
Person who has Depositor or under Art. 1962. It is that advance payment upon
In whose which ownership is transferred to the seller once
a right or in third person
behalf it is it is given subject to the completion of payment by
behalf of the designated.
held the buyer under an agreement (Cruz v. Auditor
winner.
General, G.R. No. L-12233, May 30, 1959).
Ownership of the thing deposited in a contract
of deposit PARTIES TO A CONTRACT OF DEPOSIT

The depositor need not be the owner of the thing 1. Depositary – to whom the thing is
deposited because the purpose of the contract is deposited; and
safekeeping and not transfer of ownership (NCC, 2. Depositor – the one who deposits the thing.
Art. 1984).
Effects of incapacity of the depositary or
NOTE: A deposit may also be made by two or depositor
more persons each of whom believes himself

597
 CIVIL LAW
1. If the depositary is capacitated, he is subject
to all the obligations of a depositary whether
the depositor is capacitated or not (NCC, Art.
1970); and
NOTE: Under the law, “persons who are
capable cannot allege the incapacity of those
with whom they contracted” (NCC, Art. 1397).
2. If the depositary is incapacitated, he does not
incur the obligation of a depositary. However,
he is liable to (1) return the deposited while
still in his possession; or (2) pay the depositor
the 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, in which case the
depositor may only bring an action against
him for its recovery (NCC, Art. 1971).
As to depositor:
He can exercise a reinvindicatory action at any
time either against the depositary, if the thing
deposited is still in the latter’s possession against
a third person who acquired the thing provided
that such third person acted in bad faith. If the
thing can no longer be restored, the depositor will
have the right to demand payment by which the
depositary may have enriched himself with the
thing or its price.
A guardian is not a depositary of the ward’s
property
He is not holding the funds of the ward merely for
safekeeping exclusively but also intended for the
latter’s maintenance and support. Losses, if any
without the fault of the guardian shall be deducted
from the funds of the ward (Philippine Trust Co. v.
Ballesteros, G.R. No. L-8261, April 20, 1956).
Obligations of the depositor
1. Payment for necessary expenses for
preservation:
a. If the deposit is gratuitous – depositor
must reimburse depositary; and
b. With compensation – no need for
reimbursement; expenses are borne by
depositary.
2. GR: Depositor must pay losses incurred by
depositary due to the character of the thing
deposited.
XPNs:
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
a. When at the time of deposit, the depositor
was not aware of the dangerous character
of the thing or was not expected to know
it;
b. When the depositor notified the
depositary; or
c. When the depositary was aware of it
without advice from the depositor.
3. In case of an onerous deposit, to pay the
compensation agreed upon as consideration
for the deposit.
Diligence required in a contract of deposit
The diligence required of a depositary is that
agreed upon by the parties, who may limit or
expand the degree of diligence required. In the
absence of any stipulation, the degree of diligence
required is lower if the deposit is gratuitous and
higher if the deposit is with compensation (NCC,
Art. 1972). Ordinarily, the depositary must
exercise over the thing deposited the same
diligence he would exercise over his property.
Loss through force majeure or expropriation
If the depositary by force majeure or government
order loses the thing and receives money or
another thing in its place, he shall deliver the sum
or other thing to the depositor (NCC, Art. 1990).
Manner of deposit
The depositary may change the manner of the
deposit if he may reasonably presume that the
depositor would consent to the change if the latter
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 (NCC,
Art. 1974).
Right of depositary to commingle
The depositary may commingle grain or other
articles of the same kind and quality, in which case
the various depositors shall own or have a
proportionate interest in the mass (NCC, Art.
1976).
DEPOSITARY’S RIGHT OF RETENTION
Right of the depositary to retain the thing in
pledge
The depositary has the right to retain the thing in
pledge until full payment of what may be due him
598
 CREDIT TRANSACTIONS
by reason of the deposit (NCC, Art. 1994). This is
an example of pledge created by operation of law
(NCC, Art. 2121).
Duty of the depositary’s heir who sold the
thing deposited in good faith
The depositor’s heir who in good faith may have
sold the thing 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 (NCC, Art. 1991).
The provision applies only when the depositary
has died and left heir/s who took possession of
the thing in the concept of an owner and sold it in
good faith to a third person.
NOTE: The word “depositor’s” in this part should
be read as “depositary’s” (De Leon, 2013). If the
heir acted in bad faith he is liable for damages. The
sale or appropriation of the thing deposited
constitutes estafa [(RPC, Art. 315 (b)].
To whom it must be returned
1. The depositor, to his heirs and successors, or
to the person who may have been designated
in the contract (NCC, Art. 1972);
2. If the depositor was incapacitated at the time
of making the deposit, to his guardian or
administrator or to the depositor himself
should he acquire capacity (NCC, Art. 1970,);
3. Even if the depositor had capacity at the time
of making the deposit but he subsequently
loses his capacity during the deposit, the thing
must be returned to his legal representative
(NCC, Art.1986); or
4. Two or more persons each claiming to be
entitled to a thing may deposit the same with
a third person. In such case, the third person
assumes the obligation to deliver to the one to
whom it belongs.
NOTE: The action to compel the depositors to
settle their conflicting claims among
themselves would be in the nature of an
interpleader (Sec. 1, Rule 62, Rules of Court).
Two or more depositors
When there are two or more depositors, if they
are not solidary, and the thing admits of division,
each one cannot demand more than his share
(NCC, Art. 1985).
599
When there is solidarity or the thing does not
admit of division, the provisions of Articles 1212
and 1214 shall govern. However, if there is a
stipulation that the thing should be returned to
one of the depositors, the depositary shall return
it only to the person designated (NCC, Art. 1985).
Accordingly, anyone of the depositors, by himself
and on behalf of the others, may ask the
restitution of the thing deposited in such case,
delivery to a single depositor will suffice to
discharge the depositary from the obligation even
as far as the other depositors are concerned
(Rabuya, 2017).
Proving the ownership of the thing deposited
GR: The depositary cannot demand that the
depositor should prove his ownership of the thing
deposited.
XPN: Should he discover that the thing has been
stolen and who its true owner is, he must advise
the latter of the deposit.
NOTE: If the depositary has reasonable grounds to
believe that the thing has not been lawfully
acquired by the depositor, the former may return
the same.
If the depositary knew the identity of the
owner of the thing deposited
The depositary may not return the thing to the
owner should he knew of the identity of the latter.
He is not authorized to return the thing
unceremoniously to the alleged owner without the
knowledge of the depositor. His duty is merely to
advise the owner of the deposit.
If the depositor insists on his ownership as against
the true owner, the depositary may file an
interpleader suit against both of them to avoid
responsibility. If the identity of the true owner
cannot be ascertained, the depositary may return
the thing to the depositor (Pineda, 2006).
Where it must be returned
GR: The thing deposited must be returned at the
place agreed upon.
XPN: In the absence of stipulation, at the place
where the thing deposited might be, even if it
should not be the same place where the original
deposit was made provided the transfer was
accomplished without malice on the part of the
depositary (NCC, Art. 1987).
 CIVIL LAW
When it must be returned
GR: The thing deposited should be returned upon
demand or at will, whether or not a period has
been stipulated.
XPNs:
1. The thing is judicially attached while in the
depositary’s possession;
2. The depositary was notified of the opposition
of a third person to the return or the removal
of the thing deposited (NCC, Art. 1988);
3. When the thing is stolen and the period of 30
days from notice to the true owner for him to
claim it had not yet lapsed, the depositary
cannot return the thing deposited to the
depositor. This is intended to protect the true
owner; and
4. In case of gratuitous deposit, if the depositary
has a justifiable reason for not keeping the
deposit. If the depositor refuses, the
depositary may secure its consignation from
the court (NCC, Art. 1989).
VOLUNTARY DEPOSIT
It is a contract or judicial relation wherein a thing
is delivered at the will of a person (depositor) to
another (depositary) for the purpose of
safekeeping by the latter coupled with the
obligation of returning it upon demand (Pineda,
2006).
A voluntary deposit is that wherein the delivery is
made by the will of the depositor (NCC, Art. 1968).
A deposit may also be made by two or more
persons each of whom believes himself entitled to
the thing deposited with a third person, who shall
deliver it in a proper case to the one to whom it
belongs (NCC, Art. 1968).
Form of contract of deposit
A contract of deposit may be entered into orally or
in writing (NCC, Art. 1969).
NOTE: The above article follows the general rule
that contracts shall be obligatory in whatever
form they may have been entered into provided
all the essential requisites for their validity are
present (NCC, Art. 1356). Thus, except for the
delivery of the thing, there are no formalities
required for the existence of the contract (De Leon,
2013).
Difference between voluntary and necessary
deposit
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
There is a freedom of action which is implied in
the phrase “delivery is made by the will of the
depositor,” unlike in the case of a necessary
deposit. In other words, the depositor in a
voluntary deposit is free to choose the depositary.
Obligations of a depositary in voluntary
deposit
1. To keep the thing safely and return it (NCC,
Art. 1972);
2. Exercise same diligence as he would
exercise over his own property;
3. GR: Not to deposit the thing with a third
person.
XPNs:
a. When expressly authorized by
stipulation; and
b. When the preservation of the thing
requires its use (NCC, Art. 1977).
NOTE: Depositary is liable for the loss if:
a. He deposits the thing to a third person
without authority, even though the
loss is due to fortuitous events; or
b. He deposits the thing to a third person
who is manifestly careless or unfit
although there is authority.
4. If the thing should earn interest:
a. Collect interest as it falls due; and
b. Take steps to preserve the value and
rights corresponding to it.
5. Not to commingle things if so stipulated;
6. GR: Not to make use of the thing deposited;
XPNs:
a. When preservation of thing deposited
requires its use;
b. When authorized by depositor.
NOTE:
GR: In such case, it is no longer a deposit
but a contract of loan or commodatum, as
the case may be.
XPN: If the principal reason for the contract
is still safekeeping, it is still deposit.
7. When the thing deposited is delivered
sealed and closed:
a. Return the thing in the same
condition;
b. Pay damages if seal be broken through
his fault; and
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 CREDIT TRANSACTIONS
c. Keep the secret of the deposit when
seal is broken w/ or w/o his fault
(NCC, Art. 1981).
NOTE: However, the depositary is
authorized to open the seal or lock when:
i. There is presumed authority (i.e. the
key is delivered);
ii. Out of necessity (NCC, Art. 1982).
iii. When the instructions of the depositor
as regards the deposit cannot be
executed without opening the box or
receptacle (Rabuya, 2015).
8. GR: Pay for any loss or damage that may
arise due to his fault;
XPN: Liability of loss through fortuitous event
XPNs to XPN: Even in case of loss through
fortuitous event, still liable if:
a. If it is so stipulated;
b. He uses the thing without depositor’s
permission;
c. He delays its return; or
d. He allows others to use it (even if he
himself is authorized to use it) (NCC, Art.
1979).
9. Return the thing deposited with all its
fruits, accessions, and accessories (NCC, Art.
1983); and
10. Pay interest on sums converted to personal
use if the deposit consists of money.
Extinguishment of voluntary deposit
1. Loss or destruction of thing deposited;
2. In gratuitous deposit, upon death of either
depositor or depositary (NCC, Art. 1995); or
3. Other causes.
e.g. return of thing, novation, expiration of
the term, fulfillment of resolutory condition
NECESSARY DEPOSIT (2007 BAR)
A necessary (involuntary) deposit is one wherein
the deposit is not made by the will of the
depositor but created by force of the law or on
occasion of a calamity.
When is deposit considered as necessary
1. When it is in compliance with a legal
obligation;
601
2. It takes place on the occasion of any calamity,
such as fire, storm, flood, pillage, shipwreck,
or other similar events (NCC, Art. 1996);
3. Made by passengers with common carriers; or
4. Made by travelers in hotels or inns (NCC, Art.
1998).
Governing law in cases of necessary deposit
1. In compliance with a legal obligation –
Govered by the law establishing it, and in case
of deficiency, the rules on voluntary deposit;
and
2. On occasion of a calamity – Governed by the
provisions concerning voluntary deposit
(NCC, Art. 1968–1971).
Keepers of hotels or inns
1. The keepers of hotels or inns shall be held
responsible for loss of thing in case of deposit
when both are present:
a. They have been previously informed by
guest about the effects the latter brought
in; and
b. The guest has taken precautions
prescribed for their safekeeping.
2. They are liable regardless of the degree of care
exercised when:
a. Loss or injury is caused by his employees
or even by strangers (NCC, Art. 2000); or
b. Loss is caused by act of thief or robber
when there is no use of arms or
irresistible force (NCC, Art. 2001).
3. The keepers of hotels or inns are not liable for
loss of thing in case of deposit when:
a. Loss or injury is caused by force majeure
(NCC, Art. 2000);
b. Loss due to the acts of guests, his family,
his employees, or visitors (NCC, Art.
2002); and
c. Loss arises from the character of the
goods (NCC, Art. 2002).
NOTE: Liability by the hotel or innkeeper
commences as soon as there is evident intention
on the part of the travellers to avail himself of the
accommodations of the hotel or inn. It does not
matter whether compensation has already been
paid or not, whether the guest has already
partaken of food and drink or not (Paras, 2008).
Posting of notice of exempt from liability
Hotel/Inn-keepers cannot escape or limit liability
by stipulation or the posting of notices. Any
 CIVIL LAW
stipulation between the hotel keeper and the
guest whereby the responsibility of the former
(NCC, Arts. 1998-2001) is suppressed or
diminished shall be void (NCC, Art. 2003). The
hotel or inn keepers are still liable regardless of
the posting of notices exempting themselves from
any liability.
Extent of liability of the hotel keepers in case
of loss
1. It covers liability in hotel rooms which come
under the term “baggage” or articles such as
clothing as are ordinarily used by travelers;
and
2. It includes lost or damages in hotels annexes
such as vehicles in the hotel’s garage.
Q: Venus was the owner of Suzuki Grand Vitara
which was insured with Pioneer Insurance for
loss and damage. When she arrived and
checked in at Heaven’s Hotel before midnight,
its parking attendant, John, got the key to said
Vitara. At about one in the morning, Venus was
awakened in her room by a telephone call
from the Hotel Chief Security Officer who
informed her that her Vitara was carnapped
while it was parked unattended at the parking
area of the bank near the hotel. May the
insurance company, by right of subrogation,
recover from the hotel the damages it paid to
Venus?
A: YES. The contract of necessary deposit existed
between the insured Venus and the hotel. Article
1962, in relation to Article 1998, of the Civil Code
defines this contract. Plainly, Venus deposited for
safekeeping her vehicle through the hotel’s
employee. From Venus’ delivery, when she handed
the keys to John, the contract was perfected. Thus,
there is the obligation of safely keeping it and
returning it. Ultimately, the hotel is liable for the
loss of Venus’ vehicle (Durban Apartments
Corporation v. Pioneer Insurance Surety
Corporation, G.R. No. 179419, January 12, 2011).
Right to retain given to hotel-keeper or inn-
keeper
The hotel-keeper has a right to retain the things
brought into the hotel by the guest, as a security
for credits on account of lodging, and supplies
usually furnished to hotel guests (NCC, Art. 2004).
NOTE: This is in the nature of the pledge created
by operation of law. The act of obtaining food or
accommodation in a hotel or inn without paying
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
therefor constitutes estafa [RPC, Art. 135, Sec.
(2)(e)].
Where goods are brought to the inn with notice or
knowledge on the part of the innkeeper that they
are the property of a third person, no lien
attaches, except under a statute extending lien to
property under control of guest (Rabuya, 2017).
JUDICIAL DEPOSIT
Judicial deposit (sequestration) takes place when
an attachment or seizure of property in litigation
is ordered by a court (NCC, Art. 2005).
It is auxiliary to a case pending in court. The
purpose is to maintain the status quo during the
pendency of the litigation or to insure the right of
the parties to the property in case of a favorable
judgment (De Leon, 2013).
Object of judicial deposit
The object of judicial sequestration may be
movables or immovable (NCC, Art. 2006).
Q: When will the properties sequestered cease
to be in custodia legis?
A: They cease to be in custodia legis when the
insolvency proceedings of a partnership
terminated because the assignee in insolvency has
returned the remaining assets to the firm, said
properties cease to be in custodia legis (Ng Cho
Cio, et al. v. Ng Diong & Hodges, L-14832, January
28, 1961).
Obligation of depositary of sequestered
property
The depositary of sequestered property is the
person appointed by the court (NCC, Art. 2007). He
has the obligation to take care of the property
with the diligence of a good father of a family
(NCC, Art. 2008) and he may not be relieved of his
responsibility until the litigation is ended or the
court so orders (NCC, Art. 2007; De Leon, 2013).
Applicable Law
The law on judicial deposit is remedial or
procedural in nature. Hence, the Rules of Court are
applicable. The relevant provisions of the Rules of
Court are Rule 57 (Preliminary Attachment), Rule
59 (Receivership), and Rule 60 (Replevin). Rule 127
provides for attachment in criminal cases (De
Leon, 2013).
602
 CREDIT TRANSACTIONS
GUARANTY AND SURETYSHIP
Guaranty
Guaranty is a contract where a person called the
guarantor binds himself to the creditor to fulfill
the obligation of the principal debtor in case the
latter should fail to do so (NCC, Art 2047).
Suretyship
Suretyship is a contract where a person binds
himself solidarily with principal debtor.
Q: Asia Paces Corporation (ASPAC) and Paces
Industrial Corporation (PICO) entered into a
sub-contracting agreement with the Electrical
Projects Company of Libya (ELPCO for the
construction and erection of a double
circuit bundle phase conductor transmission
line in the country of Libya. To finance
its working capital requirements, ASPAC
obtained loans from foreign banks Banque
Indosuez and PCI Capital (Hong Kong) Limited
(PCI Capital) which were secured by several
Letters of Guarantee issued by Trade and
Investment Development Corporation of the
Philippines (TIDCORP), then Philippine Export
and Foreign Loan Guarantee Corp. Under the
Letters of Guarantee, TIDCORP irrevocably and
unconditionally guaranteed full payment of
ASPAC’s loan obligations to Banque Indosuez
and PCI Capital in the event of default by the
latter. As a condition precedent to the issuance
by TIDCORP of the Letters of Guarantee,
ASPAC, PICO, and ASPAC’s President, Nicolas C.
Balderrama (Balderrama) had to execute
several Deeds of Undertaking, binding
themselves to jointly and severally pay
TIDCORP for whatever damages or liabilities it
may incur under the aforementioned letters.
In the same light, ASPAC, as principal debtor,
entered into surety agreements (Surety
Bonds) with Paramount, Phoenix, Mega Pacific
and Fortune (bonding companies), as sureties,
also holding themselves solidarily liable to
TIDCORP, as creditor, for whatever damages or
liabilities the latter may incur under the
Letters of Guarantee. ASPAC
eventually defaulted on its loan obligations to
Banque Indosuez and PCI Capital. Demand
letters to the bonding companies were sent but
to no avail. Taking into account the
moratorium request issued by the Minister of
Finance of the Republic of the Philippines,
TIDCORP and its various creditor banks, such
603
as Banque Indosuez and PCI Capital, forged a
Restructuring Agreement extending the
maturity dates of the Letters of Guarantee. The
bonding companies were not privy to the
Restructuring Agreement and, hence, did not
give their consent to the payment extensions.
Nevertheless, following new payment
schedules, TIDCORP fully settled its
obligations. Seeking payment for the damages
and liabilities it had incurred under the
Letters of Guarantee and with its previous
demands therefor left unheeded, TIIDCORP
filed a collection case against: (a) ASPAC, PICO,
and Balderrama on account of their
obligations under the deeds of undertaking;
and (b) the bonding companies on account of
their obligations under the Surety Bonds.
Whether or not the bonding companies’
liabilities to TIDCORP under the Surety Bonds
have been extinguished by the payment
extensions granted by Banque Indosuez and
PCI Capital to TIDCORP under the
Restructuring Agreement.
A: NO. The Court finds that the payment
extensions granted by Banque Indosuez and PCI
Capital to TIDCORP under the Restructuring
Agreement did not have the effect of extinguishing
the bonding companies’ obligations to TIDCORP
under the Surety Bonds, notwithstanding the fact
that said extensions were made without their
consent. This is because Article 2079 of the Civil
Code refers to a payment extension granted by the
creditor to the principal debtor without the
consent of the guarantor or surety. In this case, the
Surety Bonds are suretyship contracts which
secure the debt of ASPAC, the principal debtor,
under the Deeds of Undertaking to pay TIDCORP,
the creditor, the damages and liabilities it may
incur under the Letters of Guarantee, within the
bounds of the bonds’ respective coverage periods
and amounts. No payment extension was,
however, granted by TIDCORP in favor of ASPAC
in this regard; hence, Article 2079 of the Civil Code
should not be applied with respect to the bonding
companies’ liabilities to TIDCORP under the
Surety Bonds. (Trade and Investment Development
Corporation of the Philippines v. Asia Paces
Corporation, G.R. No. 187403, February 12, 2014)
Q. The instant petition originated from a
Complaint for Breach of Contract with
Damages and Prayer for Preliminary
Injunction and Temporary Restraining Order
filed by Nissan Specialist Sales Corporation
and its President and General Manager,
Reynaldo A. Orimaco, against herein
respondents Universal Motors Corporation
 CIVIL LAW
(UMC), Rodrigo T. Janeo, Jr., Gerardo Gelle, an independent liability as a regular
Nissan Cagayan de Oro Distributors, Inc., agreement to pay the party to the contract.
Jefferson U. Rolida, and Peter Yap. The obligation of the
temporary restraining order (TRO) prayed for principal if he fails to
was eventually issued by the RTC upon the do so.
posting by NSSC and Orimaco of a
P1,000,000.00 injunction bond issued by their Guarantor is Surety is primarily
surety, CGAC. The TRO enjoined respondents secondarily liable. liable.
from selling, dealing, and marketing all models
of motor vehicles and spare parts of Nissan, Guarantor binds Surety undertakes to
and from terminating the dealer agreement himself to pay if the pay if principal
between UMC and NSSC and restrained UMC principal cannot pay. does not pay.
from supplying and doing trading transactions
with NCOD, which, in turn, was enjoined from Insurer of solvency of Insurer of the debt.
entering and doing business on Nissan debtor.
Products within the dealership territory of
NSSC as defined in the Dealer Agreement. The Guarantor can avail of Surety cannot avail of
TRO was eventually converted into a writ of the benefit of the benefit of
preliminary injunction. Respondents filed a excussion and division excussion and division.
petition for certiorari and prohibition before in case creditor
the CA and assail the issuance of the aforesaid proceeds against him.
injunctive writ. The CA rendered a Decision
holding that the RTC committed grave abuse of Similarity between guaranty and suretyship
discretion in issuing the writ absent a clear
legal right thereto on the part of NSSC and Both guarantor and surety promise or undertake
Orimaco. Consequently, the Writ of to answer for the debt, default or miscarriage of
Preliminary Injunction issued by the RTC was another person.
ordered dissolved. Respondents filed an
application for damages against the injunction Guaranty v. Warranty
bond issued by CGAC in the amount of
P1,000,000.00. Is CGAC liable? GUARANTY WARRANTY
A contract by which a An undertaking that
A. Yes. That CGAC’s financial standing differs from person is bound to the title, quality or
that of NSSC does not negate the order of another for the quantity of the subject
execution pending appeal. As the latter’s surety, fulfillment of a matter of a contract is
CGAC is considered by law as being the same party promise or what it is represented
as the debtor in relation to whatever is adjudged undertaking of a third to be, and relates to
touching the obligation of the latter, and their person. some agreement made
liabilities are interwoven as to be inseparable. ordinarily by the party
Verily, in a contract of suretyship, one lends his who makes the
credit by joining in the principal debtor’s warranty.
obligation so as to render himself directly and
primarily responsible with him, and without NOTE: In case of guaranty, the guarantor must be
reference to the solvency of the principal. Thus, a person distinct from the debtor because a
execution pending appeal against NSSC means that person cannot be the personal guarantor of
the same course of action is warranted against its himself. A person cannot be both the primary
surety, CGAC. The same reason stands for CGAC’s debtor and the guarantor of his own debt as this is
other principal, Orimaco, who was determined to inconsistent with the very purpose of a guarantee
have permanently left the country with his family which is for the creditor to proceed against a third
to evade execution of any judgment against him. person if the debtor defaults in his obligation.
(Centennial Guaranty Corporation v. Universal
Motors Corporation, G.R. No. 189358, October 8, Unilateral character of guaranty
2014)
The contract of guaranty may be undertaken
Guaranty v. Suretyship (1992, 1997, 2010 Bar) without the knowledge of the principal debtor. It
exists for the benefit of the creditor and not for the
GUARANTY SURETYSHIP benefit of the principal who is not a party to the
Liability depends upon Surety assumes contract of guaranty. The creditor has every right

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 604
 CREDIT TRANSACTIONS
to take all possible measures to secure the
payment of his credit. Hence, it can be constituted
without the knowledge and even against the will
of the principal debtor (NCC, Arts. 2050, 1236, and
1237).
The contract is unilateral because what arises
therefrom are solely obligations on the part of the
guarantor with relation to the creditor, although
its fulfillment or consummation gives rise to
obligation on the part of the person guaranteed
with respect to the guarantor (Rabuya, 2017).
NOTE: A guarantor can recover from the debtor
what the former had to pay the creditor, even if
the guaranty was without the debtor’s consent or
against his will, but the recovery will only be to
the extent that the debtor had been benefited
(NCC, Arts.1236 and 1237; De Guzman v. Santos,
G.R. No. 45571; June 30, 1939).
Gratuitous character of guaranty
A guaranty is gratuitous, unless there is a
stipulation to the contrary (NCC, Art. 2048).
Guaranty or surety agreement is regarded valid
despite the absence of any direct consideration
received by the guarantor or surety, such
consideration need not pass directly to the
guarantor; a consideration moving to the principal
will suffice.
Kinds of guaranty
1. General classification
a. Personal – A guaranty where an individual
personally assumes the fulfillment of the
principal obligation; or
b. Real – The guaranty is property, movable,
or immovable.
2. As to its origin
a. Conventional – It is constituted by
agreement of the parties [NCC, Art.
2051(1)]; or
b. Legal – Imposed by virtue of a provision
of law
c. Judicial – Required by a court to
guarantee the eventual right of the parties
in a case.
2. As to consideration
a. Gratuitous – The guarantor does not
receive any price or remuneration for
acting as such (NCC, Art. 2048); or
605
b. Onerous – One where the guarantor
receives valuable consideration for his
guaranty.
3. As to person
a. Single – It is constituted solely to
guarantee or secure performance by the
debtor of the principal obligation (NCC,
Art. 2051, par. 2); or
b. Double or subguaranty – It is constituted
to secure the fulfillment of the obligation
of a guarantor by a sub-guarantor.
4. As to scope and extent
a. Definite – One where the guaranty is
limited to the principal obligation only, or
to a specific portion thereof (NCC, Art,
2055, par. 2); or
b. Indefinite or simple – One where the
guaranty included all the accessory
obligations of the principal, e.g. costs,
including judicial costs.
Obligations that may be secured in a contract
of guaranty
1. Valid obligations;
2. Voidable obligations, unless it is annulled by
proper action in court (NCC, Art. 1390);
3. Unenforceable obligations (NCC, Art. 1403,);
4. Natural obligations – When the debtor
himself offers a guaranty for his natural
obligation, he impliedly recognizes his
liability, thereby transforming the obligation
from a natural into a civil one;
5. Conditional obligations – Only in case of
suspensive condition because upon its
happening, it gives rise to the principal and
hence, gives rise also to the accessory
obligation.
Guaranty for present and future debts
There can be a guaranty for:
1. Present debts; and
2. Future debts (NCC, Art. 2053), even if the
amount is not yet known.
Liquidated debt – a debt is liquidated when it is
for a price fixed in a contract for the delivery of
future goods and the seller is now ready to deliver
said goods within the period stipulated (Smith,
Bell & Co. v. National Bank, G.R. No. 16482,
February 1, 1922).
Validity of the principal contract
 CIVIL LAW
A valid principal obligation necessary in contract
of guaranty 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.
Absence of consideration to guarantor
A guaranty or surety agreement 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 (Garcia Jr., v.CA, G.R. No. 80201.
November 20, 1990).
Absence of direct or personal interest of
guarantor
It is never necessary that he should receive any
part of benefit, if such there be, accruing to the
principal (Willex Plastic Industries Corp v CA, G.R.
No. 103066, April 25, 1996).
Statute of fraud in a contract of guaranty
A contract of guaranty must be expressed and in
writing [NCC, Art. 1403(2)]; otherwise, it is
unenforceable unless ratified. It need not be in a
public instrument.
NOTE: The statute of Frauds does not require that
the contract of guaranty itself be in writing. What
it requires to be in writing in order for the
contract of guaranty to be enforceable is the
undertelling or special promise of guarantor,
which must be signed by him (Rabuya, 2017).
Acceptance of the creditor in a contract of
guaranty
GR: The acceptance of the creditor is not essential
in contract of guaranty.
XPN: When there is a mere offer of a guaranty or a
conditional guaranty wherein the obligation does
not become binding until it is accepted by the
creditor and notice of such acceptance is given to
the guarantor.
Construction of a contract of guaranty or
surety
GR: In case of doubt, a contract of guaranty or
surety should be strictly construed against the
creditor and liberal in favor of the guarantor or
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
surety; terms cannot be extended beyond the
stipulation.
XPN: In cases of compensated sureties.
RATIO: A contract of guaranty is unilateral
PARTIES TO A CONTRACT OF GUARANTY
1. Guarantor; and
2. Creditor.
Guarantor
The guarantor is the person who is bound to
another for the fulfillment of a promise or
undertaking of a third person.
Qualifications of a guarantor
1. Possesses integrity;
2. Capacity to bind himself; and
3. Has sufficient property to answer for the
obligation which he guarantees.
NOTE: The qualifications need only be present at
the time of the perfection of the contract. The
creditor can naturally waive the requirements, for
right in general is waivable (Paras, 2008).
Loss of qualification of the guarantor
GR: The qualification of the guarantor is lost
through conviction of a crime involving
dishonesty or insolvency.
XPN: When the creditor had been selected by the
creditor. The supervening loss of required
qualifications will not generally end the guaranty.
However, the creditor is given the right to demand
substitution of guarantor (NCC, Art. 2057).
Married woman as a guarantor
GR: A married woman can be a guarantor without
the consent of her husband but binds only her
separate property (FC, Art. 145).
XPNs:
1. If with her husband’s consent, it binds the
community or conjugal partnership property.
2. Without husband’s consent, in cases provided
for by law, such as when the guaranty has
redounded to the benefit of the family.
Rights of a third person (guarantor or surety)
who pays for the debt guaranteed or secured
606
 CREDIT TRANSACTIONS
1. If payment is made without the knowledge or
against the will of the debtor:
a. Guarantor can recover only insofar as the
payment has been beneficial to the debtor
(NCC, Art. 1236); and
b. Guarantor cannot compel the creditor to
subrogate him in his rights (NCC, Art.
1237).
2. If payment is made with the knowledge or
consent of the debtor – The guarantor is
subrogated to all the rights which creditor
had against the debtor.
Extent of guarantor’s liability
1. Where the guaranty is definite – It is limited
in whole or in part to the principal debt to
the exclusion of accessories; and
2. Where the guaranty is indefinite or simple – It
shall comprise not only the principal
obligation but also all its accessories,
including the judicial costs provided that the
guarantor shall only be liable for those cost
incurred after he has been judicially required
to pay.
Situations when a guarantor may lawfully be
required to pay more than the original
obligation of the principal debtor
1. If upon demand, a guarantor fails to pay the
obligation, he can be held liable for interest,
even if in thus paying, the liability becomes
more than that in the principal obligation.
The increased liability is not because of the
contract but because of the default and the
necessity for judicial collection. It should be
noted, however, that the interest runs from
the time the complaint is filed, not from the
time the debt becomes due and demandable
(Tagawa v. Aldanese, G.R. No.18636,
September 28, 1922);
2. Creditors suing on a surety bond may recover
from the surety, as part of their damages,
interest at the legal rate, judicial cost and
attorney’s fees when appropriate even if the
surety would thereby become liable to pay
more than the total amount stipulated in the
bond (Dino v. CA, G.R. No. 89775, November
26, 1995); and
3. A penalty clause may also increase the
liability of the surety (General Insurance
Surety Co. v. Republic, G.R. No. L-13873,
January 31, 1963).
Effect in case of death of a party
607
Guarantor’s death – His heirs will still liable to the
extent of the value of the inheritance because the
obligation is not purely personal and is therefore
transmissible (Estate of Hemady v. Luzon Surety &
Ins. Co., G.R. No. L-8437, November 28, 1956).
NOTE: An action against a guarantor who dies
during pendency of the same, being one for the
recovery of money or debt, should be dismissed,
but may be instituted in the proceeding for the
settlement of his estate (Villegas v. Zapantaand
Zorilla, L-11056, December 26, 1958).
Debtor’s death – his obligation will survive. His
estate will be answerable. If the estate has no
sufficient assets, the guarantor shall be liable.
Jurisdiction in an action based on a contract of
guaranty
The guarantor shall be subject to the jurisdiction
of the court of the place where the obligation is to
be complied with.
EFFECTS OF GUARANTY : BENEFIT OF
EXCUSSION
Benefit of excussion
The benefit of excussion is a 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 legal
remedies against such debtor (NCC, Art. 2058)
(Bar).
Requisites of benefit of exhaustion or
excussion
1. The guarantor must set up the right of
excussion against the creditor upon the
latter’s demand for payment from him; and
2. He must point out to the creditor the available
property of the debtor (not exempted from
execution) found within the Philippine
territory (NCC, Art. 2060).
NOTE: Excussion may only be invoked after legal
remedies against principal debtor have been
expanded. The creditor must first obtain a
judgment against the principal debtor before
assuming to run after the alleged guarantor, for
obviously the exhaustion of the principal’s
property, cannot even begin to take place before
judgment has been obtained (Rabuya, 2017).
Effect of the creditor’s negligence in
exhausting the properties of the debtor
 CIVIL LAW

He shall suffer the loss to the extent of the value of

the pointed property which was not exhausted by
the creditor (NCC, Art. 2061).

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 608
 LAND TITLES AND DEEDS
LAND TITLES AND DEEDS have been held in the same way before the
Spanish conquest, and never to have been public
land (Cariño v. Insular Government, 212 U.S., 449;
GENERAL PRINCIPLES 53 Law Ed., 594)

Q: On March 1980, Cornelio filed an

application for land registration of a parcel of
REGALIAN DOCTRINE (jura regalia)
agricultural land. During the trial, Cornelio
claimed that he and his predecessors-in-
All lands of whatever classification and other
interest had been in open, continuous,
natural resources not otherwise appearing to be
uninterrupted, public and adverse possession
clearly within private ownership are presumed to
and occupation of the land for more than 30
belong to the State which is the source of any
years. He likewise introduced a certification,
asserted right to ownership of land (Republic v.
dated February 1981 citing a presidential
Sin, G.R. No. 157485, March 26, 2014).
declaration that on June 1980, the subject
matter of the application was declared
Jura regalia means that the State is the original
alienable and disposable agricultural land.
proprietor of all lands and the general source of all
private titles. All claims of private title to land,
If you are the judge, will you grant the
save those acquired from native title, must be
application for land registration of Cornelio?
traced from some grant, whether express or
(2014 Bar)
implied, from the State. Absent a clear showing
that the land had been into private ownership
A: NO, I will not grant the application. To be
through the State’s imprimatur, such land is
entitled to register the parcel of land, the applicant
presumed to belong to State (Republic v. Santos,
must show that the land being applied for is an
G.R. No. 180027, July 18, 2012).
alienable land. At the time of the filing of the
application, the land has not yet been declared
NOTE: To prove that the subject property is
alienable by the state (Republic v. CA, G.R. No.
alienable and disposable land of the public
144057, January 17, 2005).
domain, applicant must:
Q: Can Cornelio acquire said agricultural land
(1) Present a Community Environment and
through acquisitive prescription, whether
Natural Resources Office Certificate
ordinary or extraordinary? (2014 Bar)
(CENRO);
(2) Prove that the DENR Secretary had
A: Cornelio may acquire the land by acquisitive
approved the land classification and
prescription only after it was declared part of
released the land of the public domain as
alienable land by the state by possession for the
alienable and disposable; and
required number of years through ordinary
(3) That the land subject of the application
prescription, which requires ten years of
for registration falls within the approved
possession in good faith with just title; or
area per verification through survey by
extraordinary prescription by possession for
the PENRO or CENRO. In addition, the
thirty years without need of any other condition
applicant for land registration must
(NCC, Art. 1134).
present a copy of the original
classification approved by the DENR
Native title
Secretary and certified as a true copy by
the legal custodian of the official records.
Refers to pre-conquest rights to lands and
domains which, as far back as memory reaches,
Exception to the Regalian Doctrine
have been held under a claim of private ownership
by Indigenous Cultural Communities/Indigenous
NOTE: The Regalian Doctrine does not negate
People (ICCs/IPs), have never been public lands
native title to lands held in private ownership
and are thus indisputably presumed to have been
since time immemorial (Cruz v. Secretary of
held that way since before the Spanish Conquest
Environment and Natural Resources, G.R. No.
[R.A. 8371, Sec. 3 (l)].
135385, December 6, 2000).
Time immemorial possession for native title
When as far back as testimony or memory goes,
the land has been held by individuals under a
claim of private ownership, it will be presumed to

609
 CIVIL LAW
Refers to a period when as far back as memory
can go, certain ICCs/IPs are known to have
occupied, possessed in the concept of owner, and
utilized a defined territory devolved to them, by
operation of customary law or inherited from
their ancestors, in accordance with their customs
and traditions [R.A. 8371, Sec. 3(p)].
Q: Socorro Orcullo was a grantee of a Free
Patent for a parcel of land in Cebu.
Subsequently, the subject lot was sold to SAAD
Agro-Industries, Inc. by one of Orcullo’s heirs.
Yet, the Solicitor General filed a complaint for
the annulment of the title and reversion of the
said lot on the ground that the issuance of the
free patent and title was irregular and
erroneous, following the discovery that the lot
is allegedly part of the timberland and forest
reserve. Decide on the case.
A: In instances where a parcel of land considered
to be inalienable land of the public domain is
found under private ownership,
the Government is allowed by law to file an
action for reversion in which the ultimate relief
sought is to revert the land to the government
pursuant to the Regalian doctrine.
Nevertheless, in applying the Regalian Doctrine,
the paramount considerations of fairness and due
process must be observed in every claim of right
by the Government against one of its citizens.
Respondent Orcullo in this case failed to show that
the subject lot is part of timberland or forest
reserve it adverted to (Saad Agro-Industries, Inc. v.
Republic of the Philippines, G.R. No. 152570,
September 27, 2006).
THE TORRENS SYSTEM OF REGISTRATION
The Torrens system title by registration takes the
place of "title by deeds" of the system under the
"general" law. A sale of land, for example, is
effected by a registered transfer, upon which a
certificate of title is issued. The certificate is
guaranteed by statute, and, with certain
exceptions, constitutes indefeasible title to the
land mentioned therein.
Under the old system the same sale would be
effected by a conveyance, depending for its
validity, apart from intrinsic flaws, on the
correctness of a long series of prior deeds, wills,
etc. The object of the Torrens system, them, is to
do away with the delay, uncertainty, and expense
of the old conveyancing system. (Grey Alba v. Dela
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Cruz citing Duffy & Eagleson on The Transfer of
Land Act, G.R. No. 5246, September 16, 1910).
Purpose of registration
To quiet title to land and to stop forever any
question of legality of title. The Torrens system
aims to decree land titles that shall be final,
irrevocable, and indisputable, and to relieve the
land of the burden of known and unknown claims
(J. Agcaoli, Property Registration Decree & Related
Laws : Land Titles and Deeds, 2011).
NOTE: The government has adopted the Torrens
system due to its being the most effective measure
to guarantee the integrity of land titles and to
protect their indefeasibility once the claim of
ownership is established and recognized
(Casimiro Development Corporation v. Nato Mateo,
G.R. No. 175485, July 27, 2011).
Nature land registration proceedings under
the Torrens System
The Torrens system is judicial in character and
not merely administrative. Judicial proceedings
for the registration of lands throughout the
Philippines shall be in rem and shall be based on
the generally accepted principles underlying the
Torrens system (P.D. 1529, Sec. 2).
Accordingly, all other interested persons are
notified of the proceedings by publication of the
notice of initial hearing. They also and have the
right to appear in opposition to such application.
A decree of registration that has become final shall
be deemed conclusive not only on the questions
actually contested and determined but also upon
all matters that might be litigated or decided in
the land registration proceedings.
Constructive notice upon registration
Every conveyance, mortgage, lease, lien,
attachment, order, judgment, instrument or entry
affecting registered land shall, if registered, filed
or entered in the office of the Register of Deeds for
the province or city where the land to which it
relates lies, be constructive notice to all persons
from the time of such registering, filing or entering
(P.D. 1529, Sec. 52).
Judicial and quas-judicial bodies covering land
registration under the Torrens system
1. Courts;
610
 LAND TITLES AND DEEDS
GR: RTCs have plenary jurisdiction over land
registration cases.
XPN: MeTCs, MTCCs, MTCs and MCTCs have
delegated jurisdiction to hear and determine
cadastral or land registration cases in the
following instances:
a. Where the lot sought to be registered is
not the subject of controversy; or
b. Where the lot is contested but the value
thereof does not exceed P100,000.00,
such value to be ascertained by the
affidavit of the claimant or by the
agreement of the respective claimants, if
there be more than one, or from the
corresponding tax declaration of the real
property (Sec. 34, B.P. 129, as amended
by Sec. 4, R.A. No. 7691)
2. Department of Environment and Natural
Resources (DENR);
3. Department of Justice (DOJ) through the
Land Registration Authority (LRA) and its
Register of Deeds;
4. Department of Land Reform (DLR); and
5. Department of Agriculture (DAR).
ORIGINAL REGISTRATION
Laws that govern land registration
1. Property Registration Decree (P.D. 1529, as
amended);
NOTE: P.D. 1529 amended and superseded
C.A. No. 496, otherwise known as the then
Land Registration Act.
2. Cadastral Act (Act 2259, as amended);
3. Public Land Act (C.A. No. 141, as amended);
4. Emancipation Decree (P.D. 27, as amended);
5. Comprehensive Agrarian Reform Law of 1988
(R.A. 6657); and
6. Indigenous Peoples Rights Act (R.A. 8371).
Original registration
A proceeding filed in the MTC where there is no
controversy or opposition, or contested lots
where the value of which does not exceed
P100,000.00 (Sec. 4, R.A. 7691) or in the RTC (as a
land registration court) when the value exceeds
P100,000 to determine title or ownership of land
on the basis of an application for registration or
611
answer/opposition by a claimant in a cadastral
registration.
Kinds of original registration
(a) Judicial/Voluntary/Ordinary - filing with
the proper court an application by the private
individual himself; and
(b) Administrative/Involuntary/Cadastral -
compulsory registration initiated by the
government, to adjudicate ownership of land
and involuntary on the part of the claimants,
but they are compelled to substantiate their
claim or interest through an answer.
Who may apply for registration
1. Those who by themselves or their
predecessors-in-interest have been in open,
continuous, exclusive, and notorious
possession and occupation of alienable and
disposable lands of the public domain under a
bona fide claim of ownership since June 12,
1945, or earlier (OCENPO);
2. Those who have acquired ownership over
private lands by prescription under the
provisions of existing laws;
3. Those who have acquired ownership of
private lands or abandoned river beds by
right of accession or accretion under the
existing laws; and
4. Those who have acquired ownership of land
by any other manner provided for by law.
Where the land is owned in common, all the co-
owners shall file the application jointly (P.D. 1529,
Sec. 14).
Q: Rosario filed her application for land
registration of a rice land that she had
inherited, owning and possessing it openly,
publicly, uninterruptedly, adversely against
the whole world, and in the concept of owner
since then. This was opposed by the The
Republic opposed claiming that Rosario failed
to occupy and possess the land for at least 30
years immediately preceding the filing of the
application; and that the land applied for,
being a portion of a river control system, that
could not be subject of appropriation or land
registration. Is land subject of application
susceptible of private acquisition?
A: NO. The land of the public domain, to be the
subject of appropriation, must be declared
alienable and disposable either by the President
or the Secretary of the DENR. Unless public land is
shown to have been reclassified or alienated to a
 CIVIL LAW
private person by the State, it remains part of the
inalienable public domain. Indeed, occupation
thereof in the concept of owner, no matter how
long, cannot ripen into ownership and be
registered as a title (Republic vs. De Joson, G.R. No.
163767, March 10, 2014)
Q: Mario applied for registration of his land. He
claims that he bought the land from Eduardo
who also claims that his great grandfather
owned the land. Mario submitted a CENRO
from DENR stating that the land is alienable
and disposable in 1982. However, the Republic
appealed claiming that Mario did not adhere to
the requirements of time required by the law
and he failed to proof that the land is an
alienable and disposable land. The Court ruled
in favor of the Republic stating that the
possession of the land before it is declared
alienable and disposable cannot be included in
the computation of possession of the land,
thus, Mario did not adhere to the period
required by law. Can Mario register his land?
A: NO. Mario failed to present sufficient evidence
to establish that they and their predecessors-in-
interest had been in possession of the land since
June 12, 1945. Without satisfying the requisite
character and period of possession—possession
and occupation that is open, continuous, exclusive,
and notorious since June 12, 1945, or earlier—the
land cannot be considered ipso jure converted to
private property even upon the subsequent
declaration of it as alienable and disposable.
Prescription never began to run against the State,
such that the land has remained ineligible for
registration under Sec. 14(1) of the Property
Registration Decree. Likewise, the land continues
to be ineligible for land registration under Sec.
14(2) of the Property Registration Decree unless
Congress enacts a law or the President issues a
proclamation declaring the land as no longer
intended for public service or for the development
of the national wealth (Malabanan v. Republic, G.R.
No. 179987, September 3, 2013) (Bersamin, J.).
Persons qualified for registration in case the
land is subject to:
1. Pacto de retro sale
GR: Vendor a retro may apply for registration.
XPN: Vendee a retro should the period for
redemption expire during pendency of
registration proceedings and ownership to
property is consolidated in vendee a retro.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
2. Trust
GR: Trustee may apply for registration.
XPN: Unless prohibited by the instrument
creating the trust.
NOTE: Trusteeship or trust is a fiduciary
relationship with respect to property which
involves the existence of equitable duties
imposed upon the holder of the title to the
property to deal with it for the benefit of
another.
3. Reserva troncal
Reservista has the right to apply for
registration but the reservable character of
the property will be annotated in the title.
NOTE: In reserva troncal, the ascendant who
inherits from his descendant any property
which the latter may have acquired by
gratuitous title from another ascendant, or a
brother or sister, is obliged to reserve such
property as he may have acquired by
operation of law for the benefit of relatives
who are within the third degree and who
belong to the line from which said property
came.
Q: Banco Filipino needs to acquire new real
properties to open new branch sites during the
expansion of its operations. However, Sections
25(a) and 34 of RA 337 imposed a limit to a
bank’s real estate investment to only 50% of
its capital assets. By doing so, three of its
major stockholders, organized and
incorporated Tala Realty that will “warehouse”
several of its properties; the latter will
purchase and hold the real properties of Banco
Filipino in trust. Sometime later, Tala Realty
denied the trust agreement, asserted
ownership, and claimed full title over the
properties, which prompted Banco Filipino to
file complaints for reconveyance against Tala
Realty. Will the reconveyance complaints filed
by Banco Filipino before the courts a quo can
be allowed to prosper?
A: NO. The implied trust agreement between
Banco Filipino and Tala Realty was “inexistent and
void for being contrary to law.” Ergo, Banco
Filipino cannot demand reconveyance of its
properties based on the said implied trust,
effectively depriving it of any cause of action. The
Clean Hands Doctrine will not allow the creation
or the use of a juridical relation such as a trust to
subvert, directly or indirectly, the law. Neither
612
 LAND TITLES AND DEEDS
Banco Filipino nor Tala Realty came to court with
clean hands; neither will obtain relief from the
court (Banco Filipino Savings v. Tala Realty
Services Corporation, G.R. No. 15866, September 9,
2013). [Perlas-Bernabe]
Eligibility of private corporations to hold
alienable lands of the public domain
Private corporations may not hold alienable lands
of the public domain. The word “persons” refer to
natural persons who are citizens of the
Philippines. Juridical or artificial persons are
excluded. Sec. 3, Art. XII of the 1987 Constitution
prohibits private corporations or associations
from holding alienable lands of the public domain
except by lease.
GR : Private corporations or associations may not
hold alienable lands of public domain except by
lease, for a period not exceeding 25 years,
renewable for not more than 25 years, and not to
exceed 1,000 hectares in area (Sec. 3, Art. XII, 1987
Constitution).
XPN : Where at the time the corporation acquired
land, its predecessor-in-interest had been in
possession and occupation thereof in the manner
and for the period prescribed by law as to entitle
him to registration in his name, then the
proscription against corporation acquiring
alienable lands of the public domain except
through lease does not apply for the land was no
longer public land but private property.
Q: Noynoy, Erap, Manny and Gibo are co-
owners of a parcel of land. May Manny seek
registration in his name of the land in its
entirety?
A: NO. Since a co-owner cannot be considered a
true owner of a specific portion until division or
partition is effected, he cannot file an application
for registration of the whole area without joining
the co-owners as applicants.
Q: In 1998, Iglesia ni Cristo filed its application
for Registration of Title before the MCTC which
the Republic opposed. The cadastral court
held that the essential elements for judicial
confirmation of an imperfect title over the
subject lot have been complied with. The CA
also held that the INC has been in continuous,
open, and peaceful possession and occupation
of the lot for more than 40 years. May a judicial
confirmation of imperfect title prosper when
the subject property has been declared as
alienable only after June 12, 1945?
613
A: In Naguit, the Court held a less stringent
requirement in the application of Sec. 14(1) of P.D.
1529 that the reckoning period for possession is
the actual possession of property and it is
sufficient that the property sought to be registered
is already alienable and disposable at the time the
application for registration of title is filed.
The possession of INC has been established not
only from 1952 and 1959 when it purchased the
respective halves of the subject lot, but is also
tacked on to the possession of its predecessors-in-
interest. These possessions and occupation—from
Sabuco, including those of his parents, to INC; and
from Sabuco to Badanguio to INC—had been in
the concept of owners: open, continuous,
exclusive, and notorious possession and
occupation under a bona fide claim of acquisition
of property. These had not been disturbed as
attested to by respondent’s witnesses (Republic of
the Philippines v. Iglesia ni Cristo, G.R. No. 180067,
June 30, 2009).
Adverse possession of land
Possession of land is adverse when it is open and
notorious. It is open when it is patent, visible, and
apparent and it is notorious when it is so
conspicuous that it is generally known and talked
of by public or the people in the neighborhood.
Q: An Emancipation Patent OCT was issued in
Remy’s favor. However, Madarieta filed a
complaint for annulment and cancellation of
the OCT against Remy before the DARAB,
alleging that the Department of Agrarian
Reform mistakenly included her husband’s lot
as part of Luspo’s property where Remy’s
house was constructed. What is the nature of
Remy’s possession of the subject land?
A: Remy possessed the subject land in the concept
of an owner. No objection was interposed against
his possession of the subject land and Remy did
not employ fraud in the issuance of the
emancipation patent and title. In fact, Madarieta
faulted the DAR, not him (Rementizo v. Heirs of
Vda. De Madarieta, G.R. No. 170318, January 15,
2009).
Sec. 14(1) v. Sec. 14(2) of P.D. 1529
In Malabanan v. Republic, the Court clarified the
difference between Sec. 14(1) and Sec. 14(2) of
P.D. 1529.
SEC. 14(1) SEC. 14(2)
 CIVIL LAW
Registration of Free Patent To any Does not own
Registration of title on
property on the basis of Natural Born more than 12
the basis of possession.
prescription. Citizen of the hectares of land;
Deals with possession Involves prescription as Philippines. Has continuously
and occupation in the a mode of acquiring occupied and
concept of an owner. ownership. cultivated, either
Extended under the by himself or his
Available both by P.D.
aegis of the P.D. 1529 predecessors-in-
1529 and the Civil
and the Public Land Act interest tract/s of
Code.
(PLA). agricultural public
Under Sec. 48(b) of the The 30-year period land subject to
PLA, as amended by involves extraordinary disposition.
R.A. 1472, the 30-year prescription under the
period is in relation to Civil Code, particularly
possession without Art. 1113 in relation to
regard to the Civil Code. Art. 1137. Sales Patent Citizens of the To have at least
Philippines of 1/5 of the land
ACQUISITION OF TITLE BY LAW lawful age or broken and
such citizens cultivated within
1. Free patents based on Public Land Act; not of lawful five years from the
2. Title to accretion in river banks; age who is date of the award;
3. Reclamation; or head of a and
4. Title by escheat (Rules of Court, Rule 91). family may Shall have
purchase established actual
PATENTS UNDER THE PUBLIC LAND ACT public occupancy,
agricultural cultivation and
KIND OF TO WHOM land of not improvement of at
REQUIREMENTS more than 12 least 1/5 of the
PATENT GRANTED
hectares. land until the date
Homestead To any Does not own of such final
Patent Filipino more than 24 payment.
Citizen over hectares of land in
the age of 18 the Philippines or Special To non- Sec. of the DILG
years or head has not benefitted Patent Christian shall certify that
of a family. from any Filipinos the majority of the
gratuitous under Sec. 84 non-Christian
allotment of more of the Public inhabitants of any
than 24 hectares; Land Act. given reservation
Must have resided have advanced
continuously for sufficiently in
at least one year civilization.
in the
municipality Acquisition of patents
where the land is
situated; 1. By succession (testate or intestate)
Must have a. By descent – Title is acquired when an
cultivated at least heir succeeds the deceased owner
1/5 of the land whether by testate or intestate; and
applied for. b. By devise – Person acquires land from one
who may or may not be a relative, if he is
named in the deceased’s will as devisee
for such property.

2. By prescription – Possession of land for

required number of years and assertion of
ownership through an uninterrupted actual
possession of property within the period of

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 614
 LAND TITLES AND DEEDS
time prescribed by law (Articles 712, 1134,
and 1137).
LAND PATENTS
Q: How are public lands suitable for
agricultural purposes disposed of?
A: Public lands suitable for agricultural purposes
are disposed as follows:
1. Homestead settlement;
2. Sale;
3. Lease;
4. Confirmation of imperfect title or incomplete
titles either by judicial or administrative
legalization; or
5. Free title.
As evidence of ownership of land, a homestead
patent prevails over a land tax declaration (Jose
Medina v. CA & The Heirs of the Late Abundio
Castaňares, G.R. No. 137582, August 29, 2012).
NOTE: When a free patent title is issued to an
applicant and the sea water moves toward the
estate of the title holder, the invaded property
becomes part of the foreshore land. The land
under the Torrens system reverts to the public
domain and the title is annulled.
After a free patent application is granted and the
corresponding certificate of title is issued, the land
ceased to be part of the public domain and
becomes private property over which the Director
of Lands had neither control nor jurisdiction.
Restrictions on alienation or encumbrance of
lands titled pursuant to patents
1. Lands acquired under free patent or
homestead patent are prohibited from being
alienated;
XPN : If in favor of the government, five years
from and after the issuance of the patent or
grant.
2. No alienation, transfer or conveyance of any
homestead after five years and before 25
years after the issuance of title shall be valid
without the approval of the Secretary of DENR
(C.A. No. 141 as amended by C.A. No. 458);
3. It cannot be alienated within five years after
approval of such patent application;
4. It cannot be liable for the satisfaction of debt
within five years after the approval of such
patent application;
615
5. It is subject to repurchase of the heirs within
five years after alienation when such is
already allowed; and
6. No private corporation, partnership or
association may lease such land unless it is
solely for commercial, industrial, educational,
religious or charitable purposes, or right of
way (subject to the consent of the grantee and
the approval of the Secretary of the DENR)
[The Public Land Act]
Proper action in cases of improper or illegal
issuance of patents
Reversion suits
The objective of which is the cancellation of the
certificate of title and the consequent reversions
of the land covered thereby to the State.
Q: Respondents are the grantees of
agricultural public lands in General Santos City
through Homestead and Free patents
sometime in 1986 and 1991. Negotiations
were made by petitioner sometime in 1995
and eventually a Deed of Conditional Sale of
the properties in question was executed in
favor of petitioner Filinvest Land Inc. A few
days after the execution of the aforestated
deeds, respondents found that the sale was
null and void as it was done within the
prohibitory period and that the sale was not
approved by the secretary of DENR. Thus, they
filed a case for declaration of nullity of the
deeds of conditional and absolute sale of the
questioned properties. Will the action
prosper?
A: YES. The five-year prohibitory period following
the issuance of the homestead patent is provided
under Sec. 118 of the Public Land Act. It bears
stressing that the law was enacted to give the
homesteader or patentee every chance to
preserve for himself and his family the land that
the State had gratuitously given to him as a
reward for his labour in cleaning and cultivating it.
In the present case, the negotiations for the
purchase of the properties covered by the patents
issued in 1991 were made in 1995 and, eventually,
an undated Deed of Conditional Sale was executed.
The prohibition does not distinguish between
consummated and executory sale. The conditional
sale entered into by the parties is still a
conveyance of the homestead patent; that the
formal deed of sale was executed after the
expiration of the said period did not and could not
legalize a contract that was void from its inception
 CIVIL LAW
(Filinvest Land, Inc., Efren C. Gutierre v. Abdul
Backy, Abehera, Baiya, Edris, et al. G.R. No. 174715.
October 11, 2012).
To whom free patent may be issued
1. A natural-born citizen of the Philippines;
2. Is not the owner of more than 12 hectares of
land;
3. Has continuously occupied and cultivated,
either by himself or through his predecessors-
in-interest, a tract or tracts of agricultural
public land subject to disposition, for at least
30 years prior to the effectivity of Republic
Act No. 6940; and
4. Has paid the real taxes thereon while the
same has not been occupied by any person.
NOTE : Once a patent is registered and the
corresponding certificate of title is issued, the land
covered thereby ceases to be part of public
domain and becomes private property, and the
Torrens Title issued pursuant to the patent
becomes indefeasible upon the expiration of one
year from the date of such issuance.
XPN: A title emanating from a free patent which
was secured through fraud does not become
indefeasible.
Reason: The patent from whence the title sprung
is itself void and of no effect whatsoever. The
registration of a patent under the Torrens System
does not by itself vest title; it merely confirms the
registrant’s already existing one. Verily,
registration under the Torrens System is not a
mode of acquiring ownership.
NOTE: Nonetheless, a free patent that was
fraudulently acquired, and the certificate of title
issued pursuant to the same, may only be assailed
by the government in an action for reversion
pursuant to Sec. 101 of the Public Land Act (Nancy
T. Lorzano v. Juan Tabayag, Jr., G.R. No. 189647,
February 6, 2012).
Free patent issued over a private land
The settled rule is that a free patent issued over a
private land is null and void, and produces no
legal effect whatsoever. Private ownership of
land-as when there is a prima facie proof of
ownership like a duly registered possessory
information or a clear showing of open,
continuous, exclusive, and notorious possession,
by present or previous occupants-is not affected
by the issuance of a free patent over the same
land, because the Public Land Law applies only to
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
lands of the public domain (Heirs of Simplicio
Santiago v. Heirs of Mariano Santiago, G.R. No.
151440, June 17, 2003).
RECLAMATION
Reclamation is the act of filling up of parts of the
sea for conversion to land.
NOTE: It must be initially owned by the
government. It may be subsequently transferred
to private owners.
Q: Who may undertake reclamation projects?
A: Only the national government may engage in
reclamation projects.
Q: To whom does a reclaimed area belong?
A: Under the Regalian Doctrine, the State owns all
waters
and lands of the public domain, including those
physically reclaimed.
UNDER C.A. 141
Persons qualified for registration under Public
Land Act or C.A. No. 141
Those who by themselves or through their
predecessors-in-interest have been in open,
continuous, exclusive and notorious possession
and occupation of alienable and disposable
agricultural lands of the public domain, under a
bona fide claim of acquisition or ownership, since
June 12, 1945, except when prevented by war or
force majeure.
Requisites:
1. The applicant must be a Filipino citizen;
2. He must have, by himself or through his
predecessors in-interest, possessed and
occupied an alienable and disposable
agricultural portion of the public domain;
3. Such possession and occupation must have
been open, continuous, exclusive, notorious
and in the concept of owner, since June, 12,
1945; and
4. The application must be filed with the proper
court.
Public land
The term is uniformly used to describe so much of
the national domain under the legislative power of
616
 LAND TITLES AND DEEDS
the Congress as has not been subjected to private 4. By confirmation of imperfect or incomplete
right or devoted to public use. titles:
a. By judicial legalization; or
Public lands v. Government lands b. By administrative legalization (free
patent).
GOVERNMENT
PUBLIC LANDS A person deemed to possess an imperfect title
LANDS
over property when:
Includes not only the The government
government lands, but owns real estate, The applicant for confirmation of imperfect title
also other lands of the which is part of the has shown possession and occupation that is:
government already “public lands,” and
reserved or devoted to other real estate, 1. Open;
public use or subject to which is not a part 2. Continuous;
private right. thereof. 3. Exclusive;
4. Notorious; and
Equivalent to public 5. In the concept of an owner.
domain and does not, by
any means, include all Factors to consider the applicant in an open,
lands of government continuous, exclusive and notorious
ownership, but only so possession in the concept of an owner
much of said lands as are (OCENPO):
thrown open to private
appropriation and OPEN - When it is patent, visible apparent
settlement by homestead notorious and not clandestine;
and other like general
laws (Montano v. Insular CONTINUOUS - When uninterrupted, unbroken
Government, G.R. No. L- and not intermittent or occasional;
3714, January 26, 1909).
EXCLUSIVE - When the adverse possessor can
Patrimonial property v. Public land show exclusive dominion over the land and an
appropriation of it to his own use and benefits;
and
PATRIMONIAL
PUBLIC LAND
PROPERTY NOTORIOUS - When it is so conspicuous that it is
All other property of the Property for public generally known and talked of by the public or the
State which is not of the use of provinces and people in the neighborhood (Heirs of Marcelina
character of public towns. Azardon-Crisologo v. Raon, G.R. No. 171068, Sept. 5,
dominion or not intended 2007).
for public use, public
service, or for the Effect of possession of an Imperfect title
development of national
wealth. When the conditions set by law are complied with,
the possessor of the land, by operation of law,
Property of public acquires a right to government grant, without the
dominion, when no longer necessity of a certificate of the title being issued.
needed for public use, or
for public service, shall Q: RP opposed the application for registration
form part of the filed by Manna Properties under Sec. 48(b),
patrimonial property of C.A. No. 141 arguing that, as a private
the State. corporation, it is disqualified from holding
alienable lands of the public domain, except by
lease, citing Sec. 3, Art. XII, 1987 Constitution.
Means by which public lands may be disposed On the other hand, Manna Properties claims
of that the land in question has been in the open
and exclusive possession of its predecessors-
1. For homestead settlement; in-interest since the 1940s, thus, the land was
2. By sale; already private land when Manna Properties
3. By lease; and

617
 CIVIL LAW
acquired it from its predecessors-in-interest.
Decide.
A: Lands that fall under Sec. 48, C.A. No. 141
are effectively segregated from the public
domain by virtue of acquisitive prescription. Open,
exclusive and undisputed possession of alienable
public land for the period prescribed by C.A. No.
141 ipso jure converts such land into private land.
Judicial confirmation in such cases is only a
formality that merely confirms the earlier
conversion of the land into private land, the
conversion having occurred in law from the
moment the required period of possession
became complete.
Under C.A. No. 141, the reckoning point is June 12,
1945. If the predecessors-in-interest of Manna
Properties have been in possession of the land in
question since this date, or earlier, Manna
Properties may rightfully apply for confirmation
of title to the land. Manna Properties, a private
corporation, may apply for judicial confirmation of
the land without need of a separate confirmation
proceeding for its predecessors-in-interest first
(Republic v. Manna Properties Inc., G.R. No. 146527,
January 31, 2005).
Q: Manuel was born on 12 March 1940 in a
1,000-square meter property where he grew
up helping his father, Michael, cultivate the
land. Michael has lived on the property since
the land was opened for settlement at about
the time of the Commonwealth government in
1935, but for some reason never secured any
title to the property other than a tax
declaration in his name. He has held the
property through the years in the concept of
an owner and his stay was uncontested by
others. He has also conscientiously and
continuously paid the realty taxes on the land.
Michael died in 2000 and Manuel-as Michael’s
only son and heir-now wants to secure and
register title to the land in his own name. He
consults you for legal advice as he wants to
perfect his title to the land and secure its
registration in his name.
a. What are the laws that you need to consider
in advising Manuel on how he can perfect
his title and register the land in his name?
Explain the relevance of these laws to your
projected course of action.
b. What do you have to prove to secure
Manuel's objectives and what
documentation are necessary? (2013 Bar)
A:
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
(a) For purposes of confirmation of imperfect
title, I will consider the provisions of C.A. No. 141
as well as the Property Registration Decree or P.D.
1529. C.A. No. 141 provides two requisites for
judicial confirmation of imperfect title namely: (1)
open and continuous, exclusive and notorious
possession and occupation of the land by himself
or through his predecessor in interest under bona
fide claim of ownership since June 12, 1945; and
(2) the classification of the land as alienable and
disposable land of the public domain. (Secretary of
DENR v. Yap, G.R. No. 167707, October 8, 2008).
The Property Registration Decree or P.D. 1529
provides that those who by themselves or their
predecessors-in-interest have been in open,
continuous, exclusive and notorious possession
and occupation of alienable and disposable lands
of the public domain under a bona fide claim of
ownership since June 12, 1945 or earlier. Since
Manuel’s father Michael had been in open,
continuous, exclusive and notorious possession of
the land since 1935, and that the land was
declared alienable in the same year, his possession
has ripened into ownership which entitles him or
his successor Manuel to file an application for
judicial confirmation of imperfect title.
(b) I have to prove that the land was already
declared alienable at the time that Manuel or his
father Michael took possession of the land and
that their possession was open, continuous,
exclusive and notorious which started prior to or
on June 12, 1945 as required by C.A. No. 141. To
prove the first requisite, the original classification
of the land as approved by the DENR Secretary
(Republic v. T.A.N. Properties, Inc., G.R. No. 154953,
June 26, 2008) or in lieu thereof, a Certification by
the DENR Regional office attesting to the alienable
and disposable character of the land must have to
be submitted (Republic v. Serrano G.R. No. 183063,
February 24, 2010). I also have to file together
with the application for registration all original
muniments of title or copies thereof and a survey
plan of the land approved by the Bureau of Lands
in accordance with Sec. 17 of P.D. 1529. Manuel
may also submit the tax declarations and tax
payment receipts which have been ruled to be
good indications of possession in the concept of
owner (Republic v. Candy Maker, Inc., G.R. No.
163766, June 22, 2006).
Persons qualified for judicial confirmation
1. Filipino citizens who by themselves or
through their predecessors-in-interest have
been in open, continuous, exclusive and
notorious possession and occupation of
618
 LAND TITLES AND DEEDS
alienable and disposable lands of public
domain under a bona fide claim of acquisition
since June 12, 1945 or prior thereto or since
time immemorial ;
2. Filipino citizens who by themselves or their
predecessors-in-interest have been, prior to
the effectivity of P.D. 1073 on January 25,
1977, in open, continuous, exclusive and
notorious possession and occupation of
agricultural lands of the public domain under
a bona fide claim of acquisition or ownership
for at least 30 years, or at least since January
24, 1947 ;
3. Private domestic corporations or associations
which had acquired lands from Filipino
citizens who had possessed the same in the
manner and for the length of time indicated in
paragraphs 1 & 2 above ; or
4. Natural-born citizens of the Philippines who
have lost their citizenship and who has the
legal capacity to enter into a contract under
Philippine laws may be a transferee of private
land up to a maximum area of 5,000 sq.m., in
case of urban land, or three hectares in case of
rural land to be used by him for business or
other purposes. For residence purposes, the
maximum area is 1,000 sq. m. in case of urban
lands or one hectare in case of rural lands.
NOTE: Aliens are disqualified from acquiring
public and private lands (Hulst v. PR Builders, Inc.,
G.R. No. 156364, September 3, 2007; Krivenko v.
Register of Deeds, G.R. No .L-630, November 15,
1947).
NOTE: Extended period for filing of application–
Sec. 1, R.A. 9176 provides in part that, “The time to
be fixed in the entire archipelago for the filing of
applications shall not extend beyond December
31, 2020. Provided that the area applied for does
not exceed 12 hectares.”
Q : Bracewell asserts that he has a right of title
to a parcel of land having been, by himself and
through his predecessors-in-interest, in
occupation under a bona fide claim of
ownership since 1908. Thus, he filed an
application for registration in 1963 but the
land has been classified as alienable or
disposable only on May 27, 1972. May his
application for confirmation of imperfect title
be granted ?
A : NO. The land was only classified as alienable or
disposable on May 27, 1972. Prior to said date,
when the subject parcels of land were classified as
inalienable or not disposable, the same could not
be the subject of confirmation of imperfect title.
619
There can be no imperfect title to be confirmed over
lands not yet classified as disposable or alienable. In
the absence of such classification, the land
remains unclassified public land until released
and opened to disposition. Indeed, it has been held
that the rules on the confirmation of imperfect
title do not apply unless and until the land
classified as forest land is released in an official
proclamation to that effect so that it may form
part of the disposable agricultural lands of the
public domain (Bracewell v. CA, G.R. No. 107427,
January 25, 2000).
Q : In an application for judicial confirmation
of imperfect title filed by Naguit, the OSG
argues that the property must first be
alienable. Since the subject land was declared
alienable only on 1980, Naguit could not have
maintained a bona fide claim of ownership
since June 12, 1945, as required by Sec. 14 of
the Property Registration Decree, since prior
to 1980, the land was not alienable or
disposable. Is it necessary under Sec. 14(1) of
the Property Registration Decree (now Sec.
48(b) of the Public Land Act) that the subject
land be first classified as alienable and
disposable before the applicant’s possession
under a bona fide claim of ownership could
start?
A : NO. Sec. 14(1) merely requires the property
sought to be registered as already alienable and
disposable at the time the application for
registration of title is filed. If the State, at the time
the application is made, has not yet deemed it
proper to release the property for alienation or
disposition, the presumption is that the
government is still reserving the right to utilize
the property ; hence, the need to preserve its
ownership in the State irrespective of the length of
adverse possession even if in good faith. However,
if the property has already been classified as
alienable and disposable, as it is in this case, then
there is already an intention on the part of the
State to abdicate its exclusive prerogative over the
property (Republic v. CA and Naguit, G.R. No.
144057, January 17, 2005).
NOTE: This case is distinguishable from Bracewell
v. CA, where the claimant had been in possession
of the land since 1908 and had filed his
application in 1963, or nine years before the
property was declared alienable and disposable in
1972. Hence, registration was denied. The
Bracewell ruling will not apply in this case
because here, the application was made years
AFTER the property had been certified as
alienable and disposable.
 CIVIL LAW
A different rule obtains for forest lands, such as 6. Service of notice by sheriff upon contiguous
those which form part of a reservation for owners, occupants and those known to have
provincial park purposes, the possession of which interest in the property;
cannot ripen into ownership. It is elementary in 7. Filing of answer or opposition to the
the law governing natural resources that forest application by any person whether named in
land cannot be owned by private persons. As held the notice or not;
in Palomo v. CA, forest land is not registrable and 8. Hearing of case by court;
possession thereof, no matter how lengthy, cannot 9. Promulgation of judgment by court;
convert it into private property, unless such lands 10. Issuance of a decree by court declaring the
are reclassified and considered disposable and decision final, and instructing the NALDTRA
alienable. In the case at bar, the property in to issue a decree of confirmation and
question was undisputedly classified as registration;
disposable and alienable; hence, the ruling in 11. Entry of decree of registration in NALDTRA;
Palomo is inapplicable (Palomo v. CA, G.R. No. 12. Sending of copy of the decree of registration
95608, January 21, 1997). to corresponding RD; and
13. Transcription of decree of registration in the
NOTE : The law does not require that the land registration book and issuance of owner’s
subject of registration should have been alienable duplicate original certificate of title (OCT) of
and disposable during the entire period of applicant by RD, upon payment of prescribed
possession, or since June 12, 1945. It is sufficient fees.
that the land is already declared as alienable and
disposable land at the time the application for NOTE: After judgment has become final and
registration is filed so as to entitle the possessor executory, the issuance of decree and OCT is
to registration (Malabanan v. Republic, G.R. No. ministerial on the part of LRA and RD.
179987, April 29, 2009). It must be stressed,
however, that the applicant for land registration Application of Rules of Court in land
must have been in possession of the land sought to registration proceedings
be registered since June 12, 1945 or earlier.
The Rules of Court could be applied in land
REGISTRATION PROCESS AND REQUIREMENTS registration proceedings in a suppletory character
or whenever practicable or convenient.
Modes of registering land titles
NOTE: Motion to intervene in a land registration
There are two modes: case is not allowed.
1. Original registration proceedings under the
Property Registration Decree (P.D. 1529); and APPLICATION
2. Confirmation of imperfect or incomplete title
under Sec. 48(b) of the Public Land Act, as Form of the application for registration or
amended. judicial confirmation

Requisites in ordinary registration In writing:

proceedings and judicial confirmation of
imperfect title 1. Signed by the applicant or person duly
authorized in his behalf;
1. Survey of land by Bureau of Lands or any duly 2. Sworn to before an officer authorized to
licensed private surveyor; administer oaths for the province or city where
2. Filing of application for registration by the application was actually signed; and
applicant; 3. If there is more than one applicant, they shall be
3. Setting of date for initial hearing by the court; signed and sworn to by and in behalf of each.
4. Transmittal of application and date of initial
hearing with all documents or other pieces of Documents that must accompany the
evidence attached thereto by clerk of court to application
National Land Titles and Deeds Registration
Administration (NALTDRA); All muniments of titles and copies thereof with
5. Publication of notice of filing of application survey plan approved by Bureau of Lands must
and date and place of hearing; accompany the application.
Muniments of title

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 620
 LAND TITLES AND DEEDS
They are instruments or written evidence which
the applicant holds/possesses to enable him to
substantiate and prove title to his estate.
Rule regarding application covering two or
more parcels
An application may include two or more parcels of
land belonging to the applicant/s provided they
are situated within the same province or city (P.D.
1529, Sec. 18).
Jurisdiction and venue where the application
can be filed
If the application covers a single parcel of land
situated within:
1. Only one city or province:
RTC or MTC, as the case may be, of the
province or city where the land is situated.
2. Two or more provinces or cities:
a. When boundaries are not defined – In the
RTC or MTC of the place where it is
declared for taxation purposes.
b. When boundaries are defined – Separate
plan for each portion must be made by a
surveyor and a separate application for
each lot must be filed with the
appropriate RTC or MTC.
NOTE: MeTC, MCTC, and MTC has jurisdiction to
decide cadastral and land registration cases,
provided:
1. There is no controversy or opposition
(uncontested lots); or
2. Value of contested lots does not exceed P100,
000 (R.A. 7691, Sec. 4).
In other cases, the RTC has jurisdiction.
NOTE: Appeal is taken to the Court of Appeals.
NOTE: The value of the property is ascertained in
three ways:
(1) By the affidavit of the claimant;
(2) By agreement of the respective claimants,
if there are more than one; or
(3) From the corresponding tax declaration
of the real property (B.P. 129, Sec. 34).
Q: Bantigue Corp. filed with the RTC an
application for registration over a lot with an
assessed value of P14,920. However, the RTC
motu proprio remanded the case to the MTC
621
since the assessed value of the land is only
P14,920. After hearing, the MTC granted the
application. The Republic appealed arguing
that the MTC did not acquire jurisdiction since
the selling price of the property per deed of
sale attached to the application is P160,000.
Did the MTC acquire jurisdiction over the
case?
A: YES. The value of the land is determined, not
from the selling price, but from the tax declaration
which, in this case, stated that the assessed value
of the land is only P14,920, or below the
jurisdictional amount of P100,000 pertaining to
first level courts (Republic v. Bantigue, G.R. No.
162322, March 14, 2012).
Q: Is there need for a formal
assignment/delegation by the SC before first
level courts may exercise jurisdiction?
A: NO. Bantigue stresses:
“The delegated jurisdiction of the MTC over
cadastral and land registration cases is indeed set
forth in the Judiciary Reorganization Act, x xx”
“(T)he MTC has delegated jurisdiction in cadastral
and land registration cases in two instances: first,
where there is no controversy or opposition; or,
second, over contested lots, the value of which
does not exceed P100,000.”
Clearly, the law itself, Sec. 34 of B.P. Blg. 129,
already provides the specific instances when first
level courts may exercise their delegated
jurisdiction.
Q: Leonor Santos filed an application for
registration with the CFI of Rizal. The Director
of Lands opposed. Notices were given and the
case was set for hearing. Later, the court
issued an order dismissing the application on
the basis of a report from the LRC that a
“homestead patent was issued (to Julio
Delgado) by the Director of Lands during the
pendency of the registration proceedings.” Was
the court divested of its jurisdiction by a
subsequent administrative act consisting in the
issuance by the Director of Lands of a
homestead patent covering the same land
subject of the registration case?
A: NO. In her application for registration, Santos
alleged, among other matters, that she is the
owner in fee simple of the land. Since the
existence or non-existence of applicant’s
registrable title is decisive of the validity or nullity
of the homestead patent, the court’s jurisdiction
 CIVIL LAW
could not have been divested by the homestead
patent's issuance.
Proceedings for land registration are in rem,
whereas proceedings for acquisition of homestead
patent are not. A homestead patent, therefore,
does not finally dispose of the public or private
character of the land as far as courts acting upon
proceedings in rem are concerned (De los Angeles
v. Santos, G.R. No. L-19615, December 24, 1964).
Sec. 2, P.D. 1529 has eliminated the distinction
between the court’s general jurisdiction and
limited jurisdiction.
A regional trial court has the authority to hear not
only applications for original registration but also
all petitions filed after original registration of title.
The amendment aims to avoid multiplicity of suits
and simplify registration proceedings. The court
can now hear and decide not only non-
controversial cases but even contentious issues
which before were beyond its competence
(Lozada v. Bracewell, G.R. No. 179155, April 2,
2014; Averia v. Caguioa, G.R. No. L-65129,
December 29, 1986).
PUBLICATION
Within five days from the filing of the application
for registration, the court shall issue an order
setting the date and hour of initial hearing which
shall not be earlier than 45 days nor later than 90
days from date of the order.
Manner of giving notice
1) Publication once in the Official Gazette and
once in a newspaper of general circulation;
2) Mailing of the notice to persons named in the
application for registration and also to
relevant government officials; and
3) Posting of the notice on a conspicuous place
on the land itself and on the bulletin board of
the city or municipality where the land is
situated (P.D. No. 1529, Sec. 23).
NOTE: Publication in the Official Gazette shall be
sufficient to confer jurisdiction (P.D. No. 1529, Sec.
24).
However, publication of the notice in a newspaper
of general circulation remains an indispensable
requirement consistent with procedural due
process (Roxas v. Court of Appeals, G.R. No. 118436,
March 21, 1997; Director of Lands v. Court of
Appeals and Abistado, G.R. No. 102858, July 28,
1997).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
NOTE: The requirement of mailing and posting
are mandatory.
New publication necessary to include
additional area
If amendment of the application is made to
include additional area, a new publication of the
amended application must be made, but not when
the amendment consists in the exclusion of a
portion form the area originally applied for (Benin
v. Tuason, G.R. No. L-26127, June 28, 1974).
Purpose of the publication requirement
To:
1. Confer jurisdiction upon the court over the
res; and
2. Apprise the whole world of the pending
registration case so that they may assert their
rights or interests in the land, if any, and
oppose the application.
NOTE: The settled rule is that once the
registration court had acquired jurisdiction over a
certain parcel, or parcels of land in the
registration proceedings by virtue of the
publication of the application, that jurisdiction
attaches to the land or lands mentioned and
described in the application.
Q : May publication of the notice of filing of
application and date and place of hearing be
dispensed with ?
A : NO. Publication of the notice of filing of
application and date and place of hearing is
mandatory.
Q: Where must the said notice be published?
A:
1. Once in the Official Gazette (OG) – this
confers jurisdiction upon the court; and
2. Once in a newspaper of general
circulation.
Publication in a newspaper is necessary to
accord with due process requirement
Sec. 23 of P.D. 1529 clearly provides that
publication in the Official Gazette suffices to
confer jurisdiction upon the land registration
court. However, absent any publication of the
notice of initial hearing in a newspaper of general
circulation, the land registration court cannot
validly confirm and register the title of the
applicants. The rationale behind the newspaper
622
 LAND TITLES AND DEEDS
publication is due process and the reality that the
Offcial Gazette is not as widely read and circulated
as newspapers and is oftentimes delayed in its
circulation. This requirement is mandatory. For
non-compliance with the requirement of
publication, the application may be dismissed,
without prejudice to reapplication in the future,
after all the legal requisites are complied with
(Director of Lands v. CA and Abistado, G.R. 102858,
July 28, 1997).
NOTE: Publication in the Official Gazette does not
dispense with the requirement of notice by
mailing and posting.
Lack of personal notice does not vitiate the
proceedings
Land registration proceedings are proceedings in
rem, not in personam, and therefore it is not
necessary to give personal notice to the owners or
claimants of the land sought to be registered, in
order to vest the courts power or authority over
the res. Notice of hearing by proper publication in
the Official Gazette is sufficient to clothe the court
with jurisdiction, and the mere fact that a person
purporting to have a legitimate claim in the
property did not receive persoanl notice is not
sufficient ground to invalidate the proceedings
(Adez Realty Inc. v. CA, G.R. No. 100643, December
12, 1995).
Defective publication
There is a defective publication in the following
instances:
1. Where what was published in the Official
Gazette is the description of a bigger lot which
includes the lands subject of registration.
Reasons:
a. Sec. 15, P.D. 1529 requires that the
application for registration should contain
the description of the land subject of
registration and this is the description to
be published;
b. It is the publication of specific boundaries
of lands to be registered that would
actually put the interested parties on
notice of the registration proceedings and
enable them, if they have rights and
interests in the property, to show why the
application for registration should not be
granted;
c. The adjoining owners of the bigger lot
would not be the same owners of the
smaller lots subject of registration. Hence,
623
notice to adjoining owners of the bigger lot
is not notice to those of the smaller lots.
2. Where the actual publication of the notice of
initial hearing was after the hearing itself.
Effect of a defective publication
It deprives the court of jurisdiction. Hence, the
proceeding will be void.
GR: If it is later shown that the decree of
registration had included land or lands not
included in the publication, then the registration
proceedings and the decree of registration must
be declared null and void–but only insofar–as the
land not included in the publication concerned.
But the proceedings and the decree of registration,
relating to the lands that were included in the
publication, are valid.
XPN: If the difference is not as substantial as
would affect the identity of the land, failure to
publish the bigger area (insubstantial inclusion)
does not perforce affect the court’s jurisdiction.
Q: When may an amendment of the application
be made?
A: Amendments to the application including
joinder, substitution, or discontinuance as to the
parties may be allowed by the court at any stage of
the proceedings upon just and reasonable terms
(P.D. 1529, Sec. 19).
Necessity of publication and notice in the
amended application
GR: Publication and notice are necessary where
the amendment to the application consists in:
1. Substantial change in the boundaries;
2. Increase in the area of the land applied
for; and
3. The inclusion of additional land.
NOTE: Without such publication, the registration
court cannot acquire jurisdiction over the area
that is added.
Situations when publication and notice are not
necessary
1. If the amendment consists in the exclusion of a
portion of the area covered by the original
application and the original plan as previously
published, a new publication is not necessary;
 CIVIL LAW
NOTE: In this case, the jurisdiction of the
court is not affected by the failure of filing a
new application.
2. If the amendments to the application involves
joinder, substitution or discontinuance as to
the parties; and
NOTE: This may be allowed by the court at
any stage of the proceedings upon just and
equitable terms.
3. If the amendment is due to change of name of
the applicant.
Q : Is dealing with land under controversy
allowed while there’s pending original
registration?
A : YES. Sec. 22 allows land subject of registration
to be dealt with after the filing of the application
and before issuance of decree. The land may be
sold or otherwise encumbered, but whatever may
be the nature of the transaction, the interested
party should submit to the court the pertinent
instruments evidencing the transaction to be
considered in the final adjudication of the case.
Dealings or transactions entered into pending
registration do not require amendment of
application (Mendoza v. CA, G.R. No. L-36637, July
14, 1978).
The law does not require that the application for
registration be amended by substituting the
‘buyer’ or the ‘person to whom the property has
been conveyed’ for the applicant. Neither does it
require that the ‘buyer’ or the ‘person to whom
the property has been conveyed’ be a party to the
case. He may thus be a total stranger to the land
registration proceedings.
Requirements
1. That the instrument be presented to the court
by the interested party together with a motion
that the same be considered in relation with the
application; and
2. That prior notice be given to the parties to the
case (Mendoza v. CA, G.R. No. L-36637, July 14,
1978).
OPPOSITION
Persons who may oppose the application for
registration
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Any person claiming an interest, whether named
in the notice or not, may appear and file an
opposition on or before the date of initial hearing,
or within such further time as may be allowed by
the court.
Procedure to oppose the application
The opposition shall state all the objections to the
application and shall set forth the interest claimed
by the party filing the same and apply for the
remedy desired, and shall be signed and sworn to
by him or by some other duly authorized person
(P.D. No. 1529, Sec. 25).
Requisites for a valid opposition
1. The oppositor must have an interest in
the land applied for;
2. He should state the grounds for his
objection as well as the nature of his
claimed interest;
3. He should indicate the desired relief;
4. The opposition should be signed and
worn to by him or his duly authorized
representative.
NOTE: The opposition partakes of the nature of an
answer with a counterclaim.
Persons who may oppose the application for
registration or judicial confirmation
Any person whether named in the notice or not,
provided, his claim of interest in the property
applied for is based on a right of dominion or
some other real right independent of, and not
subordinate to, the rights of the government.
Persons who may oppose in specific cases
1. A homesteader who has not yet been issued
his title but who had fulfilled all the
conditions required by law to entitle him to a
patent;
2. A purchaser of friar land who is deemed to
have an equitable title to the land even before
the issuance of the patent;
3. Persons who claim to be in possession of a
tract of public land and have applied with the
Bureau of Lands for its purchase;
4. The Government relative to the right of
foreshore lessees of public land as the latter’s
right is not based on dominion or real right
independent of the right of the government;
or
5. An awardee in a sales application who, by
virtue of the award, is authorized to take
624
 LAND TITLES AND DEEDS
possession of the land to enable him to Difference between declaration of default in
comply with the requirements for the ordinary civil cases and in land registration
issuance of patent (De Castro v. Marcos, G.R. proceedings
No. L-26093, January 27, 1969).
DEFAULT IN CIVIL DEFAULT IN LAND
NOTE: A private person may not oppose an CASES REGISTRATION
application for registration on the ground that the PROCEEDINGS
land applied for is a property of the government Section 3(b), Rule 9 of Section 22 of P.D. 1529
(Roxas vs. Cuevas, GR. No. L-3637, August 31, 1907). the 1997 Rules of Civil
Procedure
The oppositor also need not show title in himself;
he should however appear to have interest in the In civil cases, there is 2 kinds :
property. only one kind of 1. Order of general
default. default—if no person
NOTE: The oppositor’s interest over the land is appears and answers
immaterial whether his interest is in the character To lift the order of within the time
of legal owner or is of a purely equitable nature as default It must be allowed ; by
where he is a beneficiary of a trust. shown that the person description in the
declared in default notice “to whom it
Absence of opposition by the government does must have a may concern”, all the
not justify outright registration meritorious defense, world are made
along with the grounds parties defendant and
Notwithstanding the absence of opposition from : shall be concluded by
the government, the applicant in land registration 1. Fraud ; the default order.
cases is not relieved of the burden of proving the 2. Accident ; 2. Order of special
imperfect right or title sought to be confirmed 3. Mistake ; and default—when an
(Director, Lands Management Bureau v. CA, G.R. No. 4. Excusable appearance has been
112567, February 7, 2000). negligence entered and answer
filed, default order
Courts are not justified in registering property shall be entered upon
under the Torrens system, simply because there is against persons who
no opposition offered. Courts may, even in the did not appear and
absence of any opposition, deny the registration of answer.
the land under the Torrens system, upon the
ground that the facts presented did not show that Effect of an order of default in land
the petitioner is the owner, in fee simple, of the registration proceedings
land which he is attempting to have registered
(Director of Lands v. Agustin, G.R. No. 16179, It is binding “against the whole world.”
October 6, 1921).
XPN: To parties who had appeared and filed
Declaration of default in land registration pleadings in the registration case.
proceedings
Effect of the absence of an opposition as
If no person appears and answers within the time regards allegations in the application
allowed, the court shall, upon motion of the
applicant, no reason to the contrary appearing, All allegations in the application are deemed
order a default to be recorded and require the confessed on the part of the opponent.
applicant to present evidence. By the description
in the notice “To all Whom It May Concern, ” all Q: What if a certificate of title was issued
the world are made parties defendant and shall be covering non-registrable lands without the
concluded by the default order. government opposing, is the government
estopped from questioning the same?
Where an appearance has been entered and an
answer filed, a default order shall be entered A: NO. The government cannot be barred from
against persons who did not appear and answer questioning the validity of the certificates of title,
(P.D. 1529, Sec. 26). which were granted without opposition from the
government, pursuant to the principle that the
State is never barred by estoppel. The principle of

625
 CIVIL LAW
estoppel does not operate against the government
for the acts of its agents.
Q: If an order of general default is issued, may
the court automatically grant the application?
A: NO. Even in the absence of an adverse claim,
the applicant still has to prove that he possesses
all the qualifications and none of the
disqualifications to obtain the title. If he fails to do
so, his application will not be granted.
Q: Can a party who has been declared in
default appeal from the judgment by default
without first filing a motion to set aside the
order of default?
A: YES. As held in the case of Martinez v. Republic:
“If it cannot be made any clearer, we hold that a
defendant party declared in default retains the
right to appeal from the judgment by default on
the ground that the plaintiff failed to prove the
material allegations of the complaint, or that the
decision is contrary to law, even without need of
the prior filing of a motion to set aside the order of
default. We reaffirm that the Lim Toco doctrine,
denying such right to appeal unless the order of
default has been set aside, was no longer
controlling in this jurisdiction upon the effectivity
of the 1964 Rules of Court, and up to this day”
(Martinez v. Republic, G.R. No. 160895, October 30,
2005).
EVIDENCE REQUIRED IN LAND REGISTRATION
Proof of:
1. Declassification – The land applied for has
been declassified from the forest or timber
zone and is a public agricultural land, is
alienable and disposable, or otherwise capable
of registration;
2. Identity of the land; and
3. Possession and occupation of the land for the
length of time and in the manner required by
law.
Proof to establish declassification of land
1. Presidential proclamation;
2. Administrative Order issued by the Secretary
of Environment and Natural Resources;
3. Executive order;
4. Bureau of Forest Development (BFD) Land
Classification Map;
5. Certification by the Director of Forestry, and
reports of District Forester;
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
6. Investigation reports of Bureau of Lands
investigator; or
7. Legislative act, or by statute.
NOTE: The Court held that the CENRO/PENRO
certification is not sufficient evidence of the facts
stated therein (Gaerlan v. Republic, G.R. No.
192717, March 12, 2014).
“In Republic v. Hanover Worldwide Trading
Corporation, the Court declared that the CENRO is
not the official repository or legal custodian of the
issuances of the DENR Secretary declaring the
alienability and disposability of public lands. Thus,
the CENRO Certification should be accompanied
by an official publication of the DENR Secretary's
issuance declaring the land alienable and
disposable” (Republic v. Aboitiz, G.R. No. 174626,
October 23, 2013).
Q: The Cenizas applied for registration of their
title over a parcel of public land which they
inherited. Without presenting proof that the
land in question is classified as alienable or
disposable, the court granted the application,
holding that mere possession for a period as
provided for by law would automatically
entitle the possessor the right to register
public land in his name. Was the court ruling
correct?
A: NO. Mere possession for a period required by
law is not enough. The applicant has to establish
first the disposable and alienable character of the
public land, otherwise, public lands, regardless of
their classification, can be subject of registration
of private titles, as long as the applicant shows
that he meets the required years of possession.
The applicant must establish the existence of a
positive act of the government, such as a
presidential proclamation or an executive order;
administrative action; reports of Bureau of Lands
investigators and a legislative act or a statute
(Republic v. Ceniza, G.R. No. 127060, November 19,
2002).
Proof to establish the identity of the land
sought to be registered
1. Survey plan in general;
2. Tracing cloth plan and blue print copies of
plan;
3. Technical description of the land applied for
duly signed by a Geodetic Engineer; and
4. Tax declarations.
Conflict between areas and boundaries
626
 LAND TITLES AND DEEDS
What defines a piece of land is not the area,
calculated with more or less certainty mentioned
in the description, but the boundaries therein laid
down, as enclosing the land and indicating its
limits (Balantakbo v. CA, G.R. No. 108515, October
16, 1995).
GR: Boundaries prevail over area.
XPNs:
1. Boundaries relied upon do not identify
land beyond doubt;
2. Boundaries given in the registration plan
do not coincide with outer boundaries of
the land covered and described in the
muniments of title.
Evidence of possession
It is not enough to simply declare one’s possession
and that of the applicant’s predecessors-in-
interest to have been “adverse, continuous, open,
public, peaceful and in concept of owner” for the
required number of years. The applicant should
present specific facts to show such nature of
possession because bare allegations, without
more, do not amount to preponderant evidence
that would shift the burden to the oppositor (Diaz
v. Republic, G.R. No. 141031, August 31, 2004).
Under Sec. 48(b) of C.A. No. 141 and Sec. 14(1) of
P.D. 1529, the reckoning point of possession is
June 12, 1945. It is only necessary that the land is
already classified as alienable and disposable at
the time of the filing of the application for
registration (Malabanan v. Republic, G.R. No.
179987, April 29, 2009).
Possession must be under a claim of
ownership
Acts of a possessory character by one who holds
the property by mere tolerance of the owner is not
in the concept of owner, and do not start the
period of prescription.
Actual possession consists of acts of dominion of
such a nature as a party would naturally exercise
over his own property.
Occupation delimits the all-encompassing effect of
constructive possession.
Overt acts of possession
1. Introducing valuable improvements on the
land like fruit-bearing trees;
2. Fencing the area;
627
3. Constructing a residential house thereon; and
4. Declaring the land for taxation purposes.
Mere possession will not defeat the title of a
holder of registered land (Eduarte v. CA, G.R. No.
121038, July 22, 1999).
NOTE: Evidence to be admissible must, however,
be credible, substantial and satisfactory.
Q: Exequiel Ampil, as representative of heirs of
the late Albina Ampil, filed a complaint for
ejectment against Perfecto Manahan, et al.
Allegedly, Albina was the owner of two
adjoining residential lots located in Bulacan as
evidenced by tax declarations. They asserted
that Albina allowed Perfecto and his family to
occupy a portion of said properties on the
condition that they would vacate the same
should the need to use it arise. Despite
requests however, Perfecto and his family
refuse to vacate the property. Respondents
aver that they had been in peaceful and
continuous possession of the property in the
concept of an owner since time immemorial
and that Albina was never the owner of the
property. Who between the petitioners and the
respondents have the better right to the
physical possession of the disputed property?
A: The petitioners have the better right to the
property in question. The bare allegation of
respondents that they had been in peaceful and
continuous possession of the lot in question
because their predecessor-in-interest had been in
possession thereof in the concept of an owner
from time immemorial, cannot prevail over the tax
declarations and other documentary evidence
presented by petitioners. In the absence of any
supporting evidence, that of the petitioners
deserves more probative value. A perusal of the
records shows that respondents’ occupation of the
lot in question was by mere tolerance. From the
minutes of the meeting in the Barangay Lupon,
Perfecto admitted that Albina permitted them to
use the lots on the condition that they would
vacate the same should Albina need it (Heirs of
Albina G. Ampil, namely Precious A. Zavalla,
Eduardo Ampil, et al. v. Teresa Manahan and Mario
Manahan, G.R. No. 175990, October 11, 2012).
Q : Mauricio and Carmencita testified to
establish their claim over the subject lots.
When the application was granted, the OSG
appealed, arguing that weight should not be
given to the self-serving testimonies of the
two; that their tax declaration is not sufficient
proof that they and their parents have been in
possession of the property for at least thirty
 CIVIL LAW
years, said tax declaration being only for the
year 1994 and the property tax receipts
presented by them were all of recent dates.
Are the said pieces of evidence sufficient to
establish actual possession of land for the
period required by law thus warranting the
grant of the application?
A: NO. Their bare assertions of possession and
occupation by their predecessors-in-interest are
hardly the “well-nigh incontrovertible” evidence
required in cases of this nature. Proof of specific
acts of ownership must be presented to
substantiate their claim. They cannot just offer
general statements which are mere conclusions of
law than factual evidence of possession.
Actual possession of a land consists in the
manifestation of acts of dominion over it of such a
nature as a party would naturally exercise over his
own property (Republic v. Alconaba, G.R. No.
155012, April 14, 2004).
NOTE: “Well-nigh incontrovertible evidence”
refers to the degree of proof of registrable rights
required by law in registration proceedings.
Proof to establish private ownership of land
1. Spanish title;
NOTE: Spanish titles are no longer admissible
as proof of ownership in land registration
proceedings filed after August 16, 1976.
2. Tax declaration and tax payments;
Tax declarations and receipts are not
conclusive evidence of ownership. At most,
they constitute mere prima facie proofs of
ownership of the property for which taxes have
been paid. In the absence of actual, public and
adverse possession, the declaration of the land
for tax purposes does not prove ownership.
They may be good supporting or collaborating
evidence together with other acts of possession
and ownership; but by themselves, tax
declarations are inadequate to establish
possession of the property in the nature and
for the period required by statute for acquiring
imperfect or incomplete title to the land (Tan v.
Republic, G.R. No. 177797, December 4, 2008).
NOTE: While tax declarations are not
conclusive proof of ownership, they constitute
good indicia of possession in the concept of
owner and a claim of title over the subject
property for no one in his right mind would be
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
paying taxes for a property that is not in his
actual or constructive possession (Charles L.
Ong v. Republic of the Philippines, G.R. No.
175746, March 12, 2008 and Republic of the
Philippines v. Teodoro P. Rizalvo, Jr. G.R. No.
172011, March 7, 2011).
Delayed declaration of property for tax
purposes negates a claim of continuous,
exclusive, and interrupted possession in the
concept of an owner (Regalado v. Republic, G.R.
No. 168155, February 15, 2007).
Mere failure of the owner of the land to pay the
realty tax does not warrant a conclusion that
there was abandonment of his right to the
property.
3. Other kinds of proof
e.g. Testimonial evidence (i.e. accretion is on a
land adjacent to a river);
NOTE: Any evidence that accretion was formed
through human intervention negates the claim.
4. Presidential issuances and legislative acts.
NOTE: It is constitutive of a “fee simple” title or
absolute title in favor of the grantee.
Q: Ildefonso died leaving a parcel of land in
favor of her granddaughter Paraguya covered
by a titulo posesorio issued sometime in 1983
or 1985 in the name of the former. However,
Paraguya found that a title on the same land
was issued in the name of Escurel, the
administrator of her grandfather’s estate. To
protect her rights, she sought the annulment of
Escurel’s title alleging that such was obtained
through fraud and deceit. In defense, Escurel
stated that she acquired the title through her
father who applied for a free patent over the
subject properties, resulting in the issuance of
Free Patent No. V-3 005844 under OCT No. P-
17792 in her name. Should the trial court give
due course to Paraguya’s complaint?
A: No. Paraguya’s complaint for annulment of title
should be dismissed altogether since she merely
relied on the titulo posesorio issued in favor
Ildefonso sometime in 1983 or 1985. Based on
Section 1 of PD 892, entitled "Discontinuance of
the Spanish Mortgage System of Registration and
of the Use of Spanish Titles as Evidence in Land
Registration Proceedings," Spanish titles can no
longer be used as evidence of ownership after six
(6) months from the effectivity of the law, or
starting August 16, 1976. (Laura Paraguya v.
628
 LAND TITLES AND DEEDS
Spouses Alma and Emetrio Crucillo, G.R. No.
200265, December 02, 2013). [Perlas-Bernabe]
Q: Carmen Galeno, a co-owner of the subject
property applied for a petition for correction
of the land area. She alleged that there was a
discrepancy as the title reflects only 20,498
square meters while the certification issued by
the DENR Office of the Regional Technical
Director shows an area of 21,298 square
meters. The trial court, in allowing the
evidence to be presented ex parte, granted the
petition on the basis of the Certification. It was
only after the decision of the trial court that
the Office of the Solicitor General filed a
motion for reconsideration opposing the
petition for correction on the ground that the
no competent evidence was given to warrant a
correction.
(a) Can the Office of the Solicitor General still
question the propriety of the petition even
after judgment?
(b) Should the petition for correction be
granted?
A:
(a) Yes. The Republic cannot be barred from
assailing the petition granting the correction of
title, if based on the law and evidence of record,
such petition has no merit. Thus, the court can
admit motion for reconsideration even after
judgment of the trial court.
(b). No. The certifications issued by the Regional
Technical Director cannot be considered prima
facie evidence for a petition for correction of title.
At best, they may be considered only as prima
facie evidence of their due execution and date of
issuance but not the former. The certifications
issued by the Regional Technical Director are not
the certified copies nor authenticated
reproductions of original records in the legal
custody of government service. Considering this,
the documentary evidence is not sufficient to
warrant the correction prayed for (Republic v.
Carmen Santorio Galeno, G.R. No. 215009, January
23, 2017). [Perlas-Bernabe]
Q: Agustin executed an Affidavit of Transfer of
Real Property where Ducat is to perform all
the necessary procedures for the registration
and acquisition of title over several parcels of
land possessed and occupied by Agustin.
Before Ducat was able to accomplish his task,
Agustin died and Bernardo administered the
properties. Ducat then filed an Application for
Free Patent over the land, which was granted.
629
The parcels of land were registered in the
names of Ducat and Kiong. The heirs of
Bernardo sought the reconveyance of the land
with damages but did not question the
authenticity of the agreement. Who is the
rightful owner of the property ?
A: The spouses Ducat and Kiong. The Affidavit
of Transfer of Real Property proved Ducat’s
ownership of the property. It stated that Ducat
bought the subject property from Cecilio and
Bernardo. The heirs did not question the
authenticity and due execution of said document.
It constitutes an admission against interest made
by Bernardo, petitioners' predecessor-in-interest.
Bernardo's admission against his own interest is
binding on his heirs. The heirs' predecessor-in-
interest recognized Ducat and Kiong as the legal
owner of the lot in dispute.
Thus, there is no proof that the titling of the
subject property was fraudulently obtained by
Ducat and Kiong in their names (Heirs of Bernardo
Ulep v. Sps. Cristobal Ducat and Flora Kiong, G.R.
No. 159284, January 27, 2009).
Q: After due hearing for registration, what will
the court do?
A: If the court, after considering the evidence and
report of the LRA, finds that the applicant or the
oppositor has sufficient title proper for
registration, it shall render judgment confirming
the title of the applicant, or the oppositor, to the
land or portions thereof, as the case may be (P.D.
1529, Sec. 29).
JUDGMENT AND DECREE OF REGISTRATION
The judgment confirms the title of the
applicant or the oppositor. Partial judgment is
proper where a subdivision plan is submitted
(P.D. 1529, Sec. 28).
Judgment becomes final after 15 days from receipt
of notice of the judgment.
NOTE: The adjudication of land in a cadastral or
land registration proceeding does not become
final, in the sense of incontrovertibility until after
the expiration of one year after the entry of the
final decree of registration. The Court retains
jurisdiction over the case until after the expiration
of one year from the issuance of the decree of
registration (Gomez v. CA, G.R. No. 77770,
December 15, 1988).
 CIVIL LAW
NOTE: The principle of res judicata applies to all
cases and proceedings, including land registration
and cadastral proceedings (Aring v. Original, G.R.
No. L-18464, December 29, 1962).
Contents of judgment in land registration
proceedings
When judgment is rendered in favor of the
plaintiff, the court shall order the entry of a new
certificate of title and the cancellation of the
original certificate and owner’s duplicate of the
former registered owner.
NOTE: A judgment in rem is binding upon the
whole world, such as a judgment in a land
registration case or probate of a will; and a
judgment in personam is binding upon the parties
and their successors-in-interest but not upon
strangers.
A judgment directing a party to deliver possession
of a property to another is in personam.
An action for declaration of nullity of title and
recovery of ownership of real property, or
reconveyance, is a real action but it is an action in
personam, for it only binds the parties impleaded
although it concerns the right to a tangible thing
(Muoz v. Yabut, G.R. No. 142676, June 6, 2011).
Motion for execution of judgment not required
Upon finality of judgment in land registration
cases, the winning party does not file a motion for
execution as in ordinary civil actions. Instead, he
files a petition with the land registration court for
the issuance of an order directing the Land
Registration Authority to issue a decree of
registration, a copy of which is then sent to the
Register of Deeds for inscription in the
registration book, and issuance of the original
certificate of title.
The LRA merely issues an order for the issuance of
a decree of registration and the corresponding
certificate of title in the name of such applicant
(Top Management Programs Corp. v. Fajardo, G.R.
No.150462, June 15, 2011).
Execution pending appeal not required
Execution pending appeal is not applicable in a
land registration proceeding and the certificate of
title thereby issued is null and void.
A Torrens title issued on the basis of a judgment
that is not final is a nullity, as it is violative of the
explicit provisions of the Land Registration Act
which requires that a decree shall be issued only
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
after the decision adjudicating the title becomes
final and executory, and it is on the basis of said
decree that the Register of Deeds concerned issues
the corresponding certificate of title (Director of
Lands v. Reyes, G.R. No. L-27594, November 28,
1975).
No period within which decree may be issued
The fact that no decree has as yet been issued
cannot divest the applicant of his title to and
ownership of the land in question. There is nothing
in the law that limits the period within which the
court may issue a decree. The reason is that the
judgment is merely declaratory in character and
does not need to be enforced against the adverse
party (Del Rosario v. Limcaoco, G.R. No. 177392,
November 26, 2012).
From another perspective, the judgment does not
have to be executed by motion or enforced by
action within the purview of Rule 39 of the 1997
Rules of Civil Procedure (Republic v. Nillas, G.R. No.
159595, January 23, 2007).
Decree of registration
It is a document prepared in the prescribed form
by the LRA Administrator, signed by him in the
name of the court, embodying the final disposition
of the land by the court and such other data found
in the record, including the name and other
personal circumstances of the applicant, the
technical description of the property, liens and
encumbrances affecting it, and such other matters
as determined by the court in its judgment.
Q: In a land registration case, the court
rendered a decision granting Reyes’
application, hence the Director of Lands
appealed. Reyes moved for the issuance of a
decree of registration pending appeal. May his
motion be granted?
A: NO. Innocent purchasers may be misled into
purchasing real properties upon reliance on a
judgment which may be reversed on appeal. A
Torrens title issued on the basis of a judgment
that is not final is a nullity as it violates the explicit
provisions of the LRA, which requires that a
decree shall be issued only after the decision
adjudicating the title becomes final and executor
(Director of Lands v. Reyes, G.R. No. L-27594,
November 28, 1975).
Scope of decree of registration
630
 LAND TITLES AND DEEDS
Only claimed property or a portion thereof can be
adjudicated. A land registration court has no
jurisdiction to adjudge a land to a person who has
never asserted any right of ownership thereof.
A land registration court has no jurisdiction to
order the registration of land already decreed in
the name of another in an earlier land registration
case. A second decree for the same land would be
null and void, since the principle behind the
original registration is to register a parcel of land
only once (Rodolfo V. Francisco v. Emilliana M.
Rojas, G.R. No. 167120, April 23, 2014).
Partial Judgment in land registration
proceedings
Where only a portion of the land, subject of
registration is contested, the court may render
partial judgment provided that a subdivision plan
showing the contested land and uncontested
portions approved by the Director of Lands is
previously submitted to the court.
Effect of a decree of registration
The decree of registration binds the land, quiets
title, subject only to such exceptions or liens as
may be provided by law.
It is conclusive upon all persons including the
national government and all branches thereof.
Such conclusiveness does not cease to exist when
the title is transferred to a successor.
Land becomes registered land only upon the
transcription of the decree in the book of the
Register of Deeds, and not on the date of the
issuance of the decree (Manotok v. CLT Realty, G.R.
No. 123346, November 29, 2005).
NOTE: Title once registered cannot be impugned,
altered, changed, modified, enlarged or
diminished, except in a direct proceeding
permitted by law.
Reopening of judgment or decree of
registration
The court has no jurisdiction or authority to
reopen the judgment or decree of registration, nor
impair the title or other interest of a purchaser
holding a certificate for value and in good faith, or
his heirs and assigns, without his or their written
consent.
631
Effects of the entry of the decree of registration
in the National Land Titles and Deeds
Registration Authority (NALDTRA)
1. This serves as the reckoning date to determine
the one year period from which one can
impugn the validity of the registration;
2. One year after the date of entry, it becomes
incontrovertible, and amendments will not be
allowed except clerical errors. It is deemed
conclusive as to the whole world; and
3. Puts an end to litigation.
NOTE: An application for registration of a titled
land constitutes a collateral attack on the existing
title (SM Prime Holdings v. Madayag, G.R. No.
164687, February 12, 2009).
WRIT OF POSSESSION
An order by which the sheriff is commanded to
place a person in possession of a real or personal
property.
The writ may be issued not only against the
person defeated in the registration case but also
against any one adversely occupying the land
during the proceedings up to the issuance of the
decree (Vencilao v. Vano, G.R. No. L-25660,
February 23, 1990).
The writ does not lie against a person who
entered the land after the issuance of the decree
and who was not a party in the case. He may only
be proceeded against in a separate action for
ejectment or reivindicatory action (Bernas v.
Nuevo, G.R. No. L-58438, January 31, 1984).
The writ is imprescriptible. A writ of demolition is
but a complement of the writ of possession
(Gawaran v. Intermediate Appellate Court, G.R. No.
L-72721, June 16, 1988; Lucero v. Loot, G.R. No. L-
16995, October 28, 1968).
It may be issued by a special order of the court.
Mandamus is a proper remedy to compel the
issuance of a writ of possession (Edralin v.
Philippine Veterans Bank, G.R. No. 168523, March 9,
2011).
Instances where a writ of possession may be
issued
1. In a land registration proceeding, which is a
proceeding in rem;
2. In an extrajudicial foreclosure of a realty
mortgage;
 CIVIL LAW
3. In a judicial foreclosure of mortgage, a quasi in
rem proceeding, provided that the mortgagor
is in possession of the mortgaged realty and no
third person, not a party to the foreclosure suit
had intervened; and
4. In execution sales.
Issuance of writ of possession not ministerial
where third party is in adverse possession or
is not a privy to the debtor
GR : A purchaser in a public auction sale of a
foreclosed property is entitled to a writ of
possession.
XPN : The possession of the property shall be
given to the purchaser or last redemptioner unless
a third party is actually holding the property
adverse to the judgment obligor (Sec. 3, Rule 39,
Rules of Court).
NOTE : The phrase ‘a third party who is actually
holding the property adversely to the judgment
obligor’ contemplates a situation in which a third
party holds the property by adverse title or right,
such as that of a co-owner, tenant or usufructuary.
The co-owner, agricultural tenant, and
usufructuary possess the property in their own
right, and they are not merely the successor or
transferee of the right of possession of another co-
owner or the owner of the property. Notably, the
property should not only be possessed by a third
party, but also held by the third party adversely to
the judgment obligor (Marquez v. Alindog, G.R. No
184045, January 22, 2014).
Q: How may possession of property be
obtained?
A: Possession of the property may be obtained by
filing an ex parte motion with the RTC court of the
province or place where the property is situated.
Upon filing of the motion and the required bond, it
becomes a ministerial duty of the court to order
the issuance of a writ of possession in favor of the
purchaser. After the expiration of the one-year
period without redemption being effected by the
property owner, the right of the purchaser to the
possession of the foreclosed property becomes
absolute (Laureano v. Bormaheco Inc., G.R. No.
137619, February 6, 2001).
Q: PNCB purchased a parcel of land in a
foreclosure sale and applied for a writ of
possession after the lapse of more than one
year. On appeal, however, it was held that the
writ of possession cannot be issued because
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
the foreclosure sale, upon which it is based,
was infirm. Is said ruling correct?
A: NO. Any question regarding the regularity and
validity of the sale, as well as the consequent
cancellation of the writ, is to be determined in a
subsequent proceeding as outlined in Sec. 8, Act
3135, as amended by Act 4118. Such question is
not to be raised as a justification for opposing the
issuance of the writ of possession, since, under the
Act, the proceeding is ex parte.
As the purchaser of the properties in the extra-
judicial foreclosure sale, PNCB is entitled to a writ
of possession. The basis of this right to possession
is the purchaser’s ownership of the property.
Mere filing of an ex parte motion for the issuance
of the writ of possession would suffice, and no
bond is required (Sulit v. CA, G.R. No. 119247,
February 17, 1997; Agcaoili, 2008).
Q: If the court granted the registration, must
the applicant move for the issuance of a writ of
possession in case he is deprived of possession
over the land subject of the registration
proceedings?
A: YES, if it is against:
1. The person who has been defeated in a
registration case; or
2. Any person adversely occupying the land or
any portion thereof during the land
registration proceedings up to the issuance of
the final decree.
However, if it is against persons who took
possession of the land AFTER final adjudication of
the same in a registration proceeding, in which
case, the remedy is to file a separate action for:
1. Unlawful entry;
2. Unlawful detainer; or
3. Reinvindicatory action, as the case may be, and
only after a favorable judgment can the
prevailing party secure a writ of possession
(Bernas v. Nuevo, G.R. No. L-58438, January 31,
1984).
Prescription of a writ of possession
GR: A petition for the issuance of a writ of
possession does not prescribe.
XPN: If a party has once made use of the benefit of
a writ of possession, he may not ask for it again, if
afterwards he loses possession of the property
obtained by virtue of the original writ.
632
 LAND TITLES AND DEEDS
Issuance of a writ of possession in a
reconstitution case
Issuance of a writ of possession cannot be issued
in reconstitution case. Reconstitution does not
confirm or adjudicate ownership over the
property covered by the reconstituted title unlike
in original land registration proceedings wherein
a writ of possession may be issued in order to
place the applicant-owner in possession.
claiming that the applicant’s OCT is fake must
file a counterclaim, and that such counterclaim
partakes the nature of a direct attack.
REASON: Fake titles do not enjoy indefeasibility.
Well-settled is the rule that the indefeasibility of a
title does not attach to titles secured by fraud and
misrepresentation. However, every certificate of
title is presumed to have been validly issued. If an
opponent claims that it is fake, he has the burden
of proving it.

DECREE OF CONFIRMATION AND EFFECT: It was as if no title was ever issued in this
REGISTRATION case to the petitioner and therefore this is hardly
the occasion to talk of collateral attack against a
It is issued by LRA after finality of judgment, and title (Heirs of Leoncio C. Oliveros, represented by
contains technical description of the land. It is Aurora B. Oliveros, et al. vs San Miguel Corporation,
subject only to an appeal. et al., G.R. No. 173531, February 1, 2012).

It is conclusive evidence of the ownership of the Q: In a case for recovery of possession based
land referred to therein and becomes indefeasible on ownership, is a third-party complaint to
and incontrovertible after one year from the nullify the title of the third-party defendant
issuance of the decree. considered a direct attack on the title?

Decree of confirmation and registration v. A: YES. If the object of the third-party complaint is
Decree of registration to nullify the title of the third-party defendant, the
third-party complaint constitutes a direct-attack
DECREE OF DECREE OF on the title because the same is in the nature of an
CONFIRMATION AND REGISTRATION OF original complaint for cancellation of title.
REGISTRATION OF TITLE
TITLE Q: If an attack is made thru a counterclaim,
should it be disregarded for being a collateral
Issued pursuant to the Issued pursuant to the attack?
Public Land Act, where Property Registration
the presumption is that Decree, where there A: NO. A counterclaim is also considered an
the land applied for already exists a title original complaint, and as such, the attack on the
pertains to the State, which is confirmed by title is direct and not collateral.
and the occupants and the court (Limcoma
possessors only claim Multi-Purpose Q: Mr. and Mrs. Roman and Mr. and Mrs. Cruz
an interest in the same Cooperative v. Republic, filed an application for registration of a parcel
by virtue of their G.R. No. 167652, July 10, of land which after due proceedings was
imperfect title or 2007). granted by the RTC acting as a land
continuous, open, and registration court. However, before the decree
notorious possession. of registration could be issued, the spouses
Roman and the spouses Cruz sold the lot to
Juan. In the notarized deed of sale, the sellers
Doctrine of non-collateral attack of a decree or
expressly undertook to submit the deed of sale
title
to the land registration court so that the title
to the property would be directly issued in
A decree of registration or a registered title cannot
Juan's name.
be impugned, enlarged, altered, modified, or
diminished either in collateral or direct
a. Is such stipulation valid?
proceeding, after the lapse of one year from the
b. Distinguish a direct attack from a
date of its entry.
collateral attack on a title.
c. If the title in (a) is issued in the names of
XPN: Fake or non-existent titles.
the original sellers, would a motion filed
by Juan in the same case to correct or
NOTE: An oppositor cannot simply invoke the
amend the title in order to reflect his name
nullity of the title as a defense as it partakes
the nature of a collateral attack. The opponent

633
 CIVIL LAW
as owner considered be collateral attack? Affidavits of merit required to prove FAMEn
(2015 Bar)
1. Affidavit setting forth the facts and
A: circumstances alleged to constitute such
a. YES, because when one who is not the owner fraud, accident, mistake, or execusable
of the property sells or alienates it and later negligence;
the seller or grantor acquires title, such title
passes by operation of law to the buyer or Reason: It is to enable the court to determine
grantee (NCC, Art. 1434). if the movant’s claim of fraud, etc. is not mere
b. A direct attack on a title is one where the conclusion but is indeed borne our by the
action filed is precisely for the purpose of relevant facts (Yap v. Tanada, G.R. No. L-32917,
pointing out the defects in the title with a July 19, 1988).
prayer that it be declared void. A collateral
attack is one where the action is not instituted 2. Affidavit setting forth the facts claimed to
for the purpose of attacking the title but the constitute the movant’s meritorious cause
nullity of the title is raised as a defense in a of action or defense.
different action.
c. NO, because Juan is not attacking the title but Reason: It would be useless, a waste of time,
merely invoking his right as transferee. Hence, to set aside the judgment and reopen the case
it does not involve a collateral attack on the to allow the movant to adduce evidence when
title. he has no valid cause of action or meritorious
defense (Yap v. Tanada, G.R. No. L-32917, July
19, 1988).
REVIEW OF DECREE OF REGISTRATION
EXTRINSIC FRAUD INTRINSIC FRAUD
refers to any fraudulent refers to acts of a party
Available remedies to question the validity of act of the successful in a litigation during
judgment in a registration case party in a litigation the trial, such as the
which is committed use of forged
1. New trial or reconsideration (Rule 37, Rules of outside the trial of a instruments or
Court); case against the perjured testimony,
2. Appeal to the CA or SC in the manner as defeated party, or his which did not affect the
ordinary actions (Section 33, PD 1529); agents, attorneys or presentation of the
3. Relief of judgment (Rule 38, Rules of Court); witnesses, whereby said case, but did prevent a
4. Annulment of judgment (Rule 37, Rules of defeated party is fair and just
Court); prevented from determination of the
5. Claim under Assurance Fund (Section 95, PD presenting fully and case.
1529); fairly his side of the
6. Review of Decree of Registration (Section 32, PD case.
1529); Fraud in the Not fraud in the
7. Reversion (Section 101, CA 141); procurement of procurement of
8. Action for reconveyance; judgment. jugment.
9. Cancellation of title;
10. Quieting of Title; Q: What kind of accident does the law
11. Criminal prosecution under the Revised Penal contemplate?
Code.
A: It must appear that there was accident or
MOTION FOR NEW TRIAL surprise which ordinary prudence could not have
guarded against, and by reason of which the party
Grounds applying has probably been impaired in his rights.
Illness constitutes accident over which a party has
1. (FAMEn) - extrinsic Fraud, accident, nocontrol. Failure to attend trial for lack of
mistake, or excusable negligence; advance notice justifies new trial (Agcaoili, 2015).
2. Newly discovered evidence, which he
could not, with reasonable diligence, have Q: What kind of mistake does the law
discovered, and produced at the trial, and contemplate?
which if presented would probably alter
the result;

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 634
 LAND TITLES AND DEEDS
A: It is some unintentional act, omission, or error
arising from ignorance, surprise, imposition or
misplaced confidence. It may arise either from
unconsciousness, ignorance, forgetfulness, impo-
sition, or misplaced confidence. Belief that there is
no need to appear during the trial because there
was already a compromise agreement is a ground
for new trial (Agcaoili, 2015).
Q: What kind of excusable neglect does the law
contemplate?
A: It means a failure to take the proper steps at the
proper time, not in consequence of the party’s
own carelessness, inattention, or willful disregard
of the process of the court, but in consequence of
some unexpected or unavoidable hindrance or
accident, or reliance on the care and vigilance of
his counsel or on promises made by the adverse
party (Agcaoili, 2015).
MOTION FOR RECONSIDERATION
Grounds
1. Damages awarded were excessive.
2. Insufficiency of evidence to support the
decision;
3. Final order or decision is contrary to law.
Similarities of New Trial and Reconsideration
The period to file the motion must be within the
period to take an appeal.
No motion for extension of time shall be allowed.
Also. a pro forma motion for new trial or
reconsideration shall not toll the reglementary
period.
NOTE: A party who has filed a timely motion for
new trial cannot file a petition for relief after his
motion has been denied. These two remedies are
exclusive of each other. He should appeal from the
judgment and question such denial. Relief will not
be granted to a party who seeks to be relieved
from the effects of a judgment when the loss of the
remedy at law was due to his own negligence, or a
mistaken mode of procedure (Feria and Noche,
Civil Procedure, Vol. I, 644).
APPEAL
Modes of appeal
(a) Ordinary appeal — The appeal to the
Court of Appeals in cases decided by the
635
Regional Trial Court in the exercise of its
original jurisdiction shall be taken by
filing a notice of appeal with the court
which rendered the judgment or final
order appealed from and serving a copy
thereof upon the adverse party. No record
on appeal shall be required except in
special proceedings and other cases of
multiple or separate appeals where the
law or the Rules so require. In such cases,
the record on appeal shall be filed and
served in like manner.
(b) Petition for review — The appeal to the
Court of Appeals in cases decided by the
Regional Trial Court in the exercise of its
appellate jurisdiction shall be by petition
for review in accordance with Rule 42.
(c) Appeal by certiorari — In all cases
where only questions of law are raised or
involved, the appeal shall be to the
Supreme Court by petition for review on
certiorari in accordance with Rule 45
(Agcaoili, 2015).
Period to file an appeal
The appeal shall be taken within fifteen (15) days
from notice of the judgment or final order
appealed from. Where a record on appeal is
required, the appellant shall file a notice of appeal
and a record on appeal within thirty (30) days
from notice of the judgment or final order.
NOTE: This is subject to the Fresh Period Rule
where the person who seeks an appeal shal
acquire a fresh period of 15 days from receipt of
the final order or the order dismissing their
motion for reconsideration or new trial (Neypes v.
Court of Appeals, G.R. No.141524, September 14,
2005).
PETITION FOR RELIEF FROM JUDGMENT
Grounds: (FAMEn)
1. Fraud;
2. Accident;
3. Mistake; and
4. Excusable negligence.
Period to file
A petition for relief must be filed within sixty (60)
days after the petitioner learns of the judgment,
final order, or other proceeding to be set aside,
and not more than six (6) months after entry of
judgment (Rule 38, Rules of Court).
 CIVIL LAW
Requirements for its validity
1. Accompanied with affidavits showing the
fraud, accident, mistake, or excusable
negligence relied upon;
2. The facts constituting the petitioner’s
good and substantial cause of action or
defense, as the case may be; and
3. Verification.
NOTE: The date of finality of the judgment or final
order shall be deemed to be the date of its entry.
PETITION FOR ANNULMENT OF JUDGMENT
When available
The annulment by the Court of Appeals of
judgments or final orders and resolutions in civil
actions of Regional Trial Courts for which the
ordinary remedies of new trial, appeal, petition for
relief or other appropriate remedies are no longer
available through no fault of the petitioner
(Section 1, Rule 47).
Grounds for annulment
1. Extrinsic fraud; and
NOTE: This shall not be a valid ground if it
was availed of, or could have been availed of,
in a motion for new trial or petition for relief.
2. Lack of jurisdiction (Section 2, Rule 47).
NOTE: If the ground for annulment is lack of
jurisdiction, another remedy is certiorari under
Rule 65, in which case, the Court of Appeals does
not have exclusive jurisdiction since the Supreme
Court also has such jurisdiction (Feria and Noche,
Civil Procedure, Vol. I, 644).
Action by the court
Should the court find no substantial merit in the
petition, the same may be dismissed outright with
specific reasons for such dismissal.
Should prima facie merit be found in the petition,
the same shall be given due course and summons
shall be served on the respondent (Section 5, Rule
47).
Effect of judgment
A judgment of annulment shall set aside the
questioned judgment or final order or resolution
and render the same null and void, without
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
prejudice to the original action being refiled in the
proper court.
However, where the judgment or final order or
resolution is set aside on the ground of extrinsic
fraud, the court may on motion order the trial
court to try the case as if a timely motion for new
trial had been granted therein (Section 7, Rule 47).
CLAIM AGAINST THE ASSURANCE FUND
Purpose
Act No. 496 provides for an Assurance Fund to pay
for the loss or damage sustained by any peron
who, without negligence on his part, is wrongfully
deprived of any land or interest therein on
account of the bringing of the same under the Act
or registration of any other persons as owner of
the land (Agcaoili, 2015).
Requisites for recovery:
1. That a person sustains loss or damage, or
is deprived of any estate or interest in
land;
2. On account of the bringing of land under
the operation of the Torrens system
arising after original registration;
3. Through fraud, error, omission, mistake,
misdescription in any certificate of title or
in any entry or memorandum in the
registration book;
4. Without negligence on his part; and
5. Is barred or precluded from bringing an
action for the recovery of such land or
estate or interest therein (Section 95,
Property Registration Decree).
Who must file
It is a condition sine qua non that he be the
registered owner, and, as to holders of a TCT, that
they be innocent purchasers in good faith and for
value. Moreover, there must be a showing that
there is no negligence on the part of the party
sustaining the loss or damage or deprivation of
any land or interest therein (La Urbana v.
Bernardo, G.R. No. 41915, January 8, 1936).
Against whom
1. The Register of Deeds of the province or city
where the land lies and the National Treasurer - If
the action is brought for the recovery of loss or
damage or for deprivation of land or of any estate
or interest therein arising through fraud,
negligence, omission, mistake or misfeasance of
the court personnel, the Register of Deeds or other
636
 LAND TITLES AND DEEDS
employees of the registry in the performance of
their duties.
2. The action shall be brought against the Register
of Deeds, the National Treasurer and such other
persons - If the action is brought for the recovery
of loss or damage or for deprivation of land or of
any estate or interest therein arising through
fraud, negligence, omission, mistake or
misfeasance of persons other than the court
personnel, the Register of Deeds or other
employees of the Registry (Section 96, P.D. 1529).
Limitation on the amount to be recovered
The plaintiff cannot recover as compensation
more than the fair market value of the land at the
time he suffered the loss, damage, or deprivation
thereof (Sec. 99, Property Registration Decree).
Amendment or cancellation of title
In the event the Assurance Fund is held liable on
account of the unlawful or erroneous issuance of a
certificate of title, the Register of Deeds, upon
authority of the LRA Administrator, shall file the
necessary action to amend or cancel the title or
perform any other act as may be directed by the
court. Such action may pre-empt any ac tion
against the Assurance Fund (Agcaoili, 2015).
Prescriptive period
The action must be brought within 6 years from
the time the right to bring the action first occured
(Sec. 102, Property Registration Decree).
PETITION FOR REVIEW OF DECREE OF
REGISTRATION
The Torrens title becomes indefeasible and
incontrovertible one year from the issuance of the
final decree and is generally conclusive evidence
of the ownership of the land referred to therein.
However, courts may reopen proceedings already
closed by final decision or decree when
application for review is filed by the party
aggrieved within one year from the issuance of the
decree of registration.
The one-year period stated in Section 32 of PD No.
1529 within which a petition to reopen and
review the decree of registration refers to the
decree of registration which is prepared and
issued by the Land Registration Authority
pursuant to Section 31 of the Decree (Agcaoili,
2015).
637
Period to file
The petition for review must be filed within one
year from entry of decree of registration (Sec. 32,
Property Registration Decree).
With respect to lands covered by patents, the one
year period starts from the date of issuance of the
patent (Sumail v. Judge of CFI of Cotabato, G.R. No.
L-8278, April 30, 1955).
Requisites
1. The petitioner must have an estate or
interest in the land;
2. He must show actual or extrinsic fraud in
the procurement of the decree of
registration;
3. The petition must be filed within one year
from the issuance of the decree by the
Land Registration Authority; and
4. The property has not yet passed to an
innocent purchaser for value.
Q: Lozada was able to secure the registration
over a parcel of land located in Las Piñas upon
securing a favorable judgment in the RTC of
Makati. Within a year from its issuance,
Bracewell filed a petition for review of a
decree of registration before the RTC of Las
Piñas City, alleging that the decree was
fraudulently acquired by deliberately
concealing his involvement in the case. The
RTC of Las Piñas then rendered a decision in
favor of Bracewell. However, Lozada
questioned the latter’s jurisdiction. He alleged
that pursuant to Section 32 of P.D. 1529, the
petition for review must be filed in the same
branch which ordered the issuance of the
decree. Moreover, he argued that the petition
for review should not have been entertained
since it was filed beyond the one-year period.
Is Lozada’s contention correct?
A: NO. Since the subject lot is situated in Las Piñas
City, it was proper for Bracewell to file the petition
for review in the RTC of Las Piñas City. Also, the
petition was timely filed since the one-year period
commences from the date of entry of the decree.
The title is not finally adjudicated and the decision
in the registration proceeding continues to be
under the control and sound discretion of the
court rendering it (Lozada v. Bracewell, GR.No.
179155, April 2, 2014). [Perlas-Bernabe]
PURCHASER IN GOOD FAITH AND FOR VALUE
A purchaser in good faith and for value is one who
buys property of another, without notice that
 CIVIL LAW
some other person has a right to, or interest in,
such property, and pays a full and fair price for the
same, at the time of such purchase, or before he
has notice of the claim or interest of some other
person in the property. Good faith is the opposite
of fraud and of bad faith, and its non-existence
must be established by competent proof. Sans
such proof, a buyer is deemed to be in good faith
and his interest in the subject property will not be
disturbed. A purchaser of a registered property
can rely on the guarantee afforded by pertinent
laws on registration that he can take and hold it
free from any and all prior liens and claims except
those set forth in or preserved against the
certificate of title [Philippine Charity Sweepstakes
Office (PCSO) v. New Dagupan Metro Gas
Corporation, et al.; G.R. No. 173171, July 11, 2012].
NOTE: An innocent purchaser for value includes a
lessee, mortgagee, or other encumbrances for
value.
Purchaser in good faith and for value is the same
as a purchaser for value.
Q: Spouses Roque Magsano and Susana Capelo
(Sps. Magsano), the parents of Norma, et. al.,
executed in favor of PSLB a Real Estate
Mortgage over their parcel of land as security
for their loan. Sps. Magsano defaulted in their
obligation, causing the extra-judicial foreclose
of the mortgaged property in which PSLB
emerged as the highest bidder. It subsequently
sold the subject land to Sps. Manuel.
Thereafter, Sps. Magsano refused to vacate the
premises despite PSLB’s demands; hence, the
latter applied for and was granted a writ of
possession and demolition. Norma et. al.
sought to annul the Real Estate Mortgage. They
averred that Roque Magsano passed away
prior to the execution of the Real Estate
Mortgage; hence, the mortgage was void, and
could not have conferred any right to PSLB
which it could pass to Sps. Manuel. PSLB and
the heirs of Sps. Manuel denied knowledge of
the death of Roque, and averred that
petitioners have no cause of action to seek the
annulment of the Real Estate Mortgage since
they were not parties thereto.
3. Is the Real Estate Mortgage void?
4. Are Sps. Manuel purchasers in
good faith?
A: 1. No. The validity of the Mortgage in favor of
PSLD should be limited only to the Susana’s
portion. At the time the Mortgage was constituted,
Roque was already deceased. Upon Roque’s death,
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
the conjugal partnership between him and Susana
was dissolved. Thus, an implied co-ownership
arose among Susana and the other heirs of Roque
with respect to his share in the assets of the
conjugal partnership pending liquidation.
While she herself as co-owner had the right to
mortgage or even sell her undivided interest in
the subject property, she could not mortgage or
otherwise dispose of the same in its entirety
without the consent of the other co-owners.
2. No. While the rule is that every person dealing
with registered land may safely rely on the
correctness of the certificate of title issued
therefor and the law will in no way oblige him to
go beyond the certificate to determine the
condition of the property, where the land sold is in
the possession of a person other than the vendor,
as in this case, the purchaser must go beyond the
certificate of title and make inquiries concerning
the actual possessor.
Here, Norma, et. al. were in possession of the
subject property when Sps. Manuel bought the
same. There is no showing that Sps. Manuel
inspected the property and inquired into the
nature of petitioners' possession and/or the
extent of their possessory rights as a measure of
precaution (Norma Magsano v. Pangasinan Savings
& Loan Bank, G.R. No. 215038, October 17, 2016).
[Perlas-Bernabe]
A forged deed may be the root of a valid title
GR: A forged or fraudulent deed is a nullity and
conveys no title.
XPN: If the certificate of title has already been
transferred from the name of the true owner to
the name of the forger or the name indicated by
the forger, and while it remained that way, the
land was subsequently sold to an innocent
purchaser (Muoz v. Yabut, G.R. No. 142676, June 6,
2011).
Q: If the land subject of the dispute was not
brought under the operation of the Torrens
system, will the concept of an innocent
purchaser for value apply?
A: NO. If the land in question was not brought
under the operation of Torrens system because
the original certificate of title is null and void ab
initio, the concept of an innocent purchaser for
value does not apply.
638
 LAND TITLES AND DEEDS
NOTE: Good faith and bad faith is immaterial in
case of unregistered land. One who purchases an
unregistered land does so at his peril.
Q: Nestor applied for and was granted a Free
Patent over a parcel of agricultural land in
General Santos City. He presented the Free
Patent to the Register of Deeds, and he was
issued a corresponding Original Certificate of
Title (OCT) No. 375. Subsequently, Nestor sold
the land to Eddie. The deed of sale was
submitted to the Register of Deeds and on the
basis thereof, OCT No. 375 was cancelled and
Transfer Certificate of Title (TCT) No. 4576
was issued in the name of Eddie. In 1986, the
Director of Lands filed a complaint for
annulment of OCT No. 375 and TCT No. 4576
on the ground that Nestor obtained the Free
Patent through fraud. Eddie filed a motion to
dismiss on the ground that he was an innocent
purchaser for value and in good faith and as
such, he has acquired a title to the property
which is valid, unassailable and indefeasible.
Decide the motion. (2000 Bar)
A: Nestor’s motion to dismiss the complaint for
annulment of OCT No. 375 and TCT No. 4576
should be denied for the following reasons:
1. Eddie cannot claim protection as an innocent
purchaser for value nor can he interpose the
defense of indefeasibility of his title, because
his TCT is rooted on a void title. Under Sec.
91, C.A. No. 141, as amended, otherwise
known as the Public Land Act, statements of
material facts in the applications for public
land must be under oath. Sec. 91 of the same
act provides that such statements shall be
considered as essential conditions and parts
of the concession, title, or permit issued, any
false statement therein, or omission of facts
shall ipso facto produce the cancellation of
the concession. The patent issued to Nestor
in this case is void ab initio not only because
it was obtained by fraud but also because it
covers 30 hectares which is far beyond the
maximum of 24 hectares provided by the
free patent law.
2. The government can seek annulment of the
original and transfer certificates of title and
the reversion of the land to the State. Eddie's
defense is untenable. The protection
afforded by the Torrens System to an
innocent purchaser for value can be availed
of only if the land has been titled thru
judicial proceedings where the issue of fraud
becomes academic after the lapse of one
year from the issuance of the decree of
639
registration. In public land grants, the action
of the government to annul a title
fraudulently obtained does not prescribe
such action and will not be barred by the
transfer of the title to an innocent purchaser
for value.
Q: Heirs of Kusop, filed for application of sales
patents for Lot X, a lot reserved for recreation
and health purposes under Proclamation No.
168. The DENR approved such application and
conveyed 16 titles to Kusop, who subsequently
transferred it to AFP-RSBS. Republic filed a
complaint for reversion, and annulment of
AFP-RSBS’ titles since the Lot X is classified as
inalienable and non-disposable public land. Is
the Republic correct?
A: YES. Certificates of title issued covering
inalienable and non-disposable public land, even
in the hands of an alleged innocent purchaser for
value, should be cancelled. The Heirs of Kusop
didn’t acquire any right to Lot X. The sales patents
over Lot X are null and void, for at the time the
sales patents were applied for and granted, the
land had lost its alienable and disposable
character (Republic of the Philippines v. AFP
Retirement and Separation Benefits System, G.R. No.
180463, January 16, 2013) ( Del Castillo, J.).
Q: Mahilum entrusted the owner’s duplicate
copy of her land to Perez, real estate broker,
who claimed that she can assist the latter in
obtaining a loan, with the title serving as
collateral. Mahilum demanded the return of
the title but Perez failed to produce the same
alleging that it was lost. Thereafter Mahilum
was informed by the RD that the title was not
lost but was presented by Sps. Ilano who
claimed that the property was sold to them
and showed Mahilum a notarized Agreement
and a Deed of Absolute Sale containing
Mahilum’s forged signature. However, the
spouses did not register the title in their
names. Mahilum then sought the annulment of
the Agreement and the Deed of Absolute Sale.
Spouses Ilano prayed for the dismissal of the
complaint arguing that Mahilum failed to
allege that they were purchasers in bad faith
and in the absence of such an allegation, the
presumption that respondents are purchasers
in good faith prevails. Can the Spouses Ilano
claim that they are purchasers in good faith?
A: NO. Since the title of the property remained
with Mahilum, there is no new title to annul.
Indeed, if the agreement and deed of sale are
forgeries, then they are a nullity and convey no
 CIVIL LAW
title. The underlying principle is that no one can
give what one does not have. Moreover, in order
for the holder of a certificate for value issued by
virtue of the registration of a voluntary
instrument may be considered a holder in good
faith for value, the instrument registered should
not be forged. When the instrument presented is
forged, even if accompanied by the owner’s
duplicate certificate of title, the registered owner
does not thereby lose his title, and neither does
the assignee in the forged deed acquire any right
or title to the property (Mahilum v. Spouses Ilano,
G.R. No. 197923, June 22, 2015)
Q: Spouses Rufloe acquired a parcel of land
located at Muntinlupa. However, in 1978 Delos
Reyes forged the signatures of the spouses in
Deed of Sale to make it appear that the
disputed property was sold to her by the
former. On the basis of the said deed of sale,
Delos Reyes succeeded in obtaining title in her
name. Hence, the Rufloes filed a complaint for
damages against Delos Reyes alleging that the
Deed of Sale was falsified as their signatures
appearing thereon was forged.
During the pendency of the case, Delos Reyes
sold the subject property to the Burgos
siblings who then sold the same to their aunt,
Leonarda Burgos. However, the sale in favor of
Leonarda was not registered. Thus, no title
was issued in her name. The subject property
remained in the name of the Burgos siblings
who also continued paying the real estate
taxes thereon.
a. Are the sales of the subject property by
Delos Reyes to the Burgos siblings and the
subsequent sale to Leonarda valid and
binding?
b. Are the respondents considered as
innocent purchasers in good faith and for
value despite the forged deed of sale of
their transferor Delos Reyes?
A:
a. The forged deed of sale was null and void
and conveyed no title. It is a well-settled
principle that no one can give what one does
not have, nemo dat quod non habet. One can
sell only what one owns or is authorized to
sell, and the buyer can acquire no more right
than what the seller can transfer legally. Due
to the forged deed of sale, Delos Reyes
acquired no right over the subject property
which she could convey to the Burgos
siblings. All the transactions subsequent to
the falsified sale between the spouses Rufloe
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
and Delos Reyes are likewise void, including
the sale made by the Burgos siblings to their
aunt, Leonarda.
b. The evidence shows that the Rufloe caused a
notice of adverse claim to be annotated on the
title of Delos Reyes as early as November 5,
1979. The annotation of an adverse claim is a
measure designed to protect the interest of a
person over a piece of real property, and
serves as a notice and warning to third parties
dealing with said property that someone is
claiming an interest on the same or may have
a better right than the registered owner
thereof. Despite the notice of adverse claim,
the Burgos siblings still purchased the
property in question. Equally significant is the
fact that Delos Reyes was not in possession of
the subject property when she sold the same
to the Burgos siblings. Leonarda cannot be
categorized as a purchaser in good
faith. Since it was the Rufloes who continued
to have actual possession of the property,
Leonarda should have investigated the nature
of their possession (Adoracion Rosales Rufloe,
et al., v. Leonarda Burgos et al., G.R. No.
143573, January 30, 2009).
Q: Cipriano, one of Pablo’s heirs, executed an
extrajudicial settlement of a sole heir and
confirmation of sales, declaring himself as the
only heir and confirmed the sales made in
favor of the spouses Rodolfo. Consequently, a
certificate of title was issued in the name of the
spouses, who then sold the property to
Guaranteed Homes. Pablo’s other descendants
seek reconveyance of the property sold to the
spouses alleging that the extrajudicial
settlement was forged. Who is the rightful
owner of the property?
A: Guaranteed Homes is the rightful owner,
even assuming that the extrajudicial settlement
was a forgery. Generally a forged or fraudulent
deed is a nullity and conveys no title. There are,
however, instances when such a fraudulent
document may become the root of a valid title.
One such instance is where the certificate of title
was already transferred from the name of the true
owner to the forger, and while it remained that
way, the land was subsequently sold to an
innocent purchaser. For then, the vendee had the
right to rely upon what appeared in the certificate.
Also, the extrajudicial settlement was recorded in
the Register of Deeds. Registration in the public
registry is notice to the whole world (Guaranteed
Homes, Inc. v. Heirs of Valdez, Heirs of Tugade,
640
 LAND TITLES AND DEEDS
Heirs of Gatmin, Hilaria Cobero and Alfredo and rightful owner of the property (Sec. 35, Chapter
Siony Tepol, G.R. No. 171531, January 30, 2009). XII, Title III, The Administrative Code of 1987).

Q: Spouses X and Y mortgaged a piece of Who institutes the action

registered land to A, delivering as well the OCT
to the latter, but they continued to possess and
cultivate the land, giving 1/2 of each harvest to
A in partial payment of their loan to the latter.
A however, without the knowledge of X and Y,
forged a deed of sale of the aforesaid land in
favor of himself, got a TCT in his name, and
then sold the land to B.
It is instituted by the government, through the
Solicitor General.
Grounds
In all cases where lands of the public domain and
the improvements thereon and all lands are held
in violation of the Constitution.

B bought the land relying on A's title, and NOTE: The State is not barred by res judicata nor
thereafter got a TCT in his name. It was only estoppel in instituting an action for reversion.
then that the spouses X and Y learned that
their land had been titled in B's name. May RECONVEYANCE
said spouses file an action for reconveyance of
the land in question against B? Reason (1999 Who institutes the action
Bar).
It is granted to the rightful owner of land which
A: The action of X and Y against B for has been wrongfully or erroneously registered in
reconveyance of the land will not prosper the name of another to compel the latter to
because B has acquired a clean title to the transfer or reconvey the land to him.
property being an innocent purchaser for value.
When to file
A forged deed is an absolute nullity and conveys
no title. The fact that the forged deed was A landowner whose property was wrongfully or
registered and a certificate of title was issued in erroneously registered under the Torrens system
his name, did not operate to vest upon A may bring an action, after one year from the
ownership over the property of X and Y. The issuance of the decree, for the reconveyance of the
registration of the forged deed will not cure the subject property. Such an action does not aim or
infirmity. However, once the title to the land is purport to re-open the registration proceeding
registered in the name of the forger and title to the and set aside the decree of registration, but only to
land thereafter falls into the hands of an innocent show that the person who secured the registration
purchaser for value, the latter acquires a clean title of the questioned property is not the real owner
thereto. A buyer of a registered land is not thereof (Agcaoili, 2015).
required to explore beyond what the record in the
registry indicates on its face in quest for any ACTION FOR ACTION FOR
hidden defect or inchoate right which may REVERSION RECONVEYANCE
subsequently defeat his right thereto. This is the The State files the It is granted to the
"mirror principle" of the Torrens system which action through the rightful owner of land
makes it possible for a forged deed to be the root Solicitor General. which has been
of a good title. wrongfully or
erroneously registered
REVERSION in the name of another.
Public domain Registered property
Subject of Reversion The State is not barred Persons qualified to file
by res judicata nor an action for
Reversion connotes restoration of public land estoppel in instituting reconveyance can be
fraudulently awarded or disposed of to the mass an action for reversion. barred by res judicata
of the public domain and may again be the subject and estoppel.
of disposition in the manner prescribed by law to
qualified applicants. It is instituted by the QUIETING OF TITLE
government, through the Solicitor General. But an
action for cancellation, not reversion, is proper Whenever there is a cloud on title to real property
where private land had been subsequently titled, or any interest therein, by reason of any
and the party plaintiff in this case is the prior instrument, record, claim, encumbrance or

641
 CIVIL LAW
proceedings which is apparently valid or effective
but is in truth and in fact invalid, ineffective,
voidable, or unenforceable, and may be prejudicial
to said title, an action may be brought to remove
such cloud or to quiet the title. An action may also
be brought to prevent a cloud from being cast
upon title to real property or any interest therein
(Art. 476, Civil Code).
Cloud on the title
A cloud on title is an outstanding claim or
encumbrance which, if valid, would affect or
impair the title of the owner of a particular estate,
and on its face has that effect, but can be shown by
extrinsic proof to be invalid or inapplicable to the
estate in question. The remedy for removing a
cloud on title is usually the means of an action to
quiet title (Black’s Law Dictionary, 6th Ed., 255).
CADASTRAL LAND REGISTRATION
It is a proceeding in rem, initiated by the filing of a
petition for registration by the government, not by
the persons claiming ownership of the land
subject thereof, and the latter are, on the pain of
losing their claim thereto, in effect compelled to go
to court to make known their claim or interest
therein, and to substantiate such claim or interest.
Purpose of cadastral registration
Here, the government does not seek the
registration of land in its name. The objective of
the proceeding is the adjudication of title to the
lands or lots involved in said proceeding.
Furthermore, it is to serve public interest by
requiring that the titles to the lands be settled and
adjudicated (Act. No. 2259, Sec. 1).
Extent of authority of cadastral courts
The cadastral court is not limited to merely
adjudication of ownership in favor of one or more
claimants. If there are no successful claimants, the
property is declared public land.
Cadastral courts do not have the power to
determine and adjudicate title to a lot already
covered by homestead patent to a person other
than a patentee.
Cadastral court possesses no authority to award
damages.
NOTE: A parcel of forest land is within the
exclusive jurisdiction of the Bureau of Forestry
and beyond the power and jurisdiction of the
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
cadastral court to register under the Torrens
system.
CERTIFICATE OF TITLE
It is the transcript of the decree of registration
made by the Register of Deeds in the registry. It
accumulates in one document a precise and
correct statement of the exact status of the fee
simple title which an owner possesses.
Registration is the operative act which gives
validity to the transfer or creates a lien upon the
land. A certificate of title serves as an evidence of
an indefeasible and incontrovertible title to the
property in favor of the person whose name
appears therein (Spouses Vilbar v. Opinion, G.R. No.
176043, January 15, 2014).
NOTE: A certificate of title is different from a title.
Title constitutes a just cause of exclusive
possession or the foundation of ownership of
property. A certificate of title is merely an
evidence of ownership and not the title to the land
itself (Castillo v. Escutin, G.R. No. 171056, March 13,
2009).
Types of certificates of title
1. Original Certificate of Title (OCT) – The first
title issued in the name of the registered
owner by the Register of Deeds covering a
parcel of land which had been registered
under the Torrens system by virtue of a
judicial or administrative proceeding. It
consists of one original copy filed in the
Register of Deeds, and the owner’s duplicate
certificate delivered to the owner; and
2. Transfer Certificate of Title (TCT) – The title
issued by the Register of Deeds in favor of a
transferee to whom the ownership of a
registered land has been transferred by any
legal mode of conveyance.
Difference between title over land, land title,
certificate of title and deed
TITLE LAND TITLE
A juridical act or deed The evidence of the
which is not sufficient owner’s right or extent
by itself to transfer of interest, by which he
ownership but provides can maintain control,
only for a juridical and as a rule, assert
justification to effect the right to exclusive
acquisition or transfer possession and
642
 LAND TITLES AND DEEDS
ownership. enjoyment of property. the annulment and cancellation of the TCT
issued in the name of St. Jude. Is the
government estopped from questioning the
approved subdivision plan which expanded
CERTIFICATE OF DEED the areas covered by the TCTs in question?
TITLE
A: YES, estoppels against the public are less
The transcript of the The instrument in favored. They should not be invoked except in
decree of registration writing, by which any rare and unusual circumstances, nor if it would
made by the Register of real estate or interest operate to defeat the effective operation of a
Deeds in the registry. It therein is created, policy adopted to protect the public. They must
accumulates in one alienated, mortgaged or be applied with circumspection and only in those
document a precise and assigned, or by which special cases where the interests of justice clearly
correct statement of the title to any real estate require it. In the case at bar, St. Jude failed to
exact status of the fee may be affected in law correct and recover the alleged increase in the
simple title which an or equity. land area for nearly 20 years. Its prolonged
owner possesses. inaction strongly militates against its cause, as it is
tantamount to laches.
Ownership as distinguished from title
Verily, all persons dealing with registered land
may safely rely on the correctness of the
OWNERSHIP TITLE certificate of title issued therefor, and the law or
the courts do not oblige them to go behind the
An independent right of The cause for
certificate in order to investigate again the true
exclusive enjoyment acquisition of
condition of the property (Republic of the
and control of the thing ownership
Philippines v. Court of Appeals and Spouses Catalino
for the purpose of e.g. sale = title; delivery
Santos, et al., G.R. No. 116111, January 21, 1999).
deriving therefrom all = mode of acquisition of
advantages required by ownership.
Modes of acquiring title over land
the reasonable needs of
the owner and the
1. By possession of land since time
promotion of the
immemorial;
general welfare but
2. By possession of alienable and disposable
subject to the
public land; and
restrictions imposed by
law and the rights of
NOTE: Under the Public Land Act (C.A. No.
others (NCC, Art. 427).
141), citizens of the Philippines, who by
themselves or through their predecessors-in-
NOTE: Registration under the Torrens system, not interest have been in open, continuous,
being a mode of acquiring ownership, does not exclusive and notorious possession and
create or vest title. The Torrens certificate of title occupation of alienable and disposable
is merely an evidence of ownership or title in the agricultural land of the public domain under a
particular property described therein. In that bona fide claim of ownership since June 12,
sense, the issuance of the certificate of title to a 1945, or earlier, (except when prevented by
particular person does not preclude the possibility war or force majeure), shall be conclusively
that persons not named in the certificate may be presumed to have performed all the
co-owners of the real property therein described conditions essential to a government grant
with the person named therein, or that the and shall be entitled to a certificate of title.
registered owner may be holding the property in
trust for another person (Casimiro Development 3. By sale, donation, and other modes of
Corporation v. Renato Mateo, G.R. No. 175485, July acquiring ownership.
27, 2011).
Modes of acquiring ownership over land
Q: St. Jude’s Enterprise, Inc. is the registered
owner of a parcel of land. It subdivided the 1. Occupation;
said land which was later on found to have 2. Law;
expanded with an increase of 1,421 sqm. St. 3. Donation;
Jude sold the lots to several individuals. Thus, 4. Tradition;
the Solicitor General filed an action seeking

643
 CIVIL LAW
5. Intellectual creation; the Torrens certificate and tax declarations in
6. Prescription; and her name. Is Filomena the lawful owner of such
7. Succession. property?

NOTE: Registration of a piece of land under the
Torrens System does not create or vest title,
because it is not a mode of acquiring ownership.
Thus, notwithstanding the indefeasibility of the
Torrens title, the registered owner may still be
compelled to reconvey the registered property to
its true owners (Heirs of Tanyag v. Gabriel, et. al.,
G.R. No. 175763, April 11, 2012).
Possession v. Occupation
POSSESSION OCCUPATION
Applies to a property Applies only to a
with or without an property without an
owner. owner.
By itself does not confer Confers ownership by
ownership. itself.
There can be possession There can be no
without ownership. occupation without
ownership.
Acquisition of land titles
1. Public grant;
2. Emancipation patent or grant;
3. Reclamation;
5. Adverse possession / acquisitive prescription;
6. Private grant or voluntary transfer;
7. Accretion;
8. Involuntary alienation; and
9. Descent or devise.
Torrens Title
A certificate of ownership issued under the
Torrens system of registration by the government,
through the Register of Deeds (RD) naming and
declaring the owner in fee simple of the real
property described therein, free from all liens &
encumbrances, except as may be expressly noted
there or otherwise reserved by law.
Q: Filomena allegedly bought a parcel of
unregistered land from Hipolito. When she had
the property titled and declared for tax
purposes, she sold it. The Mapili’s question the
transfer, saying that Filomena falsely stated in
her Affidavit that Hipolito sold it to her in
1949, since by that time, he is already dead.
Filomena maintains that she is the lawful
owner of the land by virtue of the issuance of
A: NO. A Torrens certificate does not create or
vest title, but is merely an evidence of an
indefeasible and incontrovertible title to the
property in favor of the person whose name
appears therein. Land registration under the
Torrens system was never intended to be a means
of acquiring ownership.
Neither does the existence of tax declarations
create or vest title. It is not a conclusive evidence
of ownership, but a proof that the holder has a
claim of title over the property (Larena v. Mapili,
et. al., G.R. No. 146341, August 7, 2003).
Q: In 1929, an OCT covering the lot in
controversy was issued in the name of Maria
Ramos, Heirs of Maligaso’s aunt. In 1965,
Maria sold it to the Spouses Encinas which led
to the issuance of a TCT in favor of the latter.
30 years from the time they purchased the lot,
Spouses Encinas issued two demand letters to
the Heirs of Maligaso asking them to vacate the
contested area but they refused to leave.
Hence, the Spouses Encinas filed a complaint
for unlawful detainer against them. According
to the Heirs, however, their occupation
remained undisturbed for more than 30 years
and the Spouses’ failure to detail and specify
the Heirs’ supposedly tolerated possession
suggest that they are aware of their claim over
the subject area. Decide with reason.
A: The validity of Spouses’ certificate of title
cannot be attacked by the Heirs in this case for
ejectment. Under Sec. 48 of P.D. No. 1529, a
certificate of title shall not be subject to collateral
attack. It cannot be altered, modified or cancelled,
except in a direct proceeding for that purpose in
accordance with law. Whether or not petitioner
has the right to claim ownership over the property
is beyond the power of the trial court to determine
in an action for unlawful detainer.
As ruled in Spouses Ragudo v. Fabella Estate
Tenants Association, Inc., laches does not operate
to deprive the registered owner of a parcel of land
of his right to recover possession thereof (Heirs of
Jose Maligaso, Sr., etc. v. Sps. Simon D. Encinas and
Esperanza E. Encinas, G.R. No. 182716, June 20,
2012).
Probative value of a Torrens title

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 644
 LAND TITLES AND DEEDS
A Torrens title may be received as evidence in all
courts of the Philippines and shall be conclusive as
to all matters contained therein, principally as to
the identity of the land owner, except so far as
provided in the Land Registration Act (LRA).
A Torrens certificate is an evidence of indefeasible
title of property in favor of the person whose
name appears therein–such holder is entitled to
the possession of the property until his title is
nullified.
Q: Hadji Serad filed an action to quiet title with
damages with the RTC. Accordingly, Datu
Kiram with several armed men, forcibly and
unlawfully entered his property and destroyed
the nursery buildings, cabbage seedlings and
other improvements. Datu Kiram however
denied the material allegations of Hadji Serad,
asserting that he and his predecessors-in-
interest are the ones who had been in open,
public, continuous, and exclusive possession of
the property in dispute. He also alleged that he
inherited the land in 1952 from his father and
had been in adverse possession and ownership
of the subject lot, cultivating and planting trees
and plants. He also declared the land for
taxation purposes and paid real estate taxes.
Who is the rightful owner of the subject
property?
A: Hadji Serad is the rightful owner.
The Torrens title is conclusive evidence with
respect to the ownership of the land described
therein, and other matters which can be litigated
and decided in land registration proceedings. Tax
declarations and tax receipts cannot prevail over a
certificate of title which is an incontrovertible
proof of ownership. An original certificate of title
issued by the Register of Deeds under an
administrative proceeding is as indefeasible as a
certificate of title issued under judicial
proceedings. Thus, Hadji Serad’s Torrens title is a
valid evidence of his ownership of the land in
dispute (Datu Kiram Sampaco v. Hadji Serad
Mingca Lantud, G.R. No. 163551, July 18, 2011).
Q: Ruben filed a complaint against Spouses
Agustin alleging that he is the registered
owner of two parcels of land. Accordingly, his
father bought it from Elias and then allowed
spouses Agustin to occupy the subject
properties. Despite demand to vacate, the
Agustins refused to leave the premises.
Ruben alleged that he has better right to
possess the property having acquired the same
from his father through a Deed of Quitclaim in
645
1971. Spouses Agustin however contends that
they are the rightful owners as evidenced by a
Deed of Absolute Sale in their favor. Decide
who between the parties has the right to
possession of the disputed properties.
A: Ruben has the right to possession. A title
issued under the Torrens system is entitled to all
the attributes of property ownership, which
necessarily includes possession. Ruben is correct
that as a Torrens title holder over the subject
properties, he is the rightful owner and is entitled
to possession thereof. In this case, the Quitclaim
executed by the elder Corpuz in favor of Ruben
was executed made ahead of the Deed of Sale of
Spouses Agustin. Thus, the sale of the subject
properties by Ruben’s father to Spouses cannot be
considered as a prior interest at the time Ruben
came to know of the transaction (Ruben C. Corpuz
v. Spouses Hilarion Agustin and Justa Agustin, G.R.
No. 183822, January 18, 2012).
Rules regarding the indefeasibility and
incontrovertibility of Torrens Title
1. The certificate of title serves as evidence of an
indefeasible title to the property in favor of
the person whose name appears therein;
2. After the expiration of the one year period
from the issuance of the decree of registration
upon which it is based, it becomes
incontrovertible; and
3. Decree of registration and the certificate of
title issued pursuant thereto may be attacked
on the ground of actual fraud within one year
from the date of its entry and such an attack
must be direct and not by a collateral
proceeding. The validity of the certificate of
title in this regard can be threshed out only in
an action expressly filed for the purpose.
NOTE: The defense of indefeasibility of a Torrens
title does not extend to a transferee who takes it
with notice of a flaw in the title of his
transferor. To be effective, the inscription in the
registry must have been made in good faith. A
holder in bad faith of a certificate of title is not
entitled to the protection of the law, for the law
cannot be used as a shield for fraud (Adoracion
Rosales Rufloe, et al., v. Leonarda Burgos et al., G.R.
No. 143573, January 30, 2009).
Q: There is no specific provision in the Public
Land Law (C.A. No. 141, as amended) or the
Land Registration Act (Act 496), now P.D.
1529, fixing the one year period within which
the public land patent is open to review on the
ground of actual fraud as in Sec. 38 of the Land
 CIVIL LAW
Registration Act, now Sec. 32 of P.D. 1529, and
clothing a public land patent certificate of title
with indefeasibility. What is the effect of such
absence?
A: NONE. The rule on indefeasibility of certificates
of title was applied by the Court in Public Land
Patents because such application is in consonance
with the spirit and intent of homestead laws.
The pertinent pronouncements in cases clearly
reveal that Sec. 38 of the Land Registration Act,
now Sec. 32 of P.D. 1529 was applied by
implication to the patent issued by the Director of
Lands duly approved by the Secretary of Natural
Resources, under the signature of the President of
the Philippines in accordance with law.
The date of issuance of the patent, therefore,
corresponds to the date of the issuance of the
decree in ordinary registration cases because the
decree finally awards the land applied for
registration to the party entitled to it, and the
patent issued by the Director of Lands equally and
finally grants, awards, and conveys the land
applied for to the applicant.
NOTE: A certificate of title issued under an
administrative proceeding pursuant to a
homestead patent is as indefeasible as a certificate
of title issued under a judicial registration
proceeding, provided the land covered by said
certificate is a disposable public land within the
contemplation of the Public Land Law.
Mirror doctrine
All persons dealing with a property covered by
Torrens certificate of title are not required to go
beyond what appears on the face of the title.
Where there is nothing on the certificate of title to
indicate any cloud or vice in the ownership of the
property, or any encumbrance thereon, the
purchaser is not required to explore further than
what the Torrens title upon its face indicates in
quest for any hidden defect or inchoate right that
may defeat his right thereto (Chua v. Soriano,
GR.No. 150066, April 13, 2007).
Application of mirror doctrine
GR: Mirror Doctrine applies when title over a land
is registered under the Torrens system.
XPN: Mirror Doctrine cannot be invoked where:
1. The purchaser or mortgagee is a
bank/financing institution;
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
2. The owner still holds a valid and existing
certificate of title covering the same property,
because the law protects the lawful holder of
a registered title over the transfer of a vendor
bereft of any transmissible right;
3. The purchaser is in bad faith;
4. The purchaser purchases land with a
certificate of title containing a notice of lis
pendens;
5. There are sufficiently strong indications to
impel closer inquiry into the location,
boundaries and condition of the lot;
6. The purchaser had full knowledge of flaws
and defects in the title; or
7. A person buys land not from the registered
owner but from whose rights to the land has
been merely annotated on the certificate of
title.
Q: Cipriana Delgado was the registered owner
of the lot in controversy. She and her husband
sold the property to Cecilia where it was
agreed that the latter shall make partial
payments from time to time and pay the
balance when the Spouses are ready to execute
the deed of sale and transfer title to her. After
paying the total amount and being ready to
pay the balance, Cecilia demanded the
execution of the deed which was refused.
Cecilia learned of the sale of the property to
the Dys and its subsequent mortgage to
petitioner Philippine Banking Corporation
(Philbank). Thus, a complaint for annulment of
the Certificate of title and for specific
performance and/or reconveyance with
damages was filed against Spouses Delgado,
the Dys and Philbank. However, Philbank
contends that it is a mortgagee in good faith. Is
the bank’s contention correct?
A: NO. Primarily, it bears noting that the doctrine
of “mortgagee in good faith” is based on the rule
that all persons dealing with property covered by
a Torrens Certificate of Title are not required to go
beyond what appears on the face of the title. In the
case of banks and other financial institutions,
however, greater care and due diligence are
required since they are imbued with public
interest, failing which renders the mortgagee in
bad faith. Thus, before approving a loan
application, it is a standard operating practice for
these institutions to conduct an ocular inspection
of the property offered for mortgage and to verify
the genuineness of the title to determine the real
owner(s) thereof. The apparent purpose of an
ocular inspection is to protect the “true owner” of
the property as well as innocent third parties with
a right, interest or claim thereon from a usurper
646
 LAND TITLES AND DEEDS
who may have acquired a fraudulent certificate of
title thereto (Philippine Banking Corporation v.
Arturo Dy, et al., G.R. No. 183774, November 14,
2012).
CLASSIFICATION OF LANDS
Primary classification
1. Agricultural;
2. Forest or timber;
3. Mineral lands; and
4. National parks (Sec. 3, Art. XII, 1987
Constitution).
The classification of lands of the publc domain is
an exclusive prerogative of the executive
department and not of the courts. In the absence
of such classification, the lands remain as
unclassified until it is released therefrom and
rendered open to disposition (Valiao v. Republic,
G.R. No. 170757, November 28, 2011).
NOTE: Pursuant to the Regalian Doctrine, all lands
of the public domain belong to the State. Hence,
"all lands not appearing to be clearly under
private ownership are presumed to belong to the
State. Also, public lands remain part of the
inalienable land of the public domain unless the
State is shown to have reclassified or alienated
them to private persons." To prove that a land is
alienable, the existence of a positive act of the
government, such as presidential proclamation or
an executive order; an administrative action;
investigation reports of Bureau of Lands
investigators; and a legislative act or a statute
declaring the land as alienable and disposable
must be established (Republic v. Cortez, G.R. No.
197472, September 7, 2015)
Alienable and disposable lands of the State fall
into two categories:
(a) Patrimonial lands of the State, or those
classified as lands of private ownership under Art.
425 of the Civil Code, without limitation; and
(b) Lands of the public domain, or the public lands
as provided by the Constitution, but with the
limitation that the lands must only be agricultural.
Consequently, lands classified as forest or timber,
mineral, or national parks are not susceptible of
alienation or disposition unless they are
reclassified as agricultural (Malabanan v. Republic,
G.R. No. 179987, September 3, 2013).
Secondary classification
647
Agricultural lands of the public domain may be
further classified by law according to the uses
which they may be devoted (Sec. 3, Art. XII, 1987
Constitution).
1. Agricultural;
2. Residential commercial industrial or for
similar productive purposes;
3. Educational, charitable, or other similar
purposes; and
4. Reservations for town sites and for public
and quasi-public uses (C.A. 141, Sec. 9).
CITIZENSHIP REQUIREMENT
Persons qualified to acquire private lands
1. Filipino citizens;
NOTE: Naturalized Filipino citizens can
acquire private lands. They are considered
Filipino citizens under Art. IV of the 1987
Constitution.
2. Filipino corporations and associations as
defined in Sec. 2, Art. XII of the Constitution;
and by exception;
NOTE : Only Filipino citizens or corporations
at least 60% of its capital is owned by
Filipinos are qualified to acquire or hold
lands of the public domain.
3. Aliens but only by hereditary succession; and
4. A natural-born citizen of the Philippines who
has lost citizenship may be a transferee of
private lands subject to the limitations
provided by law (Sec. 8, Art. XII, 1987
Constitution).
Former Filipinos who became aliens may also
acquire private lands. It is provided under R.A. no
9225 (Citizenship Retention and Re-acquisition Act
of 2003), which declares that natural-born citizens
of the Philippines who have lost their Philippine
citizenship by reason of their naturalization as
citizens of foreign country are hereby deemed to
have re-acquired Philippine citizenship upon
taking their oath of allegiance to the Republic of
the Philippines and shall enjoy full civil and
political rights and be subject to all attendant
liabilities and responsibilities under existing laws
of the Philippines.
NOTE: Filipino citizens can both acquire or hold
lands of public domain.
 CIVIL LAW
The time to determine whether a person acquiring
land is qualified is at the time the right to own is
acquired and not the time to register ownership
(Director of Lands v. IAC and Acme, G.R. No. 73002,
December 29, 1986).
Acquisition of private land by an alien
GR: An alien cannot acquire private lands.
XPN: By way of hereditary succession.
Aliens may not acquire private or public
agricultural lands and all acquisitions made in
contravention of the prohibitions since the
fundamental law became effective are null and
void per se and ab initio. The prohibition is a
declaration of imperative national policy
(Krivenko v. Register of Deeds, G.R. No. L-630,
November 15, 1957).
The constitutional ban against foreigners apply
only to ownership of Philippine land and not to
the improvements built thereon (Beumer v.
Amores, G.R. No. 195670, December 3, 2012).
NOTE: Under R.A. No. 4726, foreign nationals can
own Philippine real estate through the purchase of
condominium units or townhouses. It expressly
allows foreigners to acquire condominium units
and shares in condominium corporations up to
not more than 40% of the total and outstanding
capital stock of a Filipino owned or controlled
corporation. The land is owned by the
condominium corporation and the unit owner is
simply a member in this condominium
corporation.
Q: Spouses Pinoy and Pinay, both natural-born
Filipino citizens, purchased property in the
Philippines. However, they sought its
registration when they were already
naturalized as Canadian citizens. Should the
registration be denied on the ground that they
cannot do so being foreign nationals?
A: NO. For the purpose of transfer and/or
acquisition of a parcel of residential land, it is not
significant whether they are no longer Filipino
citizens at the time they purchased or registered
the parcels of land in question. What is important
is that they were formerly natural-born citizens of
the Philippines, and as transferees of a private
land, they could apply for registration in
accordance with the mandate of Sec. 8, Art. XII of
the Constitution which states that
notwithstanding the provisions of Sec. 7 of this
Article, a natural-born citizen of the Philippines
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
who has lost his Philippine citizenship may be a
transferee of private lands, subject to limitations
provided by law (Republic v. CA and Lapina, G.R.
No. 108998, August 24, 1994).
Q: Julian and respondens own a 227,270-
square meter parcel of land, covered by TCT
No. 8027[5] (subject land). Julian who owns
8/14 of the subject land sold some portions to
various buyers, including Gaspar Genorga, the
husband of petitioner. However, buyers cannot
register their respective sale because Julian
failed to surrender the TCT NO. 8027 to them.
This prompts them to file a case for the
surrender of the owner’s duplicate copy of the
TCT Mo. 8027 which the court granted. The
said decision became final and executory but
remained unexecuted. Thus, in an Order, the
RTC declared TCT No. 8027 null and void,
resulting in the issuance of a new one, bearing
annotations of the buyers' adverse claims. The
new owner's duplicate copy of TCT No. 8027
(subject owner's duplicate title) was given to
petitioner in 2009. On April 22, 2013,
respondents filed a Complaint against
petitioner before the court a quo, seeking the
surrender of the subject owner's duplicate title
with damages. Petitioner averred that their
possession of the subject owner's duplicate
title was by virtue of a court decision, and for
the legitimate purpose of registering the sales
in their favor and the issuance of titles in their
names, they should be allowed to retain
possession until the completion of the
requirements therefor. Is the petitioner
correct?
A: No. Notably, from the time petitioner received
possession of the subject owner's duplicate
title in 2009, a considerable amount of time
had passed until she submitted the same to
the RD-Naga on September 13, 2013. But even
up to the time she filed the instant petition
before the Court on May 6, 2016, she failed to
show any sufficient justification for the
continued failure of the concerned buyers to
comply with the requirements for the
registration of their respective deeds of sale
and the issuance of certificates of title in their
names to warrant a preferential right to the
possession of the subject owner's duplicate
title as against respondents who undisputedly
own the bigger portion of the subject land
(Remedios Genorga v. Heirs of Julian Meliton,
G.R. No. 224515, July 03, 2017). [Perlas-
Bernabe]
648
 LAND TITLES AND DEEDS
Q: Joe, an alien, invalidly acquired a parcel of
land in the Philippines. He subsequently
transferred it to Jose, a Filipino citizen.
a. What is the status of the transfer?
b. If Joe had not transferred it to Jose but he,
himself, was later naturalized as a Filipino
citizen, will his acquisition thereof remain
invalid?
A:
a. If a land is invalidly transferred to an alien
who subsequently becomes a Filipino citizen
or transfers it to a Filipino, the flaw in the
original transaction is considered cured and
the title of the transferee is rendered valid.
Since the ban on aliens is intended to preserve
the nation’s land for future generations of
Filipinos, that aim is achieved by making
lawful the acquisition of real estate by aliens
who became Filipino citizens by
naturalization or those transfers made by
aliens to Filipino citizens. As the property in
dispute is already in the hands of a qualified
person, a Filipino citizen, there would be no
more public policy to be protected. The
objective of the constitutional provision to
keep our lands in Filipino hands has been
achieved.
b. NO. If a land is invalidly transferred to an
alien who subsequently becomes a Filipino
citizen, the flaw in the original transaction is
also considered cured and the title of the
transferee is rendered valid (Borromeo v.
Descallar, G.R. No. 159310, February 24, 2009).
Maximum area that may be acquired by a
natural born citizen who has lost his
Philippine citizenship
A natural born citizen who has legal capacity to
enter into a contract under Philippine laws may be
a transferee of a private land up to the following
maximum areas:
a. For residence purposes: 1,000 sq. m. in
the case of urban lands or one hectare in
the case of rural lands. In the case of
married couples, one of them may avail of
the privilege herein granted, but if both
shall avail of the same, the total area
acquired shall not exceed the maximum
area fixed (B.P. Blg. 185, Sec 2).
b. For business (investment) or other
purposes: 5,000 sq. m. if urban land, or
three hectares if rural land (Sec. 10, R.A.
No. 7042, as amended by R.A. 8179).
649
Q: Does the area limitation under R.A. 9225, as
amended, apply to a natural-born Filipino who
has lost his citizenship but who re-acquired
the same under the terms of R.A. 9225?
A: The area limitation no longer applies since it is
the policy of the law “that all Philippine citizens
who become citizens of another country shall be
deemed not to have lost their Philippine citizenship
under this Act.“
R.A. 9225 expressly grants him the same right, as
any Filipino citizen to enjoy full civil and political
rights upon the re-acquisition of his Filipino
citizenship.
Acquisition of lands by a corporation
Corporation sole, which consists of one person
only, is vested with the right to purchase and hold
real estate and to register the same in trust for the
faithful or members of the religious society or
church for which the corporation was organized
(Roman Catholic Apostolic Administrator of Davao,
Inc. v. Land Registration Commission, G.R. No. L-
8451, December 20, 1957).
It can acquire by purchase a parcel of private
agricultural land without violating the
constitutional prohibition since it has no
nationality.
Q: Why is it in a corporation sole, citizenship is
not in question?
A: The framers of the constitution did not have in
mind the religious corporation sole when they
provided that 60 percentum of the capital thereof
be owned by Filipino citizens. A corporation sole
or “ordinary” is not the owner of the properties
that he may acquire but merely the administrator
thereof. The properties pass, upon his death, not
to his personal heirs but to his successor in office.
Corporation:
Private Lands
1. At least 60% (Sec. 7, Art. XII, 1987
Constitution) ;
2. Restricted as to extent reasonably necessary
to enable it to carry out purpose for which it
was created; and
3. If engaged in agriculture, it is restricted to
1,024 hectares.
Patrimonial property of the State (Sec. 3, Art. XII,
1987 Constitution).
1. Lease (cannot own land of the public domain)
for 25 years renewable for another 25 years;
 CIVIL LAW
2. Limited to 1,000 hectares; and
3. Applies to both Filipinos and foreign
corporations.
Q: May a corporation apply for registration of a
parcel of land?
A: YES, through lease not exceeding 1,000
hectares. The lease shall not exceed 25 years and
is renewable for not more than 25 years (Sec. 3,
Art. XII, 1987 Constitution).
NOTE: Determinative of this issue is the character
of the parcels of land–whether they were still
public or already private–when the registration
proceedings were commenced. If they are already
private lands, the constitutional prohibition
against acquisitions by a private corporation
would not apply.
SUBSEQUENT REGISTRATION
It is where incidental matters after original
registration may be brought before the land
registration court by way of motion or petition
filed by the registered owner or a party in interest.
Q: After registering his land, what conveyances
may the registered owner do?
A: An owner of registered land may convey,
mortgage, lease, charge or otherwise deal with the
same in accordance with existing laws. He may
use such forms of deeds, mortgages, leases or
other voluntary instruments as are sufficient in
law.
GR: Such deed, mortgage, lease, or other voluntary
instrument shall operate only as a contract
between the parties and as evidence of authority
to the Register of Deeds to make registration. It is
the act of registration which shall operate to
convey or affect the land insofar as third persons
are concerned, and in all cases, the registration
shall be made in the office of the Register of Deeds
for the province or city where the land lies. The
act of registration creates a constructive notice to
the whole world of such voluntary or involuntary
instrument or court writ or process (P.D. 1529,
Sec. 52).
XPN: A will purporting to convey or affect
registered land shall take effect as a conveyance or
bind the land, not merely as a contract or evidence
of authority of the RD to make registration (P.D.
1529, Sec. 51).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
VOLUNTARY DEALINGS
Mortgages and leases
GR: The mortgagor should be the absolute owner
of the property to be mortgaged; otherwise, the
mortgage is considered null and void.
XPN: Doctrine of mortgagee in good faith. All
persons dealing with property covered by a
Torrens Certificate of Title, as buyers or
mortgagees, are not required to go beyond what
appears on the face of the title. This is the same
rule that underlies the principle of innocent
purchasers for value. The prevailing jurisprudence
is that a mortgagee has a right to rely in good faith
on the certificate of title of the mortgagor to the
property given as security and in the absence of
any sign that might arouse suspicion, has no
obligation to undertake further investigation.
Hence, even if the mortgagor is not the rightful
owner of, or does not have a valid title to, the
mortgaged property, the mortgagee in good faith
is, nonetheless, entitled to protection (Duque-
Rosario v. Banco Filipino Savings and Mortgage
Bank, G.R. No. 140528, December 7, 2011).
NOTE : The subsequent nullification of the
mortgagor’s title will not nullify the mortgage
(Gonzales v. IAC, G.R. No. L-69622, January 29,
1988).
Effect of registration of such voluntary
dealings
It:
1. Creates a lien that attaches to the property in
favor of the mortgagee; and
2. Constitutes constructive notice of his interest
in the property to the whole world.
Rule on carry-over of encumbrances
If, at the time of any transfer, subsisting
encumbrances or annotations appear in the
registration book, they shall be carried over and
stated in the new certificate or certificates; except
so far as they may be simultaneously released or
discharged (P.D. 1529, Sec. 59).
Q: If the property that was the subject of
mortgage was subsequently foreclosed, must a
new certificate of title be automatically issued
in favor of the purchaser?
A: The answer must be qualified.
650
 LAND TITLES AND DEEDS
1. No right of redemption – The certificate of
title of the mortgagor shall be canceled, and a
new certificate issued in the name of the
purchaser; and
2. There is right of redemption – The certificate
of title of the mortgagor shall not be
cancelled, but the certificate of sale and the
order confirming the sale shall be registered
by a brief memorandum thereof made by
the Register of Deeds upon the certificate of
title.
In the event the property is redeemed, the
certificate or deed of redemption shall be filed
with the Register of Deeds, and a brief
memorandum thereof shall be made by the
Register of Deeds on the certificate of title of the
mortgagor.
If the property is not redeemed, the final deed of
sale executed by the sheriff in favor of the
purchaser at a foreclosure sale shall be registered
with the Register of Deeds; whereupon the title of
the mortgagor shall be canceled, and a new
certificate issued in the name of the purchaser
(P.D. 1529, Sec. 63).
Q: Sps. Guevarra obtained a loan from TCLC,
which was secured by a real estate mortgage
over a parcel of land emanating from a free
patent granted to Sps. Guevarra. Sps. Guevarra,
however, defaulted in the payment of their
loan, prompting TCLC to extra-judicially
foreclose the mortgage on the subject property
in accordance with Act No. 3135 as amended.
In the process, TCLC emerged as the highest
bidder at the public auction sale. the certificate
of sale was registered with the Registry of
Deeds of Iloilo. Eventually, Sps. Guevarra failed
to redeem the subject property within the one-
year reglementary period, which led to the
cancellation of Title of the spouses in favor of
TCLC. Thereafter, TCLC demanded that Sps.
Guevarra vacate the property, but to no avail.
Does Sps. Guevarra still has the right to
repurchase? If so, who should fix the
repurchase price?
A: Yes. In an extra-judicial foreclosure of
registered land acquired under a free patent, the
mortgagor may redeem the property within two
(2) years from the date of foreclosure if the land is
mortgaged to a rural bank under Republic Act No.
(RA) 720, as amended, otherwise known as the
Rural Banks Act, or within one (1) year from the
registration of the certificate of sale if the land is
mortgaged to parties other than rural banks
pursuant to Act No. 3135. If the mortgagor fails to
651
exercise such right, he or his heirs may still
repurchase the property within five (5) years
from the expiration of the redemption period.
It is TLCL who has the right to fix the price. But
such price must be limited to the amount
mentioned in the mortgage (Spouses Rodolfo and
Marcelina Guevarra v. The Commoner Lending
Corporation, Inc., G.R. No. 204672, February 18,
2015). [Perlas-Bernabe]
Q: Does non-registration of property after
judicial foreclosure and sale have the effect of
invalidating the foreclosure proceedings, such
that ownership reverts to the original owner?
A: NO. The effect of the failure to obtain the
judicial confirmation was only to prevent the title
to the property from being transferred. For sure,
such failure did not give rise to any right in favor
of the mortgagor or the respondents as his
successors-in-interest to take back the property
already validly sold through public auction. Nor
did such failure invalidate the foreclosure
proceedings. To maintain otherwise would render
nugatory the judicial foreclosure and foreclosure
sale, thus unduly disturbing judicial stability. After
all, under the applicable rule earlier cited, the
judicial confirmation operated only “to divest the
rights of all the parties to the action and to vest
their rights in the purchaser, subject to such rights
of redemption as may be allowed by law” (Robles
vs. Yapcinco et. al., G.R. No. 169569, October 22,
2014)
REMEDY IN CASE OF LOSS OR DESTRUCTION
OF CERTIFICATE OF TITLE
Remedy in case a person lost his certificate of
title
1. If what is lost is the OCT or TCT –
Reconstitution of certificate of title;
2. If, however, it is the duplicate of the OCT or
TCT – Replacement of lost duplicate certificate
of title.
Reconstitution of certificate of title
The restoration of the instrument which is
supposed to have been lost or destroyed in its
original form and condition, under the custody of
Register of Deeds.
Purpose of reconstitution of title
To have the same reproduced, after proper
proceedings, in the same form they were when the
loss or destruction occurred.
 CIVIL LAW
The reconstitution or reconstruction of a
certificate of title literally denoted restoration of
the instrument which is supposed to have been
lost or destroyed in its original form and
condition. It does not resolve or determine the
ownership of the land covered by the lost or
destroyed title. Restitution is proper only when it
is satisfacorily shown that the title sought to be
reconstituted is lost or no longer available.
Q: Homer and Ma. Susana Dagondon, as
attorneys-in-fact of Jover P. Dagondon, prayed
for the reconstitution of the Original
Certificate of Title (OCT) of Lot No. 84. In their
petition, they alleged that the subject property
had no existing OCT and that it was probably
destroyed or dilapidated during the eruption
of Hiboc-Hiboc Volcano or World War II. The
Republic prayed for the dismissal of the
petition for insufficiency in form and
substance, considering that respondents failed
to establish the existence of the very Torrens
Title (OCT) which they sought to reconstitute.
Is the Republic correct?
A: Yes. The reconstitution of a certificate of title
denotes restoration in the original form and
condition of a lost or destroyed instrument
attesting the title of a person to a piece of land.
The purpose of the reconstitution of title is to
have, after observing the procedures prescribed
by law, the title reproduced in exactly the same
way it has been when the loss or destruction
occurred. RA 26 presupposes that the property
whose title is sought to be reconstituted has
already been brought under the provisions of the
Torrens System.
In the case at bar, respondents miserably failed to
adduce clear and convincing proof that an OCT
covering Lot 84 had previously been issued.
Accordingly, there is no title pertaining to Lot 84
which could be reconstituted, re-issued, or
restored. Guided by the foregoing, judicial
reconstitution of title under Section 2 of RA 26 is
clearly improper in this case (Republic v. Homer
and Ma. Susana Dagondon, G.R. No. 210540, April
19, 2016). [Perlas-Bernabe]
Q: May a writ of possession be issued in a
petition for reconstitution?
A: NO, because reconstitution does not adjudicate
ownership over the property. A writ of possession
is issued to place the applicant-owner in
possession.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Requisites for the issuance of an order for
reconstitution
1. That the certificate of title had been lost or
destroyed;
2. That the documents presented by petitioner
are sufficient and proper to warrant
reconstitution of the lost or destroyed
certificate of title;
3. That the petitioner is the registered owner of
the property or had an interest therein;
4. That the certificate of title was in force at the
time it was lost or destroyed; and
5. That the description, area and boundaries of
the property are substantially the same as
those contained in the lost or destroyed
certificate of title (Republic of the Philippines v.
Apolinaria Catarroja, et al., G.R. No. 171774,
February 12, 2010).
Jurisdictional requirements in petitions for
reconstitution of title
Notice thereof shall be:
1. Published twice in successive issues of the
Official Gazette;
2. Posted on the main entrance of the provincial
building and of the municipal building of the
municipality or city, where the land is situated;
and
3. Sent by registered mail to every person named
in said notice.
NOTE: The above requirements are mandatory
and jurisdictional.
Q: Alleging that the original copy of a 240,269
square meter property was destroyed by the
fire, Gertrudes Susi filed a petition for
reconstitution of title to cover the property on
basis of his owner's copy. In opposing the
petition, the LRA filed a Manifestation
questioning the reconstitution considering
that the claim was anchored on the owner's
duplicate certificate which bore a different
serial number. Having duly complied with the
publication and posting requirement, the trial
court set the case for hearing and granted the
same. Should the petition for reconstitution be
granted?
A: No. It is well to point out that the trial courts
hearing reconstitution petitions under RA 26 are
duty-bound to take into account the LRA's report.
Notably, since the serial number of the owner's
duplicate did not bear a similar serial number
from the subject lot, the same should have been
denied by the trial court for failure to comply with
652
 LAND TITLES AND DEEDS
the requirements of law. Since the petition for
reconstitution failed to comply with the applicable
procedures and requirements, it follows that the
RTC never acquired jurisdiction over the case, and
all proceedings held thereon are null and void
(Republic v. Gertrudes Susi, G.R. No. 213209,
January 16, 2017). [Perlas-Bernabe]
Q: Respondent De Asis filed an amended
petition to reconstitute TCT No. 8240 in favor
of his uncle, Lauriano De Asis; for the title was
destroyed by the fire in the Quezon City Hall.
RTC found substance therefore required LRA
to furnished a copy of the title and for the
Official Gazette publish such the title in two
consecutive issues for at least 30 days prior to
the date of hearing. However, the latter was
not duly complied with, it was short of 3 days.
Is the non-compliance of RA 26 requiring
publication of notice of hearing in two
consecutive issued of the Official Gazette at
least 30 days prior to the date of hearing, a
jurisdictional requisite?
A: Yes. Reconstitution of Titles requires that (a)
notice of the petition should be published in two
successive issues of the Official Gazette; and (b)
publication should be made at least 30 days prior
to the date of hearing. While it is true that the 30-
day period in the case was short of only 3 days,
the principle of substantial compliance cannot
apply, as the law requires strict compliance,
without which the SC is devoid of authority to pass
upon and resolve the petition (Republic v.
Ricordito De Asis Jr., G.R. No. 193874, July 24, 2013).
[Perlas-Bernabe]
Kinds of reconstitution of title
1. Judicial – Partakes the nature of a land
registration proceeding in rem. The registered
owners, assigns, or any person having an
interest in the property may file a petition for
that purpose with RTC where property is
located. RD is not the proper party to file the
petition.
2. Administrative – May be availed of only in case
of:
a. Substantial loss or destruction of the
original land titles due to fire, flood, or
other force majeure as determined by the
Administrator of the Land Registration
Authority.
b. The number of certificates of title lost or
damaged should be at least 10% of the total
number in the possession of the Office of
the Register of Deeds
653
In no case shall the number of certificates of
title lost or damaged be less than 500.
c. Petitioner must have the duplicate copy of
the certificate of title.
NOTE: The law provides for retroactive
application thereof to cases 15 years immediately
preceding 1989.
Sources where a certificate of title may be
reconstituted
JUDICIAL RECONSTITUTION
For OCT (in the following order):
1. Owner’s duplicate of the certificate of title;
2. Co-owner’s, mortgagee’s or lessee’s duplicate
of said certificate;
3. Certified copy of such certificate, previously
issued by the Register of Deeds;
4. Authenticated copy of the decree of
registration or patent, as the case may be,
which was the basis of the certificate of title;
5. Deed or mortgage, lease or encumbrance
containing description of property covered by
the certificate of title and on file with the
Registry of Deeds, or an authenticated copy
thereof; or
6. Any other document which, in the judgment of
the court, is sufficient and proper basis for
reconstitution.
For TCT (in the following order):
1. Owner’s duplicate of the certificate of title;
2. Co-owner’s, mortgagee’s or lessee’s duplicate
of said certificate;
3. Certified copy of such certificate, previously
issued by the Register of Deeds;
4. Deed of transfer of other document, on file in
the registry of deeds, or an authenticated copy
thereof, showing that its original had been
registered, and pursuant to which the lost or
destroyed transfer of certificate was issued;
5. A document, on file with the Register of deeds,
by which the property, the description of
which is given in said document, is
mortgaged, leased or encumbered, or an
authenticated copy of said document showing
that its original had been registered; and
6. Any other document which, in the judgment of
the court, is sufficient and proper basis for
reconstitution.
ADMINISTRATIVE RECONSTITUTION
1. Owner’s duplicate of the certificate of title;
and
2. Co-owner’s, mortgagee’s or lessee’s duplicate
of said certificate.
 CIVIL LAW
Q: Catarroja et al. filed a petition for
reconstitution of title covering two lots in
Cavite which they inherited from their parents.
Allegedly, the LRA issued a certification
confirming that the land registration court
issued a Decree covering the lots. A copy of the
decree however was no longer available in the
record. It was also claimed that the owner’s
duplicate copy of the title had been lost while
with their parents. If you were the judge, will
you grant the petition for reconstitution of
title?
A: In Republic v. Intermediate Appellate Court,
applied the principle of ejusdem generis in
interpreting Sec. 2(f) of R.A. 26. “Any other
document” refers to reliable documents of the
kind described in the preceding
enumerations. This Court is not convinced that
the following documents (Microfilm printouts of
Official Gazette. A certification by the LRA and
from the Register of Deeds, a Report of the LRA
and an Affidavit of Loss) of the Catarrojas fall in
the same class as those enumerated in paragraphs
(a) to (e). None of them proves that a certificate of
title had in fact been issued in the name of their
parents. Accordingly, the documents must come
from official sources which recognize the
ownership of the owner and his predecessors-in-
interest. None of the documents presented in this
case fit such description (Republic of the
Philippines v. Apolinaria Catarroja, et al., G.R. No.
171774, February 12, 2010).
Where reconstituted title is a nullity, the order
for reconstitution may be attacked at any time.
A reconstitution of Torrens title, whether judicial
or administrative, cannot proceed once it is shown
that another Torrens title has already been issued
to another person over the same property. The
reconstituting body or court has no jurisdiction to
issue another Torrens title over the same property
to the petitioner. The existence of a prior title ipso
facto nullifies the reconstitution proceedings. The
proper recourse is to assail directly in a
proceeding before the regional trial court the
validity of the Torrens title already issued to the
other person (Justice Carpio’s separate concurring
opinion, Manotok v. Barque, GR. No. 162335,
December 18, 2008).
NOTE : Petition for reconstitution can be barred
by laches.
Q: Spouses Cruz are the registered owners of a
parcel of land. Nelson Cruz, through his father,
Lamberto, sold the subject lot in favor of Joy
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Sebastian. After Sebastian paid all the
corresponding tax and capital gains, the
Register of Deeds required her to present a
Special Power of Attorney executed by Nelson
which authorized the agent, Lamberto, to sell
the property to former. When Sebastian
requested for the document, Nelson did not
comply. It was only upon the latter’s inquiry
with the Register of Deeds that Nelson had in
fact executed an Affidavit of Loss which
subsequently resulted to an issuance of a
second owner’s copy covering the subject lot.
Sebastian filed a petition for annulment of
judgment to nullify the decision issuing a new
owner’s duplicate copy. Should the petition for
annulment of judgment be granted?
A: Yes. It has been consistently ruled that when
the owner’s duplicate certificate of title was not
actually lost or destroyed, but is in fact in the
possession of another person, the reconstituted
title is void because the court that rendered the
order of reconstitution had no jurisdiction over
the subject matter of the case. In this case, the
owner’s duplicate copy was in truth and in fact in
the possession of Spouses Cruz, contrary to their
claim in the lower court. Consequently, the
judgment of the lower court should be annulled on
the ground of lack of jurisdiction (Joy Vanessa
Sebastian v. Spouses Nelson and Cristina Cruz, G.R.
No. 220940, March 20, 2016). [Perlas-Bernabe]
Persons entitled to a Duplicate Certificate of
Title
1. Registered owner; and
2. Each co-owner.
Requirements for the replacement of lost
duplicate certificate of title
1. Due notice under oath shall be sent by the
owner or by someone in his behalf to the
Register of Deeds of the province or city
where the land lies as soon as the loss or theft
is discovered;
2. Petition for replacement should be filed with
the RTC of the province or city where the land
lies;
3. Notice to Solicitor General by petitioner is not
imposed by law but it is the Register of Deeds
who should request for representation by the
Solicitor General; and
4. A proceeding where the certificate of title was
not in fact lost or destroyed is null and void
for lack of jurisdiction and the newly issued
duplicate is null and void.
654
 LAND TITLES AND DEEDS
INVOLUNTARY DEALINGS
Necessity of registration of involuntary
dealings
Involuntary dealings, unlike the voluntary
dealings, requires the registration. It is the act of
registration which creates a constructive notice to
the whole world of such instrument or court writ
or process and is the operative act that conveys
ownership or affects the land insofar as third
persons are concerned.
Difference between voluntary and involuntary
dealings
VOLUNTARY INVOLUNTARY
DEALINGS DEALINGS
Does not require Requires registration
registration to create a Holdings, Inc. (Polished Arrow), and its
constructive notice to
the whole world of
such instrument or
court writ
Entry in the day book An entry thereof in the
is insufficient day book is sufficient
notice to all persons
(Garcia vs. Court of
Appeals, G.R. Nos. L-
48971 & 49011
January 22, 1980).
Involuntary dealings that must be registered
1. Attachment;
2. Adverse claim; and
3. Notice of lis pendens.
ADVERSE CLAIM NOTICE OF LIS
PENDENS
Notice to third persons Literally means
that any transaction pending suit. It
regarding the disputed operates as a notice to
land is subject to the the whole world that a
outcome of the dispute particular real property
is in litigation. The
inscription serves as a
warning that one who
acquires interest over
litigated property does
so at his own risk, or
that he gambles on the
result of the litigation
over the property
Its purpose is to Its purpose is to protect
apprise third persons the rights of the party
that there is a causing the registration
controversy over the of the lis pendens and
655
ownership of the land to advise third persons
and to preserve and who purchase or
protect the right of the contract on the subject
adverse claimant property that they do
during the pendency of so at their peril and
the controversy. subject to the result of
the pending litigation.
Writ of attachment
It is used primarily to seize the debtor’s property
in order to secure the debt or claim of the creditor
in the event that a judgment is rendered.
Q: : Petitioner Ligon filed a complaint for the
collection of a sum of money with prayer for
the issuance of a writ of preliminary
attachment against the Sps. Baladjay, a certain
Olivia Marasigan (Marasigan), Polished Arrow
incorporators. The complaint alleges among
others that the spouses Baladjay enticed her to
extend a short-term loan secured by a PDC
which bounced upon presentment, and that
the subject property was transferred to
respondent Polished Arrow allegedly
defendants’ dummy corporation to defraud
creditors. The application for the writ was
granted so the subject property was levied
upon by annotating the writ on the dorsal
portion of TCT No. 9273.While the case was
pending, a similar complaint for the sum of
money damages, and cancellation of title with
prayer for issuance of a writ of preliminary
attachment was lodged before the RTC Makati
by the Sps Vicente against the same
respondents. During the proceedings therein,
a writ of preliminary attachment also against
the subject property was issued and annotated
on the dorsal portion of TCT No. 9273.While
the case is still pending in QC, the Makati RTC
rendered a decision rescinding the transfer of
the subject property to Polished Arrow upon a
finding that the same was made in fraud of
creditors. Consequently, the Makati City RTC
directed the Register of Deeds of Muntinlupa
City to: (a) cancel TCT No. 9273 in the name of
Polished Arrow; and (b) restore TCT No. 8502
“in its previous condition” in the name of
Rosario Baladjay. In the subsequent execution
proceedings, the property was sold at a public
auction to respondent Ting.The RTC Makati
then ordered the RD under pain of contempt to
issue a new certificate in favor of Ting free
from any liens and encumbrances. Meanwhile,
the QC RTC ruled in favor of Ligon who sought
its execution and discovered the earlier
attachment annotation in her favor has been
 CIVIL LAW
deleted. Did the Makati City RTC gravely abuse
its discretion in issuing the Assailed Orders?
A: YES. Attachment is defined as a provisional
remedy by which the property of an adverse party
is taken into legal custody, either at the
commencement of an action or at any time
thereafter, as a security for the satisfaction of any
judgment that may be recovered by the plaintiff or
any proper party. Case law instructs that an
attachment is a proceeding in rem, and, hence, is
against the particular property, enforceable
against the whole world. Accordingly, the
attaching creditor acquires a specific lien on the
attached property which nothing can
subsequently destroy except the very dissolution
of the attachment or levy itself. Such a proceeding,
in effect, means that the property attached is an
indebted thing and a virtual condemnation of it to
pay the owner's debt. The lien continues until the
debt is paid, or sale is had under execution issued
on the judgment, or until the judgment is satisfied,
or the attachment discharged or vacated in some
manner provided by law (Ligon v. RTC Makati, G.R.
No. 190028, February 26, 2014). [Perlas-Bernabe]
Effect of the non-recording of a writ of
attachment
An attachment levied on real state not duly
recorded in the Registry of Property is not an
encumbrance on the attached property, nor can
such attachment unrecorded in the registry, serve
as a ground for decreeing the annulment of the
sale of the property at the request of another
creditor.
Adverse claim
It is a notice to third persons that someone is
claiming an interest on the property or has a
better right than the registered owner thereof,
and that any transaction regarding the disputed
land is subject to the outcome of the dispute.
Purpose of annotating the adverse claim
The purpose of annotating the adverse claim on
the title of the disputed land is to apprise third
persons that there is a controversy over the
ownership of the land and to preserve and protect
the right of the adverse claimant during the
pendency of the controversy.
Instances when a claim of interest is adverse
1. Claimant’s right or interest in registered land
is adverse to the registered owner;
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
2. Such right or interest arose subsequent to the
date of original registration; or
3. No other provision is made in the decree for
the registration of such right or claim.
Formal requisites of an adverse claim for
purposes of registration
1. Adverse claimant must state the following in
writing:
a. His alleged right or interest;
b. How and under whom such alleged right
of interest is acquired;
c. Description of the land in which the right
or interest is claimed; and
d. Certificate of title number.
2. Such statement must be signed and sworn to
before a notary public or other officer
authorized to administer oath; and
3. Claimant shall state his residence or place to
which all notices may be served upon him.
Registration of adverse claim
By filing a sworn statement with the Register of
Deeds of the province where the property is
located, setting forth the basis of the claimed right
together with other data pertinent thereto. The
duty of the Register of Deeds to record the same
on the title is ministerial.
NOTE: Entry of the adverse claim filed on the day
book is sufficient without the same being
annotated at the back of the corresponding
certificate of title (Director of Lands v. Reyes, G.R.
No. L-27594, November 28, 1975).
Effect of the registration of an adverse claim
It renders the adverse claim effective and any
transaction regarding the disputed land shall be
subject to the outcome of the dispute.
Effect of non-registration of an adverse claim
The effect of non-registration or invalid
registration of an adverse claim renders it
ineffective for the purpose of protecting the
claimant’s right or interest on the disputed land,
and could not thus prejudice any right that may
have arisen thereafter in favor of third parties.
Limitations to the registration of an adverse
claim
656
 LAND TITLES AND DEEDS
1. No second adverse claim based on the same
ground may be registered by the same
claimant; and
2. A mere money claim cannot be registered as
an adverse claim.
Q: May an adverse claim exist concurrently
with a subsequent annotation of a notice of lis
pendens?
A: YES, an adverse claim may exist concurrently
with a subsequent annotation of a notice of lis
pendens. When an adverse claim exists
concurrently with a notice of lis pendens, the
notice of adverse claim may be validly cancelled
after the registration of such notice, since the
notice of lis pendens also serves the purpose of the
adverse claim.
Lifespan of a registered adverse claim
The adverse claim shall be effective for a period of
30 days from the date of registration and it may be
cancelled.
Effect of the expiration of the period of
effectivity of an adverse claim
The expiration does not ipso facto terminate the
claim. The cancellation of the adverse claim is still
necessary to render it ineffective; otherwise, the
inscription will remain annotated and shall
continue as a lien to the property.
property involved in a suit, pending the
continuance of the action, and until final
judgment.
It merely creates a contingency and not a lien. It
does not produce any right or interest which may
be exercised over the property of another. It only
protects the applicant’s rights which will be
determined during trial.
NOTE: It is not a lien or encumbrance under our
civil law. It is mere cautionary notice to
prospective buyers of certain property that said
property is under litigation. The annotation of a
notice of lis pendens at the back of the original
copy of the certificate of title on file with the
Register of Deeds is sufficient to constitute
constructive notice to purchasers or other persons
subsequently dealing with the same property. One
who deals with property subject of a notice of lis
pendens cannot invoke the right of a purchaser in
good faith neither can he acquire better rights that
those of his predecessors-in-interest (Tanchoco v.
Aquino, G.R. No. 30670, January 17, 1990).
Purposes of a notice of lis pendens
To:
1. Protect the rights of the party causing the
registration of the lis pendens; and
2. Advise third persons who purchase or
contract on the subject property that they do
so at their peril and subject to the result of the
pending litigation.

Q: May the RD cancel an adverse claim? Q: When may a notice of lis pendens be made
and when may it not be resorted to?
A: NO. The RD cannot, on its own, automatically
cancel the adverse claim. A:

NOTE: Before the lapse of 30-day period, the NOTICE OF LIS PENDENS
claimant may file a sworn petition withdrawing
his adverse claim, or a petition for cancellation of When applicable When Inapplicable
adverse claim may be filed in the proper Regional
Trial Court. (1) Recover possession (1) Preliminary
of real estate; attachments;
Q: What must an interested party do if he (2) Quieting of title; (2) Levy or
seeks the cancellation of a registered adverse (3) Remove clouds upon execution;
claim? title; (3) Proceedings on
(4) For partition; or probate or wills;
A: The interested party must file with the proper (5) Any other (4) Administration
court a petition for cancellation of adverse claim, proceeding of any of the real estate
and a hearing must also first be conducted. kind in court directly of deceased
affecting title to the person; or
Notice of lis pendens land or its use or (5) Proceedings for
occupation or the the recovery of
Lis pendens literally means a pending suit. The building thereon. money
doctrine of lis pendens refers to the jurisdiction, judgments.
power or control which a court acquires over

657
 CIVIL LAW
Effects of the annotation of notice of lis
pendens
1. It keeps the subject matter of litigation within
the power of the court until the entry of the
final judgment to prevent the defeat of the
final judgment by successive alienation; and
2. It binds a purchaser, bona fide or not, of the
land subject of the litigation to the judgment
or decree that the court will promulgate
subsequently.
Notice of lis pendens negates good faith
One who deals with property subject of a notice of
lis pendens cannot invoke the right of a purchaser
in good faith—neither can he acquire better rights
than those of his predecessor-in-interest.
Q: When may a notice of lis pendens be
cancelled?
A: A notice of lis pendens may be cancelled in the
following cases before final judgment upon order
of the court:
1. When it is shown that the notice is for the
purpose of molesting the adverse party;
2. Where the evidence so far presented by the
plaintiff does not bear out the main
allegations of the complaint;
3. When it is shown that it is not necessary to
protect the right of the party who caused the
registration thereof;
4. Where the continuances of the trial are
unnecessarily delaying the determination of
the case to the prejudice of the defendant;
5. Upon verified petition of the party who
caused the registration thereof; or
6. It is deemed cancelled after final judgment in
favor of defendant, or other disposition of the
action, such as to terminate all rights of the
plaintiff to the property involved.
Q: When is a notice of lis pendens deemed
cancelled?
A: Under Sec. 77 of P.D. 1529, a notice of lis
pendens shall be deemed cancelled only upon the
registration of a certificate of the clerk of court in
which the action or proceeding was pending
stating the manner of disposal thereof if there was
a final judgment in favor of the defendant or the
action was disposed of terminating finally all
rights of the plaintiff over the property in
litigation (Isabelita Cunanan et al., v. Jumping Jap
Trading Corporation et al., G.R. No. 173834, April
24, 2009).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
NON-REGISTRABLE PROPERTIES
Non-registrable lands
These are properties of public dominion which,
under existing legislation, are not the subject of
private ownership and are reserved for public
purposes.
NOTE: The properties of public dominion are not
susceptible to acquisitive prescription and only
properties of the State that are no longer
earmarked for public use, otherwise known as
patrimonial, may be acquired by prescription. In
Heirs of Mario Malabanan v. Republic, the Supreme
Court, in observance of the foregoing, clarified the
import of Sec. 14(2) and made the following
declarations:
a. The prescriptive period for purposes of
acquiring an imperfect title over a property of
the State shall commence to run from the date
an official declaration is issued that such
property is no longer intended for public
service or the development of national
wealth; and
b. Prescription will not run as against the State
even if the property has been previously
classified as alienable and disposable as it is
that official declaration that converts the
property to patrimonial (Republic of the
Philippines v. Metro Index Realty and
Development Corporation, G.R. No. 198585, July
2, 2012).
Reason behind their non-registrability
Property of the public domain is beyond the
commerce of man and not susceptible of private
appropriation and acquisitive prescription.
Occupation thereof in the concept of owner no
matter how long cannot ripen into ownership and
be registered as a title (Valiao v. Republic, G.R. No.
170757, November 28, 2011).
Non-Registrable Lands
1. Property of public domain or those intended
for public use, public service or development
of the national wealth;
2. Forest or timber lands;
3. Water sheds;
4. Mangrove swamps;
5. Mineral lands;
6. National parks and plazas;
658
 LAND TITLES AND DEEDS
7. Military or naval reservations;
8. Foreshore lands;
9. Reclaimed lands;
10. Submerged areas;
11. River banks;
12. Lakes, rivers, creeks and lagoons;
13. Reservations for public and semi-public
purposes;
14. Protected areas;
15. Resources within ancestral domains; and
16. Others of similar character.
Q: In 1913, Gov. Gen. Forbes reserved a parcel
of land for provincial park purposes.
Sometime thereafter, the court ordered said
land to be registered in Ignacio & Carmen
Palomo’s name. What is the effect of the act of
Gov. Gen Forbes in reserving the land for
provincial park purposes?
A: As part of the reservation for provincial park
purposes, they form part of the forest zone. It is
elementary in the law governing natural resources
that forest land cannot be owned by private
persons. It is not registrable and possession
thereof, no matter how lengthy, cannot convert it
into private property, unless such lands are
reclassified and considered disposable and
alienable (Sps. Palomo, et. al. v. CA, et. al., G.R. No.
95608, January 21, 1997).
Q: Does land classified as forest loses its
classification because it has been stripped of it
forest cover?
A: NO. A forested area classified as forest land of
the public domain does not lose such classification
simply because loggers or settlers may have
stripped it of its forest cover. Parcels of land
classified as forest land may actually be covered
with grass or planted with crops
by kaingin cultivators or other farmers. Forest
lands do not have to be on mountains or in out-of-
the-way places. The classification of land is
descriptive of its legal nature or status and does
not have to be descriptive of what the land
actually looks like (Heirs of Jose Amunategui v.
Director of Forestry, G.R. No. L-27873, November 9,
1983).
Foreshore land
A strip of land that lies between the high and low
water marks and is alternately wet and dry
according to the flow of tide. It is that part of the
land adjacent to the sea, which is alternately
covered by the ordinary flow of tides.
659
Foreshore lands are inalienable unless reclaimed
by the government and classified as agricultural
lands of the public domain (Chavez v. Public
Estates Authority, G.R. No. 133250, November 11,
2003).
NOTE: Seashore, foreshore land, and/or portions
of the territorial waters and beaches, cannot be
registered. Even alluvial formation along the
seashore is part of the public domain and,
therefore, not open to acquisition by adverse
possession by private persons unless
subsequently declared as no longer needed for
public use.
Mangrove swamps
These are mud flats, alternately washed and
exposed by the tide, in which grows various
kindred plants which will not live except when
watered by the sea, extending their roots deep
into the mud and casting their seeds, which also
germinate there. These constitute the mangrove
flats of the tropics, which exist naturally, but
which are also, to some extent, cultivated by man
for the sake of the combustible wood of the
mangrove and like trees as well as for the useful
nipa palm propagated thereon (Montano v. Insular
Government, G.R. No. L-3714, January 26, 1909).
Q: Are mangrove swamps disposable?
A: NO. Mangrove swamps or manglares are
forestall and not alienable agricultural land.
Mangrove swamps form part of the public forests
and, therefore, not subject to disposition until and
unless they are first released as forest land and
classified as alienable agricultural land (Director of
Forestry v. Villareal, G.R. No. L-32266, February 27,
1989).
Mineral lands
Mineral land means any land where mineral
resources are found. Mineral resources, on the
other hand, mean any concentration of
mineral/rocks with potential economic value.
NOTE : Possession of mineral land, no matter how
long, does not confer possessory rights.
Q: Can land be partly mineral and partly
agricultural?
A: NO. The rights over the land are indivisible and
that the land itself cannot be half agricultural and
half mineral. The classification of land must be
 CIVIL LAW
categorical; the land must be either completely
mineral or completely agricultural.

Watershed

It is a land area drained by a stream or fixed body

of water and its tributaries having a common
outlet for surface runoff.

Watershed reservation

It is a forest land reservation established to

protect or improve the conditions of the water
yield thereof or reduce sedimentation.

Q: Public Reclamation Authority (formerly

Philippine Estate Authority or PEA) reclaimed
several portions of the foreshore and offshore
areas of Manila Bay. In 2003, the Parañaque
City Treasurer issued Warrants of Levy on
PRA’s reclaimed property. PRA filed a petition
for prohibiton with prayer for TRO but was
denied by the RTC on the ground that PRA was
not exempt from payment of real property
taxes as it was organized as a stock
corporation. Is PRA exempted from the
payment of real propery tax for its reclamation
project ?

A: YES. The subject lands are reclaimed lands,

specifically portions of the foreshore and offshore
areas of Manila Bay. As such, these lands remain
public lands and form part of the public domain. It
is clear from Sec. 234 of the LGC that real property
owned by the Republic of the Philippines is
exempt from real property tax unless the
beneficial use thereof has been granted to a
taxable person. In the case of Chavez v. Public
Estates Authority and AMARI Coastal Development
Corporation, the Court held that the fact that
alienable lands of the public domain were
transferred to the PEA (now PRA) and issued land
patents or certificates of title in PEA’s name did
not automatically make such lands private.
Supreme Court also held therein that reclaimed
lands retained their inherent potential as areas for
public use or public service [Republic of the
Philippines, represented by the Philippine
Reclamation Authority (PRA) v. City of Parañaque;
G.R. No. 191109, July 18, 2012].

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 660
 TORTS
TORTS
GENERAL PRINCIPLES
Tort
It is a civil wrong wherein one person’s conduct
causes a compensable injury to the person,
property or recognized interest of another, in
violation of a duty imposed by law.
It may either a direct invasion of some legal right
of an individual; or, an act or omission of a person
which causes some injury or damage directly or
indirectly to another person (Black’s Law
Dictionary, Sixth Ed., p. 1489).
Tort v. Breach of Contract
Contract duties are created by the promises of the
parties, while tort duties are imposed as rules of
law (De Leon, 2012).
Main functions of punishing tort
1. Compensation and Restitution – To
compensate persons sustaining loss or harm
as a result of another’s act or omission,
placing the cost of that compensation on those
who, in justice ought to bear it.
2. Prevention – To prevent future losses and
harm.
Civil liabilities which may arise due to an act
or omission of one, causing damage to another
1. Civil liability ex delicto
NOTE: Every person criminally liable for a
felony is also civilly liable (RPC, Art.100).
Q: Rafael Poblador engaged the service of
Manzano to look for the buyers of the
Wack-Wack share amounting to
₱18,000,00.00. Manzano showed a a
computation for the sale of the Wack-Wack
Share to petitioner, 7 showing a final net
amount of ₱l5,200,000.00. Manzano
introduced Moreland Realty Inc. who agreed
to buy the Wack-Wack share. The
₱l5,200,000.00 was received by the party of
Rafael and the remaining ₱2,800,000.00 was
given to Manzano for the payment of the
capital gains tax, documentary stamp tax, and
other pertinent fees, as well as for her service
fee. However, the sale of Wack-Wack share
was annulled by the Probate Court. As such,
661
the party of Rafael Poblador returned the
₱18,000,00.00 which Moreland paid to for the
Wack-Wack share. Rafael demanded Manzano
to return the ₱2,800,000.00, but to no avail.
Rafael requested for the accounting of the
₱2,800,000.00 which was responded by
Manzano by sending the Capital Gains Tax
Return dated September 23, 1996 indicating
the payment of Pl, 480,000.00 as capital gains
tax. Examining these documents, Rafael and
Torres allegedly noticed a discrepancy in the
faxed Capital Gains Tax Return: while the
typewritten portion of the Return indicated
Pl, 480,000.00 as the capital gains tax paid,
the machine validation imprint reflected only
P80,000.00 as the amount paid. Rafael filed a
case for Estafa against Manzano. However, the
RTC dismissed the complaint for Estafa for
failure of the prosecution to "prove all the
elements of estafa through misappropriation.
Rafael appealed the civil aspect of the case.
Will the civil aspect based on ex delicto will
prosper?
A: No. In the fairly recent case of Dy v.
People, the Court discussed the concept of
civil liability ex delicto in Estafa cases under
paragraph 1 (b), Article 315 of the RPC (with
which Manzano was likewise charged), stating
that when the element of misappropriation
or conversion is absent, there can be
no Estafa and concomitantly, the civil
liability ex delicto does not
exist. Whenever the elements of estafa are
not established, and that the delivery of any
personal property was made pursuant to a
contract, any civil liability arising from
the estafa cannot be awarded in the criminal
case. This is because the civil liability arising
from the contract is not civil liability ex
delicto, which arises from the same act or
omission constituting the crime. Civil
liability ex delicto is the liability sought to be
recovered in a civil action deemed instituted
with the criminal case." In this case, the Court
agrees with the findings of both the R TC and
the CA that the prosecution failed to prove all
the elements of estafa through
misappropriation as defined in, and penalized
under, paragraph 1 (b ), [Article 315] of the
[RPC] (ESTATE OF HONORIO POBLADOR, JR.,
represented by RAFAEL A. POBLADOR v.
ROSARIO L. MANZANO, G.R. No. 192391, June
19, 2017).
2. Independent civil liabilities, such as those:
a. Not arising from an act or omission
complained of as a felony, e.g., culpa
 CIVIL LAW
contractual or obligations arising from
law under Article 31 of the New Civil
Code (such as breach of contract or tort),
intentional torts under Articles 32 and 34,
and culpa aquiliana under Article 2176 of
the New Civil Code.
b. Where the injured party is granted a right
to file an action independent and distinct
from the criminal action under Article 33
of the New Civil Code (in cases of
defamation, fraud and physical injuries).
NOTE: Either of these liabilities may be enforced
against the offender subject to the caveat under
Article 2177 of the New Civil Code that the
plaintiff cannot recover damages twice for the
same act or omission of the defendant (Santos v.
Pizardo, G.R. No. 151452, July 29, 2005).
Tortious Act
It is a wrongful act. It is the commission or
omission of an act by one, without right, whereby
another receives, some direct or indirect injury, in
person, property, or reputation (De Leon, 2012).
GR: An action for damages can only be maintained
by the person directly injured, not by one alleging
the collateral injury.
XPN: There are instances where injury to one may
operate as an injury to another, e.g. a lone parent
cannot sue for the injury suffered by his child, but
may maintain an action in his own right for any
damages suffered as a result of the injury.
Remedies for Torts (CPR):
1. Compensatory – actions for sum of money for
the damage suffered.
2. Preventive – prayer for injunction, a writ of
preliminary injunction, and a temporary
restraining order, enjoining the defendant
from continuing the doing of the tortious
conduct.
3. Restitution – to return gains that the
defendant wrongfully obtained by tort.
Cause of Action in Tort
Elements: (ROW)
1. A legal Right in favor of a person
2. A correlative legal Obligation on the part of
the defendant to respect such right.
3, A Wrong, an act or omission in violation of
such right with consequent injury.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Note: Damage incurred without the presence of
the other elements does not constitute a cause of
action being merley damnum absque injuria
(AQUINO, Torts and Damages)
QUASI-DELICT
Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged
to pay for the damage done. Such fault or
negligence, if there is no pre-existing contractual
relation between the parties, is quasi-delict or
culpa aquilana (Art. 2176, NCC).
Elements of Quasi-Delict (1993, 1997, 2006,
2007, 2010 BAR)
1. Damage to the plaintiff; NOTE: It is the
loss, hurt or harm which results from
injury. It differs from damages which
term refers to the recompense or
compensation awarded for the damage
suffered (So Ping Bun v. CA, G.R. No.
120554, September 21, 1999).
2. Negligence, by act or omission, of which
defendant, or some person for whose acts,
must respond, was guilty; and
3. Connection of cause and effect between
such negligence and damage (Dra. Leila A.
Llano v. Rebecca Biong, G.R. No. 182356,
December 4, 2013).
NOTE: In civil cases, a party who alleges a fact has
the burden of proving it by preponderance of
evidence or greater weight of credible evidence.
Prescription of an action based on quasi-delict
An action based on quasi-delictmust be instituted
within four (4) years (NCC, Art. 1146).
Act
It is any bodily movement tending to produce
some effect in the external world, it being
unnecessary that the same be actually produced,
as the possibility of its production is sufficient
(People v. Gonzales, G.R. No. 80762, March 19,
1990).
Fault
It is a condition where a person acts in a way or
manner contrary to what normally should have
been done (Pineda, 2009).
662
 TORTS
Negligence
It consists in the omission of that diligence which
is required by the nature of the obligation and
corresponds with the circumstances of the
persons, of the time and of the place (NCC, Art.
1173).
Foreseeability of harm (Forseeability Test)
The test to determine the existence of negligence
is whether a prudent man could foresee harm as a
result of the course actually pursued (Picart v.
Smith, Jr., G.R. No. L-12219, March 15, 1918).
NOTE: The existence of negligence in a given case
is not determined by reference to the personal
judgment of the actor in the situation before him.
The law considers what would be reckless,
blameworthy, or negligent in the man of ordinary
intelligence and prudence and determines liability
by that (Ibid.).
Rule when negligence shows bad faith
When negligence shows bad faith, responsibility
arising from fraud is demandable in all
obligations (NCC, Art. 1171). Furthermore, 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 (NCC, Art. 2201).
When is negligence excused
GR: Negligence is excused when events that
transpired were unforeseen or, which though
foreseen, were inevitable (NCC, Art. 1174).
XPN:
1. In cases specified by law;
2. When declared by stipulation; or
3. When the nature of the obligation requires the
assumption of risk.
NOTE: A person or juridical entity is made liable
solidarily with a tortfeasor simply by reason of his
relationship with the latter.
Presumption of negligence on persons
indirectly responsible
The presumption of law is that there was
negligence on the part of the master or employer
either in the selection of the servant or employee
(culpa in eligendo) or in the supervision over him
after the selection (culpa vigilando), or both.
663
NOTE: The presumption is juris tantum
(rebuttable), not juris et de jure (conclusive), and
can be rebutted only by showing proof of having
exercised and observed all the diligence of a good
father of a family (diligentissimi patris familias)
(Tamagro v. CA, G.R. No. 85044, June 3, 1992).
Nature of responsibility of Vicarious Obligor
Primary and direct, not subsidiary. He is solidarily
liable with the tortfeasor. His responsibility is not
conditioned upon the insolvency of or prior
recourse against the negligent tortfeasor (De Leon
Brokerage v. CA, G.R. 15247, February 28, 1962).
Persons Vicariously Liable (F-GOES-T)
1. Father, or in case of death or incapacity,
mother:
a. Damage caused by minor children
b. Living in their company
2. Guardians:
a. For minors or incapacitated persons
b. Under their authority
c. Living in their company
3. Owners and managers of establishments:
a. For their employees
b. In the service of the branches in which
they are employed, or;
c. On the occasion of their functions
4. Employers:
a. Damages caused by employees and
household helpers
b. Acting within the scope of their assigned
tasks
c. Even if the employer is not engaged in
any business or industry
5. State – acting through a special agent and not
when the damage has been caused by the
official to whom the task done properly
pertains.
6. Teachers or heads of establishments:
a. Of arts and trades
NOTE: Article 2180 of the NCC is
applicable to all schools, whether it be
academic or non-academic (Amadora v.
CA, G.R. No. L-47745, April 15, 1988).
b. For damages caused by their pupils and
students or apprentices
c. So long as they remain in their custody
(NCC, Art. 2180).
 CIVIL LAW
The actual tortfeasor is not exempted from
liability
The minor, ward, employee, special agent, pupil,
students and apprentices who actually committed
the delictual acts are not exempted by the law
from personal responsibility. They may be sued
and made liable alone as when the person
responsible for them or vicarious obligor proves
that he exercised the diligence of a good father of a
family or when the minor or insane person has no
parents or guardians. In the latter instance, they
are answerable with their own property (Pineda,
2009).
Common Defenses
The vicarious liability shall cease when the
defendants prove that they observed all the
diligence of a good father of a family to prevent
damage (NCC, Art. 2180; Cuadra v. Monfort, G.R. No.
L-24101 September 30, 1970).
Principle of Vicarious Liability or Law on
Imputed Negligence (2001-2006, 2009, 2010
BAR)
The obligation imposed by Article 2176 of the NCC
for quasi-delicts is demandable not only for one's
own acts or omissions, but also for those persons
for whom one is responsible (NCC, Art. 2180).
THE TORTFEASOR
Persons liable for quasi-delict
Every person legally responsible is liable for a tort
committed by him provided it is the p-proximate
cause of an injury to another. (DE LEON, Torts and
Damages)
Defendants in tort cases can either be natural or
artificial beings.
Pursuant to vicarious liability, a corporation may
be held directly and primary liable for tortious
acts of its officers or employees (NCC, Art. 2180).
Joint Tortfeasors
Two or more persons who act together in
committing a wrong, or contribute to its
commission, or assist or participate therein
actively and with common intent, so that injury
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
results to a third person from the joint wrongful
act of the wrongdoers (De Leon, 2012).
Test for Joint Tortfeasors
Whether the plaintiff has a single cause of action
against such tortfeasors, or whether he has only
several causes of action against each of them.
Liability of Joint Tortfeasors
The responsibility of two or more persons who
are liable for quasi-delict is solidary (NCC, Art.
2194). Each are liable as principals, to the same
extent and in the same manner as if they had
performed the wrongful act themselves (Ruks
Konsult and Construction v. Adworld Sign and
Advertising Corp., G.R. No. 204866, January 21,
2015).
Liability of the owner of a vehicle in case of an
accident (1996, 1998, 2002, 2009 BAR)
In motor vehicle mishaps, the owner is solidarily
liable with his driver, if the former, who was in the
vehicle, could have, by the use of the due diligence,
prevented the misfortune. It is disputably
presumed that a driver was negligent, if he had
been found guilty or reckless driving or violating
traffic regulations at least twice within the next
preceding two months (NCC, Art. 2184).
Car owner not present in the vehicle
If the car owner is not present in the vehicle and
the driver was negligent, the injured party may
still sue b said owner under Article 2180 par. (5)
of the New Civil Code for imputed liability.
NOTE: Employers shall be liable for the damages
caused by their employees and household helpers
acting within the scope of their assigned tasks,
even though the former are not engaged in any
business or industry (NCC, Article 2180 par. 5).
If no knowledge of owner of vehicle not liable
An owner of a vehicle cannot be held liable for an
accident involving the said vehicle if the same was
driven without his consent or knowledge and by a
person not employed by him (Duavit v. CA, G.R. No.
82318, May 18, 1989).
Liability of proprietors of buildings
1. The proprietor of a building or structure is
responsible for the damages resulting from its
total or partial collapse, if it should be due to
664
 TORTS
the lack of necessary repairs (NCC, Art. 2190).
(1990, 2007 BAR)
2. They shall also be responsible for damages
caused by emanations from tubes, canals,
sewers or deposits of infectious matter,
constructed without precautions suitable to
the place (NCC, Art. 2191). (2002 BAR)
Rules on liability for collapse of a building
(NCC, Art. 1723)
1. The collapse of the building must be within 15
years from the completion of the structure.
NOTE: The collapse is by reason of a defect in
the engineer or architect’s plans and
specifications, or due to the defects in the
ground
2. The prescriptive period is 10 years following
the collapse.
3. The liability applies to collapse or ruin, not to
minor defects.
4. Even if payment has been made, an action is
still possible.
NOTE: Acceptance of the building, after
completion, does not imply waiver of any of
the cause of action by reason of any defect.
5. If the engineer or architect supervises the
construction, he shall be solidarily liable with
the contractor.
NOTE: The contractor is likewise responsible
for the damages if the edifice falls, within the
same period, 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.
When a building collapses during an
earthquake
GR: No one can be held liable in view of the
fortuitous event if the proximate cause of the
collapse of the building is an earthquake.
XPN: If the proximate cause is the defective
designing or construction, or directly attributable
to the use of inferior or unsafe material, it is clear
that liability exists (NCC, Art. 1723; Juan F. Nakpil
& Sons v. CA, G.R. No. L-47851, October 3, 1986).
Concurrent Negligence of Two or More Persons
Where the concurrent or successive negligent acts
or omissions of two or more persons, although
665
acting independently, are in combination the
direct and proximate cause of a single injury to a
third person (Sabido v. Custodio, G.R. No. L-21512,
August 31, 1966).
Materiality of Intent
Liability in tort for injury is determined by
conduct, and can arise regardless of the mental
state or intent to commit an unlawful.
If several persons jointly commit a tort, the
plaintiff or person injured, has his election to sue
all or some of the parties jointly, or one of them
separately, because the tort is in its nature a
separate act of each individual (Dean Worcester v.
Ocampo, G.R. No. 5932, February 27, 1912).
In case of injury to a passenger due to the
negligence of the driver of the bus on which he
was riding and of the driver of another vehicle, the
drivers as well as the owners of the two vehicles
are jointly and severally liable for damages (Tiu v.
Arriesgado, G.R. No. 138060, September 1, 2004).
ACT OR OMISSION AND ITS MODALITIES
Quasi-Delict
Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged
to pay for the damage done. Such fault or
negligence, if there is no pre-existing contractual
relation between the parties is called a quasi-
delict (NCC, Art. 2176).
NOTE: While it may be true that the pre-existing
contract between the parties may, as a general
rule, bar the applicability of the law on quasi-
delict, the liability may itself be deemed to arise
from quasi-delict, i.e., the acts which breaks the
contract may also be a quasi-delict (Coca-Cola
Bottlers Philippines, Inc. v. Court of Appeals, G.R. No.
110295, 18 October 1993).
Elements of Quasi-Delict (1993, 1997, 2006,
2007, 2010 BAR)
1. Damage to the Plaintiff;
NOTE: It is the loss, hurt or harm which
results from injury. It differs from damages
which term refers to the recompense or
compensation awarded for the damage
suffered (So Ping Bun v. CA, G.R. No. 120554,
September 21, 1999).
 CIVIL LAW
2. Negligence, by act or omission, of which
defendant, or some person for whose acts,
must respond, was guilty; and
3. Connection of cause and effect between such
negligence and damage (FGU Insurance Corp.
v. CA, G.R. No. 118889, March 23, 1998).
NOTE: An action based on quasi-delict must be
instituted within four (4) years.
Act
It is any bodily movement tending to produce
some effect in the external world, it being
unnecessary that the same be actually produced,
as the possibility of its production is sufficient
(People v. Gonzales, G.R. No. 80762, March 19,
1990).
Fault or Negligence
It consists in the omission of that diligence which
is required by the nature of the obligation and
corresponds with the circumstances of the
persons, of the time and of the place (NCC, Art.
1173).
Affirmative Duties and Miscellaneous
Activities
1.Duties of owners, proprietors and
Possessors of Property
General Rule: The owner has no duty to take
reasonable care towards a trespasser for his
protection from concealed danger. The trespasser
come on to the premises under his own risk.
(Taylor v. Manila Railroad Company, 16 Phil. 8)
XPN:
a. Visitors- owners owe a duty of care to
visitors. (Cabigao v. University of the East,
CA-G.R. No. 33554)
b. Doctrine of Attractive Nuisance- one
who maintains on his premises dangerous
instrumentalities or appliances of a
character likely top attract children in
play and fails to prevent children from
playing therewith is liable to a child of
TENDER YEARS who is injured thereby.
Even if the child is technically a
trespasser in the premises.
Example: Swimming pool with attractive
floats or paraphernalia.
Note: Generally not applicable to bodies of
natural or artificial water in the absence of
any artificial feature other than mere water.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
c. Tolerated Possession- Owner is liable if
the plaintiff is inside his property by
tolerance or by implied permission.
(AQUINO, Torts and Damages)
d. State of Necessity- A situation of present
danger to legally protected interests,
where the only remedy is injuring
another’s legally protected.
2. Duty of Banks
It is one affected by public interest. Banks are
expected to exercise the highest degree of
diligence in the selection and supervision of their
employees. (Bank of the Philippine Islands v. CA)
3.Duty of Common Carriers
They are required to exercise extraordinary
diligence in the vigilance over their passengers.
4.Duty of Doctors
General Practitioner: the standard of the care
demanded is ordinary care and diligence in the
application of his knowledge.
Specialist: generally considered to be that of an
average specialist and not of an average physician.
(Solis, Medical Jurisprudence 1998)
Captain of the Ship Doctrine
Th head surgeon is made liable for everything that
goes wrong within the four corners of the
operating room. (AQUINO, Torts and Damages)
The fact that there is a trend in American
Jurisprudence to do away with the Captain of the
Ship Doctrine does not mean that this court will
ipso facto follow said trend. (Ramos v. CA, G.R.
124354)
Doctrine of Apparent Authority
When no employment relationship exists but it is
shown that the hospital holds out to the patient
that the doctor is its agent it may be vicariously
liable under Art. 2176
Doctrine of Corporate Responsibility
A hospital has the duty to see that it meets the
standards of responsibilities for the care of
patients. Such duty includes the proper
supervision of members of its medical staff.
(Professional Services, Inc. v. Agana)
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 TORTS
5.Duty of Lawyers
An attorney is bound to exercise only a reasonable
degree of care and skill, having reference to the
business he undertakes. (Adarne v. Aldaba, A.M.
No. 801)
VICARIOUS LIABILITY: PARENTS
Basis of vicarious liability of the parents (2005
BAR); “Principal of Parental Liability”
This liability is made natural as a logical
consequence of the duties and responsibilities of
parents exercising parental authority which
includes controlling, disciplining and instructing
their children. In this jurisdiction the parent’s
liability is vested by law which assumes that when
a minor or unemancipated child living with their
parent, commits a tortious act, the parents are
presumed negligent in the performance of their
duty to supervise the children under their custody
(Tamagro v. CA, G.R. No. 85044, June 3, 1992).
Requisites of vicarious liability of the parents
(21-CL)
1. The child is below 21 years of age;
2. The child Committed a tortious act to the
damage and prejudice of another person; and
3. The child Lives in the company of the parent
concerned whether single or married (Pineda,
2009).
Minors v. Incapacitated Persons
Minor Incapacitated Persons
Those who are below Persons beyond 21
21 years of age. years of age but are
incapacitated such as
NOTE: R.A. 6809, An those who are insane or
Act Lowering the Age of imbecile.
Majority from Twenty-
One to Eighteen Years,
did not amend Article
236 of the Family Code
with regard to age.
“Nothing in this code shall be construed to derogate
from the duty or responsibility of parents and
guardians for children and wards below 21 years of
age mentioned in the second and third paragraphs
of Art. 2180 of the Civil Code” (RA 6809).
Thus, under Article 221 of the Family Code, there
is no more alternative qualification as to the civil
liability of parents. The liability of both father and
mother is now primary and not subsidiary (Libi vs.
667
IAC, G.R. No. 70890, September 18, 1992).
Otherwise stated, their responsibility is now
simultaneous, and no longer alternative (Rabuya,
2017).
NOTE: Parents and other persons exercising
parental authority shall be civilly liable for the
injuries and damages caused by the acts or
omissions of their unemancipated children living
in their company and under their parental
authority subject to the appropriate defenses
provided by law (FC, Art.221).
Vicarious liability of other persons exercising
parental authority
In default of the parents or a judicially appointed
guardian, parental authority shall be exercised by
the following persons in the order indicated:
1. Surviving grandparents;
2. Oldest sibling, over 21 years old unless unfit
or unqualified; or
3. Child’s actual custodian, over 21 years old
unless unfit or disqualified
(FC, Art. 216).
Adopted Children
Judicially adopted children are considered
legitimate children of their adopting parents (RA,
8552, Sec. 17).
Thus, adopters are civilly liable for the
tortious/criminal acts of their minor children who
live with them.
NOTE: Parental authority may not be given
retroactive effect so as to make the adopting
parents the indispensable parties in a damage
case filed against their adopted child, for acts
committed by the latter, when actual custody was
yet lodged with the biological parents (Tamargo v.
CA, G.R. No. 85044, June 3, 1992).
Reversion of parental authority to biological
parents
If the adopter dies while the adopted child is still a
minor, parental authority should be deemed to
have reverted in favor of the biological parents.
(Bartolome vs. SSS)
Illegitimate Child
As for an illegitimate child, if he is acknowledged
by the father and lives with the latter, the father
shall be responsible. However, if he is not
recognized by the putative father but is under the
custody and supervision of the mother, it is the
 CIVIL LAW
latter who is the one vicariously liable (Pineda,
2009).
VICARIOUS LIABILITY: GUARDIANS
Guardians are liable for damages caused by the
minors or incapacitated persons who are under
their authority and live in their company (NCC,
Art. 2180).
If the minor or insane person causing damage has
no parents or guardian, the minor or insane
person shall be answerable with his own property
in an action against him where a guardian ad litem
shall be appointed (NCC, Art. 2182).
NOTE: The rules on vicarious liability of parents
are applicable to vicarious liability of guardians.
De facto guardians covered by Art. 2180 of the
NCC
De facto guardians are relatives and neighbors
who take upon themselves the duty to care and
support orphaned children without passing
through judicial proceedings.
NOTE: They are liable for acts committed by
children while living with them and are below 21
years of age, the law being applied by analogy
(Pineda, 2009).
VICARIOUS LIABILITY:
OWNERS AND MANAGERS OF
ESTABLISHMENTS
AND ENTERPRISES
The owners and managers of an establishment or
enterprise are likewise responsible for damages
caused by their employees in the service of the
branches in which the latter are employed or on
the occasion of their functions [NCC, Art. 2180(4)].
Employers shall be liable for the damages caused
by their employees and household helpers acting
within the scope of their assigned tasks, even
though the former are not engaged in any
business or industry [Ibid. (5)]. (2005 BAR)
Owners and managers
The terms “owners and managers” are used in the
sense of “employer” and do not include the
manager of a corporation who himself is just an
employee (Phil. Rabbit Bus Lines v. Phil. American
Forwarders, Inc., G.R. No. L-25142, March 25, 1975).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
To make the employer liable under Art. 2180 of
the NCC, it must be established that the injurious
or tortious act was committed at the time the
employee was performing his functions (Marquez
v. Castillo, G.R. No. 46237, September 27, 1939).
NOTE: However, a manager who is not an owner
but who assumes the responsibility of supervision
over the employees of the owner may be held
liable for the acts of the employees (Pineda, 2009).
One who hires an independent contractor but
controls the latter’s work is responsible also for
his negligence. (Cuison v. Norton and Harrison co.,
G.R. No. L-32774)
Requisites before an employer may be held
liable under Article 2180 (4) for the act of its
employees
1. The employee was chosen by the employer
personally or through another;
2. The service is to be rendered in accordance
with orders which the employer has the
authority to give all times; and
3. That the illicit act of the employee was on the
occasion or by reason of the functions
entrusted to him (Jayme v. Apostol, G.R. No.
163609, November 27, 2008).
VICARIOUS LIABILITY: EMPLOYERS
Employer
An employer includes any person acting directly
or indirectly in the interest of an employer in
relation to an employee and shall include the
government and all its branches, subdivisions and
instrumentalities, all government owned or
controlled corporations and institutions, as well as
non-profit private institutions, or organizations
(PD 442, Art. 97).
Presumption on the negligence of the
employer
The negligence of the employee is presumed to be
the negligence of the employer because the
employer is supposed to exercise supervision over
the work of the employees. This liability of the
employer is primary and direct (Standard Vacuum
Oil Co. vs. Tan and Court of Appeals, G.R. No. L-
13048. February 27, 1960).
Once the employee’s fault is established, the
employer can then be made liable on the basis of
the presumption that the employer failed to
exercise diligentissimi patris familias (diligence of
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 TORTS
a good father of a family) in the selection and XPN: However, it is not necessary that the task
supervision of its employees (LRTA v. Navidad, performed by the employee is his regular job or
G.R. No. 145804, February 6, 2003). that which was expressly given to him by the
employer. It is enough that the task is
Owners/Managers Employers (Par 5, Art. indispensable to the business or beneficial to the
(Par 4, Art. 2180, NCC) 2180, NCC) employer (Filamer Christian Institute v. IAC, G.R.
Requires engagement The employers need No. 75112, August 7, 1992).
in business on the part not be engaged in
of the employers as the business or industry. NOTE: It is not required that the employer is
law speaks of engaged in some kind of industry or work
“establishment or (Castilex Industrial Corporation v. Vasquez, G.R. No.
enterprise.” 132266 December 21, 1999).

Covers negligent acts of Covers negligent acts of
employees committed employees acting
either in the service of within the scope of
the branches or in the their assigned tasks.
occasion of their
functions.
Remedies of the injured party in pursuing the
civil liability of the employer for the acts of his
employees
1. If he chooses to file a civil action for damages
based on quasi-delict under Article 2180 of the
New Civil Code and succeeds in proving the
negligence of the employee, the liability of the
employer is primary, direct and solidary. It is
not conditioned on the insolvency of the
employee (Metro Manila Transit Corp. v. CA,
G.R. No. 118069, November 16, 1998).
2. If he chooses to file a criminal case against the
offender and was found guilty beyond
reasonable doubt, the civil liability of the
employer is subsidiary. The employer cannot
use as a defense the exercise of the diligence
of a good father of a family.
NOTE: Once there is a conviction for a felony, final
in character, the employer under Article 103 of
the RPC, is subsidiary liable, if it be shown that the
commission thereof was in the discharge of the
duties of the employee. A previous dismissal of an
action based on culpa aquiliana could not be a bar
to the enforcement of the subsidiary liability
required by Art. 103 of the RPC (Jocson, et al. v.
Glorioso, G.R. No. L-22686, January 30, 1968).
Vicarious liability Owners and Managers of
Establishment under Article 2180(5) (1991,
2001 BAR)
GR: It is required that the employee must be
performing his assigned task at the time that the
injury is caused.
When a criminal case is filed against the offender,
before the employer’s subsidiary liability is
exacted, there must be proof that:
1. They are indeed the employer of the convicted
employee;
2. The former are engaged in some kind of
industry;
3. The crime was committed by the employees
in the discharge of their duties; and
4. That the execution against the latter has not
been satisfied due to insolvency (Philippine
Rabbit Bus Lines, Inc. v. People, G.R. No.
147703, April 14, 2004).
NOTE: The determination of these conditions may
be done in the same criminal action in which the
employee’s liability, criminal and civil, has been
pronounced, in a hearing set for that precise
purpose, with due notice to the employer, as part
of the proceedings for the execution of the
judgement [Rabuya (2017), citing Calang v. People,
626 SCRA 679, 2010)].
Vicarious liability Owners and Managers of
Establishment V. Vicarious liability of
Employers
Q: OJ was employed as a professional driver of
MM Transit bus owned by Mr. BT. In the course
of his work, OJ hit a pedestrian who was
seriously injured and later died in the hospital
as a result of the accident. The victim’s heirs
sued the driver and the owner of the bus for
damages. Is there a presumption in this case,
that Mr. BT, the owner, had been negligent? If
so, is the presumption absolute or not? (2004
BAR)
A: YES, there is a presumption of negligence on
the part of the employer. However, such
presumption is rebuttable. The liability of the
employer shall cease when they prove that they
observed the diligence of a good father of a family
to prevent damage (Art. 2180). When the

669
 CIVIL LAW
employee causes damage due to his own
negligence while performing his own duties, there
arises the juris tantum presumption that the
employer is negligent, rebuttable only by proof of
observance of the diligence of a good father of a
family (Delsan Transport Lines v. C & A
Construction, G.R. No. 156034, October 1, 2003).
Likewise, if the driver is charged and convicted in
a criminal case for criminal negligence, BT is
subsidiarily liable for the damages arising from
the criminal act.
Q: After working overtime up to midnight,
Alberto, an executive of an insurance company
drove a company vehicle to a favorite Videoke
bar where he had some drinks and sang some
songs with friends to "unwind." At 2:00 a.m., he
drove home, but in doing so, he bumped a
tricycle, resulting in the death of its driver.
May the insurance company be held liable for
the negligent act of Alberto? Why? (2001 BAR)
A: NO. The insurance company is not liable
because when the accident occurred, Alberto was
not acting within the assigned tasks of his
employment.
It is true that under Art. 2180(5), employers are
liable for damages caused by their employees who
were acting within the scope of their assigned
tasks. However, the mere fact that Alberto was
using a service vehicle of the employer at the time
of the injurious accident does not necessarily
mean that he was operating the vehicle within the
scope of his employment. In Castilex Industrial
Corporation v. Vasquez, G.R. No. 132266, December
21, 1999, the Supreme Court held that
notwithstanding the fact that the employee did
some overtime work for the company, the former
was, nevertheless, engaged in his own affairs or
carrying out a personal purpose when he went to
a restaurant at 2:00 a.m. after coming out from
work. The time of the accident (also 2:00 a.m.)
was outside normal working hours.
When the employee is considered to be acting
within the scope of employment
An employee who uses his employer’s vehicle in
going from his work to a place where he intends to
eat or in returning to work from a meal is not
ordinarily acting within the scope of his
employment in the absence of evidence of some
special business benefit to the employer (Castilex
Industrial Corporation v. Vasquez, G.R. No. 132266,
December 21, 1999).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
However, evidence that by using the employer’s
vehicle to go to and from meals, an employee is
enabled to reduce his time-off and so devote more
time to the performance of his duties, supports the
finding that an employee is acting within the
scope of his employment while so driving the
vehicle (Ibid.).
Defenses available to an employer
1. Exercise of due diligence in the selection and
supervision of its employees (except in
criminal action); and
NOTE: In the selection of prospective
employees, employers are required to
examine them as their qualifications,
experience, and service records. On the other
hand, with respect to the supervision of
employees, employers should formulate
standard operating procedures, monitor their
implementation, and impose disciplinary
measures for breaches thereof. To establish
these factors in a trial involving the issue of
vicarious liability, employees must submit
concrete proof, including documentary
evidence (Metro Manila Transit v. CA, G.R. No.
141089, August 1, 2002).
2. The act or omission was made outside
working hours and in violation of company’s
rules and regulations.
Q: Would the defense of due diligence in the
selection and supervision of the employee be
available to the employer in both instances?
(1997 BAR)
A: NO. The defense of diligence in the selection
and supervision of the employee under Article
2180 of the New Civil Code is available only to
those primarily liable thereunder, but not to those
subsidiary liable under Article 103 of the Revised
Penal Code (Yumul v. Juliano, G.R. No. 47690, April,
28, 1941).
Employer’s liability under Art. 2180, NCC v.
Employer’s liability under Art. 100, RPC
NEW CIVIL CODE RPC
Liability is direct, Liability is subsidiary.
primary, and solidary -
the employer may be
sued even without
suing the employee.
Diligence of a good Diligence of a good
father of a family is a father of a family is not
defense. a defense.
670
 TORTS
Employer is liable even Petitioner must prove
if not engaged in that the employer is
business. engaged in business.
Proof of negligence is Proof beyond
by mere preponderance reasonable doubt is
of evidence. required.
Q: Arturo sold his Pajero to Benjamin for P1M.
Benjamin took the vehicle but did not register
the sale with the Land Transportation Office.
He allowed his son Carlos, a minor who did not
have a driver's license, to drive the car to buy
pan de sal in a bakery. On the way, Carlos
driving in a reckless manner sideswiped
Dennis, then riding a bicycle. As a result, he
suffered serious physical injuries. Dennis filed
a criminal complaint against Carlos for
reckless imprudence resulting in serious
physical injuries.
1. Can Dennis file an independent civil action
against Carlos and his father Benjamin for
damages based on quasi-delict?
2. Assuming Dennis' action is tenable; can
Benjamin raise the defense that he is not
liable because the vehicle is not registered
in his name? (2006 BAR)
A:
1. YES. Dennis can file an independent civil
action against Carlos and his father for
damages based on quasi-delict there being an
act or omission causing damage to another
without contractual obligation. Under Section
1 of Rule 111 of the 2000 Rules on Criminal
Procedure, what is deemed instituted with the
criminal action is only the action to recover
civil liability arising from the act or omission
punished by law. An action based on quasi-
delict is no longer deemed instituted and may
be filed separately (Sec. 3, Rule 111, Rules of
Court).
2. NO, Benjamin cannot raise the defense that
the vehicle is not registered in his name. His
liability, vicarious in character, is based on
Article 2180 because he is the father of a
minor who caused damage due to negligence.
While the suit will prosper against the
registered owner, it is the actual owner of the
private vehicle who is ultimately liable (See
Duavit v.CA, G.R. No. L-29759, May 18, 1989).
The purpose of car registration is to reduce
difficulty in identifying the party liable in case
of accidents (Villanueva v. Domingo, G.R. No.
144274, September 14, 2004).
671
Q: A driver of a bus owned by company Z ran
over a boy who died instantly. A criminal case
for reckless imprudence resulting in homicide
was filed against the driver. He was convicted
and was ordered to pay P2 Million in actual
and moral damages to the parents of the boy
who was an honor student and had a bright
future. Without even trying to find out if the
driver had assets or means to pay the award of
damages, the parents of the boy filed a civil
action against the bus company to make it
directly liable for the damages.
1. Will their action prosper?
2. If the parents of the boy do not wish to file
a separate civil action against the bus
company, can they still make the bus
company liable if the driver cannot pay the
award for damages? If so, what is the
nature of the employer's liability and how
may civil damages be satisfied? (2015
BAR)
A:
1. YES, their action will prosper. The liability of
the employer in this case may be based on
quasi-delict and is included within the
coverage of independent civil actions. It is not
necessary to enforce the civil liability based
on culpa aquiliana that the driver or employee
be proven to be insolvent since the liability of
the employer for the quasi-delict committed
by their employees is direct and primary
subject to the defense of due diligence on
their part (NCC, Art. 2176; NCC, Art. 2180).
2. YES, the parents of the boy can enforce the
subsidiary liability of the employer in the
criminal case against the driver. The
conviction of the driver is a condition sine qua
non for the subsidiary liability of the employer
to attach. Proof must be shown that the
driver is insolvent (RPC, Art. 103)
VICARIOUS LIABILITY: STATE
Aspects of liability of the State
1. Public/Governmental – Where the State is
liable only for the tortious acts of its special
agents. The State has voluntarily assumed
liability for acts done through special agents
(Pineda, 2009).
2. Private/Non-governmental – When the State is
engaged in private business or enterprise, it
becomes liable as an ordinary employer (NIA
v. Fontanilla, G.R. No. 61045, December 1,
1989).
 CIVIL LAW
NOTE: The State is only liable for the negligent
acts of its officers, agents and employees when
they are acting as special agents.
Special Agent
A special agent is one who receives a definite and
fixed order or commission, foreign to the exercise
of the duties of his office.
An employee who on his own responsibility
performs functions inherent in his office and
naturally pertaining thereto is not a special agent
(Meritt v. Government of the Philippine Islands, G.R.
No. 11154, March 21, 1916).
NOTE: Where the government commissions a
private individual for a special governmental task,
it is acting through a special agent within the
meaning of the provision (Largo, 2007).
Liability of Provinces, Cities and Municipalities
As for local government units, “provinces, cities
and municipalities shall be liable for damages for
the death of, or injuries suffered by, any person by
reason of the defective condition of roads, streets,
bridges, public buildings, and other public works
under their control or supervision” (NCC, Art.
2189).
NOTE: It is not even necessary for the defective
road or street to belong to the province, city or
municipality for liability to attach. The article only
requires that either control or supervision is
exercised over the defective road or street
(Guilatco v. City of Dagupan, G.R. No. 61516, 21 Mar
1989).
Lack of knowledge not a defense
The LGU cannot be relieved of liability based on its
purported lack of knowledge of the excavation and
the condition of the road when the accident
occurred. Its obligation to maintain the safe
condition of the road within its territory is a
continuing one which is not suspended while a
street is being repaired (Municipality of San Juan v.
CA, G.R. No. 121920, 9 Aug 2005).
VICARIOUS LIABILITY: TEACHERS AND HEADS
OF ESTABLISHMENTS OF ARTS AND TRADES
Teachers or directors of arts and trades are liable
for any damages caused by their pupils or
apprentices while they are under their custody.
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
In the case of Ylarde v. Aquino, G.R. L-33722, July
29, 1988, the teacher Edgardo Aquino, after
bringing his pupils to an excavation site dug by
them, left them all by themselves, and one of the
pupils fell into the pit. The teacher acted with fault
and gross negligence because a teacher who
stands in loco parentis to his pupils would have
made sure that the children are protected from all
harm in his company.
Application of vicarious liability under Art.
2180 of the NCC not limited to schools of arts
and trade
The application of Article 2180 of the New Civil
Code is not limited to schools of arts and trades.
There is really no substantial distinction between
the academic and the nonacademic schools insofar
as torts committed by their students are
concerned. The same vigilance is expected from
the teacher over the students under his control
and supervision, whatever the nature of the school
where he is teaching. There is no reason why
different degrees of vigilance should be exercised
by the school authorities on the basis only of the
nature of their respective schools (Amadora v. CA,
G.R. No. L-47745, April 15, 1988).
NOTE: Although Art. 2180 is applicable to all
schools, the distinction between an academic
school and an establishment of arts and trades is
still essential to distinguish the liability of the
teacher from that of the head of the establishment.
Liability of the teacher as distinguished from
the head of the establishment
GR: Where the school is academic rather than
technical or vocational in nature, responsibility for
the tort committed by the student will attach to
the teacher in charge of such student.
XPN: In the case of establishments of arts and
trades, it is the head thereof, and only he, who
shall be held liable as an exception to the general
rule.
In other words, teachers in general shall be liable
for the acts of their students except where the
school is technical in nature, in which case it is the
head thereof who shall be answerable (Ibid.).
Basis of the teacher’s vicarious liability
They are acting in Loco Parentis (in place of
parents). However, teachers are not expected to
have the same measure of responsibility as that
imposed on parent for their influence over the
672
 TORTS
child is not equal in degree. The parent can instill Teachers and Heads of schools are only liable if
more lasting discipline on the child than the the students remain in schools. If they are no
teacher and so should be held to a greater longer in such premises, their responsibility shall
accountability than the teacher or the head for the attach no more. Their parents become responsible
tort committed by the child (Amadora v. CA, G.R. for them (Pineda, 2009).
No. L-47745, April 15, 1988).
A student is in custody of the school
Special Parental Authority under the Family authorities
Code
The student is in the custody of the school
Art. 218. The school, its administrators and authorities as long as he is under the control and
teachers, or the individual, entity or institution influence of the school and within its premises,
engaged in child are shall have special parental whether the semester has not ended, or has ended
authority and responsibility over the minor child or has not yet begun. The term “custody” signifies
while under their supervision, instruction or that the student is within the control and
custody. influence of the school authorities. The teacher in
charge is the one designated by the dean,
Authority and responsibility shall apply to all principal, or other administrative superior to
authorized activities whether inside or outside the exercise supervision over the pupils or students in
premises of the school, entity or institution. the specific classes or sections to which they are
assigned. It is not necessary that at the time of the
Art. 219. Those given the authority and injury, the teacher is physically present and in a
responsibility under the preceding Article shall be position to prevent it.
principally and solidarily liable for damages
caused by the acts or omissions of the Article 218 of the Family Code v. Article 2180
unemancipated minor. The parents, judicial of the New Civil Code
guardians or the persons exercising substitute
parental authority over said minor shall be ARTICLE 218 of the ARTICLE 2180 of the
subsidiarily liable. Family Code New Civil Code
School, its Teachers, head of
Rationale of vicarious liability of school heads administrators, establishment in arts
and teachers (2005 BAR) teachers engaged in and trades are made
child care are made expressly liable.
The rationale of school heads and teachers’ expressly liable.
liability for tortious acts of their pupil and
students, so long as they remain in custody, is that Liability of school, its Neither such express
they stand, to a certain extent, as to their pupils administrators, and solidary nor subsidiary
and students, in loco parentis and are called upon teachers is solidary and liability is stated.
to “exercise reasonable supervision over the parents are made
conduct of the child.” This is expressly provided subsidiary liable.
for in Articles 349, 350 and 352 of the Civil Code
(Pineda, 2009). Students involved must Students involved are
be a minor. not necessarily minors.
Age of student immaterial
Defenses available
Even if the student has already reached the age of
majority, the liability can be imputed to the Their responsibility will cease when they prove
teacher-in-charge. Under Article 2180, age does that they observed all the diligence of a good
not matter. Unlike the parent who will be liable father of a family to prevent damage (NCC, Art.
only if the child is still a minor, the teacher is held 2180). As for the employer, if he shows to the
answerable by the law for the act of the student satisfaction of the court that in the selection and in
regardless of the age of the student liable the supervision of his employees he has exercised
(Amadora v. CA, G.R. No. L-47745, April 15, 1988). the care and diligence of a good father of a family,
the presumption is overcome and he is relieved
Limitation to the liability of teachers and from liability (Layugan v. IAC, G.R. No. L-49542,
heads of Schools September 12, 1980).

673
 CIVIL LAW
Q: A 15-year-old high school student stabs his
classmate who is his rival for a girl, while they
were going out of the classroom after their last
class. Who may be held liable? (2005 BAR)
A: Under Article 218 of the Family Code, the
school, its administrators and teachers, or the
individual, entity or institution engaged in child
care shall have special parental authority and
responsibility over the minor child while under
their supervision, instruction or custody.
Authority and responsibility shall apply to all
authorized activities whether inside or outside the
premises of the school, entity or institution.
Liability of the school
1. Vicarious liability as an employer under Art.
2180 of the NCC;
2. Direct liability:
a. for quasi-delicts under Art. 2176 of the
NCC;
b. as an institution exercising special
parental authority over minor children
under Art. 219 of the FC;
c. for breach of contract; or
NOTE: When a student enrolls, a contract is
entered into between him and the school.
Under this contract, the school is supposed to
ensure that adequate steps are taken to
provide an atmosphere conducive to study
and ensure the safety of the student while
inside its premises (Saludaga v. FEU, G.R. No.
179337, April 30, 2008). Thus, any quasi-delict
committed by the school’s employee against
the student is also actionable under breach of
contractual obligations.
3. Subsidiary liability for felonies committed by
their servants, pupils, workmen, apprentices,
or employees in the discharge of their duties,
under Art. 103 of the RPC.
PROXIMATE CAUSE
Proximate cause is that cause, which, in natural
and continuous sequence, unbroken by any
efficient intervening cause, produces the injury,
and without which the result would not have
occurred (Ramos v. C.O.L. Realty, G.R. No. 184905,
August 28, 2009).
NOTE: Proximate cause is not necessarily the
immediate cause; it’s not necessarily the nearest
time, distance or space (People v. Elizalde, 59 Off.
Gaz. 1241).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
Application of proximate cause
The doctrine of proximate cause is applicable only
in actions for quasi-delict, not in actions involving
breach of contract.
The doctrine is a device for imputing liability to a
person where there is no relation between him
and another party. In such a case, the obligation is
created by law itself. But, where there is a pre-
existing contractual relation between the parties,
it is the parties themselves who create the
obligation, and the function of the law is merely to
regulate the relation thus created (Calalas v. CA,
G.R. No. 122039. May 31, 2000).
Principle of concurrent causes
Where the concurrent or successive negligent acts
or omissions of two or more persons, although
acting independently, are in combination with the
direct and proximate cause of a single injury to a
third person, and it is impossible to determine
what proportion each contributed to the injury,
either of them is responsible for the whole injury,
even though his act alone might not have caused
the entire injury (Sabido v. Custodio, G.R. No. L-
21512, August 31, 1966).
Efficient Intervening Cause (Novus Actus
Interviens)
An efficient intervening cause is one which
destroys the causal connection between the
negligent act and the injury and thereby negatives
liability (Morril v. Morril, 60 ALR 102, 104 NJL 557).
When Efficient Intervening Cause is not
applicable
There is no efficient intervening cause if the force
created by the negligent act or omission have
either:
1. Remained active itself; or
2. Created another force which remained active
until it directly caused the result; or
3. Created a new active risk of being acted upon
by the active force that caused the result (57
Am. Jur. 2d 507).
Proximate, Intervening, Remote and
Concurrent causes distinguished
It is the cause which, in
PROXIMATE natural and continuous
CAUSE sequence, unbroken by any
efficient intervening cause,
674

produces the injury, and
without which the result
would not have occurred.
One that destroys the causal
connection between the
negligent act and injury and
thereby negatives liability.
INTERVENING
CAUSE
NOTE: Foreseeable
Intervening causes cannot be
considered sufficient
intervening causes.
That cause which some
independent force merely
REMOTE
took advantage of
CAUSE
accomplish something not the
natural effect thereof.
Causes brought about by the
acts and omissions of third
persons which makes the
CONCURRENT
defendant still liable. Here, the
CAUSE
proximate cause is not
necessarily the sole cause of
the accident.
LEGAL INJURY
TORTS
or shall not do a given act (Pineda, 2011).
Tort arising from Breach of Contract
A quasi-delict can be the cause for breaching a
contract that might thereby permit the application
of principles applicable to tort even when there is
a pre-existing contract between the plaintiff and
the defendant.
Where, without a pre-existing contract between
two parties, an act or omission can nonetheless
amount to an actionable tort by itself, the fact that
the parties are contractually bound is no bar to
the application of quasi-delict provisions to the
to
case.
This rule can govern only where the act or
omission complained of would constitute an
actionable tort independently of the contract (Far
East Bank and Trust Company v. CA, G.R. No.
108164, February 23, 1995).
NOTE: The act that breaks the contract may be
also a tort (Air France v. Carrascoso, G.R. No. L-
21438, September 28, 1966).

CLASSIFICATION OF TORTS
In order that a plaintiff may maintain an action for
the injuries of which he complains, he must
establish that such injuries resulted from a breach Torts are classified as either:
of duty which the defendant owed to the plaintiff-
a concurrence of injury to the plaintiff and legal 1. Negligent Torts;
responsibility by the person causing it. 2. Intentional Torts; or
a. Intentional Physical Harms
The underlying basis for the award of tort i. Battery
damages is the premise that an individual was ii. Assault
injured in contemplation of law. Thus, there must iii. False imprisonment
first be a breach of some duty and the imposition iv. Trespass to land
of liability for that breach before damages may be v. Trespass to chattels
awarded; and the breach of such duty should be vi. Conversion
the proximate cause of the injury (Equitable
Banking Corp. v. Calderon, G.R. No. 156168. b. Intentional Non-Physical Harms
December 14, 2004). i. Violation of personal dignity
ii. Infliction of emotional distress
Injury, Damage and Damages iii. Malicious prosecution
iv. Defamation
Injury The illegal invasion of a legal right. v. Fraud or Misrepresentation
The loss, hurt, or harm which results vi. Seduction
Damage vii. Unjust dismissal
from the injury.
The recompense or compensation viii. Violation of rights committed by
Damages public officers
awarded for the damage suffered.

Right c. Interference with Relations

i. Family relations
A right is a legally enforceable claim of one person ii. Social relations
against another, that the other shall do a given act, iii. Economic relations

675
 CIVIL LAW
iv. Political relations Culpa Aquilana v. Crimes

3. Strict Liability Torts Culpa Aquiliana Crimes

a. Possessor and user of an animal There can be quasi- There must be a law
b. Nuisance delict as long as there is punishing the act.
fault or negligence
resulting in damage or
NEGLIGENT TORTS injury to another.
Criminal intent is not There must be a
necessary. criminal intent for
Negligence criminal liability to
exist.
Negligence is the omission of that degree of Quasi-delict is wrongful Crime is a wrong
diligence which is required by the nature of the act against a private against the State or the
obligation and corresponding to the individual. public interest.
circumstances of the persons, time and place (NCC, The quantum of proof The guilt if the accused
Art. 1173). for quasi-delict is must be proved beyond
preponderance of reasonable doubt.
An actionable negligence may either be culpa evidence.
contractual, culpa aquilana, and criminal The sanction is either The punishment is
negligence. Thus, an action for damages for reparation or either imprisonment,
negligent act of the defendant may basedon indemnification of the fine, or both (Pineda,
contract, quasi-delict, or delict. The bases for injury or damage. 2019).
liability are separate and distinct from each other
even if only one act is involved Test of negligence
(Aquino, 2017).
The test is would a prudent man, in the position of
Motive NOT Material: the tortfeasor, foresee harm to the person injured
as a reasonable consequence of the course about
Motive is not material ion negligence cases. The to be pursued? If so, the law imposes a duty on
defendant may still be held liable even if the act the actor to take precaution against its
was meant to be a practical joke. (AQUINO, Torts mischievous results, and failure to do so
and Damages) constitutes negligence (Picart v. Smith, G.R. No. L-
12219, March 15, 1918).
Culpa Aquiliana v. Culpa Contractual
NOTE: The determination of negligence is a
Culpa Aquiliana Culpa Contractual question of foresight on the part of the actor (Phil.
The foundation of The liability is founded Hawk Corp. v. Vivian Tan Lee, G.R. No. 166869,
liability is independent on a contract. February 16, 2010).
of a contract.
Negligence is direct, Negligence is merely Rule when negligence shows bad faith
substantive and incidental to the
independent. performance of the When negligence shows bad faith, responsibility
contractual obligation. arising from fraud is demandable in all
The defense of “good The defense of “good obligations (NCC, Art. 1171). Furthermore, in case
father of a family” is a father of a family” is of fraud, bad faith, malice or wanton attitude, the
complete and proper not a complete defense obligor shall be responsible for all damages
defense insofar as in the selection of which may be reasonably attributed to the non-
parents, guardians, employees. performance of the obligation (NCC, Art. 2201).
employers are
concerned. When is negligence excused
There is no There is presumption
presumption of of negligence as long as GR: Negligence is excused when events that
negligence. The party it can be proved that transpired were unforeseen or, which though
injured must prove the there is a breach of foreseen, were inevitable (NCC, Art. 1174).
negligence of the contract.
defendant. XPN:
1. In cases specified by law;

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 676

2. When declared by stipulation; or
3. When the nature of the obligation requires
the assumption of risk.
Degrees of negligence
1. Simple negligence – Want of slight care and
diligence only.
2. Gross negligence – There is a glaringly obvious
want of diligence and implies conscious
indifference to consequences (Amadeo v. Rio Y
Olabarrieta, Inc., G.R. No. L-6870, May 24,
1954); pursuing a course of conduct which
would probably and naturally result to injury
(Marinduque Iron Mines Agents, Inc. v. The
Workmen’s Compensation Commission, G.R. No.
L-8110 June 30, 1956).
Circumstances to be considered
determining whether an act is negligent
TORTS
9. Practice and Custom – A practice which is
dangerous to human life cannot ripen into a
custom which will protect anyone who
follows it (Yamada v. Manila Railroad Co., G.R.
No. 10073, December 24, 1915).
10. Physical Disability
General Rule: A weak or accident-prone
person must meet the standard of a
reasonable man, otherwise he will be
considered as negligent.
XPN: if the defect amounts to a real disability,
the standard of conduct is that of a reasonable
person under like disability, e.g. the standard
conduct of a blind person becomes that of a
reasonable person who is blind. (Francisco v.
Chemical Bulk Carriers Incorporated, G.R. No.
193577)
in
Quantum of proof on negligence

1. Person Exposed to the Risk – A higher degree
of diligence is required if the person involved
is a child.
2. Emergency – The actor confronted with an
emergency is not to be held up to the standard
of conduct normally applied to an individual
who is in no such situation.
3. Social Value or Utility of Action – Any act
subjecting an innocent person to unnecessary
risk is a negligent act if the risk outweighs the
advantage accruing to the actor and even to
the innocent person himself.
4. Time of the day – May affect the diligence
required of the actor (NCC, Art. 1173); e.g. a
driver is required to exercise more prudence
when driving at night.
5. Gravity of the Harm to be Avoided – Even if the
odds that an injury will result are not high,
harm may still be considered foreseeable if
the gravity of harm to be avoided is great.
6. Alternative Cause of Action – If the alternative
presented to the actor is too costly, the harm
that may result may still be considered
unforeseeable to a reasonable man. More so if
there is no alternative thereto.
7. Place – A man who should occasion to
discharge a gun on an open and extensive
marsh, or in a forest would be required to use
less circumspection and care, than if he were
to do the same thing in an inhabited town,
village or city (A Selection of Cases Illustrative
of the English Law of Tort, Kenny, 1928).
8. Violation of Rules and Statutes
a. Statutes
b. Administrative Rules
c. Private Rules of Conduct
The quantum of proof is preponderance of
evidence [Rules of Court, Rule 133(1)].
Burden of proof
GR: Plaintiff alleging damage due to negligent acts
in his complaint has the burden of proving such
negligence.
XPN: When the rules or the law provide for cases
when negligence is presumed.
Disputable presumptions of negligence
1. Motor vehicle mishaps – a driver is presumed
negligent if he:
a. was found guilty of reckless driving or
violating traffic regulations at least twice
within the preceding two months (NCC,
Art. 2184); or
b. was violating any traffic regulation at the
time of the mishap (NCC, Art. 2185).
2. Possession of dangerous weapons or
substances, results in death or injury, except
when the possession or use thereof is
indispensable in his occupation or business
(NCC, Art. 2188).
3. Common carriers are presumed to have been
at fault or acted negligently in cases of death
or injuries to passengers. Unless they prove
that they observed extraordinary diligence
(NCC, Art. 1733 & 1755).
Intoxication not negligence per se

677
 CIVIL LAW
Mere intoxication is not negligence per se nor
establishes want of ordinary care. But it may be
one of the circumstances to be considered to
prove negligence (Wright v. MERALCO, G.R. No. L-
7760, October 1, 1914).
Doctrine of Comparative Negligence
The negligence of both the plaintiff and the
defendant are compared for the purpose of
reaching an equitable apportionment of their
respective liabilities for the damages caused and
suffered by the plaintiff (Pineda, 2009).
The relative degree of negligence of the parties is
considered in determining whether, and to what
degree, either should be responsible for his
negligence (apportionment of damages).
NOTE: Under the modified form, the plaintiff can
recover only if his negligence is less than or equals
that of the defendant. Expressed in terms of
percentages, a plaintiff who is charged with 80%
of the total negligence can recover only 20% of his
damages (De Leon, 2012).
GOOD FATHER OF A FAMILY OR
REASONABLY PRUDENT MAN
The general standard of test is Bonus Pater
Familias or that of a good father of a family.
If the law or contract does not state the diligence
which is to be observed in the performance, that
which is expected of a good father of a family shall
be required [NCC, Art. 1173 (2)].
Concept of a good father of the family (pater
familias)
He is not and is not supposed to be omniscient of
the future; rather, he is one who takes precautions
against any harm when there is something before
him to suggest or warn him of the danger or to
foresee it (Picart v. Smith, G.R. No. L-12219, March
15, 1918).
The law requires a man to possess ordinary
capacity to avoid harming his neighbors unless a
clear and manifest incapacity is shown; but it does
not generally hold him liable for unintentional
injury unless, possessing such capacity, he might
ought to have foreseen the danger (Corliss v.
Manila Railroad Co., G.R. No. L-21291, March 28,
1969).
Rule in case of fault or negligence of an obligor
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
1. Art. 1173, NCC - Provides that the fault or
negligence of the obligor consists in the
omission of that diligence which is required
by the nature of the obligation and
corresponds with the circumstances of the
persons, of the time and of the place. When
negligence shows bad faith, the provisions of
Articles 1171 and 2201, paragraph 2 of the
NCC shall apply.
NOTE: Under Art. 1171 of the NCC,
responsibility arising from fraud is
demandable in all obligations. Any waiver of
an action for future fraud is void.
2. Art. 2201, NCC - In contracts and quasi-
contracts, the damages for which the obligor
who acted in good faith is liable shall be those
that are the natural and probable
consequences of the breach of the obligation,
and which the parties have foreseen or could
have reasonably foreseen at the time the
obligation was constituted.
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 (Ibid.)
Concept of Good Faith
Good faith refers to the state of the mind which is
manifested by the acts of the individual
concerned. It consists of the intention to abstain
from taking an unconscionable and unscrupulous
advantage of another (DBP v. CA, et al., G.R. No.
137916, December 8, 2004).
Application of standard of diligence to children
GR: The action of a child will not necessarily be
judged according to the standard of an adult.
XPN: If the minor is mature enough to understand
and appreciate the nature and consequences of his
actions. In such a case, he shall be considered to
have been negligent.
NOTE: The age of absolute irresponsibility is 15
years old and below. (Juvenile Justice and Welfare
Act of 2006, RA 9344).
Nevertheless, absence of negligence does not
absolutely excuse the child from liability, as his
properties, if any, can be held subsidiarily liable.
Nor will such absence of negligence excuse the
child’s parent from vicarious liability.
678
 TORTS
“Diligence before the fact”
The conduct that should be examined in
negligence cases is prior conduct or conduct prior
to the injury that resulted or, in proper cases, the
aggravation thereof.
STANDARD OF CARE
STANDARD OF CONDUCT or
DEGREE OF CARE REQUIRED
In General
If the law or contract does not state the diligence
which is to be observed in the performance, that
which is expected of a good father of a family shall
be required [Article 1173(2)].
NOTE: Diligence of a good father of a family -
bonus pater familias - A reasonable man is deemed
to have knowledge of the facts that a man should
be expected to know based on ordinary human
experience (PNR v. IAC, G.R. No. 7054, January 22,
1993).
Persons who have Physical Disability
GR: A weak or accident prone person must come
up to the standard of a reasonable man, otherwise,
he will be considered as negligent.
XPN: If the defect amounts to a real disability, the
standard of conduct is that of a reasonable person
under like disability.
Experts and Professionals
GR: They should exhibit the case and skill of one
who is ordinarily skilled in the particular field that
he is in.
NOTE: This rule does not apply solely or
exclusively to professionals who have undergone
formal education.
XPN: When the activity, by its very nature,
requires the exercise of a higher degree of
diligence
e.g. Banks; Common carriers
Insane Persons
The insanity of a person does not excuse him or
his guardian from liability based on quasi-delict
(NCC, Arts. 2180 & 2182). This means that the act
or omission of the person suffering from mental
defect will be judged using the standard test of a
reasonable man.
The bases for holding a permanently insane
person liable for his torts are as follows:
679
1. Where one of two innocent person must
suffer a loss it should be borne by the one
who occasioned it;
2. To induce those interested in the estate of
the insane person (if he has one) to
restrain and control him; and
3. The fear that an insanity defense would
lead to false claims of insanity to avoid
liability
(Bruenig v. American Family Insurance Co., 173
N.W. 2d 619, February 3, 1970).
NOTE: Under the RPC, an insane person is exempt
from criminal liability. However, by express
provision of law, there may be civil liability even
when the actor is exempt from criminal liability.
An insane person is still liable with his property
for the consequences of his acts, though they
performed unwittingly (US v. Baggay, Jr. G.R. No.
6659, September 1, 1911).
Employers
Employers are required to exercise that degree of
care as mandated by the Labor Code or other
mandatory provisions for proper maintenance of
the work place or adequate facilities to ensure the
safety of the employees.
NOTE: Failure of the employer to comply with
mandatory provisions may be considered
negligence per se.
Employees
Employees are bound to exercise due care in the
performance of their functions for the employers.
Liability may be based on negligence committed
while in the performance of the duties of the
employee (Araneta v. De Joya, G.R. No. L-25172,
May 24, 1974).
NOTE: The existence of the contract constitutes
no bar to the commission of torts by one against
the other and the consequent recovery of
damages.
Owners, Proprietors and
Possessors of Property
GR: The owner has no duty to take reasonable
care towards a trespasser for his protection or
even to protect him from concealed danger.
XPNs:
1. Visitors – Owners of buildings or premises owe
a duty of care to visitors.
2. Tolerated Possession - Owner is still liable if the
plaintiff is inside his property by tolerance or
by implied permission. However, common
carriers may be held liable for negligence to
 CIVIL LAW
persons who stay in their premises even if
they are not passengers.
3. Doctrine of Attractive Nuisance- One who
maintains on his premises dangerous
instrumentalities or appliances of a character
likely to attract children in play, and who fails
to exercise ordinary care to prevent them
from playing therefrom is liable to a child of
tender years who is injured thereby, even if
the child is a trespasser.
4. State of Necessity – A situation of present
danger to legally protected interests, in which
there is no other remedy than the injuring of
another’s also legally protected interest.
Doctors
If a General Practitioner – Ordinary care and
diligence in the application of his knowledge and
skill in the practice of his profession.
If a Specialist – The legal duty to the patient is
generally considered to be that of an average
physician.
Lawyers
An attorney is bound to exercise only a reasonable
degree of care and skill, having reference to the
business he undertakes to do (Adarne v. Aldaba,
A.M. No. 801, June 27, 1978).
UNREASONABLE RISK OF HARM
Elements to be considered to determine if a
person has exposed himself to an
unreasonable great risk
1. Magnitude of the risk;
2. Principal object;
3. Collateral object;
4. Utility of the risk; and
5. Necessity of the risk
If the magnitude of the risk is very great and the
principal object, very valuable, yet the value of the
collateral object and the great utility and necessity
of the risk counterbalanced those considerations,
the risk is made reasonable (Prosser and Keeton,
Law of Torts, 1984 Ed., p.173, citing Terry,
Negligence, 24 Harv. L. Rev. 40,42).
NOTE: In the Philippines, the courts do not use
any formula in determining if the defendant
committed a negligent act or omission. What
appears to be the norm is to give negligence a
common sense, intuitive interpretation (Aquino,
2005).
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
In the field of negligence, interests are to be
balanced only in the sense that the purposes of the
actor, the nature of his act and the harm that may
result from action or inaction are elements to be
considered. Some may not be considered
depending on the circumstances.
PRESUMPTION OF NEGLIGENCE (2000, 2009
BAR)
A person is generally presumed to have taken
ordinary care of his concerns (Rules of Court, Rule
131, Sec. 3). There are however exceptions when
negligence is presumed:
1. Article 2184, NCC - It is disputably presumed
that a driver was negligent, if he had been
found guilty of reckless driving or violating
traffic regulations at least twice within the
next preceding two months.
2. Article 2185, NCC - Unless there is proof to the
contrary, it is presumed that a person driving
a motor vehicle has been negligent if at the
time of the mishap, he was violating any
traffic regulation.
NOTE: Proof of traffic violation is required. A
causal connection must exist between the
injury received and the violation of the traffic
regulation. It must be proven that the
violation of the traffic regulation was the
proximate or legal cause of the injury or that
it substantially contributed thereto.
Negligence, consisting in whole or in part, of
violation of law, like any other negligence, is
without legal consequence unless it is a
contributing cause of the injury (Tison v.
Pomasin, G.R. No. 173180, August 24, 2011).
3. Article 2188, NCC - There is prima facie
presumption of negligence on the part of the
defendant if the death or injury results from
his possession of dangerous weapons or
substances, such as firearms and poison,
except when possession or use thereof is
indispensable in his occupation or business.
NOTE: Proof of possession of dangerous
weapons or substances is required.
4.. Captain of the ship doctrine - A surgeon is
likened to a captain of the ship, such that it is
his duty to control everything going on in the
operating room. The surgeon in charge of an
operation is liable for the negligence of his
assistants during the time when those
assistants are under the surgeon’s control
(Cantre v. Go, G.R. No. 160889, April 27, 2007).
680
 TORTS
5. Article 1756, NCC - In case of death or injuries of
passengers, common carriers are presumed to
have been at fault or acted negligently, unless
they prove that they observed extraordinary
diligence prescribed in Articles 1733 and
1755 of the NCC.
Q: Romeo L. Battung, Jr. (Battung)
boarded petitioner's (G.V. Florida
Transport, Inc.) bus. Battung was seated at
the first row behind the driver and slept
during the ride. When the bus reached the
Philippine Carabao Center in Muñoz, Nueva
Ecija, the bus driver, Duplio, stopped the bus
and alighted to check the tires. At this point,
a man who was seated at the fourth row of
the bus stood up, shot Battung at his head,
and then left with a companion. The bus
conductor, Daraoay, notified Duplio of the
incident and thereafter, brought Romeo to
the hospital, but the latter was pronounced
dead on arrival. Hence, respondents filed a
complaint for damages in the aggregate
amount of P1,826,000.00 based on a breach
of contract of carriage against petitioner,
Duplio, and Baraoay (petitioner, et al.)
before the RTC. Respondents contended that
as a common carrier, petitioner and its
employees are bound to observe
extraordinary diligence in ensuring the
safety of passengers; and in case of injuries
and/or death on the part of a passenger,
they are presumed to be at fault and, thus,
responsible therefor. RTC ruled in
respondents' favor. CA affirmed the ruling
of the RTC. Can the petitioner be held civilly
liable?
A: No. Since Battung's death was
caused by a co-passenger, the applicable
provision is Article 1763 of the Civil Code,
which states that "a common carrier is
responsible for injuries suffered by a passenger
on account of the willful acts or negligence of
other passengers or of strangers, if the
common carrier's employees through the
exercise of the diligence of a good father of a
family could have prevented or stopped the act
or omission." Notably, for this obligation, the
law provides a lesser degree of diligence, i.e.,
diligence of a good father of a family, in
assessing the existence of any culpability on the
common carrier's part.
In this case, records reveal that when the
bus stopped at San Jose City to let four (4) men
ride petitioner's bus (two [2] of which turned
out to be Battung's murderers), the bus driver,
681
Duplio, saw them get on the bus and even took
note of what they were wearing. Moreover,
Duplio made the bus conductor, Daraoay,
approach these men and have them pay the
corresponding fare, which Daraoay did. During
the foregoing, both Duplio and Daraoay
observed nothing which would rouse their
suspicion that the men were armed or were to
carry out an unlawful activity. With no such
indication, there was no need for them to
conduct a more stringent search (i.e., bodily
search) on the aforesaid men. By all accounts,
therefore, it cannot be concluded that
petitioner or any of its employees failed to
employ the diligence of a good father of a
family in relation to its responsibility under
Article 1763 of the Civil Code. As such,
petitioner cannot altogether be held civilly
liable.
NOTE: The negligence of the employee gives rise
to the presumption of negligence on the part of
the employer. This is the presumed negligence in
the selection and supervision of the employee
(Poblete v. Fabros, G.R. No. L-29803, September 14,
1979).
Negligence is proven by
1. Direct evidence
2. Circumstantial evidence
3. Res Ipsa Loquitur
TORT CONCEPTS AND DOCTRINES
RES IPSA LOQUITUR
The thing speaks for itself. Rebuttable presumption
or inference that defendant was negligent, which
arises upon proof that instrumentality causing
injury was in defendant’s exclusive control, and
that the accident was one which ordinarily does
not happen in absence of negligence (Black’s Law
Dictionary, 2004).
However, res ipsa loquitur is not a rule of
substantive law and, as such, does not create nor
constitute an independent or separate ground of
liability. Instead, it is considered as merely
evidentiary or in the nature of a procedural rule
(Professional Services v. Agana, G.R. No. 126297,
January 31, 2007).
NOTE: It is also known as the “Doctrine of
Common Knowledge.”
Requisites for the application of the doctrine
 CIVIL LAW
Resort to the doctrine may be allowed only when:
1. The accident is of such character as to
warrant an inference that it would not have
happened except for the defendant’s
negligence;
2. The accident must have been caused by an
agency or instrumentality within the exclusive
management or control of the person charged
with the negligence complained of; and
3. The accident must not have been due to any
voluntary action or contribution on the part of
the person injured (Josefa v. MERALCO, G.R.
No. 182705, July 18, 2014).
Thus, it is not applicable when an unexplained
accident may be attributable to one of several
causes, for some of which the defendant could not
be responsible (FGU Insurance Corp. v. G. P.
Sarmiento Trucking Co., G.R. No. 141910, August 6,
2002).
When doctrine is applicable
All that the plaintiff must prove is the accident
itself; no other proof of negligence is required
beyond the accident itself. It relates to the fact of
an injury that sets out an inference to the cause
thereof or establishes the plaintiff’s prima facie
case. The doctrine rests on inference and not on
presumption (Perla Compania de Seguros, Inc. v.
Sps. Sarangaya, G.R. No. 147746, October 25, 2005).
Three uses and applications of the doctrine
1. In medical negligence cases;
2. In cases where the exercise of judicial
discretion is abused; and
3. In practical instances
Some cases where doctrine was held
inapplicable
1. Where there is direct proof of absence or
presence of negligence;
2. Where other causes, including the conduct of
the plaintiff and third persons, are not
sufficiently eliminated by the evidence; and
3. When one or more requisites are absent
(Aquino, 2005).
DOCTRINE OF LAST CLEAR CHANCE
(DOCTRINE OF DISCOVERED PERIL or
DOCTRINE OF SUPERVENING NEGLIGENCE)
This is also called as the “Humanitarian
Negligence Doctrine.” Where both parties are
negligent but the negligent act of one succeeds
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
that of the other by an appreciable interval of
time, the one who has the last reasonable
opportunity to avoid the impending harm and fails
to do so, is chargeable with the consequences,
without reference to the prior negligence of the
other party (Picart v. Smith, G.R. No. L-12219,
March 15, 1918).
The doctrine of last clear chance is a theory
adopted to mitigate the harshness of the
contributory negligence of the plaintiff (Phoenix
Construction Inc. v. IAC, G.R. No. L-65295, March 10,
1987).
Requisites:
1. Plaintiff is placed in danger by his own
negligent acts and he is unable to get out from
such situation by any means;
2. Defendant knows that the plaintiff is in
danger and knows or should have known that
the plaintiff was unable to extricate himself
therefrom; and
3. Defendant had the last clear chance or
opportunity to avoid the accident through the
exercise of ordinary care but failed to do so,
and the accident occurred as a proximate
result of such failure (Pineda, 2009).
Instances when doctrine not applicable
1. When the injury or accident cannot be
avoided by the application of all means at
hand after the peril has been discovered
(Pantranco North Expressway v. Baesa, G.R.
Nos. 79050-51, November 14, 1989);
2. If the defendant’s negligence is a concurrent
cause and which was still in operation up to
the time the injury was inflicted;
3. Where the plaintiff, a passenger, filed an
action against a carrier based on contract
(Bustamante v. CA, G.R. No. 89880, February 6,
1991);
4. If the actor, though negligent, was not aware
of the danger or risk brought about by the
prior fraud or negligent act;
5. In case of a collapse of a building or structure
(De Roy v. CA, G.R. No. 80718, January 29,
1988);
6. Where both parties are negligent (Philippine
National Railways v. Brunty, G.R. No. 169891,
November 2, 2006);
7. In case of collision, it applies in a suit between
the owners and drivers of colliding vehicles
and not where a passenger demands
responsibility from the carrier to enforce its
contractual obligations (Tiu v. Arriesgado, G.R.
No. 138060, September 1, 2004).
682
 TORTS
NOTE: There is a different rule in case of collision
of vessels.
Q: Mr. and Mrs. R own a burned-out building,
the firewall of which collapsed and destroyed
the shop occupied by the family of Mr. and Mrs.
S, which resulted in injuries to said couple and
the death of their daughter. Mr. and Mrs. S had
been warned by Mr. & Mrs. R to vacate the
shop in view of its proximity to the weakened
wall but the former failed to do so. Mr. & Mrs.
S filed against Mr, and Mrs. R an action for
recovery of damages the former suffered as a
result of the collapse of the firewall. In their
defense, Mr. and Mrs. R relied on the doctrine
of last clear chance, alleging that Mr. and Mrs. S
had the last clear chance of avoiding the
accident, had they heeded the former’s
warning to vacate the shop, and therefore Mr.
and Mrs. R’s prior negligence should be
disregarded. If you were the judge, how would
you decide the case? (1990 BAR)
A: I would decide in favor of Mr. & Mrs. S. The
proprietor of a building or structure is responsible
for the damages resulting from its total or partial
collapse, if it should be due to the lack of
necessary repairs (NCC, Art. 2190). With respect to
the defense of last clear chance, the same is not
tenable as enunciated by the Supreme Court in De
Roy v. CA (L-80718, January 29, 1988), where it
held that the doctrine of last clear chance is not
applicable in instances covered by Art 2190 of the
Civil Code. Further, in Phoenix Construction, Inc. v.
IAC (G.R. L-65295, March 10, 1987) the Supreme
Court held that the role of the common law "last
clear chance" doctrine in relation to Art. 2179 of
the Civil Code is merely to mitigate damages
within the context of contributory negligence.
Q: Wenifredo Salvaña was driving the bus
owned by Bachelor Express, Inc./Ceres Liner,
Inc. along the national highway when he
overtook a PUJ jeepney while negotiating a
blind curve in a descending road causing him
to intrude into the opposite lane and bump the
10-wheeler Hino dump truck of petitioner
Cresencio Baño running uphill from the
opposite direction. The collision resulted in
damage to both vehicles, the subsequent death
of the truck driver, Amancio Asumbrado, and
serious physical injuries to bus driver Salvaña.
A complaint for quasi-delict was filed against
Salvaña for negligently driving the bus causing
it to collide with the dump truck. Respondents
denied liability, claiming that prior to the
collision; the bus was running out of control
because of a problem in the steering wheel
683
system which could not have been avoided
despite their maintenance efforts. Instead,
they claimed that Asumbrado had the last
clear chance to avoid the collision had he not
driven the dump truck at a very fast speed.
Was Salvaña grossly negligent?
A: Yes. When bus driver Salvaña overtook the
jeepney in front of him, he was rounding a blind
curve along a descending road. Considering the
road condition and that there was only one lane
on each side of the center line for the movement of
traffic in opposite directions, it would have been
more prudent for him to confine his bus to its
proper place. Having thus encroached on the
opposite lane in the process of overtaking the
jeepney, without ascertaining that it was clear of
oncoming traffic that resulted in the collision with
the approaching dump truck driven by deceased
Asumbrado, Salvaña was grossly negligent in
driving his bus. He was remiss in his duty to
determine that the road was clear and not to
proceed if he could not do so in safety (Cresencio
Baño v. Bachelor Express, GR No. 191703, March 12,
2012, PERLAS-BERNABE, J.).
DAMNUM ABSQUE INJURIA
(DAMAGE WITHOUT PREJUDICE)
A person who only exercises his legal rights does
no injury. If damages result from such exercise of
legal rights, the consequences must be borne by
the injured person alone. The law affords no
remedy for damages resulting from an act which
does not amount to a legal injury or wrong (Heirs
of Purisima Nala v. Cabansag, G.R. No. 161188, June
13, 2008).
NOTE: When the conjunction of damage and
wrong is wanting there is no damnum absque
injuria (Lagon v. CA, G.R. No. 119107, March 18,
2005).
The principle does not apply when the exercise of
this right is suspended or extinguished pursuant
to a court order (Amonoy v. Gutierrez, 651 SCRA
731, 2001).
Liability without Fault different from Damnum
Absque Injuria
Liability without Fault includes:
a. Strict Liability – there is strict liability if
one is made independent of fault,
negligence or intent after establishing
certain facts specified by law. It includes
liability for conversion and for injuries
 CIVIL LAW
caused by animals, ultra-hazardous
activities and nuisance.
b. Product Liability – is the law which
governs the liability of manufacturers and
sellers for damages resulting from
defective products (Aquino, 2005).
PRESUMPTION OF REGULARITY
Mistakes committed by public officers are not
actionable absent any clear showing of malice or
gross negligence amounting to bad faith (Farolan
v. Solmac Marketing Corp., G.R. No. 83589, March
13, 1991).
Extent of recovery of damages
1. Recovery completely barred - When the
plaintiff’s own negligence was the immediate
and proximate cause of his injury, he cannot
recover damages (NCC, Art. 2179).
2. Mitigated damages – If the plaintiff’s
negligence was only contributory, the
immediate and proximate cause of the injury
being the defendants lack of due care, he may
recover damages, but the courts shall mitigate
the damages to be awarded (Ibid.).
DOUBLE RECOVERY
Builders, Inc. v. CA, G.R. No. 121484, January 31,
2005).
NOTE: A complaint for damages is personal in
nature (personal action).
Damages v. Injury
Injury is the illegal invasion of a legal right;
damage is the loss, hurt, or harm which results
from the injury; damages are the compensation
awarded for the damage suffered. There can be
damage without injury in those instances in which
the loss or harm was not the result of a violation
of a legal duty. Example: damnum absque injuria
(Sps. Custodio v. CA, G.R. No. 116100, February 9,
1996).
Damages can only be paid with money
Damages can only be paid with money and not
“palay” because “palay” is not a legal tender
currency in the Philippines (Vda. Simeon Borlado
v. CA, G.R. No. 114118, August 28, 2001).
NOTE: In actions for damages, the courts should
award an amount to the winning party and not its
equivalent in property (Ibid.).

Prohibition against Double Recovery (2003, Kinds of damages (MENTAL)

2006 BAR)
1. Moral
Responsibility for fault or negligence under quasi- 2. Exemplary or corrective
delict is entirely separate and distinct from the 3. Nominal
civil liability arising from negligence under the 4. Temperate or moderate
Penal Code. But the plaintiff cannot recover 5. Actual or compensatory
damages twice for the same act or omission of the 6. Liquidated
defendant (NCC, Art. 2177).

NOTE: What is barred by law is the double

recovery of damages, not the availment double
remedies.

DAMAGES

GENERAL PRINCIPLES

Damages

In legal contemplation, the term “damages” is the

sum of money which the law awards or imposes
as a pecuniary compensation, a recompense or
satisfaction for an injury done or wrong sustained
as a consequence either of a breach of a
contractual obligation or a tortious act (MEA

UNIVERSITY OF SANTO TOMAS

2019 GOLDEN NOTES 684
 TORTS

ACTUAL/
MORAL NOMINAL
COMPENSATORY
According to purpose
Actual or compensatory damages simply Awarded only to enable the injured Vindicating or
make good or replace the loss caused by party to obtain means, diversion or recognizing the injured
the wrong. amusement that will alleviate the moral party’s right to a
suffering he has undergone, by reason of property that has been
defendants’ culpable action violated or invaded
(Philippine Airlines v. CA, G.R. No. L- (Tan v. Bantegui, G.R.
82619 September 15, 1993). No. 154027, October 24,
2005).
According to manner of determination
Claimant must produce competent proof No proof of pecuniary loss is necessary. No proof of pecuniary
or the best evidence obtainable such asThe assessment is left to the discretion loss is necessary. Proof
receipts to justify an award therefore.of the court according to the that a legal right has
Actual or compensatory damages cannot circumstances of each case. However, been violated is what is
be presumed but must be proved with there must be proof that the defendant only required. Usually
reasonable certainty (People v. Ereo, G.R.
caused physical suffering, mental awarded in the absence
No. 124706, February 22, 2000). anguish, moral shock, etc (Mahinay v. of proof of actual
Velasquez, G.R. No. 152753. January 13, damages.
GR: Actual damages must be 2004).
substantiated by documentary evidence,
such as receipts, in order to prove GR: Factual basis must be alleged. Aside
expenses incurred as a result of the from the need for the claimant to
death of the victim or the physical satisfactorily prove the existence of the
injuries sustained by the victim factual basis of the damages, it is also
(Philippine Hawk Corporation v. Vivian necessary to prove its causal relation to
Tan Lee, G.R. No. 166869, February 16, the defendant’s act (People v. Manero,
2010). G.R. Nos. 86883-85, January 29, 1993).

XPN: Damages for loss of earning

capacity may be awarded despite the
absence of documentary evidence when:
1. the deceased is self-employed
and earning less than the
minimum wage under current
labor laws, in which case,
judicial notice may be taken of
the fact that in the deceased's
line of work no documentary
evidence is available; or
2. the deceased is employed as a
daily wage worker earning less
than the minimum wage under
current labor laws (Ibid.).
XPN: Criminal cases. Moral damages
may be awarded to the victim in
criminal proceedings in such amount as
the court deems just without need for
pleading or proof of the basis thereof
(People v. Paredes, G.R. No. 127569. July
30, 1998). The amount of P50,000 is
usually awarded by the Court in case of
the occurrence of death.

Special/Ordinary
Ordinary Special Special

NOTE: Ordinary Damages are those NOTE: Special Damages are those which
generally inherent in a breach of a exist because of special circumstances
typical contract. and for which a debtor in good faith can
be held liable if he had been previously
informed of such circumstances.

685

TEMPERATE
Temperate damages may be
recovered when the court finds that
some pecuniary loss has been
suffered but its amount cannot, from
the nature of the case, be proved with
certainty.
No proof of pecuniary loss is
necessary. When the court is
convinced that there has been a
pecuniary loss, the judge is
empowered to calculate moderate
damages rather than let the
complainant suffer without redress
(GSIS v. Labung-Deang, G.R. No.
135644, September 17, 2001).
Special
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
CIVIL LAW
LIQUIDATED
According to purpose
Liquidated damages are frequently
agreed upon by the parties, either by
way of penalty or in order to avoid
controversy on the amount of
damages.
According to manner of determination
No proof of pecuniary loss is
necessary. If intended as a penalty in
obligations with a penal clause, proof
of actual damages suffered by the
creditor is not necessary in order that
the penalty may be demanded (NCC,
Art. 1228)
Special/Ordinary
Special
686
EXEMPLARY/
CORRECTIVE
Exemplary or corrective damages are
intended to serve as a deterrent to
serious wrong doings, and as a
vindication of undue sufferings and
wanton invasion of the rights of an
injured party or a punishment for
those guilty of outrageous conduct
(People v. Orilla, G.R. Nos. 148939-40,
February 13, 2004).
No proof of pecuniary loss is
necessary.
1. That the claimant is entitled to
moral, temperate or compensatory
damages; (NCC, Art. 2243; B. F. Metal
v. Lomotan, G.R. No. 170813, April 16,
2008); and
2. That the crime was committed
with one or more aggravating
circumstances (NCC, Art. 2230), or the
quasi-delict was committed with
gross negligence (NCC, Art. 2231), or
in contracts and quasi-contracts the
act must be accompanied by bad faith
or done in wanton, fraudulent,
oppressive or malevolent manner
(NCC, Art. 2232)
Special
 TORTS
1. Liquidated damages have been previously
ACTUAL AND COMPENSATORY DAMAGES agreed upon (NCC, Art. 2226);

NOTE: Liquidated damages take the place of

Actual damages are such compensation or actual damages except when additional
damages for an injury that will put the injured damages are incurred.
party in the position in which he had been before
he was injured. They pertain to such injuries or 2. Forfeiture of bonds in favor of the
losses that are actually sustained and susceptible government for the purpose of promoting
of measurement (Filipinas (Pre-Fab Bldg.) Systems, public interest or policy (Far Eastern Surety
Inc. v. MRT Development Corp., G.R. Nos. 167829-30, and Insurance Co. v. CA, G.R. No. L-12019,
November 13, 2007). October 16, 1958);
3. Loss is presumed (Manzanares v. Moreta, G.R.
NOTE: To recover damages, the amount of loss No. L-12306, October 22, 1918);
must not only be capable of proof but must 4. When the penalty clause is agreed upon in the
actually be proven (1991, 1996, 2004 BAR). contract between the parties (NCC, Art. 1226);
and
Kinds of Actual or compensatory damages 5. When death is caused within the
contemplation of Art. 2206 (Pineda, 2009).
1. Damnun Emergens/Dano Emergente (actual
damages) – all the natural and probable Civil liability ex delicto v. actual or
consequence of the act or omission compensatory damages distinguished
complained of, classified as one for the loss of
what a person already possesses
2. Lucrum Cessans/Lucro Cesante (compensatory Civil Indemnity Actual or
damages) – for failure to receive, as benefit, Ex Delicto Compensatory
that which would have pertained to him Damages
(expected profits) (Filipinas Synthetic v. De Los Can be awarded To be recoverable must
Santos, G.R. No. 152033, March 16, 2011). without need of further additionally be
proof than the fact of established with
NOTE: Both actual and compensatory damages commission of the reasonable degree of
can be granted at the same time to the plaintiff as felony. certainty (People v.
provided under Article 2200. In other words, Dianos, G.R. No. 119311,
there are two components to actual damages October 07, 1998).
(RCPI v. CA, G.R. No. L-55194, February 26, 1981).
NOTE: Rule applies to civil and criminal cases
Purpose of the law in awarding actual damages (People v. Abaño y Cañares, G.R. No. 188323,
February 21, 2011).
Its purpose is to repair the wrong that has been
done, to compensate for the injury inflicted, and GR: Documentary evidence should be presented
not to impose a penalty (Algarra v. Sandejas, G.R. to substantiate the claim for damages for loss of
No. L-8385, March 24, 1914). earning capacity.

When victim is unknown
The fact that the victim remains unknown and no
heirs have come forward does not warrant the
elimination of civil indemnity (People v. De
Guzman, G.R. No. 92537, April 25, 1994).
Proving the loss
GR: Loss must be proved before one can be
entitled to damages
XPN: Loss need not be proved in the following
cases:
XPN: Damages for loss of earning capacity may be
awarded despite the absence of documentary
evidence when:
1. The deceased is self-employed and earning
less than the minimum wage under current
labor laws, in which case, judicial notice may
be taken of the fact that in the deceased's line
of work no documentary evidence is available;
or
2. The deceased is employed as a daily wage
worker earning less than the minimum wage
under current labor laws (Philippine Hawk

687
 CIVIL LAW
Corporation v. Vivian Tan Lee, G.R. No. 166869,
February 16, 2010).
If amount admitted by a party
Even if there are no receipts and yet the amount
claimed is admitted by a party, it should be
granted (People v. Abolidor, G.R. No. 147231,
February 18, 2004).
Docketing fees must be based on allegation of
actual damages
The amount of damages claimed must be alleged,
not only in the body of the complaint, petition or
answer, but also in the prayer portion thereof
(Siapno v. Manalo, G.R. No. 132260, August 30,
2005).
“Such other relief as this Honorable Court may
deem reasonable”
The prayer for “such other relief as this Honorable
Court may deem reasonable” may include actual
damages although not alleged in the answer, if and
when they are proved (Heirs of Basilisa Justiva v.
Gustilo, G.R. No. L-16396, January 31, 1963).
NOTE: It is broad enough to comprehend an
application as well for nominal damages and even
exemplary damages.
Article 21 of NCC cannot be used as a basis for
award of actual damages
Article 21 of the NCC cannot be used as a basis for
award of actual damages when there is a pre-
existing contractual relation between the parties
(ACI Philippines, Inc. v. Coquia, G.R. No. 174466, July
14, 2008).
Abrazaldo Doctrine
Temperate damages may be awarded where the
amount of the actual damages, the heirs are
entitled to, cannot be shown. Such temperate
damages, taking into account current
jurisprudence fixing the indemnity for death at
P50,000, should be one half thereof, which is
P25,000. (People v. Abrazaldo, G.R. No. 124392,
February 7, 2003).
Coverage of actual damages
Aside from actual pecuniary loss, actual damages
also cover the following:
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
a. Loss or impairment of earning capacity
in cases of temporary or permanent
personal injury;
b. Injury to the plaintiff’s business
standing or commercial credit (NCC, Art.
2205).
Loss or impairment of earning capacity
To be compensated for loss of earning capacity, it
is not necessary that the victim be gainfully
employed at the time of the injury or death. Actual
damages are awarded not for the loss of earnings
but for the loss of capacity to earn money (People
v. Sanchez, G.R. Nos. 121039-45, October 18, 2001).
Determination of amount of damages
recoverable
Much is left to the discretion of the court
considering the moral and material damages
involved. There can be no exact or uniform rule
for measuring the value of a human life (Villa Rey
Transit, Inc., v. CA, G.R. No. L-25499, February 18,
1970).
The life expectancy of the deceased or of the
beneficiary, whichever is shorter, is an important
factor. Other factors that are usually considered
are:
1. Pecuniary loss to plaintiff or beneficiary;
2. Loss of support;
3. Loss of service;
4. Loss of society;
5. Mental suffering of beneficiaries; and
6. Medical and funeral expenses (Ibid.).
NOTE: The formula that has gained acceptance
over time has limited recovery to net earning
capacity. The premise is obviously that net
earning capacity is the person’s capacity to
acquire money, less the necessary expense for his
own living (Philtranco Service Enterprises v. Felix
Paras and Inland Trailways Inc., G.R. No. 161909,
April 25, 2012).
Computation of Unearned Income
Formula:
Net Earning Capacity (x) = Life Expectancy X
(Gross Annual Income LESS Living Expenses)
(People v. Asilan, G.R. No. 188322, April 11, 2012)
Legend:
688
 TORTS
Net Earning Capacity = Life Expectancy x (Gross
Annual Income – Living Expenses)
Life Expectancy = 2/3 x (80 – Age of the Deceased
Living Expenses = 50% of gross annual income
Basis of Life Expectancy
Life expectancy should not be based on the
retirement age of government employees, which is
pegged at 65. In calculating the life expectancy of
an individual for the purpose of determining loss
of earning capacity under Art. 2206 (1), it is
assumed that the deceased would have earned
income even after retirement from a particular job
(Smith Bell Dodwell Shipping Agency Corp. v. Borja,
G.R. No. 143008, June 10, 2002).
Heirs cannot claim as damages the full amount
of earnings of the deceased
Said damages consist, not of the full amount of his
earnings, but of the support they received or would
have received from him had he not died in
consequence of the negligence of the bus’s agent.
Stated otherwise, the amount recoverable is not
loss of the entire earning, but rather the loss of
that portion of the earnings which the beneficiary
would have received. In other words, only net
earnings, not gross earning, are to be considered.
In fixing the amount of that support, the
"necessary expenses of his own living" should be
deducted from his earnings. Earning capacity, as an
element of damages to one's estate for his death
by wrongful act, is necessarily his net earning
capacity or his capacity to acquire money, less the
necessary expense for his own living (Villa Rey
Transit, Inc. v. CA, et al., G.R. No. L-25499, February
18, 1970).
Medical Expenses are in the nature of actual
damages
Medical expenses are in the nature of actual
damages which should be duly proved and the
award for actual damages cannot be made on the
basis of the doctor’s prescription alone (People v.
Enguito, G.R. No. 128812, February 28, 2000).
Adjustment fees do not constitute actual
damages
Adjustment fees and expense of drivers in the
recovery of cargo lost at sea done voluntarily,
though unsuccessfully, does not constitute actual
damages (Schmitz Transport & Brokerage Corp. v.
Transport Venture, Inc., G.R. No. 150255, April 22,
2005).
689
Injury to business standing and commercial
credit of plaintiff
Compensatory damages can be warded for injury
to one’s business reputation or business standing
or for loss of goodwill and loss of customers or
shippers who shifted their patronage to
competitors (Radio Communications of the
Philippiness v Court of Appeals, G.R. No. L-55194,
February 26, 1981).
ATTORNEY’S FEES AND EXPENSES OF
LITIGATION
Two concepts of Attorney’s fees
1. Ordinary – reasonable compensation paid to a
lawyer by this client for the legal services he
has rendered to the latter.
2. Extraordinary – awarded by the court to the
successful litigant to be paid by the losing
party as indemnity for damages (Aquino v.
Casabar, G.R. No. 191470, January 26, 2015).
They are actual damages due to the plaintiff.
Payable not only to the lawyer but to the
client, unless they have agreed that the award
shall pertain to the lawyer as additional
compensation or as part thereof (Benedicto v.
Villaflores, G.R. No. 185020, October 6, 2010).
NOTE: In all cases, the attorney’s fees and
expenses of litigation must be reasonable
(NCC, Art. 2208).
ORDINARY EXTRAORDINARY
Nature
The reasonable An indemnity for
compensation paid to a damages ordered by
lawyer for the legal the court to be paid by
services rendered to a the losing to the
client who has engaged prevailing party in
him. litigation.
Basis
The fact of employment In cases authorized by
of the lawyer by the law.
client.
To whom payable
Lawyer Client
Recovery of attorney’s fees as actual damages
(1991, 1994, 2002 BAR)
 CIVIL LAW
GR: Attorney’s fees cannot be recovered as actual
damages.
XPNs: (SWISS- MUD- ERC)
1. Stipulation between parties;
2. Recovery of Wages of household helpers,
laborers and skilled workers;
3. Actions for Indemnity under workmen's
compensation and employer liability laws;
4. Legal Support actions;
5. Separate civil action to recover civil liability
arising from crime;
6. Malicious prosecution;
7. Clearly Unfounded civil action or proceeding
against plaintiff;
8. When Double judicial costs are awarded;
9. When Exemplary damages are awarded;
10. Defendant acted in gross & evident bad faith
in Refusing to satisfy plaintiff's just &
demandable claim; and
11. When defendant's act or omission Compelled
plaintiff to litigate with third persons or incur
expenses to protect his interest
NOTE: If not pleaded and prayed for in the
complaint, attorney’s fees are barred (Tin Po v.
Bautista, G.R. No. L-55514, March 17, 1981).
Furthermore, moral damages and attorney’s fees
cannot be consolidated for they are different in
nature and each must be separately determined
(Philippine Veterans Bank v. NLRC, G.R. No. 130439,
October 26, 1999).
Attorneys’ fees is not available when the
defendant employer is not guilty of bad faith
(Dalusong v. Eagle Clark Shipping Philippines, Inc.,
G.R. No. 204233, September 3, 2014).
Q: Philippine Transmarine Carriers, Inc. for and on
behalf of its foreign principal, respondent Marine
Shipmanagement Ltd. hired petitioner as a Chief
Cook while carrying provisions, suddenly felt a
severe pain on his waist, abdomen, and down to
his left scrotum. As the pain persisted for a
number of days, he was airlifted to a hospital in
Belgium where he was diagnosed with "infection
with the need to rule out Epididymitis and
Prostatitis" and advised to undergo
repatriation.8 Upon arrival in the Philippines,
petitioner claimed that he immediately reported
to PTCI and asked for referral for further
treatment, but was ignored. Thus, he filed a
complaint for, inter alia, permanent and total
disability benefits against PTCI, Marine, and
respondent Captain Marlon L. Malanao as the
crewing manager (respondents). Was it proper for
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
the CA to delete the award of attoryney’s fees?
A: No, the instances when these may be awarded
are enumerated in Article 2208 of the Civil Code
and is payable not to the lawyer but to the client,
unless the client and his lawyer have agreed that
the award shall accrue to the lawyer as additional
or part of compensation.28 Particularly, Article
2208 of the Civil Code reads:
Article 2208. In the absence of stipulation,
attorney's fees and expenses of litigation, other
than judicial costs, cannot be recovered, except:
(2) When the defendant's act or omission has
compelled the plaintiff to litigate with third
persons or to incur expenses to protect his
interest;;(8) In actions for indemnity under
workmen's compensation and employer's liability
laws;
In this case, suffice it to say that the CA erred in
deleting the award of attorney's fees, considering
that petitioner was found to be entitled to
permanent and total disability benefits and was
forced to litigate to protect his valid claim. Thus,
the reinstatement of such award is in order.
(ARIEL P. HORLADOR, v. PHILIPPINE
TRANSMARINE CARRIERS,
INC.,MARINE*SHIPMANAGEMENT, G.R. No. 236576,
September 05, 2018)
EXTENT OR SCOPE OF ACTUAL DAMAGES
IN CONTRACTS AND QUASI-CONTRACTS
Amount of actual damages
The amount of actual damages should be that
which would put the plaintiff in the same position
as he would have been if he had not sustained the
wrong for which he is claiming compensation or
reparation:
1. Property
a) Damage to or loss of personal property -
the plaintiff is entitled to their value at the
time of the destruction, that is, normally,
the sum of money which he would have to
pay in the market for identical or
essentially similar goods, plus in a proper
case, damages for the loss of the use
during the period before replacement
(Marikina Auto Line v. People G.R. No.
152040, March 31, 2006).
b) Damage to or loss of profit-earning
chattels - what has to be assessed is the
value of the chattel to its owner as a going
concern at the time and place of the loss
690
 TORTS
(PNOC Shipping v. CA, G.R. No. 107518,
October 8, 1998).
c) Damage to or loss of real property – value
at the time of destruction, or market
value, plus, in proper cases, damages for
the loss of use during the period before
replacement, value of use of premises, in
case of mere deprivation of possession.
2. Personal injury
a) Medical Expenses - plaintiff is entitled to
the amount of medical expenses for the
injury suffered as a result of the
defendant’s tortuous act.
NOTE: A person is entitled to the physical
integrity of his or her body; if that integrity is
violated or diminished, actual injury is
suffered for which actual or compensatory
damages are due and assessable (Gatchalian v.
Delim G.R. No. L-56487, October 21, 1991).
b) Rape - For simple rape or qualified rape,
where the penalty imposed is death but
reduced to reclusion perpetua because of
RA 9346, the civil indemnity is
₱100,000.00 (People v. Jugueta, G.R. No.
202124, April 5, 2016).
NOTE: Civil indemnity is mandatory upon the
finding of the fact of rape; it is distinct from
and should not be denominated as moral
damages which are based on different jural
foundations and assessed by the court in the
exercise of sound discretion (People v.
Tabayan, G.R. No. 190620, June 18, 2014).
3. Death – P100,000 by way of civil indemnity ex
delicto (People v. Jugueta, G.R. No. 202124,
April 5, 2016).
4. Physical Injuries – Civil indemnity of
P50,000.00 for the victims who suffered
mortal/fatal wounds and could have died if
not for a timely medical intervention, and a
civil indemnity of P25,000 for the victims who
suffered non-mortal/non-fatal injuries (ibid.).
Mitigation of Actual Damages
Actual damages can be mitigated in the following
cases:
1. For Contracts:
a. Violation of terms of the contract by the
plaintiff himself;
b. Enjoyment of benefit under the contract
by the plaintiff himself;
691
c. Defendant acted upon advice of counsel in
cases where the exemplary damages are
to be awarded such as under Articles
2230, 2231 and 2232;
d. Defendant has done his best to lessen the
plaintiff’s injury or loss.
NOTE: Award of compensatory damages for
breach of contract may be executed pending
appeal, but not the moral and exemplary
damages which must await the final
determination of the main cases (Radio
Communication of the Philippines, Inc. v.
Lantin, G.R. No. L-59311, January 31, 1985).
2. For Quasi-contracts:
a. In cases where exemplary damages are to
be awarded such as in Article 2232 of the
NCC;
b. Defendant has done his best to lessen the
plaintiff’s injury or loss.
3. For Quasi-delicts:
a. That the loss would have resulted in any
event because of the negligence or
omission of another, and where such
negligence or omission is the immediate
and proximate cause of the damage or
injury;
b. Defendant has done his best to lessen the
plaintiff’s injury or loss (Pineda, 2009).
4. For Crimes:
The damages to be adjudicated may be
respectively increased or lessened according to
the aggravating or mitigating circumstances
(NCC, Art. 2204).
IN CRIMES AND QUASI-DELICTS
The amount of damages for death caused by a
crime or quasi-delict shall be at least P75,000,
even though there may have been mitigating
circumstances (People v. Tabarnero, G.R. No.
168169, February 24, 2010).
In addition to the amount to be awarded, Art.
2206 of the NCC provides that the defendant shall
also be liable for the following:
1. Loss of the earning capacity of the deceased,
and the indemnity shall be paid to the heirs of
the latter; such indemnity shall in every case
be assessed and awarded by the court, unless
the deceased on account of permanent
physical disability not caused by the
defendant, had no earning capacity at the time
of his death;
 CIVIL LAW
2. If the deceased was obliged to give support
according to the provisions of Article 291, the
recipient who is not an heir called to the
decedent's inheritance by the law of testate or
intestate succession, may demand support
from the person causing the death, for a
period not exceeding five years, the exact
duration to be fixed by the court;
NOTE: The article only mentioned heir.
Consequently, it cannot speak of devisees and
legatees who are receiving support from the
deceased.
3. The spouse, legitimate and illegitimate
descendants and ascendants of the deceased
may demand moral damages for mental
anguish by reason of the death of the
deceased (1992, 1993, 2007 BAR).
NOTE: In case of death caused by quasi-delict, the
brother of the deceased is not entitled to the
award of moral damages based on Article 2206 of
the New Civil Code (Sulpicio Lines Inc. v. Curso, G.R.
No. 157009, March 17, 2010).
MORAL DAMAGES
It includes physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation,
and similar injury (NCC, Art. 2217).
It is awarded to enable the injured party to obtain
means, diversions or amusement that will serve to
alleviate the moral suffering he has undergone by
reason of the defendant’s culpable action
(Prudenciado v. Alliance Transport System, Inc., G.R.
No. L-33836, March 16, 1987).
Q: Rosalie Sy Ayson discovered that the Fil-
Estate and Fairways illegally entered into her
property when it constructed its golf course.
Despite receipt of a notice to vacate said
property, the latter still continued to encroach
the subject land. On the other hand, Fil-Estate
and Fairways contend that it was in good faith
in constructing the golf course. It contended
that a certain Villanueva, the former owner of
the subject land, gave assurances that Ayson
will agree to a land swap which will be
mutually beneficial for the parties. Ayson
thereafter filed a complaint for damages.
Assuming that the case will prosper, what kind
of damages is she entitled to?
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
A: Ayson is entitled to recover moral and
exemplary damages. Moral damages are designed
to compensate and alleviate the physical suffering,
mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral
shock, social humiliation, and similar harm
unjustly caused to a person. Exemplary damages
may be imposed by way of example or correction
for public good if the guilty party acted in a
wanton, fraudulent, reckless, oppressive or
malevolent manner.
Here, Ayson can recover moral damages as she
was made to suffer sleepless nights and mental
anguish because her right as the owner of the
subject lot was violated by Fil-Estate in
constructing its golf course in the latter's
property. She is also entitled to exemplary
damages since despite the notice to vacate, the
latter still proceeded to construct its golf course.
(ROSALIE SY AYSON v. FIL-ESTATE PROPERTIES,
INC. et.al., G.R. No. 223254, December 1, 2016)
NOTE: Moral damages apply both to natural and
juridical persons. Moral damages are generally not
awarded in favor of a juridical person, unless it
enjoys a good reputation that was debased by the
offending party resulting in social humiliation (
ABSCBN v. CA, 301 SCRA 589).
A corporation can be an offended party in an
action for defamation, and can recover moral
damages pursuant to Article 2219(7) of the NCC.
Act or omission must be with bad faith
The rule is settled that moral damages cannot be
awarded in the absence of a wrongful act or
omission or fraud or bad faith (Siasat v. IAC, G.R.
No. L-67889, October 9, 1985).
Elements required for recovery (1991, 2002,
2003 BAR)
1. An injury clearly sustained by the claimant;
2. A culpable act or omission factually
established;
3. The act or omission must be the proximate
result of the physical suffering, mental
anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock,
social humiliation and similar injury; and
wrongful act or omission of the defendant as
the proximate cause of the injury sustained by
the claimant; and
4. The award of damages predicated on any of
the cases stated in Art. 2219 (Amado v.
Salvador, G.R. No. 171401, December 13, 2007).
692
 TORTS
Court given discretion to determine moral
damages
Trial courts are given discretion to determine
moral damages and the Court of Appeals can only
modify or change the amount awarded when they
are palpably and scandalously excessive “so as to
indicate that it was the result of passion, prejudice
or corruption on the part of the trial court”
(Yuchengco v. Manila Chronicle Publishing Corp.,
G.R. No. 184315, November 25, 2009).
There is no hard and fast rule in the determination
of what would be a fair amount of moral damages,
since each case must be governed by its own
peculiar circumstances (PNB v. CA, G.R. No.
116181, January 6, 1997).
When victim bearing a child
An award for the death of a person does not cover
the case of an unborn foetus that is not endowed
with personality. The damages recoverable by the
parents of an unborn child are limited to moral
damages for the illegal arrest of the normal
development of the foetus on account of distress
and anguish attendant to its loss (Geluz v. CA, G.R.
No. L-16439, July 20, 1961).
Recovery of moral damages
GR: To recover moral damages, the plaintiff must
allege and prove:
1. The factual basis for moral damages and
2. The causal relation to the defendant’s act
XPN: Moral damages may be awarded to the
victim in criminal proceedings without the need
for pleading of proof or the basis thereof.
Award of moral damages to a corporation
GR: Juridical person is generally not entitled to
moral damages because, unlike a natural person, it
cannot experience physical suffering or such
sentiments as wounded feelings, serious anxiety,
mental anguish or moral shock. (Filipinas
Broadcasting Network v. Ago Medical and
Educational Center-Bicol, G.R. No. 141994, January
17, 2005).
XPN: A corporation may have a good reputation
which, if besmirched, may also be a ground for the
award of moral damages (Ibid.).
693
Moral damages recoverable under culpa
contractual
GR: Moral damages are not recoverable in actions
for damages predicated on a breach of contract.
XPNS: Moral damages may be awarded in culpa
contractual, involving common carriers in the
following instances:
a. Where the passenger died by reason of
negligence of the carrier (Art. 1764);
b. Where it is proved that the carrier is
guilty of fraud or bad faith, even if the
death does not result (Fores v. Miranda
105 Phil. 266; Pineda, 2010; Sulpicio Lines,
Inc., v. Napoleon Sesante, G.R. No 172682,
27 July 2016)
XPN to XPN: Even if death or injury does not
result, there is fraud or bad faith on the part of the
defendant (Sulpicio Lines, Inc., v. Curso, G.R. No.
157009, March 17, 2010)
NOTE: Even if the negligence of the bank is not
attended with malice and bad faith, moral
damages may be granted (Cavite Development
Bank v. Lim, G.R. No. 131679, February 1, 2000).
Moral damages may be recovered in the
following and analogous cases (1996, 2002,
2004, 2006, 2009 BAR)
1. A criminal offense resulting in physical
injuries;
2. Quasi-delicts causing physical injuries;
3. Seduction, abduction, rape, or other lascivious
acts;
4. Adultery or concubinage;
5. Illegal or arbitrary detention or arrest;
6. Illegal search;
7. Libel, slander or any other form of
defamation;
8. Malicious prosecution;
9. Acts mentioned in Article 309; and
10. Actions referred to in Articles 21, 26, 27, 28,
29, 30, 32, 34, and 35 (NCC, Art. 2219).
NOTE: Art. 2219 of the NCC provides for criminal
offenses resulting from physical injuries and
quasi-delicts causing physical injuries.
Parents of the victim seduced, abducted, raped, or
abused, may also recover moral damages (NCC,
Art. 2219). The prevailing jurisprudence is that the
award of moral damages should be granted jointly
to both the victim and her parents. Stated
differently, the parents are not entitled to a
 CIVIL LAW
separate award of moral damages (People v. Delen,
G.R. No. 194446, Apil 21, 2014).
NOTE: The term ‘physical injury,’ as used in Art.
2219(1) of the NCC, includes death, and no proof
of pecuniary loss is necessary in order that such
damages may be adjudicated. (People v. Tambis, G.
R No. 124452, July 28, 1999).
Tortious acts referred to in chapter of human
relations of the NCC
The plaintiff may recover moral damages:
1. Willful acts contrary to morals, good customs
or public policy;
2. Disrespect to the dignity, personality, privacy
and peace of mind of neighbors and other
persons;
3. Refusal or neglect of a public servant to
perform his official duty without just cause;
4. Unfair competition in enterprise or in labor;
5. Civil action for damages against accused
acquitted on reasonable doubt;
6. Violation of civil rights;
7. Civil action for damages against city or
municipal police force; and
8. When the trial court finds no reasonable
ground to believe that a crime has been
committed after a preliminary investigation
or when the prosecutor refuses or fails to
institute criminal proceedings.
Moral damages may be awarded in appropriate
cases referred to in the chapter on human
relations of the Civil Code (Articles 19 to 36),
without need of proof that the wrongful act
complained of had caused any physical injury
upon the complainant (Patricio v. Leviste, G.R. No.
L-51832, April 26, 1989).
Cases where moral damages is mandatory
without need of any proof
1. Rape cases
2. Murder cases
NOTE: Same rule applies in cases of frustrated
murder
3. Homicide
In robbery and other common crimes, the grant of
moral damages is not automatic, unlike in rape
cases (People v. Taño, G.R. No. 133872, May 5,
2000).
Civil indemnity different from moral damages
in rape
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES
In rape cases, civil indemnity is different from
moral damages. It is distinct from and should not
be denominated as moral damages which are
based on different jural foundations and assessed
by the court in the exercise of sound discretion
(People v. Caldona, G.R. No. 126019, March 1,
2001).
NOTE: In criminal proceedings for rape, plaintiff
need not prove the factual basis for moral
damages as well as the causal relation to the
defendant’s act.
Amount of award in qualified rape
For qualified rape, where the penalty imposed is
death but reduced to reclusion perpetua because
of RA 9346, the amount of damages to be awarded
are as follows:
1. Civil indemnity – P100,000.00;
2. Moral damages – P100,000.00;
3. Exemplary damages – P100,000.00
(People v. Jugueta, G.R. No. 202124, April 5, 2016).
Psychologically incapacity and moral damages
By declaring petitioner as psychologically
incapacitated, the possibility of awarding moral
damages was negated, which should have been
proved by specific evidence that it was done
deliberately. Thus, as the grant of moral damages
was
not proper, it follows that the grant of exemplary
damages cannot stand since the Civil Code
provides that exemplary damages are imposed in
addition to moral, temperate, liquidated or
compensatory damages (Buenaventura v. CA, G.R.
No. 127358, March 31, 2005).
NOMINAL DAMAGES
Nominal damages are adjudged in order that a
right of the plaintiff, which has been violated or
invaded by the defendant, may be vindicated or
recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by
him (NCC, Art. 2221) (1991, 1994, 2005 BAR).
Nature of Nominal Damages
Nominal damages are small sums fixed by the
court without regard to the extent of the harm
done to the injured party. They are damages in
name only and are allowed simply in recognition
of a technical injury based on a violation of a legal
694
 TORTS
right (Robes-Francisco Realty v. CFI, G.R. No. L-
41093 October 30, 1978).
Elements of Nominal Damages
1. Plaintiff has a right;
2. Such right is violated; and
3. The purpose of awarding damages is to
vindicate or recognize the right violated.
Cases where nominal damages are awarded
The court may award nominal damages in every
obligation arising from any source enumerated in
Article 1157, or in every case where any property
right has been invaded (NCC, Art. 2222).
The adjudication of nominal damages shall
preclude further contest upon the right involved
and all accessory questions, as between the
parties to the suit, or their respective heirs and
assigns (NCC, Article 2223).
NOTE: Nominal damages cannot co-exist with
compensatory damages. Nominal damages are
adjudged in order that a right of the plaintiff,
which has been violated or invaded by the
defendant, may be vindicated or recognized, and
not for the purpose of indemnifying the plaintiff
for any loss suffered by him (LRTA v. Navidad, G.R.
No. 145804, February 6, 2003).
Nominal and temperate damages cannot be
awarded concurrently. The two awards are
incompatible. Nominal damages are given in order
that a right of plaintiff which has been violated or
invaded by the defendant, may be
vindicated or recognized. On the other hand,
temperate damages may be awarded when the
court finds that some pecuniary loss has been
suffered but its amount cannot be proved with
reasonable certainty (Rabuya, 2017).
Award of nominal damages in labor
termination cases
Where an employee was terminated for a caused,
but the employer failed to comply with the notice
requirement, the employee is entitled to the
payment of nominal damages (Agabon v. National
Labor Relations Commission, G.R. No. 158693,
November 17, 2004). The nominal damages
awarded to the employees for a dismissal based
on just cause under Art. 282 of the Labor Code
without notice requirement was P30, 000; while,
where the dismissal of the employees was based
on authorized cause under Art. 283 of the Labor
Code, but without the required notice, the amount
695
was fixed at P50, 000 (Celebes Japan Foods
Corporation v. Yermo, G.R. No. G.R. No. 175855,
October 2, 2009).
TEMPERATE OR MODERATE DAMAGES
Temperate damages are those damages, which are
more than nominal but less than compensatory,
and may be recovered when the court finds that
some pecuniary loss has been suffered but its
amount cannot be proved with certainty (NCC, Art.
2224).
Nature of Temperate Damages
The allowance of temperate damages when actual
damages were not adequately proven is ultimately
a rule drawn from equity, the principle affording
relief to those definitely injured who are unable to
prove how definite the injury (Equitable PCI Bank
v. Tan, G.R. No. 165339, August 23, 2010).
Temperate damages may be awarded in the
following cases:
1. In lieu of actual damages; or
2. In lieu of loss of earning capacity.
Rationale behind the temperate or moderate
damages (1994 BAR)
The rationale behind temperate damages is
precisely that from the nature of the case, definite
proof of pecuniary loss cannot be offered. When
the court is convinced that there has been such
loss, the judge is empowered to calculate
moderate damages, rather than let the
complainant suffer without redress from the
defendant’s wrongful act (GSIS v. Spouses Labung-
Deang, G.R. No. 135644, September 17, 2001).
Elements of Temperate Damages
1. Some pecuniary loss;
2. Loss is incapable of pecuniary estimation; and
3. The damages awarded are reasonable.
Q: Nanito Evangelista filed a complaint
for damages against Andolong over the
latter's failure to give the former's share in
the net profits derived from their business.
However, this was evidenced solely by the
documentary exhibits which disclosed the
gross monthly revenue and not the actual
profit earned. During the course of the
proceedings, Andolong was declared in
default. Consequently, it was no longer
 CIVIL LAW
possible for Evangelista to prove the actual December 30, 1961).
profit earned since such documents were
in possession of Andolong. Can Evangelista Liquidated damages v. Penalties
recover damages if the net profits can no
longer be ascertained? Liquidated Damages Penalties
Purpose
A: Yes. Evangelista can recover damages It is a sum inserted in a It is a sum inserted in a
although the exact amount of the net profits contract as a measure of contract as a
remained unproven. This comes in the form of compensation for its punishment for default,
temperate or moderate damages. Temperate breach. or by way of security
damages may be recovered when the court for actual damages
finds that some pecuniary loss has been which may be
suffered but its amount cannot, from the sustained because of
nature of the case, be provided with certainty. the non- performance
Consequently, in computing the amount of of the contract.
temperate or moderate damages, it is usually
left to the discretion of the courts, but the Nature
amount must be reasonable, bearing in mind Its essence is a genuine An agreement to pay a
that temperate damages should be more than covenanted pre- stipulated sum on
nominal but less than compensatory. (NANITO estimate of damages. breach of contract
EVANGELISTA v. SPOUSES NERO ANDOLONG irrespective of the
III AND ERLINDA ANDOLONG et.al., G.R. No. damage sustained (De
221770, November 16, 2016) Leon, 2012).

LIQUIDATED DAMAGES
Liquidated damages are fixed damages previously
agreed by the parties to the contract and payable
to the innocent party in case of breach by the
other (Pineda, 2009).
Liquidated damages are those that the parties
agree to be paid in case of a breach. Under
Philippine laws, they are in the nature of penalties.
They are attached to the obligation in order to
ensure performance. As a precondition to such
award, however, there must be proof of the fact of
delay in the performance of the obligation
(Suatengco v. Reyes, G.R. No. 162729, December 17,
2008).
Legal Results
There is no difference between a penalty and
liquidated damages, as far as legal results are
concerned (Lambert v. Fox, G.R. No. L-7991,
January 29, 1914).
NOTE: Whether as a penalty or indemnity, it is
necessary that there be a contract the violation of
which give rise to the liquidate damages
stipulated upon (Pineda, 2009).
Liquidated damages may be equitably reduced
when
1. Iniquitous or unconscionable (NCC, Art. 2227)
2. Partial or irregular performance
When principal obligation is void

Nature of Liquidated Damages
A stipulation on liquidated damages is a penalty
clause where the obligor assumes a greater
liability in case of breach of an obligation. The
obligor is bound to pay the stipulated amount
without need for proof on the existence and on the
measure of damages caused by the breach (Titan
v. Uni-Field, G.R. No. 153874, March 1, 2007).
NOTE: Attorney’s fee is in the concept of actual
damages except that when it is stipulated and
therefore in the form of liquidated damages no
proof of pecuniary loss is required (NCC, Article
2216) (Santiago v. Dimayuga, G.R. No. L-17883,
The nullity of the penal clause does not carry with
it that of the principal obligation.
The nullity of the principal obligation carries with
it that of the penal clause (NCC, Art. 1230).
Rule governing in case of breach of contract
When the breach of contract committed by the
defendant is not the one contemplated by the
parties in agreeing upon the liquidated damages,
the law shall determine the measure of damages,
and not the stipulation (NCC, Art. 2228).

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2019 GOLDEN NOTES 696
 TORTS
malevolent manner (Mendoza v. Spouses
EXEMPLARY OR CORRECTIVE DAMAGES Gomez, G.R. No. 160110, June 18, 2014).

Award in Crime, Quasi-Delict, Contracts and

Exemplary damages or corrective damages are Quasi-contracts
imposed, by way of example or correction for the
public good, in addition to the moral, temperate, Award in Award in Award in
liquidated or compensatory damages (NCC, Art. Crime Quasi-Delict Contracts and
2229)(2003, 2005, 2009 BAR) Quasi-
Contracts
NOTE: They are also known as “punitive” or An aggravating May be May be
“vindictive” damages. circumstance, granted if the awarded if the
whether defendant defendant is
Nature of exemplary damages ordinary or acted with found to have
qualifying gross acted in a
Exemplary damages are mere accessories to other (People v. negligence wanton,
forms of damages except nominal damages. They Dadulla, G. R. (BPI fraudulent,
are mere additions which may or may not be No. 172321, Investment reckless,
granted at all depending upon the necessity of February 9, Corp. v. D.G. oppressive, or
setting an example for public good as a form of 2011). Carreon malevolent
deterrent to the repetition of the same act by Commercial manner (Far
anyone (Pineda, 2009). Corp., G.R. No. East Bank and
126524, Trust Company
Rationale behind exemplary damages November 29, v. Hon. Court of
2001). Appeals, G.R.
The rationale behind exemplary damages is to No. 108164,
provide an example or correction for the public February 23,
good and not to enrich the victim (Rana v. Wong, 1995).
G.R. No. 192861, June 30, 2014).
NOTE: In quasi-contracts, award of exemplary
Cases where exemplary damages may be damages is discretionary (Benguet Electric
imposed as accessory damages Cooperative, Inc. v. CA, G.R. No. 127326, December
23, 1999).
GR: Exemplary damages cannot be recovered as a
matter of right (NCC, Art. 2233).
DAMAGES IN CASE OF DEATH
XPN: They can be imposed in the following cases:
1. Criminal offense – when the crime was
committed with one or more aggravating Damages that can be recovered in case of
circumstances (NCC, Art. 2230); death (MEA-I3)
2. Quasi-delicts – when the defendant acted with
gross negligence (NCC, Art. 2231); 1. Moral damages
3. Contracts and Quasi-contracts – when 2. Exemplary damages
defendant acted in wanton, fraudulent, 3. Attorney's fees and expenses for litigation
reckless, oppressive, or malevolent manner 4. Indemnity for death
(NCC, Art. 2232). 5. Indemnity for loss of earning capacity
6. Interest in proper cases
Requirements for an award of exemplary
damages Rules when crimes and quasi-delict has caused
death
1. The claimant’s right to exemplary damages
has been established; The amount of damages for death caused by a
2. Their determination depends upon the crime or quasi-delict shall be at least P75,000,
amount of compensatory damages that may even though there may have been mitigating
be awarded to the claimant; and circumstances. In addition:
3. The act must be accompanied by bad faith or 1. The defendant shall be liable for the loss of
done in wanton, fraudulent, oppressive or the earning capacity of the deceased, and the
indemnity shall be paid to the heirs of the

697
 CIVIL LAW
latter; such indemnity shall in every case be
assessed and awarded by the court, unless the
deceased on account of permanent physical
disability not caused by the defendant, had no
earning capacity at the time of his death;
2. If the deceased was obliged to give support
according to the provisions of Article 291, the
recipient who is not an heir called to the
decedent's inheritance by the law of testate or
intestate succession, may demand support
from the person causing the death, for a
period not exceeding five years, the exact
duration to be fixed by the court;
3. The spouse, legitimate and illegitimate
descendants and ascendants of the deceased
may demand moral damages for mental
anguish by reason of the death of the
deceased (NCC, Art. 2206).
NOTE: The plaintiff is entitled to the amount that
he spent during the wake and funeral of the
deceased. However, it has been ruled that
expenses after the burial are not compensable.
GRADUATION OF DAMAGES
Reduction of damages in quasi-delict cases
In quasi-delict, the contributory negligence of the
plaintiff shall reduce the damages he may recover
(NCC, Art. 2214).
Reduction of damages in contracts, quasi-
contracts and quasi-delicts
The court can equitably mitigate the damages in
contracts, quasi-contracts and quasi-delicts in the
following instances other than in Art. 2214:
1. That the plaintiff himself has contravened the
terms of the contract;
2. That the plaintiff has derived some benefit as
a result of the contract;
3. In cases where exemplary damages are to be
awarded, that the defendant acted upon the
advice of counsel;
4. That the loss would have resulted in any
event; and
5. That since the filing of the action, the
defendant has done his best to lessen the
plaintiff’s loss or injury (NCC, Art. 2215).

Rules in graduation of damages in torts cases Liquidated damages, whether intended as an

indemnity or a penalty, shall be equitably reduced
Generally, the degree of care required is if they are iniquitous or unconscionable (Art.
graduated according to the danger a person or 2227).
property attendant upon the activity which the
actor pursues or the instrumentality he uses. The MISCELLANEOUS RULES
greater the danger the greater the degree of care
required (Keppel Cebu Shipyard v. Pioneer The injured party is obligated to undertake
Insurance, G.R. Nos. 180880-81, September 25, measures that will alleviate and not aggravate his
2009). condition after the infliction of the injury or
nuisance.
However, foreseeability is not the same as
probability. Even if there is lesser degree of The party suffering loss or injury must exercise
probability that damage will result, the damage the diligence of a good father of the family to
may still be considered foreseeable. minimize the damages resulting from the act or
omission (NCC, Art. 2203).
NOTE: The test, with respect to foreseeability, is
not the balance of probabilities, but the existence, Co-existence of Damages
in the situation in hand, of some real likelihood of
some damage and the likelihood is of such Damages Damages
Damages that
appreciable weight and moment to induce, or that cannot that must
must co-exist
which reasonably should induce, action to avoid it co-exist stand alone
on the part of a person or a reasonably prudent Nominal Exemplary Nominal
mind. Damages Damages must Damages
cannot co- co-exist with
Rules in graduation of damages in crimes exist with Moral,
Exemplary Temperate,
In crimes, the damages to be adjudicated may be Damages Liquidated or
respectively increased or lessened according to Compensatory
the aggravating or mitigating circumstances (NCC, Damages
Art. 2204).

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2019 GOLDEN NOTES 698