2015 GN Civil Law

CIVIL LAW
2015 GOLDEN NOTES

UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
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 Academics Committee of the Team: Bar-Ops.
ADDRESS: Academics Committee

Team Bar-Ops
Faculty of Civil Law
University of Santo Tomas
Espaa, Manila 1008
TEL. NO.: (02) 731-4027

(02) 4061611 loc. 8578
Academics Committee
Faculty of Civil Law
University of Santo Tomas
Espaa, Manila 1008
All Rights Reserved by the Academics Committee of the Faculty of Civil Law of
the Pontifical and Royal University of Santo Tomas, the Catholic University of
the Philippines.
2015 Edition
No portion of this material may be copied or reproduced in books, pamphlets,

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No.____________
Printed in the Philippines, June 2015.

ACADEMIC YEAR 2015-2016
CIVIL LAW STUDENT COUNCIL

JOHN ROBIN G. RAMOS PRESIDENT
DION LORENZ L. ROMANO VICE PRESIDENT INTERNAL
DEXTER JOHN C. SUYAT VICE PRESIDENT EXTERNAL
REBECCA MARIE G. RENTI CRUZ SECRETARY
JACKIELYN KRYSTYL NIHAMA C. BANA TREASURER
KRISTINE CARMINA R. MANAOG AUDITOR
TEAM: BAR-OPS
VANNESSA ANNE VIRAY CHAIRPERSON
HAZEL NAVAREZ VICE-CHAIRPERSON
ERIKA MARIZ PINEDA SECRETARY
CATHERINE SYMACO ASST. SECRETARY
MAXIMILLAN JEAN PEROLA HEAD, PUBLIC RELATIONS
PATRICIA LACUESTA ASST. HEAD, PUBLIC RELATIONS
RAFAEL LORENZ SANTOS HEAD, FINANCE COMMITTEE
HOWELL ICO ASST. HEAD, FINANCE COMMITTEE
HANNA CLARISS QUIAMBAO HEAD, HOTEL ACCOMMODATIONS COMMITTEE
JULIA MAGARRO ASST. HEAD, HOTEL ACCOMMODATIONS COMMITTEE
JINNY APOSTOL ASST. HEAD, HOTEL ACCOMMODATIONS COMMITTEE
JEFFREY CORONADO HEAD, LOGISTICS COMMITTEE
INEANDRO PEDRO TOLENTINO ASST. HEAD, LOGISTICS COMMITTEE
CARLO ANGELO TING ASST. HEAD, LOGISTICS COMMITTEE
ATTY. AL CONRAD B. ESPALDON

ADVISER
ACADEMICS COMMITTEE
MENANDRO MAGCULANG
KATRINA GRACE C. ONGOCO EXECUTIVE COMMITTEE
ANGELIE C. QUINTO
MA. SALVE AURE M. CARILLO SECRETARY GENERAL
RAFAEL LORENZ SANTOS

REUBEN BERNARD M. SORIANO LAYOUT AND DESIGN
JUAN PAOLO MAURINO R. OLLERO
CIVIL LAW COMMITTEE

MA. SALVE AURE M. CARILLO CIVIL LAW COMMITTEE HEAD
JEFFREY CORONADO ASST. CIVIL LAW COMMITTEE HEAD
NICHELLE S. PASCUAL ASST. CIVIL LAW COMMITTEE HEAD
RYAN JAMES EDQUILAG PERSONS AND FAMILY RELATIONS
MARIA THERESA LAMPA PERSONS AND FAMILY RELATIONS
JOHN PATRICK BAUTISTA PROPERTY
AILEEN MAE R. SAN JOSE PROPERTY
MA. NINNA ROEM A. BONSOL OBLIGATIONS AND CONTRACTS
KATHERINE ROSE F. KAPUNAN OBLIGATIONS AND CONTRACTS
NIELSON GRAMMS M. MARCELINO SALES
ANGELO D. DIZON SUCCESSION
KATRINA GRACE C. ONGOCO SUCCESSION
MAXIMILLAN JEAN T. PEROLA PARTNERSHIP AND AGENCY
JOHN ROBIN G. RAMOS CREDIT TRANSACTIONS
KRISTINE CARMINA R. MANAOG LAND TITLES AND DEEDS
INEANDRO PEDRO P. TOLENTINO TORTS AND DAMAGES
JUDGE MYRA B. QUIAMBAO

ADVISER
ACADEMIC OFFICIALS
ATTY. NILO T. DIVINA REV. FR. ISIDRO C. ABAO, 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 & INSPIRATION
JUSTICE OSWALDO AGCAOILI
JUDGE PHILIP A. AGUINALDO
DEAN AUGUSTO K. ALIGADA, JR.
ATTY. RUBEN F. BALANE
ATTY. VINCENT Z. BOLIVAR
ATTY. ENRIQUE V. DELA 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. 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-SEA
ATTY. MAURICIO C. ULEP
For being our guideposts in understanding the intricate sphere of Civil Law.
- Academics Committee 2015
DISCLAIMER
THE RISK OF USE, MISUSE OR

NON-USE OF THIS BAR REVIEW
MATERIAL SHALL BE BORNE BY
THE USER/ NON-USER.
COVERAGE
CIVIL LAW
2015 BAR EXAMINATIONS
I. Effect and Application of Laws (Civil Code) 1
Include: Conflict of Laws (Private International Law) 7
II. Human Relations (Arts. 19-22, Civil Code) 10
Exclude: Independent civil actions and prejudicial questions which will be covered by the
examinations in Remedial Law
PERSONS
I. Persons and Personality (Civil Code) 13
II. Marriage (Family Code) 16
Exclude: Muslim Code (P.D. 1083)
Exclude: Duties of a Civil Registrar under Articles 12-19, 23-25 (Family Code)
Exclude: A.M. No. 02-11-10-SC, Rule on Declaration of Absolute Nullity of Void Marriages and
Annulment of Voidable Marriages; R.A. No. 6955, entitled An Act to Declare Unlawful the
Practice of Matching Filipino Women for Marriage to Foreign Nationals on a Mail Order Basis
and Other Similar Practices x x x; R.A. No. 9208 or the Anti-Trafficking in Persons Act of
2003
III. Legal Separation (Family Code) 34
Exclude: A.M. No. 02-11-11-SC, or the Rule on Legal Separation
IV. Rights and Obligations Between Husband and Wife (Family Code) 41
Exclude: R.A. No. 7192 or the Women in Development and Nation Building Act; R.A. No. 8187, or the
Paternity Leave Act of 1996; R.A. No. 9710, or The Magna Carta of Women.
V. Property Relations of the Spouses (Family Code) 42
VI. The Family 57
VII. Paternity and Filiation (Family Code) 60
VIII. Adoption 67
A. Domestic Adoption Act of 1998 (R.A. No. 8552) 67

Exclude:
1. Rule on Adoption (A.M. No. 02-6-02-SC )
2. R.A. No. 9523, entitled An Act Requiring Certification of the Department of Social
Welfare and Development to Declare a Child Legally Available for Adoption as a
Prerequisite for Adoption Proceedings x x x.
B. Inter-Country Adoption Act of 1995 (R.A. No. 8043) 70
Exclude: Articles 183-188, 191-193 (Family Code)
IX. Support (Family Code) 71
X. Parental Authority (Family Code) 75
Exclude:
1. Rule on Guardianship of Minors (A.M. No. 03-02-05-SC)
2. Rules on Custody of Minors and Writ of Habeas Corpus in Relation to Custody
of Minors (A.M. No. 03-04-04-SC)
3. Solo Parents' Welfare Act of 2000 (R.A. No. 8972)
4. The Early Childhood Care and Development Act (R.A. No. 8980)
Exclude: R.A. No. 9231, entitled An Act Providing for the Elimination of the Worst
Forms of Child Labor and Affording Stronger Protection for the Working Child x x
x, which will be covered under Labor Law
Include: Child Abuse Law (R.A. No. 7610)
XI. Emancipation (Arts. 234 and 236, Family Code, as amended by R.A. No. 6809
which lowered the age of majority) 80
XII. Summary Judicial Proceedings in Family Law Cases 80
XIII. Retroactivity of the Family Code (Art. 256) 81
Exclude: Arts. 254-255, 257 (Family Code)
XIV. Funerals (Arts. 305-310, Civil Code) 81
Exclude: Care and Education of Children (Arts. 356-363, Civil Code)
XV. Use of Surnames 82
Arts. 364-369, 369-380, Civil Code (other articles repealed by Family Code)
XVI. Absence (Art. 43, Civil Code; Art. 41, Family Code) 85
XVII. Civil Registrar 88
Exclude: Act No. 375 and the Implementing Rules and Regulations of R.A. No. 9048
PROPERTY
I. Characteristics 91
II. Classification 91
III. Ownership 96
IV. Accession 100
V. Quieting of Title to or Interest in and Removal or Prevention of Cloud over Title to or

Interest in Real Property 113
VI. Co-ownership 114
VII. Possession 122
VIII. Usufruct 130
IX. Easements 136
X. Nuisance 145
XI. Modes of Acquiring Ownership 147
PRESCRIPTION
I. Definition 156
II. No prescription applicable 158
III. Prescription or limitation of actions 159
OBLIGATIONS
I. Definition 160
II. Elements of an Obligation 160
III. Different Kinds of Prestations 160
IV. Classification of Obligations 160
V. Sources of Obligations 162
VI. Nature and Effect of Obligations 167
VII. Kinds of Civil Obligations 177
VIII. Joint and Solidary Obligation 182

IX. Extinguishment of Obligations 186
CONTRACTS
I. Essential Requisites 203
II. Kinds of Contracts 208
III. Formality 208
IV. Defective Contracts 211
V. Effect of Contracts 219
SALES
I. Definition and Essential Requisites of a Contract of Sale 220
II. Parties to a Contract of Sale 225
III. Subject Matter 228
IV. Obligations of the Seller to Transfer Ownership 230
V. Price 231
VI. Formation of Contract of Sale
VII. Transfer of Ownership 239
VIII. Risk of Loss 244
IX. Documents of Title 245
X. Remedies of an Unpaid Seller 248
XI. Performance of a Contract 250
XII. Warranties 251
XIII. Breach of Contract
XIV. Extinguishment of Sale 254
XV. The Subdivision and Condominium Buyers Protective Decree (P.D. 957) 259
XVI. The Condominium Act (R.A. No. 4726) 263
Exclude: Electronic Commerce Act of 2000 (R.A. No. 8792); Public Land Law, Retail Trade and
Liberalization Act, Bulk Sales Law (Act No. 3952)
SUCCESSION
I. General Provisions 270
II. Testamentary Succession 273
III. Legal or Intestate Succession 308
IV. Provisions Common to Testate and Intestate Succession 313
Exclude: Executors and administrators (Arts. 1058-1060, Civil Code), which will be covered
under Remedial Law
PARTNERSHIP
I. Contract of Partnership 319
II. Rights and Obligations of Partnership
III. Rights and Obligations of Partners Among Themselves 332
IV. Obligations of Partnership/Partners to Third Persons 336
V. Dissolution 338
VI. Limited Partnership 342
AGENCY
I. Definition of Agency 348
II. Powers 351
III. Express vs. Implied Agency 354
IV. Agency by Estoppel 355
V. General vs. Special Agency 355
VI. Agency Couched in General Terms 356
VII. Agency Requiring Special Power of Attorney 356
VIII. Agency by Operation of Law 357
IX. Rights and Obligations of Principal 357
X. Irrevocable Agency 358
XI. Modes of Extinguishment 358

COMPROMISE
I. Definition 361
II. Void Compromise 361
III. Effect 361
CREDIT TRANSACTIONS
I. Loan 363
II. Deposit 372
III. Guaranty and Suretyship 377
IV. Pledge 386
V. Real Mortgage 391
Include: Act 3135, as amended by R.A. No. 4118
VI. Antichresis 397
VII. Chattel Mortgage 398
Include: Act 1508
VIII. Quasi-contracts 400
IX. Concurrence and Preference of Credits 401
LEASE
I. Lease of Things 416
II. Lease of Work or Services 419
III. Lease of Rural and Urban Lands 421
IV. Rights and Obligations of Lessor and Lessee
V. Special Rules for Lease of Rural/Urban Lands
VI. Household Service (Exclude, for inclusion in Labor Law)
VII. Contract of Labor (Exclude, for inclusion in Labor Law)
VIII. Contract for Piece of Work (Exclude, for inclusion in Labor Law)
LAND TITLES AND DEEDS
I. Torrens System 424
II. Regalian Doctrine 431
III. Citizenship Requirement 432
IV. Original Registration 433
V. Subsequent Registration 458
VI. Non-registrable Properties 462
VII. Dealings with Unregistered Lands 463
Exclude:
1. History of land laws
2. Remedies sufficiently covered under Remedial Law
3. Registration of judgments, orders and partitions
4. Assurance fund
5. Registration of patents
6. Administrative structure of the Register of Deeds
7. Consultas
TORTS AND DAMAGES
Book I--Torts
I. Principles 465
II. Classification of Torts 465
III. The Tortfeasor 466
IV. Act of Omission and its Modalities 467
V. Proximate Cause 473
VI. Legal Injury 474
VII. Intentional Torts 475
VIII. Negligence 490
IX. Special Liability in Particular Activities 496
X. Strict Liability 497

Book II--Damages
I. General Considerations 498
II. Actual and Compensatory Damages 500
III. Moral Damages 504
IV. Nominal Damages 506
V. Temperate or Moderate Damages 506
VI. Liquidated Damages 506
VII. Exemplary or Corrective Damages 507
VIII. Damages in Case of Death 507
IX. Graduation of Damages 508
X. Miscellaneous Rules 508
IMPORTANT NOTES:
1. This listing of covered topics is not intended and should not be used by the law schools as a course
outline. This was drawn up for the limited purpose of ensuring that Bar candidates are guided on the
coverage of the 2015 Bar Examinations.
2. All Supreme Court decisions - pertinent to a given Bar subject and its listed topics, and promulgated up to
March 31, 2015 - are examinable materials within the coverage of the 2015 Bar Examinations.
PRELIMINARY MATTERS
PRELIMINARY MATTERS NOTE: The reason for this rule is that the basic
constitutional requirement of due process must be
EFFECT AND APPLICATION OF LAWS satisfied (Rabuya, 2009). Without such notice and
publication, there would be no basis for the application of
Law the maxim ignoratia legis non excusat (Rabuya, 2009).
In its jural and concrete sense, law means a rule of conduct XPNs:
formulated and made obligatory by legitimate power of 1. Municipal Ordinances (governed by the Local
the state (Diaz, Statutory Construction, p. 1). Government Code)
2. Rules and regulations which are internal in nature
Effectivity of laws 3. Letters of Instruction issued by administrative
supervisors on internal rules and guidelines
Effectivity of a law will depend on whether or not it has 4. Interpretative regulations regulating only the
provided a specific date for its effectivity: personnel of administrative agency
1. If date is specified Upon the lapse of the said period
following its complete publication and not before XPNs to the XPNs: Administrative rules and
2. If no date is specified 15-day period, which may regulations that require publication:
either be on the 15th or on the 16th day depending on
the language used by the Congress in fixing the 1. The purpose of which is to implement or enforce
effectivity date of the statute (Rabuya, 2009). existing laws pursuant to a valid delegation;
2. Penal in nature;
a. 15th day - If the law declares that it shall become 3. It diminishes existing rights of certain individuals
effective 15 days after its publication
b. 16th day - If the law declares that it shall be NOTE: Circulars of issued by the monetary board are
effective after 15 days following its publication required to be published if they are meant not merely to
fill in details of the Central Bank Act which that body is
3. If the law provides for immediate effectivity or upon suppose to enforce. As a rule, circulars which prescribe a
approval It is effective immediately after its penalty of their violations should be published before
complete publication and not after signing by the coming into effect. However, circulars which are mere
President statements of a general policy as to how the law should be
4. If the law is voluminious Reckoning shall begin from construed do not need publication in the Official Gazette
the release of the last of the series for their publication.
NOTE: Publication is indispensable in every case, but the Where to publish

legislature may in its discretion provide that the usual
fifteen-day period shall be shortened or extended (Umali v. 1. Official Gazette
Estanislao, G.R. No. 104037, May 29, 1992; Taada v. 2. Newspaper of general circulation in the Philippines
Tuvera, G.R. No. L-63915, December 29, 1986).
Newspaper of general circulation
Unless it is otherwise provided provision on
effectivity of laws For a newspaper to be considered in general circulation:
1. It must be published within the courts jurisdiction
The clause "unless it is otherwise provided" refers to the 2. It must be published at regular intervals for
date of effectivity and not to the requirement of disseminating local news and general information
publication itself, which cannot, in any event be omitted. 3. It has a bona fide subscription list of paying
This clause does not mean that the legislator may make the subscribers
law effective immediately upon approval, or on any other 4. It is not devoted to the interest or published for the
date without its previous publication. entertainment of a particular class, profession, trade,
calling, race or religious denomination (Alvarez v.
Publication requirement People, G.R. No. 192591, June 29, 2011)
Publication must be in full or it is no publication at all since Q: Honasan questions the authority and jurisdiction of
its purpose is to inform the public of the contents of the the DOJ panel of prosecutors to conduct a preliminary
law. The mere mention of the number of the presidential investigation and to eventually file charges against
decree, the title of such decree, its whereabouts, the him, claiming that since he is a senator with a salary
supposed date of effectivity, and in a mere supplement of grade of 31, it is the Office of the Ombudsman, not the
the Official Gazette cannot satisfy the publication DOJ, which has authority and jurisdiction to conduct
requirement. This is not even substantial compliance the preliminary investigation. DOJ claims that it has
(Taada v. Tuvera, G.R. No. L-63915, December 29, 1986). concurrent jurisdiction, invoking an OMB-DOJ Joint
Circular which outlines the authority and
Indispensability of publication responsibilities among prosecutors of the DOJ and the
Office of the Ombudsman in the conduct of preliminary
GR: All laws are required to be published in full. 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

1 FACULTY OF CIVIL LAW
CIVIL LAW
published? question of law may come within the scope of the
preceding article.
A: No. OMB-DOJ Circular No. 95-001 is merely an internal c. Art. 1344: In order that fraud may make a contract
circular between the two offices which outlines the voidable, it should be serious and should not have
authority and responsibilities among prosecutors of the been employed by both contracting parties.
DOJ and of the Office of the Ombudsman in the conduct of Incidental fraud only obliges the person employing it
preliminary investigations. It does not contain any penal to pay damages.
provision nor prescribe a mandatory act or prohibit any
under pain of penalty. Further, it does not regulate the Laws covered
conduct of persons or the public, in general. As such, it
need not be published (Honasan, II v. The Panel of The laws referred to under Art. 3 of the NCC are those of
Investigating Prosecutors of the Department of Justice, G.R. the Philippine Laws and it applies to all kinds of domestic
No. 159747, Jun. 15, 2004). laws, whether civil or penal, substantive or remedial.
However, the article is limited to mandatory and
Q: The Sangguniang Bayan of Hagonoy, Bulacan prohibitory laws. It does not include those which are
enacted an ordinance which increased the stall rentals merely permissive (Rabuya, 2006).
of the market vendors in Hagonoy. Art. 3 of the said
ordinance provided that it shall take effect upon Non-applicability to foreign laws
approval. The ordinance was posted from November 4
to 25, 1996. In the last week of November 1997, Ignorance of a foreign law is a mistake of fact. There is no
petitioners were personally given copies and were presumption of knowledge of foreign laws. It must be
informed that it shall be enforced in January 1998. The alleged and proved as a matter of fact; otherwise, the
petitioners contended that the subject ordinance was doctrine of processual presumption will apply.
not published as required by law. Did the ordinance
comply with the rule of publication? Doctrine of Processual Presumption
A: Yes. An ordinance which increased the stall rentals of In international law, the party who wants to have a foreign
the market vendors has complied with the publication law applied to a dispute or case has the burden of proving
requirement when the same was posted in 3 conspicuous the foreign law. The foreign law is treated as a question of
places. Since there was no newspaper of local circulation in fact to be properly pleaded and proved as the judge or
the municipality which is in accordance with Sec. 188 of labor arbiter cannot take judicial notice of a foreign law.
the LGC (Hagonoy v. Municipality, G.R. No. 137621, He is presumed to know only domestic or forum law (ATCI
February 6, 2002). Overseas Corporation, et al. v. Echin, G.R. No. 178551.
October 11, 2010).
NOTE: Sec. 188 of the LGC provides that within ten (10)
days after their approval, certified true copies of all Mistake of fact v. Mistake of law
provincial, city, and municipal tax ordinances or revenue
measures shall be published in full for three (3) BASIS MISTAKE OF MISTAKE OF LAW
consecutive days in a newspaper of local circulation: FACT
Provided, however, That in provinces, cities and Want of Want of knowledge
municipalities where there are no newspapers of local knowledge of or acquaintance
circulation, the same may be posted in at least two (2) some fact or facts with the laws of the
conspicuous and publicly accessible places. Want of
constituting or land insofar as they
knowledge
relating to the apply to the act,
IGNORANCE OF THE LAW pertains to
subject matter on relation, duty, or
hand. matter under
Presumption of knowledge of laws consideration.
When some facts Occurs when a
GR: Everyone is conclusively presumed to know the law. which really exist person having full
Hence, ignorance of the law excuses no one from are unknown or knowledge of the
compliance therewith (Art. 3). Nature of
some fact is facts come to an
Mistake
supposed to exist erroneous
NOTE: The conclusive presumption that every person which really does conclusion as to its
knows the law presupposes that the law has been not exist. legal effects
published. Without such notice and publication, there Good faith is an Not excusable, even
would be no basis for the application of the maxim Defense
excuse if in good faith
ignoratia legis non excusat (Rabuya, 2009).
Q: Eduardo was married to Ruby. He then met Tina
and proposed marriage, assuring her that he was
XPNs: single. They got married and lived together. Tina,
a. Mistake upon a doubtful or difficult question of law upon learning that Eduardo had been previously
may be the basis of good faith (Art. 526 [3], NCC) married, charged Eduardo for bigamy for which he
b. Art. 2155: Payment by reason of a mistake in the was convicted. Eduardo testified that he declared he
construction or application of a doubtful or difficult was single because he believed in good faith that his

2
2015 GOLDEN NOTES
PRELIMINARY MATTERS
first wife was already dead, having not heard from her Province of Amoy concerning marriage were in 1895.
for 20 years, and that he did not know that he had to Therefore, there is lacking proof so clear, strong and
go to court to seek for the nullification of his first unequivocal as to produce a moral conviction of the
marriage before marrying Tina. Is Eduardo liable for existence of the alleged prior Chinese marriage.
the crime of bigamy?
Ignorance of a foreign law is not ignorance of the law but
A: Yes. Eduardo is presumed to have acted with malice or of fact because such foreign law must be first alleged and
evil intent when he married Tina. As a general rule, proved as a matter of fact, there being no judicial notice of
mistake of fact or good faith of the accused is a valid said foreign law. The Chinese marriage was not adequately
defense in a prosecution for a felony by dolo; such defense proved (Estate of Boo v. Gee, G.R. No. 18081, March 3, 1922).
negates malice or criminal intent. However, ignorance of
the law is not an excuse because everyone is presumed to RETROACTIVITY OF LAWS
know the law. It was the burden of Eduardo to prove that
when he married Tina, he was of the well-grounded belief Retroactive law
that his first wife was already dead. He should have
adduced in evidence a decision of a competent court A legislative act that looks backward or contemplates the
declaring the presumptive death of his first wife as past, affecting acts or facts that existed before the act come
required by Art. 349 of the RPC, in relation to Art. 41 of the into effect (Blacks Law Dictionary, 2009).
FC. Such judicial declaration constitutes proof
that Eduardo acted in good faith, and would negate Retroactive effect of laws
criminal intent on his part when he married the private
complainant (Manuel v. People, G.R. No. 165842, November GR: Laws shall have no retroactive effect (lex prospicit, non
29, 2005). respicit).
Q: Complainants who were connected with the Daily XPNs: (TIN CREEP)
Informer (a widely circulated newspaper in Western 1. Tax laws
Visayas) were charged before the MTC by Judge 2. Interpretative statutes
Pamonag of the crime of libel. Respondent judge 3. Laws creating New substantive rights
conducted a preliminary investigation and thereafter 4. Curative statutes
issued warrants for the arrest of the complainants. 5. Remedial/procedural
Complainants filed an administrative case against the
judge for gross ignorance of the law. They contended NOTE: Statutes regulating the procedure of the courts
that the judge neither has authority to conduct a will be construed as applicable to actions pending and
preliminary investigation nor to issue warrants for undetermined at the time of their passage. Procedural
their arrest. The judge said that it was his first libel laws are retrospective in that sense and to that extent
case and that he issued the warrants in good faith. Is (Mun. Govt of Coron v. Carno, G.R. No. 65894, Sept. 24,
the respondent guilty of gross ignorance of the law? 1987).
A: Yes. Judges are expected more than just cursory 6. Emergency laws
acquaintance with statutes and procedural rules. They 7. when Expressly provided
must know the law and apply them properly in good faith. 8. Penal laws favorable to the accused provided, accused
The provisions of Art. 360 of the RPC on the persons is not a habitual criminal
authorized to conduct preliminary investigation in libel
cases is so elementary. Not to know it constitutes gross XPNs to the XPNs: If the application of the retroactive
ignorance of the law (Miaque v. Judge Pamonag, A.M. No. law:
MTJ-02-1412. March 28, 2003). 1. Impairs obligation of contracts,
2. Is in the nature of ex post facto law or a bill of
Q: Cheong Boo, a native of China died intestate in attainder,
Zamboanga. He left a property worth P100,000. The 3. Divests vested rights, or
estate of the deceased was claimed on one hand by 4. Is constitutionally forbidden (Blacks Law
Gee, who alleged that he was a legitimate child by a Dictionary, 2009)
marriage contracted by Boo with Tan Dit in China in
1895. The estate was claimed, on the other hand, by NOTE: In case of doubt, laws apply prospectively.
Mora Adong who alleged that she had been lawfully
married to Boo in 1896. Gee introduced in evidence a Non-retroactivity of laws vis--vis judicial decisions
document in Chinese stating the marriage ceremony
that took place in Amoy, China. Is the document Judicial decisions have no retroactive effects. When a
presented by Gee sufficient enough to prove the doctrine of the Supreme Court is overruled and a different
Chinese marriage of Cheong Boo and Tan Dit? view is adopted, the new doctrine should be applied
prospectively and should not apply to parties who had
A: The Supreme Court held that the the document is not relied on the old doctrine and acted on the faith thereon
sufficient to prove the Chinese marriage between Cheong (Rabuya, 2009).
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

CIVIL LAW
Retroactivity clause of Family Code Kinds of rights
Family Code contains a retroactive clause. Art. 256 of the 1. Natural Rights Those which grow out of the nature
Family Code provides that the Code shall have retroactive of man and depend upon personality. e.g. right to life,
effect insofar as it does not prejudice or impair vested or liberty, privacy, and good reputation
acquired rights in accordance with the NCC or other laws. 2. Political Rights Consist in the power to participate,
directly or indirectly, in the establishment or
MANDATORY OR PROHIBITORY LAWS administration of government. e.g. right of suffrage,
right to hold public office, right of petition
Mandatory law 3. Civil Rights Those that pertain to a person by virtue
of his citizenship in a state or community. e.g.
A law or a provision in a statute is said to be mandatory property rights, marriage, equal protection of laws,
when disobedience to it, or want of exact compliance with freedom of contract, trial by jury (Pineda, 2009).
it, will make the act done under the statute absolutely void a. Rights of personality or human rights;
(Blacks Law Dictionary, 2009). b. Family rights; and
c. Patrimonial rights:
Prohibitory law i. Real rights
ii. Personal rights (Rabuya, 2009)
A law or a provision in a statute is said to be prohibitory
when it forbids a certain action (Blacks Law Dictionary, Unwaivable rights
2009).
1. Right to live and right to future support
Permissive law 2. Right to personality and family rights
3. Right to future inheritance This is especially so if the
A law or a provision in a statute is said to be permissive or waiver is intended to prejudice creditors. Hence,
directory when it allows certain acts but does not under Art. 1052 of the NCC, if an heir repudiates the
command them (Blacks Law Dictionary, 2009). inheritance to the prejudice of his own creditors, the
latter may petition the court to authorize them to
Violation of Mandatory or Prohibitory Laws accept it in the name of the heir (Albano, Civil Law
Reviewer, 2013).
GR: Acts executed against the provisions of mandatory or 4. Political rights- Hence, if a candidate for mayor agrees
prohibitory laws are void (Art. 5, NCC) to split his term of office with the vice-mayor to
prevent the latter from running against him, the
XPNs: Where the law: contract is void by reason of public policy (Albano,
1. Makes the act valid but punishes the violator. e.g. 2013).
Marriage solemnized by a person not authorized to do
so; Waiver of rights
2. Itself authorizes its validity;
3. Makes the act merely voidable; GR: Rights can be waived.
4. Declares the nullity of an act but recognizes its effects
as legally existing, e.g. Child born after the annulment XPNs:
of marriage is considered legitimate.
1. If waiver is:
WAIVER OF RIGHTS a. Contrary to law, public order, public policy,
morals or good customs.
Waiver b. Prejudicial to a third person with a right
recognized by law.
It is the intentional or voluntary relinquishment of a 2. If the right is:
known right or such conduct as warrants an inference of a. A natural right, such as right to life.
relinquishment of such right. b. Inchoate, such as future inheritance.
NOTE: Waivers can be express or implied, however, it Requisites of a valid waiver

cannot be presumed. It must be clearly and convincingly
shown, either by express stipulation or acts admitting no 1. Waiving party must actually have the right he is
other reasonable explanation. renouncing
2. He must have full capacity to make the waiver
Right 3. Waiver must be clear and unequivocal
4. Waiver must not be contrary to law, public order,
It is a legally enforceable claim of one person against public morals, etc.
another, that the other shall do a given act, or shall not do a 5. When formalities are required, they must be complied
given act (Pineda, 2009). with

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Q: A student was granted a scholarship but agreed not 2. There is a clear, necessary and irreconcilable conflict
to transfer to another school unless he would refund 3. The subsequent general law covers the whole subject
all the benefits he derived out of his scholarship. Is the and is clearly intended to replace the special law on
stipulation valid? Why? the matter (Rabuya, 2009).
A: No, it is void because it is contrary to public policy and Self-lapsing laws

morals (Cui v. Arellano University, G.R. L-15127, May 30,
1961). Laws that provide for their limited application (i.e. House
Rental Law, Annual Appropriations Act, Import Control
REPEAL OF LAWS Law).
Repeal of law JUDICIAL DECISIONS
Is the abrogation of an existing law by a legislative act Judicial decisions

(Blacks Law Dictionary, 2009).
Judicial decisions are evidence of what the laws mean.
Ways of repealing laws
The judicial decisions form part of the law of the land as of
1. Express - If the law expressly provides for such the date of the enactment of said law. The Supreme Courts
2. Implied If the provisions of the subsequent law are interpretation merely establishes the contemporaneous
incompatible or inconsistent with those of the legislative intent that the construed law purports to carry
previous law, provided, it is impossible to reconcile into effect. However, the decisions referred to in Art. 8 of
the two laws. the NCC are only those enunciated by the SC (Rabuya,
2009).
Requisites of implied repeal
NOTE: When a doctrine is overruled and a different view is
1. The laws cover the same subject matter; and adopted, the new doctrine should be applied prospectively
2. The latter is repugnant to the earlier (Rabuya, 2009) and should not prejudice parties who relied on the old
doctrine.
NOTE: Implied repeals are not to be favored because they
rest only on the presumption that because the old and the Doctrine of Stare Decisis
new laws are incompatible with each other, there is an
intention to repeal the old (Rabuya, 2009). It is adherence to judicial precedents. Once a question of
law has been examined and decided, it should be deemed
Instances of implied repeal settled and closed to further argument.
1. When the provisions in the two acts on the same NOTE: This doctrine, however, is not inflexible, so that
subject matter are irreconcilably contradictory, in when in the light of changing conditions, a rule has ceased
which case, the later act, to the extent of the conflict, to be beneficial to the society, courts may depart from it.
constitutes an implied repeal of earlier one; and
2. When the later act covers the whole subject of the Obiter Dictum
earlier one and is clearly intended as a substitute;
thus it will operate to repeal the earlier law An opinion expressed by a court upon some question of
(Carmelita Lledo v. Atty. Cesar V. Lledo, A.M. No. P-95- law which is not necessary to the decision of the case
1167, February 9, 2010). before it. Such are not binding as precedent (Rabuya,
2009).
Revival of repealed law
DUTY TO RENDER JUDGMENT
Revival depends on the manner how 1st law was repealed:
1. If the 1st law is repealed by implication by the 2nd law Rendering of judgment by reason of silence of law
and the 2nd law is repealed by the 3rd law; the 1st law
is revived unless otherwise provided. No judge or court shall decline to render judgment by
2. If the 1st law is expressly repealed by the 2nd law and reason of the silence, obscurity or insufficiency of the law
the 2nd law is repealed by the 3rd law, the 1st law is not (Art. 9, NCC).
revived unless expressly provided so.
However, in criminal prosecutions, the judge must dismiss
Conflict between general and special laws the case if a person is accused of a non-existent crime
following the maxin nullum crimen, nulla poena sine lege
If the general law was enacted prior to the special law, the (Rabuya, 2009).
latter is considered the exception to the general law.
NOTE: This duty, however, is not a license for courts to
If the general law was enacted after the special law, the engage in judicial legislation. The duty of the courts is to
special law remains unless: apply or interpret the law, not to make or amend it.
1. There is an express declaration

CIVIL LAW
Guidelines on rendition of decisions under Art. 9 Non-applicability of customs in criminal cases
1. When there is no law exactly applicable to the point in In criminal cases, customs cannot be applied because
controversy, the custom of the place shall be applied nullum crimen nulla poena sine lege (There is neither crime
and in default thereof, the general principles of law. nor punishment, without a law).
2. Decisions of foreign courts
3. Opinions of known authors and professors LEGAL PERIODS
4. Applicable rules of Statutory Construction
5. Principles formulated in analogous cases Computation of period
PRESUMPTION AND APPLICABILITY OF CUSTOM 1. Year 12 calendar months (CIR v. Primetown

Property Group, Inc., 531 SCRA 436, 2007)
Presumption in the interpretation of laws
NOTE: In CIR v. Primetown Property Group, Inc., the
In case there is doubt in the interpretation or application Supreme Court declared that the provision of Section
of laws, it is presumed that the lawmaking body intended 31, Chapter VII, Book I of the Administrative Code of
right and justice to prevail (Art. 10, NCC). 1987, being a more recent law, governs the
computation of legal periods with respect to counting
In case of silence, obscurity or insufficicency of the law a year.
with respect to a particular controversy
In the same case, the Court explained that Calendar
If the law is silent, or is obscure or insufficient with respect Month is a month designated in the calendar without
to a particular controversy, the judge shall apply the regard to the number of days it may contain. It is the
custom of the place, and in default thereof, the general period of time running from the beginning of a
principles of law and justice. certain numbered day of the next month, and if there
is not sufficient number of days in the next month,
Customs then up to and including the last day of that month.
To illustrate, one calendar month from December 31,
Customs are rules of conduct, legally binding and 2007 will be from January 1, 2008 to January 31,
obligatory, formed by repetition of acts uniformly 2008; one calendar month from January 31, 2008 will
observed as a social rule. be from February 1, 2008 until February 29, 2008.
Hence, twelve calendar months from December 31,
Necessity of proving customs 2007 is December 31, 2008; while twelve calendar
months from January 31, 2008 to January 31, 2009 (as
GR: Customs must be proved as a fact, according to the cited in Rabuya, 2009).
rules on evidence (Art. 12, NCC).
2. Month 30 days, unless designated by their name, in
XPN: Courts may take judicial notice of a custom if there is which case, they shall be computed according to the
already a decision rendered by the same court recognizing number of days which they respectively have.
the custom. 3. Day 24 hours
4. Night time from sunset to sunrise
Requisites before such custom could be considered a 5. Week 7 successive days regardless of which day it
source of right would start
6. Calendar week Sunday to Saturday
1. Plurality of acts
2. Uniformity of acts NOTE: In computation of period, the first day shall be
3. General practice by the great mass of the people of the excluded, and the last day included.
country or community
4. Continued practice for a long period of time If the last day falls on a Sunday or a legal holiday
5. General conviction that the practice is the proper rule
of conduct If the act to be performed within the period is:
6. Conformity with law, morals or public policy (1
Tolentino. Civil Code, p. 39; 1 Manresa 82). 1. Prescribed or allowed by:
a. the Rules of Court
Application of customs in civil cases b. an order of the court; or
c. any other applicable statute
In civil cases, customs may be applied by the courts in
cases where the applicable law is: (SOI) The last day will automatically be the next working day.
a. Silent
b. Obscure 2. From a contractual relationship The act will still
c. Insufficient become due despite the fact that the last day falls on a
Sunday or a legal holiday.
NOTE: Provided said customs are not contrary to law,
public morals, etc.

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2015 GOLDEN NOTES
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testamentary provisions - governed by national
CONFLICT OF LAWS law (in Philippines) not lex situs
b. Contracts involving real property but do not deal
Application of laws with title or real rights over the property, the
issue being the contractual rights and liabilities
1. Penal laws of parties - governed by the proper law of the
contract (lex loci voluntatis or lex loci intentionis)
GR: Territoriality rule - Penal laws and laws of public c. In contracts where real property is given as
security and safety shall be obligatory upon all who security by way of mortgage to secure a principle
live or sojourn in the Philippine territory (Art. 14, contract (i.e. loan) - loan is governed by the
NCC) proper law of the contract while the mortgage is
governed by the lex situs
XPNs: Philippine penal laws will not apply by virtue d. While the validity of the transfer of land must be
of: determined by the lex situs, the validity of the
contract to transfer is determined by the proper
a. Treaty stipulations law of the contract
b. Principles of Public International Law
c. Laws of Preferential Application. e.g. 4. Law governing extrinsic validity of contracts, wills and
Ambassadors, Ministers public instruments
d. International agencies enjoying diplomatic
immunity GR: Lex loci celebrationis (Art. 17, NCC) forms and
solemnities of contracts, wills and other public
NOTE: Consul is not entitled to the privileges and instruments shall be governed by the laws of the
immunities of ambassadors or ministers. country in which they are executed
2. Status laws XPNs: Philippine law shall apply in the following

cases even though performed abroad:
GR: Nationality rule - Laws relating to:
a. Family rights and duties a. Acts are executed before the diplomatic or
b. Status and condition consular officials of the Philippines.
c. Legal capacity of persons are binding upon b. Prohibitory laws concerning persons, their acts
citizens of the Philippines even though living or property, and those which have for their
abroad (Art. 15, NCC) object public order, public policy and good
customs (Art. 17, NCC).
XPNs:
a. In case of divorce obtained validly by an alien Q: The second clause of the will of Joseph, a Turkish
pursuant to the rules that governs his country, citizen and a resident of the Philippines, states that:
the Filipino spouse shall be considered also as xxx, it is my wish that the distribution of my property
divorced (Van Dorn v. Romillo, Jr., 139 SCRA 139, and everything in connection with this, my will, be
1985). made and disposed of in accordance with the laws in
force in the Philippine Islands, requesting all of my
Once it is proven however that a party was no relatives to respect this wish, otherwise, I annul and
longer a Filipino citizen when he obtained the cancel beforehand whatever disposition found in this
divorce from his Filipino spouse, the ruling in will favorable to the person or persons who fail to
Van Dorn would also apply. Thus, the validity of comply with this request. Is the clause above-quoted
the divorce will be determined based on the law valid?
of the country of which he is a citizen at the time
the valid divorce is obtained (Rabuya, 2009). A: No, it is void. The second clause of the will regarding the
law which shall govern it and the condition imposed, is
b. Domiciliary rule applies to stateless persons null and void, being contrary to law. Art. 792 of the Civil
Code provides that Impossible conditions and those
NOTE: The basis for determining the personal law of contrary to law or good morals shall be considered as not
an individual is either the Domiciliary Rule (Domicile) imposed and shall not prejudice the heir or legatee in any
or Nationality Rule (Citizenship) manner whatsoever, even should the testator otherwise
provide.
3. Real statutes Laws on Property
Said clause is contrary to law because it expressly ignores
GR: Lex Rei Sitae Real property as well as personal the testator's national law when, according to Art. 16 of
property is subject to the law of the country where it the NCC, such national law of the testator is the one to
is situated (Art. 16, NCC). govern his testamentary dispositions. Said condition then
is considered unwritten, hence the institution of legatees is
XPNS: unconditional and consequently valid and effective.
a. Succession as to order of succession, amount of
successional rights and intrinsic validity of the

CIVIL LAW
Conflict of Laws Doctrines XPN: Art. 26 par. 2 of the Family Code (FC), on mixed
marriages where the foreigner obtained a divorce decree
1. Renvoi Doctrine (referring back) Renvoi takes abroad and was thereby capacitated to remarry.
place when the conflicts rule of the forum makes a
reference to a foreign law, but the foreign law is found NOTE: In this case, even though divorce is not recognized
to contain a conflict rule that returns or refers the in the Philippines as a mode of terminating marriage, still
matter back to the law of the forum (Remission). the marriage is terminated by virtue of a judgment of
2. Transmission theory Provides that when the conflicts divorce and issuance of a divorce decree by a foreign court.
rule of the forum makes a reference to a foreign law,
but the foreign law is found to contain a conflict rule Requirements for the application of par. 2 of Art. 26 of
that refers it to a third country, the law of the third the Family Code
country shall apply.
3. Doctrine of Processual Presumption The foreign law, 1. There is a valid marriage that has been celebrated
whenever applicable, should be proved by the between a Filipino citizen and a foreigner; and
proponent thereof, otherwise, such law shall be 2. A valid divorce is obtained abroad by the alien spouse
presumed to be exactly the same as the law of the capacitating him or her to re-marry (Albano, Civil Law
forum. Reviewer, 2013).
4. Doctrine of Operative Facts Acts done pursuant to a
law which was subsequently declared Law that governs the validity of marriage in case of
unconstitutional remain valid, but not when the acts mixed marriages
are done after the declaration of unconstitutionality.
If the marriage is valid
Q: Edward is a citizen of California domiciled in the under the law of one of
Philippines. After he executed his will, he went back to the spouses while void
America and stayed there. During the post mortem under the law of the other,
probate of the will, Helen, his illegitimate natural the validity of the
Marriage between a
child, opposed it on the ground of preterition. She marriage should be
Filipino and foreigner
claims that under Art. 16 par. 2 of the Civil Code, in upheld, unless the
ABROAD
case of succession, the national law of the deceased - marriage is universally
the civil code of California - should govern., which incestuous or highly
provides that if a Californian not domiciled in immoral (the same rule as
California dies, the law of his domicile must govern. to foreigners who get
Lucy, on the other hand, counters that under the same married abroad)
provision, the national law of the deceased should The national law of the
apply. Which law should be applied Philippine law or Marriage between a Filipino Philippine law
Californian Law? Filipino and a should be followed
foreigner in the otherwise the countrys
A: Philippine law should be applied. Where the testator PHILIPPINES public policy would be
(Edward) was a citizen of California, and domiciled in the violated
Philippines, the amount of successional rights should be
governed by his national law, that is, Californian law. Law that governs the personal relations of the spouses
However, the conflict of law rules of California provides
that in cases of citizens who are residents of another GR: The personal relations of the spouses are governed by
country, the law of the country of domicile should apply, the national law of the husband
hence, Philippine law on legitimes should be applied. This
is so because California law itself refers the case back to Ipso facto becomes a
the Philippines. The Philippine court has no other Filipino citizen if she does
alternative but to accept the referring back, for to do not suffer under any
otherwise, might result again in its referring back to the disqualification for
Philippines, which would give rise to a sort of an Alien woman who
naturalization as a Filipino
international football (Aznar v. Garcia, G.R. No.L-16749. marries a Filipino
citizen
January 31, 1963). husband
Personal relations:
Effect of laws, judgments promulgated or conventions national law of the
agreed upon in a foreign country on Philippine husband shall govern (GR)
prohibitive laws Constitution provides that
she shall retain her
GR: Prohibitive laws concerning persons, their acts, or Philippine citizenship,
property and laws which have for their object public order, unless by her act or
public policy or good customs are not rendered ineffective A Filipina who marries
omission, she is deemed,
by laws, judgments promulgated or conventions agreed an alien husband
under our law, to have
upon in foreign country. renounced her
citizenship

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2015 GOLDEN NOTES
PRELIMINARY MATTERS
Personal relations: Art. adopter is the childs constructive domicile
80 of the Family Code
provides that the national INSANES, IDIOTS, IMBECILES
law of the wife or The law assigns their domicile to them:
Philippine law would
govern the spouses 1. If they are below the age of majority, the rules on
personal relations (rule minors apply to them
was intended to protect
the Filipino wife) 2. If they are of age and have guardians, they follow
the domicile of choice of their guardians
Effects of change of nationalities of the spouses
governing law 3. If they are of age and have no guardians, their
constructive domicile is their domicile of choice
1. If the spouses have the same nationality but they before they became insane
acquire a new nationality by their common act their
new national law will govern their personal relations MARRIED WOMEN
2. If the husband alone changes his nationality after the 1. The constructive
marriage The law of the last common nationality of domicile of the wife is
the spouses would govern the domicile of both
3. If the spouses retain their different nationalities after spouses, unless the law
the marriage National law of both spouses should allows the wife to have
govern a separate domicile for
valid and compelling
Rules in determining the domicile of a person reasons
If the marriage is valid 2. If there is legal
His domicile of origin is separation between the
that of his parents at the spouses, the wife can
time of his birth have her own domicile
If the child is legitimate of choice
If parents are separated, 3. If there is a separation
the domicile of the de facto, the wife can
custodial parent also have a separate
His domicile of origin is domicile
If the child is illegitimate that of the mother at the Apply the same rules
time of his birth when the marriage is
The domicile of his father If the marriage is valid. However, after
If the child is legitimated at the time of his birth voidable annulment, the wife can
controls freely select her own
The domicile of origin is domicile of choice
the domicile of his real The wife can have a
If the child is adopted parents at the time of his If the marriage is void domicile separate from
birth, NOT the domicile of the husband
the adopters OTHER PERSONS
The domicile of origin is His domicile is the one he
If a foundling the country where it was Convict or prisoner had possessed prior to his
found incarceration
Their domicile is their
RULES DETERMINING ONES CONSTRUCTIVE DOMICILE Soldiers domicile before their
enlistment
MINORS Their domicile is the one
1. If legitimate, the domicile of both parents they had before they were
Public officials or assigned elsewhere,
In case of disagreement, that of the father, unless employees abroad unless they voluntarily
there is a judicial order to the contrary (diplomats, etc) adopt their place of
employment as their
2. If illegitimate, the domicile of the mother permanent residence
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 the minor child
4. If the child is adopted, the domicile of choice of the

CIVIL LAW
Law that governs the validity of contracts Warsaw Convention
Extrinsic Capacity Intrinsic NOTE: If contracts involve encumbrances of property, real

validity of validity or personal, apply lex situs. If personal contracts, law on
parties contracts will apply.
Barter, sale,
Lex situs Lex situs Lex situs
donation HUMAN RELATIONS
Lease of
property: Abuse of right
Lex situs Lex situs Lex situs
creates real
rights A right, though by itself legal because recognized or
Lease of Personal Lex granted by law as such, may become the source of some
property: does Lex loci law of voluntatis illegality. When a right is exercised in a manner which
not create real celebrationis the or lex loci does not conform to the norms enshrined in Art. 19 and
rights parties intentionis results in damage to another, a legal wrong is thereby
Pledge, chattel committed for which the wrongdoer must be held
mortgage, real responsible.
estate Lex situs Lex situs Lex situs
mortgage, This principle is based upon the famous maxim summum
antichresis jus summa injuria (the abuse of a right is the greatest
Personal Lex loci possible wrong) (Arlegui v. CA, G.R. No. 126437, March 6,
Contract of Lex loci law of voluntatis 2002).
loan: mutuum celebrationis the or lex loci
parties intentionis Rationale: The exercise of a right ends when the right
Contract of disappears, and it disappears when it is abused, especially
loan: Lex situs Lex situs Lex situs to the prejudice of others. The mask of a right without the
commodatum spirit of justice which gives it life is repugnant to the
Lease of modern concept of social law. It cannot be said that a
service, agency, person exercises a right when he unnecessarily prejudices
guaranty, another or offends morals or good customs (Pineda, 2009).
suretyship Lex loci
Personal Elements of abuse of right
NOTE: Agency Lex loci voluntatis
law of
to alienate or celebrationis or lex loci
parties 1. There is a legal right or duty;
encumber real intentionis
property is 2. Such duty is exercised in bad faith;
governed by lex 3. It is for the sole intent of prejudicing or injuring
situs another;
Personal 4. The absence of good faith is essential to abuse of right
Lex loci law of Lex loci (Rabuya, Civil Law Reviewer)
celebrationis the voluntatis
parties Principle of Damnum Absque Injuria
Liability for loss, destruction,
deterioration of goods in transit: law Under this principle which literally means damage without
of destination of goods (Art. 1753, injury, one who merely exercises ones rights does no
NCC) actionable injury and cannot be held liable for damages.
This is premised on the valid exercise of a right (Amonoy v.
If COGSA applies, limitation on liability Guitierrez, 351 SCRA 731, 2001).
applies, unless the shipper declares
Contract of value of goods and inserts such NOTE: Injury is the illegal invasion of a legal right; damage
transportation declaration in the bill of lading is the loss, hurt, or harm which results from the injury; and
or carriage damages are the recompense or compensation awarded
(render for the damage suffered. There can be damage without
services) Contract for air transportation injury in those instances in which the loss or harm was not
(Warsaw Convention) the result of a violation of a legal duty. In such cases, the
consequences must be borne by the injured person alone
1. The liability of the airline in case of (Panteleon v. American Express, G.R. No. 174269, August 25,
death, injury to passengers, or loss or 2010).
damage to cargo is governed by
Warsaw Convention Article 19, 20 and 21 in the enforcement and sanctions
of abuse of right
2. If there was malice, gross
negligence, or bad faith, or improper While Art. 19 lays down the rule of conduct for the
discrimination, carrier is liable for government of human relations, it does not provide a
damages beyond those limited by remedy. Generally, an action for damages under either Art.
20 or Art. 21 would be proper. Art. 21 deals with acts

10
2015 GOLDEN NOTES
PRELIMINARY MATTERS
contra bonus mores or contrary to good morals and XPN: When the act is not a mere breach of promise to
presupposes loss or injury, material or otherwise, which marry but constitutes one where damages pursuant to Art.
one may suffer as a result of such violation. Under Arts. 19 21 of the NCC may be recovered, such as:
and 21, the act must be intentional (Rabuya, 2006).
1. Where the woman is a victim of moral seduction
Furthermore, Article 20 speaks of the general sanction for (Gashem Shookat Baksh v. CA, G.R. No. 97336, February
all other provisions of law which do not especially provide 19, 1993).
for their own sanction. Article 21 on the other hand, 2. Where one formally sets a wedding and go through
speaks of act which is legal but is contrary to morals, good and spend for all the preparations and publicity, only
custom, public order or public policy and is done with to walk out of it when the matrimony was about to be
intent to injure. solemnized (Wassmer v. Velez, G.R. No. L-20089,
December 26, 1964).
Sanction for abuse of right under Article 20 of the NCC 3. Where the woman is a victim of abduction and rape,
and thereafter the accused promised to marry her to
Generally, laws provide for their own sanctions and avoid criminal liability but later reneged on his
methods of enforcement thereof. Article 20 applies only in promise. These are grossly insensate and
cases where the law does not provide for its own reprehensible transgressions which indisputably
sanctions. Hence, Every person who, contrary to law, warrant and abundantly justify the award of moral
wilfully or negligently causes damage to another shall and exemplary damages, pursuant to Art. 21 (Buag,
indemnify the latter for the same (Art. 20, NCC). Said article Jr. v. CA, G.R. No. 101749, July 10, 1992).
provides for a general sanction indemnification for
damages (Pineda, 2009). Q: Maria met Ayatollah, an Iranian medical student, at
the restaurant where she worked. A few days after,
In view of the general sanction provided for under Art. 20, Ayatollah courted and proposed to marry Maria. The
a person however does not have an absolute right to be latter accepted his love on the condition that they
indemnified, it is essential that some right of his be would get married. When the couple visited Maria's
impaired. Without such, he is not entitled to parents, Ayatollah was allowed to sleep with Maria
indemnification (Pineda, 2009). during the few days of their stay. The couple continued
to live together in an apartment, but Ayatollah's
Sanctions for abuse of right under Article 21 of the NCC attitude towards Maria changed. He maltreated her
and when Maria became pregnant, Ayatollah gave her
Any person who willfully causes loss or injury to another medicine to abort the fetus. Despite the abuses, Maria
in a manner that is contrary to morals, good customs or continued to live with Ayatollah and kept reminding
public policy shall compensate the latter for the him of his promise to marry her. However, Ayatollah
damage(Art. 21, NCC). It fills countless gaps in the statutes, told her that he could not do so because he was
which leave so many victims of moral wrongs helpless, already married to a girl in Bacolod City. Maria left and
even though they suffered material and moral damages filed a complaint for damages against Ayatollah for the
(Tolentino, p. 70). alleged violation of their agreement to get married.
May damages be recovered for a breach of promise to
Elements of an action under Art. 21, NCC (Contra Bonus marry on the basis of Art. 21 of the NCC?
Mores)
A: Yes. A breach of promise to marry per se is not an
1. There is an act which is legal; actionable wrong. But where a man's promise to marry is
2. Such act is contrary to morals, good customs, public the proximate cause of the acceptance of his love by a
order or policy; woman and his representation to fulfill that promise
3. It is done with intent to injure. thereafter becomes the proximate cause of the giving of
herself unto him in a sexual congress, proof that the
Civil liability for moral negligence promise was only a deceptive device to inveigle her to
obtain her consent to the sexual act, could justify the
There is no civil liability for moral negligence. A person is award of damages pursuant to Art. 21, not because of such
required to act with prudence towards others, but not with promise to marry but because of the fraud and deceit
charity; the law imposes diligence and not altruism. Hence, behind it and the willful injury to her honor and reputation
the failure to make sacrifices or egoism does not constitute which followed thereafter. It is essential, however, that
a source of liability (Tolentino, p. 69). such injury should have been committed in a manner
contrary to morals, good customs or public policy. In the
Illustration: A person who fails to render assistance to a instant case, Ayatollah's fraudulent and deceptive
drowning person or to the victim of an accident, cannot be protestations of love for and promise to marry Maria that
held liable for damages (3 Colin & Capitant 826). made her surrender her virtue and womanhood to him
and to live with him on the honest and sincere belief that
Breach of promise to marry he would keep said promise. In short, Maria surrendered
her virginity, the cherished possession of every single
GR: A breach of promise to marry per se is not an Filipina, not because of lust but because of moral seduction
actionable wrong. There is no provision in the NCC (Gashem Shookat Baksh v. CA, G.R. No. 97336, February 19,
authorizing an action for breach of promise to marry. 1993).

CIVIL LAW
Q: Soledad a high school teacher used to go around
together with Francisco who was almost ten (10) years Remedy for Unjust Enrichment
younger than her. Eventually, intimacy developed
between them after Soledad became an underwriter in The remedy is Accion In Rem Verso. It is an action for
Cebu. One evening, they had sexual intercourse in recovery of what has been paid without just cause.
Francisco's cabin on board M/V Escao, to which he
was then attached as apprentice pilot. After a few NOTE: Mistake is not an essential element, as opposed to
months, Soledad advised Francisco that she was solution indebiti where mistake is an essential element.
pregnant, whereupon he promised to marry her. Later
their child was born. However, subsequently, Accion in rem verso
Francisco married another woman. Soledad filed a
complaint for moral damages for alleged breach of It is an action for recovery of what has been paid or
promise to marry. May moral damages be recovered delivered without just cause or legal ground. Under Art. 22
for breach of promise to marry? of the NCC, if a person acquires or comes into possession of
something at the expense of another without just or legal
A: No. It is the clear and manifest intent of our law making ground through an act or of performance by another or
body not to sanction actions for breach of promise to any other means has the obligation to return the same.
marry. Moreover, Francisco is not morally guilty of
seduction, not only because he is approximately 10 years Accion in rem verso can only be availed of if there is no
younger than the complainant who around 36 years of other remedy to enforce it based on contract, quasi-
age, and as highly enlightened as a former high school contract, crime or quasi-delict.
teacher and a life insurance agent are supposed to be
when she became intimate with him, than a mere Requisites
apprentice pilot, but, also, because, the court of first
instance found that, complainant "surrendered herself" to 1. The defendant has been enriched;
Francisco because, "overwhelmed by her love" for him, 2. The plaintiff has suffered a loss;
she "wanted to bind" "by having a fruit of their 3. The enrichment of the defendant is without just or
engagement even before they had the benefit of clergy legal ground; and
(Hermosisima v. CA, G.R. No. L-14628, September 30, 1960). 4. The plaintiff has no other action based on contract,
quasi-contract, crime or quasi-delict.
NOTE: To constitute seduction there must be some
sufficient promise or inducement and the woman must When accion in rem verso may be availed of
yield because of the promise or other inducement. If she
consents merely from carnal lust and the intercourse is It can only be availed of if there is no other remedy to
from mutual desire, there is no seduction. enforce it based on contract, quasi-contract, crime or
quasi-delict.
Prohibition against Unjust Enrichment
Accion in rem verso v. Solutio Debiti
No one shall unjustly enrich himself at the expense of
another (Pacific Merchandising Corp. v. Consolacion Mistake is an essential element in solutio indebiti. In accion
Insurance and Surety Co., Inc., No. L-30204, October 29, in rem verso, it is not necessary that there should have
1976). been mistake in the payment (Rabuya, 2006).
NOTE: Coverage of the article applies only if: Liability without fault or negligence
1. Someone acquires or comes into possession of The NCC recognizes liability without fault or negligence,
something which means delivery or acquisition of even when the event producing loss to others may be
things; and accidental or fortuitous, so long as another person is
2. Acquisition is undue and at the expense of another, benefited through such event or act (Art. 23, NCC).
which means without any just or legal ground.

12
2015 GOLDEN NOTES
PERSONS AND FAMILY RELATIONS
PERSONS AND FAMILY RELATIONS 3. Deaf-mute Lacking sense of hearing and the inability
to speak
Person v. Personality
NOTE: Only deaf-mutes who do not know how to
A person is every physical or moral, real or juridical and write are declared by law incapable of giving consent.
legal being susceptible of rights and obligations or being
the subject of legal relations. Personality, on the other 4. Imbecility State of a person who while advanced in
hand, is the aptitude to be the subject, active or passive, of age has the mental capacity comparable to that of a
juridical relations. One is a person, while one has child between two and seven years of age
personality (Rabuya, 2006). 5. Prodigality A spendthrift or squanderer
6. Civil Interdiction An accessory penalty imposed
Kinds of persons upon an accused who is sentenced to a principal
penalty not lower than reclusion temporal.
1. Natural Human beings and have physical existence
2. Juridical Artificial persons and product of legal NOTE: The following are the effects of civil
fiction interdiction:
Juridical capacity v. Capacity to act 1. Deprivation of parental or marital authority;

2. Deprivation of the right to be the guardian of the
JURIDICAL person and property of a ward;
BASIS CAPACITY TO ACT 3. Deprivation of his property by act inter vivos; and
CAPACITY
Fitness to be the 4. Deprivation of the right to manage one's properties
Power to do acts (Art. 34, RPC).
subject of legal
Definition with legal effect
relations (Art
(Art. 37, NCC) NOTE: They do not exempt the incapacitated person from
37, NCC)
certain obligations.
Through the
Inherent (co-
fulfillment of
Acquisition exists with the Circumstances that modify or limit capacity to act
specific legal
natural person)
activities
1. Insanity
Only through Through death and
Loss 2. Prodigality
death other causes
3. Age
Can exist
In relation to Cannot exist w/o 4. Imbecility
without capacity
the other juridical capacity 5. Deaf-Mute
to act
6. Family Relations
Art. 38 (restriction) 7. Alienage
Art. 39
8. Trusteeship
Limitation None (modification/
9. Penalty
limitation),
10. Insolvency
among others
11. Absence
NOTE: A person is presumed to have capacity to act NOTE: Prodigality per se doesnt automatically modify or
(Standard Oil Co. v. Arenas, et al, 14 Phil. 363). restrict a persons capacity to act. There must be a
declaration thereof and be placed under guardianship
Status under the Rules on Special Proceeding.
The status of a person is the legal condition or class to BIRTH
which one belongs in a society (1 del Viso 32, 2 Sanchez
Roman 110). Determination of personality
Civil personality The Civil Code provides that birth determines personality,
but the conceived child shall be considered born for all
It is merely the external manifestation of either juridical purposes that are favorable to it, provided it is born later
capacity or capacity to act. Consequently, it may be defined with the conditions specified in Art. 41 (Art. 40, NCC).
as the aptitude of being the subject of rights and
obligations (2 Sanchez Roman 114-147). This provision has been superseded by Art. 5 of P.D. No.
603 (The Child and Youth Welfare Code), which declares
RESTRICTIONS ON CAPACITY TO ACT that the civil personality of the child shall commence from
the time of his conception, for all purposes favorable to
Restrictions on capacity to act (MIDI-PC [Art. 38, NCC]) him, subject to the requirements of Art. 41 of the NCC.
1. Minority - State of a person who is under the age of
legal majority which is eighteen years of age
2. Insanity State of a person whose mental faculties are
diseased

CIVIL LAW
Acquisition of personality through birth Effect of death on civil personality
GR: Actual/Permanent Personality Personality begins at Death extinguishes civil personality. However, the rights
birth, not at conception. and obligations of the deceased are not necessarily
extinguished by his death (Pineda, 2009).
XPN: Presumptive/Temporary The law considers the
conceived child as born (Conceptus pro natohabetur) Rules to apply in case there is doubt as to who died
first
NOTE: For there to be presumptive personality, the foetus
must be born later in accordance with law and the It depends on whether the parties are called to succeed
purpose for which such personality is given must be each other.
beneficial to the child.
1. If successional rights are involved Art. 43 of the NCC:
Born later in accordance with law Survivorship Rule, and Rule 131, Sec. 3(kk):
Presumption of simultaneous deaths between persons
A foetus with an intra-uterine life of: called to succeed each other, apply.
1. Less than 7 months Must survive for at least 24 2. If no successional rights are involved Rule 131, Sec. 3
hours after its complete delivery from the maternal (jj) of the Rules of Court applies. (Presumption of
womb survivorship)
2. At least 7 months If born alive, it shall be considered
born even if it dies within 24 hours after complete NOTE: Both are to be applied only in the absence of facts.
delivery.
Q: Jaime, who is 65, and his son, Willy, who is 25, died
NOTE: Complete delivery means the cutting of the in a plane crash. There is no proof as to who died first.
umbilical cord. Jaimes only surviving heir is his wife, Julia, who is also
Willys mother. Willys surviving heirs are his mother,
Provisional personality of a conceived child Julia, and his wife, Wilma.
A conceived child, although as yet unborn, has a limited In the settlement of Jaimes estate, can Wilma
and provisional personality. Its personality is provisional successfully claim that her late husband, Willy, had a
because it depends upon the child being born alive later hereditary share since he was much younger than his
under certain conditions. father and therefore, should be presumed to have
survived longer?
Rights of the conceived child
A: No, Wilma cannot successfully claim that Willy had a
Since a conceived child has a provisional personality even hereditary share in his fathers estate.
while inside the mothers womb, it is entitled to the
following rights: Under Art. 43 of the NCC, two persons who are called to
succeed each other are presumed to have died at the same
a. Right to support time, in the absence of proof as to which of them died first.
b. To receive donations This presumption of simultaneous death applies in cases
c. To be acknowledged (Rabuya, 2009) involving the question of succession as between the two
who died, who in this case, are mutual heirs, being father
Right to be acknowledged and son.
A conceived child has the right to be acknowledged even if Q: Suppose, Jaime had a life insurance policy with his
it is still conceived. It is a universal rule of jurisprudence wife Julia, and his son, Willy, as the beneficiaries. Can
that a child, upon being conceived, becomes a bearer of Wilma successfully claim that one-half of the proceeds
legal rights and is capable of being dealt with as a living should belong to Willys estate? (1998 Bar Question)
person. The fact that it is yet unborn is no impediment to
the acquisition of rights provided it be born later in A: Yes, Wilma can invoke the presumption of survivorship
accordance with law (De Jesus v. Syquia, G.R. No. L-39110, and claim that one-half of the proceeds should belong to
November 28, 1933). Willys estate, under Rule 131, Sec.3 (jj), par. 5, Rules of
Court, as the dispute does not involve succession.
DEATH
Under this presumption, the person between the ages of
Civil personality ceases depending upon the 15 and 60 is deemed to have survived one whose age was
classification of persons over 60 at the time of their deaths. The estate of Willy
endowed with juridical personality stands in place and
1. Natural persons by death stead of Willy, as beneficiary.
2. Juridical persons by termination of existence

14
2015 GOLDEN NOTES
COMPARISON OF ART. 43 AND RULE 131 evidence (Joaquin v. Navarro, G.R. No. L-5426, May 29,
1953).
SURVIVORSHIP RULE UNDER THE NCC
Q: At the age of 18, Marian found out that she was
Survivorship rule under the NCC pregnant. She insured her own life and named her
unborn child as her sole beneficiary. When she was
If there is doubt as to who died first between 2 or more already due to give birth, she and her boyfriend Pietro,
persons who are called to succeed each other, as to which the father of her unborn child, were kidnapped in a
of them died first: resort in Bataan. The military gave chase and after one
1. Burden of Proof: Whoever alleges the death of one week, they were found in abandoned hut in Cavite.
prior to the other has the burden of proving such Marian and Pietro were hacked with bolos. Marian and
claim. the baby she delivered were both found dead, with the
2. Absent such proof: Presumption is they all died at the babys umbilical cord already cut. Pietro survived.
same time. There shall be no transmission of a. Can Marians baby be the beneficiary of the
successional rights (Rule 131, Sec. 3 [kk], Rules of insurance taken on the life of the mother?
Court). b. Between Marian and the baby, who is presumed to
have died ahead?
Conditions in the application of the survivorship rule c. Will Prieto, as surviving biological father of the
baby, be entitled to claim the proceeds of the life
It applies when the following conditions are present: insurance on the life of Marian? (2008 Bar
1. The parties are heirs to one another Question)
2. There is no proof as to who died first
3. There is doubt as to who died first A:
a) An unborn child may be designated as the beneficiary
PRESUMPTION ON SURVIVORSHIP UNDER THE RULES in the insurance policy of the mother. An unborn child
OF COURT shall be considered a person for purposes favorable to
it provided it is born later in accordance with the NCC.
Requisites for the presumption on survivorship under There is no doubt that the designation of the unborn
the Rules of Court child as a beneficiary is favorable to the child.
1. There are two or more persons; b) If the baby was not alive when completely delivered
2. They perish in the same calamity; from the mothers womb, it was not born as a person,
3. It is not shown who died first; and then the question of whom between two persons
4. There are no particular circumstances from which it survived will not be an issue. The baby had an intra-
can be inferred that one died ahead of the other. uterine life of more than 7 months, thus, it would be
considered born if it was alive at the time of its
The presumption under the survivorship rule under the complete delivery from the mothers womb. We can
Rules of Court is that the survivorship shall be determined gather from the facts that the baby was completely
from the probabilities resulting from the strength and age delivered. But whether or not it was alive has to be
of the sexes according to the following rules: proven by evidence.
Age/Sex of decedents at the time If the baby was alive when completely delivered from
Who presumed
of death the mothers womb, then it was born as a person and
to have survived
Decedent A Decedent B the question of who survived as between the baby and
Under 15 Under 15 Older the mother shall be resolved by the provisions of the
Above 60 Above 60 Younger Rules of Court on survivorship. This is because the
Under 15 question has nothing to do with succession. Obviously,
Under 15 Above 60 the resolution of the question is needed just for the
(younger)
Different sexes implementation of an insurance contract. Under Rule
Above 15 BUT Above 15 BUT male 13, Sec. 3, (jj), (5) as between the baby who was under
under 60 under 60 Same sex 15 years old and Marian who was 18 years old,
Older Marian is presumed to have survived.
Under 15 OR Between 15 and Between 15 and
over 60 60 60 In both cases, therefore, the baby never acquired any
right under the insurance policy. The proceeds of the
NOTE: The statutory rules in the determination of insurance will then go to the estate of Marian.
sequence of death do not absolutely apply in a case where
indirect and/or inferential evidence surrounding the c) Since the baby did not acquire any right under the
circumstances of the deaths exists. Where there are facts, insurance contract, there is nothing for Prieto to
known or knowable, from which a rational conclusion can inherit.
be made, the presumption does not step in, and the rule of
preponderance of evidence controls. It is the "particular
circumstances from which survivorship can be inferred"
that are required to be certain as tested by the rules of

CIVIL LAW
JURIDICAL PERSONS NATURE OF MARRIAGE
Kinds of Juridical Persons Marriage as an inviolable social institution
The following are the different kinds of Juridical Persons: It means that, marriage is an institution in which the
1. The State and its political subdivisions; community is deeply interested. The State has surrounded
2. Other corporations, institutions and entities for public it with safeguards to maintain its purity, continuity and
interest or purpose, created by law; their personality permanence. The security and stability of the State are
begins as soon as they have been constituted largely dependent on it. It is in the interest and duty of
according to law; each member of the community to prevent the bringing
3. Corporations, partnerships and associations for about of a condition that would shake its foundation and
private interest or purpose to which the law grants a lead to its destruction. The incidents of the status are
juridical personality, separate and distinct from that governed by law, not by will of the parties (Beso v.
of each shareholder, partner or member (Art. 44, NCC) Daguman, A.M. No. MTJ-99-1211, January 28, 2000 [citing
Jimenez v. Republic, G.R. No. L-12790, August 31,1960]).
Capacity of a Juridical Person
Marriage v. ordinary contract
A juridical person can acquire and possess property of all
kinds as well as incur obligations and bring civil or ORDINARY
BASIS MARRIAGE
criminal actions, provided that they are in conformity with CONTRACT
the laws and regulations of their organization (Art. 46, Special contract
NCC).
Sui Generis
Nature Merely a contract
contract
DOMICILE AND RESIDENCE OF PERSON
Social institution
Residence v. Domicile Governing Law Law on marriage Law on contracts
GR: Not subject
Residence is a place of abode, whether permanent or to stipulation
The parties are
temporary. Right of the
free to stipulate
parties to XPN: Property
subject to certain
Domicile denotes a fixed permanent place to which, when stipulate relations in
limitations
absent, one has the intention of returning (Animus marriage
Revertendi). settlements
Minors may
Domicile of natural persons contract thru
Capacity to Legal capacity is their parents or
The place of habitual residence is the domicile of a natural contract required guardians or in
person for the exercise of civil rights and fulfilment of civil some instances,
obligations. by themselves
Contracting
Contracting
Domicile of juridical persons parties may be
Gender parties must only
two or more
requirement be two persons
1. The place fixed by the law creating or recognizing the persons
of opposite sexes
juridical person; regardless of sex
2. In the absence thereof, the place where their legal Dissolved only by
representation is established or where they exercise Can be dissolved
death or
their principal functions. Dissolution by by mutual
annulment, never
agreement agreement
by mutual
MARRIAGE among others.
agreement
Marriage is a special contract of permanent union between Evidence of Marriage

a man and a woman entered into in accordance with law
for the establishment of conjugal and family life. It is the The best documentary evidence of a marriage is the
foundation of the family and an inviolable social institution marriage contract. Although a marriage contract is
whose nature, consequences, and incidents are governed considered primary evidence of marriage, the failure to
by law and not subject to stipulation, except that marriage present it is not, however, proof that no marriage took
settlements may fix the property relations during the place, as other evidence may be presented to prove
marriage within the limits provided by the Family Code marriage (Balogbog v. CA, G.R No. 83598, March 7, 1997).
(Art. 1, FC). The following may be presented as proof of marriage: (a)
testimony of a witness to the matrimony (b) the couples
public and open cohabitation as husband and wife after the
alleged wedlock (c) the birth and baptismal certificate of
children born during such wedlock and (d) the mention of
such nuptial in subsequent documents (Sarmiento v. CA,
G.R. No. 96740, March 25, 1999 citing Trinidad v. CA).

16
2015 GOLDEN NOTES
EFFECT OF ABSENCE OF REQUISITES
REQUISITES FOR A VALID MARRIAGE
Effect in the status of marriage
ESSENTIAL REQUISITES
Status of Marriage in case of:
Essential Requisites of Marriage 1. Absence of any of the essential requisites - Void ab
initio (Art. 4, FC)
1. Legal capacity of the contracting parties who must be 2. Absence of any of the formal requisites Void ab initio
a male and a female; (Art. 4, FC)
2. Consent freely given in the presence of the solemnizing
officer (Art. 2, FC). XPNs: Valid even in the absence of formal requisite:
a. Marriages exempt from license requirement
Legal capacity of the parties to marry (ASL) b. Either or both parties believed in good faith that
the solemnizing officer had the proper authority
1. Age at least 18 years of age (Art. 35 [2], FC)
2. Sex between male and female
3. Lack of legal impediment to marry 3. Defect in essential requisites - Voidable
NOTE: The impediments which may affect legal capacity 4. Irregularity in formal requisites - Valid, but the party
are those mentioned in Articles 37 and 38 of the Code. responsible for such irregularity shall be civilly,
Thus, the contracting parties are not legally capacitated to criminally or administratively liable.
marry each other
MARRIAGE CEREMONY
Reckoning of attainment of minimum age requirement
Valid marriage ceremony
The attainment of the required minimum age for marriage
should be reckoned, not on the date of filing of the That which takes place with the:
application for issuance of a marriage license, but on the 1. Personal appearance of the contracting parties before
date of the marriage. Pursuant to Article 6 of the same the solemnizing officer;
Code, parties may contract marriage on the date of the
solemnization of the marriage, i.e., when they appear NOTE: There is no marriage ceremony if what
personally before the solemnizing officer and declare in transpired was a mere private act of signing a
the presence of not less than two witnesses of legal age marriage contract by the contracting parties, without
that they take each other as husband and wife (Rabuya, the presence of the solemnizing officer (Rabuya, citing
2009). Morigo v. People, 422 SCRA 376 [2004])
Other requirements needed for the validity of such 2. Their personal declaration that they shall take each
marriage depending upon the age of the contracting other as husband and wife; and
party 3. In the presence of not less than 2 witnesses of legal
age.
ADDITIONAL
AGE
REQUIREMENTS NOTE: No particular form of ceremony or religious rite for
solemnization of the marriage is required by law (Art. 6,
Parental consent and
18 to 21 years old FC).
Marriage counseling
Parental advice and Validity of marriage by proxy

22 to 25 years old
Marriage counseling
Validity of marriage by proxy depends on the place of
celebration of marriage:
NOTE: Absence of the additional requirement of parental
advice does not make the marriage void or voidable, it only
1. If performed in the Philippines No, it is not allowed,
affects the release of the marriage license to be postponed
hence the marriage is void.
until (3) three months from the complete publication of
the application.
NOTE: Philippine laws prohibit marriages by proxy.
Since the marriage is performed in the Philippines,
FORMAL REQUISITES
Philippine laws shall apply following the principle of
lex loci celebrationis.
Formal Requisites of Marriage (CAL)
2. If performed abroad Whether it is allowed or not
1. Marriage Ceremony
depends upon the law of the place where the marriage
2. Authority of the solemnizing officer
was celebrated (lex loci celebrationis).
3. Valid marriage License (Art. 3, FC)
NOTE: As to marriages between Filipinos - all
marriages solemnized outside the Philippines, in
accordance with the laws enforced in said country

CIVIL LAW
where they are solemnized, and valid there as such, executed before the local civil registrar or any other
shall also be valid here in the country, except those person legally authorized to administer oaths, that the
prohibited under Art. 35 (1), (2), (4), (5), (6), 36, 37 marriage was performed in articulo mortis and that he
and 38 (Art. 26, FC). took the necessary steps to ascertain the ages and
relationship of the contracting parties and the absence of a
SOLEMNIZING AUTHORITY legal impediment to the marriage (Art. 29, FC).
Persons authorized to solemnize marriage Failure to execute an affidavit by solemnizing officer

no effect on validity of marriage
The following are the persons authorized to solemnize
marriage depending upon the circumstances: The failure of the solemnizing officer to execute an
affidavit that he solemnized the marriage in articulo mortis
1. Under ordinary circumstances: will have no effect as to the validity of marriage. The
a. Incumbent judiciary member Provided, within marriage will still be valid. The law permits marriages in
the courts (his) jurisdiction articulo mortis without marriage license but it requires the
solemnizing officer to make an affidavit and file it.
NOTE: Where a judge solemnized a marriage
outside his courts jurisdiction, this is a mere However, such affidavit is not an essential or formal
irregularity in the formal requisite, which while it requisite of marriage, the same with a Marriage Contract.
may not affect the validity of the marriage, may The signing of the marriage contract and the affidavit is
subject the officiating official to administrative only required for the purpose of evidencing the act, not a
liability (Navarro v. Domagtoy, A.M. No. MTJ-96- requisite of marriage. It is the obligation of the solemnizing
1088. July 19, 1996, as cited in Rabuya, 2009). officer. It does not affect the validity of marriage (De Loria
v. Felix, G.R. No. L-9005, Jun. 20, 1958).
b. Priest, rabbi, imam or minister of any
church/religious sect duly authorized Provided Authorized venues of marriage
at least one of the parties belongs to such church
or religious sect. GR: Must be solemnized publicly within the jurisdiction of
c. Consul general, consul or vice-consul Provided the authority of the solemnizing officer:
both parties are Filipinos and marriage takes a. Chambers of the judge or in open court
place abroad in the country where the consul b. Church, chapel or temple
holds office. c. Office of the consul-general, consul or vice-consul
d. Mayors (Arts. 444 and 445 of LGC) including
Acting Mayor XPNs:
1. Marriage at the point of death
NOTE: From the time of the effectivity of the 2. Marriage in remote places
Family Code on August 3, 1988 up to the time of 3. Marriage at a house or place designated by the parties
the effectivity of the Local Government Code on with the written request to the solemnizing officer to
January 1, 1992, mayors do not have the that effect.
authority to solemnize marriage
NOTE: This provision is only directory, not mandatory. The
2. Marriages in articulo mortis: requirement that the marriage be solemnized in a
a. Ship captain or airplane chief provided the particular venue or a public place is not an essential
marriage is performed: requisite for the validity of the marriage.
i. During voyage, even during stopovers
ii. Between passengers or crew members Validity of a marriage solemnized by a judge outside of
his jurisdiction
NOTE: Such authority may be exercised not only
while the ship is at sea or the plane is in flight but The marriage solemnized by a judge outside of his
also during stop-overs at ports of call (Rabuya, jurisdiction is valid. Under Art. 3 of the FC, one of the
2009). formal requisites of marriage is the "authority of the
solemnizing officer." Under Art. 7, marriage may be
b. Military commander of a unit who is a solemnized by, among others, "any incumbent member of
commissioned officer provided the marriage is the judiciary within the court's jurisdiction." Art. 8, which
performed: is a directory provision, refers only to the venue of the
i. In absence of chaplain; marriage ceremony and does not alter or qualify the
ii. Within zone of military operation; authority of the solemnizing officer as provided in the
iii. Between members of the armed forces or preceding provision. If there is defect in such requirement,
civilians the same would not make the marriage void, but it merely
subjects the officer to criminal, civil, or administrative
Duty of the solemnizing officer in a marriage in responsibility (Navarro v. Domagtoy, A.M. No. MTJ-96-
articulo mortis 1088. July 19, 1996).
The solemnizing officer in a marriage in articulo mortis NOTE: In case of a marriage solemnized by a mayor
after solemnizing such marriage shall state in an affidavit outside of his territorial jurisdiction, LGC is silent on the

18
2015 GOLDEN NOTES
matter, hence the abovementioned case may be applied by NOTE: Obtaining a marriage license in a place other than
analogy. where either party habitually resides is a mere
irregularity.
Exception to the rule requiring authority of the
solemnizing officer Requirement in the application for marriage license
The exception to the rule requiring authority of the Each of the contracting parties is required to file a sworn
solemnizing officer is when marriages contracted with application for the issuance of marriage license, specifying
either or both parties believing in good faith that the the following:
solemnizing officer had the authority to do so (Art. 35 [2],
FC). 1. Full name of the contracting party;
2. Place of birth;
MARRIAGE LICENSE 3. Age and date of birth;
4. Civil status;
Purpose of a valid marriage license 5. If previously married, how, when and where the
previous marriage was dissolved or annulled;
A marriage license is required in order to notify the public 6. Present residence and citizenship;
that two persons are about to be united in matrimony and 7. Degree of relationship of the contracting parties;
that anyone who is aware or has knowledge of any 8. Full name, residence and citizenship of the father;
impediment to the union of the two shall make it known to 9. Full name, residence and citizenship of the mother;
the local civil registrar. and
10. Full name, residence and citizenship of the guardian
The requirement and issuance of marriage license is the or person having charge, in case the contracting party
States demonstration of its involvement and participation has neither father nor mother and is under the age of
in every marriage (Rabuya, 2009). twenty-one years (Art. 11, NCC)
Validity of marriage license FOREIGN NATIONAL
The license shall be valid in any part of the Philippines for Additional requirement for foreign national applicants
a period of 120 days from the date of issue, and shall be
deemed automatically cancelled at the expiration of said When either or both of the contracting parties are citizens
period if the contracting parties have not made use of it of a foreign country, it shall be necessary for them to
(Art. 20, FC). submit a certificate of legal capacity to contract marriage,
issued by their respective diplomatic or consular officials.
NOTE: If the parties contracted marriage after the lapse of
120 days from the issuance of the marriage license, such Stateless persons or refugees from other country shall, in
marriage shall be considered void for lack of marriage lieu of the certificate of legal capacity herein required,
license. submit an affidavit stating the circumstances showing such
capacity to contract marriage (Art 21, FC).
Effect of lack of parental advice when required to file
Validity of the marriage without the required
In case a party who is required by law to obtain parental certificate of legal capacity to marry
advice or undergo marriage counselling fails to do so, the
issuance of marriage license is suspended for 3 months The status of the marriage celebrated on the basis of a
from the completion of publication of the application. license issued without the required Certificate of Legal
Capacity is valid as this is merely an irregularity in
Validity of the marriage celebrated during the complying with a formal requirement of the law in
suspension of the issuance of marriage license procuring a marriage license, which will not affect the
validity of the marriage (Garcia v. Recio, G.R. 138322,
The status of the marriage if the parties get married within October 2, 2001).
the said 3-month period depends:
1. If the parties did not obtain a marriage license the EXCEPTIONS TO MARRIAGE LICENSE REQUIREMENT
marriage shall be void for lack of marriage license.
2. If the parties were able to obtain a marriage license Marriages exempt from the license requirement
the marriage shall be valid without prejudice to the (MARCO)
actions that may be taken against the guilty party.
1. Marriages among Muslims or members of ethnic
Persons authorized to issues the marriage license cultural communities Provided they are solemnized
in accordance with their customs, rites or practices
The marriage license is issued by the local civil registrar of (Art. 33, FC).
the city or municipality where either contracting party 2. Marriages in Articulo mortis
habitually resides (Art. 9, FC). a. In case either or both of the contracting parties
are at the point of death (Art. 27, FC)
b. Solemnized by a ship captain or airplane pilot
(Art. 31, FC)

CIVIL LAW
c. Within zones of military operation (Art. 32, FC). and exclusivity, meaning no third party was involved at
3. Marriages in Remote places (Art. 28, FC). anytime within the 5 years. It should be a period of
legal union had it not been for the absence of the
NOTE: Remote Place - no means of transportation to marriage.
enable the party to personally appear before the local
civil registrar. In this case, Pepito and Norma are not exempt from
the marriage license requirement because at the time
4. Marriages between parties Cohabiting for at least 5 of Pepito and Norma's marriage, it cannot be said that
years (Art. 34, FC) they have lived with each other as husband and wife
5. Marriages solemnized Outside the Philippines where for at least five years prior to their wedding day
no marriage license is required by the country where because from the time Pepito's first marriage was
it was solemnized dissolved to the time of his marriage with Norma, only
about twenty months had elapsed.
Requisites for the 5-year cohabitation as an exception
to the marriage license requirement b) Yes, the marriage is still void. Even if they were
separated in fact, and thereafter both Pepito and
The requisites are: (5D PAS) Norma had started living with each other that has
1. Living together as husband and wife at least 5 years already lasted for five years, the fact remains that
before the marriage. Pepito had a subsisting marriage at the time when he
started cohabiting with Norma. It is immaterial that
The 5 year period must be characterized by: when they lived with each other, Pepito had already
a. Exclusivity the partners must live together been separated in fact from his lawful spouse. The
exclusively, with no other partners, during the subsistence of the marriage even where there was
whole 5-year period. actual severance of the filial companionship between
b. Continuity such cohabitation was unbroken. the spouses cannot make any cohabitation by either
spouse with any third party as being one as "husband
NOTE: The period is counted from the date of and wife" (Nial v. Bayadog, GR No. 133778, March 14,
celebration of marriage. It should be the years 2000).
immediately before the day of the marriage.
Q: Roderick and Faye were high school sweethearts.
2. No legal impediment to marry each other During the When Roderick was 18 and Faye, 16 years old, they
period of cohabitation. started living together as husband and wife without
the benefit of marriage. When Faye reached 18 years
NOTE: The five-year period of cohabitation must have of age, her parents forcibly took her back and
been a period , of legal union had it not been for the arranged for her marriage to Brad. Although Faye
absence of marriage. lived with Brad after the marriage, Roderick continued
to regularly visit Faye while Brad was away at work.
3. Fact of absence of legal impediment must be Present During their marriage, Faye gave birth to a baby girl,
at the time of the marriage Laica. When Faye was 25 years old, Brad discovered
4. Parties must execute an Affidavit that they are living her continued liaison with Roderick and in one of their
together as husband and wife for 5 years and that heated arguments, Faye shot Brad to death. She lost no
they do not have any impediment to marry time in marrying her true love Roderick, without a
5. Solemnizing officer must execute a Sworn statement marriage license, claiming that they have been
that he had ascertained the qualifications of the continuously cohabiting for more than 5 years. Was
parties and found no legal impediment to their the marriage of Roderick and Faye valid? (2008 Bar
marriage (Manzano v. Sanches, March 1, 2001). Question)
Q: Pepito was married to Teodulfa. Teodulfa was shot A: The marriage was void because there was no marriage
by him resulting in her death. After 1 year and 8 license. Their marriage was not exempt from the requisite
months, he married Norma without any marriage of a marriage license because Roderick and Faye have not
license. In lieu thereof, they executed an affidavit been cohabiting for at least 5 continuous years before the
stating that they had lived together as husband and celebration of their marriage. Their lovers trysts and brief
wife for at least five years and were thus exempt from visitations did not amount to cohabitation. Moreover, the
securing a marriage license. Supreme Court held that for the marriage to be exempt
a. What is the status of their marriage? from a license, there should be no impediment for them to
b. Would your answer be the same if Pepito was marry each other during the entire 5 years of cohabitation.
separated in fact from Teodulfa? Roderick and Faye could not have cohabited for 5 years of
cohabitation. Roderick and Faye could not have been
A: cohabited for 5 continuous years without impediment
a) Void for lack of marriage license. To be exempt from because Faye was then legally married to Brad.
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,

20
2015 GOLDEN NOTES
MARRIAGE CERTIFICATE
XPNs: It shall be void, even if it is valid in the foreign
Marriage license v. Marriage certificate country where the marriage was celebrated, if any of the
following circumstances are present: (LIM 2B 2P)
BASIS MARRIAGE MARRIAGE 1. Lack of legal capacity even with parental consent (e.g.
LICENSE CERTIFICATE party is below 18);
Authorization by Best evidence of the 2. Incestuous;
the state to existence of the 3. Contracted through Mistake of one party as to the
Nature identity of the other;
celebrate marriage.
marriage. 4. Contracted following the annulment or declaration of
Formal requisite Neither essential nullity of a previous marriage but Before partition,
Requisite of etc.;
of marriage. nor formal requisite
Marriage 5. Bigamous or polygamous except as provided in Art. 41
of marriage.
FC on terminable bigamous marriages;
6. Void due to Psychological incapacity;
Q: Guillermo and Josefa lived together as husband and
7. Void for reasons of Public policy
wife, but there is doubt as to whether they got
married, since no record of the marriage existed in the
Requisites for application of 2nd paragraph of Art. 26
civil registry but their relatives and friends
maintained that the two in fact married each other and
1. It must be a case of mixed marriage (one party is
lived as husband and wife for more than half a century.
Filipino and the other is an alien)
Is Guillermo married to Josefa?
2. The divorce must be obtained by the alien spouse and
not by the Filipino spouse.
A: They are presumed to be married. In this jurisdiction,
3. The divorce obtained by the alien spouse must
every intendment of the law leans toward legitimizing
capacitate him or her to remarry (Rabuya, 2009).
matrimony. Persons dwelling together apparently in
marriage are presumed to be in fact married. This is the
Q: Suppose in a valid mixed marriage (marriage
usual order of things in society and, if the parties are not
between a citizen of a foreign country and a citizen of
what they hold themselves out to be, they would be living
the Philippines) the foreign spouse obtained a divorce
in constant violation of the common rules of law and
decree abroad and was capacitated to remarry.
propriety. Semper praesumitur pro matrimonio always
presume marriage (Vda.De la Rosa v. Heirs of Vda. De
a. May the Filipino spouse remarry despite the fact
Damian, G.R. No. 103028, October 10, 1997).
that divorce is not valid in the Philippines?
b. Will your answer be the same if it was a valid
NOTE: Although a marriage contract is considered a
marriage between Filipinos?
primary evidence of marriage, its absence is not always
proof that no marriage took place (Vda.De la Rosa v. Heirs
A:
of Vda. De Damian, G.R. No. 103028, October 10, 1997).
a. Yes, the Filipino spouse is likewise capacitated.
Divorce validly obtained abroad by the alien spouse
EFFECT OF MARRIAGE CELEBRATED ABROAD
capacitating him/her to remarry will likewise allow
AND FOREIGN DIVORCE
the Filipino spouse to remarry. This is the rule laid
down in Art. 26 (2) of the FC.
Rules governing the validity of marriage
It should be noted however that the foreign spouse
1. As to its extrinsic validity Lex loci celebrationis
must be capacitated to remarry before the Filipino
spouse may also be capacitated to remarry.
NOTE: Locus regit actum (the act is governed by the
law of the place where it is done) - is adhered to here
NOTE: It is true that owing to the nationality principle
in the Philippines as regards the extrinsic validity of
embodied in Art. 16 of the NCC, only Philippine
marriage.
nationals are covered by the policy against absolute
divorces, the same being considered contrary to our
2. As to its intrinsic validity Personal law
concept of public policy and morality. Nevertheless,
aliens may obtain divorces abroad which may be
NOTE: Personal law may either be the national law or
recognized in the Philippines, provided they are valid
the law of the place where the person is domiciled.
according to their national law (Van Dorn v. Romillo,
Jr., GR No. L-68470, October 8, 1985).
If the person involved is a stateless person, domiciliary
rule applies, otherwise, lex nationalii applies.
b. It depends. What is material in this case is the
citizenship of the spouse who obtained a divorce
Marriages between Filipinos solemnized abroad in
decree abroad at the time the decree was obtained
accordance with the law in force in said country
and not their citizenship at the time the marriage was
celebrated.
GR: Marriages between Filipinos solemnized outside the
Philippines in accordance with the law of the foreign
If the Filipino spouse was naturalized as a citizen of a
country where it is celebrated, if valid there, shall be valid
foreign country before he/she obtains a divorce
here as such.

CIVIL LAW
decree and was thereafter capacitated to remarry, the presented and admitted in evidence. A divorce obtained
Filipino spouse will be capacitated to remarry. abroad is proven by the divorce decree itself. Indeed, the
best evidence of a judgment is the judgment itself (Rule 30,
Q: A Filipina was married to an American who Sec. 3, Rules of Court). The decree purports to be a written
obtained a divorce decree in the U.S. When the Filipina act or record of an act of an official body or tribunal of a
came back to the Philippines and started her business, foreign country (Sec. 19, Rule 130).
the American followed suit and wanted to enforce his
rights over the Filipina to the extent of claiming his Under Secs. 24 and 25 of Rule 132, a writing or document
rights to administer the properties of the woman, may be proven as a public or official record of a foreign
contending that they are still married. He also claimed country by either: a.) an official publication; or b.) a copy
hereditary rights. Is he correct? Why? thereof attested by the officer having legal custody of the
document. If the record is not kept in the Philippines, such
A: No. In Van Dorn v. Romillo, Jr. (October 8, 198), it was copy must be a.) accompanied by a certificate issued by the
said that public policy and our concept of morality abhor proper diplomatic or consular office in the Philippine
absolute divorce. But owing to the nationality principles foreign service stationed in the foreign country in which
under Art. 15, NCC, only Philippine nationals are governed the record is kept; and 2.) authenticated by the seal of his
by the policy against absolute divorce obtained abroad by office (Garcia v. Recio, G.R. No. 138322, October 2, 2002).
an alien which may be recognized in the Philippines,
provided, it is valid according to his national law. NOTE: Without the divorce decree and foreign law as part
of the evidence, the Court cannot rule on the issue of
Burden of proof in recognition of foreign divorce whether petitioner has the personality to file the petition
for declaration of nullity of marriage. After all, petitioner
Burden of Proof lies with "the party who alleges the may have the personality to file the petition but the
existence of a fact or thing necessary in the prosecution or divorce decree obtained was a limited divorce or a mensa
defense of an action." Since the divorce was a defense et thoro or the foreign law may restrict remarriage even
raised by respondent, the burden of proving the pertinent after the divorce decree becomes absolute (Garcia v. Recio,
foreign law validating it falls squarely upon him. Courts ibid).
cannot take judicial notice of foreign laws. The power of
judicial notice must be exercised with caution, and every STATUS OF MARRIAGES
reasonable doubt upon the subject should be resolved in
the negative (Garcia v. Recio, G.R. No. 138322, October 2, Status of Marriages
2001).
1. Valid
The naturalization of one of the parties, as well as the 2. Void
divorce decree obtained by him or her, must be proven as 3. Voidable
a fact under our rules on evidence. The foreign law under
which the divorce was obtained must likewise be proven VOID MARRIAGE
as our courts cannot take judicial notice of foreign laws
and judgments; hence, like any other facts, both the Marriages that are void ab initio (LAaMB- PIPS-18)
divorce decree and the national law of the alien must be
alleged and proven according to our law on evidence 1. Absence of any of the essential or formal requisites of
(Garcia v. Recio, G.R. No. 138322, October 2, 2002). marriage;
2. Marriages contracted by any party below 18 years of
However, if the Filipino spouse remained to be a citizen of age even with the consent of parents or guardians;
the Philippines when he/she obtained a divorce decree 3. Solemnized without License, except those marriages
abroad, such decree will not be recognized in the that are exempt from the license requirement;
Philippines even if that spouse is subsequently naturalized 4. Solemnized by any person not Authorized to perform
as a citizen of a foreign country. This is so because at the marriages unless such marriages were contracted
time the spouse obtained the divorce decree, he/she was with either or both parties believing in good faith that
still a citizen of the Philippines and being naturalized the solemnizing officer had the legal authority to do
afterwards does not cure this defect (Republic v. Iyoy, G.R. so;
No. 152577, September 21, 2005). 5. Contracted through Mistake of one of the contracting
parties as to the identity of the other;
Q: If a foreigner who was divorced seeks to obtain a 6. Bigamous or polygamous marriages;
marriage license in the Philippines, what should he 7. Subsequent marriages which are void under Art. 53
do? Explain. FC;
8. Marriages contracted by any party, who at the time of
A: The applicant for marriage license has to prove his legal the celebration of the marriage, was Psychologically
capacity. If the marriage was dissolved by reason of incapacitated (Art. 36, FC);
divorce, he has to file a sworn statement as to how the 9. Incestuous Marriages (Art. 37, FC);
marriage was dissolved (Art. 11, FC) and furnish the local 10. Marriages declared void because they are contrary to
civil registrar with the judgment (Art. 13, FC) and must Public policy (Art. 38, FC).
register the same with the local civil registrar to bind third
persons (Art. 52, FC). Before a foreign judgment is given
presumptive evidentiary value, the document must first be

22
2015 GOLDEN NOTES
Void v. Voidable marriages annulment
BASIS VOID MARRIAGE VOIDABLE

Judicial
MARRIAGE How may be Either directly or
declaration is
Status of Void ab initio Valid until impugned collaterally
necessary
marriage annulled
GR: Illegitimate; Legitimate
Declaration of Annulment of
Petition filed
Nullity of Marriage Marriage
XPN: Those
GR: Solely by the GR: Offended
conceived or born
husband or wife. Spouse
of marriages
declared void
XPN: Any real XPN:
Children under:
party in interest, 1. Parents or
1. Art. 36
only in the guardians in
(Psychological
following cases: cases of
incapacity), or
1. Nullity of insanity
2. Art. 52 in
marriage cases 2. Parents or
relation to Art.
commenced guardians
53
before the before the
GR: Property GR: Governed by
effectivity of party
relations are rules on absolute
A.M. No. 02-11- reaches 21
governed by rules on community
10 - March 15, years old on
co-ownership
2003. the ground of
XPN: Unless
2. Marriages Lack of
XPN: If the marriage another system is
celebrated Parental
is declared void by agreed upon in
during the Authority
reason of non- marriage
effectivity of
compliance with settlement
the Civil Code Property
Article 40 of the FC,
Who may (De Dios Carlos
the absolute
file v. Sandoval, G.R.
community or the
No. 179922,
conjugal partnership,
December 16,
as the case may be,
2008).
shall be dissolved
3. A party to the
and liquidated (Art.
previous
43 (2), in relation to
marriage may
Art. 50).
seek the nullity
GR: There is no Necessary
of the
necessity to obtain a
subsequent
judicial declaration
marriage on the Judicial
ground that the Declaration
XPN: For purposes of
subsequent
remarriage, one is
marriage is
required.
bigamous
(Estrellita
Juliano-Llave vs. ABSENCE OF REQUISITES
Republic of the
Philippines G.R. Status of a marriage between Filipinos if the parties
No. 169766 thereto are of the same sex
March 20,2011)
Void. For a marriage to be valid, it must be between
No prescriptive GR: Within 5 years
persons of opposite sexes.
period from discovery of
the ground
Q: In case of a change in sex, can the person who has
undergone said change be allowed to marry another of
XPN:
the same sex as he/she originally had?
1. Lifetime of
spouse in
Prescriptive A: It depends upon the cause for the change in sex.
cases of
period
insanity
1. If the change is artificial No, he/she cannot.
2. Before the
party reaches
NOTE: The sex or gender at the time of birth shall be
21 in cases
taken into account. He is still, in the eyes of the law, a
where parents
man although because of the artificial intervention, he
or guardians
now has the physiological characteristics of a woman
may file
(Silverio v. Republic, G.R. No. 174689, October22, 2007)

CIVIL LAW
Effect of lack of authority of solemnizing officer
2. If the change is natural He/she can. Ex.
hermaphrodite GR: The marriage is void ab initio.
Q: Jennifer was registered as a female in her Certificate XPN:

of Live Birth. In her early years, she suffered from 1. Express - If either or both parties believed in good
clitoral hypertrophy and was found out that her faith that the solemnizing officer had the legal
ovarian structures had minimized. She also alleged authority to do so (Art. 35, FC).
that she has no breasts or menstruation. She was 2. Implied - Article 10 in relation to Article 26 of the
diagnosed to have Congenital Adrenal Hyperplasia Family Code. If the marriage between a foreigner and
(CAH) a condition where persons thus afflicted possess a Filipino citizen abroad solemnized by a Philippine
secondary male characteristics because of too much consul assigned in that country is recognized as valid
secretion of androgen. She then alleged that for all in the host country, such marriage shall be considered
interests and appearances as well as in mind and as valid in the Philippines (Sta. Maria Jr., Persons and
emotion, she has become a male person. What is Family Relations Law).
Jennifers gender or sex?
Q: Judge Palaypayon solemnized marriages even
A: Male. Where the person is biologically or naturally without the requisite of marriage license. Thus, some
intersex the determining factor in his gender classification couples were able to get married by the simple
would be what the individual, having reached the age of expedient of paying the marriage fees. As a
majority, with good reason thinks of his/her sex. Jennifer consequence, their marriage contracts did not reflect
here thinks of himself as a male and considering that his any marriage license number. In addition, the judge
body produces high levels of androgen, there is did not sign their marriage contracts and did not
preponderant biological support for considering him as indicate the date of the solemnization, the reason
being male. Sexual development in cases of intersex being that he allegedly had to wait for the marriage
persons makes the gender classification at birth license to be submitted by the parties. Such marriage
inconclusive. It is at maturity that the gender of such contracts were not filed with the Local Civil Registry.
persons is fixed. Are such marriages valid?
Jennifer has simply let nature take its course and has not A: No. The Family Code pertinently provides that the
taken unnatural steps to arrest or interfere with what he formal requisites of marriage are, inter alia, a valid
was born with. And accordingly, he has already ordered marriage license, necessary for the validity of marriage,
his life to that of a male. He could have undergone except in the cases provided for therein. Complementarily,
treatment and taken steps, like taking lifelong medication, it declares that the absence of any of the essential or
to force his body into the categorical mould of a female but formal requisites shall generally render the marriage void
he did not. He chose not to do so. Nature has instead taken ab initio and that, while an irregularity in the formal
its due course in his development to reveal more fully his requisites shall not affect the validity of the marriage, the
male characteristics. party or parties responsible for the irregularity shall be
civilly, criminally and administratively liable (Cosca v.
To him belongs the primordial choice of what courses of Palaypayon, A.M. No. MTJ-92-721, September 30, 1994).
action to take along the path of his sexual development
and maturation. In the absence of evidence that he is an Mistake to render the marriage void
incompetent and in the absence of evidence to show that
classifying him as a male will harm other members of For marriage to be rendered void, the mistake in identity
society who are equally entitled to protection under the must be with reference to the actual physical identity of
law, the Court affirms as valid and justified his position other party, not merely a mistake in the name, personal
and his personal judgment of being a male (Republic v. qualifications, character, social standing, etc (Rabuya,
Jennifer Cagandahan, G.R. No. 166676, Sep. 12, 2008). 2009).
Status of marriages where one or both of the parties PSYCHOLOGICAL INCAPACITY

are below 18 years of age
Psychological incapacity
Marriages contracted where one or both of the parties are
below 18 years of age are void for lack of legal capacity The Supreme Court defined psychological incapacity as no
even if the parents consented to such marriage. less than a mental (not physical) incapacity that causes a
party to be truly incognitive of the basic marital covenants
Validity of the marriage if it is a mixed marriage where that concomitantly must be assumed and discharged by the
the Filipino is 18 years old but the foreigner is below parties to the marriage.
17 years of age
NOTE: In such case, the spouse declared to be
If the national law of the foreigner recognizes 17 year old psychologically incapacitated cannot be held liable to pay
persons to be capacitated to marry, then their marriage is moral damages to the other spouse based on Articles 2217
valid, otherwise it is void. and 21 of the NCC, which connotes wilfulness of the acts
complained of, if the same acts constitutive of the
psychological incapacity were to be made the basis for the

24
2015 GOLDEN NOTES
award of moral damages. It is contradictory to characterize Guidelines set by the Court to aid it in its disposition of
acts as a product of psychological incapacity, and hence cases involving psychological incapacity
beyond the control of the party because of an innate
inability, while at the same time considering the same set 1. Burden of proof to show the nullity of the marriage
of acts as willful (Buenaventura v. CA, 454 SCRA 261 [2005] belongs to the plaintiff;
as cited in Rabuya, 2009). 2. The root cause of the psychological incapacity must
be: (a) medically or clinically identified, (b) alleged in
Determination is left solely with the courts on a case- the complaint, (c) sufficiently proven by experts and
to-case basis (d) clearly explained in the decision.
3. The incapacity must be proven to be existing at the
Determination of psychological incapacity depends on the time of the celebration of the marriage.
facts of the case. Every court should approach the issue of 4. Such incapacity must also be shown to be medically or
nullity not on the basis of a priori assumptions, clinically permanent or incurable.
predilections or generalizations, but according to its own 5. Such illness must be grave enough to bring about the
facts in recognition of the verity that no case would be on disability of the party to assume the essential
all fours with the next one in the field of psychological obligations of marriage.
incapacity as a ground for the nullity of marriage; hence, 6. The essential marital obligations must be those
every trial judge must take pains in examining the factual embraced by Arts. 68 up to 71 of the FC as regards the
milieu and the appellate court must, as much as possible, husband and wife, as well as Arts. 220, 221 and 225 of
avoid substituting its own judgment for that of the trial the same Code in regard to parents and their children.
court. Such non-complied marital obligation(s) must also be
stated in the petition, proven by evidence and
By the very nature of Article 36, courts, despite having the included in the text of the decision.
primary task and burden of decision-making, must not 7. Interpretations given by the National Appellate
discount but, instead, must consider as decisive evidence Matrimonial Tribunal of the Catholic Church in
the expert opinion on the psychological and mental the Philippines, while not controlling or decisive,
temperaments of the parties (Kalaw v. Fernandez, G.R. No. should be given great respect by our courts.
166357, January 15, 2015). 8. The trial court must order the prosecuting attorney or
fiscal and the Solicitor General to appear as counsel
Requisites of Psychological Incapacity for the state. No decision shall be handed down unless
the Solicitor General issues a certification, which will
1. Juridical antecedence Must be rooted in the history be quoted in the decision, briefly stating therein his
of the party antedating the marriage, although overt reasons for his agreement or opposition, as the case
manifestations may arise only after such marriage. may be, to the petition (Danilo A. Aurelio v. Vide Ma.
2. Gravity Grave enough to bring about the disability of Corazon P. Aurelio, G.R. No. 175367, June 6, 2011).
the party to assume the essential marital obligations.
3. Permanence or incurability Must be incurable. If NOTE: In Republic v. Quintero-Hamano, 428 SCRA 735
curable, the cure should be beyond the means of the (2004, the SC held that these guidelines may not be relaxed
parties involved. just because the spouse alleged to be psychologically
incapacitated happens to be a foreign national. The norms
Proof of Psychological Incapacity used for determining psychological incapacity should
apply to any person regardless of nationality because the
The root cause of psychological incapacity must be: rules were formulated on the basis of studies of human
a. Medically or clinically identified behavior in general (Rabuya, Civil Law Reviewer I, p. 62).
b. Alleged in the complaint
c. Sufficiently proven by experts Instances where allegations of psychological
d. Clearly explained in the decision incapacity were not sustained
NOTE: Expert evidence may be given by qualified 1. Mere showing of irreconcilable differences and
psychiatrists and clinical psychologists. conflicting personalities (Carating-Siayngco v.
Siayngco, G.R. No. 158896, Oct, 27. 2004).
Necessity of physicians examination for proving
psychological incapacity Mere sexual infidelity or perversion, do not by
themselves constitute psychological incapacity, as
The physicians examination is not required in establishing well as immaturity and irresponsibility.
psychological incapacity as ground for declaration of
nullity. If the totality of evidence presented is enough to NOTE: It must be shown that these acts are
sustain a finding of psychological incapacity, physicians manifestations of a disordered personality which
examination of the person concerned need not be resorted would make respondent completely unable to
to (Marcos v. Marcos, G.R. No. 136490, Oct. 19, 2000; Glenn discharge the essential obligations of a marital state,
Vias v. Mary Grace Parel-Vias, G.R. No. 208790, January not merely youth, immaturity or sexual promiscuity
21, 2015). (Dedelvs CA, G.R. no. 151867, January29, 2004).
2. Disagreements regarding money matters (Tongol v.

Tongol, G.R. No. 157610, October 19, 2007).

CIVIL LAW
3. Mere abandonment. the respondent is incapacitated to comply with the
essential marital obligations of marriage and that it is also
NOTE: To constitute psychological incapacity, it must essential that he must be shown to be incapable of doing
be shown that the unfaithfulness and abandonment so due to some psychological, not physical illness (Republic
are manifestations of a disordered personality that v. Quintero-Hamano, G.R. No. 149498, May 20, 2004).
completely prevented the erring spouse from
discharging the essential marital obligations Alternative Answer: A congenital sexual pervert may be
(Republic of the Philippines vs. Cesar Enselan G.R. No. psychologically incapacitated if his perversion
170022; January 9, 2013). incapacitates him from discharging his marital obligations;
for instance, if his perversion is of such a nature as to
4. Sexual infidelity (Republic v. Dagdag, GR No. 109975, preclude any normal sexual activity with his spouse.
February 9, 2001).
INCESTUOUS MARRIAGES
Q: Would the state of being of unsound mind or the
concealment of drug addiction, habitual alcoholism, Marriages that are considered as incestuous
homosexuality or lesbianism be considered indicia of
psychological incapacity, if existing at the inception of a) Between ascendants and descendants of any degree;
marriage? (2002 Bar Question) b) Between brothers and sisters whether of the full or
half blood (Art. 37, FC).
A: In the case of Santos v. CA (240 SCRA 20, 1995), the
Supreme Court held that being of unsound mind, drug NOTE: Regardless of whether the relationship between the
addiction, habitual alcoholism, lesbianism or parties is legitimate or illegitimate.
homosexuality may be indicia of psychological incapacity,
depending on the degree of severity of the disorder. Void marriages by reason of public policy
However, the concealment of drug addiction, habitual
alcoholism, lesbianism or homosexuality is a ground of Marriages between:
annulment of marriage. 1. Collateral blood relatives (legitimate or Illegitimate)
up to the 4th civil degree;
Q: Art. 36 of the FC provides that a marriage 2. Step-parents & step-children;
contracted by any party who, at the time of the 3. Parents-in-law & children-in-law;
celebration, was psychologically incapacitated to
comply with the essential marital obligations of NOTE: The prohibition under Nos. 2 and 3 applies
marriage, shall be void. even after the termination of the marriage which is
the very source of the relationship by affinity,
Choose the spouse listed below who is psychologically regardless of the cause of such termination.
incapacitated.
a. Nagger 4. Adopting parent & the adopted child;
b. Gay or Lesbian 5. Surviving spouse of the adopting parent & the
c. Congenital sexual pervert adopted child;
d. Gambler 6. Surviving spouse of the adopted child & the adopter;
e. Alcoholic (2006 Bar Question) 7. Adopted child & legitimate child of the adopter;
8. Adopted children of the same adopter;
A: B and C. To be sure, the existence and concealment of 9. Parties where one, with the intention to marry the
these conditions at the inception of marriage renders the other, kills the latters spouse, or his/her spouse (Art.
marriage contract voidable (Art 46, FC). They may serve as 38, FC).
indicia of psychological incapacity, depending on the
degree and severity of the disorder (Santos v. CA, G.R. No. NOTE: The list is exclusive. If not falling within this
112019, January 4, 1995). Hence, if the condition of enumeration, the marriage shall be valid. Such as
homosexuality, lesbianism or sexual perversion, existing at marriages between:
the inception of the marriage, is of such a degree as to i. Adopted and Illegitimate child of the adopter
prevent any form of sexual intimacy, any of them may ii. Step brother and step sister
qualify as a ground for psychological incapacity. The law iii. Brother-in-law and sister-in-law
provides that the husband and wife are obliged to live iv. Parties who have been guilty of adultery or
together, observe mutual love, respect and fidelity (Art. 68, concubinage
FC). The mandate is actually the spontaneous, mutual
affection between the spouses in the natural order it is Q: Amor gave birth to Thelma when she was 15 years
sexual intimacy which brings the spouses wholeness and old. Thereafter, Amor met David and they got married
oneness (Chi Ming Tsoi v. CA, G.R. No. 119190, January 16, when she was 20 years old. David has a son, Julian,
1997). with his ex-girlfriend Sandra. Can Julian and Thelma
get married? (2007 Bar Question)
Alternative Answer: None of them are necessarily
psychologically incapacitated. Being a nagger, etc., are at A: If the marriage was solemnized during the effectivity of
best only physical manifestations indicative of the NCC, the marriage between stepbrother and stepsister
psychological incapacity. More than just showing the is void. However, under the FC, the marriage may be valid.
manifestations of incapacity, the petitioner must show that

26
2015 GOLDEN NOTES
SUBSEQUENT MARRIAGE Special cases when subsequent marriage is allowed
Q: If a person contracts a subsequent marriage during 1. Marriage between a Filipino and a foreigner and
the subsistence of a prior marriage, what is the status procurement by the alien spouse of a valid divorce
of the subsequent marriage? decree abroad, capacitating him/her to remarry.
2. Terminable bigamous marriages (Art. 41).
A: GR: Void for being bigamous or polygamous, even if
celebrated abroad and valid there as such. Requisites for validity of subsequent marriage under
Art. 41
XPN: Valid if it is a terminable bigamous marriage.
Before the celebration of the subsequent marriage: (ABD)
Bigamous Marriage 1. The Absent spouse had been absent for 4 consecutive
years (ordinary absence) or 2 consecutive years
It is when a person contracts a second or subsequent (extra-ordinary absence);
marriage before the former marriage has been legally 2. The present spouse has a well-founded Belief that the
dissolved, or before the absent spouse has been declared absent spouse is already dead;
presumptively dead by means of judgment rendered in the 3. There is judicial Declaration of presumptive death in a
proper proceedings (Art. 349, RPC). summary proceeding.
NOTE: The same applies to polygamy. NOTE: If both spouses of subsequent marriage acted in bad
faith, such marriage is void ab initio.
Q: Arnold, a Filipino, and Britney, an American, both
residents of California, decided to get married in their Requisites for issuance of judicial declaration of
local parish. Two years after their marriage, Britney presumptive death
obtained a divorce in California. While in Boracay,
Arnold met Jenny, a Filipina, who was vacationing 1. That the absent spouse has been missing for four
there. Arnold fell in love with her. After a brief consecutive years, or two consecutive years if the
courtship and complying with all the requirements, disappearance occurred where there is danger of
they got married in Hong Kong to avoid publicity, it death under the circumstances laid down in Article
being Arnolds second marriage. Is his marriage with 391 of the New Civil Code
Jenny valid? (2006 Bar Question) 2. That the present spouse wishes to remarry
3. That the present spouse has well-founded belief that
A: Yes. The marriage will not fall under Art. 35(4) on the absentee is dead
bigamous marriages, provided that Britney obtained an 4. That the present spouse files a summary proceeding
absolute divorce, capacitating her to remarry under her for the declaration of presumptive death of the
national law. Consequently, the marriage between Arnold absentee (Republic of the Philippines vs. Nolasco G.R.
and Jenny may be valid as long as it was solemnized and 94053, March 17, 1993).
valid in accordance with the laws of Hong Kong.
NOTE: The requirement for a judgment of the presumptive
Q: May a person contract a valid subsequent marriage death of the absent spouse is for the benefit of the spouse
before a first marriage is declared void ab initio by a present because she could be charged and convicted of
competent court? bigamy if the defense of good faith based on mere
testimony is found incredible. It is also for the protection
A: No. The Supreme Court has consistently held that a of the State. The law regulating civil marriages are
judicial declaration of nullity is required before a valid necessary to serve the interest, safety, good order, comfort
subsequent marriage can be contracted; or else, what or general welfare of the community and the parties can
transpires is a bigamous marriage, reprehensible and waive nothing essential to the validity of the proceedings.
immoral. Article 40 of the Family Code expressly requires A civil marriage anchors an ordered society by
a judicial declaration of nullity of marriage (In re: Salvador encouraging stable relationships over transient ones; it
v. Serafico, A.M. 2008-20-SC, March 15, 2010). enhances the welfare of the community (Eduardo Manuel v.
People, G.R. No. 165842, November 29, 2005).
NOTE: Under Art. 40 of the FC, before one can contract a
second marriage on the ground of nullity of the first Finality of judicial declaration of presumptive death
marriage, there must first be a final judgment declaring the
first marriage void. If a party fails to secure a judicial GR: The order of the trial court granting the petition for
declaration of nullity of the first marriage, he or she runs judicial declaration of presumptive death under Article 41
the risk of being charged with bigamy as the marital bond of the Family Code is immediately final and executory by
or vinculum in the first nuptial subsists (Mercado v. Tan the express provision of Article 247 of the Family Code
GR: 137110, August, 2000; Te v. CA GR No: 126746, (Republic of the Philippines vs. Bermudez-Lorino,
November 29, 2009). G.R.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

CIVIL LAW
the CA on the ground that, in rendering judgment thereon, Q: RTC declared Celerina J. Santos (Celerina)
the trial court committed grave abuse of discretion presumptively dead after her husband, Ricardo T.
amounting to lack of jurisdiction. From the decision of the Santos (Ricardo), had filed a petition for declaration of
CA, the aggrieved party may elevate the matter to this absence or presumptive death for the purpose of
Court via a petition for review on certiorari under Rule 45 remarriage on June 15, 2007. Subsequently, Ricardo
of the Rules of Court (Republic of the Philippines vs Yolanda remarried.
Cadacio Granada, G.R. 187512, June 13, 2012).
Celerina claimed that she learned about Ricardo's
Effect if both parties in the subsequent marriage under petition only sometime in October 2008 when she
Article 41 acted in bad faith could no longer avail the remedies of new trial, appeal,
petition for relief, or other appropriate remedies.
1. The subsequent marriage is void ab initio Thereafter, on November 17, 2008, she filed a petition
2. All donations propter nuptias made by one in favour for annulment of judgment before the Court of Appeals
of the other are revoked by operation of law on the grounds of extrinsic fraud and lack of
3. All testamentary dispositions made by one in favour jurisdiction. She argued that she was deprived her day
of the other are revoked by operation of law in court when Ricardo, despite his knowledge of her
4. The parties shall be liable for the crime of bigamy true residence, misrepresented to the court that she
(Rabuya, 2009) was a resident of Tarlac City when, in fact, she never
resided there. As a result of Ricardo's
Termination of Subsequent Bigamous Marriage misrepresentation, she was deprived of any notice of
and opportunity to oppose the petition declaring her
The recording of the affidavit of reappearance of the presumptively dead. The Court of Appeals dismissed
absent spouse in the civil registry of the residence of the Celerina's petition for annulment of judgment for
parties to the subsequent marriage shall automatically being a wrong mode of remedy and ruled that the
terminate the terminable bigamous marriage unless there proper remedy was to file a sworn statement before
is a judgment annulling the previous marriage or declaring the civil registry, declaring her reappearance in
it void ab initio (Art. 42, FC). accordance with Article 42 of the Family Code. Was the
CA correct?
In Art 42, FC, no judicial proceeding to annul a subsequent
marriage contracted under Art. 41 is necessary. Also, the A: No. For the purpose of not only terminating the
termination of the subsequent marriage by affidavit subsequent marriage but also of nullifying the effects of
provided for in Art. 42 does not preclude the filing of an the declaration of presumptive death and the subsequent
action in court to prove the reappearance of the absentee marriage, mere filing of an affidavit of reappearance would
and obtain a declaration of dissolution or termination of not suffice. Hence, Celerina's choice to file an action for
the subsequent marriage (SSS v. Jarque Vda. De Bailon, G.R. annulment of judgment is the proper remedy as annulment
No. 165545, March 24, 2006). of judgment is the remedy when the Regional Trial Court's
judgment, order, or resolution has become final, and the
Q: Gregorio married Janet. When he was employed remedies of new trial, appeal, petition for relief (or other
overseas, he was informed that Janet left. Five years appropriate remedies) are no longer available through no
later, he filed an action for her to be declared fault of the petitioner (Celerina J. Santos v. Ricardo T.
presumptively dead without alleging that he wishes to Santos, G.R. No. 187061, October 8, 2014).
remarry. Will his action prosper?
Q: When are non-bigamous subsequent marriages
A: No. A petition to declare an absent spouse void?
presumptively dead may not be granted in the absence of
any allegation that the spouse present will remarry. Also, A: The subsequent marriage of a person whose prior
there is no showing that Gregorio conducted a search for marriage has been annulled but contracted said
his missing wife with such diligence as to give rise to a subsequent marriage without compliance with Art. 52, FC,
"well-founded belief" that she is dead. The four requisites shall be void.
not having concurred, his action for the declaration of
presumptive death of his wife should be denied (Republic Before he contracts a subsequent marriage, he must first
v. Nolasco, G.R. No. 94053, March 17, 1993). comply with the requirement provided for in Art. 52, viz:
Q: What is the effect if the parties to the subsequent The recording in the civil registries and registries of
marriage obtains knowledge that the spouse absent properties of the following: (JPDD)
has reappeared? 1. Judgment of annulment;
2. Partition;
A: None. If the absentee reappears, but no step is taken to 3. Distribution of properties, and
terminate the subsequent marriage, either by affidavit or 4. Delivery of presumptive legitimes
by court action, such absentee's mere reappearance, even if
made known to the spouses in the subsequent marriage, Q: Ana Rivera had a husband, a Filipino citizen like her,
will not terminate such marriage (SSS v. Jarque Vda. De who was among the passengers on board a commercial
Bailon, G.R. No. 165545, March 24, 2006). 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

28
2015 GOLDEN NOTES
Adolf Cruz Staedler, a divorced German national born
of a German father and a Filipino mother residing in Effect of death of a party in a petition for declaration of
Stuttgart. To avoid being required to submit the nullity of marriages
required certificate of capacity to marry from the
German Embassy in Manila, Adolf stated in the 1. Before the entry of judgment The court shall order
application for marriage license stating that Adolf was the case closed and terminated without prejudice to
a Filipino, the couple got married in a ceremony the settlement of estate in proper proceedings.
officiated by the Parish Priest of Calamba, Laguna in a 2. After the entry of judgment The decision shall be
beach in Nasugbu, Batangas, as the local parish priest binding upon the parties and their successors-in-
refused to solemnize marriage except in his church. Is interest in the settlement of the estate.
the marriage valid? (2008 Bar Question)
Petition for the declaration of nullity of marriage by
A: The issue hinges on whether or not the missing husband the heirs of a deceased person after his death
was dead or alive at the time of the second marriage.
The heirs cannot file for declaration of nullity of marriage.
If the missing husband was in fact dead at the time the The advent of the Rule on Declaration of Absolute Nullity
second marriage was celebrated, the second marriage was of Void Marriages marks the beginning of the end of the
valid. Actual death of a spouse dissolves the marriage ipso right of the heirs of the deceased spouse to bring a nullity
facto whether or not the surviving spouse had knowledge of marriage case against the surviving spouse. The heirs
of such fact. A declaration of presumptive death even if can still protect their successional right, for, compulsory or
obtained will not make the marriage voidable because intestate heirs can still question the validity of the
presumptive death will not prevail over the fact of death. marriage of the spouses, not in a proceeding for
declaration of nullity but upon the death of a spouse in a
If the missing husband was in fact alive when the second proceeding for the settlement of the estate of the deceased
marriage was celebrated, the second marriage was void ab spouse filed in the regular courts.
initio because of a prior subsisting marriage. Had Ana
obtained a declaration of presumptive death, the second However, with respect to nullity of marriage cases
marriage would have been voidable. commenced before the effectivity of A.M. No. 02-11-10 and
marriages celebrated during the effectivity of the NCC, the
In both cases, the fact that the German misrepresented his doctrine laid down in the Nial v. Bayadog case still
citizenship to avoid having to present his Certificate of applies; that the children have the personality to file the
Legal Capacity, or the holding of the ceremony outside the petition to declare the nullity of marriage of their deceased
church or beyond the territorial jurisdiction of the father to their stepmother as it affects their successional
solemnizing officer, are all irregularities which do not rights (De Dios Carlos v. Sandoval, G.R. No. 179922,
affect the validity of the marriage. December 16, 2008).
JUDICIAL DECLARATION OF NULLITY OF MARRIAGE Q: If the court denies a petition for declaration of
nullity of marriage based on psychological incapacity,
Necessity of Judicial Declaration of Nullity of Marriage may a party to the said case file another petition for
declaration of its nullity based on the absence of
The absolute nullity of a previous marriage may be marriage license?
invoked for purposes of remarriage on the basis solely of a
final judgment declaring such previous marriage void (Art. A: A petition to declare the marriage void due to absence
40, FC). of marriage license, filed after the court denied a petition
to declare the marriage void due to psychological
There has yet to be a judgment declaring it void, for it is incapacity is barred by res judicata. There is only one
solely on the basis of that final judgment that a party can cause of action which is the declaration of nullity of the
remarry (Albano, 2013). marriage. Hence, when the second case was filed based on
another ground, there was a splitting of a cause of action
NOTE: Remarriage is not the sole purpose of declaration of which is prohibited. The petitioner is estopped from
nullity of a marriage, as it can be declared void for other asserting that the first marriage had no marriage license
purposes. In Valdes vs. RTC, Branch 102, QC, G.R. No. because in the first case, he impliedly admitted the same
122749, July 31, 1996, it was said that the law aims to do when he did not question the absence of a marriage
away with any continuing uncertainty on the status of the license. Litigants are provided with the options on the
second marriage (Albano, 2013). course of action to take in order to obtain judicial relief.
Once an option has been taken and a case is filed in court,
Prescriptive Period the parties must ventilate all matters and relevant issues
therein. The losing party who files another action
The time for filing an action or defense for the declaration regarding the same controversy will be needlessly
of absolute nullity of marriage, whether in a direct or squandering time, effort and financial resources because
collateral manner, does not prescribe (Art. 39, FC). he is barred by law from litigating the same controversy all
over again (Mallion v. Alcantara, G.R. No. 141528, October
NOTE: Any of the parties in a void marriage can file an 31, 2006).
action for the declaration of nullity of marriage even
though such party is the wrongdoer.

CIVIL LAW
Q: Is the declaration of nullity of marriage applied VOIDABLE MARRIAGES
prospectively?
Voidable Marriage
A: No, it retroacts to the date of the celebration of the
marriage. Although the judicial declaration of nullity of a A voidable marriage is considered valid and produces all
marriage on the ground of psychological incapacity its civil effects until it is set aside by final judgment of a
retroacts to the date of the celebration of the marriage competent court in an action for annulment (Rabuya, 2006,
insofar as the vinculum between the parties is concerned, p. 295).
it must be noted that the marriage is not without legal
consequences or effects. One such consequence or effect is Determination of the unsoundness of mind as a ground
the incurring of criminal liability for bigamy. To hold for annulment
otherwise would be to render nugatory the State's penal
laws on bigamy as it would allow individuals to It is essential that the mental incapacity must relate
deliberately ensure that each marital contract be flawed in specifically to the contract of marriage and the test is
some manner, and to thus escape the consequences of whether the party at the time of the marriage was capable
contracting multiple marriages (Tenebro v. CA, G.R. No. of understanding the nature and consequences of the
150758, February 18, 2004). marriage (Rabuya, 2006).
Q: Is a decree of nullity of the first marriage required Fraud as a ground for annulment
before a subsequent marriage can be entered into
validly? Fraud, as distinguished from fraud as a ground for
annulment of contracts, refers to the non-disclosure or
A: concealment of some facts deemed material to the marital
GR: Under the Art. 40 of the FC, the absolute nullity of a relations (Rabuya, 2009).
previous marriage may be invoked for purposes of
remarriage on the basis solely of a final judgment Circumstances constituting fraud under Art. 45(3)
declaring such previous marriage void.
1. Non-disclosure of conviction by final judgment of
XPN: If the second marriage, however, took place prior to crime involving moral turpitude;
the effectivity of the FC, there is no need for judicial 2. Concealment by the wife of the fact that at the time of
declaration of nullity of the first marriage pursuant to the marriage, she was Pregnant by a man other than her
prevailing jurisprudence at that time (Rabuya, 2006). husband;
3. Concealment of Sexually transmitted disease,
NOTE: Art. 40 is applicable to remarriages entered into regardless of nature, existing at the time of marriage;
after the effectivity of the FC on August 3, 1988 regardless 4. Concealment of Drug addiction, habitual alcoholism,
of the date of the first marriage. Besides, under Art. 256 of homosexuality and lesbianism (Art. 46, FC).
the FC, said Article is given retroactive effect insofar as it
does not prejudice or impair vested or acquired rights in NOTE: Where there has been no misrepresentation or
accordance with the Civil Code or other laws (Atienza v. fraud, that is, when the husband at the time of the
Brillantes, A.M. No. MTJ-92-706, March 29, 1995). marriage knew that the wife was pregnant, the marriage
cannot be annulled (Buccat v. Buccat, G.R. No. 47101, April
Q: While his first marriage is subsisting, Veronico 25, 1941).
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
Veronicos argument.
A: Veronicos 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).

30
2015 GOLDEN NOTES
Voidable marriages and its ratification
GROUND RATIFICATION WHO MAY FILE WHEN TO FILE

Contracting party who failed to Within 5 years after
obtain parental consent: By the contracting party attaining the age of 21
Marriage of a party 18 years Through free cohabitation after
of age or over but below 21 attaining the age of 21.
solemnized without the
consent of the parents, NOTE: The parents cannot
guardian or person having ratify the marriage. The effect
Parent, guardian, or person At any time before such
substitute parental authority of prescription on their part is
having legal charge of the party has reached the age
over the party, in that order that they are barred from
contracting party of 21
contesting it but the marriage
is not yet cleansed of its defect.
GR: Sane spouse who had no
knowledge of the others
insanity
At any time before the
XPN:
Insane spouse: Through free death of either party
Either party was of unsound Any relative, guardian or
cohabitation after coming to
mind person having legal charge of
reason. During a lucid interval or
the insane
after regaining sanity
Insane spouse during a lucid
interval or after regaining
sanity
Injured party: Through free
Consent of either party was cohabitation with full Within 5 years after the
Injured party
obtained by fraud knowledge of the facts discovery of fraud
constituting the fraud.
Injured party: Through free Within 5 years from the
Vices of consent such as force, cohabitation after the vices time the force,
intimidation or undue have ceased or disappeared. Injured party intimidation or undue
influence influence disappeared or
ceased
May not be ratified but action
Impotence and STD may be barred by prescription Within 5 years after the
Injured party
only, which is 5 years after the celebration of marriage
marriage
Q: Aurora prayed for the annulment of her marriage annulment of marriage to the 3 cases therein may be
with Fernando on the ground of fraud in obtaining her deduced from the fact that, of all the causes of nullity
consent after having learned that several months prior enumerated in Art. 85 (now, Art. 46 of the FC), fraud is the
to their marriage, Fernando had pre-marital only one given special treatment in a subsequent article
relationship with a close relative of his. According to within the chapter on void and voidable marriages. If its
her, the "non-divulgement to her of such pre-marital intention were otherwise, Congress would have stopped at
secret" constituted fraud in obtaining her consent Art. 85, for anyway, fraud in general is already mentioned
w/in the contemplation of Art. 46 of the FC. Is the therein as a cause for annulment (Anaya v. Palaroan, GR L-
concealment by the husband of a pre-marital 27930, November 26, 1970).
relationship with another woman a ground for
annulment of marriage? Q: Under what conditions, respectively, may drug
addiction be a ground, if at all, for the declaration of
A: No. The non-disclosure to a wife by her husband of his nullity of marriage, annulment of marriage, and legal
pre-marital relationship with another woman is not a separation? (1997 Bar Question)
ground for annulment of marriage. For fraud as a vice of
consent in marriage, which may be a cause for its A:
annulment, comes under Art. 46 of the FC. This fraud, as a. The drug addiction must
vice of consent, is limited exclusively by law to those kinds amount to psychological
or species of fraud enumerated in Art. 46 in relation to Art. Declaration of incapacity to comply with
45(3). Nullity of the essential obligations of
Marriage marriage;
NOTE: The intention of Congress to confine the b. It must be antecedent
circumstances that can constitute fraud as ground for (existing at the time of

CIVIL LAW
marriage), grave and Requisites for impotence to be a ground for annulment
incurable: of marriage
a. The drug addiction must be
concealed; 1. Exists at the time of the Celebration of marriage
b. It must exist at the time of 2. Permanent (does not have to be absolute)
marriage; 3. Incurable
Annulment of c. There should be no 4. Unknown to the other spouse
Marriage cohabitation with full 5. Other spouse must not also be Impotent
knowledge of the drug
addiction; Presumption of potency of one spouse
d. The case is filed within five
(5) years from discovery. GR: Presumption is in favor of potency.
a. There should be no
condonation or consent to XPN: Doctrine of triennial cohabitation.
the drug addiction;
b. The action must be filed Doctrine Triennial cohabitation
within five (5) years from
Legal Separation If after 3 years of living together with her husband, the
the occurrence of the cause.
c. Drug addiction arises during wife remained a virgin, the husband is presumed to be
the marriage and not at the impotent (Rabuya, 2009). The husband will have to
time of marriage. overcome this presumption.
Q: The day after John and Marsha got married, John

Q: If drug addiction, habitual alcoholism, lesbianism or told her that he was impotent. Marsha continued to
homosexuality should occur only during the marriage, live with John for two years. Is Marsha now estopped
would these constitute grounds for a declaration of from filing an annulment case against John? (2007 Bar
nullity or for legal separation, or would they render Question)
the marriage voidable? (2002 Bar Question)
A: No. Unlike the other grounds for annulment of voidable
A: In accordance with law, if drug addiction, habitual marriage which are subject to ratification by continued
alcoholism, lesbianism or homosexuality should occur only cohabitation, the law does not allow ratification in case of
during the marriage, they will: impotency.
1. Not constitute grounds for declaration of nullity (Art.
36, FC). Requisites of affliction of a sexually transmitted
2. Constitute grounds for legal separation (Art. 55, FC); disease (STD) as a ground for annulment
and
3. Not constitute grounds to render the marriage 1. One of the parties is Afflicted with STD
voidable (Arts. 45 and 46 of the FC) . 2. STD must be:
a. Existing at the time the marriage is celebrated
Vitiated consent as a ground for annulment of b. Serious
marriage c. Apparently Incurable
3. The other spouse must not be Aware of the others
There is vitiation of consent when: affliction
4. Injured party must be Free from STD.
GR: Consent of either party was obtained by force,
intimidation or undue influence Q: Yvette was found to be positive for HIV virus,
considered sexually transmissible, serious and
XPN: However, if the same having disappeared or ceased, incurable. Her boyfriend Joseph was aware of her
such party thereafter freely cohabited with the other as condition and yet married her. After two (2) years of
husband and wife cohabiting with Yvette, and in his belief that she would
probably never be able to bear him a healthy child,
NOTE: A threat to enforce one's claim through competent Joseph now wants to have his marriage with Yvette
authority however, if the claim is just or legal, does not annulled on the ground that Yvette has STD. Yvette
vitiate consent. opposes the suit contending that Joseph is estopped
from seeking annulment of their marriage since he
Impotence or physical incapacity knew even before their marriage that she was afflicted
with HIV virus. Can the action of Joseph for annulment
Impotence (impotentia copulandi) refers to lack of power of his marriage with Yvette prosper?
of copulation and not to mere sterility (impotentia
genrandi) which refers to ability to procreate. The test is A: No. Concealment of a sexually transmitted disease may
not the capacity to reproduce, but the capacity to copulate annul the marriage if there was fraud existing in the party
(Paras,2008). concerned. In this case, there was no fraud because Joseph
knew that Yvette was suffering from HIV when he married
her (Art. 46, par 3, FC).

32
2015 GOLDEN NOTES
Art. 45 v. 46 of the FC on STD as ground for annulment
EFFECTS OF NULLITY
ARTICLE 45 ARTICLE 46
Affliction Concealment Effects of Judicial Declaration of Nullity of Marriage
Ground for Annulment
1. Status of the Children
The act of concealing
The fact of being afflicted because it constitutes GR: Illegitimate
fraud
Concealment XPN: Legitimate if:
Not necessarily Necessary i. If the marriage is void on the ground of
Nature of the Disease psychological incapacity of either or both parties
ii. If the marriage is void due to the non-compliance
Must be serious and Does not have to be
with the requirements set forth under Article 52
incurable serious and incurable
of the Family Code
PRESENCE OF PROSECUTOR
2. Property Relations
Role of the prosecutor or Solicitor General in cases of
GR: Either Article 147 or 148 (Co-Ownership) will
annulment and judicial declaration of Nullity
apply
The prosecutor or Solicitor General shall take steps to
XPN: If the subsequent marriage is void due to non-
prevent collusion between the parties and to take care that
compliance with Article 40, the property relations of
evidence is not fabricated or suppressed. Concomitantly,
the void subsequent marriage will either be absolute
even if there is no suppression of evidence, the public
community or conjugal partnership of gains
prosecutor has to make sure that the evidence to be
presented or laid down before the court is not fabricated.
3. Donations Propter Nuptias
Truly, only the active participation of the public prosecutor
or the Solicitor General will ensure that the interest of the
GR: Donations propter nuptias are revocable at the
State is represented and protected in proceedings for
instance of the donor
declaration of nullity of marriages by preventing the
fabrication or suppression of evidence (Art. 48, FC).
XPN:
i. If the donation propter nuptias is embodied in a
NOTE: The non-intervention of the prosecutor is not fatal
marriage settlement, the donation is void under
to the validity of the proceedings in cases where the
Article 86 par. 1
respondent in a petition for annulment vehemently
ii. If the subsequent marriage is judicially declared
opposed the same and where he does not allege that
void by reason of Article 40, the donation
evidence was suppressed or fabricated by any of the
remains valid
parties (Tuason v. CA, G.R. No. 116607, April 10, 1996).
XPN to the XPN: If the donee spouse contracted
Actions prohibited in annulment and declaration of
the marriage in bad faith, all donations are
absolute nullity of marriage cases
revoked by operation by law.
1. Compromise
iii. When both parties to a subsequent marriage
2. Confession of judgment
contracted in bad faith under Article 44, all
3. Stipulation of facts
donations propter nuptias are revoked by
4. Summary judgment
operation by law.
5. Judgment on the pleadings
4. Designation as Beneficiary in Insurance Policy
NOTE: What the law prohibits is a judgment based
exclusively or mainly on defendant's confession (Ocampo
If the subsequent marriage is judicially declared to
v. Florenciano, 107 Phil. 35). Thus, stipulation of facts or
void by reason of Article 40, the innocent spouse may
confession of judgment if sufficiently supported by other
revoke such designation if the beneficiary spouse
independent substantial evidence to support the main
acted in bad faith, even if such designation be
ground relied upon, may warrant an annulment or
stipulated as irrevocable.
declaration of absolute nullity.
5. Right to Inherit
PENDENCY OF ACTION
a. Intestate Succession: The parties cannot inherit
from each other by way of intestate succession
During the pendency of the action for annulment,
since they are no longer considered as spouses
declaration of absolute nullity of marriage or legal
b. Testate Succession:
separation, the Court shall, in the absence of adequate
written agreement between the spouses, provide for the:
GR: Any Testamentary provision by one in favour of
1. Support of the spouses
the other shall remain valid
2. Support and custody of the common children
3. Visitation rights of the other parent (Art.49, FC).

CIVIL LAW
XPN: children of the guilty spouse by previous marriage or in
1. If the subsequent marriage is rendered void by default thereof, the innocent spouse.
non-compliance with Article 40 of the Family
Code, the spouse who contracted the subsequent Final judgment of nullity or annulment
marriage in bad faith is disqualified to inherit
from the innocent spouse The final judgment of nullity or annulment shall provide
2. If the marriage is void by reason of the bad faith the following:
of both parties under Article 41 of the Family 1. Liquidation, partition and distribution of the
Code, all testamentary dispositions made by one properties of the spouses;
in favour of the other are revoked by operation of 2. Custody and support of the common children; and
law 3. Delivery of their presumptive legitimes.
NOTE: The parties are not disqualified to Unless such matters had already been adjudicated in
institute each other as voluntary heir in their previous judicial proceedings, in which case, the final
respective wills to be executed after the judicial judgment of nullity or annulment need not provide for
declaration of nullity those which have already been adjudicated.
6. Parental Authority and Custody of Children NOTE: Where there was a failure to record in the civil
registry and registry of property the judgment of
GR: Since the children are considered as illegitimate, annulment or absolute nullity of the marriage, the
the parental authority and the custody of the children partition and distribution of the property of the spouses,
will be exercised by their mother. The illegitimate and the delivery of the childrens presumptive legitimes, it
father even if he admits paternity, will only have shall not affect third persons (Arts. 52, FC).
visitation rights.
Forms of presumptive legitime
XPN: If the marriage is declared void by the reason of
psychological incapacity of either or both of the 1. Cash
parties, the parental authority and the custody will be 2. Property
exercised by the parent designated by the court. 3. Sound security
Effects of Decree of Annulment Q: What must be done by a person whose prior

marriage was annulled or declared void if he wishes to
1. Termination of the marital bond, as if it had never remarry?
been entered into, but the effects thereof are not
totally wiped out. A: He must comply with the requirement provided for in
2. Children conceived or born before the judgment of Art. 52, before he contracts a subsequent marriage, viz:
annulment has become final and executory are
considered legitimate. The recording in the civil registries and registries of
3. Absolute community property regime or the conjugal properties of the following:
partnership property regime is terminated of 1. Judgment of annulment;
dissolved and the same shall be liquidated in 2. Partition;
accordance with the provisions of Arts. 102 and 129. 3. Distribution of properties; and
4. The innocent spouse may revoke the designation of 4. Delivery of presumptive legitimes.
the other spouse who acted in bad faith as beneficiary
in the insurance policy whether or not the designation LEGAL SEPARATION
is revocable.
5. The spouse who contracted the marriage in bad faith Legal separation
shall be disqualified to inherit from the innocent
spouse by testate and intestate succession Legal separation is a legal remedy available to a parties in
6. Donation propter nuptias a valid but failed marriage for the purpose of obtaining a
decree from the court entitling him or her certain reliefs
GR: It shall remain valid such as the right to live separately from each other
(without affecting the marital bond that exists between
XPN: If the donee spouse acted in bad faith, the donor them), the dissolution and liquidation of their absolute
may revoke the donation. community or conjugal partnership property regime and
the custody of their minor children.
Q: What will happen to the liquidation of property,
after final judgment of annulment, if either spouse Nature of legal separation
contracted the marriage in bad faith?
An action for legal separation which involves nothing more
A: If either spouse contracted the marriage in bad faith, his than bed-and-board separation of the spouses is purely
or her share of the net profits of the community property personal. The Civil Code recognizes this by:
or conjugal partnership property shall be forfeited in 1. By allowing only the innocent spouse and no one else
favour of the common children or if there be none, the to claim legal separation;

34
2015 GOLDEN NOTES
2. By providing that the spouses can, by their Acts considered as acts of violence under R.A. 9262
reconciliation, stop or abate the proceedings and even
rescind a decree of legal separation already granted 1. Causing, threatening to cause, or attempting to cause
(Lapuz v. Eufemio, G.R. No. L-31429, January 31, 1972). physical harm to the woman or her child;
2. Threatening to cause the woman or her child physical
GROUNDS harm;
3. Attempting to cause the woman or her child physical
Grounds for legal separation harm;
4. Placing the woman or her child in fear of imminent
1. Repeated Physical violence or grossly abusive conduct physical harm;
against petitioner, common child, child of petitioner; 5. Attempting to compel or compelling the woman or
2. Attempt to corrupt or induce petitioner, common her child to:
child, child of petitioner to engage in prostitution, or a. Engage in conduct which the woman or her child
connivance in such corruption or inducement; has the right to desist from; or
3. Attempt by respondent against Life of petitioner; b. Desist from conduct which the woman or her
4. Final judgment sentencing respondent to child has the right to engage in,
imprisonment of more than 6 years, even if pardoned;
5. Drug Addiction or habitual alcoholism of respondent; 6. Attempting to restrict or restricting the womans or
her childs freedom of movement or conduct by:
NOTE: It must exist after celebration of marriage a. Force, or
b. Threat of force;
6. Physical violence or moral pressure to Compel c. Physical, or
petitioner to change religious or political affiliation; d. Other harm, or
7. Bigamous marriage Subsequently contracted by e. Threat of physical or other harm;
respondent in the Philippines or abroad f. Intimidation directed against the woman or child.
8. Sexual Infidelity or perversion; This shall include, but not limited to, the
9. Lesbianism or homosexuality of respondent; following acts committed with the purpose or
effect of controlling or restricting the womans or
NOTE: It must exist after celebration of marriage her childs movement or conduct:
i. Threatening to deprive or actually depriving
10. Abandonment of petitioner by respondent without the woman or her child of custody to her/his
justifiable cause for more than 1 year. family;
ii. Depriving or threatening to deprive the
Q: If a man commits several acts of sexual infidelity, woman or her children of financial support
particularly in 2002, 2003, 2004, 2005, does the legally due her or her family, or deliberately
prescriptive period to file for legal separation run providing the womans children insufficient
from 2002? (2007 Bar Question) financial support;
iii. Depriving or threatening to deprive the
A: The prescriptive period begins to run upon the woman or her child of a legal right;
commission of each act of infidelity. Every act of sexual iv. Preventing the woman in engaging in any
infidelity committed by the man is a ground for legal legitimate profession, occupation, business
separation. or activity or controlling the victims own
money or properties, or solely controlling
Q: Lucita left the conjugal dwelling and filed a petition the conjugal or common money, or
for legal separation due to the physical violence, properties;
threats, intimidation and grossly abusive conduct she
had suffered at the hands of Ron, her husband. Ron 7. Inflicting or threatening to inflict physical harm on
denied such and claimed that since it was Lucita who oneself for the purpose of controlling her actions or
had left the conjugal abode, then the decree of legal decisions;
separation should not be granted, following Art. 56 (4) 8. Causing or attempting to cause the woman or her
of the FC which provides that legal separation shall be child to engage in any sexual activity which does not
denied when both parties have given ground for legal constitute rape, by:
separation. Should legal separation be denied on the a. Force, or
basis of Rons claim of mutual guilt? b. Threat of force;
c. Physical harm, or
A: No. Art. 56 (4) of the FC does not apply since the d. Through intimidation directed against the
abandonment that is a ground for legal separation is woman or her child or her/his immediate family;
abandonment without justifiable cause for more than one
year. In this case, Lucita left Ron due to his abusive 9. Engaging in purposeful, knowing, or reckless conduct,
conduct. Such act does not constitute the abandonment personally or through another that alarms or causes
contemplated in the said provision. Therefore, there is no substantial emotional or psychological distress to the
mutual guilt between them as there is only one erring woman or her child. This shall include, but not be
spouse (Ong Eng Kiam v. CA, GR No. 153206, October 23, limited to, the following acts:
2006).

CIVIL LAW
a. Stalking or following the woman or her child in 7. Death of either party during the pendency of the case
public or private places; (Lapuz-Sy v. Eufemio, G.R. No. L-31429, January 31,
b. Peering in the window or lingering outside the 1972);
residence of the woman or her child; 8. Reconciliation of the spouses during the pendency of
c. Entering or remaining in the dwelling or on the the case (Art. 56, FC)
property of the woman or her child against
her/his will; Prescriptive period for filing a petition for legal
d. Destroying the property and personal separation
belongingness or inflicting harm to animals or
pets of the woman or her child; and An action for legal separation shall be filed within five
e. Engaging in any form of harassment or violence; years from the time of the occurrence of the cause (Art. 57,
FC). An action filed beyond that period is deemed
10. Causing mental or emotional anguish, public ridicule prescribed.
or humiliation to the woman or her child, including,
but not limited to, repeated verbal and emotional Failure to interpose prescription as a defense
abuse, and denial of financial support or custody of
minor children of access to the womans While it is true that prescription was not interposed as a
child/children. defense, nevertheless, the courts can take cognizance
thereof, because actions seeking a decree of legal
Protection Order separation, or annulment of marriage, involve public
interest and it is the policy of our law that no such decree
A protection order under R.A. 9262 is an order issued be issued if any legal obstacles thereto appear upon the
under this act for the purpose of preventing further acts of record.
violence against a woman or her child and granting other
necessary relief. The relief granted under a protection This is an exception to the Rules of Court provision that
order serves the purpose of safeguarding the victim from defenses not raised in the pleadings will not be considered
further harm, minimizing any disruption in the victims since provisions on marriage are substantive in nature
daily life, and facilitating the opportunity and ability of the (Brown v. Yambao, G.R. No. L-10699, October 18, 1957).
victim to independently regain control over her life. The
provisions of the protection order shall be enforced by law Q: Rosa and Ariel were married in the Catholic Church
enforcement agencies. The protection orders that may be of Tarlac, Tarlac on January 5, 1988. In 1990, Ariel
issued under this Act are the barangay protection order went to Saudi Arabia to work. There, after being
(BPO), temporary protection order (TPO) and permanent converted into Islam, Ariel married Mystica. Rosa
protection order (PPO). learned of the second marriage of Ariel on January 1,
1992 when Ariel returned to the Philippines with
Who may file Petition for Protection orders Mystica. Rosa filed an action for legal separation on
February 5, 1994.
The following may file for protection order:
1. The offended party; 1. Does Rosa have legal grounds to ask for legal
2. Parents or guardians of the offended party; separation?
3. Ascendants, descendants or collateral relatives within 2. Has the action prescribed? (1994 Bar Question)
the fourth civil degree of consanguinity or affinity;
4. Officers or social workers of the DSWD or social A:
workers of local government units (LGUs); 1. Yes, the abandonment of Rosa by Ariel for more than
5. Police officers, preferably those in charge of women one (1) year is a ground for legal separation unless
and childrens desks; upon returning to the Philippines, Rosa agrees to
6. Punong barangay or Barangay Kagawad; cohabit with Ariel which is allowed under the Muslim
7. Lawyer, counselor, therapist or healthcare provider of Code. In this case, there is condonation.
the petitioner;
8. At least 2 concerned responsible citizens of the city or The contracting of a subsequent bigamous marriage
municipality where the violence against women and whether in the Philippines or abroad is a ground for
their children occurred and who has personal legal separation under Art. 55 (7) of the FC. Whether
knowledge of the offense committed. the second marriage is valid or not, Ariel having
converted into Islam, is immaterial.
DEFENSES
2. No. Under Art. 57 of the FC, the aggrieved spouse
Grounds for denial of petition for legal separation must file the action within 5 years from the
occurrence of the cause. The subsequent marriage of
1. Condonation of the act complained of; Ariel could not have occurred earlier than 1990, the
2. Consent to the commission of the offense/act; time he went to Saudi Arabia. Hence, Rosa has until
3. Connivance in the commission of the act; 1995 to bring the action under the FC.
4. Collusion in the procurement of decree of LS;
5. Mutual guilt;
6. Prescription: 5 yrs from occurrence of cause;

36
2015 GOLDEN NOTES
COOLING-OFF PERIOD or agreed upon, to enable him to obtain the decree of legal
separation that he sought without regard to the legal
Mandatory cooling-off period merits of his case. One such circumstance is the fact of
William's cohabitation with Lilia, since it bars him from
The requirement set forth by law that an action for legal claiming legal separation by express provision of Art. 100
separation shall be in no case tried before 6 months has of the NCC. Such evidence of misconduct is a proper
elapsed since the filing of the petition, to enable the subject of inquiry as they may justifiably be considered
contending spouses to settle differences. In other words, it is circumstantial evidence of collusion between the spouses.
for possible reconciliation (Art. 58, FC).
Art. 101 of the NCC, calling for the intervention of the state
The 6 months cooling-off period is a mandatory attorneys in case of uncontested proceedings for legal
requirement. Petition shall not be granted if it is not separation (and of annulment of marriages, under Art. 88)
observed (Pacete v. Carriaga, G.R. No. L-53880 March 17, emphasizes that marriage is more than a mere contract;
1994). that it is a social institution in which the state is vitally
interested, so that its continuation or interruption cannot
NOTE: There is no cooling-off period if the grounds alleged be made dependent upon the parties themselves. It is
are those under R.A. 9262 (Anti-Violence against Women consonant with this policy that the inquiry by the Fiscal
and Children Act). The court can immediately hear the should be allowed to focus upon any relevant matter that
case. may indicate whether the proceedings for separation or
annulment are fully justified or not (Brown v. Yambao, G.R.
RECONCILIATION EFFORTS No. L-10699, October 18, 1957).
The Court is required to take steps toward the Filing of petition for legal separation
reconciliation of the spouses and must be fully satisfied
that, despite such efforts, reconciliation is highly Who may file Husband or wife
improbable (Art. 59, FC). Within 5 years from the time of the
When to file
occurrence of the cause
CONFESSION OF JUDGMENT Family Court of the province or city
where the petitioner or the respondent
Rule in rendering a judgment of legal separation based has been residing for at least 6 months
upon a stipulation of facts or confession of judgment Where to file prior to the date of filing or in case of a
non-resident, where he may be found in
A decree of legal separation cannot be issued solely on the the Philippines, at the election of the
basis of a stipulation of facts or a confession of judgment. petitioner
The grounds for legal separation must be proved. Neither
confession of judgment nor summary judgment is allowed. EFFECTS OF FILING PETITION
In any case, the court shall order the prosecuting attorney
or fiscal to take steps to prevent collusion between the Effects of filing of a petition for legal separation
parties and to take care that the evidence is not fabricated
or suppressed. (Art. 60, FC). 1. The spouses shall be entitled to live separately from
each other.
NOTE: What the law prohibits is a judgment based 2. In the absence of a written agreement between the
exclusively or mainly on defendant's confession (Ocampo v. parties, the court shall designate either the husband
Florenciano, G.R. No. L-13553, February 23, 1960). or the wife or a 3rd person to administer the absolute
community or conjugal partnership property.
Q: After learning of Juanitas misconduct, William filed
a petition for legal separation. During his cross- EFFECT OF DEATH DURING PENDENCY
examination by the Assistant Fiscal, it was discovered
that William lived with a woman named Lilia and had Effect of the death of a party
children with her after the liberation. The court
denied the petition on the ground that both of them Being personal in character, it follows that the death of one
had incurred in a misconduct of similar nature that party to the action causes the death of the action itself -
barred the right of action under Art. 100, NCC. actio personalis moritur cum persona (Lapuz v. Eufemio,
G.R. No. L-31429, January 31, 1972, as cited in Rabuya,
William argues that in cross-examining him with 2009).
regard to his marital relation with Lilia, who was not
his wife, the Assistant Fiscal acted as counsel for Effect of death of a party before entry of judgment
Juanita when the power of the prosecuting officer is
limited to finding out whether or not there is collusion, The court shall order the case closed and terminated
and if there is no collusion, to intervene for the state. without prejudice to the settlement of estate proper
Is his argument correct? proceedings in the regular courts (Sec. 21, A.M. 02-11-11-
SC).
A: The argument is untenable. It was legitimate for the
Fiscal to bring to light any circumstances that could give
rise to the inference that Juanita's default was calculated,

CIVIL LAW
Effect of death of a party after entry of judgment afford the child a desirable atmosphere where he can grow
and develop into an upright and moral-minded person.
If the party dies after the entry of judgment, the same shall
be binding upon the parties and their successors in Q: Which of the following remedies,
interest in the settlement of the estate in the regular courts A. Declaration of nullity of marriage,
(Sec. 21, A.M. 02-11-11-SC). B. Annulment of marriage,
C. Legal separation, and/or
Q: May the heirs of the deceased spouse continue the D. Separation of property,
suit (petition for decree of legal separation) if the
death of the spouse takes place during the pendency of Can an aggrieved spouse avail himself/herself of:
the suit?
a. If the wife discovers after the marriage that her
A: No. An action for legal separation is purely personal, husband has AIDS?
therefore, the death of one party to the action causes the b. If the wife goes abroad to work as a nurse and
death of the action itself action personalis moritur cum refuses to come home after the expiration of her
persona. three-year contract there?
c. If the husband discovers after the marriage that
NOTE: In cases where one of the spouses is dead, or where his wife has been a prostitute before they got
the deceaseds heirs continue the suit, separation of married?
property and any forfeiture of share already effected d. If the husband has a serious affair with his
subsists, unless spouses agree to revive former property secretary and refuses to stop notwithstanding
regime. advice from relatives and friends?
e. If the husband beats up his wife every time he
EFFECTS OF LEGAL SEPARATION comes home drunk? (2003 Bar Question)
Effects of decree of legal separation A:

a) A. Annulment of marriage
1. Spouses entitled to live separately but the marriage Since AIDS is a serious and incurable sexually
bond is not severed; transmissible disease, the wife may file an action for
2. ACP/CPG shall be dissolved and liquidated. The share annulment of the marriage on this ground whether
of the offending spouse in the net profits shall be such fact was concealed or not from the wife,
forfeited in favour of: provided that the disease was present at the time of
a. Common children the marriage. The marriage is voidable even though
b. In default of the common children, children of the the husband was not aware that he had the disease at
guilty spouse by a previous marriage the time of marriage.
c. In default of common children and the children of
the guilty spouse, innocent spouse b) D. Separation of property,
3. Custody of minor children is awarded to the innocent If the wife refuses to come home for three (3) months
spouse (subject to Art. 213, FC); from the expiration of her contract, she is presumed
4. Offending spouse is disqualified to inherit from to have abandoned the husband and he may file an
innocent spouse by intestate succession; action for judicial separation of property. If the refusal
5. Provisions in the will of innocent spouse which favors continues for more than one year from the expiration
offending spouse shall be revoked by operation of law; of her contract, the husband may file the action for
6. Innocent spouse may revoke donations he/she made legal separation under Art. 55(10) of the FC on the
in favor of offending spouse; ground of abandonment of petitioner by respondent
without justifiable cause for more than one year. The
NOTE: Prescriptive period: 5 years from finality of wife is deemed to have abandoned the husband when
decree of legal separation she leaves the conjugal dwelling without any intention
of returning (Art. 101, FC). The intention not to return
7. Innocent spouse may revoke designation of offending cannot be presumed during the 3-year period of her
spouse as beneficiary in any insurance policy, even contract.
when stipulated as irrevocable.
c) None.
Q: In case an action for legal separation is granted, If the husband discovers after the marriage that his
what will happen to a child below the age of seven? Is wife was a prostitute before they got married, he has
the rule absolute? no remedy. No misrepresentation or deceit as to
character, health, rank, fortune or chastity shall
A: As a rule, the custody of the child shall be awarded to constitute fraud as legal ground for an action for the
the innocent spouse, except if the child is below the age of annulment of marriage (Art. 46, FC).
seven where the law says that the child cannot be
separated from the mother, except if there is a compelling d) C. Legal separation
reason to do so. In Cervantes v. Fajardo (Jan. 27, 1989), it The wife may file an action for legal separation. The
was said that the common-law relationship of a child's husbands sexual infidelity is a ground for legal
mother with a married man is a ground to separate the separation (Art. 55, FC). She may also file an action for
child from the mother, because such a situation will not judicial separation of property for failure of her

38
2015 GOLDEN NOTES
husband to comply with his marital duty of fidelity of the properties desired to be returned to the
(Art. 135[4], Art. 101, FC). community or conjugal property and those which will
remain separate, a list of creditors and their
e) C. legal separation, and D. separation of property, addresses.
The wife may file an action for legal separation on the
ground of repeated physical violence on her person 3. As to capacity to succeed: The Family Code does not
(Art. 55[1], FC). She may also file an action for judicial provide for the revival of revoked provisions in a will
separation of property for failure of the husband to originally made in favor of the offending party as a
comply with his marital duty of mutual respect (Art. result of the LS. This absence gives the innocent
135[4], Art. 101, FC). She may also file an action for spouse the right to choose whether the offending
declaration of nullity of the marriage if the husbands spouse will be reinstituted.
behavior constitutes psychological incapacity existing
at the time of the celebration of marriage. 4. As to the forfeited shares: Those given to the children
cannot be returned since the spouses are no longer
Effect to the donations made by the spouses to each the owners of such. But those given to the innocent
other spouse may be returned.
The revocation of the donations shall be recorded in the Revival of previous property regime after
registries of property in the places where the properties reconciliation
are located. Alienations, liens and encumbrances
registered in good faith before the recording of the Reconciliation does not automatically revive the former
complaint for revocation in the registries of property shall property regime of the spouses. If the spouses want to
be respected. The revocation of or change in the revive the previous property regime, they must execute an
designation of the insurance beneficiary shall take effect agreement to revive the former property regime, which
upon written notification thereof to the insured. agreement shall be submitted in court, together with a
verified motion for its approval (Art. 67, FC).
The action to revoke the donation must be brought within
five years from the time the decree of legal separation has The agreement to revive must be under oath and specify:
become final. 1. The properties to be contributed anew to the
restored regime;
RECONCILIATION 2. Those to be retained as separated properties of
each spouse; and
Effects of reconciliation 3. The names of all their known creditors, their
addresses and the amounts owing to each
1. As to the Decree: (Pineda, 2008).
a. During the pendency of the case: LS proceedings
terminated at whatever stage Effects of reconciliation while the petition is being
b. After the issuance of the decree: Final decree of LS heard by the court
to be set aside (Art. 66, FC).
1. If the spouses should reconcile, a corresponding joint
2. As to the Property Regime: manifestation under oath duly signed by them shall be
filed with the court in the same proceeding for legal
GR: In case there had been already separation of separation.
property and forfeiture of the share of the guilty 2. The legal separation proceedings, if still pending, shall
spouse, the same shall be maintained (Pineda, 2008). thereby be terminated at whatever stage.
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

CIVIL LAW
Difference of Declaration of Nullity of Marriage, Annulment and Legal Separation
BASIS DECLARATION OF NULLITY OF MARRIAGE ANNULMENT LEGAL SEPARATION

Marriage No effect, marriage bond
Dissolved Dissolved
bond remains
GR: Illegitimate
Status of
XPN: Children conceived or born of marriages before Legitimate
children
declaration of nullity under Arts. 36 and 53 considered
legitimate
ACP/CPG shall be dissolved & liquidated.
(Art. 43 [2], FC)
GR: Governed either by Article 147 or Article 148 of the Family
Code. Thus, property regime shall be liquidated pursuant to the Share of spouse, who contracted the
ordinary rules on co-ownership. subsequent marriage in bad faith, in the net
profits of the community property or
Property
XPN: Marriages declared void under Art. 40 which shall be conjugal partnership, shall be forfeited in
relations
liquidated in accordance with Art. 43 (2) (Valdes v. RTC, G.R. No. favor of the common children, or
122749. July 31, 1996).
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 revocable at the instance of
the donor
XPN: GR: Shall remain valid (Art. 43 [3], FC).

ii. If the donation propter nuptias is embodied in a marriage
settlement, the donation is void under Article 86 par. 1 XPN:
Donationsiii. If the subsequent marriage is judicially declared void by reason 1. If donee contracted the marriage in bad
propter of Article 40, the donation remains valid faith, such donations made to said donee
nuptias shall be revoked by operation of law.
XPN to the XPN: 2. If both spouses to the marriage acted in
1. If the donee spouse contracted the marriage in bad faith, all bad faith, all donations propter nuptias
donations are revoked by operation by law. shall be revoked by operation of law.
2. When both parties to a subsequent marriage contracted in
bad faith under Article 44, all donations propter nuptias are
revoked by operation by law.
If one spouse acted in bad faith, innocent
If the subsequent marriage is judicially declared by void by
spouse may revoke his designation as
reason of Article 40, the innocent spouse may revoke such
Insurance beneficiary in the insurance policy even if
designation if the beneficiary spouse acted in bad faith, even if
such designation be stipulated as irrevocable
such designation be stipulated as irrevocable
(Art. 43 [4], FC).
Intestate Succession: The parties cannot inherit from each other
by way of intestate succession since they are no longer
considered as spouses
Testate Succession:
GR: Any Testamentary provision by one in favour of the other

shall remain valid
If one spouse contracted the marriage in bad
faith, he shall be disqualified to inherit from
Succession XPN:
innocent spouse by testate and intestate
1. If the subsequent marriage is rendered void by non-
succession (Art. 43 [5], FC).
compliance with Article 40 of the Family 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 favour of the other are revoked
by operation of law

40
2015 GOLDEN NOTES
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
RIGHTS AND OBLIGATIONS BETWEEN HUSBAND AND b. In the absence thereof from the income or fruits
WIFE of their separate properties
c. In the absence or insufficiency thereof from their
ESSENTIAL OBLIGATIONS separate properties
4. Manage the household (Art. 71, FC)
Rights and obligations of the spouses 5. Not to neglect duties, or commit acts which tend to
bring danger, dishonor, or injury to family (Art. 72, FC)
1. Essential marital obligations (LOR) (Art. 68, FC): 6. Either spouse may practice any legitimate
a. Live together which includes consortium profession/business, even without the consent of the
(cohabitation) and copulation (sexual other.
intercourse)
b. Observe mutual love, respect, fidelity NOTE: The other spouse may object on valid, serious
c. Render mutual help and support and moral grounds. In case of disagreement, the court
shall decide whether:
NOTE: It is true that the Family Code, obligates the a. Objection is proper; and
spouses to love one another but this rule sanctions b. Benefit has accrued to the family prior to the
affection and sexual intimacy, as expressions of love, objection or thereafter. If the benefit accrued
that are both spontaneous and mutual and not the prior to the objection, the resulting obligation
kind which is unilaterally exacted by force or shall be enforced against the community
coercion. Further, the delicate and reverent nature of property. If the benefit accrued thereafter, such
sexual intimacy between a husband and wife excludes obligation shall be enforced against the separate
cruelty and coercion. Sexual intimacy brings spouses property of the spouse who has not obtained
wholeness and oneness. It is a gift and a participation consent (Art. 73, FC as amended by R.A. 10572).
in the mystery of creation. It is a deep sense of
spiritual communion. It is a function which enlivens The foregoing provisions shall not prejudice the
the hope of procreation and ensures the continuation rights of creditors who acted in good faith.
of family relations. It is an expressive interest in each
other's feelings at a time it is needed by the other and Other obligations of spouses
it can go a long way in deepening marital relationship.
When it is egoistically utilized to despoil marital union 1. Exercise the duties and enjoy the rights of parents;
in order to advance a felonious urge for coitus by 2. Answer for civil liability arising from injuries caused
force, violence or intimidation, the Court will step in by children below 18;
to protect its lofty purpose, vindicate justice and 3. Exercise parental authority over childrens property
protect our laws and State policies. Besides, a (Republic v. CA, Molina, G.R. No. 108763, February 13,
husband who feels aggrieved by his indifferent or 1997).
uninterested wife's absolute refusal to engage in
sexual intimacy may legally seek the court's Essential marital obligations cannot be compelled by
intervention to declare her psychologically court
incapacitated to fulfill an essential marital obligation.
But he cannot and should not demand sexual intimacy GR: Performance of essential marital obligation under Art.
from her coercively or violently (People vs. Jumawan, 68 cannot be compelled by court because it will be a
G.R. no. 187495, April 21, 2014). Therefore: violation of personal liberty.
a. The right to sexual intercourse involves normal
intercourse. Thus the wife may refuse to have XPN: Giving support (Arroyo v. Arroyo, G.R. No. L-17014,
sexual intercourse with the husband if he resorts August 11, 1921)
to abnormal or perverse practices.
b. The wife can also refuse to have sexual Reasons when the Court may exempt one spouse from
intercourse with the husband if she is ill, if it living with the other
would endanger her health, or if he is suffering
from some venereal disease. 1. If one spouse should live abroad.
c. If the husband forces the wife to have sexual 2. Other valid and compelling reasons.
intercourse with him against her will, he may be
charged with coercion (Sempio-Diy, 1995). NOTE: The Court shall not grant the exemption if it is not
compatible with the solidarity of the family.
2. Fix the family domicile (Art. 69, FC)
NOTE: In case of disagreement the Court shall decide.
3. Jointly support the family (Art. 70, FC)

a. Expenses shall be paid from the community
property

CIVIL LAW
PROPERTY RELATIONS MARRIAGE SETTLEMENTS
GENERAL PROVISIONS Marriage Settlement (MS)
Rule on Property Relations It is a contract entered into by spouses about to be married

for the purpose of fixing the terms and conditions of their
The property relations shall be governed by the ff. in the property relations with regard to their present and future
stated order: property.
1. Property relation agreed and embodied in the
marriage settlement It is also referred to as Ante Nuptial Agreement or
2. Provisions of the FC Matrimonial Contract (Pineda, 2008 ed.).
3. Local custom (Art. 74).
Requisites of a valid MS (W-SER)
NOTE: The marriage settlements must be registered in the
proper local civil registry where the marriage contract was 1. In Writing;
recorded as well as in the proper registries of property in 2. Signed by the parties;
order that they may prejudice or bind third persons (Art. 3. Executed before the celebration of marriage;
77, FC). 4. Registration (to bind 3rd persons)
Laws that will govern the property relations of the NOTE: The provisions in the marriage settlement must be
spouses in accordance with law, morals or public policy; otherwise
such agreement is void (Paras, book I, p. 516).
GR: Philippine laws shall govern, regardless of place of
celebration of marriage and residence of spouses, in the Q: A and B are married. Prior to their marriage, they
absence of contrary stipulation in a marriage settlement entered into an ante-nuptial agreement without
(Art. 80, FC). having it notarized. Is the agreement valid?
XPN: Lex rei sitae applies: A: Yes, the law is clear that the marriage settlements and
1. Where both spouses are aliens; any modification thereof shall be in writing, signed by the
2. With respect to the extrinsic validity of contracts parties and executed before the celebration of the
affecting property not situated in the Philippines; and marriage (Art. 77, FC). The law merely requires it to be in
executed in the country where the property is located; writing; it does not require that it be in a public instrument
3. With respect to extrinsic validity of contracts entered for purposes of its validity (Albano, 2013).
into in the Philippines but affecting property situated
in a foreign country whose laws require different Additional requirements for validity of the MS
formalities for its extrinsic validity (Art. 80).
ADDITIONAL
FACTUAL SITUATION
Rule on waiver of rights over the share in the REQUIREMENT
community or conjugal property The ff. must be made a
If one of both of the
party to the MS,
GR: Cannot be waived during the marriage. parties are:
otherwise the MS is void:
Parents; or
XPN: In case of judicial separation of property. 18-21 years old those required to give
consent
NOTE: The waiver must be in a public instrument and
Sentenced with civil Guardian appointed by the
recorded in the office of the local civil registrar where the
interdiction court
marriage contract was recorded as well as in the proper
registry of property. Guardian appointed by the
Disabled
court
Q: Marriage being a contract, may the parties enter
into stipulations which will govern their marriage? Modification of the marriage settlement
A: The nature, consequences and incidents of marriage are For any modification in the MS to be valid:
governed by law and not subject to stipulation between 1. The requisites for a valid MS must be present;
the spouses. This, however, is not an absolute rule. The law 2. There must be judicial approval;
allows the spouses to fix their property relations during 3. Subject to the provisions of Arts. 66, 67, 128, 135, and
the marriage through a device known as marriage 136.
settlement subject only to the condition that whatever
settlement they may have must be within the limits Effect on the ante-nuptial agreement in case the
provided by the Family Code. marriage is not celebrated
GR: Everything stipulated in the settlements or contracts

in consideration of the marriage shall be rendered void.

42
2015 GOLDEN NOTES
XPN: Those stipulations not dependent upon, or are not 2. Donation in the MS be not more than 1/5 of the
made in consideration of, the marriage, subsist. present property
3. There must acceptance by other spouse
DONATIONS BY REASON OF MARRIAGE
Rule regarding DPN made between spouses
Donation propter nuptias or Donation by reason of
marriage GR: Future spouses cannot donate to each other more than
1/5 of their present property and any excess from which
Those donations which are made before the celebration of shall be considered void.
the marriage, in consideration of the same, and in favor of
one or both of the future spouses XPN: If they are governed by ACP, then each spouse can
donate to each other in their marriage settlements present
The formalities of the donation propter nuptias follows the property without limit, provided there is sufficient
same formalities as set forth in the law on donations property left for their support and the legitimes are not
impaired.
NOTE: Donations of future property are governed by
provisions on testamentary succession and formalities of Effect of donations of encumbered property
wills.
Such donations are valid. In case of foreclosure of the
Donation propter nuptias (DPN) v. Ordinary Donation encumbrance and the property is sold for less than the
total amount of the obligation secured, the donee shall not
BASIS DPN ORDINARY be liable for the deficiency. If the property is sold for more
DONATION than the total amount of the obligation, the donee shall be
Donations of Governed by entitled to the excess (Art. 85, FC).
future property Title III, Book III
are governed by of the NCC Donations that may be revoked by the donor
the provisions on
As to formalities testamentary A donation by reason of marriage may be revoked by the
succession and donor in the following cases:
the formalities of 1. GR: Marriage is not celebrated or is judicially declared
wills (Art. 84, par. void ab initio
2)
Present property There is no limit XPN: donations made in the marriage settlements
may be donated except that the
up to 1/5 of the donor shall leave 2. Marriage takes place without the required consent of
donors present sufficient parents or guardians
property if the property for his 3. Marriage is annulled and donee acted in bad faith
future spouses support and that 4. Upon legal separation, the donee being the guilty
As to inclusion have chosen a of all relatives spouse
of present regime other than entitled to 5. If with a resolutory condition which was complied
property absolute support from with
community of him (Art. 750, 6. Donee has committed an act of ingratitude
property NCC) and further
no legitimes of Grounds for filing an action for revocation of a DPN
compulsory heirs and their respective prescriptive periods
shall be impaired
(Art. 752, NCC) PRESCRIPTIVE PERIOD
Future property Future property GROUNDS (Art. 86) Reckoning
may be included cannot be Period
As to inclusion Point
provided the included (Art. From the time
of future
donation is mortis 751, NCC) 1. Marriage is not celebrated the marriage
property
causa (Art. 84, was not
par. 2) 5 yrs
XPN: Those automatically solemnized on
rendered void by law the fixed date
Requisites for DPN (Art. 1149)
Ground
1. Made before celebration of marriage; for
2. Made in consideration of the marriage; nullity:
3. Made in favor of one or both of the future spouses. 2. Marriage is a.
judicially Contracted Revoked by operation of
Requisites if the DPN is made by one spouse in favor of declared subsequen law
the other void t marriage
before
1. There must be a MS stipulating a property regime prior
other than AC marriage

CIVIL LAW
has been PROPERTY REGIME OF THE SPOUSES
judicially
declared Different property regimes which may be adopted by
void future spouses
Finality of
judicial 1. Absolute Community of Property (ACP)
declaration of 2. Conjugal Partnership of Gains (CPG)
b. Any other 3. Absolute Separation of Property (ASOP)
5 yrs nullity (if
grounds 4. Any other regime within limits provided by the FC
action is to
recover
property) Q: Does the prohibition against donation between the
Time the spouses include the act of making the other spouse a
donor came to beneficiary in an insurance contract?
3. Marriage took place without
know that the
consent of parents or A: No. In Gercio v. Sun Life Assurance Co., of Canada (48
5 yrs required
guardian, when required by Phil. 53), it was held that the rule against donation to one
parental
law another between the spouses does not include a spouse
consent was
not obtained. being a beneficiary of an insurance contract over the life of
4. Marriage is annulled and Finality of the other.
5 yrs
donee acted in bad faith decree
5. Upon legal separation (LS), Time decree of ACP v. CPG v. ASOP.
donee being the guilty 5 yrs LS has become
spouse final ACP CPG ASOP
6. Donation subject to Happening of When it applies
resolutory condition which 5 yrs the resolutory When spouses: 1. When the 1. When future
was complied with condition. 1. Adopt it in a future spouses spouses adopt
From donors marriage adopt it in a it in a marriage
knowledge of settlement; marriage settlement
7. Donee committed an act of the 2. Do not settlement. 2. ACP or CPG is
1 yr
ingratitude commission of choose any 2. If the marriage dissolved
an act of economic is celebrated 3. Prior marriage
ingratitude. system; or under the New is dissolved
3. Adopted a Civil Code and due to death of
NOTE: Acts of ingratitude: different they have not one spouse and
1. Commission of an offense against the person, honor or property adopt any surviving
property of the donor, his wife or his children under regime and economic spouse failed
his parental authority the same is system to comply with
2. GR: Imputation to the donor any criminal offense or void. the
any act involving moral turpitude requirements
under Art. 103
XPN: if the crime was committed against the donee (judicial
himself, his wife or his children under his authority settlement
proceeding of
3. Undue refusal to support the donor when he is legally the estate of
or morally bound to give such support. deceased
spouse)
DONATIONS DURING THE MARRIAGE 4. By judicial
order. Judicial
Rule regarding donations between spouses during the separation of
marriage property may
either be
GR: Every donation or grant of gratuitous advantage, voluntary or
direct or indirect, between spouses is considered void. for sufficient
cause.
XPN: Moderate gifts on the occasion of any family Composition
rejoicing. All the properties Each spouse
owned by the retains his/her
NOTE: The aforementioned rules also apply to common spouses at the property before
law spouses (Matabuena v. Cervantes, 38 SCRA 284). time of marriage the marriage and
become only the fruits and
community income of such
property properties
become part of
the conjugal

44
2015 GOLDEN NOTES
properties during 2. Subsequent marriage contracted within one year from
the marriage the death of the deceased spouse without liquidation
Effect of Separation In Fact of the community property or conjugal partnership of
gains, either judicially or extrajudicially, as required
The separation in fact shall not affect
under Arts. 103 and 130 of the FC. In such case, a
the regime of ACP, but:
mandatory regime of complete separation of property
1. The spouse who leaves the
shall govern the subsequent marriage (Rabuya, 2009).
conjugal home or refuses to live
therein, without just cause,
Grounds for revival of former property regime
shall not have the right to be
supported;
1. Civil interdiction of the prisoner-spouse terminates;
2. When consent of one spouse to
2. Absentee spouse reappears;
any transaction of the other is
3. Court authorizes resumption of administration by the
required by law, judicial
spouse formerly exercising such power;
authorization shall be obtained
4. Spouse who has abandoned the conjugal home
in a summary proceeding.
returns and resumes common life with the other;
3. In case of insufficiency of
5. Parental authority is judicially restored to the spouse
community or conjugal
previously deprived thereof;
partnership property, separate
6. Reconciliation and resumption of commonlife of
property of both spouses shall
spouse who had been separated in fact for at least 1
be solidarily liable for the
year;
support of the family. Spouse
7. Spouses agree to revive their former property regime
present shall, upon proper
petition in a summary
Grounds for transfer of administration of the exclusive
proceeding, be given judicial
property of each spouse
authority to administer or
encumber any specific separate
When one spouses:
property of the other spouse
1. Is sentenced to penalty with civil interdiction;
and use the fruits or proceeds
2. Becomes fugitive from justice or is hiding as an
thereof to satisfy the latters
accused in a criminal case;
share (Arts. 100 & 127, FC).
3. Is judicially declared absent
Effect of Dissolution 4. Becomes guardian of another
Upon dissolution
Upon of the NOTE: Transfer of administration of the exclusive
dissolution and partnership, the property of either spouses does not confer ownership over
liquidation of separate the same (Rodriguez v.De la Cruz, G.R. No. 3629, September
the community properties of the 28, 1907).
property, what spouses are
is divided returned and ABSOLUTE COMMUNITY
equally between only the net
the spouses or profits of the GENERAL PROVISIONS
their heirs is the partnership are
net remainder of divided equally Absolute community property
the properties of between the
the ACP. spouses of their A property regime wherein the spouses are considered co-
heirs. owners of all property brought into the marriage, as well
as those acquired during the marriage, which are not
Commencement of property regime otherwise excluded from the community either by the
provisions of the Family Code or by the marriage
Property regime commences at the precise moment of the settlement (Rabuya, 2009).
celebration of the marriage.
Commencement of ACP
Property regime governing the property relations of
spouses in the absence of marriage settlement Absolute community of property commences at the precise
moment of the celebration of the marriage. i.e. actual time
GR: Absolute Community Property the marriage is celebrated on a certain date.
XPNs: NOTE: Any stipulation, express or implied, for the

1. For marriages contracted prior to the effectivity of the commencement of the community regime at any other
Family Code on August 3, 1988, conjugal partnership time shall be void (Art. 88, FC).
of gains shall govern the property relations. This is so
because Art. 119 of the NCC will apply. The provisions Law that governs the absolute community of property
of the FC shall have no retroactive effect because it
shall impair vested rights. 1. Family Code
2. Civil Code provisions on co-ownership

CIVIL LAW
A: The register of deeds is incorrect. A wife, by affixing her
Properties included in the absolute community signature to a deed of sale on the space provided for
witnesses, is deemed to have given her implied consent to
1. All the property owned by the spouses: the contract of sale. The consent need not always be
a. At the time of the celebration of the marriage; or explicit or set forth in any particular document so long as it
b. Acquired thereafter; is shown by acts of the wife that such consent or approval
2. Property acquired during the marriage by gratuitous was in fact given (Pelayo v. Perez, G.R. No. 141323, June 8,
title, if expressly made to form part of the community 2005).
property by the donor, testator or grantor;
3. Jewelry or properties with monetary value; NOTE: In this case, it will be noted that the sale was
4. Winnings in gambling. entered into prior to the effectivity of the FC. Because of
such, Art. 173, in relation to Art. 166 of the NCC would
Properties excluded in the Absolute Community have applied if there was a finding of lack of the wife's
consent. Under said provisions, the sale would have been
1. Property acquired during the marriage by gratuitous merely voidable, and not void.
title and its fruits as well as income thereof unless the
grantor expressly provide they shall form part of the Q: Andres sold a parcel of land belonging to the
community property conjugal partnership to Pepito. Days before the sale,
2. Property for personal and exclusive use of either Kumander, his wife, assented to such by signing a
spouse but jewelries shall form part of the ACP document entitled "Marital Consent" contained in a
because of their monetary value. jurat, which was then sworn to before the same notary
3. Property acquired before the marriage by one with public who notarized the deed of sale, and then
legitimate descendants by former marriage and its appended to the deed of sale itself. Is the conveyance
fruits and income, if any; valid?
4. Those excluded by the marriage settlement (Art. 92,
FC). A: It depends. The use of the jurat, instead of an
acknowledgment, does not elevate the marital consent into
Presumption of inclusion in the absolute community the level of a public document but instead consigns it to
the status of a private writing. Hence, the presumption of
In absence of evidence, property acquired during the regularity does not apply and the wife still needs to prove
marriage is presumed to belong to the community, unless its genuineness and authenticity as required under the
proven otherwise by strong and convincing evidence (Art. rules of evidence (Pan Pacific Industrial Sales Co., Inc. v. CA,
93, FC). G.R. No. 125283, February 10, 2006).
Q: Mister, without Missus consent, executed a special NOTE: The fact that the document contains a jurat, and not
power of attorney in favor of Drepa in order to secure an acknowledgment, should not affect its genuineness or
a loan to be secured by a conjugal property, which loan that of the related document of conveyance itself, the Deed
was later obtained. When the loan was not paid, the of Absolute Sale. In this instance, a jurat suffices as the
mortgage was foreclosed and sold on auction. Missus document only embodies the manifestation of the spouse's
seeks the declaration of the mortgage and sale as void consent, a mere appendage to the main document (Pan
invoking Art. 124 of the FC. Will the wifes action Pacific Industrial Sales Co., Inc. v. CA, G.R. No. 125283,
prosper? February 10, 2006).
A: Yes. The settled rule is that the sale or encumbrance of CHARGES UPON AND OBLIGATIONS OF THE
a conjugal property requires the consent of both the COMMUNITY PROPERTY
husband and the wife (Guiang v. CA, 353 Phil. 578). The
absence of the consent of one renders the entire sale or Charges upon the ACP
encumbrance null and void, including the portion of the
conjugal property pertaining to the husband who 1. The support of
contracted the sale. Neither would the conjugal a. The spouses
partnership be liable for the loan on the ground that it b. Their common children
redounded to the benefit of the family. The sweeping c. Legitimate children of either spouse;
conclusion that the loan was obtained by the husband in
order to finance the construction of housing units, without NOTE: Support of illegitimate children of either
however adducing adequate proof, does not persuade spouse is chargeable to exclusive property of the
(Homeowners Savings & Loan Bank v. Dailo, G.R. No. illegitimate parent (Art. 197).
153802, March 11, 2005).
2. All debts and obligations contracted during the
Q: In a sale of a piece of land that she and her husband, marriage by:
David, owned, Lorenza, who witnessed the sale, signed a. the designated administrator-spouse for the
on the page reserved for witnesses to the deed. When benefit of the community
the buyer sought to register the sale, it was denied by b. by both spouses
the Register of Deeds for lack of the wife's consent to c. by one spouse with the consent of the other;
the sale. Decide.

46
2015 GOLDEN NOTES
3. Debts and obligations contracted by either spouse Insufficiency of the community property to cover
without the consent of the other to the extent that the liabilities
family may have been benefited;
4. All taxes, liens, charges and expenses, including major GR: The spouses shall be solidarily liable for the unpaid
or minor repairs, upon the community property; balance with their separate properties.
5. All taxes and expenses for mere preservation made
during marriage upon the separate property of either XPN: Those falling under paragraph 9 of Art. 94. (Ante-
spouse used by the family; nuptial debts, support of illegitimate children, liabilities
6. Expenses to enable either spouse to commence or incurred by spouse by reason of a crime or quasi-delict)
complete a professional or vocational course, or other in which case the exclusive property of the spouse who
activity for self-improvement; incurred such debts will be liable. However, if the exclusive
7. Ante-nuptial debts of either spouse insofar as they property is insufficient, payment will be considered as
have redounded to the benefit of the family; advances to be deducted from share of debtor-spouse (Art.
94 [9], FC).
NOTE: For ante-nuptial debts, those contracted by
one spouse without the consent of the other during OWNERSHIP, ADMINISTRATION, ENJOYMENT AND
the marriage and those contracted by the DISPOSITION OF THE COMMUNITY PROPERTY
administrator-spouse, the burden of proof that such
debts were contracted for the benefit of the Administration of Community Property
community or of the family lies with the creditor-
party litigant claiming as much (Rabuya, 2007, citing GR: The administration of community property belongs to
Homeowner's Savings & Loan Bank v. Dailo, 453 SCRA both spouses jointly.
283 [2005]).
XPN:
8. The value of what is donated or promised by both 1. Agreement that only one of the spouses shall
spouses in favor of their common legitimate children administer the community property
for the exclusive purpose of commencing or 2. If one spouse is incapacitated or otherwise unable to
completing a professional or vocational course or other participate in the administration of the common
activity for self-improvement; properties capacitated or able spouse may assume
9. Payment, in case of absence or insufficiency of the sole powers of administration without the need of
exclusive property of the debtor-spouse, of: court approval or authorization
a. Ante-nuptial debts of either spouse which did not 3. If a spouse without just cause abandons the other or
redound to the benefit of the family; fails to comply with his or her obligations to the
b. the support of illegitimate children of either family, the aggrieved spouse may petition the court
spouse; for sole administration
c. liabilities incurred by either spouse by reason of a 4. During the pendency of the legal separation case, the
crime or quasi-delict; court may designate either of the spouses as sole
administrator
NOTE: The payment of which shall be considered as
advances to be deducted from the share of the debtor- NOTE: But such powers do not include:
spouse upon liquidation of the community 1. Disposition;
2. Alienation; or
10. Expenses of litigation between the spouses. However, if 3. Encumbrance of the conjugal or community property.
suit is found to be groundless, it cannot be charged
against the ACP Art. 94, FC). Q: When is "court authorization" in the sale of conjugal
properties resorted to?
Q: An individual, while single, purchases a house and
lot in 1990 and borrows money in 1992 to repair it. In A: Court authorization is resorted to in cases where the
1995, such individual is married while the debt is still spouse who does not give consent is incapacitated. If there
being paid. After the marriage, is the debt still the is no showing that the spouse is incapacitated, court
responsibility of such individual? (2007 Bar Question) authorization cannot be sought (Manalo v. Fernandez, G.R.
No. 147928, January 23, 2002).
A: No. Ante-nuptial debts of either spouse shall be
considered as the liability of the absolute community of Disagreement in the administration of community
property insofar as they have redounded to the benefit of property
the family.
In case of disagreement, the decision of the husband shall
NOTE: There is no presumption that the obligations prevail but subject to recourse to the court by the wife for
incurred by one of the spouses during the marriage are proper remedy.
charged against their community of property. Before any
obligation may be chargeable against the community of NOTE: Prescriptive period for recourse is within 5 years
property, it must first be established that such obligation is from the date of the contract implementing such decision.
among the charges against the same (Wong, et al, v. IAC,
G.R. No. 70082, August 19, 1991).

CIVIL LAW
Sale or Disposition of Community Property 2. When consent of one spouse to any transaction of the
other is required by law, judicial authorization must
Alienation or encumbrance of community property must be obtained
have the written consent of the other spouse or the 3. If community property is insufficient, the separate
authority of the court without which the disposition or property of both spouses shall be solidarily liable for
encumbrance is void. However, the transaction shall be the support of the family
construed as a continuing offer on the part of the
consenting spouse and the third person, and may be Abandonment
perfected as a binding contract upon the acceptance by the
other spouse or authorization by the court before the offer If a spouse without just cause abandons the other or fails
is withdrawn by either or both offerors (Arts. 96 and 124, to comply with his or her obligations to the family, the
FC; Sps. Antonio and Luzviminda Guiang v. CA, et al., G.R. No. aggrieved spouse may petition the court for:
125172, June 26, 1998). 1. Receivership;
2. Judicial separation of property;
The absence of consent of one the spouse renders the 3. Authority to be the sole administrator of the absolute
entire sale null and void, including the sale of the portion community (Art. 101, FC)
of the conjugal property pertaining to the spouse who
contracted the sale. Presumption of Abandonment
NOTE: The consent of one spouse regarding the A spouse is deemed to have abandoned the other when he
disposition does not always have to be explicit or set forth or she has left the conjugal dwelling without intention of
in any particular document, so long as it is shown by acts returning. The spouse who has left the conjugal dwelling
of the said spouse that such consent or approval was for a period of three months or has failed within the same
indeed given (Sps. Cirelos v. Sps. Hernandez, et al. G.R. No. period to give any information as to his or her
146523, June 15, 2006). However, even if the other spouse whereabouts shall be prima facie presumed to have no
actively participated in negotiating for the sale of the intention of returning to the conjugal dwelling (Pineda,
property, that other spouse's written consent to the sale is 2008).
required by law for its validity. Being aware of a
transaction is not consent (Jader-Manalo v. Camaisa, 45 NOTE: The presumption is rebuttable by the presentation
Phil. 346, 2002) of clear, strong and convincing evidence that the absent
spouse did not intend to leave the present spouse and
Q: Does the prohibition cited above include lease by family (Pineda, 2008).
the husband over properties of the community of
property without the consent of the wife? Prohibition against the sale of property between
spouses
A: Yes. In Roxas v. CA (G.R. No. 92245, June 26, 1991), in the
contract of lease, the lessor transferred his right of use in GR: Spouses cannot sell property to each other.
favor of the lessee. The lessor's right of use is impaired
therein. He may even be ejected by the lessee if the lessor XPNs:
uses the leased realty. Therefore, the lease is a burden on 1. When a separation of property was agreed upon in
the land. It is an encumbrance on the land. Moreover, lease the marriage settlement;
is not only an encumbrance but also a qualified alienation, 2. When there has been a judicial separation of property
with the lessee becoming, for all intents and purposes, and under Articles 135 and 136 of FC (Art. 1490, NCC).
subject to its terms, the owner of the thing affected by the
lease. NOTE: The proscription against the sale of property
between spouses under Art. 1490 applies even to common
Donation of a community property by a spouse law relationships. In an earlier ruling, the SC nullified a
sale made by a husband in favor of a concubine, after he
GR: A spouse cannot donate any community property had abandoned his family and left the conjugal home
without the consent of the other. where his wife and children lived, and from whence they
derived their support, for being contrary to morals and
XPN: Moderate donations for charity or on occasion of public policy. The sale was regarded by the court as
family rejoicing or distress (Art. 98, FC). subversive of the stability of the family, a basic social
institution which public policy cherishes and protects
Separation in fact between husband and wife (Ching v. CA, GR No. 165879, November 10, 2006).
GR: Such separation does not affect the regime of absolute DISSOLUTION OF COMMUNITY REGIME
community
Dissolution of Absolute Community Property
XPNs:
1. Spouse who leaves the conjugal home or refuses to Absolute Community Property is terminated by:
live therein without just cause has no right to be
supported 1. Death of either spouse;

48
2015 GOLDEN NOTES
NOTE: If the surviving spouse contracts another Consequences of failure to liquidate within 1 year
marriage without compliance with the foregoing
requirement, a mandatory regime of complete 1. Failure to liquidate the community property within 1
separation shall govern the property relations of the year from the death of the deceased spouse contrary
subsequent marriage. to Art. 103, FC, would render any disposition or
encumbrance involving community property of the
Upon lapse of the one-year period and liquidation is terminated marriage void.
made, any disposition or encumbrance involving the 2. If the surviving spouse contracts a subsequent
community property of the terminated marriage shall marriage without compliance with the foregoing
be void (Art. 103). requirements, the subsequent marriage shall be
governed, mandatorily, by a regime of complete
The reason for the law is that, the law seeks to protect separation of property (Rabuya, 2006).
the children's interest in the first marriage (Albano,
2012). CONJUGAL PARTNERSHIP OF GAINS
2. Legal separation; GENERAL PROVISIONS

3. Annulment;
4. When the marriage is declared void under Art.40, FC Conjugal Partnership of Gains
5. Judicial separation of property during marriage (Art.
99, FC) It is the property relation formed by the husband and the
wife by placing in a common fund:
NOTE: The absolute community of property or the 1. The proceeds, product, fruits and income of their
conjugal partnership is considered dissolved only upon the separate properties;
issuance of the judicial decree of separation, not at the 2. Those acquired by either or both of them through:
moment when the parties enter into a compromise a. Effort
agreement in the course of the proceedings for separation b. Chance
of property (Albano, 2013).
Commencement of CPG
LIQUIDATION OF THE ABSOLUTE COMMUNITY
ASSETS AND LIABILITIES CPG shall commence at the precise moment when the
marriage ceremony is celebrated.
Procedure in case of dissolution of ACP
Law that governs the conjugal partnership
1. Inventory of all properties of the ACP, listing
separately the communal properties from exclusive The rules on the contract of partnership in all that is not in
properties of each spouse; conflict with what is expressly determined in the FC and by
2. Payment of community debts; the spouses in their marriage settlements (Art. 108, FC).
NOTE: First, pay out of the community assets. If not EXCLUSIVE PROPERTY OF EACH SPOUSE
enough, husband and the wife are solidarily liable for
Exclusive properties of the spouses
the unpaid balance with their separate properties.
1. Those brought into the marriage as his/her own;
3. Delivery to each spouse of his/her remaining
exclusive properties;
NOTE:
4. Equal division of net community assets
(a) A property purchased before the marriage and
Unless there is:
fully paid during the marriage remains to be a
a. An agreement for a different proportion; or
separate property of either spouse (Lorenzo v.
b. A voluntary waiver of such share;
Nicolas, L-4085, July 30, 1952).
5. Delivery of the presumptive legitimes of the common
children; (b) Fruits and income of said properties shall be
included the conjugal partnership
6. Adjudication of conjugal dwelling and custody of
(c) Those included therein in the marriage
common children (Art. 102, FC).
settlement, subject to the 1/5 limitation under
Article 84 and the rule in Article 92(3) of the
Applicable procedure in the dissolution of the ACP in
Family Code which apply by analogy
case the marriage is terminated by death
2. Those acquired during the marriage by gratuitous
Community property shall be liquidated in the same
title;
proceeding for the settlement of the estate of the deceased.
NOTE:
If no judicial proceeding is instituted, the surviving spouse
(a) Pensions will not form part of the conjugal
shall, judicially or extra-judicially, liquidate the community
partnership of gains when it is given to him
property within 1 year from the death of the deceased
spouse (Art. 103, FC). 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

CIVIL LAW
the beneficiary of the life insurance is the estate when her father died. What will apply her instead is the
and the premiums are sourced from the separate ordinary rule of accession. However, the conjugal
property of the spouse partnership of gains will still enjoy the said property as a
(c) Retirement Benefits will not form part of the usufructuary and W will be the naked owner thereof.
conjugal partnership of gains when it is given to
him voluntarily and he is not entitled as a matter Presumption of inclusion of property in the Conjugal
of right such as a fruit of industry or labor Partnership of Gains
3. Those acquired by right of redemption, barter or GR: All property acquired during the marriage, whether
exchange with exclusive property; the acquisition appears to have been made, contracted or
registered in the name of one or both spouses, is presumed
NOTE: In right of redemption, for it to form part of the to be conjugal.
exclusive property of the spouse, the ownership over
such property must still pertain to the said spouse. XPN: Unless the contrary is proved.
4. That purchased with exclusive money of either Obligations Chargeable to Separate Property
spouse.
1. Support of illegitimate children
NOTE: The controlling factor is the source of the 2. Liabilities incurred by reason of a crime or quasi-
money used, or the money promised to be paid delict
(Rivera v. Bartolome, C.A., 40 O.G. 2090). 3. Expenses of litigation between the spouses if found to
be groundless
Alienation of exclusive properties of either spouse 4. Debts contracted during the marriage by the
administrator-spouse which does not benefit the
Either spouse may mortgage, encumber, alienate or community
otherwise dispose of his or her exclusive property (Art. 5. Debts contracted during the marriage without the
111 as amended by R.A. 10572). consent of the other which did not benefit the family
6. Ante-nuptial debts by either spouse which did not
Rules in cases of improvement of exclusive property benefit the family
7. Taxes incurred on the separate property which is not
1. Reverse accession If the cost of the improvement and used by the family
the value of the improvement is more than the value 8. Expenses incurred during the marriage on a separate
of the principal property at the time of the property if the property is not used by the family and
improvement, the entire property becomes conjugal. not for its preservation
NOTE: For reverse accession to apply, the separate CONJUGAL PARTNERSHIP PROPERTY
property must be owned by a spouse exclusively at
the time of the introduction of the improvement Composition of CPG
neither it will apply if the property is partly owned by
a spouse and partly owned by a third person. 1. Those acquired by onerous title during the marriage
with conjugal funds;
2. Accession If the cost of the improvement and the
value of the improvement is equal to or less than the NOTE: Requisites:
value of the principal property, the entire property (a) Acquisition is made during the marriage
becomes the exclusive property of the respective (b) Thru onerous title
spouse. (c) At the expense of common fund
NOTE: In either case, there shall be reimbursement 2. Those obtained from labor, industry, work or
upon the liquidation of the conjugal partnership and profession of either or both spouses;
ownership of entire property shall be vested only 3. Fruits of conjugal property due or received during the
upon reimbursement. marriage and net fruits of separate property;
Q: A parcel of land is owned by the father of W. With NOTE: Net fruits refer to the remainder of the fruits
his permission, H and W constructed their house over after deducting the amount necessary to cover the
the said parcel of land. After some time, the father of W expenses of administration of said exclusive property.
died leaving W as his sole heir. Who now owns the
parcel of land and the improvements introduced by 4. Share of either spouse in hidden treasure;
the H and W? Assume that the property regime of the H 5. Those acquired through occupation such as hunting
and W is conjugal partnership of gains. or fishing;
6. Livestock in excess of what was brought to the
A: The wife will now own both the parcel of land the house marriage;
introduced by the H and W. Reverse Accession under 7. Those acquired by chance such as winnings in
Article 120 of the Family Code will not apply since at the gamblings and bettings (Art. 117, FC).
time of the introduction of the improvement the parcel of
land is owned by the father of W which she inherited it

50
2015 GOLDEN NOTES
Property bought through installment no showing as to when the properties alleged to be
conjugal were acquired, the presumption does not apply
Requisites: (Francisco v. CA, G.R. No. 102330, November 30, 1998).
1. Property is bought on installment prior to the Proof of acquisition during the coverture is a condition
marriage sine qua non to the operation of the presumption in favor
2. Paid partly from exclusive funds and partly from of the conjugal partnership (Pintiano-Anno, v. Anno, et al.,
conjugal funds G.R. No. 163743, January 27, 2006).
Rules in determining ownership: Effect if properties were registered during the

1. If full ownership was vested before the marriage it marriage
shall belong to the buyer spouse.
2. If full ownership was vested during the marriage it A: The fact that the properties were registered in the name
shall belong to the conjugal partnership. of the spouses is no proof that the properties were
acquired during the marriage. It is well-settled that the
NOTE: In either case, any amount advanced by the registration does not confer title but merely confirms one
partnership or by either or both spouses shall be already existing (Jocson v. CA, 204 SCRA 297).
reimbursed by the owner/s upon liquidation of the
partnership. Q: H & W got married on October 1926. H subsequently
cohabited with X. During the cohabitation of H with X,
Q: Yamane asserts that the parcel of land, which was H acquired certain properties and places his status as
purchased at auction, belonged to the conjugal single. What is the nature of said properties?
partnership of him and his late wife. In the title, his
name appeared to be merely descriptive of the civil A: They are conjugal properties. Whether a property is
status of the registered owner, his late wife. The conjugal or not is determined by law and not by the will of
purchase took place prior to the advent of the Family one of the spouses. No unilateral declaration by one
Code. Is the property conjugal or paraphernal spouse can change the character of conjugal property. The
property of his late wife? clear intent of H in placing his status as single is to exclude
W from her lawful share in the conjugal property. The law
A: Conjugal. In this case, the provisions of the NCC would does not allow this. The cohabitation of a spouse with
apply since the purchase took place before the FC took another person, even for a long period, does not sever the
effect. Under Art. 160 of the NCC, all property of the tie of a subsisting previous marriage. H and Xs
marriage is presumed to belong to the conjugal cohabitation cannot work to the detriment of W as the
partnership, unless it be proved that it pertains exclusively legal spouse. The marriage of H and W continued to exist
to the husband or the wife. In this case, there was no proof regardless of the fact that H was already living with X.
that the property had been acquired exclusively by Hence, all property acquired from the date of their
Yamane's late wife. The mere registration of a property in marriage until the death of W are presumed conjugal. It
the name of one spouse does not destroy its conjugal was neither claimed nor proved that any of the subject
nature in the absence of strong, clear and convincing properties was acquired outside or beyond this period
evidence that it was acquired using the exclusive funds of (Villanueva v. CA, G.R. No. 143286, April 14, 2004).
said spouse (Spouses Go v. Yamane, G.R. No. 160762, May 3,
2006). Q: Suppose a property was acquired by one spouse
while they were living separately, is this property
Q: Dolores seeks to recover a parcel of land, alleging conjugal or not?
that she and her husband acquired such during their
marriage, that it formed part of their conjugal A: It is presumed to be conjugal. All property acquired
properties and that he sold it without her consent. She during the marriage regardless of whether the spouses are
presents as evidence their marriage contract and the living together or not, are presumed to be conjugal
initial tax declaration over the property. property (Flores v. Escudero, 92 Phil. 786).
A: Recovery is not warranted. The rule is all property of CHARGES UPON AND OBLIGATIONS OF THE CPG
the marriage is presumed to be conjugal in nature.
However, for this presumption to apply, the party who Charges upon the CPG
invokes it must first prove that it was acquired during the
marriage. Here, Dolores' evidence consisted of her 1. Support of the spouses, their common children and
marriage contract and the initial tax declaration over the the legitimate children of either spouse;
property. She did not identify when she and her husband 2. Debts and obligations contracted by one without the
first occupied and possessed the land. Neither did she consent of the other to the extent that the family
present any witness to prove that they first occupied the benefited;
property during their marriage and that they both, worked 3. Debts and obligations contracted during the marriage
on the land (Pintiano-Anno v. Anno, G.R. No. 163743, by an administrator-spouse, both spouses or one with
January 27, 2006). the consent of the other;
4. Taxes, liens, charges, expenses, including major or
NOTE: The presumption of conjugality of the properties of minor repairs upon conjugal property;
the husband and wife applies only when there is proof that 5. Taxes and expenses for mere preservation made
the property was acquired during the marriage. If there is during the marriage of separate property;

CIVIL LAW
6. Expenses for professional, vocational or self- XPN:
improvement courses of either spouse; 1. If one spouse is incapacitated or otherwise unable to
7. Ante-nuptial debts to the extent the family has been participate in the administration of the common
benefited; properties capacitated or able spouse may assume
8. Value of what is donated or promised to common sole powers of administration.
legitimate children for professional, vocation or self- 2. If a spouse without just cause abandons the other or
improvement courses; fails to comply with his or her obligations to the
9. Expenses of litigation between the spouses unless the family, the aggrieved spouse may petition the court
suit is found to be groundless (Art. 121, FC). for sole administration
3. During the pendency of a legal separation case, the
NOTE: If the conjugal partnership is insufficient to cover court may designate either of the spouse as sole
the foregoing liabilities, spouses shall be solidarily liable administrator.
for the unpaid balance with their separate properties.
But such powers do not include: (DAE)
Charges against the Separate Property that may be 1. Disposition;
charged upon the CPG 2. Alienation; or
3. Encumbrance of the conjugal or community property.
Requisites:
1. All the responsibilities of the partnership have already Disagreement in the administration of the CPG
been covered
2. The spouse who is bound has no exclusive properties In case of disagreement, the decision of the husband shall
or the same are insufficient prevail subject to recourse to the court by the wife for
proper remedy.
Charges:
1. Personal debts of either spouse contracted before the NOTE: Prescriptive period for recourse is 5 years from the
marriage which did not redound to the benefit of the date of the contract implementing such decision.
family
2. Support of the illegitimate children of either spouse DISSOLUTION OF CPG REGIME
3. Fines and indemnities arising from delicts and quasi-
delicts. Dissolution of CPG
Q: Levy was made on the conjugal partnership of Conjugal partnership is terminated by:
husband and wife on the basis of liability of the 1. Death of either spouse;
husband as guarantor. Is the levy proper? 2. Legal separation;
3. Annulment or Declaration of Nullity;
A: No. The payment of personal debts contracted by the 4. Judicial separation of property during marriage (Art.
husband or the wife before or during the marriage shall 126, FC).
not be charged to the conjugal partnership except as they
redounded to the benefit of the family (Art. 122, FC). LIQUIDATION OF THE CONJUGAL PARTNERSHIP
ASSETS AND LIABILITIES
Q: If one of the spouses committed the crime of slander
Steps in the liquidation of the CPG
and was held liable for damages in a damage suit, is it
chargeable against the conjugal partnership?
1. Inventory of all the properties;
2. Restitution of advances made to each of the spouses;
A: No. Unlike in the system of absolute community where
3. Reimbursement for use of exclusive funds;
liabilities incurred by either spouse by reason of a crime or
4. Debts and obligations of the CP are paid;
quasi-delict is chargeable to the absolute community of
5. Delivery of exclusive properties;
property, in the absence or insufficiency of the exclusive
property of the debtor-spouse, the same advantage is not 6. Payment of losses and deterioration of movables
belonging to each of the spouses;
accorded in the system of conjugal partnership of gains. To
7. Division of the net conjugal partnership;
reiterate, conjugal property cannot be held liable for the
8. Delivery of the common childrens presumptive
personal obligation contracted by one spouse, unless some
legitimes;
advantage or benefit is shown to have accrued to the
9. Adjudication of conjugal dwelling and custody of
conjugal partnership (Go v. Yamane, G.R. No. 160762, May 3,
common children (Art. 129, FC).
2006).
Liquidation of community property if the termination
ADMINISTRATION OF THE CPG
of the marriage by death
Administration of CPG
Upon termination of marriage by death, the community
property shall be liquidated in the same proceeding for the
GR: The right to administer the conjugal partnership
belongs to both spouses jointly. settlement of the estate of the deceased spouse.

52
2015 GOLDEN NOTES
Support to the surviving spouse and to the children b. Partial In this case, the property not agreed
during liquidation upon as separate shall pertain to the absolute
community.
The support to be given to the surviving spouse and to the
children during liquidation shall come from the common 2. As to kinds of property:
mass of property and shall be particularly charged against a. Present property
the fruits, rents or income pertaining to their shares to the b. Future property
inventories property. But where the support given exceeds c. Both present and future property
the fruits, rents or income pertaining to their shares, the
excess shall be deducted from their respective shares as Instances when separation of property is allowed
these are deemed advances from the inventoried property
(Art. 133, FC). 1. By agreement through marriage settlement
2. By judicial order
Liquidation of community property in the absence of a
judicial settlement proceeding Sufficient causes for judicial separation of property
In the absence of a judicial settlement proceeding, the 1. Civil interdiction of the spouse of petitioner;
surviving spouse shall liquidate the community property 2. Judicial declaration of absence;
either, judicially or extrajudicially within 1 year from the 3. Loss of parental authority as decreed by the court;
death of the deceased spouse. 4. Abandonment or failure to comply with family
obligation;
If during the liquidation of the CP, the conjugal partnership 5. Administrator spouse has abused authority;
assets are less than the conjugal partnership liabilities, the 6. Separation in fact for one year and reconciliation is
surviving spouse and the children shall not be entitled to highly improbable (Art. 135, FC).
support.
NOTE: In cases provided in 1, 2 and 3, the presentation of
Effects if the community property is not liquidated the final judgment against the guilty or absent spouse shall
be enough bases for the grant of the decree of judicial
1. Any disposition or encumbrance made by the separation of property.
surviving spouse involving community property of the
terminated marriage shall be void. Effects of judicial separation of property between
2. Should the surviving spouse contract a subsequent spouses
marriage a mandatory regime of complete separation
of property shall govern the property relations of the 1. The absolute community or conjugal partnership is
subsequent marriage dissolved;
2. The liability of the spouses to creditors shall be
REGIME OF SEPARATION OF PROPERTY solidary with their separate properties;
3. Mutual obligation to support each other continues
Complete separation of property except when there is legal separation;
4. Rights previously acquired by creditors are not
The system of complete separation of property will govern prejudiced.
the property relations between the spouses only in the
following cases: Rights of the spouses under the regime of separation
1. When it is expressly provided for in the marriage of property
settlement
2. When it is so decreed by a competent court 1. Each spouse shall own, dispose of, administer,
3. Mandatory regime of complete separation of property possess, and enjoy his or her own separate property,
4. By failure of the surviving spouse to liquidate the without need of the consent of the other.
absolute community or conjugal partnership of gains 2. Each spouse shall own all earnings from his or her
of a previous marriage which has been terminated by profession, business or industry and all fruits, natural,
death within the one-year period required by law industrial or civil, due or received during the marriage
prior to contracting another marriage. The from his or her separate property.
subsequent marriage is mandatorily governed by a
regime of complete separation. Liabilities of the spouses for family expenses under
the regime of separation of property
Rules governing the regime of separation of property
GR: Both spouses shall bear the family expenses in
1. Marriage settlement proportion to their income.
2. Family Code in supplemental character (Art. 149, FC).
XPN: In case of insufficiency or default thereof, to the
Kinds of separation of property current market value of their separate properties.
1. As to extent:
a. Total

CIVIL LAW
Revival of previous property regime marry each incapacitated
other; to marry each
If the spouses opted for voluntary separation of property, 2. live exclusively other or they
the parties may agree to the revival even in the absence of with each other do not live
a reason/ground. However, a subsequent voluntary as husband and exclusively
separation of property is no longer allowed. wife; and with each other
3. their union is as husband and
If the separation of property is for a sufficient cause, the without the wife; and
revival of the previous property regime depends upon the benefit of 2. their union is
cessation of the ground which was the basis of the judicial marriage or without the
order. A subsequent judicial separation of property for a their marriage is benefit of
sufficient cause may be allowed so long as there is a new void (Mercado- marriage or
ground to rely on. Fehr v. Fehr, 414 their marriage
SCRA 288, 2003; is void (Art.
The procedure of the revival of previous property regime Salas, Jr. v. 148, NCC).
is the same as those followed upon reconciliation of the Aguila, GR. No.
spouses after the finality of legal separation. 202370, 2013)
Owned in equal Separately
Transfer of Administration of Exclusive Property to shares owned by the
another Spouse during the Marriage parties. If any is
Salaries & married, his/her
(a) By agreement wages salary pertains to
the CPG of the
Requisites: legitimate
1. By means of a public instrument; marriage.
2. To be recorded in the registry of property of the Belongs to party Belongs to such
place where the property is located. Property
upon proof of party
exclusively
acquisition through
(b) By order of the court upon petition acquired
exclusive funds
Property Governed by rules Owned in common
Based on these grounds:
acquired by of co-ownership in proportion to
1. Other spouse becomes the guardian of the
both their respective
other;
through contributions
2. The other spouse is judicially declared an
their work
absentee;
or industry
3. Other spouse is sentenced to a penalty which
carries with it civil interdiction; or Property No presumption of
4. Other spouse becomes fugitive from justice or acquired while joint acquisition.
hiding as an accused in a criminal case (Art. living together
142). presumed Actual joint
obtained by their contribution of
PROPERTY REGIME OF UNIONS WITHOUT MARRIAGE joint efforts, money, property
work or industry or industry shall
Property regime of unions without marriage and owned by be owned by them
them in equal in common
BASIS ART. 147 ART. 148 shares. proportion.
1. Parties without With legal
Presumpti If one party did However, their
legal impediment
on not participate in contributions are
impediment to caused by:
acquisition: presumed equal,
marry; 1. Adulterous
presumed to in the absence if
2. Void marriage relationships
have contributed proof to the
on the ground of 2. Bigamous/poly
through care and contrary
psychological gamous maintenance of
Applicability incapacity. marriages family and
3. Incestuous void household
marriages (Buenaventura
under Art. 37
v. Buenaventura,
4. Void marriages
G.R. No. 127358,
by reason of
March 31, 2005)
public policy
(Art. 38) When only one of If one of the
the parties to a parties is validly
1. The man and the 1. The man and
As to Forfeiture void marriage is married to
woman must be the woman
requisites in good faith, the another, his/her
capacitated to must be
share of the party share in the co-

54
2015 GOLDEN NOTES
in bad faith in the ownership shall regards his participation in their purchase. However,
co-ownership accrue to the ACP she did not prove that she acquired the properties
shall be forfeited or CPG existing in using her personal funds and prior to her cohabitation
in favor of: the marriage. with Eduardo. Is her contention correct?
1. their common If the party who A: No. Art. 148 of the FC does not apply since, in said
children acted in BF is not article, a co-ownership may ensue in case of cohabitation
2. in case of validly married to where, for instance, one party has a pre-existing valid
default of or another or if both marriage, provided that the parties prove their actual joint
waiver by any or parties are in BF, contribution of money, property or industry and only to
all of the such share be the extent of their proportionate interest thereon.
common forfeited in Petitioner failed to adduce preponderance of evidence that
children or their manner provided she contributed money, property or industry in the
descendants, in the last par. of acquisition of the subject property and, hence, is not a co-
each vacant Art. 147 owner of the property. Since the subject property was
share shall acquired during the subsistence of the first marriage of
belong to the Eduardo, under normal circumstances, the same should be
respective presumed to be conjugal property of Eduardo and Josefina
surviving (Francisco v. Master Iron Works Construction Corp., G.R. No.
descendants 151967. February 16, 2005).
3. In the absence of
descendants, Q: Francisco and Ermindas marriage was nullified by
such share shall the trial court due to psychological incapacity. He did
belong to the not contest the decree of nullity but he assailed the
innocent party. division in the properties which was contained in the
Proof of Not necessary Necessary decree. He asserted that the properties were acquired
actual through his efforts and that she had no contribution
contribution whatsoever in their acquisition and maintenance;
hence, she should not be entitled to a joint share in
NOTE: For as long as it is proven that property was their properties. Is Franciscos contention correct?
acquired during marriage, the presumption of conjugality
will attach regardless in whose name the property is A: No. The property relation between the parties is
registered. governed by Art. 147 of the FC. Under this article, there is a
presumption that the properties which they acquired
The presumption is not rebutted by the mere fact that the during their cohabitation were acquired through their
certificate of title of the property or the tax declaration is joint efforts, work or industry. It further provides that a
in the name of one of the spouses (Villanueva v. CA, G.R. No. party who did not participate in the acquisition thereof
143286, Apr. 14, 2004). shall be deemed to have contributed jointly in the
acquisition thereof if his or her efforts consisted in the care
Property regime in case the marriage is declared and maintenance of the family and of the household.
null and void on the ground of psychological
incapacity NOTE: In this case, Francisco himself testified that his wife
was not a plain housewife but one who helped him in
The property relation between the parties is governed by managing the family's business. Hence, Erminda is
Art. 147 of the FC. Under this property regime, property rightfully entitled to a joint share in their properties
acquired by both spouses through their work and industry (Gonzales v. Gonzales, G.R. No. 159521, December16, 2005).
shall be governed by the rules on equal co-ownership. Any
property acquired during the union is prima facie Q: Romeo and Juliet lived together as husband and
presumed to have been obtained through their joint wife without the benefit of marriage. During their
efforts. A party who did not participate in the acquisition cohabitation, they acquired a house. When they broke
of the property shall still be considered as having up, they executed an agreement where he agreed to
contributed thereto jointly if said party's "efforts consisted leave the house provided Juliet will pay his entire
in the care and maintenance of the family household." share in their properties. She failed to do so but she
Unlike the conjugal partnership of gains, the fruits of the also ignored his demand for her to vacate. Romeo sued
couple's separate property are not included in the co- her for ejectment which the court granted. Was the
ownership. court correct in granting the same?
Q: Josefinas petition for nullity of her marriage to A: No. Under Art. 147 of the FC, the property is co-owned
Eduardo was granted on the ground of existence of a by the parties. Under said provision, in the absence of
prior marriage. She now asserts that since her proof to the contrary, any property acquired by common-
marriage to Eduardo is void, their property relation is law spouses during their cohabitation is presumed to have
to be governed by the rules on co-ownership under been obtained thru their joint efforts and is owned by
Art. 148 of the FC and not by Art.144 of the Civil Code. them in equal shares. Their property relationship in such a
In this regime, Eduardo has no share at all in the case is essentially governed by the rules on co-ownership.
properties since no proof was adduced by him as Thus, Romeo cannot seek the ejectment of Juliet therefrom.

CIVIL LAW
As a co-owner, she is as much entitled to enjoy its separated, Rico lived together with Mabel, a maiden 16
possession and ownership as him (Abing v. CA,G.R. No. years of age. While living together, Rico was a salaried
146294, Jul. 31, 2006). employee and Mabel kept house for Rico and did full-
time household chores for him. During their
Q: Luis and Rizza, both 26 years of age and single, live cohabitation, a parcel of coconut land was acquired by
exclusively with each other as husband and wife Rico from his savings.
without the benefit of marriage, Luis is gainfully
employed, Rizza is not employed, stays at home, and After living together for 1 year, Rico and Mabel
takes charge of the household chores. separated. Rico then met and married Letty, a single
woman 26 years of age. During the marriage of Rico
After living together for a little over twenty years, Luis and Letty, Letty bought a mango orchard out of her
was able to save from his salary earnings during that own personal earnings.
period the amount of P200,000.00 presently deposited
in a bank. A house and lot worth P500,000.00 was a. Who would own the riceland, and what property
recently purchased for the same amount by the couple. relation governs the ownership? Explain.
Of the P500.000.00 used by the common-law spouses b. Who would own the coconut land, and what
to purchase the property, P200.000.00 had come from property relation governs the ownership? Explain.
the sale of palay harvested from the hacienda owned c. Who would own the mango orchard, and what
by Luis and P300,000.00 from the rentals of a building property relation governs the ownership? Explain.
belonging to Rizza. In fine, the sum of P500.000.00 had (1992 Bar Question)
been part of the fruits received during the period of
cohabitation from their separate property, a car worth A:
P100.000.00 being used by the common-law spouses, a. Rico and Cora are the co-owners of the riceland. The
was donated just months ago to Rizza by her parents. relation is that of co-ownership (Art. 147, [1] FC)
Luis and Rizza now decide to terminate their Addendum: However, after Rico's marriage to Letty,
cohabitation, and they ask you to give them your legal the half interest of Rico in the riceland will then
advice on how, under the law should the bank deposit become absolute community property of Rico and
of P200,000.00 the house and lot valued at Letty.
P500.000.00 and the car worth P100.000.00 be
allocated to them (1997 Bar Question)? b. Rico is the exclusive owner of the coconut land. The
relation is a sole/single proprietorship (Art. 148, [1]
A: Art. 147 of the FC provides in part that when a man and FC, and not Art. 147 FC).
a woman who are capacitated to marry each other, live
exclusively with each other as husband and wife without Addendum: However, after Rico's marriage to Letty,
the benefit of marriage or under a void marriage, their the coconut land of Rico will then become absolute
wages and salaries shall be owned by them in equal shares community property of Rico and Letty.)
and the property acquired by both of them through their
work or industry shall be governed by the rules of co- c. Rico and Letty are the co-owners. The relations is the
ownership. In the absence of proof to the contrary, Absolute Community of Property (Arts, 75, 90 and 91,
properties acquired while they lived together shall be FC).
presumed to have been obtained by their joint efforts,
worker industry, and shall be owned by them in equal Q: Benjamin is married to Azucena. While Azucena is
shares. A party who did not participate in the acquisition out of country, Benjamin developed a romantic
by the other party of any property shall be deemed to have relationship with Sally, but her father was against this.
contributed jointly in the acquisition thereof if the former's In order to appease her father, Sally convinced
efforts consisted in the care and maintenance of the family Benjamin to sign a purported marriage contract.
and of the household. Thus: Eventually, their relationship ended a few years later.
1. The wages and salaries of Luis in the amount of P200, Benjamin asked the court for the partition of the
000.00 shall be divided equally between Luis and properties he acquired with Sally in accordance with
Rizza. Article 148 of the FC, for his appointment as
2. The house and lot valued at P500.000.00 having been administrator of the properties during the pendency
acquired by both of them through work or industry of the case. Among the 44 properties which were the
shall be divided between them in proportion to their subject of the partition, 7 were enumerated by
respective contribution, in consonance with the rules Benjamin while Sally named 37 properties in her
on co-ownership. Hence, Luis gets 2/5 while Rizza answer. Is Benjamins contention correct?
gets 3/5 of P500.000.00.
3. The car worth P100, 000.00 shall be exclusively A: Yes. The property relations of Benjamin and Sally is
owned by Rizza, the same having been donated to her governed by Article 148 of the FC. They cohabitated
by her parents. without the benefit of marriage. Thus, only the properties
acquired by them through their actual joint contribution of
Q: In 1989, Rico, then a widower 40 years of age, money, property, or industry shall be owned by them in
cohabited with Cora, a widow 30 years of age. While common in proportion to their respective contributions.
living together, they acquired from their combined Thus, the 37 properties being claimed by Sally is excluded
earnings a parcel of riceland. After Rico and Cora as part of her conjugal properties with Benjamin because

56
2015 GOLDEN NOTES
Sally was not legally married to Benjamin. As regards the penalizing judicial employees for their dalliances with
seven remaining properties, only one of them is registered married persons or for their own betrayals of the marital
in the names of the parties as spouses. The other four were vow of fidelity (Concerned Employee v. Mayor, A.M. No. P-
registered in the name of either one of them with the 02-1564, November 23, 2004).
description married to and the last two were named to
Sally as an individual. The words married to preceding Requisites before a suit between members of the same
the name of a spouse are merely descriptive of the civil family may prosper
status of the registered owner, which do not prove co-
ownership. Without proof of actual contribution from 1. Earnest efforts toward a compromise have been
either or both spouses, there can be no co-ownership made;
under Article 148 of the Family Code. (Go-Bangayan vs. 2. Such efforts failed;
Bangayan, Jr., G.R. No. 201061, July 3, 2013) 3. The fact that earnest efforts toward a compromise
have been made but the same have failed appears in
Retroactive application of Art. 148, FC the verified complaint or petition.
Although the adulterous cohabitation of the parties or the NOTE: This rule shall not apply to cases which may not be
acquisition of the property occurred before the effectivity subject of compromise under the Art. 2035 of the NCC.
of the Family Code on August 3, 1998, Article 148 applies
because the said provision was intended precisely to fill up The following cannot be compromised:
the hiatus in Article 144 of the NCC. Before Article 148 of 1. civil status of persons;
the FC was enacted, there was no provision governing 2. validity of a marriage or legal separation;
property relations of couples living in a state of adultery or 3. any ground for legal separation;
concubinage (Atienza v. De Castro, 508 SCRA 593, 2006). 4. future support;
5. jurisdiction of courts; and
THE FAMILY 6. future legitime (Art. 2035, NCC).
THE FAMILY AS AN INSTITUTION Q: In a complaint filed by Manolo against his brother,

Rodolfo, it was alleged that the case "xxx passed
Concept of family through the Barangay and no settlement was forged
between the plaintiffs and defendant as a result of
Being the foundation of the nation, it is a basic social which Certification to File Action was issued xxx".
institution which public policy cherishes and protects. (Art. Rodolfo moved to dismiss for failure to comply with a
149, FC). condition precedent - that earnest efforts for an
amicable settlement among the parties had been
Family relations exerted but that none was reached. Decide.
Family relations include: A: The case will prosper. There was in fact substantial
1. Between husband and wife compliance with Art. 151 of the FC since the spouses
2. Between parents and children alleged in the complaint for ejectment that the case "xxx
3. Among other ascendants and descendants passed through the Barangay and no settlement was
4. Among brothers and sisters, whether of the full or half forged between the plaintiffs and defendant as a result of
blood (Art. 150, FC) which Certification to File Action was issued by Barangay
97, Zone 8, District I, Tondo, Manila xxx". It bears stressing
NOTE: Thus, a suit between a brother-in-law and a sister- that under Sec. 412 (a) of R.A. 7160, no complaint
in-law is not within the coverage of the law, hence, the involving any matter within the authority of the Lupon
failure of the plaintiff to allege earnest efforts to effect a shall be instituted or filed directly in court for adjudication
compromise is not necessary. The relationship is based on unless there has been a confrontation between the parties
consanguinity, except that of the husband and wife (Gayon and no settlement was reached.
v. Gayon, 36 SCRA 105). The enumeration of brothers and
sisters as members of the same family does not Moreover, the phrase "members of the same family" found
comprehend brothers- or sisters-in-law (Guerero v. RTC, in Art. 151 of the FC must be construed in relation to Art.
G.R. No. 109068, Jan. 10, 1994). 150 thereof (Martinez, et al. v. Martinez, G.R. No. 162084.
Jun. 28, 2005).
Rules governing family relations NOTE: A sister-in-law or a brother-in-law is not covered

by these two provisions. Being an exception to the general
Family relations are governed by law. No custom, practice rule, Art. 151 must be strictly construed (Gayon v. Gayon,
or agreement destructive of the family shall be recognized G.R. No. L-28394, November 26, 1970).
or given effect (Art. 149, FC).
THE FAMILY HOME
NOTE: Even if not all forms of extra-marital relations are
punishable under penal law, the sanctity of marriage is Family home (FH)
constitutionally recognized and likewise affirmed by our
statutes as a special contract of permanent union. It is the dwelling house where the husband and wife and
Accordingly, the Court has had little qualms with their family reside, and the land on which it is situated. It is

CIVIL LAW
constituted jointly by the husband and the wife or by an home either by the owner thereof or by any of its
unmarried head of a family (Art. 152, FC). beneficiaries must be actual. That which is actual is
something real, or actually existing, as opposed to
Constitution of FH something merely possible, or to something which is
presumptive and constructive. Actual occupancy, however,
The family home is deemed constituted on a house and lot need not be by the owner of the house. Rather, the
from the time it is occupied as a family residence (Art. 153, property may be occupied by the beneficiaries
FC). enumerated by Art. 154 of the FC (Manacop v. CA, 277
SCRA 65, August 11, 1997).
Guidelines in the constitution of the family home
NOTE: This enumeration may include the in-laws where
1. FH is deemed constituted from the time of actual the family home is constituted jointly by the husband and
occupation as a family residence; wife. But the law definitely excludes maids and overseers.
2. Only 1 FH may be constituted;
3. Must be owned by the person constituting it; Effect of death of one or both spouses or of the
4. Must be permanent; unmarried head of the family upon the family home
5. Same rule applies to both valid and voidable
marriages and even to common law spouses; (Arts. The family home shall continue despite the death of one or
147 and 148) both spouses or of the unmarried head of the family for a
6. It continues despite death of one or both spouses or period of 10 years or for as long as there is a minor
an unmarried head of the family for 10 years or as beneficiary and the heirs cannot partition the same unless
long as there is a minor beneficiary. the court finds compelling reasons therefor. This rule shall
apply regardless of whoever owns the property or
NOTE: The heirs cannot partition the same unless the constituted the family home (Art. 159, FC).
court finds compelling reasons therefor. This rule shall
apply regardless of whoever owns the property or Exemption of FH from execution, forced sale or
constituted the family home. attachment
Q: On which patrimony must the family pertain? From the time of its constitution and so long as any of its
beneficiaries resides therein, the FH continues to be such
A: The family home must be part of the properties of the and is exempt from execution, forced sale or attachment
absolute community or the conjugal partnership or the (Art. 153, FC).
exclusive properties of either spouse with the latters
consent. It may also be constituted by an unmarried head However, the rule is not absolute. Art. 155 of the FC
of a family on his or her own property. provides the circumstances wherein the FH will not be
exempt from execution, forced sale of attachment, to wit:
NOTE: Property that is subject of a conditional sale on 1. Debts due to laborers, mechanics, architects, builders,
installments where ownership is reserved by the vendor to material men and others who rendered service or
guarantee payment of the purchase price may be furnished materials for the constitution of the
constituted as a family home. building;
2. Non-payment of Taxes;
Beneficiaries of a FH 3. Debts incurred Prior to its constitution;
4. Debts secured by Mortgages on the premises before
1. Husband and wife, or unmarried head of the family or after such constitution.
Parents (may include parents-in-law), ascendants,
brothers and sisters (legitimate or illegitimate) living in NOTE: Exemption is limited to the value allowed in the FC.
the FH and dependent on the head of the family for
support (Art. 154, FC). Rule for the family home to be exempted from
execution
Requisites to be considered as beneficiary
1. If the family home was constructed before the
1. They must be among the relationships enumerated in effectivity of the FC, then it must have been
Art. 154 of the FC; constituted either judicially or extrajudicially as
2. They live in the family home; and provided under Arts. 225, 229-231 and 233 of the
3. They are dependent for legal support upon the head NCC. Judicial constitution of the family home requires
of the family. the filing of a verified petition before the courts and
the registration of the courts order with the
Q: Miko contends that he should be deemed residing in Registry of Deeds of the area where the property is
the family home because his stay in the U.S. is merely located. Meanwhile, extrajudicial constitution is
temporary. He asserts that the person staying in the governed by Arts. 240 to 242 of the NCC and involves
house is his overseer and that whenever his wife, the execution of a public instrument which must also
Rosanna, visited the Philippines, she stayed in the be registered with the Registry of Property.
family home. Is the contention of Miko meritorious? 2. For family homes constructed after the effectivity of
the FC, there is no need to constitute extrajudicially
A: The law explicitly provides that occupancy of the family or judicially, and the exemption is effective from the

58
2015 GOLDEN NOTES
time it was constituted and lasts as long as any of its plus all the costs of execution
beneficiaries actually resides therein. Moreover, the
family home should belong to the absolute community The excess, if any, shall be delivered to the judgment
or conjugal partnership, or if exclusively by one debtor (Art. 160, FC).
spouse, its constitution must have been with consent
of the other, and its value must not exceed certain Q: A complaint for damages was filed against Hinahon
amounts depending upon the area where it is located. in 1986 when she incurred liabilities as early as 1977,
Further, the debts incurred for which the exemption which action prospered in 1989. The house and lot
does not apply as provided under Art. 155 for which that she owned was levied upon and sold at auction.
the family home is made answerable must have been She assails the levy and sale on the ground that it was
incurred after the effectivity of the FC. her family home and therefore exempt from execution.
3. And in both cases, whether under the Civil Code or the Decide.
Family Code, it is not sufficient that the person
claiming exemption merely alleges that such A: It is not exempt. Under Art. 155 of the FC, the family
property is a family home. This claim for exemption home shall be exempt from execution, forced sale, or
must be set up and proved (Juanita Trinidad Ramos, et attachment except for, among other things, debts incurred
al. v. Danilo Pangilinan et al. G.R. No. 185920, July 20, prior to the constitution of the family home. In the case at
2010). bar, the house and lot was not constituted as a family
home, whether judicially or extra-judicially, at the time
Exemption of Family Home must first be set up and that the debtor incurred her debts. Under prevailing
proved jurisprudence, it is deemed constituted as such by
operation of law only upon the effectivity of the Family
The family homes exemption from execution must be set Code on August 3, 1988, thus, the debts were incurred
up and proved to the Sheriff before the sale of the property before the constitution of the family home (Gomez-Salcedo,
at public auction. It should be asserted that the property is et al. v. Sta. Ines, et al., G.R. No. 132537, October 14, 2005).
a family home and that it is exempted from execution at
the time it was levied or within a reasonable time Q : Has the residential house and lot of Cesario
thereafter. It is not sufficient that the person claiming Montana which he and his family built in 1960 but
exemption merely alleges that such property is a family which was not constituted as a family home, whether
home. Failure to do so will estop one from later claiming judicially or extrajudicially, under the NCC been
the said exemption (Spouses Araceli Oliva-De Mesa and constituted as a family home by operation of law
Ernesto de Mesa v. Spouses Claudio D. Acero Jr. and under Art. 153 of the FC, and therefore, exempt from
Ma.Rufina D. Acero, Sheriff Felixberto L. Samonte and execution from a money judgement where the debt or
Registrar Alfredo Santos, G.R. No. 185064, January 16, liability was incurred before the effectivity of the FC ?
2012).
A : Under Art. 162 of the FC, it is provided that the
Requisites for the creditor to avail of the right to provisions of this Chapter shall also govern existing family
execute residences insofar as said provisions are applicable. It
does not mean that Arts. 152 and 153 of the FC have a
1. He must be a judgment creditor; retroactive effect such that all existing family residences
2. His claim must not be among those excepted under are deemed to have been constituted as a family home at
Art. 155; the time of their occupation prior to the effectivity of the
3. He has reasonable grounds to believe that the family FX and are exempt from execution for the payment of
home is worth more than the maximum amount fixed obligations before the effectivity of the FC. Art. 162 simply
in Art. 157. means that all existing family residences at the time of the
effectivity of the FC are considered family homes and are
Procedure in exercising the right to execute prospectively entitled to the benefits accorded to a family
home under the FC (Manacop v. CA, 277 SCRA 64, August
1. Creditor must file a motion in the court proceeding 11, 1997).
where he obtained a favorable judgment for a writ of
execution against the FH; Requisites in the sale, alienation, donation,
2. There will be a hearing on the motion where the assignment or encumbrance of the FH
creditor must prove that the actual value of the FH
exceeds the maximum amount fixed by the Family The following must give their written consent:
Code, either at the time of its constitution or as a 1. The person who constituted the FH;
result of improvements introduced after its 2. The spouse of the person who constituted the FH;
constitution; 3. Majority of the beneficiaries of legal age.
3. If the creditor proves that the actual value exceeds the
maximum amount, the court will order its sale in NOTE: In case of conflict, the court shall decide.
execution;
4. If the family home is sold for more than the value Limitations on FH
allowed, the proceeds shall be applied as follows:
a. The obligations enumerated in Art. 155 must be 1. Each family can have only one family home. After one
paid family home has been constituted, no other family
b. The judgment in favor of the creditor will be paid,

CIVIL LAW
home can be established without first dissolving the 2. The artificial insemination on the wife is done with
existing one. the sperm of the husband or of a donor, or both the
2. The family home can be constituted only on the husband and a donor;
dwelling place, and therefore in the locality where the 3. The artificial insemination has been authorized or
family has its domicile. ratified by the spouse on a written instrument
3. The value of the family home must not exceed the executed and signed by them before the birth of the
limit fixed by law (Tolentino, Book I, p. 508). child; and
4. The written instrument is recorded in the civil
PATERNITY AND FILIATION registry together with the birth certificate of the child
(Art. 164, FC).
Paternity and Filiation
Rights of legitimate children
Paternity is the civil status of a father with regard to the
child. 1. To bear the surname of the father and the mother;
2. To receive support from their parents, their
Filiation is the civil status of a child with regard to his ascendants, and in proper cases, their brothers and
parents. sisters;
3. To be entitled to the legitimate and other successional
Filiation may be by nature or adoption, legitimate or rights granted to them by Art. 174 of the FC.
illegitimate.
Presumption of legitimacy
NOTE: Paternity or filiation is established by clear and
convincing evidence (Constantino v. Mendez, 209 SCRA 18 Article 164 of the Family Code provides that the children
[1992]). conceived or born during the marriage of the parents are
legitimate.
Classifications of filiation
The presumption of legitimacy of children does not only
1. Natural flow out from a declaration contained in the statute but is
a. Legitimate conceived or born within a valid based on the broad principles of natural justice and the
marriage supposed virtue of the mother. The presumption is
b. Illegitimate conceived and born outside a valid grounded in a policy to protect innocent offspring from the
marriage odium of illegitimacy (Liyao, Jr. vs Tanhoti-Liyao, G.R.
2. Judicial Act 138961, March 7, 2002).
a. Legitimated conceived and born outside of
wedlock of parents without impediment to marry The presumption of legitimacy under Article 164 of the
at the time of conception or were so disqualified Family Code may be availed only upon convincing proof of
only because either or both of them were below the factual basis therefor, i.e., that the childs parents were
eighteen (18) years of age. legally married and that his/her conception or birth
b. Adopted a filiation created by law which vests occurred during the subsistence of that marriage. Else, the
between two persons a relationship similar to presumption of law that a child is legitimate does not arise
that which results from legitimate paternity and (Angeles vs Maglaya, G.R. 153798, September 2, 2005).
filiation
NOTE: The child by himself cannot choose his own
LEGITIMATE CHILDREN filiation. Neither can he elect the paternity of the husband
of his mother when the presumption of his legitimacy has
Legitimate child been successfully overthrown.
GR: One who is conceived or born during the marriage of Q: What is the effect of the declaration of a wife against
the parents the legitimacy of the child where the child is
conclusive presumed to be the legitimate child of H
XPN: Born outside of a valid marriage (void marriages) but and W?
considered as legitimate child:
A: The child shall still be legitimate, although the mother
1. Children of marriages which are declared void under may have declared against his legitimacy. This law likewise
Art. 36; and applies to such instances where the mother may have been
2. Children of marriages which are declared void under sentenced as an adulteress (Art. 167, FC).
Art. 53 (Rabuya, 2009).
NOTE: Art. 167 of the FC applies only to a situation where
Requisites for a child conceived by artificial the wife denies the paternity of the husband. Art. 167 does
insemination to be considered legitimate not apply to a situation where a child is alleged not to be
the child of nature or biological child of the couple
1. The artificial insemination is made on the wife, not on (Rabuya, 2009).
another woman;

60
2015 GOLDEN NOTES
Q: Roderick and Faye were high school sweethearts. same municipality
When Roderick was 18 and Faye, 16 years old, they or city where birth XPN: Lifetime of the
started living together as husband and wife without took place putative father
the benefit of marriage. When Faye reached 18 years 2 years husband
of age, her parents forcibly took her back and does NOT reside in In cases where the
arranged for her marriage to Brad. Although Faye the same action is for the
lived with Brad after the marriage, Roderick continued municipality or recognition of
to regularly visit Faye while Brad was away at work. city illegitimate child by
During their marriage, Faye gave birth to a baby girl, 3 years husband open and
Laica. When Faye was 25 years old, Brad discovered is living abroad continuous
her continued liaison with Roderick and in one of their possession of the
heated arguments, Faye shot Brad to death. She lost no status.
time in marrying her true love Roderick, without a
marriage license, claiming that they have been Person/s who may attack the legitimacy of the child
continuously cohabiting for more than 5 years.
a. What is the filial status of Laica? GR: Only the husband can contest the legitimacy of the
b. Can Laica bring an action to impugn her own child.
status on the ground that based on DNA results,
Roderick is her biological father? (2008 Bar XPNs: Heirs of the husband may impugn the filiation of the
Question) child within the period prescribed in Art. 170 of the FC
only in the following cases:
A: 1. If the husband should die before the expiration of the
a) Having been born during the marriage of Faye and period fixed for bringing his action;
Brad, she is presumed to be the legitimate child of 2. If he should die after the filing of the complaint,
Faye and Brad. This presumption had become without having desisted therefrom; or
conclusive because the period of time to impugn her 3. If the child was born after the death of the husband
filiation had already prescribed. (Art. 171, FC).
b) No, she cannot impugn her own filiation. The law does Prescriptive period for filing action impugning the
not allow a child to impugn his or her own filiation. In legitimacy of the child
the problem, Laicas legitimate filiation was accorded
to her by operation of law which may be impugned GR: The prescriptive period for filing action impugning the
only by Brad, or his heirs in the cases provided by law legitimacy of the child shall be counted from the
within the prescriptive period. knowledge of birth or its recording in the civil registry.
Action to impugn legitimacy v. Action to claim XPN: If the birth was:

legitimacy. 1. Concealed from or
2. Was unknown to the husband or his heirs, the periods
BASIS ACTION TO shall be counted from the discovery or knowledge of
ACTION TO CLAIM
IMPUGN the birth of the child or of the act of registration of
LEGITIMACY
LEGITIMACY said birth, whichever is earlier.
Action to impugn Action to claim
legitimacy or legitimacy Grounds in impugning legitimacy of a child
Remedy
illegitimacy (compulsory
recognition) Legitimacy of the child may be impugned only on the
GR: Husband GR: Child following grounds:
1. Physical impossibility for the husband to have sexual
XPNs: Heirs, in XPNs: Heirs of the intercourse with his wife within the first 120 days of
cases where: child, in cases where: the 300 days which immediately preceded the birth of
1. Husband died 1. Child died in state the child because of:
before the of insanity a. Physical incapacity of the husband to have sexual
expiration of 2. Child died during intercourse with his wife,
the period for minority b. The fact that the husband and wife were living
Real party bringing the separately in such a way that sexual intercourse
in interest action; NOTE: Must be filed was not possible, or
2. Husband died within 5 years. c. Serious illness of the husband which absolutely
after filing the prevented intercourse;
complaint, 2. Proved that for biological or other scientific reasons,
without having the child could not have been that of the husband,
desisted; except in the case of children conceived through
3. Child was born artificial insemination;
after the death 3. In case of children conceived through artificial
of husband. insemination, the written authorization or ratification
1 year husband GR: During the of either parent was obtained through mistake, fraud,
Prescription violence, intimidation or undue influence.
resides in the lifetime of the child

CIVIL LAW
Sterility and Impotency Rule on status of child where the mother contracted
another marriage within 300 days after termination of
Sterility is not synonymous with impotency. Sterility is the the former
inability to procreate, while impotency is the physical
inability to copulate (Menciano v. San Jose, 89, Phil. 63). The child shall be considered as conceived during the:
1. Former marriage if child is born:
Before 180 days after the solemnization of the
Q: Will an infliction of the last stages of tuberculosis be subsequent marriage, provided it is born within
a ground for impugnation of the legitimacy of the 300 days after termination of former marriage
child? 2. Subsequent marriage if a child is born:
180 days after the celebration of the subsequent
A: Tuberculosis, even in its last stages, is not the kind of marriage, even though it be born within 300 days
serious illness of the husband that will establish physical after the termination of the former marriage.
impossibility of access (Andal v. Macaraig, 89 Phil.165).
Illustrations:
1. 180th day takes place before 300th day

180th day from
Former marriage Subsequent marriage solemnization of 300th day from
terminated solemnized subsequent marriage termination of former
marriage
Born during this period:

Born during this period:
Conceived during Former Marriage
Conceived during Subsequent Marriage
2. 180th day takes place after 300th day

Subsequent 300th day from 180th day from
Former marriage marriage termination of solemnization of
terminated solemnized former marriage subsequent marriage
Born during this period: Born during this period:

Conceived during Former Marriage Conceived during Subsequent
Marriage
ILLEGITIMATE CHILDREN be considered valid and the children will be considered

legitimate.
Illegitimate children
1. Children conceived and born outside a valid marriage:

2. Children born of couples who are not legally married or
of common law marriages; Rights of an illegitimate child (LASS)
3. Children born of incestuous marriage;
4. Children born of bigamous marriage; 1. They shall use the Surname of the mother;
5. Children born of adulterous relations between parents; 2. They shall be under the parental Authority of the
6. Children born of marriages which are void for reasons mother;
of public policy under Art. 18, FC; 3. They shall be entitled to Support in conformity with
7. Children born of couples below 18, whether they are the FC;
married (which marriage is valid) or not; 4. They shall be entitled to a Legitime which shall consist
8. Children born of void marriages under art. 35, except of of the legitime of a legitimate child (Art. 176, FC).
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

62
2015 GOLDEN NOTES
Effect of the recognition of an illegitimate child by the Legitimation
father
Legitimation is a remedy or process by means of which
Such recognition would be a ground for ordering the latter those who in fact not born in wedlock and should
to give support to, but not the custody of the child. The law therefore be ordinarily illegitimate, are by fiction,
explicitly confers to the mother sole parental authority considered legitimate.
over an illegitimate child; it follows that only if she defaults
can the father assume custody and authority over the It takes place by a subsequent valid marriage between
minor (Briones v. Miguel, G.R. No. 156343, October 18, 2004) parents. Furthermore, it shall retroact to the time of the
childs birth (Art 180, FC).
Also, under the R.A. 9255, the illegitimate child has the
option to use the surname of the father. NOTE: The annulment of a voidable marriage shall not
affect the legitimation (Art. 178, FC).
Republic Act 9255
Children entitled to legitimation
This act provides that illegitimate children may optionally
use the fathers surname provided that: Only children conceived and born outside of wedlock of
1. Filiation has been recognized by the father through parents who, at the time of conception, were not
the record of birth appearing in the civil register disqualified by any impediment to marry each other or
2. Admission in public document or were so disqualified only because either or both of them
3. Private handwritten instrument is made by the father were below eighteen (18) years of age (Art. 177, FC as
amended by R.A. 9858).
NOTE: Provided that the father has the right to institute an
action before the regular courts to prove non-filiation Requisites of legitimation
during his lifetime.
1. Child must have been conceived and born outside of
Q: How may an illegitimate children establish their wedlock;
illegitimate filiation should their status be impugned? 2. Childs parents, at the time of formers conception,
When must the action to claim illegitimacy be were not disqualified by any impediment to marry
brought? each other or were so disqualified only because either
or both of them were below eighteen (18) years of
A: Illegitimate children may establish their illegitimate age;
filiation in the same way and on the same evidence as 3. The subsequent valid marriage of the parents.
legitimate children.
Q: Who may impugn the legitimation?
The action must be brought in the same period specified in
Art. 173 of the FC, except when the action is based on the A: Legitimation may be impugned only by those who are
2nd par. of Art. 172 of the FC, in which case the action may prejudiced in their rights, within 5 years from the time
be brought during the lifetime of the alleged parent (Art. their cause of action accrues, that is, from the death of the
175, FC). putative parent.
Q: Why is an illegitimate child of a woman, who gets NOTE: The right referred to are successional rights. Hence,
married, allowed to bear the surname of her spouse, only those whose successional rights are directly affected
while a legitimate child may not? may impugn the legitimation that took place.
A: To allow the child to adopt the surname of his mothers Q: Roderick and Faye were high school sweethearts.
second husband, who is not his father, could result in When Roderick was 18 and Faye, 16 years old, they
confusion in his paternity. It could also create the started living together as husband and wife without
suspicion that the child, who was born during the the benefit of marriage. When Faye reached 18 years
covertures of his mother with her first husband, was in fact of age, her parents forcibly took her back and
sired by the second husband, thus bringing his legitimate arranged for her marriage to Brad. Although Faye
status into discredit (Republic v. Vicencio, G.R. No. 88202. lived with Brad after the marriage, Roderick continued
December 14, 1998). to regularly visit Faye while Brad was away at work.
During their marriage, Faye gave birth to a baby girl,
LEGITIMATED CHILDREN Laica. When Faye was 25 years old, Brad discovered
her continued liaison with Roderick and in one of their
Legitimated children heated arguments, Faye shot Brad to death. She lost no
time in marrying her true love Roderick, without a
Legitimated children are those who, because of the marriage license, claiming that they have been
subsequent marriage of their parents to each other, are by continuously cohabiting for more than 5 years. Can
legal fiction considered legitimate. Laica be legitimated by the marriage of her biological
parents? (2008 Bar Question)
A: No, she cannot be legitimated by the marriage of her

biological parents. In the first place she is not, under the

CIVIL LAW
law, the child of Roderick. In the second place, her Yes No right to
biological parents could not have validly married each inherit ab intesto
other at the time she was conceived and born simply from legitimate
because Faye was still married to Roderick at that time. children and
Under Art. 177 of the FC, only children conceived or born Right to inherit relatives of
outside of wedlock of parents who, at the time of the ab intesto father and
conception of the child were not disqualified by any mother under
impediment to marry each other, may be legitimated. Art. 992, NCC
(Iron Curtain
RIGHTS OF CHILDREN Rule)
Rights of legitimate and illegitimate children ACTION TO CLAIM FILIATION
LEGITIMATE ILLEGITIMATE Action to claim filiation

BASIS
CHILDREN CHILDREN
Bear the Paternity and filiation or the lack of the same is a
surname of relationship that must be judicially established and it is for
either the the court to declare its existence or absence. It cannot be
mother or the left to the will or agreement of the parties (De Asis vs. Court
father under R.A. of Appeals, G.R. 127578, February 15, 1999).
9255
Bear the The manner of claiming filiation is the same for both
surnames of NOTE: Under the legitimate and illegitimate children
Surname both parents amendatory
(mother and provisions of RA Person/s who may file for claim legitimate filiation
father) 9255, the use of
illegitimate GR: The right of claiming legitimacy belongs to the child
father's surname
is permissive XPN: The right is transferred to his heirs when the child
and not dies:
obligatory 1. During minority or
(Rabuya, 2008). 2. In a state of insanity.
Receive support Receive support 3. After commencing the action for legitimacy
from: according to
1. Parents; provision of FC NOTE: Questioning legitimacy may not be collaterally
2. Ascendants; attacked. It can be impugned only in a direct action
and
Support 3. in proper Person/s who may file for claim illegitimate filiation
cases,
brothers and GR: The right of claiming illegitimacy belongs to the child
sisters under
Art. 174. XPN: The right is transferred to his heirs when:
1. During minority or
Full Legitimes Share is 2. In a state of insanity.
and other equivalent to 3. After commencing the action for legitimate filiation
successional of the share of a
Legitime Prescription of action to claim legitimacy or
rights under the legitimate child
NCC illegitimacy
His/her whole For primary An action must be brought:

lifetime proof: his/her 1. By the child during his lifetime
regardless of whole lifetime 2. By his heirs within 5 years should the child dies
Period for filing type of proof during minority, in a state of insanity or after
action for claim provided under For secondary commencing the action for legitimacy
of legitimacy or Art. 172 proof:
illegitimacy only during the NOTE: Provided that the action for illegitimacy is based on
lifetime of the admission of paternity or filiation in a birth certificate or
alleged parent written instrument.
Transmissibility Yes No However, if the action for illegitimacy is based on open and
of right to file continuous possession of status of illegitimate filiation or
an action to any other means allowed by the Rules of Court and special
claim laws, the action must be brought during the lifetime of the
legitimacy alleged parent.

64
2015 GOLDEN NOTES
Kinds of proof of filiation A: It still constitutes a public document or private
handwritten instrument signed by parent concerned.
Proof of filiation has two kinds:
1. Primary proof consists of the ff: Prima facie case of sexual relations with the putative
a. Record of birth appearing in civil registrar or father
final judgment;
b. Admission of legitimate filiation in public We explained that a prima facie case exists if a woman
document or private handwritten instrument declares supported by corroborative proof that she
signed by parent concerned. had sexual relations with the putative father; at this point,
2. Secondary consists of the ff: the burden of evidence shifts to the putative father. We
a. Open and continuous possession of legitimacy; explained further that the two affirmative defenses
b. Any means allowed by the Rules of Court and available to the putative father are: (1) incapability of
special laws. sexual relations with the mother due to either physical
absence or impotency, or (2) that the mother had sexual
NOTE: To prove open and continuous possession of the relations with other men at the time of conception (Charles
status of an illegitimate child, there must be evidence of Gotardo v. Divina Buling, G.R. No. 165166, August 15, 2012).
manifestation of the permanent intention of the supposed
father to consider the child as his, by continuous and clear Q: Rosanna, as surviving spouse, filed a claim for death
manifestations of parental affection and care, which cannot benefits with the SSS upon the death of her husband,
be attributed to pure charity. Pablo. She indicated in her claim that the decedent is
also survived by their minor child, Lyn, who was born
Such acts must be of such a nature that they reveal not in 1991. The SSS granted her claim but this was
only the conviction of paternity, but also the apparent withdrawn after investigation, when a sister of the
desire to have and treat the child as such in all relations in decedent informed the system that Pablo could not
society and in life, not accidentally, but continuously (Jison have sired a child during his lifetime because he was
v. CA, G.R. No. 124853, February 24, 1998). infertile. However in Lyns birth certificate, Pablo
affixed his signature and he did not impugn lyns
Rules in proving filiation legitimacy during his lifetime. Was the SSS correct in
withdrawing the death benefits?
GR: Primary proof shall be used to prove filiation.
A: No. Under Art. 164 of the FC, children conceived or born
XPN: In absence of primary proof, secondary proof may be during the marriage of the parents are legitimate. This
resorted to. presumption becomes conclusive in the absence of proof
that there is physical impossibility of access under Art. 166.
Pictures or certificate of baptism do not constitute Further, upon the expiration of the periods for impugning
authentic documents to prove the legitimate filiation legitimacy under Art. 170, and in the proper cases under
of a child Art. 171, of the FC, the action to impugn would no longer
be legally feasible and the status conferred by the
Pictures or the canonical baptismal certificate do not presumption becomes fixed and unassailable. In this case,
constitute the authentic documents to prove the legitimate there is no showing that Pablo, who has the right to
filiation of a child. The baptismal certificate of the child, impugn the legitimacy of lyn, challenged her status during
standing alone, is not sufficient. It is not a record of birth. his lifetime. Furthermore, there is adequate evidence to
Neither is it a public instrument nor a private handwritten show that the child was in fact his child, and this is the
instrument (Abelle v. Santiago, 7 SCRA 925). birth certificate where he affixed his signature (SSS v.
Aguas, et al., G.R. No. 165546, February 27, 2006).
Baptismal certificate does not prove filiation
Q: In an action for partition of estate, the trial court
Just like in a birth certificate, the lack of participation of dismissed it on the ground that the respondent, on the
the supposed father in the preparation of a baptismal basis of her birth certificate, was in fact the
certificate renders this document incompetent to prove illegitimate child of the deceased and therefore the
paternity. And while a baptismal certificate may be latter's sole heir, to the exclusion of petitioners.
considered a public document, it can only serve as However, trial court failed to see that in said birth
evidence of the administration of the sacrament on the certificate, she was listed therein as adopted. Was
date specified but not the veracity of the entries with the trial court correct in dismissing the action for
respect to the childs paternity. Thus, baptismal certificates partition?
are per se inadmissible in evidence as proof of filiation and
they cannot be admitted indirectly as circumstantial A: No. The trial court erred in relying upon the said birth
evidence to prove the same. (Antonio Perla v. Mirasol certificate in pronouncing the filiation of the respondent.
Baring and Randy B. Perla, G.R. No. 172471, November 12, However, since she was listed therein as adopted, she
2012). should therefore have presented evidence of her adoption
in view of the contents of her birth certificate. In this case,
Q: May a will which was not presented for probate there is no showing that she undertook such. It is well-
sufficiently establishes filiation? settled that 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

CIVIL LAW
interested parties (Rivera v. Heirs of Romualdo Villanueva, sole legitimate daughter of decedent, Ramon and Van
G.R. No. 141501, July 21, 2006). Bolatis. Phoebe, the decedent's second wife, opposed
the petition and questioned the legitimate filiation of
Q: In a complaint for partition and accounting with Cheri to the decedent, asserting that Cheris birth
damages, Ma. Theresa alleged that she is the certificate was not signed by Ramon and that she had
illegitimate daughter of Vicente, and therefore entitled not presented the marriage contract between her
to a share in the estate left behind by the latter. As alleged parents which would have supported her
proof, she presented her birth certificate which claim.
Vicente himself signed thereby acknowledging that
she is his daughter. Is the evidence presented by Ma. In said birth certificate, it was indicated that her birth
Theresa sufficient to prove her claim that she is an was recorded as the legitimate child of Ramon and Van
illegitimate child of Vicente? Bolatis, and contains as well the word "married" to
reflect the union between the two. However, it was not
A: Yes. Citing the earlier case of De Jesus v. Estate of Juan signed by Ramon and Vanemon Bolatis. It was merely
Dizon, (366 SCRA 499), the Supreme Court held that the Ma. signed by the attending physician, who certified to
Theresa was able to establish that Vicente was in fact her having attended to the birth of a child. Does the
father. The due recognition of an illegitimate child in a presumption of legitimacy apply to Cherimon?
record of birth, a will, a statement before a court of record,
or in any authentic writing is, in itself, a consummated act A: No. Since the birth certificate was not signed by Cher's
of acknowledgment of the child, and no further court alleged parents but was merely signed by the attending
action is required. The rule is, any authentic writing is physician, such a certificate, although a public record of a
treated not just as a ground for compulsory recognition; it is private document is, under Sec. 23, Rule 132 of the Rules
in itself a voluntary recognition that does not require a of Court, evidence only of the fact which gave rise to its
separate action for judicial approval (Eceta v. Eceta, G.R. No. execution, which is, the fact of birth of a child. A birth
157037, May 20, 2004). certificate, in order to be considered as validating proof of
paternity and as an instrument of recognition, must be
Q: Gerardo filed a complaint for bigamy against Ma. signed by the father and mother jointly, or by the mother
Theresa, alleging that she had a previous subsisting alone if the father refuses. There having been no convincing
marriage when she married him. The trial court proof of respondent's supposed legitimate relations with
nullified their marriage and declared that the son, who respect to the decedent, the presumption of legitimacy
was born during their marriage and was registered as under the law did not therefore arise in her favor (Angeles
their son, as illegitimate. What is the status of the v. Angeles-Maglaya, G.R. No. 153798, September2, 2005).
child?
Q: On the basis of the physical presentation of the
A: The first marriage being found to be valid and plaintiff-minor before it and the fact that the alleged
subsisting, whereas that between Gerardo and Ma. Theresa father had admitted having sexual intercourse with
was void and non-existent; the child should be regarded as the child's mother, the trial court, in an action to prove
a legitimate child out of the first marriage. This is so filiation with support, held that the plaintiff-minor is
because the child's best interests should be the primordial the child of the defendant with the plaintiff-minor's
consideration in this case. mother. Was the trial court correct in holding such?
Q: Gerardo and Ma. Theresa, however, admitted that A: No. In this age of genetic profiling and DNA analysis, the
the child was their son. Will this affect the status of the extremely subjective test of physical resemblance or
child? similarity of features will not suffice as evidence to prove
paternity and filiation before courts of law. This only
A: No. The admission of the parties that the child was their shows the very high standard of proof that a child must
son was in the nature of a compromise. The rule is that: the present in order to establish filiation.
status and filiation of a child cannot be compromised. Art.
164 of the FC is clear that a child who is conceived or born NOTE: The birth certificate that was presented by the
during the marriage of his parents is legitimate plaintiff-minor appears to have been prepared without the
(Concepcion v. CA, G.R. No. 123450. August 31, 2005). knowledge or consent of the putative father. It is therefore
not a competent piece of evidence on paternity. The local
Q: What is the effect of Ma. Theresas claim that the civil registrar in this case has no authority to record the
child is her illegitimate child with her second husband, paternity of an illegitimate child on the information of a
to the status of the child? third person. Similarly, a baptismal certificate, while
considered a public document, can only serve as evidence
A: None. This declaration an avowal by the mother that of the administration of the sacrament on the date
her child is illegitimate is the very declaration that is specified therein but not the veracity of the entries with
proscribed by Art. 167 of the FC. This proscription is in respect to the child's paternity (Macadangdang v. CA, 100
consonance with, among others, the intention of the law to SCRA 73). Thus, certificates issued by the local civil
lean towards the legitimacy of children (Concepcion v. CA, registrar and baptismal certificates are per se inadmissible
G.R. No. 123450. August 31, 2005). in evidence as proof of filiation and they cannot be
admitted indirectly as circumstantial evidence to prove the
Q: In a petition for issuance of letters of same (Jison v. CA, 350 Phil. 138; Cabatania v. CA, G.R. No.
administration, Cheri Bolatis alleged that she is the 124814. October 21, 2004).

66
2015 GOLDEN NOTES
DOMESTIC ADOPTION LAW
Q: Ann Lopez, represented by her mother Araceli
Lopez, filed a complaint for recognition and support of Domestic Adoption
filiation against Ben-Hur Nepomuceno. She assailed
that she is the illegitimate daughter of Nepomuceno Applies to adoption of Filipino children, where the entire
submitting as evidence the handwritten note allegedly adoption process beginning from the filing of the petition
written and signed by Nepomuceno. She also up to the issuance of the adoption decree takes place in the
demanded for financial support along with filial Philippines (Rabuya, 2009).
recognition. Nepomuceno denied the assertions
reasoning out that he was compelled to execute the WHO CAN ADOPT
handwritten note due to the threats of the National
Peoples Army. RTC ruled in favor of Ann. Is the trial Who can adopt
court correct?
1. Filipino citizens;
A: Anns demand for support is dependent on the 2. Aliens;
determination of her filiation. However, she relies only on 3. Guardians with respect to their ward.
the handwritten note executed by petitioner. The note
does not contain any statement whatsoever about her NOTE: A guardian may only adopt his ward after
filiation to petitioner. It is, therefore, not within the ambit termination of guardianship and clearance of his
of Article 172(2) vis--vis Art. 175 of the FC which admits financial accountabilities.
as competent evidence of illegitimate filiation an
admission of filiation in a private handwritten instrument Qualifications of a Filipino who may adopt
signed by the parent concerned.
1. Must be of legal age;
The Court is mindful that the best interests of the child in 2. In a position to support and care for his children;
cases involving paternity and filiation should be advanced. 3. Good moral character;
It is, however, just as mindful of the disturbance that 4. Full civil capacity and legal rights;
unfounded paternity suits cause to the privacy and peace 5. Not been convicted of any crime involving moral
of the putative fathers legitimate family (Ben-Hur turpitude;
Nepomuceno v. Archbencel Ann Lopez, represented by her 6. Emotionally and psychologically capable of caring for
mother Araceli Lopez G.R. No. 181258, March 18, 2010). children;
7. GR: At least 16 years older than adoptee
ADOPTION
XPN: It is not necessary that adopter be at least 16
Adoption years older:
a. Adopter is the biological parent of the adoptee,
Adoption is defined as the process of making a child, b. Adopter is the spouse of adoptees parent.
whether related or not to the adopter, possess in general,
the rights accorded to a legitimate child. It is a juridical act, NOTE: In Nieto v. Magat (136 SCRA 533), it was held that a
a proceeding in rem which creates between two persons a reading of Arts. 27 and 28 of P.D. 603 clearly shows that
relationship similar to that which results from legitimate the temporary residence of the adopting parents in a
paternity and filiation. The modern trend is to consider foreign country does not disqualify them from adopting.
adoption not merely as an act to establish a relationship of
paternity and filiation, but also as an act which endows the Qualifications of an alien who may adopt under R.A.
child with a legitimate status (In the Matter of the Adoption 8552
Stephanie Nathy Astorga Garcia, G.R. 148311 March 31,
2005). 1. Possesses same qualifications as those enumerated
for Filipino adopters;
The relationship established by the adoption is limited to 2. His country has diplomatic relations with the
the adopting parents and does not extend to their other Philippines;
relatives, except as expressly provided by law. Thus, the 3. His government allows the adoptee to enter his
adopted child cannot be considered as a relative of the country as his adopted child
ascendants and collaterals of the adopting parents, nor of 4. He has been certified by his diplomatic or consular
the legitimate children which they may have after the office or any appropriate government agency that he
adoption, except that the law imposes certain impediments has the legal capacity to adopt in their country
to marriage by reason of adoption. Neither are the children 5. GR: Has been living in the Philippines for at least 3
of the adopted considered descendants of the adopter. continuous years prior to the application for adoption
and maintains such residence until adoption decree
Preference in adoption has been entered.
1. Adoption by the extended family XPNs:

2. Domestic Adoption a. He is a former Filipino who seeks to adopt a
3. Inter-Country Adoption relative within the 4th civil degree of consanguinity
or affinity,
b. He is married to a Filipino and seeks to adopt

CIVIL LAW
jointly with his spouse a relative within the 4th adoption were filed only by Monina herself, without
degree of consanguinity or affinity, joining her husband, Olario, the trial court was correct in
c. He is married to a Filipino and seeks to adopt the denying the petitions for adoption on this ground (In Re:
legitimate or illegitimate child of his Filipino Petition for Adoption of Michelle P. Lim, In Re: Petition for
spouse. Adoption of Michael Jude P. Lim, Monina P. Lim, G.R. Nos.
168992-93, May 21, 2009).
Rule on Joint Adoption of Spouses
Joint adoption when the adoptees are already
GR: Such person must adopt with his spouse jointly. emancipated
XPNs: Even if emancipation terminates parental authority, the

1. One spouse seeks to adopt the legitimate son or adoptee is still considered a legitimate child of the adopter
daughter of the other; with all the rights of a legitimate child such as: (1) to bear
2. One spouse seeks to adopt his own illegitimate son or the surname of the father and the mother; (2) to receive
daughter; support from their parents; and (3) to be entitled to the
legitime and other successional rights. Conversely, the
NOTE: In seeking to adopt his own illegitimate son or adoptive parents shall, with respect to the adopted child,
daughter, the law requires that the consent of the enjoy all the benefits to which biological parents are
spouse of the adopter must be given to such adoption. entitled such as support and successional rights.
If on the other hand, the spouse would adopt the ADOPTEE

illegitimate son or daughter of the other, joint
adoption is still mandatory Adoptee
3. Spouses are legally separated. 1. Any person below eighteen (18) years of age who has
been administratively or judicially declared available
Q: Spouses Primo and Monina Lim, childless, were for adoption;
entrusted with the custody of two minor children, the 2. The legitimate son/daughter of one spouse by the
parents of whom were unknown. Eager to have other spouse;
children of their own, the spouses made it appear that 3. An illegitimate son/daughter by a qualified adopter to
they were the childrens parents by naming them improve his/her status to that of legitimacy;
Michelle P. Lim and Michael Jude Lim. Subsequently, 4. A person of legal age if, prior to the adoption, said
Monina married Angel Olario after Primos death. She person has been consistently considered and treated
decided to adopt the children by availing the amnesty by the adopter(s) as his/her own child since minority;
given under R.A. 8552 to those individuals who 5. A child whose adoption has been previously
simulated the birth of a child. She filed separate rescinded; or
petitions for the adoption of Michelle, then 25 years 6. A child whose biological or adoptive parent(s) has
old and Michael, 18. Both Michelle and Michael gave died: Provided, that no proceedings shall be initiated
consent to the adoption. within six (6) months from the time of death of said
parent(s).
The trial court dismissed the petition and ruled that
Monina should have filed the petition jointly with her Child
new husband. Monina, in a Motion for Reconsideration
argues that mere consent of her husband would suffice A child is any person below 18 years old.
and that joint adoption is not needed, for the adoptees
are already emancipated. Child legally free for adoption
Is the trial court correct in dismissing the petitions for A child voluntarily or involuntarily committed to the
adoption? DSWD, is freed of his biological parents, guardians, or
adopters in case of rescission.
A: Yes. Sec. 7 Art. 3 of R.A. 8552 reads: Sec. 7 Husband
and wife shall jointly adopt xxx. Necessity of written consent for adoption under
domestic adoption
The use of the word shall in the above-quoted provision
means that joint adoption by the husband and the wife is The written consent of the following is necessary for
mandatory. This is in consonance with the concept of joint adoption:
parental authority over the child which is the ideal 1. Biological parent(s) of the child, if known, or the legal
situation. As the child to be adopted is elevated to the level guardian, or the proper government instrumentality
of a legitimate child, it is but natural to require the spouses which has legal custody of the child;
to adopt jointly. The rule also ensures harmony between 2. Adoptee, if ten (10) years of age or over;
the spouses. 3. Illegitimate sons/daughters, ten (10) years of age or
over, of the adopter if living with said adopter and the
The law is clear. There is no room for ambiguity. Monina, latter's spouse, if any;
having remarried at the time the petitions for adoption
were filed, must jointly adopt. Since the petitions for

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2015 GOLDEN NOTES
4. Legitimate and adopted sons/daughters, ten (10) 18 years of age but incapacitated, the Department of Social
years of age or over, of the adopter(s) and adoptee, if and Welfare Development as the adoptees guardian or
any; counsel may assist the adoptee for rescinding the decree of
5. Spouse, if any, of the person adopting or to be adoption.
adopted.
The adopter cannot seek the rescission of the adoption but
Q: Bernadette filed a petition for adoption of the three he may disinherit the adoptee.
minor children of her late brother, Ian. She alleged
that when her brother died, the children were left to Grounds upon which an adoptee may seek judicial
the care of their paternal grandmother, Anna, who rescission of the adoption
went to Italy. This grandmother died however, and so
she filed the petition for adoption. The minors gave When the adopter has committed the following:
their written consent to the adoption and so did all of 1. Repeated physical and verbal maltreatment by the
her own grown-up children. The trial court granted adopter despite having undergone counselling
the decree of adoption even though the written 2. Attempt on the life of the adoptee
consent of the biological mother of the children was 3. Sexual assault or violence committed against the
not adduced by Bernadette. Was the trial court correct adoptee
in granting the decree of adoption? 4. Abandonment and failure to comply with parental
obligations
A: No. The rule is adoption statutes must be liberally
construed in order to give spirit to their humane and Grounds by which an adopter may disinherit adoptee
salutary purpose which is to uplift the lives of unfortunate,
needy or orphaned children. However, the discretion to 1. Groundless accusation against the testator of a crime
approve adoption proceedings on the part of the courts punishable by 6 years or more imprisonment;
should not to be anchored solely on those principles, but 2. Found guilty of attempt against the life of the testator,
with due regard likewise to the natural rights of the his/her spouse, descendant or ascendant;
parents over the child. The written consent of the biological 3. Causes the testator to make changes or changes a
parents is indispensable for the validity of the decree of testators will through violence, intimidation, fraud or
adoption. Indeed, the natural right of a parent to his child undue influence;
requires that his consent must be obtained before his 4. Maltreatment of the testator by word or deed;
parental rights and duties may be terminated and vested 5. Conviction of a crime which carries a penalty of civil
in the adoptive parents. In this case, since the minors' interdiction;
paternal grandmother had taken custody of them, her 6. Adultery or concubinage with the testators wife;
consent should have been secured instead in view of the 7. Refusal without justifiable cause to support the parent
absence of the biological mother. This is so under Sec. 9 (b) or ascendant;
of R.A. 8552, otherwise known as the Domestic Adoption 8. Leads a dishonorable or disgraceful life.
Act of 1998. Diwata failed in this respect, thus
necessitating the dismissal of her petition for adoption Effects of rescission of the adoption under the
(Landingin v. Republic, G.R. No. 164948, June 27, 2006). Domestic Adoption Act of 1998 (RA 8552)
Effects of Domestic Adoption 1. If adoptee is still a minor or is incapacitated

Restoration of:
1. GR: Severance of all legal ties between the biological a. Parental authority of the adoptees biological
parents and the adoptee and the same shall then be parents, if known or
vested on the adopters b. Legal custody of the DSWD;
2. Reciprocal rights and obligations of the adopters and
XPN: In cases where the biological parent is the adoptee to each other shall be extinguished;
spouse of the adopter; 3. Court shall order the civil registrar to cancel the
amended certificate of birth of the adoptee and
2. Deemed a legitimate child of the adopter; restore his/her original birth certificate;
3. Acquires reciprocal rights and obligations arising 4. Succession rights shall revert to its status prior to
from parent-child relationship; adoption, but only as of the date of judgment of
4. Right to use surname of adopter; judicial rescission;
5. In legal and intestate succession, the adopters and the 5. Vested rights acquired prior to judicial rescission shall
adoptee shall have reciprocal rights of succession be respected.
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. Q: Despite several relationships with different women,
Andrew remained unmarried. His first relationship
Q: Who may file the action for rescission of domestic with Brenda produced a daughter, Amy, now 30 years
adoption? old. His second, with Carla, produced two sons: Jon and
Ryan. His third, with Donna, bore him two daughters:
A: The adoptee has the sole right to sever the legal ties Vina and Wilma. His fourth, while Elena, bore him no
created by adoption and the one who will file the action for children although Elena has a daughter Jane, from a
rescission. However, if the adoptee is still a minor or above previous relationship. His last, with Fe, produced no

CIVIL LAW
biological children but they informally adopted ADOPTER
without court proceedings, Sandy, now 13 years old,
whom they consider as their own. Sandy was orphaned Adopter
as a baby and was entrusted to them by the midwife
who attended to Sandys birth. All the children, 1. Any alien;
including Amy, now live with Andrew in his house. 2. Filipino citizen, both permanently residing abroad.
a. Is there any legal obstacle to the legal adoption of Qualifications needed for a Filipino or alien to adopt
Amy by Andrew?
b. To the legal adoption of Sandy by Andrew and 1. At least 27 years old and 16 years older than the child
Elena? to be adopted at the time of the application unless:
c. In his old age, can Andrew be legally entitled to a. adopter is the parent by nature of the child;
claim support from Amy, Jon, Ryan, Vina, Wilma b. adopter is the spouse of the parent by nature of
and Sandy assuming that all of them have the the child to be adopted
means to support him? 2. If married, his spouse must jointly file for adoption;
d. Can Amy, Jon, Ryan, Vina, Wilma and Sandy legally 3. Has the capacity to act or assume all rights and
claim support from each other? responsibilities of parental authority;
e. Can Jon and Jane legally marry? (2008 Bar 4. Not been convicted of a crime involving moral
Question) turpitude;
5. Eligible to adopt under his national law;
A: 6. In a position to provide for proper care and support
a. No, there is no legal obstacle to the legal adoption of and give necessary moral values;
Amy by Andrew. While a person of age may not be 7. Agrees to uphold the basic rights of the child
adopted, Amy falls within two exceptions: (1) she is mandated by the UN convention of rights of Child and
an illegitimate child and she is being adopted by her the Philippine Laws;
illegitimate father to improve her status; and (2) even 8. Comes from a country with which the Philippines has
on the assumption that she is not an illegitimate child diplomatic relations and adoption is allowed under
of Andrew, she may still be adopted, although of legal his national law;
age, because she has been consistently considered and 9. Possesses all the qualifications and none of the
treated by the adopter as his own child since minority. disqualifications under the law or other applicable
In fact, she has been living with him until now. Philippine laws.
b. Yes. There is a legal obstacle to the adoption of Sandy Necessity of written consent for adoption in inter-
by Andrew and Elena. Andrew and Elena cannot adopt country adoption
jointly because they are not married.
The written consent of the following is necessary for
c. Yes. Andrew can claim support from all of them, adoption:
except from Sandy, who is not his legitimate, 1. Written consent of the adopters biological or adopted
illegitimate or adopted child. children above ten (10) years of age in the form of
sworn statement is required to be attached to the
d. Yes. Amy, Jon, Ryan, Vina and Wilma can ask support application to be filed with the Family Court or Inter-
from each other because they are half-blood brothers Country Adoption Board
and sisters, and Vina and Wilma are full-blood sisters 2. If a satisfactory pre-adoptive relationship is formed
(Art. 195 [5], FC), but not Sandy who is not related to between the applicant and the child, the written
any of them. consent to the adoption executed by the DSWD is
required.
e. Yes. Jon and Jane can legally marry because they are
not related to each other. Jane is not a daughter of Q: Sometime in 1990, Sarah, born a Filipino but by
Andrew. then a naturalized American citizen, and her American
husband Sonny Cruz, filed a petition in the Regional
INTERCOUNTRY ADOPTION ACT OF 1995 Trial Court of Makati, for the adoption of the minor
(R.A. 8043) child of her sister, a Filipina, can the petition be
granted? (2000 Bar Question)
Inter-Country Adoption
A: It depends. If Sonny and Sarah have been residing in
It is a socio-legal process of adopting a Filipino child by a the Philippines for at least 3 years prior to the effectivity of
foreigner or a Filipino citizen permanently residing abroad R.A. 8552, the petition may be granted. Otherwise, the
where the petition is filed, the supervised trial custody is petition cannot be granted because the American husband
undertaken, and the decree of adoption is issued outside is not qualified to adopt.
the Philippines (Sec. 3(a), RA 8043).
While the petition for adoption was filed in 1990, it was
considered refi led 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

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2015 GOLDEN NOTES
exceptions where one of them may adopt alone. When Results of Trial Custody
husband and wife must adopt jointly, the Supreme Court
has held in a line of cases that both of them must be 1. If unsatisfactory the relationship shall be suspended
qualified to adopt. While Sarah, an alien, is qualified to by the board and the foreign adoption agency shall
adopt, for being a former Filipino citizen who seeks to arrange for the childs voluntary care.
adopt a relative within the 4th degree of consanguinity or 2. If satisfactory the Board shall submit the written
affinity, Sonny, an alien, is not qualified to adopt because consent of the adoption to the foreign adoption
he is neither a former Filipino citizen nor married to a agency within 30 days after the request of the latters
Filipino. One of them not being qualified to adopt, their request.
petition has to be denied. However, if they have been
residents of the Philippines 3 years prior to the effectivity NOTE: The child shall be repatriated as a last resort if
of the Act and continues to reside here until the decree of found by the ICAB to be in his/her interests.
adoption is entered, they are qualified to adopt the
nephew of Sarah under Sec. 7(b) thereof, and the petition SUPPORT
may be granted.
Support
ADOPTEE
It comprises everything indispensable for sustenance,
Adoptee dwelling, clothing, medical attendance and transportation,
in keeping with the financial capacity of the family,
Only a legally free child may be adopted provided the including the education of the person entitled to be
following are submitted: supported until he completes his education or training for
1. Child study; some profession, trade or vocation, even beyond the age of
2. Birth certificate/ foundling certificate; majority (Art. 194, FC).
3. Deed of Voluntary Commitment/Decree of
Abandonment/Death Certificate of parents; Characteristics of support
4. Medical evaluation or history;
5. Psychological evaluation; 1. Personal
6. Recent photo; 2. Reciprocal on the part of those who are by law bound
to support each other
Child 3. Intransmissible
4. Mandatory
A child is any person below 15 years old. 5. Provisional character of support judgment
6. Exempt from attachment or execution
NOTE: No child shall be matched to a foreign adoptive 7. Not subject to waiver or compensation
family unless it is satisfactorily shown that the child cannot
be adopted in the Philippines. COMPOSITION OF SUPPORT
GR: There shall be no physical transfer of a voluntarily Composition of support

committed child earlier than 6 months from the date of
execution of Deed of Voluntary Commitment. Support comprises everything indispensable for:
1. Sustenance
XPN: 2. Dwelling
1. Adoption by relative; 3. Clothing
2. Child with special medical condition. 4. Medical attendance
5. Education includes schooling or training for some
INTER-COUNTRY ADOPTION BOARD profession, trade or vocation, even beyond the age of
majority
Function of Inter-Country Adoption Board 6. Transportation includes expenses going to and from
school, or to from place of work
The Inter-Country Adoption Board (ICAB) acts as the
central authority in matters relating to inter-country Kinds of support
adoption. The Board shall ensure that all the possibilities
for adoption of the child under the Family Code have been 1. Legal required or given by law;
exhausted and that the inter-country adoption is in the 2. Judicial required by court; May be:
best interest of the child a. Pendente lite
b. In a final judgment
Trial custody 3. Conventional by agreement.
It is the pre-adoptive relationship which ranges 6 months Rules on support of illegitimate children of either
from the time of the placement. It starts from the actual spouse
transfer of the child to the applicant who, as actual
custodian, shall exercise substitute parental authority over It depends upon the property regime of the spouses.
the person of the child
1. ACP or CP- For the support of the following:

CIVIL LAW
a. spouses; not apply if the
b. common children of the spouses; and spouses are under ACP
c. legitimate children of either spouse based on Art. 153.
Children
NOTE: If the community property or the conjugal From the
partnership is insufficient to cover them, the spouses From the
From the community separate
shall be solidarily liable for the unpaid balance with community
property properties of
their separate properties. property
the spouses
2. Separate property of person- For the support of the Liability to support

following:
The liability to support should be observed in the following
a. illegitimate children; order:
b. legitimate ascendants; 1. Spouse
c. descendants, whether legitimate or illegitimate; 2. Descendants in the nearest degree
d. brothers and sisters, whether legitimately or 3. Ascendants in the nearest degree
illegitimately related (Rabuya, 2009). 4. Brothers and sisters
PERSONS OBLIGED TO GIVE SUPPORT Q: Belen, in behalf of her minor children, instituted a
petition for declaration of legitimacy and support
Persons obliged to support each other against Federico, their alleged father, and Francisco,
father of Federico. It appears that the marriage of the
1. Spouses; two was annulled due to the minority of Federico. May
Francisco be ordered to give support?
NOTE: The spouse must be the legitimate spouse in
order to be entitled to support A: Yes. There appears to be no dispute that the children
are indeed the daughters of Federico by Belen. Under Art.
2. Legitimate ascendants & descendants; 199 of the FC, Whenever two or more persons are obliged
3. Parents and their legitimate children, and the to give support, the liability shall devolve upon the
legitimate and illegitimate children of the latter; following persons in the following order herein provided:
4. Parents and their illegitimate children, and the 1. The spouse;
legitimate and illegitimate children of the latter; 2. The descendants in the nearest degree;
5. Legitimate brothers and sisters whether full or half- 3. The ascendants in the nearest degree: and
blood (Art. 195, FC). 4. The brothers and sisters.
NOTE: Brothers and sisters not legitimately related The obligation to give support rests principally on those
likewise bound to support each other. However, when more closely related to the recipient. However, the more
the need for support of the brother or sister, being of remote relatives may be held to shoulder the
age, is due to a cause imputable to the claimants fault responsibility should the claimant prove that those who
or negligence, in this case, the illegitimate brother or are called upon to provide support do not have the means
sister has no right to be supported (Rabuya, 2009). to do so. Here, since it has been shown that the girls'
father, Federico, had no means to support them, then
Sources of support Francisco, as the girls grandfather, should then extend the
support needed by them.
SOURCES OF SUPPORT
During NOTE: The second option in Art. 204 of the FC, that of
Pending Litigation After Litigation
Marriage taking in the family dwelling the recipient, is unavailing in
Spouses this case since the filing of the case has evidently made the
ACP GR: No relations among the parties bitter and unpleasant
GR: From the obligation to (Mangonon, et al. v. CA, et al., G.R. No. 125041, Jun. 30,
community property support 2006).
assets
XPN: If there is Q: Marcelo and Juana called Dr. Arturo to their house
XPN: If Art. 203
Legal to render medical assistance to their daughter-in-law
applies, that if the
Separation. In who was about to give birth to a child. He performed
claimant spouse is the
From the which case, the the necessary operation. When Dr. Arturo sought
guilty spouse, he/she
community court may payment, Marcelo and Juana refused to pay him
is not entitled to
property require the without giving any good reason. Who is bound to pay
support.
guilty spouse to the bill for the services rendered by Arturo?
give support
CPG
Support is considered A: Her husband, not her father and mother- in-law. The
an advance of such rendering of medical assistance in case of illness is
spouses share. comprised among the mutual obligations to which the
spouses are bound by way of mutual support (Arts. 142
NOTE: The rule does

72
2015 GOLDEN NOTES
and 143). If every obligation consists in giving, doing or Mutual support of the spouses after the final judgment
not doing something (Art. 1088), and spouses are mutually granting the petition for legal separation, annulment
bound to support each other, there can be no question but and declaration of nullity of marriage
that, when either of them by reason of illness should be in
need of medical assistance, the other is under the GR: Spouses are no longer obliged to render mutual
unavoidable obligation to furnish the necessary services of support after final judgment. The obligation of mutual
a physician in order that health may be restored, and he or support ceases after final judgment.
she may be freed from the sickness by which life is
jeopardized. XPN: In case of legal separation the Court may order that
the guilty spouse shall give support to the innocent one.
Q: Cheryl married Edward Lim and they begot three
children. Cheryl, Edward and their children lived at Effect of adultery of the wife
the house of Edwards parents, Prudencio and
Filomena, together with Edwards ailing grandmother Adultery of the wife is a valid defense in an action for
and her husband. Edward was employed with the support. If adultery is proved and sustained, it will defeat
family business, which provided him with a monthly the action for support. But if both are equally at fault, the
salary of P6,000 and shouldered the family expenses. principle of in pari delicto applies in which the husband
Cheryl had no steady source of income. Cheryl caught cannot avail of the defense of adultery.
Edward in a very compromising situation with the
midwife of Edwards grandmother. After a violent Q: H and W are living separately. Both had been
confrontation with Edward, Cheryl left the Forbes Park unfaithful to each other. After their separation, H had
residence. She subsequently sued, for herself and her been giving money to W for her support. Subsequently,
children, Edward, Edwards parents and grandparents W brought an action against H for separate
for support. Edward and his parents were ordered by maintenance. Will the action prosper?
the RTC to jointly provide, monthly support to Cheryl
and her children. Is the courts judgment in making A: Yes. The principle of in pari delicto is applicable. Both
Edwards parents concurrently liable with Edward to are at fault. Consequently, H cannot avail of himself of the
provide support to Cheryl and her children correct? defense of adultery of W. Besides, the act of H in giving
money to W is implied condonation of the adultery of W
A: Yes. However, the Supreme Court modified the (Amacen v. Baltazar, L-10028, May 28, 1958).
appealed judgment by limiting liability of Edwards
parents to the amount of monthly support needed by AMOUNT
Cheryls children. Edwards parents are liable to provide
support but only to their grandchildren. By statutory and Amount of support
jurisprudential mandate, the liability of ascendants to
provide legal support to their descendants is beyond cavil. Amount shall be in proportion to the resources or means
Petitioners themselves admit as much they limit their of the giver and to the necessities of the recipient (Art. 201,
petition to the narrow question of when their liability is FC).
triggered, not if they are liable.
Support may be decreased or increased proportionately
There is no showing that private respondent is without according to the reduction or increase of the necessities of
means to support his son; neither is there any evidence to the recipient and the resources of the person obliged to
prove that petitioner, as the paternal grandmother, was furnish the same (Art. 202, FC).
willing to voluntarily provide for her grandson's legal
support. Cheryl is unable to discharge her obligation to WHEN DEMANDABLE
provide sufficient legal support to her children. It also
shows that Edward is unable to support his children. This The obligation to give support is demandable from the
inability of Edward and Cheryl to sufficiently provide for time the person who has a right to receive support needs it
their children shifts a portion of their obligation to the for maintenance.
ascendants in the nearest degree, both in the paternal
(petitioners) and maternal lines, following the ordering in The support shall be paid only from the date of judicial or
Article 199 (Spouses Lim v. Cheryl Lim, G.R. No. 163209, extrajudicial demand.
October 30, 2009).
The right to support does not arise from mere fact of
SUPPORT DURING MARRIAGE LITIGATION relationship but from imperative necessity without which
it cannot be demanded. The law presumes that such
Source of support during the pendency of legal necessity does not exist unless support is demanded.
separation, annulment and declaration of nullity of
marriage proceedings OPTIONS
The spouses and their common children shall be
supported from the properties of the absolute community Options given to persons giving support
or the conjugal partnership.
1. To give a fixed monthly allowance; or
2. To receive and maintain the recipient in the givers
home or family dwelling (Art. 204, FC).

CIVIL LAW
Edward assails the grant of the support in arrears as
Q: What if support is given by a stranger without the erroneous since under Art. 203 of the FC, there was
knowledge of the person obliged to give support? never any demand for support, judicial or extra-
judicial, from them. Is his contention right?
A:
GR: The stranger shall have the right of reimbursement. A: No. Edward could not possibly expect his daughters to
demand support from him considering their tender years
XPN: Unless it appears that he gave it without any at the time that he abandoned them. In any event, the
intention of being reimbursed (Art. 206, FC). mother of the girls had made the requisite demand for
material support although this was not in the standard
Q: What if the person obliged to give support unjustly form of a formal written demand. Asking one to give
refuses or fails to give support when urgently needed? 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
A: Any third person may furnish support to the needy (Lacson v. Lacson, et al., G.R. No. 150644, August 28, 2006).
individual, with a right of reimbursement (Art. 207, FC).
Q: Noel helped Lea by extending financial help to
ATTACHMENT support Leas children with Edward. May Noel seek
reimbursement of his contributions? If yes, from
Attachment or execution of the right to receive whom may he do so?
support
A: Yes. Pursuant to Art. 207 of the FC, Noel can rightfully
GR: The right to receive support and any money or exact reimbursement from Edward. This provision reads
property obtained as support cannot be attached nor be that "[W]hen the person obliged to support another unjustly
subject to execution to satisfy any judgment against the refuses or fails to give support when urgently needed by the
recipient. latter, any third person may furnish support to the needy
individual, with right of reimbursement from the person
XPN: In case of contractual support or support given by obliged to give support." The resulting juridical relationship
will, the excess in amount beyond that required for legal between the Edward and Noel is a quasi-contract, an
support shall be subject to levy on attachment or equitable principle enjoining one from unjustly enriching
execution. himself at the expense of another (Lacson v. Lacson, et al.,
GR No. 150644, August 28, 2006).
NOTE: Contractual support shall be subject to adjustment
whenever modification is necessary due to changes in Q: Fe and her son Martin sued Martins alleged
circumstances beyond the contemplation of the parties biological father Arnel for support. Arnel denied
having sired Martin, arguing that his affair and
Q: Jurisdictional questions may be raised at any time. intimacy with Fe had allegedly ended in long before
What is the exception with respect to the provisional Martins conception. As a result, Fe and Martin moved
character of judgment for support and the application for the issuance of an order directing all the parties to
of estoppel? submit themselves to DNA paternity testing. The said
motion was granted by the court. Did the order of the
A: Judgment for support is always provisional in character. court convert the complaint for support to a petition
Res Judicata does not apply. The lower court cannot grant a for recognition?
petition based on grounds, such as bigamy, not alleged in
the petition. Such a decision based on grounds not alleged A: The assailed order did not convert the action for
in the petition is void on the ground of no jurisdiction. support into one for recognition but merely allowed Fe to
prove their cause of action. But even if the order effectively
However, if the lower courts void decision is not assailed integrated an action to compel recognition with an action
on appeal which dealt only with the matter of support, the for support, such was valid and in accordance with
losing party is now estopped from questioning the jurisprudence. In Tayag v. Court of Appeals (209 SCRA 665),
declaration of nullity and the SC will not undo the the Supreme Court allowed the integration of an action to
judgment of the RTC declaring the marriage null and void compel recognition with an action to claim one's
for being bigamous. inheritance. A separate action will only result in a
multiplicity of suits. Furthermore, the declaration of
It is axiomatic that while a jurisdictional question may be filiation is entirely appropriate to the action for support
raised at any time, this however admits of an exception (Agustin v. CA, G.R. No. 162571, June 15, 2005).
where estoppel has supervened (Lam v. Chua, G.R. No.
131286, March 18, 2004). Q: Can DNA testing be ordered in a proceeding for
support without violating the constitutional right
Q: Edward abandoned his legitimate children when against self-incrimination?
they were minors. After 19 years from the time
Edward left them, they, through their mother, finally A: Yes. In People v. Yatar (428 SCRA 504), the Supreme
sued him for support, which the court granted. The Court had already upheld the constitutionality of
court ordered him to pay 2M pesos as support in compulsory DNA testing and the admissibility of the
arrears. results thereof as evidence. Moreover, it has mostly been
in the areas of legality of searches and seizure and in the

74
2015 GOLDEN NOTES
infringement of privacy of communication where the waiver of parental authority only in cases of adoption,
constitutional right to privacy has been critically at issue. guardianship and surrender to a children's home or an
orphan institution (Arts. 222-224, FC; Act No. 3094).
If, in a criminal case, an accused whose very life is at stake
can be compelled to submit to DNA testing, so much more Visitation rights
so may a party in a civil case, who does not face such dire
consequences, be likewise compelled. DNA testing and its It is the right of access of a noncustodial parent to his or
results is now acceptable as object evidence without her child or children.
running afoul self-incrimination rights of a person (Agustin
v. CA, GR No. 162571, June 15, 2005). Q: Who are entitled of visitation rights?
PARENTAL AUTHORITY A: The following are entitled for visitation rights:

1. The non-custodial parent in cases of:
Parental authority a. Legal separation
b. Separation de facto
Parental authority refers to mass of rights and obligations c. Annulment
which parents have in relation to the person and property d. Declaration of nullity on the ground of
of their children until the latter reaches the age of psychological incapacity or failure to comply with
majority, the obligational aspect is now supreme. In other the requirements of Article 52
words, the rights of the parents are but ancillary to the 2. Illegitimate father over his illegitimate child
proper discharge of parental duties to their children under
parental authority NOTE: In case of annulment or declaration of absolute
nullity of marriage, Article 49 of the Family Code grants
GENERAL PROVISIONS visitation rights to a parent who is deprived of custody of
his children. Such visitation rights flow from the natural
Patria potestas right of both parent and child to each others company.
There being no such parent-child relationship between
The total rights of parents over the person and property of them, a person has no legally demandable right of
their minor child. visitation (Concepcion vs. Court of Appeals, G.R. 123450,
August 31, 2005).
Parental authority includes
Q: Carlitos Silva and Suzanne Gonzales had a live-in
1. Caring for and rearing of such children for civic relationship. They had two children, namely, Ramon
consciousness and efficiency; Carlos and Rica Natalia. Silva and Gonzales eventually
2. Development of their moral, mental and physical separated. They had an understanding that Silva
character and well-being. would have the children in his company on weekends.
Silva claimed that Gonzales broke that understanding
Characteristics of parental authority on visitation rights. Hence, Silva filed a petition for
custodial rights over the children before the RTC. The
1. Jointly exercised by the father and mother; petition was opposed by Gonzales who claimed that
2. Natural right and duty of the parents; Silva often engaged in gambling and womanizing
3. GR: Cannot be Renounced, transferred or waived; which she feared could affect the moral and social
values of the children. In the meantime, Suzanne had
XPN: In cases authorized by law such as in cases of gotten married to a Dutch national. She eventually
adoption, guardianship and surrender to a children's immigrated to Holland with her children Ramon
home or an orphan institution (Santos v. CA, G.R. No. Carlos and Rica Natalia. Can Silva be denied visitation
113054, March 16, 1995). rights?
4. Purely personal; A: GR: No.

5. Temporary.
XPN: If the fears and apprehensions were unfounded as to
Exercise of parental authority the fathers corrupting influence over the children and if it
is proven therefore that indeed the father is a negative
1. The father and the mother shall jointly exercise influence because of reasons like immorality, drunkenness,
parental authority over the persons of their common etc. on the children, the court, taking into consideration the
children. In case of disagreement, the fathers decision best interest of the children, can deny his petition for the
shall prevail unless there is a judicial order to the exercise of his visitation rights (Silva v. CA, G.R. No. 114742,
contrary. July 17, 1997).
2. If the child is illegitimate, parental authority is with
the mother. Parental preference rule
NOTE: Parental authority and responsibility are The natural parents, who are of good character and who
inalienable and may not be transferred or renounced can reasonably provide for the child are ordinarily entitled
except in cases authorized by law. The right attached to to custody as against all persons.
parental authority, being purely personal, the law allows a

CIVIL LAW
Exercise of parental authority in case of absence, with a communicable disease (Pablo-Gualberto vs.
death, remarriage of either parent, or legal or de facto Gualberto, G.R. 154994 & 156254, June 28, 2005).
separation of parents
NOTE: Mere fact that the mother is a lesbian is not a
1. Absence or death of either parent parent present compelling reason to deprive her of custody without
shall continue exercising parental authority showing that she carried on her purported relationship
2. Remarriage of either parent it shall not affect the with a person of the same sex in the presence of the child
parental authority over the children, unless the court or under circumstances not conducive to the child's proper
appoints another person to be the guardian of the moral development. not even the fact that a mother is a
person or property of the children (Art. 213, FC). prostitute or has been unfaithful to her husband would
3. Legal or de facto separation of parents the parent render her unfit to have custody of her minor child. To
designated by the court. deprive the wife of custody, the husband must clearly
establish that her moral lapses have had an adverse effect
Considerations in the designation of child custody on the welfare of the child or have distracted the offending
spouse from exercising proper parental care (Rabuya,
The Court shall take into account all relevant 2009).
considerations in the designation of the parent, especially
the choice of the child over seven years of age except when Q: If the parents are separated de facto, who between
the parent chosen is unfit. them has custody over their child/ children?
NOTE: The relevant Philippine law on child custody for A: In the absence of a judicial grant of custody to one
spouses separated in fact or in law (Art. 213, 2nd par., FC) is parent, both of them have custody over their
also undisputed: no child under seven years of age shall child/children
be separated from the mother x x x. (This statutory
awarding of sole parental custody to the mother is The parent who has been deprived of the rightful custody
mandatory, grounded on sound policy consideration, of the child may resort to the remedy of habeas corpus
subject only to a narrow exception not alleged to obtain (Salientes v. Abanilla, G.R. No. 162734, August 29, 2006).
here.) Clearly then, the Agreements object to establish a
post-divorce joint custody regime between respondent Q: The petition for declaration of nullity of marriage
and petitioner over their child under seven years old filed by Crisanto against his wife included a prayer for
contravenes Philippine law. The Philippine courts do not custody pendente lite of their 4-year old son. The
have the authority to enforce an agreement that is supplication for custody was based on the alleged
contrary to law, morals, good customs, public order, or immorality of the mother who, the husband asserted,
public policy (Dacasin v. Dacasin, G.R. No. 168785, February was a lesbian. However, the trial court citing Art. 213
5, 2010). of the FC, denied Crisanto's prayer for temporary
custody of his son, there having been no compelling
Tender-Age Presumption reason to so order it. Was the trial court correct in
denying Crisantos prayer for temporary custody?
GR: No child below 7 years of age shall be separated from
the mother because the law presumes that the mother is A: Yes. The petitioner failed to overcome the so-called
the best custodian. "tender-age presumption" rule under Art. 213 of the FC.
There was no compelling evidence of the mother's
XPN: When the court finds compelling reasons to consider unfitness. Sexual preference or moral laxity alone does not
otherwise prove parental neglect or incompetence to deprive the
wife of custody, the husband must clearly establish that
NOTE: The paramount consideration in matters of custody her moral lapses have had an adverse effect on the welfare
of a child is the welfare and well-being of the child of the child or have distracted the errant spouse from
exercising proper parental care.
The use of the word shall in Art. 213 of the FC is
mandatory in character. It prohibits in no uncertain terms NOTE: The general rule that children less than 7 years of
the separation of a mother and her child below 7 years, age shall not be separated from the mother finds its raison
unless such separation is grounded upon compelling d'etre in the basic need of minor children for their
reasons as determined by a court (Lacson v. San Jose- mother's loving care. This is predicated on the "best
Lacson, G.R. No. L-23482, August 30, 1968). interest of the child" principle which pervades not only
child custody cases but also those involving adoption,
Compelling Reason guardianship, support, personal status and minors in
conflict with the law (Pablo-Gualberto v. Gualberto, G.R. No.
The so-called tender-age presumption under Article 213 154994/G.R. No. 156254, Jun. 28, 2005).
of the Family Code may be overcome only by compelling
evidence of the mothers unfitness. The mother has been SUBSTITUTE AND SPECIAL PARENTAL AUTHORITY
declared unsuitable to have custody of her children in one
or more of the following instances: neglect, abandonment, Substitute Parental Authority
unemployment, immorality, habitual drunkenness, drug
addiction, maltreatment of the child, insanity or affliction It is the parental authority which the persons designated
by law may exercise over the persons and property of

76
2015 GOLDEN NOTES
unemancipated children in case of death, absence or
unsuitability of both parents or in default of a judicially Special Parental Authority
appointed guardian.
It is the parental authority granted by law to certain
Order of substitute parental authority persons, entities or institutions in view of their special
relation to children under their supervision instruction or
1. Surviving Grandparent; custody. It is denominated as special because it is limited
and is present only when the child is under their
NOTE: The law considers the natural love of a parent supervision instruction or custody. It can also co-exists
to outweigh that of the grandparents, such that only with the parents parental authority
when the parent present is shown to be unfit or
unsuitable may the grandparents exercise substitute Persons who may exercise special parental authority
parental authority (Santos v. CA, G.R. No. 113054,
March 16, 1995). 1. The school
2. School administrators
2. Oldest brother or sister, over 21 years unless unfit or 3. School teachers
disqualified 4. Individual, entity or institution engaged in child care
3. Actual Custodian over 21 year unless unfit or
disqualified (Art. 216, FC) Scope of special parental authority
4. In case of foundlings, abandoned, neglected or abused
children similarly situated, parental authority shall be The scope of special parental authority and responsibility
entrusted in summary judicial proceedings to heads of applies to all authorized activities, whether inside or
childrens homes, orphanages and similar institutions outside the premises of the school, entity or institution.
duly accredited by the proper government agency
(Art. 217, FC). NOTE: The nature of the liability of persons having special
parental authority over said minors for their acts or
Q: Bonifacia Vancil, a US citizen, is the mother of omissions causing damage to another is principal and
Reeder C. Vancil, a US Navy serviceman who died in the solidary. The parents, judicial guardians or the persons
USA on December 22, 1986. During his lifetime, Reeder exercising substitute parental authority over said minor
had two children named Valerie and Vincent by his shall be subsidiarily liable (Art. 219, FC).
common-law wife, Helen G. Belmes. Bonifacia obtained
a favorable court decision appointing her as legal and Substitute parental authority vis--vis Special parental
judicial guardian over the persons and estate of authority
Valerie Vancil and Vincent Vancil, Jr. She alleged that
Helen was morally unfit as guardian of Valerie SUBSTITUTE PARENTAL SPECIAL PARENTAL
considering that Helens live-in partner raped Valerie AUTHORITY AUTHORITY
several times. Can Bonifacia exercise substitute Exercised in case of: DAU 1. Exercised
parental authority over Valerie and Vincent? concurrently with the
1. Death, parental authority of
A: Bonifacia, as the surviving grandparent, can exercise 2. Absence, or the parents;
substitute parental authority only in case of death, absence 3. Unsuitability of 2. Rests on the theory
or unsuitability of Helen. Considering that Helen is very parents. that while the child is
much alive and has exercised continuously parental in the custody of the
authority over Vincent, Bonifacia has to prove, in asserting person exercising
her right to be the minors guardian, Helens unsuitability. special parental
Bonifacia, however, has not proffered convincing evidence authority, the parents
showing that Helen is not suited to be the guardian of temporarily
Vincent. Bonifacia merely insists that Helen is morally relinquish parental
unfit as guardian of Valerie considering that her live-in authority over the
partner raped Valerie several times. (But Valerie, being child to the latter.
now of major age, is no longer a subject of this
guardianship proceeding.) EFFECTS OF PARENTAL AUTHORITY UPON THE
PERSON OF THE CHILDREN
Even assuming that Helen is unfit as guardian of minor
Vincent, still Bonifacia cannot qualify as a substitute Right to Childs Custody
guardian. She is an American citizen and a resident of
Colorado. Obviously, she will not be able to perform the The right of parents to the custody of their minor children
responsibilities and obligations required of a guardian. In is one of the natural rights incident to parenthood, a right
fact, in her petition, Bonifacia admitted the difficulty of supported by law and sound public policy. The right is an
discharging the duties of a guardian by an expatriate, like inherent one, which is not created by the state or decisions
her. To be sure, she will merely delegate those duties to of the courts, but derives from the nature of the parental
someone else who may not also qualify as a guardian relationship (Sagala-Eslao vs Court of Appeals, G.R. 116773,
(Vancil v. Belmes, G.R. No. 132223, June 19, 2001). January 16, 1997).

CIVIL LAW
Parents right to custody of the child
NOTE: Parents, judicial guardians or those exercising
GR: Parents are never deprived of the custody and care of substitute parental authority over the minor are
their children. subsidiarily liable for said acts and omissions of the minor.
XPNS: Q: Jayson and his classmates were conducting a

1. For cause science experiment about fusion of sulphur powder
and iron fillings under the tutelage of Tabugo, the
NOTE: the law presumes that the childs welfare will subject teacher and employee of St. Joseph College.
be best served in the care and control of his parents. Tabugo left her class while the experiment was
ongoing without having adequately secured the
2. If in consideration of the childs welfare or well-being, students from any untoward incident or occurrence. In
custody may be given even to a non-relative. the middle of the experiment, Jayson checked the
result of the experiment by looking into the test tube
Basis for the duty to provide support with magnifying glass and it was moved towards his
eyes. At that instance, the compound spurted from the
Family ties or relationship, not parental authority. test tube and several particles hit Jaysons eyes. His
left eye was chemically burned, for which he had to
NOTE: The obligation of the parents to provide support is undergo surgery and spend for medication. Jayson
not coterminous with the exercise of parental authority. filed a complaint for damages against the school and
Tabugo. Can the said school and its teacher, Tabugo, be
Rule on the parents duty of representation held liable for the unfortunate incident of Jayson?
GR: Parents are duty-bound to represent their minor A: Yes. The proximate cause of the students injury was the
children in all matters affecting their interests; concurrent failure of petitioners to prevent the foreseeable
mishap that occurred during the conduct of the science
NOTE: This duty extends to representation in court experiment. Petitioners were negligent by failing to
litigations. exercise the higher degree of care, caution and foresight
incumbent upon the school, its administrators and
XPN: A guardian ad litem may be appointed by the court to teachers. Art. 218 of the FC, in relation to Art. 2180 of the
represent the child when the best interest of the child so NCC, bestows special parental authority on a school, its
requires. administrators and teachers, or the individual, entity or
institution engaged in child care, and these persons have
Scope of the parents right to discipline the child responsibility over the minor child while under their
supervision, instruction or custody. Authority and
Persons exercising parental authority may: responsibility shall apply to all authorized activities
1. Impose discipline on minor children as may be whether inside or outside the premises of the school,
required under the circumstances. entity or institution.
2. Petition the court for the imposition of appropriate
disciplinary measures upon the child, which include In this case, the petitioners negligence and failure to
the commitment of the child in entities or institutions exercise the requisite degree of care and caution was
engaged in child care or in childrens homes duly demonstrated by the following: (i) petitioner school did
accredited by the proper government agency. not take affirmative steps to avert damage and injury to its
students although it had full information on the nature of
NOTE: Such commitment must not exceed 30 days. dangerous science experiments conducted by the students
during class; (ii) petitioner school did not install safety
Limitations on the exercise of the right to discipline measures to protect the students who conduct
the child and its consequences experiments in class; (iii) petitioner school did not provide
protective gears and devices, specifically goggles, to shield
Persons exercising such right are not allowed to: students from expected risks and dangers; and (iv)
1. Treat the child with excessive harshness or cruelty; or petitioner Tabugo (the teacher) was not inside the
2. Inflict corporal punishment. classroom the whole time her class conducted the
experiment, specifically, when the accident involving the
Otherwise, the following are its consequences: student occurred (St. Josephs College v. Miranda, G.R. No.
1. Parental authority may be suspended; 182353, June 29, 2010).
2. Parent concerned may be held criminally liable for
violation of RA 7160 (Special Protection of Children EFFECTS OF PARENTAL AUTHORITY UPON THE
against Abuse, Exploitation and Discrimination Act) PROPERTY OF THE CHILDREN
Liability of persons exercising special parental Parental authority upon the property of the children
authority over the child
Legal guardianship can be exercised by the father or
They are principally and solidarily liable for damages mother, jointly, without need of court appointment over
caused by the acts or omissions of the child while under the property of an unemancipated child.
their supervision, instruction or custody.

78
2015 GOLDEN NOTES
NOTE: In case of disagreement, the fathers decision shall 2. Temporarily: it may be revived
prevail unless there is a judicial order to the contrary. a. Adoption of the child;
b. Appointment of general guardian;
Kinds of properties of a minor c. Judicial declaration of abandonment of the child
in a case filed for the purpose;
ADVENTITIOUS PROSFECTITIOUS d. Final judgment divesting parents of parental
authority;
1. Earned or acquired by 1. Property given by the
e. Incapacity of parent exercising parental
the child through his parents to the child for
authority;
work or industry by the latter to administer;
f. Judicial declaration of absence or incapacity of
onerous or gratuitous 2. Owned by the parents;
person exercising parental authority (Art. 229,
title; 3. Parents are
FC).
2. Owned by the child; usufructuary;
3. Child is also the 4. Property administered
NOTE: In case of temporary termination of parental
usufructuary, but the by the child.
authority, parental authority may be revived thru a
childs use of the
court judgment (Rabuya, 2009).
property shall be
secondary to all
Grounds for suspension of PA
collective daily needs of
the family;
1. Gives corrupting orders, counsel or example;
4. Administered by the
2. Treats child with excessive harshness and cruelty;
parents.
3. Subjects/allows child be subjected to acts of
lasciviousness (Art. 231, FC);
Necessity of posting a bond by the parents 4. Conviction of crime with penalty of civil interdiction
(Art. 230, FC);
A parent is required to post a bond if the market value of 5. Culpable negligence of parent or person exercising
the property or the annual income of the child exceeds Php parental authority;
50,000. 6. Compels the child to beg.
NOTE: The bond shall not be less than 10% of the value of NOTE: If the person exercising PA has subjected the child
the property or annual income (Art. 225, FC). or allowed him to be subjected to sexual abuse, he/she
shall be permanently deprived of PA.
Rules regarding the use of the childs property
If the ground for suspension of parental authority is civil
1. The property of minor children shall be devoted to interdiction, the suspension is automatic so as its
their support and education unless the title or reinstatement.
transfer provides otherwise.
2. The parents have the right to use only the fruits and Revocation of suspension of PA and its revival
income of said property for the following purposes:
a. Primarily, to the childs support; The suspension may be revoked and parental authority
b. Secondarily, to the collective daily needs of the revived by filing a case for the purpose, or in the same
family. proceeding if the court finds that the cause therefore had
ceased and will not be repeated.
Rule on lease of property belonging to minor children
Transfer or renunciation of PA
GR: The parents, as legal guardians of the minors
property, may validly lease the same, even without court GR: Parental authority and responsibility are inalienable
authorization, because lease has been considered as an act and may not be transferred and renounced.
of administration.
XPN: In cases authorized by law.
XPNs: Court authorization is required if:
1. If the lease will be recorded in the Registry of NOTE: Parents may exercise authority over their
Property; childrens property.
2. If the lease is for a period of more than one year,
because this is already deemed an act of dominion. Loss of parental authority over the minor under the
Child Abuse Law (R.A. 7610)
SUSPENSION OR TERMINATION OF PARENTAL
AUTHORITY When an ascendant, stepparent or guardian of the minor,
induces, delivers or offers him to any person who would
Grounds for Termination of Parental Authority (PA) keep or have in his company such minor, twelve (12) years
or under or who in ten (10) years or more his junior, in
1. Permanently: any public or private place, hotel, motel, beer joint,
a. Death of parents; discotheque, cabaret, pension house, sauna or massage
b. Emancipation of the child; parlor, beach and/or other tourist resort or similar places.
c. Death of child (Art. 228, FC).

CIVIL LAW
Corporal punishment to any of the parties therein (Republic v. Bermudez-
Lorinom 449 SCRA 57, 2005).
It is the infliction of physical disciplinary measures to a
student. This is absolutely prohibited under the Family 5. Action of a child for delivery of presumptive legitime
Code (Sta. Maria, Jr., Persons and Family Relations Law). 6. Judicial determination of family domicile in case of
disagreement between the spouses
NOTE: While a teacher is administratively liable or civilly 7. Objection of one spouse as to the profession,
liable in the event that he or she inflicts corporal occupation, business or activity of the other (Art. 73,
punishment to a student, it has been held that where there FC in relation to Art. 253, FC).
was no criminal intent on the part of the teacher who 8. Action entrusting parental authority over foundlings,
angrily and repeatedly whipped a student resulting in abandoned, neglected or abused children to heads of
slight physical injuries to the said student and where the institutions (Art. 217, FC in relation to Art. 253, FC).
purpose of the teacher was to discipline a student, the said 9. Annulment by wife of the husband's decision in the
teacher cannot be held feloniously liable for the criminal administration and enjoyment of community or
offense of slight physical injuries (Bagajo v. Marave, G.R. conjugal property (Arts. 96 and 124, FC).
No. L-33345, November 20, 1978, also cited by Sta. Maria, Jr., 10. Appointment of one of the spouses as sole
Persons and Family Relations Law). administrator but only when the other spouse is
absent, or separated in fact, or has abandoned the
EMANCIPATION other or the consent is withheld (Uy v. CA, G.R. No.
109557, November 29, 2000).
Emancipation
Q: W filed a petition with the RTC under the rules on
It is the release of a person from parental authority Summary Judicial Proceedings in the Family Law
whereby he becomes capacitated for civil life. provided for in the FC, for the declaration of the
presumptive death of her absent spouse, H, for
Emancipation takes place by attainment of majority at the purposes of remarriage, based on Art. 41 of the FC.
age of (18) eighteen years (Art. 234, FC, as amended by RA After trial, the RTC rendered a decision declaring the
6809). presumptive death of H. The Republic received a copy
of the decision on November 14, 2001. Subsequently,
Effects of emancipation the Republic filed a Notice of Appeal on November 22,
2001. The RTC held that the appeal was filed within
1. Parental authority over the person and property of the reglementary period and thus, elevated the
the child is terminated records to the Court of Appeals. However, the Court of
2. Child shall be qualified and responsible for all acts of Appeals denied the Republics appeal and accordingly
civil life, save exceptions established by existing laws. affirmed the appealed RTC decision. Did the Court of
3. Contracting marriage shall require parental consent Appeals acquire jurisdiction over the appeal on a final
until the age of 21. and executory judgment of the RTC?
4. The responsibility of parents or guardians for children
and wards below 21 under the second and third A: No. In Summary Judicial Proceedings under the Family
paragraphs of Art. 2180 of the NCC shall not be Code, there is no reglementary period within which to
derogated. perfect an appeal, precisely because judgments rendered
thereunder, by express provision of Art. 247 of the FC, are
SUMMARY JUDICIAL PROCEEDINGS IN FAMILY LAW immediately final and executory. An appellate court
CASES acquires no jurisdiction to review a judgment which, by
express provision of law, is immediately final and
Matters subject to summary proceedings executory. The right to appeal is not a natural right nor is it
a part of due process, for it is merely a statutory privilege.
1. Petition for judicial authority to administer or Since, by express mandate of Article 247 of the Family
encumber specific separate property of the Code, all judgments rendered in summary judicial
abandoning spouse and to use the fruits or the proceedings in Family Law are immediately final and
proceeds thereof for the support of the family (Arts. executory, the right to appeal was not granted to any of
100 (3) and 127 (3), FC in relation to Arts. 239 to 248, the parties therein. The Republic, as oppositor in the
FC). petition for declaration of presumptive death, should not
2. Petition for an order providing for disciplinary be treated differently. It had no right to appeal the RTC
measures over a child (Art. 223, FC in relation to Art. decision of November 7, 2001. The RTC's decision was
249, FC). immediately final and executory upon notice to the parties
3. Petition for approval of bond of parents who exercise (Republic v. Bermudez-Lorino, G.R. No. 160258, January 19,
parental authority over the property of their children 2005).
(Art. 225, FC in relation to Art. 249, FC).
4. Judicial declaration of presumptive death (Art. 41, FC) NOTE: However, an aggrieved party may file a petition for
certiorari to question abuse of discretion amounting to
NOTE: An order of the trial court granting the petition lack of discretion (Republic v. Tango, G.R. No. 161062, July
for judicial declaration of presumptive death pursuant 31, 2009).
to Art. 41 of FC is immediately final and executory
(Art. 247, FC). Hence, the right to appeal is not granted

80
2015 GOLDEN NOTES
RETROACTIVITY OF THE FAMILY CODE
FUNERALS
Rule on the retroactivity of the Family Code
Rules regarding funeral
GR: The Code shall have retroactive effect.
General Guidelines:
XPN: When retroactivity would prejudice vested rights. 1. Duty and right to make arrangements in funerals in
accordance with Art. 199, FC:
Vested right a. Spouse,
b. Descendants in the nearest degree,
Some right or interest in property that has become fixed or c. Ascendants in the nearest degree,
established, and is no longer open to doubt or controversy. d. Brothers and Sisters
Rights are vested when the right to enjoyment, present or
prospective, has become the property of some person as NOTE: In case of descendants of the same degree, or
present interest. of brothers and sisters, the oldest shall be preferred.
Q: Antonia Aruego and her sister Evelyn filed a petition In case of ascendants, the paternal shall have a better
in the courts seeking Jose Aruego, Jr. and his five right (Art, 305, NCC).
children to recognize them as illegitimate children and
compulsory heirs of Jose. They claim that there is open 2. Funeral shall be:
and continuous possession of status of illegitimate a. In keeping with the social position of the
children of Jose who had an amorous relationship with deceased,
their mother Luz Fabian until the time of the death of b. In accordance with the expressed wishes of the
Jose. The court declared that Antonia Aruego is an deceased,
illegitimate daughter of the deceased with Luz Fabian c. In absence of the expressed wishes, his religious
while Evelyn is not. Antonia and Evelyn contested the beliefs or affiliation shall determine;
decision citing provisions of the Family Code d. In case of doubt, the form of funeral is to be
particularly Art. 127 on Filiation, Art. 172 on decided upon by the person obliged to make
illegitimate childrens filiation, and Art. 256 on the arrangements for the same, after consulting the
retroactivity of the code. Whether the provisions of the other members of the family (Art. 307, NCC).
Family Code can be applied retroactively and will it
impair the vested rights of the respondents? 3. Any person who:
a. shows disrespect to the dead, or
A: The action for compulsory recognition and enforcement b. wrongfully interferes with a funeral shall be
of successional rights which was filed prior to the advent liable to the family of the deceased for damages,
of the FC, must be governed by Art. 285 of the NCC and not
material and moral (Art. 309, NCC)
by Art. 175, par. 2 of the FC. The present law cannot be
given retroactive effect insofar as the instant case is 4. Funeral expenses are chargeable against the property
concerned, as its application will prejudice the vested right of the deceased. However, if the deceased is one of the
of private respondent to have her case decided under Art. spouses, they are chargeable against the conjugal
285 of the NCC. The right was vested to her by the fact that partnership property (Art. 310, NCC).
she filed her action under the regime of the NCC.
Prescinding from this, the conclusion then ought to be that Q: Adriano and Rosario are married to each other.
the action was not yet barred, notwithstanding the fact However, their marriage turned into sour and they
that it was brought when the putative father was already were eventually separated-in-fact. Years later, Adriano
deceased, since private respondent was then still a minor met Fe which he courted and eventually decided to live
when it was filed, an exception to the general rule together as husband and wife while his marriage with
provided under Art. 285 of the NCC. Hence, the trial court, Rosario is still subsisting. Adriano later died while
which acquired jurisdiction over the case by the filing of Rosario and the rest of his family are in the United
the complaint, never lost jurisdiction over the same States spending their Christmas vacation. When
despite the passage of E.O. No. 209, also known as the Rosario learned of Adrianos death, she immediately
Family Code of the Philippines (Aruego v. CA,G.R. No. called Fe for the delay of Adrianos interment which
112193, March 13, 1996). was unheeded by Fe. The remains of Adriano were
interred at the mausoleum of Fes family allegedly
NOTE: If an action for recognition was filed prior to the according to Adrianos oral request from her. Who
effectivity of the FC, Art. 173 of the FC cannot be given between Rosario and Fe is entitled to the remains of
retroactive effect because it will prejudice the vested Adriano?
rights of petitioners transmitted to them at the time of the
death of their father, Eutiquio Marquino. "Vested right" is a A: It is clear that the law gives the right and duty to make
right in property which has become fixed and established funeral arrangements to Rosario, she being the surviving
and is no longer open to doubt or controversy. It expresses legal wife of Atty. Adriano. The fact that she was living
the concept of present fixed interest, which in right reason separately from her husband and was in the United States
and natural justice should be protected against arbitrary when he died has no controlling significance. To say that
State action (Marquino v. IAC, G.R. No. 72078, June 27, Rosario had, in effect, waived or renounced, expressly or
1994). impliedly, her right and duty to make arrangements for the

CIVIL LAW
funeral of her deceased husband is baseless. The right and handwritten
duty to make funeral arrangements, like any other right, instrument (Art. 176,
will not be considered as having been waived or FC, as amended by RA
renounced, except upon clear and satisfactory proof of 9255)
conduct indicative of a free and voluntary intent to that
end. While there was disaffection between Atty. Adriano Under the amendatory
and Rosario and their children when he was still alive, the provisions of RA 9255, the
Court also recognizes that human compassion, more often use of the illegitimate
than not, opens the door to mercy and forgiveness once a father's surname is
family member joins his Creator. PERMISSIVE and not
obligatory (Rabuya, 2009).
Even assuming, ex gratia argumenti, that Atty. Adriano Conceived prior to
truly wished to be buried in the Fes family plot at the Fathers
annulment of marriage
Manila Memorial Park, the result remains the same. Article Conceived after
307 simply seeks to prescribe the "form of the funeral Mothers
annulment of marriage
rites" that should govern in the burial of the deceased. The
right and duty to make funeral arrangements reside in the Rule with regard to the use of surname of a married
persons specified in Article 305 in relation to Article 199 of woman
the Family Code. Even if Article 307 were to be interpreted
to include the place of burial among those on which the FACTUAL
wishes of the deceased shall be followed, Dr. Arturo M. CIRCUMSTANCE OF THE SURNAME TO BE USED
Tolentino (Dr. Tolentino), an eminent authority on civil WIFE
law, commented that it is generally recognized that any 1. First name and
inferences as to the wishes of the deceased should be maiden name +
established by some form of testamentary disposition. As husbands surname
Article 307 itself provides, the wishes of the deceased must 2. First name +
be expressly provided. It cannot be inferred lightly, such as husbands surname
from the circumstance that Atty. Adriano spent his last 3. Husbands full name +
remaining days with Valino. It bears stressing once more prefix indicating that
that other than Valinos claim that Atty. Adriano wished to Valid marriage (before
she is his wife (e.g.
be buried at the Fes family plot, no other evidence was husband dies)
Mrs.)
presented to corroborate it (Valino v. Adriano, G.R. No. Art. 370
4. Retain the use of her
182894, April 22, 2014). maiden name
USE OF SURNAMES *Use of husbands

surname is not a duty but
Rule with regard to the use of surname by a child who merely an option for the
is (1) legitimate, (2) legitimated, (3) adopted and (4) wife
illegitimate Wife is the Shall resume using her
guilty party maiden name
CHILD CONCERNED SURNAME TO BE USED
Choices:
Legitimate
Fathers 1. Resume using her
Legitimated maiden name
Adopted Adopters 2. Continue using
Mothers or Fathers if Marriage husbands surname
requisites of R.A. 9255 are is
complied with Annulled Wife is the
Unless:
Art. 371 innocent
a. Court decrees
NOTE: An illegitimate party
otherwise;
child shall have the b. She or the former
"option" to use the husband is married
surname of the father in again to another
the following instances: person
1. If his/her filiation has
Illegitimate
been expressly Wife shall continue using
recognized by the Legally Separated the name and surname
father through the Art. 372 employed by her prior to
record of birth the legal separation.
appearing in the civil She may use the
register; or Widowed Spouse deceaseds husbands
2. When an admission of Art. 373 surname as though he
paternity is made by were still living.
the father in a public
Divorced (at least if they Choices same as
document or private
allow it later or for those widowed spouse.

82
2015 GOLDEN NOTES
who got divorced during when a married woman applicant may exercise the option
the Japanese occupation) to revert to the use of her maiden name. These are death of
husband, divorce, annulment, and declaration of nullity of
Grounds for change of name which have been held marriage.
valid
In case of renewal of passport, a married woman may
1. One has Continuously used and been known since either adopt her husbands surname or continuously use
childhood by a Filipino name and was unaware of her maiden name. However, once she opted to use her
alien parentage; husbands surname in her original passport, she may not
2. The change results as a Legal consequence, as in revert to the use of her maiden name, except if any of the
legitimation; four grounds provided under R.A. 8239 is present.
3. There is a sincere desire to adopt a Filipino name to
Erase signs of former alienage, all in good faith and Further, even assuming R.A. 8239 conflicts with the Civil
without prejudicing anyone; Code, the provisions of R.A. 8239 which is a special law
4. The change will Avoid confusion; specifically dealing with passport issuance must prevail
5. The name is: over the provisions of the Civil Code which is the general
a. Ridiculous, law on the use of surnames. A basic tenet in statutory
b. Extremely difficult to write or pronounce, construction is that a special law prevails over a general
c. Dishonorable. law (Remo v. Sec. of Foreign Affairs, G.R. No. 169202, March
5, 2010).
Q: Can a person change his registered first name and
sex on the basis of a sex reassignment? Elements of usurpation of name
A: No. Before a person can legally change his given name, 1. Actual use of anothers name by the defendant;
he must present proper or reasonable cause or any 2. Use is unauthorized;
compelling reason justifying such change. In addition, he 3. Use of anothers name is to designate personality or
must show that he will be prejudiced by the use of his true identify a person.
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 Remedies available to the person whose name has
at birth, visually done by the birth attendant (the physician been usurped
or midwife) by examining the genitals of the infant.
Considering that there is no law legally recognizing sex 1. Civil insofar as private persons are concerned:
reassignment, the determination of a persons sex made at a. Injunction
the time of his or her birth, if not attended by error, is b. Damages
immutable (Silverio v. Republic, G.R. No. 174689, October 2. Criminal when public affairs are prejudiced.
22, 2007).
Use of anothers name is not always actionable
Procedural requirements for a petition for change of
name It is not actionable when it is used as stage, screen or pen
name.
1. 3 years residency in the province where the change is
sought prior to the filing (Sec. 2, Rule 103, Rules of Provided:
Court); 1. Use is in good faith;
2. Must not be filed within 30 days prior to an election 2. No injury is caused to the rights of the person
(Sec. 3, Rule 103, Rules of Court); whose name was used;
3. Petition must be verified (Sec. 2, Rule 103, Rules of 3. Use is motivated by:
Court). a. Modesty
b. Desire to avoid unnecessary trouble
Q: Virginia Remo, a Filipino citizen, is married to c. Other reason not prohibited by law or
Francisco Rallonza. In her passport, the following morals.
entries appear: "Rallonza" as her surname, "Maria
Virginia" as her given name, and "Remo" as her middle MIDDLE NAME
name. Prior to the expiration of her passport, Virginia
applied for the renewal of her passport with the DFA, Middle name
with a request to revert to her maiden name and
surname in the replacement passport. Virginia, relying A middle name has practical or legal significance as it
on Article 370 of the Civil Code, contends that the use serves to identify the maternal pedigree or filiation of a
of the husbands surname by the wife is permissive person and distinguishes him from others who may have
rather than obligatory. Is Virginia correct? the same given name and surname as he has. Art. 364 of
the Civil Code states that legitimate and legitimated
A: No. A married woman has an option, but not a duty, to children shall principally use the surname of their father.
use the surname of the husband in any of the ways Art. 174 of the Family Code gives legitimate children the
provided by Art. 370 of the Civil Code. However, R.A. 8239 right to bear the surnames of the father and mother, while
or the Philippine Passport Act of 1996 limits the instances illegitimate children, under Art. 176, as amended by R.A.

CIVIL LAW
9255, shall use the surname of their mother, unless their ruling upon the statutory principle that adoption statutes,
father recognizes their filiation, in which case, they may being humane and salutary, should be liberally construed
bear the father's surname. In the case of these children, to carry out the beneficent purposes of adoption. The
their registration in the civil registry requires that their modern trend is to consider adoption not merely as an act
middle names be indicated therein, apart of course from to establish a relationship of paternity and filiation, but
their given names and surnames (In re: Petition for Change also as an act which endows a child with legitimate status
of Name and/or Correction of Entry in the Civil Registry of (In the Matter of the Adoption of Stephanie Nathy Astorga
Julian Lin Carulasan Wang, 454 SCRA 155). Garcia, G.R. No. 148311. March 31, 2005).
Q: Does an illegitimate child have a middle name? Q: The petition filed by the parents in behalf of their
minor son Julian Lin Carulasan Wang sought the
A: No. An illegitimate child whose filiation is not dropping of the latter's middle name, "Carulasan." The
recognized by the father bears only a given name and his parents averred that their plan for Julian to study in
mother's surname, and does not have a middle name. It is Singapore and adjust to its culture necessitates the
only when the illegitimate child is legitimated by the drop since in that country, middle names or the
subsequent marriage of his parents or acknowledged by mother's surname are not carried in a person's name.
the father in a public document or private handwritten They therefore anticipate that Julian may be subjected
instrument that he bears both his mother's surname as his to discrimination on account of his middle name,
middle name and his father's surname as his surname (In which is difficult to pronounce in light of Singapore's
Re: Petition for Change of Name of Julian Wang v. Cebu Civil Mandarin language which does not have the letter "R"
Registrar, G.R. No. 155966, March 30, 2005). but if there is, Singaporeans pronounce it as "L."
Should the petition for the dropping of his middle
Q: Honorato filed a petition to adopt his minor name be granted?
illegitimate child Stephanie. Stephanie has been using
her mother's middle name and surname. He prayed A: No. Petitioners justification for seeking the change in
that Stephanie's middle name be changed from the name of their child, that of convenience, was
"Astorga" to "Garcia," which is her mother's surname characterized by the Supreme Court as amorphous, to say
and that her surname "Garcia" be changed to the least, and would not warrant a favorable ruling. As
"Catindig," which is his surname. This the trial court Julian is only a minor and has yet to understand and
denied. Was the trial court correct in denying appreciate the value of any change in his name, it is best
Honoratos request for Stephanies use of her mothers that the matter be left to his judgment and discretion when
surname as her middle name? he reaches legal age.
A: No. The name of an individual has two parts the given The State has an interest in the names borne by individuals
name or proper name and the surname or family name. and entities for purposes of identification, and that a
The given name may be freely selected by the parents for change of name is a privilege and not a right, such that
the child, but the surname to which the child is entitled is before a person can be allowed to change the name given
fixed by law. The Civil Code (Arts. 364 to 380) is silent as him either in his birth certificate or civil registry, he must
to the use of a middle name. Even Art. 176 of the FC, as show proper or reasonable cause, or any compelling
amended by R.A. 9255 (An Act Allowing Illegitimate reason which may justify such change. Otherwise, the
Children to Use the Surname of Their Father) is silent request would be denied (In Re: Petition for change of
as to what middle name a child may use. name and/or correction/cancellation of entry in civil
registry of Julian Lin Carulasan Wang, G.R. No. 159966,
An adopted child is entitled to all the rights provided by March 30, 2005).
law to a legitimate child without discrimination of any
kind, including the right to bear the surname of her father NOTE: The touchstone for the grant of a change of name is
and her mother. As she had become a legitimate child on that there be proper and reasonable cause for which the
account of her adoption, it follows that Stephanie is change is sought.
entitled to utilize the surname of her father, Honorato
Catindig, and that of her mother, Gemma Garcia. Q: Giana was born to Andy and Aimee, who at the time
of Gianas birth were not married to each other. While
Since there is no law prohibiting an illegitimate child Andy was single at that time, Aimee was still in the
adopted by her natural father, like Stephanie, to use, as process of securing a judicial declaration of nullity on
middle name her mother's surname, the High Court found her marriage to her ex-husband. Giannas birth
no reason why she should not be allowed to do so. certificate, which was signed by both Andy and Aimee,
registered the status of Gianna as legitimate, her
NOTE: The Supreme Court granted the petition for 2 surname carrying that of Andys, and that her parents
reasons: were married to each other.
1. The adopted child's continued use of her
mother's surname as her middle name will Can a judicial action for correction of entries in
maintain her maternal lineage; and Giannas birth certificate be successfully maintained
2. It will also eliminate the stigma of her to:
illegitimacy.
a. Change her status from legitimate to
The Supreme Court, in granting the petition, predicated its illegitimate; and

84
2015 GOLDEN NOTES
b. Change her surname from that of Andys to administrative procedure for change of first name
Aimees maiden surname? only and not for change of surname.
c. Instead of a judicial action, can administrative
proceedings be brought for the purpose of making d. No, Gianna will not be legitimated. While the court
the above corrections? may have declared the marriage void ab initio and,
d. Assuming that Aimee is successful in declaring her therefore, no marriage took place in the eyes of the
former marriage void, and Andy and Aimee law, Gianna will still not be legitimated. This is
subsequently married each other, would Gianna because at the time she was conceived and born, her
be legitimated? (2008 Bar Question) biological parents could not have validly married each
other. For their marriage to be valid, the court must
A: first declare the first marriage null and void. In the
a. A judicial action cannot be maintained to change the problem, Gianna was conceived and born before the
status of Gianna from legitimate to illegitimate court has decreed the nullity of her mothers previous
child of Andy and Aimee. While it is true that Gianna is marriage.
the biological daughter of Andy and Aimee conceived
and born without marriage between them, Gianna is NOTE: The word "principally" as used in the codal
presumed, under the law as the legitimate child of provision is not equivalent to "exclusively" so that there is
Aimee and her husband. This filiation may be no legal obstacle if a legitimate or legitimated child should
impugned only by the husband. To correct the status choose to use the surname of its mother to which it is
of Gianna in her birth certificate from legitimate child equally entitled. If the mother's surname is used by the
of Andy and Aimee to illegitimate child of Andy and child since childhood and the child has been using it
Aimee will amount to indirectly impugning her already in various records, then there is an ample
filiation as the child of Aimees husband in a proper justification for the continuation of the use of the mothers
action. What cannot be done directly cannot be done surname. It is therefore, not whimsical, but on the
indirectly. contrary, is based on a solid and reasonable ground, i.e. to
avoid confusion (Alfon v. Republic, G.R No. L-51201, May 29,
b. A judicial action to change the surname of Gianna 1980).
from the surname of Andy to the maiden surname of
Aimee is also not allowed. Gianna, being presumed to ABSENCE
be the legitimate child of Aimees husband is required
by law to be registered under the surname of Aimees PROVISIONAL MEASURES IN CASE OF ABSENCE
husband. While it is true that Giannas registered
surname is erroneous, a judicial action for correction Absence
of entry to change the surname of Gianna to that of
Aimees maiden surname will also be erroneous. A The special status of a person who has left his domicile and
judicial action to correct an entry in the birth thereafter his whereabouts and fate are unknown, it being
certificate is allowed to correct an error and not to uncertain whether he is already dead or still alive
commit another error. (Olaguiviel v. Morada, 63 O.G. 4940).
Alternative Answers: It may be noted that the Kinds of absence

problems does not show whether Gianna was born
while Aimee was living with her ex-husband. Neither 1. Physical Absence
does it show who filed the judicial action to correct 2. Legal Absence
the entries.
3 Stages of Absence
If the problem is intended only for purpose of
determining whether factual changes are in order, 1. Provisional Absence when a person disappears from
then the answers are: his domicile his whereabouts being unknown, without
a. A change from legitimate to illegitimate is leaving an agent to administer his property (Art. 381,
proper upon proof of lack of marriage between NCC).
Andy and Aimee. 2. Declared Absence when a person disappears from
b. If the child is considered illegitimate, then she his domicile and 2 years thereafter have elapsed
should follow the surname of her mother. without any news about him or since the receipt of
the last news, or 5 years have elapsed in case he left a
c. Under R.A. 9048, only typographical errors are person to administer his property (Art. 384, NCC).
allowed to be corrected administratively. The change 3. Presumptive Death the absentee is presumed dead
of status from legitimate to illegitimate is not a (Jurado, 2009)
typographical error and even assuming that it is, its
administrative correction is not allowed under R.A. Provisional absence
9048. Typographical errors involving status, age,
citizenship, and gender are expressly excluded from 1. When a person disappears from his domicile
what may be corrected administratively. 2. His whereabouts are unknown and:
a. he did not leave any agent; or
The change of the surname is also not allowed b. he left an agent but the agents power has expired
administratively. R.A. 9048 provides for an

CIVIL LAW
Remedy of an interested party, a relative or a friend of
the absentee to protect the latter's interest ADMINISTRATION OF THE PROPERTY OF THE
ABSENTEE
They may petition the Court for the appointment of a
representative to represent the absentee in all that may be Administration of the property of the absentee ceases
necessary. when:
1. Absentee appears personally or by means of an agent.
Duty of the Court after appointing the representative 2. Death of the absentee is proved and his testate or
intestate heirs appear.
The Court shall: 3. A third person appears, showing by a proper
1. Take the necessary measures to safeguard the rights document that he has acquired the absentee's
and interests of the absentee. property by purchase or other title.
2. Specify the powers, obligations, and remuneration of
the representative. PRESUMPTION OF DEATH
3. Regulate the powers, obligations and remuneration
according to the circumstances by the rules Kinds of presumed death
concerning guardians (Art. 382, NCC).
1. Ordinary presumption- ordinary absence; absentee
Order of preference in the appointment of a disappears under normal conditions without danger
representative or idea of death.
2. Extraordinary presumption- qualified absence;
1. Spouse present, except, when legally separated. disappearance with great probability of death.
2. In the absence of spouse, any competent person (Art.
383, NCC). Rules in ordinary presumption of death
NOTE: The administrator of the absentee's property shall In case of:

be appointed in accordance with the same order. 1. Disappearance upon or before reaching the age of
seventy five (75) years:
DECLARATION OF ABSENCE a. After an absence of seven (7) years -the absentee
is presumed dead for all purposes except,
Requisites for a declaration of absence succession.
b. After an absence of ten (10) years - the absentee
1. The absentee have disappeared from his domicile is presumed dead for all purposes including
2. His whereabouts are not known succession.
3. He has been absent without any news for 2 years, if 2. Disappearance at the age of seventy six (76) years or
nobody was left to administer his property or 5 years older, after an absence of five (5) years -the absentee
if somebody was left to administer such property is presumed dead for all purposes including
succession.
Absence may be judicially declared if:
1. The absentee left no agent to administer his property- NOTE: The word absence in the rule that a presumption
after two (2) years without any news about the of death is raised by the absence of a person from his
absentee or since receipt of the last news. domicile when unheard of for seven years, means that a
2. The absentee has left a person to administer his person is not at the place of his domicile and his actual
property- after five (5) years. residence is unknown, and it is for this reason that his
existence is doubtful, and that, after seven years of such
Person who may ask for the declaration of absence absence, his death is resumed. But removal alone is not
enough (Gorham v. Settegast, 98 SW 655, also cited by Sta.
1. Spouse present Maria, Jr. Persons and Family Relations Law).
2. Heirs instituted in a will
3. Relatives who may succeed by intestacy Presumption of death of absentee under an ordinary
4. Persons who may have over the property of the presumption
absentee some right subordinated to the condition of
his death. Absentee is presumed to have died under an ordinary
presumption at the end of the five, seven or ten year
Effectivity of judicial declaration of absence period, as the case may be.
Judicial declaration of absence takes effect six (6) months Presumption of death for all purposes
after its publication in a newspaper of general circulation.
The following are presumed dead for all purposes
NOTE: A judicial declaration of absence is necessary for including the division of estate among heirs in case of
interested persons to be able to protect their rights, extraordinary presumption of death (Art. 391, FC):
interests and benefits in connection with the person who 1. Person on board a vessel lost during a sea voyage, or
has disappeared. It is also necessary to protect the interest an airplane which is missing, who has not been heard
of the absentee (Sta. Maria, Jr., Persons and Family of for four (4) years since the loss of the vessel or
Relations Law). airplane;

86
2015 GOLDEN NOTES
2. Person in the armed forces who has taken at in war, provisions of the FC requiring Juana to exhibit "well-
and has been missing for four (4) years; founded belief" will, ultimately, result in the
3. Person who has been in danger of death under other invalidation of her second marriage, which was valid
circumstances and his existence has not been known at the time it was celebrated. Such a situation would
for four (4) years. be untenable and would go against the objectives that
the Family Code wishes to achieve.
Presumption of death of absentee under an
extraordinary presumption b) No. Under the NCC, the presumption of death is
established by law and no court declaration is needed
The absentee presumed to have died under an for the presumption to arise. For the purposes of the
extraordinary presumption at the time of disappearance. civil marriage law, Art. 83 of the Civil Code, it is not
i.e. when the calamity took place. necessary to have the former spouse judicially
declared an absentee. The law only requires that the
Q: May a petition for the declaration of presumptive former spouse has been absent for seven consecutive
death be the subject of a judicial declaration, if it is the years at the time of the second marriage, that the
only question upon which a competent court has to spouse present does not know his or her former
pass? spouse to be living, that such former spouse is
generally reputed to be dead and the spouse present
A: No. Under the NCC, the presumption of death is so believes at the time of the celebration of the
established by law and no court declaration is needed for marriage. Since death is presumed to have taken place
the presumption to arise. Moreover, it is clear that a by the seventh year of absence, Arturo is to be
judicial declaration that a person is presumptively dead, presumed dead starting October 1982.
being a presumption juris tantum only, subject to contrary
proof, cannot become final. If a judicial decree declaring a Further, the presumption of death cannot be the
person presumptively dead, cannot become final and subject of court proceedings independent of the
executory even after the lapse of the reglementary period settlement of the absentees estate. In case the
within which an appeal may be taken, then a petition for presumption of death is invoked independently of
such a declaration is useless, unnecessary, superfluous and such an action or special proceeding, there is no right
of no benefit to the petitioner. to be enforced nor is there a remedy prayed for by the
petitioner against her absent husband. Neither is
Q: Juana married Arturo in January 1973. However, there a prayer for the final determination of his right
because the latter was unemployed the spouses or status or for the ascertainment of a particular fact,
constantly argued. Thus, Arturo left the conjugal for the petition does not pray for a declaration that
dwelling on October 1975. Years passed without any the petitioner's husband is dead, but merely asks for a
word from Arturo. Juana didnt hear any news of declaration that he be presumed dead because he had
Arturo, his whereabouts or even if he was alive or not. been unheard of for seven years. In sum, the petition
Believing that Arturo was already dead, Juana married for a declaration that the petitioner's husband is
Dante on June 1986. Subsequently, however, Dante's presumptively dead, even if judicially made, would
application for naturalization filed with the United not improve the petitioner's situation, because such a
States Government was denied because of the presumption is already established by law (Valdez v.
subsisting marriage between Juana and Arturo. Hence, Republic, G.R. No. 180863, September 8, 2009).
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.
a. Was the RTC correct in dismissing the petition

based on Article 41 of the Family Code?
b. 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 FC. Under the
Civil 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

CIVIL LAW
Declaration of presumptive death for purpose of provisions of
contracting subsequent marriage v. Opening Article 391 of
succession and declaration of absence under the Rules the Civil Code
of Court (Art. 41, FC)
Effect of reappearance
DECLARATION OF PRESUMPTIVE If the absentee It does not The trustee or
DEATH FOR THE PURPOSE OF: appears, or automatically administrator
DECLARATION
CONTRACTING without terminate the shall cease in the
OPENING OF OF ABSENCE
SUBSEQUENT appearing his subsequent performance of his
SUCCESSION
MARRIAGE existence is marriage. To office, and the
Applicable laws proved, he shall cause the property shall be
Arts. 390-396, Arts. 41-44, Rule 107, Rules of recover his termination of placed at the
Civil Code Family Code Court property in the the subsequent disposal of those
Who may file petition condition in marriage, the who may have a
1. Spouse which it may be reappearance right thereto.
present; found, and the must be made in
2. Heirs price of any an affidavit of
instituted in property that reappearance
the will; may have been and the
3. Relatives who alienated or the recording of a
Absentees co- will succeed by property sworn statement
heirs, heirs, intestacy; or acquired of the fact and
assigns, 4. Those who therewith; but circumstances of
Spouse present he cannot claim such
representative have over the
or successors- property of the either fruits or reappearance in
in-interest absentee some rents. (Art. 392, the civil registry.
right Civil Code)
subordinated If, however,
to the there was
condition of previous
his death (Sec. judgment
2, Rule 107). annulling or
Purpose of petition declaring the
To appoint an prior marriage
administrator over void, then the
For the purpose the properties of reappearance of
of contracting the absentee. This the absent
To open spouse, the
subsequent is proper only
succession execution of the
marriage by where the
spouse present absentee has affidavit, and the
properties to be recording of the
administered sworn statement
When to file petition shall not result
GR: 4 to the
consecutive years After 2 years: termination of
absence of 1. From his the subsequent
spouse and the disappeara marriage.
GR: Absence of
spouse present nce and
ten years. CIVIL REGISTRAR
has a well- without
founded belief any news
XPN: If he ARTICLE 407-413
that the absent about the
disappeared
spouse was absentee;
after the age of Civil register
already dead or
seventy-five
2. From the
years, an Refers to the various registry books and related
XPN: 2 last news
absence of five certificates and documents kept in the archives of the local
consecutive years about the
years shall be civil registry offices, Philippine Consulate, and of the Office
absence of absentee.
sufficient in of the Civil Registrar General.
spouse In case
order that his
of disappearance After 5 years: If he
succession may Recorded in the civil register concerning civil status of
where there is left an
be opened persons
danger of death administrator of
under the his property (Sec.
circumstances 2). The following shall be recorded in the civil register
set forth in the concerning civil status of persons:
1. Acts

88
2015 GOLDEN NOTES
2. Events Rule with regard to changing or correction of entries
3. Judicial decrees in the civil register
Civil status GR: No entry in a civil register shall be changed or

corrected without a judicial order.
The circumstances affecting the legal situation or sum total
of capacities or incapacities of a person in view of his age, XPNs:
nationality and family membership (Beduya v. Republic, 1. Clerical or typographical errors and
G.R. L-71639, May 29, 1964). It also includes all his personal 2. Change of first name or nickname which can be
qualities and relations, more or less permanent in nature, corrected or changed administratively by the
not ordinarily terminable at his own will, such as his being concerned city or municipal civil registrar or consul
legitimate or illegitimate, or his being married or not. general in accordance with the provisions of RA 9048
(Clerical Error Law).
Acts authorized to be entered in the civil register
Clerical or Typographical error
1. Legitimation
2. Acknowledgment of illegitimate children It refers to a mistake committed in the performance of
3. Naturalization clerical work in writing, copying, transcribing or typing an
entry in the civil register that is harmless and innocuous,
Events authorized to be entered in the civil register such as misspelled name or misspelled place of birth or the
like, which is visible to the eyes or obvious to the
1. Birth understanding, and can be corrected or changed only by
2. Marriages reference to other existing record or records: Provided,
3. Naturalization that no correction must involve the change of , nationality,
4. Death age, status or sex of the petitioner (Section 2(c), RA 9048).
Judicial decrees authorized to be entered in the civil Q: Zirxthoussous delos Santos filed a petition for
register change of name with the Office of the Civil Registrar of
Mandaluyong City under the administrative
1. Legal separation proceeding provided in RA No. 9048. He alleged that
2. Annulments of marriage his first name sounds ridiculous and is extremely
3. Declarations of nullity of marriage difficult to spell and pronounce. After complying with
4. Adoption the requirements of the law, the Civil Registrar
5. Naturalization granted his petition and changed his first name
6. Loss or recovery of citizenship Zirxthoussous to "Jesus." His full name now reads
7. Civil interdiction "Jesus delos Santos."
8. Judicial determination of filiation
9. Changes of name (Silverio v. Republic, G.R. No. 174689, Jesus delos Santos moved to General Santos City to
October 22, 2007) work in a multi-national company. There, he fell in
love and married Mary Grace delos Santos. She
Nature of the books making up the civil register and requested him to have his first name changed because
the documents relating thereto his new name "Jesus delos Santos" is the same name as
that of her father who abandoned her family and
The books and documents shall be considered public became a notorious drug lord. She wanted to forget
documents and shall be prima facie evidence of the facts him. Hence, Jesus filed another petition with the Office
therein contained. of the Local Civil Registrar to change his first name to
"Roberto." He claimed that the change is warranted
NOTE: Applications for delayed registration of birth go because it will eradicate all vestiges of the infamy of
through a rigorous process. The books making up the civil Mary Grace's father. Will the petition for change of
register are considered public documents and as a public name of Jesus delos Santos to Roberto delos Santos
document, a registered certificate of live birth enjoys the under Republic Act No. 9048 prosper? (2006 Bar
presumption of validity (Nieves Estares Baldos, substituted Question)
by Francisco Baldos and Martin Baldos v. Court of Appeals
and Reynaldo Pillazar a.k.a. Reynaldo Estares Baldos, G.R. A: No, under the law, Jesus may only change his name
No. 170645, July 9, 2010). once. In addition, the petition for change of name may be
denied on the following grounds:
R.A. 9048 1. Jesus is neither ridiculous, nor tainted with dishonor
nor extremely difficult to write or pronounce.
Effectivity of RA 9048 2. There is no confusion to be avoided or created with
the use of the registered first name or nickname of the
R.A. 9048 took effect on March 22, 2001 petitioner.
3. The petition involves the same entry in the same
document, which was previously corrected or
changed under the Rules and Regulations
Implementing RA 9048.

CIVIL LAW
any compelling reason justifying such change. In
RULE 108, RULES OF COURT addition, he must show that he will be prejudiced by
the use of his true and official name. In this case, he
Clerical or typographical errors cannot be corrected failed to show, or even allege, any prejudice that he
under Rule 108 of the Rules of Court might suffer as a result of using his true and official
name.
The correction or change of clerical or typographical
errors can now be made through administrative b. No. Under RA 9048, a correction in the civil registry
proceedings and without the need for a judicial order. In involving the change of sex is not a mere clerical or
effect, RA 9048 removed from the ambit of Rule 108 of the typographical error. It is a substantial change for
Rules of Court the correction of such errors. Rule 108 now which the applicable procedure is Rule 108 of the
applies only to substantial changes and corrections in Rules of Court. The entries correctable under Rule
entries in the civil register (Silverio v. Republic, G.R. No. 108 of the Rules of Court are those provided in Arts.
174689, October 22, 2007). 407 and 408 of the NCC. These acts, events and
judicial decrees provided in Arts. 407 and 408 of the
First name NCC produce legal consequences that touch upon the
legal capacity, status and nationality of a person. Their
It refers to a name or nickname given to a person which effects are expressly sanctioned by the laws. In
may consist of one or more names in addition to the contrast, sex reassignment is not among those acts or
middle and last names. events mentioned in Art. 407. Neither is it recognized
nor even mentioned by any law, expressly or
Q: John Lloyd Cruzada filed a petition for the change of impliedly. A persons sex is an essential factor in
his first name and sex in his birth certificate in the marriage and family relations. It is a part of a persons
RTC. He alleged that his name was registered as John legal capacity and civil status. In this connection, Art.
Lloyd Cruzada in his certificate of live birth. His sex 413 of the NCC provides that all other matters
was registered as male. Further, he alleged that he is pertaining to the registration of civil status shall be
a male transsexual. Prior to filing the petition, he governed by special laws. But there is no such special
underwent sex reassignment surgery in Thailand. law in the Philippines governing sex reassignment
Thus, he seeks to have his name in his birth certificate and its effects (Silverio v. Republic, G.R. No. 174689,
changed from John Lloyd to Joanna, and his sex October 22, 2007).
from male to female on the ground of sex
reassignment pursuant to Articles 407 to 413 of the NOTE: The jurisdiction over applications for change of first
Civil Code, Rules 103 and 108 of the Rules of Court and name is now primarily lodged with the city or municipal
RA 9048. civil registrar or consul general concerned. The intent and
effect of the law is to exclude the change of first name from
a. May a person's first name be changed on the the coverage of Rules 103 (Change of Name) and 108
ground of sex reassignment? (Cancellation or Correction of Entries in the Civil Registry)
b. May a person's sex as indicated in his certificate of of the Rules of Court, until and unless an administrative
birth be changed on the ground of sex petition for change of name is first filed and subsequently
reassignment? denied. Hence, the remedy and the proceedings regulating
change of first name are primarily administrative in
A: nature, not judicial (Silverio v. Republic, G.R. No. 174689,
a. No. The State has an interest in the names borne by October 22, 2007).
individuals and entities for purposes of identification.
A change of name is a privilege, not a right. Petitions
for change of name are controlled by statutes. RA
9048 now governs the change of first name. RA 9048
provides the grounds for which change of first name
may be allowed:
(1) The petitioner finds the first name or nickname
to be ridiculous, tainted with dishonor or
extremely difficult to write or pronounce;
(2) The new first name or nickname has been
habitually and continuously used by the
petitioner and he has been publicly known by
that first name or nickname in the community; or
(3) The change will avoid confusion.
RA 9048 does not sanction a change of first name on

the ground of sex reassignment. Rather than avoiding
confusion, changing petitioners first name for his
declared purpose may only create grave
complications in the civil registry and the public
interest. Before a person can legally change his given
name, he must present proper or reasonable cause or

90
2015 GOLDEN NOTES
PROPERTY
PROPERTY CLASSIFICATION OF PROPERTY
CHARACTERISTICS Classifications of property
Property 1. As to mobility
a. Immovable or real property
It is any object which is, or may be, appropriated (Art. 414, b. Movable or personal property
NCC). 2. As to ownership
a. Public dominion
It is an object or a right which is appropriated or b. Private ownership
susceptible of appropriation by man, with capacity to 3. As to alienability
satisfy human wants and needs (Pineda, 1999). a. Alienable
b. Inalienable
Requisites for a thing to be considered as property 4. As to individuality
(USA) a. Specific property
b. Generic property
1. Utility Capacity to satisfy human wants 5. As to susceptibility to touch
2. Substantivity/ Individuality It has a separate and a. Tangible
autonomous existence. It can exist by itself and not b. Intangible
merely as a part of a whole (Paras, 2008). 6. As to susceptibility to substitution
3. Appropriability Susceptibility to a. Fungible
ownership/possession, even if not yet actually b. Non fungible
appropriated 7. As to accession
a. Principal
Properties NOT susceptible of appropriation b. Accessory
8. As to existence
1. Common things (res communes) c. Existing or present property (res existentes)
d. Future property (res futurae)
GR: Those properties belonging to everyone. While in 9. As to consumability
particular no one owns common property, still in a. Consumable
another sense, res communes are really owned by b. Non-consumable
everybody in that their use and enjoyment are given 10. As to divisibility
to all of mankind. Examples: air, wind, sunlight (Paras, a. Divisible
2008). b. Indivisible
XPN: Those that may be appropriated under certain CLASSIFICATION OF PROPERTY BY MOBILITY
conditions in a limited way.
e.g. Electricity REAL OR IMMOVABLE
2. Not susceptible due to physical impossibility Categories of immovable property:

e.g. Sun
Real Property by: (NIDA)
3. Not susceptible due to legal impossibility 1. Nature Those which cannot be carried from place to
e.g. Human body place
2. Incorporation Those which are attached to an
Human body NOT a property immovable in a fixed manner and considered as an
integral part thereof, irrespective of its ownership
The human body, whether alive or dead, is neither real nor 3. Destination Things placed in buildings or on lands
personal property. It is not even property at all, in that it by the owner of the immovable or his agent in such a
generally cannot be appropriated. manner that it reveals the intention to attach them
permanently thereto
While a human being is alive, he cannot, as such, be the 4. Analogy Classified by express provision of law.
object of a contract, for he is considered outside the
commerce of man. He may donate part of his blood, may IMMOVABLE BY NATURE & INCORPORATION
even sell part of his hair, but he cannot sell his body (Paras,
2008). Par. 1, Art. 415. Land, buildings, roads and
constructions of all kinds adhered to the soil.
NOTE: Under the R.A. 7170 or the Organ Donation Act of
1991, donation of all or a part of a human body may only Building
occur after a persons death (i.e., the irreversible
cessation of circulatory and respiratory functions or the A building is always immovable unless the same is merely
irreversible cessation of all functions of the entire brain, superimposed on the soil or is sold for immediate
including the brain system) (Sec. 2[j], R.A. 7170, as demolition, in which case it may be considered as movable
amended). or personal property; thus, barong-barongs are not
permanent structures but mere superimpositions on land.
91 UNIVERSITY OF SANTO TOMAS

CIVIL LAW
a. by nature - if they are spontaneous products of
Where buildings are sold to be demolished immediately, the soil.
the building is not an immovable property. The sale b. by incorporation - If they have been planted thru
involves movable property. What are really sold are the cultivation or labor.
materials.
2. A personal property
Effect of demolition of a house
The moment trees are detached or uprooted from the
Once a house is demolished, its character as an immovable land it is considered as personal property.
ceases. This is because a house is classified as an
immovable property by reason of its adherence to the soil NOTE: However, in case of uprooted timber, they are
on which it is built (Bicerra v. Teneza, G.R. No. L-16218, still not considered as personal property because
November 29, 1962). timber is an integral part of the timber land.
Mortgage of a building erected on a land belonging to Growing fruits

another
GR: Growing fruits are considered as real property so long
A building may be mortgaged apart from the land on which as they are still attached to the soil.
it was built. While it is true that a mortgage of land
necessarily includes, in the absence of stipulation of the XPN: Growing fruits may be exceptionally treated as
improvements thereon, buildings, still a building by itself personal property pursuant to the provisions of Art.
may be mortgaged apart from the land on which it has 416(2) of the New Civil Code (Rabuya, 2008).
been built. Such a mortgage would still be a real estate
mortgage for the building would still be considered Example:
immovable property even if dealt with separately and 1. Ungathered fruits are considered personal property
apart from the land (Yee v. Strong Machinery Company, G.R. for the purpose of sale of the whole or part of the
No. 11658, February15, 1918). crops.
2. Ungathered fruits have the nature of personal
A valid real estate mortgage can be constituted. Art. 415 of property for purposes of attachment and execution
the New Civil Code mentions buildings separate from and in applying the provisions of the Chattel Mortgage
land. This means that the building by itself is an Law.
immovable and may be subject of a REM (Prudential Bank
v. Panis, G.R. No. L-50008, August 31, 1987). IMMOVABLE BY INCORPORATION
The annotation or inscription of a deed of sale of real Par. 3, Art. 415. Everything attached to an immovable
property in a chattel mortgage registry is NOT considered in a fixed manner, in such a way that it cannot be
an inscription in the registry of real property. By its separated therefrom without breaking the material or
express terms, the Chattel Mortgage Law contemplates and deterioration of the object.
makes provisions for mortgages of personal property; and
the sole purpose and object of the chattel mortgage Res vinta
registry is to provide for the registry of Chattel
mortgages, that is to say, mortgages of personal property These are immovables by incorporation, which when
executed in the manner and form prescribed in the statute separated from the immovable, regain their condition as
(Yee v. Strong Machinery Co, G.R. No. L-11658, February 15, movable.
1918).
Q: The City Assessor sought to impose realty tax on
Building can be subject of a chattel mortgage steel towers of MERALCO. The taxes were paid under
protest, MERALCO contending that the towers were
As may be gleaned from a perusal of the deed signed by the exempt from taxation and that they were personal and
parties, the undertaking executed by them is a chattel not real properties. Decide.
mortgage, as the parties have so expressly designated, and
not a real estate mortgage, especially when it is considered A: The towers are personal properties. They are not
that the property given as a security is a house of mixed buildings adhered to the soil (Art. 415 par. 1); they are not
materials which by its very nature is considered as attached to an immovable in a fixed manner and they can
personal property. (Luna v. Encarnacion, G.R. No. L-4637, be separated without substantial damage or deterioration,
June 30, 1952). and they are not machineries intended for works on the
land (Board of Assessment Appeals v. Meralco, G.R. No. L-
Par. 2, Art. 415. Trees, plants and growing fruits, 15334, January 31, 1964).
while they are attached to the land or form an
integral part of an immovable. IMMOVABLE BY INCORPORATION & BY DESTINATION
Trees and plants Par. 4, Art. 415. Statues, reliefs, paintings or other
objects for use or ornamentation, placed in
Trees may be either be: buildings or on lands by the owner of the
1. A real property immovable in such a manner that it reveals the

92
2015 GOLDEN NOTES
PROPERTY
intention to attach them permanently to the Bus Co. v. City Assessor and Treasurer, G.R. No. L-17870,
tenements. September 29, 1962).
Machines must be essential and principal elements in the

industry and must directly meet the needs of said industry.
Placed by the owner It does not include movables which are merely incidentals,
without which the business can still continue or carry on
This means that the objects must be placed by the owner their functions.
of the immovable and not necessarily the owner of the
object. Machineries bolted or cemented on real property
mortgaged
Par. 3 distinguished from Par. 4
It is NOT considered an immovable property. The fact that
machineries were bolted or cemented on real property
PAR. 3 PAR. 4
mortgaged does not make them ipso facto immovable
Cannot be separated from Can be separated from the
under Art. 415 (3) and (5) as the parties intent has to be
the immovable without immovable without
looked into.
breaking or deterioration breaking or deterioration.
Must be placed by the
When immovable property by nature may be treated
Need not be placed by the owner of the immovable, or
as a chattel
owner by his agent whether
express or implied
Even if the properties appear to be immovable by nature,
Real property by
Real property by nothing detracts the parties from treating them as chattels
incorporation and
incorporation to secure an obligation under the principle of estoppel
destination
(Tsai v. CA, G.R. No. 120098, October 2, 2001).
Par. 5, Art. 415. Machinery, receptacles, instruments or Q: What is the effect of temporary separation of
implements intended by the owner of the tenement for movables from the immovables to which they are
an industry or works which may be carried on in a attached?
building or on a piece of land & which tend directly to
meet the needs of the said industry or works. A: There are two views regarding the issue; namely:
1. They continue to be regarded as immovables.
Requisites for machinery to be considered real 2. Fact of separation determines the condition of the
property (COTE) objects thus recovering their condition as movables.
1. The industry or work must be Carried on in a building Q: Petitioners contend that the machines that were
or on a piece of land; the subjects of the Writ of Seizure were placed in the
2. The machinery must: factory built on their own land. Indisputably, they
a. Be placed by the Owner of the tenement or his were essential and principal elements of their
agent; chocolate making industry. Hence, although each of
b. Tend directly to meet the needs of the said them was movable or personal property on its own, all
industry or work; and of them have become immobilized by destination
c. Be Essential and principal to the industry or because they are essential and principal elements in
work, and not merely incidental thereto. the industry. Petitioners argue that said machines are
real properties pursuant to Art. 415 (5) of the NCC and
Machinery placed by a tenant or by a usufructuary are not, therefore, the proper subjects of a Writ of
Seizure. However, the lease agreement entered into by
It is NOT considered real property. Since it is placed by a the petitioners provides that the machines in question
person having only a temporary right, it does not become are to be considered as personal property. How should
immobilized. Where a tenant places the machinery under the machines be classified?
the express provision of lease that it shall become a part of
the land belonging to the owner upon the termination of A: The machines should be deemed personal property
the lease without compensation to the lessee, the tenant pursuant to the Lease Agreementis good only insofar as
acts as an agent of the owner and the immobilization of the the contracting persons are concerned. Hence, while the
machineries arises from the act of the owner in giving by parties are bound by the Lease Agreement, third persons
contract a permanent destination to the machinery (Valdez acting in good faith are not affected by its stipulation
v. Central Altagracia, 225 U.S. 58, 1912). characterizing the subject machinery as personal (Sergs
Products, Inc. v. PCI Leasing and Finance, Inc., 338 SCRA 504,
Equipment of a transportation business classified as August 22, 2000).
personal property
Par. 6, Art. 415. Animal houses, pigeon-houses,
A transportation business is not carried on in a building or beehives, fish ponds or breeding places of similar
on a specified land. Hence, equipment destined only to nature, in case their owner has placed them or
repair or service a transportation business may not be preserves them with the intention to have them
deemed real property, but personal property (Mindanao permanently attached to the land, and forming a

CIVIL LAW
permanent part of it; the animals in these places a fixed place on a river or coast. Art. 415 (9) of the
are included. NCC considers as real property docks and structures
which, though floating are intended by their nature
These are immovables by destination. and object to remain at a fixed place on a river, lake,
or coasts (2007 Bar Question; Fels Energy, Inc. v. The
Cages are not included Province of Batangas, G.R. No. 168557, February 16,
2007).
It will be considered as personal property since they can
be moved from one place to another. 2. With respect to the equipment, the same is real
property under paragraph 5 of Art. 415, NCC. It is
Par. 7, Art. 415. Fertilizer actually used on a piece intended to meet the needs of the industry being
of land. undertaken by MPC. The equipment partakes of the
nature of the immovable upon which it has been
placed.
Fertilizers in sacks are not included
The living quarters, if attached to the immovable
Only fertilizers used on a piece of land are deemed
platform with permanence, becomes an immovable as
immovable since it is already placed in the land and can
well. Permanence means they cannot be separated
never be separated from it. Fertilizers which are still on
without destroying the platform or the quarters. On
the sacks, although there is intention to place them or use
the other hand, if the attachment is not permanent, or
them on land, it is still immovable.
not merely superimposed on the platform, then the
living quarters are movable property.
Par. 8, Art. 415. Mines, quarries and slag dumps,
while the matter thereof forms part of the bed, and
3. The trees, plants and flowers are also immovable,
waters either running or stagnant.
having been planted in the garden area, under Art.
415 (2) which provides that Trees, plants and
Par. 9, Art. 415. Docks and structure which, though growing fruits, while they are attached to the land or
floating, are intended by their nature and object to form an integral part of the immovable are likewise
remain at a fixed place on a river, lake or coast. immovable property.
Q: The Provincial Assessor sought to impose realty tax Par. 10, Art. 415. Contracts for public works and
on power barges of Fels Energy, Inc. The taxes were servitudes and other real rights over immovable
paid under protest, Fels Energy, Inc. contending that property.
the power barges which are floating were exempt from
taxation and that they were personal and not real
These are immovable by analogy.
properties. Decide.
e.g. Contract over a construction of a bridge
A: The power barges are real properties. Power barges
PERSONAL OR MOVABLE
are categorized as immovable property by destination,
being in the nature of machinery and other implements
Movable properties (SOFTSS)
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
1. Movables Susceptible of appropriation which are not
tend directly to meet the needs of said industry or work.
included in Art. 415;
(Fels Energy, Inc. v. Province of Batangas, G.R. No. 168557,
2. Real property which by any Special provision of law
February 19, 2007).
considers as personalty;
e.g. growing crops under the Chattel Mortgage Law.
Q: Manila Petroleum Co. (MPC) owned and operated a
3. Forces of nature which are brought under the control
petroleum operation facility off the coast of Manila.
of science ;
The facility was located on a floating platform made of
e.g. electricity generated by electric powers, solar light
wood and metal, upon which was permanently
for batteries power.
attached the heavy equipment for the petroleum
4. In general, all things which can be Transported from
operations and living quarters of the crew. The
place to place without impairment of the real
floating platform likewise contained a garden area,
property to which they are fixed;
where trees, plants and flowers were planted. The
5. Obligations and actions which have for their object
platform was tethered to a ship, the MV101, which was
movables or demandable sums; and
anchored to a seabed.
6. Shares of stock of agricultural, commercial and
industrial entities, although they have real estate (Art.
1. Is the platform movable or immovable property?
416, NCC).
2. Are the equipment and living quarters movable or
immovable property?
Tests to determine whether a property is a movable
3. Are the trees, plants and flowers immovable or
property (MES)
movable property? (2007 Bar Question)
1. Test of Exclusion Everything not included in Art. 415,
A:
e.g. ships or vessels or interest in a business
1. The platform is an immovable property by
destination. It was intended by the owner to remain at

94
2015 GOLDEN NOTES
PROPERTY
2. By reason of a Special law Immovable by nature but public service is sufficient and it is not necessary that it
movable for the purpose of the special law, e.g. must actually be used as such.
Growing crops for purposes of the Chattel Mortgage
Law Kinds of property of public dominion (USD)
3. Test of Mobility If the property is capable of being
carried from place to place without injuring the real 1. For public Use;
property to which it may in the meantime be attached 2. Intended for public Service and not for public use; and
3. For the Development of the national wealth (Art. 420,
CLASSIFICATION OF PROPERTY BY OWNERSHIP NCC).
1. In relation to the State Characteristics of properties of public dominion

a. Public Dominion (ULEP- ROB)
b. Patrimonial
2. In relation to political subdivisions/local government 1. In general, they can be Used by everybody;
unit 2. Cannot be Levied upon by execution or attachment;
a. Public use 3. May Either be real or personal property;
b. Patrimonial 4. Cannot be acquired by Prescription;
3. In relation to private persons 5. Cannot be Registered under Land Registration Law
a. Owned individually and be the subject of Torrens Title;
b. Owned collectively 6. Outside the commerce of man cannot be alienated or
leased or be subject of any contract;
NOTE: Sacred and religious objects are considered outside 7. Cannot be Burdened by voluntary easement.
the commerce of man. They are neither public nor private
party. Classification of lands of public dominion
CLASSFICATION OF PROPERTY BY NATURE 1. Agricultural;

2. Forest or timber;
Properties classified according to consumability 3. Mineral lands;
4. National Parks (Art. XIV, Sec. 10, Philippine
1. Consumable property That which cannot be used Constitution).
according to its nature without being consumed or
being eaten or used up Authority to classify or reclassify public lands
2. Non-Consumable property That which can be used
according to its nature without being consumed or As provided in the Public Land Act, the classification or
being eaten or used up. reclassification of public lands into alienable or disposable,
mineral or forest lands is a prerogative of the executive
Properties classified according to susceptibility to department of the government and not of the courts.
substitution
Property of public dominion can be converted to
1. Fungible property That property which belongs to a patrimonial property through a formal declaration by the
common genus permitting its substitution executive or legislative body that the property is no longer
2. Non- fungible property That property which is needed for public use or for public service.
specified and not subject to substitution
Local Government Units DOES NOT have the power to
NOTE: As to whether a property is fungible or non- withdraw a public street from public use, unless it has
fungible is determined by the agreement of the parties and been granted such authority by law (Dacanay v. Asistio Jr.,
not on the consumability of the thing. G.R. No. 93654, May 6, 1992).
PUBLIC DOMINION Charging of fees does not remove property as public

dominion
Public Dominion
The charging of fees to the public does not determine the
It means ownership by the public in general. It may also character of the property whether it is of public dominion
mean properties or things held by the State by regalian or not. The airport lands and buildings are devoted to
right. public use because they are used by the public for
international and domestic travel and transportation. The
Properties classified as public dominion cannot be terminal fees MIAA charges to passengers, as well as the
alienated but are not totally outside the commerce of man landing fees MIAA charges to airlines, constitute the bulk
as the Constitution allows the State to enter into co- of the income that maintains the operations of MIAA.
production, joint ventures or production-sharing (Manila International Airport Authority v. CA, G.R. No.
agreements with private individuals or corporations for 155650, July 20, 2006).
their exploration, development and utilization.
NOTE: In order to be classified as property of public

dominion, an intention to devote it to public use or to

CIVIL LAW
PRIVATE OWNERSHIP OWNERSHIP
Properties in private ownership of private persons or RIGHTS IN GENERAL

entities
Ownership
All properties not belonging to the State or its political
subdivision are properties of private ownership pertaining It is the juridical relation of a person over a thing by virtue
to private persons, either individually or collectively. of which said person has the exclusive power or authority
to receive all the benefits and advantages arising from said
Patrimonial property of the State thing, save those restricted by law or the recognized rights
of others.
It is the property not devoted to public use, public service,
or the development of the national wealth. It is intended Kinds of ownership (FNSC)
rather for the attainment of the economic ends of the State,
that is, for subsistence. It is owned by the State in its 1. Full ownership Includes all the rights of an owner;
private or proprietary capacity.
NOTE: Naked ownership + Usufruct
NOTE: It may be disposed of by the State in the same
manner that private individuals dispose of their own 2. Naked ownership Ownership where the rights to the
property subject, however, to administrative laws and use and to the fruits have been denied;
regulations.
NOTE: Full ownership Usufruct
Properties for public service and properties for the
development of national wealth 3. Sole ownership Ownership is vested in only one
person;
1. Public service depends on who pays for the service. 4. Co-ownership Ownership is vested in 2 or more
If paid for by the political subdivision, public; if for persons. There is Unity of the property, and plurality
profit, patrimonial. of the subjects.
2. National wealth still property for public use under
the regalian doctrine Characteristics of ownership
Canals constructed by private persons within private 1. Elastic Power/s may be reduced and thereafter
lands are NOT of public dominion but of private automatically recovered upon the cessation of the
ownership. limiting rights.
2. General The right to make use of all the possibilities
Art. 420 states that canals constructed by the State are of or utility of the thing owned, except those attached to
public ownership; conversely, canals constructed by other real rights existing thereon.
private persons within private lands are of private 3. Exclusive There may be two or more owners, but
ownership (Santos v. Moreno, G.R. No. L-15829, December 4, only one ownership.
1967). 4. Independent Other rights are not necessary for its
existence.
Q: The City of Cebu obtained a loan which was to be 5. Perpetual Ownership lasts as long as the thing exists.
paid with its own funds. Part of the proceeds of this It cannot be extinguished by non-user but only by
loan was used to fund the construction of the Citys adverse possession.
sewage system. NAWASA sought to expropriate the
sewage system. This was opposed with the arguments BUNDLE OF RIGHTS PERSONAL OR MOVABLE
that there was no payment of just compensation;
NAWASA offered unliquidated assets and liabilities. JUS UTENDI, FRUENDI, ABUTENDI, VINDICANDI,
NAWASA averred, as an alternative course of action, DISPODENDI, POSSIDENDI, ACCESIONES
that the property is one for public use and under the
control of the legislature. Decide whether the property Attributes of ownership
is patrimonial property of the city or property for
public use. 1. Right to enjoy (jus utendi)
2. Right to the fruits (jus fruendi)
A: The property is patrimonial and not subject to 3. Right to abuse (jus abutendi)
legislative control. It is property of the city, purchased with 4. Right to dispose (jus dispodendi)
private funds and not devoted to public use (it is for 5. Right to recover (jus vindicandi)
profit). It is therefore patrimonial under the Civil Code. 6. Right to accessories (jus accessiones)
Nor can the system be considered public works for public 7. Right to possess (jus possidendi)
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).

96
2015 GOLDEN NOTES
PROPERTY
REMEDIES TO RECOVER POSSESSION prayed that an order be rendered directing Jaime to
vacate the premises. Should the complaint be
ACTIONS TO RECOVER OWNERSHIP AND POSSESSION dismissed?
OF REAL PROPERTY
A: Yes. The records in this case show that the respondent
Legal remedies to recover possession of ones has been in possession of the property in question, not by
property mere tolerance or generosity of Rudy, but as the manager
of his mother, who conducted her business in the building
1. Personal property- Replevin which stood on a portion of the property leased from
2. Real property Alava. Jaimes possession was in behalf of his mother, and
a. Accion Interdictal not in his own right.
i. Forcible Entry
ii. Unlawful detainer Q: What is the effect of non-registration of the contract
b. Accion Publiciana of lease?
c. Accion Reinvindicatoria
A: Although the lease contract was not filed with the
DISTINCTIONS BETWEEN ACCION REIVINDICATORIA, Register of Deeds, nevertheless, Rudy was bound by the
ACCION PUBLICIANA, ACCION INTERDICTAL terms and conditions of said contract. The lease, in effect
became a part of the contract of sale. However, Rudy had
Accion interdictal no cause of action for unlawful detainer against Anita
because of the subsisting contract of lease; hence, he could
It is a summary action to recover physical or material not file the complaint against her (Lao v. Lao, G.R. No.
possession only and it must be brought within one year 149599, May 16, 2000).
from the time the cause of action arises. It may be:
1. Forcible Entry DISTINCTION BETWEEN FORCIBLE ENTRY AND
2. Unlawful detainer UNLAWFUL DETAINER
Accion publiciana Forcible entry vis--vis Unlawful detainer
It is an ordinary civil proceeding to recover the better right Forcible Entry Unlawful Detainer
of possession, except in cases of forcible entry and
As to when possession became unlawful
unlawful detainer. What is involved here is not possession
de facto but possession de jure. Possession is inceptively
lawful but becomes illegal
Accion reinvindicatoria from the time defendant
unlawfully withholds
It is an action to recover real property based on possession after the
Possession of the defendant
ownership. Here, the object is the recovery of the expiration or termination of
is unlawful from the
dominion over the property as owner. his right thereto.
beginning as he acquired
possession by force,
NOTE: Where the facts averred in the complaint reveals NOTE: The question of
intimidation, strategy, threat
that the action is neither one of forcible entry nor unlawful possession is primordial,
or stealth (FISTS).
detainer but essentially involves a boundary dispute, the while the issue of ownership
same must be resolved in an accion reinvindicatoria is generally unessential in
(Sarmiento v. CA, G.R. No. 116192, November 16, 1995). unlawful detainer (Rosa Rica
Sales Center v. Sps. Ong, G.R.
Requisites of accion reinvindicatoria 132197, August 16, 2005).
As to necessity of demand
1. Identity of property
Demand is jurisdictional if
2. Plaintiffs title to the property
No previous demand for the the ground is non-payment
defendant to vacate is of rentals or failure to
Q: A contract of lease executed by Alava (lessor) and
necessary. comply with the lease
Anita Lao (lessee) was not registered with the Register
contract.
of Deeds. Aside from Anita, Rudy Lao also leased a
portion of the same property where he put up his As to necessity of proof of prior physical possession
business. At that time, Rudy knew that Anita and her Plaintiff need not have been
husband were the owners of the said building. He also in prior physical possession.
knew that she had leased that portion of the property,
and that Jaime Lao, their son, managed and Plaintiff must prove that he
NOTE: The fact that
maintained the building, as well as the business was in prior physical
petitioners are in possession
thereon. Rudy eventually purchased the entire possession of the premises
of the lot does not
property from Alava. Rudy then filed a complaint for until he was deprived
automatically entitle them
unlawful detainer against Jaime alleging that the latter thereof by the defendant.
to remain in possession
had occupied a portion of his property without any (Ganilla v. CA, G.R. No.
lease agreement and without paying any rentals, and 150755, June 28, 2005).

CIVIL LAW
As to when 1 year period is counted from REAL v. PERSONAL RIGHTS
1 year period is generally 1 year period is counted
counted from the date of from the date of last demand Real Right Personal Right
actual entry of the land. or last letter of demand. Creation
Created by title alone
ACTIONS FOR RECOVERY OF POSSESSION OF MOVABLE It is not directly created
PROPERTY Created by both title and over a thing but is
mode directly over a thing exercised through another
Replevin against whom the action is
to be brought.
It is the remedy when the complaint prays for the recovery Object
of the possession of personal property. Incorporeal or intangible.
Generally corporeal or Object covers all the
NOTE: A property validly deposited in custodia legis tangible. Object is specific present and future
cannot be subject of a replevin suit (Calub v. CA, G.R. No. property or thing. property of the debtor.
115634, Apr. 27, 2000). (Art. 2236, NCC)
Subjects
REQUISITES FOR RECOVERY OF PROPERTY (a) One definite active
subject (e.g. owner)
Requisites in an action to recover property (b) One indefinite passive
subject which is the (a) An active subject
1. Clearly identify the land he is claiming in accordance whole world (creditor)
with the title/s on which he bases his right of Right of pursuit is (b) A definite passive
ownership; and therefore available. subject (debtor)
Real right follows its
NOTE: Burden of proof lies on the party who asserts object in the hands of
the affirmative of an issue. The description should be any possessor
so definite that an officer of the court might go to the
Enforceability
locality where the land is situated and definitely
Enforceable only against
locate it.
the original debtor or his
Enforceable against the
transferee charged with
2. Prove that he has a better title than the defendant whole world
notice of the personal
a. Best proof is a Torrens certificate.
rights
b. Tax receipts, tax declarations are only prima facie
evidence of ownership; it is rebuttable. Limit
Limited by usefulness, value
No such limitation
NOTE: Plaintiffs title must be founded on positive or productivity of the thing
right or title and not merely on the lack or inefficiency Extinguishment
of the defendants title. In other words, he shall not be Not so extinguished. Claim
permitted to rely upon the defects of the defendants Extinguished by loss or for damages may still be
title (Art. 434, NCC). destruction of the thing pursued-in case of loss or
destruction of the thing
Reasons why the plaintiff is NOT allowed to rely on the
weakness of defendants title LIMITATIONS
1. Possibility that neither the plaintiff nor the defendant Limitations on the right of ownership
is the true owner of the property. In which case, the
defendant who is in possession will be preferred. Those imposed by the: (CC-SLOG)
2. One in possession is presumed to be the owner and he 1. State in the exercise of:
cannot be obliged to show or prove a better title. a. Power of taxation
3. Possessor in the concept of an owner is presumed to b. Police power
be in good faith and he cannot be expected to be c. Power of eminent domain
carrying every now and then his proofs of ownership 2. Law
over the property. a. Legal easements (i.e., easements of waters and of
4. He who relies on the existence of a fact, should prove right of way) and
that fact. If he cannot prove, the defendant does not b. The requirement of legitime in succession;
have to prove. 3. Owner himself
a. Voluntary easement
b. Mortgage
c. Pledge
d. Lease;
4. Grantor of the property on the grantee, either by:
a. Contract
b. Donation or
c. Will;

98
2015 GOLDEN NOTES
PROPERTY
5. Those arising from Conflicts of private rights
a. Those which take place in accession continua; NOTE: If the things found be of interest to science or the
6. Constitution arts, the State may acquire them at their just price, which
a. Prohibition against the acquisition of private shall be divided in conformity with the rule stated (Art.
lands by aliens. 438, NCC).
7. Acts in state of necessity The law permits injury or
destruction of things owned by another provided this A trespasser (one prohibited to enter, or not given the
is necessary to avert a greater danger (with right to authority to enter) who discovers hidden treasure is NOT
indemnity v. principle of unjust enrichment) entitled to any share of the treasure (Paras, 2008)
8. True owner must resort to judicial process When
thing is in possession of another; law creates a By Chance
disputable presumption of ownership to those in
actual possession The finder had no intention to search for the treasure.
There is no agreement between the owner of the property
PRINCIPLE OF SELF-HELP and the finder for the search of the treasure.
This principle authorizes an owner or lawful possessor of a Yamashita treasure

property to use reasonable counterforce to prevent or stop
another person from taking the formers property. There The State is entitled to 75% share and the finder to 25%.
must be no delay in the pursuit, otherwise, his recourse (P.D. No. 7056-A).
will be to go to the court for the recovery of property.
Q: Under a tip that hidden treasure is buried in the
HIDDEN TREASURE land of A, B leases the property and conducts
excavation thereon. If in the land, valuable gold coins
Hidden treasure are found, is B entitled to the same? Explain. (1976 Bar
Question)
It is any hidden and unknown deposit of money, jewelry or
other precious objects, the lawful ownership of which does A: No, it was not found by chance (Art. 438, NCC). B
not appear (Art 439, NCC). deliberately searched for it. Moreover, treasure is defined
as hidden and unknown deposit of precious objects, the
Other precious objects lawful ownership of which does not appear. There being a
tip, the deposit is known. (Art. 439, NCC).
Under the ejusdem generis rule, the phrase should be
understood as being similar to money or jewelry. Q: Adam, a building contractor, was engaged by Blas to
construct a house on a lot which he (Blas) owns. While
Oil or gold NOT considered as hidden treasure. digging on the lot in order to lay down the foundation
of the house, Adam hit a very hard object. It turned out
These are natural resources. The Regalian Doctrine applies to be the vault of the old Banco de las Islas Filipinas.
and not the provisions on hidden treasure. Using a detonation device, Adam was able to open the
vault containing old notes and coins which were in
Rule regarding discovery of hidden treasure circulation during the Spanish era. While the notes
and coins are no longer legal tender, they were valued
GR: If the finder is the owner of the land, building, or other at P 100 million because of their historical value and
property where it is found, the entire hidden treasure the coins silver and nickel content. The following filed
belongs to him. legal claims over the notes and coins:
i. Adam, as finder;
XPN: If the finder is not the owner or is a stranger ii. Blas, as owner of the property where they were
(includes the lessee or usufructuary), he is entitled to found;
thereof (Art 566, NCC). iii. Bank of the Philippine Islands, as successor-in-
interest of the owner of the vault; and
If the finder is married iv. The Philippine Government because of their
historical value.
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 Who owns the notes and coins?
one-half of that share, it being a conjugal property (Art.
117, par. 4, FC). A: Hidden treasure is money jewelry or other precious
objects the ownership of which does not appear (Art. 439,
Requisites in order that the finder be entitled to any NCC). The vault of the Banco de las Islas Filipinas has been
share in the hidden treasure (ACTA) buried for about a century and the Bank of the Philippine
Islands cannot succeed by inheritance to the property of
1. Discovery was made on the property of Another, or of Banco de las Islas Filipinas. The ownership of the vault,
the State or any of its political subdivisions; together with the notes and coins can now legally be
2. Made by Chance; and considered as hidden treasure because its ownership is no
3. He is not a Trespasser or Agent of the landowner (Art. longer apparent. The contractor, Adams, is not a trespasser
438(2), NCC). and therefore entitled to one-half of the hidden treasure

CIVIL LAW
and Blas as owner of the property, is entitled the other half ACCESSION
(Art. 438, NCC). Since the notes and coins have historical
value, the government may acquire them at their just price Accession
which in turn will be divided equally between Adam and
Blas (Art. 438, par.3, NCC). It may be defined as the right pertaining to the owner of a
thing over everything which is produced thereby, or which
Alternative Answer: The Banco de las Islas Filipinas is the is incorporated or attached thereto, either naturally or
owner of the vault. The finder and the owner of the land artificially (Art. 440, NCC).
cannot share in the notes and coins, because they are not
buried treasure under the law, as the ownership is known. Right of accession
Although under Art. 720 of the NCC the finder shall be
given a reward of one-tenth of the price of the thing found, It is that right of ownership of which an owner of a thing
as a lost movable, on the principle of quasi-contract. has over the products of said thing (accession discreta), as
well as to all things inseparably attached or incorporated
However, the notes and coins may have become res nullius thereto whether naturally or artificially (accession
considering that Banco de las Islas Filipinas is no longer a continua) (Pineda, 2009).
juridical person and has apparently given up looking for
them and Adam, the first one to take possession with Accession NOT a mode of acquiring ownership
intent to possess shall become the sole owner.
It is not one of the modes enumerated under Art. 712
Q: Assuming that either or both Adam and Blas are (different modes of acquiring ownership). It is, therefore,
adjudged as owners, will the notes and coins be safe to conclude that accession is not a mode of acquiring
deemed part of their absolute community or conjugal ownership.
partnership of gains with their respective spouses?
(2008 Bar Question) The reason is simple: accession presupposes a previously
existing ownership by the owner over the principal.
A: Yes. The hidden treasure will be part of the absolute Fundamentally and in the last analysis, accession is a right
community or conjugal property, of the respective implicitly included in ownership, without which it will
marriages. (Arts. 91, 93 & 106, FC) have no basis or existence (Paras, 2008).
Alternative Answer: It is not hidden treasure and NOTE: In general, the right to accession is automatic (ipso
therefore, not part of the absolute or conjugal partnership jure), requiring no prior act on the part of the owner or
of the spouses. But as the finder of the lost movable, then principal.
his reward equivalent to one-tenth of the value of the
vaults contents, will form part of the conjugal partnership. FRUITS
If the government wants to acquire the notes and coins, it
must expropriate them for public use as museum pieces Rule on the owners right of accession with respect to
and pay just compensation. what is produced by his property
Q: O, owner of Lot A, learning that Japanese soldiers To the owner belongs the:
may have buried gold and other treasures at the 1. Natural fruits - the spontaneous products of the
adjoining vacant Lot B, belonging to Spouses X and Y, soil, and the young and other products of
excavated in Lot B where she succeeded in unearthing animals;
gold and precious stones. How will the treasures found 2. Industrial fruits - are those produced by lands of
by O to be divided (1) 100% to O as finder, (2) 50% any kind through cultivation or labor;
to O and 50% to X and Y, (3) 50% to O and 50% to the 3. Civil fruits - the rents of buildings, the price of
State (4) none of the above? (2010 Bar Question) leases of lands and other property and the
amount of perpetual or life annuities or other
A: None of the above. The general rule is that the treasure similar income (Art. 441, NCC).
shall belong to the Spouses X and Y, the owners of Lot B.
Under Art. 438, NCC, the exception is that when the Obligation of the owner who receives the fruit from a
discovery of a hidden treasure is made on the property of third person
another and by chance, one-half thereof shall belong to the
owner of the land and the other one-half is allowed to the He who receives the fruits has the obligation to pay the
finder. In the problem, the finding of the treasure was not expenses made by a third person in their production,
by chance because O knew that the treasure was in Lot B. gathering and preservation.
While a trespasser is also not entitled to any share and
there is no indication in the problem whether or not O was NOTE: Only such as are manifest or born are considered as
a trespasser, O is not entitled to share because the finding natural or industrial fruits.
was not by chance.
With respect to animals, it is sufficient that they are in the
womb of the mother, although unborn.

100
2015 GOLDEN NOTES
PROPERTY
Existence of the fruit Different kinds of accession continua as regard
movables (AMS)
It depends on the type of fruit:
1. Annual (must be planted every year/must re-plant 1. Adjunction or conjunction
after harvest; rice, wheat, corn) deemed manifest the 2. Mixture
moment their seedlings appear. 3. Specification
2. Perennial (only planted once and bear fruit for
several seasons; mango and coconut trees) deemed Adjunction
to exist only when they actually appear.
It is the process by virtue of which two movable things
Animal young belonging to different owners are united in such a way that
they form a single object and each of the things united
They are considered existing even if still in the maternal preserves its own nature (Art. 466, NCC).
womb. They should be considered existing only at the
commencement of the maximum ordinary period for Requisites of adjunction (2BUS)
gestation.
There is adjunction when there are:
Pratus sequitor ventrem offspring follows the mother 1. 2 movables;
2. Belonging to different owners;
This legal maxim means that the offspring follows the dam 3. United forming a single object;
(mother). The legal presumption, in the absence of proof to 4. Separation would impair their nature or result in
the contrary, is that the calf, as well as its mother belongs substantial injury to either thing.
to the owner of the latter, by the right of accretion (US v.
Caballero, G.R. No. 8608, September 26, 1913). Thus, when Classes of adjunction or conjunction (PEWWS)
the ownership over the offspring of the animal when the
male and female belongs to different owners, the owner of 1. Painting (pintura)
the female was considered also the owner of the young, 2. Engraftment - Like setting a precious stone on a
unless there is a contrary custom or speculation. golden ring
3. Writing (escritura)
When fruits are deemed to exist 4. Weaving
5. Soldering- Joining a piece of metal to another metal
1. Civil fruits accrue daily and are considered personal a. Ferruminacion - Principal and accessory are of
property and may be pro-rated. the same metal
2. Natural and industrial fruits, while still growing, are b. Plumbatura Different metals (Art. 468, NCC)
considered as real property; ordinarily, they cannot
be pro-rated. Ownership of the resulting object
Ownership of fruits The owner of the principal by law becomes owner of the
resulting object and should indemnify the owner of the
GR: Fruits belong to the owner of the land (Art. 441, NCC). accessories for the values thereof.
XPNS: If the thing is: [PULPA] Tests to determine the principal (VVUM)
1. In possession of a Possessor in good faith (Art 546,
NCC); before the possession is legally interrupted. 1. That of greater Value- (Art. 468, NCC)
2. Subject to a Usufruct (Art. 566, NCC) 2. If two things are of equal value- That of greater
3. Lease of rural land Volume (Art. 468, NCC)
4. Pledged (Art. 1680 and Art. 2102, par. 7, NCC); pledge 3. If two things are of equal volume- That to which the
is entitled to the fruits but has the obligation to other has been United as an ornament, or for its use
compensate or set-off what he receives with those or perfection.
which are owing to him. 4. That which has greater Merits, utility and volume if
5. In possession of an Antichretic creditor (Art. 2132, things.
NCC)
Ownership when the adjunction involves three or
GENERAL RULES OF ACCESSION more things
FOR MOVABLES If the adjunction involves three or more things, the court
should first distinguish the principal and apply Art. 466 in
ACCESSION CONTINUA an equitable manner such that the principal acquires the
accessory, indemnifying the former owner thereof for its
Basic principle of accession with respect to movable value.
property
NOTE: Art. 466 states that Whenever two movable things
Accession exists only if separation is not feasible. belonging to different owners are, without bad faith,
Otherwise, separation may be demanded. united in such a way that they form a single object, the

CIVIL LAW
owner of the principal thing acquires the accessory, Rules regarding mixtures
indemnifying the former owner thereof for its value.
1st Owner 2nd Owner
Separation of things is allowed in cases of (WIB)
By Will of Both Owners or by Accident
1. Separation Without injury
Good Faith Good Faith
2. Separation with Injury Accessory is much more
precious than the principal, the owner of the former 1. Right is subject to stipulations; OR
may demand its separation even though the principal 2. Right is in proportion to the part belonging to him (Co-
may suffer injury. ownership arises)
3. Owner of the principal acted in Bad faith. (Art. 469,
NCC) By Will of Only 1 Owner/ By Chance
Rights of owners over the thing in adjunction
1. Have the things separated provided the thing suffers no
OWNER OF THE injury; OR
OWNER OF THE ACCESSORY 2. If cannot be separated w/o injury, acquire interest on
PRINCIPLE
Good Faith Good Faith mixture in proportion to his part (co-ownership)
1. Receive payment for value Bad Faith
of accessory; OR Good Faith
1. Acquire accessory and (caused the mixture)
2. GR: Demand separation
pay owner of the 1st owner will lose his part on 2nd owner will acquire
provided the thing suffers
accessory for its the mixture and pay damages entire mixture and
no injury
value; OR to the 2nd owner entitled to damages
2. Demand separation
XPN: If accessory is more
provided the thing Good Faith
precious than principal, he Bad Faith
suffers no injury (caused the mixture)
may demand separation w/
or w/o injury to the thing As if both acted in GF,
As if both acted in GF, because
Good Faith Bad Faith since the 1st owner is in
the 2nd owner in GF was the
Acquire accessory w/o BF and the 2nd owner
one who caused the
paying the owner of Lose accessory and pay who caused the mixture
ratification, because the 1st
accessory and entitled to damages in GF in a way ratifies the
owner
damages BF of 1st owner.
Bad Faith Good Faith
1. Pay value of accessory 1. Receive payment and Specification
and pay damages; OR damages; OR
2. Have the things 2. Have accessory separated It is the giving of new form to anothers material through
separated, even w/ or w/o injury to application of labor. The material undergoes a
though there is injury principal and receive transformation or change of identity. The labor is the
to the principal and damages principal and the materials used is the accessory.
pay damages
Bad Faith Bad Faith Respective rights of the maker and the owner of the
Same as though both acted in good faith materials in specification
Indemnity Maker (M) Owner of Materials (OM)

It is made either by:
1. Delivery of a thing equal in kind and value; or GR: Appropriate the thing Receive payment for value
2. Payment of its price including the sentimental value. transformed and pay the of materials
(Art. 471, NCC) owner of the materials for
its value
Mixture
XPN: If the material is more
It is the combination of materials where the respective precious than the thing
identities of the component elements are lost either transformed, the owner of
voluntarily or by chance. (Arts. 472-473, NCC) the materials has the
option to:
Kinds of mixtures (COM-CON) 1. Acquire the work and
1. Commixtion mixture of solids indemnify the maker
2. Confusion mixture of liquids for his labor; or
2. Demand indemnity for
the material
1. Receive payment for 1. Appropriate new thing

102
2015 GOLDEN NOTES
PROPERTY
value of his work; OR and pay the maker for FOR IMMOVABLES
2. Appropriate the new the work; OR
thing and pay the 2. Receive payment for ACCESSION DISCRETA
owner of materials for value of materials
its value Accession discreta
GR: It is the right pertaining to the owner of a thing over
1. Lose the new thing and 1. Appropriate the new everything produced thereby.
pay damages to owner thing without paying
of the materials; OR and receive damages; XPNs: It is subject to the following exceptions:
2. Pay value of materials OR 1. If the thing is in possession of a possessor in good
and damages to owner faith in which case such possessor is entitled to the
of the materials NOTE: Not available fruits (Art. 544, NCC).
if the new thing is 2. If the thing is subject to a usufruct, in which case the
more valuable than usufructuary is entitled to the fruits(Art. 566, NCC).
materials for 3. If the thing is leased, in which case the lessee is
scientific or artistic entitled to the fruits of the thing, although such lessee
reasons must pay the owner rentals which are in the nature of
civil fruits (Art. 1654, NCC).
2. Receive payment for the 4. If the thing is in possession of an antichretic creditor,
value of materials and in which case such creditor is entitled to the fruits
damages with the obligation of applying them to the interest
and principal (Art. 2132, NCC).
Adjunction, mixture and specification distinguished
Requisites of accession discreta
ADJUNCTION MIXTURE SPECIFICATION
1. Increase or addition to the original thing
May involve 1 2. At repeated intervals
Involves at least 2 Involves at least thing (or more) 3. By inherent forces
things 2 things but form is
changed ACCESSION CONTINUA
Accessory follows Co-ownership Accessory follows Accession continua

the principal results the principal
It is the right pertaining to the owner of a thing over
Things mixed or everything incorporated or attached thereto either
The new object
confused may naturally or artificially; by external forces.
Things joined retains or
either retain or
retain their preserves the
lose their 1. With respect to real property [IN]
nature nature of the
respective a. Accession Industrial (building, planting or
original object
natures sowing)
b. Accession Natural (alluvium, avulsion, change of
RULES FOR DETERMINING THE PRINCIPAL AND a river course, and formation of islands)
ACCESSORY
NOTE: In case of uprooted trees, the owner
Factors to determine the principal and the accessory retains ownership if he makes a claim within 6
months. This does not include trees which
Primary Factors (Importance/purpose) remain planted on a known portion on land
1. The thing which is incorporated to another thing as an carried by the force of the waters. In this latter
ornament is the accessory. The other is the principal. case, the trees are regarded as accessions of the
2. The thing to which is added to or joined to another for land through gradual changes in the course of
the use or perfection of the latter is the accessory. The adjoining stream (Payatas v. Tuazon, No. 30067,
other is the principal. March 23, 1929).
Secondary Factors 2. With respect to personal property [SAC]

1. The one which has a greater value shall be considered a. Specification
principal b. Adjunction or conjunction
2. If they have equal value, the one with greater volume c. Commixtion or confusion
shall be considered principal (Art. 467-468, NCC)
Basic principles in accession continua (BADONG-E)
NOTE: In painting and sculpture, writings, printed matter,
engraving and lithographs, the board, metal, stone, canvas, 1. He who is in Bad faith is liable for damages.
paper or parchment shall be deemed the accessory thing. 2. Accessory follows the principal
(Art. 468, NCC) 3. Union or incorporation must generally be effected in
such a manner that to separate the principal from the

CIVIL LAW
accessory would result in substantial Damage to 3. What is built upon the land goes with it; or the land is
either or diminish its value. the principal, and whatever is built on it becomes the
4. To the Owner of the thing belongs the extension or accessory.
increases to such thing.
5. Bad faith of one party Neutralizes the bad faith of the Rule on ownership regarding accession industrial
other so that they shall be considered in good faith.
6. He who is in Good faith may be held responsible but GR: The owner of the land is the owner of whatever is
not penalized. built, planted or sown on that land, including the
7. No one shall unjustly Enrich himself at the expense of improvements or repairs made thereon.
another.
XPNs:
ACCESSION INDUSTRIAL 1. When the doer is in good faith the rule is modified.
2. Improvements on the land of one of the spouses at the
Maxims in connection with accession industrial expense of the conjugal partnership will belong to the
partnership or to the spouse who owns the land
1. The accessory follows the principal. depending on which of the two properties has a
2. The accessory follows the nature of that to which it higher value (Art. 120, FC)
relates.
NOTE: If the doer is in bad faith, he is entitled only to
necessary expenses for the preservation of the land.
Rule if the planter and owner of the land are different
Gathered Fruits
Planter in GF Planter in BF
Keeps fruits (Art. 544 par 1, NCC) Reimbursed for expenses for production,
Planter gathering and preservation (Art. 443,
NCC)
No necessity to reimburse the planter of Owns fruits provided he pays planter
Owner expenses since the planter retains the expenses for production, gathering and
fruits. (Art. 544 par 1, NCC) preservation (Art. 443, NCC)
Standing Crops
Planter in GF Planter in BF
Reimbursed for expenses, for production, Loses what is built, planted or sown
gathering and preservation (Art.443, NCC) without right to indemnity (Art 449,
NCC).
Planter
Entitled to reimbursement for the
necessary expenses of preservation of
the land. (Art. 452, NCC).
Owns fruits provided he pays planter Owns fruits (Art. 449, NCC)
Owner expenses for production, gathering and
preservation (Art. 443, NCC)
Rule when the land owner is the builder, planter or sower
Land Owner and Builder, Planter or Sower Owner of Materials

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

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Rule when the land owner is NOT the builder, planter or sower
Land Owner Builder, Planter, Sower and Owner of Materials

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

546, NCC).
Acquires improvements after paying indemnity and 1. Receive indemnity for improvements and receive
damages to builder, planter, sower, unless the latter decides damages; or
to remove (Art. 454,447&443, NCC). 2. Remove them in any event and receive damages
(Art. 454 & 447, NCC).
He cannot compel the builder planter or sower to buy the
land.
The reason why said article (Art. 447, NCC) 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, Property, 2008 Ed.)
Bad Faith Bad Faith
As though both acted in good faith (in pari delicto)
(Art. 453, NCC)

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 Good Faith Good Faith
He shall answer subsidiarily for their Pay value of materials to its owner (Art. 1. Collect value of materials
value and only in the event that the one 455, NCC). primarily from builder, planter,
who made use of them has no property sower, subsidiarily from land
with which to pay (Art. 455, NCC). and owner (Art. 455, NCC). Or
and If the Land Owner: 2. Remove the materials only if w/o

injury to the work constructed, or
He can either: (Art. 448, NCC) 1. Acquires the improvement, without the plantings,
1. Acquire improvements after paying Builder, Planter, or Sower may constructions or works being
indemnity for: demand from the landowner the destroyed (Art. 447, NCC).
a. Necessary expenses, and value of the materials and labor
b. Useful expenses which could (Art 455, NCC). NOTE: Landowner is subsidiarily
either be: liable only if he
a. Original costs of And he has the right to retain the appropriates/acquires the
improvements thing (and cannot be required to improvements.
b. Increase in the value of pay rent) until indemnity is paid
the whole (Art. 546 & 443, (Art. 546, NCC).
NCC)
2. Sell the land to builder and planter If the useful improvements can be
or collect rent from sower unless removed without damage to the
the value of the land is principal thing, the possessor in
considerably greater than the good faith may remove them,
building etc., in which case, the unless the person who recovers
builder and planter shall pay rent. the possession exercises the other
(Art. 547 & 447, NCC)
The parties shall agree upon the
terms of the lease and in case of 2. Sells the land or rents it, Builder or
disagreement, the court shall fix Planter cannot be obliged to buy
the terms thereof. the land if its value is considerably
more than that of the building or
trees.
In such case, he shall pay

reasonable rent.

terms of the lease and in case of
disagreement, the court shall fix
the terms thereof (Art. 448, NCC).
Good Faith Good Faith Bad Faith
Land Owner can either: (Art. 448, NCC) If the Land Owner: 1. Loses materials without right to
indemnity (Art. 449, NCC)
1. Acquire improvements after 1. Acquires the improvement,
paying indemnity for: Builder, Planter, or Sower has the 2. Pays damages (Art. 451, NCC)
a. Necessary expenses, and right to retain the thing (and
b. Useful expenses which could cannot be required to pay rent) The builder, planter or sower would be
either be: until indemnity is paid (Art. 546, considered merely an agent of the
a. Original costs of NCC). owner of materials.
improvements
b. Increase in the value of If the useful improvements can be Therefore, the provisions of Article
the whole (Art. 546 & removed without damage to the 449 of the Civil Code will apply by
443, NCC) principal thing, the possessor in analogy. He is even liable for damages
good faith may remove them, (Rabuya, 2008).
2. Sell the land to builder and planter unless the person who recovers
or collect rent from sower unless the possession exercises the
the value of the land is other (Art. 547, NCC).
considerably greater than the
building etc., in which case, the 2. Sells or rents it, Builder or
builder and planter shall pay rent. Planter cannot be obliged to buy
The parties shall agree upon the the land if its value is
terms of the lease and in case of considerably more than that of

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2015 GOLDEN NOTES
PROPERTY
disagreement, the court shall fix the building or trees.
the terms thereof.
Without subsidiary liability for In such case, he shall pay
cost of materials reasonable rent

terms of the lease and in case of
disagreement, the court shall fix
the terms thereof (Art. 448, NCC).
Without indemnity to owner of

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

1. Acquires improvements after If he pays the owner of the materials, 1. Collect value of materials
paying indemnity and damages, unless plants or seeds: primarily from builder, planter, sower,
the latter decides to remove (Art. 454, subsidiarily from land owner (Art. 455,
447 & 443, NCC). i. He may demand from the NCC) or
landowner the value of the
2. Cannot compel builder, planter and materials and labor (Art 455, NCC) 2. Remove the materials in any
sower to buy land. and shall also be obliged to the event, with a right to be indemnified
reparation of damages (Art. 447, for damages (Art. 447, NCC)
NCC) or
ii. Remove the materials in any event,
with a right to be indemnified for
damages (Art. 454 & 447, NCC)
Bad Faith Bad Faith Good Faith
The owner of the land shall answer Pay value of materials to its owner (Art. 1. Collect value of materials
subsidiarily for their value and only in 455, NCC) primarily from builder, planter, sower,
the event that the one who made use of subsidiarily from land owner (Art. 455,
them has no property with which to and NCC) or
pay (Art. 455, NCC)
If the Land Owner: 2. Remove the materials in any
and event, with a right to be indemnified
1. Acquires the improvement, for damages (Art. 447, NCC)

CIVIL LAW
Land Owner can either: (Art. 448, NCC) Builder, Planter, or Sower may demand
from the landowner the value of the
1. Acquire improvements after paying materials and labor (Art 455, NCC)
indemnity for:
a. Necessary expenses, and And he has the right to retain the thing
b. Useful expenses which could (and cannot be required to pay rent)
either be: until indemnity is paid (Art. 546, NCC).
i. Original costs of
improvements If the useful improvements can be
ii. Increase in the value of removed without damage to the
the whole (Art. 546 & 443, principal thing, the possessor in good
NCC) faith may remove them, unless the
person who recovers the possession
2. Sell the land to builder and planter exercises option 2. (Art. 547 & 447,
or collect rent from sower unless the NCC)
value of the land is considerably
greater than the building etc., in which 2. Sells or rents it, Builder or Planter
case, the builder and planter shall pay cannot be obliged to buy the land if its
rent. 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 reasonable
disagreement, the court shall fix the 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 (Art. 448, NCC).
Good Faith Bad Faith Good Faith
1. Option to: 1. Lose improvements without right 1. Collect value of materials
a. Acquire improvements to be indemnified unless the landowner primarily from builder, planter, sower,
without paying indemnity and sells the land (Art. 449, NCC). subsidiarily from land owner (Art. 455,
collect damages (Art. 445 & NCC) or
449, NCC). 2. Recover necessary expenses for
b. Order the demolition of work preservation of land without the right 2. Remove materials in any event if
or restoration to former to retain the thing until the indemnity builder, planter, sower acquired
condition and collect damages is paid (Art. 452 & 546, NCC). materials.
in both cases (Art. 450, NCC).
c. Sell the land to builder and 3. Pay value of materials to its owner
planter or rent it to the sower, plus damages (Art. 455, NCC).
and collect damages in both
cases (Art. 450, NCC). 4. Pay damages to land owner (Art.
451, NCC).
2. Pay necessary expenses for
preservation (Art. 452 & 546, NCC).
3. Subsidiarily liable to owner of

materials
Bad Faith Good Faith Bad Faith

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

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When there is good faith on the part of both the owner option, however, Felix shall have the right to a part of the
of the land and the builder, planter or sower expenses of cultivation and to a part of the net harvest,
both in proportion to the time of possession (Art. 545).
The owner of the land only has the options of paying the
value of the building or selling the land. He cannot refuse Q: Because of confusion as to the boundaries of the
either to pay or sell and compel the owner of the building adjoining lots that they bought from the same
to remove it from the land where it is erected. He is subdivision company, X constructed a house on the
entitled to such removal only when, after having chosen to adjoining lot of Y in the honest belief that it is the land
sell the land, the other party fails to pay for the same that he bought from the subdivision company.
(Ignacio v. Hilario, 76 Phil 606, 1946).
What are the respective rights of X and Y with respect
The landowner upon demand for payment CANNOT to X's house?
automatically become the owner of the improvement for
failure of the builder to pay for the value of the land. There A: The rights of Y, as owner of the lot, and of X, as builder
is nothing in Arts. 448 and 546 which would justify the of a house thereon, are governed by Art. 448 which grants
conclusion that upon failure of the builder to pay the value to Y the right to choose between two remedies: (a)
of the land, when such is demanded by the landowner, the appropriate the house by indemnifying X for its value plus
land owner becomes automatically the owner of the whatever necessary expenses the latter may have incurred
improvement under Art. 445. for the preservation of the land, or (b) compel X to buy the
land if the price of the land is not considerably more than
When the lands value is considerably more than the the value of the house. If it is, then X cannot be obliged to
improvement, the landowner cannot compel the builder to buy the land but he shall pay reasonable rent, and in case
buy the land. In such event, a forced lease is created and of disagreement, the court shall fix the terms of the lease.
the court shall fix the terms thereof in case the parties
disagree thereon (Depra v. Dumalo, No. L-57348, May 16, Q: Believing that a piece of land belonged to him, A
1985). erected thereon a building, using materials belonging
to C. the owner of the land, B was aware of the
Rule when landowner sells the land to a 3rd person construction being made by A, but did not do anything
who is in bad faith to stop it. What are the rights of A, B, and C, with
respect to the building and as against each other?
Builder must go against the 3rd person but if the latter has (1984 Bar Question)
paid the land owner, a case against such land owner may
still be filed by the builder and the 3rd person may file a 3rd A: B, regardless of his good or bad faith, becomes the
party complaint against land owner. owner of the building (Arts. 445 & 448, NCC). However, A, a
builder in good faith will be entitled to reimbursement of
Recourse left to the parties where the builder fails to his necessary and useful expenses, with right to retain the
pay the value of the land. same until paid. He may also remove the construction,
since B acted in bad faith in not stopping the construction
The Civil Code is silent on this point. Guidance may be had (Arts. 454 & 447, NCC). C shall have the right to
from these decisions: reimbursement and may also remove them but only if he
1. In Miranda v. Fadullon, G.R. No. L-8220, October 29, can do so without injury to the work (Art. 447, NCC).
1955, the builder might be made to pay rental only,
leave things as they are, and assume the relation of Suppose X was in good faith but Y knew that X was
lessor and lessee; constructing on his (Y's) land but simply kept quiet
2. In Ignacio v. Hilario, G.R. L-175, April 30, 1946, owner about it, thinking perhaps that he could get X's house
of the land may have the improvement removed; or later. What are the respective rights of the parties over
3. In Bernardo v. Bataclan, G.R. No. L-44606, November X's house in this case? (1999 Bar Question)
28, 1938, the land and the improvement may be sold
in a public auction, applying the proceeds first to the A: Since the lot owner Y is deemed to be in bad faith (Art.
payments of the value of the land, and the excess if 453), X as the party in good faith may (a) remove the house
any, to be delivered to the owner of the house in and demand indemnification for damages suffered by him,
payment thereof (Filipinas College Inc. v. Timbang, G.R. or (b) demand payment of the value of the house plus
No. L-12812, September 29, 1959). reparation for damages (Art. 447, in relation to Art. 454). Y
continues as owner of the lot and becomes, under the
Q: Felix cultivated a parcel of land and planted sugar second option, owner of the house as well, after he pays
cane, believing it to be his own. When the crop was the sums demanded.
eight months old, and harvestable after two more
months, a resurvey of the land showed that it really Q: Bartolome constructed a chapel on the land of Eric.
belonged to Fred. What are the options available to What are Bartolomes rights if he were: (1) possessor
Fred? (2000 Bar Question) of the land in good faith, or (2) in bad faith? (1996 Bar
Question)
A: As to the pending crops planted by Felix in good faith,
Fred has the option of allowing Felix to continue the A: (1) A chapel is a useful improvement, Bartolome may
cultivation and to harvest the crops, or to continue the remove the chapel if it can be removed without damage to
cultivation and harvest the crops himself. In the latter the land, unless Eric chooses to acquire the chapel. In the

CIVIL LAW
latter case, Bartolome has the right of reimbursement of A:
the value of the chapel with right of retention until he is 1. Pablo is correct. Under Art. 448 in relation to Art.
reimbursed (Arts. 448, 546 & 547, NCC). 546, the builder in good faith is entitled to a refund of
(2) Bartolome loses whatever he built, without any right to the necessary and useful expenses incurred by him, or
indemnify. (Art. 449, NCC). the increase in value which the land may have
acquired by reason of the improvement, at the option
Q: Pecson owned a commercial lot on which he built a of the landowner. The builder is entitled to a refund of
building. For failure to pay realty taxes, the lot was the expenses he incurred, and not to the market value
sold at public auction to Nepomuceno, who in turn sold of the improvement.
it to the spouses Nuguid. The sale, however, does not
include the building. The spouses subsequently moved NOTE: The case of Pecson v. CA, G.R. No. 115814, May
for the delivery of possession of the said lot and 26, 1995 is not applicable.
apartment. Pecson filed a motion to restore possession
pending determination of the value of the apartment. 2. Pablo is entitled to the rentals of the building. As
the owner of the land, Pablo is also the owner of the
May Pecson claim payment of rentals? building being an accession thereto. However, Pedro
who is entitled to retain the building is also entitled to
A: Yes, Pecson is entitled to rentals by virtue of his right of retain the rentals. He, however, shall apply the rentals
retention over the apartment. The construction of the to the indemnity payable to him after deducting
apartment was undertaken at the time when Pecson was reasonable cost of repair and maintenance.
still the owner of the lot. When the Nuguids became the
uncontested owner of the lot, the apartment was already in Q: The Church, despite knowledge that its intended
existence and occupied by tenants. contract of sale with the National Housing Authority
(NHA) had not been perfected, proceeded to introduce
Art. 448 does not apply to cases where the owner of the improvements on the disputed land. On the other
land is the builder but who later lost the land; not being hand, NHA knowingly granted the Church temporary
applicable, the indemnity that should be paid to the buyer use of the subject properties and did not prevent the
must be the fair market value of the building and not just Church from making improvements thereon. Did the
the cost of construction thereof. To do otherwise would Church and NHA act in bad faith?
unjustly enrich the new owner of the land.
A: Yes. The Church and the NHA, both acted in bad faith,
NOTE: While the law aims to concentrate in one person hence, they shall be treated as if they were both in good
the ownership of the land and the improvements thereon faith (National Housing Authority v. Grace Baptist Church,
in view of the impracticability of creating a state of forced G.R. No. 156437, March 1, 2004).
co-ownership, it guards against unjust enrichment insofar
as the good-faith builders improvements are concerned. Q: A squatter, X, is sought to be evicted by the
The right of retention is considered as one of the measures landowner Y, seeks reimbursement from the latter for
to protect builders in good faith. the improvements he made on the property, while Y
demands the value of all the fruits X gathered from the
Pending complete reimbursement, may the spouses land during the occupancy thereof. Is X entitled to the
Nuguid benefit from the improvement? indemnity he prays for? Is he bound to pay for the
fruits he received? Why? (1983 Bar Question)
A: No. Since spouses Nuguid opted to appropriate the
improvement for themselves when they applied for a writ A: As a possessor in bad faith, X may recover only the
of execution despite knowledge that the auction sale did necessary expenses he may have incurred while in
not include the apartment building, they could not benefit possession and reimbursement for useful improvements
from the lots improvement until they reimbursed the introduced by him if owner Y chooses to retain them and X
improver in full, based on the current market value of the must pay Y the value of all the fruits he received.
property (Pecson v. CA, G.R. No. 115814, May 26, 1995).
ACCESSION: USUFRUCTUARY
Q: In good faith, Pedro constructed a five-door
commercial building on the land of Pablo who was also Rights of the usufructuary over improvements he
in good faith. When Pablo discovered the construction, introduced on the property held in usufruct
he opted to appropriate the building by paying Pedro
the cost thereof. However, Pedro insists that he should GR: The usufructuary is not entitled to indemnity for the
be paid the current market value of the building, expenses he had incurred in the making of the
which was much higher because of inflation. (2000 Bar improvements.
Question)
XPN: He may remove the improvements even against the
1. Who is correct, Pedro or Pablo? will of the owner, provided, that no damage would be
2. In the meantime that Pedro is not yet paid, who is caused to the property (Art. 579, NCC).
entitled to the rentals of the building, Pedro or
Pablo? The usufructuary may introduce useful or luxurious
improvements but is prohibited from altering the form and
substance of the property.

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2015 GOLDEN NOTES
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Registration
If the improvements cannot be removed without causing
damage to the property, the usufructuary may set off the Alluvial deposits must be registered. Though,
improvements he may have made on the property against automatically it is owned by the riparian owner (Heirs of
any damage to the same (Art 580, NCC). Navarro v. IAC, G.R. No. 68166, February 12, 1997), it is still
subject to acquisitive prescription which may divest the
ACCESSION NATURAL riparian owner the ownership over the accretion
ALLUVION Failure to register
Alluvium or alluvion If the riparian owner fails to register the deposits within
the prescriptive period of acquiring real property (10
It is the gradual deposit of sediment by natural action of a years if ordinary prescription or 30 years if extraordinary
current of fresh water (not sea water), the original identity prescription), it subjects said accretion to acquisition thru
of the deposit being lost. Where it is by sea water, it prescription by third persons (Reynante v. CA, G.R. No.
belongs to the State (Government of Philippine Islands v. 95907, Apr. 8, 1992).
Cabangis, G.R. No. L-28379, March 27, 1929).
However, registration under the Torrens System does not
NOTE: Art. 457, NCC states To the owners of the lands protect the riparian owner against the diminution of the
adjoining the banks of the rivers belongs the accretion area of his registered land through gradual changes in the
which they gradually receive from the effects of the course of an adjoining stream.
current of the waters.
Reasons for granting a riparian owner the right to
Accretion v. Alluvium alluvion deposited by a river
Accretion is the process whereby the soil is deposited 1. To compensate him for:
while alluvium is the soil deposited. a. danger of loss that he suffers due to the location
of his land; and
Requisites of alluvium (GRA) b. for the encumbrances and other easements on
his land
1. Deposit be Gradual and imperceptible 2 To promote the interests of agriculture as he is in the
2. Resulted from the effects of the current of the water best position to utilize the accretion.
3. The land where the accretion takes place is Adjacent
to the banks of a river CHANGE IN THE COURSE OF RIVER
If all the requisites are present, the riparian owner is Change in the course of river
automatically entitled to the accretion.
When a river changes its course by natural causes and its
NOTE: The alluvion starts to become the property of the bed is formed on a private estate, it becomes a property of
riparian owner from the time that the deposit created by public dominion whether it is navigable or floatable.
the current of water becomes manifest (Heirs of Navarro v.
IAC, GR. No. 68166, February 12, 1997). Requisites (NAPA)
Man-made or artificial accretions to lands NOT 1. There must be a Natural change in the course of the
included waters of the river; otherwise, the bed may be the
subject of a State grant (Reyes-Puno, p.54).
The rule on alluvion does not apply to man-made or 2. The change must be Abrupt or sudden;
artificial accretions to lands that adjoin canals or esteros 3. The change must be Permanent;
or artificial drainage system (Ronquillo v. CA, G.R. No
43346, March 20, 1991). NOTE: The rule does not apply to temporary
overflowing of the river.
NOTE: If the deposits accumulate, not through the effects
of the current of the water, but because of the 4. There must be Abandonment by the owner of the bed.
constructions made by the owner purely for defensive
purposes against the damaging action of the water, the NOTE: Abandonment pertains to the decision not to
deposits are still deemed to be alluvion and will belong to bring back the river to the old bed (Reyes-Puno, p.53).
the riparian owner.
Effect when the river bed is abandoned
If the deposit is brought about by sea water
River beds which are abandoned through the natural
It belongs to the State and forms part of the public domain. 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

CIVIL LAW
exceed the value of the area occupied by the new bed (Art Rule on avulsion of uprooted trees
461, NCC).
GR: The owner of the tree retains ownership.
NOTE: The rule on abandoned river bed does not apply to
cases where the river simply dries up because there are no XPN:
persons whose lands are occupied by the waters of the 1. The owner must claim them within a period of 6
river. months.
2. If uprooted trees have been transplanted by the
AVULSION owner of the land which the trees may have been cast
and said trees have taken root in said land, the owner
Avulsion of the trees, upon making the claim, is required to
refund the expenses incurred in gathering them or in
It is the deposit of known (identifiable) portion of land putting them in safe place, including the expenses
detached from the property of another which is attached incurred by the owner of the land for the preservation
to the property of another as a result of the effect of the of the trees (Rabuya, 2008).
current of a river, creek or torrent.
ISLANDS
Art. 459, NCC states that whenever the current of a river,
creek, or torrent segregates from an estate on its banks a Rules on ownership with regard to formation of
known portion of land and transfers it to another estate, islands
the owner of the land to which the segregated portion
belonged retains the ownership of it, provided he removes LOCATION OWNER
it within 2 years. If formed on the sea
Alluvium v. Avulsion W/in territorial waters State

Outside territorial
ALLUVIUM AVULSION First country to occupy
waters
Gradual and imperceptible Sudden or abrupt process If formed on lakes or navigable/ floatable rivers
State
Soil cannot be identified Identifiable and verifiable If formed on non-navigable/ floatable rivers
Nearer in margin to one Owner of nearer margin is
Belongs to the owner of Belongs to the owner from bank the sole owner
the property to which it is whose property it was Island divided
attached detached If equidistant
longitudinally in halves
Detachment followed by
Merely an attachment
attachment Q: Eduave is the owner of land forming part of an
island in a non-navigable river. Said land was eroded
Requisites of avulsion (CAI) due to a typhoon, destroying the bigger portion
thereof and improvements thereon. Due to the
1. Transfer is caused by the Current of a river, creek, or movements of the river deposits on the part of the
torrent. land that was not eroded, the area was increased.
2. Transfer is sudden or Abrupt Later, Eduave allowed Dodong to introduce
3. The portion of the land transported is known or improvements thereon and live there as a caretaker.
Identifiable. However, Dodong however later denied Eduaves
claim of ownership so the latter filed action to quiet
NOTE: By analogy, land transferred from one tenement to title over the property. Who has a better right to the
another by forces of nature other than the river current land?
can still be considered as an avulsion.
A: Eduave. Clearly, the land in question is an island that
Rule on acquisition of titles over an avulsion appears in a non-floatable and non-navigable river, and it
is not disputed that Eduave is the owner of the parcel of
GR: Original owner retains title. land along the margin of the river and opposite the island.
Applying Art. 465, the island belongs to the owner of the
XPNs: The owner must remove (not merely claim) the parcel of land nearer the margin. More accurately, because
transported portion within 2 years to retain ownership, the island is longer than the property of Eduave, he is
otherwise, the land not removed shall belong to the owner deemed ipso jure the owner of that portion which
of the land to which it has been adjudicated in case of: corresponds to the length of his property along the margin
1. Abandonment; or of the river. If however, the riparian owner fails to assert
2. Expiration of 2 years, whether the failure to remove his claim thereof, the same may yield to the adverse
be voluntary or involuntary, and irrespective of the possession of the third parties, as indeed even accretion to
area of the portion known to have been transferred. land titled under the Torrens system must itself still be
registered. Dodong thus may acquire said land by
acquisitive prescription. But here, Dodongs possession
cannot be considered to be in good faith, so 30 years of

112
2015 GOLDEN NOTES
PROPERTY
possession is needed (Jagualing v. CA, G.R. No. 94283,
March 4, 1991). QUIETING OF TITLE: REQUIREMENTS
NOTE: There is no accession when islands are formed by Requisites for an action to quiet title (LCDR)
the branching of a river; the owner retains ownership of
the isolated piece of land. 1. Plaintiff must have a Legal or equitable title to, or
interest in the real property which is the subject
QUIETING OF TITLE matter of the action;
2. There must be Cloud in such title;
Action to quiet title 3. Such cloud must be Due to some
a. Instrument;
It is a proceeding in equity, the purpose of which is the b. Record;
declaration of the invalidity of a claim on a title or the c. Claim;
invalidity of an interest in property adverse to that of the d. Encumbrance; or
plaintiff, and thereafter to free the plaintiff and all those e. Proceeding which is apparently valid but is in
claiming under him from any hostile claim thereon truth invalid, ineffective, voidable or
(Pineda,2009). unenforceable, and is prejudicial to the plaintiffs
title; and
An action for quieting of title is essentially a common law 4. Plaintiff must
remedy grounded on equity. The competent court is tasked a. Return to the defendant all benefits he may have
to determine the respective rights of the complainant and received from the latter; or
other claimants, not only to place things in their proper b. reimburse him for expenses that may have
place, to make the one who has no rights to said redounded to his benefit.
immovable respect and not disturb the other, but also for
the benefit of both, so that he who has the right would see Reasons for quieting of title
every cloud of doubt over the property dissipated, and he
could afterwards without fear introduce the improvements 1. Prevent future litigation on the ownership of the
he may desire, to use, and even to abuse the property as he property
deems best (Dionisio Mananquil, et al. v. Roberto Moico; G.R. 2. Protect true title & possession
No. 180076. November 20, 2012). 3. To protect the Real interest of both parties
4. To determine and make known the precise state of
Quieting of title is a common law remedy for the removal title for the guidance of all
of any cloud upon, doubt, or uncertainty affecting title to
real property. Whenever there is a cloud on title to real Persons who may file an Action to Quiet Title
property or any interest in real property by reason of any
instrument, record, claim, encumbrance, or proceeding 1. Registered owner;
that is apparently valid or effective, but is, in truth and in 2. A person who has an equitable right or interest in the
fact, invalid, ineffective, voidable, or unenforceable, and property; or
may be prejudicial to said title, an action may be brought 3. The State.
to remove such cloud or to quiet the title. In such action,
the competent court is tasked to determine the respective Rules in actions for Quieting of Title
rights of the complainant and the other claimants, not only
to place things in their proper places, and make the 1. These put an end to vexatious litigation in respect to
claimant, who has no rights to said immovable, respect and property involved; plaintiff asserts his own estate &
not disturb the one so entitled, but also for the benefit of generally declares that defendants claim is without
both, so that whoever has the right will see every cloud of foundation
doubt over the property dissipated, and he can thereafter 2. Remedial in nature
fearlessly introduce any desired improvements, as well as 3. Not suits in rem nor personam but suits against a
use, and even abuse the property (Phil-Ville Development particular person or persons in respect to the res
and Housing Corporation v. Maximo Bonifacio, et al., G.R. No. (quasi in rem)
167391, June 8, 2011). 4. May not be brought for the purpose of settling a
boundary disputes.
Nature of the action to quiet title 5. Applicable to real property or any interest therein.
6. An action to quiet title brought by the person in
An action to quiet title is quasi in rem an action possession of the property is IMPRESCRIPTIBLE.
concerning real property where judgment therein is 7. If he is not in possession, he must invoke his remedy
enforceable only against the defeated party and his privies. within the prescriptive period.
Scope of the action to quiet title Classifications of actions
Only real properties can be subject of an action for 1. Remedial action one to remove cloud on title
quieting of title. Art. 476 makes reference only to real 2. Preventive action one to prevent the casting of a
property without hinting to include personal property (threatened) cloud on the title.
(Pineda, 2009).

CIVIL LAW
Requisites for existence of a cloud (ATP) PRESCRIPTION OR
NON-PRESCRIPTION OF ACTION
1. There is an Apparently valid or effective instrument.
Prescriptive periods for bringing an action to quiet
NOTE: They must appear valid or effective and title
extraneous evidence is needed to prove their
invalidity or ineffectivity. 1. Plaintiff in possession Imprescriptible
2. Plaintiff not in possession
2. But such instrument is in Truth: a. 10 years (ordinary) or
a. Invalid; b. 30 years (extra-ordinary)
b. Ineffective;
c. Voidable; NOTE: Laches is defined as the failure or neglect, for
d. Unenforceable; unreasonable and unexplained length of time, to do that
e. Has been extinguished or terminated; which by exercising due diligence, could or should have
f. Has been barred by extinctive prescription. been done earlier.
3. Such instrument may be Prejudicial to the title.
The negligence or omission to assert a right within a
Purpose of an action to remove cloud on title reasonable time, warranting a presumption that the party
entitled to assert it either has abandoned it or declined to
It is intended to procure the cancellation, or delivery of, assert it (Tijam v Sibonghanoy, L-21450, Apr. 15, 1968).
release of an instrument, encumbrance, or claim
constituting a claim on plaintiffs title, and which may be An action filed within the period of limitations, may still be
used to injure or vex him in the enjoyment of his title. barred, by laches (See Arts. 1431, 1433, 1437, NCC).
Action to quiet title v. Action to remove cloud on title Imprescriptibility of action to quiet title
ACTION TO REMOVE Even though the NCC does not include an action to quiet
ACTION TO QUIET TITLE title as one of those actions which are imprescriptible, the
CLOUD ON TITLE
SC in this case held that such action is imprescriptible. The
To put an end to troublesome For the removal of a
basis of the court is Art. 480. The imprescriptibility of an
litigation with respect to the possible foundation for a
action to quiet title is a general principle from American
property involved future hostile claim
jurisprudence (Bucton v. Gabar, G.R. No. L-36359, January
A remedial action A preventive action 31, 1974).
Involving a present adverse To prevent a future cloud
claim on the title CO-OWNERSHIP
Q: Edgardo donated a parcel of land to a barangay CHARACTERISTICS OF CO-OWNERSHIP

subject to the condition that it shall be used for the IN GENERAL
construction of a public plaza within 5 years from
execution of the Deed of Donation. Otherwise, the deed Co-ownership
shall have no force and effect and ownership of the
land will revert to the donor. The barangay took It is a state where an undivided thing or right belongs to 2
possession of the property and allowed the or more persons (Art. 484, NCC). It is the right of common
construction of buildings by public and private dominion which two or more persons have in a spiritual
entities. Edgardo filed a complaint for quieting of title (or ideal) part of the thing which is not physically divided.
and recovery of possession of the area donated against
the barangay claiming that the donation had ceased to Characteristics of co-ownership (PRES-LG)
be effective, for failure to comply with the conditions
of the donation. Was the action to quiet title properly 1. Plurality of subjects / owners;
made? 2. There is no mutual Representation by the co-owners;
3. It exists for the common Enjoyment of the co-owners;
A: No. The action to quiet title is unavailing until the 4. There is a Single object which is not materially
donation shall have first been revoked. In the case at bar, divided;
the barangay traces its claim of ownership over the 5. It has no distinct Legal personality
disputed property to a valid contract of donation which is 6. It is Governed first of all by the contract of the parties;
yet to be effectively revoked. Such rightful claim does not otherwise, by special legal provisions, and in default
constitute a cloud on the supposed title of Edgardo over of such provisions, by the provisions of Title III of the
the same property removable by an action to quiet title. New Civil Code on co-ownership.
(Dolar v. Brgy. Lublub, G.R. No. 152663, November 18, 2005)
Requisites of co-ownership (POL)
1. Plurality of owners;
2. Object, which is an undivided thing or right;

114
2015 GOLDEN NOTES
PROPERTY
3. Each co-owners right must be Limited only to his No public instrument is
ideal share of the physical whole May be made in any form
needed even if the object of
except when real property
the co-ownership is an
NOTE: By the very nature of co-ownership, a co-owner is contributed
immovable
cannot point to any specific portion of the property owned
in common as his own because his share remains intangible Limitations upon the right of a co-owner to use the
and ideal (Spouses Avila et al v. Spouses Barabat, GR. No. thing owned in common
141993, May 17, 2006).
The thing should be used by a co-owner only:
Co-ownership v. Joint tenancy 1. In accordance with the purpose for which it is
intended;
CO-OWNERSHIP JOINT OWNERSHIP 2. In such a way as not to injure the interest of the co-
Tenancy in common Joint Tenancy ownership; and
As to the extent of ownership 3. In such a way as not to prevent the other co-owners
from using it according to their rights (Art. 486, NCC).
Each co-owner is the owner Each joint owner owns the
of his own ideal share. whole thing. Alienation of property co-owned
As to disposition
Each co-owner may dispose Joint owner may not dispose When a co-owner sells the whole property as his, the sale
of his undivided share of his own share without of will affect only his own share but not those of the other co-
without the other co- all the rest, because he owners who did not consent to the sale.
owners consent. really has no ideal share.
A sale of the entire property by one co-owner without the
As to transfer of shares in case of death
consent of the other co-owners is not null and void but
Upon the death of a joint affects only his undivided share and the transferee gets
Upon the death of a co-
owner, his share goes to the only what would correspond to his grantor in the partition
owner, his ideal share goes
other joint owners by of the thing owned in common (Paulmitan v. CA, GR No.
to his heirs.
accretion. 51584, November 25, 1992).
As to minority or legal disability
In case of a minor who is a The legal disability of one Duration of the co-ownership
co-owner, this does not joint owner benefits the
benefit the others. others. An agreement to keep the thing undivided for a certain
Prescription period of time, not exceeding ten years, shall be valid. This
Prescription will continue to Prescription will not run term may be extended by a new agreement.
run among co-owners. among them.
A donor or testator may prohibit partition for a period
which shall not exceed twenty years.
Co-ownership v. Partnership
Neither shall there be any partition when it is prohibited
ORDINARY by law (Art. 494, NCC).
CO-OWNERSHIP
PARTNERSHIP
No legal personality Has legal personality Share of the co-owners in the benefits and charges
Can be created only by arising from the co-ownership
Can be created without the
contract, express or
formalities of a contract
implied According to the NCC, the share of the co-owners in the
By contract or by will By contract only benefits and charges arising from the co-ownership shall
Agreement to exist for be proportional to their respective interests and any
No term limit is set by law stipulation in a contract to the contrary shall be void (Art.
more than 10 years is void
485, par.1, NCC). Consequently, in order to determine the
There is mutual
No mutual representation share of the co-owners in the benefits and charges, we
representation
must first determine their respective interests in the co-
Not dissolved by the ownership. Under the law, such interests are presumed
Dissolved by death or
death/incapacity of a co- equal, unless the contrary is proved (Art. 485, par.2, NCC).
incapacity of a partner
owner
A co-owner can dispose of SOURCES OF CO-OWNERSHIP
his share w/o the consent A partner cannot be
of the others hence in a substituted w/o the Sources of co-ownership (LOST-CC)
way a co-owner is consent of the others
substituted 1. Law - ex. Easement of party walls (Article 658, NCC)
Profits of a co-owner Profits may be stipulated 2. Occupancy - ex. When two persons gather forest
depend on his upon (for e.g., profit- products or catch a wild animal
proportionate share sharing agreements) 3. Succession- ex. Heirs of undivided property before
For collective enjoyment For profit partition
4. Testamentary (or mortis causa) / Donation inter
vivos

CIVIL LAW
i.e. Where the donor prohibits partition of the will not put an end to existing co-ownership (Mariano v. CA
property for a certain period of time , 222 SCRA 76).
5. Contract
6. by Chance or fortuitous event Duties/liabilities of co-owners
i.e. Hidden treasure
1. Share in charges proportional to respective interest;
RIGHTS OF CO-OWNERS stipulation to contrary is void
2. Pay necessary expenses and taxes May be exercised
General rights of each co-owner as to the thing owned by only one co-owner
in common (USA-COPE-P) 3. Pay useful and luxurious expenses If determined by
majority
1. To Use the thing according to the purpose intended 4. Duty to obtain consent of all if thing is to be altered
provided that: even if beneficial; resort to court if non-consent is
a. It is w/o prejudice to the interest of the co- manifestly prejudicial
ownership; and 5. Duty to obtain consent of majority with regards to
b. w/o preventing the use of other co-owners (Art. administration and better enjoyment of the thing;
486, NCC). controlling interest; court intervention if prejudicial
Appointment of administrator
2. To Share in the benefits in proportion to his interest, 6. No prescription to run in favor of a co-owner as long
provided the charges are borne in the same as he recognizes co-ownership; requisites for
proportion (Art. 485, NCC). acquisition through prescription:
a. He has repudiated through unequivocal acts
NOTE: A contrary stipulation is void. Hence, benefits b. Such act of repudiation is made known to other
cannot be stipulated upon by the co-owners. co-owners
c. Evidence must be clear and convincing
3. Each co-owner may bring an Action for ejectment 7. Co-owners cannot ask for physical division if it would
(Art. 487, NCC). render thing unserviceable; but can terminate co-
ownership.
NOTE: Action for ejectment covers; forcible entry, 8. After partition, duty to render mutual accounting of
unlawful detainer, accion publiciana, quieting of title, benefits and reimbursements for expenses.
accion reivindicatoria, replevin.
Rights of a co-owner to 3rd parties
4. To Compel other co-owners to contribute to expenses
for preservation of the thing (Art. 488, NCC) 1. Assignees may take part in division and object if being
5. To Oppose to any act of alteration (Art. 491, NCC) even effected without their concurrence, but cannot
if beneficial to the co-owners impugn unless there is fraud or made
6. To Protect against acts of majority which are notwithstanding their formal opposition.
prejudicial to the minority (Art. 492, par. 3, NCC) 2. Non-intervenors Retain rights of mortgage and
7. To Exercise legal redemption servitude and other real rights and personal rights
8. To ask for Partition (Art. 494, NCC) belonging to them before partition was made.
9. Right to exempt himself from obligation of paying
necessary expenses and taxes by renouncing his share Q: Borromeo, a co-owner of a parcel of land, allowed
in the pro-indiviso interest; but cannot be made if Resuena to reside in said land. After sometime,
prejudicial to co-ownership Borromeo later demands that Resuena should vacate
10. Right to make repairs for preservation of things can the property, but the latter refused. May Borromeo file
be made at will of one co-owner; receive an ejectment suit even if he is a mere co-owner of the
reimbursement therefrom; notice of necessity of such lot?
repairs must be given to co-owners, if practicable
11. Right to full ownership of his part and fruits A: Yes. Art. 487 of the Civil Code which provides that
12. Right to alienate, assign or mortgage own part; except Anyone of the co-owners may bring an action in
personal rights like right to use and habitation ejectment is a categorical and an unqualified authority in
13. Right of pre-emption favor of Borromeo to evict Resuena from the portion
14. Right to be adjudicated thing (subject to right of occupied. Borromeos action for ejectment against Resuena
others to be indemnified) is deemed to be instituted for the benefit of all co-owners
15. Right to share in proceeds of sale of thing if thing is of the property (Resuena v. CA, G.R. No. 128338, March 28,
indivisible and they cannot agree that it be allotted to 2005).
one of them.
Filing of an ejectment suit
Effect of redemption of the whole property of a co-
owner Art. 487, NCC states that Any one of the co-owners may
bring action for ejectment. The law does not require that
Redemption of the whole property by a co-owner does not consent of the co-owners must be first secured before
vest in him sole ownership over said property. bringing an action for ejectment.
Redemption within the period prescribed by law by a co-
owner will inure to the benefit of all co-owners. Hence, it If the case does not prosper:

116
2015 GOLDEN NOTES
PROPERTY
Acts of administration v. Acts of alteration
GR: The other co-owners are NOT bound by the judgment.
ACTS OF
XPN: If they were also served with summons, even as ACTS OF ALTERATION
ADMINISTRATION
unwilling plaintiffs.
Acts, by virtue of which, a
A suit for ejectment CANNOT be brought by one co-owner co-owner, in opposition to
against another co-owner, since the latter also has a right the expressed or tacit
of possession; the only effect of the action will be to obtain Refer to the enjoyment, agreement of all the co-
recognition of the co-ownership. exploitation, alteration of owners, and in violation of
the thing which do not their will, change the thing
RIGHT TO PROPERTY OWNED IN COMMON v. FULL affect its substance, form, from the state in which the
OWNERSHIP OVER HIS/HER IDEAL SHARE or purpose others believe it would
remain, or withdraws it
Right to property owned in common v. full ownership from the use to which they
over his/her ideal share believe it is intended
1. Right to property owned in common
Transitory in character Permanent
NOTE: Each co- owner is granted the right to use the
Affect or relate the
property owned in common for the purpose for which Do not affect the substance
substance or essence of the
it is intended. or form
thing
There are two restrictions in the enjoyment of this In relation to the right of a
right: Require the consent of all
co-owner, they require the
a. The co- ownership shall not be injured; and co-owners
consent of the majority
b. The exercise shall not prevent the other co-
owners from using the property according to
their own rights. Can be exercised by the co- Must be exercised by the
owners through others co-owners themselves
2. Full ownership over his/her ideal share
Effect of alteration without the express or implied
NOTE: A co- owner has full ownership of his share
consent of co-owners
(undivided interest) and the fruits and benefits
arising therefrom. Being the full owner thereof he
A co-owner who makes an alteration without the express
may alienate, assign or mortgage it; he can also
or implied consent of the others shall: (LDP)
substitute another person in the enjoyment of his
share, except only when personal rights are involved.
1. Lose what he has spent;
2. Be obliged to Demolish the improvements done; and
ACTS OF ALTERATION
3. Pay for the loss and damages the community property
or other co-owners may have suffered.
Alteration
NOTE: Estoppel will operate against the co-owners who
It is a change which is more or less permanent, which
were aware of the execution of the acts of alteration, but
changes the use of the thing and which prejudices the
did not object thereto. They are deemed to have given
condition of the thing or its enjoyment by the others.
their implied consent (3 Manresa 469-470).
(Paras, 2008)
Conversion
Alteration includes the act by virtue of which a co-owner
changes the thing from the state in which the others
It refers to the act of using or disposing of anothers
believe it should remain. It is not limited to material
property without lawful authority to do so in a manner
charges (Viterbo v. Quinto, 35226-R, December 19, 1973).
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 for which the property is given
be directly to the advantage of the person
misappropriating or converting the property of another
(People v. Carballo, 17136-CR, November 17, 1976).

CIVIL LAW
RIGHT TO PARTITION considered adverse to strangers may not be considered
adverse insofar as co-owners are concerned (Salvador v.
Rights of co-owners as to the ideal share of each CA, G.R. No. 109910, Apr. 5, 1995).
(FARTS)
XPN: Co-owner's possession may be deemed adverse to
1. Each has Full ownership of his part and of his share of the cestui que trust or the other co-owners provided the
the fruits and benefits; following elements must concur:
2. Right to Alienate, dispose or encumber;
3. Right to Renounce part of his interest to reimburse 1. That he has performed unequivocal acts of
necessary expenses incurred by another co-owner; repudiation amounting to an ouster of the cestui que
4. Right to enter into Transaction affecting his ideal trust or the other co-owners;
share; 2. That such positive acts of repudiation have been made
known to the cestui que trust or the other co-owners;
NOTE: The transaction affects only his ideal share not and
that of the other co-owners. 3. That the evidence thereon must be clear and
convincing (Salvador v. CA, G.R. No. 109910, Apr. 5,
5. Right to Substitute another person in its enjoyment, 1995).
except when personal rights are involved.
NOTE: Prescription begins to run from the time of
NOTE: Personal rights or jus in personam is the power repudiation.
belonging to one person to demand from another, as a
definite passive subject-debtor, the fulfillment of a Example of acts of repudiation: filing of an action to:
prestation to give, to do, or not to do (Paras, 2008). 1. Quiet title; or
2. Recovery of ownership.
Right to demand partition
XPN to XPN: Constructive trusts can prescribe.
GR: Every co-owner has the right to demand partition. Express trust cannot prescribe as long as the
relationship between trustor and trustee is
XPNs: (EASI-PAUL) recognized (Paras, 2008).
1. When partition would render the thing Unserviceable;
or Q: The two lots owned by Alipio were inherited by his
2. When the thing is essentially Indivisible; 9 children, including Maria, upon his death. Pastor,
3. When partition is prohibited by Law by reason of Marias husband, filed a complaint for quieting of title
their origin or juridical nature- ex. party walls and and annulment of documents against the spouses
fences; Yabo, alleging that he owned a total of 8 shares of the
4. When the co-owners Agree to keep the property subject lots, having purchased the shares of 7 of
undivided for a period of time but not more than 10 Alipio's children and inherited the share of his wife,
yrs; Maria, and that he occupied, cultivated, and possessed
5. When partition is Prohibited by the transferor (donor continuously, openly, peacefully, and exclusively the
/ testator) but not more than 20 yrs; parcels of land. He prayed that he be declared the
absolute owner of 8/9 of the lots. His co-heirs then
NOTE: 10 years ordinary prescription, 30 years extra- instituted an action to partition the lots. Did Pastor
ordinary partition. acquire by prescription the shares of his other co-heirs
or co-owners?
6. When a co-owner possessed the property as an
Exclusive owner for a period sufficient to acquire it A: No. The only act which may be deemed as repudiation
through prescription. (Acquisitive Prescription) by Pastor of the co-ownership over the lots is his filing of
7. When Co-owners may agree that it be Allotted to one an action to quiet title. The period of prescription started
of them reimbursing the others; to run only from this repudiation. However, this was tolled
8. If they cannot agree, they may Sell the thing and when his co-heirs, instituted an action for partition of the
distribute the proceeds. lots. Hence, the adverse possession by Pastor being for
only about 6 months would not vest in him exclusive
NOTE: The right to ask for partition CANNOT be waived or ownership of his wife's estate, and absent acquisitive
renounced permanently. Such waiver or renunciation is prescription of ownership, laches and prescription of the
void. action for partition will not lie in favor of Pastor (Salvador
v. CA, G.R. No. 109910, Apr. 5, 1995).
Prescription
Notice of the proposed partition to creditors and/or
GR: As long as the co-owner expressly or impliedly assignees
recognizes the co-ownership, prescription cannot run in
favor of or against him. The law does not require that a notification be given but
Reason: Possession of a co-owner is like that of a trustee 1. If notice is given- It is their duty to appear to concur
and shall not be regarded as adverse to the other co- /oppose, otherwise creditors claims are deemed
owners but in fact is beneficial to all of them. Acts waived.

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2015 GOLDEN NOTES
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2. If no notice is given- creditors and/or assignees may RIGHT TO CONTRIBUTIONS FOR EXPENSES
still question the partition made.
Expenses which the co-owners can be compelled to
NOTE: Third persons who have rights attached to the contribute
community property before its partition, shall retain such
rights even after the partition of the property. The Only necessary expenses. Useful expenses and those for
protection granted by law applies to both real and pure luxury are not included.
personal rights (Pineda, p. 254).
Necessary expenses, useful expenses, and expenses of
Impugning partition already implemented pure luxury distinguished
GR: A partition already executed or implemented CANNOT Necessary expenses are those made for the preservation of
be impugned. the thing, or those without which the thing would
deteriorate or be lost, or those that augment the income of
XPNs: the things upon which are expended, or those incurred for
1. In case of fraud, regardless of notification and cultivation, production, upkeep, etc. (Mendoza v De
opposition; Guzman, 52 Phil. 171).
2. In case partition was made over their objection even
in absence of fraud (Article 497, NCC) Useful expenses incurred for the preservation of the realty
in order that it may produce the natural, industrial, and
Remedies available to co-owners where the co-owned civil fruits it ordinarily produce (Marcelino v. Miguel, 53 OG
property cannot be physically divided without 5650).
rendering it useless or unserviceable Ornamental expenses add value to the thing only for certain
persons in view of their particular whims, neither essential
1. Agree on the allotment of the entire property to one of for preservation nor useful to everybody in general.
them who in turn will indemnify the others for their
respective interests; or Acts of preservation
2. Sell the property and distribute the proceeds to the
co-owners (Pineda, p.252). 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,
Rights of co-owners that are not affected by partition if practicable, first notify the others of the necessity of such
(MRS-P) repairs.
1. Rights of: Acts requiring the majority consent of the co-owners

a. Mortgage; (IME)
b. Servitude;
c. Any other Real rights existing before partition. 1. Management
2. Enjoyment
2. Personal rights pertaining to third persons against the 3. Improvement or embellishment
co-ownership (Art. 499, NCC)
Remedy of the minority who opposes the decision of
Illustration: A, B and C where co-owners of parcel of land the majority in co-ownership
mortgaged to M. If A, B, and C should physically partition
the property, the mortgage in Ms favor still covers all the Minority may appeal to the court against the majoritys
three lots, which, together, formerly constituted one single decision if the same is seriously prejudicial.
parcel. If A alone had contracted an unsecured obligation,
he would of course be the only one responsible (Paras, p. There is no majority unless the resolution is approved by
376). the co-owners who represent the controlling interest in
the object of the co-ownership (Art. 492, par. 2, NCC).
Rights of third persons in case of partition
WAIVER
1. The partition of a thing owned in common shall not
prejudice third persons, who shall retain the rights of A co-owner may opt not to contribute to the expenses
mortgage, servitude or any other real rights belonging for the preservation of the property
to them before the division was made;
2. Personal rights pertaining to them against the co- GR: Yes, by renouncing his undivided interest equal to the
ownership shall also remain in force, notwithstanding amount of contribution.
the partition.
XPN: If the waiver or renunciation is prejudicial to the co-
ownership, otherwise he cannot exempt himself from the
contribution (Art. 488, NCC)
NOTE: The value of the property at the time of the

renunciation will be the basis of the portion to be
renounced.

CIVIL LAW
their respective parts. Can Fortunatos wife be entitled
Failure or refusal of a co-owner to contribute pro rata to right of legal redemption?
to his share in expenses NOT tantamount to
renunciation A: No, she is no longer entitled to the right of legal
redemption under Art. 1632 of the NCC. As legal
There must be an express renunciation, otherwise he is redemption is intended to minimize co-ownership, once
required to reimburse the others for the expenses they the property is subdivided and distributed among the co-
incurred. owners the community ceases to exist and there is no
more reason to sustain any right of legal redemption. The
Effect of renunciation exercise of this right presupposes the existence of a co-
ownership at the time the conveyance is made by a co-
It is in effect a dacion en pago since there is a change in the owner and when it is demanded by the other co-owners.
object of the obligation (i.e. from sum of money to interest Even an oral agreement of partition is valid and binding
in the co-ownership). Consequently, the consent of the upon the parties (Vda. de Ape v. CA, G.R. No. 133638, Apr.
other co-owners is necessary. 15, 2005).
NOTE: Dacion en pago is a juridical concept whereby a Q: Villaner, upon death of his wife, sold the conjugal
debtor pays off his obligations to the creditor by the property to Leonardo. Villaners 8 children, as co-
conveyance of ownership of his property as an accepted owners of the property, now claim that the sale does
equivalent of performance or payment. The end result may not bind them as they did not consent to such
be the same, but the concept is entirely different from that undertaking.
of a purchase (Damicog v. Desquitada, CV 43611, October 1. Is the sale binding on the children?
3, 1983). 2. What is the status of the sale? Is it valid, void or
voidable?
Consent of unpaid creditor 3. What is the remedy of the other heirs in this case?
Renunciation CANNOT be made without the consent of any A:

unpaid creditor. This is because it is in effect a novation by 1. No. While a co-owner has the right to freely sell and
substitution. It will prejudice the rights of the unpaid dispose of his undivided interest, nevertheless, as a
creditor. co-owner, he cannot alienate the shares of his other
co-owners. The disposition made by Villaner affects
NOTE: Novation by substitution is the substitution of the only his share pro indiviso, and the transferee gets
person of the debtor. only what corresponds to his grantor's share in the
partition of the property owned in common. The
RIGHT OF REDEMPTION OF CO-OWNERS SHARE property being conjugal, Villaner's interest in it is the
undivided one-half portion. When his wife died, her
Shares that a co-owner may redeem rights to the other half was vested to her heirs
including Villaner and their 8 legitimate children.
The shares of all or any other co-owner if sold to a third
person. 2. A sale of the entire property by one co-owner without
the consent of the other co-owners is valid. However,
If two or more co-owners want to redeem it will only affect the interest or share in the undivided
property of the co-owner who sold the same.
They may do so in proportion to the shares they
respectively have. 3. The proper action in cases like this is not for the
nullification of the sale or the recovery of possession
Effect of redemption by a co-owner of the thing owned in common from the third person
who substituted the co-owner or co-owners who
Redemption of the whole property by a co-owner does not alienated their shares, but the division of the common
vest in him sole ownership over said property. property or that is, an action for partition under Rule
Redemption within the period prescribed by law will inure 69 of the Revised Rules of Court (Acabal v. Acabal, G.R.
to the benefit of all co-owners. Hence, it will not put an end No. 148376, March 31, 2005).
to existing co-ownership (Mariano v. CA, GR. No. 101522,
May 28, 1993). TERMINATION/EXTINGUISHMENT
Q: Fortunato, his siblings and mother are co-owners of Extinguishment of Co-ownership (CALSTEP)
a parcel of land. Lumayno purchased the shares of
Fortunatos co-owners. When Fortunato died, his wife 1. Consolidation or merger in one co-owner;
claimed that she has the right of redemption over the 2. Acquisitive prescription in favor of a third person or a
shares previously sold by the co-owners to Lumayno co-owner who repudiates;
because they have not formally subdivided the 3. Loss or destruction of thing co-owned;
property. However, although the lot had not yet been 4. Sale of thing co-owned;
formally subdivided, still, the particular portions 5. Termination of period agreed upon;
belonging to the co-owners had already been 6. Expropriation;
ascertained. In fact the co-owners took possession of 7. Judicial or extra-judicial Partition.

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2015 GOLDEN NOTES
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SPECIAL RULES
EFFECT OF PARTITION
CONCEPT OF CONDOMINIUM
1. It confers upon the co-owner exclusive title over the
property adjudicated to him (Art. 1091, NCC); CONDOMINIUM CORPORATION
2. Possession of the co-owner over the property
adjudicated to him shall be deemed exclusive for the Condominium corporations
period during which the co-possession lasted (Art.
543, NCC). In other words, it is deemed continuous. A condominium may include, in addition, a separate
interest in other portions of such real property. Title to the
RIGHTS AGAINST INDIVIDUAL common areas, including the land, or the appurtenant
CO-OWNERS IN CASE OF PARTITION interests in such areas, may be held by a corporation
specially formed for the purpose (known as the
Obligations of co-owners upon partition (WARD) condominium corporation) in which the holders of
separate interest shall automatically be members or
1. Mutual Accounting for benefits received, fruits and shareholders, to the exclusion of others, in proportion to
other benefits the appurtenant interest of their respective units in the
2. Mutual Reimbursements for expenses common areas.
3. Indemnity for Damages caused by reason of
negligence/fraud The real right in condominium may be ownership or any
4. Reciprocal Warranty for defects of title and quality of other interest in real property recognized by law, on
the portion assigned to the co-owner (Art. 500-501, property in the Civil Code and other pertinent laws (Sec. 2,
NCC) RA No. 4726).
PARTITION IN CASE CO-OWNERS CANNOT AGREE INTEREST IN REAL PROPERTY
Q: How is partition effected? A condominium is an interest in real property consisting

of:
A:
1. By agreement between the parties; or 1. A separate interest in a unit in a residential, industrial
2. By judicial proceedings (Art. 496, NCC) or commercial building; and
2. An undivided interest in common, directly or
Rule in case the co-owners cannot agree in the indirectly, in the
partition a. Land on which it is located; and
b. In other common areas of the building.
If realty is involved, an action for partition (under Rule 69
of the Rules of Court) against the co-owners may be filed. CONCEPT OF COMMON AREAS, AMENDMENT
In case of personality and actual partition could not be
made, it may be sold under the discretion of the court and Common area
the proceeds be divided among the owners after deducting
the necessary expenses It consists of the entire project excepting all units
separately granted or held or reserved.
Rule in case the co-owners cannot agree as to the
partition of a thing which is essentially indivisible Project
1. Firstly, the property may be allotted to one of the co- It consists of the entire parcel of real property divided or
owners, who shall indemnify the other; to be divided in condominiums, including all structures
2. Otherwise, it shall be sold, and the proceeds thereon.
distributed (Art. 498, NCC).
Conveyance of units
Acts of co-ownership
GR: Only to Filipino citizens
1. Ejectment any of the co-owners may file such action XPN: To aliens in case of hereditary succession
2. Administration majority of the co-owners shall
decide GROUNDS FOR PARTITION OF COMMON AREAS, OR
3. Improvements majority of the co-owners shall take DISSOLUTION OF THE CONDOMINIUM
part
4. Alteration all of the co-owners must agree Partition of common areas
5. Preservation any of the co-owners can do so
GR: No, there can be no judicial partition of common areas.
XPNs: A partition shall be made only upon a showing that:

(COURE)
1. That 3 years after damage to the project which
rendered a material part thereof unfit for its use prior

CIVIL LAW
thereto, it has not been Repaired substantially to its Transfer of interest in the project to third persons
state prior to said damage; or
2. That damage to the project has rendered 1/2 or more An owner of a unit in a condominium project, such as an
of the units therein Untenantable and owners holding, apartment, office or store, can transfer his interest in the
in aggregate, more than 30% interest in the common project to a third person. However, the limitations
areas are opposed to the repair; or prescribed by Sec. 5 of the Condominium Act must be
3. That the project which has been in existence for more observed. According to this section: Any transfer or
than 50 yrs, is Obsolete and is uneconomic, and conveyance of a unit or an apartment, office or store or
owners holding, in aggregate, more than 50% interest other space therein, shall include the transfer or
in the common areas are opposed to the repair or conveyance of the undivided interest in the common areas
modernizing; or or, in a proper case, the membership or shareholding in
4. That the project or a material part thereof has been the condominium corporation: Provided, however, that
condemned or Expropriated, the project is no longer where the common areas in the condominium project are
viable and owners holding, in aggregate, more than held by the owners of separate units as co-owners thereof,
70% interest in the common areas are opposed to no condominium unit therein shall be conveyed or
continuation of the condominium after such transferred to person other than Filipino citizens or
expropriation or condemnation; or corporations at least 60% of the capital stock of which
5. That the Conditions for such partition by sale have belong to Filipino citizens, except in cases of hereditary
been met. succession. Where the common areas in a condominium
project are held by a corporation, no transfer or
Voluntary dissolution of a Corporation Condominium conveyance of a unit shall be valid if the concomitant
transfer of the appurtenant membership or stockholding
1. By the affirmative vote of all the stockholders or in the corporation will cause the alien interest in such
members thereof at a general or special meeting duly corporation to exceed the limits imposed by existing laws.
called for the purpose: Provided all the requirements
of Section 62 of the Corporation Law are complied POSSESSION
with.
2. GR: When the enabling or master deed is revoked CHARACTERISTICS
XPNs: Possession
a. That 3 years after damage or destruction to the
project which renders a material part thereof Is the holding of a thing or the enjoyment of a right (Art.
unfit for its use prior thereto, it has not been 523, NCC)
rebuilt or repaired substantially to its prior state;
or Requisites of possession (PAV)
b. That damage or destruction to the project has
rendered 1/2 or more of the units therein 1. Possession in fact or holding or control of a thing or
untenantable and that more than 50% of the right;
members of the corporation, if non-stock, or the 2. Animus possidendi or the deliberate intention to
shareholders representing more than 30% of the possess;
capital stock entitled to vote, if a stock 3. Possession is by Virtue of ones own right, either as an
corporation, are opposed to the repair or owner or as a holder.
reconstruction of the project, or
c. That the project has been in existence in excess of Right to Possession v. Right of Possession
50 years, that it is obsolete and uneconomical,
and more than 50% of the members of the Right to Possession or jus possidendi is an incident or
corporation, if non-stock, or the stockholders attribute of ownership over a thing; e.g. the owner of a
representing more than 50% of the capital stock house is entitled to possess it.
entitled to vote, if a stock corporation, are Right of Possession or jus possessiones is an independent
opposed to the repair or restoration or right, separate from ownership; e.g. the leasee of a
remodeling or modernizing of the project; or property, who is not the owner thereof, is entiled to
d. That the project or a material part thereof has possess it for the period of the lease.
been condemned or expropriated and that the
project is no longer viable, or that the members Degrees of possession (NJJS)
holding in aggregate more than 70% interest in 1. Possession with No right or title - Possessor knows that
the corporation, if non-stock, or the stockholders his possession is wrongful; e.g. possession by a thief.
representing more than 70% of the capital stock 2. With Juridical title Title is not one of ownership.
entitled to vote, if a stock corporation, are Possession peaceably acquired and will not ripen into
opposed to the continuation of the condominium full ownership as long as there is no repudiation of the
regime after expropriation or condemnation of a concept under which property is held; e.g. possession
material portion thereof; or of a tenant, depositary.
e. That the conditions for such a dissolution have 3. With Just title sufficient to transfer ownership, but not
been met. (Secs. 13 & 14, R.A. 4726) from the true owner - Ripens to full ownership by the
lapse of time; e.g. possession of a buyer of a car
purchased from one who pretends to be the owner.

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2015 GOLDEN NOTES
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4. With a title in fee Simple - Arises from ownership; Q: What is constructive possession?
highest degree of possession; perfect possession.
A: The possession of a part is a possession of the
Classes of possession whole. To be considered in possession, one need not have
actual or physical occupation of every square inch of the
1. In ones own name Possessor claims the thing for property at all times. (Habagat Grill v. DMC-Urban
himself. (Art. 524, NCC) Property Developer, Inc., G.R. No. 155110, March 31, 2005)
2. In the name of another Held by the possessor for
another; agent, subject to authority and ratification; if Possession v. Occupation
not authorized, negotiorum gestio. (Art. 524, NCC)
Kinds of possession in the name of another: POSSESSION OCCUPATION
a. Voluntary By virtue of an agreement; e.g. Apply to properties whether Applies only to property
possession of an agent. with or without an owner without an owner
b. Legal By virtue of law; e.g. possession in Possession does not confer Occupation confers
behalf of incapacitated. ownership ownership
There can be no
3. In the concept of an owner (en concepto de dueno) There can be possession
occupation without
Possessor, by his actions, is believed by others as the without ownership
ownership
owner, whether he is in good or bad faith. (Art. 525,
NCC) Person declared as the owner of a certain property
may still not be entitled to its possession
Q: Are tax declarations conclusive evidence of
ownership? Possession and ownership are distinct legal concepts.
Ownership confers certain rights to the owner among
A: Although tax declarations or realty tax payment of which are the right to enjoy the thing owned and the right
property are not conclusive evidence of ownership, to exclude other persons from possession thereof. On the
nevertheless, they are good indicia of possession in other hand, possession is defined as the holding of a thing
the concept of owner for no one in his right mind or the enjoyment of a right. Literally, to possess means to
would be paying taxes for a property that is not in his actually and physically occupy a thing with or without a
actual or at least constructive possession. They right. Thus a person may be declared an owner but not
constitute at least proof that the holder has a claim of entitled to possession (Heirs of Roman Soriano v. CA, GR No.
title over the property. The voluntary declaration of a 128177, August 15, 2001).
piece of property for taxation purposes manifests not
only ones sincere and honest desire to obtain title to NOTE: Possession is merely one of the attributes
the property and announces his adverse claim ownership (Jus Possidendi).
against the State and all other interested parties, but
also the intention to contribute needed revenues to ACQUISITION OF POSSESSION
the Government. Such an act strengthens ones bona
fide claim of acquisition of ownership. (Ganila v. CA, Modes of acquiring possession (FAMS)
G.R. No. 150755, June 28, 2005)
1. By Material occupation (detention) of a thing or the
4. In the concept of a holder Possessor holds it merely exercise of a right (quasi-possession). Includes
to keep or enjoy it, the ownership pertaining to constitutum possessorium or traditio brevi manu.
another; e.g. Usufructuary (Art. 525, NCC)
NOTE:
NOTE: None of these holders may assert a claim of a. constitutum possessorium the possessor who is
ownership for himself over the thing but they may be the owner of the property continues his possession
considered as possessors in the concept of an owner, no longer under a title of ownership but under a title
or under a claim of ownership, with respect to the less than ownership, i.e. lessee, depositary, etc.
right they respectively exercise over the thing. b. traditio brevi manu when the possessor who is
possessing the thing by a title other than ownership,
5. Possession in good faith (Art. 526, NCC) continues to possess it under a new title, now of
6. Possession In bad faith (Art. 526, NCC) ownership.
NOTE: Only personal knowledge of the flaw in ones 2. By Subjection of the thing/right to our will which
title or mode of acquisition can make him possessor in does not require actual physical detention or seizure.
bad faith. It is not transmissible even to an heir. Includes traditio longa manu and traditio simbolica.
Possession in good faith ceases from the moment
defects in his title are made known to the possessor. NOTE:
a. traditio longa manu delivery by consent or mere
7. Constructive possession- does not mean that a man has pointing.
to have his feet on every square meter of ground. b. traditio simbolica delivery of a mere symbol (e.g.
key) placing the thing under the control of the
transferee.

CIVIL LAW
3. By constructive possession or proper Acts and legal possession is not acquired until the act of the agent or
Formalities such as succession, donation, execution representative is ratified, without prejudice to the juridical
of public instruments. (Art. 531, NCC) consequences of negotiorum gestio in a proper case (Art.
532, NCC).
Essential elements of possession
Acts which do not give rise to possession (FATV)
1. Corpus refers to the existence of the thing and its
holding; and 1. Force or intimidation as long as there is a possessor
2. Animus refers to the intent to possess the thing. who objects thereto. (Art. 536, NCC)
2. Acts executed clandestinely and without the
Actual possession distinguished from constructive knowledge of the possessor which means that:
possession a. Acts are not public; and
b. Unknown to the owner or possessor
Actual possession consists in the manifestation of acts of 3. Mere Tolerance by the owner or the lawful possessor.
dominion over property of such a nature as a party would 4. Acts executed by Violence. (Art 537, NCC)
naturally exercise over his own; Constructive possession
may be had through succession, donation, execution of Only the possession acquired and enjoyed in the concept of
public instruments, or the possession by a sheriff by virtue owner can serve as a title for acquiring dominion. (Art. 540,
of a court order. (Remington Industrial Sales Corp v. NCC)
CYMCAPI, G.R. No. 171858, January 22, 2007)
EFFECTS OF POSSESSION
Acquistion of possession according to person of
possessor (Art. 532) POSSESSOR IN GOOD FAITH
1. Personal the possession acquired by the same Possessor in good faith

person who is to enjoy it, either the owner or a mere
holder. The requisites are: A possessor is in good faith when he is not aware that
a. Capacity to possess; there exists in his title or mode of acquisition any flaw
b. Intent to possess; and which invalidates it. (Art. 526, NCC)
c. Object must be capable of being possessed
2. Through authorized person acquisition of Requisites in order to be considered a possessor in
possession through a legal representative as good faith
provided by law or by appointing an agent. The
requisites are: 1. Ostensible title or mode of acquisition
a. Intent to possess for principal; 2. Vice or defect in the title
b. Authority or capacity to possess (for another) of 3. Possessor is ignorant of the vice or defect and must
the representative or agent; and have an honest belief that the thing belongs to him.
c. Principal has intent and capacity to possess
Cessation of possession in good faith
3. Through a person without authority (but only if
subsequently ratified) acquisition of possession Possession in good faith ceases from the moment defects
through a person who is not clothed with authority in his title are made known to the possessor by extraneous
by the supposed principal. The requisites are: evidence or by suit for recovery by the true owner.
a. Intent to possess for the principal;
b. Capacity of the principal to possess; and This interruption of good faith may take place
c. Ratification by principal 1. At the date of summons or
2. That of the answer if the date of summons does not
NOTE: The ratification does not suppress the appear at the date
consequences of negotiorum gestio. (Art. 2144, NCC)
The principal is deemed to have acquired possession Effect of cessation of possession in good faith
from the time the gestor had voluntarily took the
management of the affairs of the former. (Pineda, Possessor is now considered as a possessor in bad faith
Law on Property, 2009) and he may be required to pay rent or in case vacate the
property, in both cases he is required to pay damages to
Acquisition of minors or incapacitated persons the lawful owner or possessor of the property.
Minors or incapacitated persons may acquire the Q: Jose offered to sell his lot to Rosario which the latter
possession of things; but they need the assistance of their accepted. They executed a document containing the
legal representatives for them to be able to exercise the sale. Later, Rosario sought the execution of the formal
rights arising from the possession. (Art. 535) deed of sale, but Jose could not continue the sale
because he sold the lot to Emma with whom he
If the possession is acquired by a stranger executed a formal deed of sale. Informed that the sale
in favor of Emma was not registered, Rosario
Where possession is acquired not by an agent or registered her adverse claim. Later, Emma registered
representative but by a stranger without agency, her deed of sale and a TCT was issued to her but with

124
2015 GOLDEN NOTES
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Rosarios adverse claim. Emma then took possession their possession
of the lot. As to expenses:
(Necessary expenses)
a.) Who has a better right to the land? Right of reimbursement Right of reimbursement
b.) Is Emma entitled to the improvements she and retention only
introduced in the lot? (Useful expenses)
Right of reimbursement,
A: retention and limited right None
of removal
a.) Rosario. To merit the protection of Art 1544 (double (Ornamental Expenses)
sale) it is essential that the buyer of the realty must Shall not be refunded but
act in good faith in registering his deed of sale. Shall not be refunded but
he has a limited right of
Rosarios prior purchase of the land was made in good he has a limited right of
removal, i.e. he may remove
faith; she was the only buyer at that time. Her good removal, i.e. he may remove
if the principal thing suffers
faith did not cease after Jose told him of the second if the principal thing suffers
no injury thereby, and if the
sale to Emma. Because of that information, Rosario no injury thereby, and if the
lawful possessor does not
wanted an audience with Emma but was snubbed by lawful possessor does not
prefer to retain them by
the latter. In order to protect her right, Rosario prefer to refund the amount
paying its value at the time
registered her adverse claim. Said recording is expended
he enters into possession
deemed to be in good faith and emphasize Emmas As to liability in case of deterioration or loss
bad faith (Carbonell v.CA G.R. No. L-29972, January 26,
No liability, unless due to
1976).
his fraudulent act or Always liable
b.) No. Emmas rights to the improvements she
negligence
introduced are governed by Arts. 546 and 547
(necessary and useful expense made by possessor in
Rule when two or more persons claim possession over
good faith). These provisions seem to imply that the
the same property
possessor in bad faith has neither the right of
retention of useful improvements nor the right to
GR: Possession cannot be recognized in two different
demand refund for useful expenses (Carbonell v.CA
personalities.
G.R. No. L-29972, January 26, 1976).
XPN: In case of co-possession when there is no conflict.
Mistake upon a doubtful or difficult question of law
Criteria in case there is a dispute of possession of two
Mistake upon a doubtful or difficult question of law
or more persons (A2DE)
(provided that such ignorance is not gross and therefore
inexcusable) may be the basis of good faith. (Art. 526).
1. Present/Actual possessor shall be preferred
Ignorance of the law may be based on an error of fact.
2. If there are 2 possessors, the one longer in possession
(Jurado, Civil Code, Volume II)
3. If the Dates of possession are the same, the one with a
title
NOTE: Mistake upon a doubtful or difficult question of law
refers to the honest error in the application or
If all of the above are Equal, the fact of possession shall be
interpretation of doubtful or conflicting legal
judicially determined, and in the meantime, the thing shall
provisions/doctrines, and not to the ignorance of the law
be placed in judicial deposit (Art. 538, NCC).
(Art. 526, par. 3, NCC).
LOSS/TERMINATION
Rights of a possessor
Possession is lost through (PRADA)
GOOD FAITH BAD FAITH
As to fruits received 1. Possession of another subject to the provisions of Art.
Shall reimburse the fruits 537, if a person is not in possession for more than one
received and those which the year but less than 10 years he losses possession de
legitimate possessor could fact. This means that he can no longer bring an action
Entitled to the fruits have received and shall have of forcible entry or unlawful detainer, since the
received before the the a right only to necessary prescriptive period is one year for such actions. But he
possession is legally expenses (Art. 546, par. 1) may still institute an accion publiciana to recover
interrupted and expenses in the possession de jure, possession as a legal right or the
production, gathering and real right of possession (Paras, p. 548).
preservation of such fruits
(Art. 443) NOTE: Acts merely tolerated, and those executed
As to pending fruits clandestinely and without the knowledge of the
Liable with legitimate possessor of a thing, or by violence, do not affect
possessor for expenses of possession (Art. 537,NCC).
cultivation and shall share None
in the net harvest in 2. Abandonment
proportion to the time of

CIVIL LAW
NOTE: Abandonment involves a voluntary Duty of the owner who appeared
renunciation of all rights over a thing
1. Give a reward to the finder equivalent to one-tenth
Requisites (1/10) of the sum or of the price of the thing found
a. The abandoner must have been a possessor in (Art. 720, NCC).
the concept of owner (either an owner or mere 2. Reimburse to the finder for the latters expenses
possessor may respectively abandon either incurred for the preservation of the thing (Art. 546,
ownership or possession) NCC) and expenses spent for the location of the owner
b. The abandoner must have the capacity to 3. Reimburse the expenses for publication if there was a
renounce or to alienate ( for abandonment is the public auction sale (Pineda, 1999).
repudiation of property right)
c. There must be physical relinquishment of the FINDER OF LOST MOVABLE
thing or object
d. There must be no spes recuperandi (expectation Rule regarding the right of a possessor who acquires a
to recover) and no more animus revertendi ( movable claimed by another
intention to return or get back) (Paras, pp. 344-
345) If the possessor is in:
1. Bad faith - no right
3. Recovery of the thing by the legitimate owner 2. Good faith- presumed ownership. It is equivalent to
4. Destruction or total loss of the thing a thing is lost title.
when it perishes or goes out of commerce, or
disappears in such a way that its existence is NOTE: Requisites:
unknown, or it cannot be recovered (Art. 1189, NCC). a. Possession in good faith
5. Assignment - complete transmission of the b. Owner has voluntarily parted with the
thing/right to another by any lawful manner. possession of the thing; and
c. Possessor is in the concept of an owner.
LOSS OR UNLAWFUL DEPRIVATION OF A MOVABLE
Possession of movable property acquired in good faith
Lost thing
GR: Doctrine of irrevindicability - The possession of
A lost thing is one previously under the lawful possession movable property acquired in good faith is equivalent to
and control of a person but is now without any possessor. title.
NOTE: An abandoned property is not considered as a lost NOTE: This is merely presumptive as it can be defeated by
thing (Pineda, 1999). the true owner (Art. 559, NCC).
Duty of a finder of a lost movable XPNs:

1. When the owner has lost; or
Whoever finds a lost movable, which is not a treasure, 2. Has been unlawfully deprived of a movable.
must return it to its previous possessor. If the latter is In which case the possessor cannot retain the thing as
unknown, the finder shall immediately deposit it with the against the owner, who may recover it without paying
mayor of the city or municipality where the finding has any indemnity
taken place.
XPN to the XPNs: Where movable is acquired in good
NOTE: The mayor in turn must publicly announce the faith at a public sale, the owner must reimburse to
finding of the property for two consecutive weeks. recover (Art. 559 par. 2, NCC).
Authorized public auction of lost movable Q: Using a falsified manager's check, Justine, as the
buyer, was able to take delivery of a second hand car
If the movable cannot be kept without deterioration, or which she had just bought from United Car Sales. Inc.
without expenses which considerably diminish its value, it The sale was registered with the Land Transportation
shall be sold at public auction eight days after the Office. A week later, the United Car Sales learned that
publication. the check had been dishonored, but by that time,
Justine was nowhere to be seen. It turned out that
Awarding of the lost movable to the finder Justine had sold the car to Jerico, the present
possessor who knew nothing about the falsified check.
If the owner or previous possessor did not appear after 6 In a suit filed by United Car Sales. Inc. against Jerico for
months from the publication, the thing found or its value recovery of the car, United Car Sales alleges it had
or proceeds if there was a sale, shall be awarded to the been unlawfully deprived of its property through
finder. The finder, however, shall pay for the expenses fraud and should, consequently, be allowed to recover
incurred for the publication (Art. 719, NCC). it without having to reimburse the defendant for the
price the latter had paid. Should the suit prosper?
(1998 Bar Question)

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2015 GOLDEN NOTES
PROPERTY
A: Yes, the suit should prosper because the criminal act of the date of sale, until Artemios death, he was in
estafa should be deemed to come within the meaning of continuous possession of the land.
unlawful deprivation under Art. 559, NCC, as without it
United Car Sales would not have parted with the 2. No. The remedy of accion publiciana prescribes after
possession of its car. the lapse of ten years. In the present case, the action
was filed with the RTC in 1991. Spouses Padilla
NOTE: The possession of movable property acquired in dispossessed the heirs of Velasco of the property in
good faith is equivalent to a title. Nevertheless, one who 1987. At the time of the filing of the complaint, only 4
has lost any movable or has been unlawfully deprived years had elapsed from the time of dispossession. The
thereof, may recover it from the person in possession of real right of possession is not lost till after the lapse of
the same (Art. 559, NCC). 10 years (Spouses Padilla v. Velasco, G.R. No. 169956,
January 19, 2009).
EFFECTS OF POSSESSION
Acquisitive prescription
RIGHTS OF THE POSSESSOR
Only the possession acquired and enjoyed in the concept of
Rights of a possessor (RPR) owner can serve as a title for acquiring dominion. (Art.
540, NCC)
1. To be Respected in his possession
2. To be Protected in said possession by legal means Just title
3. To secure in an action for forcible entry the proper
writ to Restore him in his possession (Art. 539, NCC) Not limited to documents which are sufficient to transfer
ownership. it can cover other acts, even verbal acts which
Possession contemplated by law is legal possession thief are legally sufficient to transfer ownership of property or
cannot exercise possession. Such possession is exercised real right:
by every possessor in good faith or bad faith.
1. Perfect (Just title in possession) true and valid title
Only the possessor acquired and enjoyed in the concept of sufficient to transfer ownership
an owner can serve as a title for acquiring dominion. 2. Imperfect (Just title in prescription) colorable title;
although there is a mode of transferring ownership,
Although tax declarations or realty tax payment of nonetheless the grantor is not the owner; must be
property are not conclusive evidence of ownership, proved
nevertheless, they are good indicia of possession in the
concept of owner for no one in his right mind would be Putative title
paying taxes for a property that is not in his actual or at
least constructive possession. They constitute at least Putative title is not just a title. Accordingly, it is where a
proof that the holder has a claim of title over the property. person has the impression and belief that he is the owner
(Republic v. Sta. Ana-Burgos, G.R. No. 163254, June 1, 2007) of the property, however he is not the owner there being
no mode of acquiring ownership; e.g. stealing
Q: During his lifetime, Velasco acquired Lot A from
spouses Sacluti and Obial evidenced by a deed of sale. Presumptions in favor of a possessor (GCENCE)
In 1987, spouses Padilla entered the said property as
trustees by virtue of a deed of sale executed by the 1. Good faith
Rural Bank. The Padillas averred that the Solomon 2. Continuity of initial good faith
spouses owned the property which was identified as 3. Enjoyment in the same character in which possession
Lot B. However, it was proved during trial that the land was acquired until the contrary is proved
occupied by spouses Padilla was Lot A in the name of 4. Non-interruption in favor of the present possessor
Velasco, whereas the land sold by the bank to the 5. Continuous possession by the one who recovers
spouses Padilla was Lot B. The heirs of Velasco possession of which he was wrongfully deprived
demanded that spouses Padilla vacate the property, 6. Extension of possession of real property to all
but they refused. Thus, the heirs filed a complaint for movables contained therein.
accion publiciana.
NOTE: There exists a disputable legal presumption in
1. Who has the better right of possession? favor of a possessor in the concept of owner that he
2. Has the action already prescribed? possesses with a just title and he cannot be obliged to
show or prove it. (Art. 541, NCC). Also, the possession of
A: real property presumes that of the movables therein, as
1. The heirs of Velasco has the better right. Accion long as it is not shown or proved that they should be
publiciana, or for recovery of the right to possess is an excluded. (Art. 542, NCC)
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

CIVIL LAW
RIGHT TO PENDING FRUITS NOTE: Improvements be so incorporated to the principal
thing that their separation must necessarily reduce the
Q: When are fruits considered received? value of the thing not curable by ordinary repairs.
A: Useful expenses
1. Natural and industrial fruits - from the time they are
gathered or severed Useful expenses are those which increase the value or
2. Civil fruits from the time of their accrual or due date productivity of the property.
and not their actual receipt or payment which may be
late (Art. 544, NCC). Persons entitled for reimbursement of useful expenses
Q: What if there are ungathered natural or industrial Only a possessor in good faith with the same right of
fruits at the time good faith ceases? retention as in necessary expenses has the right to be
refunded for necessary expenses for the amount of
A: The possessor shall share in the expenses of cultivation expenses or of paying the increase in value which the thing
and charges, and a part in the net harvest both in may have acquired by reason thereof (Art. 546, NCC).
proportion to the time of possession (Art 545, NCC)
Effect of voluntary surrender of property
Options of the owner in case there are pending fruits
at the time good faith ceases The voluntary surrender of property is a waiver of the
possessors right of retention but his right to be refunded
1. To pay the possessor in good faith indemnity for his may still be enforced, unless he also waived the same.
cultivation expenses and charges and his share in the
net harvest; or Removal of useful improvements introduced by the
2. To allow him to finish the cultivation and gathering of possessor
the growing fruits as an indemnity for his share in the
expenses. Only a possessor in good faith is allowed to remove the
useful improvements he introduced provided that the
NOTE: If the possessor refuses, for any reason, to finish the useful improvements can be removed without damage to
cultivation and gathering, he forfeits the right to be the principal thing (Art. 547, NCC).
indemnified in any other manner. (Art. 545, par. 3, NCC)
NOTE: However, this right of removal is subordinate to the
RIGHT TO BE REIMBURSED owners right to keep the improvements himself by paying
the expenses incurred or the concomitant increase in the
NECESSARY AND USEFUL EXPENSES value of the property caused by the improvements.
Necessary expenses EXPENSES FOR PURE LUXURY
Necessary expenses are expenses incurred to preserve the Luxurious expenses

property, without which, said property will physically
deteriorate or be lost. Luxurious expenses are expenses incurred for
improvements introduced for pure luxury or mere
Persons entitled for reimbursement of necessary pleasure.
expenses
Q: Are luxurious expenses refundable?
Necessary expenses are refundable to every possessor
whether the possessor is in good faith or bad faith. A: No, even if the possessor is in good faith.
NOTE: However, only the possessor in good faith has the NOTE: But he may remove the luxurious improvements if
right to retain the thing until he has been reimbursed (Art. the principal thing suffers no injury thereby, and if his
546, NCC). The right to retain is a lien over the property. successor in the possession does not prefer to refund the
Hence, the possessor in good faith need not pay rent amount expended (Art. 548, NCC).
during the period of retention.
POSSESSOR IN BAD FAITH
Reason why there is no right of retention in case of bad
faith. Possessor in bad faith
This serves as punishment for his bad faith. A possessor is a possessor in bad faith when he is aware
that there exists in his title or mode of acquisition any flaw
Right of removal in necessary expenses which invalidates it. Only personal knowledge of the flaw in
ones title or mode of acquisition can make him a
There is NO right of removal of necessary expenses possessor in bad faith.
whether in good faith or bad faith. Necessary expenses
affect the existence or substance of the property itself.

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2015 GOLDEN NOTES
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NOTE: No tacking of bad faith, unless the successors in application which was granted. Quirino filed his sales
interest had learned of the defect in the title and still applications and the said property was awarded to
purchased it. him being the only bidder. Is Ortiz entitled to right of
Bad faith is not transmissible from a person to another, retention?
even an heir is not affected by bad faith of the deceased
predecessor. A: Yes. A possessor in good faith has the right of retention
of the property until he has been fully reimbursed for all
Q: When is good or bad faith material or immaterial? the necessary and useful expenses made by him on the
property. Its object is to guarantee the reimbursement for
A: It is important in connection with the the expenses, such as those for the preservation of the
1. Receipt of fruits, property, or for the enhancement of its utility or
2. Indemnity for expenses, and productivity. It permits the actual possessor to remain in
3. Acquisition of ownership by prescription. possession while he has not been reimbursed by the
person who defeated him in the possession for those
It becomes immaterial when the right to recover is necessary expenses and useful improvements made by
exercised (Art. 539, NCC). him on the thing possessed (Ortiz v. Kayanan, G.R. No. L-
32974, July 30, 1979).
Liabilities of possessor in bad faith regarding fruits
Rights of a possessor as to the necessary expenses
1. As to fruits already received or gathered:
Return the fruits if still existing or pay their value GOOD FAITH BAD FAITH
if already consumed or spent,
1. Right to refund; Right to refund
Pay the value of the fruits which the legitimate 2. Right of retention;
possessor could have received were it not for his
dispossession, but deducting the expenses for NOTE: During his possession, he is not
cultivation, gathering and harvesting to prevent obliged to pay rent nor damages in case
unjust enrichment on the part of the latter. he refuses to vacate the premises.
2. As to growing, pending or ungathered fruits:
Rights of a possessor with regard to useful expenses
No right whatsoever on the pending, growing or
ungathered fruits,
If the possessor is in good faith:
Not entitled to be reimbursed for expenses for
cultivation.
1. Right to refund
2. Right of retention until paid
3. As additional liability:
3. Right of removal, provided:
Pay for damages
a. Without damage to the principal thing
b. Subject to the superior right of the prevailing
Requisites to constitute possession whether in good
party to keep the improvements by paying the
faith or in bad faith
expenses or the increase in value of the thing
1. Possessor has a title/mode of acquisition;
If the possessor is in bad faith, he is not entitled for
2. There is a flaw or defect in said title/mode;
reimbursement for useful expenses.
3. The possessor is aware or unaware of the flaw or
defect.
Rights of a possessor with regard to expenses for pure
luxury
Effect of mistake upon a doubtful question or difficult
question of law on possession
GOOD FAITH BAD FAITH
Mistake upon a doubtful question or difficult question of Right of removal, Provided: Same rights, but liable only
law (provided that such ignorance is not gross and 1. Without injury to for the value of the
therefore inexcusable) may be the basis of good faith. It is principal thing; ornaments at the time he
true that ignorance of the law excuses no one but error in 2. Successor in enters into possession, in
the application of the law, in the legal solutions arising possession does not case he prefers to retain
from such application, and the interpretation of doubtful prefer to refund
doctrine can still make a person a transgressor, violator, or amount expended.
possessor in good faith. For indeed, ignorance of the law
may be based on an error of fact (Paras, 2008). Other rights of possessor
Q: When Dolorico died, his guardian Ortiz continued With respect to GOOD FAITH BAD FAITH
the cultivation and possession of the property, without On Charged to Charged to
filing any application to acquire title. In the homestead Taxes capital owner owner
application, Dolorico named Martin, as his heir and and On Charged to Charged to
successor in interest. Martin later relinquished his Charges fruits possessor owner
rights in favor of Quirino his grandson and requested Charges Pro rata Charge to owner
the Director of Lands to cancel the homestead Gathered or Possessor is Possessor must

CIVIL LAW
severed fruits entitled to the return value of preserving its form and substance, unless the title
fruits fruits already constituting it or the law provides otherwise (Pineda,
received as well 2009).
as value of fruits
which the owner NOTE: A usufruct can be constituted in favor of a town,
or legitimate corporation or association, but it cannot be for more than
possessor 50 years.
should be
entitled Characteristics of usufruct (ENA)
(does not apply
to possessor in 1. Essential Those without which it cannot be termed
BF) as usufruct:
Cultivation Possessor is Possessor is
expenses of not entitled to entitled to be a. Real right (whether registered in the registry of
gathered fruits be reimbursed reimbursed property or not);
Share pro-rata b. Constituted on property.
between i. Real
possessor and Owner is ii. Personal;
Pending or iii. Consumable;
owner of entitled to the
ungathered fruits iv. Non-consumable;
expenses, net fruits
harvest, and v. Tangible;
charges vi. Intangible.
Indemnity to c. Temporary duration;
possessor in d. Purpose: to enjoy the benefits and derive all
pro rata: advantages from the object as a consequence of
(owners normal use or exploitation.
Production option)
expenses of a. money No indemnity 2. Natural that which ordinarily is present, but a
pending fruits b. allowing full contrary stipulation can eliminate it because it is not
cultivation essential.
and a. The obligation of conserving or preserving the
gathering of form and substance (value) of the thing.
all fruits b. Transmissible
Improvements no No No
longer existing reimbursement reimbursement 3. Accidental those which may be present or absent
Liable if acting depending upon the stipulation of parties
with a. Whether it be pure or a conditional usufruct
Liability for b. The number of years it will exist
fraudulent Liable in every
accidental loss or c. Whether it is in favor of one person or several,
intent or case
deterioration etc.
negligence,
after summons
Inure to the Obligation to preserve the form and substance of the
Inure to the thing in usufruct
Improvements due owner or
owner or lawful
to time or nature lawful
possessor GR: The usufructuary is bound to preserve the form and
possessor
substance of the thing in usufruct. This is to prevent
NOTE: A possessor is protected regardless of the manner extraordinary exploitation, prevent abuse of property and
of acquisition. prevent impairment.
Q: May the owner of a property eject the possessor XPN: In case of an abnormal usufruct, whereby the law or
forcibly without court intervention? the will of the parties may allow the modification of the
substance of the thing.
A: No. The owner must resort to the courts and cannot
forcibly eject a possessor (Bago v. Garcia, No. 2587, January Q: Chayong owned a parcel of land which she
8, 1906). mortgaged to Michael. Upon the OCT was an
annotation of usufructuary rights in favor of Cheddy. Is
USUFRUCT Michael obliged to investigate Chayongs title?
CHARACTERISTICS A: No. The annotation is not sufficient cause to require

Michael to investigate Chayongs title because the latters
Usufruct ownership over the property remains unimpaired despite
such encumbrance. Only the jus utendi and jus fruendi over
Usufruct is the right of a person called usufructuary, to the property are transferred to the usufructuary. The
enjoy the property of another called the owner, with the owner of the property maintains the jus disponendi or the
obligation of returning it at the designated time and power to alienate, encumber, transform, and even destroy

130
2015 GOLDEN NOTES
PROPERTY
the same. (Hemedes v. CA, G.R. Nos. 107132 and 108472,
October 08, 1999) b. Voluntary Created by will of the parties either
by act inter vivos (e.g. donation) or by act mortis
Usufruct v. Lease causa (e.g. in a last will and testament)
c. Mixed (or prescriptive) Created by both law and
BASIS USUFRUCT LEASE act of the person (e.g. acquired by prescription: I
possessed in good faith a parcel of land which
Real right only if, as in the
really belonged to another. Still in good faith, I
case of a lease over real
gave in my will to X, the naked ownership of land
Nature of Always a property, the lease is
and to Y, the usufruct. In due time, Y may acquire
the right real right registered, or is for more
the ownership of the usufruct by acquisitive
than one year, otherwise
prescription.) (Paras, p. 572)
it is a personal right
May not be the owner, as 2. As to Number of beneficiary
Creator of Owner or his
in the case of a sub-lessor a. Simple If only one usufructuary enjoys the
Right agent
or a usufructuary usufruct
By contract, by way of b. Multiple If several usufructuaries enjoy the
exception by law (as in usufruct
By law, the case of an implied i. Simultaneous at the same time.
contract, new lease), or when a ii. Successive one after the other.
will of builder has built in good
Origin 3. As to Extent of object:
testator or faith on the land of
by another a building, when a. Total constituted on the whole thing
prescription the land is considerably b. Partial constituted only on a part
worth more in value than
the building. 4. As to Subject matter:
a. Over things
All fruits,
Extent of Only those particular or i. Normal (or perfect or regular) Involves
uses and
Enjoyment specific use. non-consumable things where the form and
benefits
substance are preserved
A passive ii. Abnormal (or imperfect or irregular)
owner who Involves consumable things
allows the b. Over rights Involves intangible property; rights
An active owner who
Cause usufructuary must not be personal or intransmissible in
makes the lessee enjoy
to enjoy the character so present or future support cannot be
object of an object of usufruct.
usufruct
Usufructuary 5. As to Effectivity or extinguishment:
pays for
ordinary a. Pure no term or condition
repairs and b. With a term there is a period which may be
Repairs and Lessee is not obliged to either suspensive or resolutory
pays for
Taxes pay for repairs/taxes i. ex die from a certain day
annual
charges and ii. in diem up to a certain day
taxes on the iii. ex die in diem from a certain day up to a
fruits certain day.
c. Conditional subject to a condition which may be
Usufructuary
Limitation The lessee cannot either suspensive or resolutory.
may lease
on the use of constitute a usufruct on
the property
property the property leased RIGHTS AND OBLIGATIONS OF USUFRUCTUARY
to another
Rights of the usufructuary as to the thing and its fruits
KINDS OF USUFRUCT (RISERI-CR)
1. To Receive the fruits of the property in usufruct and
Kinds of usufruct (ONES-E) half of the hidden treasure he accidentally finds on the
property (Arts. 566, 438, NCC)
1. As to Origin: 2. To enjoy any Increase which the thing in usufruct may
a. Legal Created by law such as usufruct of the acquire through accession (Art. 571, NCC)
parents over the property of their 3. To personally Enjoy the thing or lease it to another
unemancipated children (Arts. 572-577, NCC) generally for the same or shorter
period as the usufruct
NOTE: The right of the parents over the fruits 4. To make such Improvements or expenses on the
and income of the childs property shall be property he may deem proper and to remove the
limited primarily to the childs support and improvements provided no damage is caused to the
secondarily to the collective daily needs of the property (Art. 579, NCC)
family. (Art. 226, FC)

CIVIL LAW
5. To Set-off the improvements he may have made on Rights of the usufructuary as to advances and damages
the property against any damage to the same (Art.
580, NCC) The right to be: (ITD)
6. To Retain the thing until he is reimbursed for 1. Reimbursed for Indispensable extraordinary repairs
advances for extraordinary expenses and taxes on the made by him
capital (Art. 612, NCC)
7. To Collect reimbursements from the owner for NOTE: The reimbursement shall be in the amount
indispensable extra ordinary repairs, taxes on the equal to the increase in value of the property (Art.
capital he advanced, and damages caused to him 594, NCC)
8. To Remove improvements made by him if the same
will not injure the property 2. Reimbursed for Taxes on the capital advanced by him
(Art. 597, par. 2, NCC)
Q: 120-hectares of land from the NHA property were 3. Indemnified for Damages caused by usufructuary to
reserved for the site of the National Government the naked owner (Art. 581, NCC)
Center. 7 hectares from which were withdrawn from
the operation. These revoked lands were reserved for Rights of a usufructuary on pending natural and
the Manila Seedling Bank Foundation, Inc. (MSBF). industrial fruits
However, MSBF occupied approximately 16 hectares
and leased a portion thereof to Bulacan Garden Fruits
Corporation (BGC). BGC occupies 4,590 sqm. Rights of the usufructuary
Growing:
Implementing such revocation, NHA ordered BGC to
At the
vacate its occupied area. BGC then filed a complaint for
beginning Not bound to refund to the owner the
injunction. Has BGC any right over the leased
of the expenses of cultivation and production
premises?
usufruct
A: A usufructuary may lease the object held in Belong to the owner but he is bound to
At the
usufruct. The owner of the property must respect the reimburse the usufructuary of the
termination
lease entered into by the usufructuary so long as the ordinary cultivation expenses (Art. 545,
of the
usufruct exists. MSBF was given a usufruct over only a 7- NCC) out of the fruits received (Art. 443,
usufruct
hectare area. NHA cannot evict BGC if the 4,590 square NCC)
meter portion MSBF leased to BGC is within the 7-hectare
area held in usufruct by MSBF. However, the NHA has the NOTE: Civil fruits accrue daily, stock dividends and cash
right to evict BGC if BGC occupied a portion outside of the dividends are considered civil fruits.
7-hectare area covered by MSBF's usufructuary rights
(NHA v. CA, G.R. No. 148830, Apr. 13, 2005). When the expenses of cultivation and production
exceeds the proceeds of the growing fruits
Rights of the usufructuary as to the usufruct itself
(ARC) If the expenses exceed the proceeds of the growing fruits,
the owner has no obligation to reimburse the difference
1. To Alienate, pledge or mortgage the right of usufruct, (Art. 567, NCC).
even by gratuitous title (Art. 572, NCC)
2. In a usufruct to Recover property/real right, to bring Lease, Alienation and Encumbrance of the property
the action and to oblige the owner thereof to give him subject to usufruct
the proper authority and the necessary proof to bring
the action (Art. 578, NCC). The usufructuary, not being the owner of the thing subject
3. In a usufruct of part of a Common property, to to usufruct, cannot alienate, pledge or mortgage the thing
exercise all the rights pertaining to the co-owner with itself.
respect to the administration and collection of fruits
or interests. However, the usufructuary may lease it to another,
alienate, pledge or mortgage his right of usufruct, even by
Exercise acts of ownership by a usufructuary gratuitous title; but all the contracts he may enter into as
such usufructuary shall terminate upon the expiration of
GR: A usufructuary cannot exercise acts of ownership such the usufruct, saving leases of rural lands, which shall be
as alienation or conveyance. considered as subsisting during the agricultural year (Art.
572, NCC).
XPNs: When what is to be alienated or conveyed is a:
(CIA) Transfer of the Usufruct
1. Consumable
2. Property Intended for sale; The transferee can enjoy the rights transferred to him by
3. Property which has been Appraised when delivered. the usufructuary until the expiration of the usufruct.
Transfer of usufructuary rights, gratuitous or onerous, is
NOTE: If it has not yet been appraised or if it is not a co-terminous with the term of usufruct.
consumable: return the same quality (mutuum)

132
2015 GOLDEN NOTES
PROPERTY
When the thing subject to usufruct is mortgaged by the 2. Limitation: provided he does not alter its form and
naked owner substance;
3. Removal: usufructuary may generally remove
If the thing subject of usufruct is mortgaged by the owner, provided no injury is made on the principal even
the usufructuary has no obligation to pay mortgage. But if against the will of the naked owner. If he has chosen
the same is attached, the owner becomes liable for not to remove he cannot be compelled to remove
whatever is lost by the usufructuary. them; and
4. Indemnity: no right to be indemnified if the
Usufruct over non-consumable things which gradually improvements cannot be removed. He may however
deteriorate set-off the value of the improvements against the
amount of damage he had caused to the property.
The usufructuary has the right to use in accordance with (Pineda, 2009)
the purpose they are intended.
a. He is not obliged to return them at the termination NOTE: If the right of the usufructuary to remove
except in their condition at the time, i.e. an imperfect improvements is not registered in the registration
usufruct (e.g. a delivery van which deteriorates every proceedings of the land in usufruct, an innocent purchaser
day. The usufructuary can use the van for the for value of the property is not bound to respect the right.
purpose for which it is intended. At the end of the
usufruct, he shall return it in its present condition Offsetting of damages and improvements introduced
without being liable for the value of the deterioration by the usufructuary
provided that such deterioration was not by reason
of his fraud or negligence); If the damages exceed the value of the improvements, the
b. The usufructuary is not responsible for deterioration usufructuary is liable for the difference as indemnity.
due to wear and tear nor is he required to make any
repairs to restore it; If the improvements exceed the amount of damages, the
c. He is liable for damage suffered by the thing by usufructuary may remove the portion of the
reason of his fraud or negligence although such improvements representing the excess in value if it can be
liability may be set-off against the improvements he done without injury; otherwise, the excess in value accrues
may have made on the property; to the owner.
d. He does not answer for the deterioration due to
fortuitous event. (Art. 573, NCC) Q: Why do improvements accrue to the owner?
NOTE: But if deterioration is due to fraud or negligence, A: Because there is no indemnity for improvements.
the usufructuary is liable.
Obligations of the usufructuary
Liability of a usufructuary
1. Before the usufruct
The usufructuary may be liable for the damages suffered a. Make an inventory
by the naked owner on account of fraud committed by him b. Give security
or through his negligence.
2. During the usufruct
However, the usufructuary is not liable for deterioration a. Take care of property
due to: b. Replace the young of animals that die or are lost
1. Wear and tear or become prey when the usufruct is constituted
2. A fortuitous event on a flock or herd of livestock;
c. Make ordinary repairs
Rights and obligations of the usufructuary with d. Notify the owner of urgent extraordinary repairs
respect to consumable things e. Permit works & improvements by the naked
owner not prejudicial to the usufruct
The usufructuary shall have the right to make use of the f. Pay annual taxes and charges on the fruits
consumable thing. At the termination of the usufruct, the g. Pay interest on taxes on capital paid by the naked
usufructuary has the obligation to: owner
1. If the thing has been appraised, pay its appraised h. Pay debts when usufruct is constituted on the
value; whole patrimony
2. If the thing has not been appraised: i. Secure the naked owners/court's approval to
a. Return the same quantity and quality; or collect credits in certain cases
b. Pay its current price at such termination. j. Notify the owner of any prejudicial act committed
by 3rd persons
Right of usufructuary to make useful or luxurious k. Pay for court expenses and costs
improvements
3. At the termination
1. Unless there is an express prohibition, the a. Return the thing in usufruct to the naked owner
usufructuary may construct and make improvements unless there is a right of retention
on the property as he may deem proper. b. Pay legal interest for the time that the usufruct
lasts

CIVIL LAW
c. Indemnify the naked owner for any losses due to Exemption of usufructuary from the obligation to give
his negligence or of his transferees security
NOTE: If the animals all perish w/o fault but due to Usufructuary may be exempt from the obligation to give
contagious disease/uncommon event deliver remains security when (SIR):
saved. If the young of animals perished in part due to
accident, usufruct continues on remaining portion. If the 1. No one will be Injured by the lack of the bond;
usufruct is constituted on sterile animals, they are 2. The donor (or parent) Reserved the usufruct of the
considered as if fungible and have the obligation to replace property donated;
same kind and quality. 3. The usufruct is Subject to caucion juratoria where:
a. The usufructuary takes an oath to take care of the
Requirements for the inventory things and restore them to its previous state
before the usufruct is constituted.
1. The naked owner or representative must be b. The property subject to such cannot be alienated
previously notified. The purpose is to enable him to or encumbered or leased.
correct errors in the inventory if he desires. His
absence is a waiver for corrections. Caucion juratoria by virtue of a promise under oath
5. Conditions of immovables must be described
6. Movables must be appraised The usufructuary, being unable to file the required bond or
security, may file a verified petition in the proper court
NOTE: Inventory is not required when: asking for the delivery of the house and furniture
a. Waived; necessary for himself and his family so that he and his
b. No one will be injured; family be allowed to live in a house included in the
c. Usufruct over rights; or usufruct and retain it until the termination of the usufruct
d. Agreement of both parties without any bond or security.
Effects of failure to post a bond or security The same rule shall be observed with respect to
implements, tools and other movable property necessary
1. The owner shall have the following options: for an industry or vocation in which he is engaged (Art.
a. Receivership of realty; 587).
b. Sale of movables;
c. Deposit of securities; or Right to proceeds
d. Investment of money; or
e. Retention of the property as administrator. After the security has been given by the usufructuary, he
shall have a right to all the proceeds and benefits from the
2. The net product shall be delivered to the day on which he should have commenced to receive them
usufructuary; (Art. 588, NCC).
3. The usufructuary cannot collect credit due or make
investments of the capital without the consent of the Ordinary repairs
owner or of the court until the bond is given.
The usufructuary is obliged to make the ordinary repairs
Effects of failure to give security needed by the thing given in usufruct. It includes such as
are required by the wear and tear due to the natural use of
1. On the rights of the naked owner the thing and are indispensable for its preservation (Art.
a. May deliver the property to the usufructuary 592, NCC).
b. May choose retention of the property as
administrator NOTE:
c. May demand receivership or administration of
the real property, sale of movable, conversion or GR: Usufructuary has no liability when the thing
deposit of credit instruments or investment of deteriorates due to wear and tear. He is obliged to return
cash or profits the thing in such state.
2. On the rights of the usufructuary XPN: when there is fraud or negligence

a. Cannot possess the property until he gives
security Extraordinary repairs
b. Cannot administer property
c. Cannot collect credits that have matured nor It includes:
invest them except if the court or naked owner 1. Those required by the wear and tear due to the
consents natural use of the thing but not indispensable for its
d. May alienate his right to usufruct. preservation.
2. Those required by the deterioration of or damage to
the thing caused by exceptional circumstances and are
indispensable for its preservation.

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2015 GOLDEN NOTES
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Liability for extraordinary repairs
Q: On 1 January 1980, Minerva, the owner of a building
The liability for extraordinary repairs depends on who granted Petronila a usufruct over the property until 01
made the extraordinary repairs (Art. 594, NCC). June 1998 when Manuel, a son of Petronila, would
have reached his 30th birthday. Manuel, however, died
1. If made by the owner - he can make them but to his on 1 June 1990 when he was only 26 years old.
expense and he shall have the right to demand from
the usufructuary the payment of legal interest on the Minerva notified Petronila that the usufruct had been
amount expended during the duration of the usufruct. extinguished by the death of Manuel and demanded
2. If made by the usufructuary that the latter vacate the premises and deliver the
same to the former. Petronila refused to vacate the
GR: The usufructuary may make them but he is not place on the ground that the usufruct in her favor
entitled to indemnity because they are not needed for would expire only on 1 June 1998 when Manuel would
the preservation of the thing. have reached his 30th birthday and that the death of
Manuel before his 30th birthday did not extinguish the
XPN: He shall have the right to demand the payment usufruct. Whose contention should be accepted? (1997
of the increase in value at the termination of the Bar Question)
usufruct provided that:
1. He notified the owner of the urgency of the A: Petronilas contention is correct. Under Article 606 of
repairs the Civil Code, a usufruct granted for the time that may
2. The owner failed to make repairs elapse before a third person reaches a certain age shall
notwithstanding such notification subsist for the number of years specified even if the third
3. The repair is necessary for the preservation of person should die unless there is an express stipulation in
the property. the contract that states otherwise.
Right of retention of the usufructuary In the case at bar, there is no express stipulation that the
consideration for the usufruct is the existence of
The usufructuary has a right of retention even after the Petronilas son. Thus, the general rule and not the
termination of the usufruct until he is reimbursed for the exception should apply in this case.
increase in value of the property caused by extraordinary
repairs for preservation. Special usufructs
Determination of increase in value The following usufructs can be considered as special

usufructs:
The increase in value is the difference between the value of 1. Pension or income (Art. 570, NCC)
the property before the repairs were made and the value 2. Property owned in common (Art. 582, NCC)
after the repairs have been made. 3. Cattle (livestock) (Art. 591, NCC)
4. On Vineyards and woodland (Arts 575-576, NCC)
RIGHTS OF THE OWNER 5. Right of action (Art. 578, NCC)
6. Mortgaged property (Art. 600, NCC)
Rights of a naked owner and the limitations imposed 7. over the Entire patrimony (Art. 598, NCC)
upon him 8. things which Gradually deteriorate (Art. 573, NCC)
9. Consumable property (Art. 574, NCC)
RIGHTS LIMITATIONS
Alienation Can alienate the thing in usufruct EXTINCTION/TERMINATION
Cannot alter the form and
Alteration Usufruct is extinguished by: (PLDT-ERM)
substance
Cannot do anything prejudicial to
Enjoyment 1. Acquisitive Prescription
the usufructuary
Can construct any works and make
Construction any improvement provided it does NOTE: The use by a third person and not the non-use
and not diminish the value or the by the usufructuary
Improvement usufruct or prejudice the rights of
the usufructuary. 2. Total Loss of the thing
Effect of the death of the naked owner on the usufruct NOTE: If the loss is only partial, the usufruct
continues with the remaining part.
It does not terminate the usufruct. His rights are
transmitted to his heirs. 3. Death of the usufructuary; unless a contrary intention
appears, since a usufruct is constituted essentially as a
Improper use of the thing by the usufructuary lifetime benefit for the usufructuary or in
consideration of his person
The owner may demand the delivery of and administration 4. Termination of right of the person constituting the
of the thing with responsibility to deliver net fruits to usufruct
usufructuary.

CIVIL LAW
5. Expiration of the period or fulfilment of the resolutory
condition EASEMENTS
6. Renunciation by the usufructuary.
CHARACTERISTICS
NOTE: It partakes the nature of a condonation or
donation, it must comply with the forms of donation. Easement or servitude
Renunciation of usufructuarys rights is NOT an
assignment of right. It is really abandonment by the It is an encumbrance imposed upon an immovable for the
usufructuary of his right and does not require the benefit of:
consent of the naked owner but it is subject to the 1. Another immovable belonging to a different owner; or
rights of creditors. 2. A community or one or more persons to whom the
encumbered estate does not belong by virtue of which
7. Merger of the usufruct and ownership in the same the owner is obliged to abstain from doing or to
person who becomes the absolute owner thereof (Art. permit a certain thing to be done on his estate (Arts.
1275, NCC). 613- 614, NCC).
Other Causes of termination of usufruct Q: Can there be an easement over another easement?
Explain. (1995 Bar Question)
1. Annulment of the act or title constituting the
usufruct; A: There can be no easement over another easement for
2. Rescission; the reason that an easement may be constituted only on a
3. Expropriation; corporeal immovable property. An easement, although it is
4. Mutual withdrawal; real right over an immovable, is not a corporeal right.
5. Legal causes for terminating legal usufruct;
6. Abandonment or dissolution of juridical entity (e.g. Easement v. Servitude
corporation) granted with usufruct before the lapse
of the period. EASEMENT SERVITUDE
Usufruct cannot be constituted in favor of a town,
An English law term Used in civil law countries
corporation or association for more than fifty years.
Real Real or personal
Article 605 of the NCC clearly limits any usufruct Burden imposed upon
constituted in favor of a corporation or association to fifty The right enjoyed
another
years. A usufruct is meant only as a lifetime grant. Unlike a
natural person, a corporation or association's lifetime may Characteristics of easement (NICE LIAR)
be extended indefinitely. The usufruct would then be
perpetual. This is especially invidious in cases where the 1. Is a right limited by the Needs of the dominant owner
usufruct given to a corporation or association covers or estate, without possession;
public land. (NHA v. CA, G.R. No. 148830, April 13, 2005) 2. Is Inseparable from the estate to which it is attached
cannot be alienated independently of the estate (Art.
Expropriation of the property 617, NCC);
3. Cannot consist in the doing of an act unless the act is
In case the usufruct is expropriated for public use, the accessory in relation to a real easement;
owner is obliged to: 4. Involves 2 neighboring Estates: the dominant estate
1. Either replace it with another thing of the same value to which the right belongs and the servient estate
and of similar conditions; or upon which an obligation rests;
2. Pay legal interest to usufructuary on the amount of 5. Is a Limitation on the servient owners rights of
indemnity for the whole period of the usufruct, not ownership;
just the unexpired period. 6. Is Indivisible not affected by the division of the
estate between two or more persons (Art. 618, NCC);
Loss of the thing subject to usufruct 7. It is enjoyed over Another immovable never on ones
own property;
When a part of the thing subject of the usufruct is lost, the 8. Is a Real right but will affect third persons only when
remaining part shall continue to be held in usufruct. registered.
When a usufruct is constituted on an immovable where a Essential qualities of easements
building is erected, and the building is destroyed, the
usufructuary will have the right to make use of the land 1. Incorporeal;
and materials. 2. Imposed upon corporeal property;
3. Confer no right to a participation in the profits arising
In case an insurance covering the object of usufruct was from it;
obtained, the proceeds will be shared by both the owner 4. Imposed for the benefit of corporeal property;
and the usufructuary if both of them paid premium. 5. Has 2 distinct tenements: dominant and servient
estate;
If it was only the owner who paid, then proceeds will go to 6. Cause must be perpetual.
him alone.

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2015 GOLDEN NOTES
PROPERTY
Q: What is meant by easement established only on an on the use of to the use of real both possession
immovable? right property of another and use of
but w/o right of anothers
A: The term immovable must be understood in its possession property
common and not in its legal sense.
Generally covers Covers all fruits
Scope and
only a particular or and uses as a rule
Easement v. Usufruct Uses
specific use
BASIS EASEMENT USUFRUCT Can be created only The lessor may or
by the owner, or by a may not be the
Constituted on On real property Real or personal duly authorized owner as when
Who may
Limited to a agent, acting in there is a sub-
create
particular or Includes all uses behalf of the owner lease or when the
Use granted
specific use of the and fruits lessor is only a
servient estate usufructuary
Involves a right of May be created by: GR: only by
No possessory
As to right of possession in an a. Law contract;
right over an
possession immovable or b. Contract
immovable
movable c. last will or XPN: by law as in
Not extinguished Extinguished by d. Prescription the case of an
As to effect of implied new lease,
by death of death of
death or when a builder
dominant owner usufructuary
How it is has built in GF on
Real right Real right created the land of
Nature of right whether or not whether or not another a
registered registered building, when
As to the land is
Transmissible Transmissible
transmissibility considerably
Cannot be worth more in
May be constituted on an value than the
constituted in easement but it building
How it may be favor, or, may be The owner is more The owner or
constituted burdening, a constituted on or less passive, and lessor is more or
Passive or
piece of land held the land he allows the less active
Active
in usufruct burdened by an usufructuary to
Owner
easement enjoy the thing given
in usufruct
Q: Can there be an easement over a usufruct?
Doctrine of apparent sign
A: There can be no easement over a usufruct. Since an
easement may be constituted only on a corporeal Easements are inseparable from the estate to which they
immovable property, no easement may be constituted on a actively or passively pertain. The existence of apparent
usufruct which is not a corporeal right. 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
Q: Can there be a usufruct over an easement? easement should be constituted, since no one objected to
the continued existence of the windows.
A: There can be no usufruct over an easement. While a
usufruct may be created over a right, such right must have NOTE: It is understood that there is an exterior sign
an existence of its own independent of the property. A contrary to the easement of party wall whenever:
servitude cannot be the object of a usufruct because it has 1. There is a window or opening in the dividing wall of
no existence independent of the property to which it buildings
attaches. 2. Entire wall is built within the boundaries of one of the
estates
Easement v. Lease 3. The dividing wall bears the burden of the binding
beams, floors and roof frame of one of the buildings,
BASIS Easement Lease but not those of the others
4. The lands enclosed by fences or live hedges adjoin
Real right whether Real right only
others which are not enclosed
registered or not when registered
Nature
OR when the lease
In all these cases, ownership is deemed to belong
exceeds 1 yr.
exclusively to the owner of the property which has in its
Where Only on real Real or personal favor the presumption based on any of these signs.
constituted properties
Limitations There is limited right Limited right to

CIVIL LAW
Acknowledgement of an easement in one who owns 2. Make use of the easement unless there is an
property agreement to the contrary (Art. 628 par. 2, NCC).
3. Change the place or manner of the use of the
An acknowledgement of the easement is an admission that easement, provided it be equally convenient (Art. 629,
the property belongs to another (BOMEDCO v. Heirs of par. 2, NCC).
Valdez, G.R. No. 124669).
Obligations or limitations imposed on the servient
How easement is acquired owner (IC)
1. Prescription of 10 years 1. He cannot Impair the use of the easement.

2. By deed of recognition 2. He must Contribute to the necessary expenses in case
3. By final judgment he uses the easement, unless otherwise agreed upon
4. By apparent sign established by the owner of two (Art. 628 par. 2, NCC).
adjoining estates
5. By title CLASSIFICATIONS OF EASEMENT
PARTIES TO AN EASEMENT Classifications of easements
Parties to an easement 1. As to recipient of the benefit

a. Real (or Predial) The easement is in favor of
1. Dominant estate Refers to the immovable for which another immovable.
the easement was established. b. Personal The easement is in favor of a
2. Servient estate The estate which provides the service community, or of one or more persons to whom
or benefit. the encumbered estate does not belong
(easement of right of way for passage of
Dominant Estate v. Servient Estate livestock).
DOMINANT ESTATE SERVIENT ESTATE 2. As to purpose or nature of limitation

Immovable in favor of That property or estate a. Positive One which impose upon the servient
which, the easement is which is subject to the estate the obligation of allowing something to be
established dominant estate done or of doing it himself.
Upon which an obligation b. Negative That which prohibits the owner of the
Which the right belongs servient estate from doing something which he
rests.
could lawfully do if the easement did not exist
Rights of the dominant owner (MARE)
3. As to the manner of exercise
1. Exercise all rights necessary for the use of the a. Continuous Their use may or may not be
easement (Art. 625, NCC) incessant, without the intervention of any act of
2. Make on the servient estate all works necessary for man.
the use and preservation of the servitude (Art. 627
par. 1, NCC) NOTE: For acquisitive prescription, the
3. Renounce the easement if he desires to be exempt easement of aqueduct and easement of light and
from contributing necessary expenses (Art. 628, NCC) view are considered continuous.
4. Ask for mandatory injunction to prevent impairment
of his right (Resolme v. Lazo, 27 Phil 416). b. Discontinuous used at intervals and depend
upon the acts of man.
Obligations of the dominant owner (CAN C)
4. As to whether their existence is indicated
1. He cannot Alter the easement or render it more a. Apparent Made known and continually kept in
burdensome (Art. 627 par. 1, NCC). view by external signs that reveal the use and
2. He shall Notify the servient owner of works necessary enjoyment of the same
for the use and preservation of the servitude (Art. 627 b. Non-apparent They show no external indication
par. 2, NCC). of their existence.
3. He must Choose the most convenient time and
manner of making the necessary works as to cause the 5. As to the right given
least inconvenience to the servient owner. a. Right to partially use the servient estate
4. If there are several dominant estates he must b. Right to get specific materials or objects from the
Contribute to the necessary expenses in proportion to servient estate
the benefits derived from the works (Art. 628 par. 1, c. Right to participate in ownership
NCC). d. Right to impede or prevent the neighboring
estate from performing a specific act of
Rights of the servient owner (RMC) ownership.
1. Retain the ownership of the portion of the estate on 6. As to source

which easement is imposed

138
2015 GOLDEN NOTES
PROPERTY
a. Legal Those created by law for public use or Persons who may constitute voluntary easement
private interests.
b. Voluntary - Constituted by will or agreement of Voluntary easements may be constituted by the owner
the parties or by testator. possessing capacity to encumber property. If there are
various owners, all must consent; but consent once given
NOTE: Like any other contract, a voluntary is not revocable.
easement (of right-of-way) could be extinguished
only by mutual agreement or by renunciation of NOTE: Third persons are not bound by a voluntary
the owner of the dominant estate. (La Vista easement unless the same is duly recorded with the proper
Association v. CA, G.R. No. 95252, September 5, authorities.
1997)
Q: For whose favor are voluntary easements
c. Mixed Created partly by agreement and partly established?
by law.
A:
7. As to the duty of the servient owner: 1. Predial servitudes:
a. Positive Imposes upon the owner of the servient a. For the owner of the dominant estate
estate the obligation of allowing something to be b. For any other person having any juridical
done or doing it himself. relation with the dominant estate, if the owner
ratifies it.
e.g. right of way - imposes the duty to allow the 2. Personal servitudes: for anyone capacitated to accept.
use of said way.
Q: How are voluntary easements created and what are
b. Negative Prohibits the owner of the servient the governing rules for such?
estate from doing something which he could
lawfully do if the easement did not exist. A:
1. If created by title (contract, will, etc.), the title
e.g. Easement of light and view where the owner governs.
is prohibited from obstructing the passage of 2. If acquired by prescription, it is governed by the
light. manner or form of possession.
MODES OF ACQUIRING EASEMENTS NOTE: In both cases, the Civil Code will only apply
suppletorily.
How compulsory easements are acquired (FART-P)
Where the property held in usufruct
1. By Title All easements:
a. Continuous and apparent (Art. 620, NCC) The owner of a property in usufruct may create easements
b. Continuous non-apparent (Art. 622, NCC) thereon without the consent of the usufructuary provided
c. discontinuous, whether apparent or non- the rights of the latter are not impaired. (Art. 689, NCC)
apparent (Art. 622, NCC)
2. By Prescription of ten years continuous and NOTE: Consent of both the naked owner and the beneficial
apparent (Art. 620, NCC) owner is necessary for the creation of perpetual voluntary
3. By deed of Recognition easement. (Art. 690, NCC)
4. By Final judgment
5. By Apparent sign established by the owner of the two LEGAL EASEMENT
adjoining estates
Legal easement
Computation of prescriptive period
Legal Easement is an easement established by law for
a. Positive easement - The period is counted from the day public use or for the interest of private persons.
when the owner of the dominant estate begins to
exercise it Public Legal Easement
b. Negative easement- From the day a notarial
prohibition is made on the servient estate Public Legal Easement is for public or communal use.
VOLUNTARY EASEMENT Private Legal Easement
Voluntary easement Private Legal Easement is for the interest of private

persons or for private use. It shall be governed by:
An easement is voluntary when it is established by the will 1. Agreement of the parties provided they are neither
of the owners. prohibited by law nor prejudicial to third persons;
2. In default, general or local laws and ordinances for
the general welfare;
3. In default, title VII of Arts. 613-687 of the NCC.

CIVIL LAW
NOTE: The law on waters governs the use of waters and Requisites for easement for watering cattle
the NCC is merely suppletory.
1. It must be imposed for reasons of public use
Kinds of legal easements (WIND PLW) 2. It must be in favor of a town or village indemnity must
be paid
1. Easement relating to Waters
2. Easement relating to right of Way NOTE: The right to make the water flow thru or under
3. Intermediate distances and works for certain intervening or lower estates
construction and plantings
4. Easement against Nuisance Requisites for drawing water or for watering of
5. Drainage of Building animals
6. Easement of Party wall
7. Easement of Light and view 1. Owner of the dominant estate has the capacity to
dispose of the water;
EASEMENTS RELATING TO WATERS 2. The water is sufficient for the use intended
3. Proposed right of way is the most convenient and the
WATERS least onerous to third persons.
4. Pay indemnity to the owner of the servient estate (Art.
Different easements relating to waters: (DRAW BN) 643, NCC)
1. Natural drainage (Art. 637, NCC) EASEMENT OF AQUEDUCT

2. Drainage of Buildings (Art. 674, NCC)
3. Easement on Riparian banks for navigation, Easement of aqueduct
floatage, fishing, salvage, and tow path (Art. 638, NCC)
4. Easement of a Dam (Arts. 639, 647, NCC) The easement of aqueduct, for legal purposes, is
5. Easement for drawing Water or for watering animals considered continuous and apparent even though the flow
(Arts. 640-641, NCC) of water may not be continuous or its use depends upon
6. Easement of Aqueduct (Arts. 642- 636, NCC) the needs of the dominant estate or upon a schedule of
alternate days or hours (Art. 646, NCC).
NATURAL DRAINAGE
NOTE: Easement of aqueduct is not acquirable by
Scope of easement of natural drainage prescription after 10 years because although it is
continuous and apparent in character, under the Water
Lower estates are obliged to receive the waters which Code of the Philippines (P.D. No. 1067), all waters belong
naturally and without the intervention of man descend to the State; therefore, they cannot be the subject of
from higher estates, as well as the stones or earth which acquisitive prescription. (Jurado, 2011)
they carry with them (Art. 637, NCC).
It is an easement which gives right to make water flow
Limitations of the easement of natural drainage thru intervening estates in order that one may make use of
said water. However, unlike the easement for drawing
1. Dominant owner must not increase the burden but he water or for watering animals, the existence of this
may erect works to avoid erosion. easement does not necessarily includes the easement of
2. The servient owner must not impede the descent of aqueduct.
water (but may regulate it).
Requisites for easement of aqueduct
Prescription of easement of natural drainage
1. Indemnity must be paid to the owners of intervening
The easement of natural drainage prescribes by non-use estates and to the owners of lower estates upon which
for 10 years (Paras, 2008). waters may filter or descend.
Indemnity in easement of natural drainage NOTE: The amount usually depends on duration and
inconvenience caused
Art. 637 of the New Civil Code, which provides for the
easement of natural drainage, does not speak of any 2. If for private interests, the easement cannot be
indemnity. It follows that no indemnity is required as long imposed on existing buildings, courtyards, annexes,
as the conditions laid down in the article are complied out-houses, orchards or gardens but can be on other
with (Paras, 2008). things, like road, provided no injury is caused to said
properties
EASEMENT FOR DRAWING WATER OR FOR WATERING
ANIMALS 3. There must be a proof:
a. That the owner of the dominant estate can
NOTE: This is a combined easement for drawing of water dispose of the water
and right of way. b. That the water is sufficient for the use which it is
intended

140
2015 GOLDEN NOTES
PROPERTY
c. That the proposed course is the most convenient Least prejudicial to the servient estate
and least onerous to third persons and the
servient estate Least prejudicial in determining the right of way means it
d. That a proper administrative permission has is the shortest way and the one which will cause the least
been obtained (Paras, 2008) damage to the property to the servient estate in favor of
the dominant estate.
Right of the owner of the servient estate to fence
Q: What if the property is not the shortest way and will
The easement of aqueduct does not prevent the owner of not cause the least damage to the servient estate?
the servient estate from closing or fencing it, or from
building over the aqueduct in such manner as not to cause A: The way which will cause the least damage should be
the owner of the dominant estate any damage, or render used even if it will not be the shortest.
necessary repairs and cleanings impossible (Art. 645, NCC).
The easement of right of way shall be established at the
EASEMENT OF RIGHT OF WAY point least prejudicial to the servient estate and where the
distance from the dominant estate to a public highway is
Easement of right of way the shortest. In case of conflict, the criterion of least
prejudice prevails over the criterion of shortest distance.
Easement of right of way is the right to demand that the
owner of an estate surrounded by other estates be allowed Adequate outlet
to pass thru the neighboring estates after payment of
proper indemnity. The convenience of the dominant estate has never been
the gauge for the grant of compulsory right of way. To be
Right of way sure, the true standard for the grant of the legal right is
"adequacy." Hence, when there is already an existing
It may refer either to the easement itself, or simply, to the adequate outlet from the dominant estate to a public
strip of land over which passage can be done (Paras, 2008). highway, as in this case, even when the said outlet, for one
reason or another, be inconvenient, the need to open up
Q: Can easement of right of way be acquired by another servitude is entirely unjustified. (Dichoso v.
prescription? Marcos, G.R. No. 180282, April 11, 2011; Alicia B. Reyes vs.
Spouses Francisco S. Valentin and Anatalia Ramos, G.R. No.
A: No, because it is discontinuous or intermittent 194488, February 11, 2015)
(Ronquillo, et al. v. Roco, GR No. L-10619, February 28,
1958). Q: The coconut farm of Federico is surrounded by the
lands of Romulo. Federico seeks a right of way through
Q: What kind of servitude in favor of the government is a portion of the land of Romulo to bring his coconut
a private owner required to recognize? products to the market. He has chosen a point where
he will pass through a housing project of Romulo. The
A: The only servitude which he is required to recognize in latter wants him to pass another way which is 1km
favor of the government is: longer. Who should prevail? (2000 Bar Question)
1. The easement of a public highway,
2. Private way established by law, or A: Romulo will prevail. Under Art. 650, the easement of
3. Any government canal or lateral that has been pre- right of way shall be established at the point least
existing at the time of the registration of the land. prejudicial to the servient estate and where the distance
from the dominant estate to a public highway is the
NOTE: If the easement is not pre-existing and is sought to shortest. In case of conflict, the criterion of least prejudice
be imposed only after the land has been registered under prevails over the criterion of shortest distance. Since the
the LR Act, proper expropriation proceedings should be route chosen by Federico will prejudice the housing
had, and just compensation paid to the registered owner project of Romulo, Romulo has the right to demand that
(Eslaban v. Vda De Onorio, G.R. No. 146062). Federico pass another way even though it will be longer.
Requisites for easement on right of way (POON-D) Q: Spouses dela Cruz are occupants of a parcel of land
located at the back of Ramiscals property. They use as
1. The easement must be established at the point least their pathway, to and from the nearest public highway
Prejudicial to the servient estate from their property, a long strip of land owned by
2. Claimant must be an Owner of enclosed immovable or Ramiscal. They also enclosed such strip of land with a
with real right gate, fence, and roof. Ramiscal demanded that the
3. There must be no adequate Outlet to a public highway spouses demolish the same. The spouses refused. Are
4. The right of way must be absolutely Necessary not the spouses entitled to a right of way?
mere convenience
5. The isolation must not be Due to the claimants own A: No. There is no voluntary nor legal easement
act established. The spouses failed to show that they entered
6. There must be payment of proper Indemnity. 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

CIVIL LAW
proprietors own acts. Mere convenience for the dominant
estate is not enough to serve as its basis. There should be Q: Can a dominant owner demand a driveway for his
no other adequate outlet to a public highway. Also, under automobile?
Art. 649, it is the owner or any person who by virtue of a
real right may cultivate or use any immovable surrounded A: Yes, due to necessity of motor vehicles in the present
by other immovable pertaining to other persons, who is age.
entitled to demand a right of way through the neighboring
estates. Here, the spouses fell short of proving that they Liability for repairs and taxes
are the owners of the supposed dominant estate (Eslaban
v. Vda De Onorio, G.R. No. 146062). 1. As to repairs, the dominant owner is liable for
necessary repairs.
Q: David owns a subdivision which does not have an 2. As to proportionate share of the taxes, it shall be
access to the highway. When he applied for a license to reimbursed by said owner to the proprietor of the
establish the subdivision, he represented that he will servient estate. This applies only to permanent
purchase a rice field located between his land and the easements (Art. 654, NCC).
highway, and develop it into an access road. However,
when the license was granted, he did not buy the rice Special causes of extinguishment of right of way
field, which remained unutilized. Instead, he chose to
connect his subdivision with the neighboring 1. The opening of a public road, or
subdivision of Nestor, which has an access to the 2. Joining the dominant tenement to another which has
highway. When Nestor and David failed to arrive at an an exit to a public road.
agreement as to compensation, Nestor built a wall
across the road connecting with Davids subdivision. Is NOTE: Said extinguishment is NOT automatic. There must
David entitled to an easement of right of way through be a demand for extinguishment coupled with tender of
the subdivision of Nestor which he claims to be the indemnity by the servient owner.
most adequate and practical outlet to the highway?
Q: Emma bought a parcel of land from Equitable-PCI
A: No, David is not entitled to the right of way being Bank, which acquired the same from Felisa, the
claimed. The isolation of his subdivision was due to his original owner. Thereafter, Emma discovered that
own act or omission because he did not develop an access Felisa had granted a right of way over the land in favor
road to the rice fields which he was supposed to purchase of the land of Georgina, which had no outlet to a public
according to his own representation when he applied for a highway, but the easement was not annotated when
license to establish the subdivision (Floro v. Llenado, 244 the servient estate was registered under the Torrens
SCRA 713). system. Emma then filed a complaint for cancellation
of the right of way, on the ground that it had been
Determination of proper indemnity to the servient extinguished by such failure to annotate. How would
estate you decide the controversy? (2001 Bar Question)
If the passage is: A: The complaint for cancellation of easement of right of

a. Continuous and permanent the indemnity consists way must fail. The failure to annotate the easement upon
of the value of the land occupied plus the amount of the title of the servient estate is not among the grounds for
damages caused to the servient estate. extinguishing an easement under Art. 631 of the NCC.
b. Temporary indemnity consists in the payment of the Under Art 617, easements are inseparable from the estate
damage caused to which they actively or passively belong. Once it attaches,
it can only be extinguished under Art 631, and they exist
Two instances where indemnity is not required even if they are not stated or annotated as an
encumbrance on the Torrens title of the servient estate.
1. When a piece of land acquired by sale, exchange or
partition is surrounded by other estates of the EASEMENT OF PARTY WALL
vendor, exchanger or co-owner. In such case he shall
be obliged to grant a right of way without indemnity. Party wall
(Art. 652, NCC)
2. When a piece of land acquired by donation surround Party wall is a common wall which separates two estates,
the estate of the donor or grantor. In such case, the built by common agreement at the dividing line such that it
donee or grantee shall be obliged to grant a right of occupies a portion of both estates on equal parts. It is a
way without indemnity. (Art. 653, NCC) kind of compulsory co-ownership.
NOTE: If it is the land donated that is surrounded by
the estate of the donor or gantor, although the latter Easement of party wall v. Co-ownership
is obliged to grant a right of way, he can demand the
required indemnity. (Art. 652, NCC) PARTY WALL CO-OWNERSHIP
Shares of co-owners cannot Can be divided physically; a
Measurement for the easement of right of way
be physically segregated but co-owner cannot point to
they can be physically any definite portion of the
The width of the easement shall be that which is sufficient
identified property belonging to him
for the needs of the dominant estate (Art. 651, NCC).

142
2015 GOLDEN NOTES
PROPERTY
No limitation as to use of the None of the co-owners may
party wall for exclusive use the community property Refusal of the owner to contribute to the cost of
benefit of a party for his exclusive benefit repairs and construction of party walls
because he would be
invading on the rights of the GR: Any owner may free himself from the obligation to
others contribute by renouncing his rights in the party wall.
Any owner may free himself Partial renunciation is
XPN: When the party wall actually supports his building,
from contributing to the allowed
he cannot refuse to contribute for the expenses or repair
cost of repairs and
and construction (Art. 662, NCC).
construction of a party wall
by renouncing ALL his rights
XPN to XPN: If the owner renounces his part-
ownership of the wall, in this case he shall bear the
Presumptions (juris tantum) of existence of a party expenses of repairs and work necessary to prevent
wall any damage which demolition may cause to the party
wall (Art. 663, NCC).
1. In adjoining walls of building, up to common elevation
2. In dividing walls of gardens and yards (urban) Increase of height of party wall by the owner
3. In dividing fences, walls and live hedges of rural
tenements An owner may increase the height of a party wall provided
4. In ditches or drains between tenements that he must:
Rebuttal of presumption 1. Do so at his own expense;
2. Pay for any damage caused even if it is temporary;
1. Title 3. He must bear the cost of maintaining the portion
2. By contrary proof added;
3. By signs contrary to the existence of the servitude 4. He must pay the increased cost of preservation of the
(Arts. 660 & 661, NCC) wall (Art. 664, NCC);
5. He shall be obliged to reconstruct the wall at his
NOTE: If the signs are contradictory, they cancel each expense if necessary for the wall to bear the increased
other. height and if additional thickness is required, he shall
provide the space therefore from his own land.
Exterior signs negating the existence of a party wall
EASEMENT OF LIGHT AND VIEW
1. Whenever in the dividing wall of buildings there is a
window or opening; Easement of Light
2. Whenever the dividing wall is, one side, straight and
plumb on all its facement, and on the other, it has Easement of light (jus luminum) is the right to admit light
similar conditions on the upper part, but the lower from neighboring estate by virtue of the opening of a
part slants or projects outwards; window or the making of certain openings.
3. Whenever the entire wall is built within the
boundaries of one of the estates; Easement of view
4. Whenever the dividing wall bears the burden of the
binding beams, floors and roof frame of one of the Easement of view (jus prospectus) is the right to make
buildings, but not those of the others; openings or windows to enjoy the view thru the estate of
5. Whenever the dividing wall between courtyards, another and the power to prevent all constructions or
gardens, and tenements is constructed in such way works which could obstruct such view or make the same
that the coping sheds the water upon only one of the difficult.
estates;
6. Whenever the dividing wall, being built of masonry, NOTE: It necessarily includes easement of light.
has stepping stones which remain at certain intervals
project from the surface on one side only, but not on Modes of acquisition of easement of light and view
the other
7. Whenever lands inclosed by fences or live hedges 1. By title
adjoin others which are not inclosed (Art. 660, NCC); 2. By prescription
8. Whenever the earth or dirt removed to open the ditch
or to clean it is only on one side thereof (Art. 661, Prescriptive period for acquisition of easement of light
NCC). and view
NOTE: When there is a contradiction between an external 10 years
sign and a title to the wall, the title must prevail.
Cost of repairs and construction of party walls
It is borne by the part-owners. They are obliged to

contribute in proportion to their respective interests.

CIVIL LAW
Reckoning point of the prescriptive period Q: Does non-observance of the distances provided in
Art. 670 give rise to prescription?
The reckoning point depends on whether the easement is
positive or negative which, in turn, is dependent on where A: No, this refers to a negative easement as the window is
the opening is made if it is made: thru a wall of the dominant estate.
1. On ones own wall and the wall does not extend over NOTE: No windows, apertures, balconies, or other similar
the property of another The easement is negative. projections which afford a direct view upon or towards an
adjoining land or tenement can be made, without leaving a
Commencement of Period of prescription - starts from distance of two meters between the wall in which they are
the time formal (notarial) prohibition is made. made and such contiguous property. Neither can side or
oblique views upon or towards such conterminous
Reason: The owner merely exercises his right of property be had, unless there be a distance of 60 cm. The
dominion and not of an easement. Negative easement non-observance of these distances does not give rise to
is not automatically vested as formal prohibition is a prescription (Art. 670, NCC).
pre-requisite.
Extinguishment of easement of light and view
2. Thru a party wall or on ones own wall which extends
over the neighboring estate The easement is The easement is extinguished:
positive. 1. By Merger
2. When the easement can no longer be used
Commencement of Period of prescription starts from 3. Expiration of the term (if temporary) or fulfillment of
the time the window is opened. the condition (if conditional)
4. Renunciation of the owner of the dominant estate of
Reason: owner of the neighboring estate who has a the redemption agreed upon
right to close it up allows an encumbrance on his 5. Non-user for 10 years
property.
LATERAL AND SUBJACENT SUPPORT
Openings at height of ceiling joists
Prohibited excavation
The owner of a wall which is not a party wall may make an
opening to admit light and air, but not view, subject to the Article 684 of the Civil Code provides that no proprietor
ff: shall make such excavations upon his land as to deprive
any adjacent land or building of sufficient lateral or
1. The size must not be more than 30 square subjacent support. An owner, by virtue of his surface right,
centimeters. may make excavations on his land, but his right is subject
2. The opening must be at the height of the ceiling joists to the limitation that he shall not deprive any adjacent land
or immediately under the ceiling. or building of sufficient lateral or subjacent support.
3. There must be an iron grating imbedded in the wall Between two adjacent landowners, each has an absolute
4. There must be a wire screen. property right to have his land laterally supported by the
soil of his neighbor, and if either, in excavating on his own
Restrictions as to easement of views: premises, he so disturbs the lateral support of his
neighbors land as to cause it, or, in its natural state, by the
1. Direct Views: the distance of 2 meters between the pressure of its own weight, to fall away or slide from its
wall and the boundary must be observed position, the one so excavating is liable. (Castro v. Monsod,
2. Oblique Views: (walls perpendicular or at an angle to G.R. No. 183719, February 2, 2011)
the boundary line) must not be 60 cm to the nearest
edge of the window. NOTE: An annotation of the existence of the subjacent and
lateral support is no longer necessary. It exists whether or
NOTE: Any stipulation to the contrary is void (Art. 673, not it is annotated or registered in the registry of property.
NCC). (Ibid.)
Q: What if the wall upon which an opening is made, Stipulation or testamentary provision allowing
becomes a party wall? excavations
A: A part-owner can order the closure of the opening. No Any stipulation or testamentary provision allowing
part-owner may make an opening thru a party wall excavations that cause danger to an adjacent land or
without the consent of the others. building shall be void (Art. 685, NCC).
NOTE: If the wall becomes a party wall the part-owner can Q: What should be done first before making an
close the window unless there is a stipulation to the excavation?
contrary (Art. 669, NCC).
A: Any proprietor who intends to make any excavation
shall notify all owners of adjacent lands.

144
2015 GOLDEN NOTES
PROPERTY
EXTINGUISHMENT OF EASEMENTS remedy is action allowed to
for damages. suppress the
Easements are extinguished by (MARINE-CREW) nuisance.
1. Merger of ownership of the dominant and servient Kinds of nuisance

owner
2. Annulment of the title to the servitude 1. As to the number of persons affected:
3. Redemption agreed upon a. Public (or common) One that affects a
4. Impossibility to use the easement community or neighborhood or any considerable
5. Non-user : 10 years number of persons although the extent of the
6. Expiration of the term or fulfilment of the resolutory annoyance, danger or damage upon individuals
condition may be unequal. (Suarez, 2011, 223)
7. Bad Condition when either or both estates fall into b. Private Is one which affects an individual or few
such a condition that the easement could not be used persons only.
8. Resolution of the right of grantor to create the
easement (as when the vendor a retro redeems the 2. Other classification:
land) a. Nuisance Per Se That kind of nuisance which is
9. Expropriation of the servient estate always a nuisance. By its nature, it is always a
10. Waiver by the dominant owner gathered from nuisance all the time under any circumstances
positive acts regardless of location or surroundings.
b. Nuisance Per Accidens That kind of nuisance by
NUISANCE reason of location, surrounding or in a manner it
is conducted or managed.
Nuisance c. Temporary That kind which if properly
attended does not constitute a nuisance.
A nuisance is any act, omission, establishment, business, d. Permanent That kind which by nature of
condition of property, or anything else which: structure creates a permanent inconvenience.
1. Injures or endangers the health or safety of others; or e. Continuing That kind which by its nature will
2. Annoys or offends the senses; or continue to exist indefinitely unless abated.
3. Shocks, defies or disregards decency or morality; or f. Intermittent That kind which recurs off and on
4. Obstructs or interferes with the free passage of any may be discontinued anytime.
public highway or street, or any body of water; or g. Attractive Nuisance One who maintains on his
5. Hinders or impairs the use of property (Art. 694,NCC). premises dangerous instrumentalities or
appliances of a character likely to attract children
Nuisance v. Trespass in play, and who fails to exercise ordinary care to
prevent children from playing therewith or
Nuisance Trespass resorting thereto, is liable to a child of tender
Use of ones own property years who is injured thereby, even if the child is
Direct infringement of technically a trespasser in the premises.
which causes injury to
anothers right or property
another
Nuisance per se v. Nuisance per accidens
Injury is direct and
Injury is consequential
immediate PER SE PER ACCIDENS
As a matter of law As a matter of fact
Nuisance v. Negligence Depends upon its location
Need only be proved in and surroundings, the
Negligence Nuisance any locality manner of its conduct or
Liability is based Liability attaches other circumstances
on lack of proper regardless of the May be abated only with
Basis care or diligence. degree of care or reasonable notice to the
skill exercised to May be summarily abated
person alleged to be
avoid the injury. under the law of necessity
maintaining or doing such
Act complained There is a nuisance
of is already continuing harm
done which being suffered Easement against nuisance
caused the by the aggrieved
Condition of injury to the party by the Easement against nuisance is established by Art. 682 683.
the act plaintiff. maintenance of It is intended to prohibit the proprietor or possessor of a
the act or thing building or land from committing nuisance therein
which through noise, jarring, offensive odor, smoke, heat, dust,
constitutes the water, glare, and other causes (Gonzalez-Decano, 2010)
nuisance.
Abatement is not Abatement
Abatement available as a without judicial
remedy. The proceedings is

CIVIL LAW
ATTRACTIVE NUISANCE NOTE: The doctrine of attractive nuisance does not
generally apply to bodies of water, artificial as well as
Attractive nuisance natural in the absence of some unusual condition or
artificial feature other than the mere water and its
Attractive nuisance is a condition or appliance in question location.
although in danger is apparent to those of age, is so
enticing and alluring to children of tender years as to PUBLIC NUISANCE AND PRIVATE NUISANCE
induce them to approach, get on or use it and this
attractiveness is an implied invitation to children (Hidalgo Remedies against public nuisances
Enterprises, Inc. v.Balandan, 91 Phil 488).
1. Prosecution under the RPC or any local ordinance; or
The attractiveness of the premises or of the dangerous 2. Civil action; or
instrumentality to children of tender years is to be 3. Abatement, without judicial proceeding (Article 699,
considered as an implied invitation, which takes the NCC).
children who accepted it out of the category of a trespasser
and puts them in the category of invitees, towards whom Remedies against private nuisances
the owner of the premises or instrumentality owes the
duty of ordinary care. 1. Civil action
2. Abatement, without judicial proceedings (Art. 705,
NOTE: Nature has created streams, lakes and pools which NCC).
attract children. Lurking in their waters is always the
danger of drowning. Against this danger children are early NOTE: Any person injured by a private nuisance may abate
instructed so that they are sufficiently presumed to know it by removing, or if necessary, by destroying the thing
the danger; and if the owner of private property creates an which constitutes the nuisance, without committing a
artificial pool on his own property, merely duplicating the breach of the peace or doing unnecessary injury. However,
work of nature without adding any new danger, he is not it is indispensable that the procedure for extra-judicial
liable because of having created an "attractive abatement of a public nuisance by a private person be
nuisance" (Hidalgo Enterprises, Inc. v.Balandan, 91 Phil followed (Art. 707, NCC).
488).
Extra-judicial abatement
Doctrine of attractive nuisance
Requisites of extra-judicial abatement (BAR VID)
One who maintains on his premises dangerous 1. The nuisance must be specially Injurious to the
instrumentalities or appliances of a character likely to person affected.
attract children in play, and who fails to exercise ordinary 2. No Breach of peace or unnecessary injury must be
care to prevent children from playing therewith or committed
resorting thereto, is liable to a child of tender years who is 3. Demand must first be made upon the owner or
injured thereby, even if the child is technically a trespasser possessor of the property to abate the nuisance.
in the premises. (Jarco Marketing Corp. v. CA, G.R. No. 4. Demand is Rejected
129792, December 21, 1999) 5. Abatement is Approved by the district health officer
and executed with the assistance of the local police,
Basis for liability and
6. Value of destruction does not exceed P3,000
The attractiveness is an invitation to children. Safeguards
to prevent danger must therefore be set up. NOTE: An extra-judicial abatement can only be applied for
if what is abated is a nuisance per se and not nuisance per
Elements of attractive nuisance accidens.
1. It must be attractive. Liability for damages in case of extrajudicial

2. Dangerous to children of tender years. abatement of nuisance
Q: Is a swimming pool an attractive nuisance? The private person or a public official extrajudicially
abating a nuisance is liable for damages to the owner of the
A: thing abated, if he causes unnecessary injury or if an
alleged nuisance is later declared by courts to be not a real
GR: A swimming pool or water tank is not an attractive nuisance. (Art. 707, NCC)
nuisance, for while it is attractive, it is merely an imitation
of the work of nature. Hence, if small children are The right to question the existence of a nuisance DOES
drowned in an attractive water tank of another, the owner NOT prescribe; it is imprescriptible.
is not liable even if there be no guards in the premises
(Hidalgo Enterprises v. Balandan, et. al, L-3422 Jun. 13,
1952).
XPN: Swimming pool with dangerous slides

146
2015 GOLDEN NOTES
PROPERTY
MODES OF ACQUIRING OWNERSHIP Occupation v. Possession
Mode v. Title BASIS OCCUPATION POSSESSION

As regards Merely raises the
MODE TITLE acquisition of presumption of
Mode of acquiring
Serves merely to give the ownership ownership when
Directly and immediately ownership
occasion for its acquisition exercised in the
produces a real right
or existence concept of owner
Cause Means As to property Involves only
Any kind of
Proximate cause Remote cause involved corporeal personal
property
property
Essence of the right which is Means whereby that essence
to be created or transmitted is transmitted As regards
Requires that the The property may
ownership of
object be without be owned by
the thing by
Modes of acquiring ownership (OLD TIPS) an owner somebody
another
1. Occupation As regards the There must be an May be had in the
2. Law intent to intent to acquire concept of a mere
3. Donation acquire ownership holder
4. Tradition As regards May not take place
5. Intellectual creation May exist w/o
possession w/o some form of
6. Prescription occupation
possession
7. Succession
As to period Short duration Generally longer
Classification of modes of acquiring ownership As to leading to Cannot lead to May lead to
another mode another mode of another mode-
1. Original Those which do not arise or depend upon of acquisition acquisition prescription
any pre-existing right or title of another person:
a. Occupation (Art. 713, NCC) Things susceptible of occupation
b. Intellectual Creation (Art. 721, NCC)
c. Acquisitive Prescription (Art. 1106, NCC) 1. Things that are without an owner res nullius;
2. Derivative Are those which arise or depend upon a abandoned
pre-existing or preceding right or title of another
person: NOTE: Stolen property cannot be subject of
a. Law; e.g. hidden treasure (Art. 438, NCC), occupation
improvements on the land of another (Art. 445,
NCC), alluvium (Art. 447, NCC), abandoned river 2. Animals that are the object of hunting and fishing
beds (Art. 461, NCC), falling fruits into the 3. Hidden treasures only if the there is no known
tenement of another (Art 681, NCC) owner thereof. This is possible only if the treasure is
b. Donation (ART. 725, NCC) found in places or things without owners.
c. Succession mortis causa (ART. 774, NCC) 4. Abandoned movables a thing is abandoned when:
d. Tradition (delivery) as a consequence of certain a. The expectation to recover is gone (spes
contracts like sale, agency, partnership, mutuum, recuperandi)
assignment barter. Pure tradition does not b. The intent to return or have it returned is given
transfer ownership such as in deposit or up (spes rivertandi)
commodatum. (Pineda, 2009)
Acquisition of ownership over a wild animal by
OCCUPATION occupation
Occupation Wild animals are considered res nullius when not yet
captured. After its capture, animals that escaped become
Occupation is the acquisition of ownership by seizing res nullius again.
corporeal thing that have no owner, made with the
intention of acquiring them, and accomplished according Q: When can land be the object of occupation?
to legal rules (Paras, 2008).
A: It depends.
Requisites of occupation (WISCS) 1. If without an owner, it pertains to the State. (Regalian
Doctrine)
1. There must be Seizure of a thing, 2. If abandoned and the property is private, it can be the
2. Which must be a Corporeal personal property, object of occupation.
3. Which must be Susceptible of appropriation by 3. And if the land does not belong to anyone is presumed
nature, to be public.
4. The thing must be Without an owner, and
5. There must be an Intention to appropriate.

CIVIL LAW
Ownership of land cannot be acquired by occupation CHARACTERISTICS
When the land is without owner, it pertains to the State. EXTENT TO WHICH DONOR MAY DONATE PROPERTY
The State need not acquire abandoned lands by occupation
because once the requisites of abandonment had been Extent of donation
fulfilled, automatically the reversion operates (Pineda,
2009). It may comprehend all the present property of the donor,
or part thereof, provided he reserves, in full ownership or
Abandoned land (one with an owner before) becomes in usufruct, sufficient means for the support of himself, and
patrimonial land of the State susceptible of acquisition of all relatives who, at the time of the acceptance of the
thru acquisitive prescription (Paras, 2008). donation, are by law entitled to be supported by the donor
(Art. 750, NCC).
Prescription v. Occupation
Future properties as subject of donation
PRESCRIPTION OCCUPATION
Derivative mode Original mode no Future properties cannot be subject of donations.
somebody else was the previous owner Donations cannot comprehend future properties.
owner
Longer period of Shorter period NOTE: Future property means anything which the donor
possession is required cannot dispose of at the time of the donation (Art. 751,
NCC).
DONATION
Donation of future inheritance or the inchoate right to
Donation is an act of pure liberality whereby a person inherit
disposes gratuitously of a thing or right in favor of another
who accepts it (Art. 725, NCC). Future inheritance or the inchoate right to inherit cannot
be donated because it is future property.
Requisites of donation (ACID)
Q: May a property, the acquisition of which is subject
1. Donor must have Capacity to make the donation to suspensive condition, be donated?
2. He must have donative Intent (animus donandi)
3. There must be Delivery in certain cases A: Yes, because once the condition is fulfilled, it retroacts
4. Donee must Accept or consent to the donation during to the day the contract is constituted (Art. 1187, par. 1,
the lifetime of the donor and of the donee in case of NCC).
donation inter vivos (Art. 746, NCC); whereas in case of
donation mortis causa, acceptance is made after Donation of ownership and usufruct
donors death because they partake of a will (Art. 728,
NCC) Ownership and usufruct of a property may be donated to
different persons separately. However, all the donees are
Essential features or elements of a true donation however required to be living at the time of donation (Art.
756, NCC).
1. Alienation of property by the donor during his
lifetime, which is accepted Limitation on the amount that can be donated
2. Irrevocability by the donor of the donation 1. If the donor has forced heirs, he cannot give or receive
3. Animus Donandi (donative intent) by donation more than what he can give or receive by
4. Consequent impoverishment of the donor (diminution will.
of his assets) 2. If the donor has no forced heirs, donation may include
all present property provided he reserves in full
Donations of the same thing to different donees ownership or in usufruct:
a. The amount necessary to support him and those
These are governed by provisions on double sale as set relatives entitled to support from him.
forth in Art. 1544 (Art. 744, NCC). b. Property sufficient to pay the donors debt
contracted prior to the donation.
NOTE: If the same thing should have been sold to different
vendees, the ownership shall be transferred to the person RESERVATIONS AND REVERSIONS
who may have first taken possession thereof in good faith,
if it should be movable property. Should it be immovable Effect if the donor violates the requirement for
property, the ownership shall belong to the person reservation under Art. 750
acquiring it who in good faith first recorded it in the
Registry of Property. Should there be no inscription, the A donation where the donor did not reserve property or
ownership shall pertain to the person who in good faith assets for himself in full ownership or in usufruct sufficient
was first in the possession; and, in the absence thereof, to for his support and all relatives legally dependent upon
the person who presents the oldest title, provided there is him is not void. It is merely reducible to the extent that the
good faith (Art. 1544, NCC). support to himself and his relatives is impaired or
prejudiced (Pineda, 1999).

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2015 GOLDEN NOTES
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Kinds of donation according to perfection or
Reversion in donation extinguishment
It is a condition established in the deed of donation which 1. Pure donation Is one which is not subject to any
has for its effect the restoration or return of the property condition.
donated to the donor or his estate or in favor of other 2. Conditional Is one wherein the donor imposes on the
persons who must be living at the time of the donation for donee a condition dependent on the happening of a
any cause or circumstances (Art. 757, NCC). future event or past event unknown to the parties.
3. With a Term Is one wherein the donor imposes on
NOTE: If the reversion is in favor of other persons who are the donee a condition dependent upon the happening
not all living at the time of the donation, the reversion of a future and certain event.
stipulated shall be void, but the donation shall remain
valid. DONATION INTER VIVOS
KINDS Limitations imposed by law in making donations inter

vivos (RFM)
Kinds of donation
1. Donor must Reserve sufficient means for his support
1. According to motive or cause: and for his relatives who are entitled to be supported
a. Simple by him (Art. 750, NCC).
b. Remuneratory (1st kind) 2. Donation cannot comprehend Future property except
c. Remuneratory (2nd kind): Conditional or Modal donations between future husband and wife (See Art.
donations 84 FC).
d. Onerous donations 3. No person may give by way of donation More than he
2. As to perfection or extinguishment: may give by will
a. Pure
b. With a condition DONATION MORTIS CAUSA
c. With a term
3. According to effectivity: Donation mortis causa
a. Inter vivos (Art. 729, Civil Code)
b. Mortis Causa (Art. 728, Civil Code) These are donations which are to take effect upon the
c. Propter Nuptias death of the donor.
Kinds of donation according to motive or cause NOTE: It partakes of the nature of testamentary provisions
and governed by the rules on succession (Art. 728, NCC).
PURPOSE FORM
Simple Donation mortis causa must comply with the
Same to that of forms in formalities prescribed by law for the validity of wills
Pure liberality
donations
Remuneratory (1st kind) Donation mortis causa must comply with the formalities
To reward past merits, prescribed by law for the validity of wills, otherwise, the
services rendered by the donation is void and would produce no effect. That the
donee to the donor Same to that of forms in requirements of attestation and acknowledgment are
provided the same do not donations embodied in two separate provisions of the Civil Code
constitute a demandable (Articles 805 and 806, respectively) indicates that the law
debt. contemplates two distinct acts that serve different
Remuneratory (2nd kind) purposes. An acknowledgment is made by one executing a
1. Consideration for 1. Onerous same form deed, declaring before a competent officer or court that the
future services; or of that of contracts deed or act is his own. On the other hand, the attestation of
2. Donor imposes certain 2. Gratuitous same a will refers to the act of the instrumental witnesses
conditions, limitations form of that of themselves who certify to the execution of the instrument
or charges upon the donations before them and to the manner of its execution (Echavez v.
donee, whose value is DCDC, G.R. No. 192916, October 11, 2010).
inferior to the
donation given.
Onerous
Imposes upon the donee a
reciprocal obligation;
Burdens, charges or Same as that of contracts
services are equal or
greater in value to that of
the donation.

CIVIL LAW
Donation inter vivos v. Donation mortis causa
Conditional Donation
BASIS INTER VIVOS MORTIS CAUSA
Takes effect A conditional donation is one wherein the donor imposes
during the lifetime on the donee a condition dependent on the happening of a
As to when it Takes effect upon future event or past event unknown to the parties.
of the donor,
takes effect donors death
independently of
his death Effect if a suspensive condition may take place beyond
In contemplation the natural expectation of life of the donor
of donors death
As to cause or Cause is donors without intention The condition does not destroy the nature of the act as a
consideration pure generosity to dispose of the donation inter vivos, unless a contrary intention appears
thing in case of (Art. 730, NCC).
survival
Valid if donor Modal Donation
On Void if donor
survives the
predecease survives Modal donation is a donation subject to burdens or
donee
Generally Always revocable charges (Pineda, 1999).
irrevocable except at any time and
On FORMALITIES REQUIRED
for grounds for any reason
revocability
provided for by before the donors
law death HOW MADE AND ACCEPTED
Must comply with Must comply with
On Persons who must accept the donation
the formalities of the formalities of a
formalities
donations will
On when Acceptance during Acceptance may be made by the donee himself or thru an
After donors agent with special power of attorney; otherwise, donation
acceptance is donors
death shall be void (Art. 745, NCC).
made lifetime
On when Property Property retained
property is completely by the donor Reason for the need for an acceptance
conveyed to conveyed to the while he is still
the done done alive Because the donee may not want to accept the donors
On tax liberality or if donation is onerous, he may not agree with
Donors tax Estate tax the burden imposed.
payable
Donations made to incapacitated persons
ONEROUS DONATION
Donations made to incapacitated persons shall be void,
Onerous Donation
though simulated under the guise of another contract or
through a person who is interposed (Art. 743, NCC).
Onerous donation is a donation given for which the donor
received a valuable consideration which is the equivalent
Persons who must accept the donation made in favor
of the property so donated.
of a minor
Kinds of onerous donations
If the donation is pure and simple and does not require
written acceptance, the minors can accept the donation by
1. Totally onerous when the burden is equal to or
themselves.
greater than the value of the property donated.
2. Partially onerous when the burden is lesser than the
If the donation needs written acceptance, it may be
value of the donation. (Pineda Property, 1999)
accepted by their guardian or legal representatives.
Laws that apply to onerous donations
Persons who must accept the donation made to
conceived and unborn children
1. Totally onerous rules on contracts
2. Partially onerous
Donations made to conceived and unborn children may be
a. Portion exceeding the value of the burden
accepted by those who would legally represent them if
simple donations
they were already born (Art. 742, NCC).
b. Portion equivalent to the burden law on
contracts (Pineda, 1999)
PERFECTION
SIMPLE, MODAL, CONDITIONAL
Perfection of donation
Simple Donation
Donation is perfected from the moment the donor knows
of the acceptance by the donee (Art. 734, NCC).
Simple donation is one which is not subject to any
condition.

150
2015 GOLDEN NOTES
PROPERTY
DIFFERENCES BETWEEN FORMALITIES FOR donor because it is essential for a person to be able to
DONATION OF make a donation, he must have full civil capacity.
REAL/PERSONAL PROPERTIES
EFFECTS OF DONATION/LIMITATIONS
Formalities required for donation
IN GENERAL
1. As regards movable property:
a. With simultaneous delivery of property donated: Rights and actions the donee acquires
i. For P 5,000 or less May be oral/written
ii. For more than P 5,000 Written in public or The donee is subrogated to the rights and actions which in
private document case of eviction would pertain to the donor.
b. Without simultaneous delivery:
i. The donation and acceptance must be Liability of donors for eviction of hidden defects
written in a public or private instrument
(Statute of Frauds), regardless of value. 1. If the donation is simple or remunerative, donor is not
Otherwise, donation is unenforceable. liable for eviction or hidden defects because the
donation is gratuitous, unless the donor acted in bad
2. As regards immovable property: faith.
a. Must be in a public instrument specifying 2. If the donation is onerous, the donor is liable on his
i. The property donated and warranty against eviction and hidden defects but only
ii. The burdens assumed by the donee to the extent of the burden.
b. Acceptance may be made:
i. In the same instrument or Rules regarding the liability of the donee to pay the
ii. In another public instrument, notified to the debts of donor
donor in authentic form, and noted in both
deeds. Otherwise, donation is void. 1. Where donor imposes obligation upon the donee, (Art.
758, NCC) the donee is liable:
QUALIFICATIONS OF DONOR/DONEE a. To pay only debts previously contracted;
b. For debts subsequently contracted only when
Donor there is an agreement to that effect;
Any person who has capacity to contract and capacity to NOTE: But he is not liable for debts in excess of
dispose of his property may make a donation (Art. 735, the value of donation received, unless the
NCC). contrary is intended.
Reason for the need for capacity to contract 2. Where there is no stipulation regarding the payment
of debts: (Art. 759, NCC)
Because a donation inter vivos is contractual in nature and a. Donee is generally not liable to pay donors debts
is a mode of alienation of property. b. Donee is responsible only if donation has been
made in fraud of creditors.
Q: When is the possession of capacity to contract by
the donor determined? NOTE: The presumption that the donations was
made in fraud of creditors arises when the donor
A: His capacity shall be determined as of the time of the has not left sufficient assets to pay his debts, at
making of donation (Art. 737, NCC). the time of donation.
NOTE: Making of donation shall be construed to mean c. The donee shall not be liable beyond the value of
perfection. donation received.
Donees DOUBLE DONATIONS
All those who are not specially disqualified by law. Double donation
Q: May an unborn child be a donee or a donor? There is double donation when the same thing has been
donated to two or more persons.
A: An unborn child may be a donee but not a donor.
Rule in case of double donations
As a donee, donations made to conceived and unborn
children may be accepted by those persons who would The rule on double sale under Article 1544 shall be
legally represent them if they were already born (Art. 742, applicable:
NCC). 1. Movable Owner who is first to possess in good faith
2. Immovable
NOTE: If the conceived child did not become a person, the a. First to register in good faith
donation is null and void. An unborn child cannot be a b. No inscription, first to possess in good faith

CIVIL LAW
c. No inscription & no possession in good faith gospel who extended spiritual aid to him during the
Person who presents oldest title in good faith same period; (Art. 1027, NCC)
9. To a public Officer or his/her spouse, descendants or
EXCESSIVE/INOFFICIOUS ascendants in consideration of his/her office; (Art.
739, NCC)
Rule in case of an excessive or inofficious donation 10. To a Physician, surgeon, nurse, health officer or
druggist who took care of the donor during his/her
1. A donor may not donate more than what he can give last illness; (Art. 1027, NCC)
by will. If he donates more than what he cannot give
by will, the donation will become excessive and to NOTE: Any person who is forbidden from receiving any
insist on it, the legitimism of the compulsory heirs will donation under Art. 739 cannot be named beneficiary of a
be impaired. Legitimism is reserved for the life insurance policy by the person who cannot make any
compulsory heirs and the same cannot be impaired or donation to him. (Art. 2012, NCC)
disposed of by the testator.
2. The donee cannot receive by way of donation more REVOCATION OR REDUCTION
than what he may receive by will. If the donee can
receive by donation (devise or legacy) more than GROUNDS FOR REVOCATION AND REDUCTION
what the testator is allowed by law to give, the
donation is inofficious and it may be suppressed Grounds for revocation of donation
totally or reduced as to its excess.
1. Under Art. 760
IN FRAUD OF CREDITORS a. Birth of a donors child or children (legitimate,
legitimated, or illegitimate) after the donation,
Remedy in case of donations executed in fraud of even though born after his death.
creditors b. Appearance of a donors child who is missing and
thought to be dead by the donor.
The creditors may rescind the donation to the extent of c. Subsequent adoption by the donor of a minor
their credits. The action is known as accion pauliana. child.
NOTE: If the donor did not reserve enough assets to pay 2. Under Art. 764 When the donee fails to comply with
his creditors whom he owed before the donation, the any of the conditions which the donor imposed upon
donation is presumed to be in fraud of creditors. the donee.
VOID DONATIONS 3. Under Art. 765 by reason of ingratitude

a. If the donee should commit some offense against
Donations prohibited by law the person, the honor or the property of the
donor, or of his wife or children under his
Donations made: (LAW SCRA POP) parental authority
b. If the donee imputes to the donor any criminal
1. By individuals, associations or corporations not offense, or any act involving moral turpitude,
permitted by Law to make donations; (Art. 1027, NCC) even though he should prove it, unless the crime
2. By persons guilty of Adultery or concubinage at the or act has been committed against the donee
time of donation; (Art. 739, NCC) himself, his wife or children under his authority
c. If he unduly refuses him support when the donee
NOTE: The action for declaration of nullity may be is legally or morally bound to give support to the
brought by the spouse of the donor or donee; and the donor
guilt of the donor and donee may be proved by
preponderance of evidence. NOTE: The list of grounds for revocation by reason of
ingratitude under Art. 765 is exclusive
3. By a Ward to the guardian before the approval of
accounts; (Art. 1027, NCC) Grounds for reduction of donation
4. By Spouses to each other during the marriage or to
persons of whom the other spouse is a presumptive The same grounds for revocation under Art. 760. The
heir. (Art. 87, FC) donation shall be reduced insofar as it exceeds the portion
5. Between persons found guilty of the same Criminal that may be freely disposed of by will, taking into account
offense, in consideration thereof; (Art. 739, NCC) the whole estate of the donor at the time of the birth,
6. To Relatives of such priest, etc. within the 4th degree, appearance, or adoption of a child (Art. 761, NCC).
or to the church to which such priest belongs; (Art.
1027, NCC) Revocation of perfected donations
7. To an Attesting witness to the execution of donation,
if there is any, or to the spouse, parents or children or Once a donation is perfected, it cannot be revoked without
anyone claiming under them; (Art. 1027, NCC) the consent of the donee except on grounds provided by
8. To the Priest who heard the confession of the donor law (Arts. 760, 764, 765, NCC).
during the latters last illness, or the minister of the

152
2015 GOLDEN NOTES
PROPERTY
Revocation or reduction is NOT automatic. Obligation of the donee to return the fruits
The emergence of the circumstances enumerated in Art. 1. If due to non-compliance with any condition imposed
760 do not automatically revoke or reduce the donation. on the donation fruits acquired after non-compliance
The revocation or reduction is authorized only if the shall be returned
amount or value of the property donated exceeds the 2. If due to causes stated under Art. 760, ingratitude, or
disposable free portion. inofficious donations fruits acquired from the time
the complaint is filed shall be returned (Art. 768, NCC).
Q: For purposes of prescription of action, what is the
rule in case of concurrence of two or more grounds for PRESCRIPTION
revocation or reduction?
Period of prescription of action for revocation or
A: In the event that two or more causes are present, the reduction of donation
earliest among them shall be the starting point in the
reckoning of the period of prescription of the action. PRESCIPTIVE RECKONING
PERIOD PERIOD
Execution of a donation subject to a condition From the birth of
Birth of child 4 years
the first child
A donor may execute a donation subject to a condition, the From Birth of the
non-fulfilment of which authorizes the donor to go to court legitimated child,
to seek its revocation (not reduction). Legitimation 4 years not from the date
of marriage of the
NOTE: The word condition should be understood in its parents
broad sense and not in its strict legal sense. It means From the date the
charges or burdens imposed by the donor. recognition of the
Recognition of child by any
Revocation of donation in a conditional donation an illegitimate 4 years means
child enumerated in
A donor cannot revoke a conditional donation unilaterally, Article 712 of the
that is, without going to court, even if the donee had Family Code
breached any of the obligations imposed in the donation. A From the date of
judicial action is essential if the donee refuses to return the filing of the
property, or pay its value to the donor, or to latters heirs original petition
or assigns. However, the action must be filed within the Adoption 4 years for adoption,
prescriptive period fixed by law, otherwise, it will be provided a decree
barred (Ongsiaco v. Ongsiaco, 101 Phil 1196). of adoption is
issued thereafter
Q: Can the creditors of the deceased file an action for From the date an
reduction of inofficious donation? information was
Appearance of a received as to the
A: No. Only compulsory heirs or their heirs and successors child believed to 4 years existence or
in interest may sue for reduction of inofficious donations. be dead survival of the
The remedy of the creditor is to sue, during the lifetime of child believed to
the donor, for the annulment of inofficious donation made be dead
in fraud of creditors (Art. 1387); or they can go against the Non-compliance From the non-
estate of the deceased and not against the donees. with any compliance with
4 years
condition the condition
EFFECTS OF REVOCATION OR REDUCTION OF imposed
DONATION From the time the
donor had learned
Obligations of the donee upon the revocation or of the donees act
reduction of donation Act of
1 year of ingratitude,
ingratitude
provided it was
1. Return the thing or the object of the donation possible for him
2. If the property had already been alienated and could to file an action.
not be recovered anymore, its value shall be paid to
the donor. The value shall be the price of the property Q: What if the donor dies within the four-year
estimated at the time of the perfection of the donation prescriptive period?
3. If the property had been mortgaged, the donor may
pay the mortgage obligations, subject to A: The right of action to revoke or reduce is transmitted to
reimbursement by the donee (Art. 762, NCC). his heirs (Pineda, 1999).

CIVIL LAW
INOFFICIOUS DONATIONS Waiver of Actions to revoke donations
Inofficious Donations The donor CANNOT make a renunciation of actions to

revoke in advance. Such waiver is void. However, the
A donation is inofficious or excessive when its amount donor may renounce an action to revoke if the act of
impairs the legitimes of the compulsory heirs. ingratitude had already been done.
NOTE: Donations must be charged only against the

disposable free portion. If its amount exceeds the same,
the excess is void for being inofficious (Pineda, 1999).
Status of an inofficious donation
During the lifetime of the donor, the inofficious donation is

effective since the excessiveness of the donation can only
be determined after the donors death.
NOTE: Consequently, the donee is entitled to the fruits of

the property donated during the lifetime of the donor (Art.
771, NCC).
Q: May an heir waive his right during the lifetime of

the donor to file an action for suppression or
reduction of an inofficious donation?
A: No. Such waiver, in whatever form it is extended, is void

(Art. 772, NCC).
INGRATITUDE
Q: Are there any other grounds for revocation of

donation by reason of ingratitude other than those
enumerated under Art. 765?
A: None. The grounds under Art. 765 are exclusive.
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, p. 593)
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 (Art. 766, NCC).
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 (Art. 767, NCC).

154
2015 GOLDEN NOTES
PROPERTY
SUMMARY OF THE RULES ON REDUCTION OF DONATIONS
TIME OF FILING OF THE TRANSMISSIBILITY OF

EXTENT OF REDUCTION RIGHTS TO THE FRUITS
ACTION ACTION
1. Failure of the donor to reserve sufficient means for support (Art. 750, NCC)
Not transmissible
Any time by the donor or Donee is entitled to the
NOTE: the duty to give and Donation reduced to extent
by relatives entitled to fruits as owner of the
right to receive support are necessary to provide
support during the donors property donated (Art. 441,
personal (Art. 195, FC) support (Art. 750, NCC)
lifetime (Art. 750, NCC) NCC)
2. Inofficiousness for being in excess of what the donor can give by will (Art. 750, 771, NCC)
Transmissible to donors Donation effective during

Within 5 years after the heirs as donation shall be the donors lifetime subject
Donee appropriates fruits
donors death (Art. 771, reduced as regards the to reduction only upon his
(Art. 441, NCC)
1149, NCC) excess at donors death death with regard to the
(Art. 771, NCC) excess (Art. 771, NCC)
3. Birth, appearance or adoption of a child (Art. 760, NCC)
[Same as in #1 Revocation]
Donee appropriates fruits
not affected by reduction
W/in 4 years from birth of
[Same as in #1 Revocation] [Same as in #1 Reduction] (Art. 441, NCC). When
1st child, legitimation
donation is revoked for any
(recognition), adoption,
To children & descendants Donation reduced to extent of the cause mentioned in
judicial declaration of
of donor upon his death necessary to provide article 760, the donee shall
filiation or receipt of info of
(Art. 763, 2, NCC) support (Art. 750, NCC) not return the fruits except
existence of the child
from the filing of the
believed to be dead. (Art.
complaint (Art. 768, NCC).
763, NCC)
4. Fraud against creditors (Art. 759, NCC)
Fruits shall be returned in

Within 4 years from
Property returned for the case donee acted in bad
perfection of donation or To creditors heirs or
benefit of creditors subject faith; if impossible to
from knowledge by the successors-in-interest (Art.
to the rights of innocent 3rd return, indemnify the
creditor of the donation 1178, NCC)
persons (Art. 1387, NCC) donors creditor for
(Art. 1389, NCC)
damages (Art. 1388, NCC)
MODES OF EXTINGUISHING OWNERSHIP De facto case of eminent domain
Modes of extinguishing ownership It is an expropriation resulting from the actions of nature

as in a case where land becomes part of the sea. In this
1. Absolute All persons are affected case, the owner loses his property in favor of the state
a. Physical loss or destruction without any compensation.
b. Legal loss or destruction (when it goes out of
commerce of man)
2. Relative Only for certain persons for others may

acquire their ownership
a. Law
b. Succession
c. Tradition as a consequence of certain contracts
d. Donation
e. Abandonment
f. Destruction of the prior title or right
i.e. expropriation , rescission, annulment,
fulfillment of a resolutory condition)
g. Prescription (Paras, p. 779)

CIVIL LAW
PRESCRIPTION producing legal
consequences; it is
the possessor who
DEFINITION is the actor
Prescription Persons who may acquire by prescription (PSM)

One acquires ownership and other real rights through the 1. Persons who are capable of acquiring property by
lapse of time in the manner and under the conditions laid other legal modes
down by law. In the same way, rights and actions are lost 2. State
by prescription (Art. 1106, NCC). 3. Minors Through his guardians
Kinds of prescription Persons against whom prescription runs (MAPJ)
1. Acquisitive prescription - One acquires ownership and 1. Minors and other incapacitated persons who have
other real rights through the lapse of time in the parents, guardians or other legal representatives.
manner and under the conditions laid down by law. 2. Absentees who have administrators.
a. Ordinary Requires the possession of things in 3. Persons living abroad who have managers or
good faith and with a just title for the time fixed administrators
by law; 4. Juridical persons, except the state and its subdivision
b. Extraordinary Does not require good faith or
just title but possession for a period longer than Prescription does not run against (SPG)
ordinary acquisitive prescription
1. Between Spouses, even though there be a separation
2. Extinctive prescription Loss of property rights or of property agreed upon in the marriage settlements
actions through the possession by another of a thing or by judicial decree.
for the period provided by law or failure to bring the 2. Between Parents and children, during the minority or
necessary action to enforce ones right within the insanity of the latter.
period fixed by law. 3. Between Guardian and ward during the continuance
of the guardianship
Acquisitive v. Extinctive prescription
Subject of prescription (PP)
BASIS ACQUISITIVE EXTINCTIVE
Requires Inaction of the owner 1. Private property
How possession by a of possession or 2. Patrimonial property of the state
acquired claimant who is neglect of his right to
not the owner bring an action NOTE: Patrimonial property of the state is the property it
owns but which is not devoted to public use, public
Applicable to Applicable to all kinds
Rights service, or the development of national wealth. It is wealth
ownership and of rights whether real
covered owned by the state in its private, as distinguished from its
other real rights or personal
public, capacity (Paras, 2008).
Vests ownership Produces the
and other real extinction of rights or ACQUISITIVE
rights in the bars a right of action
occupant CHARACTERISTICS
Results in the Results in the loss of a
acquisition of real or personal right Basis of acquisitive prescription
Effect
ownership or other or bars the cause of
real rights in a action to enforce the It is based on the assertion of a usurper of an adverse right
person as well as right for such a long period of time, uncontested by the true
the loss of said owner of the right, as to give rise to the presumption that
ownership or real the latter has given up such right in favor of the former
rights in another (Tolentino, Civil Code, Vol. IV, p. 2).
Can be proven Should be
under the general affirmatively pleaded Basic requirements of prescription as a mode of
acquiring ownership
How proved issue without its and proved to bar the
being affirmatively action or claim of the
1. Actual possession of a property, which is susceptible
pleaded adverse party
of prescription
Relationship One does not look to 2. Possession must be in the concept of an owner and
between the the act of the not that of a mere holder (Art. 1118, NCC)
Relationship
occupant and the possessor but to the 3. Possession must be public or open (Art. 1118, NCC)
by owner and
land in terms of neglect of the owner 4. Possession must be peaceful (Art. 1118, NCC)
possessor
possession is 5. Possession must be continuous and not interrupted
capable of (Art. 1118, NCC)

156
2015 GOLDEN NOTES
PRESCRIPTION
6. Possession must be adverse, that is, exclusive and not Prescription of ownership of personal property
merely tolerated
7. Possession must satisfy the full period required by Uninterrupted possession for 8 years, without need of any
law (Pineda, 2009) other condition (Art. 1132, NCC).
ORDINARY Prescription of ownership and other real rights over

immovables
Ordinary prescription requires possession of things in
good faith and with just title for the time fixed by law. They prescribe through uninterrupted adverse possession
for 30 years, without need of title or of good faith (Art.
GOOD FAITH 1137, NCC).
Possessor in good faith Requisites of extraordinary prescription (CLAS G)
A person is a possessor in good faith if he is not aware of 1. Capacity of the possessor to acquire by prescription;
the existence of any flaw or defect in his title or mode of 2. Susceptibility of object to prescription;
acquisition which invalidates it (Art. 526 in relation to Art. 3. Adverse possession of the character prescribed by
1128) and has reasonable belief that the person from law;
whom he received the thing was the owner thereof, and 4. Lapse of time required by law;
could transmit his ownership (Art. 1127, NCC).
REQUISITES
Existence of good faith
Basic requirements of prescription as a mode of
It must exist not only from the beginning but throughout acquiring ownership
the entire period of possession fixed by law. (Pineda, 2009)
1. Capacity to acquire by prescription;
JUST TITLE 2. A thing capable of acquisition by prescription;
3. Possession of the thing under certain conditions; and
Just title 4. Lapse of time provided by law
Just title means that the possessor obtained the possession NOTE: The first two requisites apply to both ordinary and
of the property through one of the modes recognized by extraordinary prescription, but the last two requisites vary
law for acquiring ownership but the transferor or grantor for each kind.
was not the owner of the property or he has no power to
transmit the right. (Art. 1129, NCC) PERIOD
NOTE: Just title is never presumed, it must be proved (Art. Periods as regards prescription as a mode of
1130, NCC). acquisition of ownership
True title 1. Movables

a. 4 years- good faith
A true title is one which actually exists and is not just a b. 8 years- bad faith
pretended one.
2. Immovables
NOTE: An absolutely simulated or fictitious title is void a. 10 years- good faith
and cannot be a basis for ordinary prescription (Pineda, b. 30 years- bad faith
2009).
Rules for the computation of time necessary for
Valid title prescription
A valid title is a title which is sufficient to transmit 1. The present possessor may complete the period
ownership of the property or right being conveyed had the necessary for prescription by tacking his possession
transferor or grantor been the real owner thereof. to that of his grantor or predecessor in interest.
2. It is presumed that the present possessor who was
EXTRAORDINARY also the possessor at a previous time, has continued to
be in possession during the intervening time, unless
Extraordinary Prescription there is proof to the contrary.
3. The first day shall be excluded and the last day
Extraordinary prescription occurs where the possessor is included (Art 1138, NCC).
in bad faith. It does not require good faith or just title but
possession for a period longer than ordinary acquisitive
prescription (Pineda, 2009).

CIVIL LAW
WHAT CANNOT BE ACQUIRED BY PRESCRIPTION donation. This is more than the required 30 years of
uninterrupted adverse possession without just title and
Properties not subject to prescription good faith. Such possession was public, adverse and in the
concept of an owner. He declared the land for taxation
The following cannot be subject of prescription (PRIM) purposes and religiously paid the realty taxes thereon.
1. Public domain; Together with his actual possession of the land, these tax
2. Registered land; declarations constitute strong evidence of ownership of
3. Intransmissible rights; the land occupied by him (Calicdan v. Cendea, G.R. No.
4. Movables possessed through a crime; 155080, February 5, 2004).
Q: Emilio died, leaving 8 children. In 1960, His eldest Q: Anthony bought a piece of untitled agricultural land
child, Flores, took possession of and cultivated the from Bert. Bert, in turn, acquired the property by
land, caused the cancellation of the tax declaration in forging Carlos signature in a deed of sale over the
Emilios name covering a parcel of land and caused the property. Carlo had been in possession of the property
issuance of another in his own name. The co-heirs of for 8 years, declared it for tax purposes, and
Flores discovered the cancellation. Upon Flores death, religiously paid all taxes due on the property. Anthony
the heirs of his sisters together with his surviving is not aware of the defect in Berts title, but has been in
sisters filed a complaint in 1999 against the heirs of actual physical possession of the property from the
Flores for partition of the lot and declaration of nullity time he bought it from Bert, who had never been in
of the documents. Did the heirs of Flores acquire possession. Anthony has since then been in possession
ownership over the lot by extraordinary acquisitive of the property for 1 year.
prescription?
1. Can Anthony acquire ownership of the property
A: Yes. While the action to demand partition of a co-owned by acquisitive prescription? How many more
property does not prescribe, a co-owner may acquire years does he have to possess it to acquire
ownership thereof by prescription, where there exists a ownership?
clear repudiation of the co-ownership, and the co-owners 2. If Carlo is able to legally recover his property, can
are apprised of the claim of adverse and exclusive he require Anthony to account for all the fruits he
ownership. In this case, the respondents never possessed has harvested from the property while in
the lot, much less asserted their claim thereto until 1999 possession?
when they filed the complaint for partition. In contrast, 3. If there are standing crops on the property when
Flores took possession of the lot after Emilios death and Carlo recovers possession, can Carlo appropriate
exercised acts of dominion thereon- tilling and cultivating them? (2008 Bar Question)
the land, introducing improvements, and enjoying the A:
produce thereof. The statutory period of prescription 1. Yes, Anthony can acquire ownership of the property
commenced in 1960 when Flores, who had neither title by ordinary acquisitive prescription which requires
nor good faith, secured a tax declaration in his name and just title and good faith (Art. 1117, NCC). There was
may, therefore, be said to have adversely claimed just title because a deed of sale was issued in his favor
ownership of the lot. On said date, respondents were also even though it was forged, which fact he was not
deemed to have become aware of the adverse claim. aware of. He needs to possess the land in good faith
Floress possession thus ripened into ownership through and in the concept of owner for a total of 10 years in
acquisitive prescription after the lapse of 30 years (Heirs of order to acquire ownership. Since Anthony possessed
Restar v. Heirs of Cichon, G.R. No. 161720, November 22, the land for only one year, he has not completed the
2005). 10-year period. Even if Anthony tacks the 8-year
period of possession by Carlo who in the deed of sale
Q: Sixto, owner of a parcel of land, died. He was is supposed to be his grantor or predecessor in
survived by his wife and 3 children. The subject land interest, the period is still short of ten years.
was donated by his wife to Silverio, who immediately 2. Since Anthony is a possessor in good faith, Anthony
entered into possession of the land, built a fence cannot be made to account for the fruits he gathered
around it, constructed a residential house, declared it before he was served with summons. A possessor in
for tax purposes and paid the taxes thereon, and good faith is entitled to the fruits received before the
resided there until his death. After 45 years from the possession was legally interrupted by the service of
time of donation, Soledad, one of Sixtos children, filed summons (Art. 544, NCC). After Anthony was served
a complaint for recovery of ownership, and possession with summons, he became a possessor in bad faith
against Silverio. Who is the rightful owner of the land? and a builder, planter, sower in bad faith. He can also
be made to account for the fruits but he may deduct
A: By extraordinary acquisitive prescription, Silverio expenses for the production gathering and
became the rightful owner of the land. In extraordinary preservation of the fruits (Art. 443, NCC).
prescription ownership and other real rights over 3. The value of the standing crops must be prorated
immovable property are acquired through uninterrupted depending upon the period of possession and the
adverse possession thereof for 30 years without need of period of growing and producing the fruits. Anthony
title or of good faith. is entitled to a part of the net harvest and a part of the
expenses of cultivation in proportion to his period of
When Soledad filed the case, Silverio was in possession of possession. However, Carlo may allow Anthony to
the land for 45 years counted from the time of the gather these growing fruits as an indemnity for the

158
2015 GOLDEN NOTES
PRESCRIPTION
expenses of cultivation. If Anthony refuses to accept public the State of the public properties
this concession, he shall lose the right to indemnity dominion registered and which are not capable
under Art. 443 (Art. 545, par. 3, NCC). of private appropriation or private
acquisition does not prescribe
EXTINCTIVE
NOTE: In contrast, where private
Extinctive Prescription property is taken by the Government
for public use without first acquiring
Extinctive prescription refers to the time within which an title thereto either through
action may be brought, or some act done, to preserve a expropriation or negotiated sale , the
right (Pineda, 2009). owners action to recover the land or
the value thereof does not prescribe.
Basis of extinctive prescription
PRESCRIPTION OR LIMITATION OF ACTIONS
It is based on the probability, born of experience, that the
alleged right which accrued in the past never existed or Prescriptive periods of actions specified under the
has already been extinguished; or if it exists, the Civil Code
inconvenience caused by the lapse of time should be borne
by the party negligent in the assertion of his right ACTIONS PRESCRIPTIVE PERIOD
(Tolentino, Civil Code of the Philippines, Vol. IV, p. 2).
8 years (good faith)or 4
years (bad faith) from the
NO PRESCRIPTION APPLICABLE Recover Movables
time the possession is lost
When it is possessed through a crime (Art. 1140, Pineda, 2009)
such as robbery, theft, or estafa. 30 years (Recover
ownership) (Art. 1141)
NOTE: The person who cannot invoke Recover Immovables 10 years (Recover real right
the right of prescription is the of possession) (Art. 555 (4),
offender or person who committed the Pineda, 2009)
By Offender
crime or offense, not a subsequent 10 years from default of
Mortgage Action
transferee who did not participate in mortgagor (Art. 1142)
the crime or offense, unless the latter Based on written contract
knew the criminal nature of the
acquisition of the property by the 10 years
NOTE: If contract is oral or
transferor. (Art. 1133; Pineda, 2009)
quasi, prescriptive period
1. An action to recover a registered is 6 years (Art. 1145)
land by the owner Based on obligation 10 years from the time the
2. Right to petition for the issuance created by law right of action accrues
Registered of a Writ of Possession filed by 10 years from the day
Lands (P.D. the applicant for registered land Based on judgment judgment became final and
1529) executory (Art. 1144)
NOTE: Similarly, an action to recover Based upon an injury to
possession of a registered land never 4 years
the rights of plaintiff
prescribes. Based on quasi-delicts 4 years (Art. 1146)
1. Action legal Forcible entry and
1 year
to demand a detainer
right of way Imprescriptible Defamation 1 year (Art. 1147)
2. To abate a All other actions not
nuisance 5 years (Art. 1149)
specified
Action to quiet
title if plaintiff Imprescriptible
is in possession
Applies to both action and defense.
Void contracts NOTE: However, an action to annul a

voidable contract prescribes after 4
years
Action to
demand
As long as the co-ownership is
partition
recognized expressly or impliedly (Art.
NOTE:
494, NCC)
Distinguished
from laches
Property of Right of reversion or reconveyance to

CIVIL LAW
OBLIGATIONS
DIFFERENT KINDS OF PRESTATION
A juridical necessity to give, to do, or not to do (Art. 1156,
NCC). BASIS OBLIGATION OBLIGATION OBLIGATION
TO GIVE TO DO NOT TO DO
A juridical relation whereby a person (creditor) may Covers the
demand from another (debtor) the observance of a rendering of
determinative conduct (giving, doing, or not doing), and in As to what Consists in
works or Refraining
case of breach, may demand satisfaction from the assets of the the delivery
services from doing
the latter (Arias Ramos). obligation of a thing to
whether certain acts
consists of the creditor
physical or
Art. 1156 refers only to civil obligations which are mental
enforceable in court when breached. It does not cover
e.g. Contract
natural obligations (Arts. 1423-1430, NCC) because these e.g. Negative
e.g. Sale, for
are obligations that cannot be enforced in court being easement,
deposit, professional
based merely on equity and natural law and not on restraining
Examples pledge, services like
positive law (Pineda, 2000). order or
donation, painting,
injunction
antichresis modeling,
NOTE: There is no particular form to make obligations (Pineda, 2000)
singing, etc.
binding, except in certain rare cases (Tolentino, 2002).
ELEMENTS OF AN OBLIGATION CLASSIFICATION OF OBLIGATIONS
The following are the elements of an obligation (JAPO): From the viewpoint of:
1. Creation
1. Juridical tie or vinculum juris or efficient cause - The a. Legal imposed by law (Art. 1158, NCC)
efficient cause by virtue of which the debtor becomes b. Conventional established by the agreement of
bound to perform the prestation (Pineda, 2000). the parties (ex. contracts)
2. Nature
NOTE: The vinculum juris is established by: a. Personal (to do; not to do)
1. Law (e.g. husband and wife in relation to their b. Real (to give)
obligation to give support) 3. Object
2. Bilateral acts (e.g. contracts) a. Determinate / specific - particularly designated
3. Unilateral acts (e.g. crimes, quasi-delicts) or physically segregated from all others of the
(Tolentino, 1999) same class
b. Generic designated merely by its class or genus
2. Active subject [creditor (CR) or obligee] - The person c. Limited generic generic objects confined to a
demanding the performance of the obligation. It is he particular class or source (e.g. an obligation to
in whose favor the obligation is constituted, deliver one of my horses) (Tolentino, 2002)
established or created (Pineda, 2000). 4. Performance
3. Passive subject [debtor (DR) or obligor] - The one a. Positive - to give; to do
bound to perform the prestation to give, to do, or not b. Negative not to do (ex. An obligation not to
to do (Pineda,2000). run for an elective post);
5. Person obliged
NOTE: When there is a right, there is a corresponding a. Unilateral only one party is bound
obligation. Right is the active aspect while obligation b. Bilateral both parties are bound
is the passive aspect. Thus, it is said that the concepts
of credit and debt are two distinct aspects of unitary NOTE: A bilateral obligation may be reciprocal or
concept of obligation (Pineda, 2000). non-reciprocal. Reciprocal obligations are those
which arise from the same cause, wherein each
4. Object or prestation - The subject matter of the party is a debtor and a creditor of the other, such
obligation which has a corresponding economic value that the performance of one is conditioned upon
or susceptible of pecuniary substitution in case of the simultaneous fulfillment of the other.
noncompliance. It is a conduct that may consist of
giving, doing, or not doing something (Pineda, 2000). 6. Existence of burden or condition
a. Pure not burdened with any condition or term.
NOTE: In order to be valid, the object/prestation must It is immediately demandable (Art. 1179, NCC)
be: b. Conditional subject to a condition which may be
1. Licit or lawful; suspensive (happening of which shall give rise to
2. Possible, physically & judicially; the obligation) or resolutory (happening of which
3. Determinate or determinable; and terminates the obligation) (Art. 1181, NCC)
4. Pecuniary value or possible equivalent in money. 7. Character of responsibility or liability
a. Joint each debtor is liable only for a part of the
Absence of any of the first three (licit, possible whole liability and to each creditor shall belong
and/or determinate) makes the object void.

160
2015 GOLDEN NOTES
OBLIGATIONS
only a part of the correlative rights (8 Manresa 2. Reimbursement of a third person for a debt that has
194; Art. 1207, NCC) prescribed (Art. 1425, NCC);
b. Solidary debtor is answerable for the whole of 3. Restitution by minor of the thing or price after
the obligation without prejudice to his right to annulment of contract (Art. 1426, NCC);
collect from his co-debtors the latters shares in 4. Delivery by minor of money or fungible thing in
the obligation (Art. 1207, NCC) fulfillment of obligation (Art. 1427, NCC);
8. Susceptibility of partial fulfillment 5. Performance after action to enforce civil obligation
a. Divisible obligation is susceptible of partial has failed (Art. 1428, NCC);
performance (Art. 1223, NCC; Art. 1224, NCC) 6. Payment by the heir of a debt exceeding the value of
b. Indivisible obligation is not susceptible of property he inherited (Art. 1429, NCC); and
partial performance (Art. 1225, NCC) 7. Payment of legacy after will has been declared void
9. Right to choose and substitution (Art. 1430, NCC).
a. Alternative obligor may choose to completely
perform one out of the several prestations (Art. The enumeration is not exclusive. The following also
1199, NCC) constitute natural obligations:
b. Facultative only one prestation has been agreed 1. Support given to unrecognized illegitimate children
upon, but the obligor may render one in by their putative parents, including support given to
substitution of the first one (Art. 1206, NCC) illegitimate children by the putative parents despite
10. Imposition of penalty judgment denying their recognition;
a. Simple there is no penalty imposed for violation 2. Interest voluntarily paid for the use of money even if
of the terms thereof (Art. 1226, NCC) no interest is agreed upon in writing may be
b. Obligation with penalty obligation which considered as a natural obligation (Art. 1956, NCC;
imposes a penalty for violation of the terms 1960, NCC);
thereof (Art. 1226, NCC; Pineda, 2000) 3. Support given to relatives for whom the law made no
11. Sanction provisions for their support; and
a. Civil gives a right of action to compel their 4. Indemnification given to a woman seduced, although
performance the seducer was acquitted of the charge of seduction.
b. Natural not based on positive law but on equity
and natural law; does not grant a right of action Q: A borrowed P 1, 000 from B which amount B failed
to enforce their performance, but after voluntary to collect. After the debt had prescribed, A voluntarily
fulfillment by the obligor, they authorize paid B who accepted the payment. After a few months,
retention of what has been delivered rendered being in need of money, A demanded the return of the
by reason thereof. money on the ground that there was a wrong payment,
c. Moral cannot be enforced by action but are the debt having already prescribed. B refused to
binding on the party who makes it in conscience return the amount paid. May A succeed in collecting if
and natural law. he sues B in court? Reason out your answer (1970 Bar
Examinations)
NATURAL OBLIGATIONS
A: A will not succeed in collecting the P 1,000 if he sues B
Natural obligations in court. The case is expressly covered by Art. 1424 of the
New Civil Code which declares that when a right to sue
Natural obligation, not being based on positive law but on upon a civil obligation has lapsed by extinctive
equity and natural law, do not grant a right of action to prescription, the obligor who voluntarily performs the
enforce their performance, but after voluntary fulfillment contract cannot recover what he has delivered or the value
by the obligor, they authorize the retention of what has of the service he has rendered.
been delivered or rendered by reason thereof (Art. 1423,
NCC). Because of extinctive prescription, the obligation of A to
pay his debt of P 1,000 to B became a natural obligation.
NOTE: They are real obligations to which the law denies While it is true that a natural obligation cannot be enforced
an action, but which the debtor may perform voluntarily. by court action, nevertheless, after voluntary fulfillment by
the obligor, under the law, the obligee is authorized to
Conditions for natural obligations to arise retain what has been paid by reason thereof (Jurado,
2009).
1. The obligation is not prohibited by law or contrary to
morals and good customs. Effect of partial performance
2. There must be a previous juridical relationship
between two persons but due to certain intervening If only a part of the natural obligation has been fulfilled,
circumstances, it lost its legal enforceability leaving its such cannot be later on recovered. The obligation is
fulfillment entirely to the free will or discretion of the converted into a civil one (if it is legally susceptible of
supposed debtor (Pineda, 2000). confirmation or ratification).
Examples of natural obligations However, if the fulfilled portion is not susceptible of

confirmation or ratification, this portion can be the basis of
1. Performance even after the civil obligation has a cause of action for recovery of what has been delivered
prescribed (Art. 1424, NCC);

CIVIL LAW
because it has not been converted into legal obligation CIVIL OBLIGATIONS
(Pineda, 2000).
Sources of obligations (LCQ-DQ)
Natural obligation v. Civil obligation
1. Law
BASIS NATURAL CIVIL 2. Contracts
OBLIGATION OBLIGATION 3. Quasi-contracts
Based on law, 4. Delict
As to the source Based on equity contracts, quasi- 5. Quasi-delict
of the obligation and natural law contracts, delicts,
and quasi-delicts This enumeration is exclusive. No obligation exists if its
Cannot be source is not one of those enumerated in Article 1157
As to the enforced in court (Navales v. Rias, 8 Phil. 508).
Can be enforced
availability of because the
in court because Sources Obligations Perfection Examples
enforcement of obligee has no
the obligee has a
the obligation in right of action to From the time Pay taxes,
right of action
courts compel its designated by the render
Law ex lege
performance law creating or support
regulating them.
Conversion of natural obligation to civil obligation GR: From the
time of the
Natural obligations may be converted into civil obligations perfection of the
by acts of novation. Thus a prescribed debt is turned into contract (i.e.
civil obligation when the debtor renounces the defense of meeting of the
prescription or by signing a document recognizing such minds)
with a promise to pay the debt at some future time. The
natural obligation becomes a valid cause for a civil XPNs:
obligation after it has been affirmed or ratified anew by the 1. When the
debtor (Pineda, 2009). parties made
stipulation on
Compliance with a natural obligation is discretionary. If a the right of the
person chose to fulfill, he cannot recover what he delivered creditor to the
Contracts ex contractu
in compliance therewith. Fulfillment puts the debtor into fruits of the
estoppel from recovering what had been paid or delivered thing Contract
(Pineda,2009). 2. When the of sale
obligation is
Natural obligation v. Moral obligation subject to a
suspensive
BASIS NATURAL MORAL condition or
OBLIGATION OBLIGATION period, it
Juridical tie arises upon
previously fulfillment of
existed between the condition
the parties but or expiration
As to the because of of the period.
presence of certain No juridical tie Return
juridical tie intervening money
causes they Quasi- ex quasi- paid by
cannot be contracts contractu mistake
enforced in or which
courts is not due
Performance is a Duty of a
Voluntary killer to
pure act of
As to the fulfillment by the ex maleficio From the time indemnify
liberality which Delicts
performance of debtor is a legal or ex delicto designated by the the heirs
springs from
the obligation fulfillment with law creating or of his
blood relation or
legal effect regulating them. victim
affection
As to the Within the Obligation
Within the of the
applicability of domain of the
domain of morals ex quasi possessor
the law law
Performance Quasi- maleficio or of an
As to the effect of When fulfilled delict ex quasi- animal to
does not produce
the performance produce legal delicto pay for
legal effects
of the obigation effects the
damage

162
2015 GOLDEN NOTES
OBLIGATIONS
which it Rules governing the obligations arising from contracts
may have
caused GR: These obligations arising from contracts shall be
governed primarily by the stipulations, clauses, terms and
OBLIGATION EX LEGE conditions of the parties agreements.
Obligation ex lege XPN: Contracts with prestations that are unconscionable

or unreasonable (Pineda, 2009).
Obligations derived from law are not presumed.
Binding force of obligation ex contractu
Only those expressly determined in the Code or in special
laws are demandable and shall be regulated by the Obligations arising from contracts have the force of law
precepts of the law which establishes them and as to what between the parties and should be complied with in good
has not been foreseen by the provisions of Book IV of NCC faith (Art. 1159, NCC).
(Art. 1158, NCC).
Compliance in good faith
NOTE: If there is conflict between the NCC and a special
law, the latter prevails unless the contrary has been Performance in accordance with the stipulation, clauses,
expressly stipulated in the NCC (Art. 18, NCC; Paras, 2008). terms and conditions of the contract (Pineda, 2000).
Characteristics of a legal obligation GR: Neither party may unilaterally evade his obligation in
the contract.
1. Does not need the consent of the obligor;
2. Must be expressly set forth in the law creating it and XPNs: Unilateral evasion is allowed when the:
not merely presumed; and 1. Contract authorizes such evasion
3. In order that the law may be a source of obligation, it 2. Other party assents thereto
should be the creator of the obligation itself (Art.
1158, NCC). OBLIGATION EX QUASI - CONTRACTU
Determining whether an obligation arises from law or Quasi-contract

from some other source
A juridical relation arising from lawful, voluntary and
According to Manresa, when the law establishes the unilateral acts based on the principle that no one shall be
obligation and the act or condition upon which it is based unjustly enriched or benefited at the expense of another
is nothing more than a factor for determining the moment (Art. 2142, NCC).
when it becomes demandable, then the law itself is the
source of the obligation; however, when the law merely Characteristics of a quasi-contract
recognizes or acknowledges the existence of an obligation
generated by an act which may constitute a contract, 1. It must be lawful
quasi-contract, criminal offense or quasi-delict and its only 2. It must be voluntary
purpose is to regulate such obligation, then the act itself is 3. It must be unilateral (Pineda, 2000)
the source of the obligation and not the law.
Presumptive consent
Thus, if A loses a certain amount to B in a game of chance,
according to Art. 2014 of the NCC, the former may recover Since a quasi-contract is a unilateral contract created by
his loss from the latter, with legal interest from the time he the sole act(s) of the gestor, there is no express consent
paid the amount lost. It is evident that the source of the given by the other party. The consent needed in a contract
obligation of B to refund A the amount which he had won is provided by law through presumption (Pineda, 2000).
from the latter is the law itself (Leung Ben v. OBrien, 38
Phil 182). The same can be said with regard to obligation of Principal forms of quasi-contracts
the spouses to support each other, the obligation of the
employers under the Workers Compensation Act, the 1. Negotiorum gestio (inofficious manager) Arises
obligations of the owners of the dominant and servient when a person voluntarily takes charge of the
estates in legal easements and others scattered in the NCC management of the business or property of another
and in special laws (Jurado, 2009). without any power from the latter (Art. 2144, NCC).
2. Solutio indebiti (unjust enrichment) Takes place
OBLIGATION EX CONTRACTU when a person received something from another
without any right to demand for it, and the thing was
Requisites of a contractual obligation unduly delivered to him through mistake (Art. 2154,
NCC).
1. It must contain all the essential requisites of a
contract (Art. 1318, NCC). NOTE: The delivery must not be through liberality or
2. It must not be contrary to law, morals, good customs, some other cause.
public order, and public policy (Art. 1306, NCC).

CIVIL LAW
Rule in case of excess of payment of interest
XPNs: When the acquittal is on the basis that:
If the borrower pays interest when there has been no 1. The accused did not commit the crime charged; or
stipulation therefor, the provisions of the Code concerning 2. There is a declaration in the decision of acquittal that
solutio indebiti, or natural obligations, shall be applied, as no negligence can be attributed to the accused and
the case may be. that the fact from which the civil action might arise
did not exist (Art. 29, NCC).
If the payment of interest is made out of mistake, solutio
indebiti applies; hence, the amount must be returned to the OBLIGATIONS EX QUASI DELICTO
debtor. If the payment was made after the obligation to
pay interest has already prescribed, natural obligation Quasi-delict or tort
applies; hence, the creditor is authorized to retain the
amount paid. An act or omission arising from fault or negligence which
causes damage to another, there being no pre-existing
*For further discussion on quasi contracts, please see the contractual relations between the parties (Art. 2176, NCC).
discussion of quasi contract on Credit Transactions
NOTE: A single act or omission may give rise to two or
OBLIGATIONS EX DELICTO more causes of action. Thus, an act or omission may give
rise to an action based on delict, quasi-delict or contract.
Delict
In negligence cases, prior conduct should be examined,
An act or omission punishable under the law. that is, conduct prior to the injury that resulted, or in
proper case, the aggravation thereof.
Basis
Elements of a quasi-delict (DANC)
Art. 100 of the Revised Penal Code provides: Every person
criminally liable for a felony is also civilly liable. 1. Negligent or wrongful act or omission;
2. Damage or injury caused to another;
NOTE: 3. Causal relation between such negligence or fault and
GR: A crime has two aspects: damage;
1. Offense against the state because of the disturbance of 4. No pre-exisitng contractual relationship between the
the social order; and parties (Article 2176, NCC).
2. Offense against the private person
Instances when Art. 2176 is inapplicable
XPNs: Crimes of treason, rebellion, espionage, contempt
and others wherein no civil liability arises on the part of 1. When there was a pre-existing contractual relation
the offender either because there are no damages to be because the breach of contract is the source of the
compensated or there is no private person injured by the obligation (Robles v. Yap Wing, 41 SCRA 267).
crime (Reyes, 2008).
NOTE: However, if the act that breaches the contract is
Scope of civil liability (IRR) tortuous, the pre-existing contractual relation will not
bar the recovery of damages (Singson v. BPI, G.R. No. L-
1. Restitution 24837, June 27, 1968)
2. Reparation for damage caused
3. Indemnity for consequential damages (Art. 104, RPC) 2. When the fault or negligence is punished by law as a
crime, Art. 100 of RPC shall be applicable.
Implied institution of the civil action in a criminal case 3. If the action for quasi-delict is instituted after 4 years,
it is deemed prescribed (Afialda v.Hisole, 85 Phil 67).
GR: When a criminal action is instituted, the civil action for 4. When the injury suffered by a person is the result of a
the recovery of the civil liability arising from the offense fortuitous event without human intervention.
charged shall be deemed instituted with the criminal 5. If there is no damage or injury caused to another
action (Rule 111, Sec. 1, RRC). (Walter A. Smith & Co. v. Cadwallader Gibson Lumber
Company, 55 Phil 517).
XPNs: When the offended party:
1. Waives the civil action
2. Reserves the right to institute it separately
3. Institutes the civil action prior to the criminal action
(Rule 111, Sec. 1, RRC)
Acquittal in criminal case
GR: The acquittal of the accused in criminal case on the

ground of reasonable doubt does not preclude the filing of
a subsequent civil action and only preponderance of
evidence is required to prove the case.

164
2015 GOLDEN NOTES
OBLIGATIONS
Delict v. Quasi-delict
BASIS DELICT QUASI-DELICT

Presence of
criminal or
As to the kind of Only negligence
malicious intent
intent present
or criminal
negligence
As to the
whether private
Concerned with Concerned with
or public
public interest private interest
interest is
concerned
Generally, the act
or omission gives The act or
As to the kind of rise to two omission gives
liability arises liabilities: rise only to a civil
criminal and civil liability
liability
Criminal liability The civil liability
As to availability
is not subject to a can be
of a compromise
compromise compromised
As to the Guilt may be
Guilt must be
quantum of proved by
proved beyond
evidence is preponderance of
reasonable doubt
required evidence
NOTE: Inasmuch as civil liability co-exists with criminal

responsibility in negligence cases, the offended party has
the option between an action for enforcement of civil
liability based on culpa criminal under Article 100 of the
Revised Penal Code and an action for recovery of damages
based on culpa aquiliana under Article 2177.
* For further discussion on quasi delict, see the discussion of

quasi-delict on torts and damage.
Culpa contractual, Culpa aquiliana, Culpa criminal, distinguished
BASIS CULPA CONTRACTUAL CULPA AQUILIANA CULPA CRIMINAL

Civil Negligence, Quasi-Delict,
Nature Contractual Negligence Tort, Criminal Negligence
Culpa Extra-Contractual
Proof of guilt beyond
Proof needed Preponderance of evidence Preponderance of evidence
reasonable doubt
Victim must prove:
Contracting party must 1. The damage suffered;
prove: 2. The negligence of the Prosecution must prove the
Onus probandi 1. The existence of the defendant; guilt of the accused beyond
contract; 3. The causal connection reasonable doubt.
2. The breach thereof. between the damage and the
negligence.
Exercise of diligence of a
Exercise of extraordinary
good father of a family in the Defenses provided for under
Defenses available diligence (in contracts of
selection and supervision of the Revised Penal Code.
carriage), Force majeure
employees.
Existence of contract
There is pre-existing contract No pre-existing contract No pre-existing contract
between the parties
NOTE: The result in the criminal case, whether acquittal, or conviction is irrelevant in the independent civil action under the
Civil Code (Dionisio v.Alyendia, 102 Phil 443, cited in Mckee v. IAC, 211 SCRA 536) unless the acquittal is based on the courts
declaration that the fact from which the civil action arose did not exist, hence the dismissal of criminal action carries with the
extinction of the civil liability (Andamo v. IAC, 191 SCRA 204, 90 J. Fernan).

CIVIL LAW
ESTOPPEL
Estoppel by acceptance of benefits
Estoppel
It refers to a type of estoppel in pais which arises when a
An admission or representation rendered conclusive upon party, by accepting benefits derived from a certain act or
the person making it, and cannot be denied or disproved as transaction, intentionally or through culpable negligence,
against the person relying thereon (Art. 1431, NCC). induces another to believe certain facts to exit and such
other relies and act on such belief, as a consequence of
Estoppel is effective only between the parties thereto or which he would be prejudiced if the former is permitted to
their successors in interest (Art. 1439, NCC). deny the existence of such facts (Jurado, 2009).
NOTE: The admission or representation must be plain and Illustration:

clear. Estoppel cannot be sustained on doubtful or
ambiguous inferences. Article 1438 provides:
Basis and purpose of estoppel One who has allowed another to assume apparent
ownership of personal property for the purpose of making
Estoppel is based on public policy, fair dealing, good faith any transfer of it, cannot, if he received the sum for which a
and justice and its purpose is to forbid one to speak pledge has been constituted, set up his own title to defeat
against his own act, representation or commitments to the the pledge of the property, made by the other to a pledgee
injury of one who reasonably relied thereon (Pineda, who received the same in good faith and for value.
2000).
Estoppel by silence or inaction
Kinds of Estoppel
It refers to a type of estoppel in pais which arises when a
1. Estoppel by deed (technical estoppel) party, who has a right and opportunity to speak or act as
a. Estoppel by deed proper A party signs a well as a duty to do so under the circumstances,
document which bars him from denying the truth intentionally or through culpable negligence, induces
of any material facts asserted in it. It applies only another to believe certain facts to exist and such other
between the same parties, their privies and relies and acts on such belief, as a consequence of which he
cannot be used against strangers (Pineda, 2000) would be prejudiced if the former is permitted to deny the
b. Estoppel by record Truth set forth in a record, existence of such facts.
whether judicial or legislative, cannot be denied
(Pineda, 2000) Illustration:
c. Estoppel by court record - The parties are
precluded from: Article 1437 provides that:
i. Raising questions involving matters which
were directly adjudged because of the When in a contract between third persons concerning
principle of res judicata - Estoppel by immovable property, one of them is misled by a person,
judgment or direct estoppel by judgment with respect to the ownership of real right over the real
ii. From raising questions involving matters estate, the latter is precluded from asserting his legal title
that have not been adjudged but could have or interest therein, provided all these requisites are
been placed in issue and decide in the present:
previous case because of their relation to the 1. There must be fraudulent representation or wrongful
issues therein - Collateral estoppel by concealment of of facts known to the party estopped;
judgment (Pineda, 2000). 2. The party precluded must intend that the other
should act upon the facts as misrepresented;
2. Estoppel in pais (equitable estoppel) 3. The party misled must have been aware of the true
a. By conduct or by acceptance of benefits facts; and
b. By representation or concealment 4. The party defrauded must have acted in accordance
c. By silence with the misrepresentation.
d. By omission
e. By laches LACHES
Estoppel by judgment Laches (stale demands)
Estoppel by judgment is a type of estoppel by record. It is The failure or neglect, for an unreasonable length of time,
the preclusion of a party to a case from denying the facts to do that which by exercising due diligence could or
adjudicated by a court of competent jurisdiction. It must should have been done earlier; its negligence or omission
not be confused with res judicata. Estoppel by judgment to assert a right within a reasonable time, warranting a
bars the parties from raising any question that might have presumption that the party entitled to assert it either has
been put in issue and decided in a previous litigation abandoned it or declined to assert it. It is also known as
whereas, res judicata makes a judgment conclusive stale demands (Lim Tay vs. Court of Appeals, 293 SCRA 634;
between the same parties as to the matter directly Pineda, 2000).
adjudged (Philippine National Bank v. Barreto, 52 Phil 818).

166
2015 GOLDEN NOTES
OBLIGATIONS
Basis of the doctrine of laches 3. Limited generic generic objects confined to a
particular class (e.g. an obligation to deliver one of my
It is based upon grounds of public policy which requires horses) (Tolentino, 2002)
for the peace of society, discouragement of state claims.
Obligations of a debtor in an obligation to deliver
Elements of Laches (DILC)
The obligations of the debtor (in an obligation to deliver)
1. Delay in asserting complainants right after he had depends upon the kind thing involved:
knowledge of the defendants conduct and after he has
opportunity to exercise it; BASIS SPECIFIC GENERIC
2. Injury or prejudice to the defendant in the event relief
is accorded to the complainant (Pineda, 2000). Deliver the thing
3. Lack of knowledge or notice on the part of the which is neither of
defendant that the complainant would assert the right superior nor
on which he bases his suit; inferior quality if
What the Deliver the thing
4. Conduct on the part of the defendant or one under quality and
obligation agreed upon (Art.
whom he claims, giving rise to the situation circumstances
consists of 1165, NCC)
complained of; have not been
stated by the
Q: In 1928, a non-Christian, sold a parcel of land to C, partiies (Art. 1246,
father or the defendant, without executive approval NCC)
required by Sec. 145 of the Administrative Code. Take care of the
Despite the invalidity of the sale, B allowed C to enter, thing with the
If the object is
possess and enjoy the land in question without proper diligence
generic, but the
protest, from 1928 to 1943 when B died. The plaintiffs of a good father of
Required source is specified
who are the heirs of B, also remained inactive, taking a family unless the
diligence to be or delimited, the
no step to reinvidicate the property from 1944 to law requires or
observed obligation is to
1962, when the present suit was commenced in court. parties stipulate
preserve the
Will the suit prosper? Reason. another standard
source
of care (Art.1163,
A: The suit will not prosper. Even granting plaintiffs NCC)
proposition that no prescription lies against their fathers Delivery of
recorded title, their passivity and inaction for more than Deliver all another thing
34 years justifies the defendant in setting up the defense of accessions, within the same
laches. All of the four (4) elements of laches are present. As accessories and genus as the thing
a result, the action of plaintiffs must be considered barred What delivery fruits of the thing promised if such
(Miguel v. Catalino). comprises of even though they thing is damaged
may not have been due to lack of care
Laches v. Prescription (Pineda, 2000) mentioned (Art. or a general
1166, NCC) breach is
LACHES PRESCRIPTION committed
Concerned with the effect of Concerned with the fact of
Pay damages in Pay damages in
delay delay
case of breach of case of breach of
Principally a question of
obligation by obligation by
inequity of permitting a It is a matter of time
Effect of breach reason of delay, reason of delay,
claimed to be enforced
of obligation fraud, negligence, fraud, negligence,
Not statutory Statutory contravention of contravention of
Applies in equity Applies at law the tenor thereof the tenor thereof
Not based on fixed of time Based on fixed of time (Art. 1170, NCC) (Art. 1170, NCC)
Obligation is not
NOTE: The doctrine of laches is inapplicable when the
claim was filed within the prescriptive period set forth Fortuitous event extinguished
Effect of
under the law (Pineda, 2000). extinguishes the (genus nun quam
fortuitous event
obligation peruit genus
NATURE AND EFFECTS OF OBLIGATIONS never perishes)
Types of real obligations
1. Determinate/specific particularly designated or

physically segregated from all others of the same
class.
2. Indeterminate/Generic is designated merely by its
class or genus.

CIVIL LAW
Remedies of the creditor in case of failure to deliver just and equitable. The general rule is that this equitable
the thing due relief will not be granted if, under the circumstances of the
case, the result of the specific performance of the contract
The following are the remedies of the creditor in case of would be harsh, inequitable, and oppressive or result in an
failure to deliver the thing due (Pineda, 2000): unconscionable advantage to the plaintiff (Agcaoili v. GSIS,
G.R. No. 30056, Aug. 30, 1988).
SPECIFIC GENERIC
Types of personal obligations
Specific performance
(delivery of any thing
Specific performance 1. Positive - to do
belonging to the same
2. Negative - not to do
species)
Ask that the obligation be Remedies in personal obligations
Rescission (action to rescind
complied with at the
under Art. 1380,NCC)
debtors expense 1. Positive personal obligations
Resolution or specific a. Not purely personal act - To have obligation
Resolution (action for executed at debtor's expense plus damages
performance, with damages
cancellation under Art. 1191, b. Purely personal act - Damages only.
in either case (Art. 1191,
NCC)
NCC)
2. Negative personal obligation To have the prohibited
Damages, in both cases (Art. 1170, NCC)
thing undone at the expense of the debtor plus
damages. However, if thing cannot be physically or
NOTE: May be exclusive or in addition to the above-
legally undone, only damages may be demanded (8
mentioned remedies
Manresa 58).
NOTE: In an obligation to deliver a specific thing, the Specific performance is not a remedy in positive
creditor has the right to demand preservation of the thing, personal obligations
its accessions, accessories, and the fruits. The creditor is
entitled to the fruits and interests from the time the If specific performance will be allowed, it will amount to
obligation to deliver the thing arise. involuntary servitude which is prohibited by the
Constitution (Pineda, 2000).
Right of the creditor to the fruits
BREACHES OF OBLIGATIONS
The creditor has a right to the fruits of the thing from the
time the obligation to deliver it arises. However, he shall Degree of diligence required
acquire no real right over it until the same has been
delivered to him (Art. 1164, NCC). 1. That agreed upon;
2. In the absence of such, that which is required by the
Delivery of the thing and the fruits law;
3. GR: In the absence of the foregoing, diligence of a
As to when the debtor is obliged to deliver the thing and good father of a family
the fruits depends on the source of the obligation, when
the obligation is: XPN: Common carriers requiring extraordinary
1. Based on law, quasi-delict, quasi-contract or crime - diligence (Arts. 1998-2002, NCC)
the specific provisions of the applicable law, shall
determine when the delivery shall be done or effected Diligence of a good father of a family
2. Subject to a suspensive condition - the obligation to
deliver arises from the happening of the condition That reasonable diligence which an ordinary prudent
3. Subject to a suspensive term or period - the obligation person would have done under the same circumstances.
arises from the constitution, creation or perfection of
the obligation Forms of breach of obligations
4. Pure - the obligation to deliver arises from the
constitution, creation or perfection of the obligation 1. Voluntary debtor is liable for damages if he is guilty
(Pineda, 2009). of:
a. Default (mora)
Nature of the right of the creditor with respect to fruits b. Fraud (dolo)
c. Negligence (culpa)
1. Before delivery personal right d. Breach through contravention of the tenor
2. After delivery real right thereof (Art. 1170, NCC)
Principle of balancing of equities in actions for 2. Involuntary debtor is unable to perform the
specific performance obligation due to fortuitous event thus not liable for
damages.
In decreeing specific performance, equity requires not only
that the contract be just and equitable in its provisions, but
that the consequences of specific performance likewise be

168
2015 GOLDEN NOTES
OBLIGATIONS
Effects of breach of obligation Kinds of legal delay or default
If a person obliged to do something fails to do it, or if he 1. Mora solvendi default on the part of the
does it in contravention of the tenor of the obligation or debtor/obligor
what has been poorly done be undone, the same shall be a. Ex re default in real obligations (to give)
executed at his cost (Art. 1167, NCC). b. Ex personae default in personal obligations (to
do)
When the obligation consists in not doing, and the obligor 2. Mora accipiendi default on the part of the
does what has been forbidden him, it shall also be undone creditor/obligee
at his expense (Art.1168, NCC). 3. Compensatio morae default on the part of both the
debtor and creditor in reciprocal obligations
Instances where the remedy under Art. 1168 is not
available Causes of cessation of the effects of mora
1. Where the effects of the act which is forbidden are 1. Renunciation (express/implied); or
definite in character even if it is possible for the 2. Prescription.
creditor to ask that the act be undone at the expense
of the debtor, consequences contrary to the object of Q. American Express Card failed to approve Xs credit
the obligation will have been produced which are card purchases which urged the latter to commence a
permanent in character. complaint for moral and exemplary damages before
2. Where it would be physically or legally impossible to the RTC against American Express. He said that he and
undo what has been undone because of: his family experienced inconvenience and humiliation
a. The very nature of the act itself; due to the delays in credit authorization during his
b. A provision of law; or vacation trip in Amsterdam and in the United States.
c. Conflicting rights of third persons. RTC rendered a decision in favor of Pantaleon. CA
reversed the award of damages in favor of X, holding
NOTE: In either case, the remedy is to seek recovery for that American Express had not breached its
damages (Art.1168, NCC). obligations to X, as the purchase deviated from X's
established charge purchase pattern. Did American
DELAY (MORA) Express commit a breach of its obligations to X?
Delay or default A. Yes. Generally, the relationship between a credit card

provider and its cardholders is that of creditor-debtor,
Those obliged to deliver or to do something incur in delay with the card company as the creditor extending loans and
from the time the obligee (creditor) judicially or credit to the cardholder, who as debtor is obliged to repay
extrajudicially demands from them the fulfillment of their the creditor. One hour appears to be patently
obligation. unreasonable length of time to approve or disapprove a
credit card purchase. The culpable failure of AmEx herein
In reciprocal obligations, neither party incurs in delay if is not the failure to timely approve petitioners purchase,
the other does not comply or is not ready to comply in a but the more elemental failure to timely act on the same,
proper manner with what is incumbent upon him. From whether favorably or unfavorably (Pantaleon vs. American
the moment one of the parties fulfills his obligations, delay Express, G.R. No. 174269, May 8, 2009).
by the other begins (Art. 1169, NCC).
MORA SOLVENDI
Requisites of delay
Requisites
1. Obligation must be due, demandable and liquidated;
2. Debtor fails to perform his positive obligation on the 1. Obligation pertains to the debtor;
date agreed upon; 2. Obligation is determinate, due and demandable, and
3. A judicial or extra-judicial demand made by the liquidated;
creditor upon the debtor to fulfill, perform or comply 3. Obligation has not been performed on its maturity
with his obligation; and date;
4. Failure of the debtor to comply with such demand. 4. There is judicial or extrajudicial demand by the
creditor;
Kinds of delay 5. Failure of the debtor to comply with such demand.
1. Ordinary delay this is the mere failure to perform an Non-applicability of mora solvendi
obligation at the stipulated time.
2. Extraordinary delay or legal delay this delay already Mora solvendi does not apply in natural obligations. This is
equates to non-fulfillment of the obligation and arises because performance is optional or voluntary on the
after the extrajudicial or judicial demand has been debtors part. It does not grant a right of action to enforce
made upon the debtor (Pineda, 2000). their performance.

CIVIL LAW
Mora solvendi does not apply in negative obligations. This Effects of mora accipiendi
is because one can never be late in not giving or doing
something. 1. Responsibility of debtor is limited to fraud and gross
negligence
Instances when demand by the creditor is not 2. Debtor is exempted from risk of loss of thing; creditor
necessary in order that delay may exist bears risk of loss
3. Expenses by debtor for preservation of thing after
Demand by the creditor shall not be necessary in order delay is chargeable to creditor
that delay may exist: 4. If the obligation bears interest, debtor does not have
1. When the obligation or the law expressly so declares; to pay it from time of delay
or 5. Creditor liable for damages
2. When from the nature and the circumstances of the 6. Debtor may relieve himself of obligation by
obligation it appears that the designation of time consigning the thing
when the thing is to be delivered or the service is to
be rendered was a controlling motive for the COMPENSATIO MORAE
establishment of the contract; or
3. When demand would be useless, as when the obligor Reciprocal obligations
has rendered it beyond his power to perform (Art.
1169, par. 2 NCC). Obligations created and established at the same time, out
of the same cause and which results in the mutual
Q: A borrowed P2,000 from B on December 1, 1956. relationship between the parties.
He executed a promissory note promising to pay the
indebtedness on December 1, 1958. Upon the arrival Delay in reciprocal obligations
of the designated date for payment, is demand
necessary in order that A shall incur in delay? In reciprocal obligations, one party incurs in delay from
the moment the other party fulfills his obligation, while he
A: Yes. In order that the first exception provided for in Art. himself does not comply or is not ready to comply in a
1169 of the NCC can be applied, it is indispensable that the proper manner with what is incumbent upon him.
obligation or the law should expressly add that the obligor
shall incur in delay if he fails to fulfill the obligation upon In reciprocal obligations, demand is only necessary in
the arrival of the designated date or that upon the arrival order for a party to incur delay when the respective
of such date demand shall not be necessary (Bayala v. obligations are to be performed on separate dates.
Silang Traffic Co., 73 Phil. 557).
Effect of non-compliance of both parties in reciprocal
Effects of mora solvendi obligations
1. Debtor may be liable for damages or interests; and If neither party complies with his prestation, default of one
compensates for the default of the other.
NOTE: The interest begins to run from the filing of the
complaint when there is no extrajudicial demand. Rules on Compensatio Morae
2. When the obligation has for its object a determinate 1. Unilateral obligations
thing, the debtor may bear the risk of loss of the thing
even if the loss is due to fortuitous event. GR: Default or delay begins from extrajudicial or
3. Rescission or resolution judicial demand mere expiration of the period fixed
is not enough in order that debtor may incur delay.
Debtors liability may be mitigated even if he is guilty
of delay XPNs:
a. The obligation or the law expressly so dictates;
If the debtor can prove that loss would nevertheless b. Time is of the essence;
transpire even if he had not been in default, the court may c. Demand would be useless, as debtor has
equitably mitigate his liability (Art. 2215 (4), NCC; Pineda, rendered it beyond his power to perform; or
2000). d. Debtor has acknowledged that he is in default.
MORA ACCIPIENDI 2. Reciprocal obligations
Requisites GR: Fulfillment by both parties should be

simultaneous.
1. Offer of performance by a capacitated debtor;
2. Offer must be to comply with the prestation as it XPN: When different dates for the performance of
should be performed; and obligation is fixed by the parties.
3. Refusal of the creditor without just cause.

170
2015 GOLDEN NOTES
OBLIGATIONS
FRAUD contract or causal fraud. It is the intentional evasion of the
normal fulfillment of the obligation (Pineda, 2000).
Fraud
Waiver of action arising from future fraud
It is an intentional evasion of the faithful performance of
the obligation (8 Manresa 72). It is also known as deceit or With respect to fraud that has already been committed, the
dolo. law does not prohibit renunciation of the action for
damages based on the same. However, the law prohibits
Kinds of fraud any waiver of an action for future fraud since the same is
contrary to law and public policy. Waiver for future fraud
Basis Fraud in the Fraud in the is void (Art. 1171, NCC).
performance perfection
It occurs after It occurs before or NOTE: Waiver of past fraud is valid since such can be
the valid simultaneous with deemed an act of generosity. What is renounced is the
execution of the the creation or effect of fraud, particularly the right to indemnity.
Time of contract. It is perfection of the
occurrence employed in the obligation; Remedies of the defrauded party
performance of a
pre-existing 1. Specific performance (Art. 1233, NCC)
obligation; 2. Resolution of the contract (Art. 1191, NCC)
Consent is free Consent is vitiated 3. Damages, in either case
and not vitiated; by serious
Consent NEGLIGENCE
deception or
misrepresentation;
It is not a ground It is a ground for Negligence
Effect for annulment of annulment of the
the contract; contract; The fault or negligence of the obligor consists in the
Action for Action for omission of that diligence which is required by the nature
Remedy damages only. annulment with of the obligation and corresponds with the circumstances
damages. of the persons, of the time and the place. When negligence
shows bad faith, the provisions of Art. 1171 and 2201,
Classes of fraud in the perfection paragraph 2, shall apply.
1. Dolo causante (casual fraud) - This is the essential If the law or contract does not state the diligence which is
cause of the consent without which the party would to be observed in the performance, that which expected of
not have agreed to enter into the contract (Art. 1338, a good father of a family shall be required (Art. 1173, NCC).
Civil Code).
2. Dolo incidente (incidental fraud) - This is the kind of Test of negligence
fraud which is not the efficient cause for the giving of
the consent to the contract, as it refers merely to an The test by which we can determine the existence of
incident therein and, which even if not present, the negligence in a particular case may be stated as follows:
contracting party would have still agreed to the Did the defendant in doing the alleged negligent act use the
contract. reasonable care and caution which an ordinarily prudent
person would have used in the same situation? If not, then
Dolo causante v. Dolo incidente he is guilty of negligence. The law here in effect adopts the
standard supposed to be supplied by the imaginary
Basis Dolo causante Dolo incidente conduct of the discreet pater familias of the Roman Law
It is the efficient It is not the (Picart v. Smith, 37 Phil 809).
cause to the efficient cause for
Nature giving of consent the giving of Fraud v. Negligence
to the contract; consent to the
contract; BASIS FRAUD NEGLIGENCE
It renders the It does not affect There is no
Effect contract the validity of the As to the deliberate
voidable; contract; There is deliberate
intention to intention to cause
intention to cause
Annulment with Contract remains cause damage damage or injury
damage
damages. valid. Remedy is even if the act was
Remedy
claim for done voluntarily
damages only. As to the
Liability cannot be Liability may be
mitigation of
Fraud as mentioned in Article 1171 mitigated mitigated
liability
It is incidental fraud or fraud in the performance of the GR: Waiver for
Waiver for future
obligation and not the fraud in the execution of the future negligence
fraud is void
may be allowed in

CIVIL LAW
As to the waiver certain cases be reasonably attributed to the non-performance of the
of future fraud obligation.
XPN:Nature of the
obligation or Contributory negligence of the creditor
public policy
requires GR: It reduces or mitigates the damages which he can
extraordinary recover.
diligence (e.g.
common carrier) XPN: If the negligent act or omission of the creditor is the
proximate cause of the event which led to the damage or
NOTE: When negligence is so gross that it amounts to injury complained of, he cannot recover
wanton attitude on the part of the debtor or such
negligence shows bad faith, the laws in case of fraud shall Kinds of negligence or culpa
apply.
1. Culpa contractual (contractual negligence)
Effect of good faith or bad faith of the obligor negligence which results from the breach of contract
2. Culpa aquiliana (civil negligence or tort or quasi-
If the obligor acted in good faith, he is responsible for the delict) acts or omissions that cause damage to
natural and probable consequences of the breach of another, there being no contractual relation between
contract and which the parties have reasonably foreseen at the parties (Art. 2176, NCC).
the time of the constitution of the obligation. 3. Culpa criminal (criminal negligence) those which
results in the commission of a crime or a delict
If the obligor is guilty of fraud, bad faith, malice or wanton
attitude, he shall be responsible for all damages which may
BASIS CULPA CONTRACTUAL CULPA AQUILIANA CULPA CRIMINAL

(CONTRACT) (QUASI-DELICT) (DELICT)
Negligence is merely an Negligence is substantive and Negligence is substantive
Existence of negligence incident in the performance of independent and independent
an obligation
There is always a pre-existing There is no pre-existing There is no pre-existing
Contractual relations
contractual relation contractual relation contractual relation
The source of obligation of The source of obligation is The source of obligation is
defendant to pay damages is defendants negligence itself an act or omission
Source of obligation
the breach or non-fulfillment of punishable by law
the contract
Proof of the existence of the The negligence of the Accused shall be presumed
contract and of its breach or defendant must be proved innocent until the contrary
Proof of negligence non-fulfillment is sufficient is proved beyond
prima facie to warrant reasonable doubt
recovery
Defense of good father of a Defense of good father of a
family in the selection & familyin the selection &
supervision of the employees is supervision of the
not a proper complete defense Defense of good father of a employees is not a proper
though it may mitigate familyin the selection & defense
Defense available
damages. supervision of the employees is
a proper and complete defense The employees guilt is
Respondeat superior or automatically the
command responsibility or the employers civil guilt, if the
master and servant rule former is insolvent
Proof of guilt beyond
Proof needed Preponderance of evidence Preponderance of evidence
reasonable doubt

172
2015 GOLDEN NOTES
OBLIGATIONS
CONTRAVENTION OF TENOR OF OBLIGATION 7. The obligor is Guilty of fraud, negligence or delay or
(VIOLATIO) if he contravened the tenor of the obligation (Juan
Nakpil v. United Construction Co., Inc. v. CA, G.R. No. L-
The act of contravening the tenor or terms or conditions of 47851, Apr. 15, 1988)
the contract. It is also known as violatio, i.e. failure of
common carrier to take its passenger to their destination Act of God v. Act of Man
safely (Pineda, 2000).
ACT OF GOD ACT OF MAN
Under Art.1170, the phrase in any manner contravene the Fortuitous event Force majeure
tenor of the obligation includes any illicit act which Event caused by the
impairs the strict and faithful fulfillment of the obligation, Event which is absolutely
legitimate or illegitimate
or every kind of defective performance. Such violation of independent of human
acts of persons other than
the terms of contract is excused in proper cases by intervention
the obligor
fortuitous events. i.e. earthquakes, storms, i.e. armed invasion,
floods, epidemics robbery, war (Pineda, 2000)
FORTUITOUS EVENT
NOTE: There is no essential difference between fortuitous
Fortuitous event event and force majuere; they both refer to causes
independent of the will of the obligor (Tolentino, 2002).
An occurrence or happening which could not be foreseen,
or even if foreseen, is inevitable (Art. 1174, NCC). Q: MIAA entered into a compromise agreement with
ALA. MIAA failed to pay within the period stipulated.
Requisites Thus, ALA filed a motion for execution to enforce its
claim. MIAA filed a comment and attributed the delays
1. Cause of breach is independent of the will of the to its being a government agency and the Christmas
debtor; rush. Is the delay of payment a fortuitous event?
2. The event is unforeseeable or unavoidable;
3. Occurrence renders it absolutely impossible for the A: No. The act-of-God doctrine requires all human agencies
debtor to fulfill his obligation in a normal manner - to be excluded from creating the cause of the mischief.
impossibility must be absolute not partial, otherwise Such doctrine cannot be invoked to protect a person who
not force majeure; and has failed to take steps to forestall the possible adverse
4. Debtor is free from any participation in the consequences of loss or injury. Since the delay in payment
aggravation of the injury to the creditor. in the present case was partly a result of human
participation - whether from active intervention or neglect
NOTE: The fortuitous event must not only be the - the whole occurrence was humanized and was therefore
proximate cause but it must also be the only and sole outside the ambit of a caso fortuito.
cause. Contributory negligence of the debtor renders him
liable despite the fortuitous event (Pineda, 2000). First, processing claims against the government are
certainly not only foreseeable and expectable, but also
If the negligence was the proximate cause, the obligation is dependent upon the human will. Second, the Christmas
not extinguished. It is converted into a monetary season is not a caso fortuito, but a regularly occurring
obligation for damages event. Third, the occurrence of the Christmas season did
not at all render impossible the normal fulfillment of the
Difficulty to foresee obligation.
The mere difficulty to foresee the happening is not Fourth, MIAA cannot argue that it is free from any
impossibility to foresee the same (Republic v. Luzon participation in the delay. It should have laid out on the
Stevedoring Corp., G.R. No. L-21749, Sept. 29, 1967). compromise table the problems that would be caused by a
deadline falling during the Christmas season. Furthermore,
Liability for loss due to fortuitous event it should have explained to ALA the process involved for
the payment of ALAs claim (MIAA v. Ala Industries Corp.,
GR: There is no liability for loss in case of fortuitous event. G.R. No. 147349, Feb. 13, 2004).
XPNs: (LaNS-PCBaG) Effects of fortuitous events

1. Law
2. Nature of the obligation requires the assumption of 1. On determinate obligation The obligation is
risk extinguished
3. Stipulation 2. On generic obligation The obligation is not
4. The debtor is guilty of dolo, malice or bad faith, has extinguished (genus nun quam peruit genus never
Promised the same thing to two or more persons who perishes)
does not have the same interest (Art. 1165, NCC).
5. The debtor Contributed to the loss (Tan v. Inchausti & Q: Kristina brought her diamond ring to a jewelry shop
Co., G.R. No. L-6472, Mar. 7, 1912) for cleaning. The jewelry shop undertook to return the
6. The possessor is in Bad faith (Art. 552, NCC) ring by February 1, 1999. When the said date arrived,
the jewelry shop informed Kristina that the job was

CIVIL LAW
not yet finished. They asked her to return five days b) Yes, XY Corp. may unilaterally cancel the obligation
later. On February 6, 1999, Kristina went to the shop but this is subject to the risk that the cancellation of
to claim the ring, but she was informed that the same the reciprocal obligation being challenged in court
was stolen by a thief who entered the shop the night and if AB Corp. succeeds, then XY Corp. will be
before. Kristina filed an action for damages against the declared in default and be liable for damages.
jewelry shop which put up the defense of force
majeure. Will the action prosper or not? (2000 Bar c) No, under the principle of quantum meruit, AB Corp.
Question) had the right to retain payment corresponding to his
percentage of accomplishment less the amount of
A: Yes. The action will prosper. Since the defendant was damages suffered by XY Corp. because of the delay or
already in default for not having delivered the ring when default.
delivery was demanded by plaintiff at due date, the
defendant is liable for the loss of the thing and even when REMEDIES
the loss was due to force majeure.
In case of breach of obligation, the following are the
The defendant who is obliged to deliver incurred delay remedies available:
from the time the plaintiff extrajudicially demands the 1. Specific performance, or substituted performance by a
fulfillment of the obligation (Art. 1169, NCC). The third person in case of an obligation to deliver a
defendant shall be held liable for the loss of the thing even generic thing, and in obligations to do, unless it is a
it was due to fortuitous event. purely personal act; or
2. Rescission (or resolution in reciprocal obligations);
Q: AB Corp. entered into a contract with XY Corp. 3. Damages, in any case;
whereby the former agreed to construct the research 4. Subsidiary remedies of creditors:
and laboratory facilities of the latter. Under the terms a. Accion subrogatoria
of the contract, AB Corp. agreed to complete the b. Accion pauliana
facility in 18 months, at the total contract price of P10 c. Accion directa
million. XY Corp. paid 50% of the total contract price,
the balance to be paid upon completion of the work. SPECIFIC PERFORMANCE
The work started immediately, but AB Corp. later
experienced work slippage because of labor unrest in Remedies in connection with specific performance
his company. AB Corp.s employees claimed that they
are not being paid on time; hence, the work slowed 1. Exhaustion of the properties of the debtor (not
down. As of the 17th month, work was only 45% exempt from attachment under the law)
completed. AB Corp. asked for extension of time, 2. Accion subrogatoria (subrogatory action) An
claiming that its labor problems is a case of fortuitous indirect action brought in the name of the debtor by
event, but this was denied by XY Corp. When it became the creditor to enforce the formers rights except:
certain that the construction could not be finished on a. Personal rights of the debtor
time, XY Corp. sent written notice cancelling the b. Rights inherent in the person of the debtor
contract and requiring AB Corp. to immediately vacate c. Properties exempt from execution (e.g .family
the premises. home)
a. Can the labor unrest be considered a fortuitous 3. Accion pauliana (rescissory action) An action to
event? impugn or assail the acts done or contracts entered
b. Q: Can XY Corp. unilaterally and immediately into by the debtor in fraud of his creditor.
cancel the contract?
c. Q: Must AB Corp. return the 50% down payment? NOTE: Resort to the remedies must be in the order stated
(2008 Bar Question) above (Art. 1177, NCC).
A: Q: Sacramento Steel Corporation (SSC) is a business

a) No. Labor unrest is not a fortuitous event that will entity manufacturing and producing steel and steel
excuse AB Corp. from complying with its obligation of products. It entered into a credit agreement with
constructing the research and laboratory facilities of respondent International Exchange Bank (IEB). As
XY Corp. The labor unrest, which may even be security for its obligations, SSC executed 5 separate
attributed in large part to AB Corp. itself, is not the deeds of chattel mortgage constituted over various
direct cause of non-compliance by AB Corp. It is equipment found in its steel manufacturing plant.
independent of its obligation. It is similar to the
failure of a DBP borrower to pay her loan just because Subsequently, SSC defaulted in the payment of its
her plantation suffered losses due to the cadang- obligations. IEBs demand for payment went
cadang disease. It does not excuse compliance with unheeded. Meanwhile, Metropolitan Bank and Trust
the obligation (DBP v. Vda. De Moll).AB Corp. could Company (Metro Bank) filed a motion for intervention
have anticipated the labor unrest which was caused as a creditor of SSC. It contends that the mortgage
by delays in paying the laborers wages. The company contracts between IEB and SSC were entered into to
could have hired additional laborers to make up for defraud the latters creditors. Thus, it prayed for the
the work slowdown. rescission of the chattel mortgaged executed by SSC in

174
2015 GOLDEN NOTES
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favor of IEB. Will the action to rescind the mortgage a. If not purely personal Substitute performance;
prosper? the obligation shall be executed at debtors cost if
he fails to do it (Art. 1167).
A: No. Jurisprudence is clear that the following successive b. Purely personal No substitute performance may
measures must be taken by a creditor before he may bring be demanded because of the personal
an action for rescission of an allegedly fraudulent contract: qualifications taken into consideration. The only
(1) exhaust the properties of the debtor through levying by remedy is damages.
attachment and execution upon all the property of the 2. Real obligation:
debtor, except such as are exempt by law from execution; a. Generic thing Substitute performance; delivery
(2) exercise all the rights and actions of the debtor, save may be made by a person other than the debtor
those personal to him (accion subrogatoria); and (3) seek since the object is merely designated by its class
rescission of the contracts executed by the debtor in fraud or genus. The creditor may ask that the obligation
of their rights (accion pauliana). It is thus apparent that an be complied with at the expense of the debtor
action to rescind, or an accion pauliana, must be of last (Art. 1165, NCC).
resort, availed of only after the creditor has exhausted all b. Specific thing Specific performance may be
the properties of the debtor not exempt from execution or demanded, that is, the creditor may compel the
after all other legal remedies have been exhausted and debtor to make the delivery.
have been proven futile (Metropolitan Bank and Trust
Company v. International Exchange Bank, G.R. No. 176008, RESCISSION (RESOLUTION)
August 10, 2011).
Rescission (Article 1191, NCC)
Q: While the case was pending, Felix donated his
parcels of land in favor of his children. Judgment was It refers to the cancellation of the contract or reciprocal
rendered against Felix. When the sheriff, accompanied obligation in case of breach on the part of one, which
by counsel of Philam, sought to enforce the alias writ breach is violative of the reciprocity between the parties.
of execution, they discovered that Felix no longer had This is properly called resolution.
any property and that he had conveyed the subject
properties to his children. Thus, Philam filed an accion NOTE: The rescission under Art. 1380 is rescission based
pauliana for rescission of the donations. Felix on lesion or fraud upon creditors.
countered that an action for rescission of the donation
had already prescribed since the time of prescription Applicability
has to run from the date of registration. Has the action
filed by Philam prescribed? Rescission or resolution is applicable in reciprocal
obligations, since it is implied therein.
A: No. Philam only learned about the unlawful
conveyances made by Felix more than four years after the Characteristics of the right to rescind
donations were effected, when its counsel accompanied
the sheriff to Butuan City to attach the properties. There 1. Can be demanded only if plaintiff is ready, willing and
they found that he no longer had any properties in his able to comply with his own obligation and defendant
name. It was only then that Philam's action for rescission is not;
of the deeds of donation accrued because then it could be 2. Not absolute;
said that Philam had exhausted all legal means to satisfy 3. Needs judicial approval in the absence of a stipulation
the trial court's judgment in its favor. Since Philam filed its allowing for extra-judicial rescission, in cases of non-
complaint for accion pauliana against petitioners barely a reciprocal obligations;
month from its discovery that Felix had no other property 4. Subject to judicial review if availed of extra-judicially;
to satisfy the judgment award against him, its action for 5. May be waived expressly or impliedly; and
rescission of the subject deeds clearly had not yet 6. Implied to exist in reciprocal obligations therefore
prescribed (Khe Hong Cheng v. CA,G.R. No. 144169, Mar. 28, need not be expressly stipulated upon.
2000).
Fulfillment or rescission of the obligation
NOTE: The debtor is liable with all his property, present
and future, for the fulfillment of his obligations, subject to GR: The injured party can only choose either fulfillment or
the exemptions provided by law (De Leon, 2003). rescission of the obligation, and not both.
Substitute performance XPN: If fulfillment has become impossible, Article 1191

allows the injured party to seek rescission even after he
It is a remedy of the creditor in case of non-performance has chosen fulfillment. (Ayson-Simon v. Adamos,G.R. No. L-
by the debtor where another party performs the obligation 39378, Aug. 28 1984)
or the same is performed at the expense of the debtor.
Q: Vermen and Seneca entered into an "offsetting
Applicability of substitute performance agreement", where Seneca is obliged to deliver
construction materials to Vermen, who is obliged to
1. Positive personal obligation: pay Seneca and to deliver possession of 2
condominium units to Seneca upon its completion.
Seneca filed a complaint for rescission of the offsetting

CIVIL LAW
against Vermen alleging that the latter had stopped acquiring an obligatory force (Ong v. CA, G.R. No. 97347,
issuing purchase orders of construction materials July 6, 1999).
without valid reason, thus resulting in the stoppage of
deliveries of construction materials on its part, in DAMAGES
violation of the Offsetting Agreement. Can the
agreement be rescinded? Liability for damages
A: Yes, because the provisions of the offsetting agreement Those liable under Art. 1170 shall pay damages only if
are reciprocal in nature. Article 1191 of the Civil Code aside from the breach of contract, prejudice or damage
provides the remedy of rescission (more appropriately, the was caused (Berg v. Teus, G.R. No. L-6450, Oct 30, 1954).
term is "resolution") in case of reciprocal obligations,
where one of the obligors fails to comply with that is NOTE: If action is brought for specific performance,
incumbent upon him. damages sought must be asked in the same action;
otherwise the damages are deemed waived (Daywalt v.
The question of whether a breach of contract is substantial Augusitinian Corp, 39 Phil 567).
depends upon the attendant circumstances. Seneca did not
fail to fulfill its obligation in the offsetting agreement. The Kinds of damages (MENTAL)
discontinuance of delivery of construction materials to
Vermen stemmed from the failure of Vermen to send 1. Moral
purchase orders to Seneca. Vermen would never have been 2. Exemplary
able to fulfill its obligation in allowing Seneca to exercise 3. Nominal
the option to transfer from Phase I to Phase II, as the 4. Temperate
construction of Phase II has ceased and the subject 5. Actual
condominium units will never be available. The 6. Liquidated
impossibility of fulfillment of the obligation on the part of
Vermen necessitates resolution of the contract, for indeed, SUBSIDIARY REMEDIES: ACCION SUBROGATORIA
the non-fulfillment of the obligation aforementioned
constitutes substantial breach of the agreement (Vermen Accion subrogatoria
Realty Development Corp. v. CA and Seneca Hardware Co.,
Inc., G.R. No. 101762, July 6, 1993). An action whereby the creditor, whose claim has not been
fully satisfied, may go after the debtors (third persons) of
Q: Ong and spouses Robles executed an "agreement of the defendant-debtor.
purchase and sale" of 2 parcels of land. Pursuant to the
contract they executed, Ong partially paid the spouses Accion subrogatoria is different and distinct from active
the by depositing it with the bank. Subsequently, Ong subjective subrogation governed by Articles 1300 to 1304.
deposited sums of money with the BPI in accordance In the latter, there is change of creditors whereas in the
with their stipulation that Ong pay the loan of the former there is no change of creditors; the creditor merely
spouse with BPI. To answer for Ongs balance, he acts in the name and for the account of the debtor after
issued 4 post-dated checks which were dishonored. exhausting the assets of the latter but not enough to satisfy
Ong failed to replace the checks and to pay the loan in the claims of the creditor.
full. Can the contract entered into by Ong and the
spouses be rescinded? Requisites (IPNI)
A: No. The agreement of the parties in this case may be set 1. The debtors assets must be Insufficient to satisfy
aside, but not because of a breach on the part of Ong for claims against him;
failure to complete payment of the purchase price. Rather, 2. The creditor must have Pursued all properties of the
his failure to do so brought about a situation which debtor subject to execution;
prevented the obligation of the spouses to convey title 3. The right of action must Not be purely personal; and
from acquiring an obligatory force. 4. The debtor whose right of action is exercised must be
Indebted to the creditor.
The agreement of purchase and sale shows that it is in the
nature of a contract to sell. Ongs failure to complete Effects of subrogatory action
payment of the purchase price is a non-fulfillment of the
condition of full payment which rendered the contract to 1. The creditor may exercise the subrogatory action in
sell ineffective and without force and effect. The breach behalf of the debtor not only up to the amount of his
contemplated in Article 1191 is the obligors failure to credit but in its totality.
comply with an obligation. In this case, Ongs failure to pay
is not even a breach but merely an event which prevents NOTE: The excess (if any) must be returned to the
the vendors obligation to convey title from acquiring debtor.
binding force.
2. The bringing of action does not entitle the creditor to
NOTE: In a contract to sell, the payment of the purchase preference.
price is a positive suspensive condition, the failure of 3. The defendant (the debtor of the debtor) may avail
which is not a breach, casual or serious, but a situation that himself of all defenses available against the creditor.
prevents the obligation of the vendor to convey title from

176
2015 GOLDEN NOTES
OBLIGATIONS
SUBSIDIARY REMEDIES: ACCION PAULIANA violated when a reasonable period is granted for
performance (Jurado, 2009, citing Manresa).
Accion pauliana
Conditional obligation
An action where the creditor files an action in court for the
rescission of acts or contracts entered into by the debtor An obligation subject to a condition and the effectivity of
designed to defraud the former. which is subordinated to the fulfillment or non-fulfillment
of a future and uncertain event, or upon a past event
NOTE: When the creditor could not collect in any manner, unknown to the parties (Pineda,2000).
accion pauliana may be resorted by him to rescind a
fraudulent alienation of property (Regalado, v. Luchsinger Condition
and Co., 5 Phil 625).
An uncertain event which wields an influence on a legal
Requisites relationship (Manresa).
1. Defendant must be indebted to plaintiff; A condition may be defined as a future and uncertain event
2. The fraudulent act performed by the debtor upon which an obligation (Escriche Dictiornary). From this
subsequent to the contract gives advantage to definition, it is evident that it has two requisites: first,
another; futurity; and second, uncertainty.
3. The creditor is prejudiced by such act;
4. The creditor must have pursued all properties of the Q: Can an uncertain but past event be considered a
debtor subject to execution; and condition
5. The creditor has no other legal remedy.
A: The answer must be qualified. It must be noted that the
SUBSIDIARY REMEDIES: ACCION DIRECTA event itself can never constitute a condition because in
order to be classified as a condition, the requisites of
Accion directa futurity and uncertainty are required. Neither can it
constitute a term or period because in order to be
The right of a person to go directly against another who is classified as a term or period, the requisites of futurity and
not a privy to the contract. (Arts. 1652, 1608, 1729, 1893, certainty are required. But the proof or ascertainment of
NCC) the fact or event, as distinguished from the fact or event
itself may either constitute a a condition or a term
NOTE: depending upon the circumstances of each case (Jurado,
1) Subsidiary liability of sublessee for the rent (Art. 1652, 2009).
NCC)
2) Right of sellers a retro to redeem property from Constructive fulfillment of a condition
persons other than the buyer a retro (Art. 1608)
3) Subsidiary liability of owners to laborers and material The condition shall be deemed fulfilled when the obligor
men (Art. 1729) voluntarily prevents its fulfillment (Art. 1186, NCC).
4) The principal may sue the substitute of the agent with
respect to the obligations which the substitute has Q: Ramon, the judicial administrator of the estate of
contracted under the substitution (Art. 1893) Juan, found out that Rodriguez had enlarged the area
of the land which he purchased from Juan before his
KINDS OF CIVIL OBLIGATION: PURE AND death. Thus, Ramon demanded Rodriguez to vacate the
CONDITIONAL OBLIGATION portion allegedly encroached by him. Rodriguez
refused and contested there was indeed a conditional
Pure obligation sale with the balance of the purchase price payable
within five years from the execution of the deed of
An obligation whose performance does not depend upon a sale. Ramon then filed an action for recovery of
future or uncertain event, or upon a past event or upon a possession of the disputed lot. Is the contract of sale a
past event unknown to the parties, demandable at once conditional one?
(Art. 1179, NCC).
A: No. The stipulation that the "payment of the full
The most distinctive characteristic of a pure obligation is consideration based on a survey shall be due and payable
its immediate demand-ability. This quality, however, must in 5 years from the execution of a formal deed of sale" is
not be understood in such a way as to lead to absurd not a condition which affects the efficacy of the contract of
interpretations which would literally require the obligor sale. It merely provides the manner by which the full
or debtor to comply immediately with his obligation. A consideration is to be computed and the time within which
distinction must be made between: the same is to be paid. But it does not affect in any manner
1. The immediate demandability of the obligation; and the effectivity of the contract (Heirs of San Andres v.
2. Its performance or fulfillment by the obligor or Rodriguez, G.R. No. 135634, May 31, 2000).
debtor. Although the obligee or creditor can demand
the performance of the obligation immediately, the
quality of immediate demandability is not infringed or

CIVIL LAW
Period v. Condition b. Petition for the annotation of the creditors right
with the proper registry
BASIS PERIOD CONDITION c. Action to demand security if the debtor has
May refer to past become insolvent
Refers to the d. Action to set aside alienations made by the
As to time event unknown
future debtor in fraud of creditors
to the parties
It will happen at e. Action against adverse possessors to interrupt
an exact date or the running of prescriptive period.
May or may not 2. Debtor May recover what, during the same time, he
As to fulfillment at an indefinite
happen has paid by mistake in case of a suspensive condition
time, but is
definite to arrive (Art. 1188, NCC).
May give rise to
No effect upon an obligation Effect of loss, deterioration and improvement in an
The effect of its the existence of (suspensive) or obligation to deliver a determinate thing subject to a
happening to the obligation but the cessation of suspensive condition
the obligation only in its one already
demandability existing BASIS WITHOUT
WITH DEBTORS
(resolutory) DEBTORS
FAULT
FAULT
NOTE: Period refers to a future and certain event while Debtor pays Obligation
Loss
condition refers to a future and uncertain event. damages extinguished
Creditor may
Suspensive condition choose between
rescission of
A condition the fulfillment of which will give rise to the obligation or Impairment
Deterioration
acquisition of a right. While the condition has not arrived fulfillment (with borne by creditor
yet, in the meantime, the rights and obligations of the indemnity for
parties are suspended. damages in
either case)
NOTE: In suspensive condition or condition precedent, the 1. By the things nature or through
efficacy or the obligatory force is subordinated to the time inure to the benefit of the
happening of a future and uncertain event; if the creditor
Improvement
suspensive condition does not take place the parties would 2. At the debtors expense debtor
stand as if the conditional obligation never existed (Gaite v. shall have no right other than
Fonacier, 2 SCRA 830; Cheng v. Genato, 300 SCRA 722; that granted to a usufructuary
Pineda, 2000).
NOTE: The abovementioned do not apply to indeterminate
Effects of fulfillment of the suspensive condition or generic things on the basis of the maxim Genus nun
quam peruit (genus never perishes).
1. Real obligations
Requisites for the application of Art.1189
GR: Retroacts to the day of the constitution of the
obligation. 1. Must be a real obligation;
2. Object of the obligation is a specific thing;
XPNs: There is no retroactive effect with respect to 3. Obligation is subject to a suspensive condition;
the fruits and interest: 4. The condition is fulfilled; and
a. In reciprocal obligations, the fruits and interests 5. There is loss, deterioration or improvement of the
shall be deemed to have been mutually thing during the pendency of the happening of the
compensated; condition.
b. In unilateral obligations, the debtor appropriates
the fruits and interest received before the NOTE: The same conditions apply to an obligor in
fulfillment of the condition unless contrary to the obligations subject to a resolutory condition. In such cases,
intention of the parties (Art. 1187, NCC) the third requisite must read, subject to a resolutory
2. Personal obligations- the court determines the condition.
retroactive effect of the condition fulfilled (Art. 1187,
NCC) Positive suspensive condition
Rights of the parties before the fulfillment of the A condition which requires a positive act on the part of the
condition obligor that gives rise to the acquisition of rights. In case of
a contract to sell, the obligation to deliver the subject
1. Creditor May bring the appropriate actions for the properties becomes demandable only upon the happening
preservation of his right (Art. 1188, NCC), such as: of the positive suspensive condition (payment of full
a. Action for prohibition/restraining the alienation purchase price). Without full payment, there can be no
of the thing pending the happening of the breach of contract to speak of because the seller has no
suspensive condition

178
2015 GOLDEN NOTES
OBLIGATIONS
obligation yet to turn over the title (Reyes v. Tuparan, G.R. rights of the donor. The donation had to be valid before the
No. 188064, June 1, 2011). fulfillment of the condition. If there was no fulfillment or
compliance with the condition, the donation may now be
Resolutory condition revoked and all rights which the donee may have acquired
under it shall be deemed lost and extinguished (Central
A condition where the rights already acquired are lost Philippine University v. CA, G.R. No. 112127, July 17, 1995).
upon fulfillment of the condition. It is also known as
condition subsequent. Negative resolutory condition
Effects of fulfillment of resolutory condition An act, which if not done, would give rise to a cause of
action against the obligor. It contemplates a situation
1. Real obligations: where rights are already acquired but subject to an
a. The parties shall return to each other what they obligation, the non-fulfillment of which does not affect the
have received (mutual restitution). rights already acquired but merely gives a cause of action
b. Obligation is extinguished. in favor of the other party. In a contract of sale, the buyers
c. In case of loss, deterioration or improvement of non-payment of the price is a negative resolutory
the thing, Art. 1189, with respect to the debtor, condition. In such case, the seller has lost and cannot
shall be applied to the party who is bound to recover the ownership of the property unless he takes
return (Art. 1190, NCC). action to set aside the contract of sale (Heirs of Atienza v.
2. Personal obligations the courts shall determine, in Espidol, G.R. No. 180665, August 11, 2010).
each case, the retroactive effect of the condition that
has been complied with (Art. 1187, NCC; Art. 1190, Potestative Condition
NCC).
A condition which depends upon the will of one of the
Suspensive condition v. Resolutory condition contracting parties (Art. 1182, NCC).
BASIS SUSPENSIVE RESOLUTORY Effects of potestative conditions upon the obligation

CONDITION CONDITION
Obligation arises If the condition is potestative in the sense that its
Effect of Obligation is fulfillment depends exclusively upon the will of the debtor,
or becomes
fulfilment extinguished and the same is suspensive, both the condition and
effective
If not fulfilled, no If not fulfilled, obligation are VOID. However, if the condition is a pre-
Effect of non- existing one or the condition is resolutory, only the
juridical relation juridical relation
fulfillment condition is void, leaving the obligation itself valid because
is created is consolidated
Rights are not yet what is left to the sole will of the debtor is not the
Rights are existence or the fulfillment of the obligation but merely its
acquired, but
already vested, extinguishment.
When rights are there is hope or
but subject to the
acquired expectancy that
threat or danger If the condition us potestative in the sense that its
they will soon be
of extinction fulfillment depends exclusively upon the will of the
acquired
creditor, the obligation shall be valid. This is so because
Q: The late Don Lopez, Sr., who was then a member of the provision of the first sentence of Art. 1182 extends
the Board of Trustees of CPU, executed a deed of only to conditions which are potestative to the obligor or
donation in favor of the latter involving a parcel of debtor. Besides, the creditor is naturally interested in the
land subject to the condition that it shall be utilized for fulfillment of the condition since it is only by such
the establishment and use of a medical college. fulfillment that the obligation arises or becomes effective
However, the heirs of Don Lopez, Sr., filed an action for (Jurado, 2009 citing Art. 1181, NCC and Manresa).
annulment of the donation, reconveyance and
damages against CPU alleging that CPU did not comply Casual Condition
with the conditions of the donation. Are the conditions
imposed resolutory or suspensive? It is the performance or the fulfillment of the condition
which depends upon chance and/or the will of a third
A: Under Art. 1181 of the Civil Code, on conditional person.
obligations, the acquisition of rights, as well as the
extinguishment or loss of those already acquired, shall Mixed Condition
depend upon the happening of the event which constitutes
the condition. Thus, when a person donates land to It is the performance or fulfillment of the condition which
another on the condition that the latter would build upon depends partly upon the will of a party to the obligation
the land a school, the condition imposed was not a and partly upon chance and or the will of a third person.
condition precedent or a suspensive condition but
resolutory. It is not correct to say that the school house (or NOTE: Casual and mixed conditions are valid, unlike
the establishment and use of a medical college in this case) purely potestative conditions.
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

CIVIL LAW
Q: Suppose that the debtor executed a promissory note
promising to pay his obligation to the creditor as soon Day certain
as he has received funds derived from the sale of his
property in a certain place, is the condition potestative It is understood to be that which must necessarily come,
or mixed? although it may not be known when.
A: According to the SC in the case of Hermosa v. Longara, Kinds of terms or periods

93 Phil. 971, the condition is mixed because its fulfillment
depends not only upon the will of the debtor but also upon 1. Ex die this is a term or period with suspensive effect.
the concurrence of other factors, such as the acceptability The obligation begins only from a day certain, in other
of the price and other conditions of the sale, as well as the words upon the arrival of the period.
presence of a buyer, ready, able and willing to purchase 2. In diem a period or term with a resolutory effect. Up
the property. to a certain extent, the obligation remains valid, but
upon the arrival of said period, the obligation
Impossible Conditions terminates.
3. Legal a period granted under the provisions of the
GR: Impossible conditions annul the obligation which law.
depends upon the parties but not of a third person. 4. Conventional or voluntary period agreed upon or
stipulated by the parties.
XPNs: 5. Judicial the period or term fixed by the courts for the
1. Pre-existing obligation performance of an obligation or for its termination.
2. Obligation is Divisible 6. Definite the exact date or time is known and given.
3. In simple or remuneratory Donations 7. Indefinite something that will surely happen but the
4. In case of conditions Not to do an impossible thing date of happening is unknown.
5. In Testamentary dispositions
I will pay when my means permit me to do so.
NOTE: In the foregoing, the obligations remain valid, only
the condition is void and deemed to have not been When the debtor binds himself to pay when his means
imposed. It is applicable only to obligations not to do and permit him to do so, the obligation is deemed with a period
gratuitous obligations. (Art. 1180, NCC). This is valid because it is not the payment
Other types of conditions itself that is dependent upon the will of the debtor, but the
moment of payment.
1. Positive involves the doing of an act
2. Negative involves the omission of an act As the time of payment is not fixed, the court must fix the
3. Divisible is susceptible of partial performance same before any action for collection may be entertained,
4. Indivisible is not susceptible of partial performance unless, the prior action of fixing the term or period will
5. Conjunctive there are several conditions in an only be a formality and will serve no purpose but delay
obligation all of which must be performed (Tiglao v. Manila Railroad Co., 98 Phil. 181).
6. Alternative there are several conditions in an
obligation but only one must be performed Benefit of the period
7. Possible is capable of fulfillment according to the
nature, law, public policy or good customs GR: Whenever in an obligation a period is designated, it is
8. Impossible is not capable of fulfillment according to presumed to have been established for the benefit of both
nature, law, public policy or good customs (Art. 1183, the creditor and the debtor
NCC)
XPN: When it appears from the tenor of the period or
KINDS OF CIVIL OBLIGATION: OBLIGATIONS WITH A other circumstances that it was established for the benefit
PERIOD of one of the parties (Art.1196, NCC).
Obligation with a period or a term Effect of the term/period
Obligations for whose fulfillment a day certain has been 1. When it is for the benefit of the creditor Creditor may
fixed, shall be demandable only when that day comes (Art. demand the performance of the obligation at any time
1193, NCC). but the debtor cannot compel him to accept payment
before the expiration of the period (e.g. on demand)
Term or period 2. When it is for the benefit of the debtor Debtor may
oppose any premature demand on the part of the
A certain length of time which determines the effectivity or creditor for performance of the obligation, or if he so
the extinguishment of the obligations. desires, he may renounce the benefit of the period by
performing his obligation in advance (Manresa).
Requisites of a valid period or term
1. Future
2. Certain
3. Possible, legally and physically (Paras, 2008)

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2015 GOLDEN NOTES
OBLIGATIONS
Effect of a fortuitous event to an obligation with a 3. When by his own acts he has Impaired said guaranties
period or securities after their establishment, and when
through a fortuitous event they disappear, unless he
It only relieves the contracting parties from the fulfillment immediately gives new ones or equally satisfactory;
of their respective obligation during the term or period. 4. When the debtor Violates any undertaking, in
consideration of which the creditor agreed to the
Instances where the court may fix the period period;
5. When the debtor attempts to Abscond (Art. 1198,
1. If the obligation does not fix a period, but from its NCC).
nature and circumstances it can be inferred that a
period was intended by the parties. If the time of payment is not fixed, the court must fix the
2. If the duration of the period depends upon the will of same before any action for collection may be entertained,
the debtor. unless, the prior action of fixing the term or period will be
3. In case of reciprocal obligations, when there is a just a formality and will serve no purpose but delay.
cause for fixing the period.
4. If the debtor binds himself when his means permit KINDS OF CIVIL OBLIGATION: ALTERNATIVE
him to do so. OBLIGATION / FACULTATIVE OBLIGATION
NOTE: Once fixed by the courts, the period cannot be Alternative obligation
changed by the parties.
It is one where the debtor is alternatively bound by
Instances where the debtor loses his right to make use different prestations but the complete performance of one
of the period of them is sufficient to extinguish the obligation.
1. When after the obligation has been contracted he Facultative obligation

becomes insolvent, unless he gives a guaranty or
security for the debt; It is one where the debtor, who has a reserved right to
2. When he does not furnish to the creditor the choose another prestation or thing, is bound to perform
Guaranties or securities which he has promised; one of the several prestations due or to deliver a thing as
substitute for the principal.
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 of
Manner of compliance
one that is due those alternately due
GR: Choice pertain to debtor
Right to choose Choice pertains only to debtor
XPN: Expressly granted to creditor or
third person
Fortuitous loss extinguishes the Fortuitous loss of all prestation 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 substitute prestation without
rise to liability to debtor
liability to debtor
The creditor shall have the right of
indemnity for damages when, through
When substitution has been made and
the fault of the debtor, all the things
communicated to the creditor, the
Liability of the debtor which are alternatively the object of the
obligor is liable for the loss of the thing
obligation have been lost or the
on account of delay, negligence or fraud
compliance of the obligation has become
impossible.
If 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 some prestations are impossible to
If there is impossibility to deliver the
perform except one - this one must be
principal thing or prestation, the
Impossibility of prestation delivered.
obligation is extinguished, even if the
If all prestations are impossible to
substitute obligation is valid
perform, the obligation is extinguished
Loss of the substitute before the Where the choice is given to the
substitution is made through the fault of creditor, the loss of the alternative
Loss of substitute
the debtor doesnt make him liable through the fault of the debtor renders
him liable for damages

CIVIL LAW
Right to choose prestation in an alternative obligation Effects of loss of objects in alternative obligations
GR: The right of choice belongs to the debtor DUE TO FORTUITOUS DUE TO DEBTORS
EVENT FAULT
XPN: unless it has been expressly given to the creditor Choice Belongs to Debtor
(Art. 1200, NCC). Creditor shall have a
right to be indemnified
Limitations on debtors right to choose for damages based on
All are Debtor released the value of the last
1. The debtor must absolutely perform the prestation lost from the obligation thing which
chosen. He cannot compel the creditor to receive part disappeared/ last
of one and part of the other undertaking. service which became
2. The debtor shall have no right to choose those impossible
prestation which are impossible, unlawful or which Debtor shall deliver
could not have been the object of the obligation (Art. Debtor shall deliver
Some but that which he shall
1200, NCC). that which he shall
not all choose from among
3. The debtor shall lose the right to choice when among choose from among
are lost the remainder without
the prestation whereby he is alternatively bound, only the remainder
damages
one is practicable (Art. 1202, NCC). Only one
Deliver that which remains
remains
Effectivity of the choice in alternative obligations Choice Belongs to Creditor
Creditor may claim the
The choice made takes effect only upon communication of All are Debtor released price/value of any of
the choice to the other party and from such time the lost from the obligation them with indemnity
obligation ceases to be alternative (Art. 1201, NCC; Art. for damages
1205, NCC). Creditor may claim
Creditor may any of those subsisting
NOTE: The notice of selection or choice may be in any Some but choose from among OR he may choose any
form provided it is sufficient to make the other party know not all the remainder or of those were lost, but
that the election has been made (Tolentino, 2002). are lost that which remains it is the price/value of
if only one subsists with right to damages
When alternative obligation becomes a simple that can be claimed
obligation Deliver that which remains. In case of fault of
Only one
debtor, creditor has a right to indemnity for
1. When the debtor has communicated the choice to the remains
damages
creditor.
2. When debtor loses the right of choice among the
KINDS OF CIVIL OBLIGATIONS: JOINT AND SOLIDARY
prestations whereby the debtor is alternatively
OBLIGATIONS
bound, only one is practicable (Art. 1202, NCC).
3. When the choice has been expressly given to the
Joint obligations
creditor and his choice has been communicated to the
debtor.
One where the credit or debt shall be presumed to be
divided into as many equal shares as there are creditors or
NOTE: The choice made by the debtor does not require the
debtors, the credit or debts being considered distinct from
concurrence of the creditor. Otherwise, it would destroy
one another (Art. 1208, NCC). Each debtor is liable only for
the very nature of the right to select given to the debtor.
a proportionate part of the debt and each creditor to his
proportionate share to the credit.
Impossibility of choice due to creditors acts
Solidary obligations
When choice is rendered impossible through the creditors
fault, the debtor may bring an action to rescind the
It is where each of the debtors obliges to pay the entire
contract with damages (Art. 1203, NCC).
obligation while 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, NCC; Pineda,
2000).

182
2015 GOLDEN NOTES
OBLIGATIONS
Joint obligation v. Solidary obligation changed the tenor of the decision by changing their
liability from joint to solidary, by the insertion of the
JOINT SOLIDARY words "AND/OR". Is the liability of INIMACO pursuant
OBLIGATION OBLIGATION to the decision of the labor arbiter solidary or not?
Not presumed.
Must be expressly A: INIMACO's liability is not solidary but merely joint.
stipulated by the Well-entrenched is the rule that solidary obligation cannot
parties, or when lightly be inferred. There is a solidary liability only when
Presumption Presumed by law the obligation expressly so states, when the law so
the law or the
by law (Art. 1208, NCC) provides or when the nature of the obligation so requires.
nature of the
obligation requires In the dispositive portion of the labor arbiter, the word
solidarity. (Art. "solidary" does not appear. The said fallo expressly states
1207, NCC) the following respondents therein as liable, namely:
Liability of Proportionate part Obliged to pay the Filipinas Carbon Mining Corporation, Sicat, Gonzales, Chiu
each debtor of the entire debt entire obligation Chin Gin, Lo Kuan Chin, and INIMACO. Nor can it be
Each creditor has inferred therefrom that the liability of the six respondents
Right of the the right to in the case below is solidary, thus their liability should
Each creditor, if merely be joint (INIMACO v. NLRC, G.R. No. 101723, May 11,
creditor to demand from any
there are several, is 2000).
the of the debtors, the
entitled only to a
fulfillment of payment or
proportionate part Consequences of a joint obligation
the fulfillment of the
of the credit
obligation entire obligation
(Tolentino, 1999) 1. Each debtor is liable only for a proportionate part of
the entire debt
Character of an obligation 2. Each creditor, if there are several, is entitled only to a
proportionate part of the credit
GR: When two or more creditors or two or more debtors 3. The demand made by one creditor upon one debtor,
concur in one and the same obligation, the presumption is produces effects of default only as between them
that the obligation is joint. 4. Interruption of prescription caused by the demand
made by one creditor upon one debtor, will NOT
XPNs: The obligation shall only be solidary when: (LEN-CJ) benefit the co-creditors or the co-debtors
1. Law requires solidarity; 5. Insolvency of a debtor will not increase the liability of
2. Expressly stipulated that there is solidarity; his co-debtor
3. Nature of the obligation requires solidarity; 6. Vices of each obligation emanating from a particular
4. Charge or condition is imposed upon heirs or legatees debtor or creditor will not affect the others
and the will expressly makes the charge or condition 7. In indivisible or joint obligation, the defense of res
in solidum (Manresa); or judicata of one does not extend to the others.
5. Solidary responsibility is imputed by a final Judgment
upon several defendants (Gutierrez v. Gutierrez, 56 JOINT INDIVISIBLE OBLIGATIONS
Phil 177).
Joint indivisible obligations
Q: Chua bought and imported to the Philippines
dicalcium phosphate. When the cargo arrived at the The obligation is joint because the parties are merely
Port of Manila, it was discovered that some were in proportionately liable. It is indivisible because the object
apparent bad condition. Thus, Chua filed with Smith or subject matter is not physically divisible into different
Bell, and Co., Inc. (claiming agent of First Insurance parts. In other words, it is joint as to liabilities of the
Co.) a formal statement of claim for the loss. No debtors or rights of the creditors but indivisible as to
settlement of the claim having been made, Chua then compliance (De Leon, 2010).
filed an action. Is Smith, Bell, and Co., solidarily liable
upon a marine insurance policy with its disclosed A joint indivisible obligation gives rise to indemnity for
foreign principal? damages from the time anyone of the debtors does not
comply with his undertaking. The debtors who may have
A: No. Article 1207 of the Civil Code clearly provides that been ready to fufill their promises shall not contribute to
"there is a solidary liability only when the obligation the indemnity beyond the corresponding portion of the
expressly so states, or when the law or the nature of the price of the thing or of the value of the service in which the
obligation requires solidarity." The well-entrenched rule is obligation consists (Art. 1224, NCC).
that solidary obligation cannot lightly be inferred. It must
be positively and clearly expressed (Smith, Bell & Co., Inc. v. Effects of different permutations of joint indivisible
CA, G.R. No. 110668, Feb. 6, 1997). obligations
Q: The labor arbiter rendered a decision, the fallo of 1. If there are two or more debtors, compliance with the
which states the following respondents as liable, obligation requires the concurrence of all the debtors,
namely: FCMC, Sicat, Gonzales, Chiu Chin Gin, Lo Kuan although each for his own share. The obligation can be
Chin, and INIMACO. INIMACO questions the execution, enforced only by preceding against all of the debtors.
alleging that the alias writ of execution altered and

CIVIL LAW
2. If there are two or more creditors, the concurrence or indemnity
collective act of all the creditors, although each of his Death of solidary
own share, is also necessary for the enforcement of debtor
the obligation. Heirs of the
terminates the
3. Each credit is distinct from one another; therefore a debtor remain
As to the effect of solidarity, the tie
joint debtor cannot be required to pay for the share of bound to perform
death of a party or vinculum
another with debtor, although he may pay if he wants the same
being
to. prestation
intransmissible
4. In case of insolvency of one of the debtors, the others to the heirs
shall not be liable for his shares. To hold otherwise
would destroy the joint character of the obligation Rules in solidary obligations
(Art. 1209, NCC).
1. Anyone of the solidary creditors may collect or
Effect of breach of a joint indivisible obligation by one demand payment of the whole obligation; there is
debtor mutual agency among solidary debtors (Arts. 1214,
1215, NCC).
If one of the joint debtors fails to comply with his 2. Any of the solidary debtor may be required to pay the
undertaking, and the obligation can no longer be fulfilled whole obligation; there is mutual guaranty among
or performed, it will then be converted into one of solidary debtors (Arts. 1216, 1217, 1222, NCC).
indemnity for damages. Innocent joint debtor shall not 3. Each one of solidary creditors may do whatever
contribute to the indemnity beyond his corresponding maybe useful to the others, but not anything
share of the obligation. prejudicial to them (Art. 1212, NCC); however, any
novation, compensation, confusion or remission of
SOLIDARY OBLIGATIONS debt made by any solidary creditors or with any of the
solidary debtors shall extinguish the obligation
Solidary obligation without prejudice to his liability for the shares of
other solidary creditors (Art. 1215, NCC;
Each one of the debtors is obliged to pay the entire Art.1219,NCC).
obligation, and each one of the creditors has the right to
demand from any of the debtors the payment or fulfillment Q: Joey, Jovy and Jojo are solidary debtors under a loan
of the entire obligation. obligation of P300,000.00 which has fallen due. The
creditor has, however, condoned Jojo's entire share in
Kinds of solidary obligation the debt. Since Jovy has become insolvent, the creditor
makes a demand on Joey to pay the debt.
1. Passive solidarity on the part of the debtors a. How much, if any, may Joey be compelled to pay?
2. Active solidarity on the part of the creditors b. To what extent, if at all, can Jojo be compelled by
3. Mixed solidarity on both sides Joey to contribute to such payment? (1998 Bar
Question)
NOTE: Example of words that connote solidary obligation:
a) joint and several; b) in solidum; c) individually and A:
collectively; d) each will pay the whole value; e) I promise a) Joey can be compelled to pay only the remaining
to pay and there are two or more signatures balance of P200, 000, in view of the remission of
Jojos share by the creditor (Art. 1219, NCC).
Solidarity v. Indivisibility b) Jojo can be compelled by Joey to contribute P50,000.
When one of the solidary debtors cannot, because of
BASIS SOLIDARITY INDIVISIBILITY his insolvency, reimburse his share to the debtor
Refers to the Refers to the paying the obligation, such share shall be borne by all
As to the kind of vinculum existing prestation or his co-debtors, in proportion to the debt of each (par.
unity it refers to between the object of the 3, Art. 1217, NCC).
subjects or parties contract
As to the Since the insolvent debtor's share which Joey paid
Requires the Does not require
requirement of was P100, 000, and there are only two remaining
plurality of plurality of
plurality of debtors - namely Joey and Jojo - these two shall share
parties or subjects or
parties or equally the burden of reimbursement. Jojo may thus
subjects parties
subjects be compelled by Joey to contribute P50, 000.
In case of breach,
In case of breach,
it is converted to To whom payment should be made in a solidary
the liability of the
one of indemnity obligation
solidary debtors
for damages and
although
As to the effect of the indivisibility GR: To any of the solidary creditors.
converted into
breach of the obligation
one of the
is terminated and XPN: If demand, judicial or extra-judicial, has been made
indemnity for
so each debtor is by one of the creditors, payment should be made to him
damages remains
liable only for his (Art. 1214).
solidary
part of the

184
2015 GOLDEN NOTES
OBLIGATIONS
In cases of solidary creditors, one may act for all 2. Those which are not susceptible of partial
performance
Each one of the solidary creditors may execute acts which 3. Even the object or service may be physically divisible,
may be useful or beneficial to the others, but he may not an obligation is indivisible if so provided (i) by law or
do anything which may be prejudicial to them (Art. 1212, (i) intended by the parties (Art. 1225, NCC).
NCC).
NOTE: A pledge or mortgage is one and indivisible by
NOTE: Prejudicial acts may still have valid legal effects, but provision of law, and the rules apply even if the obligation
the performing creditor shall be liable to his co-creditors is joint and not solidary (Art. 2089, NCC).
(Pineda, 2000).
Obligations that are deemed divisible
Effects of assignment of rights in a solidary obligation
When the object of the obligation involves:
GR: Solidary creditor cannot assign his right because it is a. Certain number of days of work;
predicated upon mutual confidence, meaning personal b. Accomplishment of work by metrical unit;
qualification of each creditor had been taken into c. Analogous things which are by their nature
consideration when the obligation was constituted (Art. susceptible of partial performance (Art. 1225, NCC)
1213, NCC).
Effect of illegality of a part of a contract
XPNs:
1. Assignment to co-creditor; or 1. Divisible contract illegal part is void and
2. Assignment is with consent of co-creditor. unenforceable. Legal part is valid and enforceable
(Art. 1420).
KINDS OF CIVIL OBLIGATIONS: DIVISIBLE AND 2. Indivisible contract entire contract is indivisible and
INDIVISIBLE OBLIGATIONS unenforceable.
Divisible obligations Partial performance in indivisible obligation
Those which have as their object a prestation which is It is tantamount to non-performance (Pineda, 2000).
susceptible of partial performance with the essence of the
obligation being changed. KINDS OF CIVIL OBLIGATIONS: OBLIGATIONS WITH A
PENAL CLAUSE
Indivisible obligations
Obligations with a penal clause
Those which have as their object a prestation which is not
susceptible of partial performance, because otherwise the An obligation with a penal clause is one with an accessory
essence of the obligation will be changed. The obligation is undertaking by virtue of which the obligor assumes a
clearly indivisible because the performance of the contract greater liability in case of breach of he obligations (Jurado,
cannot be done in parts, otherwise, the value of what is 2009, citing Manresa).
transferred is diminished (Nazareno v. CA, G.R. No. 138842,
October 18, 2000). Penal clause
Divisible v. Indivisible obligations An accessory obligation or undertaking to assure greater

responsibility in case of breach.
DIVISIBLE INDIVISIBLE
NOTE: Proof of actual damages suffered by the creditor is
Non-susceptibility to be
not necessary in order that the penalty may be demanded
Susceptibility of an performed partially
(Art. 1228, NCC).
obligation to be performed Partial performance is
partially tantamount to non-
Kinds of penalties
performance
1. As to origin
Test of divisibility a. Legal - It is legal when it is constituted by law;
b. Conventional - It is constituted by agreement of
Whether or not the prestation is susceptible of partial the parties.
performance, not in the sense of performance in separate
or divided parts, but in the sense of the possibility of 2. As to purpose
realizing the purpose which the obligation seeks to obtain. a. Compensatory - It is compensatory when it is
If a thing could be divided into parts and as divided, its established for the purpose of indemnifying the
value is impaired disproportionately, that thing is damages suffered by the obligee or creditor in
indivisible (Pineda, 2000). case of breach of the obligation.
b. Punitive - It is punitive when it is established for
Obligations that are deemed indivisible the purpose of punishing the obligor or debtor in
case of breach of the obligation.
1. Obligations to give definite things

CIVIL LAW
3. As to effect 4. Confusion or merger
a. Subsidiary - It is subsidiary when only the 5. Compensation
penalty may be demanded in case of breach of the 6. Novation (Art. 1231, NCC)
obligation;
b. Joint - It is joint when the injured party may Other Modes (PARF)
demand the enforcement of both the penalty and 7. Annulment
the principal obligation. 8. Rescission
9. Fulfillment of a resolutory condition
Q: Can the debtor just choose penalty over non- 10. Prescription (Art. 1231, NCC)
fulfillment?
NOTE: The enumeration is not exclusive.
A: GR: The debtor cannot exempt himself from the
performance of the obligation by paying the penalty (Art. Mutual desistance as another mode of extinguishing
1227, NCC). obligations
XPN: When the right has been expressly reserved to the Mutual agreement of the parties to extinguish the
debtor (Art. 1227, NCC). obligation. It is a concept derived from the principle that
since mutual agreement can create a contract, mutual
Creditor cannot demand both the fulfillment of the disagreement by the parties can likewise cause its
principal obligation and the penalty extinguishment (Saura v. Development Bank of the Phils.,
G.R. No. 24968, Apr. 27, 1972).
GR: The creditor cannot demand the fulfillment of the
obligation and the satisfaction of the penalty at the same PAYMENT OR PERFORMANCE
time (Art. 1227, NCC).
Payment
XPNs:
1. When the right has been clearly granted to him; Payment is the fulfilment of the prestation due, a fulfilment
2. If the creditor has decided to require the fulfillment of that extinguishes the obligation by the realization of the
the obligation, the performance thereof should purposes for which it is constituted (Tolentino, 2002).
become impossible without his fault, the penalty may
be enforced (Art. 1227, NCC). Payment may consist not only in the delivery of money but
also the giving of a thing (other than money), the doing of
Effect of incorporating a penal clause in an obligation an act, or not doing of an act (Art. 1232, NCC).
GR: The penalty fixed by the parties is a compensation or Characteristics of payment

substitute for damages in case of breach.
1. Integrity the payment of the obligation must be
XPNs: Damages shall still be paid even if there is a penal completely made
clause if: 2. Identity the payment of the obligation must consist
1. There is a stipulation to the contrary the performance of the very thing due
2. The debtor refuses to pay the agreed penalty 3. Indivisibility the payment of the obligation must be
3. The debtor is guilty of fraud in the fulfillment of the in its entirety
obligation (Art. 1126, NCC).
Integrity
NOTE: The nullity of the penal clause does not carry with it
that of the principal obligation but the nullity of the GR: Payment or Performance must be complete (Art. 1233,
principal obligation carries with it that of the penal clause NCC)
(Art. 1230, NCC).
XPNs:
Instances where penalty may be reduced by the courts 1. Substantial performance performed in good faith
(PIU) (Art. 1234, NCC)
2. When the obligee accepts the performance, knowing
1. Partial performance of the obligation its incompleteness or irregularity and without
2. Irregular performance of the obligation expressing any protest or objection (Art. 1235, NCC)
3. Penalty is Unconscionable even if there has been no 3. Debt is partly liquidated and partly unliquidated, but
performance. the liquidated part of the debt must be paid in full.
EXTINGUISHMENT OF OBLIGATIONS Substantial Performance Doctrine
Modes of extinguishment of an obligation It provides the rule that if a good-faith attempt to perform
does not precisely meet the terms of an agreement or
Principal Modes (PaLoCo3N) statutory requirements, the performance will still be
1. Payment or performance considered complete if the essential purpose is
2. Loss of the thing due accomplished (Blacks Law Dictionary, 9th edition, 2009).
3. Condonation or remission of debt

186
2015 GOLDEN NOTES
OBLIGATIONS
Requisites for Substantial Performance Doctrine Person who pays
1. Attempt in good-faith to comply with obligation The following persons may effect payment and compel the
2. Slight deviation of the obligation or omission or defect creditor to accept the payment:
of the performance is technical and unimportant 1. Debtor himself
(Tolentino, 2002). 2. His heirs and assigns
3. His agents and representatives
Identity of the thing 4. Third persons who have a material interest in the
fulfilment of the obligation
GR: Thing paid must be the very thing due and cannot be
another thing even if of the same or more quality and Payment made by third persons
value.
GR: The creditor is not bound to accept payment or
XPNs: performance by a third person.
1. Dation in payment
2. Novation of the obligation XPNs:
3. Obligation is facultative 1. When made by a third person who has interest in the
fulfillment of the obligation
NOTE: In an obligation to do or not to do, an act or 2. Contrary stipulation (Art. 1236, NCC)
forbearance cannot be substituted by another act or
forbearance against the obligees will. Rights of a third person who made the payment
Indivisibility 1. If the payment was made with knowledge and consent

of the debtor:
GR: Debtor cannot be compelled by the creditor to perform a. Can recover entire amount paid (absolute
obligation in parts and neither can the debtor compel the reimbursement)
creditor to accept obligation in parts. b. Can be subrogated to all rights of the creditor.
2. If the payment was made with without knowledge or
XPNs: When: against the will of the debtor can recover only
1. Partial performance has been agreed upon insofar as payment has been beneficial to the debtor
2. Part of the obligation is liquidated and part is (right of conditional reimbursement)
unliquidated
3. To require the debtor to perform in full is impractical NOTE: Payment made by a third person who does not
intend to be reimbursed by the debtor is deemed to be a
Acceptance by a creditor of a partial payment NOT an donation, which requires the debtor's consent. But the
abandonment of its demand for full payment payment is in any case valid as to the creditor who has
accepted it (Art. 1238, NCC).
When creditors receive partial payment, they are not ipso
facto deemed to have abandoned their prior demand for Person to whom payment is made
full payment.
Persons entitled to receive the payment:
To imply that creditors accept partial payment as complete 1. The person in whose favor the obligation has been
performance of their obligation, their acceptance must be constituted
made under circumstances that indicate their intention to 2. his successor in interest, or
consider the performance complete and to renounce their 3. any person authorized to receive it (Art. 1240, NCC).
claim arising from the defect.
Payment to an unauthorized person
NOTE: While Article 1248 of the Civil Code states that
creditors cannot be compelled to accept partial payments, GR: Payment to an unauthorized person is not a valid
it does not prohibit them from accepting such payments payment (Art. 1241, NCC).
(Selegna Management and Development Corp. v. UCPB, G.R.
No. 165662, May 30, 2006). XPNs:
1. Payment to an incapacitated person if:
Requisites of a valid payment (P3AD) a. He kept the thing delivered, or
b. It has been beneficial to him (Art. 1241, NCC)
1. Person who pays 2. Payment to a third person insofar as it redounded to
2. Person to whom payment is made the benefit of the creditor
3. Propriety of the time, place, and manner of payment
4. Acceptance by the creditor Benefit to the creditor need not be proved: (RRE)
5. Delivery of the full amount or the full performance of a. If after the payment, the third person acquires
the prestation the creditors Rights;
b. If the creditor Ratifies the payment to the third
person;
c. If by the creditors conduct, the debtor has been
led to believe that the third person had

CIVIL LAW
authority to receive the payment (Estoppel) Elements of dation in payment
(Art. 1241, NCC).
1. Existence of a money obligation
3. Payment in good faith to the possessor of credit (Art. 2. Alienation to the creditor of a property by the debtor
1242, NCC) with the consent of the former
3. Satisfaction of the money obligation of the debtor
NOTE: Payment made to the creditor by the debtor
after the latter has been judicially ordered to retain Q: Lopez obtained a loan in the amount of P20,000.00
the debt shall not be valid (Art. 1243, NCC). from the Prudential Bank. He executed a surety bond
in which he, as principal, and PHILAMGEN as surety,
Consent of the debtor is necessary when the third bound themselves jointly and severally for the
person does not intend to be reimbursed payment of the sum. He also executed a deed of
assignment of 4,000 shares of the Baguio Military
Payment made by a third person who does not intend to be Institution in favor of PHILAMGEN. Is the stock
reimbursed by the debtor is deemed to be a donation assignment made by Lopez dation in payment or
which requires the debtors consent. But the payment is in pledge?
any case valid to the creditor who has accepted it (Art.
1238, NCC). A: The stock assignment constitutes a pledge and not a
dacion en pago. Dation in payment is the delivery and
SPECIAL FORMS OF PAYMENT transmission of ownership of a thing by the debtor to the
creditor as an accepted equivalent of the performance of
Dation in Payment the obligation. Lopezs loan has not yet matured when he
Alienation by the debtor of a particular property in favor of "alienated" his 4,000 shares of stock to Philamgen. Lopez's
his creditor, with the latters consent, for the satisfaction of obligation would arise only when he would default in the
the formers money obligation to the latter, with the effect payment of the principal obligation which is the loan and
of extinguishing the said money obligation (Pineda, 2000) Philamgen had to pay for it. Since it is contrary to the
Application of Payment nature and concept of dation in payment, the same could
Designation of the particular debt being paid by the debtor not have been constituted when the stock assignment was
who has two or more debts or obligations of the same kind executed. In case of doubt as to whether a transaction is a
in favor of the same creditor to whom the payment is made pledge or a dation in payment, the presumption is in favor
(Pineda, 2000) of pledge, the latter being the lesser transmission of rights
Payment by Cession and interests (Lopez v. CA, G.R. No. L-33157, June 29, 1982).
Debtor cedes his property to his creditors so the latter may
sell the same and the proceeds realized applied to the Q: Cebu Asiancars Inc., with the conformity of the
debts of the debtor (Pineda, 2000) lessor, used the leased premises as a collateral to
Tender of Payment secure payment of a loan which Asiancars may obtain
Voluntary act of the debtor whereby he offers to the from any bank, provided that the proceeds of the loan
creditor for acceptance the immediate performance of the shall be used solely for the construction of a building
formers obligation to the latter (Pineda, 2000) which, upon the termination of the lease or the
voluntary surrender of the leased premises before the
Consignation
expiration of the contract, shall automatically become
Act of depositing the object of the obligation with the court
the property of the lessor. Meeting financial difficulties
or competent authority after the creditor has unjustifiably
and incurring an outstanding balance on the loan,
refused to accept the same or is not in a position to accept
Asiancars conveyed ownership of the building on the
it due to certain reasons or circumstances (Pineda, 2000)
leased premises to MBTC, by way of "dacion en
pago."Is the dacion en pago by Asiancars in favor of
DATION IN PAYMENT
MBTC valid?
Dation in payment (dacion en pago)
A: Yes. MBTC was a purchaser in good faith. MBTC had no
knowledge of the stipulation in the lease contract.
The delivery and transmission of ownership of a thing by
Although the same lease was registered and duly
the debtor to the creditor as an accepted equivalent of the
annotated, MBTC was charged with constructive
performance of the obligation. The property given may
knowledge only of the fact of lease of the land and not of
consist not only of a thing but also of a real right
the specific provision stipulating transfer of ownership of
(Tolentino, 2002).
the building to the Jaymes upon termination of the lease.
While the alienation was in violation of the stipulation in
NOTE: The undertaking partakes of the nature of sale, that
the lease contract between the Jaymes and Asiancars,
is, the creditor is really buying the thing or property of the
MBTCs own rights could not be prejudiced by Asiancars
debtor, payment for which is to be charged against the
actions unknown to MBTC. Thus, the transfer of the
debtors debt. As such, the essential elements of a contract
building in favor of MBTC was valid and binding (Jayme v.
of sale, namely, consent, object certain, and cause or
CA, G.R. No. 128669, Oct. 4, 2002).
consideration must be present.

188
2015 GOLDEN NOTES
OBLIGATIONS
Assignment of credit
A: The repeal of R.A. 529 by R.A. 8183 has the effect of
An agreement by virtue of which the owner of a credit, removing the prohibition on the stipulation of currency
known as the assignor, by a legal cause, such as sale, dation other than Philippine currency, such that obligations or
in payment, exchange or donation, and without the transactions may now be paid in the currency agreed upon
consent of the debtor, transfers his credit and accessory by the parties. Just like R.A. 529, however, the new law
rights to another, known as the assignee, who acquires the does not provide for the applicable rate of exchange for the
power to enforce it to the same extent as the assignor conversion of foreign currency-incurred obligations in
could enforce it against the debtor. It may be in the form of their peso equivalent. It follows, therefore, that the
sale, but at times it may constitute a dation in payment, jurisprudence established in R.A. 529 regarding the rate of
such as when a debtor, in order to obtain a release from conversion remains applicable. Thus, in Asia World
his debt, assigns to his creditor a credit he has against a Recruitment, Inc. v. National Labor Relations Commission,
third person. As a dation in payment, the assignment of the SC, applying R.A. 8183, sustained the ruling of the
credit operates as a mode of extinguishing the obligation; NLRC that obligations in foreign currency may be
the delivery and transmission of ownership of a thing (in discharged in Philippine currency based on the prevailing
this case, the credit due from a third person) by the debtor rate at the time of payment. It is just and fair to preserve
to the creditor is accepted as the equivalent of the the real value of the foreign exchange- incurred obligation
performance of the obligation. to the date of its payment.
FORM OF PAYMENT PAYMENT BY NEGOTIABLE INSTRUMENT
1. Payment in cash all monetary obligations shall be Rule on tender payment as to checks
settled in Philippine currency. However, the parties
may agree that the obligation be settled in another A check does not constitute a legal tender, and that a
currency at the time of payment (Sec. 1, R.A. 8183). creditor may validly refuse it. However, this does not
2. Payment in check or other negotiable instrument not prevent a creditor from accepting a check as payment the
considered payment, they are not considered legal creditor has the option and the discretion of refusing or
tender and may be refused by the creditor except accepting it (Far East Bank & Trust Company vs. Diaz
when: Realty, Inc, G.R. No. 138588, 2001).
a. the document has been encashed; or
b. it has been impaired through the fault of the Q: Diaz & Company obtained a loan from Pacific
creditor. Banking Corp which was secured by a real estate
mortgage over two parcels of land owned by the
PAYMENT IN CASH plaintiff Diaz Realty. ABC rented an office space in the
building constructed on the properties covered by the
Legal Tender mortgage contract. The parties then agreed that the
monthly rentals shall be paid directly to the mortgagee
Legal Tender means such currency which in a given for the lessor's account, either to partly or fully pay off
jurisdiction can be used for the payment of debts, public the aforesaid mortgage indebtedness. Thereafter,
and private, and which cannot be refused by the creditor FEBTC purchased the credit of Diaz & Company in
(Tolentino, 2002). favor of PaBC, but it was only after 2 years that Diaz
was informed about it. Diaz asked the FEBTC to make
The legal tender covers all notes and coins issued by the an accounting of the monthly rental payments made by
Bangko Sentral ng Pilipinas and guaranteed by the Allied Bank. Diaz tendered to FEBTC the amount of
Republic of the Philippines. The amount of coins that may P1,450,000.00 through an Interbank check, in order to
be accepted as legal tender are: prevent the imposition of additional interests,
a. 1-Peso, 5-Pesos, 10-Pesos coins in amount not penalties and surcharges on its loan but FEBTC did not
exceeding P1,000.00 accept it as payment, instead, Diaz was asked to
b. 25 centavos or less in amount not exceeding deposit the amount with the FEBTCs Davao City
P100.00 (BSP Circular No. 537, Series of 2006, July 18, Branch Office. Was there a valid tender of payment?
2005).
A: Yes. True, jurisprudence holds that, in general, a check
Q: Northwest Airlines, through its Japan Branch, does not constitute legal tender, and that a creditor may
entered into an International Passenger Sales Agency validly refuse it. It must be emphasized, however, that this
Agreement with CF Sharp, authorizing the latter to sell dictum does not prevent a creditor from accepting a check
its air transport tickets. CF Sharp failed to remit the as payment. In other words, the creditor has the option and
proceeds of the ticket sales, thus, Northwest Airlines the discretion of refusing or accepting it (FEBTC v. Diaz
filed a collection suit before the Tokyo District Court Realty Inc., G.R. No. 138588, Aug. 23, 2001).
which rendered judgment ordering CF Sharp to pay
83,158,195 Yen and damages for the delay at the rate Burden of proving payment in an action for sum of
of 6% per annum. Unable to execute the decision in money
Japan, Northwest Airlines filed a case to enforce said
foreign judgment with the RTC of Manila. What is the The party who pleads payment as a defense has the burden
rate of exchange that should be applied for the of proving that such payment has, in fact, been made.
payment of the amount?

CIVIL LAW
EXTRAORDINARY INFALTION OR DEFLATION
Rules on legal application of payment
In case an extraordinary inflation or deflation of the
currency stipulated should supervene, the value of the The payment should be applied to the more onerous debts:
currency at the time of the establishment of the obligation 1. When a person is bound as principal in one obligation
shall be the basis of payment, unless there is an agreement and as surety in another, the former is more onerous.
to the contrary (Art. 1250, NCC). 2. When there are various debts, the oldest ones are
more burdensome.
NOTE: It applies only to contractual obligations, it cannot 3. Where one bears interest and the other does not, even
be applied to obligations arising from torts. This rule only if the latter is the older obligation, the former is
applies when there is an official pronouncement or considered more onerous.
declaration of the existence of an extraordinary inflation or 4. Where there is an encumbrance, the debt with a
deflation. guaranty is more onerous than that without security.
5. With respect to indemnity for damages, the debt
APPLICATION OF PAYMENTS which is subject to the general rules on damages is
less burdensome than that in which there is a penal
Application of Payments clause.
6. The liquidated debt is more burdensome than the
The designation of the debt to which the payment must be unliquidated one.
applied when the debtor has several obligations of the 7. An obligation in which the debtor is in default is more
same kind in favor of the same creditor (Art. 1252, NCC). onerous than one in which he is not (Tolentino, 2002).
Requisites NOTE: If the debts happen to be of same nature and

burden, the payment shall be applied proportionately.
1. There is only one debtor and creditor
2. The debtor owes the creditor two or more debts PAYMENT BY CESSION
which are of the same kind or identical nature (e.g.
both debts are money obligations obtained on Circumstances evidencing payment by cession
different dates)
3. All debts are due and demandable. Except: Debtor abandons all of his property for the benefit of his
(1) When there is stipulation to the contrary; creditors in order that from the proceeds thereof, the
(2) The application is made by the party for latter may obtain payment of credits.
whose benefit the term has been constituted (par.
1, Art. 1252, NCC) NOTE: It presupposes insolvency of the debtor. All the
4. The payment made by the debtor is not sufficient to debtors creditors must be involved and the consent of the
cover or settle all debts (Pineda, 2009) latter must be obtained.
Right of the debtor in the application of payments Dation in payment v. Payment in cession
The law grants to the debtor a preferential right to choose DATION IN PAYMENT PAYMENT IN CESSION
the debt to which his payment is to be applied. But the Number of creditors
right of the debtor is not absolute; he cannot impair the Maybe one creditor Plurality of creditors
rights granted by law to the creditor (Tolentino, 2002). Financial condition of the debtor
Not necessarily in state of Debtor must be partially or
Debtors failure to ascertain which debt his payment is financial difficulty relatively insolvent
to be applied Object
Thing delivered is
The right of the debtor to choose to which debt his Universality or property of
considered as equivalent of
payment will be applied against may be transferred to the debtor is what is ceded
performance
creditor when he fails to make the application and Extent of the extinguishment
subsequently he accepts a receipt from the creditor
Payment extinguishes
evidencing the latters choice of application. Under this Merely releases debtor for
obligation to the extent of
circumstance, the debtor cannot complain of the net proceeds of
the value of the thing
application made by the creditor unless there be a cause things ceded or assigned,
delivered as agreed upon,
for invalidating such act. unless there is contrary
proved or implied from the
intention
conduct of the creditor
NOTE: The debtor has the preferential right to choose
Ownership
which debt of the several debts shall be due (Art. 1252,
Ownership is transferred to Ownership is not
NCC).
CR upon delivery transferred
Novation
Legal application of payment
An act of novation Not an act of novation
If both the creditor and the debtor failed to exercise the Presumption of insolvency
right of application of payment, legal application (the law Does not presuppose
Presupposes insolvency
makes the application) of payment will be now govern. insolvency

190
2015 GOLDEN NOTES
OBLIGATIONS
TENDER OF PAYMENT AND CONSIGNATION Effectivity of consignation as payment
Tender of Payment GR: Consignation shall produce effects of payment only if

there is a valid tender of payment.
The definitive act of offering to the creditor what is due
him together with the demand that the creditor accept the XPNs: When: (ARTIT)
same (FEBTC v. Diaz Realty Inc., G.R. No. 138588, Aug. 23, 1. Creditor is Absent or unknown, or doesnt appear at
2001). place of payment
2. Creditor Refuses to issue a receipt without just cause
Voluntary act of the debtor whereby he offers to the 3. Title of the obligation has been lost
creditor for acceptance the immediate performance of the 4. Creditor is Incapacitated to receive payment at the
formers obligation to the latter (Pineda, 2000). time it is due
5. Two or more persons claim the right to collect (Art.
Tender of payment is the manifestation by debtors of their 1256, NCC)
desire to comply with or to pay their obligation (Sps. Benos
v. Sps. Lawilao, G.R. No. 172259, Dec. 5, 2006). NOTE: The expenses of consignation, when properly made,
shall be charged against the creditor (Art. 1259, NCC).
NOTE: If the creditor refuses the tender of payment
without just cause, the debtors are discharged from the Right of the debtor to withdraw the thing deposited
obligation by the consignation of the sum due (Sps. Benos v.
Sps. Lawilao, G.R. No. 172259, Dec. 5, 2006). Before the creditor has accepted the consignation, or
before a judicial declaration that the consignation has been
There must be a fusion of intent, ability and capability to properly made, the debtor may withdraw the thing or the
make good such offer, which must be absolute and must sum deposited, allowing the obligation to remain in force
cover the amount due (FEBTC v. Diaz Realty Inc., G.R. No. (Art. 1260, NCC).
138588, Aug. 23, 2001).
NOTE: If, the consignation having been made, the creditor
Consignation should authorize the debtor to withdraw the same, he shall
lose every preference which he may have over the thing.
Act of depositing the object of the obligation with the court The co-debtors, guarantors and sureties shall be released
or competent authority after the creditor has unjustifiably (Art. 1261, NCC).
refused to accept the same or is not in a position to accept
it due to certain reasons or circumstances (Pineda, 2000). Tender of Payment v. Consignation
Consignation shall be made by depositing the things due at TENDER OF PAYMENT CONSIGNATION
the disposal of judicial authority, before whom tender of Nature
payment shall be proved, in proper case, and the Antecedent of Principal or
announcement of the consignation in other cases (Art. consignation or consummating act for the
1258, NCC). preliminary act to extinguishment of the
consignation obligation
NOTE: Once the consignation has been duly made, the Effect
debtor may ask the judge to order the cancellation of the It extinguishes the
obligation (Art. 1260, NCC). It does not by itself
obligation when declared
extinguish the obligation
valid
Requisites of consignation (VP-CPAS) Character
Judicial for it requires the
1. Valid existing debt which is already due; Extrajudicial filing of a complaint in
2. Prior valid tender of payment except when prior court (Pineda, 2000)
tender of payment is dispensable
3. Creditor unjustly refuses the tender of payment Q: In an ejectment case, X refused to vacate the land
4. Prior notice of consignation given to persons alleging that Y had sold to him the additional area, the
interested in the fulfillment of the obligation payment of which would be effected five years after
the execution of a formal deed of sale. However, the
NOTE: For reasons of equity, substantial compliance parties failed to execute a deed of sale. During the
with the requirement of notice is enough (De Mesa v. pendency of the action, X deposited the payment for
CA, G.R. Nos. 106467-68, 1999). the addition to the lot with the court. Is there a valid
consignation?
5. Amount or thing is deposited at the disposal of
judicial authority A: No. Under Art. 1257 of the Civil Code, consignation is
6. Subsequent notice of the fact of consignation to proper only in cases where an existing obligation is due. In
persons interested in the fulfillment of the obligation. this case, the contracting parties agreed that full payment
of purchase price shall be due and payable within 5 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,

CIVIL LAW
therefore, the 5-year period during which the purchase
price should be paid had not commenced. In short, the GR: The obligation is extinguished when the object of
purchase price was not yet due and payable (Heirs of San the obligation is lost or destroyed (Art. 1262, NCC).
Andres v. Rodriguez, G.R. No. 135634, May 31, 2000).
XPNs: (LAS-CD-PCG)
Q: Under a pacto de retro sale, X sold to Y his lot and a. Law provides otherwise (Art. 1262, NCC)
the building erected thereon. They agreed that half of b. Nature of the obligation requires the Assumption
the consideration shall be paid to the bank to pay off of risk (Ibid)
the loan of X. After paying the first installment, Y, c. Stipulation to the contrary (Ibid)
instead of paying the loan to the bank, restructured it d. Debtor Contributed to the loss (Ibid)
twice. Eventually, the loan became due and e. Loss the of the thing occurs after the debtor
demandable. Thus, X paid the bank. On the same day, Y incurred in Delay (Ibid)
also went to the bank and offered to pay the loan, but f. When debtor Promised to deliver the same thing
the bank refused to accept the payment. Y then filed an to two or more persons who do not have the
action for consignation without notifying X. Is there a same interest (Art. 1165, NCC)
valid consignation by Y of the balance of the contract g. When the debt of a certain and determinate thing
price? proceeds from a Criminal offense (Art. 1268, NCC)
h. When the obligation is Generic (Art. 1263, NCC)
A: No. Y filed the petition for consignation against the bank
without notifying the X, resulting to the formers failure to 2. Generic obligation to give:
prove the payment of the balance of the purchase price
and consignation. In fact, even before the filing of the GR: The obligation is not extinguished because a
consignation case, Y never notified the X of their offer to generic thing never perishes (genus nun guam perit)
pay (Sps. Benos v. Sps.Lawilao, G.R. No. 172259, Dec. 5, (Art. 1263, NCC).
2006).
Q: Because of Ligayas refusal to accept several tenders XPNs:

of payment and notices of consignation given by OSSA a. In case of generic obligations whose object is a
in its desire to comply with its obligation to pay on particular class or group with specific or
installments, OSSA brought a complaint for determinate qualities (delimited generic
consignation against Ligaya before the RTC. The RTC obligation)
allowed OSSA, among others, to deposit with it,by way b. In case the generic thing has already been
of consignation, all future quarterly installments segregated or set aside, in which case, it has
without need of formal tenders of payment and service become specific.
of notices of consignation. Ligaya assails the validity of
the consignation on the ground that there was no 3. An obligation to do the obligation is extinguished
notice to her regarding OSSA's consignation of the when the prestation becomes legally or physically
amounts corresponding to certain installments. Is impossible without the fault of the obligor (Art. 1266,
Ligaya correct? NCC).
A: No. The motion and the subsequent court order served Types of impossibility to perform an obligation to do
on Ligaya in the consignation proceedings sufficiently
served as notice to Ligaya of OSSA's willingness to pay the 1. Legal impossibility act stipulated to be performed is
quarterly installments and the consignation of such subsequently prohibited by law.
payments with the court. For reasons of equity, the 2. Physical impossibility act stipulated could not be
procedural requirements of consignation are deemed physically performed by the obligor due to reasons
substantially complied with in the present case (De Mesa v. subsequent to the execution of the contract (Pineda,
CA, G.R. Nos. 106467-68, Oct. 19, 1999). 2000).
LOSS OF THE THING DUE NOTE: The impossibility must be after the
constitution of the obligation. If it was before, there is
When a thing is considered lost (DOPE) nothing to extinguish.
1. It Disappears in such a way that its existence is Effect of partial loss

unknown;
2. It goes Out of commerce; 1. Due to the fault or negligence of the debtor Creditor
3. It Perishes; or has the right to demand the rescission of the
4. Its Existence is unknown or if known, it cannot be obligation or to demand specific performance, plus
recovered. damages, in either case.
2. Due to fortuitous event:
Effect of loss of the thing/object of the obligation a. Substantial loss obligation is extinguished.
b. Unsubstantial loss the creditor shall deliver the
If the obligation is a: thing promised in its impaired condition (Art.
1264, NCC).
1. Determinate obligation to give:

192
2015 GOLDEN NOTES
OBLIGATIONS
Effect when the thing is lost in the possession of the CONDONATION OR REMISSION OF DEBT
debtor
Condonation
GR: It is presumed that loss is due to debtors fault.
An act of liberality by virtue of which the creditor, without
XPN: Presumption shall not apply in case loss is due to receiving any price or equivalent, renounces the
earthquake, flood, storm or other natural calamity (Art. enforcement of the obligation, as a result of which it is
1262, NCC) extinguished in its entirety or in that part or aspect of the
same to which the condonation or remission refers
XPN to the XPN: Debtor still liable even if loss is due (Pineda, 2000).
to fortuitous event when:
1. Debtor incurred in delay; or Requisites of condonation (GAIDE)
2. Debtor promised to deliver the thing to two or
more persons with different interests (par. 3, Art. 1. Must be Gratuitous;
1165, NCC) 2. Acceptance by the debtor;
3. Must not be Inofficious;
Rebus sic stantibus 4. Formalities provided by law on Donations must be
complied with if condonation is express; and
A principle in international law which means that an 5. An Existing demandable debt.
agreement is valid only if the same conditions prevailing at
time of contracting continue to exist at the time of Effect of the remission of the principal debt with
performance. It is the basis of the principle of unforeseen respect to the accessory obligation and vice versa
difficulty of service (Art. 1267, NCC).
The renunciation of the principal debt shall extinguish the
NOTE: Principle of unforeseen events applies when the accessory but the waiver of the latter shall leave the
service has become so difficult as to be manifestly beyond former in force (Art. 1273, NCC).
the contemplation of the parties, the obligor may also be
released therefrom in whole or in part (Art. 1267). NOTE: It is presumed that the accessory obligation of
However, this principle cannot be applied absolutely in pledge has been remitted when the thing pledged, after its
contractual relations since parties are presumed to have delivery to the creditor, is found in the possession of the
assumed the risk of unfavorable developments (Pineda, debtor, or of a third person who owns the thing (Art. 1274,
2000). NCC).
Requisites in order to relieve the debtor from his Effect of inofficious condonation
obligation, in whole or in part, based on unforeseen
difficulty of fulfillment It may be totally revoked or reduced depending on
whether or not it is totally or only partly inofficious
1. Event or change in circumstance could not have been (Pineda, 2000).
foreseen at the time of the execution of the contract
2. Such event makes the performance extremely difficult Acceptance by the debtor
but not impossible
3. The event must not be due to the act of any of the The acceptance by the debtor is required. There can be no
parties unilateral condonation. This is because condonation or
4. The contract is for a future prestation (Tolentino, remission is an act of liberality. It is a donation of an
2002). existing credit, considered a property right, in favor of the
debtor, it is required that the DR gives his consent thereto
Debt which proceeds from a criminal offense by making an acceptance. If there is no acceptance, there is
no condonation (Pineda, 2009).
GR: Debtor shall not be exempted from the payment of his
obligation regardless of the cause of the loss CONFUSION OR MERGER OF RIGHTS
XPN: The thing having been offered by debtor to the Confusion or Merger of rights
person who should receive it, the latter refused without
justification to accept it (Art. 1268, NCC). There is a confusion when there is a meeting in one person
of the qualities of a creditor and debtor of the same
NOTE: Offer referred in Art. 1268 is different from obligation (Sanchez Roman).
consignation; the former refers to extinguishment of
obligation through loss while the latter refers to the Requisites of confusion or merger of rights
payment of the obligation.
1. Merger in the same person of the characters of both a
creditor and debtor (Art. 1275, NCC);
2. Must take place in the persons of a principal creditor
and a principal debtor(Art. 1276, NCC); and
3. Merger is definite and complete.

CIVIL LAW
Effect of confusion or merger of rights It is the offsetting of the respective obligation of two
persons who stand as principal creditors and debtors of
The creditor and debtor becomes the same person each other, with the effect of extinguishing their
involving the same obligation. Hence, the obligation is obligations to their concurrent amount.
extinguished (Art. 1275, NCC).
Requisites of compensation
There can be partial confusion
1. Each one of the obligors must be bound principally,
It will be definite and complete up to the extent of the and that he be at the same time a principal creditor of
concurrent amount or value, but the remaining obligation the other except guarantor who may set up
subsists (Pineda, 2000). compensation as regards what the creditor may owe
the principal (Art. 1279, 1280, NCC);
Effect of confusion or merger in relation to the 2. Both debts consist in sum of money, or if the things
guarantors due are consumable, they be of the same kind and also
of the same quality if the latter has been stated;
1. Merger which takes place in the person of the 3. Both debts are due;
principal debtor or principal creditor benefits the 4. Both debts are liquidated and demandable;
guarantors. The contract of guaranty is extinguished. 5. Neither debt must be retained in a controversy
2. Confusion which takes place in the person of any of commenced by third person and communicated in
the guarantors does not extinguish the obligation (Art. due time to the debtor (neither debt is garnished)
1276, NCC). (Art. 1279, NCC); and
6. Compensation must not be prohibited by law (Art.
Effect of confusion or merger in one debtor or creditor 1290, NCC).
in a joint obligation
When all the requisites mentioned in Art. 1279 of the Civil
GR: Joint obligation is not extinguished since confusion is Code are present, compensation takes effect by operation
not definite and complete with regard to the entire of law, and extinguishes both debts to the concurrent
obligation. A part of the obligation still remains amount, even though the creditors and debtors are not
outstanding. aware of the compensation (Art. 1290, NCC).
XPN: Obligation is extinguished with respect only to the Q: X, who has a savings deposit with Y Bank in the sum
share corresponding to the DR or CR concerned. In effect, of PI,000,000.00, incurs a loan obligation with the said
there is only partial extinguishment of the entire bank in the sum of P800,000.00 which has become
obligation (Art. 1277, NCC; Pineda, 2000). due. When X tries to withdraw his deposit, Y Bank
allows only P200,000.00 to be withdrawn, less service
Effect of confusion or merger in one debtor or creditor charges, claiming that compensation has extinguished
in a solidary obligation its obligation under the savings account to the
concurrent amount of X's debt. X contends that
If a solidary debtor had paid the entire obligation, the compensation is improper when one of the debts, as
obligation is totally extinguished without prejudice to the here, arises from a contract of deposit. Assuming that
rights of the solidary debtor who paid, to proceed against the promissory note signed by X to evidence the loan
his solidary co- debtors for the latters individual does not provide for compensation between said loan
contribution or liability (Pineda, 2000). and his savings deposit, who is correct? (1998 Bar
Question)
Revocation of confusion or merger of rights
A: Y bank is correct. All the requisites of Art. 1279, Civil
If the act which created the confusion is revoked for some Code are present. Compensation shall take place when two
causes such as rescission of contracts, or nullity of the will persons are reciprocally creditor and debtor of each other.
or contract, the confusion or merger is also revoked. The In this connection, it has been held that the relation
subject obligation is revived in the same condition as it existing between a depositor and a bank is that of creditor
was before the confusion. 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
NOTE: During such interregnum, the running of the period indebtedness to it on the part of a depositor" (Gullas v.
of prescription of the obligation is suspended (Pineda, PNB, GR No. L-43191, November 13, 1935). Hence,
2000). compensation took place between the mutual obligations
of X and Y bank.
COMPENSATION
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 (Art. 1278, NCC).

194
2015 GOLDEN NOTES
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Compensation v. Payment Generally, both debts must Does not require that debts
be liquidated are liquidated
BASIS COMPENSATION PAYMENT Judicial compensation
A mode of provided that the
Legal or conventional
extinguishing to requirements of Rules of
compensation governed by
the concurrent Court, particularly on
the Civil Code
amount, the Counterclaims and/or
Payment means Cross-claims are observed.
obligations of
not only delivery
those persons
Definition of money but also Debts or obligations not subject to compensation
who in their own
performance of
right are
an obligation 1. Debts or obligations arising from contracts of
reciprocally
debtors and depositum (Art. 1287, NCC)
creditors of each 2. Debts arising from obligations of a depositary (Ibid).
other 3. Debts arising from obligations of a baileee in
Capacity of commodatum (Ibid)
parties not Debtor must 4. Claims for support due by gratuitous title (Ibid)
necessary have capacity to 5. Obligations arising from criminal offenses (Art. 1288,
As to the NCC)
dispose of the
necessity of the 6. Certain obligations in favor of government (e.g. taxes,
Reason: thing paid;
capacity of the fees, duties, and others of a similar nature)
Compensation creditor must
parties
operates by law, have capacity to
not by the act of receive payment NOTE: Compensation takes place by operation of law, even
the parties though the debts may be payable at different places, but
The performance there shall be an indemnity for expenses of exchange or
As the There can be transportation to the place of payment (Art. 1286, NCC).
must be complete
susceptibility of partial
and indivisible
partial extinguishment KINDS OF COMPENSATION
unless waived by
extinguishment of the obligation
the creditor
Legal Kinds of compensation
compensation Takes effect by
As to the 1. Legal compensation by operation of law
takes place by the act of the
operation of 2. Conventional by agreement of the parties
operation of law parties and
extinguishing 3. Judicial (set-off) by judgment of the court when
without involves delivery
the obligation there is a counterclaim duly pleaded, and the
simultaneous or action
delivery compensation decreed
It is not 4. Facultative may be claimed or opposed by one of the
Parties must be necessary that parties.
As to the
mutually debtors the parties be
relationship of Q: De Leon sold and delivered to Silahis various
and creditors of mutually debtors
the parties merchandise. Due to Silahis' default, De Leon filed a
each other and creditors of
each other complaint for the collection of said accounts. Silahis
asserts, as affirmative defense, a debit memo as
Compensation v. Confusion unrealized profit for a supposed commission that
Silahis should have received from De Leon. Was there
COMPENSATION CONFUSION legal compensation?
(Arts. 1278-1279) (Arts. 1275-1277)
Two persons who are One person where qualities A: None. Silahis admits the validity of its outstanding
mutual debtors and of debtor and creditor are accounts with De Leon. But whether De Leon is liable to
creditors of each other merged pay Silahis a commission on the subject sale to Dole is
disputed. This circumstance prevents legal compensation
At least two obligations One obligation
from taking place (Silahis Marketing Corp. v. IAC, G. R. No. L-
74027, Dec. 7, 1989).
Compensation v. Counterclaim or Set-off
NOTE: Compensation is not proper where the claim of the
COUNTERCLAIM /
COMPENSATION person asserting the set-off against the other is not clear or
SET-OFF
liquidated; compensation cannot extend to unliquidated,
Need not to be pleaded; disputed claim existing from breach of contract (Silahis
takes place by operation of Marketing Corp. v. IAC, G. R. No. L-74027, Dec. 7, 1989).
law and extinguishes
reciprocally the two debts It must be pleaded to be Q: Atty. Laquihon, in behalf of Pacweld, filed a pleading
as soon as they exist effectual addressed to MPCC titled motion to direct payment of
simultaneously, to the attorney's fee, invoking a decision wherein MPCC was
amount of their respective adjudged to pay Pacweld the sum of P10,000.00 as
sums. attorney's fees. MPCC filed an opposition stating that

CIVIL LAW
the said amount is set-off by a like sum of P10,000.00, Q: Eduardo was granted a loan by XYZ Bank for the
collectible in its favor from Pacweld also by way of purpose of improving a building which XYZ leased
attorney's fees which MPCC recovered from the same from him. Eduardo executed the promissory note in
CFI of Manila in another civil case. Was there legal favor of the bank, with his friend Ricardo as
compensation? cosignatory. In the PN, they both acknowledged that
they are individually and collectively liable and
A: Yes. MPCC and Pacweld were creditors and debtors of waived the need for prior demand. To secure the PN,
each other, their debts to each other consisting in final and Ricardo executed a real estate mortgage on his own
executory judgments of the CFI in two separate cases. The property. When Eduardo defaulted on the PN, XYZ
two obligations, therefore, respectively offset each other, stopped payment of rentals on the building on the
compensation having taken effect by operation of law and ground that legal compensation had set in. Since there
extinguished both debts to the concurrent amount of was still a balance due on the PN after applying the
P10,000.00, pursuant to the provisions of Arts. 1278, 1279 rentals, XYZ foreclosed the real estate mortgage over
and 1290 of the Civil Code, since all the requisites provided Ricardos property. Ricardo opposed the foreclosure
in Art. 1279 of the said Code for automatic compensation on the ground that he is only a co-signatory; that no
"even though the creditors and debtors are not aware of demand was made upon him for payment, and
the compensation" were present (Mindanao Portland assuming he is liable, his liability should not go
Cement Corp. v. CA,G.R. No. L-62169, Feb. 28, 1983). beyond half of the balance of the loan. Further, Ricardo
said that when the bank invoked compensation
Conventional compensation between the rentals and the amount of the loan, it
amounted to a new contract or novation, and had the
It is one that takes place by agreement of the parties. effect of extinguishing the security since he did not
give his consent (as owner of the property under the
Effectivity of conventional compensation real estate mortgage) thereto.
Compensation to become effective: a. Can XYZ Bank validly assert legal

GR: The mutual debts must be both due (Art. 1279, NCC) compensation?
b. Can Ricardos property be foreclosed to pay
XPN: The parties may agree that their mutual debts be the full balance of the loan?
compensated even if the same are not yet due (Art. 1282, c. Does Ricardo have basis under the Civil Code
NCC). for claiming that the original contract was
novated? (2008 Bar Question)
Judicial compensation
A:
If one of the parties to a suit over an obligation has a claim a) No. XYZ Bank may validly assert the partial
for damages against the other, the former may set it off by compensation of both debts, but it should be
proving his right to said damages and the amount thereof facultative compensation because not all of the five
(Art. 1283, NCC). requisites of legal compensation are present (Art.
1279). The payment of the rentals by XYZ Bank is not
All the requisites mentioned in Art. 1279 must be present, yet due, but the principal obligation of loan where
except that at the time of filing the pleading, the claim need both Eduardo and Ricardo are bound solidarily and
not be liquidated. The liquidation must be made in the therefore any of them is bound principally to pay the
proceedings. entire loan, is due and demandable without need of
demand. XYZ Bank may declare its obligation to pay
Facultative compensation rentals as already due and demand payment from any
of the two debtors.
One of the parties has a choice of claiming or opposing the
compensation but waives his objection thereto such as an b) No, because there was no prior demand on Ricardo,
obligation of such party is with a period for his benefit depriving him of the right to reasonably block the
alone and he renounces the period to make the obligation foreclosure by payment. The waiver of prior demand
become due. in the PN is against public policy and violates the right
to due process. Without demand, there is no default
Facultative compensation is unilateral and does not and the foreclosure is null and void. Since the
require mutual agreement; voluntary or conventional mortgage, insofar as Ricardo is concerned is not
compensation requires mutual consent. violated, a requirement under Act 3135 for a valid
foreclosure of real estate mortgage is absent.
Example: X owes Y P100,000 demandable and due on Apr.
1, 2012. Y owes X P100,000 demandable and due on or In the case of DBP v. Licuanan, it was held that: the
before Apr. 15, 2012. Y, who was given the benefit of the issue of whether demand was made before the
term, may claim compensation on April 1, 2012. On the foreclosure was effected is essential. If demand was
other hand, X, who demands compensation, can be made and duly received by the respondents and the
properly opposed by Y because Y could not be made to pay latter still did not pay, then they were already in
until Apr. 15, 2012. 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

196
2015 GOLDEN NOTES
OBLIGATIONS
respondents had not defaulted in their payment and a. With the consent of the debtor compensation
the foreclosure was premature. cannot be set up except when the right to
compensation is reserved.
c) None of the three kinds of novation is applicable. b. With the knowledge but without consent of the
There is no objective novation, whether express or debtor compensation can be set up regarding
implied, because there is no change in the object or debts previous to the cession or assignment but
principal conditions of the obligation. There is no not subsequent ones.
substitution of debtors, either. Compensation is c. Without the knowledge of debtor - can set up
considered as abbreviated or simplified payment and compensation as a defense for all debts maturing
since Ricardo bound himself solidarily with Eduardo, prior to his knowledge of the assignment.
any facultative compensation which occurs does not
result in partial legal subrogation. Neither Eduardo NOVATION
nor Ricardo is a third person interested in the
obligation under Art. 1302. Novation
Obligations subject to facultative compensation It is the substitution or change of an obligation by another,

resulting in its extinguishment or modification, either by
When one of the debts arises from: changing the object or principal conditions, or by
1. Depositum substituting another in the place of the debtor or by
2. Obligations of a depositary subrogating a third person to the rights of the creditor
3. Obligations in commudatum (Pineda, 2000).
4. Support
Requisites of novation (OIC SN)
GR: Claim of support due to gratuitous title
1. Valid Old obligation
XPN: Future support. 2. Intent to extinguish or to modify the old obligation
3. Capacity and consent of all the parties to the new
5. Civil liability from a crime obligation (except in case of expromission where the
old debtor does not participate)
NOTE: Art. 1288 prohibits compensation if one of the 4. Substantial difference of the old and new obligation
debts consists in civil liability arising from a penal offense. on every point incompatible with each other (implied
However, the victim is allowed to claim compensation. novation)
5. Valid New obligation
If one or both debts are rescissible or voidable
Presumption of Novation
When one or both debts are recissible or voidable, they
may be compensated against each other before they are Novation is never presumed, it must be proven as a fact
judicially rescinded or avoided (Art. 1284, NCC). either by:
1. Explicit declaration if it be so declared in
If the prescriptive period had already lapsed, there is unequivocal terms; or
automatic compensation and the same will not be 2. Material incompatibility that the old and the new
disturbed anymore. Whereas, if the debt is rescinded or obligations be on every point incompatible with each
annulled, compensation shall be restitution of what each other (Art. 1292, NCC).
party had received before the rescission or annulment.
Two-fold functions of novation
Effects of assignment on compensation of debts
1. It extinguishes the old obligation; and
1. After the compensation took place 2. Creates a new obligation in lieu of the old one.
GR: ineffectual; useless act since there is nothing Kinds of novation

more to assign
1. As to essence
XPN: when the assignment was made with the a. Objective or real novation changing the object or
consent of the debtor. principal conditions of the obligation (Art. 1291,
NCC).
NOTE: Such consent operates as a waiver of the rights b. Subjective or personal novation change of the
to compensation. parties.
i. Substituting the person of the debtor
XPN TO THE XPN: at the time he gave his (passive novation) may be made without
consent, he reserved his right to the the knowledge of or against the will of the
compensation. latter, but not without the consent of the
creditor.
2. Before compensation took place a) Delegacion the substitution is
initiated by the old debtor himself
(delegante) by convincing another

CIVIL LAW
person (delegado) to take his place Requisites of delegacion
and to pay his obligation to the
creditor. 1. Substitution is upon the initiative or proposal of the
b) Expromission the substitution of the old debtor himself by proposing to the creditor the
old debtor by a new debtor is upon the entry of another (third person) as the new debtor
initiative or proposal of a third person. who will replace him in payment of the obligation.
2. The creditor accepts and the new debtor agrees to the
NOTE: If it is the creditor who initiated the proposal of the old debtor.
change of debtor, it is considered 3. The old debtor is released from the obligation with
expromission the consent of the creditor.
ii. Subrogating a third person to the rights of Insolvency of the new debtor in delegacion
the creditor (active novation)
GR: Insolvency of the new debtor (delegado), who has
c. Mixed combination of the objective and been proposed by the original debtor (delegante) and
subjective novation. accepted by the creditor (delegatario), shall not revive the
action of the latter against the original obligor (Art. 1295,
2. As to form of their constitution NCC).
a. Express the parties declared in unequivocal
terms that the obligation is extinguished by the XPNs: Original debtor shall be held liable:
new obligation. 1. Insolvency was already existing and of public
b. Implied no express declaration that the old knowledge, or known to the debtor (Art. 1295, NCC);
obligation is extinguished by the new one. The 2. Insolvency of the new debtor was already existing and
old and new obligation is incompatible on every known to the original debtor at the time of the
material point (Art. 1292, NCC). delegation of the debt to the new debtor (Art. 1295,
NCC).
3. As to extent of their effects
a. Total or extinctive obligation is originally Requisites of expromission
extinguished.
b. Partial or modificatory original obligation is not 1. Substitution is upon the initiative or proposal of a
extinguished but merely modified. third person who will step into the shoes of the
debtor;
4. As to their origin 2. Creditor must give his consent to the proposal of the
a. Legal novation by operation of law (Art. 1300 third person.
and 1302, NCC) 3. Old debtor must be released from the obligation with
b. Conventional novation by agreement of the the consent of the creditor.
parties (Art. 1300 and 1301, NCC)
Insolvency of the new debtor in expromission
5. As to presence of absence of conditio
a. Pure new obligation is not subject to a condition If substitution is without the knowledge or against the will
b. Conditional when the creation of the new of the debtor, the new debtors insolvency or
obligation is subject to a condition. nonfulfillment of the obligation shall not give rise to any
liability on the part of the original debtor (Art. 1294, NCC).
Rights of the new debtor
NOTE: If the old debtor gave his consent and the new
1. With the debtors consent right of reimbursement debtor could not fulfill the obligation, the old debtor
and subrogation. should be liable for the payment of his original obligation.
2. Without the consent of the old debtor or against his will
right to beneficial reimbursement.
Consent of the creditor
The consent of the creditor is mandatory both in

delegacion and expromission (Art. 1293, NCC). 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: Creditors 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, 54 Phil. 994).

198
2015 GOLDEN NOTES
OBLIGATIONS
SUMMARY As a requirement of SDIC, Danilo secured from
Jeanette her approval and the latter obliged. Danilo's
DELEGACION EXPROMISSION request was granted and he was issued a Diamond
Person who (Edition) Diners Club Card. Danilo had incurred credit
initiated the Old debtor Third person charged plus appropriate interest and service charge.
substitution However, he defaulted in the payment of this
It may be express or implied from his obligation. Was the upgrading a novation of the
Consent of the original agreement governing the use of Danilo Alto's
acts but not from his mere acceptance
creditor first credit card, as to extinguish that obligation?
of payment by a third party.
With the consent With or without
of the old debtor the knowledge of A: Yes. Novation, as a mode of extinguishing obligations,
Consent of the may be done in two ways: by explicit declaration, or by
(since he the debtor or
old debtor material incompatibility.
initiated the against the will of
substitution) the old debtor
Consent is There is no doubt that the upgrading was a novation of the
Consent of third needed but it Consent is original agreement covering the first credit card issued to
person need not be given needed Danilo Alto, basically since it was committed with the
simultaneously intent of cancelling and replacing the said card. However,
Intention of Released from the obligation with the the novation did not serve to release Jeanette from her
substitution consent of the creditor surety obligations because in the surety undertaking she
With the debtors expressly waived discharge in case of change or novation
consent right of in the agreement governing the use of the first credit card
reimbursement (Molino v. Security Diners International Corp., G.R. No.
and subrogation 136780, Aug. 16, 2001).
With the debtors
Rights of the consent right of Effects of novation
Without the
new debtor reimbursement
consent of the old
and subrogation 1. Extinguishment of principal also extinguishes the
debtor or against
his will right to accessory, except:
beneficial a. Mortgagor, pledgor, surety or guarantor agrees to
reimbursement be bound by the new obligation (Tolentino, 1999).
Shall not revive b. Stipulation made in favor of a third person such
the action of the as stipulation pour atrui (Art. 1311), unless
With the debtors beneficiary consents to the novation (Art. 1296,
latter against the
consent - If the NCC).
original obligor
old debtor gave
his consent and 2. If old obligation is:
Original debtor
the new debtor a. Void novation is void (Art. 1298, NCC)
shall be held
could not fulfill b. Voidable novation is valid provided that the
liable:
the obligation, annulment may be claimed only by the debtor or
1. Insolvency
the old debtor when ratification validates acts (Art. 1298, NCC).
was already
should be liable c. If the old obligation was subject to a suspensive
existing and
for the payment or resolutory condition, the new obligation shall
of public
of his original be under the same condition, unless it is
Insolvency or knowledge,
obligation. otherwise stipulated (Art. 1299, NCC).
nonfulfillment of or known to
the obligation of the debtor 3. If old obligation is conditional and the new obligation
Without the is pure:
the new debtor 2. Insolvency of
consent of the old a. if resolutory and it occurred old obligation
the new
debtor or against already extinguished; no new obligation since
debtor was
his will the new nothing to novate.
already
debtors b. if suspensive and it did not occur it is as if there
existing and
insolvency or is no obligation; thus, there is nothing to novate
known to the
nonfulfillment of 4. If the new obligation is:
original
the obligation a. Void original one shall subsist, unless the
debtor at the
shall not give rise parties intended that the former relation should
time of the
to any liability on be extinguished in any event (Art. 1297, NCC).
delegation of
the part of the b. Voidable novation can take place, except when
the debt to
original debtor. such new obligation is annulled. In such case, old
the new
debtor. obligation shall subsist.
c. Pure obligation conditions of old obligation
deemed attached to the new, unless otherwise
Q: SDIC issued to Danilo a Diners Card (credit card)
with Jeannete as his surety. Danilo used this card and stipulated (Tolentino, 1999)
initially paid his obligations to SDIC. Thereafter, d. Conditional obligation:
Danilo wrote SDIC a letter requesting it to upgrade his i. if resolutory valid until the happening of the
Regular Diners Club Card to a Diamond (Edition) one. condition (Art. 1181, NCC)

CIVIL LAW
ii. if suspensive and did not materialize no he shall be preferred to the person who has been
novation, old obligation is enforced (Art. subrogated in his place in virtue of the partial
1181, NCC) payment of the same credit. (Art. 1304, NCC)
Q: Will a contract of suretyship, which is secondary to Presumption of legal subrogation

a principal obligation, be extinguished when novation
occurs? GR: Legal subrogation is not presumed (Art. 1300, NCC)
A: It depends. A surety is released from its obligation XPN: In cases expressly mentioned in the law (Art. 1302,
when there is a material alteration of the principal NCC):
contract in connection with which the bond is given, such 1. When a creditor pays another creditor who is
as a change which imposes a new obligation on the preferred, even without the debtors knowledge;
promising party, or which takes away some obligation 2. When a third person, not interested in the obligation,
already imposed, or one which changes the legal effect of pays with the express or tacit approval of the debtor
the original contract and not merely its form (Philippine 3. When, even without the knowledge of the debtor, a
Charter Insurance Corporation vs. Petroleum Distributors & person interested in the fulfillment of the obligation
Service Corporation, G.R. No. 180898, April 18, 2012). pays, without prejudice to the effects of confusion as
Furthermore, a surety is not released by a change in the to the latters share (Art. 1302, NCC)
contract, which does not have the effect of making its
obligation more onerous (Stronghold Insurance Company, Conventional subrogation v. Assignment of credit
Inc. v. Tokyu Construction Company, G.R. Nos. 158820-21
[2009]). As such, a contract is only extinguished by CONVENTIONAL ASSIGNMENT OF
novation when there is a material alteration in the BASIS SUBROGATION CREDITS OR
principal contract or if it has the effect of making the RIGHTS
obligation more onerous. Governing law Art. 1300-1304 Art. 1624-1627
The transfer of
Subrogation the credit or right
does not
It is the active subjective novation characterized by the It extinguishes
extinguish or
transfer to a third person of all rights appertaining to the the original
modify the
creditor in the transaction concerned including the right to Effect obligation and
obligation. The
proceed against the guarantors or possessors of mortgages creates a new
transferee
and similar others subject to any applicable legal provision one
becomes the new
or any stipulation agreed upon by the parties in creditor for the
conventional subrogation. same obligation.
The consent of
NOTE: Whoever pays on behalf of the debtor without the the debtor is not
knowledge or against the will of the latter, cannot compel The consent of necessary.
the creditor to subrogate him in his rights, such as those Need for consent the debtor is Notification is
arising from a mortgage, guaranty, or penalty (Art. 1237, of debtor necessary (Art. enough for the
NCC). 1301, NCC). validity of the
assignment (Art.
Kinds of subrogation 1626, NCC).
Begins from the Begins from
1. As to their creation Effectivity moment of notification of the
a. Legal subrogation constituted by virtue of a subrogation debtor
law (Art. 1300, NCC; Art. 1302, NCC) The defect in the
b. Voluntary or conventional subrogation created The defect in the
old obligation
by the parties by their voluntary agreement (Art. credit or rights is
Curability of may be cured
1300, NCC) not cured by its
defect or vice such that the new
mere assignment
obligation
NOTE: Conventional subrogation of a third person to a third person
becomes valid
requires the consent of the original parties and of the Debtor cannot set
third person. (Art. 1301, NCC) The debtor can
up a defense
still set up the
against the new
2. As to their extent defense
creditor which he
a. Total subrogation credits or rights of the Defense (available against
could have
creditor in the transaction are totally the old creditor)
availed himself of
transferred to the third person. against the new
against the old
b. Partial subrogation only part of the credit or creditor
creditor
rights of the creditor in the transaction are
transferred to the third person. NOTE: In the law of subrogation, active subjective
novation is stricter than passive subjective novation. In the
NOTE: A creditor, to whom partial payment has been latter, the consent of the old debtor is not even required in
made, may exercise his right for the remainder and expromission.

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CONTRACTS by parties to a contract upon third persons (Art. 1311,
NCC) and which stipulation is merely part of a
Contract contract entered into by the parties, neither of whom
acted as agents of the third person and which favor
The meeting of minds between two persons whereby one can be demanded by the third person if duly accepted
binds himself, with respect to the other, to give something by him before it could be revoked.
or to render some service (Art. 1305, NCC).
Requisites of stipulation pour atrui:
Obligation v. Contract a. Stipulation in favor of a third person;
b. Stipulation is just part and not the whole
While a contract is one of the sources of obligations, an obligations of the contract;
obligation is the legal tie or relations itself that exists after c. Contracting parties must have clearly and
a contract has been entered into. deliberately conferred a favor upon third
person;
Hence, there can be no contract if there is no obligation. d. Third person must have communicated his
But an obligation may exist without a contract (De Leon, acceptance; and
2003). e. Neither of the contracting parties bears the
legal representation of the third person
Duty of courts in interpreting contracts (Young v. Court of Appeals G.R. No. 79518,
Jan. 13, 1989).
It is not the province of the court to alter a contract by
construction or to make a new contract for the parties. Its 3. Third persons coming into possession of the object of
duty is confined to the interpretation of the one which they the contract creating real rights subject to the
have made for themselves without regard to its wisdom or provisions of Mortgage Law and the Land Registration
folly as the court cannot supply material stipulations or Law (Art. 1312, NCC).
red into the contract words which it does not contain 4. Contracts entered into in fraud of creditors (Art. 1313,
(Cuizon v. CA, G.R. No. 102096, August 22, 1996). NCC).
5. When a third person induces a party to violate the
CHARACTERISTICS OF A CONTRACT contract (Art. 1314, NCC).
The following are the characteristics of a contract (ROMA): NOTE: This tort or wrongful conduct is known as
Interference with contractual relations.
1. Relativity (Art. 1311, NCC)
2. Obligatoriness and consensuality(Art. 1315, NCC) Requisites:
3. Mutuality (Art. 1308, NCC) a. Existence of a valid contract;
4. Autonomy (Art. 1306) b. Third person has knowledge of such
contract;
RELATIVITY OF CONTRACTS c. Third person interferes without justification.
Principle of relativity or Principle of limited effectivity Q: Fieldmen's Insurance issued, in favor of MYT, a
of contracts (2011 Bar Question) common carrier, accident insurance policy. 50% of the
premium was paid by the driver. The policy indicated
GR: Contracts take effect only between the parties or their that the Company will indemnify the driver of the
assigns and heirs, except where the rights and obligations vehicle or his representatives upon his death. While
arising from the contract are not transmissible by their the policy was in force, the taxicab driven by Carlito,
nature, by stipulation, or by provision of law (Art. 1311, met with an accident. Carlito died. MYT and Carlito's
NCC). parents filed a complaint against the company to
collect the proceeds of the policy. Fieldmens admitted
Res inter alios acta aliis neque nocet prodest (a thing done the existence thereof, but pleaded lack of cause of
between others does not harm or benefit others) a action on the part of the parents. Decide.
contract can only obligate the parties who entered into it,
or their successors who assumed their personalities, and A: Carlitos parents who, admittedly, are his sole heirs
that, concomitantly, a contract can neither favor nor have a direct cause of action against the Company. This
prejudice third persons (Vitug, 2006). is so because pursuant to the stipulations, the Company
will also indemnify third parties. The policy under
NOTE: With respect to the heir, he shall not be liable consideration is typical of contracts pour autrui, this
beyond the value of the property he received from the character being made more manifest by the fact that the
decedent (Art. 1311, NCC). deceased driver paid 50% of the premiums (Coquia v.
Fieldmens Insurance Co., Inc.,G.R. No. L-23276, Nov. 29,
XPNs: 1968).
1. Rights and obligations that are not transmissible by
their nature, or by the stipulation or by provisions of
law (Art. 1311, NCC).
2. Stipulation pour autrui (stipulation in favor of a third
person) benefits clearly and deliberately conferred

CIVIL LAW
OBLIGATORY FORCE OF CONTRACTS left to one party by agreement or under a resolutory
facultative condition (Vitug, 2006).
Obligatory force of contracts
Contract of Adhesion
Contracts shall be obligatory, in whatever form they may
have been entered into, provided all the essential It is a contract in which one of the parties prepares the
requisites for validity are present (Art. 1356, NCC). stipulations in the form of a ready-made contract, which
the other party must accept or reject, but not modify, by
The parties are bound from the moment the contracts are affixing his signature or his adhesion thereto; leaving no
perfected by mere consent not only from the fulfillment of room for negotiation and depriving the latter of the
what has been expressly stipulated but also to all the opportunity to bargain on equal footing (Norton Resources
consequences which, according to their nature, may be in and Development Corporation v. All Asia Bank Corporation,
keeping with good faith, usage and law (Art. 1315, NCC). G.R. No. 162523, November 25, 2009).
NOTE: Obligations arising from contracts have the force of Validity of contract of adhesion
law between the contracting parties and should be
complied with in good faith (Art. 1159, NCC). It is not entirely prohibited since the one who adheres to
the contract is, in reality, free to reject it entirely, and if he
Q: Villamor borrowed a large amount from Borromeo, adheres, he gives his consent (Premiere Development Bank
for which he mortgaged his property but subsequently v. Central Surety & Insurance Company, Inc., G.R. No.
defaulted. Borromeo pressed him for settlement. The 176246, February 13,2009). However, it is void when the
latter instead offered to execute a promissory note weaker party is imposed upon in dealing with the
containing a promise to pay his debt as soon as he is dominant bargaining party, and its option is reduced to the
able, even after 10 years and that he waives his right to alternative of taking or leaving it, completely depriving
prescription. What are the effects of said the such party of the opportunity to bargain on equal footing
stipulation to the action for collection filed by (Keppel Cebu Shipyard, Inc. v. Pioneer Insurance and Surety
Borromeo? Corporation, G.R. Nos. 180880-81, September 25, 2009).
A: None. The rule is that a lawful promise made for a Interpretation of contract of adhesion
lawful consideration is not invalid merely because an
unlawful promise was made at the same time and for the In interpreting such contracts, however, courts are
same consideration. This rule applies although the expected to observe greater vigilance in order to shield the
invalidity is due to violation of a statutory provision, unwary or weaker party from deceptive schemes
unless the statute expressly or by necessary implication contained in ready-made covenants (Premiere
declares the entire contract void. Thus, even with such Development Bank v. Central Surety Insurance Company,
waiver of prescription, considering that it was the intent of Inc., G.R. No. 176246, February 13, 2009). In case of doubt
the parties to effectuate the terms of the promissory note, which will cause a great imbalance of rights against one of
there is no legal obstacle to the action for collection filed the parties, the contract shall be construed against the
by Borromeo (Borromeo v. CA,G.R. No. L-22962, Sept. 28, party who drafted the same (Magis Young Achievers
1972). Learning Center v. Manalo, G.R. No. 178835, February
13,2009).
NOTE: Where an agreement founded on a legal
consideration contains several promises, or a promise to Third person may determine the performance of a
do several things, and a part only of the things to be done contract
are illegal, the promises which can be separated, or the
promise, so far as it can be separated, from the illegality, The determination of the performance may be left to a
may be valid (Borromeo v. CA,G.R. No. L-22962, Sept. 28, third person. However, his decision shall not be binding
1972). until it has been known to both the contracting parties
(Art. 1309, NCC). Moreover, the determination made shall
MUTUALITY OF CONTRACTS not be obligatory if it is evidently inequitable. In such case,
the courts shall decide what is equitable under the
Principle of mutuality of contracts circumstances (Art. 1310, NCC).
The contract must bind both contracting parties and its AUTONOMY OF CONTRACTS
validity or compliance cannot be left to the will of one of
them (Art. 1308, NCC). It is the freedom of the parties to contract and to stipulate
provided the stipulations are not contrary to law, morals,
NOTE: A contract containing a condition whose efficacy or good customs, public order or public policy (Art. 1306,
fulfillment is dependent solely on the uncontrolled will of NCC).
one of the parties is void (Garcia v. Rita, Gr. No. L-20175,
October 30, 1967; PNB v. CA, G.R. No. 88880, April 30, 1991). NOTE: Courts cannot make for the parties better or more
equitable agreements than they themselves have been
However, the termination of the contract does not satisfied to make, or rewrite contracts because they
necessarily require mutuality, and it can even be validly operate harshly or inequitably as to one of the parties, or
alter them for the benefit of one party and to the detriment

202
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of the other, or by construction, relieve one of the parties 2. Intentional
from terms which he voluntarily consented to, or impose 3. Complete unconditional
on him those which he did not (Angel Bautista v. Court of
Appeals, G.R. No. 123655, January 19, 2000). NOTE: We follow the cognitive theory and not the mailbox
theory. Under our Civil Law, the offer and acceptance
ESSENTIAL REQUISITES OF A CONTRACT concur only when the acceptance has reached the
knowledge of the offeror (actual knowledge), and not at
The following are the essential requisites of contracts the time of sending the acceptance.
(COC):
Requisites of a valid offer
1. Consent;
2. Object or subject matter; and 1. Must be certain (Art. 1345, NCC)
3. Cause or consideration. 2. May be made orally or in writing, unless the law
prescribes a particular form
CONSENT
Q: The husband assumed sole administration of the
Consent familys mango plantation since his wife worked
abroad. Subsequently, without his wifes knowledge,
It is the manifestation of the meeting of the offer and the the husband entered into an antichretic transaction
acceptance upon the thing and the cause which are to with a company, giving it possession and management
constitute the contract (Art. 1319, NCC). of the plantation with power to harvest and sell the
fruits and to apply the proceeds to the payment of a
NOTE: Consent is essential to the existence of a contract; loan he got. What is the standing of the contract?
and where it is wanting, the contract is non-existent. (2011 Bar Question)
Elements of consent (LM-CR) A: It is considered a continuing offer by the parties;

perfected only upon the wifes acceptance or the courts
1. Legal capacity of the contracting parties; authorization.
NOTE: To form a valid and legal agreement it is NOTE: The person making the offer may fix the time, place
necessary that there be a party capable of contracting and manner of acceptance, all of which must be complied
and a party capable of being contracted with. Hence, if with. (Art. 1321, NCC)
any one party to a supposed contract was already
dead at the time of its execution, such contract is Rules on complex offer
undoubtedly simulated and false and, therefore, null
and void by reason of its having been made after the 1. Offers are interrelated contract is perfected if all the
death of the party who appears as one of the offers are accepted
contracting parties therein. The death of a person 2. Offers are not interrelated single acceptance of each
terminates contractual capacity (Milagros De Belen offer results in a perfected contract unless the offeror
Vda. De Cabalu, et. al. v. SPS. Renato Dolores Tabu and has made it clear that one is dependent upon the
Laxamana, G.R. No. 188417, September 24, 2012). other and acceptance of both is necessary.
2. Manifestation of the conformity of the contracting Rules on advertisements as offers

parties;
3. Parties Conformity to the object, cause, terms and 1. Business advertisements not a definite offer, but
condition of the contract must be intelligent, mere invitation to make an offer, unless it appears
spontaneous and free from all vices of consent; and otherwise (Art. 1325, NCC).
4. The conformity must be Real. 2. Advertisement for bidders simply invitation to make
proposals and advertiser is not bound to accept the
Requisites of a valid consent highest or lowest bidder, unless the contrary appears
(Art. 1326, NCC).
It must be:
1. Intelligent, or with an exact notion of the matter to Grounds that would render the offer ineffective
which it refers;
1. Death, civil interdiction, insanity or insolvency of
NOTE: Intelligence in consent is vitiated by error; either party before acceptance is conveyed
freedom by violence, intimidation or undue influence; 2. Express or implied revocation of the offer by the
and spontaneity by fraud. offeree
3. Qualified or conditional acceptance of the offer, which
2. Free; and becomes counter-offer
3. Spontaneous. 4. Subject matter becomes illegal or impossible before
acceptance is communicated
Elements of a valid offer and acceptance 5. Period given to the offerree to signify his acceptance
has already lapsed
1. Definite unequivocal

CIVIL LAW
Requisites of a valid acceptance
Mistake
1. Must be absolute; a qualified acceptance constitutes a
counter-offer (Art. 1319, NCC) GR: Mistake as a vice of consent refers to mistake of facts
2. No specified form but when the offeror specifies a and not of law.
particular form, such must be complied with.
XPN: When mistake of law involves mutual error as to the
NOTE: Offer or acceptance, or both, expressed in legal effect of an agreement when the real purpose of the
electronic form, is valid, unless otherwise agreed by the parties is frustrated (Art. 1334, NCC).
parties (electronic contracts).
Requisites:
Period for acceptance 1. Mistake must be with respect to the legal effect
of the agreement;
1. Stated fixed period in the offer 2. It must be mutual; and
a. Must be made within the period given by the 3. Real purpose of the parties must have been
offeror. frustrated.
b. As to withdrawal of the offer:
GR: It can be made by communicating such Kinds of mistakes of fact which vitiate consent
withdrawal at any time before the acceptance
is made 1. Error in Re (mistake as to object)
a. Error in Corpore (mistake as to the identity of
XPN: When the option is founded upon a the thing)
consideration (something paid or promised b. Error in Substantia (mistake as to the substance
since partial payment of the purchase price is of the thing)
considered as proof of the perfection of the c. Error in Quantitae (mistake as to the quantity of
contract) the thing)
d. Mistake as to the conditions of the thing,
2. No stated period provided such conditions have principally
a. Offer is made to a person present acceptance moved one or both parties to enter into the
must be made immediately. contract
b. Offer is made to a person absent acceptance
may be made within such time that, under 2. Error in Persona (Mistake as to person)
normal circumstances, an answer can be
expected from him. Mistake as to the identity or qualifications of one of
the parties will vitiate consent only when such
Persons incapacitated to give consent (DIM) identity or qualifications have been the principal
cause of the contract. For mistake (as to the
1. Deaf-mutes who do not know how to read and write qualification of one of the parties) to vitiate consent,
(illiterates) two requisites must concur:
2. Insane or demented persons, unless the contract was a. The mistake must be either with regard to
entered into during a lucid interval the identity or with regard to the
3. Minors (Art. 1327, NCC) except: qualification of one of the contracting
a. Contracts for necessaries (Art. 1489, NCC) parties; and
b. Contracts by guardians or legal representatives b. The identity or qualification must have
and the court having jurisdiction had approved been the principal consideration for the
the same celebration of the contract (The Roman
c. When there is active misrepresentation on the Catholic Church v. ReginoPante, G.R. No.
part of the minor (minor is estopped) 174118, April 11, 2012)
d. Contracts of deposit with the Postal Savings
Bank provided that the minor is over 7 years of Q: Leonardo is the only legitimate child of the late
age spouses Tomasina and Balbino. She only finished
e. Upon reaching age of majority they ratify the Grade three and did not understand English. The
same Sebastians, on the other hand, are illegitimate
children. She filed an action to declare the nullity of
Vices of consent (MIVUF) the extrajudicial settlement of the estate of her
parents, which she was made to sign without the
1. Mistake contents thereof, which were in English, explained to
2. Intimidation her. She claims that her consent was vitiated because
3. Violence she was deceived into signing the extrajudicial
4. Undue influence settlement. Is the extra-judicial settlement of estate of
5. Fraud Tomasina valid?
NOTE: A threat to enforce a just or legal claim through a A: No. When one of the parties is unable to read, or if the
competent authority does not amount to intimidation nor contract is in a language not understood by him, and
vitiate consent (Art. 1335, NCC). mistake or fraud is alleged, the person enforcing the

204
2015 GOLDEN NOTES
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contract must show that the terms thereof have been fully
explained to the former(Art. 1332). Leonardo was not in a Determination of undue influence
position to give her free, voluntary and spontaneous
consent without having the document, which was in The test to determine whether or not there is undue
English, explained to her. Therefore, the consent of influence which will invalidate a contract is to determine
Leonardo was invalidated by a substantial mistake or whether or not the influence exerted has so overpowered
error, rendering the agreement voidable. The extrajudicial and subjugated the mind of the contracting party as to
partition between the Sebastians and Leonardo should be destroy his free agency, making him express the will of
annulled and set aside on the ground of mistake (Leonardo another rather than his own (Jurado,2011).
v. CA, G.R. No. 125485, Sept. 13, 2004).
Requisites of intimidation (CICU) Fraud
1. One of the parties is compelled to give his Consent by There is fraud when through the insidious words or
a reasonable and well-grounded fear of an evil; machinations of one of the contracting parties, the other is
2. The evil must be Imminent and grave; induce to enter into a contract which, without them, he
3. It must be Unjust; and would not have agreed to (Art. 1338, NCC).
4. The evil must be the determining Cause for the party
upon whom it is employed in entering into the NOTE: Insidious words refers to a deceitful scheme or plot
contract (Art. 1335, NCC). with an evil design, or a fraudulent purpose (Pineda, 2000).
NOTE: To determine the degree of the intimidation, the Kinds of Fraud

age, sex and condition of the person shall be borne in mind
(Art. 1335, NCC). 1. Fraud in the perfection of the contract
a. Causal fraud (dolo causante)
Validity of a contract if consent is reluctant b. Incidental fraud (dolo incidente)
A contract is valid even though one of the parties entered 2. Fraud in the performance of an obligation (Art. 1170,
into it against his wishes and desires or even against his NCC)
better judgment. Contracts are also valid even though they
are entered into by one of the parties without hope of Requisites:
advantage or profit (Martinez v. Hongkong and Shanghai a. Fraud, insidious words or machinations
Banking Corp., G.R. No. L-5496, Feb. 19, 1910). must have been employed by one of the
contracting parties;
Requisites of violence b. It must have been material and serious;
c. It induced the other party to enter into a
1. Physical force employed must be serious or contract;
irresistible; and d. It must be a deliberate intent to deceive or
2. The determining cause for the party upon whom it is and induce;
employed in entering into the contract. e. Should not have been employed by both
contracting parties or by third persons;
NOTE: Violence or intimidation shall annul the obligation, f. The victim suffered damage or injury.
although it may have been employed by a third person
who did not take part in the contract (Art. 1336, NCC). Dolo Causante v. Dolo Incidente
Undue influence DOLO DOLO

BASIS CAUSANTE INCIDENTE
There is undue influence when a person takes improper (ART. 1338) (ART. 1344)
advantage of his power over the will of another, depriving Serious in
Gravity of Fraud Not serious
the latter of a reasonable freedom of choice (Art. 1337, character
NCC). efficient cause
which induces Not the efficient
Efficient Cause
Circumstances to be considered for the existence of the party to enter cause
undue influence into a contract
Effect on the Does not affect
Renders the
1. Confidential, family, spiritual and other relations Status of the the validity of the
contract voidable
between the parties Contract contract
2. Mental weakness Contract remains
3. Ignorance Annulment with valid. Remedy is
Remedies
4. Financial distress (Art. 1337, NCC) damages claim for
damages.
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.

CIVIL LAW
Q: Santos lease contract was about to expire but it was contract is lawful, it is absolutely enforceable,
extended and he continued to occupy the leased provided it has all the essential requisites: consent,
premises beyond the extended term. Samson offered object, and cause (Art. 1345, NCC; Art. 1346, NCC).
to buy Santos store and his right to the lease. Santos
stated that the lease contract between him and the As to third persons without notice, the apparent
lessor was impliedly renewed and that formal renewal contract is valid for purposes beneficial to them. As to
thereof would be made upon the arrival of a certain third persons with notice of the simulation, they
Tanya Madrigal, based on the letter to him given by the acquire no better right to the simulated contract than
lessor. When Samson occupied the premises, he was the original parties to the same.
forced to vacate for Santos failure to renew his lease.
He filed an action for damages against Santos for fraud NOTE: If the parties state a false cause in the contract
and bad faith claiming that the misrepresentation to conceal their real agreement, the contract is only
induced him to purchase the store and the leasehold relatively simulated and the parties are still bound by
right. Decide. their real agreement. Hence, where the essential
requisites of a contract are present and the
A: No, Santos was not guilty of fraud nor bad faith in simulation refers only to the content or terms of the
claiming that there was implied renewal of his contract of contract, the agreement is absolutely binding and
lease with his lessor. The letter given by the lessor led enforceable between the parties and their successors
Santos to believe and conclude that his lease contract was in interest.
impliedly renewed and that formal renewal thereof would
be made upon the arrival of Tanya Madrigal. Thus, from In absolute simulation, there is a colorable contract
the start, it was known to both parties that, insofar as the but it has no substance as the parties have no
agreement regarding the transfer of Santos leasehold right intention to be bound by it. The main characteristic
to Samson was concerned, the object thereof relates to a of an absolute simulation is that the apparent
future right. It is a conditional contract, the efficacy of contract is not really desired or intended to produce
which depends upon an expectancy the formal renewal of legal effect or in any way alter the juridical situation
the lease contract between Santos and lessor. The efficacy of the parties. As a result, an absolutely simulated or
of the contract between the parties was thus made fictitious contract is void, and the parties may
dependent upon the happening of this suspensive recover from each other what they may have given
condition (Samson v. CA, G.R. No. 108245, Nov. 25, 1994). under the contract (Heirs of Dr. Mario S. Intac and
Angelina Mendoza-Intac v. CA, G.R. No. 173211,
Acts considered not fraudulent October 11, 2012).
1. The usual exaggerations in trade and the other party Q: Tiro is a holder of an ordinary timber license issued
had an opportunity to know the facts are not by the Bureau of Forestry. He executed a deed of
themselves fraudulent (Art. 1340, NCC); assignment in favor of the Javiers. At the time the said
2. A mere expression of an opinion does not signify deed of assignment was executed, Tiro had a pending
fraud, unless made by an expert and the other party application for an additional forest concession. Hence,
had relied on the formers special knowledge (Art. they entered into another agreement.
1341, NCC);
3. Misrepresentation does not vitiate consent, unless Afterwards, the Javiers, now acting as timber license
such misrepresentation has created substantial holders by virtue of the deed of assignment entered
mistake and the same is mutual (Art. 1342, NCC); and into a forest consolidation agreement with other
4. Misrepresentation made in good faith is not ordinary timber license holders. For failure of the
fraudulent but may constitute error (Art. 1337, NCC). Javiers to pay the balance due under the two deeds of
assignment, Tiro filed an action against them. Are the
Simulation of contract deeds of assignment null and void for total absence of
consideration and non-fulfillment of the conditions?
It is the declaration of a fictitious will, deliberately made
by agreement of the parties, in order to produce, for the A: They are not null and void per se. The parties are to be
purposes of deception, the appearance of a juridical act bound by their real agreement. The contemporaneous and
which does not exist or is different from that which was subsequent acts of Tiro and the Javiers reveal that the
executed (Tolentino, 2002). cause stated in the first deed of assignment is false. It is
settled that the previous and simultaneous and subsequent
Kinds of simulation of contract acts of the parties are properly cognizable indicia of their
true intention. Where the parties to a contract have given
1. Absolute (simulados) The contracting parties do not it a practical construction by their conduct as by acts in
intend to be bound by the contract at all, thus the partial performance, such construction may be considered
contract is void (Art. 1345, NCC; Art. 1346, NCC). by the court in construing the contract, determining its
2. Relative (disimulados) The contracting parties meaning and ascertaining the mutual intention of the
conceal their true agreement; (Art. 1345, NCC) binds parties at the time of contracting. The first deed of
the parties to their real agreement when it does not assignment is a relatively simulated contract which states
prejudice third persons or is not intended for any a false cause or consideration, or one where the parties
purpose contrary to law, morals, good customs, public conceal their true agreement. A contract with a false
order or public policy. Art. 1346) If the concealed consideration is not null and void per se. Under Article

206
2015 GOLDEN NOTES
CONTRACTS
1346 of the Civil Code, a relatively simulated contract, CAUSE
when it does not prejudice a third person and is not
intended for any purpose contrary to law, morals, good Cause
customs, public order or public policy binds the parties to
their real agreement (Javier v. CA, G.R. No. L-48194, Mar. 15, It is the essential and impelling reason why a party
1990). assumes an obligation (Manresa).
OBJECT Requisites of a cause
Object It must:
1. Exist;
It is the subject matter of the contract. It can be a thing, 2. Be true; and
right or service arising from a contract. 3. Be licit.
Requisites of an object (DELiCT) NOTE: Every contract is presumed to have a cause; and
such cause of lawful.
1. Determinate as to kind (even if not determinate,
provided it is possible to determine the same without Kinds of cause
the need of a new contract);
2. Existing or the potentiality to exist subsequent to the 1. Cause of onerous contracts the prestation or promise
contract; of a thing or service by the other.
3. Must be Licit; 2. Cause of remuneratory contracts the service or
4. Within the Commerce of man; and benefit remunerated.
5. Transmissible. 3. Cause of gratuitous contracts the mere liberality of
the donor or benefactor.
NOTE: The most evident and fundamental requisite in 4. Accessory identical with cause of principal contract,
order that a thing, right or service may be the object of a the loan which it derived its life and existence (e.g.:
contract, is that it should be in existence at the moment of mortgage or pledge)
the celebration of the contract, or at least, it can exist
subsequently or in the future. Complementary contracts construed together doctrine
Object of contracts An accessory contract must be interpreted with its

principal contract. The provisions must be construed
GR: All things or services may be the object of contracts. together to arrive at their true meaning. Certain
stipulations cannot be segregated and then made to
XPNs: control. This doctrine closely adheres to the spirit of Art.
1. Things outside the commerce of men (Art. 1347, 1374 of the Civil Code which states that the various
NCC); stipulations of a contract shall be interpreted together,
2. Intransmissible rights; attributing to the doubtful ones that sense which may
3. Future inheritance, except in cases expressly result from all of them taken jointly (Spouses Rigor v.
authorized by law; Consolidated Orix Leasing and Finance Corporation, G.R. No.
4. Services which are contrary to law, morals, good 136423. August 20, 2002).
customs, public order or public policy;
5. Impossible things or services; and Cause v. Motive
6. Objects which are not possible of determination as to
their kind. BASIS CAUSE MOTIVE
Direct and most
Exceptions to the rule that no person can enter into a As to proximate
proximate Indirect or
contract with regard to future inheritance reason in a
reason of a remote reasons
contract
contract
1. Under Art. 130 of the Family Code, which allows the As to the kind of Objective and Psychological or
future spouses to give or donate to each other in their reason in the juridical reason purely personal
marriage settlement their future property to take contract of contract reason
effect upon the death of the donor and to the extent Legality or
laid down by the provisions of the NCC relating to Legality or
illegality of
testamentary succession; and illegality of cause
As to the legal motive does not
2. Under Art. 1080 of the Code, which allows a person to affects the
effect to the affect the
make a partition of his estate among his heirs by an existence or
contract existence or
act inter vivos, provided that the legitime of the validity of the
validity of
compulsory heirs is not prejudiced (Jurado, 2009). contract
contract
Cause is always Motive differs for

As to the parties the same for each each contracting
contracting party party

CIVIL LAW
According to their relation to other contracts:
Rules relating to cause on contracts 1. Preparatory Contracts are those which have for
their object the establishment of a condition in
1. Absence of cause Confers no right and produces no law which is necessary as a preliminary step
legal effect. towards the celebration of another subsequent
2. Failure of cause - Does not render the contract void contract. (e.g. Partnership, Agency)
3. Illegality of cause - Contract is null and void. 2. Principal Contracts are those which can subsist
4. Falsity of cause Contract is void; unless the parties independently from other contracts (e.g. Sale,
show that there is another cause which is true and Lease)
lawful. 3. Accessory Contracts those which can exist only
5. Lesion or inadequacy of cause Does not invalidate the as a consequence of, or in relation with, another
contract, unless: prior contract. (e.g. Pledge, Mortgage)
a. there is fraud, mistake, or undue influence;
b. when the parties intended a donation or some According to their form:
other contract; or 1. Common or Informal Contracts are those which
c. in cases specified by law (e.g. contracts entered require no particular form. (e.g. Loan)
by guardian when ward suffers lesion of more 2. Special or Formal Contracts are those which
than 25% and with court approval, otherwise, if require a particular form. (e.g. Donations, Chattel
there is no approval, the contract is void Mortgage)
regardless of the amount of lesion).
According to their purpose:
Q: May a moral obligation constitute a sufficient cause 1. Transfer of Ownership (e.g. Sale)
to support an onerous contract? 2. Conveyance of Use (e.g. Usufruct, Commodatum)
3. Rendition of Services (e.g. Agency)
A: Where the moral obligation arises wholly from ethical
considerations, unconnected with any civil obligation, and According to the nature of the vinculum which they
as such is demandable only in conscience, and not in law, it produce:
cannot constitute a cause to support an onerous contract, 1. Unilateral Contracts are those which give rise to
but where such moral obligation is based upon a previous an obligation only to one of the parties. (e.g.
civil obligation which has already been barred by the Commodatum)
statute of limitations at the time when the contract is 2. Bilateral Contracts are those which give rise to
entered into, it constitutes a sufficient cause or reciprocal obligations for both parties. (e.g. Sale)
consideration to support said contract (Villaroel v. Estrada,
71 Phil. 14). According to their cause:
1. Onerous (e.g. Sale)
KINDS OF CONTRACTS (Jurado, 2011) 2. Gratuitous (e.g. Commodatum)
According to perfection or formation According to the risks involved:

1. Consensual contracts which are perfected by the 1. Commutative Contracts are those where each of
mere meeting of the minds of the parties. (Art. the parties acquire an equivalent of his prestation
1305) (e.g. Sale, Lease) and such equivalent is pecuniarily appreciable
2. Real contracts are those which require for their and already determined from the moment of the
perfection both the consent of the parties and the perfection of the contract. (e.g. Lease)
delivery of the object by one party to the other. 2. Aleatory Contracts are those which are
(e.g. creation of real rights over immovable dependent upon the happening of an uncertain
property must be written, deposit and pledge) event, thus, charging the parties with the risk of
3. Solemn contracts contracts which must appear loss or gain. (e.g. Insurance)
in writing, such as:
a. Donations of real estate or of movables According to their names or norms regulating them:
if the value exceeds P5,000; 1. Nominate Contracts are those which have their
b. Partnership to which immovables are own name and individuality, and are regulated by
contributed; provisions of law. (e.g. Sale)
c. Contract of antichresis requires the 2. Innominate Contracts are those which lack
amount of principal and interest be name or individuality, and are not regulated by
specified; special provisions of law.
d. Sale of piece of land or interest therein
is through an agent; FORMALITY
e. Stipulation to charge interest;
f. Stipulation limiting common carrier's Rules on the form of contracts
duty of extraordinary diligence to
ordinary diligence; GR: Form is not required in consensual contracts.
g. Chattel mortgage; or
h. Transfer of large cattle (Sec. 22, Act No. XPNs: When the law requires a contract be in writing for
1147; Art. 1581, NCC); its:
1. Validity (formal contracts); or

208
2015 GOLDEN NOTES
CONTRACTS
2. Enforceability (under Statute of Frauds). 4. Antichresis (Art. 2134) the amount of the principal
3. For the convenience of the parties and the interest shall be specified in writing (Jurado,
2011).
NOTE: The parties may compel each other to reduce the
verbal agreement into writing. Contracts which must appear in a public document
Formalities required in specific contracts 1. Donation of real properties (Art. 719, NCC);
2. Partnership where immovable property or real rights
1. Donations are contributed to the common fund (Arts. 1171 &
a. Personal property- if value exceeds 5,000, the 1773, NCC);
donation and acceptance must both be written 3. Acts and contracts which have for their object the
(Art. 748, NCC). creation, transmission, modification or
b. Real property: extinguishment of real rights over immovable
i. Donation must be in a public instrument, property; sale of real property or of an interest
specifying therein the property donated and therein is governed by Arts. 1403, No. 2, and 1405
value of charges which donee must satisfy. (Art. 1358 (1), NCC);
ii. Acceptance must be written, either in the 4. The cession, repudiation or renunciation of hereditary
same deed of donation or in a separate rights or of those of the conjugal partnership of gains
instrument. (Art. 1358 (2), NCC);
iii. If acceptance is in a separate instrument, the 5. The power to administer property or any other power
donor shall be notified thereof in authentic which has for its object an act appearing or which
form, and this step shall be noted in both should appear in a public document or should
instruments (Art. 749, NCC). prejudice a third person (Art. 1358 (3), NCC);
6. The cession of actions or rights proceeding from an
2. Partnership where real property contributed act appearing in a public document (Art. 1358 (4),
a. There must be a public instrument regarding the NCC).
partnership;
b. The inventory of the realty must be made, Contracts that must be registered
signed by the parties and attached to the public
instrument (Art. 1773, NCC) 1. Chattel mortgages (Art. 2140, NCC)
3. Antichresis - the amount of the principal and interest NOTE: In accordance with Article 2125 of the Civil
must be in writing (Art. 2134, NCC). Code, an unregistered chattel mortgage is a valid and
binding between the parties because registration is
4. Agency to sell real property or an interest therein necessary only for the purpose of binding third
- authority of the agent must be in writing (Art. 1874, persons (Filipinas Marble Corporation v. Intermediate
NCC). Appellate Court, G.R. No. L-68010, 1986).
5. Stipulation to charge interest - interest must be 2. Sale or transfer of large cattle (Cattle Registration Act)
stipulated in writing (Art. 1956, NCC).
REFORMATION
6. Stipulation limiting common carrier's duty of
extraordinary diligence to ordinary diligence: Reformation of instruments
a. must be in writing, signed by shipper or owner
b. supported by valuable consideration other than It is a remedy to conform to the real intention of the
the service rendered by the comon carrier parties due to mistake, fraud, inequitable conduct, accident
c. reasonable, just and not contrary to public policy (Art. 1359, NCC).
(Art. 1744, NCC).
NOTE: Reformation is based on justice and equity (Pineda,
7. Chattel mortgage - personal property must be 2000).
recorded in the Chattel Mortgage Register (Art. 2140,
NCC). Requisites in reformation of instruments
Contracts which must be in writing to be valid 1. Meeting of the minds to the contract
2. True intention is not expressed in the instrument
1. Donation of personal property whose value exceeds 3. By reason of: (MARFI)
five thousand pesos (Art. 748, NCC) the donation and a. Mistake,
acceptance must be in writing b. Accident,
2. Sale of a piece of land or any interest therein through c. Relative simulation,
an agent (Art. 1874, NCC) the authority of the agent d. Fraud, or
shall appear in writing e. Inequitable conduct
3. Agreements regarding payment of interest in f. Clear and convincing proof of MARFI.
contracts of loan (Art. 1956, NCC)
NOTE: When there is no meeting of the minds, the proper
remedy is annulment and not reformation (Pineda, 2000).

CIVIL LAW
4. When through the ignorance, lack of skill, negligence
The fundamental distinction between reformation of an or bad faith on the part of the person drafting the
instrument and annulment of a contract is that the first instrument or of the clerk or typist, the instrument
presupposes a perfectly valid contract in which there has does not express the true intention of the parties (Art.
been a valid meeting of the minds of the contracting 1364, NCC).
parties while the second is based on a defective contract in 5. If the parties agree upon the mortgage or pledge of
which there has been no meeting of the minds because the real or personal property, but the instrument states
consent is vitiated (Jurado, 2010). that the property is sold absolutely or with a right of
repurchase (Art. 1365, NCC).
Basis and nature of the remedy of reformation of
instrument Reformation of instruments; when not allowed
The remedy of reformation of an instrument is based on 1. Simple, unconditional donations inter vivos;
the principle of equity where, to express the true intention 2. Wills;
of the contracting parties, an instrument already executed 3. When the agreement is void(Art. 1366, NCC);
is allowed by law to be reformed. The right of reformation 4. When an action to enforce the instrument is filed
is necessarily an invasion or limitation of the parol (estoppel).
evidence rule, since, when a writing is reformed, the result
is that an oral agreement is by court decree made legally Prescriptive period in reformation of instruments
effective. The remedy, being an extraordinary one, must be
subject to the limitations as may be provided by law. A suit 10 years from the date of the execution of the instrument
for for reformation of an instrument must be brought
within the period prescribed by law, otherwise, it will be Persons who can ask for the reformation of the
barred by the mere lapse of time (Bentir v. Leanda, G.R. instrument
128991, April 12, 2000).
It may be ordered at the instance of:
Reformation of instruments; when allowed 1. if the mistake is mutual either party or his
successors in interest; otherwise;
1. When the mutual mistake of the parties causes the 2. upon petition of the injured party; or
failure of the instrument to disclose their agreement 3. his heirs and assigns.
(Art. 1361, NCC).
2. When one party was mistaken and the other acted Q: Will period to bring an action for reformation run
fraudulently or inequitably in such a way that the from the time the contract became disadvantageous to
instrument does not show their true intention, the one party?
former may ask for the reformation of the instrument
(Art. 1362, NCC). A: In reformation of contracts, what is reformed is not the
3. When one party was mistaken and the other knew or contract itself, but the instrument embodying the contract.
believed that the instrument did not state their real It follows that whether the contract is disadvantageous or
agreement, but concealed that fact from the former not is irrelevant to reformation and therefore, cannot be
(Art. 1363, NCC). an element in the determination of the period for
prescription of the action to reform (Pineda, 2000).

210
2015 GOLDEN NOTES
CONTRACTS
DEFECTIVE CONTRACTS
VOID
BASIS RESCISSIBLE VOIDABLE UNENFORCEABLE
/INEXISTENT
Economic damage Illegality (void) or
Incapacity of one of Entered without authority or in
or lesion to either absence of any of
Origin of the parties to give excess thereof; non-compliance with
one of the parties or essential requisites
defect consent or vitiated Statute of Frauds; incapacity of both
to 3rd persons; of a contract
consent parties to give consent
declaration by law (inexistent)
Necessity of Suffered by either As to the other
Damage/ one of parties or 3rd contracting party - Not necessary Not necessary
prejudice person not necessary
Curable by
Curable Curable Not curable Not Curable
Prescripiton
Valid & legally Valid & legally Inoperative until ratified; not
Legal effect enforceable until enforceable until enforceable in court without proper None
judicially rescinded judicially annulled ratification
Rescission or Annulment of Declaration of
Remedy Only personal defense
rescissory action contract nullity of contract
Can be attacked
Nature of Must be a direct Direct action
Indirect attack allowed directly or
action action needed
indirectly
GR: Contracting 3rd persons cannot
Who can file party; file unless their
Contracting party Contracting party
the action XPN: Defrauded interest are directly
Creditors affected
Susceptible but not
Susceptibility
of ratification Susceptible Susceptible Not Susceptible
of ratification
proper
Action for
Action for Action for Action for recovery; specific
declaration of
Susceptibility rescission annulment performance or damages prescribes
nullity or putting of
prescription prescribes after 4 prescribes after 4 (10 years if based on a written
defense of nullity
years years contract; 6 years if unwritten)
does not prescribe

CIVIL LAW
Rescissible contracts availed only after all legal remedies have been exhausted
and proven futile (Khe Hong Cheng v. CA, G.R. No. 144169,
These are contracts validly constituted but nevertheless March 28, 2001).
maybe set aside due to a particular economic damage or
lesion caused to either to one of the parties or to a third Persons who may institute an action for the rescission
person. It may be set aside in whole or in part, or up to the of a rescissible contract
extent of the damage caused (Art. 1381, NCC).
The action for rescission may be instituted by the
The following are rescissible contracts: following:
1. The person who is prejudiced, such as the person
1. Entered into by persons exercising fiduciary capacity: suffering the lesion in rescissory actions based on
those lesion, the creditor who is defrauded in rescissory
a. Entered into by guardians whenever the wards actions based on fraud, and other persons authorized
whom they represent suffer lesion by more than to exercise the same in other rescissory actions;
of value of the property (Art. 1381(1), NCC); 2. Their representatives;
3. Their heirs; and
NOTE: Contracts entered by a guardian over the 4. Their creditors by virtue of subrogatory action
property of his ward, without court approval is defined in Art. 1177 of the NCC (Jurado, 2009).
void, not merely rescissible regardless of the
existence of lesion Prescriptive period of action for rescission
b. Agreed upon in representation of absentees, if 1. Under Art. 1381, no.1 within 4 years from the time
absentee suffers lesion by more than of value the termination of the incapacity of the ward;
of property (Art. 1381(2), NCC); 2. Under Art. 1381, no. 2- within 4 years from the time
c. Contracts where rescission is based on fraud the domicile of the absentee is known; or
committed on creditor and cannot collect the 3. Under Art. 1381, nos. 3 & 4 & Art. 1382 within 4 years
claim due (accion pauliana) (Art. 1381(3), NCC); from the time of the discovery of fraud.
d. Contracts where the object involved is the subject
of litigation; contract entered into by defendant Requisites that must concur before a contract may be
without knowledge or approval of litigants or rescinded on the ground of lesion
judicial authority (Art. 1381(4), NCC);
e. Payment by an insolvent on debts which are not Whether the contract is entered into by a guardian in
yet due; prejudices the claim of others (Art. 1382, behalf of his ward or by a legal representative in behalf of
NCC); an absentee, before it can be rescinded on the ground of
f. Provided for by law (Arts. 1526, 1534, 1538, 1539, lesion, it is indispensable that the following requisites
1542, 1556, 1560, 1567 & 1659, NCC) must concur:
1. The contract must be entered into by the
2. Payments made in state of insolvency: guardian in behalf of his ward or by the legal
a. Plaintiff has no other means to maintain representative in behalf of an absentee.
reparation; 2. The ward or absentee suffered lesion of more
b. Plaintiff must be able to return whatever he may than 1/4 of the value of the property which is
be obliged to return due to rescission; object of the contract.
c. The things must not have been passed to third 3. The contract must be entered into without
persons in good faith; judicial approval.
d. It must be made within 4 yrs. 4. There must be no other legal means for obtaining
reparation for the lesion.
Characteristics of rescissible contract 5. The person bringing the action must be able to
return whatever he may be obliged to restore.
1. It has all the elements of a valid contract; 6. The object of the contract must not be legally in
2. It has a defect consisting of an injury (generally in the the possession of a third person who did not act
form of economic damage or lesion, fraud, and in bad faith.
alienation of the property) to one of the contracting
parties or to a third person,. Requisites before a contract entered into in fraud of
3. It is valid and effective until rescinded; the creditors may be rescinded
4. It can be attacked only directly.
5. It is susceptible of convalidation only by prescription There must be a credit existing prior to the constitution of
(Pineda, 2000) the said fraudelent contract;
1. There must be fraud, or at least, the intent to
commit fraud to the prejudice of the creditor
Nature of an action for rescission seeking rescission;
2. The creditor cannot in any legal manner collect
The action for rescission is subsidiary. It cannot be his credit (subsidiary character of rescission);
instituted except when the party suffering damage has no and
other legal means to obtain reparation for the same (Art. 3. The object of the contract must not be legally in
1383, NCC). Hence, it must be availed of as the last resort, possession of a third person in good faith.

212
2015 GOLDEN NOTES
CONTRACTS
Badges of fraud NOTE: Rescission is possible only when the person

demanding rescission can return whatever he may be
1. Consideration for the conveyance of the property is obliged to restore. A court of equity will not rescind a
inadequate or fictitious; contract unless there is restitution, that is, the parties are
2. Transfer was made by the debtor after a suit has restored to the status quo ante (Art. 1385, NCC).
commenced and during its pending against him
3. Sale upon credit by an insolvent debtor; Mutual restitution is not applicable when:
4. The presence of evidence of large indebtedness or 1. Creditor did not receive anything from contract;
complete insolvency of the debtor; or
5. Transfer of all his property by a debtor when he is 2. Thing already in possession of third persons in
financially embarrassed or insolvent; good faith; subject to indemnity only, if there are
6. Transfer is made between father and son, where there two or more alienations liability of first
are present some or any of the above circumstances; infractor.
and
7. Failure of the vendee to take exclusive possession of Q: Reyes (seller) and Lim (buyer) entered into a
the property. (Oria v. McMicking, 21 Phil. 243) contract to sell a parcel of land. Harrison Lumber
occupied the property as lessee. Reyes offered to
Resolution v. Rescission return the P10 million downpayment to Lim because
Reyes was having problems in removing the lessee
RESOLUTION RESCISSION from the property. Lim rejected Reyes offer. Lim
(ART. 1191) (ARTICLE 1381) learned that Reyes had already sold the property to
Both presuppose contracts validly entered into and another.
subsisting and both require mutual restitution when
proper Both Reyes and Lim are now seeking rescission of the
Nature contract to sell. However, Reyes does not want to
Principal action; deposit the 10M to the court because according to him,
Subsidiary remedy he has the right to use, possess and enjoy of the
Retaliatory in character
Grounds for Rescission money as its owner before the contract to sell is
5 grounds under Art. 1381. rescinded. Is Reyes contention correct?
(lesions or fraud of
Non-performance of A: No. There is also no plausible or justifiable reason for
creditors);
obligation (only ground) Reyes to object to the deposit of the P10 million
Non-performance is not
important downpayment in court. The contract to sell can no longer
Applicability be enforced because Reyes himself subsequently sold the
Only to reciprocal Applies to both unilateral property. Both Lim and Reyes are seeking for rescission of
obligations and reciprocal obligations the contract. By seeking rescission, a seller necessarily
offers to return what he has received from the buyer. Such
Person who can Initiate the Action
a seller may not take back his offer if the court deems it
Only the injured party to the Even third persons
equitable, to prevent unjust enrichment and ensure
contract prejudiced by the contract
restitution, to put the money in judicial deposit.
Fixing of Period by the Court
Court may fix a period or NOTE: In this case, it was just, equitable and proper for the
grant extension of time for trial court to order the deposit of the down payment to
the fulfillment of the Court cannot grant prevent unjust enrichment by Reyes at the expense of Lim.
obligation when there is extension of time Depositing the down payment in court ensure its
sufficient reason to justify restitution to its rightful owner. Lim, on the other hand,
such extension has nothing to refund, as he has not received anything
Purpose under the contract to sell (Reyes v. Lim, Keng and Harrison
Reparation for damage or Lumber, Inc., G.R. No. 134241, Aug. 11, 2003).
injury, allowing partial
rescission of contract Q: Goldenrod offered to buy a mortgaged property
Cancellation of the contract
(Pineda, Obligations and owned by Barreto Realty to which it paid an earnest
Contracts, 2000 ed., pp. 514- money amounting to P1 million. It was agreed upon
515) that Goldenrod would pay the outstanding obligations
of Barreto Realty with UCPB. However, Goldenrod did
NOTE: While Article 1191 uses the term rescission, the not pay UCPB because of the banks denial of its
original term which was used in the old Civil Code, from request for the extension to pay the obligation.
which the article was based, was resolution. (Ong v. CA, Thereafter, Goldenrod, through its brocker, informed
G.R. No. 97347, July 6, 1999). Barreto Realty that it could not go through with the
purchase of the property and also demanded the
Mutual Restitution refund of the earnest money it paid. In the absence of a
specific stipulation, may the seller of real estate
Rescission of contract creates an obligation of mutual unilaterally rescind the contract and as a consequence
restitution of the objects of the contract, their fruits, and keep the earnest money to answer for damages in the
the price with interest.

CIVIL LAW
event the sale fails due to the fault of the prospective NOTE: He who has capacity to contract may not invoke the
buyer? incapacity of the party with whom he has contracted nor
can those who exerted intimidation, violence or undue
A: No. Goldenrod and Barretto Realty did not intend that influence or employed fraud or caused mistake base their
the earnest money or advance payment would be forfeited action upon these flaws of the contract.
when the buyer should fail to pay the balance of the price,
especially in the absence of a clear and express agreement Effects of annulment of a contract
thereon.
1. If contract not yet consummated parties shall be
Moreover, Goldenrod resorted to extrajudicial rescission of released from the obligations arising therefrom.
its agreement with Barretto Realty. Under Article 1385, 2. If contract has already been consummated rules
rescission creates the obligation to return the things which provided in Arts. 1398-1402, shall govern.
were the object of the contract together with their fruits
and interest. Therefore, by virtue of the extrajudicial a. Restitution
rescission of the contract to sell by Goldenrod without
opposition from Barretto Realty, which in turn, sold the GR: Mutual restitution. the contracting parties
property to other persons, Barretto Realty, had the shall restore to each other things which have
obligation to return the earnest money which formed part been the subject matter of the contract, with their
of the purchase price plus legal interest from the date it fruits and the price with its interest except in case
received notice of rescission. It would be most inequitable provided by law. In an obligation to render
if Barretto Realty would be allowed to retain the money at services, the value thereof shall be the basis for
the same time appropriate the proceeds of the second sale damages (Art. 1398, NCC).
made to another (Goldenrod, Inc. v. CA, G.R. No. 126812,
Nov. 24, 1998). XPN: No restitution. The party incapacitated is
not obliged to make any restitution except insofar
VOIDABLE CONTRACTS as he has been benefited by the thing or the price
received by him (Art. 1399, NCC).
Voidable contracts
b. Whenever the person obliged by the decree of
Voidable contracts are those where consent is vitiated annulment to return the thing cannot do so
either by the incapacity of one of the contracting parties or because it has been lost through his fault, he shall
by mistake, violence, intimidation, undue influence or return the fruits received and the value of the
fraud. These contracts are binding, unless they are thing at the time of the loss, with interest from the
annulled by a proper action in court. It is susceptible of same date (Art. 1400, NCC).
ratification (Art. 1390, NCC).
Causes of extinction of action to annul
NOTE: Annulment may be had even if there be no damage
to the contracting parties. 1. Prescription the action for annulment must be
commenced within 4 years depending on the ground
Characteristics of a voidable contract stated.
1. Effective until set aside; NOTE: If the action has prescribed, the contract can
2. May be assailed only in an action for such purpose; no longer be set aside (Villanueva v. Villanueva, 91 Phil
3. Can be confirmed; and 43).
4. Can be assailed only by the party whose consent was
defective or his heirs or assigns. 2. Ratification cleanses the contract of its defects from
the moment it was constituted (Art. 1396, NCC).
Classes of voidable contracts 3. By loss of the thing which is the object of the contract
through fraud or fault of the person who is entitled to
1. Those where one of the parties is incapable of giving annul the contract (Art. 1401, NCC).
consent; and
NOTE: If the right of action is based upon the incapacity of
NOTE: If both parties are incapacitated to give any one of the contracting parties, the loss of the thing shall
consent, the contract is unenforceable and not merely not be an obstacle to the success of the action, unless it
voidable. took place through the fraud or fault of the plaintiff (Art.
1401, NCC).
2. Those where the consent is vitiated by mistake,
violence, intimidation, undue influence or fraud (Art. Prescriptive period for an annulment of a voidable
1390, NCC). contract
Who may institute action for annulment The action for annulment shall be brought within 4 years,
reckoned from:
An action for annulment may be instituted by all who are 1. In cases of intimidation, violence or undue influence,
thereby obliged principally or subsidiarily. from the time the defect of the consent ceases.
2. In case of mistake or fraud, from the time of the

214
2015 GOLDEN NOTES
CONTRACTS
discovery of the same. It is an act whereby a defect of
3. And when the action refers to contracts entered into proof is cured such as when an
It is an act by which a
by minors or other incapacitated persons, from the oral contract is put into writing or
voidable contract is
time the guardianship ceases (Art. 1391, NCC). when a private instrument is
cured of its vice or
converted into a public
defect.
Ratification instrument (Luna v. Linatoc, 74
Phil. 15)
It is the act or means by virtue of which, efficacy is given to
a contract which suffers from a vice of curable nullity Voidable contract v. Rescissible contract (Pineda,
(Manresa) 2000)
NOTE: Ratification extinguishes the action to annul a BASIS VOIDABLE RESCISSIBLE

voidable contract (Art. 1392, NCC). As to the kind of
Defect is intrinsic Defect is external
defect present
Requisites of ratification The damage or
prejudice
1. The contract involved must be voidable; Vitiated consent suffered by one
2. Person ratifying must know the reason for the As to the source makes the of the contracting
voidability; of defect contract parties or a third
3. The cause for the voidability must immediately cease voidable. person makes the
after the ratification; contract
4. Ratification must be express or through an act rescissible.
implying a waiver of the action to annul; and As to the Damage /
5. The person ratifying it must be the injured party. Damage is
necessity of prejudice is
immaterial.
damage material.
NOTE: Ratification entered into by the incapacitated Annulability of Rescissibility of
person may be effected by the guardian of the As to the source
the contract is the contract is
incapacitated person (Art. 1394, NCC). However, this of remedy
based on law. based on equity.
rule does not pertain to a rescissible contract entered As to the kind of
into by the guardian in behalf of his ward. Public interest Private interest
interest the
predominates. predominates.
predominates
Kinds of ratification As to the
Susceptible of Not susceptible
susceptibility of
1. Express the desire of the innocent party to ratification. of ratification.
ratification
convalidate the contract, or his waiver or renunciation
As to whether a
of his right to annul the contract is clearly manifested
sanction or a It is a sanction. It is a remedy.
verbally or formally in writing (Pineda, 2000)
remedy
2. Implied (tacit) it is the knowledge of the reason
Third persons
which renders the contract voidable and such reason As to who can Only parties to
who are affected
having ceased, the person who has a right to invoke it avail the the contract can
may file the
should execute an act which necessarily implies an remedies assail it.
action
intention to waive his right (Art. 1393, NCC).
It is a subsidiary
As to the kind of It is a principal
action.
Retroactivity in ratification of contracts action action.
GR: Retroactivity applies in ratification of contracts.

UNENFORCEABLE CONTRACTS
XPN: When the rights of innocent third persons will be
prejudiced, ratification will not take effect. Unenforceable contracts
NOTE: Ratification does not require the conformity of the Those contracts which cannot be enforced by action or
contracting party who has no right to bring the action for complaint, unless they have been ratified by the party or
annulment. parties who did not give consent.
Characteristics of unenforceable contract
Confirmation v. Recognition 1. It cannot be enforced by a proper action in court;

2. It may be ratified;
3. It cannot be assailed by third person.
CONFIRMATION RECOGNITION
Kinds of unenforceable contracts
The following contracts are unenforceable unless they are

ratified:

CIVIL LAW
1. Those entered into the name of another person the purchasers and person on whose account the sale
by one who has been given no authority/legal is made, it is a sufficient memorandum;
representation or acted beyond his powers; 5. An agreement for the leasing for a longer period than
one year, or for the sale of real property or of an
NOTE: A contract of sale over a piece of land entered interest therein;
by an agent whose authority is not in writing, even if 6. A representation as to the credit of a third person
he acted beyond the scope of his authority is void, not (Art. 1403, NCC).
merely unenforceable (Art. 1874, NCC).
NOTE: The enumeration is exclusive.
2. Those that do not comply with the Statute of
Frauds; and Fundamental principles governing Statute of Frauds
3. Those where both parties are incapable of giving
consent to a contract (Art. 1403, NCC). 1. It only applies to executory contracts and not partially
or completely executed.
Statute of Frauds 2. It cannot apply if the action is neither for damages
because of violation of an agreement nor for the
The term "Statute of Frauds" [Article 1403, (2)] is specific performance of said agreement.
descriptive of statutes which require certain classes of 3. It is exclusive as it applies only to the agreements or
contracts to be in writing. It requires certain contracts contracts enumerated in Art. 1403.
enumerated therein to be evidenced by some note or 4. The defense of Statute of Frauds may be waived
memorandum subscribed by the party charged or by his 5. It is a personal defense, it cannot be assailed by third
agent in order to be enforceable. The Statute does not persons.
deprive the parties of the right to contract with respect to 6. Contracts infringing the Statute of Frauds are not
the matters therein involved, but merely regulates the void; they are merely unenforceable.
formalities of the contract necessary to render it 7. It is a Rule of Exclusion as it excludes oral testimony.
enforceable. Evidence of the agreement cannot be received 8. It does not determine the credibility or weight of
without the writing or a secondary evidence of its contents evidence. It merely concerns itself with the
(Swedish Match, AB v. CA, G.R. No. 128120, Oct. 20, 2004). admissibility.
9. It does not apply if the claim is that the contract does
The Statute of Frauds applies only to executory contracts, not express the true agreement of the parties (Paras,
not to those that are partially or completely fulfilled. 2008).
Where a contract of sale is alleged to be consummated, it
matters not that neither the receipt for the consideration Q: Cenido, as an heir of Aparato and claiming to be the
nor the sale itself was in writing. Oral evidence of the owner of a house and lot, filed a complaint for
alleged consummated sale is not forbidden by the Statute ejectment against spouses Apacionado. On the other
of Frauds and may not be excluded in court (Victoriano v. hand, spouses Apacionado allege that they are the
CA, G.R. No. 87550, Feb. 11, 1991). owners which are unregistered purchased by them
from its previous owner, Aparato. Their claim is
Purpose of the Statute of Frauds anchored on a 1-page typewritten document entitled
"Pagpapatunay," executed by Aparato. Is the
It is to prevent fraud and perjury in the enforcement of Pagpapatunay entered into by Bonifacio and spouse
obligations depending for their evidence on the unassisted Apacionado valid and enforceable?
memory of witnesses, by requiring certain enumerated
contracts and transactions to be evidenced by a writing A: Yes, it is valid and enforceable. Generally, contracts are
signed by the party to be charged (Swedish Match, AB v. CA, obligatory, in whatever form such contracts may have
G.R. No. 128120, Oct. 20, 2004) been entered into, provided all the essential requisites for
their validity are present. When, however, the law requires
Contracts or agreements covered by the Statute of that a contract be in some form for it to be valid or
Frauds enforceable, that requirement must be complied with.
1. An agreement that by its terms is not to be performed The sale of real property should be in writing and
within a year from the making thereof; subscribed by the party charged for it to be enforceable.
2. A special promise to answer for the debt, default or The "Pagpapatunay" is in writing and subscribed by
miscarriage of another; Aparato, hence, it is enforceable under the Statute of
3. An agreement made in consideration of marriage, Frauds. Not having been subscribed and sworn to before a
other than a mutual promise to marry; notary public, however, the "Pagpapatunay" is not a public
4. An agreement for the sale of goods, chattels or things document, and therefore does not comply with par. 1, Art.
in action, at a price not less than 500 pesos, unless the 1358.
buyer accepts and receives part of such goods and
chattels, or the evidences, or some of them, of such Moreover, the requirement of a public document in Article
things in action, or pay at the time some part of the 1358 is not for the validity of the instrument but for its
purchase money; but when a sale is made by an efficacy. Although a conveyance of land is not made in a
auction and entry is made by the auctioneer in his public document, it does not affect the validity of such
sales book, at the time of the sale, of the amount and conveyance. The private conveyance of the house and lot is
kind of property sold, terms of sale, price, names of therefore valid between Aparato and the spouses. For

216
2015 GOLDEN NOTES
CONTRACTS
greater efficacy of the contract, convenience of the parties Void contracts are those which have no force and effect
and to bind third persons, respondent spouses have the from the beginning and which cannot be ratified or
right to compel the vendor or his heirs to execute the validated by lapse of time (Pineda, 2000).
necessary document to properly convey the property
(Cenidon v. Spouses Apacionado, G.R. No. 132474, Nov. 19, NOTE: The principle of in pari delicto is applicable in cases
1999). of void contracts but not in inexistent contracts.
Consequently, void contracts may produce effects (Arts.
Unenforceable contract is ratifiable 1411, 1412, NCC), but inexistent contracts do not produce
any effect whatsoever (Jurado, 2009).
1. A contract entered into in the name of another by one
who has no authority, legal representation or who Characteristics of void/inexistent contracts
acted beyond his powers shall be unenforceable,
unless it is ratified expressly or impliedly, by the 1. It cannot be ratified (Art. 1409, NCC).
person on whose behalf it has been executed, before it 2. The right to set up the defense of illegality cannot be
is revoked by the other contracting party (Art. 1317, waived (Art. 1409, NCC).
NCC). 3. The action or defense for the declaration of the
2. Contracts infringing the Statute of Frauds are ratified: inexistence of a contract does not prescribe (Art. 1410,
a. by failure to object to the representation of oral NCC).
evidence to prove the same; or 4. The defense of illegality of contracts is not available to
b. by the acceptance of benefits under them (Art. third persons whose interests are not directly affected
1317, NCC). (Art. 1421, NCC).
5. A contract which is the direct result of a previous
3. In a contract where both parties are incapable of illegal contract is also void and inexistent (Art. 1422,
giving consent, express or implied ratification by the NCC).
parents or guardian, as the case may be, of one of the 6. GR: They produce no legal effect whatsoever in
contracting parties, or one of the contracting parties accordance with the principle quod nullum est nullum
upon attaining capacity, shall give the contract the producit effectum. (Jurado, 2011)
same effect as if only one of them is incapacitated.
Hence, the contract becomes voidable and the rules on XPN: In case of pari delicto since it will refuse legal
voidable contracts should govern. remedy to either party to an illegal agreement and
leaves them to where they were. Hence, if a void
If the ratification is made by the parents or guardians contract is already executed, neither of the parties can
as the case may be, of both contracting parties, or both recover from each other.
of the contracting parties upon attaining capacity, the
contract shall be validated from the inception (Jurado, Kinds of void contracts
2011).
1. Those lacking in essential elements:
Two ways of ratifying contracts which infringe the a. Those whose cause, object or purpose is
Statute of Frauds contrary to law, morals, good customs, public
order or public policy: illicit cause, or object.
1. Failure to object to the admissibility of parol evidence b. Those which are absolutely simulated or
to support a contract covered by the Statute of Frauds fictitious: no cause
during the trial. c. Those whose cause or object did not exist at the
2. Acceptance of benefits when the contract has been time of the transaction: no cause or object
partly executed because estoppel sets in by accepting d. Those whose object is outside the commerce of
performance. man: no object
e. Those which contemplate an impossible service:
VOID/INEXISTENT CONTRACTS no object
f. Those where the intention of parties relative to
Void contracts and Inexistent contracts principal object of the contract cannot be
ascertained
In general, void and inexistent contracts may be defined as
those which lack absolutely either in fact and or in law one 2. Contracts prohibited by law
or some or all of those elements which are essential for its a. Pactum commisorium the creditor appropriates
validity. In particular, void contracts are the contracts to himself the things given by way of pledge or
where all of the requisites prescribed by law for contracts mortgage to fulfill the debt
are present, but the cause, object or purpose is contrary b. Pactum de non alienando an agreement
to law, morals, good customs, public order or public policy, prohibiting the owner from alienating the
or they are prohibited by law, or they are declared by law mortgaged immovable
to be void. In existent contracts, on the other hand, are c. Pactumleonina a stipulation in a partnership
those contract which lack absolutely one or some or all of agreement which excludes one or more partners
those requisites which are essential for validity. from any share in the profits or losses
3. Illegal or illicit contracts (e.g. contract to sell

marijuana)

CIVIL LAW
Q: Judie sold one-half of their lot to Guiang under a Exceptions to the principle of in pari delicto
deed of transfer of rights without the consent and over
the objection of his wife, Gilda and just after the latter The exceptions to the principles of pari delicto are the
left for abroad. When Gilda returned home and found following:
that only her son, Junie, was staying in their house. She 1. Payment of money or delivery of property for an
then gathered her other children, Joji and Harriet and illegal purpose, where the party who paid or delivered
went to stay in their house. For staying in their alleged repudiates the contract before the purpose has been
property, the spouses Guiang complained before the accomplished, or before any damage has been caused
barangay authorities for trespassing. to a third person. In such case, the courts may allow
such party to recover what he has paid or delivered, if
Is the deed of transfer of rights executed by Judie the public interest will thus be subserved.
Corpuz and the spouses Guiang void or voidable? 2. Payment of money or delivery of property by an
incapacitated person. In such case, the courts may
A: It is void. Gildas consent to the contract of sale of their allow such person to recover what he has paid or
conjugal property was totally inexistent or absent. Thus, delivered, if the interest of justice so demands.
said contract properly falls within the ambit of Article 124 3. Agreement or contract which is not illegal per se but
of the FC. is merely prohibited by law, and the prohibition is
designed for the protection of the plaintiff. In such
The particular provision in the old Civil Code which case, such plaintiff, if public policy is thereby
provides a remedy for the wife within 10 years during the enhanced, may recover what he has paid or delivered.
marriage to annul the encumbrance made by the husband 4. Payment of any amount in excess of the maximum
was not carried over to the Family Code. It is thus clear price of any article or commodity fixed by law. In such
that any alienation or encumbrance made after the Family case, the buyer may recover the excess.
Code took effect by the husband of the conjugal 5. Contract whereby a laborer undertakes to work
partnership property without the consent of the wife is longer than the maximum number of hours fixed law.
null and void (Spouses Guiangv.CA, G.R. No. 125172, June 26, In such case, the laborer may demand for overtime
1998). pay.
6. Contract whereby a laborer accepts a wage lower than
Q: On July 6, 1976, Honorio and Vicente executed a the minimum wage fixed by law. In such case the
deed of exchange. Under this instrument, Vicente laborer may demand for the deficiency.
agreed to convey his 64.22-square-meter lot to
Honorio, in exchange for a 500-square-meter Void contract v. Inexistent contract
property. The contract was entered into without the
consent of Honorios wife. Is the deed of exchange null BASIS VOID INEXISTENT
and void? Those where all
the requisites of
A: The deed is valid until and unless annulled. The deed a contract are
was entered into on July 6, 1976, while the Family Code present, but the
took effect only on August 3, 1998. Laws should be applied cause, object or
prospectively only, unless a legislative intent to give them Those where one
purpose is
retroactive effect is expressly declared or is necessarily As to the or some of the
contrary to law,
implied from the language used. Hence, the provisions of presence of requisites which
morals, good
the Civil Code, not the Family Code are applicable. requisites of a are essential for
customs, public
According to Article 166 of the Civil Code, the husband contract validity are
order or public
cannot alienate or encumber any real property of the absolutely lacking
policy or the
conjugal partnership without the wifes consent. This contract itself is
provision, however, must be read in conjunction with prohibited or
Article 173 of the same Code. The latter states that an declared
action to annul an alienation or encumbrance may be prohibited.
instituted by the wife during the marriage and within ten As to the
years from the transaction questioned. Hence, the lack of Principle of in Principle of in
applicability of
consent on her part will not make the husbands alienation pari delicto is pari delicto
the principle of
or encumbrance of real property of the conjugal applicable. Is not applicable.
in pari delicto
partnership void, but merely voidable (Villarandav.
Villaranda, G.R. No. 153447, Feb. 23, 2004). Void contract v. Unenforceable contract
Principle of in pari delicto BASIS VOID UNENFORCEABLE

There is contract
When the defect of a void contract consists in the illegality As to the effect No contract at
but which cannot
of the cause or object of the contract, and both of the of the contract all.
be enforced.
parties are at fault or in pari delicto, the law refuses them As to the
every remedy and leaves them where they are. This rule It is not subject It is subject to
susceptibility to
which is embodied in Arts. 1141 and 1142 of the NCC is to ratification. ratification.
ratification
what is commonly known as the principle in pari delicto. As to the It can be easily It cannot be

218
2015 GOLDEN NOTES
CONTRACTS
capacity of assailed by third assailed by third (Art. 1389;
third persons to persons whose persons. Pineda,
assail the interests are Obligations and
contract directly affected. Contracts, 2000
ed, p. 605)
Void contract v. Voidable contract
EFFECT OF CONTRACTS
BASIS VOID VOIDABLE
Consent is Contracts take effect only between the parties, and their
Absence of assigns and heirs, the latter being liable only to the extent
vitiated or
As to the defect of essential of the property received from the decedent (Art. 1311,
there is
the contract element/s of a NCC).
incapacity to
contract
give consent
As to the status of No effect even if Valid contract Liability of heirs for the obligation contracted by the
the contract not set aside until set aside decedent
As to the
susceptibility of Cannot be ratified Can be ratified The heirs are liable for the obligation contracted by the
ratification decedent when the rights and obligations arising from the
Nullity can be set contract are transmissible:
up against any 1. By their nature; or
person asserting Nullity can be 2. By stipulation; or
As to the effect of right arising from set up only 3. By provision of law (Art. 1311, NCC).
the nullity it, and his against a party
successors in thereto Requisites in order that a third person may demand
interest not the fulfillment of the contract
protected by law
Action to annul 1. The contracting parties must have clearly and
contract deliberately conferred a favor upon the third person;
As to the Action to declare prescribes in 4 2. The third persons interest or benefit in such
prescription of nullity does not years (Pineda, fulfillment must not be merely incidental; and
the contract prescribe Obligations and 3. Such third person communicated his acceptance to
Contracts, 2000 the obligor before the stipulations in his favor are
ed, p. 606) revoke.
Defense may
Defense may be be invoked
availed of by only by the
anybody, whether parties (those
As to the set-up of he is a party to the principally and
defense contract or not as subsidiarily
long as his interest liable) or their
is directly affected successors in
(Art. 1421, NCC). interest and
privies
Void contract v. Rescissible contract
BASIS VOID RESCISSIBLE

Defect is in its
Defect is inherent effects, either
As to the defect of
in the contract against one of
the contract
itself the parties or a
third person
Based on
Nullity is a matter
As to the source equity and
of law and public
of the defect matter of
interest
private interest
Produces legal
No legal effects effects and
As to effect of the
even if no action is remains valid if
contract
filed to set it aside no action is
filed
Action to declare Action to
As to the
its nullity does not rescind
prescription of
prescribe (Art. prescribes
the action
1410) within 4 years

CIVIL LAW
SALES 1) Factors acts, recording laws, or any other
provision of law enabling the apparent owner of
DEFINITION AND ESSENTIAL REQUISITES OF A the goods to dispose them as if he were the true
CONTRACT OF SALE owner;
2) Sales made under the order of a court of
Sale competent jurisdiction;
3) Sales made pursuant to a special law;
By the contract of sale, one of the contracting parties 4) Purchases made in a merchants store or fairs or
obligates himself to transfer the ownership of and to markets (Art. 1505, NCC).
deliver a determinate thing, and the other to pay therefor a
price certain in money or its equivalent (Art. 1458, NCC). Example: A, the seller sold a car owned by B, to C, the
buyer. The contract of sale is valid since ownership at the
NOTE: Gross inadequacy of price does not affect a contract time of perfection is not required. A was able to deliver the
of sale, except as it may indicate a defect in the consent, or car in the absence of the knowledge of B. Later, C sold the
that the parties really intended a donation or some other car to D. B now comes to Court to ask for annulment of the
act or contract (Art. 1470, NCC). sale made by C to D on the principle of nemo dat quod non
habet. Since, A, the first seller was not able to transfer
ELEMENTS OF A CONTRACT OF SALE ownership to C because he was not the owner at the time
of delivery, then C cannot also transfer ownership to D
Elements of a contract of sale (ENA) (Tsai v. CA, G.R. No. 120098, October 2, 2001).
1. Essential elements for validity: Q: Jose, as co-owner, sold the entire land in favor of his
a. Consent minor daughter, Ida. Alleging that Jose had
b. Determinate subject matter fraudulently registered it in his name alone, his
c. Consideration sisters, sued him for recovery of 2/3 share of the
property. Ida did not pay for the land. Is the sale valid?
2. Natural elements those which are inherent in the
contract, and which in the absence of any contrary A: No. Jose did not have the right to transfer ownership of
provision, are deemed to exist in the contract the entire property to petitioner since 2/3 thereof
a. Warranty against eviction belonged to his sisters. Also, Ida could not have given her
b. Warranty against hidden defects consent to the contract, being a minor at the time. Consent
of the contracting parties is among the essential requisites
3. Accidental elements dependent on parties of a contract, including one of sale, absent which there can
stipulations; be no valid contract. Moreover, Ida admittedly did not pay
Examples: any centavo for the property, which makes the sale void.
a. Conditions Article 1471 of the Civil Code provides: If the price is
b. Interest simulated, the sale is void, but the act may be shown to
c. Time & Place of payment have been in reality a donation, or some other act or
d. Penalty contract (Labagala v. Santiago, G.R. No. 132305, Dec. 4,
2001).
Consent
CHARACTERISTICS OF A CONTRACT OF SALE
Consent is the meeting of the minds to transfer ownership
in exchange for the price. 1. Consensual a sale is perfected by mere consent,
manifested by the meeting of the minds as to the offer
Effect and/or consequence of the absence of consent of and acceptance thereof on the subject matter, price
the owner in a contract of sale of said property and terms of payment.
2. Bilateral the seller will deliver and transfer a
GR: The contract of sale is void. One of the essential determinate thing to the buyer and the latter will pay
requirements of a valid contract of sale is the consent of an ascertained price (or equivalent) therefor.
the owner of the property. The buyer acquires no better 3. GR: Commutative the thing sold is considered the
title to the goods than the seller had. This law stems from equivalent of the price paid and the price paid is the
the principle that nobody can dispose of that which does equivalent of the thing sold.
not belong to him Nemo dat quod non habet. A stream
cannot rise higher than its source. 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
NOTE: The principle of nemo dat quod non habet pertains than the price of the ticket.
to the effect of delivery of the subject matter pursuant to a
valid contract of sale, which is at the consummation stage 4. Principal its existence does not depend upon the
of the contract. It does not pertain to the validity of the existence and validity of another contract.
contract of sale upon perfection (Villanueva, 2004). 5. Onerous the thing sold is conveyed in consideration
of the purchase price, and vice versa.
XPN: When the owner of the goods is, by his conduct, 6. Nominate it has a specific name given by law
precluded from denying the sellers authority to sell (Art. (Pineda, p. 4, 2010 ed).
1505, NCC). However, it shall not affect the following:

220
2015 GOLDEN NOTES
SALES
Formal requirement for the validity of a contract of b. Sale of a right (assignment of a right, or a credit
sale or other intangibles such as copyright,
trademark, or good will);
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, NOTE: An intangible object is a chose in action.
or may be inferred from the conduct of the parties (Art.
1483, NCC). Contracts shall be obligatory, in whatever form 4. Validity or defect of the transaction:
they have been entered into, provided all the essential a. Valid
requisites for their validity are present. b. Rescissible
c. Voidable
XPNs: d. Unenforceable
a) If the law requires a document or other special form, e. Void
the contracting parties may compel each other to
observe that form (Art. 1357, NCC). 5. Legality of the object:
b) Under Statute of Frauds, the following contracts must a. Licit object
be in writing; otherwise, they shall be unenforceable: b. Illicit object
1. Sale of personal property at a price not less than
P500; 6. Presence or absence of conditions:
2. Sale of a real property or an interest therein; a. Absolute
3. Sale of property not to be performed within a year b. Conditional
from the date thereof;
4. When an applicable statute requires that the 7. Wholesale or retail:
contract of sale be in a certain form (Art. 1403, a. Wholesale
par.2, NCC) b. Retail
Instances where the Statute of Frauds is not essential 8. Proximate inducement for the sale:
for the enforceability of a contract of sale a. Sale by description
b. Sale by sample
1. When there is a note or memorandum in writing and c. Sale by description and sample
subscribed to by the party or his agent (contains
essential terms of the contract); 9. When the price is tendered:
2. When there has been partial performance/execution a. Cash sale
(seller delivers with the intent to transfer title/receives b. Sale on installment plan
price);
3. When there has been failure to object to presentation Absolute Sale
of evidence aliunde as to the existence of a contract
without being in writing and which is covered by the A sale is absolute when no condition is imposed and
Statute of Frauds; ownership passes to the vendee upon delivery of the thing
4. When sales are effected through electronic commerce subject of the sale (Art. 1497, NCC).
(Villanueva, p. 192).
Instance when a deed of sale considered absolute in
NOTE: Rules on forms, and of validity and enforceability of nature
contracts of sale, are strictly kept within the contractual
relationship of the seller and buyer pursuant to the A deed of sale is considered absolute in nature where there
characteristic of relativity of every contract, and do not is neither a stipulation in the deed that title to the property
necessarily apply to third parties whose rights may be sold is reserved in the seller until the full payment of the
affected by the terms of a sale. price, nor one giving the vendor the right to unilaterally
resolve the contract the moment the buyer fails to pay
KINDS OF CONTRACT OF SALE within a fixed period.
Kinds of Contract of Sale Conditional Sale
As to: It is conditional where the sale contemplates a

1. Nature of the subject matter: contingency, and in general, where the contract is subject
a. Sale of real property; to certain conditions, usually in the case of the vendee, the
b. Sale of personal property full payment of the agreed purchase price and in the case
2. Value of the things exchanged: of the vendor, the fulfillment of certain warranties (De
a. Commutative sale; Leon, p. 15).
b. Aleatory sale
3. Whether the object is tangible or intangible:
a. Sale of property (tangible or corporeal);
NOTE: A tangible object is also called chose in

possession

CIVIL LAW
Conditional sale v. Absolute sale 2. Barter
CONDITIONAL SALE ABSOLUTE SALE SALE BARTER

One where the title to the Consideration is giving of Consideration is giving
One where the seller is
property is not reserved to money as payment of a thing
granted the right to
the seller or if the seller is If consideration consists partly in money & partly by
unilaterally rescind the
not granted the right to thinglook at manifest intention
contract predicated on the
rescind the contract based If intention is not clear, If intention is not clear, and
fulfillment or non-
on the fulfillment or non- and the value of thing is the value of thing is more
fulfillment, as the case may
fulfillment, as the case may equal or less than amount than amount of money =
be, of the prescribed
be, of the prescribed of money = Sale Barter
condition.
condition. Both are governed by law on sales
Effect of the non-performance of the condition or if the 3. Agency to Sell

condition did not take place
SALE AGENCY TO SELL
Where the obligation of either party to a contract of sale is
Agent not obliged to pay for
subject to any condition which is not performed, such Buyer pays for price of
price; must account for the
party may refuse to proceed with the contract or he may object
proceeds of the sale.
waive performance of the condition. Unlike in a non-
Principal remains the owner
fulfillment of a warranty which would constitute a breach Buyer becomes owner of
even if the object
of the contract, the non-happening of the condition, thing
delivered to agent
although it may extinguish the obligation upon which it is
based, generally does not amount to a breach of a contract Agent assumes no personal
of sale. Seller warrants liability as long as within
authority given
Instance when a conditional sale considered an Not unilaterally May be revoked unilaterally
absolute sale revocable even w/o ground
Seller receives profit Agent not allowed to profit
A deed of sale is absolute in nature although denominated Real contract Personal contract
a conditional sale absent such stipulations reserving title
to the vendor until full payment of the purchase price, nor 4. Dacion en Pago
any stipulation giving them the right to unilaterally rescind
the contract in case of non-payment. SALE DACION EN PAGO
Contract where property is
Q: A contract of sale of a lot stipulates that the No pre-existing
alienated to extinguish pre-
"payment of the full consideration based on a survey credit
existing credit/debt
shall be due and payable in 5 years from the execution Buyer-seller Novates creditor-debtor
of a formal deed of sale". Is this a conditional contract relationship relationship into seller-buyer
of sale?
5. Lease
A: No, it is not. The stipulation is not a condition which
affects the efficacy of the contract of sale. It merely SALE LEASE
provides the manner by which the full consideration is to Use of thing is for
be computed and the time within which the same is to be Obligation to absolutely
specified period only
paid. But it does not affect in any manner the effectivity of transfer ownership of thing
with obligation to return
the contract (Heirs of San Andres v. Rodriguez, G.R. No.
Consideration is the
135634, May 31, 2000). Consideration is the price
rental
Seller needs to be owner of
DISTINCTIONS OF THE CONTRACT OF SALE WITH
thing to transfer ownership.
OTHER CONTRACTS
Lessor need not be
NOTE: Lease with option to
Sale distinguished from owner
buy really a contract of sale
but designated as lease in
1. Donation
name.
SALE DONATION 6. Contract for piece-of-work
Onerous Gratuitous/onerous
Consensual Formal contract SALE CONTRACT FOR PIECE-
Law on Sales Law on Donation OF-WORK
Manufacturing in the Manufacturing upon special
ordinary course of order of a customer
business
For the general market Not for the general market,

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but specially for the customer him. The prospective automatically transfers
seller still has to convey to the buyer by
title to the prospective operation of law without
Rules in determining if the contract is one of sale or a buyer by entering into a any further act having to
piece of work contract of absolute sale. be performed by the
seller.
1. Sale if ordered or manufactured in the ordinary There being no previous Upon the fulfillment of
course of business (Art. 1467, NCC). sale of the property, a the suspensive
2. Piece of work if manufactured especially for the third person buying such condition, the sale
customer and upon his special order, and not for the property despite the becomes absolute and
general market (Art. 1467, NCC). fulfillment of the this will definitely affect
suspensive condition such the sellers title
CONTRACT TO SELL as the full payment of the thereto. The second
purchase price, cannot be buyer of the property
Contract to sell deemed a buyer in bad who may have had actual
faith. There is no double or constructive
Contract to sell may be defined as a bilateral contract sale in such case. Title to knowledge of such defect
whereby the prospective seller, while expressly reserving the property will transfer in the sellers title, or at
the ownership of the subject property despite delivery to the buyer after least was charged with
thereof to the prospective buyer, binds himself to sell the registration because there the obligation to
said property exclusively to the prospective buyer upon is no defect in the owner- discover such defect,
fulfillment of the condition agreed upon, that is, full sellers title per se, but the cannot be a registrant in
payment of the purchase price (Coronel v. Court of appeals, latter, of course, may be good faith. Such second
G.R. no. 103577, October 7, 1996). sued for damages by the buyer cannot defeat the
intending buyer. first buyers title. In case
Instances when a contract to sell may be resorted to a title is issued to the
second buyer, the first
1. Where subject matter is indeterminate (Arts. 1458 and buyer may seek
1460, NCC); reconveyance of the
2. Sale of future goods except future inheritance (Art. property subject of the
1462, NCC); sale.
3. Stipulation that deed of sale & corresponding (Reyes v. Tuparan, G.R. No. 188064, June 1, 2011; Coronel v.
certificate of sale would be issued only after full Court of Appeals, G.R. No. 103577, October 7, 1996).
payment (David v. Tiongson, G.R. No. 108169, Aug. 25,
1999).
Contract to Sell v. Conditional Contract of Sale
CONTRACT TO SELL CONDITIONAL

CONTRACT OF SALE
The prospective seller The first element of
does not as yet agree or consent is present,
consent to transfer although it is
ownership of the property conditioned upon the
subject of the contract to happening of a
sell until the happening of contingent event, which
an event, which may be may or may not occur.
the full payment of the
purchase price. What the
seller agrees or obliges
himself to do is to fulfill
his promise to sell the
subject property when the
entire amount of the
purchase price is
delivered to him.
Upon the fulfillment of the If the suspensive
suspensive condition, condition is fulfilled, the
which is the full payment contract of sale is
of the purchase price, thereby perfected, such
ownership will not that if there had already
automatically transfer to been previous delivery
the buyer although the of the property subject of
property may have been the sale to the buyer,
previously delivered to ownership thereto

CIVIL LAW
Contract of Sale v. Contract to sell
BASIS CONTRACT OF SALE CONTRACT TO SELL

Ownership is transferred to the buyer upon
Ownership is transferred upon full payment of
delivery of the object to him.
the purchase price.
As regards transfer of
ownership NOTE: Vendor has lost and cannot recover
NOTE: Prior to full payment, ownership is
ownership until and unless the contract is
retained by the seller.
resolved or rescinded
There are two contracts:
1. The contract to sell
As to numbers of There is only one contract executed between NOTE: Preparatory sale
contracts involved the seller and the buyer.
2. The deed of absolute sale
NOTE: The principal contract is executed after

full payment of the purchase price.
Full payment of the price is a positive
suspensive condition.
Non-payment of the price is a resolutory
condition. Vendor loses ownership over the
Payment as a condition NOTE: Failure to fully pay the price is not a
property and cannot recover it until and unless
breach but an event that prevents the
the contract is resolved or rescinded.
obligation of the vendor to convey title from
becoming effective.
1. Specific
Performance 1. Resolution
Remedies available
2. Rescission 2. Damages
3. Damages
Q: Having agreed to sell property which they inherited the down payment. As soon as the new TCT is issued
from their father, which was then still in their fathers in their names, they were committed to immediately
name, the Coronels executed a document entitled execute the deed of absolute sale. Only then will the
"Receipt of Down Payment" in favor of Ramona for the obligation of the buyer to pay the remainder of the
purchase of their house and lot, with the condition that purchase price arise. This suspensive condition was
Ramona will make a down payment upon execution of fulfilled. Thus, the conditional contract of sale became
the document. The Coronels would then cause the obligatory, the only act required for the
transfer of the property in the name of Ramona and consummation thereof being the delivery of the
will execute a deed of absolute sale in favor of property by means of the execution of the deed of
Ramona. absolute sale in a public instrument, which they
a. Ramona paid the downpayment as agreed. Is unequivocally committed themselves to do as
there a perfected contract of sale or a mere evidenced by the "Receipt of Down Payment."
contract to sell? (Coronel, et al. v. CA, G.R. No. 103577, Oct. 7, 1996).
b. Instead of executing a deed of Absolute Sale in b) Yes. Under Article 1187, the rights and obligations of
favor of Ramona, the Coronels sold the the parties with respect to the perfected contract of
property to Catalina and unilaterally and sale became mutually due and demandable as of the
extrajudicially rescinded the contract with time of fulfillment or occurrence of the suspensive
Ramona. Ramona then filed a complaint for condition. Hence, petitioner-sellers' act of unilaterally
specific performance. Will Ramonas action and extrajudicially rescinding the contract of sale
prosper? cannot be justified, there being no express stipulation
authorizing the sellers to extrajudicially rescind the
A: contract of sale (Coronel, et al. v. CA, G.R. No. 103577,
a) The agreement could not have been a contract to Oct. 7, 1996).
sell because the sellers herein made no express
reservation of ownership or title to the subject parcel of Q: Project Movers Realty and Development
land. The Coronels had already agreed to sell the Corporation (PMRDC) was indebted to Keppel Bank
house and lot they inherited from their father, for P200M. To pay the debt, PMRDC conveyed to the
completely willing to transfer full ownership of the bank 25 properties. Adao occupies one of the
subject house and lot to the buyer if the documents properties conveyed. The bank demanded Adao to
were then in order. However, the TCT was then still in vacate the property but he refused. Hence, an
the name of their father, that is why they caused the ejectment case was filed against Adao. In his defense,
issuance of a new TCT in their names upon receipt of Adao assailed that he had a Contract to Sell entered

224
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between PMRDC and Adao. To prove full payment of respondent fails to pay within the fixed period. Second, the
the property, he presented an affidavit. The lower agreement between the parties was not embodied in a
court ordered that Keppel banks should respect the deed of sale. The absence of a formal deed of conveyance is
contract to sell because when the bank acquired the a strong indication that the parties did not intend
properties by way of dacion en pago, it merely stepped immediate transfer of ownership, but only a transfer after
into the shoes of PMRDC. Is Keppel bank bound by the full payment of the purchase price. Third, petitioners
contract to sell between PMRDC and Adao? retained possession of the certificate of title of the lot. This
is an additional indication that the agreement did not
A: No. Adaos lone affidavit is self-serving, and cannot be transfer to respondent, either by actual or constructive
considered as substantial evidence. As a general rule, one delivery, ownership of the property (Spouses Herrera v.
who pleads payment has the burden of proving it. Even Caguiat, G.R. No. 139173, Feb. 28, 2007).
where the petitioner alleged non-payment, the general
rule is that the burden rests on the respondent to prove PARTIES TO A CONTRACT OF SALE
payment, rather than on the petitioner to prove non-
payment (Kepel Bank Phils. Inc., v. Adao, G.R. No. 158227, Parties to a contract of sale
Oct. 19, 2005).
1. Seller one who sells and transfers the thing and
Q: Ursal and Spouses Monesets entered into a ownership to the buyer
Contract to Sell of a house and lot. A downpayment 2. Buyer one who buys the thing upon payment of the
was to be paid by Ursal and subsequently the balance consideration agreed upon
of the price is to be paid every month until it is fully
paid. After 6 months, the monthly installments were CAPACITY OF THE PARTIES
stopped because the spouses did not give Ursal the
transfer of certificate title. Subsequently, the Spouses Persons who may enter into a contract of sale
Monesets sold the property to Dr. Canora. The same
property was also mortgaged by the spouses to a rural GR: All persons, whether natural or juridical, who can
bank. When the spouses failed to pay the rural bank, bind themselves, have legal capacity to buy and sell (Art.
the bank moved to foreclose the mortgage. Does Ursal 1489, par. 1, NCC).
have vested ownership over the property?
XPNs:
A: No. In such contract, the prospective seller expressly 1. Minors, insane and demented persons and deaf-mutes
reserves the transfer of title to the prospective buyer, until who do not know how to write
the happening of an event, which in this case is the full 2. Persons under a state of drunkenness or during
payment of the purchase price. In this case, the parties not hypnotic spell
only titled their contract as Contract to Sell Lot and 3. Husband and wife - sale by and between spouses
House but specified in their agreement that the vendor
shall only execute a deed of absolute sale on the date of the NOTE: Rationale for the prohibition:
final payment by the vendee. Since the contract in this case a. To prevent a spouse from defrauding his creditors
is a contract to sell, the ownership of the property by transferring his properties to the other spouse
remained with the Monesets even after petitioner has paid b. To avoid a situation where the dominant spouse
the down payment and took possession of the property. In would unduly take advantage of the weaker spouse
other words, petitioner did not acquire ownership over the c. To avoid an indirect violation of the prohibition
subject property as she did not pay in full the equal price against donations between spouses under Article
of the contract to sell (Ursal v. Court of Appeals, et. al, G.R. 133 of the Civil Code (Medina v. Collector of Internal
No. 142411, Oct. 14, 2005). Revenue, 1 SCRA 302)
Q: Caguiat offered to buy Spouses Herreras lot and XPN to XPN:

subsequently gave the spouses a partial payment. In 1. Where necessaries are sold and delivered to a
turn, the spouses gave Caguiat the corresponding minor or other person without capacity to act,
receipt stating that respondent promised to pay the he must pay a reasonable price therefor.
balance of the purchase price on or before a fixed date. 2. In case of sale between spouses:
Caguiats counsel wrote the spouses informing them of a. when separation of property was agreed
his readiness to pay the balance of the price and upon in the marriage settlements; or
requesting them to prepare the final deed of sale. b. when there has been a judicial separation
However, the spouses counsel sent a letter to Caguiat of property agreed upon between them
stating that the wife is leaving for abroad and that they
are cancelling the transaction. The spouses allowed ABSOLUTE INCAPACITY
Caguiat to recover the partial payment he paid them. Is
the transaction a contract of sale? Persons who are absolutely incapacitated to enter into
A: No. In this case, the "Receipt for Partial Payment" shows a contract of sale
that the true agreement between the parties is a contract
to sell. First, ownership over the property was retained by 1. Unemancipated minors (Art. 1327, NCC);
petitioners and was not to pass to respondent until full 2. Insane or demented persons, and deaf-mutes who do
payment of the purchase price. In effect, petitioners have not know how to write (Art. 1327, NCC)
the right to rescind unilaterally the contract the moment

CIVIL LAW
NOTE: Contracts entered into during intervals by insane or i. When a separation of property was
demented persons are generally valid (Art. 1328, NCC); agreed upon in the marriage settlements;
whereas, those entered into in a state of drunkenness, or or
during hypnotic spell, are merely voidable (Art.1328). ii. When there has been a judicial separation
Contracts entered into by such legally incapacitated of property agreed upon between them
persons are not void, but merely voidable, subject to
annulment or ratification (Art. 1393, NCC). b. Contract of sale with 3rd parties:
Capacitated person CANNOT file an action for GR: Under the law on sales, it would seem that a
annulment using as basis the incapacity of the spouse may, without the consent of the other
incapacitated party spouse, enter into sales transactions in the regular
or normal pursuit of their profession, vocation or
He is disqualified from alleging the incapacity of the trade (in relation with Art. 73, Family Code).
person whom he contracts (Art. 1397, NCC);
XPN: Even when the property regime prevailing
Obligation to make restitution in a defective contract, was the conjugal partnership of gains, the Supreme
where such defect consists in the incapacity of a party Court held the sale by the husband of a conjugal
property without the consent of the wife is void,
GR: The incapacitated person is not obliged to make any not merely voidable under Art. 124 of the Family
restitution. Code since the resulting contract lack one of the
essential elements of full consent (Guiang v. CA, G.R.
XPN: Insofar as he has been benefited by the thing or price No. 125172, June 26, 1998).
received by him. (Art. 1399, NCC)
3. Between Common Law Spouses - also null and void.
RELATIVE INCAPACITY
In Calimlim-Canullas v. Fortun, the Court decided that
Persons who are relatively incapacitated to enter into sale between common law spouses is null and void
a contract of sale because Art. 1490 prohibits sales between spouses to
prevent the exercise of undue influence by one spouse
1. Spouses (Art. 1490, NCC) over the other, as well as to protect the institution of
2. Agents, Guardians, Executors and Administrators, marriage. The prohibition applies to a couple living as
Public Officers and Employees, Court Officers and husband and wife without the benefit of marriage,
Employees, and others specially disqualified by law otherwise, the condition of those incurred guilt would
(Art. 1491, NCC). turn out to be better than those in legal union
(Calimlim-Canullas v. Fortun, et. al., G.R. No. L-57499,
Status of the following contracts of sale June 22, 1984).
1. That entered into by minors: But when the registered property has been conveyed
a. Merely voidable, subject to annulment or subsequently to a third-party buyer in good faith and
ratification for value, then reconveyance is no longer available to
b. Action for annulment cannot be instituted by the common-law spouse-seller, since under the Torrens
person who is capacitated since he is disqualified system every buyer has a right to rely upon the title of
from alleging the incapacity of the person with his immediate seller (Cruz v. CA, G.R. No. 120122, Nov.
whom he contracts (with partial restitution in so 6, 1997).
far as the minor is benefited) where necessaries
are sold and delivered to a minor or other person Persons who has the right to assail the validity of the
without capacity to act, he must pay a reasonable transaction between spouses
price (Art. 1489, NCC).
The following are the only persons who can question the
2. Sale by & between spouses (Art. 1490, NCC): sale between spouses:
a. Status of prohibited sales between spouses: 1. The heirs of either of the spouses who have been
prejudiced;
GR: Null and void 2. Prior creditors; and
3. The State when it comes to the payment of the
XPN: In case of sale between spouses: proper taxes due on the transactions

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Persons relatively incapacitated to be the vendee in a contract of sale (AGE-COP)
RELATIVELY
PROPERTIES INVOLVED STATUS OF SALE RATIFICATION
INCAPACITATED TO BUY
Property entrusted to them for Can be ratified after the
administration or sale inhibition has ceased
Agents XPN: When principal gave his Reason: the only wrong that
Unenforceable
consent subsists is the private wrong to
the ward, principal or estate;
and can be condoned by the
Property of the ward during period private parties themselves
Guardian
of guardianship
NOTE: Contracts entered by
guardian in behalf of ward are
rescissible if ward suffers lesion
Voidable by more than of the value of
Executors and Property of the estate under
property. Sale by guardian of
administrators administration
property belonging to a ward
without Court approval is void
regardless of the lesion, hence,
cannot be ratified.
Property and rights in litigation or
Court officers and
levied upon on execution before the Cannot be ratified
employees
court under their jurisdiction
Void
Others specially disqualified Reason: It is not only a private
by law wrong, but also a public wrong.
Pubic officers and Property of the State entrusted to (Villanueva, Law on Sales, p. 58)
employees them for administration
NOTE: Prohibitions are applicable to sales in legal redemption, compromises and renunciations.

CIVIL LAW
Effect of sale in violation of the prohibition SALE BY A PERSON HAVING A VOIDABLE TITLE
1. With respect to guardians, agents, Effect of a sale made by the seller with voidable title
executors/administrators, the sale shall only be over the object
voidable because in such cases only private interests
are affected defect can be cured by ratification; 1. Perfection stage: valid buyer acquires title of goods
2. With respect to Public officers/employees, justices, 2. Consummation stage: valid If the title has not yet
judges, lawyers, clerks of courts, and those specially been avoided at the time of sale and the buyer must
disqualified by law, the sale shall be null and void buy the goods under the following conditions:
since public interest being involve therein (De Leon, a. In good faith
Comments and Cases on Sales and Lease, 7th edition, pg b. For Value
168) c. Without notice of sellers defect of title (Art.
Q: Atty. Leon G. Maquera acquired his clients property 1506, NCC).
as payment for his legal services, then sold it and as a
consequence obtained an unreasonable high fee for NOTE: Art. 1506 is predicated on the principle
handling his clients case. Did he validly acquire his that where loss has happened which must fall on
clients property? one of two innocent persons, it should be borne
by him, who is the occasion of the loss (De Leon,
A: No. Article 1491 (5) of the New Civil Code prohibits 2005).
lawyers acquisition by assignment of the clients property
which is the subject of the litigation handled by the lawyer. SUBJECT MATTER
Also, under Article 1492, the prohibition extends to sales
in legal redemption (In Re: Suspension from the Practice of Requisites of a proper objects of sale
Law in the territory of Guam of Atty. Leon G. Maquera, B.M.
No. 793, July 30, 2004). 1. Things
Q: The stipulation between the lawyer and counsel is a. Determinate or determinable
as follows, the attorneys fees of the Atty. X will be b. Lawful (licit), otherwise contract is void
of whatever the client might recover from his share in c. Should not be impossible (within the
the property subject of the litigation. Is the commerce of men)
stipulation valid?
NOTE: From the viewpoint of risk or loss, not until the
A: Yes. The stipulation made is one of a contingent fee object has really been made determinate can we say
which is allowed by the CPE and the CPR. It does not that the object has been lost, because genus never
violate the prohibition of acquisition of property subject of perishes.
the litigation by the lawyer provided for in the Civil Code
since the prohibition applies only to a sale or assignment 2. Rights
to the lawyer by his client during the pendency of the GR: Must be transmissible.
litigation. The transfer actually takes effect after the
finality of the judgment and not during the pendency of the Example: right of redemption, right of usufruct, sale of
case. As such it is valid stipulation between the lawyer and credit, right to inheritance already assigned, etc.
client.
XPN:
SPECIAL DISQUALIFICATIONS a. Future inheritance cannot be the subject
of sale
Persons specially disqualified by law to enter into b. Service cannot be the object of sale. They
contracts of sale (ALIEN-UnOS) are not determinate things and no transfer
of ownership is available but it can be the
1. ALIENs who are disqualified to purchase private object of certain contracts such as contract
agricultural lands (Art. XII Secs. 3 & 7, 1987 for a piece of work (Pineda, 2010).
Constitution)
2. Unpaid seller having a right of lien or having stopped Thing considered as determinate
the goods in transitu, is prohibited from buying the
goods either directly or indirectly in the resale of the A thing is determinate when it is particularly designated or
same at public/private sale which he may make (Art. physically segregated from all others of the same class
1533 [5], NCC; Art. 1476 [4], NCC) (Art. 1460, NCC). The requisite that a thing be determinate
3. The Officer holding the execution or deputy cannot is satisfied if at the time the contract is entered into, the
become a purchaser or be interested directly or thing is capable of being made determinate without the
indirectly on any purchase at an execution. (Sec. 21 necessity of a new or further agreement between the
Rule 39, RRC) parties.
4. In Sale by auction, seller cannot bid unless notice has
been given that such sale is subject to a right to bid in When a thing is determinable
behalf of the seller (Art. 1476, NCC).
When the thing is capable of being made determinate
without the necessity of a new or further agreement
between the parties (Art. 1460, NCC).

228
2015 GOLDEN NOTES
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b. Sale of an undivided share in a specific mass of
Q: Rodriguez first purchased a portion of a Lot A fungible goods makes the buyer a co-owner of
consisting of 345 square meters located in the middle the entire mass in proportion to the amount he
of Lot B, which has a total area of 854 square meters, bought. (Art. 1464, NCC)
from Juan. He then purchased another portion of said c. A co-owner cannot sell more than his share
lot. As shown in the receipt, the late Juan received (Yturralde v. CA)
P500.00 from Rodriguez as "advance payment for the
residential lot adjoining his previously paid lot on three 4. Sale of Things in Litigation
sides excepting on the frontage. Juans heirs now a. Sale of things under litigation is rescissible if
contests the validity of the subsequent sale, alleging entered into by the defendant , without the
that the object is not determinate or determinable. approval of the litigants or the court (Art. 1381,
Decide. NCC)
A: Their contention is without merit. There is no dispute NOTE: If the property involved belongs to a ward
that Rodriguez purchased a portion of Lot A consisting of and the guardian enters into a contract involving
345 square meters. This portion is located in the middle of such property without court approval, the contract is
B, which has a total area of 854 square meters, and is void, not merely rescissible.
clearly what was referred to in the receipt as the
"previously paid lot." Since the lot subsequently sold to b. No rescission is allowed where the thing is legally
Rodriguez is said to adjoin the "previously paid lot" on in the possession of a 3rd person who did not act
three sides thereof, the subject lot is capable of being in bad faith.
determined without the need of any new contract. The fact 5. Things subject to Resolutory Condition.
that the exact area of these adjoining residential lots is
subject to the result of a survey does not detract from the Example: Things acquired under legal or conventional
fact that they are determinate or determinable. right of redemption, or subject to reserva troncal (Art.
Concomitantly, the object of the sale is certain and 1465, NCC).
determinate (Heirs of San Andres v. Rodriguez, G.R. No.
135634, May 31, 2000). 6. Indeterminate Quantity of Subject Matter
NOTE: Where land is sold for a lump sum and not so much NOTE: The fact that the quantity is not determinate
per unit of measure or number, the boundaries of the land shall not be an obstacle to the existence of the
stated in the contract determine the effects and scope of contract provided it is possible to determine the same
the sale, not the area thereof. The vendors are obligated to without need of a new contract (Art. 1349, NCC).
deliver all the land included within the boundaries,
regardless of whether the real area should be greater or EMPTIO REI SPERATAE EMPTIO SPEI
smaller than that recited in the deed. This is particularly Sale of thing having Sale of mere hope or
true where the area is described as "humigit kumulang," potential existence expectancy
that is, more or less (Semira v. CA, G.R. No. 76031, Mar. 2, Uncertainty is w/ regard to Uncertainty is w/ regard to
1994). quantity & quality existence of thing
Contract deals w/ present
Q: Lino entered into a contract to sell with Ramon, Contract deals w/ future
thing hope or
undertaking to convey to the latter one of the five lots thing
expectancy
he owns, without specifying which lot it was, for the Sale is valid even though
price of P1 million. Later, the parties could not agree Sale is valid only if the expected thing does not
which of five lots he owned Lino undertook to sell to expected thing will come into existence as
Ramon. What is the standing of the contract? (2011 exist. long as the hope itself
Bar Question) validly existed. (eg. lotto)
A: It is a void contract since the particular lot sold cannot NOTE: The presumption is Emptio Rei Speratae.
be determined.
SALE BY A PERSON WHO DOES NOT OWN THE THING
KINDS OF OBJECT OF SALE SOLD
Objects of Sale Sale of a good made by a person who does not own it
1. Existing Goods owned/ possessed by seller at the In the case of sale of property, ownership is not required at
time of perfection the time of perfection in order for the sale to be valid.
2. Future Goods goods to be manufactured, raised, Ownership is material only at the time of delivery but only
acquired by seller after perfection of the contract or for the purpose of transferring ownership and does not
whose acquisition by seller depends upon a affect the validity of the contract of sale. This is because
contingency (Art. 1462, NCC) validity is determined not at the time of performance but
3. Sale of Undivided Interest or Share at the time of perfection. If the seller is still not the owner
a. Sole owner may sell an undivided interest. (Art. of the thing subject of the sale at the time of delivery, then
1463, NCC) Ex. A fraction or percentage of such the contract of sale does not become void. It is still valid.
property

CIVIL LAW
The remedy of the buyer is rescission with damages under payment would still generally require judicial or
Art. 1191. extrajudicial demand before default can arise.
What the law requires is that the seller has the right to Other Obligations of the Buyer
transfer ownership at the time the thing sold is delivered.
Perfection per se does not transfer ownership which 1. To take care of the goods without the obligation to
occurs upon the constructive delivery of the thing sold. A return, where the goods are delivered to the buyer and
perfected contract of sale cannot be challenged on the he rightfully refuses to accept;
ground of non-ownership on the part of the seller at the
time of its perfection (Quijada v. CA, 299 SCRA 69). NOTE: The goods in the buyers possession are at the
sellers risk.
NOTE: Future inheritance cannot be the subject of sale. 2. To be liable as a depositary if he voluntarily
constituted himself as such;
Legal effect of Sale by a Non-Owner 3. To pay interest for the period between delivery of the
thing and the payment of the price in the following
GR: The buyer acquires no better title to the goods than cases:
the seller had; caveat emptor (buyer beware). a. should it have been stipulated;
b. should the thing sold and delivered produces
XPNs: fruits or income; or
1. Estoppel when the owner of the goods is by his c. should he be in default, from the time of judicial
conduct precluded from denying the sellers authority or extra-judicial demand for the payment of the
to sell price.
2. When the contrary is provided for in recording laws
3. When the sale is made under statutory power of sale or Obligations of the Seller (DDTWTP)
under the order of a court of competent jurisdiction
4. When the sale is made in a merchants store in 1. Deliver the thing sold;
accordance with the Code of Commerce and special 2. Deliver fruits & accessions/accessories accruing
laws from perfection of sale;
5. When a person who is not the owner sells and delivers 3. Transfer the ownership;
a thing, and subsequently acquired title thereto 4. Warranties;
6. When the seller has a voidable title which has not been 5. Take care of the thing, pending delivery, with proper
avoided at the time of the sale diligence;
7. Sale by co-owner of the whole property or a definite 6. Pay for the expenses of the deed of sale unless there
portion thereof is a stipulation to the contrary
8. Special rights of unpaid seller
Obligation of the Seller in terms of the nature of the
Instances when the Civil Code recognizes sale of things subject matter of the sale
not actually or already owned by the seller at the time
of sale When the subject matter of the sale is a determinate thing,
the seller must deliver the thing to the buyer when
1. Sale of a thing having potential existence (Art.1461, compelled by the latter. When the subject matter is an
NCC) indeterminate or generic thing, the seller may be asked
2. Sale of future goods (Art. 1462, NCC) that the obligation be complied with at his expense (Art.
3. Contract for the delivery at a certain price of an article, 1165, NCC).
which the seller in the ordinary course of business
manufactures/ procures for the general market, Sellers obligation in case of delay or promise to
whether the same is on hand at the time or not (Art. deliver the thing to two or more persons who do not
1467, NCC) have the same interest
OBLIGATIONS OF THE PARTIES The seller shall be responsible for any fortuitous event that
may occur until he has delivered the thing (Art. 1165, NCC).
Obligations of the Buyer
OBLIGATION OF THE SELLER TO TRANSFER
1. Payment of the price OWNERSHIP
GR: Seller is not bound to deliver unless the purchase Seller need NOT be the owner of the thing at the time
price is paid of perfection of the contract
XPN: A period of payment has been fixed GR: Seller must have the right to transfer ownership at the
time of delivery or consummation stage. He need not be
2. Accept delivery of thing sold the owner at the time of perfection of the contract.
NOTE: A grace period granted the buyer in case of XPN: Foreclosure sale wherein the mortgagor should be
failure to pay is a right not an obligation. Non- the absolute owner.

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2015 GOLDEN NOTES
SALES
Transfer of ownership by the Seller to the Buyer PRICE
GR: The ownership of the thing sold is acquired by the Price

vendee from the moment it is delivered to him in any ways
specified in articles 1497 to 1501. This is the case when Price signifies the sum stipulated as the equivalent of the
the sale is absolute. thing sold and also every incident taken into consideration
for the fixing of the price put to the debit of the buyer and
XPN: Any other manner signifying an agreement that the agreed to by him (Villanueva, 2004).
possession is transferred from vendor to vendee. The sale
in this exception is a conditional one. NOTE: A definite agreement on the manner of payment of
the price is an essential element in the formation of a
Q: EJ was subjected to a buy-bust operation where binding and enforceable contract of sale (Co v. CA, G.R. No.
police officers posed to buy 500 pesos worth of S. She 123908, Feb. 9, 1998).
was then charged with a violation of the Dangerous
Drugs Act for trafficking drugs. EJ uses as defense her Requisites of Price
lack of possession of the object of the sale. Would her
contention free her from liability? It must be:
1. Real
A: No. Though she was not in possession of the object of 2. In money or its equivalent
sale, Article 1459 merely requires that the vendor must 3. For valuable consideration
have the right to transfer ownership of the object sold at 4. Certain or ascertainable at the time of the perfection
the time of delivery. In the case at bar, though Beth is not of the contract
the owner, she had the right to dispose of the prohibited
drug. Ownership was thereafter acquired upon her When price is certain
delivery to the men in the alley after her payment of the
price (People v. Ganguso, G.R. No. 115430, Nov. 23, 1995). 1. If there is a stipulation
2. If it be with reference to another thing certain
Q: Spouses De Leon alleged that they are the owners of 3. If the determination of the price is left to the
a parcel of land which was inherited by the husband judgment of specified person(s)
from his father. They engaged the services of Atty. Juan 4. By reference to certain fact(s) as referred to in Art.
to take care of the documents of the properties of his 1472 (Art. 1469, NCC)
parents. The lawyer let them sign voluminous
documents. After the death of Atty. Juan, some NOTE: If the price is based on estimates, it is uncertain.
documents surfaced and revealed that their properties
had been conveyed by sale or quitclaim to the Effect if price is simulated
husband's brothers and sisters and to Atty. Juan and
his sisters, when in truth and in fact, no such GR: The sale is void.
conveyances were ever intended by them. His
signature in the deed was forged. The land in question XPN: If it can be shown to be a donation or another
was subsequently sold to Alcantara by Rodolfo De contract (Art. 1471, NCC). The price is simulated when
Leon, one of the brothers. The spouses demanded neither party had the intention that the amount will be
annulment of the document and reconveyance but it paid (Yu Bun Guan v. Ong, G.R. No. 144735, October 18,
was refused. Likewise, Alcantara averred that she 2001).
bought the land in question in good faith and for value.
Was there a right to transfer ownership of the land? When price of securities, grains, liquids and things is
considered certain
A: None. It is during the delivery that the law requires the
seller to have the right to transfer ownership of the thing 1. When the price fixed is that which the thing would
sold. In general, a perfected contract of sale cannot be have on a definite day, or in a particular exchange or
challenged on the ground of the sellers non-ownership of market
the thing sold at the time of the perfection of the contract. 2. When the amount is fixed above or below the price of
Undisputed is the fact that at the time of the sale, Rodolfo such day, or in such exchange or market, provided said
de Leon was not the owner of the land he delivered to amount be certain (Art. 1472, NCC).
petitioner. Thus, the consummation of the contract and the 3. When by reference to another certain thing (Art. 1469,
consequent transfer of ownership would depend on NCC).
whether he subsequently acquired ownership of the land.
A comparison of the genuine signatures of Hermoso de NOTE: Art. 1469 is not allowed for the determination
Leon with his purported signature on the Deed of of the subject matter of the sale.
Extrajudicial Partition with Quitclaim will readily reveal
that the latter is a forgery (Alcantara-Daus v. Spouses De Fixing of the price CANNOT be left to the discretion of
Leon, G.R. No. 149750, June 16, 2003). one of the contracting parties
GR: No. The price cannot be fixed unilaterally by one of the

contracting parties.

CIVIL LAW
XPN: If the other party agreed or consented (Art. 1473, Effect on the Contract of Sale in case of a Breach in the
NCC). agreed manner of payment
Effect when the price in unilaterally fixed by one of the There is NO effect on the contract of sale in case of breach
contracting parties without consent of the other party in the agreed manner of payment. It is not the act of
payment of price that determines the validity of a contract
There is no meeting of the minds. The sale is inefficacious of sale. Payment of the price has nothing to do with the
(Pineda, 2010). perfection of the contract, as it goes into the performance
of the contract. Failure to pay the consideration is different
Effect of Gross Inadequacy of Price from lack of consideration. Failure to pay such, results in a
right to demand the fulfillment or cancellation of the
GR: It does not affect the validity of the sale if it is fixed in obligation under an existing valid contract. On the other
good faith and without fraud hand, lack of consideration prevents the existence of a
valid contract (Sps. Bernardo Buenaventura and
XPN: (CoRDS) Consolacion Joaqui v. CA, GR No. 126376, Nov. 20, 2003).
1. If Consent is vitiated (may be annulled or
presumed to be equitable mortgage) WHEN NO PRICE IS AGREED UPON BY THE PARTIES
2. If the parties intended a Donation or some other
act/ contract Effect of failure to determine the price
3. If the price is so low as to be Shocking to the
conscience 1. Where contract is executory ineffective
4. If in the event of Resale, a better price can be 2. Where the thing has been delivered to and
obtained appropriated by the buyer the buyer must pay a
reasonable price therefore
Annulment of sale NOT the remedy in a simulated sale
NOTE: The fixing of the price cannot be left to the
It is a well-entrenched rule that where the deed of sale discretion of one of the parties. However, if the price fixed
states that the purchase price has been paid but in fact has by one of the parties is accepted by the other, the sale is
never been paid, the deed of sale is null and void ab perfected.
initio for lack of consideration. Moreover, Article 1471 of
the Civil Code, provides that if the price is simulated, the Effect when a thing or a part thereof is delivered to the
sale is void, which applies to the instant case, since the buyer although the contract is inefficacious and the
price purportedly paid as indicated in the contract of sale latter appropriated the same
was simulated for no payment was actually made. Since it
was well established that the Deed of Sale is simulated and, The buyer must pay the reasonable price for the thing
therefore void, petitioners claim that respondent's cause received (Art. 1474, NCC).
of action is one for annulment of contract, which already
prescribed, is unavailing, because only voidable contracts Determination of reasonable price
may be annulled. On the other hand, respondent's defense
for the declaration of the inexistence of the contract does Reasonableness of price is a question of fact. Its
not prescribe (Catindig v. Vda. de Meneses, Roxas v. Court of determination is dependent upon the circumstances of
Appeals, G.R. No. 165851 & G.R. No. 165851 , Feb. 2, 2011). each particular case. The market value is a good standard
in determining the reasonable price (Pineda, 2010)
Reasonable price
Market value
It is considered reasonable price if, generally, the market
price at the time and place fixed by the contract or by law Market value is that reasonable sum which a property
for the delivery of the goods. would command in a fair sale by a man willing but not
obliged to sell to another who is willing but not obliged to
Time contemplated to determine the adequacy or buy.
inadequacy of price
Q: In an action for specific performance with damages,
In determining the adequacy or inadequacy of the price, X alleged that there was an agreement to purchase the
the price obtaining at the time of the execution of the lot of Y. As regards the manner of payment, however,
contract shall be considered, and not the price obtaining Ys receipts contradicted the testimony of X. The
thereafter (Pineda, 2010). receipts failed to state the total purchase price or
prove that full payment was made. For this reason, it
Proving inadequacy of price was contended that there was no meeting of their
minds and there was no perfected contract of sale.
Allegation of inadequacy of price must be proved by Decide.
sufficient evidence. Without being substantiated with
evidence, it is a mere speculation (Pineda, 2010). A: The question to be determined should not be whether
there was an agreed price, but what that agreed price was.
The sellers could not render invalid a perfected contract of
sale by merely contradicting the buyers obligation

232
2015 GOLDEN NOTES
SALES
regarding the price, and subsequently raising the lack of
agreement as to the price (David v. Tiongson, G.R. No. It is considered as:
108169, Aug. 25, 1999). 1. Part of the purchase price earnest money is
deducted from the total price;
Failure to pay the consideration v. Lack of 2. Proof of perfection of the contract (Art. 1482, NCC).
consideration
NOTE: Option money may become earnest money if the
BASIS FAILURE TO PAY LACK OF parties agree (De Leon, 2011).
CONSIDERATION CONSIDERATION
As to Contract is valid Effect of giving an earnest money
validity of because it is the
contract existence of the price It is statutory rule that whenever earnest money is given in
of sale and not the act of a contract of sale, it shall be considered as part of the price
payment of price that and as proof of the perfection of the contract. It constitutes
determines the an advance payment and must, therefore be deducted from
Lack of the total price (Adelfa Properties, Inc. v. CA, 240 SCRA 265).
validity of a contract
consideration
of sale.
prevents the Effect of rescission on earnest money received
existence of a valid
NOTE: Payment of the
contract. When the seller seeks to rescind the sale, he is obliged to
price has nothing to
do with the perfection return the thing which was the object of the contract along
of the contract, but with fruits and interest (Art. 1385, NCC).
merely goes into the
performance of the Option money v. Earnest money
contract.
As to Failure to pay the OPTION MONEY EARNEST MONEY
resultant consideration results Money given as distinct
The contract of sale Forms part of the purchase
right in a right to demand consideration for an
is null and void and price
the fulfillment or option contract
produces no effect
cancellation of the Applies to a sale not Given only when there is
whatsoever
obligation under an yet perfected already a sale
existing valid contract. Prospective buyer is not When given, the buyer is
required to buy. bound to pay the balance.
OPTION MONEY vis-a-vis EARNEST MONEY If sale did not materialize, it
If buyer does not decide
must be returned.
to buy, it cannot be
Option money (Villanueva, p. 87; Pineda,
recovered.
p.77)
It is the distinct consideration in case of an option contract.
It does not form part of the purchase price hence, it cannot Q: Bert offers to buy Simeon's property under the
be recovered if the buyer did not continue with the sale. following terms and conditions: P1 million purchase
(Art. 1479, NCC). price, 10% option money, the balance payable in cash
upon the clearance of the property of all illegal
NOTE: An option is not itself a purchase, but merely occupants. The option money is promptly paid and
secures the privilege to buy. It is not a sale of property but Simeon clears the property of all illegal occupants in
a sale of right to purchase. He does not sell his land; he no time at all. However, when Bert tenders payment of
does not then agree to sell it; but he does sell something, the balance and asks for the deed of absolute sale,
i.e., the right or privilege to buy at the election or option of Simeon suddenly has a change of heart, claiming that
the other party. Its distinguishing characteristic is that it the deal is disadvantageous to him as he has found out
imposes no binding obligation on the person holding the that the property can fetch three times the agreed
option, aside from the consideration for the offer (Limson purchase price. Bert seeks specific performance but
v. CA, G.R. No. 135929, 2001). Simeon contends that he has merely given Bert an
option to buy and nothing more and offers to return
Consideration of payment as option money the option money which Bert refuses to accept.
1. Will Bert's action for specific performance
Payment is considered option money when it is given as a prosper? Explain.
separate and distinct consideration from the purchase 2. May Simeon justify his refusal to proceed with
price. Consideration in an option contract may be anything the sale by the fact that the deal is financially
or undertaking of value. disadvantageous to him? Explain. (2002 Bar
Question)
Earnest money or arras
A:
This is the money given to the seller by the prospective 1. Bert's action for specific performance will prosper
buyer to show that the latter is truly interested in buying because there was a binding agreement of sale, not
the property, and its aim is to bind the bargain (Pineda, just an option contract. The sale was perfected upon
2010). acceptance by Simeon of 10% of the agreed price. This

CIVIL LAW
amount is in reality an earnest money because the FORMATION OF CONTRACT OF SALE
agreement states that the balance was to be paid after
fulfilling the condition. Under Art. 1482, it "shall be Three (3) stages involved in the formation of a
considered as part of the price and as proof of the contract of sale
perfection of the contract." (Topacio v. CA, G.R. No.
102606, July 3, 1992; Villongco Realty v. Bormaheco, 1. Negotiation/Preparatory offer/Policitation
G.R. No. L-26872, July 25, 1975). 2. Perfection
3. Consummation
2. Simeon cannot justify his refusal to proceed with
the sale by the fact that the deal is financially Policitation
disadvantageous to him. Having made a bad bargain
is not a legal ground for pulling out of a binding Policitation is defined as an unaccepted unilateral promise
contract of sale, in the absence of some actionable to buy or sell. This produces no judicial effect and creates
wrong by the other party (Vales v. Villa, G.R. No. 10028, no legal bond. This is a mere offer, and has not yet been
Dec. 16, 1916), and no such wrong has been converted into a contract. It covers the period from the
committed by Bert. time the prospective contracting parties indicate interest
in the contract to the time the contract is perfected
Q: Spouses Pangan owned a lot and a two-door (Villanueva, p. 6).
apartment. The wife, Consuelo Pangan agreed to sell
the properties to spouses Perreras. Consuelo Usually included in a policitation
received P20,000 from the respondents as earnest
money with a receipt that also contained the terms of Legal matters arising prior to the perfection of the sale,
agreement. Later on, the parties agreed to increase the dealing with concepts of invitation to make offer, offer,
price from P540,000 to P580,000. Spouses Perreras acceptance, right of first refusal option contract, supply
issued two checks in compliance to the new agreement agreement, mutual promises to buy and sell or contracts to
amounting to P200,000 and P250,000. Consuelo, sell, and even agency to sell or agency to buy (Villanueva,
however, refused to accept the checks. She justified 2009).
her refusal by saying that her children, co-owners of
the subject properties, did not agree to sell the Certainty of an offer
properties. Consuelo offered to return the P20,000
earnest money to the spouses buyers but the latter An offer is certain only where there is an offer to sell or
rejected it. Hence, Consuelo filed a complaint for an offer to buy a subject matter and for a price certain
consignation. Spouses Perreras insisted on enforcing having all the essential requisites mandated by law.
the agreement, hence they filed an action for specific
performance. In Consuelos answer, she claimed that Acceptance of an offer
the contract became ineffective for lack of the requisite
consent from the co-owners, her children. Decide. The acceptance must be absolute and must not qualify the
terms of the offerit must be plain, unequivocal,
A: The presence of Consuelos consent and, corollarily, the unconditional and without variance of any sort from the
existence of a perfected contract between the parties are proposal.
further evidenced by the payment and receipt
of P20,000.00, an earnest money by the contracting Rules in the conception stage about the offer
parties common usage. The law on sales, specifically
Article 1482 of the Civil Code, provides that whenever RULE
earnest money is given in a contract of sale, it shall be Prior to acceptance, may be withdrawn at
considered as part of the price and proof of the perfection of Offer is
will by offeror but no authority to modify
the contract. Although the presumption is not conclusive, floated
it
as the parties may treat the earnest money differently, Must be accepted within the period,
there is nothing alleged in the present case that would otherwise, extinguished at the end of
give rise to a contrary presumption. In cases where the With a
period and may be withdrawn at will by
Court reached a conclusion contrary to the presumption period
offeror but must not be arbitrary,
declared in Article 1482, we found that the money initially otherwise, liable for damages
paid was given to guarantee that the buyer would not back With a Extinguished by happening/ non-
out from the sale, considering that the parties to the sale condition happening of condition
have yet to arrive at a definite agreement as to its terms without
that is, a situation where the contract has not yet been Continues to be valid depending upon
period/
perfected. These situations do not obtain in the present circumstances of time, place and person
condition
case, as neither of the parties claimed that the P20,000.00 With a
was given merely as guarantee by the respondents, as counter- Original offer is extinguished
vendees, that they would not back out from the sale (Heirs offer
of Pangan v. Spouses Perreras, G.R. No. 157374, Aug. 27,
2009). Option contract
An option contract is a contract by which the owner of the

property agrees with another person that he shall have the

234
2015 GOLDEN NOTES
SALES
right to buy his property at a fixed price within a certain contract, even if no consideration was as yet paid for the
time. It is binding upon the promissor if the promise is option. In which case, if the offeror does not perform his
supported by a consideration distinct from the price. An obligations under the perfected contract, he shall be liable
option contract is likewise a separate and distinct contract for all consequences arising from the breach thereof based
from a contract of sale. on any of the available remedies such as specific
performance, or rescission with damages in both cases.
Nature of an option contract
Right of first refusal
It is a preparatory contract in which one party grants to
another, for a fixed period and at a determined price, the A right of first refusal is a contractual grant, not of the sale
privilege to buy or sell, or to decide whether or not to of a property, but of the first priority to buy the property in
enter into a principal contract. It binds the party who has the event the owner sells the same.
given the option not to enter into the principal contract
with any other person during the period designated, and NOTE: Where a time is stated in an offer for its acceptance,
within that period, to enter into such contract with the one the offer is terminated at the expiration of the time given
whom the option was granted, if the latter should decide to for its acceptance (Pineda, 2010).
use the option. It is a separate and distinct contract.
Instance when the owner offers the sale of the
NOTE: If the option is perfected, it does not result in the property to a third person
perfection or consummation of the sale (Diaz, p.7).
Only after the grantee fails to exercise its right under the
Period within which to exercise the option same terms and within the period contemplated can the
owner validly offer to sell the property to a third person,
1. Within the term stipulated again under the same terms as offered to the grantee.
2. If there is no stipulation, the court may fix the term
Q: NDC and Firestone entered into a contract of lease
Exercise of an option wherein it is stipulated that Firestone has the right of
first refusal to purchase the leased property "should
A notice of acceptance must be communicated to offeror lessor NDC decide to sell the same. After the rumor
even without actual payment as long as payment is that NDC will transfer the lot to PUP, Firestone
delivered in the consummation stage provided it still instituted an action for specific performance to compel
within the period provided. NDC to sell the property in its favor. PUP moved to
intervene arguing that the Memorandum issued by
Effect of a separate consideration in an option contract then President Aquino ordered the transfer of the
whole NDC compound to the Government, which in
1. With separate consideration: turn would convey it in favor of PUP. Can Firestone
a. Contract is valid exercise its right of first refusal?
b. Offeror cannot withdraw offer until after
expiration of the option A: Yes. It is a settled principle in civil law that when a lease
c. Is subject to rescission and damages but not contract contains a right of first refusal, the lessor is under
specific performance a legal duty to the lessee not to sell to anybody at any price
2. Without separate consideration: until after he has made an offer to sell to the latter at a
a. the option contract is not deemed perfected certain price and the lessee has failed to accept it. The
b. offer may be withdrawn at any time prior to lessee has a right that the lessor's first offer shall be in his
acceptance favor (PUP v. CA, G.R. No. 143513, Nov. 14, 2001).
NOTE: However, even though the option was not Q: In a 20-year lease contract over a building, the
supported by a consideration, the moment it was accepted, lessee is expressly granted a right of first refusal
contract of sale is perfected (Art. 1324, NCC). should the lessor decide to sell both the land and
building. However, the lessor sold the property to a
Obligations of the offeror third person who knew about the lease and in fact
agreed to respect it. Consequently, the lessee brings an
1. Not to offer to any third party the sale of the object of action against both the lessor-seller and the buyer (a)
the option during the option period; to rescind the sale and (b) to compel specific
2. Not to withdraw the offer or option during the option performance of his right of first refusal in the sense
period; that the lessor should be ordered to execute a deed of
3. To hold the subject matter for sale to the offeree in the absolute sale in favor of the lessee at the same price.
event that the latter exercises his option during the The defendants contend that the plaintiff can neither
option period. seek rescission of the sale nor compel specific
performance of a "mere" right of first refusal. Decide
Effect of acceptance and withdrawal of the offer the case. (1998 Bar Question)
If the offer had already been accepted and such acceptance A: The action filed by the lessee, for both rescission of
has been communicated before the withdrawal is the offending sale and specific performance of the
communicated, the acceptance creates a perfected right of first refusal which was violated, should

CIVIL LAW
prosper. If the right of first refusal was violated and the OPTION CONTRACT RIGHT OF FIRST REFUSAL
property was sold to a buyer who was aware of the Principal contract; stands Accessory; cannot stand on
existence of such right, the resulting contract is rescissible on its own its own
by the person in whose favour the right of first refusal was Needs separate Does not need separate
given and although no particular price was stated in the consideration consideration
covenant granting the right of first refusal, the same price There must be subject
by which the third-party buyer bought the property shall Subject matter and price
matter but price not
be deemed to be the price by which the right of first refusal must be valid
important
shall therefore be exercisable (Equitorial Realty Not conditional Conditional
Development, Inc. v. Mayfair Theater, Inc., 264 SCRA 483). There is no offer to sell, but There is an offer to sell
only an opportunity for
NOTE: The offer of the person in whose favor the right of the buyer to enter into a
first refusal was given must conform with the same terms contract of sale
and conditions as those given to the offeree. Not subject to specific Subject to specific
performance performance
Q: Andres leased his house to Iris for a period of 2
years, at the rate of P25, 000 monthly, payable Necessity it that the right of first refusal be embodied
annually in advance. The contract stipulated that it in a written contract
may be renewed for another 2-year period upon
mutual agreement of the parties. The contract also The right of first refusal be embodied in a written contract
granted Iris the right of first refusal to purchase the and the grant of such right must be clear and express.
property at any time during the lease, if Andres
decides to sell the property at the same price that the NOTE: It is applicable only to executory contracts and not
property is offered for sale to a third party. Twenty- to contracts which are totally or partially performed.
three months after execution of the lease contract,
Andres sold the house to his mother who is not a third If a particular form is required under the Statute of Frauds:
party. Iris filed an action to rescind the sale and to sale is valid & binding between the parties but not to 3 rd
compel Andres to sell the property to her at the same persons.
price. Alternatively, she asked the court to extend the
lease for another two years on the same terms. Can Iris Q: Pozzolanic entered a long-term contract with the
seek rescission of the sale of the property to Andres National Power Corporation (NPC) for the purchase of
mother? (2008 Bar Question) all fly ash to be produced by the latters future power
plants. In the contract, NPC granted Pozzolanic a right
A: Iris can seek rescission because pursuant to of first refusal to purchase the fly ash that may be
Equatorial Realty Co. v. Mayfair Theater rescission is a generated in the future. When NPCs two new power
relief allowed for the protection of one of the contracting plants started operation, it published an invitation to
parties and even third persons from all injury and damage interested buyers for the purchase of the fly ash.
the contract of sale may cause or the protection of some Pozzolanic sent letters to NPC reminding its right of
incompatible and preferred right. first refusal. NPC deferred its public bidding with the
first power plants fly ash but it nevertheless
Alternative prayer for extension of the lease will NOT continued with the bidding of the second power plants
prosper (2008 Bar Question) fly ash. Pozzolanic filed a complaint, but during the
pendency of the case NPC decided to likewise dispose
The extension of the lease should be upon the mutual the fly ash from the first power plant without allowing
agreement of the parties. Pozzolanic to exercise its right of first refusal. Can
Pozzolanic exercise its right of first refusal?
Option contract v. Right of First Refusal
A: No. The right of first refusal granted in favour of
An option contract is a preparatory contract in which one Pozzolanic is invalid for being contrary to public policy as
party grants to another, for a fixed period and at a the same violates the requirement of competitive public
determined price, the privilege to buy or sell, or to decide bidding in the award of government contracts. In this
whether or not to enter into a principal contract. jurisdiction, public bidding is the established procedure in
the grant of government contracts. Thus, respondents
In a right of first refusal, while the object may be right of first refusal cannot take precedence over the
determinate, the exercise of the right would be dependent dictates of public policy. The right of first refusal of
not only on the grantors eventual intention to enter into a respondent being invalid, it follows that it has no binding
binding juridical relation with another but also on terms, effect. It does not create an obligation on the part of
including the price, that are yet to be firmed up (Diaz, p. petitioner to acknowledge the same (PSALM Corp., vs.
54). Pozzolanic, G.R. No. 183789, Aug. 24, 2011).
Right of first refusal may be waived
Like other rights, the right of first refusal may be waived or

when a party entered into a compromise agreement (Diaz,
p. 55).

236
2015 GOLDEN NOTES
SALES
Rule on the inspection of goods
Availment of sublessee of the right of first refusal of
the lessee GR: If the goods have not yet been previously examined,
the buyer is not deemed to have accepted them until and
GR: No. The sublessee is a stranger to the lessor who is unless he is given reasonable time to examine them (Art.
bound to respect the right of first refusal in favor of the 1584, NCC).
lessee only.
XPNs:
XPN: When the contract of lease granted the lessee the 1. The buyer had reasonable time to inspect the goods
right to assign the lease, the assignee would be entitled to but he failed to do so
exercise such right as he steps into the shoes of the 2. Stipulation to the contrary
original assignee (Villanueva, 2009). 3. C.O.D. sales
PERFECTION Effect and/or consequence of a qualified acceptance
Perfection of a Contract of Sale It constitutes merely a counter-offer which must in turn be

accepted to give rise to a valid and binding contract
GR: It is deemed perfected at the moment there is meeting (Villanueva, 2009).
of minds upon the thing which is the object of the contract
and upon the price (Art. 1475, par.1, NCC). Perfection of a contract of sale perfected through a
letter or a telegram
NOTE: The acceptance of the offer must be absolute. It
must be plain, unequivocal, unconditional and without It is perfected only when the offeror has received or has
variance of any sort from the proposal. gain knowledge of the acceptance made by the offeree.
Even if the buyer has accepted, the seller may still
XPN: When the sale is subject to a suspensive condition by withdraw if he does not know yet of the buyers
virtue of law or stipulation. acceptance (Pineda, 2010).
Required Form of Acceptance Effect of the parties failure to appear before the
notary public who notarized the deed
It may be express or implied. Acceptance may be
evidenced by some act, or conduct, communicated to the The non-appearance of the parties before the notary public
offeror, either in a formal or an informal manner, that who notarized the deed does not necessarily nullify nor
clearly manifest the intention or determination to accept render the parties' transaction void ab initio. Article 1358,
the offer to buy or sell (Villanueva, 2009). NCC on the necessity of a public document is only for
convenience, not for validity or enforceability. Where a
How acceptance is made contract is not in the form prescribed by law, the parties
can merely compel each other to observe that form, once
It is made at the time and place stipulated in the contract. the contract has been perfected.
If there is no stipulation, it shall be made at the time and
place of the delivery of the thing (Art. 1582, NCC). NOTE: Contracts are obligatory in whatever form they may
have been entered into, provided all essential requisites
The buyer is deemed to have accepted the goods are present (Penalosa v. Santos, G.R. No. 133749, Aug. 23,
2001).
1. When he communicates to the seller that he has
accepted them Q: DBP sought to consolidate its ownership with
2. When the goods have been delivered and he does any Paragon Paper Industries, Inc. Medrano, President and
act inconsistent with the ownership of the seller General Manager of Paragon, was instructed to contact
3. When, after the lapse of reasonable time, he retains all minority stockholders to convince them to sell their
the goods without intimating to the seller that he shares to DBP at the price of 65% of the par value. He
rejected them (Art. 1585, NCC). was able to contact all except for one who was in
Singapore. Medrano testified that all have agreed to
Rule on refusal to accept the goods by the buyer sell their shares to DBP. Paragon made proposals to
DBP and the sale was approved by a DBP resolution
The buyer is not bound to return the goods to the seller subject to terms and conditions. However, the
and it is sufficient that he notifies the seller of his refusal in required number of shares contained in the conditions
the absence of a contrary stipulation (Art. 1587, NCC). was not delivered by Medrano. Is the sale perfected?
NOTE: If the refusal is without just cause, the title passes A: No. DBP imposed several conditions to its acceptance
to the buyer from the moment the goods are placed at his and it is clear that Medrano indeed tried in good faith to
disposal (Art. 1588, NCC). comply with the conditions given by DBP but
unfortunately failed to do so. Hence, there was no birth of a
perfected contract of sale between the parties (DBP v.
Medrano and PMO, G.R. No. 167004. Feb. 7, 2011).

CIVIL LAW
Q: Licup, through a letter, offered to buy parcels of
land to The Holy See and Philippine Realty Q: Spouses Biong and Linda wanted to sell their house.
Corporation (PRC). He enclosed a check for They found a prospective buyer, Ray. Linda negotiated
P100,000.00 to close the transaction and accepted with Ray for the sale of the property. They agreed on
the responsibility of removing informal settlers. Msgr. a fair price of P2 Million. Ray sent Linda a letter
Cirilos, representative of the Holy See and PRC signed confirming his intention to buy the property. Later,
the conforme portion of the letter and accepted the another couple, Bernie and Elena, offered a similar
check. A stop-payment order was issued by Licup and house at a lower price of P1.5 Million. But Ray
the latter requested that the titles to the land instead insisted on buying the house of Biong and Linda for
be given to SSE. Msgr. Cirilos wrote SSE requesting to sentimental reasons. Ray prepared a deed of sale to
remove the informal settlers, otherwise, the be signed by the couple and a manager's check for
P100,000.00 would be returned. SSE replied with an P2 Million. After receiving the P2 Million, Biong
updated proposal that they will comply provided signed the deed of sale. However, Linda was not able to
that the purchase price is lowered. The proposal was sign it because she was abroad. On her return, she
rejected. The parcel of land was sold to another third refused to sign the document saying she changed her
person. Is there a perfected contract of sale between mind. Linda filed suit for nullification of the deed of
the two parties? sale and for moral and exemplary damages against
Ray. Will the suit prosper? Explain. (2006)
A: No. When Msgr. Cirilos affixed his signature on that
letter, he expressed his conformity to the terms of Licups A: No, the suit will not prosper. The contract of sale
offer appearing on it. There was meeting of the minds as was perfected when Linda and Ray agreed on the object of
to the object and consideration of the contract. But when the sale and the price (Art. 1475, NCC). The consent of Linda
Licup ordered a stop-payment on his deposit and proposed has already been given, as shown by her agreement to the
in his April 26, 1988 letter to Msgr. Cirilos that the price of the sale. There is therefore consent on her part,
property be instead transferred to SSE, a subjective as the consent need not be given in any specific form.
novation took place. The proposed substitution of Licup by Hence, her consent may be given by implication, especially
SSE opened the negotiation stage for a new contract of sale since she was aware of, and participated in the sale of the
as between SSE and the owners (Starbright Sales v. Phil. property (Pelayo v. CA, G.R. No. 141323, June 8, 2005). Her
Realty Corp., et. al, G.R. No. 177936, Jan. 18, 2012). action for moral and exemplary damages will also not
prosper because the case does not fall under any of those
Q: Petitioners are the co-owners of undivided shares of mentioned in Art. 2219 and 2232 of the Civil Code.
two parcels of land. Respondent Paraiso Development
Corporation purchased from them their respective Q: Does Ray have any cause of action against Biong and
shares except for two shares. A Contract to Sell was Linda? Can he also recover damages from the spouses?
then established, where the petitioner affixed their Explain.
signatures thereon. However, the petitioners decided
to withdraw from the said agreement and along with it A: Considering that the contract has already been
the request for the rescission of the contract which perfected and taken out of the operation of the statute of
they said they never signed. They allege there is frauds, Ray can compel Linda and Biong to observe the
inability to understand the consequences of the form required by law in order for the property to be
contract. Was the contract perfected between the registered in the name of Ray which can be filed together
parties? with the action for the recovery of house (Art. 1357, NCC).
In the alternative, he can recover the amount of Two million
A: It is well-settled that contracts are perfected by mere pesos (P2,000,000.00) that he paid. Otherwise, it would
consent, upon the acceptance by the offeree of the offer result in solutio indebiti or unjust enrichment. Ray can
made by the offeror. From that moment, the parties are recover moral damages on the ground that the action
bound not only to the fulfillment of what has been filed by Linda is clearly an unfounded civil suit which falls
expressly stipulated but also to all the consequences under malicious prosecution (Ponce v. Legaspi, G.R. No.
which, according to their nature, may be in keeping with 79184, May 6, 1992).
good faith, usage and law. To produce a contract, the
acceptance must not qualify the terms of the offer. Perfection of an auction sale
However, the acceptance may be express or implied. For a
contract to arise, the acceptance must be made known to A sale by auction is perfected when the auctioneer
the offeror. Accordingly, the acceptance can be withdrawn announces its perfection by the fall of the hammer, or in
or revoked before it is made known to the offeror. In the other customary manner (Art. 1476, par.2, NCC).
case at bar, the Contract to Sell was perfected when the
petitioners consented to the sale to the respondent of their Seller has the right to bid in an auction sale
shares in the subject parcels of land by affixing their
signatures on the said contract. Such signatures show their The seller has the right to bid provided that such right was
acceptance of what has been stipulated in the Contract to reserved and notice was given to that effect (Pineda, p. 53).
Sell and such acceptance was made known to respondent
corporation when the duplicate copy of the Contract to Sell
was returned to the latter bearing petitioners' signatures
(Rizalino, substituted by his heirs, vs. Paraiso Development
Corporation, G.R. No. 157493, February 5, 2007).

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CONSUMMATION 1. Pactum reservatii in domini agreement that
ownership will remain with seller until full payment
Consummation stage in a contract of sale of price (Contract to sell)
2. Sale on acceptance/approval
Consummation stage in a contract of sale takes place by 3. Sale on return
the delivery of the thing together with the payment of the 4. There is implied reservation of ownership
price.
NOTE: Seller bears expenses of delivery.
NOTE: The ownership of the thing is acquired by the buyer
in any of the ways specified by law or in any manner Different kinds of delivery
agreed upon by the parties.
1. Actual thing sold is placed under the control and
Q: A and PDS Development Corp. executed a contract possession of buyer/agent;
to sell a parcel of land. A died without having 2. Constructive does not confer physical possession of
completed the installment on the property. His heirs the thing, but by construction of law, is equivalent to
then took over the contract to sell and assumed his acts of real delivery.
obligations by paying the selling price of the lot from
their own funds, and completed the payment. To Requisites:
whom should the final Deed of Absolute Sale be a. The seller must have control over the thing
executed by PDS? b. The buyer must be put under control
c. There must be intention to deliver the thing for
A: Having stepped into the shoes of the deceased with purposes of ownership
respect to the said contract, and being the ones who i. Tradicion Symbolica delivery of certain
continued to pay the installments from their own funds, symbols representing the thing
As heirs became the lawful owners of the said lot in ii. Tradicion Instrumental delivery of the
whose favor the deed of absolute sale should have been instrument of conveyance
executed by vendor PDS (Dawson v. Register of Deeds of iii. Traditio Longa Manu Delivery of thing by
Quezon City, G.R. No. 120600 Sept. 22, 1998). mere agreement; when seller points to the
property without need of actually delivering
TRANSFER OF OWNERSHIP iv. Tradicion Brevi Manu the buyer, being
already in possession of the thing sold due to
Sale by itself DOES NOT transfer ownership some other cause, merely remains in
possession after the sale is effected, but now
The most that a sale does is to create the obligation to in concept of owner. E.g.From lessee to
transfer ownership. It is only a title and not a mode of becoming an owner
transferring ownership. v. Constitutum Possessorium the seller
remains in possession of the property in a
Mode v. Title different capacity. E.g. From owner to lessee
Mode is the legal means by which dominion or ownership 3. Quasi-tradition delivery of rights, credits or
is created, transferred, or destroyed; Title only constitutes incorporeal property, made by:
the legal basis by which to affect dominion or ownership a. Placing titles of ownership in the hands of the
(Villanueva, 2009). buyer;
b. Allowing buyer to make use of rights
Transfer of ownership
4. Tradition by operation of law Execution of a public
It is tradition or delivery, which is a consequence of the instrument is equivalent to delivery. But to be
sale that transfers ownership. effective, it is necessary that the seller have such
control over the thing sold that, at the moment of sale,
Ownership deemed transferred its material delivery could have been made.
The thing shall be understood as delivered, when it is GR: There is presumption of delivery
placed in the control and possession of the vendee.
XPN:
NOTE: The most that a sale does is to create the obligation a. Contrary stipulation;
to transfer ownership. It is only the title while the mode of b. When at the time of execution, subject
transferring ownership is delivery. matter was not subject to the control of
seller;
Effect of Delivery c. Seller has no capacity to deliver at time of
execution;
GR: Title /ownership is transferred d. Such capacity should subsist for a reasonable
time after execution of instrument.
XPN: When the contrary is stipulated as in the case of:

CIVIL LAW
Delivery deemed effective subject by means of a gate pass issued by the
petitioner. However, during the hauling of the second
Delivery should be coupled with intention of delivering the lot, only nine items were pulled out instead of sixteen
thing, and acceptance on the part of the buyer to give legal because Creative Lines employees prevented
effect of the act. Without such intention, there is no such respondent from hauling the remaining machinery
tradition. and equipment. Respondent filed a complaint for
specific performance and damages against petitioner
Delivery of incorporeal property and Creative Lines. Petitioner argued that upon the
execution of the deed of sale it had complied with its
1. When sale is made through a public instrument (Art. obligation to deliver the object of the sale since there
1498, NCC). was no stipulation to the contrary. It further argued
2. By placing the titles of ownership in the possession of that being a sale on an as-is-where-is basis, it was the
the buyer. duty of respondent to take possession of the property.
3. When buyer uses and enjoys the rights pertaining to Is there a constructive delivery of the subject
the incorporeal property with the consent of the seller properties?
(Art. 1501, NCC).
A: None. As a general rule, when the sale is made through
Q: Lagrimas Boy borrowed P15,000 from spouses a public instrument, the execution thereof shall be
Ramos. Thereafter, Boy executed a Deed of Absolute equivalent to the delivery of the thing which is the object
Sale with the Ramoses involving a house and lot. The of the contract, if from the deed the contrary does not
price agreed upon was P31,000. It was alleged that appear or cannot clearly be inferred. And with regard to
Boys debt is to be deducted, so the spouses needed movable property, its delivery may also be made by the
only to pay P16,000. Because the Ramoses were not delivery of the keys of the place or depository where it is
yet in immediate need of the properties, Lagrimas stored or kept. In order for the execution of a public
stayed therein. Later on, Lagrimas went to the wife, instrument to effect tradition, the purchaser must be
Erlinda, asking that they execute a Kasunduan. In the placed in control of the thing sold. However, the execution
Kasunduan, it states that the spouses still had a of a public instrument only gives rise to a prima
remaining balance of P16,000 and that interest is to be facie presumption of delivery. Such presumption is
deducted in favor of the spouses so that would leave a destroyed when the delivery is not effected because of a
balance of P8,500. The Kasunduan was notarized, legal impediment. It is necessary that the vendor shall
however Erlinda changed her mind upon signing. have control over the thing sold that, at the moment of
According to her, she realized that they already paid sale, its material delivery could have been made. Thus, a
P31,000 to Lagrimas when the Deed of Sale was person who does not have actual possession of the thing
executed. When the spouses Ramos already needed to sold cannot transfer constructive possession by the
occupy the land, Lagrimas refused to vacate. She execution and delivery of a public instrument. In this case,
invoked the Kasunduan. Decide. there was no constructive delivery of the machinery and
equipment upon the execution of the deed of absolute sale
A: Under Article 1477 of the Civil Code, the ownership of or upon the issuance of the gate pass since it was not
the thing sold shall be transferred to the vendee upon the petitioner but Creative Lines which had actual possession
actual or constructive delivery thereof. In addition, Article of the property. The presumption of constructive delivery
1498 of the Civil Code provides that when the sale is made is not applicable as it has to yield to the reality that the
through a public instrument, as in this case, the execution purchaser was not placed in possession and control of the
thereof shall be equivalent to the delivery of the thing property (Asset Privatization Trust v. T.J. Enterprises, G.R.
which is the object of the contract, if from the deed the No. 167195, May 8, 2009).
contrary does not appear or cannot clearly be inferred. In
this case, the Deed of Absolute Sale does not contain any Symbolic delivery by mere execution of the deed of
stipulation against the constructive delivery of the conveyance sufficient to convey ownership over
property to private respondents. In the absence of property
stipulation to the contrary, the ownership of the
property sold passes to the vendee upon the actual or Possession is also transferred along with ownership
constructive delivery thereof. The Deed of Absolute thereof by virtue of the deed of conveyance. The mere
Sale, therefore, supports private respondents right of execution of the deed of conveyance in a public document
material possession over the subject property (Boy v. Court is equivalent to the delivery of the property, prior physical
of Appeals, et. al, G.R. No. 125088, April 14, 2004). delivery or possession is not legally required. The deed
operates as a formal or symbolic delivery of the property
Q: Asset Privatization (petitioner) entered into an sold and authorizes the buyer or transferee to use the
absolute deed of sale over certain machinery and document as proof of ownership. Nothing more is required
refrigeration equipment with T.J. Enterprises (Sps. Sabio v. International Corporate Bank, Inc. et. at. G.R.
(respondent) on an as-is-where-is basis. Respondent No. 132709, Sept. 4, 2001).
paid the full amount of P84,000.00 as evidenced by a
receipt. After two days, respondent demanded the Q: Spouses Bernal purchased a jeepney from Union
delivery of the machinery. The subject properties were Motor to be paid in installments. They then executed a
located in a compound under the possession of promissory note and a deed of chattel mortgage in
Creative Lines, Inc. Sometime after, respondent was favor of Union Motor which in turn assigned the same
able to pull out from the petitioners compound the with Jardine Finance. To effectuate the sale as well as

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2015 GOLDEN NOTES
SALES
the assignment of the promissory note and chattel Sellers duties after delivery to the carrier
mortgage, the spouses were required to sign
documents, one of which was a sales invoice. Although 1. To enter on behalf of the buyer into such contract
the Spouses have not yet physically possessed the reasonable under the circumstances;
vehicle, Union Motors agent required them to sign the 2. To give notice to the buyer regarding necessity of
receipt as a condition for the delivery of the vehicle. It insuring the goods.
was discovered that the said agent stole the vehicle
even prior to its delivery to the spouses. Was there a When the object should be delivered
transfer of ownership of the subject vehicle?
Object should be delivered at:
A: No. The issuance of a sales invoice does not prove 1. Stipulated time
transfer of ownership of the thing sold to the buyer; an 2. If there is none, at a reasonable hour.
invoice is nothing more than a detailed statement of the
nature, quantity and cost of the thing sold and has been Place of delivery
considered not a bill of sale.
The place of delivery shall be:
The registration certificate signed by the spouses does not 1. That agreed upon
conclusively prove that constructive delivery was made 2. Place determined by usage of trade
nor that ownership has been transferred to the respondent 3. Sellers place of business
spouses. Like the receipt and the invoice, the signing of the 4. Sellers residence
said documents was qualified by the fact that it was a 5. In case of specific goods, where they can be found
requirement of Union Motor for the sale and financing
contract to be approved. In all forms of delivery, it is Effects of a sale of goods on installment
necessary that the act of delivery, whether constructive or
actual, should be coupled with the intention of delivering 1. Goods must be delivered in full except when
the thing. The act, without the intention, is insufficient. stipulated
Inasmuch as there was neither physical nor constructive 2. When not examined by the buyer it is not accepted
delivery of a determinate thing, (in this case, the subject until examined or at least had reasonable time to
motor vehicle) the thing sold remained at the sellers risk. examine
The Union Motor should therefore bear the loss of the
subject motor vehicle after its agent allegedly stole the Seller not bound to deliver the thing sold
same (Union Motor Corp. v. CA, G.R. No. 117187, July 20, The seller is not bound to deliver the thing sold:
2001). 1. If the buyer has not paid the price;
2. No period for payment has been fixed in the contract;
Effect of delivery through a carrier 3. A period for payment has been fixed in the contract
but the buyer has lost the right to make use of the
GR: Yes, if the seller is authorized. Delivery to carrier is time.
delivery to the buyer.
Suspension of payment by the buyer
XPN:
1. A contrary intention appears GR:
2. Implied reservation of ownership under Art. 1503, 1. If he is disturbed in the possession or ownership of
pars 1, 2, 3. the thing bought
2. If he has well-grounded fear that his possession or
Kinds of delivery to carrier ownership would be disturbed by a vindicatory action
or foreclosure of mortgage.
1. FAS (Free Along Side) when goods are delivered
alongside the ship, there is already delivery to the XPN:
buyer 1. Seller gives security for the return of the price in a
2. FOB (Free On Board) when goods are delivered at proper case;
the point of shipment, delivery to carrier by placing 2. A stipulation that notwithstanding any such
the goods on vessel is delivery to buyer contingency, the buyer must make payment;
3. CIF (Cost, Insurance, Freight) 3. Disturbance or danger is caused by the seller;
a. When buyer pays for services of carrier, delivery 4. If the disturbance is a mere act of trespass;
to carrier is delivery to buyer, carrier as agent of 5. Upon full payment of the price.
buyer;
b. When buyer pays seller the price from the Necessity of payment of the purchase price to transfer
moment the vessel is at the port of destination, ownership
there is already delivery to buyer
4. COD (Collect On Delivery) the carrier acts for the Unless the contract contains a stipulation that ownership
seller in collecting the purchase price, which the of the thing sold shall not pass to the purchaser until he
buyer must pay to obtain possession of the goods. has fully paid the price, ownership of the thing sold shall
be transferred to the vendee upon the actual or
constructive delivery thereof (Diaz, p. 48).

CIVIL LAW
Acceptance of delivery by the buyer of the thing sold
7. On sale or return The ownership passes to buyer
1. Express he communicates to seller that he has upon delivery, but he may revest ownership in the
accepted seller by returning or tendering the goods within the
2. Implied time fixed in the contract or within reasonable time
a. Buyer does not act inconsistent with ownership (Art. 1502, NCC).
of seller after delivery
b. Retains the thing without communicating to Sale on trial, approval or satisfaction
seller that he has rejected
It is a contract in the nature of an option to purchase if the
Effect if the buyer refuses to accept despite delivery of goods prove to be satisfactory, the approval of the buyer
the object of the sale being a condition precedent.
Delivery is completed. Since delivery of the subject matter Transfer of ownership deemed on a contract of sale on
of the sale is an obligation on the part of the seller, the trial, approval or satisfaction
acceptance thereof by the buyer is not a condition for the
completeness of the delivery (Villanueva, 2004). 1. When buyer signifies approval or acceptance to the
seller or does any act adopting the transaction
NOTE: Thus, even with such refusal of acceptance, delivery 2. If buyer did not signify approval or acceptance, but
(actual/constructive), will produce its legal effects (e.g. retains the goods without giving notice of rejection
transferring the risk of loss of the subject matter to the after the expiration of the period fixed or of
buyer who has become the owner thereof) (Villanueva, reasonable time (Art. 1502, NCC)Rules in case of
2004). sale on trial, approval or satisfaction
Under Art. 1588, when the buyers refusal to accept the Title Who bears the loss
goods is without just cause, the title thereto passes to him GR: Borne by seller
from the moment they are placed at his disposal
(Villanueva, 2004). XPN:
Risk of Loss
1. Buyer is at fault
WHEN DELIVERY DOES NOT TRANSFER TITLE 2. Buyer agreed to bear
the loss
When delivery does not transfer title GR: Buyer must give goods a
trial
1. Sale on Trial, Approval, or Satisfaction
2. When there is an EXPRESS RESERVATION As to trial
XPN: Buyer need not do so if
a. If it was stipulated that ownership shall not pass it is evident that it cannot
to the purchaser until he has fully paid the price perform the work.
(Art. 1478, NCC) It runs only when all the
3. When there is an IMPLIED RESERVATION When period within
parts essential for the
a. When goods are shipped, but the bill of lading which buyer must signify
operation of the object has
states that goods are deliverable to the seller or his acceptance runs
been delivered
his agent, or to the order of the seller or his agent
b. When the bill of lading is retained by the seller or Validity of stipulation
his agent that a 3rd person must Valid, provided the 3rd
c. when the seller of the goods draws on the buyer satisfy approval or person is in good faith
for the price and transmits the bill of exchange satisfaction
and the bill of lading to the buyer , and the latter If the sale is made to a Generally, it cannot be
does not honor the bill of exchange by returning buyer who is an expert considered a sale on
the bill of lading to the seller on the object purchased approval
4. When sale is not VALID
5. GR: When the seller is not the owner of the goods
DOUBLE SALE
XPNs:
a. Estoppel: when the owner is precluded from Double Sale (Article 1544, NCC)
denying the sellers authority to sell
b. Registered land bought in good faith (Ratio: There is double sale when the same object of the sale is
Buyer need not go beyond the Torrens title) sold to different vendees.
c. Order of Courts in a Statutory Sale
d. When the goods are purchased in a Merchants Requisites of Double Sales
store, Fair or Market (Art. 1505, NCC)
1. Same subject matter
6. GR: When goods are held by a third party 2. Same immediate seller
3. Two or more different buyers
XPN: Third person acknowledges to the buyer that he 4. Both sales are valid
holds the goods in behalf of the buyer (Art. 1521, NCC)

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2015 GOLDEN NOTES
SALES
Rules according to Article 1544 of the Civil Code (Rules sale, since such knowledge taints his prior registration
on preference) with bad faith (Art. 1544, NCC; Uraca, et. al v. CA, G.R. No.
115158, Sept. 5, 1997).
1. Movable Owner who is first to possess in good faith
2. Immovable Principle of caveat emptor buyer beware
a. First to register in good faith
b. No inscription, first to possess in good faith It literally means, Let the buyer beware. The rule requires
c. No inscription & no possession in good faith the purchaser to be aware of the supposed title of the
Person who presents oldest title in good faith vendor and one who buys without checking the vendors
title takes all the risks and losses consequent to such
Person in good faith failure (Agcaoili, p. 184).
One who
1. Buys the property without notice that some other Application of caveat emptor in particular sale
person has a right to, or interest in such transactions
property; and
2. Pays a full and fair price for the same at the time 1. Sales of animals (Art. 1574, NCC)
of such purchase, or before he has notice of the 2. Double sales (Art. 1544, NCC)
claim or interest of some other person in the 3. In sheriffs sales (Art. 1570, NCC)
property (Agricultural and Home Extension 4. Tax sales (Art. 1547, last paragraph, NCC)
Development Group v. CA, G.R. No. 92319,
September 3, 1992). NOTE: In the above sales, there is no warranty of title or
quality on the part of the seller. The purchaser who buys
Rule on Double Sale regarding immovables without checking the title of the vendor is assuming all
risks of eviction.
GR: Apply Art.1544 In sheriffs sales, the sheriff does not guarantee the title to
real property and it is not incumbent upon him to place the
XPN: Sale of registered lands apply Torrens System buyer in possession of such property (Pineda, 2010).
Principle of prius tempore, potior jure - first in time, Caveat emptor NOT applicable in sales of registered
stronger in right land
Knowledge by the first buyer of the second sale cannot The purchaser of a registered land under the Torrens
defeat the first buyers rights except when the second system is merely charged with notice of the burdens and
buyer first registers in good faith the second sale. claims on the property which are inscribed on the face of
Conversely, knowledge gained by the second buyer of the certificate of title (Pineda, 2010).
first sale defeats his rights even if he is first to register,
since such knowledge taints his registration with bad faith Application of caveat emptor in judicial sales
to merit the protection of Art. 1544 (2nd par.), the second
realty buyer must act in good faith in registering his deed Caveat emptor is applicable in judicial sales. The purchaser
of sale (Diaz, p. 125). in a judicial sale acquires no higher or better title or right
than that of the judgment debtor. If it happens that the
NOTE: Where one sale is absolute and the other is a pacto judgment debtor has no right, interest, or lien on and to
de retro transaction where the period to redeem has not the property sold, the purchaser acquires none (Pineda,
yet expired, Art. 1544 will not apply (Pineda, p. 223). 2010).
Q: Does prior registration by the second buyer of a Q: Juliet offered to sell her house and lot, together with
property subject of a double sale confer ownership or all the furniture and appliances therein, to Dehlma.
preferred right in his favor over that of the first buyer? Before agreeing to purchase the property, Dehlma
went to the Register of Deeds to verify Juliets title. She
A: No. Prior registration of the disputed property by the discovered that while the property was registered in
second buyer does not by itself confer ownership or a Juliets name under the Land Registration Act, as
better right over the property. Article 1544 requires that amended by the Property Registration Decree, it was
such registration must be coupled with good faith. mortgaged to Elaine to secure a debt of P80, 000.
Wanting to buy the property, Dehlma told Juliet to
Knowledge gained by the first buyer of the second sale redeem the property from Elaine, and gave her an
advance payment to be used for purposes of releasing
Knowledge gained by the first buyer of the second sale the mortgage on the property. When the mortgage was
cannot defeat the first buyer's rights except where the released, Juliet executed a Deed of Absolute Sale over
second buyer registers in good faith the second sale ahead the property which was duly registered with the
of the first, as provided by the Civil Code. Registry of Deeds, and a new TCT was issued in
Dehlmas name. Dehlma immediately took possession
Knowledge gained by the second buyer of the first sale over the house and lot and the movables therein.
Thereafter, Dehlma went to the Assessors Office to get
Knowledge gained by the second buyer of the first sale a new tax declaration under her name. She was
defeats his rights even if he is first to register the second surprised to find out that the property was already

CIVIL LAW
declared for tax purposes in the name of XYZ Bank Effect when the loss occurred before perfection
which had foreclosed the mortgage on the property
before it was sold to her. XYZ Bank was also the The thing perishes with the owner (Res perit domino; Art.
purchaser in the foreclosure sale of the property. At 1504, NCC).
that time, the property was still unregistered but XYZ
Bank registered the Sheriffs Deed of Conveyance in NOTE: The seller still owns the thing because there is no
the day book of the Register of Deeds under Act 3344 delivery or transfer of ownership yet. Hence the seller
and obtained a tax declaration in its name. (2008 Bar bears the risk of loss (Villanueva, 2004).
Question)
Effect when the loss occurred at the time of perfection
a. Was Dehlma a purchaser in good faith? of the contract of sale
b. Who as between Dehlma and XYZ Bank has a
better right to the house and lot? GR: When the object of the contract is entirely lost, the
c. Who owns the movables inside the house? contract shall be without effect.
A: XPN: In case of partial loss, the buyer may choose between

a) Yes, Dehlma is a purchaser in good faith. She learned withdrawing from the contract and demanding the
about the XYZ tax declaration and foreclosure sale remaining part. If he chooses the latter, he shall pay the
only after the sale to her was registered. She relied on remaining parts corresponding price in proportion to the
the certificate of title of her predecessor-in-interest. total sum agreed upon (Art. 1493, NCC).
Under the Torrens System, a buyer of registered lands
is not required by law to inquire further than what the NOTE: As there is no distinction, even if the loss is not
Torrens certificate indicates on its face. If a person substantial, Res perit domino applies (Pineda, 2010).
proceeds to but it relying on the title, that person is
considered a buyer in good faith. The contract is considered void or inexistent because the
object did not exist at the time of the transaction. Any
The priority in time rule could not be invoked by action for the enforcement of such void contract can be
XYZ Bank because the foreclosure sale of the land in defeated by a motion to dismiss or by setting up a counter-
favour of the bank was recorded under Act 3344, the claim for the declaration of its nullity (Pineda, 2010).
law governing transactions affecting unregistered
land, and thus, does not bind the land. Options of the buyer with regard to the sale in the total
or partial loss or deterioration of a mass of specific
b) Between Dehlma and the bank, the former has a goods without the knowledge of the seller
better right to the house and lot.
1. He may treat the sale as avoided or cancelled
c) Unless there is a contrary stipulation in the 2. He may continue with the sale with respect to the
absolute deed of sale, Dehlma owns the movables available or remaining goods (Art. 1494, NCC).
covered by the Deed of Sale and her ownership is
perfected by the execution and delivery of public Effect suppose the buyer chooses to continue with the
document of sale. The delivery of the absolute deed sale of the remaining goods
of sale is a symbolical delivery of the house and lot,
including the contents of the house. This is an The remaining goods shall pass in ownership to the buyer
obligation to deliver a specific thing, which includes but subject to proportionate reduction of the price. But
the delivery of the specific thing itself and all of its this is applicable only if the goods are divisible or capable
accessions and accessories even though they may not of being divided (Pineda, 2010). If indivisible, the only
have been mentioned (Art. 1166, NCC). option available is the avoidance of the sale.
RISK OF LOSS Effect when the loss occurred after perfection but
before delivery
A thing is considered as lost
GR: Who bears the risk of loss is governed by the
GR: It is understood that the thing is lost when it: stipulations in the contract.
1. perishes, or
2. goes out of commerce, or In the absence of stipulation: there are two conflicting
3. disappears in such a way that its existence is views:
unknown or cannot be recovered (Art. 1189, 2nd par.,
NCC). First view: Res perit creditori or buyer bears the risk of
loss (Paras, Vitug, Padilla and De Leon).
XPN: In an obligation to deliver a generic thing, the loss or
destruction of anything of the same kind does not Article 1504 of the Civil Code, which embodies Res perit
extinguish the obligation (Art. 1263, NCC). 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

244
2015 GOLDEN NOTES
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the delivery but after the contract has been perfected. This
theory is an exception to the rule of Res perit domino. DOCUMENTS OF TITLE
Pursuant to Article 1262 of the Civil Code, if the thing is
lost or destroyed without the fault of the seller, the Document of Title
obligation to deliver is extinguished but the obligation to
pay subsist (Pineda, 2010). A document used in the ordinary course of business in the
sale or transfer of goods , as proof of the possession or
Second view: Res perit domino or seller bears the risk of control of the goods , or authorizing or purporting to
loss (Tolentino, Jurado, Baviera, and Villanueva) authorize the possessor of the document to transfer or
receive, either by endorsement or by delivery, goods
In reciprocal obligations, the extinguishment of the represented by such document (Art. 1636, NCC).
obligation due to loss of the thing affects both debtor and
creditor; the entire juridical relation is extinguished. Under Purpose of the Documents of Title
this view, the rule on loss under Article 1189 of the Civil
Code would be different from the rule on deterioration 1. Evidence of possession or control of goods described
the loss would be for the account of the seller, while therein
deterioration would be for the account of the buyer 2. Medium of transferring title and possession over the
(Tolentino, 2002). goods described therein without having to effect
actual delivery (Villanueva, 2009).
This view would make Articles 1480 and 1538 of the Civil 3. The custody of a negotiable warehouse receipts
Code consistent with the provisions of Article 1504 of the issued to the order of the owner, or to bearer, is a
Civil Code (Villanueva, 2004). representation of title upon which bona fide
purchasers for value are entitled to rely, despite
Ownership is transferred only after delivery, further, the breaches of trust or violations of agreement on the
contract is reciprocal. If the vendee cannot have the thing, part of the apparent owner (Siy Cong Bieng v. HSBC, 56
it is illogical and unjust to make him pay the price (Pineda, Phil 598).
2010).
Rationale behind a document of title
Effect when loss occurred after delivery
Merchants are able to transact with goods and
GR: Res perit domino applies the buyer is now the owner, merchandise without having to physically carry them
hence, the buyer bears the risk of loss (Art. 1504, NCC). around, and that buyers should be assured that they may
deal with the evidence thereof with the same effect as
XPNs: though they could feel the merchandise themselves
1. Where the delivery has been made either to the buyer (Villanueva, 2009).
or to the bailee for the buyer, but ownership in the
goods has been retained by the seller merely to secure Negotiable Document of Title
performance by the buyer of his obligations under the
contract; and A document of title which states that the goods referred
2. Where actual delivery has been delayed through the therein will be delivered to the bearer, or to the order of
fault of either the buyer or seller, the goods are at the any person named in such document (Art. 1507, NCC).
risk of the party at fault (Art. 1504, pars. 1 &2, NCC).
Persons who may negotiate a Negotiable Document of
Person who bears the risk of loss or deterioration Title
1. Owner
BEFORE Res perit domino Seller is the owner
2. Person to whom the possession or custody of the
PERFECTION so seller bears risk of loss
document has been entrusted by the owner
Res perit domino a. If bailee undertakes to deliver the goods to such
person
AT Contract shall be without any effect b. If document is in such form that it may be
PERFECTION the seller bears the loss since the buyer negotiated by delivery. (Art 1512, NCC).
is relieved of his obligation under the
contract Non-negotiable documents of title
AFTER
PERFECTION Seller; 1. They are delivered only to a specified person
BUT Deterioration & fruits Buyer bears 2. Carrier will not deliver the goods to any holder of the
BEFORE loss (Tolentino) document or to whom such document may have been
DELIVERY endorsed by the consignee
Buyer becomes the owner so buyer 3. Must present the deed of sale or donation in his favor
bears risk of loss
AFTER Warranties of seller of documents of title
DELIVERY Delivery extinguish ownership vis-a-vis
the seller & creates a new one in favor 1. Genuineness of the Document
of the buyer 2. Legal right to negotiate or transfer

CIVIL LAW
3. No knowledge of fact which would impair the validity - satisfying the claim by means allowed by law or
or worth of the document equity (Art. 1520, NCC).
4. Right to transfer Title to the goods and
merchantability or fitness for a particular purpose, REMEDIES OF THE PARTIES
whenever such warranties would have been implied
had the contract transfer the goods without a REMEDIES OF THE SELLER
document.
Installment Sales Law
Acquisition of a person to whom a non-negotiable
instrument has been transferred but not negotiated Commonly known as the Recto Law. It is embodied in Art.
1484 of the NCC, which provides for the remedies of a
He acquires: seller in the contracts of sale of personal property by
1. Title to the goods, subject to the terms of any installments.
agreement with the transferor;
2. Right to notify the bailee who issued the NOTE: Art. 1484 of the NCC incorporates the provisions of
document of the transfer thereof, and thereby to Act No. 4122 passed by the Philippine Legislature on Dec.
acquire the direct obligation of such bailee to 9, 1939, known as the "Installment Sales Law" or the
hold possession of the goods for him according to "Recto Law," which then amended Art. 1454 of the Civil
the terms of the document. Code of 1889.
How the transferors creditor may defeat the Application of Recto Law
aforementioned rights of the transferee
This law covers contracts of sale of personal property by
Prior to the notification to such bailee by the transferor or installments (Act No. 4122). It is also applied to contracts
transferee of a non-negotiable document of title, the title of purporting to be leases of personal property with option to
the transferee to the goods and the right to acquire the buy, when the lessor has deprived the lessee of the
obligation of such bailee may be defeated by the possession or enjoyment of the thing (PCI Leasing and
transferors creditor by the levy of an attachment or Finance Inc. v. Giraffe- X Creative Imaging, Inc., G.R. No.
execution upon the goods (Art. 1514, NCC). 142618, July 12, 2007).
Q: If the goods are delivered to the bailee by the owner Requisites of the Recto Law
or by a person whose act in conveying the title to them
to a purchaser in good faith for value and a negotiable 1. Valid contract of sale;
instrument was issued for them, can the said goods be 2. Subject matter is personal property;
attached, garnished or levied upon? 3. Payable in installments; and
4. In the case of the second and third remedies, that
A: there has been a failure to pay two or more
GR: No, the goods cannot be attached, garnished or levied installments (Art. 1484, NCC).
upon while they are in the bailees possession.
Alternative remedies in case of sale of personal
XPN: property in installments
1. When the document is first surrendered; or
2. When its negotiation is enjoined. 1. Specific Performance: Exact fulfillment should the
buyer fail to pay
NOTE: The bailee shall in no case be compelled to deliver
the actual possession of the goods until the document is: GR: If availed of, the unpaid seller cannot anymore
1. Surrendered to him; or choose other remedies;
2. Impounded by the court. (Art. 1519, NCC)
XPN: if after choosing, it has become impossible,
Rationale for the prohibition is to protect the bailee from rescission may be pursued
liability as the document may have been negotiated by the
holder to subsequent transferees for value and in good 2. Rescission: Cancel the sale if buyer fails to pay 2 or
faith. He may be liable for damages if he cannot produce more installments. Deemed chosen when:
and deliver the goods later (Pineda, 2010). a. Notice of rescission is sent
b. Takes possession of subject matter of sale
Rights of a creditor whose debtor is the owner of a c. Files action for rescission
negotiable document of title
3. Foreclosure: Foreclose on chattel mortgage if buyer
He is entitled to such aid from courts of appropriate fails to pay 2 or more instalments. He shall have no
jurisdiction by: further action against the purchaser to recover any
1. injunction; unpaid balance of the price. Any agreement to the
2. attaching such document; contrary shall be void.
3. as regards property which cannot be readily
attached or levied upon by ordinary legal process GR: Actual foreclosure is necessary to bar recovery of
balance.

246
2015 GOLDEN NOTES
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buyers of real estate payable on installments. The law
XPN: Mortgagor refuses to deliver property to effect declares as "public policy to protect buyers of real estate
foreclosure; expenses incurred in attorneys fees, etc. on installment payments against onerous and oppressive
conditions.
NOTE: The remedies are alternative not cumulative.
Availment of one is a bar to the other remedies NOTE: The purpose of the law is to protect buyers in
installment against oppressive conditions.
Rationale of Recto Law
Transactions/sale covered by the Maceda Law
To remedy the abuses committed in connection with the
foreclosure of chattel mortgages and to prevent The law involves the sale of immovables on installment
mortgagees from seizing the mortgaged property, buying it (Maceda Law, R.A. 6552).
at a foreclosure sale for a low price and then bringing suit 1. Coverage: Residential Real Estate (Villanueva,
against the mortgagor for a deficiency judgment 2009).
(Villanueva, 2009). 2. Exclude:
a. Industrial lots
Q: A, sold and delivered a car to B which was to be paid b. Commercial buildings (and commercial lots
on a monthly basis. After a series of payments, B by implication)
subsequently defaulted. A then filed an action against c. Sale to tenants under agrarian laws
B for specific performance. However, the amount d. Sale of lands payable in straight terms (R.A.
collected was not sufficient to cover the amount of the 6552, Sec. 3).
car. The court then issued a writ of execution and the
sheriff levied the subject car. B contends that this is a NOTE: The list is not exclusive (Villanueva, 2009).
violation of the Recto law because having elected
specific performance, A can no longer foreclose the Q: What are the so-called Maceda and Recto laws in
subject car. Is this correct? connection with sales on installments? Give the most
important features on each law. (1999 Bar Question)
A: No. A evidently chose the remedy of specific
performance. The sheriff levied upon the car by virtue of A: The Maceda Law (R.A. 6552) is applicable to sales of
an execution and not as an incident of a foreclosure immovable property on installments. The most important
proceeding. The rule is that in installment sales, if the features are:
action instituted is for specific performance and the
mortgaged property is subsequently attached and sold, the 1. After having paid installments for at least two
sale thereof does not amount to a foreclosure of the years, the buyer is entitled to a mandatory grace
mortgage. Hence, the seller-creditor is entitled to a period of one month for every year of installment
deficiency judgment (Industrial Finance Corporation v payments made, to pay the unpaid installments
Ramirez, G.R. No. L-43821 May 26, 1977). without interest.
Q: A mortgaged a diamond ring to M as a security for a If the contract is cancelled, the seller shall refund
loan which was to be paid 2 years thereafter. Since A to the buyer the cash surrender value equivalent
failed to pay M, she then foreclosed the mortgaged to fifty percent (50%) of the total payments
property. However, it turned out that the proceeds of made, and after five years of installments, an
the sale were insufficient, thus, M filed an action for additional five percent (5%) every year but not to
specific performance. A contends that this is a exceed ninety percent (90%) of the total
violation of the Recto law since the foreclosure of the payments made.
chattel bars subsequent recovery. Is this correct?
2. In case the installments paid were less than 2
A: No. A is not correct in invoking the Recto law since it is years, the seller shall give the buyer a grace
only applicable in case of sale of personal property period of not less than 60 days. If the buyer fails
through installment. In the given case, the amount being to pay the installments due at the expiration of
claimed by A was to be paid 2 years thereafter as a lump the grace period, the seller may cancel the
sum, not through installments. Moreover, the transaction contract after 30 days from receipt by the buyer
is a loan not a sale. of the notice of cancellation or demand for
rescission by notarial act. (Rillo v. CA, G.R. No.
Recto Law does NOT cover a contract to sell of 125347 June 19, 1997)
movables
The Recto Law (Art.1484) refers to sale of movables
There will be nothing to rescind if the suspensive payable in installments and limiting the right of seller, in
condition (payment of full purchase price) upon which the case of default by the buyer, to one of three remedies:
contract is based fails to materialize (Villanueva, 2009).
1. Exact fulfillment;
Realty Installment Buyer Act 2. Cancel the sale of two or more installments have
not been paid;
Commonly known as the 957 Law. It is embodied in R.A. 3. Foreclose the chattel mortgage on the things sold,
6552 which provides for certain protection to particular also in case of default of two or more

CIVIL LAW
installments, with no further action against the Million, payable P3 Million down and the balance
purchaser. with interest thereon at 14% per annum payable in
sixty (60) equal monthly installments of P198,333.33.
Other rights granted to a buyer under the Maceda Law They executed a Deed of Conditional Sale in which it
is stipulated that should the vendee fail to pay three
1. Sell or assign rights to another (3) successive installments, the sale shall be deemed
2. Reinstate contract by updating within 30 days before automatically rescinded without the necessity of
and cancellation judicial action and all payments made by the vendee
3. Deed of Sale to be done by notarial act shall be forfeited in favor of the vendor by way of
4. Pay full installment in advance the balance of price rental for the use and occupancy of the unit and as
anytime w/o interest liquidated damages. For 46 months, Priscilla paid the
5. Have full payment annotated in certificate of title monthly installments religiously, but on the 47th and
48th months, she failed to pay. On the 49th month, she
NOTE: Applies to contracts even before the law was tried to pay the installments due but the vendor
enacted. Stipulation to the contrary is void refused to receive the payments tendered by her.
The following month, the vendor sent her a notice
Q: Bernie bought on installment a residential that it was rescinding the Deed of Conditional Sale
subdivision lot from DEVLAND. After having faithfully pursuant to the stipulation for automatic rescission,
paid the installments for 48 months, Bernie and demanded that she vacate the premises. She
discovered that DEVLAND had failed to develop the replied that the contract cannot be rescinded without
subdivision in accordance with the approved plans judicial demand or notarial act pursuant to Article
and specifications within the time frame in the plan. 1592 of the Civil Code. (2000, 2014 Bar Question)
He thus wrote a letter to DEVLAND informing it that he a) Is Article 1592 applicable?
was stopping payment. Consequently, DEVLAND b) Can the vendor rescind the contract?
cancelled the sale and wrote Bernie, informing him
that his payments are forfeited in its favor. A:
a. Was the action of DEVLAND proper? Explain. a) Article 1592 of the Civil Code does not apply to a
b. Discuss the rights of Bernie under the conditional sale. In Valarao v. CA, 304 SCRA 155, the
circumstances. Supreme Court held that Article 1592 applies only
c. Supposing DEVLAND had fully developed the to a contract of sale and not to a Deed of
subdivision but Bernie failed to pay further Conditional Sale where the seller has reserved title
installments after 4 years due to business to the property until full payment of the purchase
reverses. Discuss the rights and obligations of price. The law applicable is the Maceda Law.
the parties. (2005 Bar Question)
b) No, the vendor cannot rescind the contract under the
A: circumstances. Under the Maceda Law, which is the
a) Assuming that the land is a residential subdivision law applicable, the seller on installment may not
project under P.D. No. 957 (The Subdivision and rescind the contract till after the lapse of the
Condominium Buyers Protective Decree), DEVLAND's mandatory grace period of 30 days for every one
action is not proper because under Section 23 of said year of installment payments, and only after 30 days
Decree, no installment payment shall be forfeited to from notice of cancellation or demand for rescission by
the owner or developer when the buyer, after due a notarial act. In this case, the refusal of the seller to
notice, desists from further payment due to the failure accept payment from the buyer on the 49th month was
of the owner-developer to develop the subdivision not justified because the buyer was entitled to 60
according to the approved plans and within the time days grace period and the payment was tendered
limit for complying with the same. within that period. Moreover, the notice of
rescission served by the seller on the buyer was not
b) Under the same Section of the Decree, Bernie may, at effective because the notice was not by a notarial act.
his option, be reimbursed the total amount paid Besides, the seller may still pay within 30 days from
including amortization interests but excluding such notarial notice before rescission may be
delinquency interests at the legal rate. He may also effected. All these requirements for a valid rescission
ask the Housing and Land Use Regulatory Board to were not complied with by the seller. Hence, the
apply penal sanctions against DEVLAND consisting of rescission is invalid.
payment of administrative fine of not more than
P20.000.00 and/or imprisonment for not more than REMEDIES OF AN UNPAID SELLER
20 years.
Unpaid Seller
c) Under R.A. No. 6552 (Maceda Law), DEVLAND has the
right to cancel the contract but it has to refund Bernie One is considered as unpaid seller when:
the cash surrender value of the payments on the 1. The whole of the price has not been paid or
property equivalent to 50% of the total payments tendered;
made. 2. A bill of exchange or other negotiable instrument
has been received as conditional payment, and
Q: Priscilla purchased a condominium unit in Makati the condition on which it was received has been
City from the Citiland Corporation for a price of P10 broken by reason of the dishonor of the

248
2015 GOLDEN NOTES
SALES
instrument, the insolvency of the buyer, or b. Stipulated the right of resale in case of
otherwise. default, or
c. Buyer in default for unreasonable time
NOTE: The mere delivery of a negotiable instrument
does not ipso facto extinguish the obligation of the 4. Special Right to Rescind
buyer to pay because the instrument which has been Requisites:
delivered may be dishonoured. In which case, the a. Expressly stipulated OR buyer is in default
seller is still an unpaid seller (US v. Bedoya, 14 Phil. for unreasonable time
398). b. Notice needed to be given by seller to buyer
It includes an agent of the seller to whom the bill of lading Instances when possessory lien is lost
has been indorsed, or consignor or agent who has himself
paid, or is directly responsible for the price, or any other 1. Seller delivers without reserving ownership in goods
person who is in the position of a seller (Pineda, 2010). or right to possess them
2. Buyer or agent lawfully obtains possession of goods
Q: When is a Seller considered unpaid despite the title 3. Waiver (Art. 1529, NCC).
of the goods passing to the buyer?
NOTE: Seller loses lien when he parts with goods (but still,
A: Whenever the seller was only paid partially, he remains stoppage in transitu can be exercised)
an unpaid seller (Pineda, 2010)
Right of stoppage in transitu
Remedies of an Unpaid Seller
The seller may resume possession of the goods at any time
I. Ordinary while they are in transit, and he will then become entitled
1. Action for Price to the same rights in regard to the goods as he would have
Exercised when: had if he had never parted with the possession (Art. 1530,
a. ownership has passed to buyer; NCC).
b. price is payable on a day certain
c. goods cannot readily be resold for Goods considered to be in transit
reasonable price and Art. 1596 is
inapplicable 1. After delivery to a carrier or other bailee and before
2. Action for Damages In case of wrongful the buyer or his agent takes delivery of them; and
neglect or refusal by the buyer to accept or pay 2. If the goods are rejected by the buyer, and the carrier
for the thing sold or other bailee continues in possession of them (Art.
II. Special 1531, par. 1, NCC).
1. Possessory Lien Seller not bound to deliver if
buyer has not paid him the price. This remedy Goods deemed to be no longer in transit
presupposes that the sale is on credit. It is
exercisable only in following circumstances: 1. After delivery to the buyer or his agent
a. goods sold without stipulation as to 2. If the buyer/agent obtains possession of the goods at
credit a point before the destination originally fixed;
b. goods sold on credit but term of credit 3. If the carrier or the bailee acknowledges that he holds
has expired the goods in behalf of the buyer/ his agent;
c. buyer becomes insolvent 4. If the carrier or bailee wrongfully refuses to deliver
the goods to the buyer or his agent. (Villanueva, p.
NOTE: When part of goods delivered, may still 181)
exercise right on goods undelivered
Enforcement of right to stoppage in transitu
2. Stoppage in Transitu
Requisites: I-CSENT-U The seller may:
a. Insolvent buyer a. Take actual possession of the goods
b. The sale of goods must be on Credit b. Give notice of his claim to the carrier or other
c. Seller must Surrender the negotiable bailee who is in possession of the goods
document of title, if any
d. Seller must bear the Expenses of delivery of Effect of the exercise of this right
the goods after the exercise of the right.
e. Seller must either actually take possession of 1. The goods are no longer in transit
the goods sold or give Notice of his claim to 2. Contract of carriage end. The carrier now becomes a
the carrier or other person in possession mere bailee, and will be liable as such; and
f. Goods must be in Transit 3. Seller would have the same rights to the goods as if he
g. Unpaid seller had never had never parted possession with it (Art.
1530 & 1531, NCC).
3. Special Right to Resell the Goods
Exercised when: Sellers knowledge of the buyers insolvency
a. Goods are perishable,

CIVIL LAW
The seller cannot exercise the right to stoppage in transit a. Accept goods & set up breach of warranty
because he is under estoppel. He assumed the risk. by way of recoupment in diminution or
extinction or the price.
Rationale behind the right of stoppage in transitu b. Accept goods & maintain action against
seller for damages
To prevent injustice of allowing the buyer to acquire c. Refuse to Accept goods & maintain action
ownership and possession of the goods when owing to his against seller for damages
insolvency, he cannot pay the price (Pineda, 2010). d. Rescind contract of sale & refuse to
receive goods/return them when already
Effect of exercising the special right of resale received.
The unpaid seller shall not be liable to the original buyer 3. Disturbed in possession or with reasonable
upon the sale or for any profit made by such resale, but grounds to fear disturbance Suspend
may recover from the buyer damages for any loss payment
occasioned by the breach of the sale (Art. 1533, NCC).
NOTE: When the buyer has claimed and been granted
Notice to the defaulting buyer a remedy in any of these ways, no other remedy can
thereafter be granted, without prejudice to the buyers
GR: Notice to the defaulting buyer NOT required in the right to rescind, even if previously he has chosen
resale of goods specific performance when fulfillment has become
impossible (Villanueva, 2011 in relation with Art. 1191,
XPN: Where the right to resell is not based on the par. 2, NCC).
perishable nature of the goods or upon an express
provision of the sale. PERFORMANCE OF CONTRACT
NOTE: Notice of time and place of resale is not essential to Rule when the seller delivers goods lesser than what
the validity of such resale (Art. 1433, NCC). he has contracted to sell
Effect of exercising the special right to rescind 1. The buyer may reject the goods delivered and he shall
have no liability
The unpaid seller shall not be liable to the buyer upon the 2. The buyer may accept the goods delivered, but he will
sale, but may recover from the buyer damages for any loss pay the contract price, if he has knowledge that the
occasioned by the breach of the sale (Art. 1534, NCC). seller is not going to deliver all the goods contracted
for (Art. 1522, NCC).
Buyer deemed as insolvent
Rule when the seller delivers goods greater than what
One is deemed insolvent when he either ceased to pay his he has contracted to sell
debts in the ordinary course of business or cannot pay his
debts as they become due, whether insolvency 1. The buyer may accept only the goods which were
proceedings have been commenced or not (Villanueva, included in the contract and reject the excess.
2009). 2. The buyer may accept the entire goods delivered and
he shall pay for them at the contract rate (Art. 1522,
REMEDIES OF THE BUYER NCC).
Remedies of the buyer Rule when the seller delivers goods which are mixed
with other goods of different description not included
I. Immovables in general in the contract
1. Disturbed in possession or with reasonable
grounds to fear disturbance Suspend The buyer may accept the goods which are in accordance
payment with the contract and reject the rest (Art. 1522, NCC).
2. In case of subdivision or condominium projects
If real estate developer fails to comply with Rule if the subject matter is indivisible
obligation according to approved plan:
a. Rescind The buyer may reject the whole of the goods (Art. 1522,
b. Suspend payment until seller complies NCC).
II. Movables Duty of the seller with regard to accessions and

1. Failure of seller to deliver Action for specific accessories
performance without giving the seller the
option of retaining the goods on payments of The seller has the duty to preserve the thing and its
damages accessions and accessories from the time of the perfection
of the contract of sale (Art. 1537, NCC).
2. Breach of sellers warranty The buyer may, at
his election, avail of the following remedies: NOTE: In case of loss or deterioration, the seller is liable
for damages or the buyer may seek rescission with

250
2015 GOLDEN NOTES
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damages. However, if loss or deterioration is due to a
fortuitous event, the seller is not liable (Art. 1538, NCC). Requisites of express warranties (AIR)
Rule when the sale of immovable is by unit of measure 1. It must be an Affirmation of fact relating to the subject
or number matter of sale
2. Natural tendency is to Induce buyer to purchase
GR: The seller must deliver all that may have been stated subject matter
in the contract. 3. Buyer purchases the subject matter Relying thereon
Liability of the seller for breach of express warranties

XPN: If impossible to deliver all, the buyer may choose
between: The seller is liable for damages (Villanueva, p. 249).
1. Proportional reduction of the price
2. Rescission of the contract, provided the deficiency is at Implied warranties
least 1/10 of the area stated in the contract (Art. 1539,
NCC). Warranties deemed included in all contracts of sale by
operation of law (Art. 1547, NCC).
Prescription period for the action of rescission of
contract 1. Warranty that seller has right to sell refers to
consummation stage. Not applicable to sheriff,
6 months from the day of delivery (Art. 1543, NCC). auctioneer, mortgagee, pledgee
How payment is made by the buyer 2. Warranty against eviction
Price is paid at the time and place stipulated in the Requisites: (JPENS)
contract. It is made to the person in whose favor the a. Final Judgment
obligation has been constituted or his successor in b. Buyer is Evicted in whole or in part from the
interest, or any person authorized to receive (Villanueva, subject matter of sale
2009). c. Basis of eviction is a right Prior to sale or act
imputable to seller
WARRANTIES d. Seller has been Summoned in the suit for
eviction at the instance of buyer; or made 3rd
Warranty party defendant through 3rd party complaint
brought by buyer
A statement or representation made by the seller of goods, e. No waiver on the part of the buyer
as part of the contract of sale, having reference to the
character, quality, or title, of the goods, and by which he NOTE: For eviction disturbance in law is required
promises or undertakes to insure that certain facts are or and not just trespass in fact.
shall be as he then represents (De Leon, 2011).
3. GR: Warranty against encumbrances (non- apparent)
NOTE: May either be express or implied.
Requisites:
Effect of a breach of warranty a. immovable sold is encumbered with non-
apparent burden or servitude not mentioned in
Buyer may: the agreement
1. Refuse to proceed with the contract; or b. nature of non-apparent servitude or burden is
2. Proceed with the contract and waive the such that it must be presumed that the buyer
condition. would not have acquired it had he been aware
thereof
NOTE: If the condition is in the nature that it should
happen, the non-performance may be treated as a breach XPN: warranty not applicable when non-apparent
of warranty. burden or servitude is recorded in the Registry of
Property unless there is expressed warranty that the
Kinds of warranties thing is free from all burdens and encumbrances
1. Express 4. Warranty against Hidden Defects

2. Implied
Requisites: (HENNAS)
Express warranties a. Defect is important or Serious
i. The thing sold is unfit for the use which it is
Any affirmation of fact or any promise by the seller intended
relating to the thing if the natural tendency of such ii. Diminishes its fitness for such use or to such
affirmation or promise is to induce the buyer to purchase an extent that the buyer would not have
the same, and if the buyer purchases the thing relying acquired it had he been aware thereof
thereon (Art. 1546, NCC). b. Defect is Hidden

CIVIL LAW
c. Defect Exists at the time of the sale WARRANTY AGAINST EVICTION
d. Buyer gives Notice of the defect to the seller
within reasonable time Warranty against eviction
e. Action for rescission or reduction of the price is
brought within the proper period In a contract of sale, unless a contrary intention appears,
i. 6 months from delivery of the thing sold there is an implied warranty on the part of the seller that
ii. Within 40 days from the delivery in case of when the ownership is to pass, and that the buyer shall
animals from that time have and enjoy the legal and peaceful
f. There must be No waiver of warranty on the part possession of the thing (Art. 1547, 1st paragraph, NCC).
of the buyer.
Coverage of a warranty against eviction
Non-applicability of implied warranty (ASAP)
It covers eviction by a final judgment based on a right prior
1. As is and where is sale to the sale or an act imputable to the vendor, the vendee is
2. Sale of second hand articles deprived of the whole or of a part of the thing purchased.
3. Sale by virtue of authority in fact or law
4. Sale at public auction for tax delinquency The vendor shall answer for the eviction even though
nothing has been said in the contract on the subject (Art.
Q: Petitioner De Guzman purchased from Rspondent 1548, NCC).
Toyota Cubao a white Toyota Hi-Lux 2.4 SS double cab
motor vehicle, 1996 model, for a price of P508,000. He Effect of a breach of warranty against eviction
paid a downpayment of P152,400, leaving a balance of
P355,600. Later on, he demanded that the engine of The buyer shall have the right to demand the seller:
the vehicle be replaced for it had a crack after 1. The return of the value which the thing sold had
travelling along Marcos Highway while raining hard. at the time of the eviction, be it greater or lesser
Petitioner claims the replacement is based on an than the price of the sale
implied warranty. On the other hand, respondent 2. The income or fruits, if he has been ordered to
answered that the said damage was not covered by a deliver them to the party who won the suit
warranty. Decide. against him
3. The costs of suit which caused the eviction, and,
A: In the absence of an existing express warranty on the in a proper case, those of suit brought against the
part of the respondent, as in this case, the allegations in vendor for the warranty
petitioner's complaint for damages were clearly anchored 4. The expenses of contract if buyer has paid them
on the enforcement of an implied warranty against hidden 5. The damages and interests and ornamental
defects, i.e., that the engine of the vehicle which expenses if sale was made in bad faith.
respondent had sold to him was not defective. By filing this
case, petitioner wants to hold respondent responsible for NOTE: Vendor is liable for any hidden defect even if he is
breach of implied warranty for having sold a vehicle with not aware. (Caveat Venditor)
defective engine. Such being the case, petitioner should Purchaser must be aware of the title of the vendor.
have exercised this right within six months from the (Caveat Emptor)
delivery of the thing sold. Since petitioner filed the
complaint on April 20, 1999, or more than nineteen Rights of buyer in case of partial eviction
months counted from November 29, 1997 (the date of the
delivery of the motor vehicle), his cause of action had 1. Restitution (with obligation to return the thing w/o
become time-barred (De Guzman v. Toyota Cubao, G.R. other encumbrances than those which it had when he
No. 141480, November 29, 2006). acquired it)
2. Enforcement of warranty against eviction (Paras, and
Effects of waiver of an implied warranty Art. 1556, NCC)
1. Seller in bad faith and there is waiver against eviction Inapplicability of rescission
void
2. When buyer without knowledge of a particular risk, GR: Rescission is not a remedy in case of eviction because
made general renunciation of warranty is not a rescission contemplates that the one demanding it is able
waiver but merely limits liability of seller in case of to return whatever he has received under the contract.
eviction Since the vendee can no longer restore the subject matter
3. When buyer with knowledge of risk of eviction of the sale to the vendor, rescission cannot be carried out
assumed its consequences and made a waiver seller (Art. 1385, NCC).
not liable (applicable only to waiver of warranty
against eviction) XPN: The buyer may demand rescission in case of partial
eviction, because there still remains a portion of the thing
sold (De Leon, 2009).

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2015 GOLDEN NOTES
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WARRANTY AGAINST HIDDEN DEFECT 1. If the thing should be lost in consequence of the
hidden faults, and seller was aware of them he
Hidden defect shall:
a. bear the loss,
A hidden defect is one which is unknown or could not have b. return the price and
been known to the buyer (Diaz, p. 145). c. refund the expenses of the contract with
damages
NOTE: Seller does not warrant patent defect; Caveat
emptor (buyer beware). 2. If the thing is lost and seller was not aware of the
hidden faults he shall:
Redhibitory defect a. return the price and interest
b. reimburse the expenses of the contract
It is a defect in the article sold against which defect the which the buyer might have paid, but not for
seller is bound to warrant. The vice must constitute an damages. (Villanueva, 2004).
imperfection, a defect in its nature, of certain importance;
and a minor defect does not give rise to redhibition (De Remedies of the buyer in case of sale of things with
Leon, 2005). hidden defects
Redhibitory defect on animals The vendee may elect between:

1. Withdrawing from the contract, or
If the hidden defect of animals, even in case a professional 2. Demanding a proportionate reduction of the
inspection has been made, should be of such a nature that price, with damages in either case.
expert knowledge is not sufficient to discover it, the defect
shall be considered as redhibitory. Waiver of Warranty against eviction
Void sale of animal There is waiver of warranty against eviction when the
lessee has inspected the premises and decides to
The sale is void if animal is: consummate the contract based on such inspection. Under
1. Suffering from contagious diseases; Arts. 1561 and 1653 of the Civil Code, the lessor is
2. Unfit for the use or service for which they were responsible for warranty against hidden defects, but he is
purchased as indicated in the contract not answerable for patent defects or those, which are
visible, and which can be seen upon inspection (Jon and
Responsibility of a vendor for hidden defects Marissa De Ysasi v. Arturo and Estela Arceo, G.R. No. 136586,
Nov. 22, 2001).
If the hidden defects which the thing sold may have:
1. Render it unfit for the use for which it is Specific implied warranties in sale of goods
intended, or
2. Diminish its fitness for such use to such an extent 1. Warranty of fitness
that, had the vendee been aware thereof, he
would not have acquired it or would have given a GR: No implied warranty
lower price for it (Art. 1561, NCC).
XPN:
Extent of warranty by the seller against hidden defects a. Buyer manifests to the seller the particular
purpose for which the goods are required; and
The seller is responsible to the vendee for any hidden b. Buyer relies upon the sellers skill or judgment
faults or defects in the thing sold, even though he was not
aware thereof. 2. Warranty of merchantability That goods are
reasonably fit for the general purpose for which they
When the seller is not answerable for the defects of the are sold.
thing sold
REMEDIES IN CASE OF BREACH OF WARRANTY
1. For patent defects or those which are visible
2. Even for those which are not visible if the buyer is an Remedies of the buyer in case of breach of warranty
expert who, by reason of his trade or profession,
should have known them (Art. 1561, NCC) 1. Accept goods and set up breach of warranty by way of
3. If the contrary has been stipulated, and the vendor recoupment in diminution or extinction or the price.
was not aware of the hidden faults or defects in the 2. Accept goods and maintain action against seller for
thing sold (Art. 1566, NCC) damages
3. Refuse to accept goods and maintain action against
Effect of a breach of warranty against hidden defects seller for damages
4. Rescind contract of sale and refuse to receive
It would depend on whether the seller had knowledge of goods/return them when already received.
such defect and whether there has been a waiver of the
warranty. Remedies of the buyer in case of breach of warranty
NOT absolute

CIVIL LAW
CONDITION vis--vis WARRANTY
The vendee's remedies against a vendor with respect to
the warranties against hidden defects or encumbrances Condition
upon the thing sold are not limited to those prescribed in
Article 1567 where the vendee, in the case of Arts. 1561, An uncertain event or contingency upon the happening of
1562, 1564, 1565 and 1566, may elect either to withdraw which the obligation or right of the contract depends. In
from the contract or demand a proportionate reduction of such case, the obligation of the contract does not attach
the price, with damages in either case. until the condition is performed (De Leon, 2011).
The vendee may also ask for the annulment of the contract NOTE: There may be a contract of sale of goods, whose
upon proof of error or fraud, in which case the ordinary acquisition by the seller depends upon a contingency,
rule on obligations shall be applicable. Under the law on which may or may not happen (Art. 1462, par. 2, NCC).
obligations, responsibility arising from fraud is
demandable in all obligations and any waiver of an action Effect of non-fulfillment of a condition
for future fraud is void. Responsibility arising from
negligence is also demandable in any obligation, but such If imposed on the perfection of contract prevents the
liability may be regulated by the courts, according to the juridical relation itself from coming into existence
circumstances. The other party may:
1. Refuse to proceed with the contract
The vendor could likewise be liable for quasi-delict under 2. Proceed w/ contract, waiving the performance of
Article 2176 of the Civil Code, and an action based thereon the condition
may be brought by the vendee. While it may be true that
the pre-existing contract between the parties may, as a Condition v. Warranty
general rule, bar the applicability of the law on quasi-delict,
the liability may itself be deemed to arise from quasi-delict, CONDITION WARRANTY
i.e., the acts which breaks the contract may also be a quasi- Purports to the existence Purports to the
delict (Coca-Cola Bottlers Philippines, Inc. v. CA, G.R. No. of obligation performance of obligation
110295, Oct. 18, 1993). Need not be stipulated;
Must be stipulated to form may form part of
Instances when the buyer cannot rescind the sale in part of the obligation obligation by provision of
case there is a breach of warranty law
Relates to the subject
1. If he knew of the breach of warranty May attach itself to
matter itself or to
2. If he fails to return or offer to return goods to seller in obligation of seller to
obligation of the seller as
substantially as good condition as they were at time deliver possession and
to the subject matter of
ownership was transferred transfer
the sale
3. If he fails to notify the seller within a reasonable time
of his election to rescind EXTINGUISHMENT OF THE SALE
Q: Goodyear Philippines sold a car to Anthony Sy. Later Causes for extinguishment of sale
on, Sy sold the car to Jose Lee. When Lee tried to
register the car in his name, he failed to have it A contract of sale is extinguished by:
registered because it turned out that the car was 1. Same causes as how an obligation is
stolen before and was only subsequently recovered by extinguished, namely:
Goodyear. However, PNP did not lift the alert alarm a. Payment or performance
over the said car. Due to this, the car was impounded b. Loss of the thing due
and Lee was sued by PNP. This problem was relayed by c. Condonation or remission of the debt
Lee to Sy. It led to Sy filing a case against Goodyear for d. Confusion or merger of the rights of creditor
breach of warranty. It is Sys argument that it is and debtor
Goodyears duty to convey the vehicle to Sy free from e. Compensation
all liens, encumbrances and legal impediments. Was f. Novation
there a breach of warranty by Goodyear? g. Annulment
h. Rescission
A: No. Upon the execution of the Deed of Sale, petitioner i. Fulfillment of resolutory condition
did transfer ownership of and deliver the vehicle to j. Prescription
Respondent Sy. The impoundment of the vehicle and the 2. Conventional Redemption
failure to register it were clearly acts that were not 3. Legal redemption
deliberately caused by petitioner, but that resulted solely
from the failure of the PNP to lift the latters own alarm Redemption
over the vehicle. Hence, the former did not breach its
obligation as a vendor to Respondent Sy; neither did it It is a mode of extinguishment wherein the seller has the
violate his right for which he could maintain an action for right to redeem or repurchase the thing sold upon return
the recovery of damages (Goodyear Philippines, Inc. v. Sy of the price paid.
and Lee, G.R. No. 154554, Nov. 9, 2005).

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2015 GOLDEN NOTES
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Kinds of redemption Effect on the reserved right to repurchase if the
principal contract of sale is void
1. Legal
2. Conventional Since the underlying contract of sale was inoperative and
consequently void, then the right of repurchase reserved
Incorporation of right to redeem in every contract of would also be void (Villanueva, 2009).
sale
EQUITABLE MORTGAGE
The right of the vendor to redeem/repurchase must
appear in the same instrument. However, parties may Equitable mortgage
stipulate on the right of repurchase in a separate
document but in this case, it is valid only between the One which lacks the proper formalities, form or words or
parties and not against third persons (Pineda, p. 333). other requisites prescribed by law for a mortgage, but
shows the intention of the parties to make the property
Pre-emption v. Redemption subject of the contract as security for a debt and contains
nothing impossible or contrary to law (Cachola v. CA, G.R.
PRE-EMPTION REDEMPTION No. 97822, May 7, 1992).
Arises before sale Arises after sale
There can be rescission of Essential requisites of equitable mortgage
Rescission inapplicable
original sale
Action is directed against Action is directed against 1. Parties entered into a contract of sale
prospective seller buyer 2. Their intention was to secure an existing debt by way
of a mortgage.
CONVENTIONAL REDEMPTION
Presumption of an equitable mortgage
Conventional redemption
A sale with conventional redemption is deemed to be an
Seller reserves the right to repurchase thing sold coupled equitable mortgage in any of the following cases (Art. 1602,
with obligation to return the purchase price of the sale, NCC): (AIR-STAR)
expenses incurred under the contract, other legitimate 1. Price of the sale with right to repurchase is
payments and, necessary & useful expenses made on the unusually Inadequate
thing sold. 2. Seller Remains in possession as lessee or
otherwise
Other person can exercise the right to repurchase 3. Upon or after the expiration of the right to
repurchase Another instrument extending the
The right to repurchase may be exercised by any person to period of redemption or granting a new period is
whom the right of repurchase may be transferred, or in executed
case of legal redemption, by the person so entitled by law 4. Purchaser Retains for himself a part of the
(Villanueva, 2009). purchase price
5. Seller binds himself to pay the Taxes on the thing
NOTE: Right to repurchase must be reserved at the time of sold
perfection of sale (Pineda, p. 333). 6. In any other case where the real intention of the
parties is that the transaction shall Secure the
Reservation of right to repurchase payment of a debt or the performance of any
other obligation.
The right to repurchase is reserved by a stipulation to that 7. Art. 1602 shall also apply to a contract
effect in the contract of sale. Because it is not a right purporting to be an Absolute sale (Art. 1604,
granted to the vendor by the vendee, but is a right NCC).
reserved by the vendor.
NOTE: In case of doubt in determining whether it is
Reservation CANNOT be made in an instrument different equitable mortgage or sale a retro (with right of
from that of the contract of sale. Once the instrument of repurchase); it shall be construed as equitable mortgage.
absolute sale is executed, and any right thereafter granted The remedy is reformation.
the vendor in a separate instrument cannot be a right of
repurchase but some other right like the option to buy in Inadequacy of price and Equitable Mortgage
the instant case (Villanueva, 2009).
Inadequacy of price does NOT constitute proof sufficient to
Parole Evidence in proving right of repurchase declare a contract as one of equitable mortgage. Mere
inadequacy of the price is not sufficient. The price must be
The right of repurchase may be proved by parole evidence grossly inadequate, or purely shocking to the conscience
when the contract of sale has been reduced in writing (Diaz, p. 186).
(Mactan Cebu International Airport Authority v. CA, G.R. No.
121506, October 30, 1996). Q: Spouses Ramos executed a Deed Of Sale under Pacto
De Retro over their conjugal house and lot in favor of
Susana Sarao. The contract granted the Ramos spouses

CIVIL LAW
the option to repurchase the property within six passed without respondent repurchasing the property.
months plus an interest of 4.5 percent a month. It was Petitioners registered the Deed of Sale executed by
further agreed that should the spouses fail to pay the Monte de Piedad in favor of respondent, as well as the
monthly interest or to exercise the right to repurchase Deed of Sale of the property executed by respondent in
within the stipulated period, the conveyance would be favor of petitioners. Notwithstanding this, respondent
deemed an absolute sale. In the succeeding months, failed to vacate the property. An ejectment case was
the wife Myrna Ramos tendered to Sarao payment in filed against respondent. Is the agreement a contract
the form of two managers checks, which the latter of sale or an equitable mortgage?
refused to accept for being allegedly insufficient.
Myrna filed a complaint for the redemption of the A: It is a contract of sale. The presumption of equitable
property. She deposited with the RTC two checks that mortgage created in Article 1602 of the Civil Code is not
Sarao refused to accept. Is the contract a Pacto De conclusive. It may be rebutted by competent and
Retro sale or an equitable mortgage? Decide. satisfactory proof of the contrary. In the case at bar, ample
evidence supports petitioners claim that the transaction
A: The contract shall be presumed to be an equitable between them and respondent was one of sale with option
mortgage, in any of the following cases: (1) When the price to repurchase. While after the sale of the property
of a sale with right to repurchase is unusually inadequate; respondent remained therein, her stay was not in the
(2) When the vendor remains in possession as lessee or concept of an owner. Contrary to respondents claim that
otherwise; (3) When upon or after the expiration of the after the sale of the property in 1987, the tax declarations
right to repurchase another instrument extending the remained in her name and she continued to pay realty
period of redemption or granting a new period is executed; taxes thereon, the record shows that the 1987 tax
(4) When the purchaser retains for himself a part of the declarations were in the names of Monte de Piedad and
purchase price; (5) When the vendor binds himself to pay petitioners (Spouses Cristobal, et. al v. Dizon, G.R. No.
the taxes on the thing sold; (6) In any other case where it 172771, Jan. 31, 2008).
may be fairly inferred that the real intention of the parties
is that the transaction shall secure the payment of a debt Q: Ceballos was able to borrow from Mercado certain
or the performance of any other obligation. (Article 1602, sum of money and as security, she executed a Deed of
New Civil Code) Furthermore, a contract purporting to be Real Estate Mortgage over the subject property. The
a pacto de retro is construed as an equitable mortgage said mortgage was not registered. Ceballos defaulted.
when the terms of the document and the surrounding Thereafter, a Deed of Absolute Sale was executed by
circumstances so require. The law discourages the use of Ceballos and her husband whereby the mortgaged
a pacto de retro, because this scheme is frequently used to property was sold to Mercado for the price of P16,
circumvent a contract known as a pactum 500.00. Ceballos offered to redeem the property from
commissorium. Jurisprudence has consistently declared Mercado for the price of P30, 000.00 but the latter's
that the presence of even just one of the circumstances set wife refused since the same was already transferred in
forth in the foregoing Civil Code provision suffices to their names by virtue of the Deed of Absolute Sale. As
convert a contract to an equitable mortgage. Article 1602 a consequence, Ceballos filed the case contending that
specifically states that the equitable presumption applies the Contract should be declared as an equitable
to any of the cases therein enumerated. In the present mortgage. Is the contention of Ceballos correct?
factual milieu, the vendor retained possession of the
property allegedly sold. Petitioner and her children A: No. The instances when a contract, regardless of its
continued to use it as their residence, even after Jonas nomenclature, may be presumed to be an equitable
Ramos had abandoned them. In fact, it remained as her mortgage are enumerated in Art. 1602 of the Civil Code.
address for the service of court orders and copies of Here, none of those circumstances were present. The
Respondent Saraos pleadings (Ramos v. Sarao, G.R. No. original transaction was a loan. Ceballos failed to pay the
149756, Feb. 11, 2005). loan; consequently, the parties entered into another
agreement the assailed, duly notarized Deed of Absolute
Q: Respondent Dizon mortgaged to Monte de Piedad a Sale, which superseded the loan document. Ceballos had
parcel of land including the two-storey apartment the burden of proving that she did not intend to sell the
built thereon to secure a loan. Respondent failed to property and that Mercado did not intend to buy it; and
settle the loan, drawing Monte de Piedad to foreclose that the new agreement did not embody the true intention
the mortgage, consolidate its ownership of the of the parties (Ceballos v. Intestate Estate of the Late
property, and register it in its name. Monte de Piedad Emigdio Mercado, G.R. No. 155856, May 28, 2004).
nevertheless gave respondent until May 28, 1987 to
purchase back the property. On the day of the Q: Eulalia was engaged in the business of buying and
expiration itself, one of the petitioners on behalf of selling large cattle. In order to secure the financial
respondent paid for the property. Monte de Piedad capital she advanced for her employees (biyaheros)
thereupon executed a deed of sale in favor of she required them to surrender TCT of their
respondent who, the following day, executed a deed of properties and to execute the corresponding Deeds of
sale in favor of petitioners. Also, respondent and Sale in her favor. Domeng Bandong was not required
petitioners executed an agreement giving respondent to post any security but when Eulalia discovered that
repurchase within three months from the date of this he incurred shortage in cattle procurement operation,
agreement. Failure to repurchase shall result to he was required to execute a deed of sale over a parcel
respondent vacating the premises and turn over of land in favor of Eulalia. She sold the property to her
possession thereof to petitioners. Three months grandniece Jocelyn who thereafter instituted an action

256
2015 GOLDEN NOTES
SALES
for ejectment against the Spouses Bandong. To assert in another contract upon
their right, Spouses Bandong filed an action for perfection
annulment of sale against Eulalia and Jocelyn alleging Does not need a separate Separate consideration is
that there was no sale intended but only equitable consideration to be valid and needed for it to be valid
mortgage for the purpose of securing the shortage effective and effective
incurred by Domeng in the amount of P70, 000.00 Period for an option
while employed as biyahero by Eulalia. Was the deed Redemption period cannot
right may exceed 10
of sale between Domeng and Eulalia a contract of sale exceed 10 years
years
or an equitable mortgage? Notice is required for its
exercise accompanied with
A: It is an equitable mortgage. In executing the said deed Only notice is required
tender of
of sale, Domeng and Eulalia never intended the transfer of payment/consignment
ownership of the subject property but to burden the same Its exercise results into
with an encumbrance to secure the indebtedness incurred Its exercise extinguishes a
the perfection of a
by Domeng on the occasion of his employment with existing contract of sale
contract of sale
Eulalia. The agreement between Dominador and Eulalia (Villanueva, 2009)
was not avoided in its entirety so as to prevent it from
producing any legal effect at all. Instead, the said Q: On May 19, 1951, the spouses-sellers executed a
transaction is an equitable mortgage, thereby merely public instrument of absolute sale in favor of the buyer
altering the relationship of the parties from seller and for a consideration which is sufficiently adequate. A
buyer, to mortgagor and mortgagee, while the subject few days thereafter, the buyers executed in favor of
property is not transferred but subjected to a lien in favor the sellers an option to buy within one year, the
of the latter (Sps. Raymundo, et al. v. Sps. Bandong, G.R. No. property subject of the absolute sale, which option was
171250, Jul. 4, 2007). extended for a month. Prior to the expiration of said
one-year period, the buyer sold said property to a
Effects when sale is adjudged as an equitable mortgage third person.
1. The apparent seller may ask for the reformation of the If the spouses-sellers would file an action for
instrument (Art. 1605, NCC). reformation of instrument where they seek
2. Money, fruit or other benefit to be received by the reformation of the absolute sale into one of equitable
buyer as rent or otherwise shall be considered as mortgage, will said action prosper?
interest (Art. 1602, NCC).
3. The court may decree that vendor pay his A: No, it will not prosper. If a seller has been granted
outstanding loan to the vendee (Banga v. Bello, G.R. merely an option to buy (not a right to repurchase) within
No. 156705, September 30, 2005). a certain period, and the price paid by the buyer is
4. A remand of the case to the trial court where the latter adequate, the sale is absolute and cannot be construed nor
did not pass upon the mortgagors claim that he had presumed to be one of equitable mortgage, even if the
paid his mortgage obligation, for the purpose of the period within which to exercise the option has been
determining whether said obligation has been paid, extended (Villarica, et. al. v. CA, G.R. L-19196, Nov. 29,
and if not, how much should still be paid (Banga v. 1968).
Bello, G.R. No. 156705, September 30, 2005).
NOTE: SC held that in this case, there was no sale a retro
Pactum Commissorium and that the right of repurchase is not a right granted the
seller by the buyer in a separate instrument. Such right is
A stipulation for automatic vesting of title over the security reserved by the vendor in the same instrument of the sale
in the creditor in case of debtors default (Villanueva, as one of the stipulations in the contract.
2009).
Also, once the instrument of absolute sale is executed, the
The creditor cannot appropriate the things given by way of seller can no longer reserve the right of repurchase and
pledge or mortgage or dispose of them, otherwise that any right thereafter granted the seller by the buyer cannot
would result in pactum commissorium. The proper be a right of repurchase but some other rights, like that of
remedy is foreclosure of the mortgage. If there is no an option to buy.
foreclosure, the debtors retains the ownership (Vasquez v.
CA, G.R. No. 144882, February 4, 2005). PERIOD OF REDEMPTION
REDEMPTION V. OPTION TO BUY Period of redemption
Redemption v. Option to Buy 1. No period agreed upon 4 years from date of contract
2. When there is agreement should not exceed 10
REDEMPTION OPTION TO BUY years; but if it exceeded, valid only for the first 10
Forms part of the contract of Principal and years.
sale preparatory contract 3. When period to redeem has expired & there has been
The right must be imbedded in May exist prior to or a previous suit on the nature of the contract seller
a contract of sale upon its after the perfection of still has 30 days from final judgment on the basis that
perfection the sale, or be imbedded contract was a sale with pacto de retro:

CIVIL LAW
Rationale: no redemption due to erroneous belief that EXERCISE OF THE RIGHT TO REDEEM
it is equitable mortgage which can be extinguished by
paying the loan. Obligations the vendor a retro if he desires to redeem
4. When period has expired & seller allowed the period The vendor a retro must pay or reimburse the vendee a
of redemption to expire seller is at fault for not retro the following:
having exercised his rights so should not be granted a 1. Price of the sale
new period 2. Expenses of the contract
3. Other legitimate expenses
NOTE: Tender of payment is sufficient but it is not in itself 4. Necessary and useful expenses (Pineda, 2010)
a payment that relieves the seller from his liability to pay
the redemption price. Written notice mandatory for the right of redemption
to commence
Running of period of redemption
Written notice is mandatory for the right of redemption to
1. Right of legal pre-emption or redemption shall be commence and the notice must be in writing stating the
exercised within 30 days from written notice by the execution of the sale and its particulars. It may be made in
buyer deed of sale not to be recorded in Registry of a private or public document (Pineda, p. 400).
Property unless accompanied by affidavit that buyer
has given notice to redemptioners Prescribed form for an offer to redeem
2. When there is actual knowledge, no need to give There is no prescribed form for an offer to redeem to be
written notice; period of redemption begins to run properly effected. Hence, it can either be through a formal
from actual knowledge tender with consignation of the redemption price within
the prescribed period. What is paramount is the availment
Extension of the time to redeem of the fixed and definite period within which to exercise
the right of legal redemption.
Parties may extend the period to redeem as long as the
total period shall not exceed ten years. However, such NOTE: Art. 1623 does not prescribe any distinctive
extension can only be granted when the original period method for notifying the redemptioner.
has not yet expired. Otherwise, there exists only a promise
to sell on the buyers part (Pineda, 2010). Tender of payment NOT necessary for redemption to
take effect
Q: Adela and Beth are co-owners of a parcel of land.
Beth sold her undivided share of the property to Tender of payment is not necessary; offer to redeem is
Xandro, who promptly notified Adela of the sale and enough.
furnished the latter a copy of the deed of absolute sale.
When Xandro presented the deed for registration, the Effect of failure to redeem
register of deeds also notified Adela of the sale,
enclosing a copy of the deed with the notice. There must be judicial order before ownership of real
However, Adela ignored the notices. A year later, property is consolidated to the buyer a retro.
Xandro filed a petition for the partition of the
property. Upon receipt of summons, Adela Vendor a retro CANNOT be compelled to redeem
immediately tendered the requisite amount for the
redemption. Xandro contends that Adela lost her right There is no obligation on the part of the vendor a retro to
of redemption after the expiration of 30 days from her repurchase. He may or may not exercise the right to
receipt of the notice of the sale given by him. May Adela repurchase (Pineda, 2010).
still exercise her right of redemption? Explain. (2001,
2002) Trust de son tort
A: Adela can no longer exercise her right of redemption. It is a trust created by the purchase or redemption of
As co-owner, she had only 30 days from the time she property by one other than the person lawfully entitled to
received written notice of the sale which in this case took do so and in fraud of the other.
the form of a copy of the deed of sale being given to her
(Conejero v. CA, 16 SCRA 775 [1966]). The law does not Constructive trusts does NOT arise only out of fraud or
prescribe any particular form of written notice, nor any duress
distinctive method for notifying the redemptioner
(Etcuban v. CA, 148 SCRA 507 [1987]). So long as the A constructive trust, otherwise known as a trust ex
redemptioner was informed in writing, he has no cause maleficio, a trust ex delicto, a trust de son tort, an
to complain (Distrito v. CA, 197 SCRA 606, 609 [1991]). In involuntary trust, or an implied trust, is a trust by
fact, in Distrito, a written notice was held unnecessary operation of law which arises contrary to intention and in
where the co-owner had actual knowledge of the sale, invitum, against one who, by fraud, actual or constructive,
having acted as middleman and being present when the by duress or abuse of confidence, by commission of wrong,
vendor signed the deed of sale. or by any form of unconscionable conduct, artifice,

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2015 GOLDEN NOTES
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concealment, or questionable means, or who in any way The right of legal redemption shall not be exercised except
against equity and good conscience, either has obtained or within 30 days from the notice in writing by the
holds the legal right to property which he ought not, in prospective seller, or seller, as the case may be. The deed
equity and good conscience, hold and enjoy. It has been of sale shall not be recorded in the Registry of Property
broadly ruled that a breach of confidence, although in unless accompanied by an affidavit of the seller that he has
business or social relations, rendering an acquisition or given written notice thereof to all possible redemptioners
retention of property by one person unconscionable (Art. 1623, NCC).
against another, raises a constructive trust. It is raised by
equity in respect of property, which has been acquired by Written notice indispensable
fraud, or where, although acquired originally without fraud,
it is against equity that it should be retained by the person The right of legal pre-emption or redemption shall not be
holding it (Arlegui v. CA G.R. No. 126437, Mar. 6, 2002). exercised except within thirty days from the notice in
writing by the prospective vendor, or by the vendor, as the
A constructive trust is substantially an appropriate remedy case may be (Art. 1623, NCC).
against unjust enrichment. It is raised by equity in respect
of property, which has been acquired by fraud, or where, NOTE: Knowledge is insufficient the mere fact that the
although acquired originally without fraud, it is against redemptioner the person who has the right to redeem
equity that it should be retained by the person holding it." is already aware of the existence of the sale will not excuse
(76 Am. Jur. 2d, Sec. 222, p. 447 cited in Arlegui v. CA G.R. No. the written notice. Mere knowledge does not satisfy the
126437, Mar. 6, 2002). requirement; there must still be written notice despite
such knowledge (Barcellano v. Banas, et al., G.R. No.
LEGAL REDEMPTION 165287, September 14, 2011).
Legal redemption Pre-emption
It is also referred to as retracto legal, it is the right to be Redemption presupposes that the property was already
subrogated upon the same terms and conditions stipulated sold or transferred to another. In pre-emption, the right is
in the contract, in the place of one who acquires the thing present before the sale; there is a right to purchase ahead
by purchase or by dation in payment or by other of or before it can be sold or transferred to other persons.
transaction whereby ownership is transmitted by onerous
title. Example: Whenever a piece of urban land which is so small
and so situated that a major portion thereof cannot be
Instances of legal redemption used for any practical purpose within a reasonable time,
having been bought merely for speculation, is about to be
1. Sale of a co-owner of his share to a stranger (Art. re-sold, the owner of any adjoining land has a right of pre-
1620, NCC) emption at a reasonable price (Art. 1620, NCC).
2. When a credit or other incorporeal right in litigation
is sold (Art. 1634, NCC) THE SUBDIVISION AND CONDOMINIUM BUYERS
3. Sale of an heir of his hereditary rights to a stranger PROTECTIVE DECREE (P.D. 957)
(Art. 1088, NCC)
4. Sale of adjacent rural lands not exceeding 1 hectare Purpose
(Art. 1621, NCC)
5. Sale of adjacent small urban lands bought merely for To afford its inhabitants the requirements of a decent
speculation (Art. 1622, NCC) human settlement and to provide them with ample
opportunities for improving their quality of life (De Leon,
Other instances when the right of legal redemption is 2011).
also granted
National Housing Authority (NHA)
1. Redemption of homesteads
2. Redemption in tax sales It shall have exclusive jurisdiction to regulate real estate
3. Redemption by judgment debtor trade and business in accordance with the provisions of
4. Redemption in extrajudicial foreclosure this decree (P.D. 957, Sec. 3).
5. Redemption in judicial foreclosure of mortgage
Q: Are sales or dispositions of subdivision lots or
Basis of legal redemption condominium units prior to the effectivity of the
decree exempt from compliance with the
It is created partly for reason of public policy and partly requirements stated therein?
for the benefit and convenience of the redemptioner to
afford him a way out of what might be a disagreeable or A: No. It shall be incumbent upon the owner or developer
inconvenient association into which he has been in trust. It of the subdivision or condominium project to complete
is intended to minimize co-ownership (Pineda, 2010). compliance with his or its obligations as provided in the
decree within two years from the date of effectivity of the
Running of period of legal redemption Decree, unless otherwise extended by the Authority or
unless an adequate performance bond is filed.

CIVIL LAW
NOTE: Failure of the owner or developer to comply with
the obligations under this and the preceding provisions Condominium unit
shall constitute a violation punishable under Sections 38
and 39 of the Decree. A part of the condominium project intended for any type of
independent use or ownership, including one or more
Sale or Sell defined under the Decree rooms or spaces located in one or more floors (or part of
parts of floors) in a building or buildings and such
It shall include: accessories as may be appended thereto.
1. Every disposition, or attempt to dispose, for a
valuable consideration, of a subdivision lot, Definition of Terms
including the building and other improvements
thereof, if any, in a subdivision project or a a. Owner - Registered owner of the land subject of a
condominium unit in a condominium project; subdivision or a condominium project.
2. contract to sell; b. Developer - person who develops or improves the
3. contract of purchase and sale; subdivision project or condominium project for and
4. exchange; in behalf of the owner thereof.
5. attempt to sell; c. Dealer - any person directly engaged as principal in
6. option of sale or purchase; the business of buying, selling or exchanging real
7. solicitation of a sale; estate whether on a full-time or part-time basis.
8. offer to sell, directly or by an agent, or by a d. Broker - any person who, for commission or other
circular, letter, advertisement or otherwise; and compensation, undertakes to sell or negotiate the
9. a. privilege given to a member of a cooperative, sale of a real estate belonging to another.
corporation, partnership, or any association e. Salesman - person regularly employed by a broker
and/or to perform, for and in his behalf, any or all functions
b. the issuance of a certificate or receipt of a real estate broker.
evidencing or giving the right of participation in,
or right to, any land in consideration of Procedure for converting of a parcel of land into a
payment of the membership fee or dues. (Deemed subdivision or condominium project by the Registered
sale) Owner
Buy and purchase defined under the Decree He shall:

1. Submit his subdivision plan to the Authority
It shall include any contract to buy, purchase, or otherwise which shall act upon and approve the same, upon
acquire for a valuable consideration a subdivision lot, a finding that the plan complies with the
including the building and other improvements, if any, in a Subdivision Standards' and Regulations
subdivision project or a condominium unit in a enforceable at the time the plan is submitted.
condominium project. 2. If the conversion desired involves a
condominium project, the same procedure shall
Subdivision project be followed except that, in addition, the NHA
shall act upon and approve the plan with respect
A tract or a parcel of land registered under Act No. 496 to the building or buildings included in the
which is partitioned primarily for residential purposes into condominium project in accordance with the
individual lots with or without improvements thereon, and National Building Code (R.A. No. 6541).
offered to the public for sale, in cash or in installment 3. The subdivision plan, as so approved, shall then
terms. be submitted to the Director of Lands for
approval.
NOTE: It shall include all residential, commercial, 4. In case of complex subdivision plans, court
industrial and recreational areas as well as open spaces approval shall no longer be required.
and other community and public areas in the project. 5. The condominium plan as likewise so approved,
shall be submitted to the Register of Deeds of the
Subdivision lot province or city in which the property lies and
the same shall be acted upon subject to the
Any of the lots, whether residential, commercial, industrial, conditions and in accordance with the procedure
or recreational, in a subdivision project. prescribed in Section 4 of the Condominium Act
(R.A. No. 4726).
Complex subdivision plan
Q: The owner or the real estate dealer interested in the
A subdivision plan of a registered land wherein a street, sale of lots or units, respectively, in such subdivision
passageway or open space is delineated on the plan. project or condominium project shall register the
project with the Authority by filing a sworn
Condominium project registration statement. What shall be contained in the
sworn registration statement?
The entire parcel of real property divided or to be divided
primarily for residential purposes into condominium units, A:
including all structures thereon. (a) Name of the owner

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(b) The location of the owner's principal business office,
and if the owner is a non-resident Filipino, the name License to sell and performance bond NOT required in
and address of his agent or representative in the all subdivision and condominium projects
Philippines is authorized to receive notice
(c) The names and addresses of all the directors and The following transactions are exempt from said
officers of the business firm, if the owner be a requirements:
corporation, association, trust, or other entity, and of 1. Sale of a subdivision lot resulting from the
all the partners, if it be a partnership partition of land among co-owners and co-heirs.
(d) The general character of the business actually 2. Sale or transfer of a subdivision lot by the
transacted or to be transacted by the owner original purchaser thereof and any subsequent
(e) A statement of the capitalization of the owner, sale of the same lot.
including the authorized and outstanding amounts of 3. Sale of a subdivision lot or a condominium unit
its capital stock and the proportion thereof which is by or for the account of a mortgagee in the
paid-up. ordinary course of business when necessary to
liquidate a bona fide debt.
Q: Part of the required documentary attachments to
the application is a certificate of title to the property Suspension of a license to sell
which is free from all liens and encumbrances. Does 1. Upon verified complaint by a buyer of a subdivision
this bar an owner of mortgaged property from lot or a condominium unit in any interested party, the
engaging in subdivision or condominium project while Authority may, in its discretion, immediately suspend
the mortgage is in force? the owner's or dealer's license to sell pending
investigation and hearing of the case.
A: No. In case any subdivision lot or condominium unit is 2. The NHA may motu proprio suspend the license to sell
mortgaged, it is sufficient if the instrument of mortgage if, in its opinion, any information in the registration
contains a stipulation that the mortgagee shall release the statement filed by the owner or dealer is or has
mortgage on any subdivision lot or condominium unit as become misleading, incorrect, inadequate or
soon as the full purchase price for the same is paid by the incomplete or the sale or offering for a sale of the
buyer. subdivision or condominium project may work or
tend to work a fraud upon prospective buyers.
Q: When is a subdivision or condominium project
deemed to be registered? Revocation of license to sell or registration of a
subdivision or condominium project
A: Upon completion of the publication requirement
The Authority may, motu proprio or upon verified
NOTE: The fact of such registration shall be evidenced by a complaint filed by a buyer of a subdivision lot or
registration certificate to be issued to the applicant-owner condominium unit, revoke the registration of any
or dealer. subdivision project or condominium project and the
license to sell any subdivision lot or condominium unit in
Q: After issuance of the registration certificate, may said project by issuing an order to this effect, with his
the owner or dealer already sell subdivision lots or findings in respect thereto, if upon examination into the
condominium units? affairs of the owner or dealer during a hearing, it shall
appear there is satisfactory evidence that the said owner
A: No. He must first obtain a license to sell the project or dealer:
within two weeks from the registration of such project. 1. is insolvent; or
2. has violated any of the provisions of this Decree
Issuance of license to sell or any applicable rule or regulation of the
Authority, or any undertaking of his/its
After an examination of the registration statement filed by performance bond; or
said owner or dealer and all the pertinent documents 3. has been or is engaged or is about to engage in
attached thereto, the Authority is convinced that the fraudulent transactions; or
owner or dealer is of good repute, that his business is 4. has made any misrepresentation in any
financially stable, and that the proposed sale of the prospectus, brochure, circular or other literature
subdivision lots or condominium units to the public would about the subdivision project or condominium
not be fraudulent. project that has been distributed to prospective
buyers; or
Purpose of the requirement of posting of a 5. is of bad business repute; or
performance bonds before a license to sell may be 6. does not conduct his business in accordance with
issued law or sound business principles.
It is to guarantee the construction and maintenance of the NOTE: Where the owner or dealer is a partnership or
roads, gutters, drainage, sewerage, water system, lighting corporation or an unincorporated association, it shall be
systems, and full development of the subdivision project or sufficient cause for cancellation of its registration
the condominium project and the compliance by the owner certificate and its license to sell, if any member of such
or dealer with the applicable laws and rules and partnership or any officer or director of such corporation
regulations. or association has been guilty of any act or omission which

CIVIL LAW
would be cause for refusing or revoking the registration of Q: Within what period must the owner or developer
an individual dealer, broker or salesman. construct and provide the facilities, improvements,
infrastructures and other forms of development,
Duration of the registration of dealers, brokers and including water supply and lighting facilities, which
salesmen are offered and indicated in the approved subdivision
or condominium plans, brochures, prospectus, printed
On the thirty-first day of December of each year. However, matters, letters or in any form of advertisement?
in the case of salesmen, their registration shall also cease
upon termination of their employment with a dealer or A:
broker. GR: Within one year from the date of the issuance of the
license for the subdivision or condominium project
NOTE: Renewal of registration for the succeeding year
shall be granted upon written application therefore made XPN: Such other period of time as may be fixed by the
not less than thirty nor more than sixty days before the Authority.
first day of the ensuing year and upon payment of the
prescribed fee, without the necessity of filing further Registration needed after the execution of a contract
statements or information, unless specifically required by to sell relevant to the sale or conveyance of
the Authority. subdivision lots and condominium units
All applications filed beyond said period shall be treated as All contracts to sell, deeds of sale and other similar
original applications. instruments relative to the sale or conveyance of the
subdivision lots and condominium units, whether or not
Grounds for refusal or revocation of registration as the purchase price is paid in full, shall be registered by the
dealers, brokers or salesmen seller in the Office of the Register of Deeds of the province
or city where the property is situated.
Such registration may be refused or revoked by the NHA if,
after reasonable notice and hearing, it shall determine that Mortgage CANNOT be made by the owner or developer
such applicant or registrant has: without permission
1. violated any provision of this Decree or any rule
or regulation made hereunder; or There must be prior written approval of the Authority.
2. made a material false statement in his application
for registration; or When approval by the Authority is given
3. been guilty of a fraudulent act in connection with
any sale of a subdivision lot or condominium When it is shown that the proceeds of the mortgage loan
unit; or shall be used for the development of the condominium or
4. demonstrated his unworthiness to transact the subdivision project and effective measures have been
business of dealer, broker, or salesman, as the provided to ensure such utilization.
case may be.
Rule if the owner desires to make alterations in the
NOTE: The suspension or revocation of the registration of approved subdivision plan
a dealer or broker shall carry with it all the suspension or
revocation of the registration of all his salesmen. GR: No owner or developer shall change or alter the roads,
open spaces, infrastructures, facilities for public use
Warranties attached to advertisements made by the and/or other form of subdivision development as
owner or developer contained in the approved subdivision plan and/or
represented in its advertisements
1. Advertisements that may be made through
newspaper, radio, television, leaflets, circulars or any XPN: If he has obtained the permission of the Authority
other form about the subdivision or the condominium and the written conformity or consent of the duly
or its operations or activities must reflect the real organized homeowners association, or in the absence of
facts and must be presented in such manner that will the latter, by the majority of the lot buyers in the
not tend to mislead or deceive the public. subdivision.
2. The owner or developer shall answerable and liable
for the facilities, improvements, infrastructures or Q: May payment made by a buyer be forfeited in favor
other forms of development represented or promised of the owner or developer in case the buyer desists
in brochures, advertisements and other sales from further payment due to the failure of the owner
propaganda disseminated by the owner or developer or developer to develop the subdivision or
or his agents and the same shall form part of the sales condominium project according to the approved plan
warranties enforceable against said owner or within the time limit provided for such? What is the
developer, jointly and severally. buyers remedy in this case?
NOTE: Failure to comply with these warranties shall also A: No, such forfeiture is not allowed. Such buyer may, at
be punishable in accordance with the penalties provided his option, be reimbursed the total amount paid including
for in this Decree. amortization interests but excluding delinquency interests,
with interest thereon at the legal rate.

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2015 GOLDEN NOTES
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Where the transaction or contract was entered into prior
Defaulting buyers have rights under the Decree to the effectivity of Republic Act No. 6552, the defaulting
buyer shall be entitled to the corresponding refund based
The rights of the buyer in the event of this failure to pay on the installments paid after the effectivity of the law in
the installments due for reasons other than the failure of the absence of any provision in the contract to the contrary
the owner or developer to develop the project shall be (Sec. 24, P.D. 957).
governed by Republic Act No. 6552.
Take-Over Development
Where the transaction or contract was entered into prior
to the effectivity of Republic Act No. 6552 on August 26, The NHA may take over or cause the development and
1972, the defaulting buyer shall be entitled to the completion of the subdivision or condominium project at
corresponding refund based on the installments paid after the expenses of the owner or developer, jointly and
the effectivity of the law in the absence of any provision in severally, in cases where the owner or developer has
the contract to the contrary. refused or failed to develop or complete the development
of the project as provided for in the Decree.
Owner or developers obligation in case the lot bought
and fully-paid by the buyer is mortgaged NOTE: The Authority may, after such take-over, demand,
collect and receive from the buyers the installment
In the event a mortgage over the lot or unit is outstanding payments due on the lots, which shall be utilized for the
at the time of the issuance of the title to the buyer, the development of the subdivision.
owner or developer shall redeem the mortgage or the
corresponding portion thereof within six months from Q: Ernesto Marcelo sold the lot where the water tank
such issuance in order that the title over any fully paid lot of the subdivision, Happy Glen Loop, is located for
or unit may be secured and delivered to the buyer in almost 30 years to Hermogenes Liwag, president of the
accordance herewith. Homeowners association of the said subdivision. Is
the sale of the lot where the water tank was located
Parties CANNOT waive compliance with the decree valid?
Any condition, stipulation, or provision in contract of sale A: The basic statutory construction principle of ejusdem
whereby any person waives compliance with any generis states that where a general word or phrase follows
provision of the Decree or of any rule or regulation issued an enumeration of particular and specific words of the
thereunder shall be void. same class, the general word or phrase is to be construed
to include or to be restricted to things akin to or
Instance when there will be non-forfeiture of resembling, or of the same kind or class as, those
installment payments paid by the buyer specifically mentioned.
No installment payment shall be forfeited in favor of the Here, the water facility was undoubtedly established for
owner or developer when the buyer, after due notice to the the benefit of the community. Water is a basic need in
owner or developer, desists from further payment due to human settlements, without which the community would
the failure of the owner or developer to develop the not survive. We therefore rule that, based on the principle
subdivision or condominium project according to the of ejusdem generis and taking into consideration the
approved plans and within the time limit for complying intention of the law to create and maintain a healthy
with the same (Sec. 23, P.D. 957). environment in human settlements, the location of the
water facility in the Subdivision must form part of the area
Remedy of the buyer in case of non-compliance by the reserved for open space.
owner or developer of the approved plans within the
time limit The law expressly provides that open spaces in
subdivisions are reserved for public use and are beyond
Such buyer may, at his option, be reimbursed the total the commerce of man. As such, these open spaces are not
amount paid including amortization interests but susceptible of private ownership and appropriation. The
excluding delinquency interests, with interest thereon at sale of the subject parcel of land by the subdivision
the legal rate (Sec. 23, P.D. 957). owner or developer to Hermogenes was contrary to
law (Liwag v. Happy Glen Loop Homeowners Association,
Notice NOT required in the demand of refund Inc., G.R. No. 189755, July 4, 2012).
Section 23 of P.D. 957 does not require that a notice be THE CONDOMINIUM ACT (RA 4726)
given first by the buyer to the seller before a demand for
refund can be made as the notice and demand can be made Condominium
in the same letter or communication (Villanueva, 2009).
It is an interest in real property consisting of separate
Rights of the buyer in case he defaults in his interest in a unit in a residential, industrial or commercial
installment payment due to causes other than the building and an undivided interest in common, directly or
failure of the owner or developer to develop the indirectly, in the land on which it is located and in other
project common areas of the building.

CIVIL LAW
It may include, in addition, a separate interest in other the appurtenant membership or stockholding in the
portions of such real property (R.A. 4726, Sec. 2). corporation will cause the alien interest in such
corporation to exceed the limits imposed by existing
Real right in condominium laws.
The real right in condominium may be ownership or any NOTE: Under Republic Act (R.A.) No. 4726, otherwise
other interest in real property recognized by law, on known as the Condominium Act, foreign nationals can own
property in the Civil Code and other pertinent laws. Philippine real estate through the purchase of
condominium units or townhouses constituted under the
Condominium unit Condominium principle with Condominium Certificates of
Title. The law provides that no condominium unit can be
It is a part of the condominium project intended for any sold without at the same time selling the corresponding
type of independent use or ownership, including one or amount of rights, shares or other interests in the
more rooms or spaces located in one or more floors (or condominium management body, the Condominium
part or parts of floors) in a building or buildings and such Corporation; and no one can buy shares in a Condominium
accessories as may be appended thereto. Corporation without at the same time buying a
condominium unit. It expressly allows foreigners to
Condominium project acquire condominium units and shares in condominium
corporations up to not more than 40% of the total and
It is the entire parcel of real property divided or to be outstanding capital stock of a Filipino-owned or controlled
divided in condominiums, including all structures thereon, corporation. Under this set up, the ownership of the land is
legally separated from the unit itself (Hulst v. PR Builders,
Common areas Inc., G.R. No. 156364, September 25, 2008).
The entire project excepting all units separately granted or Incidents of a condominium grant
held or reserved.
Unless otherwise expressly provided in the enabling or
To divide real property master deed or the declaration of restrictions, the
incidents of a condominium grant are as follows:
To divide the ownership thereof or other interest therein
is by conveying one or more condominiums therein but 1. The boundary of the unit granted are the interior
less than the whole thereof. surfaces of the perimeter walls, floors, ceilings,
windows and doors thereof.
Rule as regards acquisition of ownership over
common areas NOTE: The following are not part of the unit
bearing walls, columns, floors, roofs, foundations
Transfer or conveyance of a unit or apartment, office or and other common structural elements of the
store or other space therein shall include the transfer or building:
conveyance of the undivided interests in the common
areas or, in a proper case, the membership or a. lobbies, stairways, hallways, and other
shareholdings in the condominium corporation areas of common use,
b. elevator equipment and shafts, central
Restrictions as regards ownership of condominium heating,
units provided under the Condominium Act c. central refrigeration and central air-
conditioning equipment,
1. As regards individuals: d. reservoirs, tanks, pumps and other central
services and facilities,
GR: None. e. pipes, ducts, flues, chutes, conduits, wires
and other utility installations, wherever
XPN: where the common areas in the condominium located, except the outlets thereof when
project are owned by the owners of separate units as located within the unit.
co-owners thereof, no condominium unit therein shall
be conveyed or transferred to persons other than: 2. There shall pass with the unit, as an appurtenance
1. Filipino citizens, or thereof, an exclusive easement for the use of the air
2. Corporations at least sixty percent of the capital space encompassed by the boundaries of the unit as
stock of which belong to Filipino citizens it exists at any particular time and as the unit may
lawfully be altered or reconstructed from time to
XPN to the XPN: in cases of hereditary time.
succession.
NOTE: Such easement shall be automatically
2. As regards corporations: terminated in any air space upon destruction of
the unit as to render it untenantable.
Where the common areas in a condominium project
are held by a corporation, no transfer or conveyance
of a unit shall be valid if the concomitant transfer of

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3. Common areas are held in common by the holders of percent interest in the common areas are
units, in equal shares, one for each unit, unless opposed to continuation of the condominium
otherwise provided. regime after expropriation or condemnation of a
material portion thereof; or
4. A non-exclusive easement for ingress, egress and 5. the conditions for such partition by sale set forth
support through the common areas is appurtenant to in the declaration of restrictions, duly registered
each unit and the common areas are subject to such in accordance with the terms of the Act, have
easements. been met.
5. Each condominium owner shall have the exclusive Requirements before a property be considered
right to paint, repaint, tile, wax, paper or otherwise divided or to be divided into condominiums
refinish and decorate the inner surfaces of the walls,
ceilings, floors, windows and doors bounding his own An enabling or master deed must be recorded in the
unit. Register of Deeds of the province or city in which the
property lies and duly annotated in the corresponding
6. Each condominium owner shall have the exclusive certificate of the title of the land, if the latter has been
right to mortgage, pledge or encumber his patented or registered under either the Land Registration
condominium and to have the same appraised or Cadastral Acts (Sec. 4, R.A. 4726).
independently of the other condominiums but any
obligation incurred by such condominium owner is Contents of enabling or master deed
personal to him.
1. Description of the land on which the building or
7. GR: Each condominium owner has also the absolute buildings and improvements are or are to be located;
right to sell or dispose of his condominium. 2. Description of the building or buildings, stating the
number of stories and basements, the number of units
XPN: If the master deed contains a requirement that and their accessories, if any;
the property be first offered to the condominium 3. Description of the common areas and facilities;
owners within a reasonable period of time before the 4. A statement of the exact nature of the interest
same is offered to outside parties; acquired or to be acquired by the purchaser in the
separate units and in the common areas of the
Division of common areas through judicial partition condominium project. Where title to or the
appurtenant interests in the common areas are or are
GR: Common areas shall remain undivided, and there shall to be held by a condominium corporation, a statement
be no judicial partition thereof. to this effect shall be included;
5. Statement of the purposes for which the building or
XPN: Where several persons own condominiums in a buildings and each of the units are intended or
condominium project, an action may be brought by one or restricted as to use;
more such persons for partition thereof by sale of the 6. A certificate of the registered owner of the property, if
entire project, as if the owners of all of the condominiums he is other than those executing the master deed, as
in such project were co-owners of the entire project in the well as of all registered holders of any lien or
same proportion as their interests in the common areas: encumbrance on the property, that they consent to
the registration of the deed;
NOTE: However, a partition shall be made only upon a 7. The following plans shall be appended to the deed as
showing that: integral parts thereof:
1. three years after damage or destruction to the a. A survey plan of the land included in the project,
project which renders material part thereof unit unless a survey plan of the same property had
for its use prior thereto, the project has not been previously been filed in said office;
rebuilt or repaired substantially to its state prior b. A diagrammatic floor plan of the building or
to its damage or destruction, or buildings in the project, in sufficient detail to
2. damage or destruction to the project has identify each unit, its relative location and
rendered one-half or more of the units therein approximate dimensions;
untenantable and that condominium owners 8. Any reasonable restriction not contrary to law,
holding in aggregate more than thirty percent morals or public policy regarding the right of any
interest in the common areas are opposed to condominium owner to alienate or dispose of his
repair or restoration of the project; or condominium.
3. the project has been in existence in excess of fifty
years, that it is obsolete and uneconomic, and NOTE: The enabling or master deed may be amended or
that condominium owners holding in aggregate revoked upon registration of an instrument executed by
more than fifty percent interest in the common the registered owner or owners of the property and
areas are opposed to repair or restoration or consented to by all registered holders of any lien or
remodelling or modernizing of the project; or encumbrance on the land or building or portion thereof.
4. the project or a material part thereof has been The term registered owner shall include the registered
condemned or expropriated and that the project owners of condominiums in the project. Until registration
is no longer viable, or that the condominium of a revocation, the provisions of RA. No. 4726 shall
owners holding in aggregate more than seventy continue to apply to such property (Sec. 4, R.A. 4726).

CIVIL LAW
for bonding of the members of any
Rule regarding issuance of certificate of title where the management body;
enabling or master deed provides that the land c. Provisions for maintenance, utility,
included within a condominium project are to be gardening and other services benefiting the
owned in common by the condominium owners common areas, for the employment of
therein personnel necessary for the operation of the
building, and legal, accounting and other
The Register of Deeds may, at the request of all the professional and technical services;
condominium owners and upon surrender of all their d. For purchase of materials, supplies and the
"condominium owner's" copies, cancel the certificates of like needed by the common areas;
title of the property and issue a new one in the name of e. For payment of taxes and special
said condominium owners as pro-indiviso co-owners assessments which would be a lien upon the
thereof. entire project or common areas, and for
discharge of any lien or encumbrance levied
Construction of deeds, declarations or plans for a against the entire project or the common
condominium project areas;
f. For reconstruction of any portion or
1. Liberally, to facilitate the operation of the project portions of any damage to or destruction of
2. Provisions shall be presumed to be independent and the project;
severable. g. The manner for delegation of its powers;
h. For entry by its officers and agents into any
Registration of declaration of restrictions and its effect unit when necessary in connection with the
maintenance or construction for which such
The owner of a project shall, prior to the conveyance of body is responsible;
any condominium therein, register a declaration of i. For a power of attorney to the management
restrictions relating to such project. body to sell the entire project for the benefit
of all of the owners thereof when partition of
Such restrictions shall constitute a lien upon each the project may be authorized under Section
condominium in the project, and shall insure to and bind 8 of the Condominium Act, which said power
all condominium owners in the project. shall be binding upon all of the
condominium owners regardless of whether
NOTE: Such liens, unless otherwise provided, may be they assume the obligations of the
enforced by any condominium owner in the project or by restrictions or not.
the management body of such project. 2. The manner and procedure for amending such
restrictions: Provided, that the vote of not less
Mandatory provisions of declaration of restrictions than a majority in interest of the owners is
obtained.
The declaration of restrictions shall provide for the 3. For independent audit of the accounts of the
management of the project by anyone of the following management body;
management bodies: 4. For reasonable assessments to meet authorized
1. a condominium corporation, expenditures, each condominium unit to be
2. an association of the condominium owners, assessed separately for its share of such expenses
3. a board of governors elected by condominium in proportion (unless otherwise provided) to its
owners, or owners fractional interest in any common areas;
4. a management agent elected by the owners or by 5. For the subordination of the liens securing such
the board named in the declaration. assessments to other liens either generally or
5. voting majorities, specifically described;
6. quorums, 6. For conditions, other than those provided for in
7. notices, Sections 8 and 13 of the Act, upon which partition
8. meeting date, and of the project and dissolution of the
9. other rules governing such body or bodies. condominium corporation may be made.
Other provisions of declaration of restrictions NOTE: Such right to partition or dissolution may
be conditioned upon:
Such declaration of restrictions, among other things, may a. failure of the condominium owners to
also provide: rebuild within a certain period;
1. As to any such management body; b. specified inadequacy of insurance proceeds;
a. For the powers thereof, including power to c. specified percentage of damage to the
enforce the provisions of the declarations of building;
restrictions; d. a decision of an arbitrator; or
b. For maintenance of insurance policies, e. upon any other reasonable condition.
insuring condominium owners against loss
by fire, casualty, liability, workmen's
compensation and other insurable risks, and

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Duty of the Register of Deeds as regards this Rules regarding membership in a condominium
declaration of restrictions corporation
The Register of Deeds shall enter and annotate the Membership in a condominium corporation, regardless of
declaration of restrictions upon the certificate of title whether it is a stock or non-stock corporation, shall not be
covering the land included within the project, if the land is transferable separately from the condominium unit of
patented or registered under the Land Registration or which it is an appurtenance.
Cadastral Acts.
NOTE: When a member or stockholder ceases to own a
Restrictions imposed by the law upon corporations unit in the project in which the condominium corporation
which is also the management body of the owns or holds the common areas, he shall automatically
condominium project cease to be a member or stockholder of the condominium
corporation.
The restrictions are as follows:
1. The corporate purposes of such a corporation Q: May a condominium corporation sell, exchange,
shall be limited to the: lease or otherwise dispose of the common areas
a. holding of the common areas, either in owned or held by it in the condominium project?
ownership or any other interest in real
property recognized by law, A:
b. management of the project, and GR: During its existence, it cannot do so.
c. to such other purposes as may be necessary,
incidental or convenient to the XPN: If authorized by the affirmative vote of all the
accomplishment of said purposes. stockholders or members.
2. The articles of incorporation or by-laws of the
corporation shall not contain any provision Q: Is the so called appraisal right under the
contrary to or inconsistent with the: Corporation Code available to stockholders or
a. provisions of the Act; members of a condominium corporation?
b. enabling or master deed; or
c. declaration of restrictions of the project. A:
GR: It is not available. The law provides that the by-laws
Q: May the management body acquire and hold, for the of a condominium corporation shall provide that a
benefit of the condominium owners, tangible and stockholder or member shall not be entitled to demand
intangible personal property and dispose of the same payment of his shares or interest in those cases where
by sale or otherwise? such right is granted under the Corporation Law xxx
A: Yes, unless otherwise provided for by the declaration of XPN: If said stockholder or member consents to sell his
restrictions. separate interest in the project to the corporation or to any
purchaser of the corporation's choice who shall also buy
NOTE: The beneficial interest in such personal property from the corporation the dissenting member or
shall be owned by the condominium owners in the same stockholder's interest.
proportion as their respective interests in the common
areas. NOTE: In case of disagreement as to price, the
procedure set forth in the appropriate provision of the
A transfer of a condominium shall transfer to the Corporation Law for valuation of shares shall be
transferee ownership of the transferor's beneficial interest followed.
in such personal property.
The corporation shall have two years within which to
Condominium corporation pay for the shares or furnish a purchaser of its choice
from the time of award.
A corporation specially formed for the purpose, in which
the holders of separate interest shall automatically be All expenses incurred in the liquidation of the interest
members or shareholders, to the exclusion of others, in of the dissenting member or stockholder shall be borne
proportion to the appurtenant interest of their respective by him.
units in the common areas.
Effect of involuntary dissolution of a condominium
NOTE: As regards title to the common areas, including the corporation for any of the causes provided by law
land, or the appurtenant interests in such areas, these may
be held by a condominium corporation. 1. The common areas owned or held by the corporation
shall, by way of liquidation, be transferred pro-indiviso
Term of a condominium corporation and in proportion to their interest in the corporation
to the members or stockholders thereof, subject to the
Co-terminous with the duration of the condominium superior rights of the corporation creditors.
project, the provisions of the Corporation Law to the
contrary notwithstanding.

CIVIL LAW
NOTE: Such transfer or conveyance shall be deemed Dissolution of a condominium corporation by the
to be a full liquidation of the interest of such members members or stockholders of such corporation
or stockholders in the corporation.
A condominium corporation may be dissolved by the
2. After such transfer or conveyance, the provisions of affirmative vote of all the stockholders or members thereof
this Act governing undivided co-ownership of, or at a general or special meeting duly called for the
undivided interest in, the common areas in purpose: Provided, that all the requirements of Section 62
condominium projects shall fully apply. of the Corporation Law are complied with.
Instances when voluntary dissolution of a Consequence of voluntary dissolution of a

condominium corporation may be allowed condominium corporation
A condominium corporation may be voluntarily dissolved GR: The corporation shall be deemed to hold a power of
only: attorney from all the members or stockholders to sell and
1. when the enabling or the master deed of the dispose of their separate interests in the project.
project in which the condominium corporation
owns or holds the common area is revoked; and XPN: Unless otherwise provided for in the declaration of
2. upon a showing that: restrictions
a. three years after damage or destruction to
the project in which the corporation owns or Liquidation of the condominium corporation
holds the common areas, which damage or
destruction renders a material part thereof Liquidation of the corporation shall be effected by a sale of
unfit for its use prior thereto, the project has the entire project as if the corporation owned the whole
not been rebuilt or repaired substantially to thereof, subject to the rights of the corporate and of
its state prior to its damage or destruction; individual condominium creditors.
or
b. damage or destruction to the project has Q: What should the Court do if, in an action for
rendered one-half or more of the units partition of a condominium project or for the
therein untenantable and that more than dissolution of condominium corporation on the
thirty percent of the members of the ground that the project or a material part thereof has
corporation, if non-stock, or the been condemned or expropriated, the Court finds that
shareholders representing more than thirty the conditions provided for in the Condominium Act or
percent of the capital stock entitled to vote, in the declaration of restrictions have not been met?
if a stock corporation, are opposed to the
repair or reconstruction of the project, or A: The Court may decree a reorganization of the
c. the project has been in existence in excess of project, declaring which portion or portions of the project
fifty years, that it is obsolete and shall continue as a condominium project, the owners
uneconomical, and that more than fifty thereof, and the respective rights of said remaining owners
percent of the members of the corporation, if and the just compensation, if any, that a condominium
non-stock, or the stockholders representing owner may be entitled to due to deprivation of his
more than fifty percent of the capital stock property.
entitled to vote, if a stock corporation, are
opposed to the repair or restoration or NOTE: Upon receipt of a copy of the decree, the Register of
remodeling or modernizing of the project; or Deeds shall enter and annotate the same on the pertinent
d. the project or a material part thereof has certificate of title.
been condemned or expropriated and that
the project is no longer viable, or that the Assessment for taxation of a real property that has
members holding in aggregate more than been divided into condominiums
seventy percent interest in the corporation,
if non-stock, or the stockholders Each condominium separately owned shall be separately
representing more than seventy percent of assessed, for purposes of real property taxation and other
the capital stock entitled to vote, if a stock tax purposes to the owners thereof and the tax on each
corporation, are opposed to the continuation such condominium shall constitute a lien solely thereon.
of the condominium regime after
expropriation or condemnation of a material Q: Who should pay for an assessment upon any
portion thereof; or condominium made in accordance with a duly
e. the conditions for such a dissolution set registered declaration of restrictions?
forth in the declaration of restrictions of the
project in which the corporation owns or A: It is an obligation of the owner thereof at the time the
holds the common areas, have been met. assessment is made.
NOTE: An action for voluntary dissolution is that under

Rule 104 of the Rules of Court.

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Rules as regards the notice of assessment Q: Can the management body bid in the foreclosure
sale based on the lien for unpaid assessments?
The notice:
1. is to be registered with the Register of Deeds of A:
the city or province where such condominium GR: No, the management body shall have power to bid at
project is located. foreclosure sale.
2. shall state the following:
a. amount of such assessment and such other XPN: Unless otherwise provided for in the declaration of
charges thereon as may be authorized by the restrictions,
declaration of restrictions,
b. a description of the condominium unit NOTE: The condominium owner shall have the same right
against which same has been assessed, and of redemption as in cases of judicial or extra-judicial
c. the name of the registered owner thereof. foreclosure of mortgages.
3. Such notice shall be signed by an authorized
representative of the management body or as
otherwise provided in the declaration of
restrictions.
Effect if the management body causes a notice of

assessment to be registered with the register of deeds
The amount of any such assessment plus any other charges

thereon, such as interest, costs (including attorney's fees)
and penalties, as such may be provided for in the
declaration of restrictions, shall be and become a lien upon
the condominium assessed.
NOTE: Upon payment of said assessment and charges or

other satisfaction thereof, the management body shall
cause to be registered a release of the lien.
Rules as regards the lien created in case of unpaid

assessments, etc
GR: Such lien shall be superior to all other liens registered

subsequent to the registration of said notice of assessment
XPNs:
1. real property tax liens are superior;
2. when declaration of restrictions provide for the
subordination thereof to any other liens and
encumbrances.
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.

CIVIL LAW
Rules on properties acquired after the execution of a
SUCCESSION will
GENERAL PROVISIONS GR: Property acquired during the period between the
execution of the will and the death of the testator will not
Succession is a mode of acquisition by virtue of which the pass under the provisions of the will but by the rules on
property, rights and obligations to the extent of the value legal succession. Otherwise stated, the property will NOT
of the inheritance of a person, are transmitted through his form part of the estate of the testator that will pass on to
death to another or others either by his will or by his instituted heirs.
operation of law (Art. 774, NCC).
XPN:
Requisites of succession (DATE) 1. When a contrary intention expressly appears in
the will (Art. 793), in which case the property will
1. Death of decedent; be included in that portion of the estate that will
2. Acceptance of the inheritance by the successor; pass to the instituted heirs by way of
3. Transmissible estate; testamentary succession; and
4. Existence and capacity of successor, designated by 2. If the after-acquired property is one which the
decedent or law. testator has disposed of under his will as a legacy
or device, i.e., the property did not belong to the
A decedent is a person whose property is transmitted testator at the time he disposed of it as a device
through succession whether or not he left a will. If the or as a legacy and he only acquired the same after
decedent left a will, he is also called a testator (Art. 775, making his will. In this case, the legacy or device
NCC). will be given effect even if the will is silent with
regard to such an intention on the part of the
Inheritance includes all the property, rights and testator.
obligations of a person which are not extinguished by his
death (Art 776, NCC). NOTE: Property acquired after the death of the testator in
the form of accession, accruals, earnings and the like
Only the property, rights and obligations not extinguished pertain to the heirs as owners of the estate in their own
by death are transmitted to the heirs in succession. right but for purposes of defining the extent of the heirs
liability for the obligations left behind by the decedent, the
The inheritance of a person includes not only the property properties after death should be treated as part of the
and the transmissible rights and obligations existing at the heirs inheritance (Refer to Art. 781 in relation to Art. 777,
time of his death, but also those which have accrued NCC).
thereto since the opening of the succession (Art. 781, NCC).
Rights that are extinguished by death (P3AUL)
Purely personal rights are extinguished by death. Hence,
they are not transmitted to the heirs. 1. Partnership rights
2. Agency
GR: Patrimonial rights are transmissible to the heirs 3. Personal easements
4. Usufruct
XPN: 5. Legal support
1. Otherwise provided by law 6. Parental authority
2. By the will of the testator
Liability of the heirs for the obligations of the decedent
The heirs succeed not only to the rights of the deceased
but also to his obligations. The heirs CANNOT be held liable for the debts or
obligations of the decedent. They are not personally liable
GR: Rights and obligations arising from contracts are with their own individual properties for the monetary
binding upon the heirs. obligations/debts left by the decedent.
XPN: When the rights and obligations arising are not It is the estate that pays for the debts left by the decedent.
transmissible by:
1. Their nature The responsibility of the heirs for the debts of their
2. Stipulation decedent cannot exceed the value of the inheritance they
3. Provision of law (Art. 1311, NCC). receive from him (Estate of Hemady v. Luzon Surety Co., G.R.
No. L-8437, Nov. 28, 1956). It is only after the debts are
Inheritance Succession paid that the residue of the estate is distributed among the
It is the objective element It is the legal mode by successors.
of succession, to the mass which inheritance is
or totality of the estate of a transmitted. With respect to obligations arising from contracts, while
deceased person. the same is transmissible to the heirs, they are not liable
beyond the value of the property he received from the
decedent (Art. 1311, NCC).

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SUCCESSION
Q: Before his death, A borrowed from X P1, 000 as transmitted to her heirs upon her death. Her heirs have
evidenced by a promissory note. A died without paying thus acquired interest in the properties in litigation and
the debt. A left no property but he is survived by his became parties in interest in the case (Bonilla v. Barcena, et
son, B, who is making good in the buy and sell al., G.R. No. L-41715, June 18, 1976).
business. Subsequently, X brought an action against B
for the collection of P1,000 plus legal interest thereon Q: Can the heir enter into a contract of sale,
on the ground that, since B is the only heir of A, he conveyance or any disposition pertaining to his
inherited from the latter not only the latters property, interest in the inheritance even pending the
but also all his rights and obligations. Will the action settlement of the estate?
prosper? Reason.
A: Yes, because his hereditary share/interest in the
A: No. The heirs are not personally liable with their own decedents estate is transmitted or vested immediately
individual properties for the monetary obligations/debts from the moment of decedents death. This is, however,
left by the decedent. An heirs liability for his predecessors subject to the outcome of the settlement proceedings.
obligations is limited by the amount of inheritance he
receives. B cannot be made liable for As unpaid obligation Q: What is the nature of the transaction entered into
because B did not inherit anything from A. No inheritance, by the heir pertaining to his hereditary share in the
no obligation. estate pending the settlement of the estate?
A contract of guaranty is NOT extinguished by death A: The effect of such transaction is to be deemed
limited to what is ultimately adjudicated to the heir.
It is not extinguished by death because a contract of However, this aleatory character of the contract does not
guaranty is not one of the exceptions under Art. 1311 affect the validity of the transaction.
(Relativity of Contracts). A guarantors obligation is
basically to pay the creditor if the principal debtor cannot An heir can sell his undivided share of the inheritance but
pay. Payment does not require any personal qualifications. not any particular part of the estate. (Flora v. Prado, GR. No.
The personal qualifications become relevant only at the 156879, January 20, 2004) An heir can validly convey a
time the obligation is incurred but not so at the time of property of the estate only in so far as his individual share
discharge or fulfillment of the obligation (Estate of Hemady in the co-ownership is concerned (Aguirre v. CA, GR. No.
v. Luzon Surety Co., Inc., G.R. No. L-8437, Nov. 28, 1956). 122249, January 29, 2004).
Q: The wife died while the action for legal separation Future Inheritance
was pending. Her children, however, wanted to
continue the action. They ask that they be allowed to GR: No contract may be entered into upon future
substitute their deceased mother, arguing that the inheritance (Art 1347, (2), NCC).
action should be allowed to continue. Decide.
XPN:
A: The children cannot be substituted in an action for legal 1. Partition inter vivos (Art 1080, NCC)
separation upon the death of their mother who filed the 2. Donations propter nuptias by future spouses to
case. An action for legal separation which involves nothing each other of future property
more than bed-and-board separation of the spouses is
purely personal. Being personal in character, it follows Requisites for the contract to be classified as one upon
that the death of one party to the action causes the death future inheritance:
of the action itself actio personalis moritur cum persona.
(Lapuz vs. Eufemio, G.R. No. L-30977. January 31, 1972). 1. The succession has not yet been opened.
2. The object of the contract forms part of the
Q: Fortunata died while her action for quieting of title inheritance.
of parcels of land was pending. Does her death result 3. The promissory has an expectancy of a right
in the extinguishment of the action or may her heirs which is purely hereditary in nature with respect
substitute her in the case? to the object.
A: Her heirs may substitute her because the action is An heir CANNOT enter into a compromise agreement to
not extinguished by her death. Since the rights to the renounce his rights over a future inheritance.
succession are transmitted from the moment of the death
of the decedent, from that moment, the heirs become the Every renunciation or compromise as regards a future
absolute owners of his property, subject to the rights and legitime between the person owing it and his compulsory
obligations of the decedent, and they cannot be deprived of heirs is void, and the latter may claim the same upon the
their rights thereto except by the methods provided for by death of the former; but they must bring to collation
law. The right of the heirs to the property of the deceased whatever they may have received by virtue of the
vests in them upon such death even before judicial renunciation or compromise (Art 905, NCC).
declaration of their being heirs in the testate or intestate
proceedings. A future legitime is merely an expectancy, and the heir
does not acquire any right over the same until the death of
When she died, her claim or right to the parcels of land in the testator. Hence, juridically, there is nothing on which to
litigation was not extinguished by her death but was compromise. Furthermore, Art. 1347 of NCC expressly

CIVIL LAW
provides that, no contract may be entered into upon heard of for four years since the loss of the vessel or
future inheritance except in cases expressly authorized by aeroplane;
law. 2. A person in the armed forces who has taken part in
war, and has been missing for four years;
Actual delivery is NOT necessary for an heir to acquire 3. A person who has been in danger of death under
ownership over an inherited property other circumstances and his existence has not been
known for four years (Art. 391, NCC).
The possession of hereditary property is deemed
transmitted to the heir without interruption and from the NOTE: If there is a doubt, as between two or more persons
moment of the death of the decedent, in case the who are called to succeed each other, as to which of them
inheritance is transmitted. died first, whoever alleges the death of one prior to the
other, shall prove the same; in the absence of proof, it is
Pending a proceeding determining the rightful heirs, the presumed that they died at the same time and there shall
prospective heirs can demand delivery of their supposed be no transmission of rights from one to the other (Art. 43,
inheritance because ownership passes to the heir at the NCC).
very moment of death. Basis of the heirs rights to the
fruits is the Right of Accession KINDS OF SUCCESSION AND SUCCESSORS
SUCCESSION OCCURS AT THE MOMENT OF DEATH Kinds of Succession
The rights to the succession are transmitted from the 1. Testamentary Succession- that which results from
moment of the death of the decedent (Art. 777, NCC). the designation of an heir, made in a will executed in
the form prescribed by law (Art 779, NCC).
The moment of death is the determining point when the
heirs acquire a definite right to the inheritance, whether 2. Legal or Intestate Succession- that which takes
such right is pure or conditional. The possession of place if a person dies without a will, or with a void
hereditary property is therefore deemed transmitted to will, or one which has subsequently lost its validity.
the heir without interruption and from the moment of
death of the decedent, in case the inheritance is accepted. 3. Mixed Succession- that effected partly by will and
partly by operation of law (Art 780, NCC).
The right of the heirs to the property of the deceased vests
in them even before judicial declaration of their being 4. Compulsory Succession- that which takes place
heirs in the estate or intestate proceedings. compulsorily by operation of law with respect to the
legitime in favor of compulsory heirs.
It is immaterial whether a short or long period of time
elapses between the death of the predecessor and the Kinds of Heirs
entry in the possession of the properties of the inheritance,
because the right is always deemed to retroact to the 1. Voluntary or Testamentary Heirs called to succeed
moment of death. by virtue of the will of the testator:
a. Devisee - are persons to whom gifts of real
The interest of the heir over the inheritance prior to the property are given by virtue of a will
death of the decedent is merely inchoate or a mere b. Legatee - are persons to whom gifts of personal
expectancy. property are given by virtue of a will
The law in force at the time of the decedents death will NOTE: An heir is one who succeeds to the whole
determine who the heirs should be (Uson vs Del Rosario, GR (universal) or aliquot part of the estate. Devisee or
No. L-4963, January 29, 1953). legatee is one who succeeds to definite, specific, and
individualized properties.
Death
2. Compulsory Heir called by law to succeed to a
a. Actual death; and portion of the testators estate known as legitime.
b. Presumptive death. Those who succeed by force of law to some portion of
the inheritance, in an amount predetermined by law,
Presumptive Death of which they cannot be deprived by the testator,
except by a valid disinheritance.
The absentee shall not be presumed dead for the purpose 3. Legal or Intestate Heir those who succeed by
of opening his succession till after an absence of ten years. operation of law through intestate succession. Those
If he disappeared after the age of seventy-five years, an who succeed to the estate of the decedent who dies
absence of five years shall be sufficient in order that his without a valid will, or to the portion of such estate
succession may be opened (Art. 390, NCC). not disposed of by will.
a. Those who inherit in their own right
The following shall be presumed dead for all purposes, b. Those who inherit by right of representation
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

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2015 GOLDEN NOTES
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Distinctions between heirs and legatees/devisees Instances where the distinctions between heirs and
devisees/legatees become significant
Basis HEIRS DEVISEES OR
LEGATEES 1. Preterition.
Represent the Never
juridical represent the The effect is:
As to personality of personality of a. to annul entirely the institution of heirs, but
representation the deceased the deceased no b. the legacies and devises shall be valid insofar as
of deceaseds and acquire matter how big they are not inofficious.
juridical person their rights, with the legacy or
certain the devise is 2. Imperfect/defective disinheritance.
exceptions to his
obligations The effect is:
Inherit an Are always a. to annul the institution of heirs insofar as it
undetermined given a may prejudice the person disinherited, but
quantity whose determinate b. the devises and legacies and other testamentary
Determinability exact amount thing or a fixed dispositions shall be valid to such extent as will
of amount of cannot be amount not impair the legitime.
inheritance known a priori
and which TESTAMENTARY SUCCESSION
cannot be fixed
until the A will is an act whereby a person is permitted, with the
inheritance is formalities prescribed by law, to control to a certain
liquidated degree the disposition of his estate, to take effect after his
Succeed to the Only succeed to death (Art. 783, NCC).
remainder of the the determinate
Extent of properties after thing or Characteristics of a Will
successional all the debts and quantity which
right all the legacies is mentioned in 1. Statutory right The making of a will is only a
and devices have the legacy or statutory not a natural right. A will should be
been paid or devise subordinated to both the law and public policy.
given 2. Unilateral act No acceptance by the transferees
Can exist Only in is needed during the lifetime of the testator.
As to when they whether the testamentary 3. Strictly personal act The disposition of
exist succession be succession property is solely dependent upon the testator.
testate or 4. Ambulatory A will is essentially revocable
intestate during the lifetime of the testator. The testator
The institution The legacies can alter, revise, or revoke it at any time before
of an heir is and devises his death.
Effect of entirely annulled remain valid 5. Free from vices of consent It must be executed
preterition insofar as they freely, knowingly and voluntarily, otherwise, it
are not will be disallowed.
inofficious. 6. Individual act A will must be executed only by
In case of The legacies one person. A joint will executed by Filipinos
imperfect or and devises even abroad is not allowed in the Philippines.
defective remain valid to
Effect of disinheritance, such extent as NOTE: Mutual wills Separate wills although
defective the institution of will not impair containing reciprocal provisions are not
disinheritance an heir is the legitime. prohibited, subject to the rule on disposicion
annulled insofar captatoria.
as it may
prejudice the 7. Solemn or formal act A will is executed in
person accordance with formalities prescribed by law.
disinherited. 8. Dispositive of property disposition of the
testators estate mortis causa
Q: Suppose a person is named to succeed to an entire
estate. The estate, however, consists of only one parcel Q: The document, a holographic one, contained only a
of land. Is he an heir or a devisee? clause of disinheritance of one of the testators son.
Does the document meet the definition of the will
A: It depends on the manner of his designation in the will. under Art. 783 NCC since it does not contain any
Here, because he is called to inherit the entire estate, he is disposition of the estate of the deceased?
an heir.
A: The document, although it may initially come across as
mere disinheritance instrument, conforms to the
formalities of holographic will. The disinheritance results

CIVIL LAW
in the disposition of the property of the testator in favour
of those who would succeed in the absence of the Testamentary provisions in favor of the poor in general,
disinherited heir (Seangio vs Reyes, GR. Nos. 14037172. without designation of particular persons or of any
November 27, 2006). community, shall be deemed limited to the poor living in
the domicile of the testator at the time of his death, unless
PERSONAL ACT; it should clearly appear that his intention was otherwise
NON-DELEGABILITY OF WILL-MAKING (Art. 1030, NCC).
The making of a will is a strictly personal act; it cannot be Construction of a Wills Provision
left in whole or in part to the discretion of a third person,
or accomplished through the instrumentality of an agent If a testamentary disposition admits of different
or attorney (Art. 784, NCC). interpretations, in case of doubt, that interpretation by
which the disposition is to be operative shall be preferred
Rule on Non-delegability of Will-making (Art. 788, NCC).
The exercise of the disposing power is the act that cannot Construing the provisions of a will, substance rather than
be delegated. But the mere mechanical act of drafting the form must be regarded, and the instrument should receive
will may be done by a third person as it does not constitute the most favorable construction to accomplish the purpose
a delegation of the will or disposition. intended by the testator.
Doctrine of Prohibited Designation The words of a will are to receive an interpretation which
will give to every expression some effect, rather than one
The following cannot be left to the discretion of a third which will render any of the expressions inoperative; and
person: of two modes of interpreting a will, that is to be preferred
which will prevent intestacy (Art. 791, NCC).
1. Duration or efficacy of designation of heirs, legatees, or
devisees. Reason: Testacy is preferred over intestacy because testacy
2. Determination of the portions which the heirs, legatees is the express will of the decedent whereas intestacy is
or devisees are to receive when referred to by name. only his implied will.
3. Determination as to whether or not a disposition is to be
operative (Art. 785 and 787, NCC). Rules on the Construction of Wills
NOTE: It is not only the delegation which is void; the 1. The words of the will are to be taken in their ordinary
testamentary disposition whose effectivity will depend and grammatical sense unless there is a clear
upon the determination of the third person is the one that intention to use them in another sense can be
cannot be made. Hence, the disposition itself is void. gathered, and that can be ascertained (Art. 790, NCC).
2. Technical words are to be taken in their technical
The following, however may be entrusted to a third sense, unless:
person a. The context clearly indicates a contrary intention
or
1. Distribution of specific property or sums of money b. It satisfactorily appears that the will was drawn
that the testator may leave in general to specified solely by the testator and that he was
classes or causes unacquainted with such technical sense (Ibid.).
2. Designation of the persons, institutions or 3. The invalidity of one of several dispositions contained
establishments to which such property or sums are to in a will does not result in the invalidity of the other
be given or applied (Art. 786, NCC). dispositions unless it is to be presumed that the
testator would not have made such other dispositions
Reason: Here, there is really no delegation because the if the first invalid disposition had not been made (Art.
testator has already set the parameters required by law, 792, NCC).
namely: 4. Every devise or legacy shall cover all the interest
a. The specification of property or sums of money which the testator could devise or bequeath in the
b. The specification of classes or causes. property disposed of, unless it clearly appears from
the will that he intended to convey a less interest (Art.
In effect, the third person will only be carrying out the will 794, NCC).
of the testator as determined by these parameters.
Parol Evidence Rule in the interpretation of wills
NOTE: Should the testator dispose of the whole or part of
his property for prayers and pious works for the benefit of When there is an imperfect description, or when no person
his soul, in general terms and without specifying its or property exactly answers the description, mistakes and
application, the executor, with the court's approval shall omissions must be corrected, if the error appears from the
deliver one-half thereof or its proceeds to the church or context of the will or from extrinsic evidence, excluding the
denomination to which the testator may belong, to be used oral declarations of the testator as to his intention; and
for such prayers and pious works, and the other half to the when an uncertainty arises upon the face of the will, as to
State, for the purposes mentioned in article 1013 (Art. the application of any of its provisions, the testator's
1029, NCC). intention is to be ascertained from the words of the will,

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2015 GOLDEN NOTES
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taking into consideration the circumstances under which it
was made, excluding such oral declarations (Art.789, NCC). TESTAMENTARY CAPACITY AND INTENT
Kinds of Ambiguities in a Will Requisites of Testamentary Capacity
1. Latent (Intrinsic) Ambiguities which are not 1. All persons not expressly prohibited by law
apparent on the face of a will but to circumstances
outside the will at the time the will was made. E.g. If it The capacity of a person to make a will shall be
contains an imperfect description of person or governed by his national law (Art. 15, NCC).
property; No person or property exactly answers the
description. NOTE: The ability as well as the power to make a
will must be present at the time of the execution of the
Example: Testator gives a legacy to my cousin Anna will.
and it will turn out that the testator has three cousins
named Anna 2. At least 18 years of age; and
2. Patent (Extrinsic) when an uncertainty arises upon 3. Of sound mind

the face of the will as to the application of any of its
provisions (Art. 789, NCC). To be of sound mind, it shall be sufficient if the
testator was able at the time of making the will to
Example: Testator gives a devise to some of the know the:
eleven children of my only brother"
a. nature of the estate to be disposed of;
Steps in Resolving Ambiguities b. proper objects of his bounty; and
c. character of the testamentary act.
1. Examine the will itself;
2. Refer to extrinsic evidence or the surrounding It is not necessary that the testator be in full
circumstances, except oral declarations of the testator possession of all his reasoning faculties or that his
as to his intention but in the case of patent mind be wholly unbroken, unimpaired or unshattered
ambiguities, the extrinsic evidence acceptable is by disease, injury or other cause.
limited to those pertaining to the circumstances under
which the will was executed. The requirement that the testator be of sound mind is
essential only at the time of the making of the will (or
Law Governing the Validity of Wills execution).
1. As to Extrinsic validity - refers to the forms and If he is not of sound mind at that time, the will is
solemnities required by law. It is governed by: invalid regardless of his state of mind before or after
a. As to time - the law in force at the time of the such execution.
making of the will. The will of an incapable will not be validated by
b. As to place - the will can be executed in supervening capacity.
accordance to the formalities of the testators
nationality, domicile, residence or the place NOTE: If the testator was of sound mind at the time of
where the will was executed depending on the the making of the will, the will is valid even if the
place where it is executed and the nationality of testator should later on become insane and die in that
the testator. condition. In other words, supervening incapacity
does not invalidate an effective will.
2. As to Intrinsic validity - refers to the legality of
provisions in the will. It is governed by: GR: The law presumes that every person is of
a. As to time - the law in force at the time of the sound mind, in the absence of proof to the contrary.
decedents death.
b. As to place - the national law of the testator XPN: If the testator was:
governs the intrinsic validity of the will 1. Publicly known to be insane, one month or
regardless of the place of execution. less, before making his will;
2. Under guardianship at the time of the
Basis Place of Applicable Law making of the will.
execution
Testator Philippines NCC NOTE: Mere weakness of mind or partial imbecility
is a from disease of body or from age does not necessarily
Filipino Foreign Law of the place of execution render a person incapable of making a will.
country
Philippines NCC or National law The burden of proving that the testator acted in lucid
Testator interval lies on the person who maintains the validity
is an Foreign 1. National law;
of the will.
alien country 2. Law of the place of
residence;
3. NCC

CIVIL LAW
Testamentary capacity refers to the ability as well as the Matters pertaining to intestate and testamentary
power to make a will. successions which are regulated by the national law of
the deceased
In American law, testamentary capacity is concerned with
the ability of the testator while the testamentary power 1. Order of succession
involves a privilege under the law. Hence, although a 2. Amount of successional rights
person may have testamentary capacity, it does not 3. Intrinsic validity of testamentary provisions
necessarily follow that he has testamentary power. 4. Capacity to succeed (Art. 16; Art. 1039, NCC).
In the Philippines, such distinction is lost altogether. Formal Requirements Common to Both Notarial and
The term testamentary power is sometimes understood to Holographic Wills
refer to the power of the testator to designate the person
or persons who are to succeed him in his property and 1. Law governing extrinsic validity of wills;
transmissible rights and obligations. 2. In writing;
3. In a language or dialect known to the testator.
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 (Art. 34, RPC). The object of the solemnities surrounding the execution of
wills are:
Married Woman
1. to close the door against bad faith and fraud,
A married woman may make a will without the consent of 2. to avoid substitution of wills and testaments and
her husband, and without the authority of the court (Art 3. to guarantee their truth and authenticity.
802, NCC).
Every will must be in Writing
A married woman may dispose by will all her separate
property as well as her share of the conjugal partnership The rule is mandatory. If the will is not in writing, it is void
or absolute community property (Art 803, NCC). and cannot be probated. Philippine laws do not recognize
the validity of noncupative wills.
FORMAL VALIDITY OF WILLS
Noncupative wills are oral wills declared or dictated by
It is the law of the country where the will was executed the testator and dependent merely on oral testimony.
that governs the form and solemnities of wills (Art. 17(1);
Art. 815, NCC). A person may execute a holographic will which must be
entirely written, dated and signed by the hand of the
The will of an alien who is abroad produces effect in the testator himself. It is subject to no other form, and may be
Philippines if made with the formalities prescribed by the made in or out of the Philippines, and need not be
law of the place in which he resides, or according to the witnessed (Art. 810, NCC).
formalities observed in his country, or in conformity with
those which the Civil Code prescribes (Art. 816, NCC). NOTARIAL WILLS
A will made in the Philippines by a citizen or subject of Formalities in the Execution of a Notarial Will (LaW-
another country, which is executed in accordance with SPA2N2)
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 1. In Writing;
own country, shall have the same effect as if executed
according to the laws of the Philippines (Art. 817, NCC). Notarial or Attested will may be:
A joint will executed by Filipinos in a foreign country 1. Entirely handwritten by a person other than the
shall not be valid in the Philippines, even though testator;
authorized by the laws of the country where they may 2. Partly handwritten by the testator himself and
have been executed (Art. 819, NCC). A joint will is against partly handwritten by another person;
the public policy of the Philippines. 3. Entirely printed, engraved or lithographed; or
4. Partly handwritten (whether by testator or
GOVERNING LAW AS TO SUBSTANTIVE VALIDITY another person) and partly printed, engraved or
lithographed.
Laws relating to family rights and duties, or to the status,
condition and legal capacity of persons are binding upon 2. Executed in a language or dialect known to the
citizens of the Philippines even though living abroad (Art. testator;
15, NCC).
Every will must be executed in a language known to the
testator. This rule is mandatory. Otherwise, the will is void.
(Suroza v. Honrado, Adm. Matter No. 2026-CFI, December

276
2015 GOLDEN NOTES
SUCCESSION
19, 1981). It is also applicable even if the provisions of the The one who alleges that it is the customary, habitual or
will are interpreted or explained to the testator. one of the ways he sign his signature has the burden of
proof. (Garcia vs Lacuesta, GR No. L-4067, November 29,
The fact that the will was executed in a language known to 1951).
the testator NEED NOT be stated in the attestation clause.
This fact can be established by extrinsic evidence or Signing by an Agent of the testator
evidence aliunde (Lopez v. Liboro, GR No. L-1787, August 27,
1948). 1. must sign in testators presence, and
2. by the testators express direction
Presumption that the testator knew the language in
which the will was written is present when: The important thing is that it should clearly appear that
the name of the testator was signed at his express
a. the will must be in a language or dialect generally direction, in the presence of three witnesses, and in the
spoken in the place of execution presence of the testator and of each other (Barut vs
b. the testator must be a native or resident of said Cabacungan, GR No. 6285, February 15, 1912).
locality (Abangan v. Abangan, G.R. No. 13431, Nov. 12,
1919). 4. Attested and subscribed by three or more credible
witnesses in the presence of the testator and of
The fact that the testator knew the language need not one another;
appear on the face of the will. This fact may be proven by
extrinsic evidence. This rule does NOT apply to witnesses Two Requirements:
in a notarial or attested will because the witnesses do not
need to know the contents of the will. The attestation 1. Attesting an act of witnessing
clause, on the other hand, must be understood by the 2. Subscribing an act of signing their names in the proper
witnesses even if it is in a language not known to them. places of the will
(Art. 805, NCC states that the attestation clause need not be
in a language known to the witnesses.) Test for the Determination of the Presence of
Witnesses
3. Subscribed at the end thereof by the testator
himself or by the testators name written by some The true test of presence of the testator and the witnesses
other person in his presence, and by his express in the execution of a will is not whether they actually saw
direction; each other sign, but whether they might have seen each
other sign had they chosen to do so considering their
The signature of the testator of the will must be at the end mental and physical condition and position with relation
of the will, which may be at the logical end (last to each other at the moment of inscription of each
testamentary disposition) or physical end (non dispositive signature.
provisions).
The question whether the testator and the subscribing
In an ordinary will, the testator may validly delegate the witnesses to an alleged will sign the instrument in the
signing to someone else. A will is valid if it is signed by way presence of each other does not depend upon proof of the
of the testators name written by some other person in his fact that their eyes were actually cast upon the paper at the
presence, and by his express direction. moment of its subscription by each of them, but whether at
that moment existing conditions and the position of the
Where the signature is followed by dispositive provisions, parties, with relation to each other, were such that by
even the portion of the instrument preceding the signature merely casting their eyes in the proper direction they
cannot be probated, because the instrument must be could have seen each other sign (Nera vs Rimando, GR No.
considered as a whole. 5971, February 27, 1911).
In notarial wills, subscription by fingerprint is allowed as Actual seeing is not required, but the ability to see each
long as it is voluntarily made but not in holographic wills other by merely casting their eyes in the proper direction
given the explicit requirement for a holographic will to be and without any physical obstruction to prevent his doing
entirely written, dated and signed with the handwriting of so (Jaboneta vs Gustilo, 5 Phil. 541).
the testator.
Q: Clara, thinking of her mortality, drafted a will and
Cross as signature asked Roberta, Hannah, Luisa and Benjamin to be
witnesses. During the day of the signing of the will,
GR: A cross is not a sufficient signature Clara fell down the stairs and broke both her arms.
Coming from the hospital, Clara, insisted on signing
XPN: The cross appearing on the will is: her will by thumbmark. Later Clara was run over by a
drunk driver while crossing the street in Greenbelt.
1. the customary, habitual signature of the testator May the will of Clara be admitted to probate? Give your
or reason briefly. (2007 Bar Question)
2. one of the ways the testator signs his signature.
A: Yes. Claras thumbmark in this case has all the
hallmarks of a valid signature. Clara clearly intended to use

CIVIL LAW
her thumbmark as her signature and the circumstances The certification of acknowledgement need not be signed
justified her use of her thumbmark (Garcia v. La Cuesta, GR. by the notary public in the presence of the testator and the
No. L-4067). witnesses (Javellana vs Ledesma, 97 Phil. 258).
5. The testator or the person requested by him to A jurat is insufficient as the law requires an
write his name must also sign every page, except acknowledgment executed by the party before a notary
the last, on the left margin in the presence of the public, not a declaration of the notary public.
witnesses;
A notary public CANNOT serve as one of the instrumental
a. Mandatory the signing on every page in the witnesses. The notary public before whom the will was
witnesses presence acknowledged cannot be considered as the third
b. Directory the place of the signing (on the left instrumental witness since he cannot acknowledged
margin). The signature can be affixed anywhere on before himself having signed the will. He cannot split his
the page (Balane 2010). personality into two so that one will appear before the
other to acknowledge his participation in the making of the
If the entire document consists only of two sheets, the first will. To permit such a situation to obtain would be
containing the will and the second, the attestation clause, sanctioning a sheer absurdity (Cruz v. Villasor, 52 SCRA 31).
there need not be any marginal signatures at all (Abangan
vs Abangan, 40 Phil. 476). Lack of one of the requisites is a fatal defect which will
render the will null and void.
Order of Signing
SPECIAL RULES FOR HANDICAPPED TESTATORS
The order of signing is immaterial provided everything is
done in a single transaction. However, if the affixation of Rules if the Testator is Deaf or Mute
the signatures is done in several transactions, then it is
required for validity that the testator affixes his signature 1. If the testator is able to read, he must personally read
ahead of the witnesses (Balane, 2010). the will; or
2. If the testator is unable to read, he must designate two
6. All the pages shall be Numbered correlatively in persons to read it and communicate to him, in some
letters on the upper part of each page; practicable manner, the contents thereof (Art. 807,
NCC).
a. Mandatory pagination by means of a conventional
system purpose of which is to prevent insertion or NOTE: The law does not require that the persons
removal of pages. reading and communicating the contents of the will be
b. Directory pagination in letters on the upper part of the instrumental witnesses.
each page (Balane, 2010).
Rules if the Testator is Blind
7. Must contain an Attestation clause which
expressly states the following: The will shall be read to him twice, once by one of the
1. The number of pages used upon which the subscribing witnesses, and another time by the notary
will is written; public before whom the will is acknowledged (Art. 808,
2. The fact that the testator signed the will and NCC).
every page thereof, or caused some other
person to write his name, under his express Art. 808 applies not only to blind testators but also to
direction, in the presence of the instrumental those who, for one reason or another, are incapable of
witnesses; reading their wills, either because of poor or defective eye
3. The fact that the witnesses witnessed and sight or because of illiteracy.
signed the will and all the pages thereof in the
presence of the testator and of one another. SUBSTANTIAL COMPLIANCE
The attestation clause is executed by the witnesses to the A will is not rendered invalid by reason of defects or
will and not the testator. Hence, even if the language used imperfections in the form of attestation or in the
in the attestation clause is not known to the testator, but language used therein in the absence of bad faith,
only to the witnesses, the will still remains valid. forgery, or fraud, or undue and improper pressure and
influence, defects and imperfections in the form of
The signature of the witnesses must be at the bottom of attestation or in the language used therein shall not render
the attestation clause. An unsigned attestation clause the will invalid if it is proved that the will was in fact
cannot be considered as an act of the witnesses, since the executed and attested in substantial compliance with all
omission of their signatures at the bottom thereof the requirements of article 805 (Art 809, NCC).
negatives their participation (Cagro vs Cagro 92 Phi. 1032).
In cases of omissions in the will, if it can be supplied by an
8. Must be acknowledged before a Notary public by examination of the will itself, without the need of resorting
the testator and the witnesses. to extrinsic evidence, it will not be fatal and,
correspondingly, would not obstruct the allowance to
probate of the will being assailed.

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However, evidence aliunde are not allowed to fill a void in A:

any part of the document or supply missing details that a. Yes. Stevie may make a notarial will. A blind man is
should appear in the will itself. Those omissions which not expressly prohibited from executing a will. In fact,
cannot be supplied except by evidence aliunde would Art. 808 of NCC provides for an additional formality
result in the invalidation of the will itself (Caeda v. CA, when the testator is blind. Stevie however, may not
G.R. No. 103554, May 28, 1993). make a holographic will in Braille because the writing
in Braille is not handwriting. A holographic will to be
WITNESSES valid must be entirely written, signed and dated by
the testator in his own handwriting.
Qualifications of witnesses (S18-ABCD)
b. No. A blind man is disqualified by law to be a witness
1. Of Sound mind. to a notarial will.
2. At least 18 years of age.
3. Able to read and write c. In case Stevie executes a notarial will, it has to be
4. Not Blind, deaf or dumb read to him twice. First by one of the instrumental
witnesses and second by the notary public before
NOTE: While a blind or deaf may not be a witness, he whom the will was acknowledged (Art. 808, NCC).
could be a testator in a notarial will
If one of the instrumental witnesses is of unsound mind, a
5. Not have been Convicted by final judgment of notarial will CANNOT be considered valid even if the
falsification of a document, perjury or false testimony. testator is of sound mind. The will shall be void since it
6. Domiciled in the Philippines his habitual residence was expressly provided under Art. 820 of the NCC that for
must be in the Philippines (Art. 50, NCC). a witness to a notarial or attested will to be qualified,
he/she must be of sound mind.
Determination of qualifications of witnesses
The person signing the testators name must NOT be one
The presence of the qualifications of witnesses is of the 3 instrumental witnesses because he must sign in
determined at the time of the attestation of the will. If the the presence of the testator and of three other
witnesses attesting the execution of a will are competent at instrumental witnesses.
the time of attesting, their becoming subsequently
incompetent shall not prevent the allowance of the will. The essential thing for validity (if a witness is the one who
would sign under the presence of the testator and under
A person qualified to make a will is NOT necessarily his express direction or the signing by an agent of the
qualified to be a witness to the will of another. Even if a testator) is that the agent write the testators name
person can make a will because he can comply with the age nothing more (Barut v. Cabacungan, 21 Phil. 461).
and mental requirements imposed by law, he cannot be a
witness to the will of another in four specific cases. They HOLOGRAPHIC WILLS
are: (ABCD)
1. Where he is not able to read or write. A holographic will is one entirely written, dated, and
2. Where he is blind, deaf or dumb signed by the hand of the testator himself. It is subject to
3. Where he had been convicted of falsification of a no other form, and may be made in or out of the
document, perjury or false testimony Philippines, and need not be witnessed (Art. 810, NCC).
4. Where he is not domiciled in the Philippines
Formalities Required in the Execution of Holographic
Instrumental Witness as Beneficiary in a Will Wills: (EDS)
The fact that a person acts as a witness to a will does not 1. Entirely handwritten by the testator
disqualify him to be a beneficiary. However, it renders void
any legacy or device given under said will to such person An illiterate cannot make a holographic will because it is
or to his spouse, or parent or child, unless there are three required to be in writing by the testator. However, he can
other competent witnesses to the will (Art 823, NCC). make an ordinary or notarial will because the law allows a
notarial will to be written by someone else and in certain
If the witness is instituted as heir, not as devisee or cases, for the will to be read by someone else not the
legatee, the rule would still apply, because undue influence testator.
or pressure on the part of the attesting witness would still
be present. Effects of Insertions or Interpolations
Q: Stevie was born blind. He went to school for the GR: When a number of erasures, corrections,
blind, and learned to read in Braille language. He cancellation, or insertions are made by the testator in
speaks English fluently. Can he: the will but the same have not been noted or
a. Make a will? authenticated with his full signature, only the particular
b. Act as a witness to a will? words erased, corrected, altered will be invalidated, not
c. In either of the instances, must the will be the entirety of the will.
read to him? (2008 Bar Question)

CIVIL LAW
XPNs: particular disposition is void, without affecting the validity
a. Where the change affects the essence of the will of the of the others or of the will itself.
testator;
When a number of dispositions appearing in a holographic
NOTE: When the holographic will had only one will are signed without being dated, and the last
substantial provision, which was altered by substituting disposition has a signature and a date, such date validates
the original heir with another, and the same did not the dispositions preceding it, whatever be the time of prior
carry the requisite full signature of the testator, the dispositions (Art. 813, NCC).
entirety of the will is voided or revoked.
NOTE: It is not required that the will be executed on a
Reason: What was cancelled here was the very essence single day, at one time and in the same ink. The unity of the
of the will; it amounted to the revocation of the will. act is not required in holographic wills.
Therefore, neither the altered text nor the original
unaltered text can be given effect (Kalaw v. Relova, G.R. Rules for the Probate of Holographic Wills
No. L-40207, Sept. 28, 1984).
In the post mortem probate of holographic wills, the
b. Where the alteration affects the date of the will or the following rules are to be observed as to the number of
signature of the testator, the whole will is void. witnesses to be presented:
c. If the words written by a 3rd person were a. If the will is not contested, it shall be necessary that at
contemporaneous with the execution of the will, even least one witness who knows the handwriting and
though authenticated by the testator, the entire will is signature of the testator explicitly declares that the
void for violation of the requisite that the holographic will and the signature are in the handwriting of the
will must be entirely in the testators handwriting. testator.
b. If the will is contested, at least three of such witnesses
2. Dated shall be required.
c. In the absence of any competent witness and if the
GR: The "date" in a holographic will should include court deems it necessary, expert testimony may be
the day, month, and year of its execution. resorted to (Art. 811, NCC).
XPN: When there is no appearance of fraud, bad faith, In the probate of a holographic will, the will is
undue influence and pressure and the authenticity of contested. It is required to have at least three
the will is established and the only issue is whether or witnesses to explicitly declare that the signature in the
not the date appearing on the holographic will is a will is the genuine signature of the testator.
valid compliance with Art. 810, probate of the
holographic will should be allowed under the This requirement is mandatory. In the case of Ajero v.
principle of substantial compliance (Roxas vs De Jesus Court of Appeals, the Court held that the object of the
134 SCRA 245). solemnities surrounding the execution of wills is to close
the door against bad faith and fraud, to avoid substitution
The day and month may be indicated by implication of wills and testaments and to guaranty their truth and
as long as there is no doubt as to the exact date. The authenticity.
date may be placed at the end or at the beginning of
the will, or in the body, although its normal location Therefore, the laws on this subject should be interpreted
should be after the signature. in such a way as to attain these primordial ends. But, on
the other hand, one must not also lose sight of the fact that
The law does not specify the particular location where it is not the object of the law to restrain and curtail the
the date should be placed in the will. The only exercise of the right to make a will.
requirements are that the date be in the will itself and
executed in the hand of the testator. The contents and due execution of a lost holographic
will CANNOT be established merely through oral
3. Signed by the hand of the testator himself testimonies of witness who allegedly seen the same
In a holographic will, the signature must be at the end of The execution and contents of a lost or destroyed
the will. This can be inferred from Article 812 of the NCC holographic will may not be proved by the bare testimony
by the reference to dispositions written below his of witnesses who have seen or read such will. The will
signature. This phrase implies that the signature is at the itself must be presented; otherwise, it shall produce no
end of the will, and any disposition below it must further effect (Gan v. Yap, 104 Phil. 509). By its very nature, a
be signed and dated. holographic will can only be proven authentic by
establishing that the handwriting in which it is written
In a holographic will, the dispositions of the testator belongs to the testator himself and this can only be done
written below his signature must be dated and signed by through an examination of the will.
him in order to make them valid as testamentary
dispositions (Art. 812). If one disposition below the A holographic will which was lost or could not be
signature of the testator is not dated, even if signed, that found can be proved by means of a photostatic copy
(photocopy).

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of undue influence and of one testator killing the other
A photostatic copy or xerox copy of the holographic will (Dacanay v. Florendo 87 Phil 324).
may be allowed because comparison can be made with the
standard writings of the testator (Rodelas v. Aranza, 119 Q: John and Paula, British citizens at birth, acquired
SCRA 16). Philippine citizenship by naturalization after their
marriage. During their marriage the couple acquired
REQUIREMENTS FOR ALTERATIONS substantial landholdings in London and in Makati.
Paula bore John three children, Peter, Paul and Mary.
In case of insertion, cancellation, erasure or alteration in a In one of their trips to London, the couple executed a
holographic will, the testator must authenticate the joint will appointing each other as their heirs and
same by his full signature (Art. 814, NCC). providing that upon the death of the survivor between
them the entire estate would go to Peter and Paul only
Full signature refers to the testators habitual, usual and but the two could not dispose of nor divide the London
customary signature. estate as long as they live. John and Paula died
tragically in the London Subway terrorist attack in
GR: If not authenticated with the testators full 2005. Peter and Paul filed a petition for probate of
signature, it is considered as not made, but the will is not their parents will before a Makati Regional Trial
invalidated. It does not affect the validity of the will itself. Court.
The will is not thereby invalidated as a whole, but at most a. Should the will be admitted to probate?
only as regards the particular words erased, corrected or b. Are the testamentary dispositions valid?
inserted. (Kalaw v. Relova, 132 SCRA 237, 1984), citing c. Is the testamentary prohibition against the
Velasco v. Lopez, (1 Phil 720, 1903). division of the London estate valid? (2008 Bar
Question)
XPN: Unless the portion involved is an essential part of the
will, such as the date. A:
a. No, the will cannot be admitted to probate. Joint wills
Crossing-out of name of heir are void under the New Civil Code. Even if the joint
will executed by Filipinos abroad were valid where it
Where the testator himself crossed out the name of the was executed, the joint will is still not valid in the
original heir, and substituted the name of another, without Philippines.
proper authentication, it was held that this did not result
in making the person whose name was crossed as heir. The b. If a will is void, all testamentary dispositions
cancellation should not have also been given effect. The contained therein are also void. Hence, all
Supreme Court, however, ruled that neither the original testamentary provisions contained in the void joint
heir nor the substituted heir can receive the estate on the will are also void.
ground that it could not ignore what appeared to be a
change of heart on the part of the testator. One way to c. No, the testamentary prohibition against the division
justify the ruling of the Supreme Court is to consider the by Peter and Paul of the London estate for as long as
cancellation as tantamount to a revocation of the will. It they live, is not valid. Art. 494 of NCC provides that a
amounts to a revocation even though the cancellation only donor or testator may prohibit partition for a period
pertained to the name of the original heir because without which shall not exceed twenty (20) years.
the said name, there remains no other disposition in the
will (Kalaw v. Relova, 132 SCRA 237). Q: Manuel, a Filipino, and his American wife Eleanor,
executed a joint will in Boston, Massachusetts when
JOINT WILLS they were residing in said city. The law of
Massachusetts allows the execution of joint wills.
Joint wills are NOT allowed in the Philippines. Shortly thereafter, Eleanor died. May the said will be
probated in the Philippines for the settlement of her
Two or more persons cannot make a will jointly, or in the estate? (2000 Bar Question)
same instrument, either for their reciprocal benefit or for
the benefit of a third person (Art. 818, NCC). A: Yes, the will may be probated in the Philippines insofar
as the estate of Eleanor is concerned. While the Civil Code
Wills, prohibited by Article 818, executed by Filipinos in a prohibits the execution of joint wills here and abroad, such
foreign country shall not be valid in the Philippines, even prohibition applies only to Filipinos. Hence, the joint will
though authorized by the laws of the country where they which is valid where executed is valid in the Philippines
may have been executed (Art. 819, NCC). but only with respect to Eleanor. Under Article 819, it is
void with respect to Manuel whose joint will remains void
NOTE: Mutual wills Separate wills although containing in the Philippines despite being valid where executed.
reciprocal provisions are not prohibited, subject to the rule
on disposition captatoria. CODICILS
Reason: Whether in the Philippines or in foreign country, A codicil is a supplement or addition to a will, made after
Filipino citizens are prohibited from executing joint wills the execution of a will and annexed to be taken as part
because it is a matter against public policy. There is danger thereof, by which any disposition made in the original will
is explained, added to, or altered (Art. 825, NCC).

CIVIL LAW
4. It must be Signed by the testator and the witnesses
The formalities which are required in the execution of the on each and every page, except in case of voluminous
codicil are the same as those required in the execution of books of account or inventories (Art. 827, NCC).
the will.
Incorporation by reference applies only to attested wills
GR: A codicil is a supplement or addition to a will made because of the mention of witnesses in paragraph 4 of Art.
after the execution of a will and annexed to be taken as a 827 (Rabuya, 2009).
part thereof (Art.825).
REVOCATION OF WILLS
XPN: If the latter instrument makes disposition
independent of those in the original will, without A will may be revoked by the testator at any time before
explaining or modifying such original will, then it is a NEW his death. Any waiver or restriction of this right is void
WILL, and it must be executed in accordance with all the (Art. 828, NCC).
formalities required in executing a will.
The testators right to revoke during his lifetime is
CODICIL SUBSEQUENT WILL absolute because a will is ambulatory. It can neither be
waived nor restricted. As a matter of fact, even if the will
Forms a part of the
It is a new or a separate will. has already been admitted to probate during the testators
original will.
lifetime, it may still be revoked. This necessarily follows
Supplements the original Makes dispositions without from the principle that a testament is of force after men
will, explaining, adding to, reference to and are dead; otherwise it is of no strength at all while the
or altering any of its independent of the original testator lives.
dispositions. will.
Governing Law in case of Revocation
If it provides for a full
disposition of the testators
1. If the revocation takes place in the Philippines,
Does not, as a rule, revoke estate, may revoke the
whether the testator is domiciled in the Philippines or
entirely the prior will. whole prior will by
in some other country Philippine laws
substituting a new and last
2. If the revocation takes place outside the
disposition for the same.
Philippines:
A prior will and a a. by a testator who is domiciled in the Philippines
A will and a codicil, being Philippine laws
subsequent will, being two
regarded as a single b. by a testator who is not domiciled in this country
separate wills, may be
instrument are to be
construed independently of
construed together. i. Laws of the place where the will was made, or
each other.
ii. Laws of the place in which the testator had his
If the former will is a notarial will, it is not required that domicile at the time of revocation (Art. 829,
the codicil be notarial in form as well. The law only NCC).
requires that a codicil be in the form of a will. It does not
require that it be of the same kind as the will it is Revocation based on a false or illegal cause is null and
supplementing. void
INCORPORATION BY REFERENCE Requisites:

1. The cause must be concrete, factual and not
Incorporation by reference is the incorporation of an purely subjective
extrinsic document or paper into a will by reference so as 2. It must be false
to become a part thereof. 3. The testator must not know of its falsity
4. It must appear from the will that the testator is
The documents or papers incorporated will be considered revoking because of the cause which is false.
part of the will even though the same are not executed in
the form of a will. The doctrine of incorporation by If the revocation is based on a false or illegal cause, it is
reference is not applicable in a holographic will unless, of null and void (Art. 833, NCC) while institution of heir based
course, the testator executes a holographic will and, on false cause as a general rule does not affect the validity
superfluously, has it witnessed (Balane, 2010). or efficacy of the institution (Art. 850, NCC).
Requisites of Incorporation by Reference (EDIS) Modes of Revoking a Will
1. The document or paper referred to in the will must be 1. By implication of law;

in Existence at the time of the execution of the will; 2. By some will, codicil, or other writing
2. The will must clearly Describe and identify the same, 3. By physical destruction through burning, cancelation
stating among other things the number of pages or obliteration (Art. 830, NCC).
thereof;
3. It must be Identified by clear and satisfactory proof as
the document or paper referred to therein;

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Revocation by Implication of law 2. The testator must possess testamentary capacity;
3. The subsequent instrument must either contain a
It takes place when certain acts or events take place revocatory clause or be incompatible with the prior
subsequent to the making of a will, which nullify or render will (totally or partially); and
inoperative either the will itself or some testamentary 4. The revoking will must be admitted to probate.
disposition therein.
Ways of Making a Revocation by a Subsequent Will
Instances when revocation by implication of law takes
place a. Express by providing for a revocatory clause;
b. Implied provisions are completely inconsistent with
1. Upon the termination of the subsequent marriage in previous will.
Article 41 of the FC through the filing of the affidavit
of reappearance, the spouse who contracted the The will containing the revocatory clause must itself be
marriage in bad faith shall be disqualified to inherit valid, and admitted to probate, otherwise, there is no
from the innocent spouse by testate and intestate revocation.
succession. Hence, any testamentary disposition in
the will of the innocent spouse in favour of the guilty Principle of Instanter
spouse shall be revoked by implication of law (Art. 43,
par. 5, FC). The express revocation of the 1st will renders it void
2. If both spouses of the subsequent marriage referred because the revocatory clause of the 2nd will, not being
in Art. 41 of the FC acted in bad faith, testamentary testamentary in character, operates to revoke the 1 st will
dispositions by one in favour of the other are revoked instantly upon the execution of the will containing it.
by operation of law (Art. 44, FC).
3. In case of annulment, the spouse who contracted the In implied revocation, the first will is not instantly revoked
marriage in bad faith shall be disqualified to inherit by the second will because the inconsistent testamentary
from the innocent spouse by testate and intestate dispositions of the latter do not take effect immediately
succession. Hence, any disposition in the will of the but only after the death of the testator.
innocent spouse in favour of the guilty spouse shall be
revoked by operation of law (Art. 50 in relation to Art. The fact that the subsequent will is posterior and
43(5), FC). incompatible with the first does not mean that the first is
4. Upon issuance of the decree of legal separation, entirely revoked because the revocation may be total or
provisions in favor of the offending spouse made in partial. Therefore it is possible for a prior will to subsist
the will of the innocent spouse shall be revoked by with a subsequent will even if they are incompatible.
operation of law (Art. 63 (4), FC).
5. In case of preterition of compulsory heirs in the direct NOTE: In case of inconsistent wills, the subsequent will
line, whether living at the time of the execution of the prevails over the prior will because it is the latest
will or born after the death of the testator. In such expression of testamentary intent of the testator.
case, the preterition shall annul the institution of heir;
but the devises and legacies shall be valid insofar as A revocation made in a subsequent will shall take effect
they are not inofficious (Art. 854, NCC). even if the new will should become inoperative by reason
6. When the heir, devisee or legatee commits any of the of the incapacity of the heirs, devisees or legatees
acts of unworthiness which by express provision of designated therein, or by their renunciation (Art. 832,
law will incapacitate him to succeed. In such case, any NCC).
testamentary disposition in favour of such heir,
devisee or legatee is revoked (Art. 1032, NCC). Ways of Revocation by Physically Destroying a Will
7. When in the testators will there is a legacy of a credit (BTCO)
against a third person or of the remission of a debt of
the legatee, and subsequently, after the execution of 1. Burning
the will, the testator brings an action against the 2. Tearing
debtor for the payment of his debt. In such case, the 3. Cancelling
legacy is revoked (Art. 935 and 936, NCC). 4. Obliterating
8. When the testator (a) transforms the thing
bequeathed in such a manner that it does not retain Requisites of Revocation by Physical Act of Destruction
either the form or denomination it had, or (b) when (OTAP)
he alienates by any title or for any cause the thing
bequeathed or any part thereof, or (c) when the thing 1. Overt act of physical destruction;
bequeathed is totally lost during the testators lifetime 2. Testamentary capacity of the testator at the time of
or after his death without the heirs fault. In such performing the act of revocation;
cases, the legacy is revoked (Art. 957, NCC; Rabuya, 3. Animus Revocandi - intention to revoke;
2009). 4. Performed by testator himself or other person in the
presence and express direction of the testator.
Requisites of Revocation by Subsequent will or codicil
NOTE: It is not necessary that the will be totally destroyed.
1. The subsequent instrument must comply with the It is sufficient if on the face of the will, there is shown some
formal requirements of a will;

CIVIL LAW
sign of the physical act of destruction (Maloto v. CA, G.R. No. court, such destruction cannot have the effect of defeating
76464, Feb. 29, 1988). the prior will of 1918 because of the fact that it is founded
on the mistaken belief that the will of 1939 has been
Revocation by physical destruction must be coupled validly executed and would be given due effect. The theory
with animus revocandi. on which this principle is predicated is that the testator did
not intend to die intestate. And this intention is clearly
The physical act of destruction of a will, like burning, does manifest when he executed two wills on two different
not per se constitute an effective revocation, unless the occasions and instituted his wife as his universal heir.
destruction is coupled with animus revocandi on the part There can therefore be no mistake as to his intention of
of the testator (Maloto v. CA, G.R. No. 76464, Feb. 29, 1988). dying testate (Molo v. Molo, G.R. No. L-2538, Sept. 21, 1951).
The physical destruction NEED NOT be done by the NOTE: Failure of the new testamentary disposition upon
testator himself whose validity the revocation depends is equivalent to the
non-fulfillment of a suspensive condition and thus
It may be performed by another person under his express prevents the revocation of the original will.
direction and in his presence. If the destruction done by a
person other than the testator is made not in his presence Q: Mr. Reyes executed a will completely valid as to
or not upon his express direction, there is no revocation. form. A week later, however, he executed another will
which expressly revoked his first will, upon which he
Even if the person directed by the testator to revoke tore his first will to pieces. Upon the death of Mr.
his will is incapacitated to make a will (such as when Reyes, his second will was presented for probate by
he is below 18 years of age), such revocation will still his heirs, but it was denied due to formal defects.
be valid Assuming that a copy of the first will is available, may
it now be admitted to probate and given effect? Why?
The capacity of the person directed by the testator to (2003 Bar Question)
revoke his will is immaterial because in revocation of wills,
what is essential is the capacity of the testator to revoke. A: Yes, the first will may be admitted to probate and given
effect because the will that was supposed to revoke the
Q: In 1919, Miguel executed a will. In the post mortem same was never admitted to probate on account of formal
probate, there was a testimony to the effect that the defects. Admission to probate of the subsequent revoking
will was in the testators possession in 1919, but it can will is one of the requisites for express revocation to take
no longer be found. Is the will revoked? place.
A: Yes, the Doctrine of Presumed Revocation applies, which Recognition in a will of an illegitimate child does not lose
provides that: where a will which cannot be found, is its legal effect even if the will is revoked.
shown to have been in the possession of the testator when
last seen, the presumption is, in the absence of other REPUBLICATION AND REVIVAL OF WILLS
competent evidence, that the same was cancelled or
destroyed. The same presumption arises where it is shown Republication of wills is the re-execution or the re-
that the testator had ready access to the will and it cannot establishment by a testator of a will which is void or a will
be found after his death (Gago v. Mamuyac G.R. No. 26317, which the testator had once revoked.
Jan. 29, 1927).
Two ways of Republishing Wills
NOTE: The presumption is not conclusive and anyone may
prove the contrary to rebut the presumption. 1. By Reproduction - the contents of a previous will are
reproduced in a subsequent will
Doctrine of Dependent Relative Revocation 2. By Execution of a Codicil - such codicil referring to
the previous will to be republished
Where the testators act of destruction is connected with
the making of another will, so as fairly to raise the There can be NO republication by execution of a codicil if
inference that the testator meant the revocation of the old the previous will is void as to its form. If the previous will
to depend upon the efficacy of the new disposition is void as to its form, it can only be republished by
intended to be substituted, the revocation will be reproducing the provisions thereof in a subsequent will.
conditional and dependent upon the efficacy of the new
disposition; and if, for any reason, the new will intended to Revival of Wills is the process of renewing the operative
be made as a substitute is inoperative, the revocation fails force of a will which had once been revoked by the
and the original will remains in full force. But a mere intent testator.
to make at some time a will in place of that which is
destroyed will not render the destruction conditional. It Rule on revival of wills
must appear that the revocation is dependent upon the
valid execution of a new will. 1. If there is an EXPRESS REVOCATION - The revocation
of the expressly revoking will by a subsequent will
It was held, therefore, that even in the supposition that the does not revive the first will. The previous will can
destruction of the original will by the testator could be only be revived by republication.
presumed from the failure of the petitioner to produce it in

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2. If there is an IMPLIED REVOCATION - The revocation Questions that can be determined by a probate court
of the subsequent will which impliedly revoked the
previous will revives the latter. GR: Probate courts cannot inquire into the intrinsic
validity of a will. The questions that can be determined by
ALLOWANCE AND DISALLOWANCE OF WILLS a probate court are the following:
PROBATE REQUIREMENT a. Due execution
b. Testamentary capacity
Probate is a special proceeding mandatorily required for c. Identity of the will
the purpose of establishing the validity of a will.
XPN:
No will shall pass either real or personal property unless it a. When the defect of the will is apparent on the face and
is proved and allowed in accordance with the Rules of the probate of the will may become a useless
Court (Art. 838). ceremony if it is intrinsically invalid;
b. For practical considerations as when there is
It means to prove before some officer or tribunal, vested preterition of heirs, or testamentary provisions are of
by law with authority for that purpose, that the instrument doubtful legality;
offered to be proved is the will and testament of the c. Estoppel on the part of the parties if they put the
deceased person whose testamentary act is alleged to be, intrinsic validity of the will in issue.
and that it is executed, attested, and published as required
by law, and that the testator was of sound and disposing Q: The testator devised a part of his estate to his
mind. concubine, which fact of concubinage was stated in his
will. On probate, the court ruled that the will was
The presentation of the will for probate is mandatory, and validly executed but the devise in favor of the
is a matter of public policy. concubine is null and void. Can the probate court pass
upon the intrinsic validity of the testamentary
Probate deals with the wills extrinsic validity. The court provision stated in the will?
merely inquires into its due execution. It does not
determine the validity of each and every disposition made A: Yes. While as a general rule, in probate proceedings, the
in it. courts area of inquiry is limited to an examination and
resolution of the extrinsic validity of the will, given
In testate succession, there can be no valid partition exceptional circumstances, the probate court is not
among the heirs, until after the will has been probated. powerless to do what the situation constrains it to do and
pass upon certain provisions of the will, as in this case
Waiver of probate proceeding (Nepomuceno v. CA, G.R. No. 62952, Oct. 9, 1985).
The parties CANNOT agree to waive the probate NOTE: The SC held as basis its finding that in the event of
proceedings. It is a mandatory requirement. Until admitted probate of the will, or if the court rejects the will,
to probate, no right can be claimed under the will. probability exists that the case will come up once again on
the same issue of the intrinsic validity or nullity of the will,
Principle of estoppel IS NOT applicable in probate the same will result in waste of time, effort, expense plus
proceedings added anxiety.
These proceedings involve public interest and the Probate court on Questions of Ownership
application therein of the principle of estoppel would seem
inimical to public policy when it will block the GR: A probate court has no jurisdiction to decide
ascertainment of truth surrounding the execution of a questions of ownership.
testament.
XPN:
Imprescriptibility of probate 1. When the parties voluntary submit the issue of
ownership to the court;
Prescription (statute of limitations) DOES NOT apply to 2. When provisionally, the ownership is passed upon to
probate of wills. determine whether or not the property involved is
part of the estate.
Rationale: Probate proceedings are not established in the 3. The question of ownership is an extraneous matter
interest of the surviving heirs, but primarily for the which the probate court cannot resolve with finality.
protection of the expressed wishes of the testator.
Q: When Vic died, he was survived by his legitimate
Different kinds of probate son, Ernesto, and natural daughter, Rosario. Rosario,
who had Vics will in her custody, did not present the
1. Ante-mortem testator himself petitions the court will for probate. She instituted an action against
for the probate of his own will during his lifetime. Ernesto to claim her legitime on the theory that Vic
2. Post-mortem another person applies for probate of died intestate because of the absence of probate. To
the will after the testators death. support her claim, she presented Vics will, not for its
probate, but for proving that Vic acknowledged her. Is
the procedure adopted by Rosario allowed?

CIVIL LAW
by him in the presence of the required number of
A: No. It is in violation of procedural law and an attempt to witnesses and, that the will is genuine and not a forgery
circumvent and disregard the last will and testament of the (Gallanosa vs Arcangel, 83 SCRA 676).
decedent. The presentation of a will to the court for
probate is mandatory and its allowance by the court is Due execution of the will
essential and indispensable to its efficacy (Guevara v.
Guevara G.R. No. 48840, Dec. 29, 1943). It includes a determination of whether:
1. the testator was of sound and disposing mind at the
Q: To put an end to the numerous litigations involving time of its execution,
decedent Franciscos estate, his heirs entered into a 2. that he freely executed the will and was not acting
compromise agreement whereby they agreed to pay under duress, fraud, menace or undue influence and
Tasiana, Franciscos surviving spouse, P800,000 as her 3. that the will is genuine and not forgery,
full share in the hereditary estate. 4. that he was of proper testamentary age
5. that he is not expressly prohibited by law from
When submitted to the court for approval, Tasiana making a will.
attacked its validity on the ground that the heirs
cannot enter into a compromise agreement without Q: After an ante mortem proceeding, the will was
first probating Franciscos will. Tasiana relied on allowed. Later on, during the post mortem settlement
Guevara v. Guevara (74 Phil. 479) where the court held of estate proceedings, one of the heirs filed a criminal
that the presentation of a will for probate is case alleging falsification in the execution of the will.
mandatory and that the settlement and distribution of Will the action prosper?
an estate on the basis of intestacy when the decedent
left a will, is against the law and public policy. Decide. A: No. Pursuant to Sec. 1, Rule 75 of the Rules of Court, the
probate court inquires into the due execution of the will.
A: The Guevara ruling is not applicable in this case Regardless of whether it is ante mortem or post mortem,
because here, there was no attempt to settle or distribute once an issue of due execution has already been passed
the estate among the heirs before the probate of the will. upon by the probate court, it would constitute res judicata
The clear object of the contract was merely Tasianas if such issue be raised again. In the present scenario, the
conveyance of any and all her individual share and issue on due execution was already passed upon and
interest, actual or eventual in the estate. There is no therefore, allegations of whatever ground assailing the due
stipulation as to any other claimant, creditor or legatee. execution of the will, will be barred by res judicata.
As a hereditary share in a decedent's estate is transmitted Q: If a probate court passed upon the intrinsic validity
or vested immediately from the moment of the death of of a will pursuant to the exceptions as regards its
such predecessor in interest, there is no legal bar to a powers and jurisdiction, may the decision of that
successor (with requisite contracting capacity) disposing of probate court be considered as res judicata?
her or his hereditary share immediately after such death,
even if the actual extent of such share is not determined A: Yes. As a general rule, a probate court may only pass
until the subsequent liquidation of the estate. upon the extrinsic validity of the will. However, by virtue
of the exceptions, the probate court may pass upon the
Also, as Franciscos surviving spouse, Tasiana was his intrinsic validity of a will. If it does so, then it will
compulsory heir. Barring unworthiness or valid constitute as a ruling on such issues on the intrinsic
disinheritance, her successional interest existed validity and questioning such again in a different
independent of Francisco's last will and testament and proceeding shall be barred by res judicata.
would exist even if such will were not probated at all. Thus,
the prerequisite of a previous probate of the will, as NOTE: A joint will even if invalid but has been probated by
established in the Guevara and analogous cases, can not the court and whose decision was not appealed, already
apply to the case. constitutes res judicata, and has a conclusive effect. The
error committed by the probate court was an error of law
NOTE: Neither the aleatory character of the contract nor that should have been corrected by appeal, but which did
the coetaneous agreement that the numerous litigations not affect the jurisdiction of the probate court nor the
between the parties are to be considered settled and conclusiveness of its final decision, however erroneous
should be dismissed, although such stipulation gives the since the final judgment is binding upon the whole world
contract the character of a compromise, affect the validity (De la Cerna v. Potot, 12 SCRA 576).
of the transaction (De Borja, et al. v. Vda. de Borja, G.R. No.
L-28040, Aug. 18, 1972). GROUNDS FOR DENYING PROBATE
Scope of a Final Decree of Probate Grounds for Disallowance of a Will (IF2 SUM)
A final decree of probate is conclusive as to the due 1. The Formalities required by law have not been
execution and extrinsic validity of the will, i.e., as to the complied with;
extrinsic or formal validity only. That means that the 2. The testator was Insane or otherwise mentally
testator was of sound and disposing mind at the time when incapable of making a will, at the time of its execution;
he executed the will and was not acting under duress, 3. The will was executed through Force or under duress,
menace, fraud or undue influence; that the will was signed or influence of fear or threats;

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4. The will was procured by Undue and improper should not accept the inheritance or should be
pressure and influence, on the part of the beneficiary incapacitated to succeed (Art. 841, NCC).
or some other person;
5. The Signature of testator was procured by fraud. Requisites of a Valid Institution
6. The testator acted by Mistake or did not intend that
the instrument he signed should be his will at the time 1. The will must be extrinsically valid;
of affixing his signature thereto (Art. 839, NCC).
NOTE: The testator must have the testamentary
Q: When do the following constitute as grounds for capacity to make the institution.
disallowance?
2. The institution must be intrinsically valid;
1. Violence
NOTE: The legitime must not be impaired, the person
A: When in order to compel the testator to execute a instituted must be identified or identifiable, and there
will, serious or irresistible force is employed. is no preterition.
2. Intimidation 3. The institution must be effective.
A: When the testator is compelled by a reasonable and NOTE: No repudiation by the heir; testator is not
well-grounded fear of an imminent and grave evil predeceased by the heir.
upon his person or property of his spouse,
descendants, or ascendants, to execute the will. Three Principles in the Institution of Heirs
3. Undue Influence 1. Equality heirs who are instituted without a

designation of shares inherit in equal parts.
A: When a person takes improper advantage of his
power over the will of another, depriving the latter of NOTE: Applies only when the heirs are of the same
a reasonable freedom of choice. class or same juridical condition and involves only the
free portion.
4. Mistake
As between a compulsory heir and a voluntary heir
A: Pertains to the mistake in execution which may and they are instituted without any designation of
either be: shares, the legitime must first be respected and the
1. mistake as to the identity or character of the free portion shall then be equally divided between
instrument which he signed, or them.
2. mistake as to the contents of the will itself.
2. Individuality heirs collectively instituted are deemed
If the grounds for disallowance is proved, the will in such individually instituted unless contrary intent is
case shall be set aside as VOID. proven.
The person who intervenes must have an interest in the NOTE: Art. 847 itself gave an example, when the
estate or in the will, or in the property to be affected by it, testator institutes some heirs individually and others
either as executor or claimant of the estate, and an collectively as when he says, I designate my heirs A
interested party is one who would be benefited by the and B, and the children or C, those collectively
estate such as an heir or one who has a claim against the designated shall be considered as individually
estate like a creditor. instituted, unless it clearly appears that the intention
of the testator was otherwise.
INSTITUTION OF HEIRS
3. Simultaneity when several heirs are instituted, they
Institution of heirs is an act by virtue of which a testator are instituted simultaneously and not successively,
designates in his will the person or persons who are to unless the contrary is proved.
succeed him in his property and transmissible rights and
obligations (Art. 840, NCC). Designation of Heir
Institution of heirs cannot be allowed to affect the Generally, an heir must be designated by his name and
legitimes of the compulsory heirs. surname. This rule, however, is not mandatory. Even when
the name of the heir has been omitted but the testator has
There can be an instituted heir only in testamentary designated the heir in such a manner that there can be no
succession. doubt as to who has been instituted, the institution is valid.
There can be a valid will even if it contains only a provision If two or more persons have the same names, the testator
for disinheritance or if only legacies and devises are must indicate some circumstance by which the instituted
contained in the will even though it does not contain an heir may be known.
institution of heir, or such institution should not comprise
the entire estate, and even though the person so instituted

CIVIL LAW
If the testator fails to mention any circumstance regarding
the heir instituted and there appears to be several persons Reason for the general rule, that institution of heir,
bearing the same name, there is latent ambiguity and though based on false cause, will not affect the validity
extrinsic evidence other than the oral declaration of the or efficacy of the institution
testator as to his intention is admissible to resolve the
ambiguity. This is because testamentary dispositions are ultimately
based on liberality. As such, the false cause is merely
A conceived child may be instituted, provided the incidental to the ultimate cause of making the disposition
conditions in Arts. 40 and 41 are present (Conceptus pro which is the testators liberality. Unless it be shown that
nato habetur). the testator would not have made such institution if he had
known the falsity of such cause, which is the reason for the
NOTE: A conceived child, although as yet unborn, has disposition (Art. 850, NCC).
a limited and provisional personality (Quimiguing v.
Icao, G.R. No. 26795, 1970). Its personality is Kinds of institution
essentially limited because it is only for purposes
favourable to the child. Its personality is provisional 1. With a condition
because it depends upon the child being born alive 2. With a term
later under the following conditions: 3. For a certain purpose or cause (modal Institution)
1. The child must be alive for at least 24 hours from
complete delivery, if it had an intra-uterine Conditional Institution of heirs
life of less than 7 months.
2. If the child had an intra-uterine life of at least 7 A condition is a future or uncertain event or a past event
months (Art. 41, NCC), it is enough that the unknown to the parties, upon which the performance of an
child is alive upon delivery. obligation depends.
Disposition in favor of an Unknown Person Conditions, terms and modes are not presumed, they must
be clearly expressed in the will. The condition must fairly
GR: Every disposition in favor of an unknown person shall appear from the language of the will. Otherwise, it shall be
be void. considered pure.
XPNS: Kinds of Condition

1. If the identity can become certain by some event or
circumstance, the disposition is valid. It is important, Resolutory Condition Suspensive
however, that the event or circumstance must appear Condition
in the will itself; it cannot be shown by extrinsic The disposition The effectivity of the
evidence, either oral or documentary. becomes effective upon disposition is
2. A disposition in favor of a definite class or group of the death of the suspended until the
persons shall be valid. testator but is fulfillment of the
extinguished upon the condition.
Evidence aliunde CANNOT be presented to identify the happening of the
unknown person. The determinate event or circumstance, condition.
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. Effect of Impossible Condition on the Testamentary
Disposition
If there is merely a latent ambiguity as to the identity of
the heir, extrinsic evidence other than the oral declaration Impossible conditions and those contrary to law or good
of the testator may be used, but if his identity is unknown, customs shall be considered as not imposed and shall in no
extrinsic evidence is not allowed. manner prejudice the heir, even if the testator should
otherwise provide (Art. 873, NCC).
Effect if the institution of heir is based on a false cause
GR: The testator CANNOT impose any charge, condition or
GR: The institution of heir is valid. The false cause shall be substitution whatsoever upon the legitimes. If a charge
considered simply as not written. condition or substitution is imposed, it shall be considered
as not imposed.
XPN: If from the will itself, it appears that the testator
would not have made the institution if he had known the XPN: Testator can validly impose a prohibition against the
falsity of the cause, the institution shall be void. partition of the legitimes for a period not exceeding 20
years.
NOTE: The rule is, if the revocation is based on a false or
illegal cause, it is null and void (Art. 833) while institution NOTE: The legitime passes by strict operation of law,
of heir based on false cause as a general rule does not independently of the testators will. As such, any condition,
affect the validity or efficacy of the institution (Art. 850, burden, or substitution upon the same is merely
NCC). considered by law as not imposed (Art. 872, NCC).

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2. Casual The fulfillment of the condition depends
Conditions on the Prohibition to Marry solely on chance or on the will of a third person.
GR: An absolute condition not to contract a first or 3. Mixed The fulfillment of the condition depends
subsequent marriage is not a valid condition and shall be partly on chance and partly on the will of the heir,
considered as not written (Art. 874, NCC). However, the devisee, or legatee.
validity of the disposition itself shall not be affected.
Rules for Casual and Mixed Conditions
XPN: If such condition was imposed on the widow or
widower by the deceased spouse or by the latters GR: The condition may be fulfilled any time, either before
ascendants or descendants, in which case, the condition is or after the testators death unless the testator provides
valid (Art. 874, NCC). otherwise.
If the prohibition is relative with respect to persons, time XPN:

or place, such conditions is valid and must be complied a. If the condition is fulfilled at any time before the death
with unless the testator renders it impossible for the heir of the testator, the condition is deemed fulfilled,
to marry at all. unless the testator provides otherwise.
b. If condition is already fulfilled at the time of the
Disposition Captatoria is any disposition made upon the execution:
condition that the heir shall make some provision in his 1. Testator is unaware - The condition is deemed
will in favor of the testator or of any other person shall be complied with or fulfilled.
void (Art. 875, NCC). Here, both the condition and the 2. Testator is aware -
disposition are void but the validity of the other i. If the condition can no longer be fulfilled
provisions, including the will itself, shall not be affected. again, it is deemed fulfilled.
ii. If the condition can still be fulfilled, there is a
Reason for the prohibition: Disposition captatoria is need to fulfill it again.
incompatible with good faith and with the nature of
testaments; it is immoral and contrary to the freedom to Effect of a Suspensive Condition
make wills.
1. Heir, Devisee, or legatee acquires no rights until the
When a Violation of the NCC would NOT Invalidate the condition is fulfilled.
will 2. If he dies before the condition is fulfilled, he transmits
no rights to his heirs, even though he survived the
1. False cause in case of institution of heir because it is testator.
merely considered not written unless from the will
itself, it appears that the testator would not have Reason: Capacity to succeed by the conditional heir
made the institution if he had known the falsity of the must be determined both at the time of the death of
cause, the institution shall be void (Art. 850, NCC). the testator and at the time of the fulfillment of the
2. Charge, condition or substitution whatsoever upon condition.
the legitimes shall be considered as not written
(Art.872, NCC). 3. Once the condition is fulfilled, its effects retroact to
3. Defect in the fideicommissary substitution will not the moment of the death of the testator.
affect the will (Art. 868, NCC). 4. If the suspensive condition is not fulfilled, the estate
will be placed under administration until:
Instances when a violation of the NCC would invalidate a. The condition is fulfilled, in which case the estate
the will not just the provision should be given to the instituted heir;
b. It becomes obvious that it cannot be fulfilled, in
1. Joint wills (Art. 818, NCC) which case, the estate should be given to the
2. False cause in case of revocation (Art. 833, NCC) intestate heirs.
3. Disposition Captatoria (Art. 875, NCC)
Q: Must there be actual or strict fulfillment of the
Kinds of Suspensive Conditions condition, or is constructive or substantial fulfillment
sufficient?
1. Purely Potestative the fulfillment of the condition
depends solely upon the will of the heir, devisee or A:
legatee 1. Casual Condition - there must be actual or strict
fulfillment.
GR: The condition must be fulfilled as soon as the heir 2. Potestative Condition - there can be constructive
learns of the testators death. fulfillment, i. e. Heir or legatee has done everything to
perform the condition and yet for some reason or
XPN: If the condition has already been fulfilled and it another it cannot be fulfilled.
cannot be fulfilled again and the condition was 3. Mixed Condition -
already complied with at the time he learns of the GR: There must be actual or strict fulfillment
testators death.

CIVIL LAW
XPN: There can be constructive fulfillment when the
heir has done everything in his power to comply and Instances when Caucion Muciana is Needed
still the condition is not fulfilled because it was
prevented by a third party interest in its non- 1. Suspensive term - the legal heir shall be considered as
fulfillment. called to the succession until the arrival of the period.
But he shall not enter into possession of the property
Negative potestative condition consists in the non- until after having given sufficient security, with the
performance of an act or not giving something (Art. 879, intervention of the instituted heir (Art. 885 (2)).
NCC). In this case, the heir instituted has a right to receive
his share in the inheritance upon the death of the testator 2. Negative potestative condition - If the potestative
and loses his right only when he violates the condition. condition imposed upon the heir is negative, or consists
in not doing or not giving something, he shall comply by
Institution of Heir With a Term giving a security that he will not do or give that which
has been prohibited by the testator, and that in case of
A term is any future and certain event upon the arrival of contravention he will return whatever he may have
which the validity or efficacy of a testamentary disposition received, together with its fruits and interests (Art. 879,
subject to it, depends. NCC).
A disposition with a suspensive term does not prevent the NOTE: If the heirs do not post the required bond in case
instituted heir from acquiring his rights and transmitting of a suspensive term or a negative potestative condition,
them to his heirs even before the arrival of the term. the estate shall be placed under administration (Art. 880,
NCC).
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 3. Mode - That which has been left in this manner may be
for the term to expire. Before the arrival of the term, the claimed at once provided that the instituted heir or his
property should be delivered to the intestate heirs but a heirs give security for compliance with the wishes of the
caucion muciana must be posted by them (Art. 885 (2)). testator and for the return of anything he or they may
receive, together with its fruits and interests, if he or
If the heir dies after the testator but before the term they should disregard this obligation (Art. 882, NCC).
expires, he transmits his rights to his own heirs because of
the vested right. Modal Institution of heirs
Suspensive Term Suspensive Condition A mode is an obligation imposed upon the heir to do or to
The right of the heir The instituted heir does give something
instituted subject to a not acquire any
term is vested at the time successional right upon Modal institution statement of:
of the testators death. the death of the testator 1. Object of the institution,
Hence, if he dies after the as long as the condition is 2. Application of the property left by the testator,
testator but before the not yet fulfilled. Hence, 3. Charge imposed by him.
term expires, he can upon the death of the
transmit his rights to his instituted heir, prior to Modal disposition
own heirs. the fulfillment of the
condition, no right is A mode imposes an obligation upon the heir, devisee or
transmitted to his heirs. legatee, but it does not affect the efficacy of his rights to
the succession. The mode obligates but does not suspend.
Q: When the disposition is subject to a term, what
should be done by the instituted heirs or legal heirs so Mode distinguished from a Condition
that they can enjoy possession of the property?
MODE CONDITION
A: If the disposition is subject to a: Imposes an obligation The condition must
1. Suspensive term - The legal heirs can enjoy upon the heir, devisee happen or be fulfilled in
possession of the property until the expiration of or legatee, but it does order for the heir to be
the period but they must put up a bond (caucion not affect the efficacy of entitled to succeed the
muciana) in order to protect the right of the his rights to the testator.
instituted heir. succession.
Obligates but does not Suspends but does not
2. Resolutory term - The legal heirs can enjoy suspend obligate
possession of the property but when the term In case of doubt, the institution should be considered
arrives, he must give it to the legal heirs. The as modal not conditional.
instituted heir does not have to file a bond.
Q: The testatrix devised a parcel of land to Dr.
A Caucion Muciana is a security or bond required from Rabadilla. It was provided that Dr. Rabadilla will
the conditional heir in order to secure the rights of those acquire the property subject to the obligation, until he
who would succeed to the property upon violation of the dies, to give Maria 100 piculs of sugar, and in the event
condition.

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2015 GOLDEN NOTES
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of non-fulfillment, the property will pass to the nearest
descendants of the testatrix. 2. Has received nothing by way of donation inter vivos or
propter nuptias; and
When Dr. Rabadilla died, Maria filed a complaint to
reconvey the land alleging that the heirs of Dr. NOTE: If a compulsory heir has already received a
Rabadilla violated the condition. Is the institution of donation from the testator, there is no preterition.
Dr. Rabadilla, a modal institution?
Reason: A donation to a compulsory heir is considered
A: Yes, because it imposes a charge upon the instituted an advance of the inheritance.
heir without, however, affecting the efficacy of such
institution. 3. The heir will receive nothing by way of intestate
succession. (e.g. if the heir is not mentioned in the
In a modal institution, the testator states the object of the will nor a recipient of a donation inter vivos and all of
institution, the purpose or application of the property left the estate is disposed by will)
by the testator, or the charge imposed by the testator upon
the heir. A mode imposes an obligation upon the heir or Effects of Preterition
legatee but it does not affect the efficacy of his rights to the
succession. The condition suspends but does not obligate; 1. Preterition annuls the institution of heirs;
and the mode obligates but does not suspend (Rabadilla v. 2. Devices and legacies are valid insofar as they are not
CA, G.R. No. 113725, June 29, 2000). inofficious;
3. If the omitted compulsory heir dies before the
PRETERITION testator, the institution shall be effectual, without
prejudice to the right of representation.
Preterition is the omission in testators will of one, some or
all of the compulsory heirs in the direct line, whether living Example: X has two legitimate children: A and B. X
at the time of execution of the will or born after the death makes a will which results in the preterition of A. A
of the testator (Art. 854, NCC). predeceases X but leaves a legitimate child A-1, who is
himself completely omitted from the inheritance (A-1
Meaning of born after the death of the testator being entitled to succeed X by representation). There
is preterition, not because A was preterited but
It simply means that the omitted heir must already be because A-1 was preterited (Balane, 2010). In such
conceived at the time of death of the testator but was born case, the descendant of A can now file an action to
only after the death of the testator. annul the institution of heirs.
Requisites of Preterition NOTE: The effect of annulling the institution of heirs will
open intestacy except for the legacies and devices which
1. There is a total omission in the inheritance; must be respected.
2. The person omitted is a compulsory heir in the direct
line; Omission of an illegitimate child in a will amounts to
3. The omitted compulsory heir must survive the preterition
testator, or in case the compulsory heir predeceased
the testator, there is a right of representation; Art. 854 does not distinguish. It is immaterial whether the
4. Nothing must have been received by the heir by heir omitted in the testators will is legitimate or
gratuitous title. illegitimate provided that he is a compulsory heir in the
direct line.
A spouse CANNOT be preterited. While a spouse is a
compulsory heir, he/she is not in the direct line (ascending Omission of an adopted child in a will also amount to
or descending). preterition
NOTE: The surviving spouse shall only be entitled to An adopted child is by legal fiction considered a
recover his legitime but the institution of heirs shall not be compulsory heir in the direct line. Besides an adopted
annulled. child is by law given all of the successional rights of a
legitimate child (Acain vs IAC, 155 SCRA 100).
There is Total Omission when the heir:
The decedents parents may also be preterited. In the
1. Receives nothing under the will whether as heir, absence of legitimate compulsory heirs in the descending
legatee, or devisee; line, the parents and other ascendants step in as the
compulsory heirs of the decedent.
NOTE: If a compulsory heir is given a share in the
inheritance, no matter how small, there is no Compulsory Heirs in the Direct Line
preterition.
1. Legitimate children and descendants with respect to
However, if a compulsory heir gets less than his their legitimate parents or ascendants;
legitime, while this is not a case of preterition, he is 2. Legitimate parents of ascendants, with respect to
entitled to a completion of his legitime under Art. 906. their legitimate children and descendants;

CIVIL LAW
3. Illegitimate children; Reason: The nullification of such institution of the
4. The father or mother of illegitimate children universal heirs without any other testamentary disposition
in the will amounts to a declaration that nothing at all was
Preterition and Defective Disinheritance written.
DEFECTIVE PRETERITION Rights of the Preterited Heirs

DISINHERITANCE
Distinctions They are entitled not only to their shares of the legitime
A testamentary Omission in the testators but also to those of the free portion which was not
disposition depriving will of the forced heirs or expressly disposed of by the testator by way of devises and
any compulsory heir of any of them legacies.
his share in the
legitime for a cause PREDECEASE, INCAPACITY
authorized by law & REPUDIATION
The institution remains The institution of heirs is
valid, but must be completely annulled. Hence, Effect if the Heir Predeceases the Testator
reduced insofar as the the annulment is in toto,
legitime has been unless there are in addition, If the heir who predeceases the testator is a voluntary heir,
impaired. Such nullity testamentary dispositions in a devisee or a legatee, he shall transmit no right to his own
of institution is limited the form of legacies and heirs. Death prevents him from acquiring any rights.
only to that portion of devices which shall remain
which, the disinherited valid so long as they are not NOTE: The rule is absolute with respect to a voluntary heir
heir has been inofficious. and a devisee or legatee.
unlawfully deprived of.
The omission is By mere mistake or Effect if the Heir Repudiated or Renounced his
intentional in which inadvertence resulting in the Inheritance
case the institution of fact that the compulsory heir
heir is not wholly void receives nothing at all. There An heir who renounced his inheritance, whether as
but only in so far as it is total deprivation. compulsory or as voluntary heir, does not transmit any
prejudices the legitime right to his own heirs.
of the person
disinherited. NOTE: An heir who repudiated his inheritance, may
Similarities represent the person whose inheritance he has renounced
(Art. 976, NCC). The reason for this is found in Art. 971 (2nd
In both cases, the omitted heir and the imperfectly
sentence): the representative does not succeed the person
disinherited heir get at least their legitimes.
represented but the one whom the person represented
Both legacies and devises remain valid insofar as the
would have succeeded.
legitime has not been impaired.
Both legacies and devises refer to compulsory heirs. RIGHT OF REPRESENTATION
The mere fact that an heir was omitted in a will, does Right of representation is the right created by fiction of
NOT automatically equate to preterition law, by virtue of which, the representative is raised to the
place and degree of the person represented, and acquires
One must distinguish whether the omission of a forced the rights which the latter would have if he were living or
heir in the will of the testator is by mistake or in if he could have inherited.
advertence or voluntary or intentional:
a. If by mistake or inadvertence, there is true The representative thereby steps into the shoes of the
preterition and total intestacy results. person he represents and succeeds, not from the latter, but
b. If the omission is intentional, the effect would be from the person whose estate, the person represented
a defective disinheritance covered by Art. 918 in would have succeeded.
which case the institution of heir is not wholly
void but only in so far as it prejudices the The right of representation is allowed in compulsory
legitime of the person disinherited succession with respect to the legitime in case the
compulsory heir in the descending line dies before the
Effect of Preterition on the Will Itself testator or becomes incapacitated to succeed.
GR: The effect of annulling the institution of heirs will be, Heirs who repudiated their share MAY NOT be
necessarily, the opening of a total intestacy except that represented. A voluntary heir MAY NOT also be
proper legacies and devises must be respected. Here, the represented.
will is not abrogated.
Rules in case of representation
XPN: If the will contains a universal institution of heirs to
the entire inheritance of the testator, the will is totally 1. It shall take place in cases of:
abrogated. a. Predecease
b. Incapacity

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c. Disinheritance The concept of substitution applies in cases if the heir or
heirs instituted should die before the testator or should
2. Representation applies only to those acquired by not wish, or should be incapacitated to accept the
virtue of provision of the law (legitime, intestate inheritance.
share, in case of reserva troncal);
3. No representation in cases of repudiation; If the Substitute Dies Ahead of the Testator
4. Representation only occurs in the direct descending
line and never in the ascending; The substitute who dies ahead of the testator prevents him
5. In the direct collateral line, the right of representation from acquiring any rights, since there is no substitution to
only takes place in favour of children of brothers or speak of.
sisters, full or half-blood
6. The representation obtains degree by degree, and no Extinguishment of Substitution
jump is made.
1. By the nullity of the will;
Outline of Rules (Balane, 2010) 2. By the annulment of the institution of heir;
3. By the death of the substitute before the testator;
Predecease Incapacity Renunciation Disinheritance 4. When the substitute himself is incapacitated to
Compulsory Heir succeed the testator;
5. When the substitute repudiates or renounces the
1. TN 1. TN 1. TN 1. TN inheritance.
2. R 2. R 2. No R 2. R
Voluntary Heir Kinds of substitution
1. TN 1. TN 1. TN
Not applicable
2. No R 2. No R 2. No R 1. Simple/common takes place when the heir
Legal Heir instituted:
1. TN 1. TN 1. TN a. predeceases testator;
Not applicable b. repudiates the inheritance; or
2. R 2. R 2. No R
c. is incapacitated to succeed
TN = Transmit Nothing
NOTE: Simple substitution without a statement of the
R = Representation
causes, to which it refers, shall comprise the 3 above
mentioned situations unless the testator has
COMPLETION OF THE LEGITIME
otherwise provided.
Any compulsory heir to whom the testator has left by any
title less than the legitime belonging to him may demand 2. Brief/compendious when two or more persons are
substituted for one; and one person for two or more
that the same be fully satisfied (Art. 906, NCC).
heirs.
NOTE: Testamentary dispositions that impair or diminish
the legitime of the compulsory heirs shall be reduced on 3. Reciprocal one heir designated as substitute for
petition of the same, insofar as they may be inofficious or instituted heir while latter is simultaneously
excessive (Art. 907, NCC). instituted as substitute for former.
GR: The substitute shall be subject to the same

If the testator has instituted only one heir, and the
charges and conditions imposed upon the instituted
institution is limited to an aliquot part of the inheritance,
heir.
legal succession takes place with respect to the remainder
of the estate.
XPN:
1. If the testator has expressly provided the contrary
If the testator instituted several heirs as sole heirs but
2. If the charges or conditions are personally
allotted only an aliquot part of the inheritance and
applicable only to the heir instituted (Art 862, NCC).
together they do not cover the whole inheritance, or the
whole free portion, each part shall be increased
proportionately (Art. 852, NCC). 4. Fideicommissary Substitution (Indirect Substitution)
It is a substitution by virtue of which the fiduciary or
If each of the instituted heirs has been given an aliquot first heir instituted is entrusted with the obligation to
part of the inheritance and the parts together exceed the preserve and to transmit to a second heir the whole or
whole inheritance, or the whole free portion, as the case part of the inheritance, shall be valid and shall take
may be, each part shall be reduced proportionately (Art. effect, provided such substitution does not go
beyond one degree from the heir originally
853, NCC).
instituted, and provided, further, that the fiduciary or
first heir and the second heir are living at the time of
SUBSTITUTION OF HEIRS
the death of the testator.
Substitution is the appointment of another heir so that he
may enter into the inheritance in default of the heir
originally instituted (Art 857, NCC).

CIVIL LAW
Parties to a Fideicommissary Substitution and their 2. An absolute obligation is imposed upon the fiduciary
Obligations to preserve and to transmit to a second heir the
property at a given time;
PARTIES OBLIGATIONS 3. There is a second heir who takes the property
First heir or He has the obligation to preserve subsequent from the fiduciary and must be one
fiduciary and transmit the inheritance. degree from the first heir;
Second heir or He eventually receives the 4. The first and second heir must both be living and
fideicommissary property from the fiduciary. qualified at the time of the death of the testator.
Testator None
NOTE: That it should be imposed on the free portion and
not on the legitime. Fideicommissary substitution can
Distinctions between Direct and Indirect Substitution never burden the legitime (Art 864, NCC).
INDIRECT Meaning of "One degree"

SUBSTITUTION
DIRECT SUBSTITUTION
(Fideicommissary It refers to the degree of relationship; it means one
Substitution) generation. As such, the fideicommissary can only be
The substitute receives the either a parent or child of the first heir (Palacios v.
The substitute receives the
property in default of the Ramirez, G.R. No. L-27952, 1982).
property after the heir
first heir instituted who
first instituted has enjoyed
does not or cannot receive The relationship is always counted from the first heir.
the same for some time.
the same. However, fideicommissary substitutions are also limited to
There are various one transmission. Upon the lapse of time for the first heir,
liberalities, one that is he transmits the property to the second heir. In other
immediate and the other words, there can only be one fideicommissary
or others eventual, but There are two liberalities transmission such that after the first, there can be no
with only one of them which are both effective second fideicommissary substitution.
effective (because but successively enjoyed.
ultimately either the Both the first and second heir must be living and
instituted heir succeeds or qualified at the time of the death of the testator
it is the substitute).
The first heir instituted is The fideicommissary inherits not from the first heir but
The testator so directs the obliged to preserve the from the testator, thus, the requirement that the
transmission of his property for the benefit of fideicommissary be alive or at least conceived at the time
property that one or more one or more succeeding of the testators death.
heirs enjoy and may freely heirs and his power of
dispose of the same. alienation is curtailed or at The heirs to a fideicommissary substitution does not
least limited. inherit successively
Has a further social effect
as it limits the free Both the first heir and the fideicommissary inherit the
No other purpose than to
circulation of property and property simultaneously, although the enjoyment and
prevent the succession of
for such reason many laws possession are successive.
the intestate heirs.
prohibit the same or limit
it. Effect if the fideicommissary predeceases the fiduciary
There is only one transfer. There are 2 transfers
No absolute disposition If the fideicommissary predeceases the fiduciary, but
because it is subject to the survives the testator, his rights pass to his own heirs.
condition that he will
preserve and transmit the Obligations of a fiduciary
Has the free and absolute
same to the
disposition and control 1. To preserve the inheritance;
fideicommissary. And
over the property. 2. To deliver the inheritance;
also, there is control on the
property but there is a 3. To make an inventory of the inheritance.
limit to the circulation of
the property. NOTE: The first heir receives property, either upon the
The fideicommissary is death of the testator or upon the fulfillment of any
limited to relatives within suspensive condition imposed by the will.
The identity of the
one degree from the first
substitute does not matter. The first heir is almost like a usufructuary with right to
heir or fiduciary: parent
child. enjoy the property. Thus, like a usufructuary, he cannot
alienate the property. The first heir is obliged to make an
Elements of Fideicommissary Substitution inventory but he is not required to furnish a bond.
1. There must be a first heir or fiduciary who takes the

property upon the testators death;

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2015 GOLDEN NOTES
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Alienation of the property subject to the usufructuary) (Perez v.
fideicommissary substitution by the first heir Gachitorena,G.R. No. L-
31703, 1930).
Alienation of the property subject to the fideicommissary
substitution by the first heir is not valid. The fiduciary Express obligation to preserve and transmit the
cannot alienate the property either by an act inter vivos or property
mortis causa. He is bound to preserve the property and
transmit it to the second heir or fideicommissary. The obligation to preserve and transmit must be given
clearly and expressly:
NOTE: 1. by giving it a name fideicommissary substitution or
a. If the fiduciary registers the property in his name 2. by imposing upon the first heir the absolute obligation
without the fideicommissary substitution, innocent to preserve and deliver the property to the second
parties are protected. However, if the property is heir.
unregistered, the buyer acquires only the sellers
right; i.e., subject to the fideicommissary Q: If the testator provided that the 1st heir shall enjoy
substitution the property during his life and that upon his death it
b. The fideicommissary is a sort of naked owner; shall pass to another expressly designated by the
ownership is consolidated in him upon testator, but without imposing the obligation to
transmission of the property to him. preserve the property, is there fideicommissary
substitution in this case?
Fiduciarys Tenure
A: None. There is no fideicommissary substitution but
1. Primary rule the period indicated by the testator merely a legacy of the residue, a kind of conditional
2. Secondary rule if the testator did not indicate a institution.
period, then the fiduciarys lifetime
Remedy of the fideicommissary to protect himself
Delivery of the property to the fideicommissary heir against alienation to an innocent third person
GR: The fiduciary should deliver the property intact and If the first heir was able to register the property in his
undiminished to the fideicommisary heir upon arrival name, the fideicommissary should annotate his claim on
of the period. the land on the title to protect himself against any
alienation in favor of innocent third parties.
XPN: The only deductions allowed, in the absence of a
contrary provision in the will are: When the property passes to the fideicommissary, there is
1. Legitimate expenses no more prohibition to alienate.
2. Credits
3. Improvements If the testator gives the usufruct to different persons
successively, the provisions on fideicommissary
The coverage of legitimate expenses and improvements substitution also apply.
are limited to necessary and useful expenses, but not to
ornamental expenses. Different dispositions related or analogous to
fideicommissary substitutions which the law considers
Distinctions between a fiduciary in fideicommissary as void
substitution and a trustee in a trust
1. Fideicommissary substitutions which are not made in
FIDUCIARY TRUSTEE an express manner, either by giving them this name,
May be designated either or imposing upon the fiduciary the absolute obligation
Can only be designated expressly by acts inter to deliver the property to a second heir.
expressly by means of a vivos or mortis causa or 2. Provisions which contain a perpetual prohibition to
will impliedly by operation of alienate and even a temporary one, beyond the limit
law fixed in Art. 863 (20 years).
Has no usufructuary 3. Those which impose upon the heir the charge of
Entitled to all of the
right over the property paying to various persons successively, beyond the
rights of a usufructuary
which he holds in trust limit prescribed in Art. 863, a certain income or
May alienate his right of pension.
usufruct but always 4. Those which leave to a person the whole or part of the
subject to his obligation Cannot alienate anything hereditary property in order that he may apply or
of preserving and whatsoever invest the same according to secret instructions
transmitting the object to communicated to him by the testator (Art. 867, NCC).
a second heir
Fiduciary carries out not The nullity of the fideicommissary substitution DOES
Obligation is broader NOT prejudice the validity of the institution of the heirs
anothers wishes but his
because it extends not first designated; the fideicommissary clause shall simply
own and he enjoys the
only to the properties be considered as not written (Art. 868, NCC).
use and the fruits unlike
but also to the fruits
a trustee (he is like a

CIVIL LAW
Q: Raymond, single, named his sister Ruffa in his will Determination of the Legitime
as a devisee of a parcel of land which he owned. The
will imposed upon Ruffa the obligation of preserving To determine the legitime, the value of the property left at
the land and transferring it, upon her death, to her the death of the testator shall be considered, deducting all
illegitimate daughter Scarlet who was then only one debts and charges, which shall not include those imposed
year old. Raymond later died, leaving behind his in the will.
widowed mother, Ruffa and Scarlet.
a. Is the condition imposed upon Ruffa to preserve Donations given to children shall be charged to the
the property and to transmit it upon her death to legitime (Art. 908, NCC).
Scarlet, valid?
b. If Scarlet predeceases Ruffa, who inherits the Kinds of Legitime
property?
c. If Ruffa predeceases Raymond, can Scarlet inherit 1. Fixed If the amount (fractional part) does not vary
the property directly from Raymond? (2008 Bar or change regardless of whether there are concurring
Question) compulsory heirs or not.
a. legitimate children and descendants (legitimate
A: childrens legitime is always )
a) When an obligation to preserve and transmit the b. legitimate parents and ascendants (When there
property to Scarlet was imposed on Ruffa, the testator are no legitimate children and descendants, Art.
Raymond intended to create a fideicommissary 887 (1))
substitution where Ruffa is the fiduciary and Scarlet is
the fideicommissary. Having complied with the 2. Variable If the amount changes or varies in
requirements of Art. 863 and 869 (NCC), the accordance with whom the compulsory heir concur.
fideicommissary substitution is valid.
NOTE: Factors which affect the legitime:
b) If Scarlet predeceases Ruffa, the latter as the formers 1. Identity of the concurring compulsory heirs
heir, will be entitled to the property. But since it is 2. Number of concurring compulsory heirs.
also Ruffas death which will trigger the
fideicommissary substitution, the practical effect of After the legitime has been determined in accordance
her death would be to allow her (Ruffas) mother to with Articles 908 to 910, the reduction shall be made
inherit the property as Ruffas heir. The transfer of the as follows:
property from Scarlet to Ruffa (as Scarlets heir) is
what allows Ruffas mother to inherit the property 1. Donations shall be respected as long as the legitime
which she would otherwise be disqualified to inherit can be covered, reducing or annulling, if necessary,
under Article 992. the devises or legacies made in the will;
2. The reduction of the devises or legacies shall be pro
c) One requirement of a valid fideicommissary rata, without any distinction whatever.
substitution is that both heirs should be alive at the
time of the testators death. Ruffa predeceasing If the testator has directed that a certain devise or
Raymond means that the fideicommissary legacy be paid in preference to others, it shall not
substitution is no longer valid. In this regard, the only suffer any reduction until the latter have been
way by which Scarlet can inherit the property directly applied in full to the payment of the legitime.
from Raymond is by legal succession. Her right to do
so, however, is negated by (1) the presence of 3. If the devise or legacy consists of a usufruct or life
Raymond and Ruffas mother who necessarily annuity, whose value may be considered greater than
excludes her; and (2) the provisions of Art. 992. that of the disposable portion, the compulsory heirs
may choose between complying with the
LEGITIME testamentary provision and delivering to the devisee
or legatee the part of the inheritance of which the
Legitime is that part of the testator's property which he testator could freely dispose (Art. 911).
cannot dispose of because the law has reserved it for 4. If the devise subject to reduction should consist of
certain heirs who are, therefore, called compulsory heirs real property, which cannot be conveniently divided,
(Art. 886, NCC). it shall go to the devisee if the reduction does not
absorb one-half of its value; and in a contrary case, to
It is mandatory on the part of the testator to reserve that the compulsory heirs; but the former and the latter
part of the estate to the legitime. shall reimburse each other in cash for what
respectively belongs to them (Art. 912). The devisee
The New Civil Code adheres to the system of partial who is entitled to a legitime may retain the entire
reservation where the inheritance is divided into the free property, provided its value does not exceed that of
portion and the legitime. The distribution may be the disposable portion and of the share pertaining to
exclusively by the will of the testator, or by law and will him as legitime.
(Paras,)
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

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2015 GOLDEN NOTES
SUCCESSION
right may exercise it; should the latter not make use of 3. Insofar as they may be inofficious or may exceed the
it, the property shall be sold at public auction at the disposable portion, they shall be reduced according to
instance of any one of the interested parties (Art. 913, the rules established by this Code (Art. 909, NCC).
NCC). 4. Donations which an illegitimate child may have
received during the lifetime of his father or mother,
The testator may devise and bequeath the free shall be charged to his legitime. Should they exceed
portion as he may deem fit (Art. 914, NCC). the portion that can be freely disposed of, they shall
be reduced in the manner prescribed by this Code
RULES ON LEGITIME (Art. 910, NCC).
The compulsory heirs are not obliged to accept their Remedies of a Compulsory Heir whose Legitime has
legitimes. There is no obligation on the compulsory heirs been Impaired
to accept.
1. In case of preterition annulment of institution of heir
GR: The testator cannot deprive the compulsory heirs of and reduction of devises and legacies
their legitimes. 2. In case of partial impairment completion of legitime
3. In case of inofficious donation collation
XPN:
1. When the testator validly disinherited his heir (Art. The renunciation or compromise of future legitime is
915, NCC) prohibited and considered null and void.
2. When the partition of the hereditary estate for a
period not exceeding twenty (20) years is expressly Scope of the Prohibition
forbidden by the testator (Art. 1083, NCC)
1. Any renunciation of future legitimes, whether for a
NOTE: Only the legitime is reserved. The free portion may valuable consideration or not;
be disposed of by will. 2. Any waiver of the right to ask for the reduction of an
inofficious donation;
Rules Governing Succession in the Direct Descending 3. Compromise between the compulsory heirs
Line themselves during the lifetime of the testator.
1. Rule on preference between lines descending line is NOTE: The prohibition is not applicable in cases of:
preferred over the ascending line 1. Renunciations or compromises made after the
2. Rule on proximity the nearer excludes the more death of the testator;
remote 2. Donations or remissions made by the testator to
3. Right on representation, in case of predecease, the compulsory heirs as advances of their
incapacity and disinheritance legitimes.
4. If all the legitimate children repudiate their legitimes,
the next generation of legitimate descendants, Order of Preference in Reducing Testamentary
succeed in their own right. Dispositions and Donations:
Rules Governing Succession in the Ascending Line 1. Reduce pro rata the non-preferred legacies and
devises (Art.911(2), NCC), and the testamentary
1. Rule of proximity the nearer excludes the more dispositions (to heirs) (Art. 907, NCC). Among these
remote legacies, devises, and testamentary dispositions, there
2. Division by line is no preference.
3. Equal division within the line
NOTE: preferred legacies and devisees are those
Limitations on the Testators Rights of Ownership directed by testator to be preferred than the others
The testator CANNOT make donations inter vivos which 2. Reduce pro rata the preferred legacies and devises
impinge upon the legitime or which are inofficious. (Art. 911, last par.).
3. Reduce the donations inter vivos according to the
NOTE: The prohibition does not cover an onerous inverse order of their dates (i.e., the oldest is the most
disposition (sale) because this involves an exchange of preferred) (Art. 773, NCC).
values.
NOTE: These reductions shall be to the extent
Rules on the donations made by the testator in favor of required to complete the legitimes, even if in the
his children, legitimate and illegitimate, and strangers process the disposition is reduced to nothing.
and those which are inofficious:
The order of preference is applicable when:
1. Donations given to children shall be charged to their 1. The reduction is necessary to preserve the
legitimes. legitime of compulsory heirs from impairment
2. Donations made to strangers shall be charged to that whether there are donations inter vivos or not; or
part of the estate of which the testator could have 2. Although the legitime has been preserved by the
disposed by his last will. testator himself, there are donations inter vivos.

CIVIL LAW
Properties that are to be collated
Effect of Donations to the Inheritance of an Heir
1. Any property/right received by gratuitous title during
Donations given to children shall be charged to their testators lifetime
legitimes (Art. 909). 2. All that may have been received from decedent during
his lifetime
Reason: Donations to the compulsory heirs are advances to 3. All that their parents have brought to collation if alive
the legitimes.
Properties not subject to collation
NOTE: Donations inter vivos to strangers shall be charged
to the free portion. 1. Absolutely no collation expenses for support,
education (elementary and secondary only), medical
Collation is the process of adding the value of the thing attendance, even in extra-ordinary illness,
donated to the net value of hereditary estate. apprenticeship, ordinary equipment or customary
gifts.
To collate is to bring back or return to the hereditary mass, 2. Generally not imputed to legitime:
in fact or fiction, property which came from the estate of a. Expenses incurred by parents in giving their
the decedent, during his lifetime, but which the law children professional, vocational, or other career
considers as an advance from the inheritance. unless the parents so provide, or unless they
impair the legitimes.
Collation is applicable to both donations to compulsory b. Wedding gifts by parents and ascendants
heirs and donations to strangers. consisting of jewelry, clothing and outfit except
when they exceed 1/10 of the sum disposable by
GR: Compulsory heirs are obliged to collate. will.
XPN: NOTE: Only the value of the thing donated shall be brought
1. When testator should have so expressly provided; to collation. This value must be the value of the thing at the
2. When compulsory heir repudiates his inheritance time of the donation.
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.

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Steps in Determining the Legitime of Compulsory
Heirs
1. Determination of the gross value of the estate at the time

Step 1: INVENTORY of the death of the testator
(Gross Value of Estate)
2. Determination of all the debts and charges which are

Step 2: DEDUCT chargeable against the estate
OBLIGATIONS
3. Determination of the net value of the estate by

Step 3: Net Value deducting all the debts and charges from the gross
value of the estate
4. Collation or addition of all the value of all donations

Step 4: Collation inter vivos to the net value of the estate
1. Determination of the Net Hereditary Estate from the

Net Hereditary Estate total thus found
2. Imputation of all the value of donations inter vivos

made to compulsory heirs against their legitimes and of
the value of all donations inter vivos made to strangers
against the disposable free portion and restoration to
the hereditary estate if the donation is inofficious.
3. If the legitime is impaired, the following reductions

shall be made:
1. First, reduce pro rata non-preferred legacies and
devices, and the testamentary dispositions.
2. Second, reduce pro rata the preferred legacies and
devises
3. Third, reduce the donations inter vivos according to
the inverse order of their dates.
*** As to the remaining portion of the estate, it shall be

distributed to the devisees and legatees

CIVIL LAW
TABLE OF LEGITIMES
WHEN SURVIVING ALONE

of the hereditary estate (Free portion = )
Surviving spouse where the marriage was solemnized 1/3 of the hereditary estate (Free portion =2/3)
under articulo mortis and the deceased died within 3
months from the time of marriage.
NOTE: The deceased was the spouse who was at the point
of death at the time of marriage (Tolentino, Civil Code, 1992
ed.)
Surviving spouse where the marriage was solemnized of the hereditary estate (Free portion = )
under articulo mortis and the deceased died within 3
months from the time of marriage but the parties have
been living as husband and wife for more than 5 years
prior to the marriage.
PRIMARY HEIRS CONCUR WITH CONCURRING COMPULSORY HEIRS

One legitimate child and the surviving spouse Legitimate child = of the hereditary estate
Surviving spouse = of the hereditary estate
Free portion =
Two or more legitimate children and the surviving spouse Legitimate children = of the hereditary estate in equal
portions
Surviving spouse = a share equal to that of each child
Free portion = whatever remains
One legitimate child and illegitimate children Legitimate child = of the hereditary estate (if there
are several, they shall divide the
share in equal portions)
Illegitimate children = of the share of each legitimate
child (if the free portion is insufficient,
the illegitimate children shall divide the
free portion equally among themselves)
One legitimate child, the surviving spouse, and illegitimate Legitimate child = of the hereditary estate
children Surviving spouse = of the hereditary estate
child
NOTE: The share of the surviving spouse shall have

preference over those of the illegitimate children whose
share may suffer reduction pro rata because there is no
preference as among themselves.
Two or more legitimate children, surviving spouse, and Legitimate children = of the hereditary estate in equal
illegitimate children portions
Surviving spouse = a share equal to that of each
legitimate child
child
NOTE: The share of the surviving spouse shall have

preference over those of the illegitimate children whose
share may suffer reduction pro rata because there is no
preference as among themselves.
SECONDARY HEIRS CONCUR WITH COMPULSORY HEIRS

Legitimate parents and surviving spouse Legitimate parents = of the hereditary estate
Surviving spouse = of the hereditary estate
Free portion =
Legitimate parents and illegitimate children Legitimate parents = of the hereditary estate
Illegitimate children = of the hereditary estate in equal

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2015 GOLDEN NOTES
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shares
Free portion =
Legitimate parents, surviving spouse, and illegitimate Legitimate parents = of the hereditary estate
children Illegitimate children = of the hereditary estate in equal
shares
Surviving spouse = 1/8 of the hereditary estate
Free portion = 1/8
Parents of the Illegitimate Decedent and children Parents = excluded
Children = if legitimate and of the share of
each legitimate child if illegitimate
children
Parents of the Illegitimate Decedent and the surviving Parents = of the hereditary estate
spouse Surviving spouse = of the hereditary estate
Free portion =
CONCURRENCE AMONG CONCURRING COMPULSORY HEIRS

Surviving spouse and illegitimate children Surviving spouse = 1/3 of the hereditary estate
Illegitimate children = 1/3 of the hereditary estate
(Rabuya, 2009).
COMPULSORY HEIRS AND VARIOUS COMBINATIONS

Adopted Child is a Compulsory Heir
The following are Compulsory Heirs
Legitimate children include adopted children and
1. Legitimate children and descendants, with respect to legitimated children.
their legitimate parents and ascendants;
2. In default of the foregoing, legitimate parents and Under R.A. 8552 or the Domestic Adoption Law, adopted
ascendants, with respect to their legitimate children children have the same rights granted to the legitimate
and descendants; children. Adopted children, for all intents and purposes are
3. The widow or widower; considered as legitimate children. The relationship,
4. Acknowledged natural children, and natural children however, does not extend to other relatives of the adopter,
by legal fiction; thus, disqualifying the adopted from directly inheriting
5. Other illegitimate children referred to in Article 287. from the adopters ascendants.
Compulsory heirs mentioned in Nos. 3, 4, and 5 are not Since the adopted child enjoys successional rights as a
excluded by those in Nos. 1 and 2; neither do they exclude legitimate child, then he excludes the adopters parents
one another. and ascendants.
In all cases of illegitimate children, their filiation must be Formal or judicial adoption is necessary before the
duly proved. adopted child can inherit from the adopter because
adoption is a juridical act, a proceeding in rem, which
The father or mother of illegitimate children of the three creates between two persons a relationship similar to that
classes mentioned shall inherit from them in the manner which results from legitimate paternity and filiation.
and to the extent established by this Code (Art. 887, NCC).
Without the benefit of formal (judicial) adoption, the
Classifications of Compulsory Heirs adopted child is neither a compulsory nor a legal heir.
Hence, he is not entitled to inherit.
1. Primary They are not excluded by the presence of
other compulsory heirs. Those who have precedence Rule on Legitimated Children
over and exclude other compulsory heirs. E.g.
legitimate children and / or decendants. Prior to the marriage of the parents of the child, he is an
2. Secondary Those who succeed only in default of the illegitimate child since he is born outside a valid marriage.
primary compulsory heirs. E.g. legitimate parents Legitimation takes place upon the marriage of the childs
and/ or legitimate ascendants; illegitimate parents. parents, the marriage being valid or at least voidable, the
3. Concurring Those who succeed together with the child is automatically raised to the status of legitimacy,
primary or secondary compulsory heirs. E.g. Surviving without need of any additional act on the part of either the
spouse and illegitimate children and descendants. child or the parents.
Compulsory Heirs Inherit Either: Children conceived and born outside of wedlock of parents
who, at the time of the conception of the former, were not
1. in their own right; or disqualified by any impediment to marry each other, or
2. by right of representation were so disqualified only because either or both of them
were below eighteen (18) years of age, may be legitimated

CIVIL LAW
(Art. 177, FC as amended by R.A. 9858). For purposes of The surviving spouse is not a compulsory heir of his/her
succession, the opening of succession must happen after parent-in-law. When the spouse has given a ground for
the effectivity of R.A. 9858; otherwise, the child will be legal separation, it is a sufficient cause for disinheriting a
considered as illegitimate. spouse even without a decree of legal separation. If there is
already a decree for legal separation then disinheritance is
Rule as regards an Illegitimate Child superfluous for this in effect would be denying the guilty
spouse of a right not possessed.
He may become a primary compulsory heir of his
illegitimate parents only if they do not concur with RESERVA TRONCAL
legitimate children or descendants of his illegitimate
parents. Reserva Troncal
If the illegitimate parents have legitimate children or The ascendant who inherits from his descendant any
descendants, the latter shall be the primary compulsory property which the latter may have acquired by gratuitous
heirs and the illegitimate child shall be considered merely title from another ascendant, or a brother or sister, is
as concurring compulsory heir. obliged to reserve such property as he may have acquired
by operation of law for the benefit of relatives who are
NOTE: Under the Family Code, there is no more distinction within the third degree and who belong to the line from
between acknowledged natural children and illegitimate which said property came (Art. 891, NCC).
children. They are all considered as illegitimate.
Purposes:
Compulsory heirs of a person who is illegitimate: 1. To prevent persons who are outsiders to the family
1. Legitimate children and descendants; from acquiring, by chance or accident, property which
2. Illegitimate children and descendants; otherwise would have remained with the said family.
3. In default of the foregoing, parents only; 2. To put back the property to the line from which it
4. Surviving spouse. originally came.
3. To keep the property within the family to which such
Parents and ascendants are secondary compulsory heirs. property belongs (Velayo Bernardo vs. Siojo, GR No. L-
They inherit in default of legitimate children and 36078, March 11, 1933).
descendants.
NOTE: Other terms used to refer to Reserva Troncal
GR: The presence of the illegitimate children of the 1. Lineal
decedent DOES NOT exclude parents and ascendants. 2. Familiar
Parents and ascendants concur with the illegitimate 3. Extraordinaria
children of the decedent. 4. Semi-troncal
5. Pseudo-troncal
XPN: If the decedent is himself illegitimate, his illegitimate
children exclude the illegitimate parents and Requisites that must exist in order that a property may
ascendants. be impressed with a reservable character
Common law spouse NOT a compulsory heir 1. That the property was acquired by a descendant
(called praepositus or propositus) from an
A common law spouse CANNOT be a compulsory heir. ascendant or from a brother or sister by gratuitous
There must be a valid marriage between the decedent and title when the recipient does not give anything in
the surviving spouse. If the marriage is null and void, the return;
surviving spouse cannot inherit. 2. That said descendant (praepositus) died without an
issue;
Raising nullity of marriage in settlement proceedings 3. That the same property (called reserva) is inherited
by another ascendant (called reservista) by
The heirs of the decedent can raise the issue of nullity of operation of law (either through intestate or
the marriage in the same proceeding for the settlement of compulsory succession) from the praepositus; and
the estate to prevent the surviving spouse from inheriting. 4. That there are living relatives within the third degree
This is allowed because a marriage that is null and void counted from the praepositus and belonging to the
can be collaterally attacked. same line from where the property originally came
(called reservatarios) (Art. 891; Chua v. CFI of Negros
However, in case of voidable marriages, if the marriage is Occidental, Branch V, 78 SCRA 412; Rabuya, 2009).
not annulled before the decedent died, the surviving
spouse can still inherit. Reserva troncal DOES NOT exist in an illegitimate or
adoptive relationship. It only exists in the legitimate
NOTE: Voidable marriages can only be attacked in a direct family (Centeno v. Centeno, 52 Phil. 322; id, p. 635).
proceeding, i.e. annulment proceeding.
NOTE: In order that reserva will exist, all the persons
Surviving spouse NOT a compulsory of parent-in-law should be legitimately related. Reserva troncal only exists
in a legitimate family relation. Illegitimate and adoptive
relationships, as well as those by affinity are excluded.

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2015 GOLDEN NOTES
SUCCESSION
therefore, he has the perfect right to dispose of it, in
Causes for the extinguishment of the reserva (LD2R2 P) any way he wants, subject, however to the rule on
inofficious donations.
1. Death of the reservista
2. Death of all the relatives within the third degree prior 2. Propositus
to the death of the reservista
3. Accidental Loss of all the reservable properties The propositus must be a legitimate descendant or
4. Renunciation or waiver by the reservatarios half-brother/sister of the origin of the property.
5. Registration under Act 496 without the reservable
character being annotated if it falls into the hands of a NOTE: To give rise to reserva troncal, the propositus
buyer in good faith for value must not have any legitimate child; otherwise, the
6. By Prescription reservista seeks to acquire (30 years reservable property will be inherited by the latter.
immovable; 8 years- movable)
The presence of illegitimate children of the propositus
Reserva Minima distinguished from Reserva Maxima will not prevent his legitimate parents or ascendants
from inheriting the reserved property.
RESERVA MINIMA RESERVA MAXIMA
The propositus is the descendant whose death gives
All of the properties which the
All of the properties which rise to the reserva troncal, and from whom therefore
descendant had previously
the descendant had the third degree is counted.
acquired by gratuitous title
previously acquired by
from another ascendant or
gratuitous title from The propositus can alienate the property. While
from a brother or sister must
another ascendant or from a propositus is still alive, there is no reserva yet,
be considered as passing to
brother or sister must be therefore, he is the absolute owner of the property,
the ascendant- reservista
included in the ascendants with full freedom to alienate or dispose or encumber.
partly by operation of law and
legitime insofar as such
partly by force of the
legitime can contain. NOTE: The propositus is referred to as the arbiter of
descendants will.
the reserva.
Q: A son received from his mother P200,000 by virtue 3. Reservista
of a will. The son had properties of his own amounting
to P400,000. When the son died without issue, he left a The reservista is the ascendant who inherits from the
will giving all his estate to his father. How much is the propositus by operation of law. He has the obligation
reservable property? to reserve.
A: Since the fathers legitime is only , he received the NOTE: The relationship between the reservista and
P600,000 in two capacities: P300,000 as a compulsory heir the propositus must be legitimate.
and which was received therefore as a legitime or by
operation of law and P300,000 as a voluntary heir. If he inherited the property from the propositus, not
According to the theory of reserva minima, the reservable by legal succession or by virtue of legitime, there is no
property is only P 100,000 on the theory that half of the obligation to reserve.
P200,000 received from the origin (mother in this case)
was given to the father as his legitime or by operation of The reservista owns the reservable property. The
law. Therefore, the reservable property is only P100,000 reservista is an absolute or full owner, subject to a
(Paras, 2008). resolutory condition. If the resolutory condition is
fulfilled, the reservistas ownership of the property is
NOTE: According to Manresa, in view of the silence of the terminated.
law on the matter, the principle of reserve minima should
be followed. This seems also the opinion of Scaevola Resolutory condition: If at the time of the
(Paras, 2008). reservistas death, there still exist relatives within the
third degree (reservatarios) of the propositus and
Parties in Reserva Troncal belonging to the line from which the property came.
1. Origin NOTE: The reservable property is not part of the
estate of the reservista.
The origin of the property must be an ascendant,
brother or sister of the propositus. The transmission The reservista can alienate the property. Unlike in
from the origin to the propositus must be by fideicommissary substitution where the fiduciary heir
gratuitous title. cannot alienate the property because he is merely
considered a usufruct, the reservista can alienate the
NOTE: The origin must be a legitimate relative property being the owner thereof but subject to the
because reserva troncal exists only in the legitimate reservation.
family.
GR: The reservista is required to furnish a bond,
The origin can alienate the property. While the origin security or mortgage to guarantee the safe delivery
owns the property, there is no reserva yet, and

CIVIL LAW
later on to the reservatarios of the properties
concerned, in the proper cases. Requisites for Passing of Title to the Reservatarios
XPN: The bond, security or mortgage is not needed 1. Death of the reservista; and
when the property has been registered or annotated 2. The fact that the reservatarios survived the reservista.
in the certificate of title as subject to reserva troncal.
The reservatario acquires the right over the reservable
NOTE: Upon the reservistas death the ownership of property upon the death of the reservista, the reservatario
the reserved properties is automatically vested to the nearest the decedent propositus becomes, automatically
reservatarios who are existing. Hence, the reservista and by operation of law, the absolute owner of the
cannot dispose the reserved property by will if there reservable property (Cano v. Director of Lands).
are reservatarios existing at the time of his death.
There is right of representation in reserva troncal but the
4. Reservatartios/Reservees representative must also be within the third degree from
the propositus (Florentino v. Florentino, 40 Phil. 480, 1990).
The reservatarios are relatives within the third degree
of the propositus, who belong to the same line from NOTE: The reservatarios inherit the property from the
which the property originally came, who will become propositus, not from the reservista.
the full owners of the property the moment the
reservista dies, because by such death, the reserva is Reserva troncal is governed by the following rules on
extinguished. intestate succession: (Applicable when there are concurring
relatives within the third degree)
NOTE: It is further required that the reservatario 1. Proximity - The nearer excludes the farther
should be related by blood not only from the 2. The direct line is preferred over the collateral line
prepositus but also to the other descendant, or 3. The descending line is preferred over the ascending
brother, or sister, from whom the property came. Only line
then can he be considered as belonging to the line
from which the property came. Rights of the Reservatarios:
Relatives Within the Third Degree from the Propositus 1. To ask for the inventory of all reservable property
2. The appraisal of all reservable movable property
1. Parents; 3. The annotation in the registry of deeds of the
2. Grandparents; reservable character of all reservable immovable
3. Full and half blood brothers and sisters; property
4. Great grandparents, 4. Constitution of the necessary mortgage
5. Nephews and nieces.

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2015 GOLDEN NOTES
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OPERATION OF RESERVA TRONCAL
The origin of the property is the legitimate ascendant, brother or sister of the propositus
Upon death of the ORIGIN, his property is transmitted to the PROPOSITUS either by donation
inter vivos or mortis causa, as long as it is by gratuitous title.
ORIGIN
The PROPOSITUS is a legitimate descendant or half-brother/sister of the ORIGIN of the

property.
To give rise to reserva troncal, the PROPOSITUS must not have any legitimate children,
otherwise, the reservable property will be inherited by the latter
PROPOSITUS The PROPOSITUS is the descendant whose death gives rise to the reserva troncal, and from
whom the third degree is counted.
The RESERVISTA is the ascendant who inherits from the PROPOSITUS by operation of law. It is
he who has the obligation to reserve.
The relationship between the RESERVISTA and the PROPOSITUS must be legitimate.
The RESERVISTA is an absolute or full owner, subject to a resolutory condition.
Resolutory condition: If at the time of the RESERVISTASs death, there should still exist relatives
RESERVISTA within the third degree (reservatarios) of the propositus and belonging to the line from which
the property came.
The RESERVATARIO's are relatives within the third degree of the propositus, who belong to the
same line from which the property originally came, who will become the full owners of the
property the moment the reservista dies.
The reservatarios inherit the property from the PROPOSITUS, not from the RESERVISTA.
Upon the death of the RESERVISTA, the RESERVATARIO nearest the decedent PROPOSITUS
RESERVISTA becomes, automatically and by operation of law, the absolute owner of the reservable property.
DISINHERITANCE
Burden of Proof
Disinheritance is the process or act, thru a testamentary
disposition of depriving a compulsory heir of his legitime The burden of proving the truth of the cause for
for causes expressly stated by law (Art. 915, NCC). disinheritance shall rest upon the other heirs of the
testator, if the disinherited heir should deny it (Art. 917,
The only way in which a compulsory heir can be deprived NCC).
of his legitime is through valid disinheritance. It can be
effected only through a will wherein the legal cause Effect of Disinheritance
therefor shall be specified (Art. 916, NCC).
Total exclusion to the inheritance, meaning, loss of
Disinheritance is not automatic legitime, right to intestate succession, and of any
disposition in a prior will.
There must be evidence presented to substantiate the
disinheritance and must be for a valid and sound cause.

CIVIL LAW
Disinheritance, however, is without prejudice to the right c. Spouse:
of representation of the children and descendants of the i. When the spouse has given cause for legal
person disinherited. separation
ii. When the spouse has given grounds for the
But the disinherited parent shall not have the usufruct or loss of parental authority
administration of the property which constitutes the
legitime. Reconciliation exists when two persons who are at odds
decide to set aside their differences and to resume their
NOTE: Parents no longer enjoy the right of usufruct over relations. They need not go back to their old relation.
the properties of their children under the Family Code.
NOTE: A handshake is not reconciliation. It has to be
Requisites of a Valid Disinheritance something more. It must be clear and deliberate.
1. Made in a valid will In order to be effective, the testator must pardon the
2. Identity of the heir is clearly established disinherited heir. The pardon whether express or tacit,
3. For a legal cause must refer specifically to the heir disinherited and to the
4. Expressly made acts he has committed, and must be accepted by such heir.
5. Cause stated in the will
6. Absolute or unconditional In disinheritance, reconciliation need not be in writing.
7. Total
8. Cause must be true and if challenged by the heir, it Effect of Reconciliation on a Persons Right to
must be proved to be true. Disinherit
Grounds for Disinheritance 1. If made before disinheritance right to disinherit is

extinguished.
1. Common causes for disinheritance of children or 2. If made after disinheritance disinheritance is set
descendants, parents or ascendants, and spouse: aside.
a. When the heir has been found guilty of an
attempt against the life of the testator, his/her Right of representation in case of disinheritance
descendants or ascendants, and spouse, in case of
children or parents. The causes of disinheritance are personal to the
b. When the heir by fraud, violence, intimidation, or disinherited heir. Hence, in case of valid disinheritance,
undue influence causes the testator to make a only the disinherited heir is deprived of his right to the
will or to change one already made. legitime. But the children or descendants of the
c. When the heir has accused the testator of a crime disinherited heir can take his place and preserve the
for which the law prescribes imprisonment of six disinherited heirs share to the legitime.
years or more, if the accusation has been found
groundless. Effect of Disinheritance Without Cause
d. Refusal without justifiable cause to support the
testator who disinherits such heir. Disinheritance without a specification of the cause, or for a
cause the truth of which, if contradicted, is not proved, or
2. Peculiar Causes for Disinheritance which is not one of those set forth in this Code, shall annul
a. Children and Descendants: the institution of heirs insofar as it may prejudice the
i. Conviction of a crime which carries with it a person disinherited; but the devises and legacies and other
penalty of civil interdiction testamentary dispositions shall be valid to such extent as
ii. Maltreatment of the testator by word or deed will not impair the legitime (Art. 918, NCC).
by the children or descendant
iii. When the children or descendant has been LEGACIES AND DEVISES
convicted of adultery or concubinage with the
spouse of the testator All things and rights which are within the commerce of
iv. When the children or descendant leads a man may be bequeathed or devised (Art. 924, NCC).
dishonorable or disgraceful life
b. Parents or Ascendants: Persons that may be charged with legacies and devices
i. When the parent or ascendant has been
convicted of adultery or concubinage with the 1. Any compulsory heir
spouse of the testator 2. Any voluntary heir
ii. When the parents have abandoned their 3. Any legatee or devisee
children or induced their daughters to live a 4. The estate, represented by the executor or
corrupt or immoral life, or attempted against administrator (Jurado, p. 345)
their virtue
iii. Loss of parental authority for causes specified Testator can bequeath or devise a thing or property
in the Code belonging to someone else
iv. Attempt by one of the parents against the life
of the other, unless there has been It occurs when:
reconciliation between them 1. The testator thought that he owned it

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2015 GOLDEN NOTES
SUCCESSION
Order of Payment of Legacies and Devises
GR: A legacy or devise of a thing belonging to
someone else when the testator thought that he owned 1. Remuneratory legacies or devises
it is a void legacy or devise because it is vitiated by 2. Legacies or devises declared by testator to be
mistake. preferential
3. Legacies for support
XPN: If the testator acquires it after making his will. 4. Legacies for education
5. Legacies or devises of a specific determinate thing
2. The testator knows that he does not own but ordered which forms part of the estate
its acquisition 6. All others pro rata
If the thing given as devise or legacy is not owned by NOTE: The order of preference abovementioned is
the testator at the time he made the will but he orders applicable when:
his estate to acquire it, it is a valid legacy or devise. 1. There are no compulsory heirs and the entire estate is
The testator knew that he did not own it. There is no distributed by the testator as legacy/devise; or
mistake. 2. There are compulsory heirs but their legitimes have
already been provided for by the testator and there
If the thing or property bequeathed or devised belonged to are no donations inter vivos.
the legatee or devisee at the time the will was executed,
the legacy or devise is ineffective even if the legatee or Distinction between Art. 911 and Art. 950
devisee alienates the thing after the will is made.
Order of preference Order of preference under
Suppose the legatee or devisee acquired the property under Art. 911 Art. 950
after the will has been executed
LDPO: 1. Remuneratory L/D;
1. Legitime of 2. Preferential L/D;
1. If he acquired it by gratuitous title, then the legacy or
compulsory heirs; 3. Legacy for support;
devise is void.
2. Donations inter vivos; 4. Legacy for education;
3. Preferential legacies or 5. L/D of a specific,
Reason: The purpose of the testator that the property
devises; determinate thing which
would go to the devisee or legatee has already been
4. All Other legacies or forms a part of the estate;
accomplished with no expense to the legatee or
devises pro rata 6. All others pro rata
devisee.
2. If he acquired it by onerous title, the legacy or devise is NOTE: When the question of reduction is between and
valid and the estate may be required to reimburse the among legatees and devisees themselves, Art. 950 governs;
amount. but when there is a conflict between compulsory heirs and
legatees/devisees, Art. 911 governs.
Suppose the property bequeathed or devised has been
pledged or mortgaged Grounds for the Revocation of Legacy or Devise
GR: The pledge or mortgage must be paid by the estate. 1. Transformation of the thing in such a manner that it
does not retain either the form or the denomination it
XPN: If the testator provides otherwise. However, any had.
other charge such as easements and usufruct, with
which the thing bequeathed is burdened, shall be 2. Alienation of the thing bequeathed.
respected by the legatee or devisee.
GR: The alienation of the property revokes the legacy
A legacy of credit takes place when the testator bequeaths or devise notwithstanding the nullity of the
to another a credit against a third person. In effect, it is a transaction. However, if the nullity is based on
novation of the credit by the subrogation of the legatee in vitiated consent, the legacy or devise is not revoked
the place of the original creditor. because there was no intention to revoke (Fernandez
v. Dimagiba, G.R. No. L-23638, 1967).
A legacy of remission is a testamentary disposition of a
debt in favor of the debtor. The legacy is valid only to the XPN: If the sale is pacto de retro and the testator
extent of the amount of the credit existing at the time of reacquired it during his lifetime.
the testator's death. In effect, the debt is extinguished.
3. Total loss of the thing bequeathed.
A legacy or devise is NOT considered payment of a debt if
the testator has a standing indebtedness to the legatee or The loss of the thing bequeathed must not be
devisee. Because if it is, then it would be a useless legacy or attributed to the heirs.
devise since it will really be paid.
4. If the legacy is a credit against a third person or the
remission of a debt, and the testator, subsequent to
the making of the will, brings an action against the
debtor for payment.

CIVIL LAW
LEGAL OR INTESTATE SUCCESSION a. Exclude collaterals and State
b. Concur with surviving spouse
Legal or intestate succession is that which is effected by c. Are excluded by legitimate children and illegitimate
operation of law in default of a will. children
It is legal because it takes place by operation of law; it is 5. Surviving spouse

intestate because it takes place in the absence or in default a. Excludes collaterals other than brothers, sister,
of a last will of the decedent. nephews and nieces, and State
b. Concurs with legitimate children, illegitimate
Application of inheritance children, legitimate parents, illegitimate parents,
brothers, sisters, nephews and nieces
The following are applied successively (ISRAI): c. Is excluded by no one
1. Institution of an heir (Bequest, in case of legacies or 6. Brothers and Sister, nephews and nieces
devises) a. Exclude all other collaterals and the State
2. Substitution, if proper b. Concur with surviving spouse
3. Representation, if applicable c. Are excluded by legitimate children, illegitimate
4. Accretion, if applicable children, legitimate parents and illegitimate parents
5. Intestacy, if all of the above are not applicable
7. Other collaterals
Legal or Intestate succession takes place when: a. Exclude collaterals in remoter degrees and the State
b. Concur with collaterals in the same degree
1. There is no will; the will is void, or the will is revoked; c. Are excluded by legitimate children, illegitimate
2. The will does not dispose all the property of the children, legitimate parents, illegitimate parents,
testator (partial intestacy); surviving spouse, brothers and sisters, and nephews
3. The suspensive condition attached to the inheritance and nieces
is not fulfilled;
4. The heir predeceased the testator or repudiates the 8. State
inheritance and no substitution and no right of a. Excludes no one
accretion take place. b. Concurs with no one
5. The heir instituted is incapacitated to succeed. c. Is excluded by everyone (Balane, 2010).
NOTE: The enumeration is not exclusive; there are other ORDER OF INTESTATE SUCCESSION
causes for intestacy which are not included in the
enumeration. Order of Preference between lines in legal or intestate
E.g. succession
1. Preterition;
2. Arrival of the resolutory term or period; First, succession takes place in the direct descending line;
3. Fulfillment of a resolutory condition attached to Second, in the direct ascending line;
the inheritance; Finally, in the collateral line.
4. Non-compliance or impossibility of complying
with the will of the testator. Order of intestate succession to a legitimate child
Rules on Exclusion and Concurrence in Intestate In general, and without prejudice to the concurrent right of
Succession other heirs in proper cases, the order of intestate
succession to a legitimate child is as follows:
1. Legitimate children i. legitimate children and descendants;
a. Exclude parents, collaterals and State ii. legitimate parents and ascendants;
b. Concur with surviving spouse and illegitimate iii. illegitimate children;
children iv. the surviving spouse;
c. Are excluded by no one v. collaterals up to the fifth degree; and
vi. State (Rabuya, 2009).
2. Illegitimate children
a. Exclude illegitimate parents, collaterals and State Order of intestate succession to an illegitimate child
b. Concur with surviving spouse, legitimate children,
and legitimate parents 1. The legitimate children and descendants of a person
c. Are excluded by no one who is an illegitimate child are preferred over other
intestate heirs, without prejudice to the right of
3. Legitimate parents concurrence of illegitimate children and the surviving
a. Exclude collaterals and the State spouse.
b. Concur with illegitimate children and surviving 2. In the absence of legitimate children and descendants,
spouse the illegitimate children (of the illegitimate child) and
c. Are excluded by legitimate children their descendants succeed to the entire estate,
without prejudice to the concurrent right of the
4. Illegitimate parents surviving spouse.

308
2015 GOLDEN NOTES
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3. In the absence of children and descendants, whether Illegitimate children = of the
legitimate or illegitimate, the third in the order of estate
succession to the estate of the illegitimate child is his Illegitimate children The whole estate, divided
illegitimate parents. If both parents survive and are alone equally
entitled to succeed, they divide the estate share and Illegitimate children and Illegitimate children = of the
share alike. Although the law is silent, if the surviving surviving spouse estate
spouse of the illegitimate child concurs with the Surviving spouse = of the
illegitimate parents, the surviving spouse shall be estate
entitled to one-half of the estate while the illegitimate Surviving spouse alone The whole estate
parents get the other half. Surviving spouse and No article governing, but Art.
illegitimate parents 997 may be applied by analogy,
NOTE: In the ascending line, only the illegitimate thus:
parents are entitled to inherit from the illegitimate Surviving spouse = of the
child; the other illegitimate descendants are not so estate
entitled. Illegitimate parents = of the
estate
4. In default of children or descendants, legitimate or Surviving spouse and Surviving spouse = of the
illegitimate, and illegitimate parents, the surviving legitimate brothers and estate
spouse shall inherit the entire estate. But if the sisters, nephews and Legitimate brothers, sisters,
surviving spouse should survive with brothers and nieces nephews, nieces = of the
sisters, nephews and nieces, the surviving spouse estate (the nephews and nieces
shall inherit one-half of the estate, and the latter the inheriting by representation in
other half. The brothers and sisters must be by proper cases)
illegitimate filiation, otherwise, the Iron Curtain Rule Surviving spouse and Surviving spouse = of the
shall apply. illegitimate brothers estate
5. Although the law is silent, illegitimate brothers and and sisters, nephews Illegitimate brothers, sisters,
sisters who survive alone shall get the entire and nieces nephews and nieces = of the
inheritance. The legitimate children of the illegitimate estate (the nephews and nieces
parents are not entitled to inherit from the inheriting by representation in
illegitimate child by virtue of Article 992 of the NCC. proper cases)
6. The State (id., pp. 691-692).
NOTE: When the law speaks of
TABLE OF INTESTATE SHARES brothers and sisters, nephews
and nieces as legal heirs of an
Legitimate Children The whole estate divided illegitimate child, it refers to
alone equally illegitimate brothers and
Legitimate children and The whole estate, each sisters as well as to the
Illegitimate children illegitimate child getting children, whether legitimate or
share of one legitimate child illegitimate, of such brothers
Legitimate children and The whole estate, divided and sisters (Manuel v. Ferrer,
surviving spouse equally (the surviving spouse 247 SCRA 476)
counted as one legitimate Illegitimate parents The whole estate
child) alone
Legitimate Children, The whole estate, the surviving Illegitimate parents and Illegitimate parents = excluded
surviving spouse and spouse being counted as one children of any kind Children
illegitimate children legitimate child and each a. Child alone (legitimate or
illegitimate child getting illegitimate) = whole estate
share of one legitimate child b. Legitimate and illegitimate
Legitimate parents The whole estate, divided children = each illegitimate
alone equally gets share of one legitimate
Legitimate ascendants The whole estate, observing in child
(other than parents) proper cases, the rule of
alone division by line
Legitimate parents and Legitimate parents = of the
illegitimate children estate
Illegitimate children = of the Legitimate brothers and The whole estate, with a
estate sister alone brother/sister of the half-blood
Legitimate parents and Legitimate parents = of the inheriting the share of a
surviving spouse estate brother/sister of the full blood
Surviving spouse = of the Legitimate brothers and The whole estate, observing
estate sisters, nephews and the 2:1 proportion of full and
Legitimate parents, Legitimate parents = of the nieces half blood fraternity and the
surviving spouse and estate nephews and nieces inheriting
illegitimate children Surviving spouse = of the by representation in the
estate proper cases

CIVIL LAW
Nephews and nieces Uncles and Aunts = excluded Effect of Representation
with Uncles and aunts Nephews and nieces = whole
estate per capita, but observing Whenever there is succession by representation, the
the 2:1 proportion for the full division of the estate shall be made per stirpes, in such
and half blood manner that the representative or representatives shall
Illegitimate brothers The whole estate, observing not inherit more than what the person they represent
and sisters alone the 2:1 proportion of full and would inherit, if he were living or could inherit (Art. 974,
half blood fraternity NCC).
Illegitimate brothers, No article governing, but Arts.
sisters, nephews and 1005 and 1008 may be applied NOTE: Per stirpes means inheritance by group, all those
nieces by analogy, hence, they acquire within the group inheriting in equal shares.
the whole estate
Nephews and nieces The whole estate per capita, Right of representation arise either because of:
alone but observing the 2:1
proportion for the full and half 1. Predecease
blood 2. Incapacity
Other collaterals The whole estate, per capita, 3. Disinheritance
the nearer in degree excluding
the more remote When Right of Representation is NOT AVAILABLE:
State The whole estate
1. As to compulsory heirs: In case of repudiation, the one
Assignment and disposition who repudiates his inheritance cannot be
represented. Their own heirs inherit in their own
1. If decedent was a resident of right.
the Philippines at any time: 2. As to voluntary heirs: Voluntary heirs, legatees and
a. Personal property to devisees who either:
municipality of last a. Predecease the testator, or
residence b. Renounce the inheritance cannot be represented
b. Real property where by their own heirs, with respect to their
situated supposed inheritance.
2. If decedent was never a In representation, the representative does NOT inherit

resident of the Philippines from the person represented but from the decedent.
Personal and real property
where respectively situated The right of representation takes place in the direct
descending line, but never in the ascending.
How property is to be used:
In the collateral line, it takes place only in favor of the
1. For the benefit of public children of brothers or sisters, whether they be of the full
educational and charitable or half blood (Art. 972, NCC).
institutions in the respective
municipalities/cities NOTE: This rule applies only when the decedent does not
have descendants. Also, an illegitimate child can represent
2. Alternatively, at the instance his father, provided that the father was also illegitimate.
of an interested party, or motu
propio, court may order An illegitimate sibling of the decedent can be represented.
creation of a permanent trust An illegitimate brother or sister of the deceased can be
for the benefit of the represented by his children, without prejudice to the
institutions concerned application of the Iron Curtain Rule (Tolentino, p. 451).
RIGHT OF REPRESENTATION The right of representation does NOT apply to adopted

children. The right of representation cannot be invoked by
Representation is a right created by fiction of law, by adopted children because they cannot represent their
virtue of which the representative is raised to the place adopting parents to the inheritance of the latters parents.
and degree of the person represented, and acquires the
rights which the latter would have if he were living or Reason: The law does not create any relationship between
could have inherited (Art. 970, NCC). the adopted child and the relatives of the adopting parents,
not even to the biological or legitimate children of the
In order that representation may take place, it is necessary adopting parents.
that the representative himself be capable of succeeding
the decedent (Art. 973, NCC). NOTE: Under R.A. 8552 or the Domestic Adoption Law, the
adopted child and the adopting parents have reciprocal
successional rights.

310
2015 GOLDEN NOTES
SUCCESSION
Rule on Equal Division of Lines prevent such. child who died.
GR: Intestate heirs equal in degree inherit in equal shares.
XPN:
1. In the ascending line, the rule of division by line
is to the maternal line and to the paternal
line, and within each line, the division is per
capita.
2. In the collateral line, the full-blood
brothers/sisters will get double that of the half-
blood.
3. 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.
IRON CURTAIN RULE
An illegitimate child has no right to inherit ab intestato

from the legitimate children and relatives of his father or
mother; nor shall such children or relatives inherit in the
same manner from the illegitimate child (Art. 992).
NOTE: The iron curtain rule only applies in intestate

succession.
There is a barrier recognized by law between the

legitimate relatives and the illegitimate child so that one
cannot inherit from the other.
Application of iron curtain rule and right of

representation distinguished
RIGHT OF
IRON CURTAIN RULE
REPRESENTATION
Prohibits absolutely a Right created by fiction of
succession ab intestato law where the
between the illegitimate representative is raised to
child and the legitimate the place and degree of the
children and relatives of person represented, and
the father or mother of acquires the rights which
said illegitimate child. the latter would have if he
were living or could have
NOTE: Iron curtain rule inherited.
imposes a limitation on
right of representation.
Applies only in intestate Applies to both intestate
succession and testate succession
Determining factor: who died first? Is it the parent of the
illegitimate child or is it the legitimate relative or child of
his parent?
Applies if the one who died Applies if the one who died
first is the illegitimates first is the legitimate
parent. parent or child of the
illegitimates parent.
Reason: illegitimate will be
representing his parent Reason: illegitimate
because of the predecease, inherits from his parents
the bar imposed by the estate which includes his
iron curtain rule is parents inheritance from
rendered operative to said legitimate relative or

CIVIL LAW
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 If ILLEGITIMATE-
the child to be represented
LEGITIMATE- only legitimate
LEGITIMATE only legitimate children/
both legit & is
ILLEGITIMATE both legit & illegit
children/
descendants candescendants
represent him can illegit children/ descendants can
children/ descendants can represent him
represent him represent him
Legit X Illegit Y
Predeceased D Predeceased D
legit illegit legit illegit

(X1) (X2) (Y2) (Y1)
IronCurtain
Iron Curtain Rule
Rule applies
applies
Since X and
Since Y both
X and predeceased
Y both predeceasedD,D,only
onlyX1
X1can
can represent X.X2
represent X. X2cannot
cannotby
byvirtue
virtueofof the
the Iron
iron Curtain
curtain
rule.Both
Rule. Both Y1 and Y2
Y2 can
canrepresent
representYY.

312
2015 GOLDEN NOTES
SUCCESSION
PROVISIONS COMMON TO TESTATE AND INTESTATE 2. That one of the persons thus called die before the
SUCCESSION testator, or renounce the inheritance, or be
incapacitated to receive it (Art. 1016, NCC).
RIGHT OF ACCRETION
In testamentary succession, accretion takes place in
Accretion is a right by virtue of which, when two or more case of:
persons are called to the same inheritance, devise or
legacy, the part assigned to the one who renounces or 1. Predecease
cannot receive his share, or who died before the testator, is 2. Incapacity
added or incorporated to that of his co-heir, co-devisees, or 3. Renunciation
co-legatees (Art. 1015, NCC). 4. Non-fulfillment of the suspensive condition imposed
upon instituted heir
Basis: Accretion is a right based on the presumed will of 5. Ineffective testamentary disposition
the deceased that he prefers to give certain properties to
certain individuals rather than to his legal heirs. Accretion In intestate succession, accretion takes place in case
is preferred over intestacy. of:
Requisites of Accretion 1. Predecease of legal heir

2. Incapacity of legal heir
In order that the right of accretion may take place in a 3. Repudiation by legal heir
testamentary succession, it shall be necessary:
NOTE: Accretion takes place only if there is no
1. That two or more persons be called to the same representation. In renunciation, there is always accretion.
inheritance, or to the same portion thereof, pro
indiviso; and Reason: No representation in renunciation.

CIVIL LAW
Substitution, representation and accretion in testate and intestate succession distinguished:
TESTAMENTARY SUCCESSION INTESTATE SUCCESSION

With respect to LEGITIME in case of predecease, incapacity and In case of predecease and incapacity
disinheritance
1. If the right of representation takes place, then the 1. If the right of representation takes place, then
representative succeeds to the vacant portion. the representative succeeds to the vacant
portion.
2. If representation is not available, then the co-heirs of the
same degree shall succeed to it in their own right and NOTE: Representation takes place in case of
not by accretion since there is no accretion with respect predecease and incapacity with respect to
to the legitime. inheritance conferred by law. Hence, it takes
place in legal or intestate succession.
3. In default of the above, the vacant portion shall go to the
other secondary and/or other compulsory heirs. 2. If representation is not available, then the vacant
portion shall go to the co-heirs in their own
NOTE: Substitution cannot take place with respect to legitime. right.
3. In default thereof, then the vacant share shall go

to the heirs in the next order of intestacy.
With respect to LEGITIME in case of repudiation In case of repudiation
1. The other co-heirs shall succeed to it in their own right The vacant portion shall go to the other co-heirs by right
and not by right of accretion since there is no accretion of accretion. In legal succession, the share of the person
with respect to legitime. who repudiates the inheritance always accrues to his co-
heirs.
2. In default thereof, the vacant portion shall go to the
other secondary and/or compulsory heirs. In default thereof, the vacant share shall go to the heirs of
next degree in their own right.
NOTE: Representation does not take place in repudiation.
In default thereof, it shall go to the heirs in the next order
NOTE: Substitution cannot take place with respect to legitime. of intestacy.
With respect to the FREE PORTION in case of predecease,

incapacity or renunciation
1. Substitution shall take place if provided for by the
testator
2. If no substitution is provided, the vacant share shall go

to the co-heir by right of accretion if the requisites are
present and the testator has not provided the contrary
3. If the requisites of accretion are not present or when the

testator provides that no accretion shall take place, the
vacant portion shall pass to the legal heirs if no
substitute has been designated
NOTE: In testamentary succession, representation takes place

only with respect to the legitime; it does not take place with
respect to what is voluntarily given by will.
CAPACITY TO SUCCEED BY WILL OR INTESTACY under the conditions prescribed in Article 41 (Art. 1025,
NCC).
Persons not incapacitated by law may succeed by will or
ab intestate. PERSONS INCAPABLE OF SUCCEEDING
The provisions relating to incapacity by will are equally Absolute incapacity to succeed means that the person is
applicable to intestate succession (Art. 1024, NCC). incapacitated to succeed in any form, whether by testate or
intestate succession.
In order to be capacitated to inherit, the heir, devisee or
legatee must be living at the moment the succession opens, Persons who are Absolutely Incapacitated to Succeed:
except in case of representation, when it is proper.
1. Those not living at the time of death of the testator
A child already conceived at the time of the death of the 2. Those who cannot be identified (Art. 845, NCC).
decedent is capable of succeeding provided it be born later
UNIVERSITY OF SANTO TOMAS 314

2 0 15 G O L D E N N O T E S
SUCCESSION
3. Those who are not permitted by law to inherit (Art. 6. Individuals, associations and corporations not
1027, NCC) permitted by law to inherit (Art. 1027, NCC).
Determination of the Capacity to Succeed Requisites for a priest to be disqualified from

inheriting
GR: In order to judge the capacity of the heir, devisee, or
legatee, his qualification at the time of the death of the 1. The will was made during the last illness of the
decedent shall be the criterion. testator;
2. The spiritual ministration must have been extended
XPN: If the institution, devise or legacy should be during the last illness;
conditional (suspensive condition), the capacity is to be 3. The will was executed during or after the spiritual
determined not only at the time of the death of the ministration.
decedent but also at the time of the fulfillment of the
condition. The following are covered by this disqualification to
inherit (PMRC)
The governing law in determining the capacity to
succeed of the heir, devisee, legatee is the law of the 1. Priest who heard the confession of the testator during
nation of the decedent. his last illness;
2. Minister of the gospel who extended spiritual aid to
RELATIVE INCAPACITY TO SUCCEED him during the same period;
3. Relatives of such priest or minister of the gospel
Relative incapacity to succeed means the person is within the fourth degree; or
incapacitated to succeed because of some special relation 4. The Church, order, chapter, community, organization,
to the testator. or institution to which such priest or minister may
belong;
Grounds for Relative Incapacity to Succeed (UMA)
Q: If the confession was made before the will was
1. Undue influence or interest (Art. 1027, NCC) made, can the priest inherit upon the death of the sick
2. Morality or public policy (Art. 739, NCC) person, if:
3. Acts of unworthiness (Art. 1032, NCC) 1. The priest is the son of the sick person?
2. The priest was the sick persons brother?
The following are incapacitated to succeed based on
undue influence or interest (PRG-WPI) A:
1. Yes. He can get the legitime.
1. The Priest who heard the confession of the testator
during his last illness, or the minister of the gospel NOTE: A priest is incapacitated to succeed when the
who extended spiritual aid to him during the same confession is made prior to or simultaneously with the
period; making of a will.
2. The Relatives of such priest or minister of the gospel The disqualification applies only to testamentary
within the fourth degree, the church, order, chapter, dispositions.
community, organization, or institution to which such
priest or minister may belong; 2. Yes. He can inherit by intestacy.
3. A Guardian with respect to testamentary dispositions NOTE: Despite this apparent restriction to Christian
given by a ward in his favor before the final accounts ministers, this applies to all spiritual ministers, e.g.,
of the guardianship have been approved, even if the Buddhist monks.
testator should die after the approval thereof;
nevertheless, any provision made by the ward in favor Reason: It is conclusively presumed that the spiritual
of the guardian when the latter is his ascendants, minister used his moral influence to induce or
descendant, brother, sister, or spouse, shall be valid; influence the sick person to make a testamentary
disposition in his favor.
4. Any attesting Witness to the execution of a will, the
spouse, parents, or children, or any one claiming Q: When is a guardian disqualified from inheriting by
under such witness, spouse, parents, or children; testate succession?
NOTE: Numbers 1 to 4 do not apply to legitimes. A:

GR: The disqualification applies when the disposition is
5. Any Physician, surgeon, nurse, health officer or made before the approval of final accounts or lifting of
druggist who took care of the testator during his last guardianship.
illness;
XPN: It does not apply even when the disposition is made
NOTE: Number 5 is an absolute disqualification. after the guardianship began or before it is terminated
when the guardian is an: ADBS2
1. Ascendant

CIVIL LAW
2. Descendant NOTE: This prohibition shall not apply to cases
3. Brother wherein, according to law, there is no obligation to
4. Sister make an accusation.
5. Spouse
5. Person convicted of Adultery or concubinage with the
The following are covered by the disqualification on spouse of the testator
attesting witnesses 6. Person who by Fraud, violence, intimidation, or undue
influence should cause the testator to make a will or
1. Attesting witness to the execution of a will; to change one already made
2. The attesting witness: 7. Person who by the same means Prevents another
a. spouse from making a will, or from revoking one already
b. parents made, or who supplants, conceals, or alters the latter's
c. children will
3. Any one claiming under such witness, spouse, parents, 8. Person who Falsifies or forges a supposed will of the
or children; decedent (Art. 1032, NCC).
NOTE: If, notwithstanding the disqualified witness, the NOTE: Grounds 1, 2, 3, 5 and 6 are the same grounds as in
number of witnesses is sufficient, the former is not disinheritance.
disqualified. Numbers 6, 7 and 8 cover six (6) acts which relate to wills:
1. Causing the testator to make a will
Requisites for the Disqualification of Physician 2. Causing the testator to change an existing will
3. Preventing the decedent from making a will
1. The will was made during the last illness 4. Preventing the testator from revoking his will
2. The sick person must have been taken cared of during 5. Supplanting, concealing, or altering the testator's
his last illness will.
3. Medical attendance was made 6. Falsifying or forging a supposed will of the
4. The will was executed during or after he was being decedent
taken cared of.
UNWORTHINESS vs. DISINHERITANCE
Disqualification Applies to the following (PSN-HD)
DISINHERITANCE UNWORTHINESS
1. Physician; Exclusion from
2. Surgeon; the entire
3. Nurse; Effects on the Deprivation of a inheritance.
4. Health officer; or inheritance compulsory heir of However,
5. Druggist his legitime. donations inter
vivos are not
The following are incapacitated to succeed based on affected.
morality or public policy (ACO) Reconciliation
between the
1. Persons guilty of Adultery or concubinage with the Effects of offender and the If the testator
testator at the time of the making of the will pardon or offended party pardons the act of
2. Persons guilty of the same Criminal offense, in reconciliation deprives the latter unworthiness, the
consideration thereof of the right to cause of
3. A public officer or his wife, descendants and disinherit, and unworthiness
ascendants, by reason of his Office (Art. 1028 in renders ineffectual shall be without
relation to Art. 739, NCC) any disinheritance effect.
that may have been
The following are incapacitated to succeed by reason made.
of unworthiness (P-CAV-AFP-F) Manner of
reconciliation Express or implied
1. Parents who have abandoned their children or or pardon
induced their daughters to lead a corrupt or immoral There are grounds for disinheritance
life, or attempted against their virtues Grounds which are also causes for incapacity by
2. Persons Convicted of an attempt against the life of the reason of unworthiness.
testator, his or her spouse, descendants or ascendants Effect of
3. Persons who Accused the testator of a crime for which subsequent
the law prescribes imprisonment for six years or reconciliation
more, if the accusation has been found to be if The moment the testator uses one of the
groundless disinheritance causes for unworthiness as a ground for
4. Heir of full age who, having knowledge of the Violent has already disinheritance, he thereby submits it to
death of the testator, should fail to report it to an been made on the rule on disinheritance (Rabuya, 2009).
officer of the law within a month unless the authorities any of the
have already taken action. grounds which
are also

2 0 15 G O L D E N N O T E S
SUCCESSION
causes for testate heir, he may still accept the inheritance as a testate
unworthiness heir.
Remedy if the heir repudiates the inheritance to the

ACCEPTANCE AND REPUDIATION OF THE prejudice of his creditors
INHERITANCE
If the heir repudiates the inheritance to the prejudice of his
The acceptance or repudiation of the inheritance is an act own creditors, the latter may petition the court to
which is purely voluntary and free (Art. 1041, NCC). authorize them to accept it in the name of the heir.
Principal Characteristics of Acceptance and Requisites

Repudiation
1. The heir who repudiated his inheritance must have been
1. It is voluntary and free indebted at the time when the repudiation is made.
2. It is retroactive 2. The heir-debtor must have repudiated his inheritance
3. Once made, it is irrevocable according to the formalities prescribed by law.
3. Such act of repudiation must be prejudicial to the
Requisites of Acceptance and Repudiation creditor or creditors.
4. There must be judicial authorization (Art. 1052, NCC).
1. Certainty of the death of the decedent
2. Certainty of the right of inheritance PARTITION AND DISTRIBUTION OF ESTATE
Inheritance may be accepted either by: Partition, in general, is the separation, division and
assignment of a thing held in common among those to
1. Express acceptance through a public or private whom it may belong. The thing itself may be divided or its
instrument value (Art. 1079, NCC).
2. Tacit acceptance through acts by which the
intention to accept is necessarily implied or which Every act which is intended to put an end to indivision
one would have no right to do except in the capacity among co-heirs and legatees or devisees is deemed to be a
of an heir. partition, although it should purport to be a sale, an
exchange, a compromise, or any other transaction (Art.
Inheritance is deemed accepted 1082, NCC).
1. When the heir sells, donates, or assigns his rights The partition may be effected either
2. When the heir renounces it for the benefit of one or
more heirs 1. By the decedent himself during his lifetime by an act
3. When renunciation is in favor of all heirs inter vivos or by will
indiscriminately for consideration 2. By a third person designated by the decedent or by
4. Other tacit acts of acceptance: the heirs themselves
a. Heir demands partition of the inheritance 3. By a competent court in accordance with the New
b. Heir alienates some objects of the inheritance Rules of Court
c. Acts of preservation or administration if, through
such acts, the title or capacity of the heir has been Partition may be demanded by:
assumed
d. Under Art. 1057, failure to signify acceptance or 1. Compulsory heir
repudiation within 30 days after an order of 2. Voluntary heir
distribution by the probate court. 3. Legatee or devisee
4. Person who has acquired an interest in the estate
Ways by which the repudiation of the inheritance,
legacy or devise may be made Partition cannot be demanded when (PAPU)
1. By means of a public instrument 1. Expressly Prohibited by testator for a period not

2. By means of an authentic instrument more than 20 years
3. By means of a petition presented to the court having 2. Co-heirs Agreed that estate not be divided for period
jurisdiction over the testamentary or intestate not more than 10 years, renewable for another 10 yrs
proceedings. 3. Prohibited by law
4. To partition estate would render it Unserviceable for
Effect of repudiation if an heir is both a testate and use for which it was intended
legal heir
An estate can be partitioned inter vivos. Such partition
If an heir is both a testate and legal heir and he repudiated shall be respected, insofar as it does not prejudice the
the inheritance as a testate heir, he is understood to have legitime of compulsory heirs (See Art. 1080, NCC).
repudiated in both capacities. However, should he
repudiate as a legal heir, without knowledge of being a

CIVIL LAW
Effects of Partition
It may also be rescinded on account of lesion, when any
1. Confers upon each heir the exclusive ownership of one of the co-heirs received things whose value is less, by
property adjudicated. at least 1/4, than the share to which he is entitled,
2. After the partition, the co-heirs shall be reciprocally considering the value of the things at the time they were
bound to warrant the title to (warranty against adjudicated (Art. 1098, NCC).
eviction) and the quality of (warranty against hidden
defects) each property adjudicated. Prescriptive Period
3. The obligation of warranty shall cease in the following
cases: The action for rescission on account of lesion shall
a. When the testator himself has made the partition prescribe after 4 years from the time the partition was
unless his intention was otherwise, but the made (Art. 1100, NCC).
legitime shall always remain unimpaired.
b. When it has been expressly stipulated in the
agreement of partition, unless there has been bad
faith.
c. When the eviction was due to a cause subsequent
to the partition, or has been caused by the fault of
the distributee of the property.
4. An action to enforce warranty among co-heirs must
be brought within 10 years from the date the right of
cause of action accrues.
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.
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 (Art. 1085, NCC).
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 (Art. 1086, NCC).
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 (Art.
1088, NCC).
Rescission and Nullity of Partition
A partition may be rescinded or annulled for the same

causes as contracts (Art. 1097, NCC).

2 0 15 G O L D E N N O T E S
PARTNERSHIP
PARTNERSHIP beyond the amount of their investment (Art 1843,
NCC).
CONTRACT OF PARTNERSHIP 6. A fiduciary relation exists between the partners (Art.
1807, NCC).
Partnership 7. On dissolution, the partnership is not terminated, but
continues until the winding up of partnership is
It is a contract whereby two or more persons bind completed (Art 1828, NCC)
themselves to contribute money, property, or industry to a
common fund, with the intention of dividing the profits NOTE: Such incidents may be modified by stipulation of
among themselves (Art. 1767, NCC). the partners subject to the rights of third persons dealing
with the partnership.
NOTE: Two or more persons may also form a partnership
for the exercise of a profession (Art. 1767, NCC).
Essential elements of a 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, Oct. 15,
1987).
Characteristics of a 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.
Typical incidents of partnership
1. The partners share in profits and losses. (Arts.

1767,1797-98, NCC)
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. (Art. 1768,
NCC)
3. They have equal rights in the management and
conduct of the partnership business. (Art. 1803, NCC)
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 (Art. 1818, NCC). 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 (Arts. 1816,
1822-24, NCC) except limited partners are not bound

CIVIL LAW
Partnership, Co-ownership and Corporation, partnership
distinguished each
partner is
BASIS CO- agent of
PARTNERS COPORATI
OWNERSH partnership
HIP ON
IP Death of a Death of Death of
Created by Created by Created by partner co-owner stockholder
contract or law law results in does not does not
Effect of
by mere dissolution necessarily dissolve the
Creation Death
agreement of dissolve corporation
of the partnership co-
parties ownership
Has juridical None Has May be May be Can only be
personality juridical dissolved at dissolved dissolved
separate and personality any time by anytime by with the
Juridical distinct from separate the will of the will of consent of
Personality that of each and distinct any or all of any or all the State
partner from that of the partners of the co-
each owners
corporators NOTE: If an
Realization Common Depends in unlawful
of profits enjoyment Articles of partnership
Purpose Dissolution
of a thing Incorporati is dissolved
or right on (AOI) by a judicial
No 10 years 50 years decree, the
limitation maximum maximum, profits shall
(May be extendible be
Duration/ confiscated
extended for not
Term of in favor of
by new more than
Existence the State.
agreement, 50 years in
Art. 494, any one (Art. 1770,
Civil Code) instance NCC)
Minimum of Minimum GR: In case of a GR: The
2 persons of 2 Minimum of general obligation
persons 5 persons partner, his to third
Number of separate and persons is
XPN:
incorporator personal limited to
Corporation
s property the assets
sole,
merger of shall also be of the
banks liable if the corporation
Liability
From the None From the assets of the .
moment of date of partnership
Commencem execution of issuance of is not
ent of the contract the sufficient to
Juridical of certificate satisfy the
Personality partnership of obligation to
incorporati third
on persons
Partner may Co-owner Stockholder
not dispose may freely has a right
of his do so to transfer
individual shares
Disposal/
interest without
Transferabili
unless prior
ty of Interest
agreed upon consent of
by all other
partners stockholder
s
In absence Co-owner Managemen
of cannot t is vested
Power to Act
stipulation represent with the
with 3rd
to contrary, the co- BOD
Persons
a partner ownership
may bind

2 0 15 G O L D E N N O T E S
PARTNERSHIP
Joint venture A partnership
acquires
It is an association of persons or companies jointly personality after
undertaking some commercial enterprise; generally, all following the
contributes assets and share risks. It requires a community requisites required
of interest in the performance of the subject matter, a right by law. e.g. Art.
to direct and govern the policy in connection therewith, Firm Name 1771-1773, NCC A joint venture has
and a duty which may be altered by agreement to share and no legal
both in profits and losses. Liabilities NOTE: SEC personality.
registration is not
Partnership v. Joint Venture required before a
partnership
BASIS Partnership Joint Venture acquires legal
The duration of a personality. (Art.
Limited to the 1768)
partnership
period in which the
Transaction generally relates to
goods are sold or ESSENTIAL FEATURES OF PARTNERSHIP
s entered a continuing
the project is
into business of various
carried on or a Essential Features of Partnership
transactions of a
single transaction.
certain kind.
Permanent - 1. There must be a valid contract.
partners are 2. The parties (two or more persons) must have legal
interested in capacity to enter into the contract.
carrying on 3. There must be a mutual contribution of money,
together of a property, or industry to a common fund.
general and 4. The object must be lawful.
continuing 5. The primary purpose must be to obtain profits and to
Temporary, divide the same among the parties. (De Leon, 2010)
business of a
although it may
Nature particular kind.
continue for a 1. VALID CONTRACT
number of years.
NOTE: A particular
partnership has a Contractual nature of partnership
limited and
temporary or ad Partnership is a voluntary relation created by agreement
hoc nature, being of the parties. It excludes from its concept all other
confined to a single associations which do not have their origin in a contract,
undertaking. express or implied. There is no such thing as a partnership
There must be a created by law or by operation or implication of law alone
partnership or firm (De Leon, 2010).
A firm name is not
name under which
necessary, thus the Partnership as a contract
the partnership
participating
shall operate. The
persons can Since partnership is fundamentally contractual, all the
Legal names of the
transact business essentials of a valid contract must be present.
Personality partners may
under their own
appear in the firm
name and can be As in other cases of contracts, in order to make an
name and the act of
individually liable agreement for a partnership valid, there must be a valid
the partners will
therefore. consideration existing as between the partners. Each
make the
partnership liable. partner surrenders to the partnership in accordance with
the express or implied stipulations of their mutual
Corporation cannot
Corporations can agreement (De Leon, 2010).
enter into a
engage in a joint
partnership
venture with 2. LEGAL CAPACITY OF THE PARTIES TO CONTRACT
contract, thus it
others through a
cannot be a partner
contract of Before there can be a valid contract of partnership, it is
by reason of public
Corporation agreement if the essential that the contracting parties have the necessary
policy; otherwise
as partner nature of the legal capacity to enter into the contract. Consequently, any
people other than
venture in line with person who cannot give consent to a contract cannot be a
its officers may be
the business of the partner.
able to bind it
corporation and it
(Albano, Civil Law
is authorized in its Persons who cannot give their consent to a contract of
Reviewer, 1998,
charter. partnership
p.570)
1. Minors;
2. Insane or demented persons;

CIVIL LAW
3. Deaf-mutes who do not know how to write; representatives as they are business.
4. Persons who are suffering from civil interdiction; and of money. There considered
5. Incompetents who are under guardianship is no property
contribution of
Persons qualified to be a partner money until they
have been
GR: Any person capacitated to contract may enter into a encashed.
contract of partnership. (De Leon, 2010)
XPNs: A partnership may be formed even if the common fund

1. Persons who are prohibited from giving each other is comprised entirely of borrowed or loaned money
any donation or advantage cannot enter into a
universal partnership (Art. 1782). A partnership may be deemed to exist among parties who
agree to borrow money to pursue a business and to divide
NOTE: A husband and wife, however, may enter into a the profits or losses that may arise therefrom, even if it is
particular partnership or be members thereof (De shown that they have not contributed any capital of their
Leon, 2010). own to a "common fund." Their contribution may be in the
form of credit or industry, not necessarily cash or fixed
2. Persons suffering from civil interdiction assets. Being partners, they are all liable for debts incurred
3. Persons who cannot give consent to a contract: by or on behalf of the partnership (Lim Tong Lim v.
a. Minors Philippine Fishing Gear Industries, Inc., G.R. No. 136448, Nov.
b. Insane persons 3, 1999).
c. Deaf-mutes who do not know how to write
4. LAWFUL OBJECT
Principle of delectus personae
Limitation on the parties freedom to choose the
This refers to the rule that is inherent in every partnership, transaction or transactions they will engage in
that no one can become a member of the partnership
association without the consent of all the partners. The only limitation is that the object must be lawful and
for the common benefit of the members. The limitation
Even if a partner will associate another person in his share arises not only from the express provisions of the law, but
in the partnership, the associate shall not be admitted into from the general principles of morality and justice (De
the partnership without the consent of all the partners, Leon, 2010).
even if the partner having an associate should be a
manager (Art. 1804, NCC). Consequences of a partnership formed for an unlawful
purpose
Corporation entering into a partnership with another
corporation 1. The contract is void ab initio and the partnership
never existed in the eyes of the law
As a rule, it is illegal for two corporations to enter into a 2. The profits shall be confiscated in favor of the
partnership. Nevertheless, a corporation may enter into a government
joint venture with another if the nature of the venture is in 3. The instruments or tools and proceeds of the crime
line with the business authorized by its charter (Tuason v. shall also be forfeited in favor of the government
Bolaos, G.R. No. L-4935, May 28, 1954). 4. The contributions of the partners shall not be
confiscated unless they fall under No.3 (De Leon,
3. MUTUAL CONTRIBUTION 2010).
A partner may contribute any of the following Necessity of judicial decree to dissolve an unlawful
partnership
MONEY PROPERTY INDUSTRY
The term is to be The property The word Judicial decree is not necessary to dissolve an unlawful
understood as contributed industry has partnership; however, it may sometimes be advisable that
referring to may be real or been construed to a judicial decree of dissolution be secured for the
currency which personal, mean the active convenience and peace of mind of the parties (De Leon,
is a legal tender corporeal or cooperation, the 2010).
in the incorporeal. work of the party
Philippines. Hence, credit associated, which 5. INTENTION TO DIVIDE THE PROFITS
Checks, drafts, such as may be either
promissory promissory personal manual Sharing of profits as a presumptive evidence of
notes payable to note or other efforts or partnership
order, and other evidence of intellectual, and for
mercantile obligation or which he receives The sharing in profits is merely presumptive and not
documents are even goodwill a share in the conclusive, even if cogent, evidence of partnership. There
not money but may be profits (not merely are numerous instances of parties who have a common
only contributed, salary) of the interest in the parties and losses of an enterprise but who

2 0 15 G O L D E N N O T E S
PARTNERSHIP
are not partners. Thus, if the division of profits is merely Distribution of losses
used as guide to determine the compensation due to one of
the parties, such is not a partner (De Leon, 2010). Agreeing upon a system of sharing losses is not necessary
for the obligation is implied in the partnership relation. If
Q: Mariano and Isabelo entered into a partnership only the share of each partner in the profits has been
agreement wherein they are to contribute P15,000 agreed upon, the share of each in the losses shall be in the
each for the purpose of printing 95,000 posters. same proportion.
Isabelo was unable to print enough posters pursuant
to the agreement, thus he executed in favor of Mariano The definition of partnership under Article 1767 refers to
a promissory note in an amount equivalent to the profits only and is silent as to losses. The reason is that
unrealized profit due to insufficient printing. The the object of partnership is primarily the sharing of profits,
whole amount became due but Isabelo defaulted while the distribution of losses is but a consequence of the
payment. Is Mariano entitled to file a case for the same. Be that as it may, the right to share in the profits
recovery of the unrealized profit of the partnership? carries with it the duty to contribute to the losses, of any.
A: No. The essence of a partnership is to share in the Q: Jose entered into a verbal agreement with
profits and losses, thus, Mariano should shoulder the Francisco to form a partnership for the purchase of
losses with Isabelo (Moran Jr., v. CA, G.R. No. L-59956, Oct. cascoes for a proposed boat rental business. It was
31, 1984). agreed that Francisco would buy the cascoes and each
partner is to furnish such amount of money as he
Q: To form a lending business, it was verbally agreed could, and that the profits will be divided
that Noynoy would act as financier while Cory and Kris proportionately. After Francisco purchased a casco
would take charge of solicitation of members and with the money advanced by Jose, they undertook to
collection of loan payments. They agreed that Noynoy draft the articles of partnership and embody the same
would receive 70% of the profits while Cory and Kris in an authentic document. However, they did not come
would earn 15% each. The parties executed the to an agreement. So, Francisco returned the money
'Articles of Agreement' which formalized their earlier advanced by Jose, which the latter received with an
verbal agreement. Later, Noynoy filed a complaint express reservation of all his rights as a partner.
against Cory and Kris for misappropriation of funds
allegedly in their capacities as Noynoys employees. In a. Was there a partnership formed between Jose and
their answer, Cory and Kris asserted that they were Francisco?
partners and not mere employees of Noynoy. What b. If such partnership existed, was it terminated by
kind of relationship existed between the parties? the receipt of Jose of the money he advanced?
A: A partnership was formed among the parties. The A:

"Articles of Agreement" stipulated that the signatories a) Yes. Both elements in a contract of partnership exist:
shall share the profits of the business in a 70-15-15 a) mutual contribution to a common stock, and b) a
manner, with Noynoy getting the lion's share. This joint interest in the profits. If the contract contains
stipulation clearly proved the establishment of a these two elements, a partnership relation results,
partnership (Santos v. Spouses Reyes, G.R. No.135813, Oct. and the law itself fixes the incidents of this relation if
25, 2001). the parties fail to do so. In this case, there was money
furnished by Jose and received by Francisco for the
Q: Jose conveyed his lots in favor of his four sons in purchase of the cascoes and there was also an
order for them to build their residences. His sons sold intention to divide the profits proportionately
the lots since they found the lots impractical for between them. Thus, there is a partnership by virtue
residential purposes because of high costs of of the verbal agreement between Jose and Francisco.
construction. They derived profits from the sale and
paid income tax. The sons were required to pay b) No. There was no clear intent on the part of Jose, in
corporate income tax and income tax deficiency, on accepting the money, to relinquish his rights as a
the theory that they formed an unregistered partner (Fernandez v. Dela Rosa, G.R. No. 413, Feb. 2,
partnership or joint venture taxable as a corporation. 1903).
Did the siblings form a partnership?
NOTE: The partnership relation is not the contract itself,
A: No. The original purpose was to divide the lots for but the result of the contract. The relation is evidenced by
residential purposes. If later, they found out that it is not the terms of the contract which may be oral or written,
feasible to build their residences on the lots, they can express or implied from the acts and declarations of the
dissolve the co-ownership by reselling said lots. The parties, subject to the provisions of Articles 1771-1773
division on the profit was merely incidental to the and to the Statute of Frauds (De Leon, 2010).
dissolution of the co-ownership which was in the nature of
things a temporary state (Obillos, Jr. v. CIR, G.R. No. L-
68118, Oct. 29, 1985).

CIVIL LAW
FORMATION OF PARTNERSHIP ii. Registered with Securities and Exchange
Commission (Art. 1772, NCC)
Formation of a partnership NOT an absolute right
NOTE: Even if the partnership is not
To organize a corporation or a partnership that could registered with SEC, the partnership is still
claim a juridical personality of its own and transact valid and possesses a distinct personality
business as such is not a matter of right but a privilege (Paras, 1969)
which may be enjoyed only under such terms as the State
may deem necessary to impose (De Leon, 2010). 2. Real property or real rights must be:
a. In a public instrument (Art. 1771, NCC)
Formation of Partnership b. With an inventory of said property
i. Signed by the parties
It is created by agreement of the parties (consensual). ii. Attached to the public instrument (Art. 1773,
There is no such thing as a partnership created by law or NCC)
by operation or implication of law alone (De Leon, 2005). iii. Registered in the Registry of Property of the
province, where the real property is found to
Articles of Partnership bind third persons (Paras, p. 412)
While partnership relation may be informally created and 3. Limited partnership Must be registered as such with
its existence proved by manifestations of the parties, it is SEC, otherwise, it is not valid as a limited partnership
customary to embody the terms of the association in a but may still be considered a general partnership with
written document known as Articles of Partnership juridical personality (Paras,1969)
stating the name, nature or purpose and location of the
firm, and defining, among others, the powers, rights, Where capital of the partnership consists of money or
duties, and liabilities of the partners among themselves, personal property, amounting to P3000 or more
their contributions, the manner by which the profits and
losses are to be shared, and the procedure for dissolving Article 1772 requires that partnerships with a capital of
the partnership (De Leon, 2010). P3,000 or more must register with SEC. However, this
registration requirement is not mandatory. Article 1768
Commencement of Contract of Partnership explicitly provides that in case of failure to register with
the SEC as provided for in this article, the partnership will
A partnership is a consensual contract; hence, it exists from retain its juridical personality. The failure to register the
the moment of the celebration of the contract by the contract of partnership does not invalidate the same as
partners. among the partners, so long as the contract has the
essential requisites, because the main purpose of
A partnership begins from the moment of the execution of registration is to give notice to third parties, and it can be
the contract, unless it is otherwise stipulated (Art 1784). assumed that the members themselves knew of the
Since under Art. 1784, a partnership commences from the contents of their contract. Non-compliance with this
time of execution of the contract if there is no contrary directory provision of the law will not invalidate the
stipulation as to the date of effectivity of the same, its partnership.
registration in the Securities and Exchange Commission is
not essential to give it juridical personality (De Leon, 2010) Registration is merely for administration and licensing
purposes; hence, it shall not affect the liability of the
Formalities needed for the creation of a partnership partnership and the members thereof to third persons
(Art. 1772, (2), NCC).
GR: No special form is required for its validity or existence
(Art. 1771, NCC). The contract may be made orally or in Where real property is contributed
writing regardless of the value of the contributions.
A partnership may be constituted in any form, except
NOTE: An agreement to enter in a partnership at a future where immovable property of real rights are contributed
time, which by its terms is not performed within a year thereto, in which case a public instrument shall be
from the making thereof is covered by the Statute of necessary. Hence, based on the intention of the parties, a
Frauds (Art. 140 3(2), NCC). Such agreement is verbal contract of partnership may arise (Sunga-Chan v.
unenforceable unless the same be in writing or at least Chua, G.R. No. 143340, Aug. 15, 2001).
evidenced by some note or memorandum thereof
subscribed by the parties (De Leon, 2010). A contract of partnership is VOID if the requirements
under Art. 1773, as regards contribution of real property
XPN: If property or real rights have been contributed to to a partnership, has not been complied with. Nonetheless,
the partnership: a void partnership under Art.1773, in relation to Art. 1771,
may still be considered by the courts as an ordinary
1. Personal property contract as regards the parties thereto from which rights
a. Less than P3,000 may be oral and obligations to each other may be inferred and
b. P 3,000 or more must be: enforced (Torres v. CA, G.R. No. 134559, Dec. 9 1999).
i. In a public instrument; and
NOTE: Torres v. CA does not involve third persons.

2 0 15 G O L D E N N O T E S
PARTNERSHIP
contract was made, they were the joint proprietors
To be effective against third persons, the transfer of real and operators of the said lumber yard engaged in the
property to the partnership must be duly registered in the purchase and sale of lumber under the name and style
Registry of Property of the province or city where the of Chim. In an action to recover the balance under the
property contributed is located (Art. 1771, NCC). contract filed by Frank against Chim, Vicente and Ting,
the latter two alleged that they are not Chims
Q: A partnership was entered into between Mauricio partners. Did Chim, Vicente and Ting form a
and Severino to operate a fishpond. Neither partner partnership?
contributed a fishpond or a real right over any fish
pond. Their capital contributions were in cash in the A: No. A simple business was formed by Chim exclusively
amount of P1,000 each. While the partnership contract in his own name and under his personal management and
was done in a public instrument, no inventory of the he effected every transaction in his name and in the names
fishpond to be operated was attached in the said of other persons interested in the profits and losses of the
instrument. Is there a valid contract of partnership? business. What has been formed is an accidental
partnership of cuentas en participacion.
A: Yes. There is a valid contract of partnership despite the
lack of inventory. The purpose of the partnership was not Q: Henry and Lyons are engaged in real estate business
to engage in the fishpond business but to operate a and are co-owners of a parcel of land. Henry, with the
fishpond. Neither said fishpond nor a real right to any fish consent of Lyons, mortgaged the property to raise the
pond was contributed to the partnership (Agad v. Mabato, funds sufficient to buy and develop the San Juan
G.R. No. L-24193, June 28, 1968). Estate. Lyons expressed his desire not to be part of the
development project, but Henry, nevertheless,
Q: A and B are co-owners of an inherited property. pursued the business alone. When the business
They agreed to use the said common properties and prospered, Lyons demanded for a share in the
the income derived therefrom as a common fund with business. Is Lyons entitled to the shares in San Juan
the intention to produce profits for them in proportion Estate?
to their respective shares in the inheritance as
determined in a project of partition. What is the effect A: No. Lyons himself manifested his desire not to be part of
of such agreement on the existing co-ownership? the development project. Thus, no partnership was
formed. The mortgage of the land was immaterial to the
A: The co-ownership is automatically converted into a existence of the partnership. It is clear that Henry, in
partnership. From the moment of partition, A and B, as buying the San Juan Estate, was not acting for any
heirs, are entitled already to their respective definite partnership composed of himself and Lyons, and the law
shares of the estate and the income thereof, for each of cannot be distorted into a proposition which would make
them to manage and dispose of as exclusively his own Lyons a participant in this deal contrary to his express
without the intervention of the other heirs, and, determination (Lyons v. Rosenstock, G.R. No. 35469, Mar. 17,
accordingly, he becomes liable individually for all the taxes 1932).
in connection therewith.
Q: Catalino and Ceferino acquired a joint tenancy over
If, after such partition, an heir allows his shares to be held a parcel of land under a verbal contract of partnership.
in common with his co-heirs under a single management It was stipulated that each of the said purchasers
to be used with the intent of making profit thereby in should pay one-half of the price and that an equal
proportion to his share, there can be no doubt that, even if division should be made between them of the land
no document or instrument were executed for the thus purchased. Despite Catalinos demand for an
purpose, for tax purposes, at least, an unregistered equal division between them, Ceferino refused to do so
partnership is formed (Ona v. Commissioner of Internal and even profited from the fruits of the land. Are they
Revenue, 45 SCRA 74 [1972]). partners or co-owners?
Meaning of cuentas en participacion A: They are co-owners because it does not appear that
they entered into any contract of partnership but only for
Under the Code of Commerce, cuentas en participacion the sole purpose of acquiring jointly or by mutual
means a sort of an accidental partnership constituted in agreement of the land under the condition that they would
such a manner that its existence was only known to those pay of the price of the land and that it be divided equally
who had an interest in the same, there being no mutual between them (Gallemit v. Tabiliran, G.R. No. 5837, Sept. 15,
agreement between the partners, and without a corporate 1911).
name indicating to the public in some way that there were
other people besides the one who ostensibly managed and Future partnership
conducted the business, governed under Article 239 of the
Code of Commerce (Bourns v. Carman, G.R. No. L-2880, Dec. It is a kind of partnership where the partners may
4, 1906). stipulate some other date for the commencement of the
partnership. Persons who enter into a future partnership
Q: Chim was the owner and manager of a lumber yard. do not become partners until or unless the agreed time has
Vicente and Ting participated in the profits and losses. arrived or the contingency has happened (De Leon, 2010).
A contract of sawing lumber was entered into by Chim,
acting in his own name, with Frank. At the time the

CIVIL LAW
As long as the agreement for a partnership remains DIFFERENT KINDS OF PARTNERS
inchoate or unperformed, the partnership is not
consummated (De Leon, 2010). A. Under the Civil Code
RULES TO DETERMINE EXISTENCE 1. Capitalist Contributes money or property to the

common fund
Rules to determine the existence of partnership 2. Industrial Contributes only his industry or personal
service
1. Except as provided by Art. 1825 (partnership by 3. General One whose liability to 3rd persons extends to
estoppel), persons who are not partners as to each his separate or personal property
other are not partners as to third persons; 4. Limited One whose liability to 3rd persons is limited
2. Co-ownership or co-possession does not of itself to his capital contribution
establish a partnership, whether such co-owners or 5. Managing Manages the affairs or business of the
co- possessors do or do not share any profits made by partnership; he may be appointed either in the
the use of the property; articles of partnership or after the constitution of the
3. The sharing of gross returns does not of itself partnership. He is also known as general or real
establish a partnership, whether or not the persons partner.
sharing them have a joint or common right or interest 6. Liquidating Takes charge of the winding up of
in any property from which the returns are derived; partnership affairs upon dissolution
4. The receipt by a person of a share of the profits of a 7. Partner by estoppel Is not really a partner but is
business is prima facie evidence that he is a partner in liable as a partner for the protection of innocent 3rd
the business, but no such inference shall be drawn if persons; he is also known as the partner by
such profits were received in payment: implication or nominal partner or a quasi-partner
a. As a debt by instalments or otherwise; 8. Continuing partner Continues the business of a
b. As wages of an employee or rent to a landlord; partnership after it has been dissolved by reason of
c. As an annuity to a widow or representative of a the admission of a new partner, retirement, death or
deceased partner; expulsion of one of the partners
d. As interest on a loan, though the amount of 9. Surviving partner Remains after a partnership has
payment vary with the profits of the business; been dissolved by death of any partner
e. As the consideration for the sale for the sale of a 10. Sub-partner Is not a member of the partnership;
goodwill of a business or other property by contracts with a partner with reference to the latter's
instalments or otherwise. (Art. 1769, NCC) share in the partnership
NOTE: In sub-paragraphs a e, the profits in the B. Other Classifications

business are not shared as profits of a partner as a
partner, but in some other respects or for some other 11. Ostensible Takes active part and known to the public
purpose. as partner in the business, whether or not he has an
actual interest in the firm. Thus, he may be an actual
Burden of proving the existence of a partnership or a nominal partner.
12. Secret Takes active part in the business but is not
The burden of proving the existence of a partnership rests known to be a partner by outside parties
on the party having the affirmative of that issue. The 13. Silent Does not take any active part in the business
existence of a partnership must be proved and will not be although he may be known to be a partner. If he
presumed. withdraws from the partnership, he must give notice
to those persons who do business with the firm to
However, when a partnership is shown to exist, the escape liability in the future
presumption is that it continues in the absence of evidence 14. Dormant Does not take active part in the business
to the contrary, and the burden of proof is on the person and is not known or held out as a partner; the term is
asserting its termination (De Leon, 2010). also synonymous with a sleeping partner
15. Original partner -one who is a member of the
Person who alleges the existence of partnership partnership from the time of its organization
cannot prove it by evidence of an agreement wherein 16. Incoming partner - a person lately, or about to be,
the parties call themselves partners taken into an existing partnership as a member
17. Retiring partner - one withdrawn from the
The reason behind this is because the use of the term partnership; a withdrawing partner
partner in popular sense, or as a matter of business
convenience, will not necessarily import an intention that CLASSIFICATIONS OF PARTNERSHIP
a legal partnership should result. But while the use of
partnership or partners in an alleged oral agreement 1. Object
claimed to have constituted partnership is not conclusive a. Universal partnership
that partnership did not exist, non-use of such terms is i. Of all present property (Art. 1778, NCC) The
entitled to weight (De Leon, 2010). 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

2 0 15 G O L D E N N O T E S
PARTNERSHIP
may acquire therewith. The following a. Secret partnership Partnership that is not
become the common fund of all the partners: known to many but only as to its partners.
Property which belonged to each of the b. Notorious or open partnership It is known not
partners at the time of the constitution only to the partners, but to the public as well.
of the partnership
Profits which they may acquire from all 7. Purpose
property contributed a. Commercial or trading One formed for the
ii. Of all profits (Art. 1780, NCC) Comprises all transaction of business.
that the partners may acquire by their b. Professional or non-trading One formed for the
industry or work during the existence of the exercise of a profession
partnership
UNIVERSAL vs. PARTICULAR
b. Particular partnership It is one which has for its
object, determinate things, their use and fruits, or Classes of Universal Partnership
a specific undertaking or the exercise of a
profession or a vocation. (Art. 1783, NCC) ALL PROFITS ALL PRESENT PROPERTY
What constitutes common property
2. Liability of partners Only usufruct of
a. General partnership One where all partners are the properties All properties actually belonging to
general partners who are liable even with respect of the partners the partners are contributed they
to their individual properties, after the assets of become become common property
the partnership have been exhausted (Paras, p. common (owned by all of the partners and
411) property the partnership)
b. Limited partnership One formed by 2 or more
persons having as members one or more general As to profits as common property
partners and one or more limited partners, the As to profits from other sources:
latter not being personally liable for the
GR: Aside from the contributed
obligations of the partnership. (Art. 1843)
properties, the profits of said
All profits
property become common
3. Duration acquired by the
property
a. Partnership at will Partnership for a particular industry of the
undertaking or venture which may be terminated partners
XPN: Profits from other sources
anytime by mutual agreement; one for a fixed become
may become common if there is a
term or particular undertaking which is common
stipulation to such effect
continued by the partners after the termination property
(whether or not As to properties subsequently
of such term or particular undertaking without
they were acquired:
express agreement
obtained GR: Properties subsequently
b. Partnership with a fixed period The term for
through the acquired by inheritance, legacy or
which the partnership is to exist is fixed or
usufruct donation, cannot be included in the
agreed upon or one formed for a particular
contributed) stipulation
undertaking.
XPN: Only fruits thereof can be
4. Legality of existence
included in the stipulation (Art.
a. De jure partnership One which has complied
1779, NCC)
with all the requirements for its establishment
b. De facto partnership One which has failed to
comply with all the legal requirements for its Presumption of universal partnership of profits
establishment.
When the Articles of Universal Partnership fail to specify
whether it is one of all present property or of profits, only
5. Representation to others
constitutes a universal partnership of profits (Art. 1781,
a. Ordinary or real partnership One which actually
NCC), because it imposes lesser obligations on the
exist among the partners and also as to third
partners, since they preserve the ownership of their
person.
separate property.
b. Ostensible or partnership by estoppel When two
or more persons attempt to create a partnership
but fail to comply with the legal personalities Persons disqualified from entering into universal
essential for juridical personality, the law partnership
considers them as partners, and the association is
a partnership insofar as it is favorable to third a. Legally married spouses (Art. 87, FC). However they
persons, by reason of the equitable principle of can enter into particular partnership.
estoppel (MacDonald et. al. v. Natl. City Bank of b. Common law spouses.
c. Parties guilt of adultery or concubinage.
New York, G.R. No. L-7991, May 21, 1956)
d. Criminals convicted for the same offense in
consideration of the same (Art. 739 [2]).
6. Publicity

CIVIL LAW
e. A person and a public officer (or his wife, ascendant after their marriage (Commissioner of Internal Revenue v.
or descendants) by reason of his office (Art. 739 [3]). Suter, G.R. No. L-25532, Feb. 28, 1969).
Contribution of future properties GENERAL vs. LIMITED
As a general rule, future properties cannot be contributed. General partnership

The very essence of the contract of partnership that the
properties contributed be included in the partnership It is a partnership where all partners are general partners
requires the contribution of things determinate (De Leon, who are liable even with respect to their individual
2010). properties, after the assets of the partnership have been
exhausted (Paras, 1969)
Hence, a subsequently acquired inheritance, legacy or
devise or donation cannot be included in stipulation in General partner
universal partnership of present property (Pineda, 2006).
It is a partner whose liability to third persons extends to
Particular partnership his separate property; he may be either a capitalist or an
industrial partner (De Leon, 2005). He is also known as
It is one which has for its object determinate things, their real partner.
use or fruits, or a specific undertaking, or the exercise of a
profession or vocation (Art. 1783, NCC). General v. Limited partner/partnership
The fundamental difference between a universal BASIS GENERAL LIMITED

partnership and a particular partnership lies in the scope Personally liable Liability extends
of their subject matter or object. In the former, the object is Composition /
for partnership only to his capital
vague and indefinite, contemplating a general business Membership
obligations contributions
with some degree of continuity, while in the latter, it is When manner of No participation in
limited and well-defined, being confined to an undertaking management has management
of a single, temporary, or ad hoc nature (De Leon, 2010). not agreed upon,
Right in all general
There is no requirement that the business of the Management partners have an
partnership be continuing in nature. equal right in the
management of
This may be inferred from Articles 1761 and 1783 that the the business
carrying on of a business of a continuing nature is not Contribute Contribute cash or
essential to constitute partnership. An agreement to Contribution money, property property only, not
undertake a particular piece of work or a single or industry services
transaction or a limited number of transactions and Not proper party
immediately divide the resulting profits would seem to fall Proper party to to proceedings
within the meaning of the term partnership as used in proceedings by/against
the law (De Leon, 2010). by/against partnership,
partnership unless:
Q: J, P and B formed a limited partnership called Suter 1. He is also a
Co., with P as the general partner and J and B as If Proper Party general partner;
limited partners. J and B contributed P18,000 and to Proceedings or
P20,000 respectively. Later, J and B got married and P By or Against 2. Where the
sold his share of the partnership to the spouses which Partnership object of the
was recorded in the SEC. Has the limited partnership proceeding is to
been dissolved by reason of the marriage between the enforce a
limited partners? limited partners
right or liability
A: No. The partnership is not a universal but a particular to the
one. As provided by law, a universal partnership requires partnership
either that the object of the association must be all present Interest is not Interest is freely
property of the partners as contributed by them to a Assignment of assignable assignable
common fund, or all else that the partners may acquire by Interest without consent
their industry or work. Here, the contributions were fixed of other partners
sums of money and neither one of them were industrial It must operate It must also
partners. Thus, the firm is not a partnership which the under a firm operate under a
spouses are forbidden to enter into. The subsequent name, which may firm name,
marriage cannot operate to dissolve it because it is not one or may not followed by the
of the causes provided by law. The capital contributions Firm Name include the name word Limited.
were owned separately by them before their marriage and of one or more of
shall remain to be separate under the Spanish Civil Code. the partners. GR: The surname
Their individual interest did not become common property of a limited
NOTE: Those, partner shall not

2 0 15 G O L D E N N O T E S
PARTNERSHIP
who, not being appear in the Composed only of Composed of at
members of the partnership name. Extent of general partners least one general
partnership, Liability partner and one
include their XPNs: limited partner.
names in the firm 1. It is also the
name, shall be surname of a PARTNERSHIP WITH A FIXED TERM v. PARTNERSHIP
subject to the general partner; AT WILL
liability of a 2. Prior to the time
partner. (Art. when the Partnership with a fixed term
1815) limited partner
became such, It is one in which the term of its existence has been agreed
the business had upon by the partners either:
been carried on 1. Expressly There is a definite period
under a name in 2. Impliedly A particular enterprise or transaction is
which his undertaken
surname
appeared. The mere expectation that the business would be
successful and that the partners would be able to recoup
NOTE: A limited their investment is not sufficient to create a partnership
partner whose for a term.
surname appears
in a partnership Fixing the term of the partnership contract
name is liable as a
general partner to The partners may fix in their contract any term and they
partnership shall be bound to remain under such a relation for the
creditors who duration of the term.
extend credit to
the partnership Expiration of the partnership contract
without actual
knowledge that he The expiration of the term fixed or the accomplishment of
is not a general the particular undertaking specified will cause the
partner. (Art. automatic dissolution of the partnership.
1846)
The capitalist No prohibition Termination of partnership at will
partner cannot against engaging in
engage for their business It may be lawfully terminated at any time by the express
own account in will of all the partners or any of them.
any operation
which is of the Dissolution of partnership at will
kind of business
in which the Any one of the partners may dictate the dissolution of a
Prohibition to partnership is partnership at will.
Engage in engaged, unless
Other Business there is a The partner who wants the partnership dissolved must do
stipulation to the so in good faith, not that the attendance of bad faith can
contrary prevent the dissolution of the partnership, but to avoid the
liability for damages to other partners.
If he is an
industrial Q: A, B, and C entered into a partnership to operate a
partner- in any restaurant business. When the restaurant had gone
business for past break-even stage and started to gamer
himself. considerable profits, C died. A and B continued the
Retirement, Does not have business without dissolving the partnership. They in
Effect of Death, death, insolvency, same effect; rights fact opened a branch of the restaurant, incurring
Insolvency, insanity of are transferred to obligations in the process. Creditors started
Retirement, general partner legal demanding for the payment of their obligations.
Insanity dissolves representative a. Who are liable for the settlement of the
partnership partnerships obligations? Explain.
As a rule, it Created by the b. What are the creditors recourse/s? Explain.
maybe members after
constituted in substantial A:
any form, by compliance in a. The two remaining partners, A and B, are liable.
Creation When any partner dies and the business is
contract or good faith of the
conduct of the requirements set continued without any settlement of accounts as
parties forth by law between him or his estate, the surviving partners

CIVIL LAW
are held liable for continuing the business despite Partnership Tort
the death of C (Articles 1841, 1785, par. 2, and 1833,
NCC). There is a partnership tort where
1. By any wrongful act or omission of any partner, acting
b. Creditors can file the appropriate actions, for in the ordinary course of business of the partnership
instance, an action for the collection of sum of or with authority of his co-partners, loss or injury is
money against the partnership at will and if there caused to any person, not being a partner in the
are no sufficient funds, the creditors may go after partnership;
the private properties of A and B (Article 816,New 2. One partner, acting within the scope of his apparent
Civil Code). Creditors may also sue the estate of C. authority, receives money or property from a third
The estate is not excused from the liabilities of the person, and misapplies it; or
partnership even if C is dead already but only up to 3. The partnership, in the course of its business, receives
the time that he remained a partner (Article 1829, money or property, and it is misapplied by any partner
1835, par. 2; NCC, Testate Estate of Mota v. Serra, 47 while it is in the custody of the partnership.
Phil. 464 [1925]). However, the liability of Cs
individual property shall be subject first to the NOTE: Partners are solidarily liable with the partnership
payment of his separate debts (Article 1835, NCC). for any penalty or damage arising from a partnership tort.
PARTNERSHIP BY ESTOPPEL PROFESSIONAL PARTNERSHIP
Partner by estoppel Professional partnership
It is one who, by words or conduct does any of the It is a partnership formed by persons for the sole purpose
following: of exercising their common profession, no part of the
1. Directly represents himself to anyone as a partner in income of which is derived from engaging in any trade or
an existing partnership or in a non-existing business.
partnership
2. Indirectly represents himself by consenting to In a professional partnership, it is the individual partners
another representing him as a partner in an existing that are deemed engaged in the practice of profession and
partnership or in a non-existing partnership not the partnership. Thus, they are responsible for their
own acts.
Elements before a partner can be held liable on the
ground of estoppel Prohibition in the formation of a professional
partnership
1. Defendant represented himself as partner or is
represented by others as such, and did not Partnership between lawyers and members of other
deny/refute such representation. profession or non-professional persons should not be
2. Plaintiff relied on such representation. formed or permitted where any part of the partnerships
3. Statement of defendant is not refuted. employment consists of the practice of law (Canons of
Professional Ethics).
Liabilities in case of estoppel
Characteristics of a partnership for the practice of law
When Partnership is Liable
1. A duty of public service, of which the emolument is a
If all actual partners consented to the representation,
by-product;
then the liability of the person who represented himself
2. A relation as an officer of court to the administration
to be a partner or who consented to such
of justice involving thorough sincerity, integrity, and
representation and the actual partner is considered a
reliability;
partnership liability
3. A relation to clients in the highest fiduciary degree;
When Liability is PRO RATA 4. A relationship to colleagues at the bar characterized
When there is no existing partnership and all those by candor, fairness, and unwillingness to resort to
represented as partners consented to the current business methods of advertising and
representation, then the liability of the person who encroachment on their practice, or dealing with their
represented himself to be a partner and all who made clients (In the Matter of Petition for Authority to
and consented to such representation, is joint or pro- Continue Use of Firm Name Sycip, Salazar, etc. /
rata Ozaeta Romulo, etc., 92 SCRA 1 [1979], citing H.S.
Drinker, Legal Ethics [1953], pp4-5.)
When Liability is SEPARATE
When there is no existing partnership and not all but Prohibition in the firm name of a partnership for the
only some of those represented as partners consented practice of law
to the representation, or none of the partnership in an
existing partnership consented to such representation, In the selection and use of firm name, no false, misleading,
then the liability will be separate assumed, or trade names should be used (Canons of
Professional Ethics).

2 0 15 G O L D E N N O T E S
PARTNERSHIP
MANAGEMENT OF THE PARTNERSHIP With stipulation that none of the managing partners
shall act without the consent of the others
Modes of appointment of a manager GR: Unanimous consent of all the managing partners
shall be necessary for the validity of the acts and
Appointment through the Appointment Other Than absence or inability of any managing partner cannot be
Articles of Partnership in the Articles alleged.
Power is irrevocable
without just or lawful XPN: Where there is an imminent danger of grave or
cause irreparable injury to the partnership.
NOTE: Vote required for

removal of manager Power to act is revocable Rule when the manner of management has not been
anytime, with or without agreed upon
1. For just cause Vote cause (should be done by
of the controlling the controlling interest) 1. All partners shall be considered agents and whatever
partners (controlling any one of them may do alone shall bind the
financial interest) partnership, without prejudice to the provisions of
2. Without cause or for Art. 1801. This right is not dependent on the amount
unjust cause or size of the partners capital contribution or services
Unanimous vote to the business.
Extent of Power
1. If he acts in good faith, NOTE: If two or more partners have been entrusted
he may do all acts of with the management of the partnership without
As long as he is a manager,
administration specification of their respective duties, or without a
he can perform all acts of
(despite opposition of stipulation that one of them shall not act without the
administration (if others
his partners) consent of all the others, each one may separately
oppose, he can be removed)
2. If he acts in bad faith, execute all acts of administration, but if any of them
he cannot should oppose the acts of the others, the decision of
the majority shall prevail. In case of a tie, the matter
Scope of the power of a managing partner shall be decided by the partners owning the
controlling interest (Art. 1801, NCC).
As a general rule, a partner appointed as manager has all
the powers of a general agent as well as all the incidental 2. None of the partners may, without the consent of the
powers necessary to carry out the object of the others, make any important alteration in the
partnership in the transaction of its business. The immovable property of the partnership. (Art. 1803,
exception is when the powers of the manager are NCC)
specifically restricted (De Leon, 2010).
Rule in case where unanimity of action is stipulated
A managing partner may not bind the partnership by a
contract wholly foreign to its business. The partners may stipulate that none of the managing
partners shall act without the consent of the others.
GR: The power of a managing partner is irrevocable.
GR: In such a case, the unanimous consent of all the
XPN: managing partners shall be necessary for the validity of
a. Upon showing of just and lawful cause to revoke it their acts.
and;
b. Upon the vote of the partners representing the XPN: Imminent danger of grave or irreparable injury for
controlling interest (Pineda, 2006). the partnership, in which case, a partner may act alone
without the consent of the partner who is absent or under
Rule where there are two or more managers disability, without prejudice to his liability for damages.
Without specification of their respective duties and Q: Azucena and Pedro acquired a parcel of land and a
without stipulation requiring unanimity of action building. Azucena obtained a loan from Tai Tong Co.,
GR: Each may separately execute all acts of secured by a mortgage which was executed over the
administration (unlimited power to administer) land and building. Arsenio, representative of Tai Tong,
insured it with Travellers Multi Indemnity
XPN: If any of the managers opposes, decision of the Corporation. The building and the contents thereof
majority prevails were razed by fire. Travellers failed to pay the
insurance. Hence, Azucena and Pedro filed a case
NOTE: In case of tie Decision of the controlling interest against Travellers wherein Tai Tong intervened
(who are also managers) shall prevail claiming entitlement to the proceeds from Travellers.
Who is entitled to the proceeds of the policy?
A: Tai Toing is entitled to the insurance proceeds.

Arsenio contracted the insurance policy on behalf of Tai

CIVIL LAW
Tong. As the managing partner of the partnership, he may 3. Answer for risks in consequence of its management
execute all acts of administration including the right to sue (Art. 1796, NCC)
debtors of the partnership in case of their failure to pay
their obligations when it became due and demandable. Or RIGHTS AND OBLIGATIONS OF PARTNERS AMONG
at the very least, Arsenio is an agent of the partnership. THEMSELVES
Being an agent, it is understood that he acted for and in
behalf of the firm (Tai Tong Chuache & Co. v. Insurance Obligations of partners among themselves
Commissioner, G.R. No. L-55397, Feb. 29, 1988).
1. Contribution of property (Art. 1786, NCC)
NOTE: If refusal of partner is manifestly prejudicial to the 2. Contribution of money and money converted to
interest of partnership, courts intervention may be personal use (Art. 1788, NCC)
sought. 3. Prohibition in engaging in business for himself (Art.
1789, NCC)
COMPENSATION 4. Contribute additional capital (Art. 1791, NCC)
5. Managing partner who collects debt (Art. 1792, NCC)
Entitlement of partners to compensation 6. Partner who receives share of partnership credit (Art.
1793, NCC)
GR: In the absence of an agreement to the contrary, each 7. Damages to partnership (Art. 1794, NCC)
member of the partnership assumes the duty to give his 8. Keep the partnership books (Art. 1805, NCC)
time, attention, and skill to the management of its affairs, 9. Render information (Art. 1806, NCC)
so far, at least, as may be reasonably necessary to the 10. Accountable as fiduciary (Art. 1807, NCC)
success of the common enterprise; and for this service a
share of the profits is his only compensation. Obligations of partners with respect to contribution of
property
XPNS:
1. A partner engaged by his co-partners to perform To:
services not required of him in fulfillment of the 1. Contribute at the beginning of the partnership, or at
duties which the partnership relation imposes and in the stipulated time, the money, property or industry
a capacity other than that of a partner which] he may have promised to contribute;
2. A contract for compensation may be implied if there is 2. Answer for eviction in case the partnership is
extraordinary neglect on the part of one partner to deprived of the determinate property contributed
perform his duties toward the firms business, thereby 3. Answer to the partnership for the fruits of the
imposing the entire burden on the remaining partner property the contribution of which he delayed, from
3. One partner may employ his co-partner to do work the date they should have been contributed up to the
for him outside of and independent of the co- time of actual delivery
partnership, and become personally liable therefor 4. Preserve said property with the diligence of a good
4. Where the services rendered are extra-ordinary father of a family, pending delivery to the partnership
5. Where one partner is entrusted with the management 5. Indemnify the partnership for any damage caused to it
of the partnership business and devotes his whole by the retention of the same or by the delay in its
time and attention thereto, at the instance of the other contribution
partners who are attending to their individual
business and giving no time or attention to the Withdrawal or disposal of money or property by a
business of the firm (De Leon, 2010). contributing partner
RELATIONSHIPS IN A CONTRACT OF PARTNERSHIP Money or property contributed by a partner cannot be

withdrawn or disposed of by the contributing partner
A contract of partnership gives rise to at least four distinct without the consent or approval of the partnership or of
juridical relations, namely: the other partners. The reason behind this is because the
1. Relations among the partners themselves money or property contributed by a partner becomes the
2. Relations of the partners with the partnership property of the partnership (De Leon, 2010).
3. Relations of the partnership with third persons with
whom it contracts Liability of partner who fails to perform the personal
4. Relations of the partners with such third persons (De services which he has stipulated to render to the
Leon, 2010). partnership for the value of the services
RESPONSIBILITIES OF A PARTNERSHIP TO PARTNERS Unless there is a special agreement to that effect, the
partners are not entitled to charge each other, or the
1. Refund the amounts disbursed by partner in behalf of partnership of which they are members, for their services
the partnership plus corresponding interest from the in the firm business. The doctrine seems to be that every
time the expenses are made, not from the date of partner is bound to work to the extent of his ability for the
demand. (e.g. loans and advances made by a partner benefit of the whole, without regard to the services of his
to the partnership aside from capital contribution); co-partners, however unequal in value or amount, and to
2. Answer for obligations the partner may have require a partner to account for the value of his services
contracted in good faith in the interest of the would be, in effect, allowing compensation to the other
partnership business;

2 0 15 G O L D E N N O T E S
PARTNERSHIP
members of the partnership for the services they Liability of a capitalist partner to contribute additional
rendered. capital
Q: Who bears the risk of loss of things contributed? GR: A capitalist partner is not bound to contribute to the
partnership more than what he agreed to contribute.
A:
XPN:
WHO BEARS THE
KIND OF PROPERTY / THING 1. In case of imminent loss of the business
RISK?
2. There is no agreement to the contrary.
Specific and determinate things
which are not fungible where only Partners
He is under obligation to contribute an additional
the use is contributed
share to save the venture. If he refuses to contribute,
Specific and determinate things the he shall be obliged to sell his interest to the other
ownership of which is transferred to partners.
the partnership
Partnership Requisites before capitalist partners are compelled to
Fungible things (Consumable)
contribute additional capital
Things brought and appraised in the
inventory 1. Imminent loss of the business of the partnership;
2. Majority of the capitalist partners are of the opinion
Effect if a partner fails to contribute the property that an additional contribution to the common fund
which he promised to deliver to the partnership would save the business;
3. Capitalist partner refuses deliberately to contribute
1. Partner become ipso jure a debtor of the partnership (not due to financial inability);
even in the absence of any demand (Art. 1786, NCC) 4. There is no agreement to the contrary.
2. Remedy of the other partner is not rescission but
specific performance with damages and interest from NOTE: The refusal of the partner to contribute his
defaulting partner from the time he should have additional share reflects his lack of interest in the
complied with his obligation. continuance of the partnership. (De Leon, 2010)
When the capital or a part hereof which a partner is bound It is to be noted that the industrial partner is exempted
to contribute consists of goods, their appraisal must be from the requirement to contribute an additional share.
made in the manner prescribed in the contract of Having contributed his entire industry, he can do nothing
partnership, and in the absence of stipulation, it shall be further (De Leon, 2010).
made by experts chosen by the partners, and according to
current prices, the subsequent changes thereof being for Obligations of managing partners who collect his
the account of the partnership. (Art. 1787, NCC) personal receivable from a person who also owes the
partnership
Rules regarding contribution of money to the
partnership 1. Apply sum collected to 2 credits in proportion to their
amounts
To: 2. If he received it for the account of partnership, the
1. Contribute on the date fixed the amount the partner whole sum shall be applied to partnership credit
has undertaken to contribute to the partnership;
2. Reimburse any amount the partner may have taken Requisites:
from the partnership coffers and converted to his own 1. At least 2 debts, one where the collecting partner
use; is creditor and the other, where the partnership
3. Indemnify the partnership for the damages caused to is the creditor
it by delay in the contribution or conversion of any 2. Both debts are demandable
sum for the partners personal benefit; 3. Partner who collects is authorized to manage and
4. Pay the agreed or legal interest, if the partner fails to actually manages the partnership
pay his contribution on time or in case he takes any
amount from the common fund and converts it to his NOTE: The debtor is given the right to prefer payment of
own use. the credit of the partner if it should be more onerous to
him in accordance with his right to application of payment
Rule regarding obligation to contribute to partnership (Art. 1252, NCC; De Leon, 2010)
capital
Reason for applying payment to partnership credit
Unless there is a stipulation to the contrary, the partners
shall contribute equal shares to the capital of the The law safeguards the interests of the partnership by
partnership (Art 1790, NCC). It is not applicable to an preventing the possibility of their being subordinated by
industrial partner unless, besides his services, he has the managing partner to his own interest to the prejudice
contributed capital pursuant to an agreement. of the other partners (De Leon, 2010)

CIVIL LAW
Obligation of a partner who receives share of Rule with regard to the obligation of a partner as to
partnership credit damages suffered by the partnership through his fault
To bring to the partnership capital what he has received GR: Every partner is responsible to the partnership for
even though he may have given receipt for his share only. damages suffered by it through his fault and he cannot
compensate them with the profits and benefits which he
Requisites: may have earned for the partnership by his industry.
1. A partner has received in whole or in part, his
share of the partnership credit XPN: The courts may equitably lessen this responsibility if
2. Other partners have not collected their shares through the partners extraordinary efforts in other
3. Partnership debtor has become insolvent activities of the partnership, unusual profit has been
realized (Art. 1794, NCC).
Liability of a person who has not directly transacted in
behalf of an unincorporated association for a contract Set-off of damages caused by a partner
entered into by such association
GR: The damages caused by a partner to the partnership
The liability for a contract entered into on behalf of an cannot be offset by the profits of benefits which he may
unincorporated association or ostensible corporation may have earned for the partnership by his industry.
lie in a person who may not have directly transacted on its
behalf, but reaped benefits from that contract (Lim Tong Ratio: The partner has the obligation to secure benefits for
Lim v. Philippine Fishing Gear Industries Inc., G.R. No. the partnership. Hence, the profits which he may have
136448, Nov. 3, 1999). earned pertain as a matter of law or right, to the
partnership
Rules regarding the prohibition to engage in another
business XPN: If unusual profits are realized through the
extraordinary efforts of the partner at fault, the courts may
INDUSTRIAL PARTNER CAPITALIST PARTNER equitably mitigate or lessen his liability for damages. This
Prohibition rule rests on equity.
Absolute: Cannot engage Relative: Cannot engage
in business for himself in business (with same Note that even in this case, the partner at fault is not
unless the partnership kind of business with the allowed to compensate such damages with the profits
expressly permits him to partnership) for his own earned. The law does not specify as to when profits may be
do so account, unless there is a considered unusual. The question depends upon the
stipulation to the circumstances of the particular case.
contrary
Remedy Duty of the partners with respect to keeping the
Capitalist partners may: Capitalist partner, who partnership books
1. Exclude him from the violated shall:
firm 1. Bring to the common The partnership books shall be kept, subject to any
2. Avail themselves of fund any profits agreement between partners, at the principal place of
the benefits which he accruing to him from business of the partnership (Art. 1805, NCC).
may have obtained said transaction; and
3. Damages, in either 2. Personally bears all Duty to keep partnership book belongs to managing or
case (Art. 1789) losses (Art. 1808) active partner
Q: Joe and Rudy formed a partnership to operate a car The duty to keep true and correct books showing the
repair shop in Quezon City. Joe provided the capital firms accounts, such books being at all times open to
while Rudy contributed his labor and industry. On one inspection of all members of the firm, primarily rests on
side of their shop, Joe opened and operated a coffee the managing or active partner (De Leon, 2010).
shop, while on the other side, Rudy put up a car
accessories store. May they engage in such separate Duty of the partners with respect to information
businesses? Why? (2001 Bar Question) affecting the partnership
A: Joe, the capitalist partner, may engage in the restaurant Partners shall render on demand true and full information
business because it is not the same kind of business the of all things affecting the partnership to:
partnership is engaged in. On the other hand, Rudy may 1. Any partner; or
not engage in any other business unless their partnership 2. Legal representative of any deceased or any partner
expressly permits him to do so because as an industrial under legal disability (Art. 1806, NCC).
partner he has to devote his full time to the business of the
partnership (Art. 1789, NCC). 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, 2010).

2 0 15 G O L D E N N O T E S
PARTNERSHIP
Q: P and G are partners engaged in real estate b. If the right exist under the terms of any
business. P received information that someone is agreement;
interested to buy a parcel of land owned by the c. As provided by Art. 1807;
partnership. P did not disclose this material fact to G. d. Whenever there are circumstances render it just
Instead, he induced G to sell to him his share in and reasonable.
nominal price. Thereafter, P sold the entire property 5. Right to have the partnership dissolved.
to the buyer and made huge profit. G sued P seeking 6. Property rights of a partner (Art. 1810, NCC)
damages alleging deceit by P. The latter, as defense,
countered that G did not ask him about any interested Rule as to formal accounting during the existence of
purchaser of the lot. Is P liable for damages? Decide. the partnership
A: Yes. P should not have concealed the fact that there was GR: During the existence of the partnership, a partner is
a buyer interested to purchase the firms property. Good not entitled to a formal account of partnership affairs.
faith not only requires that a partner should not make any
false concealment to his partner, but also abstain from XPNs: However, in the special and unusual situations
concealment (Poss vs Gottlieb, 193 NYS 418). enumerated under Article 1809, the justification for a
formal accounting even before dissolution of the
Accountability of partners to each other as fiduciary partnership cannot be doubted. An example under No. (4)
of Article 1809 is where a partner has been assigned
Every partner must account to the partnership for any abroad for a long period of time in connection with the
benefit, and hold as trustee for it any profits derived by partnership business and the partnership books during
him without the consent of the other partners from any such period being in the possession of the other partners.
transaction connected with the formation, conduct, or
liquidation of the partnership or from any use by him of its Partners inspection rights
property (Art. 1807, NCC).
The partners inspection rights are not absolute. He can be
Duty of a partner to act with utmost good faith towards restrained from using the information gathered for other
co-partners continues even after dissolution than partnership purpose.
The duty of a partner to act with utmost good faith Any reasonable hour
towards his co-partners continues throughout the entire
life of the partnership even after dissolution for whatever Article 1805 declares that the rights of the partners with
reason or whatever means, until the relationship is respect to partnership books can be exercised at any
terminated, i.e., the winding up of partnership affairs is reasonable hour. This phrase has been interpreted to
completed (De Leon, 2010). mean reasonable hours on business days throughout the
year and not merely during some arbitrary period of a few
Failure to disclose facts, when there is duty to reveal them, days chosen by the managing partners (De Leon, 2010).
as when parties are bound by confidential relations,
constitutes fraud (Art. 339, NCC). Action for accounting
RIGHTS OF PARTNERS An action for accounting, asking that the assets of the
partnership be accounted for, sold and distributed
Rights of partners among themselves according to the agreement of the partners is a personal
action which under the Rules of Court, may be commenced
1. Right to reimbursement for amounts advanced to the and tried where the defendant resides or may be found or
partnership and to indemnification for risks in where the plaintiffs reside, at the election of the latter.
consequence of management (Art. 1796);
2. Right on the distribution of profits and losses (Art. NOTE: The fact that the some of the assets of the
1797, NCC). partnership are real property does not materially change
3. Right to associate another person with him in his the nature of the action. It is an action in personam because
share without the consent of the other partners (Art. it is an action against a person for the performance of a
1804, NCC). personal duty on his part, and not an action in rem where
the action is against the thing itself. It is only incidental
NOTE: Such partnership formed between a member that part of the assets of the partnership subject to
of a partnership and a third person for a division of accounting or under liquidation happen to be real property
the profits coming to him from the partnership (De Leon, 2010).
enterprise is termed subpartnership. (De Leon, 2010)
Rules regarding distribution of profits and losses
4. Right to free access and to inspect and copy at any
reasonable hour the partnership books (Art. 1805, 1. Distribution of profits
NCC). a. The partners share in the profits according to
5. Right to formal account as to partnership affairs: their agreement
a. If he is wrongfully excluded from the partnership b. In the absence of such:
business or possession of its property by his co- i. Capitalist partner in proportion to his
partners; contribution

CIVIL LAW
ii. Industrial partner what is just and Effects of assignment of partners whole interest in the
equitable under the circumstances partnership
NOTE: If the industrial partner has contributed 1. Rights withheld from the assignee:
capital other than his services, he shall also Such assignment does not grant the assignee the right
receive a share in the profits in proportion to his to:
capital. a. To interfere in the management
b. To require any information or account
2. Distribution of losses c. To inspect partnership books
a. The partners share in the losses according to
their agreement 2. Rights of assignee on partners interest:
b. In the absence of such, according to their a. To receive in accordance with his contract the
agreement as to profits profits accruing to the assigning partner
c. In the absence of profit agreement, in proportion b. To avail himself of the usual remedies provided
to his capital contribution by law in the event of fraud in the management
c. To receive the assignors interest in case of
Rule regarding a stipulation excluding a partner in the dissolution
sharing of profits and losses d. To require an account of partnership affairs, but
only in case the partnership is dissolved, and
GR: Stipulation is void. such account shall cover the period from the date
only of the last account agreed to by all the
XPN: Industrial partner is not liable for losses (Art. partners
1797(2), NCC). However, he is not exempted from liability
insofar as third persons are concerned. Q: Rosa received from Jois money, with the express
obligation to act as Jois agent in purchasing local
NOTE: Loss is different from liability cigarettes, to resell them to several stores, and to give
Jois the commission corresponding to the profits
Property rights of a partner received. However, Rosa misappropriated and
converted the said amount due to Jois to her personal
1. Right in specific partnership property use and benefit. Jois filed a case of estafa against Rosa.
2. Interest in the partnership (share in the profits and Can Rosa deny liability on the ground that a
surplus) partnership was formed between her and Rosa?
3. Right to participate in the management
A: No. Even assuming that a contract of partnership was
Related rights to the property rights of a partner indeed entered into by and between the parties, when a
partner receives any money or property for a specific
1. Right to the partnership and to indemnification for purpose (such as that obtaining in the instant case) and he
risks in consequence of management (Art. 1796, NCC); later misappropriates the same, he is guilty of estafa
2. The right of access and inspection of partnership (Liwanag v. CA, G.R. No. 114398, Oct. 24, 1997).
books (Art. 1805, NCC);
3. The right to true and full information of all things OBLIGATIONS OF PARTNERSHIP/PARTNERS TO THIRD
affecting the partnership (Art. 1806, NCC); PERSONS
4. The right to a formal account of partnership affairs
under certain circumstances (Art. 1809, NCC); and Obligations of partners with regard to 3rd persons
5. The right to have the partnership dissolved also under
certain conditions (Arts. 1830-1831, NCC) (De Leon, 1. Every partnership shall operate under a firm name.
2010). Persons who include their names in the partnership
name even if they are not members shall be liable as a
Nature of a partner's right in specific partnership partner (Art. 1815, NCC)
property 2. All partners shall be liable for contractual obligations
of the partnership with their property, after all
1. Equal right to possession for partnership purposes partnership assets have been exhausted:
2. Right is not assignable, except in connection with a. Pro rata
assignment of rights of all partners in the same b. Subsidiary (Art. 1816, NCC)
property
3. Right is limited to his share of what remains after NOTE: Any stipulation against the liability laid
partnership debts have been paid down in Art. 1816 shall be void except as among
4. Right is not subject to attachment or execution except the partners. (Art. 1817, NCC)
on a claim against the partnership
5. Right is not subject to legal support 3. Partner as an agent of the partnership (Art. 1818,
NCC)
4. Conveyance of real property belonging to the
partnership (Art. 1819, NCC)
5. Admission or representation made by any partner
concerning partnership affairs within the scope of his

2 0 15 G O L D E N N O T E S
PARTNERSHIP
authority is evidence against the partnership (Art. Remedies available to the creditors of a partner
1820, NCC)
6. Notice to partner of any matter relating to partnership 1. Separate or individual creditors should first secure a
affairs operates as notice to partnership except in case judgment on their credit; and
of fraud: 2. Apply to the proper court for a charging order
a. Knowledge of partner acting in the particular subjecting the interest of the debtor-partner in the
matter acquired while a partner partnership for the payment of the unsatisfied
b. Knowledge of the partner acting in the particular amount of the judgment debt with interest thereon.
matter then present to his mind
c. Knowledge of any other partner who reasonably Effects of the acts of partners acting as an agent of the
could and should have communicated it to the partnership
acting partner (Art. 1821, NCC)
7. Partners and the partnership are solidarily liable to ACTS OF A PARTNER EFFECT
3rd persons for the partner's tort or breach of trust With binding effect except:
(Art. 1822-24, NCC) 1. When the partner so
8. Liability of incoming partner is limited to: acting has in fact no
a. His share in the partnership property for existing authority to act for the
obligations Acts for apparently partnership in the
b. His separate property for subsequent obligations carrying on in the usual particular matter, and
(Art. 1826, NCC) way the business of the 2. The person with
9. Creditors of partnership are preferred in partnership partnership whom he is dealing
property & may attach partner's share in partnership has knowledge of the
assets (Art. 1827, NCC) fact that he has no
such authority.
NOTE: On solidary liability, Art. 1816 should be construed (Art. 1818, par. 1, NCC)
together with Art. 1824 (in connection with Arts. 1822 and Do not bind partnership
1823). While the liability of the partners is merely joint in Acts not in the ordinary
unless authorized by other
transactions entered into by the partnership, a third course of business
partners (Art. 1818, NCC)
person who transacted with said partnership may hold the Acts of strict dominion GR: One or more but less
partners solidarily liable for the whole obligation if the or ownership: than all the partners have
case of the third person falls under Articles 1822 and no authority
1823(Munasque v. CA, G.R. No. L-39780, Nov. 11, 1985). 1. Assigning partnership
property in trust for XPNs:
Importance of having a firm name creditors ; 1. Authorized by the other
2. Disposing of goodwill partners; or
A partnership must have a firm name under which it will of business; 2. Partners have
operate. It is necessary to distinguish the partnership 3. Doing an act which abandoned the
which has a distinct and separate juridical personality would make it business (Art. 1818,
from the individuals composing the partnership and from impossible to carry on par. 3 , NCC)
other partnerships and entities (De Leon, 2010). the ordinary business
of partnership;
The partners enjoy the utmost freedom in the selection of 4. Confessing a judgment;
the partnership name. As a general rule, they may adopt 5. Entering into a
any firm name desired. The firm name of a partnership compromise
may be that of an individual partner, the surnames of all concerning a
the partners, or the surname of one or more of the partnership claim or
members with the addition of and Company, or it may liability;
consist of individual names wholly distinct from the names 6. Submitting partnership
of any of the members, or it may be a name purely fanciful claim or liability to
or fictitious. But whatever the firm name may be, the arbitration;
signature of the firm name is, in law, the signature of the 7. Renouncing claim of
several partners name. partnership
Partnership is not liable to
Discuss the liability for the inclusion of name in the Acts in contravention of 3rd persons having actual
firm name a restriction on or presumptive knowledge
authority of the restriction (Art.
Persons who, not being partners, include their names in 1818, par.4, NCC)
the firm name do not acquire the rights of a partner but
under Article 1815, they shall be subject to the liability of a
partner (Art. 1816, NCC) insofar as third persons without
notice are concerned (De Leon, 2010).

CIVIL LAW
Effect of conveyance of a real property DISSOLUTION
TYPE OF Dissolution, Winding Up and Termination,

EFFECT
CONVEYANCE distinguished
Conveyance passes title but
partnership can recover unless: Winding
Dissolution Termination
1. up
a. Conveyance was done in A change in the Settling the Point in time
the usual way of relation of the partnership when all
business, and partners caused by business or partnership
b. The partner so acting any partner ceasing affairs after affairs are
Title in the
has the authority to act to be associated in dissolution wound up or
partnerships name;
for the partnership; or carrying on the completed; the
Conveyance in
2. The property which has been business. end of the
partnership name
conveyed by the grantee or a partnership life
person claiming through such It is that point in It is the It signifies the
grantee to a holder for value time when the final step end of the
without knowledge that the partners cease to after partnership life.
partner, in making the carry on the dissolution It takes place
conveyance, has exceeded his business together. in the after both
authority It represents the termination dissolution and
Conveyance does not pass title demise of a of the winding up
but only equitable interest, partnership. Thus, partnership. have occurred.
Title in the provided: any time a partner
partnerships name; 1. Conveyance was done in the leaves the business,
Conveyance in usual way of business, or the partnership is
partner's name 2. The partner so acting has the dissolved.
authority to act for the
partnership Causes of dissolution
Conveyance passes title but the
Title in the name of partnership may recover such 1. Without violating the agreement:
1 or more partners, property if the partners act does a. Termination of the definite term or specific
and the record does not bind the partnership: undertaking
not disclose the 1. The partner so acting has no b. Express will of any partner in good faith, when
right of the authority to act for the there is no definite term and no specified
partnership; partnership, and undertaking
Conveyance in 2. The person with whom he is c. Express will of all partners (except those who
name of partner/s dealing has knowledge of the have assigned their interests or suffered them to
in whose name title fact unless the purchaser of be charged for their separate debts) either before
stands his assignee, is a holder for or after the termination of any specified term or
value, without knowledge particular undertaking
Title in name of 1 or d. Expulsion of any partner in good faith of a
more or all member
partners or 3rd Conveyance will only pass 2. Violating the agreement
person in trust for equitable interest, provided: 3. Unlawfulness of the business
partnership; 1. The act is one within the 4. Loss
Conveyance authority of the partner, and a. Specific thing promised as contribution is lost or
executed in 2. Conveyance was done in the perished before delivery
partnership name usual way of the business b. Loss of a specific thing contributed before or after
or in name of delivery, if only the use of such is contributed
partners
Title in the names NOTE: The partnership shall not be dissolved by
of all the partners; the loss of the thing when it occurs after the
Conveyance will pass all the rights partnership has acquired the ownership thereof.
Conveyance
in such property
executed by all the
partners 5. Death of any of the partners
6. Insolvency of any partner or of the partnership
7. Civil interdiction of any partner
8. By decree of court under Art. 1831
a. A partner has been declared insane or of
unsound mind
b. A partner becomes in any other way incapable of
performing his part of the partnership contract

2 0 15 G O L D E N N O T E S
PARTNERSHIP
c. A partner has been guilty of such conduct as 1. In so far as the partners themselves are concerned The
tends to affect prejudicially the carrying on of the authority of any partner to bind the partnership by a
business new contract is immediately terminated when the
d. A partner wilfully or persistently commits a dissolution is not by the act, insolvency, or death of a
breach of the partnership agreement partner.
e. The business of the partnership can only be 2. When the dissolution is by the act, insolvency, or
carried on at a loss death, the termination of authority depends upon
f. Other circumstances render a dissolution whether or not the partner had knowledge or notice
equitable of dissolution (Art. 1833, NCC).
Effects of dissolution Q: The articles of co-partnership provide that in case

of death of one partner, the partnership shall not be
1. Partnership is not terminated dissolved but shall be continued by the deceased
2. Partnership continues for a limited purpose partners heirs. When H, a partner, died, his wife, W,
3. Transaction of new business is prohibited (De Leon, took over the management of some of the real
Comments and Cases on Partnership, Agency, and Trust, properties with permission of the surviving partner, X,
p. 229, 2005 ed) but her name was not included in the partnership
name. She eventually sold these real properties after a
As to previous obligations, the dissolution of partnership few years. X now claims that W did not have the
does not mean that the partners can evade previous authority to manage and sell those properties as she
obligations entered into (Testate Estate of Mota vs Serra, was not a partner. Is the sale valid?
47 Phil. 464).
A: Yes. The widow was not a mere agent, because she had
As to new obligations, the dissolution spares the former become a partner upon her husband's death, as expressly
partners from new obligations entered into by the provided by the articles of co-partnership, and by
partnership without their consent, implied or express, authorizing the widow to manage partnership property X
unless the obligation are essential for the winding up of recognized her as a general partner with authority to
partnership affairs (ibid). administer and alienate partnership property. It is
immaterial that W's name was not included in the firm
NOTE: The dissolution of a partnership must not be name, since no conversion of status is involved, and the
understood in the absolute and strict sense so that at the articles of co-partnership expressly contemplated the
termination of the object for which it was created the admission of the partner's heirs into the partnership
partnership is extinguished, pending the winding up of (Goquiolay v. Sycip, G.R. No. L-11840, Dec. 16, 1963).
some incidents and obligations of the partnership, but in
such case, the partnership will be reputed as existing until Liability of a partner where the dissolution is caused
the juridical relations arising out of the contract are by the act, death or insolvency of a partner
dissolved (Testate of Motta v. Serra, G.R. No. L-22825, Feb.
14, 1925). GR: Each partner is liable to his co-partners for his share,
of any liability created by any partner for the partnership,
Dissolution does not automatically result in the as if the partnership had not been dissolved.
termination of the legal personality of the partnership, nor
the relations of the partners among themselves who XPNs: Partners shall not be liable when:
remain as co-partners until the partnership is terminated 1. The dissolution, being by act of any partner, the
(De Leon, 2005). partner acting for the partnership had knowledge of
the dissolution; or
A partner cannot be expelled from the partnership 2. The dissolution, being by the death or insolvency of a
without agreement thereto. partner, the partner acting for the partnership had
knowledge or notice of the death or insolvency (Art.
In the absence of an express agreement to that effect, there 1833, NCC).
exists no right or power of any member, or even a majority
of the members, to expel all other members of the firm at Q: After the dissolution of a partnership, can a partner
will. Nor can they at will forfeit the share or interest of a still bind the partnership?
member or members and compel him or them to quit the
firm, even paying what is due him (De Leon, 2010). A:
GR: A partner continues to bind partnership even after
Effect of dissolution on the authority of a partner dissolution in the following cases:
1. Transactions to wind up partnership affairs or to
GR: The partnership ceases to be a going concern complete transactions unfinished at dissolution;
2. Transactions which would bind partnership if
XPN: The partners power of representation is confined dissolution had not taken place, provided the other
only to acts incident to winding up or completing party/obligee:
transactions begun but not then finished (Art. 1832, NCC). a. Had extended credit to partnership prior to
dissolution; and had no knowledge/notice of
NOTE: Subject to the qualifications set forth in Articles dissolution; or
1833 and 1834 in relation to Article 1832:

CIVIL LAW
b. Did not extend credit to partnership; Had known 2. Those to limited partners in respect to their share of
partnership prior to dissolution; AND Had no the profits and other compensation by way of income
knowledge/notice of dissolution/fact of on their contributions
dissolution not advertised in a newspaper of 3. Those to limited partners in respect to the capital of
general circulation in the place where their contributions
partnership is regularly carried on. 4. Those to general partners other than for capital and
profits
XPNs: Partner cannot bind the partnership anymore after 5. Those to general partners in respect to profits
dissolution where dissolution is due to unlawfulness to 6. Those to general partners in respect to capital (Art.
carry on business. 1863, NCC)
XPN to XPN: Winding up of partnership affairs NOTE: Subject to any statement in the certificate or to
1. Partner has become insolvent subsequent agreement, limited partners share in the
2. Act is not appropriate for winding up or for partnership assets in respect to their claims for capital,
completing unfinished transactions and in respect to their claims for profits or for
3. Completely new transactions which would bind the compensation by way of income on their contribution
partnership if dissolution had not taken place with respectively, in proportion to the respective amounts of
third persons in bad faith. such claims.
4. Partner is unauthorized to wind up partnership
affairs, except by transaction with one who: WINDING UP
a. Had extended credit to partnership prior to
dissolution; AND Had no knowledge or notice of Winding up of the partnership
dissolution; or
b. Did not extend credit to partnership prior to It is during this time after dissolution that partnership
dissolution; Had known partnership prior to business or affairs are being settled (De Leon, 2005).
dissolution; AND Had no knowledge/notice of
dissolution/fact of dissolution not advertised in a Ways of winding up
newspaper of general circulation in the place
where partnership is regularly carried on. The winding up of the dissolved partnership may be done
either:
Q: Does the dissolution of a partnership discharge
existing liability of a partner? 1. Judicially, under the control and direction of the
proper court upon cause shown by any partner, his
A: legal representative, or his assignee; or
2. Extrajudicially, by the partners themselves without
GR: Dissolution does not discharge the existing liability of intervention of the court (De Leon, 2010).
a partner.
Action for liquidation
XPN: Said liability is discharged when there is an
agreement between: An action for the liquidation of a partnership is a personal
1. Partner himself; one; hence, it may be brought in the place of residence of
2. Person/s continuing the business; and either the plaintiff or the defendant (De Leon, 2010).
3. Partnership creditors
Persons authorized to wind up
Liability of the estate of a deceased partner.
1. Partners designated by the agreement
In accordance with Article 1816, the individual property of 2. In the absence of such, all partners who have not
a deceased partner shall be liable for all obligations of the wrongfully dissolved the partnership
partnership incurred while he was a partner. Note that the 3. Legal representative of last surviving partner who is
individual creditors of the deceased partner are to be not insolvent
preferred over partnership creditors with respect to the
separate property of said deceased partner (De Leon, NOTE: The court may, in its discretion, after considering
2010). all the facts and circumstances of the particular case,
appoint a receiver to wind up the partnership affairs
Order of priority in the distribution of assets during where such step is shown to be to the best interests of all
the dissolution of a limited partnership persons concerned.
In setting accounts after dissolution, the liabilities of the An insolvent partner does not have the right to wind up
partnership shall be entitled to payment in the following partnership affairs (De Leon, 2010).
order:
1. Those to creditors, in the order of priority as provided Rights of liquidating partner
by law, except those to limited partners on account of
their contributions, and to general partners 1. Make new contracts
2. Raise money to pay partnership debts

2 0 15 G O L D E N N O T E S
PARTNERSHIP
3. Incur obligations to complete existing contracts or less any damage caused by the dissolution to
preserve partnership assets his co-partners, ascertained and paid in cash,
4. Incur expenses necessary in the conduct of litigation or secured by bond approved by the court;
(De Leon, 2010). and
ii. To be released from all existing and future
Order of payment in winding up liabilities of the partnership
1. Those owing to creditors other than partners Rights of injured partner where partnership contract
2. Those owing to partners other than for capital or is rescinded
profits
3. Those owing to partners in respect of capital 1. Right of a lien on, or retention of, the surplus of
4. Those owing to partners in respect to profits (Art. partnership property after satisfying partnership
1839 (2) , NCC) liabilities for any sum of money paid or contributed by
him;
Doctrine of marshalling of assets 2. Right of subrogation in place of partnership creditors
after payment of partnership liabilities; and
The doctrine of marshalling of assets provides that: 3. Right of indemnification by the guilty partner against
all debts and liabilities of the partnership.
1. Partnership creditors have preference in partnership
assets Settlement of accounts between partners
2. Separate or individual creditors have preference in
separate or individual properties 1. Assets of the partnership include:
3. Anything left from either goes to the other. a. Partnership property (including goodwill)
b. Contributions of the partners
NOTE: The doctrine of marshalling of assets involves the 2. Order of application of the assets:
ranking of assets in a certain order toward the payment of a. First, those owing to partnership creditors
outstanding debts. (De Leon, 2010) b. Second, those owing to partners other than for
capital and profits such as loans given by the
Rights of a partner where dissolution is not in partners or advances for business expenses
contravention of the agreement c. Third, those owing for the return of the capital
contributed by the partners
Unless otherwise agreed, the rights of each partner are as d. Fourth, the share of the profits, if any, due to each
follows: partner
1. To have the partnership property applied to discharge
the liabilities of partnership; and Q: A partnership was formed with Magdusa as the
2. To have the surplus, if any, applied, to pay in cash the manager. During the existence of the partnership, two
net amount owing to the respective partners. partners expressed their desire to withdraw from the
firm. Magdusa determined the value of the partners
Rights of a partner where dissolution is in share which were embodied in the document drawn in
contravention of the agreement the handwriting of Magdusa but was not signed by all
of the partners. Later, the withdrawing partners
The rights of a partner vary depending upon whether he is demanded for payment but were refused. Considering
the innocent or guilty partner. that not all partners intervened in the distribution of
1. Rights of partner who has not caused the dissolution all or part of the partnership assets, should the action
wrongfully: prosper?
a. To have partnership property applied for the
payment of its liabilities and to receive in cash his A: No. A partners share cannot be returned without first
share of the surplus dissolving and liquidating the partnership, for the return is
b. To be indemnified for the damages caused by the dependent on the discharge of creditors, whose claims
partner guilty of wrongful dissolution enjoy preference over those of the partner, and it is self-
c. To continue the business in the same name during evident that all members of the partnership are interested
the agreed term of the partnership, by in its assets and business, and are entitled to be heard in
themselves or jointly with others the matter of the firms liquidation and distribution of its
d. To possess partnership property should they property. The liquidation prepared by Magdusa not signed
decide to continue the business by the other partners is not binding on them (Magdusa v.
2. Rights of partner who has wrongfully caused the Albaran, G.R. No. L-17526, June 30, 1962).
dissolution:
a. If the business is not continued by the other Since the capital was contributed to the partnership, not to
partners, to have the partnership property partners, it is the partnership that must refund the equity
applied to discharge its liabilities and to receive of the retiring partners. Since it is the partnership, as a
in cash his share of the surplus less damages separate and distinct entity that must refund the shares of
caused by his wrongful dissolution the partners, the amount to be refunded is necessarily
b. If the business is continued: limited to its total resources. In other words, it can only
i. To have the value of his interest in the pay out what it has in its coffers, which consists of all its
partnership at the time of the dissolution, assets (Villareal v. Ramirez, G.R. No. 144214, July 14, 2003).

CIVIL LAW
partnership when the final accounting is done. Contrary to
Partners lien Emnaces protestations, prescription had not even begun
to run in the absence of a final accounting. The right to
It is the right of every partner to have the partnership demand an accounting accrues at the date of dissolution in
property applied, to discharge partnership liabilities and the absence of any agreement to the contrary. When a final
surplus assets, if any, distributed in cash to the respective accounting is made, it is only then that prescription begins
partners, after deducting what may be due to the to run (Emnace v. CA, G.R. No. 126334, Nov. 23, 2001).
partnership from them as partners.
Q: Pauline, Patricia and Priscilla formed a business
Effects when the business of a dissolved partnership is partnership for the purpose of engaging in neon
continued advertising for a term of five (5) years. Pauline
subsequently assigned to Philip her interest in the
1. Creditors of old partnership are also creditors of the partnership. When Patricia and Priscilla learned of the
new partnership who continues the business of the assignment, they decided to dissolve the partnership
old one without liquidation of the partnership affairs. before the expiration of its term as they had an
2. Creditors have an equitable lien on the consideration unproductive business relationship with Philip in the
paid to the retiring/deceased partner by the past. On the other hand, unaware of the move of
purchaser when retiring/deceased partner sold his Patricia and Priscilla but sensing their negative
interest without final settlement with creditors. reaction to his acquisition of Paulines interest, Philip
3. Rights of retiring/estate of deceased partner: simultaneously petitioned for the dissolution of the
a. To have the value of his interest ascertained as of partnership.
the date of dissolution; and a. Is the dissolution done by Patricia and Priscilla
b. To receive as ordinary creditor the value of his without the consent of Pauline or Philip valid?
share in the dissolved partnership with interest Explain
or profits attributable to use of his right, at his b. Does Philip have any right to petition for the
option. dissolution of the partnership before the
expiration of its specified term? Explain (1995 Bar
NOTE: The right to demand on accounting of the value of Question)
his interest accrues to any partner or his legal
representative after dissolution in the absence of an A:
agreement to the contrary. a) Under Art 1830(1)(c), the dissolution by Patricia
and Priscilla is valid and did not violate the contract
Prescription begins to run only upon the dissolution of the of partnership even though Pauline and Philip did not
partnership, when the final accounting is done. consent thereto. The consent of Pauline is not
necessary because she had already assigned her
Continuation of Partnership by a corporation interest to Philip. The consent of Philip is also not
necessary because the assignment to him of Paulines
If a corporation is formed consisted of the members of the interest did not make him a partner, under Art. 1813.
partnership, whose business and properties are
transferred to the corporation for continuing its business, b) No, Philip has no right to petition for dissolution
in payment of which corporate capital stock was issued, because he does not have the standing of a partner
such corporation is presumed to have assumed the (Art. 1813, NCC)
partnership debts and is prima facie liable therefor. The
rationale of the rule is that members of the partnership LIMITED PARTNERSHIP
may be said to have simply put on new coat or taken a
corporate cloak and the corporation is a mere continuation Limited Partnership
of the partnership (Laguna Transportation Co., Inc. vs. SSS,
107 Phil 833). It is one formed by two or more persons having as
members one or more general partners and one or more
Persons that are required to render an account limited partners, the latter not being personally liable for
partnership debts (Art. 1843, NCC).
1. Winding up partner;
2. Surviving partner; and Characteristics of limited partnership
3. Person or partnership continuing the business
1. It is formed by compliance with the statutory
Q: Emnace and Tabanao decided to dissolve their requirements.
partnership in 1986. Emnace failed to submit the 2. One or more general partners control the business
statement of assets and liabilities of the partnership, and are personally liable to creditors.
and to render an accounting of the partnership's 3. One or more limited partners contribute to the capital
finances. Tabanaos heirs filed against Emnace an and share in the profits but do not participate in the
action for accounting, etc. Emnace counters, management of the business and are not personally
contending that prescription has set in. Decide. liable for partnership obligations beyond their capital
contributions.
A: Prescription has not yet set in. Prescription of the
said right starts to run only upon the dissolution of the

2 0 15 G O L D E N N O T E S
PARTNERSHIP
4. The limited partners may ask for the return of their c. An additional limited partner is admitted
capital contributions under conditions prescribed by d. A person is admitted as a general partner
law. e. A general partner retires, dies, becomes insolvent
5. Partnership debts are paid out of common fund and or insane, or is sentenced to civil interdiction and
the individual properties of general partners the business is continued under Article 1860
f. There is a change in the character of the business
Consequences of separate personality of limited of the partnership
partnership g. There is a false or erroneous statement in the
certificate
The personality of a limited partnership being different h. There is a change in the time as stated in the
from that of its members, it must, on general principle, certificate for the dissolution of the partnership
answer for, and suffer, the consequence of its acts as such or for the return of a contribution
an entity capable of being the subject of rights and i. A time is fixed for the dissolution of the
obligations. If the limited partnership failed to pay its partnership, or the return of a contribution, no
obligations, this partnership must suffer the consequences time having been specified in the certificate
of such a failure, and must be adjudged insolvent (Campos j. The members desire to make a change in any
Rueda & Co. v. Pacific Commercial Co., et. al, G.R. No. L- other statement in the certificate in order that it
18703, Aug. 28, 1922). shall accurately represent the agreement among
them (Art. 1864 , NCC)
Business reasons and purposes of statutes authorizing
limited partnerships 2. Must be signed and sworn to by all of the members
including the new members if some added; in case of
1. Secure capital from others for ones business and still substitution, the assigning limited partner must also
retain control sign.
2. Share in profits of a business without risk of personal 3. Must be recorded in the SEC
liability
3. Associate as partners with those having business skill Instances when a general partner needs consent or
(De Leon, 2010). ratification of all the limited partners
FORMATION AND AMMENDMENT OF LIMITED When he:

PARTNERSHIP 1. Does any act in contravention of the certificate;
2. Does any act which would make it impossible to carry
Essential Requirements for the formation of limited on the ordinary business of the partnership;
partnership 3. Confesses judgment against partnership;
4. Possesses partnership property / assigns rights in
1. Certificate of articles of limited partnership which specific partnership property other than for
states the matters enumerated in Art. 1844, must be partnership purpose;
signed and sworn; and 5. Admits person as general partner;
2. Certificate must be filed for record in the office of the 6. Admits person as limited partner unless authorized
SEC. in certificate; or
7. Continues business with partnership property on
NOTE: Strict compliance with legal requirements is not death, retirement, civil interdiction, insanity or
necessary. It is sufficient that there is substantial insolvency of general partner unless authorized in the
compliance in good faith. If there is no substantial certificate.
compliance, the partnership becomes general partnership
as far as third persons are concerned, in which the RIGHTS AND OBLIGATIONS OF A LIMITED PARTNER
member are liable as general partners (Jo Chun v. Pacific
Commercial Co., G.R. No. 19892, Sept. 6, 1923). Rights of a limited partner
Cancellation of certificate or articles of limited 1. To have partnership books kept at principal place of
partnership business;
2. To inspect/copy books at reasonable hours;
1. When the partnership is dissolved 3. To have on demand true and full information of all
2. When all the limited partners ceased to be such (Art. things affecting partnership;
1864, NCC) 4. To have formal account of partnership affairs
whenever circumstances render it just and
Instances when a certificate or articles of limited reasonable;
partnership can be amended 5. To ask for dissolution and winding up by decree of
court;
1. It must fall under the following changes and 6. To receive share of profits/other compensation by
conditions: way of income; and
a. There is a change in the name of the partnership 7. To receive return of contributions, provided the
or in the amount or character of the contribution partnership assets are in excess of all its liabilities.
of any limited partner
b. A person is substituted as a limited partner

CIVIL LAW
Liabilities of a limited partner
NOTE: In the absence of such statement in the certificate,
AS CREDITOR AS TRUSTEE even if there is an agreement, all limited partners shall
Specific property stated as stand on equal footing in respect of these matters.
Deficiency in
contributed but not yet
contribution Requisites for return of contribution of a limited
contributed/ wrongfully returned
Money/other property wrongfully partner
Unpaid
paid/ conveyed to him on account
contribution 1. All liabilities of the partnership have been paid or if
of his contribution
they have not yet been paid, the assets of the
Transactions allowed or prohibited in a limited partnership are sufficient to pay such liabilities;
partnership 2. The consent of all the members (general and limited
partners) has been obtained except when the return
1. Allowed may be rightfully demanded; and
a. Granting loans to partnership 3. The certificate of limited partnership is cancelled or
b. Transacting business with partnership amended
c. Receiving pro rata share of partnership assets
with general creditors if he is not also a general Return of contribution of a limited partner as a matter
partner of right
2. Prohibited When all liabilities of the partnership, except liabilities to

a. Receiving/holding partnership property as general partners and to limited partners on account of
collateral security their contributions, have been paid or there remains
b. Receiving any payment, conveyance, release from property of the partnership sufficient to pay them and the
liability if it will prejudice right of 3rd persons certificate is cancelled or so amended as to set forth the
withdrawal or reduction:
NOTE: The prohibition is not absolute because there 1. On the dissolution of the partnership;
is no prohibition if the partnership assets are 2. Upon the arrival of the date specified in the certificate
sufficient to discharge partnership liabilities to for the return; or
persons not claiming as general or limited partners. 3. After the expiration of 6 month notice in writing given
by him to the other partners if no time is fixed in the
Substituted limited partner certificate for the return of the contribution or for the
dissolution of the partnership.
It is a person admitted to all the rights of a limited partner
who has died or assigned his interest in the partnership. NOTE: Even if a limited partner has contributed property,
he has only the right to demand and receive cash for his
Rights and liabilities of a substituted limited partner contribution. The exceptions are:
1. When there is stipulation to the contrary in the
GR: He has all the rights and powers and is subject to all certificate; or
the restrictions and liabilities of his assignor. 2. When all the partners (general and limited partners)
consent to the return other than in the form of cash
XPN: Those liabilities which he was ignorant of at the time
that he became a limited partner and which could not be Liabilities of a limited partner
ascertained from the certificate
1. To the partnership
Requirements for the admission of a substituted
limited partner Since limited partners are not principals in the
transaction of a partnership, their liability as a rule, is
1. All the members must consent to the assignee to the partnership, not to the creditors of the
becoming a substituted limited partner or the limited partnership. The general partners cannot, however
partner, being empowered by the certificate must give waive any liability of the limited partners to the
the assignee the right to become a limited partner; prejudice of such creditors.
2. The certificate must be amended in accordance with
Art. 1865; and 2. To the partnership creditors and other partners
3. The certificate as amended must be registered in the
SEC. a. A limited partner is liable for partnership
obligations when he contributed services instead
Basis of preference given to limited partners over of only money or property to the partnership
other limited partners b. When he allows his surname to appear in the
firm name
Priority or preference may be given to some limited c. When he fails to have a false statement in the
partners over other limited partners as to the: certificate corrected, knowing it to be false
1. Return of their contributions; d. When he takes part in the control of the business
2. Their compensation by way of income; or
3. Any other matter.

2 0 15 G O L D E N N O T E S
PARTNERSHIP
e. When he receives partnership property as 3. Those to limited partners in respect to the capital of
collateral security, payment, conveyance, or their contributions
release in fraud of partnership creditors 4. Those to general partners other than for capital and
f. When there is failure to substantially comply profits
with the legal requirements governing the 5. Those to general partners in respect to profits
formation of limited partnerships 6. Those to general partners in respect to capital (Art.
1863, NCC)
3. To separate creditors
NOTE: Subject to any statement in the certificate or to
As in a general partnership, the creditor of a limited subsequent agreement, limited partners share in the
partner may, in addition to other remedies allowed partnership assets in respect to their claims for capital,
under existing laws, apply to the proper court for a and in respect to their claims for profits or for
charging order subjecting the interest in the compensation by way of income on their contribution
partnership of the debtor partner for the payment of respectively, in proportion to the respective amounts of
his obligation. (De Leon, Comments and cases on such claims.
Partnership, Agency and Trust, 2010, pp. 306-307)
Q: Is a limited partner, not a proper party to
Requisites for waiver or compromise of liabilities proceedings?
The waiver or compromise: A:

1. Is made with the consent of all partners; and
2. Does not prejudice partnership creditors who GR: A limited partner is not a proper party to proceedings:
extended credit or whose claims arose before the 1. By a partnership
cancellation or amendment of the certificate. 2. Against a partnership
When may a limited partner have the partnership XPNs:

dissolved 1. If he is also a general partner.
2. Where the object is to enforce a limited partners right
1. When his demand for the return of his contribution is against or liability to the partnership. (Art. 1866)
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 (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.
2. Limited partner - The partnership is not dissolved
except all limited partners cease to be such.
Rights of the executor/administrator on the death of

the limited partner
1. All the rights of a limited partner for the purpose of

settling his estate
2. To have the same power as the deceased had to
constitute his assignee as substituted limited partner.
In setting accounts after dissolution, the liabilities 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

CIVIL LAW
SUMMARY OF RIGHTS AND OBLIGATIONS OF Obligations of partners to To the partnership
PARTNERS 3rd persons creditors and other
partners
GENERAL PARTNER LIMITED PARTNER 1. Every partnership shall
Rights operate under a firm 1. A limited partner is
1. Right in specific 1. To have partnership name. Persons who liable for partnership
partnership property books kept at principal include their names in obligations when he
2. Interest in the place of business the partnership name contributed services
partnership (share in 2. To inspect/copy books even if they are not instead of only money
the profits and surplus) at reasonable hours members shall be liable or property to the
3. Right to participate in 3. To have on demand as a partner partnership
the management true and full 2. All partners shall be 2. When he allows his
4. Right to associate information of all liable for contractual surname to appear in
another person with things affecting obligations of the the firm name
him in his share partnership partnership with their 3. When he fails to have a
without the consent of 4. To have formal account property, after all false statement in the
other partners (sub- of partnership affairs partnership assets have certificate corrected,
partnership) whenever been exhausted: knowing it to be false
5. Right to inspect and circumstances render it a. Pro rata 4. When he takes part in
copy partnership books just and reasonable b. Subsidiary the control of the
at any reasonable hour. 5. To ask for dissolution 3. Admission or business
6. Right to a formal and winding up by representation made by 5. When he receives
account as to decree of court any partner concerning partnership property as
partnership affairs 6. To receive share of partnership affairs collateral security,
(even during existence profits/other within the scope of his payment, conveyance,
of partnership) compensation by way authority is evidence or release in fraud of
a. if he is wrongfully of income against the partnership partnership creditors
excluded from 7. To receive return of 4. Notice to partner of any 6. When there is failure to
partnership contributions, provided matter relating to substantially comply
business or the partnership assets partnership affairs with the legal
possession of its are in excess of all its operates as notice to requirements
property by his co- liabilities partnership except in governing the
partners. case of fraud: formation of limited
b. if right exists under a. Knowledge of partnerships
the terms of any partner acting in
agreement. the particular
c. as provided in Art. matter acquired
1807 while a partner
d. whenever the b. Knowledge of the
circumstances partner acting in
render it just and the particular
reasonable. matter then
present to his
Obligations mind
Obligations of partners To the partnership c. Knowledge of any
among themselves other partner who
Since limited partners are reasonably could
1. Contribution of not principals in the and should have
property transaction of a partnership, communicated it to
2. Contribution of money their liability as a rule, is to the acting partner
and money converted the partnership, not to the 5. Partners and the
to personal use creditors of the partnership. partnership are
3. Prohibition in engaging The general partners cannot, solidarily liable to 3rd
in business for himself however waive any liability persons for the
4. Contribute additional of the limited partners to partner's tort or breach
capital the prejudice of such of trust
5. Managing partner who creditors. 6. Liability of incoming
collects debt partner is limited to:
6. Partner who receives a. His share in the
share of partnership partnership
credit property for
7. Damages to partnership existing
8. Render information obligations
9. Accountable as b. His separate
fiduciary property for

2 0 15 G O L D E N N O T E S
PARTNERSHIP
subsequent disability. partnership of the debtor
obligations 2. Duty to account to the partner for the payment of
7. Creditors of partnership partnership as his obligation.
are preferred in fiduciary.
partnership property &
may attach partner's
share in partnership
assets
Other obligations To separate creditors
1. Duty to render on As in a general partnership,

demand true and full the creditor of a limited
information affecting partner may, in addition to
partnership to any other remedies allowed
partner or legal under existing laws, apply to
representative of any the proper court for a
deceased partner or of charging order subjecting
any partner under legal the interest in the

CIVIL LAW
AGENCY
Parties to a contract of agency
DEFINITION OF AGENCY
1. Principal One whom the agent represents and from
whom he derives his authority; he is the person
Contract of agency
represented.
By the contract of agency a person binds himself to render 2. Agent One who acts for and represents another; he
some service or to do something in representation or on is the person acting in a representative capacity (De
behalf of another, with the consent or authority of the Leon, 2010).
latter (Art. 1868, NCC).
NOTE: From the time the agent acts or transacts the
Characteristics of a contract of agency business for which he has been employed in
representation of another, a third party is added to the
agency relationship the party with whom the business is
1. Bilateral If it is for compensation, it gives rise to
transacted (De Leon, 2010).
reciprocal rights and obligations.
2. Unilateral If gratuitous, it creates obligations for
Essential elements of an agency
only one of the parties.
3. Nominate It has its own name.
1. Consent (express or implied) of the parties to
4. Consensual It is perfected by mere consent.
establish the relationship.
5. Principal It can stand by itself without need of
another contract.
6. Preparatory It is entered into as a means to an end NOTE: A person may express his consent (1) by
(De Leon, 2010). contract (Art. 1868, NCC), orally or in writing, (2) by
conduct (Art. 1869, NCC) (3) by ratification (Art. 1910,
Classifications of Agency NCC) or the consent may arise (4) by presumption or
operation of law (De Leon, 2010)
1. As to manner of creation
2. The object is the execution of a juridical act in relation
a. Express Agent has been actually authorized by
to third persons.
the principal, either orally or in writing (Art.
3. The agent acts as a representative and not for himself.
1869, NCC)
4. The agent acts within the scope of his authority (De
b. Implied Agency is implied from the acts of the
Leon, 2010).
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 Appointment of an Agent
authority (Art. 1869, NCC)
GR: There are no formal requirements governing the
2. As to character appointment of an agent.
a. Gratuitous Agent receives no compensation for
his services(Art. 1875, NCC) XPN: When the law requires a specific form. i.e. when
b. Onerous Agent receives compensation for his sale of land or any interest therein is through an agent, the
authority of the latter must be in writing; otherwise, the
services (Art. 1875, NCC)
sale shall be void (Art. 1874, NCC).
3. As to extent of business of the principal
Appointment of Special Agent
a. General Agency comprises all the business of
the principal (Art. 1876, NCC)
The State is responsible in like manner when it acts
b. Special Agency comprises one or more specific
through a special agent, but not when the damage has been
transactions (Art. 1876, NCC)
caused by the official to whom the task done properly
4. As to authority conferred pertains, in which case, Art. 2176 applies. Matters
a. Couched in general terms Agency is created in involving special agents of the State are governed by Art
general terms and is deemed to comprise only 2180 (Pineda, 2006).
acts in the name and representation of the
principal (Art. 1877, NCC) Rules on implied acceptance of agency
b. Couched in specific terms Agency authorizing
1. Between persons who are present The acceptance of
only the performance of a specific act or acts (Art.
the agency may also be implied if the principal
1876, NCC)
delivers his power of attorney to the agent and the
latter receives it without any objection (Art. 1871,
5. As to nature and effects
NCC).
a. Ostensible or representative Agent acts in the
2. Between persons who are absent The acceptance of
name and representation of the principal (Art.
the agency cannot be implied from the silence of the
1868, NCC)
b. Simple or commission Agent acts in his own agent except:
name but for the account of the principal (De a. When the principal transmits his power of
Leon, 2010) attorney to the agent, who receives it without any
objection;

2 0 15 G O L D E N N O T E S
AGENCY
b. When the principal entrusts to him by letter or Exceptions to the theory of imputed knowledge
telegram a power of attorney with respect to the
business in which he is habitually engaged as an 1. The agents interests are adverse to those of the
agent and he did not reply to the letter or principal.
telegram (Art. 1872, NCC). 2. The agents duty is not to disclose the information, as
where he is informed by way of confidential
NOTE: Acceptance by the agent may also be express or information.
implied from his acts which carry out the agency, or from 3. The person claiming the benefit of the rule colludes
his silence or inaction according to the circumstances (Art. with the agent to defraud the principal.
1870, NCC).
NOTE: The theory of imputed knowledge ascribes the
Nature of the relationship between principal and agent knowledge of the agent to the principal, not the other way
around. The knowledge of the principal cannot be imputed
It is fiduciary in nature that is based on trust and to his agent (Sunace International Management Services,
confidence (De Leon, 2010). Inc. vs. NLRC, 480 SCRA 146).
Qualifications of a Principal Kinds of Agents
1. Natural or juridical person 1. Universal agent One employed to do all acts which
2. He must have capacity to act the principal may personally do, and which he can
lawfully delegate to another the power of doing.
NOTE: If a person is capacitated to act for himself or his 2. General agent One employed to transact all business
own right, he can act through an agent. of the principal, or all the business of a particular kind
or in a particular place, do all acts connected with a
Insofar as third persons are concerned, it is enough that particular trade, business or employment.
the principal is capacitated. But insofar as his obligations 3. Special or particular agent One authorized to do act
to his principal are concerned, the agent must be able to in one or more specific transactions or to do one or
bind himself. more specific acts or to act upon a particular occasion
(De Leon, 2010).
Kinds of Principal
Rule with regard to the execution of the agency
1. Disclosed principal At the time of the transaction
contracted by the agent, the other party knows that GR: The agent is bound by his acceptance to carry out the
the agent is acting for a principal and of the principals agency, in accordance with the instruction of the principal
identity. and is liable for damages which, through his non-
2. Partially disclosed principal The other party knows performance, the principal may suffer (Art. 1884; Art.1887,
or has reason to know that the agent is or may be NCC).
acting for a principal but is unaware of the principals
identity. XPN: If its execution could manifestly result in loss or
3. Undisclosed principal The party has no notice of the damage to the principal (Art. 1888, NCC).
fact that the agent is acting as such for a principal (De
Leon, 2010). Responsibility of two or more agents appointed
simultaneously
Joint Principals
GR: Jointly liable.
Two or more persons appoint an agent for a common
transaction or undertaking (Art. 1915, NCC). XPN: Solidarity has been expressly stipulated. Each of the
agents becomes solidarily liable for:
Requisites for solidary liability of joint principals 1. The non-fulfilment of the agency
2. Fault or negligence of his fellow agent
1. There are two or more principals.
2. They have all concurred in the appointment of the XPNs to the XPN:
same agent. 1. When one of the other agents acts beyond the
3. Agent is appointed for a common transaction or scope of his authority Innocent agent is not
undertaking (De Leon, 2010) liable.
2. When the fault or negligence of his fellow agents
Theory of Imputed Knowledge acted beyond the scope of their authority
Innocent agent is not liable (Art. 1895, NCC).
The importance of the duty to give information of material
facts becomes readily apparent when it is borne in mind NOTE: An innocent agent has a right later on to recover
that knowledge of the agent is imputed to the principal from the guilty or negligent agent (Art. 1217, NCC).
even though the agent never communicated such
knowledge to the principal (De Leon, 2010).

CIVIL LAW
Instances when the agent may incur personal liability Q: A granted B the exclusive right to sell his brand of
Maong pants in Isabela, the price for his merchandise
1. Agent expressly bound himself. payable within 60 days from delivery, and promising B
2. Agent exceeds his authority. a commission of 20% on all sales. After the delivery of
3. Acts of the agent prevent the performance on the part the merchandise to B but before he could sell any of
of the principal. them, Bs store in Isabela was completely burned
4. When a person acts as agent without authority or without his fault, together with all of A's pants. Must B
without a principal. pay A for the lost pants? Why? (1999 Bar Question)
5. A person who acts as an agent of an incapacitated
principal unless the third person was aware of the A: The contract between A and B is a sale not an agency
incapacity at the time of the making of the contract to sell because the price is payable by B upon 60 days
(De Leon, 2010) 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
Presumption of contract of agency resell it. As a buyer, ownership passed to B upon delivery
and, under Art. 1504, the thing perishes for the owner.
GR: Agency is not presumed. The relation between Hence, B must still pay the price.
principal and agent must exist as a fact. Thus, it is held that
where the relation of agency is dependent upon the acts of Proving the existence of principal-agent relationship
the parties, the law makes no presumption of agency, and through mere representation
it is always a fact to be proved, with the burden of proof
resting upon the person alleging the agency to show, not Mere representation of an alleged agent is not sufficient to
only the fact of its existence, but also its nature and extent. prove the existence of a principal-agent relationship.The
declarations of the agent alone are generally insufficient to
XPNs: establish the fact or extent of agency. It is a settled rule
1. Operation of law that the persons dealing with the assumed agent are
2. To prevent unjust enrichment (De Leon, 2010) bound at their peril, if they would hold the principals
liable, to ascertain not only the fact of agency but also the
Agency by necessity nature and extent of authority, and in case either is
controverted, the burden of proof is upon them to
Agency cannot be created by necessity. What is created establish it (Sps. Yu v. Pan American World Airways, Inc.,
instead is additional authority in an agent appointed and G.R. No. 123560, Mar. 27, 2000).
authorized before the emergency arose.
Q: A foreign manufacturer of computers and a
Requisites for the additional authority of agent in Philippine distributor entered into a contract whereby
cases of necessity the distributor agreed to order 1,000 units of the
manufacturer's computers every month and to resell
1. Real existence of emergency them in the Philippines at the manufacturer's
2. Inability of the agent to communicate with the suggested prices plus 10%. All unsold units at the end
principal of the year shall be bought back by the manufacturer
3. Exercise of additional authority is for the principals at the same price they were ordered. The
protection manufacturer shall hold the distributor free and
4. Adoption of fairly reasonable means, premises duly harmless from any claim for defects in the units. Is the
considered agreement one for sale or agency? (2000 Bar
Question)
Rule regarding double agency
A: The contract is one of agency not sale. The notion of
GR: It is disapproved by law for being against public policy sale is negated by the following indicia: (1) the price is
and sound morality. fixed by the manufacturer with the 10% mark-up
constituting the commission; (2) the manufacturer
XPN: Where the agent acted with full knowledge and reacquires the unsold units at exactly the same price; and
consent of the principals. (3) warranty for the units was borne by the manufacturer.
The foregoing indicia negate sale because they indicate
Acts that a principal may delegate to his agent that ownership over the units was never intended to
transfer to the distributor.
GR: What a man may do in person, he may do thru
another.
XPNs:
1. Personal acts
2. Criminal acts or acts not allowed by law

2 0 15 G O L D E N N O T E S
AGENCY
Agency v. Guardianship the will of either only at the will
principal or of both
BASIS AGENCY GUARDIANSHIP agent
As to who Agent Guardian As to the kind Agent exercises Employee has
they represents a represents an of function he discretionary ministerial
represent capacitated incapacitated exercises powers functions
person person
As to the Agent derives Agency v. Trust
Guardian derives
source of authority from
authority from
authority the principal BASIS AGENCY TRUST
the court
As to the Agent usually Trustee may
Agent is Guardian is capacity to holds no title at hold legal title to
As to the appointed by appointed by the hold title over all the property
appointing the principal court, and stands the property
authority and can be in loco parentis As to his Agent usually Trustee may act
removed by the actions acts in the name in his own name
latter of the principal
Agent is subject Guardian is not As to the Agency usually Trust usually
As to being
to directions of subject to the termination may be ends by the
subject to the
the principal directions of the of the terminated or accomplishment
person they
ward, but must relationship revoked any of the purposes
represent
act for the wards time for which it was
benefit formed
Agent can As to the Agency may not Trust involves
Guardian has no
make the scope of be connected at control over
As to liability power to impose
principal authority all with property property
personal liability
personally over property
on the ward
liable As to the Agent has Trustee does not
binding effect authority to necessarily or
Agency v. Judicial administration of the make contracts even possess
contracts which will be such authority to
JUDICIAL entered by binding on his bind the trustor
BASIS AGENCY ADMINISTRATI them principal or the cestui que
ON trust
As to the Agent is Judicial As to its Agency is really Trust may be the
source of appointed by the Administrator is creation a contractual result of a
authority principal appointed by the relation contract, it may
court also be created
As to whom Represents the Represents not by law
they principal only the court
represent but also the POWERS
heirs and
creditors of the Kinds of agency as to extent of powers conferred
estate
As to the Agent does not Judicial An agency may be couched in:
requirement file a bond Administrator 1. General terms It is one which is created in general
of bond files a bond terms and is deemed to comprise only acts of
As to control Agent is His acts are administration (Art. 1877, NCC)
of the agent/ controlled by the subject to 2. Specific terms It is necessary to perform any act of
administrator principal thru specific orders strict ownership (De Leon, 2010).
the agreement from the court
Instances when the act of an agent is binding to the
Agency v. Lease of services principal
BASIS LEASE OF 1. When the agent acts as such without expressly

AGENCY binding himself or does not exceed the limits of his
SERVICES
Agent Worker or authority (Art. 1897, NCC).
As to 2. If principal ratifies the act of the agent which
represents the lessor of
representation exceeded his authority (Art. 1898, NCC).
principal services does
by the agent 3. Circumstances where the principal himself was, or
not represent
or worker ought to have been aware (Art. 1899, NCC).
his employer
As to Relationship Generally, 4. If such act is within the terms of the power of
termination of can be relationship can attorney, as written (Art.1900 & 1902, NCC).
relationship terminated at be terminated

CIVIL LAW
5. Principal has ratified, or has signified his willingness 2. GR: When the act is within the scope of the agents
to ratify the agents act (Art 1901, NCC). authority but in his own name.
Knowledge of a fact by an agent is binding on the XPN: When the transaction involves things belonging
principal to the principal (Art. 1883, NCC).
GR: Knowledge of agent is knowledge of principal. NOTE: The limits of the agents authority shall not be
considered exceeded should it have been performed
XPNs: in a manner more advantageous to the principal than
1. Agents interests are adverse to those of the principal. that specified by him.
2. Agents duty is not to disclose the information (e.g.
confidential information). RIGHTS OF AGENTS
3. Where the person claiming the benefit of the rule
colludes with the agent to defraud the principal (De Instances when the agent may retain in pledge the
Leon, 2010) object of the agency
Effects of the acts of an agent 1. If principal fails to reimburse the agent the necessary
sums, including interest, which the latter advanced for
1. With authority the execution of the agency (Art. 1912, NCC).
a. In principals name Valid 2. If principal fails to indemnify the agent for all
b. In his own name Not binding on the principal; damages which the execution of the agency may have
agent and stranger are the only parties, except caused the latter, without fault or negligence on his
regarding things belonging to the principal or part (Art. 1913, NCC).
when the principal ratifies the contract or derives
benefit there from Rule where two persons deal separately with the agent
and the principal
2. Without authority
a. In principals name Unenforceable but may be If the two contracts are incompatible with each other, the
ratified, in which case, may be validated one of prior date shall be preferred. This is subject
retroactively from the beginning however to the rule on double sale under Art. 1544 of the
b. In his own name Valid on the agent, but not on NCC.
the principal
NOTE: Rules of preference in double sale
Q: CX executed a special power of attorney authorizing 1. Personal property possessor in good faith
DY to secure a loan from any bank and to mortgage his 2. Real property
property covered by the owners certificate of title. In a. Registrant in good faith
securing a loan from M Bank, DY did not specify that b. Possessor in good faith
he was acting for CX in the transaction with the bank. c. Person with the oldest title in good faith (Art.
Is CX liable for the bank loan? (2004 Bar Question) 1544, NCC).
A: While as a general rule the principal is not liable for the If agent acted in good faith, the principal shall be liable for
contract entered into by his agent in case the agent acted damages to the third person whose contract must be
in his own name without disclosing his principal, such rule rejected. If agent is in bad faith, he alone shall be liable
does not apply if the contract involves a thing belonging to (Art. 1917, NCC).
the principal. In such case, the principal is liable under Art.
1883 of the NCC. The contract is deemed made in his A person acting as an agent cannot escape criminal
behalf (Sy-Juco v. Sy-Juco, G.R. No. L-13471, Jan. 12, 1920). liability by virtue of the contract of agency
Rule as to when the principal is not bound by the act of The law on agency has no application in criminal cases.
the agent When a person participates in the commission of a crime,
he cannot escape punishment on the ground that he simply
1. GR: When the act is without or beyond the scope of acted as an agent of another party (Ong v. CA, G.R. No.
his authority in the principals name. 119858, Apr. 29, 2003).
XPNs: An agent cannot maintain an action against persons

a. Where the acts of the principal have contributed with whom they contracted on behalf of his principal.
to deceive a 3rd person in good faith.
b. Where the limitation upon the power created by Agents are not a party with respect to that contract
the principal could not have been known by the between his principal and third persons. As agents, they
3rd person. only render some service or do something in
c. Where the principal has placed in the hands of representation or on behalf of their principals. The
the agent instruments signed by him in blank. rendering of such service did not make them parties to the
d. Where the principal has ratified the acts of the contracts of sale executed in behalf of the latter. The fact
agent. that an agent who makes a contract for his principal will
gain or suffer loss by the performance or non-performance

2 0 15 G O L D E N N O T E S
AGENCY
of the contract by the principal or by the other party 15. Bear the risk of collection and pay the principal the
thereto does not entitle him to maintain an action on his proceeds of the sale on the same terms agreed upon
own behalf against the other party for its breach. An agent with the purchaser, should he receive also on sale, a
entitled to receive a commission from his principal upon guarantee commission (Art. 1907,NCC)
the performance of a contract which he has made on his 16. Indemnify the principal for damages for his failure to
principal's account does not, from this fact alone, have any collect the credits of his principal at the time that they
claim against the other party for breach of the contract, become due (Art. 1908,NCC)
either in an action on the contract or otherwise. An agent 17. Be responsible for fraud or negligence (Art. 1909, NCC;
who is not a promisee cannot maintain an action at law De Leon, 2010)
against a purchaser merely because he is entitled to have
his compensation or advances paid out of the purchase NOTE: The court shall judge with more or less rigor,
price before payment to the principal (Uy v. CA, G.R. No. the fault or negligence of the agent, according to
120465, Sept. 9, 1999). whether the agency was or was not for compensation.
RESPONSIBILITIES AND OBLIGATIONS OF AN AGENT Instructions
Specific obligations of an agent to the principal Private directions which the principal may give the agent
in regard to the manner of performing his duties as such
1. Carry out the agency (Art. 1884, NCC) agent but of which a third party is ignorant. They are said
2. Answer for damages which through his non- to be secret if the principal intended them not to be made
performance the principal may suffer (Ibid) known to such party (De Leon, 2010).
3. Finish the business already begun on the death of the
principal (Ibid) Authority v. Principals instructions
4. Observe the diligence of a good father of a family in
the custody and preservation of the goods forwarded BASIS AUTHORITY INSTRUCTIONS
to him by the owner in case he declines an agency, Sum total of the Contemplates
until an agent is appointed (Art. 1885,NCC) powers only a private
committed to the rule of guidance
NOTE: the owner shall as soon as practicable either As to the scope
agent by the to the agent;
appoint an agent or take charge of the goods (Art. principal independent and
1885, NCC). distinct in
character
5. Advance the necessary funds should there be a Relates to the Refers to the
stipulation to do so except when the principal is subject/business manner or mode
insolvent (Art. 1886, NCC) As to the
with which the of agents action
6. Act in accordance with the instructions of the relationship to
agent is
principal (Art. 1887,NCC) the agent
empowered to
7. Not to carry out the agency if its execution would deal or act
manifestly result in loss or damage to the principal Limitations of Without
(Art. 1888, NCC) authority are significance as
8. Answer for damages if there being a conflict between operative as against those
his interests and those of the principal, he should As to third
against those who with neither
prefer his own (Art. 1889,NCC) persons
have/charged knowledge nor
9. Not to loan to himself if he has been authorized to with knowledge notice of them
lend money at interest (Art. 1890,NCC) of them
10. Render an account of his transactions and to deliver Contemplated to Not expected to
to the principal whatever he may have received by be made known be made known
virtue of the agency, even though it may not be owing to third persons to those with
to the principal (Art. 1891, NCC) As to purpose
dealing with the whom the agent
agent deals (De Leon,
NOTE: every stipulation exempting the agent from the 2010)
obligation to render an account shall be void (Art.
1891(2), NCC) Breach of loyalty of the agent
11. Distinguish goods by countermarks and designate the In case of breach of loyalty, the agent is NOT entitled to
merchandise respectively belonging to each principal, commission
in the case of a commission agent who handles goods
of the same kind and mark, which belong to different The forfeiture of the commission will take place regardless
owners (Art. 1904, NCC) of whether the principal suffers any injury by reason of
12. Be responsible in certain cases for the acts of the such breach of loyalty. It does not even matter if the
substitute appointed by him (Art. 1892,NCC) agency is for a gratuitous one, or that the principal
13. Pay interest on funds he has applied to his own use obtained better results, or that usage and customs allow a
(Art. 1896, NCC) receipt of such a bonus.
14. Inform the principal, where an authorized sale of
credit has been made, of such sale (Art. 1906,NCC)

CIVIL LAW
NOTE: An agent has an absolute duty to make a full Tort committed by the agent
disclosure or accounting to his principal of all transactions
Principal civilly liable so long as the tort is committed by
and material facts that may have some relevance with the
the agent while performing his duties in furtherance of the
agency (Domingo v. Domingo, G.R. No. L-30573, Oct. 29,
principals business
1971).
Agent in good faith but prejudices 3rd parties
When the obligation to account not applicable Principal is liable for damages
1. If the agent acted only as a middleman with the task of

EXPRESS v. IMPLIED AGENCY
merely bringing together the vendor and vendees.
2. If the agent informed the principal of the
BASIS EXPRESS AGENCY IMPLIED AGENCY
gift/bonus/profit he received from the purchaser and
his principal did not object thereto. As to One where the One which is
3. Where a right of lien exists in favor of the agent. definition agent has been implied from the
actually acts of the
SUMMARY OF RULES; ACTS OF AN AGENT authorized by the principal,
principal, either
orally or in writing
In behalf of the principal, within the scope of authority
As to When it is directly When it is
1. Binds principal; authority conferred by incidental to the
2. Agent not personally liable words transaction or
reasonably
Without or beyond scope of authority necessary to
accomplish the
Contract is unenforceable as against the principal but binds
purpose of the
the agent to the third person
agency, and
therefore, the
Binding on the principal when:
principal is
1. Ratified or
deemed to have
2. The principal allowed the agent to act as though he
actually intended
had full powers
the agent to
Within the scope of authority but in the agents name possess
1. Not binding on the principal;
2. Principal has no cause of action against the 3rd parties Scope of the agents authority as to third persons
and vice versa
It includes not only the actual authorization conferred
NOTE: When the transaction involves things belonging to upon the agent by his principal but also that which is
the principal: apparent or impliedly delegated to him (De Leon, 2010).
Remedy of the principal damages for agents failure to
comply with the agency Q: When third person is required to inquire into the
Within the scope of the written power of attorney but authority of the agent?
agent has actually exceeded his authority according to
an understanding between him and the principal A:
1. Where authority is not in writing Every person
1. Insofar as 3rd persons are concerned (not required to dealing with an assumed agent must discover upon
inquire further than the terms of the written power), his peril, if he would hold the principal liable, not only
agent acted within scope of his authority; the fact of the agency but the nature and extent of the
2. Principal stopped authority of the agent.
With improper motives 2. Where authority is in writing 3rd person is not
Motive is immaterial; as long as within the scope of required to inquire further than the terms of the
authority, valid written power of attorney.
With misrepresentations by the agent NOTE: A third person with whom the agent wishes to
1. Authorized principal still liable contract on behalf of the principal may require the
2. Beyond the scope of the agents authority presentation of the power of attorney or the instructions
as regards the agency (Art. 1902, NCC).
GR: Principal not liable
Q: When is the principal may be bound by the actual or
XPN: Principal takes advantage of a contract or receives apparent authority of the agent?
benefits made under false representation of his agent
Mismanagement of the business by the agent A: The principal is bound by the acts of the agent on his
behalf, whether or not the third person dealing with the
1. Principal still responsible for the acts contracted by agent believes that the agent has actual authority, so long
the agent with respect to 3rd persons; as the agent has actual authority, express or implied.
2. Principal, however, may seek recourse from the agent

2 0 15 G O L D E N N O T E S
AGENCY
Doctrine of Apparent Authority as against the principal, agent, or third persons in
interest.
The principal is liable only as to third persons who have 4. Estoppel of the government The government is not
been led reasonably to believe by the conduct of the estopped by the mistake or error on the part of its
principal that such actual authority exists, although none agents.
has been given.
NOTE: However, the rule on non-estoppel of the
Apparent authority v. Authority by estoppel government is not designed to perpetrate an injustice
(Leca Realty Corp. vs. Republic, G.R. Nos. 155605 & 160179,
BASIS Apparent Authority by Sept. 27, 2006).
Authority Estoppel
As to the That which is Arises when the Implied agency v. Agency by estoppel
knowledge of though not principal, by his
the principal of actually culpable negligence, BASIS IMPLIED AGENCY BY
the authority of granted, the permits his agent to AGENCY ESTOPPEL
the agent principal exercise powers not Agent is a true If caused by the
As to
knowingly granted to him, agent, with rights agent, he is not
liability
permits the even though the and duties of an considered a true
between
agent to principal may have agent agent, hence, he
principal
exercise or no notice or has no rights as
and agent
holds him out as knowledge of the such
possessing agents conduct 1. The principal is 1. If caused by
As to the Founded in Founded on the always liable the principal,
establishment conscious principals 2. The agent is he is liable, but
of the authority permission of negligence in failing never only if the 3rd
acts beyond the properly to As to personally person acted
powers granted supervise the liability to liable on the
affairs of the agent third misrepresenta
persons tion;
AGENCY BY ESTOPPEL 2. If caused by
the agent
Agency by estoppel alone, only the
agent is liable
It is when one leads another to believe that a certain
person is his agent, when as a matter of fact such is not GENERAL v. SPECIAL AGENCY
true, and the latter acts on such misrepresentation, the
former cannot disclaim liability, for he has created an BASIS General Agent Special Agent
agency by estoppels (Paras, Civil Code of the Philippines All acts Specific acts in
Annotated, 6thed.). connected with pursuance of
the business or particular
Rules regarding estoppel in agency Scope of employment in instructions or
Authority which he is with restrictions
1. Estoppel of agent One professing to act as agent for engaged necessarily
another may be estopped to deny his agency both as implied from the
against his asserted principal and the third persons act to be done
interested in the transaction in which he engaged. Nature of Involves No continuity of
2. Estoppel of principal Service continuity of service
a. As to agent One who knows that another is Authorized service
acting as his agent and fails to repudiate his acts, May bind his Cannot bind his
or accepts the benefits, will be estopped to deny principal by an principal in a
the agency as against the other. act within the manner beyond
b. As to sub-agent To estop the principal from Extent to
scope of his or outside the
denying his liability to a third person, he must which the
authority specific acts
have known or be charged with knowledge of the Agent may
although it may which he is
fact of the transaction and the terms of the Bind the
be contrary to authorized to
agreement between the agent and sub-agent. Principal
the latters perform
c. As to third persons One who knows that special
another is acting as his agent or permitted instructions
another to appear as his agent, to the injury of Apparent Duty imposed
third persons who have dealt with the apparent authority does upon the third
agent as such in good faith and in the exercise of Termination not terminate by party to inquire
reasonable prudence, is estopped to deny the of Authority mere revocation makes
agency. of his authority termination of
3. Estoppel of third persons A third person, having dealt without notice to the relationship
with one as agent may be estopped to deny the agency

CIVIL LAW
the third party effective upon
revocation The making of customary gifts for charity, or those made to
Construction Merely advisory Strictly employees in the business managed by the agent are
of in nature construed as they considered acts of administration (Art. 1878, NCC; De Leon,
Principals limit the agents 2010)
Instruction authority
Q: P granted to A a special power to mortgage the
Commission agent formers real estate. By virtue of said power, A secured
a loan from C secured by a mortgage on said real
He is one engaged in the purchase and sale of personal estate. Is P personally liable for said loan?
property for a principal, which, for this purpose, has to be
placed in his possession and at his disposal. A: No. A special power to mortgage property is limited to
such authority to mortgage and does not bind the grantor
Broker personally to other obligations contracted by the grantee
in the absence of any ratification or other similar act that
He is a middleman or intermediary who in behalf of others would estop the grantor from questioning or disowning
and for a commission or fee negotiates such other obligations contracted by the grantee.
contracts/transactions relating to real or personal
property. AGENCY REQUIRING SPECIAL POWER OF ATTORNEY
Factorage Special power of attorney (SPA)
It is the compensation of a factor or commission agent. It is an instrument in writing by which one person, as
principal, appoints another as his agent and confers upon
Ordinary commission him the authority to perform certain specified acts or
kinds of acts on behalf of the principal with a primary
It is the compensation for the sale of goods which are purpose to evidence agents authority to third parties
placed in the agents possession or at his disposal. within whom the agent deals.
Guarantee commission Intervention of a notary public in the validity of an SPA
It is the fee which is given in return for the risk that the GR: A power of attorney is valid although no notary public
agent has to bear in the collection of credits. intervened in its execution (Barretto v. Tuason, G.R. Nos.L-
36811, 36827, 36840, 36872, Mar. 31, 1934).
The purpose of the guarantee commission is to
compensate the agent for the risks he will have to bear in XPN: When SPA is executed in a foreign country, it must be
the collection of the credit due the principal (De, Leon, certified and authenticated according to the Rules of Court,
2010). particularly Sec. 25, Rule 132.
Del credere agent NOTE: When the special power of attorney is executed and
acknowledged before a notary public or other competent
He is the agent who guarantees payment of the customers official in a foreign country, it cannot be admitted in
account in consideration of the commission (De, Leon, evidence unless it is certified as such by a secretary of
2010). embassy or legation, consul general, consul, vice consul, or
consular agent or by any officer in the foreign service of
A delcredere agent may sue in his name for the purchase the Philippines stationed in the foreign country in which
price in the event of non-performance by the buyer (De, the record is kept of said public document and
Leon, 2010) authenticated by the seal of his office (Medina v. Natividad,
G.R. No. 177505, Nov. 27, 2008).
AGENCY COUCHED IN GENERAL TERMS
The failure to have the special power of attorney (executed
Agency couched in general terms in a foreign country) authenticated is not merely a
technicality it is a question of jurisdiction. Jurisdiction
It is one which is created in general terms and is deemed over the person of the real party-in-interest was never
to comprise only acts of administration (Art. 1877, NCC). acquired by the courts (Ibid).
Acts of administration A special power of attorney is required
Refers to those acts which do not imply the authority to 1. To create or convey real rights over immovable
alienate for the exercise of which an express power is property.
necessary (De Leon, 2010). 2. To enter into any contract by which the ownership of
an immovable is transmitted or acquired either
NOTE: Payment is an act of administration when it is made gratuitously or for a valuable consideration.
in the ordinary course of management (Art. 1878, NCC; De
Leon, 2010)

2 0 15 G O L D E N N O T E S
AGENCY
3. To loan or borrow money, unless the latter act be RIGHTS AND OBLIGATIONS OF PRINCIPAL
urgent and indispensable for the preservation of the
things which are under administration. Obligations of the principal to the agent
4. To lease any real property to another person for more
than one year. To:
5. To make such payments as are not usually considered 1. Comply with all obligations which the agent may
as acts of administration. have contracted within the scope of his authority
6. To obligate principal as guarantor or surety. (Art. 1910(1), NCC).
7. To bind the principal to render some service without 2. Advance to the agent, should the latter so
compensation. request, the sums necessary for the execution of
8. To bind the principal in a contract of partnership. the agency (Art. 1912, NCC).
9. To ratify obligations contracted before the agency. 3. Reimburse the agent for all advances made by
10. To accept or repudiate an inheritance. him, even if the business or undertaking was not
11. To effect novation which put an end to obligations successful, provided the agent is free from fault
already in existence at the time the agency was (Ibid).
constituted. 4. Indemnify the agent for all damages which the
12. To make gifts, except customary ones for charity or execution of the agency may have caused the
those made to employees in the business managed by latter without fault or negligence on his part (Art.
the agent. 1913, NCC).
13. To compromise, to submit questions to arbitration, to 5. Pay the agent the compensation agreed upon, or
renounce the right to appeal from a judgment, to if no compensation was specified, the reasonable
waive objections to the venue of an action or to value of the agents services (De Leon, 2010).
abandon a prescription already acquired.
14. Any other act of strict dominion. Liability for the expenses incurred by the agent
15. To waive an obligation gratuitously.
GR: Principal is liable for the expenses incurred by the
Limitations to a special power of attorney agents
1. A special power to sell excludes the power to XPNs:

mortgage (Art. 1879, NCC). 1. If the agent acted in contravention of the principal's
2. A special power to mortgage does not include the instructions, unless principal should wish to avail
power to sell (Ibid). himself of the benefits derived from the contract.
3. A special power to compromise does not authorize 2. When the expenses were due to the fault of the agent
submission to arbitration (Art. 1880, NCC). 3. When the agent incurred them with knowledge that
an unfavorable result would ensue, if the principal
AGENCY BY OPERATION OF LAW was not aware thereof.
4. When it was stipulated that the expenses would be
Instances where an agency is created by operation of borne by the agent, or that the latter would be
law allowed only a certain sum (Art. 1918, NCC).
1. When the agent withdraws from the agency for a valid Liability for the contracts entered by the agent
reason, he must continue to act until the principal has
had a reasonable opportunity to take the necessary GR: The principal must comply with all the obligations
steps like the appointment of a new agent to remedy which the agent may have contracted within the scope of
the situation caused by the withdrawal (Art. 1929, his authority.
NCC).
2. In case a person declines an agency, he is bound to XPN: Where the agent exceeded his authority.
observe the diligence of good father of the family in
the custody and preservation of the goods forwarded XPN to the XPN: When the principal ratifies it
to him by the owner until the latter should appoint an expressly or tacitly (Art. 1910, NCC)
agent (Art. 1885, NCC).
NOTE: Even if the agent has exceeded his authority, the
NOTE: The law reconciles the interests of the agent principal is solidarily liable with the agent if the former
with those of the principal, and if it permits the allowed the latter to act as though he had full powers (Art.
withdrawal of the agent, it is on the condition that no 1911, NCC)
damage results to the principal, and if the agent
desires to be relieved of the obligation of making Liability for tort committed by the agent
reparation when he withdraws for a just cause, he
must continue to ac so that no injury may be caused to GR: Where the fault or crime committed by the agent is not
the principal (De Leon, 2010). 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.

CIVIL LAW
XPNs: Presumption of continuance of agency
1. Where the tort was committed by the agent because
of defective instructions from the principal or due to It means that when once shown to have existed, an agency
lack of necessary vigilance or supervision on his part; relation will be presumed to have continued, in the
or absence of anything which shows its termination (De Leon,
2. When the tort consists in the performance of an act 2010).
which is within the powers of an agent but becomes
criminal only because of the manner in which the Essential elements for continuance of agency
agent has performed it; the principal is civilly liable to
3rd persons who acted in good faith. Both principal and agent must be:
1. Present
IRREVOCABLE AGENCY 2. Capacitated
3. Solvent (De Leon, 2010)
An agency is irrevocable
Heirs continuing the contract of agency
1. If a bilateral contract depends upon it.
2. If it is the means of fulfilling an obligation already GR: Heirs cannot continue the contract of agency
contracted.
3. If partner is appointed manager and his removal from Ratio: The agency calls for personal services on the part of
the management is unjustifiable (Art 1927, NCC). the agent since it is founded on a fiduciary relationship;
4. If it has been constituted in the common interest of rights and obligations intransmissible.
the principal and the agent (Art. 1930, NCC).
5. Stipulation pour atrui (Art. 1311, NCC). XPNs:
1. Agency by operation of law, or a presumed or tacit
NOTE: The agent may withdraw from the agency by giving agency
due notice to the principal. If the latter should suffer any 2. Agency is coupled with an interest in the subject
damage by reason of the withdrawal, the agent must matter of the agency (e.g. power of sale in a mortgage)
indemnify him therefor, unless the agent should base his
withdrawal upon the impossibility of continuing the Revocability of the contract of agency
performance of the agency without grave detriment to
himself (Art. 1928, NCC). GR: Agency is revocable at will by the principal.
The agent, even if he should withdraw from the agency for XPNs: It cannot be revoked if:
a valid reason, must continue to act until the principal has 1. A bilateral contract depends upon it
had reasonable opportunity to take the necessary steps to 2. It is the means of fulfilling an obligation already
meet the situation (Art. 1929, NCC). contracted
3. A partner is appointed manager of a partnership and
MODES OF EXTINGUISHMENT his termination is unjustifiable (Art. 1927, NCC)
4. It is created not only for the interest of the principal
Modes of extinguishing an agency but also for the interest of third persons (Art. 1930,
NCC)
1. Expiration of the period
2. Death, civil interdiction, insanity or insolvency of XPN to the XPN: When the agent acts to defraud the
principal or of the agent principal.
3. Withdrawal by the agent
4. Accomplishment of the object or the purpose of the Kinds of revocation
agency
5. Revocation Revocation may either be express or implied (De Leon,
6. Dissolution of the firm or corporation which 2010; Art. 1920, NCC)
entrusted or accepted the agency (Art. 1919, NCC)
A contract of agency is impliedly revoked when the
NOTE: The list is not exclusive; May also be extinguished principal:
by the modes of extinguishment of obligations in general
whenever they are applicable, like loss of the thing and 1. Appoints a new agent for the same business or
novation. transaction (Art. 1923, NCC)
2. Directly manages the business entrusted to the agent
Agency may be terminated: (1) by agreement (Nos. 1 and (Art. 1924, NCC)
4); (2) by the subsequent acts of the parties which may be 3. After granting general power of attorney to an agent,
either: (a) by the act of both parties or by mutual consent; grants a special one to another agent which results in
or (b) by unilateral act of one of them (Nos. 3 and 5; (3) by the revocation of the former as regards the special
operation of law (Nos. 2 and 6) (De Leon, 2010). matter involved in the latter (Art.1926, NCC).
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

2 0 15 G O L D E N N O T E S
AGENCY
act authorized under the special power (Tolentino, Q: Eduardo executed a SPA authorizing Zenaida to
Civil Code of the Philippines, Vol. V). participate in the pre-qualification and bidding of a
NIA project and to represent him in all transactions
Revocation of agency when the agent is appointed by related thereto. It was granted to them. Zenaida leased
two or more principals Manuels heavy equipment to be used for the NIA
project. Manuel interposed no objection to Zenaidas
When the agent has been appointed by two or more actuations. Eduardo later revoked the SPA alleging
principals, the agency is revoked if any one of the that Zenaida acted beyond her authority in contracting
principals is granted the right to revoke the power of with Manuel under the SPA. Records show that
attorney without the consent of the others (Art. 1927, Eduardo and Zenaida entered into a partnership in
NCC). regard to the NIA project. Decide.
Necessity of notice of revocation A: Under Art. 1818 of the NCC, every partner is an agent of
the partnership for the purpose of its business and each
1. As to the agent Express notice is not always one may separately execute all acts of administration,
necessary; sufficient notice if the party to be notified unless, under Art. 1801, a specification of their respective
actually knows, or has reason to know, a fact duties has been agreed upon, or else it is stipulated that
indicating that his authority has been any one of them shall not act without the consent of all the
terminated/suspended; revocation without notice to others. As such, even granting that Zenaida exceeded the
the agent will not render invalid an act done in authority granted by the SPA, being a partner in the
pursuance of the authority (De Leon, 2010) constituted partnership between her and Eduardo, she
2. As to 3rd persons Express notice is necessary can still execute acts of administration absent any
a. As to former customers Actual notice must be agreement that one cannot act without the consent of
given to them because they always assume the all others(Mendoza v. Paule, G.R. No. 175885, Feb. 13,
continuance of the agency relationship (Art. 1873, 2009).
NCC)
b. As to other persons Notice by publication is When the agent can withdraw from the agency
enough (Art. 1922, NCC)
The agent may renounce or withdraw from the agency at
NOTE: There is implied revocation of the previous agency any time, without the consent of the principal, even in
when the principal appoints a new agent for the same violation of the latters contractual rights; subject to
business or transaction, provided there is incompatibility. liability for breach of contract or for tort.
But the revocation does not become effective as between
the principal and the agent until it is in some way Kinds of withdrawal by the agent
communicated to the latter.
1. Without just cause The law imposes upon the agent
Effect of the direct management by the principal the duty to give due notice to the principal and to
indemnify the principal should the latter suffer
GR: The agency is revoked for there would no longer be damage by reason of such withdrawal.
any basis for the representation previously conferred. But 2. With just cause If the agent withdraws from the
the principal must act in good faith and not merely to agency for a valid reasons (Art. 1929, NCC) as when
avoid his obligation to the agent. the withdrawal is based on the impossibility of
continuing with the agency without grave detriment
XPN: The only desire of the principal is for him and the to himself (Art. 1928, NCC) or is due to a fortuitous
agent to manage the business together. event (Art. 1174, NCC), the agent cannot be held liable
(De Leon, 2010)
Q: Richard sold a large parcel of land in Cebu to Leo for
P100 million payable in annual installments over a NOTE: Even if the agent withdraws from the agency
period of ten years, but title will remain with Richard for a valid reason, he must continue to act until the
until the purchase price is fully paid. To enable Leo to principal has had reasonable opportunity to take the
pay the price, Richard gave him a power-of-attorney necessary steps to meet the situation (Art. 1929, NCC).
authorizing him to subdivide the land, sell the
individual lots, and deliver the proceeds to Richard, to Death of a party to the contract of agency
be applied to the purchase price. Five years later,
Richard revoked the power of attorney and took over GR: The agency is terminated by the death of the principal
the sale of the subdivision lots himself. Is the even if the agency is for a definite period (Art. 1919, NCC).
revocation valid or not? Why? (2001 Bar Question)
XPNs:
A: The revocation is not valid. The power of attorney 1. If it has been constituted in common interest of the
given to the buyer is irrevocable because it is coupled with principal and the agent or in the interest of the third
an interest the agency is the means of fulfilling the person who accepted the stipulation in his favour
obligation of the buyer to pay the price of the land (Art. (Art. 1930, NCC).
1927, NCC). In other words, a bilateral contract (contract to 2. Anything done by the agent, without the knowledge
buy and sell the land) is dependent on the agency. of the death of the principal or on any other cause
which extinguishes the agency is valid and shall be

CIVIL LAW
fully effective with respect to third persons who may
have contracted with him in good faith (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 (Art. 1921, 1922, NCC) 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, 1 SCRA 406).
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
(Art. 1884).
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 Go Chan, G.R. No. L-24332,
Jan. 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
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).

2 0 15 G O L D E N N O T E S
COMPROMISE
COMPROMISE effort to settle the case, X offered to pay the principal
but begged for the reduction of the interest. Y refused,
DEFINITION hence, trial was conducted. Can the judge reduce the
rate of interest?
Compromise
A compromise is a contract whereby the parties, by A: Yes. The courts may mitigate the damage to be paid by
making reciprocal concessions, avoid litigation or put an the losing party who has shown a sincere desire for a
end to one already commenced (Art. 2028, NCC). compromise (Art. 2031, NCC).
Characteristics of a compromise Persons who should seek courts approval before

entering into a compromise
1. Consensual
2. Reciprocal 1. Guardians
3. Nominate 2. Parents
4. Onerous 3. Absentees representatives
5. Accessory (in the sense that a prior conflict is 4. Administrators or executors of decedents estates
presupposed) (Art. 2032, NCC)
6. Once accepted, it is binding on the parties, provided
there is no vitiated consent (McCarthy v. Barber A juridical person can enter into a compromise.
Steamship Lines, 45 Phil. 488).
7. It is the settlement of a controversy principally, and is Juridical persons may compromise only in the form and
but merely incidentally, the settlement of a claim. with the requisites which may be necessary to alienate
(ibid) their property (Art. 2033, NCC).
Kinds of Compromise Compromise on the civil aspect of a crime
1. Judicial to end a pending litigation There may be a compromise upon the civil liability arising
from an offense; but such compromise shall not extinguish
NOTE: As a contract, a compromise is perfected by the public action for the imposition of the legal penalty
mutual consent. However, a judicial compromise, (Art. 2034, NCC).
while immediately binding between the parties upon
its execution, is not executory until it is approved by VOID COMPROMISE
the court and reduced to a judgment. The validity of a
compromise is upon its compliance with the A compromise of the following is void:
requisites and principles of contracts dictated by law. 1. Civil status of person
Also the terms and conditions of a compromise must 2. Validity of a marriage or a legal separation
not be contrary to law, morals, good customs, public 3. Any ground for legal separation
policy and public order. A review of the terms of the 4. Future support
agreement, indicated that it is a judicial compromise 5. Jurisdiction of courts
because the parties intended it to terminate their 6. Future legitime (Art. 2035, NCC)
pending litigation by settling their dispute (Land Bank
of the Phils. vs. Heirs of Spouses Jorja Rigor-Soriano EFFECT
&Magin Soriano; G.R. No. 178312, January 30, 2013).
Effect if two parties enter into a compromise
2. Extrajudicial to prevent a litigation from arising
It has the effect of res judicata. A compromise has upon the
Duty of a court whenever a suit is filed parties the effect and authority of res judicata (Art. 2037,
NCC).
The court shall endeavor to persuade the litigants in a civil
case to agree upon some fair compromise (Art. 2029, NCC). Requirements in the execution of a compromise
Circumstances that may suspend the proceeding of a There must be an approval of the court (Art 2037, NCC)
civil action
Q: When will a compromise become voidable?
1. Willingness to discuss a possible compromise is
expressed by one or both parties; or A: When there is a mistake, fraud, violence, intimidation,
2. It appears that one of the parties, before the undue influence or falsity of documents (Art. 2038, NCC)
commencement of the action or proceeding, offered to
discuss a possible compromise but the other party NOTE: However, one of the parties cannot set up a mistake
refused the offer (Art. 2030, NCC). of fact as against the other if the latter, by virtue of the
compromise, has withdrawn from a litigation already
Q: X is indebted to Y in the amount of P50,000 with the commenced (Art. 2038, NCC).
stipulation that the same shall earn interest at 40%
per annum. When X failed to pay, Y sued him. In an

CIVIL LAW
Q: A and B entered into a compromise agreement. A
week thereafter, B filed an action in court seeking to Q: X and Y entered into a compromise agreement,
annul the compromise agreement contending that it is terminating a suit between them. X failed to comply
one-sided. Is the action proper? with the terms and conditions of the same. What are
the remedies of the aggrieved party?
A: No, because where the compromise is instituted and
carried through in good faith, the fact that there was a A: If one of the parties fails or refuses to abide by the
mistake as to the law or as to the facts, except in certain compromise, the other party may either enforce the
cases where the mistake was mutual and correctible as compromise, or regard it as rescinded and insist upon
such in equity, cannot afford a basis for setting aside a his original demand (Art 2041, NCC).
compromise. Compromises are favored without regard to
the nature of the controversial compromise, and they Effect of a contract or a compromise that is
cannot be set aside because the event shows all the gains disadvantageous to one of the parties
have been on one side (Asong v. Intermediate Appellate
Court, May 12, 1989). It remains to be valid. It is a long established doctrine that
the law does not relieve a party from the effects of an
NOTE: If a litigation has been decided upon by a final unwise, foolish, or disastrous contract, entered into with
judgment, a compromise later on agreed upon by either or all the required formalities and with full awareness of
both parties being unaware of the existence of the final what he is doing. Courts have no power to relieve parties
judgment, the compromise may be rescinded. from obligations voluntarily assumed, simply because
their contracts turned out to be disastrous deals or unwise
Ignorance of a judgment which may be revoked or set investments (Tanda v. Aldaya, 89 Phil. 497; Villacorte v.
aside is not a valid ground or attacking a compromise (Art. Mariano, 89 Phil. 341).
2040, NCC).
It is a truism that a compromise agreement entered into
Q: X and Y entered into a compromise agreement by party-litigants, when not contrary to law, public order,
whereby X respected the ownership of Y over a part of public policy, morals, or good customs is a valid contract
a creek (now a fishpond). Is the agreement valid? which is the law between the parties themselves. It
follows, therefore, that a compromise agreement, not
A: No, because that is contrary to public policy and the law. tainted with infirmity, irregularity, fraud or illegality is the
The creek is a property belonging to the State; hence, it is between the parties who are duty bound to abide by it and
part of public domain which is not susceptible to private observe strictly its terms and conditions (Esguerra v. CA,
appropriation and acquisition (Maneclang v Intermediate GR 119310, February 3, 1997).
Appellate Court, 161 SCRA 469).

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
CREDIT TRANSACTIONS Bailment
GENERAL PRINCIPLES It is the delivery of a personal property for some particular

use, or on mere deposit, upon a contract, express or
Credit implied, that after the purpose has been fulfilled, it shall be
redelivered to the person who delivered it, or otherwise
It is a persons ability to borrow money by virtue of dealt with according to his directions, or kept until he
confidence or trust reposed in him by the lender that he reclaims it, as the case may be.
will pay what he may promise.
Generally, no fiduciary relationship is created by bailment.
Significance of Credit No trustee-beneficiary relationship is created.
By virtue of the use of credit, more exchanges are possible: Parties in a contract of bailment
persons are able to enjoy a thing today but pay it for later,
and through the banking system, the transfer of actual 1. Bailor The giver; the party who delivers the
money is eliminated by cancellation of debts and credits. possession or custody of the thing bailed
2. Bailee The recipient; the party who receives the
Credit transaction possession or custody of the thing thus delivered
It refers to an agreement based on trust or belief of Contractual bailments with reference to compensation
someone on the ability of another person to comply with
his obligations. 1. For the sole benefit of the bailor (gratuitous) e.g.
gratuitous deposit, commodatum
It includes all transactions involving the purchase or loan 2. For the sole benefit of the bailee (gratuitous) e.g.
of goods, service, or money in the present with a promise commodatum, mutuum
to pay or deliver in the future. 3. For the benefit of both parties (mutual-benefit
bailments) e.g. deposit for compensaton, involuntary
Kinds of credit transactions deposit, pledge and bailments for hire:
a. Hire of things temporary use
1. As contracts of security b. Hire of service for work or labor
a. Contracts of real security These are contracts c. Hire of carriage of goods for carriage
supported by collateral/s or burdened by an d. Hire of custody for storage
encumbrance on property such as mortgage and
pledge LOAN
b. Contracts of personal security These are
contracts where performance by the principal GENERAL PROVISIONS
debtor is not supported by collateral/s but only
by a promise to pay or by the personal Loan
undertaking or commitment of another person
such as in surety or guaranty It is a contract where one of the parties delivers to another,
2. As to their existence either something not consumable so that the latter may
a. Principal contracts They can exist alone. Their use the same for a certain time and return it, in which case
existence does not depend on the existence of is called a commodatum; or money or other consumable
another contract (e.g. commodatum and mutuum) things, upon the condition that the same amount of the
b. Accessory contracts They have to depend on same kind and quality shall be paid, in which case the
another contract. These accessory contracts contract is simply called a loan or mutuum (Art. 1933,
depend on the existence of a principal contract of NCC).
loan (e.g. guaranty proper, suretyship, pledge,
mortgage and antichresis) Kinds of loan
3. As to their consideration
a. Onerous This is a contract where there is 1. Commodatum Where the bailor (lender) delivers to
consideration or burden imposed like interest. the bailee (borrower) a non-consumable thing so that
b. Gratuitous This is a contract where there is no the latter may use it for a given time and return the
consideration or burden imposed (e.g. same thing (i.e. identical thing)
commodatum) 2. Mutuum or Simple Loan Where the bailor (lender)
delivers to the bailee (borrower) money or other
Security consumable thing subject to the condition that the
latter shall pay same amount of the same kind and
It is something given, deposited, or serving as a means to quality
ensure the fulfillment or enforcement of an obligation or of
protecting some interest in the property. Consideration in a contract of loan
1. As to the borrower, the acquisition of the thing

2. As to the lender, the right to demand its return or its
equivalent.

CIVIL LAW
ownership; he loses his the obligor
Object of a contract of loan control over the property
rented during the period
1. Commodatum The object is generally not of contract
consumable; Landlord-tenant Obligor-obligee
2. Mutuum The object is consumable. relationship relationship
BARTER LOAN
Consumable things and Non-consumable things Subject matter are non- Subject matter is money
fungible things or other fungible things
A thing is consumable when it cannot be used in a manner Always onerous May be gratuitous or
appropriate to its nature without being consumed (Art. onerous
418, NCC) (e.g. food, firewood, gasoline). There is a mutual sale In mutuum, there is
resulting in the transfer transfer of ownership,
On the other hand, a non-consumable thing is a movable of ownership on both there is no sale
thing which can be used in a manner appropriate to its sides
nature without it being consumed (Art. 418, NCC) (e.g. car, The parties do not return In commodatum, the
television, radio). the things subject of the bailee returns the thing
exchange after the expiration of the
Fungible and Non-Fungible things period agreed upon
DEPOSIT LOAN
Fungible thing is one where the parties have agreed to Safekeeping of the thing Lender grants the
allow the substitution of the thing given or delivered with deposited. Generally, the borrower the use of the
an equivalent thing (3 Manresa 58). Non-fungible thing is depositary cannot use the thing learned
one where the parties have the intention of having the thing deposited
same identical thing returned after the intended use (Ibid).
Depositor can demand Generally, borrower pays
the return of the thing at the end of the period
NOTE: As to whether a thing is consumable or not, it
deposited at any time
depends upon the nature of the thing.
Compensation not Compensation of credits
applicable to things applicable
As to whether it is fungible or not, it depends upon the
deposited
intention of the parties.
Relationship is one of Relationship is one of
depositor and depositary lender and borrower; or
Fungibles are usually determined by number, weight or
creditor and debtor
measure.
Irreplaceability of Non-Fungible thing Perfection of contract of loan
GR: Non-fungible things are irreplaceable. They must be An accepted promise to deliver something by way of
returned to the lender after the purpose of the loan had mutuum or simple loan is binding upon the parties, but the
been accomplished. mutuum or simple loan itself shall not be perfected until
the delivery of the object of the contract (Art. 1934, NCC).
XPN: Non-fungible things may be replaced by agreement
of the parties. In such case, the contract is barter and not Unlawful purpose of the contract of loan
loan
If the loan is executed for illegal or immoral or unlawful
Loan distinguished from Credit, Discount, Rent, Barter purpose or use, the contract is void. The bailor may
and Deposit immediately recover the thing before any illegal act is
committed and provided he is innocent or in good faith
(Arts. 1411 and 1412, NCC).
CREDIT LOAN
Ability to borrow money Delivery by one party and
COMMODATUM
by virtue of the the receipt by the other
confidence reposed by party of a given sum of
Commodatum
the lender unto him that money, upon an
he will pay what he has agreement, expressed or
It is a contract where one of the parties (bailor) delivers to
promised implied, to repay the sum
another (bailee) something not consumable so that the
loaned, with or without
latter may use the same for a certain time and thereafter
interest
returns it.
DISCOUNT LOAN
Interest is deducted in Interest is taken at the Kinds of commodatum
advance expiration of a credit
Always on double-name Generally on a single- 1. Ordinary commodatum bailor cannot just demand
paper name paper the return of the thing at will, because there is a
RENT LOAN period agreed upon by the parties.
The owner of property The thing loaned
does not lose the becomes the property of

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
2. Precarium one whereby the bailor may demand the Use of fruits of the property by the bailee
thing loaned at will in the following cases:
a. If the duration of the contract had not been The bailee in commodatum acquires only the use of the
stipulated; thing loaned but not its fruits (Art. 1935, NCC).
b. If the use to which the thing loaned should be
devoted had not been stipulated; or A stipulation that the bailee may make use of the fruits of
c. If the use of the thing is merely by tolerance of the thing loaned is valid. It is understood that the
the owner enjoyment of the fruits must only be incidental to the use
NOTE: The word owner in Art. 1947 (2) is not of the thing. It should not be the main cause; otherwise, the
proper because the bailor need not be the owner contract is not a commodatum but a usufruct (Art. 1940,
of the thing (Pineda, 2006; Art. 1938). NCC).
Characteristics of a contract of commodatum The stipulation that the bailee may make use of the fruits
of the thing loaned will not impair the essence of
1. Real contract delivery of the thing loaned is commodatum because the actual cause or consideration
necessary for the perfection of the contract therefore is still the liberality of the bailor or lender.
2. Unilateral contract once subject matter is delivered,
it creates obligations on the part of only one of the Elements of commodatum
parties (the borrower)
3. Essentially gratuitous 1. There must be a bailor and bailee;
4. Purpose is to transfer the temporary use of the thing 2. the bailee acquires the use of the thing;
loaned 3. it must be gratuitous
5. Principal contract
6. Purely personal contract Parties to a commodatum
Consequence of purely personal character of 1. Bailor/Comodatario/Commodans The giver/ lender -

commodatum The party who delivers the possession or custody of
the thing bailed.
1. Death of a party 2. Bailee/Comodante/Commodatarius The recipient/
borrower - The party who receives the possession or
GR: Commodatum is purely personal in character custody of the thing thus delivered.
hence death of either bailor or bailee extinguishes the
contract (Art. 1939, NCC). Liability when there are two or more bailees
XPN: By stipulation, the commodatum is transmitted When there are 2 or more bailees to whom a thing is
to the heirs of either or both party. loaned in the same contract, they are liable solidarily (Art.
1945, NCC).
2. Lease of the thing subject of commodatum
Their liability is solidary in order to protect the bailors
GR: The bailee can neither lend nor lease the object of rights over the thing loaned.
the contract to a third person.
Q: Following the principle of autonomy of contracts,
XPN: Members of the bailees household may make may the parties to a contract of commodatum validly
use of the thing loaned because members of the stipulate that the liability of the bailees shall be joint?
bailees household are not considered as third
persons. A: No. Article 1245 expressly provides that in a contract of
commodatum, when there are two or more bailees to
NOTE: Household members are those permanently whom a thing is loaned in the same contract, they are
living or residing within the same residence including liable solidarily. It constitutes as an exception to the
the household helpers. general rule of joint obligations where there are two or
more debtors, who concur in one and same obligation
XPN to the XPN: Contrary stipulation; or Nature under Articles 1207 and 1208. Solidarity is provided to
of the thing forbids such use. safeguard effectively the rights of the bailor over the thing
loaned.
3. Right of retention
Subject matter of commodatum
GR: The bailee cannot exercise the right of retention
against the bailor GR: Under Art. 1933, the subject matter of commodatum
must be non-consumable because the thing must be
XPN: However, he can exercise the right of retention returned.
on the account of damages suffered by the bailee
because of flaws that the bailor knew of but did not XPN: Consumable goods may be the subject of
disclose to the bailee 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

CIVIL LAW
goods shall be returned to the lender or bailor (Art. 1936, RIGHTS OF THE BAILOR
NCC).
Return of the thing loaned
Object of commodatum
GR: The return of the thing loaned may be demanded by
Both movable and immovable property may be the object the bailor only (1) after the expiration of the period
of commodatum (Art. 1937, NCC). stipulated or (2) after the accomplishment of the use for
which it is constituted.
Consideration in a commodatum
XPNs:
1. As to the borrower The acquisition of thing loaned 1. In case of urgent need by the bailor
2. As to the lender The right to demand the return of 2. In case of precarium
the same thing loaned 3. If the bailee commits an act of ingratitude specified in
Article 765 to the bailor (Art. 1948, NCC), to wit:
OBLIGATIONS OF THE BAILOR a. If the bailee should commit some offenses against
the person, honor or the property of the bailor, or
Obligations of the bailor his wife or children under his parental authority;
b. If the bailee imputes to the bailor any criminial
1. Allow the bailee the use of the thing loaned for the offense, or any act involving moral turpitude,
duration of the period stipulated or until the even though he should prove it, unless the crime
accomplishment of the purpose. or the act has been committed against the bailee,
2. Refund the extraordinary expenses the bailee his wife or children under his authority; or
incurred for the preservation of the thing. c. If the bailee unduly refuses the bailor support
when the bailee is legally or morally bound to
GR: The bailee must bring to the knowledge of the give support to the bailor.
bailor such expenses before incurring the same.
NOTE: The rationale for the application of Art.
XPN: In case there is urgency and delay would cause 765 which refers to donations is the fact that
imminent danger. commodatum, like donation, is gratuitous in
nature.
If the extraordinary expenses arise on the occasion of
the actual use of the thing loaned by the bailee, the Q: If the contract of commodatum is a precarium, will
expenses shall be borne by the bailor and bailee Art. 1942 (1) and (2) still apply?
equally, even though the bailee is without fault (Art.
1949, NCC). A: It depends. If there has been a demand on the part of
the bailor before the loss of the thing under the
3. To be liable for damages for known hidden defects. circumstances set forth under Art. 1942 (1) and (2) and
4. Cannot exempt himself from payment of expenses or the bailee did not return the thing, then the latter is liable.
damages by abandonment of the thing to bailee. However, if there has been no demand on the part of the
bailor and the thing was lost, the bailor is estopped and
Liability of the bailor for hidden defects cannot hold the bailee liable for under a contract of
precarium, the use of the thing by the bailee depends on
Requisites: the pleasure of the bailor and no time is fixed for such use.
1. There was a flaw or defect in the thing loaned; Hence, demand on the part of the bailor is needed for the
2. The flaw or defect is hidden; return of the thing. Without such, loss of the thing on the
3. The bailor is aware thereof; hands of the bailee will not make him liable.
4. He does not advise the bailee of the same; and
5. The bailee suffers damages by reason of said flaw or Bailor and ownership of the thing loaned
defect.
The bailor in commodatum need not be the owner of the
Cause of Action against bailor who did not disclose thing loaned. It is sufficient that he has possessory interest
flaw or defect over subject matter (Art. 1938, NCC).
The cause of action against the bailor who did not disclose NOTE: A mere lessee or usufructuary may gratuitously
the flaw or defect is action for recovery of damages on the give the use of the thing leased or in usufruct, provided
ground of quasi-delict because of negligence or bad faith. there is no prohibition against such.
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.

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
OBLIGATIONS OF THE BAILEE Commodatum v. Lease
As to COMMODATUM LEASE
Pay for the ordinary expenses for the
ordinary Real contract Consensual
use and preservation of the thing
expenses Object is a non-
Object may even be work
Liable for loss even through consumable and non
or service
fortuitous event when: fungible thing
1. When being able to save either of Essentially gratuitous Onerous
the thing borrowed or his own If the bailor is not aware Provisions governing
thing, he chose to save the latter of the flaws, he is not warranty are made
2. He keeps it longer than the liable for the resulting applicable
As to the loss period stipulated, or after the danger caused by such.
of the thing accomplishment of its use (in
in case of default); Conversion of commodatum to lease
fortuitous 3. The thing loaned has been
event delivered with appraisal of its The legal effect if the bailee pays for the use of the thing is
value that the contract ceases to be commodatum; it becomes
4. When he lends or leases it to lease.
third persons who are not
members of his household Right of retention in Commodatum
5. There is deviation from the
purpose GR: There is no right of retention in commodatum. The
Not liable for the deterioration of the bailee cannot retain the thing loaned on the ground that
thing loaned caused by the ordinary the bailor owes the bailee.
As to the
wear and tear of the thing loaned
deterioration
(Art. 1943, NCC). XPN: The bailee has the right of retention for claims of
of the thing
loaned damages which the bailee incurred or suffered by reason
NOTE: When there are two or more of the hidden defects or flaws of the thing loaned, of which
bailees, their liability is solidary. he was not informed or advised by the bailor.
RIGHTS OF A BAILEE The reason for the general rule that there is no right of
retention is that bailment implies a trust that as soon as
Rights of a bailee the time has expired or the purpose accomplished, the
bailed property must be returned to the bailor. Also, Art.
1. Use of the thing; 1287 provides that compensation shall not be proper
2. Make use of the fruits of the thing when such right is when one of the debts arises from the obligations of a
stipulated in the contract; bailee in commodatum (Art. 1287, reworded)
3. Not answerable for the deterioration of the thing
loaned due to the use thereof and without his fault; Q: Suppose during the said retention of the bailee by
and reason of hidden defects, the thing is lost due to a
4. Right of retention for damages due to hidden defects fortuitous event. Can the bailor hold the bailee liable
or flaws of the thing of which he was not advised by for said loss based on Art.1942 (2)?
the bailor.
A: No, the bailee cannot be held liable for the loss. Art.
Q: Art. 1178 of the NCC provides that all rights 1942 (2) contemplates wrongful retention or a situation
acquired by virtue of an obligation are transmissible. where the bailee is not entitled to retain the thing loaned.
Is the right to use the thing by virtue of a contract of
commodatum transmissible? NOTE: Article 1942 (2) provides that the bailee is liable for
the loss of the thing, even if it should be through a
A: No, it is not transmissible for 2 reasons: fortuitous event if he keeps it longer than the period
stipulated, or after the accomplishment of the use for
a.) Art. 1178 provides that the transmissibility of said which the commodatum has been constituted.
acquired rights are either subject to the laws or to a
contrary stipulation; and EXPENSES
b.) Art. 1939 provides that a contract of commodatum is
purely personal in character. Rules on who shall pay Ordinary, Extraordinary
expenses and other expenses
To rule otherwise would be to run counter to the purely
personal character of the commodatum and to the proviso 1. Ordinary Expenses for both the use and preservation
that transmissibility is subject to the law governing such of the thing, it shall be paid or shouldered by the
obligations. bailee (Art. 1941, NCC)
2. Extraordinary Expenses
a. Preservation Bailor, provided the bailee brings
the same to the knowledge of the bailor before

CIVIL LAW
incurring them, except when they are so urgent defect or fault; Tito, on the other hand, shall shoulder
that the reply to the notification cannot be "that part of the P15,000.00 spent for the tune-up,
awaited without danger (Art. 1949, NCC). said expense being ordinary for the use and
preservation of the van.
b. Use
GR: Borne equally by the bailor and bailee b) The costs for the fuel and other materials are
XPN: Stipulation to the contrary (Art. 1949, NCC) considered ordinary expenses, and consequently Tito,
3. Other expenses Bailee (Art. 1950, NCC) the bailee, shall shoulder them (Art. 1941, NCC).
Q: What if the bailee is entitled to payment or c) No, Pedro cannot demand the return of the van until
reimbursement of expenses incurred or damages after the expiration of the one-year period stipulated.
suffered and the bailor offers the thing loaned as However, if in the meantime he should have urgent
payment for said expenses or damages, would such need of the van, he may demand its return or
offer be valid or not, in view of the prohibition under temporary use.
Art. 1952 which states that the bailor cannot exempt
himself from the payment of expenses or damages by d) Both Tito and Pedro shall bear equally the costs of the
abandoning the thing to the bailee? extraordinary expenses, having been incurred on the
occasion of actual use of the van by Tito, the bailee,
A: The offer is not valid. It may be considered as dation in even though he acted without fault (Art. 1949(2),
payment. In this case, the abandonment done by the bailor NCC).
was made in favor of the bailee for the payment of the
expenses incurred by the latter, hence, a violation of what MUTUUM
the law has expressly prohibited under Article 1952.
Mutuum
Entitlement for reimbursement
It is a contract whereby one of the parties called the
The bailee is not entitled to reimbursement for the lender delivers to another called the borrower, money
expenses he incurred if, for the purpose of making use and or other consumable thing subject to the condition that the
preservation of the thing, the bailee incurs expenses other same amount of the same kind and quantity shall be paid.
than those ordinary and extraordinary expenses.
Characteristics of a contract of mutuum
Q: Before he left for Riyadh to work as a mechanic,
Pedro left his van with Tito, with the understanding 1. Borrower acquires ownership of the thing (Art 1953,
that the latter could use it for one year for his personal NCC).
or family use while Pedro works in Riyadh. He did not 2. If the thing loaned is money, payment must be made
tell Tito that the brakes of the van were faulty. Tito in the currency which is legal tender in the Philippines
had the van tuned up and the brakes repaired. He and in case of extraordinary deflation or inflation, the
spent a total amount of P15,000.00. After using the basis of payment shall be the value of the currency at
vehicle for two weeks, Tito discovered that it the time of the creation of the obligation (Art 1249
consumed too much fuel. To make up for the expenses, and 1250, NCC).
he leased it to Annabelle. Two months later, Pedro 3. If fungible thing was loaned, the borrower is obliged
returned to the Philippines and asked Tito to return to pay the lender another thing of the same kind,
the van. quality and quantity even if it should change in value.
Unfortunately, while being driven by Tito, the van was Perfection of the Contract of Mutuum
accidentally damaged by a cargo truck without his
fault. Real contracts, such as deposit, pledge and commodatum,
are not perfected until the delivery of the object of the
a. Who shall bear the P15,000.00 spent for the obligation (Art. 1316, NCC). While mutuum or simple loan
repair of the van? Explain. is not mentioned, it has the same character as
b. Who shall bear the costs for the van's fuel, oil and commodatum. Hence, mutuum is also a real contract which
other materials while it was with Tito? Explain. cannot be perfected until the delivery of the object.
c. Does Pedro have the right to retrieve the van even
before the lapse of one year? Explain. An accepted promise to make a future loan is a consensual
d. Who shall bear the expenses for the accidental contract and therefore, binding upon the parties but it is
damage caused by the cargo truck, granting that only after delivery, will the real contract of loan arise.
the truck driver and truck owner are insolvent?
Explain. (2005 Bar Question) Mere issuance of checks does not perfect the contract of
loan. It is only after the checks have been encashed that
A: the contact may be deemed perfected.
a) The contract between Pedro and Tito is one of
commodatum. Of the P15, 000.00 spent, Pedro, the
bailor, shall bear the expenses for the repair of the
faulty brakes, they being extraordinary expenses
incurred due to the non-disclosure by the bailor of the

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
Consideration in a simple loan
XPNs:
1. As to the borrower the acquisition of money or any use of the fruits is
other fungible thing stipulated;
2. As to the lender the right to demand the return of the enjoyment of the
money or any other fungible thing or its equivalent fruits is stipulated;
or enjoyment of the
Object of mutuum fruits is incidental
to its use
Money or fungible and consumable things. Real or personal
property
Governing rules on payment of loan
Generally non-
If the object of loan is Subject consumable things Only personal
Matter but may cover property
1. Money Governed by Arts. 1249 and 1250, NCC consumables if the
purpose of the
GR: Payment shall be made in the currency stipulated. contract is for
exhibition.
XPN: If not, that currency which is legal tender in the Ownership
Philippines. Retained by the Passes to the
of the
bailor debtor
thing
In case of extraordinary inflation value of the Thing to Equal amount of
currency at the time of the creation of the obligation. be Exact thing loaned the same kind and
returned quality
Loan of money can be payable in kind if there is an Who bears
agreement between the parties Bailor Debtor
risk of loss
In case of urgent
2. Consumable or fungible thing Debtor or borrower need even before
shall pay another thing of the same kind, quality and Only after the
When to the expiration of
quantity even if it should change in value. If cannot be expiration of the
return term (the contract
done, the value of the thing at the time of its term
is in the meantime
perfection (delivery) shall be the basis of the payment suspended)
of the loan (Art 1955, NCC). Contract of
Contract Contract of use
consumption
Q: Can estafa be committed by a person who refuses to
pay his debt or denies its existence? Mutuum v. Lease and Barter
A: No, because the debtor in mutuum becomes the owner MUTUUM LEASE
of the thing delivered to him. If he consumed or disposed
Object is money or any Object may be any thing,
of the thing, the act which is an act of ownership is not
consumable (fungible) whether movable or
misappropriation. Hence, there is no basis for a criminal
thing immovable, fungible or
prosecution.
non-fungible
There is transfer of No transfer of ownership
Destruction of the thing loaned
ownership
Creditor-debtor Lessor-lessee relationship
The destruction of the thing loaned does not extinguish
relationship
ones obligation in a simple loan because his obligation is
not to return the thing loaned but to pay a generic thing. Unilateral Bilateral
Commodatum v. Mutuum MUTUUM BARTER

Subject matter is money Subject matter are non-
BASIS COMMODATUM MUTUUM or other fungible things fungible things
Non-consumable Money or May be gratuitous or Always onerous
Object onerous
and Non- fungible consumable thing
Gratuitous, While in mutuum, there There is a mutual sale
May or may not be is transfer of ownership, resulting in the transfer
Cause otherwise it is a
gratuitous there is no sale of ownership on both
lease
Use or temporary sides
possession of the The money or The parties do not return
thing loaned but consumable thing loaned the things subject of the
Purpose Consumption is not returned but the exchange
GR: not its fruit same amount of the same
because the bailor kind and quantity shall be
remains the owner paid.

CIVIL LAW
Q: Siga-an granted a loan to Villanueva in the
INTEREST AND THE SUSPENSION OF THE USURY LAW amount of P540,000.00. Such agreement was not
reduced to writing. Siga-an demanded interest which
Interest was paid by Villanueva in cash and checks. The total
amount Villanueva paid accumulated to
It is the compensation to be paid by the borrower for the P1,200,000.00. Upon advice of her lawyer, Villanueva
use of the money lent to him by the lender. demanded for the return of the excess amount of
P660,000.00 which was ignored by Siga-an.
Classes of interest 1. Is the payment of interest valid?
2. Is solutio indebiti applicable? Explain. (2012 Bar
1. Simple Interest which is paid for the use of the Question)
money, at a certain rate stipulated in writing by the
parties. A:
2. Compound Interest which is imposed upon accrued 1. No. Payment of monetary interest is allowed only if:
interest, that is, the interest due and unpaid. a. There was an express stipulation for the payment
3. Legal That interest which the law directs to be paid of interest; and
in the absence of any agreement as to the rate. b. The agreement for the payment of interest was
reduced in writing.
Rules on interest
The concurrence of the two conditions is required for
GR: No interest shall be due unless it is stipulated in the payment of monetary interest. Thus, collection of
writing (Art. 1956, NCC). interest without any stipulation therefor in writing is
prohibited by law.
XPN: In case of interest on damages or indemnity for
damages, it need not be in writing. 2. Yes. The quasi-contract of solutio indebiti harks back
to the ancient principle that no one shall enrich
NOTE: Art. 1956 applies only to interest for the use of himself unjustly at the expense of another.The
money and not to interest imposed as items of damages. principle of solutio indebiti applies where (1) a
payment is made when there exists no binding
Basis of the right to interest relation between the payor, who has no duty to pay,
and the person who received the payment; and (2) the
The basis of the right to interest is it only arises by reason payment is made through mistake, and not through
of the contract (stipulation in writing) for the use of money liberality or some other cause. We have held that the
or by reason of delay or failure to pay principal on which principle of solutio indebiti applies in case of
interest is demanded due to a breach of an obligation erroneous payment of undue interest (Siga-an v.
(Baretto v. Santa Marina, No. 11908, Feb. 4, 1918). Villanueva, G.R. No. 173227, Jan. 20, 2009).
If the obligation consists of the payment of a sum of Interest on unliquidated claims

money, and the debtor incurs delay, the indemnity for
damages shall be the payment of legal interest (Philrock, GR: Interest may not be adjudged on unliquidated claims
Inc. v. Construction Industry Arbitration Commission, G.R.
Nos. 132848-49, June 25, 2001). XPN: Unless the same can be established with reasonable
certainty (Atlantic Gulf and Pacific Company of Manila, Inc.
Equitable Mortgage v. CA, G.R. Nos. 114841-42, Aug. 23, 1995).
Equitable mortgage is one which, although it lacks the Running of interest on unliquidated claims
proper formalities or other requisites of a mortgage
required by law, nevertheless reveals the intention of the If the interest is adjudged on unliquidated claim but the
parties to burden real property as a security for a debt, and pleadings in court did not spell out said amount with
contains nothing impossible or contrary to law. certitude, the legal interest thereon shall run only from the
promulgation of judgment of said court, it being at that
Interest in Equitable mortgage stage that the quantification of damages may be deemed to
have been reasonably ascertained (Ibid).
There can be no interest to be collected in equitable
mortgage because the same is not stipulated in writing The actual base for computing legal interest shall be the
(Tan v. Valdehueza, G.R. No. L-38745, Aug. 6, 1975). amount as finally adjudged by the Supreme Court (Ibid).
Recovery of unstipulated interest Monetary Interest and Compensatory Interest
A payment for unstipulated interest can be recovered if Monetary interest must be expressly stipulated in writing
paid by mistake, the debtor may recover as in the case of and it must be lawful (Art. 1956, NCC).
solutio indebiti or undue payment. However if payment is
made voluntarily, no recovery can be made as in the case
of natural obligation (Art. 1960, NCC).

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
Governing rate of interest effective July 1, 2013 principal obligation and the resulting total amount
shall earn interest (Art. 1959, NCC); or
The rate of interest for the loan or forbearance of any 2. Judicial demand has been made upon the borrower
money, goods or credits and the rate allowed in judgments, (Art. 2212, NCC)
in the absence of an express contract as to such rate of
interest, shall be six percent (6%) per annum (BSP Circular Governing rule on usurious transactions
No. 799, July 1, 2013).
CB Circular No. 905 has expressly removed the interest
Prospective application of BSP Circular No. 799 ceilings prescribed by Usury Law, thus, the said law has
become legally non-existent.
It should be noted, nonetheless, that the new rate could
only be applied prospectively and not retroactively. NOTE: It did not repeal/amend the usury law but merely
Consequently, the twelve percent (12%) per annum legal suspended its effectivity.
interest shall apply only until June 30, 2013. Come July 1,
2013 the new rate of six percent (6%) per annum shall be Rationale behind the invalidity of unconscionable
the prevailing rate of interest when applicable (Nacar v. interest rate in a loan despite the suspension of the
Gallery Frames, G.R. No. 189871, August 13, 2013). Usury law
NOTE: If the obligation consists in the payment of a sum of The Supreme Court said nothing in Circular 905
money and the debtor incurs in delay, the debtor is liable suspending Usury Law that grants the lender the authority
for damages (Art. 2209, NCC). to raise interest rates to levels which will either enslave
their borrowers or lead to a hemorraghing of their assets
Basis for the interest rate for compensatory interest (Almeda v. CA, G.R. No. 113412, Apr. 17, 1996).
1. Central Bank Circular No. 799 6% per annum in Courts may simply reduce unreasonable interests
cases of:
a. Loans In the case of Medel v. CA, G.R. No. 131622, Nov. 27, 1998,
b. Forbearance of money, goods and credits the court ruled that while stipulated interest of 5.5% per
c. Judgment involving such loan or forbearance month on a loan is usurious pursuant to CBC No. 905, the
same must be equitably reduced for being iniquitous,
2. Art. 2209, NCC 6% per annum in cases of: unconscionable and exorbitant. It is contrary to morals. It
a. Other sources (i.e. sale) was reduced to 12% per annum in consonant with justice
b. Damages arising from injury from person. and fairplay.
c. Loss of property which does not involve a loan.
The Court had previously tagged a 5% monthly interest
3. Interest accruing from unpaid interest (compound rate agreed upon as excessive, iniquitous, unconscionable
interest) There must first be a stipulation for and exorbitant, contrary to morals, and the law. We need
payment of interest due and this shall earn interest not unsettle the principle we had affirmed in a plethora of
from the time it is judicially demanded although the cases that stipulated interest rates of 3% per month and
obligation may be silent upon this point. higher are excessive, iniquitous, unconscionable, and
exorbitant (Arthur F. Mechavez v. Marlyn M, Bermudez, G.R.
Forbearance No. 185368, Oct. 11, 2012).
Forbearance signifies the contractual obligation of the Floating interest

creditor to forbear during a given period of time to require
the debtor payment of an existing debt then due and Floating interest is the interest stipulated by banks which
payable. Such forbearance of giving time for the payment is not fixed and made to depend upon the prevailing
of a debt is, in substance, a loan (91 C.J.S. 598). market conditions, considering the fluctuating economic
conditions.
Compounding of interest
A stipulation for floating interest is not valid. A stipulation
There must first be a stipulation of payment of interest and for a floating rate of interest in a letter of credit in which
this interest may earn interest only when it is judicially there is no reference rate set either by it or by the Central
demanded, although the obligation is silent upon this point Bank, leaving the determination thereof to the sole will
(Art. 2212, NCC). and control of the lender bank is invalid. While it may be
acceptable for practical reasons given the fluctuating
Rule on compounding of interest economic conditions for banks to stipulate that interest
rates on a loan not be fixed and instead be made
GR: Accrued interest (interest due and unpaid) shall not dependent on prevailing market conditions, there should
earn interest. be a reference rate upon which to peg such variable
interest rates (Consolidated Bank and Trust Corp (Solid
XPN: When: Bank v. CA, G.R. No. 114672, Apr. 19, 2001).
1. There is express stipulation made by the parties -that
the interest due and unpaid shall be added to the

CIVIL LAW
Q: Samuel borrowed P300,000.00 housing loan from b. The depositary is engaged in the business of
the bank at 18% per annum interest. However, the storing goods, like a warehouseman (Art. 1965,
promissory note contained a proviso that the bank NCC).
"reserves the right to increase interest within the c. Where the property is saved from destruction
limits allowed by law." By virtue of such proviso, over without knowledge of the owner, the latter is
the objections of Samuel, the bank increased the bound to pay the other person just compensation
interest rate periodically until it reached 48% per (as in case of involuntary deposit).
annum. Finally, Samuel filed an action questioning the
right of the bank to increase the interest rate up to NOTE: Deposit shall be considered as a loan if there is
48%. The bank raised the defense that the Central a stipulation for the payment of interest (Aquino v.
Bank of the Philippines had already suspended the Deala, 63 Phil. 582). The reason is that interest can
Usury Law. Will the action prosper or not? Why? (2001 only arise from a contract of loan (mutuum).
Bar Question)
5. The depositary cannot use the thing deposited, unless:
A: The action will prosper. While it is true that the a. Permitted by the depositor; or
interest ceilings set by the Usury Law are no longer in b. Preservation of the thing requires its use, but
force, it has been held that PD No. 1684 and CB Circular only for said purpose.
No. 905 merely allow contracting parties to stipulate freely
on any adjustment in the interest rate on a loan or Deposit v. Mutuum, Commodatum, Agency, Lease and
forbearance of money but do not authorize a unilateral Sale
increase of the interest rate by one party without the
other's consent (PNB v. CA, G.R. No. 107569, Nov. 8, 1994). DEPOSIT MUTUUM
To say otherwise will violate the principle of mutuality of Purpose
contracts under Article 1308 of the Civil Code. To be valid, Safekeeping/custody Consumption
therefore, any change of interest must be mutually agreed When to return
upon by the parties (Dizon v. Magsaysay, G.R. No. L-23399, Upon expiration of the
May 31, 1974). In the present problem, the debtor not Upon demand of the
term granted to the
having given his consent to the increase in interest, the depositor
borrower
increase is void. Subject Matter
Movable (extrajudicial)
DEPOSIT Money or other fungible
or may be immovable
thing
(judicial)
Deposit Relationship
Depositor-depositary Lender-borrower
Deposit is a contract whereby a person (depositor)
Compensation
delivers a thing to another (depositary), for the principal
No compensation of There can be
purpose of safekeeping it, with the obligation of returning
things deposited with compensation of credits
it when demanded.
each other (except by
mutual agreement)
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 DEPOSIT COMMODATUM
demand. Principal Purpose
Transfer of use
Safekeeping
Characteristics of contract of deposit Use of the thing
Nature
1. Real contract Because it can only be perfected by the May be gratuitous or
Always gratuitous
delivery of the object of the contract. However, an onerous
agreement to constitute a future deposit is a
consensual contract and is therefore binding. DEPOSIT AGENCY
Purpose
NOTE: There is no consensual contract of deposit; Representation of the
there is only a consensual promise to deliver which is Safekeeping
principal by the agent
binding if such is accepted. Reason for custody of the thing
2. Object of the contract must be a movable property. The custody of the thing
This rule applies only to extra-judicial deposit. Thus, is the principal and It is merely an incidental
in cases of judicial deposit, the subject matter may be essential reason for the obligation of the agent
a real property. deposit
3. Purpose is for the safekeeping of the thing deposited. Nature
This must be the principal purpose and not only It is generally onerous or
Essentially gratuitous
secondary. for compensation
4. It is gratuitous, unless there is a:
a. Contrary agreement; or

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
DEPOSIT LEASE the General Banking Law of 2000 has excluded the renting
Principal Purpose out of safety deposit box where the bank shall act as agent
or depositary with the obligation to keep the funds,
Safekeeping Use of the thing
securities and other effects which it receives duly separate
When to return
from the banks own assets and liabilities.
Upon demand of the Upon termination of the
depositor lease contract.
The case of Sia v. CA (G.R. No. 102970, May 13, 1993)
enunciating that a rent of a safety deposit box is a special
DEPOSIT SALE kind of deposit, was decided under the former General
Ownership Banking Act. However, SC has not yet decided a case
Retained by depositor. Transferred to buyer. abandoning the ruling in Sia v. CA, making it conform with
the General Banking Law of 2000.
Kinds of deposit
Fixed, savings and current deposits in banks
1. Judicial (sequestration)
2. Extra-judicial Fixed, savings and current deposits in banks and other
a. Voluntary The delivery is made by the will of similar institutions are not true deposits but are
the depositor (Art. 2005, NCC) considered simple loans because they earn interest (Art.
b. Necessary Made in compliance with a legal 1980, NCC). Bank deposits are in the nature of irregular
obligation, or on the occasion of any calamity, or deposit but they are really loans governed by the law on
by travelers in hotels and inns, or by travelers loans (De Leon, 2010).
with common carriers (Art. 1996, NCC)
NOTE: An irregular deposit is a deposit in which the
Judicial v. Extra-judicial deposit depositary is not to return the specific money deposited,
but he is to return an equal sum to the depositor.
BASIS JUDICIAL EXTRA-JUDICIAL
Will of the court Will of the Q: Maneja assigned and conveyed to Serrano her time
Creation deposit. Notwithstanding series of demands for
contracting parties
Security or to Custody and encashment of the aforementioned time deposits, OBM
ensure the right of safekeeping refused to honor the time deposits. Is OBM liable to
a party to property Serrano despite the fact the Central Bank declared that
Purpose OBM could no longer operate due to its chronic
or to recover in
case of favorable reserve deficiencies?
judgment
Movables or Movables only A: Yes. Bank deposits are in the nature of irregular
Subject immovables but deposits. They are really loans because they earn interest.
Matter generally All kinds of bank deposits, whether fixed, savings or
immovable current, are to be treated as loans and are to be covered by
Generally the law on loans. Current and savings deposits are loans to
Cause Always onerous gratuitous but may a bank because it can use the same. Serrano, in making
be compensated time deposits that earn interest with OBM was in reality a
When Upon demand of creditor of the respondent bank, and not a depositor. The
Upon order of the bank was in turn a debtor of Serrano. Failure of OBM to
must the depositor
court or when honor the time deposits is failure to pay its obligation as a
thing be
litigation is ended debtor and not a breach of trust arising from a depositarys
returned
In whose Depositor or third failure to return the subject matter of the deposit (Serrano
Person who has a v. Central Bank, G.R. No. 30511, Feb. 14, 1980).
behalf it is person designated
right
held
Nature of advance payment in a contract of sale
Ownership of the thing deposited in a contract of
deposit A so called deposit of an advance payment in the case of a
sale is not the deposit contemplated under Art. 1962. It is
The depositor need not be the owner of the thing that advance payment upon which ownership is
deposited because the purpose of the contract is transferred to the seller once it is given subject to the
safekeeping and not transfer of ownership. completion of payment by the buyer under an agreement
(Cruz v. Auditor General, No. L-12233, May 30, 1959).
NOTE: A deposit may also be made by two or more
persons each of whom believes himself entitled to the PARTIES TO A CONTRACT OF DEPOSIT
thing deposited with a third person, who shall deliver it in
a proper case to the one to whom it belongs. Parties to a contract of deposit
Rent of safety deposit boxes 1. Depositary To whom the thing is deposited

2. Depositor The one who deposits the thing
The rent of safety deposit boxes is an ordinary contract of
lease of things and not a special kind of deposit because

CIVIL LAW
A guardian is not a depositary of the wards property Duty of the depositors heir who sold the thing
deposited in good faith
He is not holding the funds of the ward merely for
safekeeping exclusively but also intended for the latters The depositors heir who in good faith may have sold the
maintenance and support. Losses, if any without the fault thing he did not know was deposited, shall only be bound
of the guardian shall be deducted from the funds of the to return the price he may have received or to assign his
ward (Phil. Trust Co. v. Ballesteros, No. L-8261, April 20, right of action against the buyer in case the price has not
1956). been paid him (Art. 1991, NCC).
Obligations of the depositor The provision applies only when the depositary has died
and left heir/s who took possession of the thing in the
1. Payment for necessary expenses for preservation concept of an owner and sold it in good faith to a third
a. If the deposit is gratuitous reimburse person.
depositary
b. With compensation no need for NOTE: The word depositors in this part should be read
reimbursement; expenses borne by depositary as depositarys (De Leon, 2010).
2. GR: Pay losses incurred by depositary due to the To whom it must be returned
character of the thing deposited.
1. The depositor, to his heirs and successors, or to the
XPNs: person who may have been designated in the contract
a. When at the time of deposit, the depositor was (Art. 1972, NCC).
not aware of the dangerous character of the thing 2. If the depositor was incapacitated at the time of
or was not expected to know it; making the deposit, to his guardian or administrator
b. When the depositor notified the depositary; or or to the depositor himself should he acquire capacity
c. When the depositary was aware of it without (Art. 1970, NCC).
advice from the depositor. 3. Even if the depositor had capacity at the time of
making the deposit but he subsequently loses his
3. In case of an onerous deposit, to pay the capacity during the deposit, the thing must be
compensation agreed upon as consideration for the returned to his legal representative (Art.1986, NCC).
deposit.
Two or more depositors
Diligence required in a contract of deposit
When there are two or more depositors, if they are not
The depositary shall observe the diligence of a good father solidary, and the thing admits of division, each one cannot
of a family in the performance of his obligations to protect demand more than his share.
and preserve the thing deposited, unless a higher degree of
diligence is stipulated by the parties. When there is solidarity or the thing does not admit of
division, the provisions of Art. 1212 and 1214 shall govern.
Loss through force majeure or expropriation However, if there is a stipulation that the thing should be
returned to one of the depositors, the depositary shall
If the depositary loses the thing through force majeure or return it only to the person designated (Art. 1985, NCC).
government order and receives money or another thing in
its place, he shall deliver the sum or other thing to the Proving the ownership of the thing deposited
depositor.
GR: The depositary cannot demand that the depositor
Manner of deposit should prove his ownership of the thing deposited
The depositary may change the manner of the deposit if he XPN: Should he discover that the thing has been stolen and
may reasonably presume that the depositor would consent who its true owner is, he must advise the latter of the
to the change if the latter knew of the facts of the situation. deposit.
However, before the depositary may make such change, he
shall notify the depositor thereof and wait for his decision, NOTE: If the depositary has reasonable grounds to believe
unless delay would cause danger (Art. 1974, NCC). that the thing has not been lawfully acquired by the
depositor, the former may return the same.
Right of the depositary to retain the thing in pledge
If the depositary knew the identity of the owner of the
The depositary has the right to retain the thing in pledge thing deposited
until full payment of what may be due him by reason of the
deposit (Art. 1994, NCC). 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.

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
If the depositor insists on his ownership as against the true
owner, the depositary may file an interpleader suit against NOTE: Depositary is liable for the loss if:
both of them to avoid responsibility. If the identity of the i. He deposits the thing to a third person without
true owner cannot be ascertained, the depositary may authority, even though the loss is due to
return the thing to the depositor (Pineda, 2006). fortuitous events
ii. Deposits the thing to a third person who is
Where it must be returned manifestly careless or unfit although there is
authority.
GR: The thing deposited must be returned at the place
agreed upon. 4. If the thing should earn interest:
a. Collect interest as it falls due
XPN: In the absence of stipulation, at the place where the b. Take steps to preserve the value and rights
thing deposited might be, even if it should not be the same corresponding to it
place where the original deposit was made provided the
transfer was accomplished without malice on the part of 5. Not to commingle things if so stipulated
the depositary (Art. 1987, NCC). 6. GR: Not to make use of the thing deposited
When it must be returned XPNs:

a. When preservation of thing deposited requires
GR: The thing deposited should be returned upon demand its use
or at will, whether or not a period has been stipulated. b. When authorized by depositor
XPNs: NOTE: GR: In such case, it is no longer a deposit

1. Thing is judicially attached while in the depositarys but a contract of loan or commodatum, as the
possession. case may be.
2. Depositary was notified of the opposition of a third
person to the return or the removal of the thing XPN: Principal reason for the contract is still
deposited (Art. 1988, NCC). safekeeping, it is still deposit.
3. When the thing is stolen and the period of 30 days
from notice to the true owner for him to claim it had 7. When the thing deposited is delivered sealed and
not yet lapsed, the depositary cannot return the thing closed:
deposited to the depositor. This is intended to protect a. Return the thing in the same condition
the true owner. b. Pay damages if seal be broken through his fault
4. In case of gratuitous deposit, if the depositary has a c. Keep the secret of the deposit when seal is
justifiable reason for not keeping the deposit. If the broken w/ or w/o his fault
depositor refuses, the depositary may secure its
consignation from the court (Art. 1989, NCC). NOTE: However, the depositary is authorized to open
the seal or lock when:
VOLUNTARY DEPOSIT i. There is presumed authority (i.e. the key is
delivered)
Voluntary deposit ii. Out of necessity
It is a contract or judicial relation wherein a thing is 8. GR: Pay for any loss or damage that may arise due to
delivered at the will of a person (depositor) to another his fault
(depositary) for the purpose of safekeeping by the latter
coupled with the obligation of returning it upon demand. XPN: Liability of loss through fortuitous event
Difference between voluntary and necessary deposit XPNs to XPN Even in case of loss through
fortuitous event, still liable if: (Art. 1979, NCC)
There is a freedom of action which is implied in the phrase a. Stipulated
delivery is made by the will of the depositor, unlike in the b. He uses the thing without depositors
case of a necessary deposit. In other words, the depositor permission
in a voluntary deposit is free to choose the depositary. c. He delays its return
d. He allows others to use it (even if he himself
Obligations of a depositary in voluntary deposit is authorized to use it)
1. To keep the thing safely and return it 9. Return the thing deposited with all its fruits,
2. Exercise same diligence as he would exercise over his accessions, and accessories (Art. 1983, NCC)
own property 10. Pay interest on sums converted to personal use if the
3. GR: Not to deposit the thing with a third person deposit consists of money
XPNs:
a. When expressly authorized by stipulation; and
b. When the preservation of the thing requires its
use (Art. 1977, NCC)

CIVIL LAW
Extinguishment of voluntary deposit responsibility of the former (Arts. 1998-2001, NCC) is
suppressed or diminished shall be void (Art. 2003, NCC).
1. Loss or destruction of thing deposited; The hotel or inn keepers are still liable regardless of the
2. In gratuitous deposit, upon death of either depositor posting of notices exempting themselves from any liability.
or depositary; or
3. Other causes (e.g. return of thing, novation, expiration Extent liability of the hotel keepers in case of loss
of the term, fulfillment of resolutory condition)
1. It covers liability in hotel rooms which come under
NECESSARY DEPOSIT the term baggage or articles such as clothing as are
ordinarily used by travelers.
Necessary deposit 2. It includes lost or damages in hotels annexes such as
vehicles in the hotels garage.
A necessary (involuntary) deposit is one wherein the
deposit is not made by the will of the depositor but created Q: Venus was the owner of Suzuki Grand Vitara which
by force of the law or on occasion of a calamity. was insured with Pioneer Insurance for loss and
damage. When she arrived and checked in at Heavens
When is deposit considered as necessary Hotel before midnight, its parking attendant, John, got
the key to said Vitara. At about one in the morning,
1. When it is in compliance with a legal obligation; Venus was awakened in her room by a telephone call
2. It takes place on the occasion of any calamity, such as from the Hotel Chief Security Officer who informed her
fire, storm, flood, pillage, shipwreck, or other similar that her Vitara was carnapped while it was parked
events (Art. 1996, NCC). unattended at the parking area of the bank near the
3. Made by passengers with common carriers; or hotel. May the insurance company, by right of
4. Made by travelers in hotels or inns (Art. 1998, NCC). subrogation, recover from the hotel the damages it
paid to Venus?
Governing law in cases of voluntary deposit
A: Yes. The contract of necessary deposit existed between
1. In compliance with a legal obligation by the law the insured Venus and the hotel. Article 1962, in relation to
establishing it, and in case of deficiency, the rules on Article 1998, of the Civil Code defines this contract. Plainly,
voluntary deposit; Venus deposited for safekeeping her vehicle through the
2. On occasion of a calamity by the provisions hotels employee. From Venus delivery, when she handed
concerning voluntary deposit (Art. 1968 Art. 1971, the keys to John, the contract was perfected. Thus, there is
NCC) the obligation of safely keeping it and returning it.
Ultimately, the hotel is liable for the loss of Venus vehicle
Keepers of hotels or inns (Durban Apartments Corporation v. Pioneer Insurance
Surety Corporation, G.R. No. 179419, January 12, 2011).
1. The keepers of hotels or inns shall be held responsible
for loss of thing in case of deposit when both are Right of retain given to hotel-keeper or inn-keeper
present:
a. They have been previously informed by guest The hotel-keeper has a right to retain the things brought
about the effects the latter brought in, and into the hotel by the guest, as a security for credits on
b. The guest has taken precautions prescribed for account of lodging, and supplies usually furnished to hotel
their safekeeping. guests (Art. 2004, NCC).
2. They are liable regardless of the degree of care JUDICIAL DEPOSIT

exercised when:
a. Loss or injury is caused by his employees or even Judicial deposit
by strangers (Art. 2000, NCC); or
b. Loss is caused by act of thief or robber when Judicial deposit (sequestration) take place when an
there is no use of arms or irresistible forc (Art. attachment or seizure of property in litigation is ordered
2001, NCC). by a court (Art. 2005, NCC).
3. The keepers of hotels or inns are not liable for loss of It is auxiliary to a case pending in court. The purpose is to
thing in case of deposit when: maintain the status quo during the pendency of the
a. Loss or injury is caused by force majeure; litigation or to insure the right of the parties to the
b. Loss due to the acts of guests, his family, his property in case of a favorable judgment (De Leon, 2010).
employees, or visitors; and
c. Loss arises from the character of the goods (Art. Object of judicial deposit
2002, NCC)
The object of judicial sequestration may be movables or
Posting of notice of exempt from liability immovables (Art. 2006, NCC)
Hotel/Inn-keepers cannot escape or limit liability by

stipulation or the posting of notices. Any stipulation
between the hotel keeper and the guest whereby the

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
Q: When will the properties sequestered cease to be in 4. Unilateral
custodia legis? 5. Nominate
6. Cannot be presumed
A: The properties sequestered cease to be in custodia legis 7. Subsidiary
when the insolvency proceedings of a partnership 8. Covered by the Statute of Frauds
terminated because the assignee in insolvency has 9. Gratuitous
returned the remaining assets to the firm, said properties
cease to be in custodia legis (Ng Cho Cio, et al. v. Ng Diong & NOTE: In case of guaranty, the guarantor must be a person
Hodges, L-14832, Jan. 28, 1961). distinct from the debtor because a person cannot be the
personal guarantor of himself. A person cannot be both the
GUARANTY AND SURETYSHIP primary debtor and the guarantor of his own debt as this is
inconsistent with the very purpose of a guarantee which is
Guaranty for the creditor to proceed against a third person if the
debtor defaults in his obligation.
Guaranty is a contract where a person called the guarantor
binds himself to the creditor to fulfill the obligation of the Unilateral character of guaranty
principal debtor in case the latter should fail to do so.
The contract of guaranty may be undertaken without the
Suretyship knowledge of the principal debtor. It exists for the benefit
of the creditor and not for the benefit of the principal who
Suretyship is a contract where a person binds himself is not a party to the contract of guaranty. The creditor has
solidarily with principal debtor. every right to take all possible measures to secure the
payment of his credit. Hence, it can be constituted without
Guaranty v. Suretyship the knowledge and even against the will of the principal
debtor.
GUARANTY SURETYSHIP
Surety is an original Gratuitous character of guaranty
Collateral undertaking
promissory undertaking
Guarantor-secondarily A guaranty is gratuitous, unless there is a stipulation to the
Surety-primarily liable contrary (Art. 2048, NCC).
liable
Guarantor binds himself Surety undertakes to pay
to pay if the principal if principal Guaranty or surety agreement is regarded valid despite the
cannot pay does not pay absence of any direct consideration received by the
Insurer of solvency of guarantor or surety, such consideration need not pass
Insurer of the debt directly to the guarantor; a consideration moving to the
debtor
Guarantor can avail of the principal will suffice.
Surety cannot avail of the
benefit of excussion and
benefit of excussion and Kinds of guaranty
division in case creditor
division
proceeds against him
1. General classification
Similarity between Guaranty and Suretyship a. Personal guaranty where an individual
personally assumes the fulfillment of the
Both guarantor and surety promise or undertake to principal obligation;
answer for the debt, default or miscarriage of another b. Real guaranty is property, movable, or
person. immovable.
2. As to its origin
Guaranty v. Warranty a. Conventional constituted by agreement of the
parties
GUARANTY WARRANTY b. Legal imposed by virtue of a provision of law
A contract by which a An undertaking that the c. Judicial required by a court to guarantee the
person is bound to title, quality or quantity of eventual right of the parties in a case.
another for the fulfillment the subject matter of a 3. As to consideration
of a promise or contract is what it is a. Gratuitous guarantor does not receive any price
undertaking of a third represented to be, and or remuneration for acting as such.
b. Onerous one where the guarantor receives
person relates to some agreement
valuable consideration for his guaranty
made ordinarily by the
4. As to person
party who makes the
a. Single constituted solely to guarantee or secure
warranty
performance by the debtor of the principal
obligation.
Characteristics of Guaranty
b. Double or subguaranty constituted to secure the
fulfillment of the obligation of a guarantor by a
1. Accessory
sub-guarantor
2. Consensual
5. As to scope and extent
3. Conditional

CIVIL LAW
a. Definite where the guaranty is limited to the PARTIES TO A CONTRACT OF GUARANTY
principal obligation only, or to a specific portion
thereof. Parties to a contract of guaranty
b. Indefinite or simple where the guaranty
included all the accessory obligations of the 1. Guarantor
principal, e.g. costs, including judicial costs. 2. Creditor
Obligations that may be secured in a contract of Guarantor

guaranty
The guarantor is the person who is bound to another for
1. Valid obligations the fulfillment of a promise or undertaking of a third
2. Voidable obligations person.
3. Unenforceable obligations
4. Natural obligations When the debtor himself offers a Qualifications of a guarantor
guaranty for his natural obligation, he impliedly
recognizes his liability, thereby transforming the 1. Possesses integrity;
obligation from a natural into a civil one. 2. Capacity to bind himself; and
5. Conditional obligations Only in case of suspensive 3. Has sufficient property to answer for the obligation
condition because upon its happening, it gives rise to which he guarantees.
the principal and hence, gives rise also to the
accessory obligation. NOTE: The qualifications need only be present at the time
of the perfection of the contract.
Validity of the principal contract
Loss of qualification of the guarantor
A valid principal obligation necessary in contract of
guaranty since guaranty is an accessory contract, it is an The qualification of the guarantor is lost through
indispensable condition for its existence that there must conviction of a crime involving dishonesty or insolvency.
be a principal obligation. Hence, if the principal obligation
is void, it is also void. The supervening loss of required qualifications will not
generally end the guaranty. However, the creditor is given
Statute of fraud in a contract of guaranty the right to demand substitution of guarantor.
A contract of guaranty must be expressed and in writing Married woman as a guarantor

(Art. 1403 (2), NCC); otherwise, it is unenforceable unless
ratified. It need not be in a public instrument. GR: A married woman can be a guarantor without the
consent of her husband but binds only her separate
NOTE: Guaranty, as a contract, requires the expression of property.
the consent of the guarantor in order to be bound. It
cannot be presumed because of the existence of a contract XPNs:
or principal obligation. It shall be unenforceable by action 1. If with her husbands consent, it binds the community
unless made in writing. or conjugal partnership property.
2. Without husbands consent, in cases provided for by
Acceptance of the creditor in a contract of guaranty law, such as when the guaranty has redounded to the
benefit of the family.
GR: The acceptance of the creditor is not essential in
contract of guaranty. Rights of a third person (guarantor or surety) who
pays for the debt guaranteed or secured
XPN: When there is a mere offer of a guaranty or a
conditional guaranty wherein the obligation does not 1. If payment is made without the knowledge or against
become binding until it is accepted by the creditor and the will of the debtor:
notice of such acceptance is given to the guarantor. a. Guarantor can recover only insofar as the
payment has been beneficial to the debtor (Art.
Construction of a contract of guaranty or surety 1236, NCC)
b. Guarantor cannot compel the creditor to
GR: In case of doubt, a contract of guaranty or surety subrogate him in his rights (Art. 1237, NCC)
should be strictly construed against the creditor and
liberal in favor of the guarantor or surety; terms cannot be 2. If payment is made with the knowledge or consent of
extended beyond the stipulation. the debtor Subrogated to all the rights which
creditor had against the debtor.
XPN: In cases of compensated sureties.
Extent of guarantors liability
1. Where the guaranty is definite It is limited in whole

or in part to the principal debt to the exclusion of
accessories.

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
2. Where the guaranty is indefinite or simple It shall 2. He must point out to the creditor the available
comprise not only the principal obligation but also all property of the debtor (not exempted from execution)
its accessories, including the judicial costs provided found within the Philippine territory (Art. 2060, NCC).
that the guarantor shall only be liable for those cost
incurred after he has been judicially required to pay. Effect of the creditors negligence in exhausting the
properties of the debtor
Situations when a guarantor may lawfully be required
to pay more than the original obligation of the He shall suffer the loss to the extent of the value of the
principal debtor pointed property which was not exhausted by the creditor
(Art. 2061, NCC).
1. If upon demand, a guarantor fails to pay the
obligation, he can be held liable for interest, even if in NOTE: The article applies when the guarantor has
thus paying, the liability becomes more than that in complied with the conditions of Art. 2060 (requisites of
the principal obligation. The increased liability is not benefit of excussion).
because of the contract but because of the default and
the necessity for judicial collection. It should be noted, Filing of complaint against the debtor and guarantor
however, that the interest runs from the time the simultaneously to enforce the obligation
complaint is filed, not from the time the debt becomes
due and demandable (Tagawa v. Aldanese, No.18636, A complaint may be filed against the debtor and guarantor
Sept. 28, 1922). simultaneously in one case before the exhaustion of all the
properties of the debtor. There is nothing procedurally
2. Creditors suing on a surety bond may recover from objectionable in impleading the guarantor as a co-
the surety, as part of their damages, interest at the defendant. As a matter of fact, the Rules of Court on
legal rate, judicial cost and attorneys fees when permissive joinder of parties explicitly allow it. If the
appropriate even if the surety would thereby become creditor obtained a favorable judgment against the debtor
liable to pay more than the total amount stipulated in and guarantor, the latter is entitled to a deferment of the
the bond (Dino v. CA, G.R. No. 89775, Nov. 26, 1995). execution of the said judgment against him until all
properties of the debtor shall have been exhausted to
3. A penalty clause may also increase the liability of the satisfy the latters obligation involved in the case.
surety (General Insurance Surety Co. v. Republic, G.R.
No. L-13873, Jan. 31, 1963). NOTE: Just because the guarantor was sued at the same
time as the debtor does not mean that the creditor has
Effect in case of death of a party already made the demand on the guarantor.
1. Guarantors death - His heirs will still liable to the Declaration of insolvency and Right of excussion
extent of the value of the inheritance because the
obligation is not purely personal and is therefore Just because the debtor has been declared insolvent in
transmissible. insolvency proceeding does not necessarily mean that he
2. Debtors death - His obligation will survive. His estate cannot pay, for part of the debtors assets may still be
will be answerable. If the estate has no sufficient available to the creditor. One good proof of the debtors
assets, the guarantor shall be liable. inability to pay is an unsatisfied writ of execution which
has been returned by the implementing sheriff (Machetti v.
Jurisdiction in an action based on a contract of Hospicio de San Jose, 43 Phil. 297, Feb. 7, 1920).
guaranty
Benefit of excussion shall not take place in the
The guarantor shall be subject to the jurisdiction of the following instances
court of the place where the obligation is to be complied
with. 1. Guarantor has expressly renounced it;
2. Guarantor has bound himself solidarily with the
EFFECTS OF GUARANTY: BENEFIT OF EXCUSSION Debtor;
3. Debtor is insolvent;
Benefit of excussion 4. Guarantor has absconded, or cannot be sued within
the Philippines unless he left a manager or
The benefit of excussion is a right by which the guarantor representative;
cannot be compelled to pay the creditor unless the latter 5. If it may be presumed that an execution on the
has exhausted all the properties of the principal debtor property of the Debtor cannot satisfy the obligation
and has resorted to all legal remedies against such debtor (Art. 2059, NCC);
(Art. 2058, NCC). 6. Guarantor does not invoke the benefit against
Creditor upon demand to him for payment and he
Requisites of benefit of exhaustion or excussion does not point out available property of the Debtor
within the Philippines sufficient to cover the
1. The guarantor must set up the right of excussion obligation (Art. 2060, NCC).
against the creditor upon the latters demand for 7. Guarantor is a judicial bondsman or sub-surety (Art.
payment from him; and 2084, NCC).

CIVIL LAW
8. A pledge or mortgage of his own property has been The consequences of the guarantors appearance or non-
given by Guarantor as special security. appearance in the case against the debtor:
9. Guarantor fails to interpose it as a defense before
judgment is rendered. 1. If he does not appear and judgment is rendered
against the debtor, he cannot set up defenses which
EFFECTS OF GUARANTY: BENEFIT OF DIVISION he could have set up had he appeared; moreover, he
cannot question the decision anymore;
Benefit of division 2. If he appears such as by filing an answer in
intervention, he may lose or may win the case. If he
The principle of benefit of division is when there are losses, he is still entitled to the benefit of excussion.
several guarantors of only one debtor for the same debt, There is no waiver of his benefit of excussion by his
the obligation to answer for the same is divided among all appearance in the case.
(Joint liability) (Art. 2065, NCC).
Compromise agreement between the creditor and the
NOTE: GR: Creditor can claim from the guarantors only up principal debtor
to the extent they are respectively bound to pay.
A compromise between the creditor and the principal
XPN: When solidarity has been stipulated. debtor is valid if the compromise is beneficial to the
guarantor; otherwise, it is not binding upon him (1st
Should any of the guarantors become insolvent, his share sentence, Art. 2063, NCC).
shall be borne by the other guarantors including the
paying guarantor in the same joint proportion in In a compromise between the creditor and the guarantor
accordance with the rule in solidary obligations. to the principal debtor, if compromise is beneficial to the
principal debtor, it is valid; otherwise, it is not binding
The right to be reimbursed from his co- guarantors is upon him (2nd sentence, Art. 2063, NCC). To be binding, it
acquired ipso jure by virtue of said payment. must benefit both the guarantor and the debtor.
Payment made by a co-guarantor not by virtue of a EFFECTS OF GUARANTY BETWEEN THE DEBTOR AND
judicial demand or by reason of insolvency THE GUARANTOR
The effect of payment made by a co-guarantor not by Right of indemnity and reimbursement of the
virtue of a judicial demand or by reason of insolvency is guarantor who paid the debt
that he cannot directly seek reimbursement from the other
co-guarantors. He has to pursue first the claim against the GR: Guarantor is entitled to be reimbursed by debtor for:
principal debtor alone (Sadaya v. Sevilla, 126 Phil. 101). 1. Total amount of the debt paid;
2. Legal interest from the time payment was made
Benefit of division v. Benefit of contribution known to the debtor;
3. Expenses incurred after notifying debtor that demand
BENEFIT OF to pay was made upon him; and
BENEFIT OF DIVISION
CONTRIBUTION 4. Damages in accordance with law.
Controversy is between Controversy between and
the co-guarantors and the among the several co- XPNs:
creditor guarantors
There is already payment 1. Guaranty is constituted without the knowledge or
There is no payment yet, against the will of the debtor.
of debt; the paying co-
but there is merely a claim
guarantor is seeking the
pressed against one or Effect: Guarantor may only recover so much as was
contribution of the co-
more co-guarantors beneficial to the debtor.
guarantors
EFFECTS OF GUARANTY BETWEEN THE 2. Payment by third persons who does not intend to be
GUARANTOR AND THE CREDITOR reimbursed.
Action of the creditor against the debtor Effect: deemed a donation and as such requires the
consent of debtor.
GR: In an action of the creditor against the debtor, only the
principal debtor should be sued alone. Right of subrogation
XPN: If the benefit of excussion is not available, the The guarantor has the right of subrogation after the
guarantor can be sued jointly with the debtor. payment of the debt is made to the creditor. The guarantor
is subrogated to all the rights which the creditor had
The guarantor entitled to be notified of the complaint against the debtor (Art. 2067(1)).
against the debtor. If the guarantor desires to set up
defenses as are granted him by law, he may have the If the guarantor pays without notice to the debtor, the
opportunity to do so (Art. 2062, NCC). debtor may interpose against the guarantor defenses

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
available to the debtor as against the creditor at the time Remedy of a guarantor of a third person at request of
payment was made. another
Notification of payment made by the guarantor The remedy of a person who becomes a guarantor at the
request of another for the debt of a third person who is not
GR: Guarantor must first notify the debtor before paying, present is the option of suing either the principal debtor or
otherwise, if the debtor pays again, the guarantor can only the requesting party (Art. 2072, NCC).
collect from the creditor and the guarantor will have no
cause of action against the debtor even if the creditor NOTE: The provision applies when the guarantor has
becomes insolvent (Art. 2070, NCC). actually paid the debt.
XPN: Guarantor may still recover from debtor if the SUB-GUARANTY

following circumstances concur:
1. Guaranty is gratuitous; Sub-guaranty
2. Guarantor was prevented by fortuitous event from
notifying the debtor; and Double or sub-guaranty is one constituted to guarantee the
3. Creditor was insolvent. obligation of the guarantor.
Payment of the guarantor before maturity NOTE: In case of insolvency of the guarantor for whom he
bound himself, he is responsible to the co-guarantors in
GR: The guarantor cannot seek reimbursement from the the same terms as the guarantors (Art. 2075, NCC).
debtor until expiration of the period stipulated. The
guarantor must wait. For being subsidiary in character, the Entitlement to right of excussion
guaranty is not enforceable until the debt has become due
(Art. 2069, NCC). A sub-guarantor entitled to the right of excussion both
with respect to the guarantor and to the principal debtor
XPN: If ratified by the debtor. (Art. 2064, NCC).
Right of the guarantor to proceed against debtor CONTINUING GUARANTY

before payment
Continuing guaranty
GR: Guarantor cannot proceed against the principal debtor
even before having paid the creditor. A continuing guaranty or suretyship is one which covers
all transactions, including those arising in the future,
XPNs: which are within the description or contemplation of the
1. When he is sued for payment; contract of guaranty until the expiration or termination
2. In case of insolvency of the principal debtor; thereof.
3. When the debtor has bound himself to relieve him
from the guaranty within a specified period, and this A guaranty may be given to secure even future debts, the
period has expired. amount of which may not be known at the time the
4. When the debt has become demandable by reason of guaranty is executed. This is the basis for contracts
the expiration of the period of payment; denominated as continuing guaranty or suretyship. It is
5. After the lapse of ten years, when the principal one which covers all transactions, including those arising
obligation has no fixed period for its maturity, unless in the future, which are within the description or
it be of such nature that it cannot be extinguished contemplation of the contract of guaranty, until the
except within a period longer than ten years; expiration or termination thereof (Dino v. CA, G.R. No.
6. If there are reasonable grounds to fear that the 89775, Nov. 26, 1995)
principal debtor intends to abscond; or
7. If the principal debtor is in imminent danger of GR: It is not limited to a single transaction but
becoming insolvent. contemplates a future course of dealings, covering a series
of transactions generally for an indefinite time or until
NOTE: In all these cases, the cause of action of the revoked.
guarantor is either to obtain release from the guaranty, or
to demand a security that shall protect him from any XPN: A chattel mortgage can only cover obligations
proceedings by the creditor and from the danger of existing at the time the mortgage is constituted and not to
insolvency of the debtor (Art. 2071, NCC). obligations subsequent to the execution of the mortgage.
Purpose of the right of guarantor to proceed against XPN to the XPN: In case of stocks in department
debtor before payment stores, drug stores etc.
The purpose of this right is to enable the guarantor to take Determination of continuing guaranty
measures for the protection of his interest in view of the
probability that he would be called upon to pay the debt A guaranty shall be construed as continuing when by the
(De Leon, 2010). terms thereof it is evident that the object is to give a
standing credit to the principal debtor to be used from

CIVIL LAW
time to time either indefinitely or until a certain period, Undertaking, binding themselves to jointly and
especially if the right to recall the guaranty is expressly severally pay TIDCORP for whatever damages or
reserved (Dino v. CA, G.R. No. 89775, Nov. 26, 1995). liabilities it may incur under the aforementioned
letters. In the same light, ASPAC, as principal debtor,
Q: PAGRICO submitted a Surety Bond issued by R&B entered into surety agreements (Surety Bonds) with
Surety to secure an increase in its credit line with PNB. Paramount, Phoenix, Mega Pacific and Fortune
For consideration of the Surety Bond, Cochingyan and (bonding companies), as sureties, also holding
Villanueva entered into an Indemnity Agreement with themselves solidarily liable to TIDCORP, as creditor,
R&B Surety and bound themselves jointly and for whatever damages or liabilities the latter may
severally to the terms and conditions of the Surety incur under the Letters of Guarantee. ASPAC
Bond. When PAGRICO defaulted, PNB demanded eventually defaulted on its loan obligations, prompting
payment to R&B Surety; R&B Surety, in turn, BI and PCI to demand payment from TIDCORP. Taking
demanded payment to Cochingyan and Villanueva. into account the moratorium request issued by the
R&B sued them. Villanueva argued that the complaint Minister of Finance of the Republic of the Philippines
was premature because PNB had not yet proceeded (whereby members of the international banking
against R&B Surety to enforce the latter's liability community were requested to grant government
under the Surety Bond. Is the contention correct? financial institutions a 90-day roll over from their
foreign debts beginning October 17, 1983), TIDCORP
A: No. Indemnity Agreements are contracts of and its various creditor banks, such as BI and PCI,
indemnification not only against actual loss but against forged a Restructuring Agreement on April 16, 1986,
liability as well. While in a contract of indemnity against extending the maturity dates of the Letters of
loss an indemnitor will not be liable until the person to be Guarantee. The bonding companies were not privy to
indemnified makes payment or sustains loss, in a contract the Restructuring Agreement and, hence, did not give
of indemnity against liability, as in this case, the their consent to the payment extensions granted by BI
indemnitor's liability arises as soon as the liability of the and PCI in favor of TIDCORP. Did the Restructuring
person to be indemnified has arisen without regard to Agreement extinguished the bonding companies
whether or not he has suffered actual loss. Accordingly, R liabilities to TIDCORP?
& B Surety was entitled to proceed against petitioners not
only for the partial payments already made but for the full A: NO. The Restructuring Agreement did not have the
amount owed by PAGRICO to the PNB (Cochingyan, Jr. v. effect of extinguishing the bonding companies obligations
R&B Surety and Ins. Co., GR.No.L-47369, June 30, 1987). to TIDCORP under the Surety Bonds, notwithstanding the
fact that said extensions were made without their consent.
EXTINGUISHMENT OF GUARANTY Article 2079 of the Civil Code refers to a payment
extension granted by the creditor to the principal debtor
Grounds for extinguishing a contract of guaranty: without the consent of the guarantor or surety. In this case,
the Surety Bonds are suretyship contracts which secure
1. Principal obligation is extinguished the debt of ASPAC, the principal debtor, under the Deeds of
2. Same causes as all other obligations Undertaking to pay TIDCORP, the creditor, the damages
3. If creditor voluntarily accepts immovable or other and liabilities it may incur under the Letters of Guarantee,
properties in payment of the debt (even if he should within the bounds of the bonds respective coverage
afterwards lose the same through eviction or periods and amounts. No payment extension was,
conveyance of property) (Art. 2077, NCC) however, granted by TIDCORP in favor of ASPAC in this
4. Release in favor of one of the guarantors, w/o consent regard; hence, Article 2079 of the Civil Code should not be
of the others, benefits all to the extent of the share of applied with respect to the bonding companies liabilities
the guarantor to whom it has been granted (Art. 2078, to TIDCORP under the Surety Bonds (TIDCORP v. ASPAC, et
NCC) al. G.R. No. 187403, February 12, 2014).
5. Extension granted to debtor by creditor without
consent of guarantor (Art. 2079, NCC) MATERIAL ALTERATION OF CONTRACT
6. When by some act of the creditor, the guarantors even
though they are solidarily liable cannot be subrogated Material alteration of contract
to the rights, mortgages, and preferences of the
former (Art. 2080, NCC) An alteration is considered material when there is a
change which imposes an obligation or added burden on
Q: Asia Paces Corporation (ASPAC) and Paces the party promising or which takes away some obligation
Industrial Corporation (PICO) obtained loans from already imposed, changing the legal effect of the original
foreign banks Banque Indosuez (BI) and PCI Capital contract and not merely the form thereof.
(Hong Kong) Limited (PCI) which were secured by
several Letters of Guarantee issued by Trade and NOTE:
Investment Development Corporation of the a. The increase in the interest rates without the
Philippines (TIDCORP). Under the Letters of guarantors consent does not release the guarantor
Guarantee, TIDCORP irrevocably and unconditionally where the creditor is demanding only the original and
guaranteed full payment of ASPACs loan obligations to not the increased rate of interest rate.
BI and PCI in the event of default by the latter. As a b. Assignment of the creditor without the knowledge or
condition precedent to the issuance of the Letters of consent of surety is not material alteration of the
Guarantee, ASPAC had to execute several Deeds of contract

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
c. Change in the technical specifications of the items to not about the oblige will seeing to it that the principal pays
be purchased but their amount, length, and quality the debt or fulfills the contract, but that the surety will see
remained unchanged, and the period for payment and that the principal pay or perform (PNB v. Manila Surety &
the amount of liability of principal debtor and surety Fidelity Co., Inc., 14 SCRA 776, 1965).
were untouched is not material.
Violation by the creditor of the terms of the surety
Effect of material alteration of contract agreement
Any agreement between the creditor and the principal A violation by the creditor of the terms of the surety
debtor which essentially varies the terms of the principal entitles the surety to be released therefrom (Associated Ins.
contract without the consent of the surety will release the & Surety Co. v. Bacolod Murcia Milling Co., GR. No. L-12334,
surety from liability. Material alteration would constitute a May 22, 1959).
novation or change of the principal contract and which is
consequently extinguished. The effect of the violation of a surety bond filed for an alien
staying in the country is that its subsequent unauthorized
LEGAL AND JUDICIAL BONDS cancellation thru mistake or fraud does not relieve the
surety. A bond surrendered thru mistake or fraud may,
Bond therefore, be considered as a valid and subsisting
instrument (Far Eastern Surety and Ins. Co., v. CA, GR No. L-
A bond, when required by law, is commonly understood to 12019, Oct 16, 1958).
mean an undertaking that is sufficiently secured, and not
cash or currency. Whenever surety bonds are submitted, When the performance of a bond is rendered
they are subject to any objections as to their sufficiency or impossible
as to the solvency of the bondsman.
If the performance of a bond is rendered impossible, it is
Bondsman the suretys duty to inform the court of the happening of
the event so that it may take action or decree in the
A bondsman is a surety offered in virtue of a provision of discharge of the surety when the performance of the bond
law or a judicial order. He must have the qualifications is rendered impossible by an act of God, or the obligee, or
required of a guarantor and in special laws like the Rules the law (People v. Otiak Omal & Luzon Co., Inc., GR. No. L-
of Court. 14457, June 30, 1961).
The necessary qualifications of sureties to a property bond

shall be as follows:
1. Each of them must be a resident owner of real estate

within the Philippines;
2. Where there is only one surety, his real estate must be
worth at least the amount of the undertaking;
3. 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
(Sec. 12, Rule 114, Rules of Court).
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.
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

CIVIL LAW
PLEDGE, MORTGAGE, AND ANTICHRESIS
Pledge v. Mortgages v. Antichresis
PLEDGE CHATTEL MORTGAGE REAL ESTATE MORTGAGE ANTICHRESIS

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

Movable or personal property, or Personal property Immovable property or real Fruits of an immovable
document evidencing incorporeal rights over immovable
rights property
Necessity of delivery
Property must be delivered Delivery is not Delivery is not necessary Property is delivered to
necessary the creditor
Similarities of pledge and mortgage Rules common to pledge and mortgage
1. Both are accessory contracts; 1. Constituted to secure the fulfillment of a valid

2. Both pledgor and mortgagor must be the absolute principal obligation.
owner of the property; 2. Pledgor or mortgagor must be the absolute owner of
3. Both pledgor and mortgagor must have the free the thing pledged or mortgaged.
disposal of their property or be authorized to do so; 3. They must have the free disposal of their property,
and and in the absence thereof, that they be legally
4. In both, the thing proffered as security may be sold at authorized for such purpose.
public auction, when the principal obligation becomes 4. Debtor retains ownership of the thing given as a
due and no payment is made by the debtor. security.
Indivisibility of pledge, mortgage and antichresis Limited liability of a third person as a pledgor or
mortgagor
GR: A pledge, mortgage or antichresis is indivisible.
GR: A third person who pledged and mortgaged his
NOTE: The mortgage is indivisible even if the obligation of property is not liable for any deficiency.
the debtor is joint and not solidary. Generally, the
divisibility of the principal obligation is not affected by the XPN: If the third party pledgor or mortgagor expressly
indivisibility of the pledge or mortgage. agreed to be bound solidarily with the principal debtor.
XPNs: Property acquirable in the future cannot be mortgaged

1. Where each one of several things guarantees
determinate portion of the credit (Art. 2089, NCC). Where the mortgagor mortgaged a property and in the
2. Where only a portion of the loan was released. contract he agreed to mortgage additional properties
3. Where there was failure of consideration. which he may acquire in the future, there was no valid
mortgage as to the latter because he was not yet the owner
Obligations that can be secured by pledge, mortgage of the properties at the time of the mortgage (Dilag v. Heirs
and antichresis of Ressurrecion, No. 48941, May 6, 1946).
1. Valid obligations Mortgage constituted to secure future advances

2. Voidable obligations
3. Unenforceable obligations Mortgage constituted to secure future advances is valid. It
4. Natural obligations is a continuing security and not discharged by repayment
5. Conditional obligations of the amount named in the mortgage, until the full
amount of the advances is paid. However, a chattel
mortgage can only cover obligations existing at the time

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
the mortgage is constituted and not to obligations
subsequent to the execution of the mortgage. A: The shares of stock cannot be deemed owned by ABC
upon default of MNO. They have to be foreclosed. Under
Nature of an assignment of rights to guarantee an Article 2088, NCC, the creditor cannot appropriate the
obligation of a debtor things given by way of pledge. And even if the parties have
stipulated that ABC becomes the owner of the shares in
An assignment of rights to guarantee an obligation of a case MNO defaults on the loan, such stipulation is void for
debtor is in effect a mortgage and not an absolute being a pactum commissorium.
conveyance of title which confers ownership on the
assignee (Manila Banking Corp. v. Teodoro, Jr., G.R. No. Q: To secure a loan obtained from a rural bank, Purita
53955, Jan. 13, 1989). assigned her leasehold rights over a stall in the public
market in favor of the bank. The deed of assignment
ACCOMMODATION MORTGAGE provides that in case of default in the payment of the
loan, the bank shall have the right to sell Purita's
Accomodation Mortgagor rights over the market stall as her attorney-in-fact,
and to apply the proceeds to the payment of the loan.
An accommodation mortgagor is a third person who is not
a party to a principal obligation and secures the latter by 1. Was the assignment of leasehold rights a
mortgaging or pledging his own property. mortgage or a cession? Why?
2. Assuming the assignment to be a mortgage, does
The liability of an accommodation mortgagor extends up the provision giving the bank the power to sell
to the loan value of their mortgaged property and not to Purita's rights constitute pactum commissorium
the entire loan itself. or not? Why? (2001 Bar Question)
NOTE: Accommodation is also applicable to pledge since A:

the law provides that third parties who are not parties to 1. The assignment was a mortgage, not a cession, of the
the principal obligation may secure the latter by pledging leasehold rights. A cession would have transferred
or mortgaging their own property (Art. 2085, Civil Code). ownership to the bank. However, the grant of
It is also applicable to antichresis since Art. 2139 states authority to the bank to sell the leasehold rights in
that the last paragraph of Art. 2085 shall be applicable to a case of default is proof that no such ownership was
contract of antichresis. transferred and that a mere encumbrance was
constituted. There would have been no need for such
PACTUM COMMISSORIUM authority had there been a cession.
Pactum commisorium 2. No, the clause in question is not a pactum

commissorium. It is pactum commissorium when
Pactum commisorium is a stipulation whereby the thing default in the payment of the loan automatically vests
pledged or mortgaged or subject of antichresis shall ownership of the encumbered property in the bank. In
automatically become the property of the creditor in the the problem given, the bank does not automatically
event of non-payment of the debt within the term fixed. become owner of the property upon default of the
Such stipulation is null and void. mortgagor. The bank has to sell the property and
apply the proceeds to the indebtedness.
Elements of Pactum Commissorium
Q: Spouses Uy Tong purchased seven motor vehicles
1. There is a pledge, mortgage or antichresis of a from Bayanihan Investment payable in installments. It
property by way of security; and was agreed that if the spouses should fail to pay their
2. There is an express stipulation for the automatic obligation, Bayanihan will automatically be the owner
appropriation by the creditor of the property in case of the apartment which the spouses has a leasehold
of non-payment right. The spouses after paying the downpayment,
failed to pay the balance, hence, Bayanihan filed an
NOTE: What are prohibited are those stipulations action for specific performance against the spouses.
executed or made simultaneously with the original The judgment provided that in case the spouses failed
contract, and not those subsequently entered into. to pay the obligation within 30 days from notice, they
are to execute a Deed of Absolute Sale over the
Q: ABC loaned to MNO P40,000 for which the latter apartment and/or leasehold rights. Is the stipulation a
pledged 400 shares of stock in XYZ Inc. It was agreed pactum commissorium?
that if the pledgor failed to pay the loan with 10%
yearly interest within four years, the pledgee is A: No. The questioned agreement evinces no basis for the
authorized to foreclose on the shares of stock. As application of pactum commissorium. There is no contract
required, MNO delivered possession of the shares to of pledge or mortgage entered into by the parties.
ABC with the understanding that the shares would be Bayanihan sought the intervention of the court by filing an
returned to MNO upon the payment of the loan. action for specific performance. Hence there was no
However, the loan was not paid on time. A month after automatic appropriation of the property (Uy Tong v. CA,
4 years, may the shares of stock pledged be deemed G.R. No. 77465, May 21, 1988).
owned by ABC or not? Reason. (2004 Bar Question)

CIVIL LAW
Q: X borrowed money from Y and gave a piece of land installments
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 Possession Possession is vested
stipulation is in the nature of pactum commissorium which Possession remains with the in the creditor
is prohibited by law. The property should be sold at public debtor
auction and the proceeds thereof applied to the Contract Formal contract Real contract
indebtedness. Any excess shall be given to the mortgagor.
Must be recorded Must be in a public
in a public instrument
Q: Suppose in the preceding question, the agreement
Recording instrument to bind containing
between X and Y was that if X failed to pay the
in a public third persons description of the
mortgage debt on time, the debt shall be paid with the
instrument thing pledged and
land mortgaged by X to Y. Would your answer be the
the date thereof to
same as in the preceding question? Explain. (1999 Bar
bind third persons
Question)
Pledge v. Real Estate Mortgage
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 REAL ESTATE
PLEDGE
without need of any further action. In the instant problem MORTGAGE
another act is required to be performed, namely, the Real contract Consensual contract
conveyance of the property as payment (dacion en pago). Subject matter is Subject matter is real
personal property property
PLEDGE Possession of the thing Possession of the thing
pledged is vested in the mortgaged remains with
Pledge creditor the debtor
Pledgee has the right to
Pledge is a contract whereby the debtor delivers to a receive the fruits of the
creditor or third person a movable or document thing pledged, with the
evidencing incorporeal right for the purpose of securing obligation of applying Mortgagee does not
fulfillment of a principal obligation with the understanding the same to the interest possess such right
that when the obligation is fulfilled, the thing delivered of the debt, if owing, and
shall be returned with all its fruits and accessions. the balance, if any, to the
principal
Pledge v. Chattel Mortgage Sale at public auction of
Sale may be judicial or
the thing pledged is
extrajudicial
BASIS CHATTEL PLEDGE always extrajudicial
MORTGAGE Description of the thing
Must be registered,
Delivery is not Delivery is and the date of pledge
Delivery otherwise, it is not valid
necessary necessary must appear in a public
against third persons
Procedure for the Art. 2112, NCC instrument otherwise, it
although binding
sale of the thing is not valid as to third
Governing between the parties
given as security is person
Law Real right and real
governed by Sec. Not a real right
14, Act No. 1508 property by itself
If the property is If the property is
foreclosed, the sold, the debtor is Kinds of pledge
Excess excess goes to the not entitled to the
debtor excess unless 1. Conventional - By agreement of parties
otherwise agreed. 2. Legal - By operation of law
The creditor is The creditor is not
NOTE: A thing lawfully pledged to one creditor, cannot be
entitled to recover entitled to recover
pledged to another as long as the first pledge subsists
the deficiency from the
(Mission de San Vicente v. Reyes 19 Phil 524).
Recovery of the debtor except if deficiencynotwithst
the the chattel anding any
deficiency mortgage is a stipulation to the
security for the contrary.
purchase of
property in

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
Requisites of a contract of pledge Requisites to bind third persons in a contract of pledge
1. Constituted to secure the fulfillment of a principal The following must appear in the public instrument in
obligation; order to affect third persons
2. Pledgor is the absolute owner of the thing pledged;
3. Persons constituting the pledge have the free disposal 1. A description of the thing pledged; and
of their property, and in the absence thereof, that they 2. Statement of date when the pledge was executed (Art.
be legally authorized for the purpose (Art. 2085, NCC). 2096, NCC).
4. A contract of pledge is perfected when the thing
pledged is placed in the actual possession of or Effect of undated instrument of pledge
delivered to the pledgee or a third person designated
by the parties by common consent (Art. 2093, NCC). An undated instrument of pledge cannot ripen into a valid
pledge (Betita v. Ganzon, 49 Phil. 87).
NOTE: If Art. 2093 is not complied with, the pledge is void.
Effect if no public instrument is made
Continuous possession is required in pledge
The purpose of the requirements is to forestall fraud,
The mere taking of the property is not enough in pledge. because a debtor may attempt to conceal his property
There must be continuous possession of the thing. from his creditors when he sees it in danger of execution
However, the pledgee is allowed to temporarily entrust the by simulating a pledge thereof with an accomplice (Tec Bi
physical possession of the thing pledged to the pledgor & Co. v. Chartered Bank of India, 41 Phil. 576).
without invalidating the contract. But here, the pledgor
would be in possession as a mere trustee and his Constructive/symbolic delivery in a contract of pledge
possession is subject to the order of the pledgee.
GR: Constructive or symbolic delivery of the thing is not
When possession or delivery of the thing pledged was sufficient to constitute pledge.
not made
XPN: If the pledge consists of goods stored in a warehouse
An agreement to constitute a pledge only gives rise to a for purposes, of showing the pledgees control over the
personal action between the contracting parties. Unless goods, the delivery to him of the keys to the warehouse is
the movable given as a security by way of pledge be sufficient delivery of possession (constructive/symbolic
delivered to and placed in the possession of the creditor or delivery).
of a third person designated by common agreement, the
creditor acquires no right to the property because pledge The type of delivery will depend upon the nature and
is merely a lien and possession is indispensable to the peculiar circumstances of each case (Yuliongsiu v. PNB, G.R.
right of a lien. No. L-19227, Feb. 17, 1968).
When the pledge fails to take the property pledged Pledge of incorporeal rights
into his possession
Incorporeal rights evidenced by proper document can be
If a pledgee fails or neglects to take the property pledged pledged. It is, however, required that the actual instrument
into his possession, he is presumed to have waived the be delivered to the pledgee. More, if the instrument is a
right granted him by the contract (U.S. v. Terrel, 2 Phil. negotiable document, it must be indorsed.
222).
Q: Pablo owns a tractor which he left with his son Mike
Pledge must be embodied in a public instrument to for safekeeping. Mike then offered the said tractor to
affect third persons Calibo as security for the payment of his debt. When
Pablo came back and learned that the tractor was in
The requisite in Art. 2096 that the pledge must be in a the custody of Calibo, he demanded its return. Calibo,
public instrument does not affect its validity. It is still valid however, refused. Calibo alleged that the tractor was
between the parties, but it will not bind third person if the pledged to him, and in the alternative, the tractor was
said provision is not complied with. left with him in the concept of deposit and he may
validly hold on to it until Mike pays his obligation. Is
When the contract of pledge is not recorded in a public Calibo correct?
instrument, it is void as against third persons; the buyer of
the thing pledged is a third person. The fact that the A: No. There is no valid pledge because Mike is not the
person claiming as pledgee has taken actual physical absolute owner of the property pledged. He who is not the
possession of the thing sold will not prevent the pledge owner or proprietor of the property pledged or mortgaged
from being declared void insofar as the innocent stranger to guarantee the fulfillment of a principal obligation,
is concerned (Tec Bi & Co. v. Chartered Bank of India, cannot legally constitute such a guaranty as may validly
Australia and China, 16 O.G. 908; Ocejo, Perez and Co. v. bind the property in favor of his creditor, and the pledgee
International Bank, 37 Phil. 631). 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

CIVIL LAW
receiving the object is not safekeeping (Calibo Jr. v. CA, G.R. XPN: Unless there is stipulation to the contract (Art.
No. 120528, Jan. 29, 2001). 2100, NCC).
Right of an owner of personal property pledged NOTE: Pledgee is liable for the loss or deterioration of
without authority the thing pledged caused by the acts or negligence of
the agents or employees of the pledgee.
An owner of personal property pledged without authority
may invoke Art. 559, NCC. The defense that pawnshop 3. Apply the fruits, income, dividends, or interests
owner acquired ownership of the thing in good faith is not produced or earned by the property, to interests or
available. expenses first, then to the principal (Art. 2102, NCC).
4. GR: Cannot use the thing pledged without authority
Art. 559 reads as: (Art. 2104, NCC).
The possession of movable property acquired in good faith
is equivalent to a title. Nevertheless, one who has lost any XPNs:
movable or has been unlawfully deprived thereof, may a. If the pledgor had given him authority or
recover it from the person in possession of the same. permission to use it;
b. If the use of the thing is necessary for its
If the possessor of a movable lost or of which the owner has preservation but only for that purpose.
been unlawfully deprived, has acquired it in good faith at a
public sale, the owner cannot obtain its return without 5. Return the thing pledged to the pledgor when the
reimbursing the price paid therefore principal obligation is fulfilled or satisfied it.
When two or more things are pledged When the thing pledged is expropriated by the State
When two or more things are pledged, the pledgee may The debtor is no longer the owner of the thing in case the
choose which he will cause to be sold, unless there is a same is expropriated by the State as ownership is
stipulation to the contrary (1st sentence, Art. 2119, NCC). transferred to the expropriating authority.
The restriction on the right of the pledgee under the 1st NOTE: The creditor may bring actions pertaining to the
sentence of Art. 2119 is that he may only demand the sale owner of the thing pledged in order to recover it from, or
of only as many of the things as are necessary for the defend it against a third person (Art. 2103, NCC).
payment of the debt (2nd sentence, Art. 2119, NCC).
Return of the pledge, when demandable
RIGHTS AND OBLIGATIONS OF THE
PLEDGOR AND THE PLEDGEE GR: A debtor cannot ask for the return of the thing pledged
against the will of the creditor.
Parties in a contract of pledge
XPNs:
1. Pledgor the debtor; the one who delivers the thing 1. If the debtor has paid the debt and its interest, with
pledged to the creditor expenses in a proper case (Art. 2105, NCC).
2. Pledgee the creditor; the one who receives the thing 2. If the thing is in danger of destruction or impairment
pledged provided, the pledgor offers an acceptable substitute
for it which is of the same kind and not of inferior
Rights of a pledgee quality and without prejudice to the application of
Art. 2108 whenever warranted (Art. 2107, NCC).
1. Retain the thing until debt is paid (Art. 2098, NCC).
2. To be reimbursed for the expenses made for the When the pledgee may cause the sale of the thing even
preservation of the thing pledged (Art. 2099, NCC). if the obligation is not yet due
3. Creditor may bring any action pertaining to the
pledgor in order to recover it from or defend it against If, without the fault of the pledgee, there is a danger of
a third person (Legal Subrogation) (Art. 2103, NCC). destruction, impairment, or diminution in value of the
thing pledged, he may cause the same to be sold at public
Obligations of a pledgee auction. The proceeds of the auction shall be security for
the principal obligation in the same manner as the thing
1. Take care of the thing pledged with the diligence of a originally pledged (Art. 2108, NCC).
good father of a family (Art. 2099, NCC).
Rights of the creditor who is deceived on the substance
NOTE: Pledgee is liable for the loss or deterioration of or quality of the thing pledged
the thing by reason of fraud, negligence, delay, or
violation of the terms of the contract. To demand:
1. From the pledgor an acceptable substitute of the
2. GR: Pledgee cannot deposit the thing pledged to a thing; or
third person. 2. The immediate payment of the principal obligation
(Art. 2109, NCC).

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
NOTE: The remedies are alternative and not cumulative.
Only one may be chosen. The law used the conjunctive 1. Is the liability of IRC deemed paid by virtue of the
or. Either one is more convenient than annulment. deed of assignment?
2. Is OBM liable for damages
Return of the thing pledged
A:
The return of the thing pledged to the pledgor by the 1. No. For all intents and purposes, the deed of
pledgee shall extinguish the pledge. Any stipulation to the assignment in this case is actually a pledge. Where a
contrary shall be void (Art. 2110, NCC). CTD in a bank, payable at a future time, was handed
over by a debtor to his creditor, it was not payment,
Presumption of return to the pledgor/owner by the unless there was an express agreement on the part of
pledgee the creditor to receive it as such.
There is a prima facie presumption that the thing pledged 2. Yes. While it is true that no interest shall be due
has been returned by the pledgee to the pledgor or owner, unless it has been expressly stipulated in writing, this
in any of the following circumstances: applies only to interest for the use of money. It does
not comprehend interest paid as damages. Santos has
1. If the thing is found in the possession of the pledgor or the right to recover damages resulting from the
owner after the pledge had been perfected; or default of OBM and the measure of such damages is
2. If the thing is found in the possession of a third person interest at the legal rate of 6% per annum on the
who received it from the pledgor or owner after the amounts due and unpaid at the expiration of the
perfection of the pledge (Art. 2110 (2), NCC). periods respectively provided in the contracts
(Integrated Realty Corp. v. PNB, G.R. No. 60705, June
NOTE: It is presumed that the accessory obligation of 28, 1989)
pledge has been remitted when the thing pledged, after its
delivery to the creditor, is found in the possession of the Rights of the pledgor
debtor, or of a third person who owns the thing (Art. 1274,
NCC). 1. Right to dispose the thing pledged, provided there is
consent of the pledgee (Art. 2097, NCC)
Renunciation of the pledge by the pledgee
NOTE: The pledge however, shall continue in
The renunciation or abandonment of the pledge by the possession.
pledgee requires a statement in writing to that effect (1st
sentence, Art. 2111, NCC). 2. Right to ask that the thing pledged be deposited (Art.
2104 and Art. 2106, NCC)
NOTE: The renunciation of the pledge is not contrary to 3. Right to substitute thing pledged (Art. 2107, NCC)
law, public order, public policy, morals or good customs.
Further, Art. 1356 of the NCC, which speaks of the form of Right to ask that the thing pledged be deposited
contracts, must be complied with.
The owner ask that the thing pledged be deposited
Necessity of acceptance in renunciation judicially or extrajudicially in the following instances:
1. If the creditor uses the thing without authority
Acceptance or return of the thing is not necessary for the 2. If he misuses the thing in any other way
validity of the renunciation under Art. 2111. It is not a case 3. If the thing is in danger of being lost or impaired
of donation where acceptance is necessary to make the because of the negligence or willful act of the pledge
donation valid. (Art. 2106, NCC)
Necessity of return in extinguishment of pledge Right to demand the return of thing pledged against
the will of creditor
Even if the thing was not returned, as long as there is an
effective renunciation, abandonment or waiver, the pledge The pledgor does not have the right to demand the return
is already extinguished even if the thing is not returned. of the thing pledged against the will of the creditor. He
The pledgor will be considered as a depositor and the cannot ask for its return until the obligation is fully paid
pledgee shall become a depositary of the thing. including interest due thereon and expenses incurred for
Accordingly, the law on deposit will apply. its preservation (Art. 2105, NCC)
Q: Santos made time deposits with OBM. IRC, through Requisites before the pledgor may substitute the thing
its president Santos, applied for a loan with PNB. To pledged with another thing
secure the loan, Santos executed a Deed of Assignment
of the time deposits in favor of PNB. When PNB tried to 1. Pledgor has reasonable grounds to fear the
collect from OBM, the latter did not pay the CTDs. PNB destruction or impairment of the thing pledged;
then demanded payment from Santos and IRC, but the 2. No fault on the part of the pledge
latter refused payment alleging that the obligation was 3. Pledgor is offering in place of the thing, another thing
deemed paid with the irrevocable assignment of the in pledge which is of the same kind and quality as the
CTDs. former; and

CIVIL LAW
4. Pledgee does not choose to exercise his right to cause Effect when the thing pledged was not sold at the first
the thing pledged to be sold at public auction (Art. public auction
2107, NCC).
When the property was not sold at the first auction (such
FORECLOSURE as when there are no participating bidders), there will be
another setting for the second auction following the same
Foreclosure of the thing pledged formalities.
A pledgee foreclose the thing pledged when there is no The pledgee is allowed to appropriate the thing pledged if
payment of the debt on time, the object of the pledge may no sale was effected on the second auction. This is an
be alienated for the purpose of satisfying the claims of the exception to the prohibition against pactum commissorium.
pledgee.
Deed of acquittance
Right of the pledge or mortgagor to foreclose
A deed of acquittance is a document of the release or
If the debtor failed to pay on maturity date, the thing discharge of the pledgor from the entire obligation
pledged or mortgaged may be sold at public auction as including interests and expenses. This shall be executed by
provided by law so that the proceeds may be used for 1the pledgee after appropriating the thing in case a no sale
payment of the obligation. was made in a second auction.
Options of an unpaid creditor Application of the proceeds of the sale
1. Foreclose the thing pledged; or The pledgee may collect and receive the amount due when
2. Abandon the pledge and file a claim for collection what has been pledged is a credit. He shall apply the
same to the payment of his claim, and deliver the surplus,
Procedure for the public sale of a thing pledged should there be any, to the pledgor (Art. 2118, NCC).
1. The obligation must be due and unpaid PLEDGE BY OPERATION OF LAW

2. The sale of the thing pledged must be at public auction
3. There must be notice to the pledgor and owner, Legal pledge
stating the amount for which the sale is to be held
4. The sale must be conducted by Notary Public. Pledge by operation of law or legal pledges are those
constituted or created by operation of law. This refers to
Who can bid in a public auction the right of retention.
The following can bid in the public auction Rules that apply to legal pledge
1. The public
2. Pledgor/owner/debtor Shall be preferred if same 1. The rules governing conventional pledge applies to
terms as the highest bidder is offered legal pledge.
3. Pledgee/creditor He must not be the only bidder, 2. There is no definite period for the payment of the
otherwise, his bid is invalid and void principal obligation. The pledge must, therefore, make
a demand for the payment of the amount due him.
Third person paying pledgors debt Without such demand, he cannot exercise the right of
sale at public auction (De Leon).
A third person pay the pledgors debt if he has any interest
in the fulfillment of the principal obligation (Art. 2117, Instances of legal pledges where there is right of
NCC). retention
Effect of sale of the thing pledged 1. Art. 546 Right of the possessor in good faith to retain
the thing until refunded of necessary expenses.
The sale of the thing pledged extinguishes the principal 2. Art. 1707 Lien on the goods manufactured or work
obligation. The extinction is automatic regardless of done by a laborer until his wages had been paid.
whether or not the proceeds realized from the public 3. Art. 1731 Right to retain of a worker who executed
auction sale are more or less than the amounts of the work upon a movable until he is paid.
principal obligation and other incidental expenses. 4. Art. 1914 Right of an agent to retain the thing subject
of the agency until reimbursed of his advances and
If the price of the sale is more than the amount of the debt, damages (Arts. 1912 and 1913, NCC).
the excess will go the pledgee. This is to compensate him 5. Art. 1994 Right of retention of a depositary until full
for the eventuality where the purchase price is lesser than payment of what is due him by reason of the deposit.
the amount of the debt, wherein he cannot retrieve any 6. Art. 2004 Right of the hotel-keeper to retain things
deficiency unless there is a contrary agreement. of the guest which are brought into the hotel, until his
hotel bills had been paid.

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
Sale of the thing pledged Kinds of real mortgages
Before the pledgee may cause sale of the thing pledged he 1. Conventional mortgages constituted voluntarily by
must first make a demand of the amount for which the the contracting parties.
thing is retained. After the demand, the pledgee must 2. Legal mortgage required by law.
proceed with the sale of the thing within thirty (30) days. 3. Equitable mortgage intention of the parties is to
Otherwise, the pledgor can require of him the return of the make the immovable as a security for the
thing retained. performance of the obligation but the formalities of a
real mortgage are not complied with.
The remainder of the price of sale shall be delivered to the
obligor (Art. 2121, NCC). Requisites for a valid constitution of a real mortgage
Effects of sale of the thing pledged 1. It covers only immovable property and alienable real
rights imposed upon immovables
1. Extinguish the principal obligation even if the 2. It must appear in a public instrument
proceeds of the sale do not satisfy the whole amount 3. Registration in the Registry of Property is necessary
of the obligation. to bind third persons
2. If proceeds from the sale exceed the amount due, the
debtor is not entitled to the excess, the excess goes to Real estate mortgage v. Contract of sale with right of
the pledgee. This is to compensate him for the repurchase
eventuality where the purchase price is lesser than
the amount of the debt, wherein he cannot receive any REAL ESTATE SALE WITH RIGHT OF
deficiency unless there is a contrary agreement or in MORTGAGE REPURCHASE
case of legal pledge, the pledgor is entitled to the Principal and
excess Accessory contract
independent contract
3. If the proceeds of the sale is less than the amount due, There is transfer of title
the creditor has no right to recover the deficiency and There is no transfer of
and possession of the
the pledgor is not liable for the deficiency even if title and possession of
property, although
there is a stipulation that he be so liable. Such the property
conditional
stipulation is void. Creditor has no right to The vendee a retro is
the fruits of the property entitled to the fruits even
REAL MORTGAGE during the pendency of during the period of
the mortgage redemption
Real Estate Mortgage If the debtor fails to pay As soon as there is a
his debt, the creditor consolidation of title in
Real estate mortgage (REM) is a contract whereby the cannot appropriate the the vendee a retro, he
debtor secures to the creditor the fulfillment of the property mortgaged nor may dispose of it as an
principal obligation, specially subjecting to such security dispose of it absolute owner
immovable property or real rights over immovable
property in case the principal obligation is not fulfilled at Registration of mortgage
the time stipulated.
Registration of mortgage is a matter of right. By executing
Essence of a contract of mortgage the mortgage, the mortgagor is understood to have given
his consent to its registration, and he cannot be permitted
The essence of a contract of mortgage indebtedness is that to revoke it unilaterally.
a property has been identified or set apart from the mass
of the property of the debtor-mortgagor as security for the Mortgage as a real and inseperable right
payment of money or the fulfillment of an obligation to
answer the amount of indebtedness in case of default of Mortgage is a real and inseparable right. The mortgage
payment. directly and immediately subjects the property upon
which it is imposed, whoever the possessor may be, to the
Laws that govern contract of real mortgage fulfillment of the obligation for whose security it was
constituted (Art. 2126, NCC).
1. New Civil Code
2. Mortgage Law Things that are deemed included in the mortgage
3. Property Registration Decree (PD 1529)
4. Sec. 194, as amended by Act No. 3344, Revised 1. Natural accessions
Administrative Code (Phil. Bank of Commerce v. De 2. Improvements
Vera, G.R. No. L-18816, Dec. 29, 1962) 3. Growing fruits
5. R.A. 4882 law governing aliens who become 4. Rents
mortgagees. 5. Income
6. Insurance proceeds
7. Expropriation price (Art. 2127, NCC)

CIVIL LAW
Attachment of mortgage lien on new or future the mortgage stand as a security, if, from the four corners
improvements of the instrument the intent to secure future and other
indebtedness can be gathered.
The mortgage lien attach in case of new or future
improvements on the date of the registration of the Q: Petitioner obtained a loan of P20K from defendant
mortgage (Luzon Lumber and Hardware Co., Inc, v. Rural Bank of Kawit. The loan was secured by a REM
Quiambao, G.R. No. L-5638, Mar. 20, 1954). over a parcel of land. The mortgage contract states
that the mortgage will cover the payment of the loan of
Dragnet clause P20K and such other loans or other advances already
obtained or to be obtained by the mortgagors from the
A dragnet clause is a mortgage provision which is bank. The loan of P20k was fully paid. Thereafter they
specifically phrased to subsume all debts of past or future again obtained a loan of P18K, secured by the same
origin. It is a valid and legal undertaking, and the amounts mortgage. The spouses defaulted. The bank extra
specified as consideration in the contracts do not limit the judicially foreclosed the mortgage. Was the
amount for which the pledge or mortgage stands as foreclosure sale valid?
security, if from the four corners of the instrument, the
intent to secure future and other indebtedness can be A: Yes. It has long been settled that mortgages given to
gathered. A pledge or mortgage given to secure future secure future advancements are valid and legal contracts;
advancements is a continuing security and is not that the amounts named as consideration in said contract
discharged by the repayment of the amount named in the do not limit the amount for which the mortgage may stand
mortgage until the full amount of all advancements shall as security, if from the four corners of the instrument the
have been paid (Premiere Development Bank v. Central intent to secure future and other indebtedness can be
Surety & Insurance, Inc., G.R. No. 176246 [2009]). gathered. A mortgage given to secure advancement is a
continuing security and is not discharged by repayment of
NOTE: It is a clause which operates as a convenience and the amount named in the mortgage, until the full amount
accommodation to the borrowers as it makes available of the advancements is paid (Mojica v. CA, G.R. No. 94247,
additional funds without their having to execute additional Sept. 11, 1991).
security documents, thereby saving time, travel, loan
closing costs, costs of extra legal services, recording fees Alienation or assignment of mortgage credit
etc.
Mortgage credit bemay be alienated or assigned to a third
Interpretation of dragnet clause person in whole or in part, with the formalities required by
law (Art. 2128, NCC).
Dragnet clause must be carefully scrutinized and strictly
construed particularly where the mortgage contract is one Assignment of credit, right or action shall be in a
of adhesion. public instrument in order to affect third persons
NOTE: An assignment of a credit, right or action shall produce no

1. A mortgage must sufficiently describe the debt sought effect as against third persons, unless it appears in a public
to be secured, and an obligation is not secured by a instrument, or the instrument is recorded in the Registry
mortgage unless it comes fairly within the terms of of Property in case the assignment involves real property
the mortgage. (Art. 1625, NCC).
2. Where the intention of the mortgagor is to secure a
larger amount, the action to foreclose may be for the Possession by third person of the property mortgaged
larger amount.
3. But where the obligation is not a series of The creditor may claim from the third person in
indeterminate sums incurred over a period of time possession of the property payment of the credit up to the
but 2 specific amounts procured in a single instance, extent secured by the property which the third party
what applies is the general rule state above that an possesses, in terms and with the formalities which the law
action to foreclose a mortgage must be limited to the establishes (Art. 2129, NCC).
amount mentioned in the mortgage.
4. A mortgage given to secure future advancements is a A stipulation forbidding the owner from alienating the
continuing security and is not discharged by the immovable mortgaged is not valid. The prohibition to
repayment of the amount named in the mortgage, alienate is contrary to public good inasmuch as the
until the full amount of the advancements is paid. It transmission of property should not be unduly impeded
permitted the mortgagor to take the money as it is (Report, Code Commission, p. 58).
needed and thus avoid the necessity of paying interest
until the necessity for its use actually arises. FORECLOSURE
Statement of the amount in a mortgage contract in a Foreclosure

dragnet clause
Foreclosure is a remedy available to the mortgagee in
The amount stated in the contract is not controlling in case which he subjects the mortgaged property to the
of mortgage securing future advancements. The amount satisfaction of the obligation.
named in the contract does not limit the amount for which

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
Kinds of foreclosure Extrajudicial foreclosure
1. Judicial Governed by Rule 68, Rules of Court An extrajudicial foreclosure may only be effected if in the
2. Extrajudicial Mortgagee is given a SPA to sell the mortgage contract covering a real estate, a clause is
mortgaged property (Act No. 3135) incorporated therein giving the mortgagee the power,
upon default of the debtor, to foreclose the mortgage by an
Nature of judicial foreclosure extrajudicial sale of the mortgage property (Sec. 1, Act No.
3135, as amended by Act No. 4148).
A judicial foreclosure is an action quasi in rem (Ocampo v.
Domalanta, 20 SCRA 1136). Authority to sell
Action for foreclosure of mortgage survive the death of The authority to sell may be done in a separate document
mortgagor but annexed to the contract of mortgage. The authority is
not extinguished by the death of the mortgagor or
An action for foreclosure of mortgage survive the death of mortgagee as it is an essential and inseparable part of a
mortgagor because the claim is not a pure money claim but bilateral agreement (Perez v. PNB, No. L-21813, July 30,
an action to enforce a mortgage lien. Being so, the 1966).
judgment rendered therein may be enforced by a writ of
execution. The action may be prosecuted by the interested How to initiate an extrajudicial foreclosure
person against the executor or administrator
independently of the testate or intestate proceedings of An extrajudicial foreclosure initiated by filing a petition
the settlement of the mortgagors estate for the reason with the office of the sheriff. It may also be initiated
that such claims cannot in any just sense be considered through a Notary Public commissioned in the place where
claims against the estate, but the right to subject specific the property is situated.
property to the claim arises from the contract of the debtor
whereby he has during life set aside certain property for NOTE: Notice containing the place and date is required
its payment, and such property does not, except in so far as before an auction sale is made in extrajudicial foreclosure
its value may exceed the debt, belong to the estate (Sec. 3, Act No. 3135).
(Testamentaria de Don Amadeo Matute Olave v. Canlas, No.
L-12709, Feb. 28, 1962). Notice of sheriffs sale
Remedies of the mortgagee in case of death of the The notice of sheriffs sale must contain the correct
debtor number of the certificate of title and the correct technical
description of the real property to be sold (San Jose v. CA,
1. To waive the mortgage and claim the entire debt from GR No. 106953, Aug. 19, 1993).
the estate of the mortgagor as an ordinary claim;
2. To foreclose the mortgage judicially and prove any Publication and posting requirements cannot be waived
deficiency as an ordinary claim; or because they are imbued with public policy considerations
3. To rely on the mortgage exclusively, foreclosing the and any waiver thereon would be inconsistent with the
same at any time before it is barred by prescription, intent and letter of the law. It would thus be converting
without right to file claim for any deficiency into a private sale what ought to be a public auction.
(Maglaque v. Planters Development Bank, GR No.
109472, May 18, 1999). The purpose of notice of sale is to inform the public of the
nature and condition of the property sold, and of the time,
Necessity for confirmation of court in foreclosure sale place and terms of the sale.
(Judicial Foreclosure)
Place of posting of notice of sale
A foreclosure sale (in judicial foreclosure) is not complete
until it is confirmed and before such confirmation, the The notice of sale should be posted in at least 3 public
court retains control of the proceedings by exercising places in the city or municipality where the property is
sound discretion in regard to it either granting or situated
withholding confirmation as the rights and interests of the
parties and the ends of justice may require (Rural Bank of 1. Sheriffs Office;
Oroquieta v. CA, No. 53466, Nov. 10, 1980). 2. Assessors Office; and
3. Register of Deed
There can be no redemption of the property after
confirmation. Such confirmation retroacts to the date of Publication of notice of sale in newspaper of general
the auction sale. After the confirmation, the previous circulation
owners lose any right they may have had over the
property, which rights in turn vested on the Purchaser of The publication of the notice of sale in a newspaper of
the property (Lonzame v. Amores, No. L-53620, Jan. 31, general circulation alone is more than sufficient
1985). compliance with the notice-posting requirement of law
considering that such newspaper which is distributed
nationwide, has a readership of more people than notice

CIVIL LAW
posted in a public bulletin board, no matter how strategic mortgagee is entitled to recover the deficiency (DBP v.
its location may be, which caters only to a limited few. Mirang, G.R. No. L-29130, Aug. 8, 1975).
Requisites for a newspaper to be deemed of general NOTE: In judicial foreclosure, the Rules of Court
circulation specifically gives the mortgagee the right to claim for
deficiency in case a deficiency exists (Sec. 6, Rule 70).
1. It must be published for the dissemination of local
news and general information; While Act No. 3135 governing extrajudicial foreclosures of
2. It must have a bona fide subscription list of paying mortgage does not give a mortgagee the right to recover
subscribers; deficiency after the public auction sale, neither does it
3. It must be published at regular intervals; and expressly or impliedly prohibit such recovery.
4. It must be available to the public in general and not
just to a select few chosen by the publisher, otherwise, Stipulation for upset price
the precise objective of publication of notice of sale
will not be realized; Stipulation of upset price is a stipulation of minimum price
5. It must not be devoted to the interests or published at which the property shall be sold to become operative in
for the entertainment of a particular profession, trade, the event of a foreclosure sale at public auction. It is null
calling, race or religion. and void.
Q: MBTC granted a loan to spouses Peafiel, who REDEMPTION

mortgaged their two (2) parcels of land in
Mandaluyong. The spouses defaulted in the payment. Redemption
MBTC instituted an extrajudicial foreclosure
proceeding under Act No. 3135. The Notice of Sale was Redemption is a transaction by which the mortgagor
published in Maharlika Pilipinas, which has no reacquires or buys back the property which may have
business permit in Mandaluyong and its list of passed under the mortgage or divests the property of the
subscribers shows that there were no subscribers lien which the mortgage may have created.
from Mandaluyong. Did MBTC comply with the
publication requirement under Section 3, Act No. Kinds of redemption
3135?
1. Equity of redemption Right of mortgagor to redeem
A: No. Maharlika Pilipinas is not a newspaper of general the mortgaged property after his default in the
circulation in Mandaluyong where the property is located. performance of the conditions of the mortgage but
To be a newspaper of general circulation, it is enough that before the sale of the mortgaged property or
it is published for the dissemination of local news and confirmation of sale. It applies in cases of judicial
general information, that it has a bona fide subscription foreclosure.
list of paying subscribers, and that it is published at 2. Right of redemption Right of the mortgagor to
regular intervals. The newspaper must be available to the redeem the mortgaged property within one year from
public in general, and not just to a select few chosen by the the date of registration of the certificate of sale. It
publisher. Otherwise, the precise objective of publishing applies in case of extrajudicial foreclosure.
the notice of sale in the newspaper will not be realized
(Metropolitan Bank and Trust Company, Inc. v. Eugenio Q: X and Y, judgment creditors of A, obtained the
Peafiel, G.R. No. 173976, Feb. 27, 2009). transfer of the title of the mortgaged property in their
names. Earlier, A executed a mortgage over the same
Enjoining the implementation of writ possession property in favor of FGU Insurance. The latter
mortgage was registered. When A defaulted, FGU
As a rule, any question regarding the validity of the foreclosed the property. A certificate of sale was
mortgage or its foreclosure cannot be a legal ground for thereafter issued in FGUs favor, which was confirmed
refusing the issuance of a writ of possession. Regardless of by the RTC. However, before the new TCT could be
whether or not there is a pending suit for annulment of the issued, X and Y filed their respective motion for
mortgage or the foreclosure itself, the purchaser is entitled intervention and to set aside the judgment alleging
to a writ of possession, without prejudice to the outcome that they are the new owners of the property and the
of the case. Hence, an injunction to prohibit the issuance of failure of FGU to implead X and Y in the action for
writ of possession is entirely out of place. Prohibition does foreclosure deprived the latter of due process. Is the
not lie to enjoin the implementation of a writ of contention of X and Y correct?
possession. Once the writ of possession has been issued,
the trial court has no alternative but to enforce the writ A: No. Subordinate lien holders acquire only a lien upon
without delay (Sps. Ong v. CA, G.R. No. 121494, June 8, the equity of redemption vested in the mortgagor, and
2000). their rights are strictly subordinate to the superior lien of
the mortgagee. Such equity of redemption does not
Recovery of the deficiency constitute a bar to the registration of the property in the
name of the mortgagee. Registration may be granted in the
The mortgagee recover the deficiency if there be a balance name of the mortgagee but subject to the subordinate lien
due to him after applying the proceeds of the sale, the holders equity of redemption, which should be exercised
within ninety (90) days from the date the decision

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
becomes final. This registration is merely a necessary
consequence of the execution of the final deed of sale in A mortgagor, whose property has been extrajudicially
the foreclosure proceedings (Looyuko v. CA, G.R. No. foreclosed and sold, can validly execute a mortgage
102696, July 12, 2001). contract over the same property in favor of a third party
during the period of redemption. The purchaser at the
Requisites for valid right of redemption foreclosure sale merely acquires an inchoate right to the
property which could ripen into ownership only upon the
1. Must be made within one year from the time of the lapse of the redemption period without his credit having
registration of the sale. been discharged, it is illogical to hold that during that same
2. Payment of the purchase price of the property plus period of twelve months the mortgagor was "divested" of
1% interest per month together with the taxes his ownership, since the absurd result would be that the
thereon, if any, paid by the purchaser with the same land will consequently be without an owner although it
rate of interest computed from the date of registration remains registered in the name of the mortgagor. Such
of the sale; and mortgage does not involve a transfer, cession or
3. Written notice of the redemption must be served on conveyance of the property but only constitutes a lien
the officer who made the sale and a duplicate filed thereon (Medida v. CA, G.R. No. 98334, May 8, 1992).
with the proper Register of Deeds (Rosales v. Yboa,
G.R. No. L-42282, Feb. 28, 1983). Q: DBP guaranteed LCDs loan. When LCD defaulted,
DBP paid it and sought reimbursement. LCD failed to
NOTE: The redemptioner should make an actual tender in reimburse DBP, hence DBP extrajudicially foreclosed
good faith of the full amount of the purchase price as the REM, where it was the highest bidder. The Sheriffs
provided above, i.e., the amount fixed by the court in the certificate of sale was annotated in the certificate of
order of execution or the amount due under the mortgage titles on April 30, 1976. La Campana failed to redeem
deed, as the case may be, with interest thereon at the rate the properties. The court, among others, ordered LCD
specified in the mortgage, and all the costs, and judicial to pay such sums of money unlawfully collected or
and other expenses incurred by the bank or institution received by way of rentals and/or fruits from the
concerned by reason of the execution and sale and as a subject properties to DBP. When should the period for
result of the custody of said property less the income the remittance of collected/received rentals/fruits
received from the property (Heirs of Quisimbing v. PNB, from the properties, of LCD to DBP start?
G.R. No. 178242, Jan. 20, 2009).
A: In foreclosure proceedings, the buyer becomes the
Period of redemption is not a prescriptive period absolute owner of the property purchased if it is not
redeemed during the prescribed period of redemption,
The period of redemption is not a prescriptive period but a which is one year from the date of registration of the sale.
condition precedent provided by law to restrict the right of The Sheriffs certificate of sale was annotated in the
the person exercising redemption. certificate of titles on April 30, 1976. DBP became the
absolute owner of the properties on May 1, 1977. Thus,
If a person exercising the right of redemption has offered the period to be considered in determining the amount of
to redeem the property within the period fixed, he is collection should start from May 1, 1997 up to the time
considered to have complied with the condition precedent when the possession of the properties are actually and
prescribed by law and may thereafter bring an action to completely surrendered to DBP (La Campana Development
enforce redemption. Corporation v. DBP, G.R. No. 146157, Feb. 13, 2009).
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.
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, Aug. 9,
2005).

CIVIL LAW
Flowchart for Judicial Foreclosure of

Real Estate Mortgage
(Rule 68, 1997 Rules of Civil
Procedure)
Complaint with the court. Include
subsequent lien holders, otherwise
equity of redemption will not be Hearing Judgment Entry of judgment
divested. (Lampin v. IAC, No. L-70987,
Sept. 29, 1988))
Upon failure to pay, 90 days 120 days from

Mortgagee to file mortgagee to file motion entry of judgment for
motion for Execution sale mortgagor to pay his debt,
for execution foreclosing
confirmation of sale mortgage as determined by court
Issuance of order confirming the

sale (order is appealable) Cancellation of the title of the
Registration of the order
(Ocampo v. Dimalanta, No. L- mortgagor/issuance of new title to
confirming the sale
21011, Aug. 30, 1967) the mortgagee
Wait for finality of order
* If mortgagee/bidder is bank or credit Secure a writ of possession,

institution, mortgagor has one more year from by motion, from the same
registration of order confirming the sale + court that ordered the
certificate of sale to redeem the property. foreclosure
NOTE:
GR: In judicial foreclosure, there is only equity of redemption.
XPN: If the mortgagee is a bank or credit institution, there is one year right of redemption.
Equity of redemption right of the mortgagor not to be divested of the ownership of the mortgaged property and
to stop the foreclosure sale by paying the mortgagee debt within 90-120 days from entry of judgment and even
beyond, until finality of order confirming the sale.

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
ANTICHRESIS Antichresis v. Real Estate Mortgage
Antichresis REAL ESTATE

ANTICHRESIS
MORTGAGE
Antichresis is a contract whereby the creditor acquires the Property is delivered to Debtor usually retains
right to receive the fruits of an immovable of the debtor, creditor possession of the
with the obligation to apply them to the payment of property
interest, if owing, and thereafter to the principal of his Creditor acquires only Creditor has no right to
credit. the right to receive the receive fruits, but
fruits of the property; mortgage creates real
Characteristics of antichresis does not produce a real right against the property
right unless registered in
1. Accessory contract. the Registry Property
2. Formal contract the amount of the principal and of Creditor obliged to pay Creditor has no such
the interest must both be in writing; otherwise the the taxes and charges obligation
contract of antichresis is void. upon the estate unless
3. It deals only with immovable property. stipulated otherwise
4. It is a real right. There is an express There is no such
5. The creditor has the right to receive the fruits of the stipulation that the obligation on the part of
immovable. creditor shall apply the the mortgagee
6. It is a real contract. fruits to the payment of
7. It can guarantee all kinds of valid obligations. the interest, if owing, and
thereafter to the
NOTE: It is not essential that the loan should earn interest principal of the debt.
in order that it can be guaranteed with a contract of
antichresis. Antichresis is susceptible of guaranteeing all Antichresis v. Pledge
kinds of obligations, pure or conditional [Javier v. Valliser,
(CA) N. 2648-R, Apr. 29, 1950; Sta. Rosa v. Noble, 35 O.G. Antichresis Pledge
27241] Refers to real property Personal property
Formal Real
Stipulation authorizing for appropriation of property
Principal and interest Need not be in writing,
upon non-payment of the debt
must be specified in oral evidence may be
writing, otherwise allowed to prove the
A stipulation authorizing the antichretic creditor to
contract is void same.
appropriate the property upon the non-payment of the
debt within the period agreed upon is void (Art. 2038,
Antichresis v. Pacto de retro sale
NCC).
Antichresis Pacto de retro sale
Form of a contract of antichresis and its contents
Creditor is given the right Creditor does not have
1. Covers only the Fruits of real property to enjoy the fruits and such right
2. Delivery of the property necessary so that CR may apply them to the
receive the fruits therefrom payment of the interest
and to the principal of the
NOTE: Delivery of the property to the creditor is loan
required only in order that the creditor may receive
the fruits and not for the validity of the contract. Availability of acquisitive prescription to the
antichretic creditor
3. Amount of principal and interest must be specified in
writing, otherwise, the contract shall be void. Prescription is not as a mode of acquiring ownership
4. Express agreement that debtor will give Possession to available to the creditor in antichresis because the
the CR and that CR will apply the fruits to the interest possession of the property is not in the concept of an
and then to the principal. owner but that of a mere holder during the existence of the
contract (Ramirez v. CA, G.R. No. L-38185, September 24,
NOTE: The fruits of the immovable which is the object 1986).
of the antichresis must be appraised at their actual
market value at the time of the application (Art. 2138, Determination of the amount paid in antichresis
NCC).The property delivered stands as a security for
the payment of the obligation of the debtor in The amount of payment in antichresis is determined the
antichresis. Hence, the debtor cannot demand its actual market value of the fruits at the time of the
return until the debt is totally paid. application thereof to the interest and the principal shall
be the measure of such application (Art. 2133, NCC).

CIVIL LAW
2. It is an accessory contract because its existence
Parties to a contract of antichresis depends upon an existing valid principal obligation;
3. It is a unilateral contract because the obligation is
1. Antichretic creditor One who receives the fruits on only on the part of the creditor to free the chattel from
the immovable property of the debtor. encumbrance upon the payment of the principal
2. Antichretic debtor One who pays his debt through obligation;
the application of the fruits of his immovable 4. It does not convey dominion but is only a security (In
property. re: Du Tec Chuan, No. 11156, March 28, 1916);
5. It creates a real right or a lien which is being recorded
Obligations of an antichretic creditor and follows the chattel wherever it goes (Northern
Motors, Inc. v. Coquia, No. L-40018, Dec. 15, 1975).
1. Pay the taxes and charges assessable against the
property like real estate taxes and others; Requisites in a chattel mortgage
2. Bear the necessary expenses for the preservation of
the property; 1. GR: It covers only movable property
3. Bear the expenses necessary for the repair of the
property; and XPN: When the parties treat as personalty that which
4. Apply the fruits received for payment of the is according to its nature realty.
outstanding interests, if any, and thereafter of the
principal. 2. Registration with the Chattel Mortgage Register.
3. Description of the property.
NOTE: The creditor be exempted from the obligations
imposed by Art. 2135 by compelling the debtor to re-enter NOTE: Section 7 of the Chattel Mortgage Law does not
into the property. demand specific description of every chattel
mortgaged in the deed of mortgage, but only requires
Rule on the application of the fruit upon the debt that the description of the mortgaged property be
such as to enable the parties to the mortgage or any
The application of the fruit upon the debt must be other person to identify the same after a reasonable
expressly agreed between the creditor and the debtor that investigation and inquiry (Saldana v. Phil. Guaranty
the former, having been given possession of the properties Co., Inc., No. L-13194, Jan. 29, 1960); otherwise, the
given as security, is to apply their fruits to the payment of mortgage is invalid.
interest, if owing, and thereafter to the principal of his
credit (Art. 2132, NCC). 4. Accompanied by an affidavit of good faith to bind
third persons.
Return of the property of the antichretic debtor
NOTE: The absence of an affidavit of good faith does
The antichretic debtor can only demand the return of the not affect the validity of the contract.
property after having fully paid his obligations to the
creditor. It is not fair for the debtor to regain the Laws that govern chattel mortgages
possession of the property when his debt has not been
fully paid. Until there is full payment of the obligation, the 1. Chattel Mortgage Law (Act No. 1508)
property shall stand as security therefor (Macapinlac v. 2. Provisions of the Civil Code on pledge
Gutierrez Repide, No. 18574, Sept. 20, 1922).
NOTE: In case of conflict between nos. 1 and 2, the
Remedy of the creditor in case of nonpayment of his former shall prevail.
credit
3. Revised Administrative Code
1. File an action for collection; or 4. Revised Penal Code (Art. 319)
2. File a petition for the public sale of the property 5. Other special laws (i.e. Motor vehicle law)
(Barretto v. Barretto, No. 11933, Dec. 1, 1917). 6. Ship Mortgage Decree of 1978 (P.D. No. 1521)
CHATTEL MORTGAGE Similarities between chattel mortgage and pledge
Chattel Mortgage 1. Both are executed to secure performance of a

principal obligation;
Chattel mortgage is a contract by virtue of which personal 2. Both are constituted only on personal property;
property is recorded in the Chattel Mortgage Register as a 3. Both are indivisible;
security for the performance of an obligation. 4. Both constitute a lien on the property;
5. In both cases, the creditor cannot appropriate the
Characteristics of chattel mortgage property to himself in payment of the debt;
6. When the debtor defaults, the property must be sold
1. It is a formal contract because it must be embodied in for the payment of the creditor
a public instrument and recorded in the Chattel 7. Extinguished by the fulfillment of the principal
Mortgage Register; obligation or by the destruction of the property
pledged or mortgaged.

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
Registration in Real Estate Mortgage and Registration

Subject matter of chattel mortgage in Chattel Mortgage
1. Shares of stock in a corporation; The difference in registration of real mortgage and chattel
2. Interest in business; mortgage is that a deed of real estate mortgage is
3. Machinery and house of mixed materials treated by considered registered once recorded in the entry book.
parties as personal property and no innocent third However, chattel mortgage must be registered not only in
person will be prejudiced thereby (Makati Leasing the entry book but also in the Chattel Mortgage Register
and Finance Corp. v. Weaver Textile Mills, Inc., No. L- (Associated Insurance and Surety Co. v. Lim Ang, (CA) 52 Off.
58469, May, 16, 1983); Gaz. 5218).
4. Vessels, the mortgage of which have been recorded
with the Philippine Coast Guard in order to be Increase in mortgage credit
effective as to third persons;
5. Motor vehicles, the mortgage of which had been If the parties to a chattel mortgage take an oath that the
registered both with the Land Transportation debt, honestly due and owing from the mortgagor to the
Commission and the Chattel Mortgage Registry in mortgagee, it is obvious that a valid mortgage cannot be
order to affect third persons; made to secure a debt to be thereafter contracted (11 C.J.
6. House which is intended to be demolished; or 448). A mortgage that contains a stipulation in regard to
7. Growing crops and large cattle (Sec. 7 (2)(3), Act No. future advances in the credit will take effect only from the
1508). date of the mortgage. The increase in the mortgage credit
becomes a new mortgage (Belgian Catholic Missionaries v.
Affidavit of good faith Magallanes Press, No. 25729, Nov. 24, 1926).
An affidavit of good faith is an oath in a contract of chattel Abandoment of mortgage lien

mortgage wherein the parties severally swear that the
mortgage is made for the purpose of securing the The mortgage lien is deemed abandoned by obtaining a
obligation specified in the conditions thereof and for no personal judgment on the mortgage lien.
other purposes and that the same is a just and valid,
existing obligation and one not entered into for the Offenses involving chattel mortgage
purpose of fraud.
1. Knowingly removing any personal property
The absence of the affidavit vitiates the mortgage only as mortgaged under the Chattel Mortgage Law to any
against third persons without notice like creditors and province or city other than the one in which it was
subsequent encumbrances, but its absence is not fatal located at the time of the execution of the mortgage
between the parties. without the written consent of the mortgagee; or
2. Selling or pledging personal property already
Chattel mortgage v. Real Estate Mortgage mortgaged, or any part thereof, under the terms of the
Chattel Mortgage Law without the consent of the
CHATTEL REAL ESTATE mortgagee written on the back of the mortgage and
BASIS
MORTGAGE MORTGAGE duly recorded in the Chattel Mortgage Register (Art.
Subject 319, RPC).
Personal property Real property
matter
Cannot guaranty FORECLOSURE
As to
future obligations
Guaranty May guaranty future Procedure in foreclosure of a chattel mortgage
because it requires
of Future obligations
immediate
Obligations The mortgagee may, after thirty (30) days from the time of
recording
the default or from the time the condition is violated, cause
REGISTRATION the mortgaged property to be sold at public auction by a
public officer (Sec. 14, Act No. 1508).
Registration of the Chattel mortgage
The 30-day period to foreclose a chattel mortgage is the
Registration is tantamount to the symbolic delivery of the minimum period after violation of the mortgage condition
mortgage to the mortgagee, which is equivalent to actual for the mortgage
delivery (Meyers v. Thein, No. 5577, Feb. 21, 1910).
The creditor has at least ten (10) days notice served to the
Registration period of the chattel mortgage mortgagor
The law does not provide period within which the The notice of time, place and purpose of such sale, is
registration should be made. Yet, the law is substantially posted
and sufficiently complied with where the registration is
made by the mortgagee before the mortgagor has After the sale of the chattel at public auction, the right of
complied with his principal obligation and no right of redemption is no longer available to the mortgagor (Cabral
innocent third persons is prejudiced. v. Evangelista, 28 L-26860, July 30, 1969).

CIVIL LAW
d. When through an accident or other cause a
Legal consequences of mortgaging a building erected person is injured or becomes seriously ill, and he
not by the owner of the land is treated or helped while he is not in a condition
to give consent to a contract, he shall be liable to
A building is immovable or real property whether it is pay for the services of the physician or other
erected by the owner of the land, by a usufructuary, or by a person aiding him, unless the service has been
lessee. It may be treated as a movable by the parties to a rendered out of pure generosity (Art. 2167, NCC).
chattel mortgage but such is binding only between them e. When during a fire, flood, storm, or other
and not on third parties. As far as third parties are calamity, property is saved from destruction by
concerned, the chattel mortgage does not exist. another person without the knowledge of the
owner, the latter is bound to pay the former just
Recovery of deficiency compensation (Art. 2168, NCC).
f. When the government, upon the failure of any
GR: CR may recover deficiency if the redemption price is person to comply with health or safety
less than the debt secured in case of foreclosure sale in regulations concerning property, undertakes to
chattel mortgage. do the necessary work, even over his objection,
he shall be liable to pay the expenses (Art. 2169,
XPN: When the chattel mortgage is used to secure the NCC).
purchase of personal property in installments (Recto Law). g. When in a small community a majority of the
inhabitants of age decide upon a measure for
QUASI-CONTRACTS protection against lawlessness, fire, flood, storm
or other calamity, anyone who objects to the plan
Quasi Contracts and refuses to contribute to the expenses but is
benefited by the project as executed shall be
Quasi-contracts are lawful, voluntary, and unilateral acts liable to pay his share of said expenses (Art. 2174,
which generally require a person to reimburse or NCC).
compensate another in accordance with the principle that h. Any person who is constrained to pay the taxes of
no one shall be unjustly enriched at the expense of another another shall be entitled to reimbursement from
(Art. 2142, NCC). the latter (Art. 2175, NCC).
Bases for quasi-contracts NEGOTIORUM GESTIO
1. No one must unjustly enrich himself at anothers Negotiorum Gestio

expense
2. If one benefits, he must reimburse Negotiorum Gestio is a kind of quasi-contract where
3. Justice and equity someone called the gestor takes the management of the
4. Presumed consent of the person obliged to business or property of another person known as owner
compensate (Pineda, 2006) without the consent or authority of the latter.
Kinds of quasi-contract Essential requisites for negostiorum gestio
1. Negotiorum Gestio 1. Taking charge of anothers business or property

2. Solutio Indebiti 2. The property or business must have been abandoned
3. Other kinds of quasi-contract or neglected
a. When, without the knowledge of the person 3. The officious manager (gestor) must not have been
obliged to give support, it is given by a stranger, expressly or implicitly authorized
the latter shall have a right to claim the same 4. The officious manager (gestor) must have voluntarily
from the former, unless it appears that he gave it taken charge
out of piety and without intention of being repaid 5. The officious manager or gestor must not be acting
(Art. 2164, NCC). erroneously on the belief that he is the owner of the
b. When funeral expenses are borne by a third property or business.
person, without the knowledge of those relatives
who were obliged to give support to the Required diligence from the gestor
deceased, said relatives shall reimburse the third
person, should the latter claim reimbursement Diligence of a good father of a family (Art. 2145, NCC) is the
(Art. 2165, NCC). required diligence from a gestor. Hence, a gestor is liable
c. When the person obliged to support an orphan, for the acts or negligence of his employees (MRR Co. v.
or an insane or other indigent person unjustly Compania Transatlantica, 38 Phil. 875).
refuses to give support to the latter, any third
person may furnish support to the needy Liability of two or more gestors
individual, with right of reimbursement from the
person obliged to give support. The provisions of GR: If there are two or more officious managers, their
this article apply when the father or mother of a liability for their acts is solidary.
child under eighteen years of age unjustly refuses
to support him (Art. 2166, NCC).

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
XPN: When the management was assumed by the officious doubtful or difficult question of law may lead to solutio
managers to save the property or business from imminent indebiti because of the mistake committed (Art. 2155,
danger, in which case, the liability is only joint. NCC).
Ratification of the owner Liabilities of a person who accepts an undue payment

in bad faith
Ratification of the owner of the business produces the
effect of an express agency; and this is true even if the 1. He shall pay legal interest if a sum of money is
business is not successful (Art 2149, NCC). involved, or shall be liable for fruits received or which
should have been received if the thing produces fruits.
Liabilities of the owner even if there is no ratification 2. He shall furthermore be answerable for any loss or
impairment of the thing from any cause, and for
1. Liability for the obligation incurred in his interest. damages to the person who delivered the thing, until
2. Liability for necessary and useful expenses and for it is recovered (Art. 2159, NCC).
damages.
3. Damages suffered by the gestor while performing his Effect of acceptance in good faith if there was mistake
duties as such (Art 2150, NCC). in the payment
Minority of the owner 1. In case of impairment or loss, liability is only to the

extent of benefit (Art. 2160, NCC).
If the owner is a minor, he is still liable under the article 2. In case of alienation, the price is to be reimbursed, or
for he should not be unjustly enriched at anothers in case of credit, the same should be assigned (Art.
expense (Rotea v. Delupio, 67 Phil. 330). 2160, NCC).
3. He shall be exempt from the obligation to restore if he
Causes for extinguishment of management destroyed the document, or allowed the action to
prescribe, or gave up the pledges, or cancelled the
1. Repudiation or termination of the management by the guaranties for his right (Art. 2162, NCC).
owner himself;
2. Withdrawal of gestor from the management; and NOTE: He who paid unduly may proceed only against
3. Death, civil interdiction, insanity or insolvency of the true debtor or the guarantors with regard to
either party. whom the action is still effective (Art. 2162, NCC).
SOLUTIO INDEBITI When property is wrongfully delivered or money is

wrongfully paid
Solutio indebiti
When the property delivered or money paid belongs to a
Solutio indebiti is the quasi-contract that arises when a third person, the payee shall comply with the provisions of
person is obliged to return whatever was received by him article 1984 (Art. 2158, NCC).
through error or mistake or received by him although
there was no right to demand it. NOTE: Art. 1948 states that the depositary cannot demand
that the depositor prove his ownership of the thing
NOTE: If the payer was in doubt whether the debt was deposited. Nevertheless, should he discover that the thing
due, he may recover if he proves that it was not due (Art. has been stolen and who its true owner is, he must advise
2156, NCC). The responsibility of two or more payees, the latter of the deposit. If the owner, in spite of such
when there has been payment of what is not due, is information, does not claim it within the period of one
solidary (Art. 2157, NCC). month, the depositary shall be relieved of all responsibility
by returning the thing deposited to the depositor. If the
Requisites for solutio indebiti depositary has reasonable grounds to believe that the
thing has not been lawfully acquired by the depositor, the
1. Receipt of something. former may return the same.
2. There was no right to demand it
3. Undue delivery was because of mistake. CONCURRENCE AND PREFERENCE OF CREDITS
NOTE: It is presumed that there was a mistake in the Concurrence of credit

payment if something which had never been due or had
already been paid was delivered; but he from whom the Concurrence of credit implies the possession by two or
return is claimed may prove that the delivery was made more creditors of equal rights or privileges over the same
out of liberality or for any other just cause (Art. 2163, property or all the property of a debtor.
NCC).
Preference of credit
Application of solutio indebiti in difficult or doubtful
question of law Preference of credit is a right held by a creditor to be
preferred in the payment of his claim above others out of
Solutio indebiti can be applied if there is doubtful or the debtors assets.
difficult question of law. There can be payment because of

CIVIL LAW
NOTE: The rules apply when two or more creditors have
separate and distinct claims against the same debtor who Summary:
has insufficient property. 1. Taxes
2. Malversation by public officials
Preference of credit and lien 3. Vendors lien
4. Pledge, chattel mortgage
Preference of credit applies only to claims which do not 5. Mechanics lien
attach to specific properties while a lien creates a charge 6. Laborers wages
on a particular property. 7. Salvage
8. Tenancy
Preferred credits on specific movables as provided in 9. Carriers lien
Art. 2241 10. Hotels lien
11. Crop loan
1. Duties, taxes and fees due thereon to the state or any 12. Rentals one year
subdivision thereof; 13. Deposit
2. Claims arising from misappropriation, breach of trust,
or malfeasance by public officials committed in the Preferred credits on specific immovables as provided
performance of their duties, on the movables, money in Art. 2242 are as follows:
or securities obtained by them;
3. Claims for the unpaid price of movable sold, on said 1. Taxes due upon the land or building;
movables, so long as they are in the possession of the 2. For the unpaid price of real property sold upon the
debtor, up to the value of the same, and if the movable immovable sold;
has been resold by the debtor and the price is still 3. Claims of laborers. Masons, mechanics and other
unpaid, the lien may be enforced on the price; this workmen, as well as of architects, engineers and
right is not lost by the immobilization of the thing by contractors, engaged in the construction,
destination, provided it has not lost its form, reconstruction or repair of buildings, canals or other
substance and identity; neither is the right lost by the works, upon said buildings, canals or other works;
sale of the thing together with other property for a 4. Claims of furnishers of materials used in the
lump sum, when the price thereof can be determined construction, reconstruction, or repair of buildings,
proportionally; canals, and other works, upon said buildings, canals or
4. Credits guaranteed with a pledge so long as the things other works;
pledged are in the hands of the creditor, or those 5. Mortgage credits recorded in the Registry of Property,
guaranteed by a chattel mortgage upon the things upon the real estate mortgage;
mortgaged, up to the value thereof; 6. Expenses for the preservation or improvement of real
5. Credits for making repairs or preservation or property when the law authorizes reimbursement,
personal property on the movable thus made, upon the immovable preserved or improved;
repaired, kept or possessed; 7. Credits annotated in the Registry of Property, by
6. Claims for laborers wages, on the goods manufactured virtue of a judicial order, by attachments or
or the work done; executions, upon the property affected, and only as to
7. For expenses of salvage, upon the goods salvaged; later credits;
8. Credits between the landlord and the tenant arising 8. Claims of co-heirs for warranty in the partition of an
from the contract of tenancy on shares, on the share of immovable among them, upon the real property thus
each in the fruits or harvest; divided;
9. Credits for transportation, upon the goods carried, for 9. Claims of donors or real property for pecuniary
the price of the contract and incidental expenses, until charges or other conditions imposed upon the donee,
their delivery and for thirty days thereafter; upon the immovable donated;
10. Credits for lodging and supplies usually furnished to 10. Credits of insurers, upon the property insured, for the
travelers by hotelkeepers, on the movables belonging insurance premium for two years.
to the guest as long as such movables are in the hotel,
but not for money loaned to the guests; Summary:
11. Credits for seeds and expenses for cultivation and 1. Taxes
harvest advanced to the debtor, upon the fruits 2. Vendors lien
harvested; 3. Contractors lien
12. Credits for rent for one year, upon the personal 4. Lien of materialmen
property of the lessee existing on the immovable 5. Mortgage
leased on the fruits of the same, but not on money or 6. Expenses of preservation
instruments of credit; 7. Recorded attachments
13. Claims in favor of the depositor if the depository has 8. Warranty in partition
wrongfully sold the thing deposited, upon the price of 9. Conditional donations
the sale. 10. Premiums for 2 year insurers
NOTE: In the foregoing cases, if the movables to which the Properties exempt from execution and sale
lien or preference attaches have been wrongfully taken,
the creditor may demand them from any possessor within 1. GR: Family home constituted jointly by husband and
thirty (30) days from the unlawful seizures. wife or by unmarried head of a family (Art. 152, FC).

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
4. Compensation due to the laborers of their dependents
XPNs: For: under laws providing for indemnity for damages in
a. Non-payment of taxes; cases of labor accident or illness resulting from the
b. Debts incurred prior to the constitution of the nature of the employment;
family home; 5. Credits and advancements made to the debtor for
c. Debts secured by mortgages on the premises support of himself or herself, and family, during the
before or after such constitution; and last preceding insolvency;
d. Debts due to laborers, mechanics, architects, 6. Support during the insolvency proceedings, and for
builders, material men and others who have three months thereafter;
rendered service or furnished material for the 7. Fines and civil indemnification arising from a criminal
construction of the building offense;
8. Legal expenses, and expenses incurred in the
2. Right to receive Support as well as any money or administration of the insolvents estate for the
property obtained as such support (Art. 205, FC). common interest of the creditors, when properly
3. Tools and implements necessarily used by him in his authorized and approved by the court;
trade or employment; 9. Taxes and assessments due the national government,
4. Two horses, or two cows, or two carabaos or other other those mentioned in Articles 2241, No. 1, and
Beasts of burden, such as the debtor may select, not 2242, No. 1;
exceeding one thousand pesos in value and 10. Taxes and assessments due any province, other than
necessarily used by him in his ordinary occupation; those mentioned in Articles 2241, No. 1 and 2242, No.
5. His necessary Clothing and that of all his family. 1;
6. Household Furniture and utensils necessary for 11. Taxes and assessments due any city or municipality
housekeeping and used for that purpose by the other than those mentioned in Articles 2241, No.1 and
debtor, such as the debtor may select, of a value not 2242, No. 1;
exceeding one thousand pesos; 12. Damages for death or personal injuries caused by a
7. Provisions for individual or family use insufficient for quasi-delict;
three months; 13. Gifts due to public and private institutions of charity
8. The professional libraries of attorneys, judges, or beneficence;
physicians, pharmacists, dentist, engineers, surveyors, 14. Credits which without special privilege, appear in (a)
clergymen, teachers and other professionals, not a public instrument; or (b) in the final judgment, if
exceeding three thousand pesos in value; they have been the subject of litigation. These credits
9. One fishing Boat and net, not exceeding the total value shall have preference among themselves in the order
of one thousand pesos, the property of any fisherman, of priority of the dates of the instruments and of the
by the lawful use of which he earns a livelihood; judgments, respectively (Art. 2244 in relation to Art.
10. So much of the Earnings of the debtor for his personal 110 of the Labor Code).
services within the month preceding the levy as are
necessary for the support of his family; Summary:
11. Lettered gravestones; 1. Wages of employees
12. All Moneys, benefits, privileges or annuities accruing 2. Funeral expenses
or in any manner growing out of any life insurance, if 3. Expenses of last illness
the annual premiums paid do not exceed five hundred 4. Workmens compensation
pesos, and if they exceed the sum, a like exemption 5. Support for one year
shall exist which shall bear the same proportion to the 6. Support during insolvency
moneys, benefits privileges and annuities so accruing 7. Fines in crimes
or growing out of such insurance that said five 8. Legal expenses administration
hundred pesos bears to the whole premiums paid; 9. Taxes
13. Copyrights and other properties especially exempted 10. Tort
by law (Sec. 12, Rule 39) 11. Donations
14. Property under Legal custody and of the public 12. Appearing in public instrument or final judgment
dominion.
Effect of Article 110 of the Labor Code to the
Order of preference with respect to other properties of Preference of Credits
the debtor under Art. 2244:
Article 110 of the Labor Code does not purport to create a
1. In the event of bankruptcy or liquidation of an lien in favor of workers or employees for unpaid wages
employer's business, his workers shall enjoy first either upon all of the properties or upon any particular
preference as regards wages due them for services property owned by their employer. It is but a preference of
rendered during the period prior to the bankruptcy or credit in their favor that do not attach to specific
liquidation (as amended by the Labor Code) properties. Claims for unpaid wages do not therefore fall at
2. Proper funeral expenses for the debtor, or children all within the category of specially preferred claims
under his or her parental authority who have no established under Articles 2241 and 2242 of the Civil
property of their own, when approved by the court; Code, except to the extent that such claims for unpaid
3. Expenses during the last illness of the debtor or of his wages are already covered by Article 2241, number 6:
or her spouse and children under his or her parental claims for laborer wages, on the goods manufactured or
authority, if they have no property of their own; the work done, or by Article 2242, number 3: "claims of

CIVIL LAW
laborers and other workers engaged in construction, assessments upon the immovable property or real
reconstruction or repair of buildings, canals and other right (Art. 2249, NCC).
works, upon said buildings, canals and other works." To 5. The excess, if any, after the payment of the credits
the extent that claims for unpaid wages fall outside the which enjoy preference with respect to specific
scope of Article 2241, number 6 and Article 2242, number property, real or personal, shall be added to the free
3, they would come within the ambit of the category of property which the debtor may have, for the payment
ordinary preferred credits under Article 2244 (Republic v. of the other credits (Art. 2250, NCC).
Peralta, 150 SCRA 37). 6. Those credits which do not enjoy any preference with
respect to specific property and those which enjoy
NOTE: Article 110 of the Labor Code has modified Article preference, as to the amount not paid, shall be
2244 of the Civil Code in two respects: (a) firstly, satisfied according to the following rules:
by removing the one year limitation found in Article 2244, a. In the order established in Article 2244;
number 2; and (b) secondly, by moving up claims for b. Common credits referred to in Article 2245 shall
unpaid wages of laborers or workers of the Insolvent from enjoy no preference and shall be paid pro rata
second priority to first priority in the order of preference regardless of dated (Art. 2251, NCC).
established by Article 2244 (Republic v. Peralta, 150 SCRA
37). Rule regarding obligation arising from transactions
utilizing ATM networks
CLASSIFICATION OF CREDITS
The rule regarding obligation arising from transactions
General categories of credit utilizing ATM networks is based on Sec. 16 of E-Commerce
Act which provides for the rule regarding electronic
1. Special preferred credits those listed in Arts. 2241- transactions made through networking among banks or
2242, NCC shall be considered mortgages and pledges linkages with other entities. The obligation arising
of real and personal property or liens (Art. 2243). therefrom is considered absolute and not subjected to
Hence, they are not included in the insolvent debtors preference of credit (Sec. 16, IRR).
assets.
2. Ordinary preferred credits those listed in Art 2244, INSOLVENCY LAW
NCC as amended by Art. 110 of the Labor Code Financial Rehabilitation and Insolvency Act (FRIA)
3. Common credits those listed under Art. 2245, NCC,
which shall be paid pro rata regardless of dates. Insolvency
NOTE: Art. 2245 states that credits of any other kind or Insolvency is the state of a person whose liabilities are
class, or by any other right or title not comprised in the more than his assets. The term is frequently used in the
four preceding articles (Art. 2241-2244, NCC), shall enjoy more restricted sense to express inability of a person to
no preference; hence, they are called common credits pay his debts as they become due in the ordinary course of
which can be paid only after the preferred credits are his business.
satisfied.
Debtors under the FRIA
Extent of liability of a debtor for his obligations
The debtors under FRIA law, unless specifically excluded
The liability of a debtor for his obligations extends to all of by a provision of this Act, are as follows:
his property, present and future, for the fulfillment of his 1. A sole proprietorship duly registered with the
obligations, subject to the exemptions provided by law Department of Trade and Industry (DTI)
(Art. 2236, NCC). 2. A partnership duly registered with the Securities and
Exchange Commission (SEC)
ORDER OF PREFERENCE OF CREDIT 3. A corporation duly organized and existing under
Philippine laws, or
1. Those credits which enjoy preference with respect to 4. An individual debtor who has become insolvent as
specific movable, excluded all others to the extent of defined herein.
the value of the personal property to which the
preference refers (Art. 2246, NCC). The term debtor does not include banks, insurance
2. If there are two or more credits with respect to the companies, pre-need companies and national and local
same specific movable property, they shall be satisfied government agencies or units.
pro-rata, after the payment of duties, taxes, and fees
due the State or any subdivision thereof (Art. 2247, Classes of creditors
NCC).
3. Those credits which enjoy preference in relation to 1. Secured creditors
specific real property or real rights, exclude all others 2. Unsecured creditors
to the extent of the value of the immovable or real 3. Trade creditors and suppliers
right to which the preference refers (Art. 2248, NCC). 4. Employees of the debtor
4. If there are two or more credits with respect to the
same specific real property or real rights, they shall be
satisfied pro rata, after the payment of the taxes and

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
Tests to determine insolvency
NOTE: The effects of the Commencement Order and the
1. Equity test A state of inability of a person to pay his Stay or Suspension Order shall apply to government
debts at maturity. financial institutions.
2. Balance sheet test The assets, if all made
immediately available, would not be sufficient to Effects of suspension order
discharge the balance.
a. It suspends all actions or proceedings, in court or
Remedies of an insolvent debtor otherwise, for the enforcement of claims against the
debtor;
1. Petition the court to suspend payments of his debts; b. Suspends all actions to enforce any judgment,
or attachment or other provisional remedies against the
2. To be discharged from his debts and liabilities by debtor;
voluntary or involuntary insolvency proceedings (Sec. c. Prohibits the debtor from selling, encumbering,
1) transferring or disposing in any manner any of its
properties except in the ordinary course of business;
Effect of insolvency proceedings filed by individual and
debtors d. Prohibits the debtor from making any payment of its
liabilities outstanding as of the commencement date
1. Suits pending in court except as may be provided herein.
a. Secured obligations suspended until assignee
appointed Exceptions to the Stay or Suspension Order
b. Unsecured obligations terminated except to fix
amount of obligation It shall not apply to:
c. Foreclosure suits pending continue 1. Cases already pending appeal in the Supreme Court as
2. Suits not yet filed cannot be filed anymore but of commencement date Provided, That final and
claims may be presented to assignee. executory judgment from such appeal shall be
referred to the court for appropriate action;
NOTE: The result is different if the petitioner is a 2. Subject to the discretion of the court, to cases pending
corporation because under the Revised Rules on Corporate or filed at a specialized court or quasi-judicial agency;
Recovery, all claims whether secured or unsecured are 3. Enforcement of claims against sureties and other
stayed. persons solidarily liable with the debtor, and third
party or accommodation mortgagors as well as
Three modes of rehabilitation under FRIA law issuers of letters of credit, where the property subject
of mortgage is necessary for the rehabilitation. (In
1. Court-supervised rehabilitation other words, claims may be enforced despite issuance
2. Pre-negotiated rehabilitation of suspension order if the property is not necessary
3. Out of court or informal restructuring agreements or for rehabilitation);
rehabilitation plans 4. Any form of action of customers or clients of a
securities market participant to recover or otherwise
COURT-SUPERVISED REHABILITATION claim moneys and securities entrusted to the latter in
the ordinary course of the latter's business;
Kinds of proceedings in court-supervised 5. The actions of a licensed broker or dealer to sell
rehabilitation pledged securities of a debtor pursuant to a securities
pledge or margin agreement;
1. Voluntary The debtor, at its initiative, files a petition 6. The clearing and settlement of financial transactions
in court, and states, among others, the fact and cause through the facilities of a clearing agency; and
of its insolvency, its schedule of liabilities, and 7. Any criminal action against individual debtor or
proposed rehabilitation plan. owner, partner, director or officer of a debtor shall
2. Involuntary The petition is filed by any creditor or a not be affected by any proceeding commend under
group of creditors with a claim of at least 1 million this Act.
pesos or 25% of the debtors subscribed capital stock
or partners contribution, whichever is higher. Creditors failure to file notice of claim
Initiation of court-supervised rehabilitation A creditor whose claim is not listed in the schedule of
proceeding debts and liabilities and who fails to file a notice of claim
but subsequently files a belated claim shall not be entitled
A court-supervised rehabilitation proceeding is initiated to participate in the rehabilitation proceedings but shall be
by filing a petition for rehabilitation with the court. entitled to receive distributions arising therefrom.
If the court finds the petition to be sufficient in form and Rehabilitation receiver
substance, it shall, issue a Commencement Order, which,
among others, shall declare that the debtor is under Rehabilitation receiver shall refer to the person or
rehabilitation, appoint a rehabilitation receiver, and persons, natural or juridical, appointed as such by the
includes Stay or Suspension Order.

CIVIL LAW
court and which shall be entrusted with such powers and
duties (Sec. 4 (hh), RA 10142). NOTE: The rehabilitation receiver may be removed at any
time by the court either motu proprio or upon motion by
Qualifications of a rehabilitation receiver any creditor/s holding more than fifty percent (50%) of
the total obligations of the debtor.
1. A citizen of the Philippines or a resident of the
Philippines in the six (6) months immediately Sale or disposal of encumbered property of the debtor
preceding his nomination; and assets of third parties held by debtor
2. Of good moral character
3. Has knowledge of insolvency and other relevant The court may authorize the sale, transfer, conveyance or
commercial laws, rules and procedures, and the disposal of encumbered property of the debtor, or
relevant training; and property of others held by the debtor pertaining to third
4. Has no conflict of interest (such conflict of interest parties under a financial, credit or other similar
may be waived) transactions if (a) such sale or disposal is necessary for the
continued operation of the debtor's business; and (b) the
NOTE: If the rehabilitation receiver is a juridical entity, it debtor has made arrangements to provide a substitute lien
must designate a natural person who possesses all the or ownership right that provides an equal level of security
qualifications above. for the counter-party's claim or right.
Appointment of a rehabilitation receiver NOTE: Third parties who have in their possession or
control property of the debtor shall not transfer, conveyor
The court shall initially appoint the rehabilitation receiver, otherwise dispose of the same to persons other than the
who may or may not be from among the nominees of the debtor, unless upon prior approval of the rehabilitation
petitioner. receiver.
NOTE: If a qualified natural person or entity is nominated Procedure after preparation to approval of
by more than fifty percent (50%) of the secured creditors rehabilitation plan
and the general unsecured creditors, the court shall
appoint the creditors' nominee. 1. Consultation with Debtor and Creditors.
2. Creditor Approval of Rehabilitation Plan - The Plan is
Powers of the rehabilitation receiver deemed to have been approved by a class of creditors
if members of the said class holding more than fifty
The rehabilitation receiver shall be deemed an officer of percent (50%) of the total claims of the said class vote
the court with the principal duty of: in favor of the Plan.
Preserving and maximizing the value of the assets of 3. Submission of Rehabilitation Plan to the Court.
the debtor during the rehabilitation proceedings, 4. Filing of Objections to Rehabilitation Plan by creditor
Determining the viability of the rehabilitation of the under the following grounds:
debtor, a. The creditors' support was induced by fraud;
Preparing and recommending a Rehabilitation Plan to b. The documents or data relied upon in the
the court, and Rehabilitation Plan are materially false or
Implementing the approved Rehabilitation Plan and misleading; or
other powers provided in FRIA. c. The Rehabilitation Plan is in fact not supported
by the voting creditors.
NOTE: The rehabilitation receiver shall not take over the 5. Hearing on the Objections.
management and control of the debtor but may 6. Confirmation of the Rehabilitation Plan The court
recommend the appointment of a management committee may confirm the Rehabilitation Plan notwithstanding
over the debtor. However, the court may appoint and unresolved disputes over claims if the Rehabilitation
direct the rehabilitation receiver to assume the powers of Plan has made adequate provisions for paying such
management of the debtor, or appoint a management claims.
committee that will undertake the management of the 7. Termination of proceedings.
debtor.
Effect of confirmation of the rehabilitation plan
Grounds for removal of the rehabilitation receiver
1. It shall be binding upon the debtor and all persons
1. Incompetence, gross negligence, failure to perform or who may be affected by it, including the creditors;
failure to exercise the proper degree of care; 2. The debtor shall comply with the provisions of the
2. Lack of a particular or specialized competency Rehabilitation Plan and shall take all actions
required by the specific case; necessary to carry out the Plan;
3. Illegal acts or conduct in the performance of his duties 3. Payments shall be made to the creditors in accordance
and powers; with the provisions of the Rehabilitation Plan;
4. Lack of qualification or presence of any 4. Contracts and other arrangements between the
disqualification; debtor and its creditors shall be interpreted as
5. Conflict of interest that arises after his appointment; continuing to apply to the extent that they do not
and conflict with the provisions of the Rehabilitation Plan;
6. Manifest lack of independence.

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
5. Any compromises on amounts or rescheduling of 4. It must be approved by creditors holding at least
timing of payments by the debtor shall be binding on eighty-five percent (85%) of the total liabilities,
creditors regardless of whether or not the Plan is secured and unsecured, of the debtor.
successfully implement; and
6. Claims arising after approval of the Plan that are SUSPENSION OF PAYMENTS
otherwise not treated by the Plan are not subject to
any Suspension Order. Suspension of payments
Period for confirmation of the rehabilitation plan Suspension of payments is the postponement, by court
order, of the payment of debts of one who, while
The court shall have a maximum period of one (1) year possessing sufficient property to cover his debts, foresees
from the date of the filing of the petition to confirm a Plan, the impossibility of meeting them when they respectively
Otherwise, it may upon motion or motu propio, be fall due.
converted into one for the liquidation of the debtor.
The remedy of suspension of payments is available when
PRE-NEGOTIATED REHABILITATION the debtor who, possessing sufficient property to cover all
his debts, foresees the impossibility of meeting them when
Initiation of pre-negotiated rehabilitation they respectively fall due, may petition that he be declared
in the state of suspension of payments by the court of the
An insolvent debtor, by itself or jointly with any of its province or city in which he has resided for six months
creditors, may file a verified petition with the court for the next preceding the filing of his petition (Sec. 2 [1]).
approval of a pre-negotiated Rehabilitation Plan which has
been endorsed or approved by creditors holding at least Taking effect of suspension
two-thirds (2/3) of the total liabilities of the debtor,
including secured creditors holding more than fifty The suspension shall take effect upon the filing of the
percent (50%) of the total secured claims of the debtor petition. The suspension order shall lapse when three (3)
and unsecured creditors holding more than fifty percent months shall have passed without the proposed agreement
(50%) of the total unsecured claims of the debtor. The being accepted by the creditors or as soon as such
petition shall include as a minimum: agreement is denied (Sec. 96, FRIA).
(a) A schedule of the debtor's debts and liabilities;
(b) An inventory of the debtor's assets; Steps in suspension of payments
(c) The pre-negotiated Rehabilitation Plan, including the
names of at least three (3) qualified nominees for 1. Filing of the petition by the debtor (Sec. 94);
rehabilitation receiver; and 2. Issuance by the court of an order calling a meeting of
(d) A summary of disputed claims against the debtor and creditors (Sec.95);
a report on the provisioning of funds to account for 3. Publication of the order and service of summons;
appropriate payments should any such claims be 4. Meetings of creditors for the consideration of the
ruled valid or their amounts adjusted. debtors proposition (Sec. 97);
5. Approval by the creditors of the debtors proposition
Period of approval of rehabilitation plan (Sec. 8, [20]);
6. The Double Majority Rule applies. To obtain a
The court shall have a maximum period of one hundred majority vote, it is necessary that:
twenty (120) days from the date of the filing of the petition a. At least 2/3 of the creditors must vote on the
to approve the Rehabilitation Plan. If the court fails to act same proposition, and
within the said period, the Rehabilitation Plan shall be b. Said 2/3 represent at least 3/5 of the total
deemed approved. liabilities of the debtor.
7. Objections, if any, to the decision must be made within
The effect of approval of a Plan shall have the same legal 10 days following the meeting (Sec. 100);
effect as confirmation of a Plan. 8. Issuance of order by the court directing that the
agreement be carried out in case the decision is
OUT OF COURT OR INFORMAL RESTRUCTURING declared valid, or when no objection to said decision
AGREEMENTS OR REHABILITATION PLANS has been presented (Sec. 101)
Minimum requirements of out-of-court or informal Documents that should accompany the petition
restructuring agreements and rehabilitation plans
1. A verified schedule containing a full and true
1. The debtor must agree to the out-of-court or informal statement of the debts and liabilities of the petitioner
restructuring/workout agreement or Rehabilitation together with a list of creditors (Secs. 15, 2);
Plan; 2. A verified inventory containing a list of creditors, an
2. It must be approved by creditors representing at least accurate description of all the property of the
sixty-seven (67%) of the secured obligations of the petitioner including property exempt from execution
debtor; and a statement as to the value of each item of
3. It must be approved by creditors representing at least property, its location, and encumbrances thereon, if
seventy-five percent (75%) of the unsecured any (Secs. 16, 2);
obligations of the debtor; and

CIVIL LAW
3. A statement of his assets and liabilities (Sec. 2); and When the petition for suspension of payments is
(not in FRIA) deemed rejected
4. The proposed agreements he requests of his creditors
(Ibid.) A petition for suspension of payments shall be deemed
rejected when the number of creditors representing at
Effects of filing of the petition least 3/5 of the liabilities not attend (Secs. 8, 10); or when
the two majorities required are not in favor of the
1. No disposition in any manner of his property may be proposed agreement (Sec. 10).
made by the petitioner except insofar as concerns the
ordinary operations of commerce or of industry in Effect of disapproval of the petition
which he is engaged [(Sec. 95 (e)];
2. No payments may be made by the petitioner except in If the decision of the meeting be negative as regards the
the ordinary course of his business or industry [(Sec. proposed agreement or if no decision is had in default of
95 (f)]; and such number or of such majorities, the proceeding shall
3. Upon motion, the court may issue an order be terminated without recourse. In such case, the
suspending any pending execution against the parties concerned shall be at liberty to enforce the rights
individual debtor. Provide, That properties held as which correspond to them (Sec. 99).
security by secured creditors shall not be the subject
of such suspension order (Sec. 96). LIQUIDATION
NOTE: No creditor shall sue or institute proceedings to Steps in Liquidation of INSOLVENT JURIDICAL
collect his claim from the debtor from the time of the filing DEBTORS
of the petition for suspension of payments and for as long
as proceedings remain pending except: A. Voluntary Liquidation
1. Those creditors having claims for personal labor,
maintenance, expense of last illness and funeral of the 1. Filing of verified petition for liquidation with the
wife or children of the debtor incurred in the sixty court containing the following:
(60) days immediately prior to the filing of the a. A schedule of the debtor's debts and liabilities
petition; and including a list of creditors with their addresses,
2. Secured creditors. amounts of claims and collaterals, or securities, if
any;
Creditors affected by filing of the petition b. An inventory of all its assets including
receivables and claims against third parties; and
Only creditors included in the schedules filed by the debtor c. The names of at least three (3) nominees to the
shall be cited to appear and to take part in the meeting position of liquidator.
(Sec. 5). Hence, those who did not appear because they 2. If the court finds the petition sufficient in form and
were not informed of the proceedings are unaffected by substance it shall, within five (5) working days issue
filing of the petition. the Liquidation Order.
3. Publication of the petition or motion in a newspaper
Creditors not affected by order of suspension of of general circulation once a week for two (2)
payments consecutive weeks.
4. Election/Appointment of Liquidator
1. Those having claims for personal labor, maintenance, 5. Determination of claims.
expenses of the last illness and funeral of wife or child 6. Submit Liquidation Plan.
of debtor, incurred during the 60 days immediately 7. Implementation of the Plan (e.g. Selling of assets at
preceding the filing of the petition; and public auction, payment of claims)
2. Those having legal or contractual mortgages. (Sec. 9) 8. Discharge of Liquidator.
change to: secured creditors who failed to attend the
meeting or refrained from voting therein. B. Involuntary Liquidation
Q: Who may refrain from voting during the creditors 1. Three (3) or more creditors the aggregate of whose
meeting? claims is at least either One million pesos
(Php1,000,000,00) or at least twenty-five percent
A: Persons who may refrain from voting during the (25%0 of the subscribed capital stock or partner's
creditors meeting are creditors who are unaffected by the contributions of the debtor, whichever is higher, may
Suspension Order may refrain from attending the meeting apply for and seek the liquidation of an insolvent
and from voting therein. Such persons shall not be bound debtor by filing a petition for liquidation of the debtor
by any agreement determined upon at such meeting, but if with the court. The petition shall show that:
they should join in the voting they shall be bound in the a. There is no genuine issue of fact or law on the
same manner as are the other creditors (Sec. 98). claims/s of the petitioner/s, and that the due and
demandable payments thereon have not been
made for at least one hundred eighty (180) days
or that the debtor has failed generally to meet its
liabilities as they fall due; and

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
b. There is no substantial likelihood that the debtor
may be rehabilitated. Documents to accompany the petition
2. If the petition or motion is sufficient in form and 1. A verified schedule must contain:
substance, the court shall issue an Order: 2. A full and true statement of all debts and liabilities of
a. Directing the publication of the petition or the insolvent debtor; and
motion in a newspaper of general circulation 3. An outline of the facts giving rise or which might give
once a week for two (2) consecutive weeks; and rise to a cause of action against such insolvent debtor
b. Directing the debtor and all creditors who are not (Sec. 15);
the petitioners to file their comment on the
petition or motion within fifteen (15) days from Contents of a verified inventory
the date of last publication.
1. An accurate description of all the personal and real
3. If, after considering the comments filed, the court property of the insolvent exempt or not from
determines that the petition or motion is meritorious, execution including a statement as to its value,
it shall issue the Liquidation Order location and encumbrances thereon; and
4. Publication of the petition or motion in a newspaper 2. An outline of the facts giving rise or which might give
of general circulation once a week for two (2) rise to a right of action in favor of the insolvent debtor
consecutive weeks. (Sec. 16).
5. Election/Appointment of Liquidator
6. Determination of claims. Effect of filing of the petition
7. Submit Liquidation Plan.
8. Implementation of the Plan (e.g. Selling of assets at The effect of filing petition is that the petition ipso facto
public auction, payment of claims) takes away and deprives the debtor petitioner of the right
9. Discharge of Liquidator. to do or commit any act of preference as to creditors,
pending the final adjudication (Philippine Trust Co. v.
NOTE: During the pendency of or after a rehabilitation National Bank, 42 Phil 413).
court-supervised or pre-negotiated rehabilitation
proceedings, three (3) or more creditors whose claims is at INVOLUNTARY INSOLVENCY
least either One million pesos (Php1,000,000.00) or at
least twenty-five percent (25%) of the subscribed capital Persons who may file for involuntary liquidation
or partner's contributions of the debtor, whichever is
higher, may also initiate liquidation proceedings. Any creditor or group of creditors with a claim of, or with
claims aggregating at least Php500, 000.00 may file a
INSOLVENCY OF INDIVIDUAL DEBTORS verified petition for liquidation with the court of the
province or city in which the individual debtor resides.
VOLUNTARY INSOLVENCY
NOTE: A surety for the debtor is not a creditor, he cannot
Persons who may apply for voluntary liquidation and institute involuntary proceedings. All he can do is to prove
ways to apply it his claim.
An individual debtor whose properties are not sufficient to Acts of insolvency

cover his liabilities, and owing debts exceeding
Php500,000.00, may apply to be discharged from his debts 1. Such person is about to depart or has departed from
and liabilities by filing a verified petition with the court of the Philippines, with intent to defraud his creditors;
the province or city in which he has resided for six (6) 2. Being absent from the Philippines, with intent to
months prior to the filing of such petition with the defraud his creditors, he remains absent;
following attachments: 3. He conceals himself to avoid the service of legal
1. A schedule of debts and liabilities and process for purpose of hindering or delaying or
2. Inventory of assets. defrauding his creditors;
4. He conceals, or is removing, any of his property to
Procedure for voluntary insolvency avoid its being attached or taken on legal process;
5. He has suffered his property to remain under
1. Filing of the petition by the debtor praying for the attachment or legal process for 3 days for the purpose
declaration of insolvency (Sec. 103); of hindering or delaying or defrauding his creditors;
2. Issuance Liquidation order (Sec. 104); 6. He has confessed or offered to allow judgment in
3. Publication of petition or motion in a newspaper of favor of any creditor or claimant for the purpose of
general circulation once a week for two consecutive hindering or delaying or defrauding any creditor or
weeks [Sec. 112 (d)]; claimant;
4. Election and appointment of Liquidator [Sec. 112 (j)]; 7. He has willfully suffered judgment to be taken against
5. Liquidation of the debtors assets and payment of his him by default for the purpose of hindering or
debts (Sec. 119); delaying or defrauding his creditors;
6. Composition, if agreed upon (Sec. 63); 8. He has suffered or procured his property to be taken
7. Discharge of Liquidator (Sec 122) on legal process with intent to give a preference to
8. Appeal

CIVIL LAW
one or more of his creditors and thereby hinder, resided 6 months prior to residence or has his
delay, or defraud any one of his creditors; the filing of petition. principal place of
9. He has made any assignment, gift, sale, conveyance, or business.
transfer of his estate, property, rights, or credits with No need for the Debtor must have
intent to delay, defraud, or hinder his creditors; commission of any of the committed any of the acts
10. He has, in contemplation of insolvency, made any acts of insolvency. of insolvency.
payment, gift, grant, sale, conveyance, or transfer of Amount of debts must Amount of debts must not
his estate, property, rights, or credits; exceed P500,000.00. be less than P500,000.00.
11. Being a merchant or tradesman he has generally Debtor deemed insolvent Debtor is considered
defaulted in the payment of his current obligations for through an order of insolvent upon the
a period of 30 days; adjudication after filing of issuance by the court of an
12. For a period of 30 days he has failed after demand, to the petition; adjudication order after due hearing
pay any moneys deposited with him or received by may be granted ex parte. declaring him insolvent;
him in a fiduciary capacity; and adjudication granted only
13. An execution having been issued against him on final after hearing.
judgment for money, he shall have been found to be Bond is not required. Bond is required.
without sufficient property subject to execution to
satisfy the judgment (Sec. 105). Assignee in insolvency
Procedure in involuntary insolvency An assignee in insolvency is a person elected by the

creditors or appointed by the court to whom an insolvent
1. Filing of petition by creditor or group of creditors and debtor makes an assignment of all his property for the
posting of bond (Sec. 105); benefit of his creditors.
2. Issuance of order requiring the debtor to show cause
why he should not be adjudged insolvent (Sec. 106); NOTE: The assignee must be a person elected by the
3. Service of order to show cause; majority of the creditors who have proven their claims,
4. Filing of answer or motion to dismiss; such majority being in number and amount.
5. Hearing of the case (Sec. 107);
6. Issuance of Liquidation order Creditors not entitled to vote in the election of
7. Publication of petition or motion in a newspaper of assignee
general circulation once a week for two consecutive
weeks [Sec. 112 (d)]; 1. Those who did not file their claims at least 2 days
8. Election and appointment of Liquidator [Sec. 112 (j)]; prior to the time appointed for such election;
9. Liquidation of the debtors assets and payment of his 2. Those whose claims are barred by the statute of
debts (Sec. 119); limitations;
10. Discharge of Liquidator (Sec 122) 3. Secured creditors unless they surrender their security
11. Appeal or lien to the sheriff or receiver or unless they shall
first have the value of such security; and
NOTE: Assets of the insolvent which are not exempt from 4. Holders of claims for unliquidated damages arising
execution will then be distributed among his creditors in out of pure tort.
accordance with the rules of concurrence and preference
of credits in the Civil Code. Bond requirement of the assignee
Voluntary Insolvency v. Involuntary Insolvency The assignee is required to give a bond for the faithful
performance of his duties after his election
VOLUNTARY INVOLUNTARY
INSOLVENCY INSOLVENCY NOTE: Courts have the power to appoint receivers to hold
Filed by the debtor. Filed by any creditor or the property of individuals or corporations although no
group of creditors. insolvency proceedings are involved. A receiver appointed
Only 1 creditor is 3 or more creditors are by a court before the institution of the insolvency
required. required. proceedings may be appointed the permanent assignee in
No requirement for Requirements for such proceedings.
creditors. creditors:
Effects of liquidation order
1. Residents of the
Philippines; (a) The juridical debtor shall be deemed dissolved and its
2. Their credits or corporate or juridical existence terminated;
demands must have (b) Legal title to and control of all the assets of the debtor,
accrued in the except those that may be exempt from execution, shall
Philippines; and be deemed vested in the liquidator or, pending his
3. Must not have been a election or appointment, with the court;
creditor by assignment (c) All contracts of the debtor shall be deemed
within 30 days prior to terminated and/or breached, unless the liquidator,
the filing of the petition. within ninety (90) days from the date of his
Venue: where he has Where the debtor has

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
assumption of office, declares otherwise and the Properties included in the insolvency proceedings
contracting party agrees;
(d) No separate action for the collection of an unsecured 1. All the property of the partnership; and
claim shall be allowed. Such actions already pending 2. All the separate of each of the partners except:
will be transferred to the Liquidator for him to accept a. Separate properties of limited partners (Art.
and settle or contest. If the liquidator contests or 1843, NCC)
disputes the claim, the court shall allow, hear and b. Properties which are exempt by law
resolve such contest except when the case is already
on appeal. In such a case, the suit may proceed to Effect of insolvency of partnership or any partner
judgment, and any final and executor judgment
therein for a claim against the debtor shall be filed 1. A partnership may be declared insolvent
and allowed in court; and notwithstanding the solvency of the partners
(e) No foreclosure proceeding shall be allowed for a constituting the same.
period of one hundred eighty (180) days. 2. A partnership is not necessarily insolvent because one
of its members is insolvent. The solvent members are
Rights of secured creditors bound to wind up the partnership affairs.
3. Under the law, a partnership is automatically
The Liquidation Order shall not affect the right of a dissolved by the insolvency of any partner or of the
secured creditor to enforce his lien in accordance with the partnership.
applicable contract or law. A secured creditor may:
(a) Waive his right under the security or lien, prove his Q: In filing claims in an insolvency proceeding, what
claim in the liquidation proceedings and share in the debts may and may not be proved?
distribution of the assets of the debtor; or
(b) Maintain his rights under the security or lien: A:
DEBTS THAT MAY BE DEBTS THAT MAY NOT
If the secured creditor maintains his rights under the PROVED BE PROVED
security or lien: The debts which may be The following debts are
(1) The value of the property may be fixed in a manner proved against the estate not provable or allowed
agreed upon by the creditor and the liquidator. When of the debtor in in insolvency
the value of the property is less than the claim it insolvency proceedings proceedings:
secures, the liquidator may convey the property to the are the following:
secured creditor and the latter will be admitted in the 1. Claims barred by the
liquidation proceedings as a creditor for the balance. 1. All debts due and statute of limitations
If its value exceeds the claim secured, the liquidator payable from the (Sec. 29, 73);
may convey the property to the creditor and waive debtor at the time of 2. Claims of secured
the debtor's right of redemption upon receiving the adjudication of creditors with a
excess from the creditor; insolvency (Sec. 53, mortgage or pledge in
(2) The liquidator may sell the property and satisfy the Insolvency Law); their favor unless they
secured creditor's entire claim from the proceeds of 2. All debts existing at the surrender the security
the sale; or time of the (Sec. 59);
(3) The secure creditor may enforce the lien or foreclose adjudication of 3. Claims of creditors
on the property pursuant to applicable laws. insolvency but not who hold an
payable until a future attachment or
Declaration of insolvency of a partnership time, a discount being execution on the
made if no interest is property of the debtor
A partnership may be declared insolvent by a petition of payable by the terms of duly recorded and not
the partners and may be done during the continuation of the contract; dissolved (Sec. 32);
the partnership business or after its dissolution and before 3. Any debt of the 4. Claims on account of
the final settlement thereof. insolvent arising from which a fraudulent
his liability as indorser, preference was made
A partnership may be declared insolvent notwithstanding surety, bail or or given (Sec. 61);
the solvency of the partners constituting the same (Campos guarantor, where such 5. Support, as it does not
Rueda & Co. v. Pacific Commercial Co., G.R. No. L-18703 Aug. liability became arise from any
28, 1922). absolute after the business transaction
adjudication of but from the relation of
Persons who may petition for declaration of insolvency but before marriage; and
insolvency of a partnership the final dividend shall 6. A claim for
have been declare (Sec. unliquidated damages
1. Voluntary insolvency By all the partners or any of 54); arising out of a pure
them; 4. Other contingent debts tort, which neither
2. Involuntary insolvency By one or more of the and contingent constitutes a breach of
partners or three or more creditors of the liabilities contracted by an express contract
partnership. the insolvent if the nor results in any
contingency shall unjust enrichment of
happen before the the tortfeasor that may

CIVIL LAW
order of final dividend form the basis of an insolvency, but not later than 1 year from such
(Sec. 55); and implied contract. adjudication of insolvency, unless the property of the
5. Any debt of the insolvent has not been converted into money (Sec. 64)
insolvent arising from without his fault, thereby delaying the distribution of
his liability to any dividends among the creditors in which case the court may
person liable as bail, extend the period.
surety, or guarantor or
otherwise, for the Any creditor may oppose the discharge by filing his
insolvent, ho shall have objections thereto, specifying the grounds of his
paid the debt in full, or opposition. After the debtor has filed and served his
in part (Sec. 56). verified answer, the court shall try the issue or issues
raised (Sec. 66).
Contingent claim
Requisites for discharge
Contingent claim is a claim in which liability depends on
some future event that may or may not happen and which 1. Compliance with statutory requirements regarding
makes it uncertain whether there will be any liability. surrender of his assets for the benefit of the creditors
and regarding the rendition of an account of his assets
NOTE: After the close of the insolvency proceedings and and liabilities;
the happening of the contingency, the creditor may pursue
any available remedy for the collection of his claim. NOTE: A discharge in insolvency is a matter of
legislative grace or favour to the debtor, to be
Q: How are claims arising or acquired after insolvency obtained only by a strict compliance with the
treated? conditions prescribed by the statute.
A: Claims arising or acquired after insolvency is treated: 2. Application for discharge should be filed after the
expiration of 3 months from the adjudication of
1. A claim which arose after commencement of insolvency, but not later than 1 year (Sec. 64); and
proceedings An obligation coming in force after the 3. Insolvent debtor must not have committed any of the
initiation of the proceedings is not generally a proper acts of insolvency preventing discharge.
claim to be proved.
2. Claim owned by insolvent purchased after insolvency Acts of debtor or grounds which will prevent discharge
One indebted to an insolvent will not be permitted to
interpose as an offset, a claim owned by the insolvent No discharge shall be granted, or if granted, shall be valid,
which he has purchased after the insolvency. to the following cases:
1. False swearing;
Alternative rights of a secured creditor 2. Concealment of any part of his estate or effects;
3. Fraud or willful neglect in the care of his property or
1. To maintain his rights under his security or lien and in the delivery thereof to the assignee;
ignore the insolvency proceedings, in which case, it is 4. Procuring his properties to be attached or seized on
the duty of the assignee to surrender to him the execution within 1 month before the commencement
property encumbered; of insolvency proceedings;
2. To waive his right under the security or lien and 5. Destruction, mutilation, alteration or falsification of
thereby share in the distribution of the assets of the his books, documents, and papers;
debtor; or 6. Giving fraudulent preference to a creditor;
3. To have the value of the encumbered property 7. Non-disclosure of the assignee of a proven false or
appraised and then share in the distribution of the fictitious debt within 1 month after acquiring
assets of the debtor with respect to the balance of his knowledge;
credit. 8. Being a merchant, failure to keep proper books or
accounts;
Discharge 9. Influencing the action of any creditor, at any state of
the proceedings, by pecuniary consideration;
Discharge, under the Insolvency Law, is the formal and 10. Effecting any transfer, conveyance or mortgage in
judicial release of an insolvent debtor from his debts with contemplation of insolvency;
the exception of those expressly reserved by law. 11. Conviction of any misdemeanor under the Insolvency
Law:
NOTE: Only natural persons may ask for discharge; 12. In case of voluntary insolvency, he has received the
corporations cannot ask for discharge. (Sec. 52) When benefit of insolvency within 6 years next preceding
granted, takes effect not from its date, but from the his application for discharge; and
commencement of the proceedings in insolvency. 13. If insolvency proceeding in which he could have
applied are pending by or against him in the RTC of
Application for discharge any other province or city (Sec. 65).
A debtor may apply to the RTC for a discharge at any time

after the expiration of 3 months from the adjudication of

2 0 15 G O L D E N N O T E S
CREDIT TRANSACTIONS
Effects of discharge 2. Who has discovered facts constituting the fraud
subsequent to the discharge and fraudulent transfer;
1. It releases the debtor from all claims, debts, liabilities and provided,
and demand set forth in the schedule or which were 3. The petition is filed within 1 year after the date of the
or might have been proved against his estate in discharge (Sec. 69).
insolvency (Sec. 69). Hence, non-provable debts are
not affected whether or not they were properly
scheduled;
2. It operates as a discharge of the insolvent and future
acquisitions, but pemits mortgagees and other lien
creditors to have their satisfaction out of the
mortgage or subject of the lien;
3. It is a special defense which may be pledged and be a
complete bar to all suits brought on any such debts,
claims, liabilities or demands (Ibid.).
4. It does not operate to release any person liable for the
same debt, for or with the debtor, either as partner,
joint contractor, indorser, surety or otherwise; (Sec.
68)
5. The certificate of discharge is prima facie evidence of
the fact of release, and the regularity of such
discharge.
NOTE: Where a debtor is judicially declared insolvent,

the remedy of the guarantor or surety would be to file
a contingent claim in the insolvency proceeding, if his
rights as such guarantor or sureties are not to be
barred by the subsequent discharge of the insolvent
debtor from all his liabilities.
Debts and obligations not affected by discharge of

insolvent
1. Taxes or assessments due the Government, whether

national or local;
2. Any debt created by the fraud or embezzlement of the
debtor;
3. Any debt created by the defalcation of the debtor as a
public officer or while acting in a fiduciary capacity;
4. Debt of any person liable for the same debt, for or
with the insolvent debtor, either as partner, joint
contractor, indorser, surety or otherwise (Sec. 68);
5. Debts of a corporation (Sec. 52);
6. Claim for support;
7. Discharged debt but revived by a subsequent new
promise to pay;
8. Debts which have not been duly scheduled in time for
proof and allowance, unless the creditors had notice
or actual knowledge of the insolvency proceedings,
are not discharged as to such creditors;
9. Claims for unliquidated damages arising out of a pure
tort;
10. Claims of secured creditors (Sec. 59);
11. Claims not in existence or not mature at the time of
the discharge;
12. Claims that are contingent at the time of discharge.
Revocation of discharge
A discharge may be revoked by the court which granted it

on petition of any creditor:
1. Whose debt was proved or provable against the estate
in insolvency on the ground that the discharge was
fraudulently obtained;

CIVIL LAW
LEASE Contract of lease v. Contract of sale
Contract of Lease BASIS LEASE SALE

Only the use or
As to transfer Ownership is
A contract by which one of the parties agrees to give the enjoyment is
of ownership transferred
other for a fixed time and price the use or profit of a thing transferred
or of his service to another who undertakes to pay some As to status of Transfer is Transfer is
rent, compensation or price. transfer temporary permanent
As to Seller must be
Lessor need not
A contract of lease is a consensual, bilateral, onerous and ownership of the owner at the
to be the owner
commutative contract by which one person binds himself the thing time of delivery
to grant temporarily, the use of a thing or the rendering of The price of the
some service to another who undertakes to pay some rent, object
compensation, or price(4 Sanchez Roman 736). Usually, the
(distinguished
As to price selling price is
from the rent) is
Characteristics of a Contract of Lease mentioned
usually not
mentioned
1. Consensual
2. Bilateral NOTE: Contract of lease becomes a contract of salewhen a
3. Commutative lease of personal property with option to buy is entered
4. Principal into, and the title is transferred at the end of the contract
5. Nominate provided rents have been fully paid.
6. Onerous
7. Subject matter must be within the commerce of man Contract of lease v. Usufruct
8. Purpose is to allow enjoyment or use of a thing
9. Purpose to which the thing will be devoted should not BASIS LEASE USUFRUCT
be immoral Ownership on Ownership of the
10. Period is temporary As to ownership of the part of the thing on the part
11. Period may be definite or indefinite the thing lessor is not of the grantor is
12. Lessor need not be the owner necessary necessary
GR: Personal
Kinds of lease As to nature of
right Real right
right
XPN: Real right
1. Lease of things (immovable/movable) One of the Includes all
parties binds himself to give to another the enjoyment Limited to the
possible uses
or use of a thing for a price certain. As to extent of use use specified in
and enjoyment
the contract
of the thing
Period: definite or indefinite but not more than 99 As to the owners Lessor places
years (Art. 1634, NCC). obligation to and maintains Owner allows
respect the the lessee in the the usufructuary
NOTE: It may be made orally but if the lease of real possession of the peaceful to use and enjoy
property is for more than one year, it must be in lessee and enjoyment of the property
writing. (Statute of Frauds) usufruct the thing
May be for an
2. Lease of work (contract for a piece of work) One of As to duration Definite period
indefinite period
the parties binds himself to produce a result out of his
Created by Created by law,
work or labor for a certain price. As to mode of
contract as a contract, last will
creation
general rule or prescription
NOTE: Duties of a contractor who furnishes work and
Lessee has no Usufructuary has
materials: As to duty to make
duty to make duty to make
a. To deliver repairs
repairs repairs
b. To transfer ownership
Lessee has no Usufructuary has
c. To warrant eviction and hidden defects As to duty to pay
duty to pay a duty to pay
taxes
3. Lease of service One party binds himself to render to taxes taxes
the other some service for a price certain. As to the Lessee cannot
Usufructuary
constitution of a constitute a
may constitute a
sublease or sub- usufruct of the
sublease
usufructuary property leased
Persons disqualified to become lessee
Persons disqualified to buy referred to in Arts. 1490 and

1491, are also disqualified to become lessees of the things
mentioned therein (Art. 1646, NCC).

2 0 15 G O L D E N N O T E S
LEASE
NOTE: Foreigners are disqualified to lease lands in the A: It depends.

Philippines except for residential purposes(Smith, Bell and 1. If the lease will be for one year or less, no other
Co. vs. Register of Deeds, 96 Phil 53). authority is required.
2. If the lease on the real property will be for more than
Form required in a contract of lease of things a year, then a special power of attorney (aside from
the public instrument transferring administration) is
Lease may be made orally, but if the lease of real property required (Art.1878, NCC).
is for more than a year, it must be in writing. 3. Furthermore, whether it be a) or b), if the lease is to
be recorded, there must be a special power of
Where the written contract of lease called for the erection attorney (Art. 1647, NCC).
by the tenant, of a building of strong wooden materials, but
what he actually did construct on the leased premises was NOTE: If it is the wife who is administering her
semi-concrete edifice at a much higher cost, in accordance paraphernal real property, the husband has no authority
with a subsequent oral agreement with the lessor, oral whatsoever, to lease, in any way, or administer the
evidence is admissible to prove the verbal modification of property.
the original terms of the lease (Paterno v. Jao Yan, GR. No.
L-12218, February 28, 1961). Q: If a father, who is administering the real estate of
his minor son, wants to record the lease, should he ask
Purpose of recording a lease for judicial permission?
A lease does not have to be recorded in the Registry of A:A father who is administering the real estate of his
Property to be binding between the parties; registration is minor son should ask for judicial permission if he wants to
useful only for the purpose of notifying strangers to the record the lease (Art. 1647, NCC). But even if no judicial
transaction (Art. 1648, NCC). authorization is asked, such defect cannot be invoked by a
lessee who has dealt with him (Summers v. Mahinay, [CA]
However, if a purchaser has actual knowledge of the 40 O.G. [11th S] No. 18, p.40). Only the son or his own heirs
existence of the lease, which knowledge is equivalent to may question the validity of the transaction.
registration, he is bound by the lease (Quimson vs. Suarez,
45 Phil. 901, dissenting opinion of J. John). DURATION OF LEASE
Proper Authority Duration of lease
Proper authority means a power of attorney to constitute 1. With determinate or fixed period Lease will be for the
the lease. said period and it ends on the day fixed without need
of a demand.
Q: When is proper authority required? 2. No fixed period
a. For rural lands (Art. 1682, NCC) It shall be all
A: time necessary for the gathering of fruits which
1. Husband with respect to the paraphernal real estate the whole estate may yield in 1 year, or which it
of the wife may yield once.
b. For urban lands
NOTE: The husband is not the administrator of the 3. If rent is paid daily, lease is from the day to day.
paraphernal real property unless such administration 4. If rent is paid weekly, lease is from week to week.
has been transferred to him by virtue of a public 5. If rent paid monthly, lease is from month to month.
document, which shall be recorded in the registry of 6. If rent is paid yearly, lease is from year to year.
property of the place the property is located (Art. 110,
FC). Entitlement of the lessee for the reduction of rent
2. Father or Guardian with respect to the property of GR: The lease is entitled for a reduction of rent in case of
the minor or the ward the loss of more than one-half of the fruits through
3. Manager with respect to the property under extraordinary and unforeseen fortuitous events.
administration
XPN: Stipulation to the contrary.
A Manager is an administrator of:
NOTE: It is applicable only to lease of rural lands.
1. Administrator of a conjugal property
2. Administrator of a co-ownership Rules on extension of lease period
3. Administrator of state patrimonial property
1. A lease contract for definite terms allows lessee to
Q: A husband was properly given by his wife the duly notify lessor of his desire to so extend the term,
authority to administer herparaphernal real property. unless the contrary is stipulated.
Does this necessarily mean that just because the 2. May be extended as stipulation lessee can extend
husband is now the administrator, he can lease said without lessors consent but lessee must notify lessor.
property without any further authority?

CIVIL LAW
3. May be extended for 6 years agreed upon by both 2. There is no definite fixed period in the original lease
parties as stipulation this must be interpreted in contract as in the case of successive renewals.
favor of the lessee. Hence, ordinarily the lessee, at the
end of the original period, may either: Effectsof an implied new lease
a. Leave the premises
b. Remain in possession 1. The period of the new lease is not that stated in the
4. In co-ownership, assent of co-owner is needed, original contract; but in the legal periods established
otherwise, it is void or ineffective as against non- by law in Art. 1682 of NCC, if the lease is rural lease,
consenting co-owners. or Art. 1687 of NCC, if the lease is urban lease.
5. Where according to the terms of the contract, the
lease can be extended only by the written consent of NOTE:
the parties thereto, no right of extension can rise
without such written consent. Art. 1682. The lease of a piece of rural land, when its
6. If the option is given to the lessor, the lessee cannot duration has not been fixed, is understood to have
renew the lease against the formers refusal been for all the time necessary for the gathering of the
7. The lessor may impose additional conditions after the fruits which the whole estate leased may yield in one
expiration of the original period year, or which it may yield once, although two or
8. Par. 2, Art. 1687, NCC provides that in the event that more years have to elapse for the purpose.
the lessee has occupied the leased premises for over a
year, courts may fix a longer term of lease Art. 1687. If the period for the lease has not been
fixed, it is understood to be from year to year, if the
NOTE: The power of the courts to establish a grace period rent agreed upon is annual; from month to month, if it
is potestative or discretionary, depending on the particular is monthly; from week to week, if the rent is weekly;
circumstances of the case. and from day to day, if the rent is to be paid daily.
Perpetual Lease 2. Accessory obligations contracted by a third person

are extinguished (Art. 1672, NCC).
A lease contract providing that the lessee can stay in the 3. Other terms of the original contract are revived.
premises for as long as he wants and for as long as he can
pay the rentals and its increase. NOTE: The terms that are revived are only those
which are germane to the enjoyment of possession,
An agreement that the duration of lease shall subsist for an but not those with respect to special agreements
indefinite period, provided that the payment of rentals is which are by nature foreign to the right of occupancy
up-to-datetakes the form of a perpetual lease which is not or enjoyment inherent in a contract of lease.
valid.It is a purely potestative condition because it leaves
the effectivity and enjoyment of leasehold rights to the sole LEASE OF THINGS
and exclusive will of the lessee.
Q: Is lease of real property a real right?
Tacita Reconducion (Implied New Lease)
A:
A lease that arises if at the end of the contract the lessee
should continue enjoying the thing leased for 15 days with GR: Lease of a real property is a personal right
the acquiescence of the lessor, unless a notice to the
contrary had previously been given by the either party. XPNs: It is a real right:
1. If it is for more than one year and to be enforceable
Requisites for Tacita Reconducion must be writing
2. If it is registered with Registry of Property -
1. The term of the original contract has expired regardless of its period
2. The lessor has not given the lessee a notice to vacate
3. The lessee continued enjoying the thing leased for at Effects if the lease of real property is not registered
least 15 days with the acquiescence of the lessor
1. It is not binding on third persons.
NOTE: This acquiescence may be inferred from the 2. Such third person is allowed to terminate the lease in
failure of the lessor to serve notice to vacate upon the case he buys the property from the owner-lessor.
lessee. This principle is provided for under Article 3. Actual knowledge of existence and duration of lease is
1670 of the Civil Code. Thus, after the expiration of equivalent to registration.
the contract of lease, the implied new lease should 4. A stranger who knows of the existence of the lease,
have only been in a monthly basis (Zosima Inc. v. but was led to believe that the lease would expire
Salimbagat, G.R. No. 174376. September 12, 2012). soon or before the new lease in favor of him begins,
the stranger can still be considered innocent.
There is no implied new lease when
Subject matter of a lease of things
1. Before or after the expiration of the term, there is a
notice to vacate given by either party. Things within the commerce of man.

2 0 15 G O L D E N N O T E S
LEASE
NOTE: Lease of properties belonging to the public domain Right of a purchaser of a leased property
is void.
GR: Purchaser of thing leased can terminate the lease.
Principal obligation of a lessor
XPNs:
To deliver the thing leased to the lessee. 1. Lease is recorded in Registry of Property
2. There is a stipulation in the contract of sale that the
Remedies in case of breach of contract of lease purchaser shall respect the lease
3. Purchaser knows the existence of the lease
1. Action for Specific Performance 4. Sale is fictitious
2. Damages 5. Sale is made with a right of repurchase.
Properties that may be leased SUBLEASE
1. By Filipinos public domain with an area of 500 Sublease

hectares and may acquire not more than 12 hectares.
2. By corporations If at least 60% Filipinos-owned It is an agreement between a sublessor and sublessee
public domain for a period of 25 years, renewable for whereby the former grants temporarily the enjoyment or
another 25 years; the area not to exceed more than use of the same thing, service or work subject of the
1,000 hectares. original contract of lease to the latter in exchange for
compensation or price, respecting the terms and
Rules on lease of things when lessee is an alien conditions of original contract of lease between the lessor
and lessee.
1. Personal property 99 year limit applies.
2. Aliens cannot lease public lands, and cannot acquire Lessee cannot assign the lease without consent of lessor
private lands except through succession unless there is a stipulation to the contrary (Art. 1649,
3. If lease of real property (private lands), maximum of NCC).
25 years renewable for another 25 years (P.D. 713)
4. Under the Investors Lease Act of 1995, the 25 year Juridical relationships in a sublease arrangement
period was extended to 50 years provided the
following conditions are met: 1. Principal lease
a. Lessee must make investments 2. Sublease
b. Lease is approved by DTI
c. If terms are violated, DTI can terminate it These relationships co-exist and are intimately related to
each other but are distinct from one another(Albano, p.
NOTE: The ILA did not do away with P.D. 713, under 748).
ILA the consent of DTI is required, while in P.D. 713
no consent is required. Nature of Sublease
Rent It is a separate and distinct contract of lease wherein the

original lessee becomes a sublessor to a sublessee.
It is the amount paid for the use or occupancy of a
residential unit whether payment is made on a monthly or Q: Alfonso was the owner of a building being leased to
other basis (Sec. 4, RA934 Rent Control Act). Beatriz. The contract allowed subleasing of the
building, thus, Beatriz subleased it to Charlie. Charlie
Requisites of rent directly paid his rent to Alfonso after the lease
expired. Was Charlie correct?
1. Not fictitious or nominal, otherwise the contract
becomes gratuitous; A: No. There are two (2) distinct leases involved, the
2. Capable of determination; and principal lease and the sublease. In such agreement, the
3. May be in the form of products, fruits, or construction, personality of the lessee does not pass on to or is acquired
as long as it has value. by the sublessee. Thus, the payment to the lessor was not
payment to the sublessor. Alfonso was a stranger to the
NOTE: Owner has the right to fix the rent because the sublease agreement (Blas vs. CA, G.R. No. 82813 December
contract is consensual and not imposed by law, but 14, 1989).
increasing the rent is not an absolute right of the lessor.
The new rate must be reasonable and in no case shall the Parties to a Sublease
lessor be allowed to increase the rental when the term has
not yet expired, unless, the tenant consents(Paras, p. 262). 1. Lessor
2. Sublessor (original lessee in the contract of lease)
If the rent is fixed for the first time, courts cannot interfere, 3. Sublessee
but if it is a renewal, the courts can settle the
disagreements.

CIVIL LAW
Right of the lessee/sublessor to sublease the property Extent of the subsidiary liability of the sublessee
The lessee has the right to sublease the property, unless The sublessee shall be responsible only to the amount of
expressly stipulated. rent due from him, in accordance with the terms and
conditions of the sublease contract, at the time the demand
If the prohibition to sublease is not express but only was made by the lessor(Art. 1652, NCC).
implied, the sublease will still be allowed (Art.1650, NCC).
Failure of the lessee to pay rentals
NOTE: The duration of sublease cannot be longer than that
of the lease to which it is dependent Mere failure of the lessee to pay rentals is insufficient to
make the sublesseesubsidiarily liable to the lessor. There
Q: May a lessee sublease a leased property without the must be a judgment cancelling the lessees principal lease
consent of the lessor? (1999 Bar Question) contract or ousting the lessee from the premises before the
sub-lessee becomes subsidiarily liable (Wheelers Club Intl,
A: Yes, providedthat there is no express prohibition Inc. vs. Bonifacio, Jr.,G.R. No. 139540, June 29, 2005).
against subleasing. Under the law, when in the contract of
lease of things, there is no express prohibition, the lessee Assignment of lease
may sublease the thing leased without prejudice to his
responsibility for the performance of the contract toward It exists when the lessee made an absolute transfer of his
the lessor (Art. 1650, NCC). leasehold rights in a contract, and he has disassociated
himself from the original contract of lease (Pineda, p. 451).
In case there is a sublease of the premises being leased, the
sublessee is bound to the lessor for all the acts which refer The assignment has the effect of novation consisting in the
to the use and preservation of the thing leased in the substitution. There being a novation, the consent of lessor
manner stipulated between the lessor and the lessee (Art. is necessary to effect assignment unless the contract of
1651, NCC). lease allows the lessee to assign (Pineda, p. 452).
The sublessee is subsidiarily liable to the lessor for any Effect of assignment of lease
rent due from the lessee. However, the sublessee shall not
be responsible beyond the amount of the rent due form The personality of the original lessee disappears and there
him. only remain in the juridical relation of two persons: the
lessor and the assignee, who is converted into a lessee
As to the lessee, the latter shall still be responsible to the (Pineda, p. 451).
lessor for the rents; bring to the knowledge of the lessor
every usurpation or untoward act which any third person Sublease v. Assignment of lease
may have committed or may be openly preparing to carry
out upon the thing leased; advise the owner the need for ASSIGNMENT
all repairs; to return the thing leased upon the termination BASIS SUBLEASE
OF LEASE
of the lease just as he received it, save what has been lost As to number There are 2 leases There is only
or impaired by the lapse of time or by ordinary wear and
of juridical and 2 distinct one juridical
tear or from an inevitable cause; responsible for the
deterioration or loss of the thing leased, unless he proves relationship juridical relationship,
that it took place without his fault. relationships that of the
although lessor and the
Responsibility of the lessee to the lessor in case he immediately assignee, who
subleases the property connected and is converted
related to each into a lease
By express provision of Article 1650, NCC, the lessee is still
responsible for the performance of his obligations toward other
the lessor. As to Personality of the Personality of
presence of lessee does not the lessee
Responsibilities of a sublessee to the lessor lessees disappear disappears
personality
GR: There is no juridical relationship between lessor and
As to absolute Lessee does not Lessee
sublessee andtherefore, no responsibility arises.
transfer of transmit absolutely transmits
XPNs: rights his rights and absolutely his
1. All acts which affect the use and preservation of the obligations to the rights to the
thing leased sublessee assignee
2. For any rent due to the lessor from the lessee which As to direct Sublessee, Assignee has
the latter failed to pay, the lessor must collect first action generally, does not a direct action
from the lessee, and if the lessee is insolvent, the
against the have any direct against the
sublessee becomes liable (subsidiary liability)
lessor action against the lessor
lessor

2 0 15 G O L D E N N O T E S
LEASE
REMEDIES IN SUBLEASE Contract for Piece of Work
Accion Directa A contract whereby one of the parties binds himself to

produce a result out of his work or labor and the other
A direct action which the lessor may bring against a party binds himself to pay remuneration therefor.
sublessee who misuses the subleased property.
Lease of services v. Agency
Remedies when either the lessor or the lessee did not
comply with his obligations LEASE OF SERVICES AGENCY
Based on employment
1. Rescission and damages; Based on representation
the lessor of services
2. Damages only (contract will be allowed to remain in agent represent his
does not represent his
force); or principal and enter into
3. Ejectment employer nor does he
juridical acts
execute juridical acts
Grounds for ejectment Principal contract Preparatory contract
1. When the period agreed upon has expired Contract of piece of work as v. Contract of lease
2. Lack of payment of the price stipulated services
3. Violation of any of the conditions agreed upon in the
contract PIECE OF LEASE OF
4. When the lessee devotes the thing leased to any use or BASIS
WORK SERVICES
service not stipulated which caused the deterioration
thereof (Art. 1673, NCC). Object of
contract is the
Object of contract
Grounds for judicial ejectment under the Rental result of the
As to object of is the service itself
Reform Act of 2002 work without
contract and not the result
considering the
1. Assignment of lease or subleasing of residential units which it generates
labor that
in whole or in part, including the acceptance of
produced it
boarders or bedspacers, without the written consent
of the lessor; If the result
Even if the result
2. Rental payment in arrears for 3 months; Provided, promised is not
intended is not
that in case of refusal by the lessor to accept the As to payment accomplished,
payment of the rent, the lessee may deposit the attained, the
of the lessor or
amount in court or with the city or municipal services of the
compensation promissory is
treasurer, as the case may be, or in the bank in the lessor must still be
not entitled to
name of and with notice to the lessor, within one paid.
month after the refusal of the lessor to accept compensation.
payment.
Q: What if the value has not been agreed upon in a
Q: Jane leased a truck to Ed for 2 years. After 1 year contract of lease of service?
from delivery, the truck was destroyed by a strong
typhoon. What is the effect of the destruction of the A: When no rate has been fixed, the same shall be
truck with respect to the lease? determined by the courts according to the uses and
customs of the place and the evidence, unless the services
A: It depends. If the thing leased is totally destroyed by a by agreement were to be rendered gratuitously (Pineda,
fortuitious event, the lease is extinguished. If the 2002).
destruction is partial, the lessee may choose between:
proportional reduction of rent or, rescission of lease (Art. RIGHTS AND OBLIGATIONS OF LESSORS AND LESSES
1655, NCC).
Obligations of the lessor
LEASE OF WORK OR SERVICES
1. To deliver the things in such condition as to render it
Contract for Lease of Services fit for the use intended (cannot be waived).
2. GR: To make, during the lease all the necessary
A contract whereby one party binds himself to render repairs in order to keep it suitable for the use to
some service to the other party consisting his own free which it has been devoted.
activity of labor, and not its result and the other party
binds himself to pay a remuneration therefor (Pineda, XPN: Stipulation to the contrary.
2002).
3. To maintain the lessee in the peaceful and adequate
enjoyment of the lease for the entire duration of the
contract.
4. Cannot alter the form of the thing leased.

CIVIL LAW
7. Tolerance of urgent repairs which cannot be deferred
Rules on changing the form of thing leased until the end of lease (Art. 1662 (1), NCC).
1. Lessor can alter the thing leased provided there is no Q: A leased his land to B. B made useful improvements
impairment of the use to which the things are devoted on the land. Upon the expiration of the lease contact, B
under the terms of the lease. seeks for reimbursement of the useful improvements
2. Alteration can be made by lessee provided the value from A. Should A reimburse B?
of property is not substantially impaired.
A: The lessormay pay for one-half (1/2) of the value of the
Rulesif urgent repairs are necessary improvements which the lessee made in good faith, which
are suitable for the use for which the lease is intended, and
1. Lessee is obligated to tolerate the work, although it which have not altered the form and substance of the
may be annoying to him and although during the same land. On the other hand, the lessee may remove the
time he may be deprived of a part of the premises, if improvements should the lessor refuse to reimburse (Art.
repairs last for not more than 40 days. 1678, NCC; SulosaNayon Inc. vs. Nayong Pilipino, G.R. No.
2. If repairs last for 40 days or more, lessee can ask for 170923, January 20, 2009).
reduction of the rent in proportion to the time
including the 1st 40 days and the part of the Effect of the destruction of the thing leased
property of which he is deprived.
1. Total destruction by fortuitous event Lease is
NOTE: In either case, rescission may be availed of if the extinguished.
main purpose of the lease is to provide a dwelling place 2. Partial destruction
and the property becomes uninhabitable. a. Proportional reduction of rent; or
b. Rescission of the lease.
Effects if the lessor fails to make urgent repairs
Right to suspend the payment of rents
The lessee may:
1. order repairs at the lessors cost The lessee may suspend the payment of rents when the
2. sue for damages lessor fails to:
3. suspend the payment of the rent 1. Undertake urgent repairs; or
4. ask for rescission, in the case of substantial damage to 2. Maintain the lessee in peaceful and adequate
him enjoyment of the property leased.
If the contract of lease is silent as to who will pay for NOTE: For the intervening period, the lessee does not have
repair expenses to pay the rent.
1. Major Repairs Lessor The right begins:

2. Minor Repairs Lessee 1. In the case of repairs from the time of the demand
and it went unheeded
Remedy of the lessee if the lessor fails to make major 2. In case of eviction from the time the final judgment
or necessary repairs for eviction becomes effective
Lessee may ask for: Kinds of trespass in lease

1. Rescission of contract and indemnification for
damages. 1. Trespass in the fact (perturbation de mere hecho)
2. Indemnification only, while the contract remains in physical enjoyment is reduced. Lessor will not be
force (Art. 1659, NCC). liable.
2. Trespass in the law (perturbation de derecho) a 3rd
Obligations of the lessee person claims legal right to enjoy the premises. Lessor
will be held liable.
1. Pay the price of the lease according to the terms
stipulated Alternative remedies of the aggrieved party in case of
2. Use the thing leased as a diligent father of a family non-fulfillment of duties
devoting it to the use stipulated, and in the absence of
stipulation, to that which may be inferred from nature 1. Rescission and damages
of thing leased, according to the custom of the place 2. Damages only, allowing the contract to remain in
3. Pay the expenses of the deed of lease force (specific performance)
4. Notify the lessor of usurpation or untoward acts
5. To notify the lessor of need for repairs Remedies of the lessee if the lessor refuses to accept
6. To return the property leased upon termination of the rentals
lease in the same condition as he receive it except
when what has been lost or impaired by lapse of time, 1. Tender of payment
ordinary wear and tear or inevitable cause/ fortuitous 2. Consignation
event

2 0 15 G O L D E N N O T E S
LEASE
Effect of failure to comply with the requirements by
the lessee NOTE:If there is no stipulation to the contrary, pending
crops at the end of the lease belong to the lessee.
It is a ground for ejectment of the lessee (Alfonso vs. CA,
G.R. No. 76824, December 20, 1988). Rule for land tenancy on shares
SPECIAL RULES FOR LEASE OF RURAL AND URBAN This refers to the contracts of aparceria. Land tenancy on
LANDS shares are primarily governed by special laws (ex:
Agricultural Tenancy Act, RA 1199), and suppletorily, by
RURAL LANDS the stipulations of the parties, the provisions on
partnership, and the customs of the place.
Rural land (Product-Producing Lands)
Tenant
Regardless of site, if the principal purpose is to obtain
products from the soil, the lease is of rural lands. Hence, as A person, who, himself, and with the aid of available from
used here, rural lands are those where the lessee within his immediate farm household, cultivates the land
principally is interested in soil products. belonging to, or possessed by another, with the latters
consent for the purpose of production, sharing the produce
Effect of sterility of land in case of rural lease with the landholder under the share tenancy system, or
paying to the landlord a price certain or ascertainable in
There is no reduction. The fertility or sterility of the land produce, or in money or both, under the leasehold tenancy
has already been considered in the fixing of the rent. system (Pangilinan v. Alvendia, G.R. No.L-10690, June 28,
1957).
Effect of damage caused by a fortuitous event on the
rural lease Immediate farm household
1. Ordinary fortuitous event no reduction. The lessee This includes the members of the family of the tenant, and
being the owner of crops must bear the loss. Res perit such other person/s, whether related to the tenant or not,
domino who are dependent upon him for support, and who usually
2. Extraordinary fortuitous event help him operate the farm enterprise.
a. More than one-half of the fruits were lost, there is
a reduction (XPN: specific stipulation to the Q: Can a tenant work for different landowners?
contrary)
b. Less than one-half, or if the loss is exactly one- A:It is prohibited for a tenant, whose holding is 5 hectares
half, there is no reduction or more, to contract work at the same time on two or more
separate holdings belonging to different landholders
NOTE: The rent must be reduced proportionately. without the knowledge and consent of the landholder with
whom he had first entered into the tenancy relationship
Rule for reduction of rent (Sec. 24, RA 1199).
The reduction of rent can be availed of only if the loss Grounds for ejectment of the tenant on shares
occurs before the crops are separated from their stalk,
root, or trunk. If the loss is afterwards, there is no 1. Voluntary surrender of the land
reduction of rent. 2. Bona fide intention of the landholders to cultivate the
land himself personally or thru the employment of
Duration of rural lease with an unspecified duration farm machineries
3. Tenant violates or fails to comply with the terms and
The lease of a piece of rural land, when its duration has not conditions of the contract or the RA 1199
been fixed, is understood to have been for all the time 4. Failure to pay the agreed rental or deliver the
necessary for the gathering of the fruits which the whole landholders share
estate leased may yield in one year, or which it may yield 5. Tenant uses the land for different purpose
once, although two or more years have to elapse for the 6. Share-tenant fails to follow farm practices which will
purpose (Art. 1682, NCC). contribute towards the proper care and increased
production
Q: A rural lease was agreed upon to last for a certain 7. Negligence permits serious injury to land which will
definite period. But the tenant planted fruit trees impair its productive capacity
which would require a long period of time to bear 8. Conviction by a competent court of a tenant or any
fruit, as well as introduce certain more or less valuable member of his immediate family or farm household of
improvements. Has this act of the tenant changed the a crime against the landholder or a member of his
duration of the contract? immediate family.
A: No, the duration of the lease has not been changed. Sale of land subject to tenancy
There was a fixed period for the lease and therefore the
nature of the fruit trees or valuable improvements is Sale of the land does not extinguish the tenancy
immaterial (Iturralde v. Garduno, 9 Phil. 605). relationship. The purchaser or the transferee shall assume

CIVIL LAW
the rights and obligations of the former landholder in 4. Loss of the thing
relation to the tenant. 5. Rescission due to the performance of the obligations
of one of the parties stated under art. 1654 and 1657.
Effect of expiration of the period of tenancy 6. The dwelling place or any other building is unfit for
human habitation and is dangerous to life or health.
Expiration of the period of the contract of tenancy fixed by
the parties does not extinguish the relationship. The Q: Will the death of the lessee extinguish the lease
landlord is required by law, if the tenant does not agreement? (1997 Bar Question)
voluntarily abandon the land or turn it over to him, to ask
the court for an order of dispossession of the tenant (Sec. A: No. The death of the lessee will not extinguish the lease
49, RA 1199, as amended by RA 2263). agreement, since lease is not personal in character and the
right is transmissible to the heirs (Heirs of Dimaculangan v.
Extinguishment of the tenancy relationship due to IAC, G.R. No.L-68021, Feb. 20, 1989).
death
Remedies of the aggrieved party in case of non-
1. Death of tenant extinguishes relationship but heirs compliance of the other partys obligations under
and members of his immediate farm household may Arts.1654 (obligations of lessor) and 1657 (obligations
continue to work on the land until the close of the of lessee)
agricultural year.
2. Death of landholder does not extinguish the 1. Rescission with damages
relationship because his heirs shall assume his rights 2. Damages only allowing the lease to subsists
and obligation.
Restrictions in exercising the right to rescind
URBAN LANDS
1. Breach must be substantial and fundamental (de
Urban land (Non-Product Producing Lands) minimis non curatlex the law is not concerned with
trifles).
Lands leased principally for purposes of residence are 2. It requires judicial action.
called urban lands. 3. It can be filed only by the aggrieved party.
Rules applicable to repairs forwhich an urban lessor is In case of action to rescind, the other party cannot validly
liable request for time within which to comply with his duties.
The aggrieved party seeking rescission will prevail. Under
1. Special stipulation Article 1659, NCC, the court has no discretion to refuse
2. If none, custom of the place. rescission, unlike the situation covered by Art. 1191, NCC,
in the general rules on obligations (Bacalla v. Rodriguez, et.
Rules when the duration of lease is not fixed al., C.A. 40 O.G. (supp.), Aug. 30, 1941).
1. If there is a fixed period - the lease would be for the Amount of damages
said period.
2. If there are no fixed period - apply the following: Difference between the rents actually received and that
a. Rent paid daily lease is from day to day amount stipulated in the contract representing the true
b. Rent paid weekly lease is from week to week rental value of the premises(A. Maluenda and Co. vs.
c. Rent paid monthly lease from month to month Enriquez, 49 Phil. 916).
d. Rent paid yearly lease from year to year
Q: Under a written contract dated December 1, 1989,
TERMINATION OF LEASE Victor leased his land to Joel for a period of five (5)
years at a monthly rental of P1,000.00, to be increased
Q: When does immediate termination of lease apply? to P1,200.00 and P1,500.00 on the third and fifth year,
respectively. On January 1, 1991, Joel subleased the
A: land to Conrad for a period of 2 years at a monthly
rental of P1,500.00. On December 31, 1992, Joel
1. Dwelling places or any other building intended for assigned the lease to his compadre, Ernie, who acted
human habitation. on the belief that Joel was the rightful owner and
2. Even if at the time the contract was perfected, the possessor of the said lot. Joel has been faithfully
lessee knew of the dangerous condition or waived the paying the stipulated rentals to Victor. When Victor
right to rescind the contract on account of this learned on May 15, 1992 about the sublease and
condition. assignment, he sued Joel, Conrad and Ernie for
rescission of the contract of lease and for damages.
Grounds for termination of lease
1. Will the action prosper? If so, against whom?
1. Expiration of the period Explain.
2. Resolution of the right of lessor (i.e.: when the lessor is 2. In case of rescission, discuss the rights and
a usufructuary and the usufruct is terminated) obligations of the parties. (2005 Bar Question)
3. By the will of the purchaser or transferee of the thing

2 0 15 G O L D E N N O T E S
LEASE
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 (Art. 1649, NCC). But Joel may
sublet to Conrad because there is no express
prohibition (Art. 1650, NCC; 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 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, As
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 Bs demand. Did A do right in rejecting Bs
demand? (1993 Bar Question)
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 (Art. 1655, NCC).

CIVIL LAW
LAND TITLES AND DEEDS XPN: Metropolitan Trial Courts, Municipal Trial
Courts in Cities, Municipal Trial Courts and Municipal
TORRENS SYSTEM Circuit Trial Courts have delegated jurisdiction to
hear and determine cadastral or land registration
Torrens System cases in the following instances:
It is a system for registration of land under which, upon a) Where the lot sought to be registered is not the
the landowners application, the court may, after subject of controversy; or
appropriate proceedings, direct the Register of Deeds for b) Where the lot is contested but the value thereof
the issuance of a certificate of title. does not exceed P100,000.00, such value to be
ascertained by the affidavit of the claimant or by
Purposes in adopting the Torrens System of land the agreement of the respective claimants, if
registration there be more than one, or from the
corresponding tax declaration of the real
To: property.
1. Avoid possible conflicts of title regarding real
property; and 2. Department of Environment and Natural Resources
2. Facilitate transactions relative thereto by giving the (DENR)
public the right to rely on the face of the Torrens 3. Department of Justice (DOJ) through the Land
certificate of title and to dispense with the need of Registration Authority (LRA) and its Register of Deeds
inquiring further. 4. Department of Land Reform (DLR)
5. Department of Agriculture (DAR)
NOTE: The Government has adopted the Torrens system
due to its being the most effective measure to guarantee CERTIFICATE OF TITLE
the integrity of land titles and to protect their
indefeasibility once the claim of ownership is established Certificate of Title
and recognized (Casimiro Development Corporation v. Nato
Mateo, G.R. No. 175485, July 27, 2011). It is the transcript of the decree of registration made by the
Register of Deeds in the registry. It accumulates in one
Nature of the proceeding for land registration under document a precise and correct statement of the exact
the Torrens System status of the fee simple title which an owner possesses.
The Torrens system is judicial in character and not merely Types of certificates of title
administrative. Under the Torrens system, the proceeding
is in rem, which means that it is binding upon the whole 1. Original Certificate of Title (OCT) The first title
world. issued in the name of the registered owner by the
Register of Deeds covering a parcel of land which had
Accordingly, all occupants, adjoining owners, adverse been registered under the Torrens system by virtue of
claimants, and other interested person are notified of the a judicial or administrative proceeding. It consists of
proceedings, by publication of the notice of initial hearing, one original copy filed in the Register of Deeds, and
and have a right to appear in opposition to such the owners duplicate certificate delivered to the
application. owner.
2. Transfer Certificate of Title (TCT) The title issued by
NOTE: In a registration proceeding instituted for the the Register of Deeds in favor of a transferee to whom
registration of a private land, with or without opposition, the ownership of a registered land has been
the judgment of the court confirming the title of the transferred by any legal mode of conveyance (e.g. sale,
applicant or oppositor, as the case may be, and ordering its donation). It also consists of an original and an
registration in his name, constitutes, when final, res owners duplicate certificate.
judicata against the whole world.
Differentiate title over land, land title, certificate of
A decree of registration that has become final shall be title, and deed.
deemed conclusive not only on the questions actually
contested and determined but also upon all matters that Title is a juridical act or a deed which is not sufficient by
might be litigated or decided in the land registration itself to transfer ownership but provides only for a
proceedings. juridical justification for the effectuation of a mode to
acquire or transfer ownership.
Bodies that implement land registration under the
Torrens system Land title is the evidence of the owners right or extent of
interest, by which he can maintain control, and as a rule,
1. Courts assert right to exclusive possession and enjoyment of
property.
GR: Regional Trial Courts have plenary jurisdiction
over land registration cases Certificate of title 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

2 0 15 G O L D E N N O T E S
statement of the exact status of the fee simple title which estoppel may be invoked against public authorities as well
an owner possesses. as against private individuals.
A deed is the instrument in writing, by which any real In the case at bar, for nearly twenty years petitioner failed
estate or interest therein is created, alienated, mortgaged to correct and recover the alleged increase in the land area
or assigned, or by which title to any real estate may be of St. Jude. Its prolonged inaction strongly militates
affected in law or equity. against its cause, as it is tantamount to laches, which
means the failure or neglect, for an unreasonable and
Title v. Ownership unexplained length of time, to do that which by exercising
due diligence could or should have been done earlier; it is
Title is a juridical act or a deed which is not sufficient by negligence or omission to assert a right within a
itself to transfer ownership but provides only for a reasonable time, warranting a presumption that the party
juridical justification for the effectuation of a mode to entitled to assert it either has abandoned it or declined to
acquire or transfer ownership. It provides the cause for the assert it.
acquisition of ownership (i.e. sale = title; delivery = mode
of acquisition of ownership). Likewise time-settled is the doctrine that where innocent
third persons, relying on the correctness of the certificate
Ownership, on the other hand, is an independent right of of title, acquire rights over the property, courts cannot
exclusive enjoyment and control of the thing for the disregard such rights and order the cancellation of the
purpose of deriving therefrom all advantages required by certificate. Such cancellation would impair public
the reasonable needs of the owner and the promotion of confidence in the certificate of title, for everyone dealing
the general welfare but subject to the restrictions imposed with property registered under the Torrens system would
by law and the rights of others (Art. 427, NCC) have to inquire in every instance whether the title has
been regularly issued or not. This would be contrary to
NOTE: Registration under the Torrens system, not being a the very purpose of the law, which is to stabilize land
mode of acquiring ownership, does not create or vest titles. Verily, all persons dealing with registered land may
title. The Torrens certificate of title is merely an evidence safely rely on the correctness of the certificate of title
of ownership or title in the particular property described issued therefor, and the law or the courts do not oblige
therein. In that sense, the issuance of the certificate of title them to go behind the certificate in order to investigate
to a particular person does not preclude the possibility again the true condition of the property. They are only
that persons not named in the certificate may be co- charged with notice of the liens and encumbrances on the
owners of the real property therein described with the property that are noted on the certificate (Republic of the
person named therein, or that the registered owner may Philippines v. Court of Appeals and Spouses Catalino Santos,
be holding the property in trust for another person et al., G.R. No. 116111, January 21, 1999).
(Casimiro Development Corporation v. Nato Mateo, G.R. No.
175485, July 27, 2011). Q: Spouses Serafin were the original registered owners
of a lot in Bukdnon. This property was then mortgaged
Q: St. Judes Enterprise, Inc. is the registered owner of to the DBP and upon default in the payment of the loan
a parcel of land located in Caloocan City. It then obligation, it was foreclosed and ownership was
subdivided the said land and was later on found to consolidated in DBPs name. Serafin Adolfo however,
have expanded and enlarged with an increase of 1, 421 repurchased the same in 1971, after his wife died. In
square meters. Subsequently, St. Jude sold the lots to 1975, he allegedly mortgaged the subject property to
several individuals. Thus, the Solicitor General filed an Aniceto Bangis who took possession of the land. Yet,
action seeking the annulment and cancellation of the this transaction was not reduced into writing. In 1998,
TCT issued in the name of St. Jude. Is the government the heirs of Adolfo expressed their intention to
estopped from questioning the approved subdivision redeem the property from Bangis but the latter
plan which expanded the areas covered by the TCTs in refused claiming that the transaction was one of sale
question? evidenced by TCT No. T-10567 issued in 1967. Decide
with reason.
A: The general rule is that the State cannot be put in
estoppel by the mistakes or error of its officials or A: As held in the case of Top Management Programs
agents. However, like all general rules, this is also subject Corporation v. Luis Fajardo and the Register of Deeds of Las
to exceptions, viz.: Pias City: if two certificates of title purport to include the
same land, whether wholly or partly, the better approach
Estoppels against the public are little favored. They is to trace the original certificates from which the
should not be invoked except in rate and certificates of titles were derived.
unusual circumstances, and may not be invoked where
they would operate to defeat the effective operation of a Having, thus, traced the roots of the parties respective
policy adopted to protect the public. They must be applied titles supported by the records of the Register of Deeds of
with circumspection and should be applied only in those Malaybalay City, the courts a quo were correct in
special cases where the interests of justice clearly require upholding the title of the Heirs of Adolfo as against TCT No.
it. Nevertheless, the government must not be allowed to T-10567 of Bangis, notwithstanding its earlier issuance on
deal dishonorably or capriciously with its citizens, and August 18, 1976 or long before the Heirs of Adolfo secured
must not play an ignoble part or do a shabby thing; and their own titles on May 26, 1998. To paraphrase the
subject to limitations x x x, the doctrine of equitable Courts ruling in Mathay v. Court of Appeals: where two (2)

CIVIL LAW
transfer certificates of title have been issued on different 3. Reclamation
dates, the one who holds the earlier title may prevail only 4. Adverse possession / acquisitive prescription
in the absence of any anomaly or irregularity in the 5. Private grant or voluntary transfer
process of its registration, which circumstance does not 6. Accretion
obtain in this case (Aniceto Bangis, substituted by his heirs, 7. Involuntary alienation
namely Rodolfo B. Bangis, et al. vs. Heirs of Serafin and Salud 8. Descent or devise
Adolfo, namely: Luz A. Banniester, et al.; G.R. No. 190875,
June 13, 2012). Torrens title
Modes of acquiring title over land It is a certificate of ownership issued under the Torrens
system of registration by the government, through the
1. By possession of land since time immemorial Register of Deeds (RD) naming and declaring the owner in
2. By possession of alienable and disposable public land fee simple of the real property described therein, free from
all liens & encumbrances, except as may be expressly noted
NOTE: Under the Public Land Act (CA No. 141), there or otherwise reserved by law.
citizens of the Philippines, who by themselves or
through their predecessors-in-interest have been in Q: Filomena allegedly bought a parcel of unregistered
open, continuous, exclusive and notorious possession land from Hipolito. When she had the property titled
and occupation of alienable and disposable and declared for tax purposes, she sold it. The Mapilis
agricultural land of the public domain under a bona question the transfer, saying that Filomena falsely
fide claim of ownership since June 12, 1945, or earlier, stated in her Affidavit of Transfer of Real Property that
(except when prevented by war or force majeure), Hipolito sold it to her in 1949, since by that time, he is
shall be conclusively presumed to have performed all already dead. Filomena maintains that she is the
the conditions essential to a government grant and lawful owner of such by virtue of the issuance of the
shall be entitled to a certificate of title. Torrens certificate and tax declarations in her name. Is
Filomena the lawful owner of such property?
3. By sale, donation, and other modes of acquiring
ownership A: No. Torrens certificate pertaining to the disputed
property does not create or vest title, but is merely an
Modes of acquiring ownership over land evidence of an indefeasible and incontrovertible title to the
property in favor of the person whose name appears
1. Occupation therein. Land registration under the Torrens system was
2. Law never intended to be a means of acquiring ownership.
3. Donation
4. Tradition Neither does the existence of tax declarations create or
5. Intellectual creation vest title. It is not a conclusive evidence of ownership, but
6. Prescription a proof that the holder has a claim of title over the
7. Succession property. (Larena v. Mapili, et. al., G.R. No. 146341, Aug. 7,
2003)
NOTE: Registration of a piece of land under the Torrens
System does not create or vest title, because it is not a Effects of the issuance of a Torrens title
mode of acquiring ownership. A certificate of title is
merely an evidence of ownership or title over the 1. The land is placed under the operation of torrens
particular property described therein. Thus, system;
notwithstanding the indefeasibility of the Torrens title, the 2. Land is relieved from all claims except those noted
registered owner may still be compelled to reconvey the thereon and provided by law;
registered property to its true owners (Heirs of Tanyag vs. 3. The land becomes incontrovertible and indefeasible;
Gabriel, et. al.; G.R. No. 175763, April 11, 2012). 4. Title to the land becomes non-prescriptible; and
5. The certificate of title is not subject to collateral
Possession v. Occupation attack.
POSSESSION OCCUPATION Q: Spouses Encinas are the registered owner of a lot in

It applies to properties Sorsogon. The controversy involves a potion of the
It applies only to said lot which the Heirs of Jose Maligaso, Sr. continue
whether with or without
property without owner to occupy despite having received 2 notices to vacate.
owner
By itself does not confer In 1929, accordingly, an OCT covering such lot was
It confers ownership issued in the name of Maria Ramos, petitioners aunt.
ownership
There can be no In 1965, Maria sold it to the respondents which led to
There can be possession the issuance of a TCT in favour of the latter.
occupation without
without ownership
ownership
In 1998 or 30 years from the time they purchased the
Acquisition of land titles lot, respondents issued 2 demand letters to the
petitioners asking them to vacate the contested area.
1. Public grant The petitioners refused to leave. Hence, respondents
2. Emancipation patent or grant filed a complaint for unlawful detainer against them.

2 0 15 G O L D E N N O T E S
Accoding to the petitioners however, their occupation He also declared the land for taxation purposes and
remained undisturbed for more than 30 years and the paid real estate taxes. Who is the rightful owner of the
respondents failure to detal and specifies their subject property?
supposedly tolerated possession suggest that they are
aware of their claim over the subject area. Decide with A: Datu Kiram is the rightful owner. The Torrens title is
reason. conclusive evidence with respect to the ownership of the
land described therein, and other matters which can be
A: In Soriente v. Estate of the Late Arsenio E. Concepcion, a litigated and decided in land registration proceedings. Tax
similar allegation possession of the property in dispute declarations and tax receipts cannot prevail over a
since time immemorial was met with rebuke as such certificate of title which is an incontrovertible proof of
possession, for whatever length of time, cannot prevail ownership. An original certificate of title issued by the
over a Torrens title, the validity of which is presumed and Register of Deeds under an administrative proceeding is as
immune to any collateral attack. indefeasible as a certificate of title issued under judicial
proceedings. However, indefeasibility of title does not
The validity of respondents certificate of title cannot be attach to titles secured by fraud and misrepresentation.
attacked by petitioner in this case for ejectment. Under Nonetheless, fraud and misrepresentation, as grounds for
Section 48 of Presidential Decree No. 1529, a certificate of cancellation of patent and annulment of title, should never
title shall not be subject to collateral attack. It cannot be be presumed, but must be proved by clear and convincing
altered, modified or cancelled, except in a direct evidence, mere preponderance of evidence not being
proceeding for that purpose in accordance with law. The adequate. Fraud is a question of fact which must be
issue of the validity of the title of the respondents can only proved. Thus, respondents Torrens title is a valid evidence
be assailed in an action expressly instituted for that of his ownership of the land in dispute (Datu Kiram
purpose. Whether or not petitioner has the right to claim Sampaco v. Hadji Serad Mingca Lantud, G.R. No. 163551,
ownership over the property is beyond the power of the July 18, 2011).
trial court to determine in an action for unlawful detainer.
Q: Ruben C. Corpuz filed a complaint against Spouses
Given the foregoing, the petitioners attempt to remain in Hilarion and Justa Agustin on the allegation that he is
possession by casting a cloud on the respondents title the registered owner of 2 parcels of land in Laoag City.
cannot prosper. Accordingly, his father bought it from Elias Duldulao
and then allowed spouses Agustin to occupy the
Neither will the sheer lapse of time legitimize the subject properties. Despite demand to vacate, the
petitioners refusal to vacate the subject area or bar the Agustins refused to leave the premises.
respondents from gaining possession thereof. As ruled in
Spouses Ragudo v. Fabella Estate Tenants Association, Inc., Ruben alleged that he has better right to possess the
laches does not operate to deprive the registered owner of property having acquired the same from his father
a parcel of land of his right to recover possession thereof through a Deed of Quitclaim in 1971. Spouses Agustin
(Heirs of Jose Maligaso, Sr., etc. vs. Sps. Simon D. Encinas and however contends that they are the rightful owners as
Esperanza E. Encinas; G.R. No. 182716, June 20, 2012). evidenced by a Deed of Absolute Saale in their favor.
Decide who between the parties has the right to
Probative value of a Torrens title possession of the disputed properties.
Torrens title may be received in evidence in all courts of A: Indeed, a title issued under the Torrens system is
the Philippines and shall be conclusive as to all matters entitled to all the attributes of property ownership, which
contained therein, principally as to the identity of the land necessarily includes possession. Petitioner is correct that
owner except so far as provided in the Land Registration as a Torrens title holder over the subject properties, he is
Act (LRA) the rightful owner and is entitled to possession thereof. In
this case, the Quitclaim executed by the elder Corpuz in
A Torrens certificate is an evidence of indefeasible title of favor of petitioner was executed ahead of the Deed of Sale
property in favor of the person in whose name appears of respondents. Thus, the sale of the subject properties by
therein such holder is entitled to the possession of the petitioners father to respondents cannot be considered as
property until his title is nullified. a prior interest at the time that petitioner came to know of
the transaction. (Ruben C. Corpuz v. Spouses Hilarion
Q: Hadji Serad Lantud filed an action to quiet title with Agustin and Justa Agustin, G.R. No. 183822, Jan. 18, 2012)
damages with the RTC of Lanao del Sur. Accordingly,
Datu Kiram Sampaco with several armed men, forcibly Indefeasibility and incontrovertibility of certificates of
and unlawfully entered his property and destroyed the title
nursery buildings, cabbage seedlings and other
improvements. Datu Kiram however denied the The certificate, once issued, becomes a conclusive evidence
material allegationos of Hadji Lantud asserting that he of the title/ownership of the land referred to therein. What
and his predecessors-in-interest are the ones who had appears on the face of the title is controlling on questions
been in open, public, continuous, and exclusive of ownership of the property in favor of the person whose
possession of the property in dispute. He also alleged name appears therein and such cannot be defeated by
that he inherited the land in 1952 from his father and adverse, open, and notorious possession; neither can it be
had been in adverse possession and ownership of the defeated by prescription.
subject lost, cultivating and planting trees and plants.

CIVIL LAW
Rules as regarding the indefeasibility and Mirror doctrine
incontrovertibility of Torrens Title
All persons dealing with a property covered by Torrens
1. The certificate of title serves as evidence of an certificate of title are not required to go beyond what
indefeasible title to the property in favor of the person appears on the face of the title. Where there is nothing on
whose name appears therein. the certificate of title to indicate any cloud or vice in the
2. After the expiration of the one (1) year period from ownership of the property, or any encumbrance thereon,
the issuance of the decree of registration upon which the purchaser is not required to explore further than what
it is based, it becomes incontrovertible. the Torrens title upon its face indicates in quest for any
3. Decree of registration and the certificate of title issued hidden defect or inchoate right that may defeat his right
pursuant thereto may be attacked on the ground of thereto. However, this doctrine is unavailing when the
actual fraud within one (1) year from the date of its party concerned has actual knowledge of facts and
entry and such an attack must be direct and not by a circumstances that should imply a reasonably cautious
collateral proceeding. The validity of the certificate of man to make such further inquiry.
title in this regard can be threshed out only in an
action expressly filed for the purpose. NOTE: Stated differently, an innocent purchaser for value
relying on the Torrens title issued is protected.
NOTE: The defense of indefeasibility of a Torrens title does
not extend to a transferee who takes it with notice of a Application of mirror doctrine
flaw in the title of his transferor. To be effective, the
inscription in the registry must have been made in good GR: Mirror Doctrine applies when a title over a land is
faith. A holder in bad faith of a certificate of title is not registered under the Torrens system
entitled to the protection of the law, for the law cannot be
used as a shield for fraud (Adoracion Rosales Rufloe, et al., XPN: Mirror Doctrine cannot be invoked where:
v. Leonarda Burgos et al., G.R. No. 143573, Jan. 30, 2009). 1. The purchaser or mortgagee is a bank/financing
institution;
Q: There is no specific provision in the Public Land 2. The owner still holds a valid and existing certificate of
Law (CA No. 141, as amended) or the Land Registration title covering the same property because the law
Act (Act 496), now P.D. 1529, fixing the one (1) year protects the lawful holder of a registered title over the
period within which the public land patent is open to transfer of a vendor bereft of any transmissible right;
review on the ground of actual fraud as in Section 38 of 3. The purchaser is in bad faith;
the Land Registration Act, now Section 32 of PD 1529, 4. The purchaser purchases land with a certificate of
and clothing a public land patent certificate of title title containing a notice of lis pendens;
with indefeasibility. What is the effect of such absence? 5. There are sufficiently strong indications to impel
closer inquiry into the location, boundaries and
A: None. The rule on indefeasibility of certificates of title condition of the lot;
was applied by the Court in Public Land Patents because, 6. The purchaser had full knowledge of flaws and defects
according to the Court, such application is in consonance in the title; or
with the spirit and intent of homestead laws. 7. A person buys land not from the registered owner but
from whose rights to the land has been merely
The Court held that the pertinent pronouncements in cases annotated on the certificate of title.
clearly reveal that Sec. 38 of the Land Registration Act,
now Sec. 32 of PD 1529 was applied by implication by this Q: Cipriana Delgado was the registered owner of a lot
Court to the patent issued by the Director of Lands duly situated in Cebu. Meanwhile, she and her husband
approved by the Secretary of Natural Resources, under the entered into an agreement with Cecilia Tan (buyer) for
signature of the President of the Philippines in accordance the sale of the said property for a consideration of
with law. P10.00/sq.m. It was agreed that the buyer shall make
partial payments from time to time and pay the
The date of issuance of the patent, therefore, corresponds balance when the Spouses are ready to execute the
to the date of the issuance of the decree in ordinary deed of sale and transfer title to her. Cecilia was
registration cases because the decree finally awards the already occupying a portion of the property where she
land applied for registration to the party entitled to it, and operates a bihon factory while the rest was occupied
the patent issued by the Director of Lands equally and by tenants which the Spouses undertook to clear prior
finally grants, awards, and conveys the land applied for to to full payment. After paying the total amount and
the applicant. being ready to pay the balance, Cecilia demanded the
execution of the deed which was refused. Cecilia, at
NOTE: A certificate of title issued under an administrative this point, learned of the sale of the property to the
proceeding pursuant to a homestead patent is as Dys and its subsequent mortgage to petitioner
indefeasible as a certificate of title issued under a judicial Philippine Banking Corporation (Philbank). Thus, a
registration proceeding, provided the land covered by said complaint for annulment of the Certificate of title and
certificate is a disposable public land within the for specific performance and/or reconveyance with
contemplation of the Public Land Law. damages was filed against Spouses Delgado, the Dys
and Philbank. However, Philbank contends that it is a
mortgagee in good faith. Is the banks contention
correct?

2 0 15 G O L D E N N O T E S
A: Primarily, it bears noting that the doctrine of Q: In 1979, Nestor applied for and was granted a Free
mortgagee in good faith is based on the rule that all Patent over a parcel of agricultural land with an area
persons dealing with property covered by a Torrens of 30 hectares, located in General Santos City. He
Certificate of Title are not required to go beyond what presented the Free Patent to the Register of Deeds, and
appears on the face of the title. This is in deference to the he was issued a corresponding Original Certificate of
public interest in upholding the indefeasibility of a Title (OCT) No. 375. Subsequently, Nestor sold the land
certificate of title as evidence of lawful ownership of the to Eddie. The deed of sale was submitted to the
land or of any encumbrance thereon. In the case of banks Register of Deeds and on the basis thereof, OCT No.
and other financial institutions, however, greater care and 375 was cancelled and Transfer Certificate of Title
due diligence are required since they are imbued with (TCT) No. 4576 was issued in the name of Eddie. In
public interest, failing which renders the mortgagees in 1986, the Director of Lands filed a complaint for
bad faith. Thus, before approving a loan application, it is a annulment of OCT No. 375 and TCT No. 4576 on the
standard operating practice for these institutions to ground that Nestor obtained the Free Patent through
conduct an ocular inspection of the property offered for fraud. Eddie filed a motion to dismiss on the ground
mortgage and to verify the genuineness of the title to that he was an innocent purchaser for value and in
determine the real owner(s) thereof. The apparent good faith and as such, he has acquired a title to the
purpose of an ocular inspection is to protect the true property which is valid, unassailable and indefeasible.
owner of the property as well as innocent third parties Decide the motion. (2000 Bar Question)
with a right, interest or claim thereon from a usurper who
may have acquired a fraudulent certificate of title thereto A: Nestors motion to dismiss the complaint for annulment
(Philippine Banking Corporation v. Arturo Dy, et al., G.R. No. of OCT No. 375 and TCT No. 4576 should be denied for the
183774. November 14, 2012). following reasons:
Purchaser in good faith and for value 1. Eddie cannot claim protection as an innocent
purchaser for value nor can he interpose the defense
A purchaser in good faith and for value is one who buys of indefeasibility of his title, because his TCT is rooted
property of another, without notice that some other on a void title. Under Sec. 91, CA No. 141, as amended,
person has a right to, or interest in, such property, and otherwise known as the Public Land Act, statements
pays a full and fair price for the same, at the time of such of material facts in the applications for public land
purchase, or before he has notice of the claim or interest of must be under oath. Sec. 91 of the same act provides
some other person in the property. Good faith is the that such statements shall be considered as essential
opposite of fraud and of bad faith, and its non-existence conditions and parts of the concession, title, or permit
must be established by competent proof. Sans such proof, a issued, any false statement therein, or omission of
buyer is deemed to be in good faith and his interest in the facts shall ipso facto produce the cancellation of the
subject property will not be disturbed. A purchaser of a concession. The patent issued to Nestor in this case is
registered property can rely on the guarantee afforded by void ab initio not only because it was obtained by
pertinent laws on registration that he can take and hold it fraud but also because it covers 30 hectares which is
free from any and all prior liens and claims except those far beyond the maximum of 24 hectares provided by
set forth in or preserved against the certificate of title the free patent law.
(Philippine Charity Sweepstakes Office (PCSO) vs. New
Dagupan Metro Gas Corporation, et al.; G.R. No. 173171, July 2. The government can seek annulment of the original
11, 2012). and transfer certificates of title and the reversion of
the land to the State. Eddie's defense is untenable. The
NOTE: An innocent purchaser for value includes a lessee, protection afforded by the Torrens System to an
mortgagee, or other encumbrances for value. innocent purchaser for value can be availed of only if
the land has been titled thru judicial proceedings
Purchaser in good faith and for value is the same as an where the issue of fraud becomes academic after the
innocent purchaser for value. lapse of one (1) year from the issuance of the decree
of registration. In public land grants, the action of the
Good faith consists in an honest intention to abstain from government to annul a title fraudulently obtained
taking any unconscious advantage of another. does not prescribe such action and will not be barred
by the transfer of the title to an innocent purchaser
Q: If the land subject of the dispute was not brought for value.
under the operation of the Torrens system, will the
concept of an innocent purchaser for value apply? Q: Spouses Angel and Adoracion Ruflor acquired a
parcel of land located at Muntinlupa. However, in 1978
A: If the land in question was not brought under the Elvira Delos Reyes forged the signatures of the spouses
operation of Torrens system because the original in Deed of Sale to make it appear that the disputed
certificate of title is null and void ab initio, the concept of property was sold to her by the former. On the basis of
an innocent purchaser for value does not apply. the said deed of sale, Delos Reyes succeeded in
obtaining title in her name. hence, the Rufloes filed a
NOTE: Good faith and bad faith is immaterial in case of complaint for damages against Delos Reyes alleging
unregistered land. One who purchases an unregistered that the Deed of Sale was falsified as their signatures
land does so at his peril. appearing thereon was forged.

CIVIL LAW
possession (Adoracion Rosales Rufloe, et al., v.
During the pendency of the case, Delos Reyes sold the Leonarda Burgos et al., G.R. No. 143573, Jan. 30, 2009)
subject property to the Burgos siblings.
Correspondingly, they sold the same to their aunt, Q: Duran owned two parcels of land which were made
Leonarda Burgos. However, the sale in favor of subject of a deed of sale in favor of Fe, her mother.
Leonarda was not registered. Thus, no title was issued After obtaining title in her name, Fe mortgaged the
in her name. The subject property remained in the property to Erlinda. With Fes failure to redeem,
name of the Burgos siblings who also continued paying Erlinda acquired the property at public auction.
the real estate taxes thereon. Duran, claiming that the deed of sale is a forgery,
sought to recover the property. Erlinda invokes the
a. Are the sales of the subject property to Delos defense of being a purchaser in good faith. Is Erlinda a
Reyes to the Burgos siblings and the subsequent purchaser in good faith?
sale to Leonarda valid and binding?
b. Who is an innocent purchaser for value? A: Yes. Erlinda, in good faith, relied on the certificate of
c. Are the respondents considered as innocent title in the name of Fe. A fraudulent or forged document of
purchasers in good faith and for value despite the sale may become the root of a valid title if the certificate of
forged deed of sale of their transferor Delos title has already been transferred from the name of the true
Reyes? owner to the name of the forger or the name indicated by
the forger. (Duran v. IAC, G.R. No. L-64159, Sept. 10, 1985)
A:
a. It is undisputed that the forged deed of sale was Q: Cipriano, one of Pablos heirs, executed an
null and void and conveyed no title. It is a well- extrajudicial settlement of a sole heir and
settled principle that no one can give what one does confirmation sales, declaring himself as the only heir
not have, nemo dat quod non habet. One can sell only and confirmed the sales made in favor of the spouses
what one owns or is authorized to sell, and the buyer Rodolfo. Consequently, a certificate of title was issued
can acquire no more right than what the seller can in the name of the spouses, who then sold the property
transfer legally. Due to the forged deed of sale, Delos to Guaranteed Homes. Pablos other descendants seek
Reyes acquired no right over the subject property reconveyance of the property sold to the spouses
which she could convey to the Burgos siblings. All the alleging that the extrajudicial settlement was forged.
transactions subsequent to the falsified sale between Who is the rightful owner of the property?
the spouses Rufloe and Delos Reyes are likewise void,
including the sale made by the Burgos siblings to their A: Guaranteed Homes is the rightful owner, even
aunt, Leonarda. assuming that the extrajudicial settlement was a forgery.
Generally a forged or fraudulent deed is a nullity and
b. An innocent purchaser for value is one who buys the conveys no title. There are, however, instances when such
property of another without notice that some other a fraudulent document may become the root of a valid title.
person has a right to or interest in it, and who pays a One such instance is where the certificate of title was
full and fair price at the time of the purchase or before already transferred from the name of the true owner to the
receiving any notice of another persons claim. The forger, and while it remained that way, the land was
burden of proving the status of a purchaser in good subsequently sold to an innocent purchaser. For then, the
faith and for value lies upon one who asserts that vendee had the right to rely upon what appeared in the
status. This onus probandi cannot be discharged by certificate.
mere invocation of the ordinary presumption of good
faith. Also, the extrajudicial settlement was recorded in the
Register of Deeds. Registration in the public registry is
c. The evidence shows that the Rufloes caused a notice notice to the whole world. (Guaranteed Homes, Inc. v. Heirs
of adverse claim to be annotated on the title of Delos of Valdez, Heirs of Tugade, Heirs of Gatmin, Hilaria Cobero
Reyes as early as November 5, 1979. The annotation and Alfredo and Siony Tepol, G.R. No. 171531, Jan. 30, 2009)
of an adverse claim is a measure designed to protect
the interest of a person over a piece of real property, Q: Spouses X and Y mortgaged a piece of registered
and serves as a notice and warning to third parties land to A, delivering as well the OCT to the latter, but
dealing with said property that someone is claiming they continued to possess and cultivate the land,
an interest on the same or may have a better right giving 1/2 of each harvest to A in partial payment of
than the registered owner thereof. Despite the notice their loan to the latter. A however, without the
of adverse claim, the Burgos siblings still purchased knowledge of X and Y, forged a deed of sale of the
the property in question. Equally significant is the fact aforesaid land in favor of himself, got a TCT in his
that Delos Reyes was not in possession of the subject name, and then sold the land to B.
property when she sold the same to
the Burgos siblings. It was Amado Burgos who bought B bought the land relying on A's title, and thereafter
the property for his children, the Burgos siblings. got a TCT in his name. It was only then that the
spouses X and Y learned that their land had been titled
In the same vein, Leonarda cannot be categorized as a in B's name. May said spouses file an action for
purchaser in good faith. Since it was the Rufloes who reconveyance of the land in question against B?
continued to have actual possession of the property, Reason. (1999 Bar Question)
Leonarda should have investigated the nature of their

2 0 15 G O L D E N N O T E S
A: The action of X and Y against B for reconveyance of (Republic of the Philippines vs. Gloria Jaralve (deceased),
the land will not prosper because B has acquired a clean substituted by Alan Jess Jaralve-Document, Jr., et al. G.R. No.
title to the property being an innocent purchaser for value. 175177. October 24, 2012).
A forged deed is an absolute nullity and conveys no title. Application of the Regalian doctrine
The fact that the forged deed was registered and a
certificate of title was issued in his name, did not operate All lands not otherwise appearing to be clearly within
to vest upon A ownership over the property of X and Y. The private ownership are presumed to belong to the State.
registration of the forged deed will not cure the infirmity. Incontrovertible evidence must be shown that the land is
However, once the title to the land is registered in the alienable or disposable in order to overcome such
name of the forger and title to the land thereafter falls presumption.
into the hands of an innocent purchaser for value, the
latter acquires a clean title thereto. A buyer of a NOTE: It does not negate native title to lands held in
registered land is not required to explore beyond what the private ownership since time immemorial (Cruz v.
record in the registry indicates on its face in quest for any Secretary of Environment and Natural Resources, G.R. No.
hidden defect or inchoate right which may subsequently 135385, Dec. 6, 2000).
defeat his right thereto. This is the "mirror principle" of the
Torrens system which makes it possible for a forged deed Native title
to be the root of a good title.
It refers to a pre- conquest rights to lands and domains
Besides, it appears that spouses X and Y are guilty of which, as far back as memory reaches, have been held
contributory negligence when they delivered the OCT to under a claim of private ownership by Indigenous Cultural
the mortgagee without annotating the mortgage thereon. Communities of Indigenous Peoples, have never been
Between them and the innocent purchaser for value, they public lands and are thus indisputably presumed to have
should bear the loss. been held that way before Spanish conquest.
REGALIAN DOCTRINE Time immemorial possession for native title
Regalian doctrine (jura regalia) It refers to a period of time as far back as memory can go,
certain Indigenous Cultural Communities of Indigenous
A time-honored constitutional precept that all lands of the Peoples are known to have occupied, possessed in the
public domain belong to the State, and that the State is the concept of owner, and utilized a defined territory devolved
source of any asserted right to ownership in land, and to them, by operation of customary law or inherited from
charged with the conservation of such patrimony. their ancestors, in accordance with their customs and
tradition.
Under the Regalian doctrine, land that has not been
acquired from the government, either by purchase, grant, Q: Socorro Orcullo was a grantee of a Free Patent for a
or any other mode recognized by law, belongs to the State parcel of land in Cebu. Subsequently, the subject lot
as part of the public domain. Thus, it is indispensable for a was sold to SAAD Agro-Industries, Inc. by one of
person claiming title to a public land to show that his title Orculoos heirs. Yet, in 199, the Solicitor General filed
was acquired through such means. To prove that the a complaint for the annulment of the title and
subject property is alienable and disposable land of the reversion of the said lot on the ground that the
public domain, respondents presented the Community issuance of the free patent and title was irregular and
Environment and Natural Resourtces Office Certificate erroneous, following the discovery that the lot is
(CENRO). However, a CENRO or PENRO Certification is not allegedly part of the timberland and forest reserve.
enough to certify that a land is alienable and disposable. Decide on the case.
The applicant for land registration must prove that the
DENR Secretary had approved the land classification and A: Under the Regalian doctrine or jura regalia, all lands of
released the land of the public domain as alienable and the public domain belong to the State, and the State is the
disposable, and that the land subject of the application for source of any asserted right to ownership in land and
registration falls within the approved area per verification charged with the conservation of such patrimony. In
through survey by the PENRO or CENRO. In addition, the instances where a parcel of land considered to be
applicant for land registration must present a copy of the inalienable land of the public domain is found under
original classification approved by the DENR Secretary and private ownership, the Government is allowed by law to
certified as a true copy by the legal custodian of the official file an action for reversion, which is an action where the
records. ultimate relief sought is to revert the land to the
government under the Regalian doctrine.
Although the survey and certification were done declaring
certain portions of the public domain situated in Cebu City Nevertheless, in applying this doctrine, we must not lose
as alienable and disposable, an actual copy of such sight of the fact that in every claim or right by the
classification, certified as true by the legal custodian of the Government against one of its citizens, the paramount
official records, was not presented in evidence. considerations of fairness and due process must be
Unfortunately, respondents were not able to discharge the observed. Respondent in this case failed to show that the
burden of overcoming the presumption that the land they subject lot is part of timberland or forest reserve it
sought to be registered forms part of the public domain adverted to. In the face of the uncontroverted status of

CIVIL LAW
Free Patent No. 473408 and OCT No. 0-6667 as valid and could apply for registration in accordance with the
regular issuances, respondents insistence on the mandate of Section 8, Article XII of the Constitution which
classification of the lot as part of the forest reserve must be states that Notwithstanding the provisions of Section 7 of
rejected (Saad Agro-Industries, Inc. v. Republic of the this Article, a natural-born citizen of the Philippines who
Philippines, G.R. No. 152570, Sept. 27, 2006). has lost his Philippine citizenship may be a transferee of
private lands, subject to limitations provided by law
Coordination of the 3 departments in their goals in (Republic v. CA and Lapina, G.R. No. 108998, Aug. 24, 1994).
achieving the objectives in the conservation and
utilization of natural resources Q: Joe, an alien, invalidly acquired a parcel of land in
the Philippines. He subsequently transferred it to Jose,
The legislature has the authority to implement the a Filipino citizen.
constitutional provision classifying the lands of the public
domain; the executive, administers our public lands a.) What is the status of the transfer?
pursuant to their duty to ensure that laws be faithfully b.) If Joe had not transferred it to Jose but he, himself,
executed and in accordance with the policy prescribed; was later naturalized as a Filipino citizen, will his
lastly, the judiciary steps into the picture if the rules laid acquisition thereof remain invalid?
down by the legislature are challenged or if it is claimed
that they are not being correctly observed by the executive A:
branch. a.) If a land is invalidly transferred to an alien who
subsequently becomes a Filipino citizen or transfers it
CITIZENSHIP REQUIREMENT to a Filipino, the flaw in the original transaction is
considered cured and the title of the transferee is
Persons qualified to acquire private lands rendered valid. Since the ban on aliens is intended to
preserve the nations land for future generations of
1. Filipino citizens; Filipinos, that aim is achieved by making lawful the
2. Filipino corporations and associations as defined in acquisition of real estate by aliens who became
Sec. 2, Article XII of the Constitution and by Filipino citizens by naturalization or those transfers
exceptionl; made by aliens to Filipino citizens. As the property in
3. Aliens, but only by hereditary succession; dispute is already in the hands of a qualified person, a
4. A natural-born citizen of the Philippines who has lost Filipino citizen, there would be no more public policy
citizenship under the terms and Section 8. to be protected. The objective of the constitutional
provision to keep our lands in Filipino hands has been
NOTE: Filipino citizens can both acquire or otherwise hold achieved (Borromeo v. Descallar, G.R. No. 159310, Feb.
lands of public domain. 24, 2009)
Acquisition of private land by an alien b.) No. If a land is invalidly transferred to an alien who
subsequently becomes a Filipino citizen, the flaw in
GR: An alien cannot acquire private lands. the original transaction is also considered cured and
the title of the transferee is rendered valid (Borromeo
XPN: Acquisition by aliens is allowed when it is thru v. Descallar, G.R. No. 159310, Feb. 24, 2009).
hereditary succession.
Maximum area that may be acquired by a natural born
NOTE: Under R.A. No. 4726, foreign nationals can own citizen who has lost his Philippine citizenship
Philippine real estate through the purchase of
condominium units or townhouses. It expressly allows A natural born citizen who has legal capacity to enter into
foreigners to acquire condominium units and shares in a contract under Philippine laws may be a transferee of a
condominium corporations up to not more than 40% of private land up to a maximum area of 5,000 square meters
the total and outstanding capital stock of a Filipino owned in the case of urban land or 3 hectares in the case of rural
or controlled corporation. The land is owned by the land to be used by him for business or other purposes. In
condominium corporation and the unit owner is simply a the case of married couples, one of them may avail of the
member in this condominium corporation. privilege herein granted, but if both shall avail of the same,
the total area acquired shall not exceed the maximum area
Q: Spouses Pinoy and Pinay, both natural-born Filipino fixed (Sec. 10, R.A. 7042; Agcaoili, Reviewer in Property
citizens, purchased property in the Philippines. Registration and Related Proceedings, 2008 ed.).
However, they sought its registration when they were
already naturalized as Canadian citizens. Should the Persons not allowed to file an application for
registration be denied on the ground that they cannot registration
do so being foreign nationals?
1. A public land sales applicant insofar as the land
A: No. For the purpose of transfer and/or acquisition of a covered by his sales application is concerned
parcel of residential land, it is not significant whether they
are no longer Filipino citizens at the time they purchased Reason: He acknowledged that he is not the owner of
or registered the parcels of land in question. What is the land and that the same is a public land.
important is that they were formerly natural-born citizens
of the Philippines, and as transferees of a private land, they

2 0 15 G O L D E N N O T E S
2. An antichretic creditor cannot acquire by prescription 2. Cadastral Act (Act 2259, as amended)
the land surrendered to him by the debtor. 3. Public Land Act (CA No. 141,as amended)
4. Emancipation Decree (PD 27, as amended)
Reason: His possession is not in the concept of an 5. Comprehensive Agrarian Reform Law of 1988 (R.A.
owner but mere holder placed in possession of the 6657)
land by its owners. 6. Indigenous Peoples Rights Act (R.A. 8371)
3. A mortgagee or his successor in interest to the Original registration

mortgage, notwithstanding the lapse of the period for
the mortgagor to pay the loan secured to redeem it It is a proceeding brought before the MTC where there is
no controversy or opposition, or contested lots where the
Reason: Such act would amount to a pactum value of which does not exceed P100,000.00 (Sec. 4, R.A.
commissorium, which is against good morals and 7691) or in the RTC (as a land registration court) when the
public policy. value exceeds P100,000 to determine title or ownership of
land on the basis of an application for registration or
4. A person or entity whose claim of ownership to land answer/opposition by a claimant in a cadastral
had been previously denied in a reivindicatory action. registration.
Acquisition of lands by a corporation Purposes of land registration
Corporation sole can acquire by purchase a parcel of To:

private agricultural land without violating the 1. Quiet title to the land and to stop forever any question
constitutional prohibition since it has no nationality. as t ao the legality of said title;
2. Relieve land of unknown claims;
Corporation: 3. Guarantee the integrity of land titles and to protect
their indefeasibility once the claim of ownership is
Private Lands established and recognized;
1. At least 60% Filipino (Sec. 7, Art. XII, 1987 4. Give every registered owner complete peace of mind;
Constitution) 5. Issue a certificate of title to the owner which shall be
2. Restricted as to extent reasonably necessary to enable the best evidence of his ownership of the land; and
it to carry out purpose for which it was created 6. Avoid conflicts of title in real estate and to facilitate
3. If engaged in agriculture, it is restricted to 1,024 transactions.
hectares.
Kinds of original registration
Patrimonial property of the State (Sec. 3, Art. XII, 1987
Constitution) ADMINISTRATIVE/
JUDICIAL/ VOLUNTARY/
1. Lease (cannot own land of the public domain) for INVOLUNTARY/
ORDINARY
25 years renewable for another 25 years CADASTRAL
2. Limited to 1,000 hectares Filing with the proper Compulsory registration
3. Applies to both Filipinos and foreign court an application by the initiated by the
corporations. private individual himself government, to adjudicate
ownership of land and
Q: May a corporation apply for registration of a parcel under PD 1529 (Property involuntary on the part of
of land? Registration Decree) the claimants, but they are
compelled to substantiate
A: Yes, through lease not exceeding 1,000 hectares. Such under Sec. 48 of CA 141 their claim or interest
lease shall not exceed twenty five (25) years and (Public Land Act) through an answer.
renewable for not more than twenty five (25) years. (Sec.
3, Art. XII, 1987 Constitution) Registerable lands
NOTE: Determinative of this issue is the character of the 1. Alienable and disposable public agricultural lands;
parcels of land whether they were still public or already and
private when the registration proceedings were 2. Private lands.
commenced. If they are already private lands, the
constitutional prohibition against acquisitions by a private General incidents of a registered land
corporation would not apply.
Registered land or the owners are not relieved from the
ORIGINAL REGISTRATION following:
1. Any rights incident to the relation of husband and
Laws that govern land registration wife, landlord and tenant;
2. Liability to attachment or levy on execution;
1. Property Registration Decree (PD 1529, as amended) 3. Liability to any lien of any description established by
law on the land and buildings thereon, or in the
NOTE: Amended and superseded C.A. No. 496. interest of the owner in such land or building;

CIVIL LAW
4. Any right or liability that may arise due to change of prescription. (Jean Tan, et al. v. Republic of the
the law of descent; Philippines; G.R. No. 193443, April 16, 2012.)
5. The rights of partition between co-owners;
6. The right of government to take the land by eminent 3. Those who have acquired ownership of private lands
domain; or abandoned river beds by right of accession or
7. Liability to be recovered by an assignee in insolvency accretion under the existing laws.
or trustee or bankruptcy under the laws relative to 4. Those who have acquired ownership of land by any
preferences; and other manner provided for by law.
8. Any other rights or liabilities created by law and
applicable to unregistered land. Where the land is owned in common, all the co-owners
shall file the application jointly. (Sec. 14, PD 1529)
WHO MAY APPLY
Persons qualified for registration in case the land is
UNDER P.D. 1529 subject to:
Persons qualified for registration in ordinary 1. Pacto de retro sale

registration proceedings:
GR: Vendor a retro may apply for registration.
1. Those who by themselves or through their
predecessors-in-interest have been in open, XPN: Vendee a retro should the period for redemption
continuous, exclusive, and notorious possession and expire during pendency of registration proceedings
occupation of alienable and disposable lands of public and ownership to property is consolidated in vendee
domain under a bona fide claim of ownership since a retro.
June 12, 1945 or earlier (OCENCO);
2. Those who have acquired ownership of private lands 2. Trust
by prescription under provisions of existing laws;
GR: Trustee may apply for registration.
GR: Properties of public dominion cannot be acquired
by prescription. XPN: Unless prohibited by the instrument creating the
trust.
XPN: Where the law itself so provides. Thus,
patrimonial property of the state may be the subject NOTE: Trusteeship or trust is a fiduciary relationship
of acquisition through prescription. with respect to property which involves the existence
of equitable duties imposed upon the holder of the
Under ordinary acquisitive prescription, a person title to the property to deal with it for the benefit of
acquires ownership of a patrimonial property through another
possession for at least 10 years, in good faith and with
just title. Under extraordinary acquisitive 3. Reserva troncal
prescription, a persons uninterrupted adverse
possession of patrimonial property for at least 30 Reservista has the right to apply for registration but
years, regardless of good faith or just title, ripens into the reservable character of the property will be
ownership. annotated in the title.
NOTE: For one to invoke the provisions of Section NOTE: In reserva troncal the ascendant who inherits
14(2) and set up acquisitive prescription against the from his descendant any property which the latter
state, it is primordial that the status of the property as may have acquired by gratuitous title from another
patrimonial be first established. Furthermore, the ascendant, or a brother or sister, is obliged to reserve
period of possession preceding the classification of such property as he may have acquired by operation
the property as patrimonial cannot be considered in of law for the benefit of relatives who are within the
determining the completion of the prescriptive third degree and who belong to the line from which
period. said property came.
Adverse, continuous, open, public possession in the Eligibility of private corporations to hold alienable
concept of an owner is a conclusion of law and the lands of the public domain
burden to prove it by clear, positive and convincing
evidence is on the applicant. A claim of ownership will Private corporations may not hold alienable lands of the
not proper on the basis of tax declarations if public domain. The word persons refers to natural
unaccompanied by proof of actual possession. persons who are citizens of the Philippines. Juridical or
artificial persons are excluded. Sec. 3, Art. XII of the 1987
The counting of the thirty (30)-year prescriptive Constitution prohibits private corporations or associations
period for purposes of acquiring ownership of a from holding alienable lands of the public domain except
public land under section 14(2) can only start from by lease.
the issuance of DARCO conversion order. Before the
property was declared patrimonial by virtue of such Private corporations or associations may not hold such
conversion order, it cannot be acquired by alienbale lands of public domain except by lease, for a

2 0 15 G O L D E N N O T E S
period not exceeding twenty-five years, renewable for not A: In Naguit, the Court held a less stringent requirement in
more than twenty-five years, and not to exceed one the application of Sec. 14(1) of PD 1529 in that the
thousand hectares in area. But where at the time the reckoning for the period of possession is the actual
corporation acquired land, its predecessor-in-interest had possession of the property and it is sufficient for the
been in possession and occupation thereof in the manner property sought to be registered to be already alienable
and for the period prescribed by law as to entitle him to and disposable at the time of the application for
registration in his name, then the proscription against registration of title is filed.
corporation acquiring alienable lands of the public domain
except through lease does not apply for land was no longer The possession of INC has been established not only from
public land but private property. 1952 and 1959 when it purchased the respective halves of
the subject lot, but is also tacked on to the possession of its
Q: Noynoy, Erap, Manny and Gibo are co-owners of a predecessors-in-interest. These possessions and
parcel of land. May Manny seek registration in his occupationfrom Sabuco, including those of his parents,
name of the land in its entirety? to INC; and from Sabuco to Badanguio to INChad been in
the concept of owners: open, continuous, exclusive, and
A: Since a co-owner cannot be considered a true owner of notorious possession and occupation under a bona
a specific portion until division or partition is effected, he fide claim of acquisition of property. These had not been
cannot file an application for registration of the whole area disturbed as attested to by respondents witnesses
without joining the co-owners as applicants. (Republic of the Philippines v. Iglesia ni Cristo, G.R. No.
180067, June 30, 2009).
Requisites for the filing of an application under Sec.
14(1) of PD. No. 1529 Adverse possession of land
1. That the property is an agricultural land of public Possession of land is adverse when it is open and
domain; notorious. It is open when it is patent, visible, and apparent
2. That it has been classified by a positive act of and it is notorious when it is so conspicuous that it is
government as alienable and disposable (A and D); generally known and talked of by public or the people in
3. That the applicant, by himself or through his the neighborhood.
predecessors-in-interest has been in open,
continuous, exclusive and notorious possession and Q: Is adverse possession similar with the possession
occupation of the land in the concept of owner required in acquisitive prescription?
(OCENCO); and
4. That such possession and occupation is under a bona A: Yes. Possession, to constitute the foundation of a
fide claim of ownership since June 12, 1945 or earlier. prescriptive right, must be possession under a claim of
title or it must be adverse (Cuaycong v. Benedicto, G.R. No.
NOTE: There must be an express declaration by the State 9989, Mar. 13, 1918)
that the public dominion property is no longer intended
for public service or the development of the national Q: An Emancipation Patent OCT was issued in Remys
wealth or that the property has been converted into favor. However, Madarieta filed a complaint for
patrimonial. Without such express declaration, the annulment and cancellation of the OCT against Remy
property, even if classified as alienable or disposable, before the DARAB, alleging that the Department of
remains property of the public dominion, pursuant to Agrarian Reform mistakenly included her husbands
Article 420(2), and thus incapable of acquisition by lot as part of Luspos property where Remys house
prescription. It is only when such alienable and disposable was constructed. From the facts of the case, what is the
lands are expressly declared by the State to be no longer nature of Remys possession of the subject land?
intended for public service or for the development of the
national wealth that the period of acquisitive prescription A: Remy possessed the subject land in the concept of
can begin to run. Such declaration shall be in the form of a an owner. No objection was interposed against his
law duly enacted by Congress or a Presidential possession of the subject land and Remy did not employ
Proclamation in cases where the President is duly fraud in the issuance of the emancipation patent and title.
authorized by law. In fact, Madarieta faulted the DAR, not him (Rementizo v.
Heirs of Vda. De Madarieta, G.R. No. 170318, Jan. 15, 2009).
Q: In 1998, Iglesia ni Cristo filed its application for
Registration of Title before the MCTC in Paoay- Q: Against whom can acquisition of ownership by
Currimao. Yet, the Republic filed an opposition to INCs prescription not be used?
application. The cadastral court held that the essential
elements for judicial confirmation of an imperfect title A: Acquisition of ownership by prescription is unavailing
over the subject lot have been complied with. The CA against the registered owner and his hereditary successors
also held that the INC has been in continuous, open, because under Section 47 of the Property Registration
and peaceful possession and occupation of the lot for Decree, registered lands are not subject to prescription. No
more than 40 years. May a judicial confirmation of title to registered land in derogation of the title of the
imperfect title prosper when the subject property has registered owner shall be acquired by prescription or
been declared as alienable only after June 12, 1945? adverse possession (Agcaoili, Reviewer in property
registration and related proceedings, p. 341, 2008 ed)

CIVIL LAW
ACQUISITION OF TITLE BY LAW
Acquisition of patents
Acquisition of title by law
By:
1. Free Patents based on Public Land Act; 1. Succession (testate or intestate)
2. Title to Accretion in river banks; a. By descent Title is acquired when an heir
3. Reclamation; or succeeds the deceased owner whether by testate
4. Title by Escheat (Rule 91, Rules of Court) or intestate.
b. By devise Person acquires land from one who
PATENTS UNDER THE PUBLIC LAND ACT may or may not be a relative, if he is named in the
deceaseds will as devisee for such property.
Q: What are the different kinds of patents under the 2. Prescription Possession of land for required number
Public Land Act? To whom are they granted and what of years and assertion of ownership through an
are the requirements for acquisition of such? uninterrupted actual possession of property within
the period of time prescribed by law (Arts. 712, 1134,
A: 1137, NCC).
KIND OF TO WHOM
REQUIREMENTS
PATENT GRANTED LAND PATENTS
Homeste To any Does not own more
ad Filipino than 24 hectares of land Q: How are public lands suitable for agricultural
Patent citizen over in the Philippines or purposes disposed of?
the age of 18 has not had the benefit
years or head of any gratuitous A: Public Lands suitable for agricultural purposes are
of a family allotment of more than disposed as follows:
24 hectares 1. Homestead settlement;
Must have resided 2. Sale;
continuously for at least 3. Lease;
1 year in the 4. Confirmation of imperfect title or incomplete titles
municipality where the either by judicial or administrative legalization; or
land is situated 5. Free title.
Must have cultivated at
least 1/5 of the land When a homesteader has complied with all the terms and
applied for conditions which entitle him to a patent for a particular
Free To any natural Does not own more tract of public land, he acquires a vested interest therein,
Patent born citizen of than 12 hectares of land enough to be regarded as the equitable owner thereof.
the Has continuously Where the right to a patent to land has once become
Philippines occupied and vested in a purchaser of public lands, it is equivalent to a
cultivated, either by patent actually issued. The execution and delivery of
himself or his patent, after the right to a particular parcel of land has
predecessors-in- become complete, are the mere ministerial acts of the
interest tract/s of officer charged with that duty. Even without a patent, a
agricultural public land perfected homestead is a property right in the fullest
subject to disposition sense, unaffected by the fact that the paramount title to the
land is still in the government. Such land may be conveyed
Sales Citizens of the To have at least 1/5 of or inherited.
Patent Philippines of the land broken and
lawful age or cultivated within 5 As evidence of ownership of land, a homestead patent
such citizens years from the date of prevails over a land tax declaration. (Jose Medina v. Court
not of lawful the award of Appeals & The Heirs of the Late Abundio Castaares, G.R.
age who is Shall have established No. 137582, August 29, 2012.)
head of a actual occupancy,
family may cultivation and NOTE: When a free patent title is issued to an applicant
purchase improvement of at least and the sea water moves toward the estate of the title
public 1/5 of the land until the holder, the invaded property becomes part of the
agricultural date of such final foreshore land. The land under the Torrens system reverts
land of not payment to the public domain and the title is annulled.
more than 12
hectares After a free patent application is granted and the
Special To non- Sec. of the DILG shall corresponding certificate of title is issued, the land ceased
Patent Christian certify that the majority to be part of the public domain and becomes private
Filipinos of the non-Christian property over which the Director of Lands had neither
under Sec. 84 inhabitants of any given control nor jurisdiction.
of the Public reservation have
Land Act advanced sufficiently in
civilization

2 0 15 G O L D E N N O T E S
Restrictions on alienation or encumbrance of lands homestead within the prohibitory period of five years from
titled pursuant to patents the date of the issuance of the patent is void from its
execution. In a number of cases, this Court has held that
1. Lands acquired under free patent or homestead such provision is mandatory (Binayug v. Ugaddan, et al. GR
patent is prohibited from being alienated, except if in No. 181623, Dec. 5, 2012).
favor of the government, 5 years from and after the
issuance of the patent or grant. Q: Respondents are the grantees of agricultural public
2. No alienation, transfer or conveyance of any lands in General Santos City through Homestead and
homestead after five (5) years and before twenty-five Fee patents sometime in 1986 and 1991. Negotiations
(25) years after the issuance of title shall be valid were made by Petitioner sometime in 1995 and
without the approval of the Secretary of DENR. (C.A. eventually a Deed of Conditional Sale of the properties
No. 141 as amended by C.A. No. 458) in question was executed in favour of Petitioner
3. It cannot be alienated within five (5) years after Filinvest Land Inc. A few days after the execution of the
approval of such patent application. aforestated deeds, respondents came to know that the
4. It cannot be liable for the satisfaction of debt within sale was null and void because it was done within the
five (5) years after the approval of such patent period they were not allowed to do so and that the sale
application. did not have the approval of the secretary of DENR.
5. It is subject to repurchase of the heirs within five (5) Thus, they filed a case for declaration of nullity of the
years after alienation when such is already allowed. deeds of conditional and absolute sale of the
6. No private corporation, partnership or association questioned properties. Will the action prosper?
may lease such land unless it is solely for commercial,
industrial, educational, religious or charitable A: The five-year prohibitory period following the issuance
purposes, or right of way (subject to the consent of of the homestead patent is provided under Section 118 of
the grantee and the approval of the Secretary of the the Public Land Act. It bears stressing that the law was
DENR). [The Public Land Act (C.A. No. 141)]. enacted to give the homesteader or patentee every chance
to preserve for himself and his family the land that the
Exceptions to the restrictions on alienation or State had gratuitously given to him as a reward for his
encumbrance of lands titled pursuant to patents labour in cleaning and cultivating it.
1. Actions for partition because it is not a conveyance, In the present case, the negotiations for the purchase of
2. Alienations or encumbrances made in favor of the the properties covered by the patents issued in 1991 were
government. made in 1995 and, eventually, an undated Deed of
Conditional Sale was executed. Petitioner raises the issue
Proper action in cases of improper or illegal issuance whether by a deed of conditional sale there was alienation
of patents or encumbrance within the contemplation of the law. The
prohibition does not distinguish between consummated
Reversion suits, the objective of which is the cancellation of and executory sale. The conditional sale entered into by
the certificate of title and the consequent reversions of the the parties is still a conveyance of the homestead patent;
land covered thereby to the State. that the formal deed of sale was executed after the
expiration of the staid period did not and could not legalize
Q: Gerardo acquired title over 2 parcels of land located a contract that was void from its inception. Nevertheless,
in Cagayan covered by OCT No. P-311 through the petitioner does not err in seeking the return of the down
grant of Homestead Patent No. V-6269 in his favour on payment as a consequence of the sale having been
January 12, 1951. Upon Gherardos death however, declared void. The rule is settled that the declaration of
respondents discovered that OCT No. P-311 had been nullity of a contract which is void ab initio operates to
cancelled as the same has been sold to Juan Binayug. restore things to the state and condition in which they
Thus, respondents filed a complaint for declaration of were found before the execution thereof. (Filinvest Land,
nullity of title, annulment of instrument, and Inc., Efren C. Gutierrer vs. Abdul Backy, Abehera, Baiya,
declaration of ownership with damages against the Edris, et al. G.R. No. 174715. October 11, 2012)
petitioners. According to them, the purported sale
between Gerardo and Juan was prohibited under CA Q: To whom may free patent be issued?
No. 141 and that the sale violated the 5-year
prohibitory period under Sec. 118 of the Public Land A: A Free Patent may be issued where the applicant is:
Act. Is the contention of the respondents correct?
1. A natural-born citizen of the Philippines;
A: Yes. To reiterate, Section 118 of the Public Land Act, as 2. Is not the owner of more than twelve (12) hectares of
amended, reads that [e]xcept in favor of the Government land;
or any of its branches, units, or institutions, or legally 3. Has continuously occupied and cultivated, either by
constituted banking corporations, lands acquired under himself or through his predecessors-in-interest, a
free patent or homestead provisions shall not be subject to tract or tracts of agricultural public land subject to
encumbrance or alienation from the date of the approval of disposition, for at least 30 years prior to the effectivity
the application and for a term of five years from and after of Republic Act No. 6940; and
the date of issuance of the patent or grant x x x. The 4. Has paid the real taxes thereon while the same has not
provisions of law are clear and explicit. A contract which been occupied by any person.
purports to alienate, transfer, convey, or encumber any

CIVIL LAW
Once a patent is registered and the corresponding However, the owners of the lands adjoining the old bed
certificate of title is issued, the land covered thereby shall have the right to acquire the same by paying the
ceases to be part of public domain and becomes private value thereof, which value shall not exceed the value of the
property, and the Torrens Title issued pursuant to the area occupied by the new bed.
patent becomes indefeasible upon the expiration of one
year from the date of such issuance. Rule on ownership by right of accretion along river
banks
However, a title emanating from a free patent which was
secured through fraud does not become indefeasible, Article 457 of the Civil Code provides that to the owners of
precisely because the patent from whence the title sprung lands adjoining the banks of rivers belong the accretion
is itself void and of no effect whatsoever. Well-settled is which they gradually receive from the effects of the
the doctrine that the registration of a patent under the current of the waters.
Torrens System does not by itself vest title; it merely
confirms the registrants already existing one. Verily, Rule on accretion along the banks of creeks, streams
registration under the Torrens System is not a mode of and lakes
acquiring ownership.
Alluvial deposits along the banks of creeks, streams and
Nonetheless, a free patent that was fraudulently acquired, lakes do not form part of the public domain as the alluvial
and the certificate of title issued pursuant to the same, may property automatically belongs to the owner of the estate
only be assailed by the government in an action for to which it may have been added. That the owner of the
reversion pursuant to Section 101 of the Public Land Act. adjoining property must register the same under the
Since it was the Director of Lands who processed and Torrens system otherwise, the alluvial property may be
approved the applications of the appellants and who subject to acquisition through prescription by third
ordered the issuance of the corresponding free patents in persons.
their favor in his capacity as administrator of the
disposable lands of the public domain, the action for Rule on accretion on the sea bank
annulment should have been initiated by him, or at least
with his prior authority and consent. (Nancy T. Lorzano vs. Still of public domain, and is not available for private
Juan Tabayag, Jr., G.R. No. 189647. February 6, 2012.) ownership until formally declared by the government to be
no longer needed for public use (Republic v. Amanda Vda.
ACCRETION De Castillo, G.R. No. L-69002 June 30, 1988).
Accretion v. Alluvium Q: If the area of a non-registrable land is increased due

to accretion, may the alluvial deposits be subjected to
Alluvium is the soil imperceptibly and gradually deposited private ownership?
on lands adjoining the banks of rivers caused by the
current of the water. A: No. Non-registrable lands (property of public dominion)
are outside the commerce of man, they are not subject to
Accretion is the process whereby the soil is so deposited. private appropriation.
Requisites of accretion Q: If the land, the area of which is increased by

accretion, has already been registered, is there still a
1. The deposit of soil or sediment be gradual and need to register the alluvion?
imperceptible;
2. It is the result of the current of the waters (river/sea); A: Yes. Accretion does not automatically become
and registered. It needs a new registration.
3. The land where accretion takes place is adjacent to
the banks of rivers or the sea coast. Q: If the land area has been diminished due to
accretion, may the riparian owner claim protection
NOTE: In Republic v. CA and Tancinco, the court found that against such diminution based on the fact of
the alleged alluvial deposits were artificial and manmade registration of his land?
and not the exclusive result fo the current of the
Merycauayan and Bocaue rivers. The deposits came into A: Registration does not protect the riparian owner against
being not because of the sole effect of the current of the diminution of land through accretion. Accretions become
rivers but as a result of the transfer of the dike towards the the property of the owners of the banks and are natural
river and encroaching upon it (G.R. No. L-61647, Oct. 12, incidents to land bordering on running streams and the
1984). provisions of the Civil Code thereon are not affected by the
Land Registration Act (now Property Registration Decree)
Rule on ownership of abandoned river beds by right of (Republic v. CA and Tancinco, G.R. No. L-61647, Oct. 12,
accession 1984).
Under Article 461 of the Civil Code, river beds which are Q: The properties of Jessica and Jenny, who are
abandoned through the natural change in the course of the neighbors, lie along the banks of the Marikina River. At
waters ipso facto belong to the owners whose lands are certain times of the year, the river would swell and as
occupied by the new course in proportion to the area lost. the water recedes, soils, rocks and other materials are

2 0 15 G O L D E N N O T E S
deposited on Jessicas and Jennys properties. This City. It was bounded in the Northeast by Lot 4079 in
pattern of the river swelling, receding and depositing the southeast by the Paraaque River. Arcadio alleged
soil and other materials being deposited on the that the property has been formed through accretion
neighbors properties have gone on for many years. and had been in their joint, open, notorious, public,
Knowing this pattern, Jessica constructed a concrete continuous and adverse possession for more than 30
barrier about 2 meters from her property line and years. Can he claim the property by virtue of
extending towards the river, so that when the water acquisitive prescription pursuant to Sec. 14(1) of the
recedes, soil and other materials are trapped within Property Registration Decree?
this barrier. After several years, the area between
Jessicas property line to the concrete barrier was A: The principle that the riparian owner whose land
completely filled with soil, effectively increasing receives the gradual deposits of soil does not need to make
Jessicas property by 2 meters. Jennys property, an express act of possession, and that no acts of possession
where no barrier was constructed, also increased by are necessary in that instance because it is the law itself
one meter along the side of the river. that pronounces the alluvium to belong to the riparian
owner from the time that the deposit created by the
a.) Can Jessica and Jenny legally claim ownership current of the water becomes manifest has no applicability
over the additional 2 meters and one meter, herein. This is simply because the lot was not formed
respectively, of land deposited along their through accretion. Hence the ownership of the land
properties? adjacent to the river bank by respondents predecessor-in-
b.) If Jessicas and Jennys properties are registered, interest did not translate to possession of the subject lot
will the benefit of such registration extend to the that would ripen to acquisitive prescription.
increased area of their properties?
c.) Assume the two properties are on a cliff adjoining Yet, even conceding, for the sake of argument that
the shore of Laguna Lake. Jessica and Jenny had a respondents possessed the subject lot for more than thirty
hotel built on the properties. They had the earth years in the character they claimed, they did not thereby
and rocks excavated from the properties dumped acquire the land by prescription or by other means
on the adjoining shore, giving rise to a new patch without any competent proof that the land was already
of dry land. Can they validly lay claim to the patch declared as alienable and disposable by the government.
of land? (2008 Bar Question) Absent that declaration, the land still belonged to the State
as part of its public dominion. (Republic of the Philippines v.
A: Arcadio Ivan Santos III and Arcadio Santos, Jr. G.R. No.
160453. November 12, 2012)
a.) Jenny can legally claim ownership of the lands by
right of accession (accretion) under Article 457 of RECLAMATION
the Civil Code. The lands came into being over the
years through the gradual deposition of soil and silt Reclamation
by the natural action of the waters of the river.
Reclamation is the act of filling up of parts of the sea for
Jessica cannot claim the two meter-wide strip of land conversion to land.
added to her land. Jessica constructed the cement
barrier two meters in front of her property towards NOTE: It must be initially owned by the government. It
the river not to protect her land from the destructive may be subsequently transferred to private owners.
forces of the water but to trap the alluvium. In order
that the riparian owner may be entitled to the Q: Who may undertake reclamation projects?
alluvium the deposition must occur naturally without
the intervention of the riparian owner (Republic v. CA A: Only the National Government may engage in
132 SCRA 514 [1984]). reclamation projects.
b.) No, the registration of Jessicas and Jennys adjoining Q: To whom does a reclaimed area belong?
property does not automatically extend to the
accretions. They have to bring their lands under the A: Under the Regalian doctrine, the State owns all waters
operation of the Torrens system of land registration and lands of the public domain, including those physically
following the procedure prescribed in P.D. No. 1529. reclaimed.
c.) Jessica and Jenny cannot validly lay claim to the UNDER C.A. 141
price of dry land that resulted from the dumping of
rocks and earth materials excavated from their Persons qualified for registration under Public Land
properties because it is a reclamation without Act or CA No. 141
authority. The land is part of the lakeshore, if not the
lakebed, which is inalienable land of the public Those who by themselves or through their predecessors-
domain. in-interest have been in open, continuous, exclusive and
notorious possession and occupation of alienable and
Q: Alleging continuous and adverse possession of more disposable agricultural lands of the public domain, under a
than 10 years, respondent Arcadio Santos III applied bona fide claim of acquisition or ownership, since June 12,
for registration of Lot 4998-B located in Paraaque 1945, except when prevented by war or force majeure.

CIVIL LAW
private land. Judicial confirmation in such cases is only a
NOTE: The following conditions must concur in order that formality that merely confirms the earlier conversion of
the benefits of the Public Land Act on the confirmation of the land into private land, the conversion having occurred
imperfect or incomplete title may be availed of: in law from the moment the required period of possession
became complete.
1. The applicant must be a Filipino citizen;
2. He must have, by himself or through his predecessors- Under CA No. 141, the reckoning point is June 12, 1945. If
in-interest, possessed and occupied an alienable and the predecessors-in-interest of Manna Properties have
disposable agricultural portion of the public domain; been in possession of the land in question since this date,
3. Such possession and occupation must have been open, or earlier, Manna Properties may rightfully apply for
continuous, exclusive, notorious and in the concept of confirmation of title to the land. Manna Properties, a
owner, since June, 12, 1945; and private corporation, may apply for judicial confirmation of
4. The application must be filed with the proper court. the land without need of a separate confirmation
proceeding for its predecessors-in-interest first (Republic
Public land v. Manna Properties Inc., G.R. No. 146527, Jan. 31, 2005).
The term is uniformly used to describe so much of the Persons qualified for judicial confirmation
national domain under the legislative power of the
Congress as has not been subjected to private right or 1. Filipino citizens who by themselves or through their
devoted to public use. predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and
Means by which public lands may be disposed of occupation of alienable and disposable lands of public
domain under a bona fide claim of acquisition since
1. For homestead settlement; June 12, 1945 or prior thereto or since time
2. By sale; immemorial;
3. By lease; 2. Filipino citizens who by themselves or their
4. By confirmation of imperfect or incomplete titles: predecessors-in-interest have been, prior to the
a. By judicial legalization; or effectivity of PD 1073 on January 25, 1977, in open,
b. By administrative legalization (free patent) continuous, exclusive and notorious possession and
occupation of agricultural lands of the public domain
Q: When is a person deemed to possess an imperfect under a bona fide claim of acquisition or ownership
title over property? for at least 30 years, or at least since January 24, 1947;
3. Private domestic corporations or associations which
A: When the applicant for confirmation of imperfect title had acquired lands from Filipino citizens who had
has shown possession and occupation that is: possessed the same in the manner and for the length
1. Open, of time indicated in paragraphs 1 & 2 above; or
2. Continuous, 4. Natural-born citizens of the Philippines who have lost
3. Exclusive and their citizenship and who has the legal capacity to
4. Notorious enter into a contract under Philippine laws may be a
5. In the concept of an owner transferee of private land up to a maximum are of
5,000 sq.m., in case of urban land, or 3 hectares in
Effect of possession of an imperfect title case of rural land to be used by him for business or
other purposes.
When the conditions set by law are complied with, the
possessor of the land, by operation of law, acquires a right NOTE: Extended period for filing of application Sec. 1,
to government grant, without the necessity of a certificate R.A. 9176 provides in part that, The time to be fixed in the
of the title being issued. entire archipelago for the filing of applications shall not
extend beyond December 31, 2020. Provided that the area
Q: RP opposed the application for registration filed by applied for does not exceed 12 hectares.
Manna Properties under Sec. 48(b), CA No. 141 arguing
that, as a private corporation, it is disqualified from Q: In 1913, Gov. Gen. Forbes reserved for provincial
holding alienable lands of the public domain, except by park purposes a parcel of land which, sometime
lease, citing Sec. 3, Art. XII, 1987 Constitution. On the thereafter, the court ordered registered in Palomos
other hand, Manna Properties claims that the land in name. In 1954, then Pres. Magsaysay converted the
question has been in the open and exclusive land into the Tiwi Hot Spring National Park, under the
possession of its predecessors-in-interest since the management of the Bureau of Forest Development.
1940s, thus, the land was already private land when The area was never released as alienable or
Manna Properties acquired it from its predecessors- disposable. The Palomos, however, continued to
in-interest. Decide. possess the said property, had introduced
improvements therein as well as paid real estate taxes.
A: Lands that fall under Sec. 48, CA No. 141 are The Republic now seeks the cancellation of the titles
effectively segregated from the public domain by virtue over the subject land. Should the cancellation be
of acquisitive prescription. Open, exclusive and undisputed granted?
possession of alienable public land for the period
prescribed by CA No. 141 ipso jure converts such land into

2 0 15 G O L D E N N O T E S
A: Yes. The adverse possession which may be the basis of a NOTE: This case is distinguishable from Bracewell v. CA,
grant of title in confirmation of imperfect title cases where the claimant had been in possession of the land
applies only to alienable lands of the public domain. There since 1908 and had filed his application in 1963, or nine
is no question that the lands in the case at bar were not (9) years before the property was declared alienable and
alienable lands of the public domain. The records show disposable in 1972. Hence, registration was denied. The
that such were never declared as alienable and disposable Bracewell ruling will not apply in this case because here,
and subject to private alienation prior to 1913 up to the the application was made years after the property had
present (Sps. Palomo, et. al., v. CA, et. al., G.R. No. 95608, Jan. been certified as alienable and disposable.
21, 1997).
A different rule obtains for forest lands, such as those
Q: Bracewell asserts that he has a right of title to a which form part of a reservation for provincial park
parcel of land having been, by himself and through his purposes the possession of which cannot ripen into
predecessors-in-interest, in xxx occupation xxx under ownership. It is elementary in the law governing natural
a bona fide claim of ownership since 1908. Thus, he resources that forest land cannot be owned by private
filed an application for registration in 1963 but the he persons. As held in Palomo v. CA, forest land is not
land has been classified as alienable or disposable registrable and possession thereof, no matter how lengthy,
only on May 27, 1972. May his application for cannot convert it into private property, unless such lands
confirmation of imperfect title be granted? are reclassified and considered disposable and alienable.
In the case at bar, the property in question was
A: No. The land was only classified as alienable or undisputedly classified as disposable and alienable; hence,
disposable on May 27, 1972. Prior to said date, when the the ruling in Palomo is inapplicable.
subject parcels of land were classified as inalienable or not
disposable, the same could not be the subject of REGISTRATION PROCESS AND REQUIREMENTS
confirmation of imperfect title. There can be no imperfect
title to be confirmed over lands not yet classified as Modes of registering land titles
disposable or alienable. In the absence of such
classification, the land remains unclassified public land There are two modes:
until released and opened to disposition. Indeed, it has 1. Original registration proceedings under the Property
been held that the rules on the confirmation of imperfect Registration Decree (PD 1529), and
title do not apply unless and until the land classified as 2. Confirmation of imperfect or incomplete title under
forest land is released in an official proclamation to that Section 48(b) of the Public Land Act, as amended.
effect so that it may form part of the disposable
agricultural lands of the public domain (Bracewell v. CA,
G.R. No. 107427, Jan. 25, 2000) Requisites in ordinary registration proceedings and
judicial confirmation of imperfect title
Q: In an application for judicial confirmation of
imperfect title filed by Naguit, the OSG argues that the 1. Survey of land by Bureau of Lands or any duly
property xxx must first be alienable. Since the subject licensed private surveyor
land was declared alienable only on 1980, Naguit 2. Filing of application for registration by applicant
could not have maintained a bona fide claim of 3. Setting of date for initial hearing by the court
ownership since June 12, 1945, as required by Section 4. Transmittal of application and date of initial hearing
14 of the Property Registration Decree, since prior to with all documents or other pieces of evidence
1980, the land was not alienable or disposable. Is it attached thereto by clerk of court to National Land
necessary under Section 14(1) of the Property Titles and Deeds Registration Administration
Registration Decree (now Sec. 48 (b) of the Public Land (NALTDRA)
Act) that the subject land be first classified as alienable 5. Publication of notice of filing of application and date
and disposable before the applicants possession and place of hearing
under a bona fide claim of ownership could start? 6. Service of notice by sheriff upon contiguous owners,
occupants and those known to have interest in the
A: No. Section 14(1) merely requires the property sought property
to be registered as already alienable and disposable at the 7. Filing of answer or opposition to the application by
time the application for registration of title is filed. If the any person whether named in the notice or not
State, at the time the application is made, has not yet 8. Hearing of case by court
deemed it proper to release the property for alienation or 9. Promulgation of judgment by court
disposition, the presumption is that the government is still 10. Issuance of a decree by court declaring the decision
reserving the right to utilize the property; hence, the need final, and instructing the NALDTRA to issue a decree
to preserve its ownership in the State irrespective of the of confirmation and registration
length of adverse possession even if in good faith. 11. Entry of decree of registration in NALDTRA
However, if the property has already been classified as 12. Sending of copy of the decree of registration to
alienable and disposable, as it is in this case, then there is corresponding RD
already an intention on the part of the State to abdicate its 13. Transcription of decree of registration in the
exclusive prerogative over the property. (Republic v. CA registration book and issuance of owners duplicate
and Naguit, G.R. No. 144057, Jan. 17, 2005) original certificate of title (OCT) of applicant by RD,
upon payment of prescribed fees

CIVIL LAW
NOTE: After judgment has become final and executory, the
issuance of decree and OCT is ministerial on the part of Documents that must accompany the application
LRA and RD.
All muniments of titles and copies thereof with survey plan
Application of Rules of Court in land registration approved by Bureau of Lands must accompany the
proceedings application.
The Rules of Court could be applied in land registration Muniments of title

proceedings in a suppletory character or whenever
practicable or convenient. They are instruments or written evidence which the
applicant holds/possesses to enable him to substantiate
NOTE: Motion to intervene in a land registration case is and prove title to his estate.
not allowed.
Rule regarding application covering two or more
APPLICATION parcels
Form of the application for registration or judicial An application may include two or more parcels of land
confirmation belonging to the applicant/s provided they are situated
within the same province or city (Sec 18, P.D. 1529).
In writing;
1. Signed by the applicant or person duly authorized in Q: Where shall the application be filed?
his behalf;
2. Sworn to before an officer authorized to administer A: If the application covers a single parcel of land situated
oaths for the province or city where the application within:
was actually signed; and 1. Only one city or province:
3. If there is more than 1 applicant, they shall be signed RTC or MTC, as the case may be, of the province or
and sworn to by and in behalf of each. city where the land is situated.
2. Two or more provinces or cities:
Contents of the application a. When boundaries are not defined In the RTC or
MTC of the place where it is declared for taxation
1. Description of the land applied for together with the purposes.
buildings and improvements; the plan approved by b. When boundaries are defined Separate plan for
Director of Lands and the technical descriptions must each portion must be made by a surveyor and a
be attached separate application for each lot must be filed
2. Citizenship and civil status of the applicant with the appropriate RTC or MTC.
a. If married, name of spouse
b. If the marriage has been legally dissolved, when NOTE: MeTC, MCTC, and MTC has jurisdiction to decide
and how the marriage relation was terminated cadastral and land registration cases, provided:
3. Assessed value of the land and the buildings and other 1. There is no controversy or opposition (uncontested
improvements based on the last assessment for lots); or
taxation purposes 2. Value of contested lots does not exceed P100,000
4. Manner of acquisition of land (Sec. 4, R.A. 7691)
5. Mortgage or Encumbrance affecting the land or names
of other persons who may have an interest therein, In other cases, the RTC has jurisdiction.
legal or equitable
6. The court may require facts to be stated in the Q: Does the RTC acting as a land registration court
application in addition to those prescribed by the have general or limited jurisdiction?
Decree not inconsistent therewith and may require
the filing of additional papers A: Sec. 2 of P.D. No. 1529 has eliminated the distinction
7. Full names and addresses of all occupants of the land between the general and the limited jurisdiction of the
and those of the adjoining owners, if known, and if not registration court. All conflicting claims of ownership and
known, the applicant shall state the extent of the interest in the land, and related issues submitted to the
search made to find them court with or without the unanimity of the parties, may
8. If the application describes the land as bounded by a now be heard and resolved by the court. The court is now
public or private way or Road, it shall state whether authorized to hear and decide not only non-controversial
or not the applicant claims any portion of the land cases but even contentious issues which used to be beyond
within the limits of the way or road, and whether the its competence.
applicant desires to have the line of way or road
determined Purpose of the publication requirement
9. If the applicant is a non-resident of the Philippines, he
shall file an instrument in due form appointing an To:
agent residing in the Philippines and shall agree that 1. Confer jurisdiction upon the court over the res.
service of any legal process shall be of the same legal 2. Appraise the whole world of the pending registration
effect as if made upon the applicant within the case so that they may assert their rights or interests in
Philippines (Sec.16, PD 1529) the land, if any, and oppose the application.

2 0 15 G O L D E N N O T E S
GR: If it is later shown that the decree of registration had
NOTE: The settled rule is that once the registration court included land or lands not included in the publication, then
had acquired jurisdiction over a certain parcel, or parcels the registration proceedings and the decree of registration
of land in the registration proceedings by virtue of the must be declared null and void but only insofar as the
publication of the application, that jurisdiction attaches to land not included in the publication concerned. But the
the land or lands mentioned and described in the proceedings and the decree of registration, relating to the
application. lands that were included in the publication, are valid.
Q: May publication of the notice of filing of application XPN: However, if the difference is not as substantial as
and date and place of hearing be dispensed with? would affect the identity of the land, failure to publish the
bigger area (insubstantial inclusion) does not perforce
A: No. Publication of the notice of filing of application and affect the courts jurisdiction.
date and place of hearing is mandatory.
Q: When may an amendment of the application be
Q: Where must the said notice be published? made?
A: A: Amendments to the application including joinder,

1. Once in the Official Gazette (OG) this confers substitution, or discontinuance as to the parties may be
jurisdiction upon the court; and allowed by the court at any stage of the proceedings upon
2. Once in a newspaper of general circulation just and reasonable terms. (Sec. 19, PD 1529)
NOTE: Publication in the Official Gazette is sufficient to Requirements in amending the application
confer jurisdiction upon the court (Sec. 23, P.D. 1529).
1. Publication
Q: What is considered conclusive proof of publication
and notice? Mailing of notice Within 7 days after publication of
said notice in the OG to:
A: The certification of the LRA Administrator and of the a. Every person named in the notice whose address
sheriff to the effect that the publication of the notice of is known.
initial hearing and posting as required by law has been b. Secretary of Public Highways, Provincial
complied with. Governor and Mayor, if the applicant requests to
have the line of a public way or road determined
Defective publication c. Secretary of Agrarian Reform, Solicitor General,
Director of Lands, Director of Fisheries, and
There is a defective publication in the following instances: Director of Mines, if the land borders on a river,
navigable stream, or shore, or on an arm of the
1. Where what was published in the Official Gazette is sea where a river or harbor lies
the description of a bigger lot which includes the d. Other persons as the court may deem proper
lands subject of registration.
NOTE: Service of notice upon contiguous owners
Reasons: is indispensable and lack of service constitutes
a. Sec. 15, PD 1529 requires that the application for extrinsic fraud.
registration should contain the description of the
land subject of registration and this is the 2. Posting In conspicuous place on subject land and on
description to be published; bulletin board of the municipal building for at least
b. It is the publication of specific boundaries of fourteen (14) days before the initial hearing.
lands to be registered that would actually put the
interested parties on notice of the registration Necessity of publication and notice in the amended
proceedings and enable them, if they have rights application
and interests in the property, to show why the
application for registration should not be GR: Publication and notice are necessary where the
granted; amendment to the application consists in:
c. The adjoining owners of the bigger lot would not
be the same owners of the smaller lots subject of 1. Substantial change in the boundaries
registration. Hence, notice to adjoining owners of 2. Increase in the area of the land applied for
the bigger lot is not notice to those of the smaller 3. The inclusion of additional land
lots.
NOTE: Without such publication, the registration court
2. Where the actual publication of the notice of initial cannot acquire jurisdiction over the area that is added.
hearing was after the hearing itself.
XPN: However, publication and notice is not necessary:
Effect of a defective publication
1. If the amendment consists in the exclusion of a
It deprives the court of jurisdiction. portion of the area covered by the original application

CIVIL LAW
and the original plan as previously published, a new Persons who may oppose in specific cases
publication is not necessary (Exclusion).
The following may be proper oppositors:
NOTE: In this case, the jurisdiction of the court is not 1. A homesteader who has not yet been issued his title
affected by the failure of filing a new application. but who had fulfilled all the conditions required by
law to entitle him to a patent.
2. If the amendments to the application involves joinder, 2. A purchaser of friar land before the issuance of the
substitution or discontinuance as to the parties. patent to him.
a. Joinder means joining of two or more defendants 3. Persons who claim to be in possession of a tract of
or plaintiffs involved in a single claim, or where public land and have applied with the Bureau of Lands
two or more claims or remedies can be disposed for its purchase.
of in the same legal proceedings. 4. The Government relative to the right of foreshore
b. Substitution means the replacement of one of the lessees of public land as the latters rights is not based
parties in a lawsuit because of events that on dominion or real right independent of the right of
prevent the party from continuing with the trial. the government.
c. Discontinuance means the voluntary termination
of litigation by a plaintiff who has elected not to Q: May a private person oppose registration on the
pursue it or by both parties pursuant to a ground that the land sought to be registered is owned
settlement. by the government?
NOTE: This may be allowed by the court at any A: No. A private person may not oppose an application for
stage of the proceedings upon just and equitable registration on the ground that the land applied for is a
terms. property of the government.
3. If the amendment is due to change of name of the Q: Should an oppositor have title over the disputed
applicant. land?
OPPOSITION A: No. The oppositor need not show title in himself; he

should however appear to have interest in the property.
Persons who may oppose the application for
registration Q: Should an oppositors interest over the land be legal
or may it be merely equitable?
Any person claiming an interest, whether named in the
notice or not, may appear and file an opposition on or A: It is immaterial whether his interest is in the character
before the date of initial hearing, or within such further of legal owner or is of a purely equitable nature as where
time as may be allowed by the court. The opposition shall he is a beneficiary of a trust.
state all the objections to the application and shall set forth
the interest claimed by the party filing the same and apply Declaration of default in land registration proceedings
for the remedy desired, and shall be signed and sworn to
by him or by some other duly authorized person (Sec. 25, If no person appears and answers within the time allowed,
PD No. 1529). the court shall, upon motion of the applicant, no reason to
the contrary appearing, order a default to be recorded and
Requisites for a valid opposition require the applicant to present evidence. By the
description in the notice To all Whom It May Concern, all
1. Set forth objections to the application; the world are made parties defendant and shall be
2. State interest claimed by oppositor; concluded by the default order
3. Apply for the remedy desired; and
4. Signed and sworn to by him or by some other duly Where an appearance has been entered and an answer
authorized person. filed, a default order shall be entered against persons who
did not appear and answer. (Sec. 26, PD 1529)
NOTE: The opposition partakes of the nature of an answer
with a counterclaim. Q: A judge declared in default an oppositor who had
already filed with the court an opposition based on
Persons who may oppose the application for substantial grounds for his failure to appear at the
registration or judicial confirmation initial hearing of the application for registration. Is the
default order proper? If not, what is his remedy?
Any person whether named in the notice or not, provided,
his claim of interest in the property applied for is based on A: No, it is not. Failure of the oppositor to appear at the
a right of dominion or some other real right independent initial hearing is not a ground for default. In which case, his
of, and not subordinate to, the rights of the government. proper remedy is to file a petition for certiorari to contest
the illegal declaration of order of default, not an appeal.

2 0 15 G O L D E N N O T E S
Effect of an order of default in land registration Q: Can a party who has been declared in default appeal
proceedings from the judgment by default without first filing a
motion to set aside the order of default?
An order of default issued in a land registration case, a
proceeding in rem, is binding against the whole world, A: Yes. As held in the case of Martinez v. Republic: If it
with the exception only of the parties who had appeared cannot be made any clearer, we hold that a defendant
and filed pleadings in the registration case. party declared in default retains the right to appeal from
the judgment by default on the ground that the plaintiff
Effect of the absence of an opposition as regards failed to prove the material allegations of the complaint, or
allegations in the application that the decision is contrary to law, even without need of
the prior filing of a motion to set aside the order of default.
When there is no opposition, all allegations in the We reaffirm that the Lim Toco doctrine, denying such right
application are deemed confessed on the part of the to appeal unless the order of default has been set aside,
opponent. was no longer controlling in this jurisdiction upon the
effectivity of the 1964 Rules of Court, and up to this day.
Q: What if a certificate of title was issued covering non- (G.R. No. 160895, Oct. 30, 2005.)
registrable lands without the government opposing, is
the government estopped from questioning the same? EVIDENCE REQUIRED
A: The government cannot be estopped from questioning Q: What must the applicant for land registration
the validity of the certificates of title, which were granted prove?
without opposition from the government. The principle of
estoppel does not operate against the government for the A: The applicant must prove:
acts of its agents. 1. Declassification The land applied for has been
declassified from the forest or timber zone and is
Q: If an order of general default is issued, may the a public agricultural land, is alienable and
court automatically grant the application? disposable, or otherwise capable of registration.
2. Identity of the land; and
A: No. Even in the absence of an adverse claim, the 3. Possession and occupation of the land for the
applicant still has to prove that he possesses all the length of time and in the manner required by law.
qualifications and none of the disqualifications to obtain
the title. If he fails to do so, his application will not be Proof to establish declassification of land
granted.
1. Presidential proclamation
Remedy of a party who was declared in default in land 2. Administrative Order issued by the Secretary of
registration proceeding Environment and Natural Resources
3. Executive order
1. Motion to set aside default order A defaulted 4. Bureau of Forest Development (BFD) Land
interested person may gain standing in court by filing Classification Map
such motion at any time after notice thereof and 5. Certification by the Director of Forestry, and
before judgment, upon proper showing that: reports of District Forester
a. His failure to answer (or file an opposition as in 6. Investigation reports of Bureau of Lands
ordinary land registration case) was due to: investigator
i. Fraud 7. Legislative act, or by statute
ii. Accident
iii. Mistake Q: The Cenizas applied for registration of their title
iv. Excusable Neglect over a parcel of public land which they inherited.
b. And that he has a meritorious defense. (Sec. 3, Without presenting proof that the land in question is
Rule 9, Rules of Court) classified as alienable or disposable, the court granted
2. Petition for Certiorari Failure of the oppositor to the application, holding that mere possession for a
appear at the initial hearing is not a ground for period as provided for by law would automatically
default. In which case, his proper remedy is to file a entitle the possessor the right to register public land
petition for certiorari not later than sixty (60) days in his name. Was the court ruling correct?
from notice of judgment, order or resolution to
contest the illegal declaration or order of default, not A: No. Mere possession for a period required by law is not
an appeal. (Sec. 4, Rule 65, Rules of Court) enough. The applicant has to establish first the disposable
and alienable character of the public land, otherwise,
NOTE: The petition shall be filed not later than 60 public lands, regardless of their classification, can be
days from notice of the order. In case a motion for subject of registration of private titles, as long as the
reconsideration or new trial is timely filed, whether applicant shows that he meets the required years of
such motion is required or not, the petition shall be possession. The applicant must establish the existence of a
filed not later than 60 days counted from the notice of positive act of the government, such as a presidential
the denial of the motion (Sec. 4, Rule 65, Rules of proclamation or an executive order; administrative action;
Court) reports of Bureau of Lands investigators and a legislative

CIVIL LAW
act or a statute. (Republic v. Ceniza, G.R. No. 127060, Nov. peaceful and in concept of owner for the required number
19, 2002) of years. The applicant should present specific facts to
show such nature of possession because bare allegations,
Proof to establish the identity of the land sought to be without more, do not amount to preponderant evidence
registered that would shift the burden to the oppositor (Diaz v.
1. Survey plan in general Republic, G.R. No. 141031, Aug. 31, 2004).
2. Tracing cloth plan and blue print copies of plan
3. Technical description of the land applied for, duly Specific overt acts of possession which may
signed by a Geodetic Engineer substantiate a claim of ownership
4. Tax Declarations
1. Introducing valuable improvements on the property
Effect of the failure to present the original tracing like fruit-bearing trees;
cloth plan 2. Fencing the area;
3. Constructing a residential house thereon; or
While the submission in evidence of the original tracing 4. Declaring the same for taxation purposes.
cloth plan is a mandatory and even a jurisdictional
requirement, the Court has recognized instances of NOTE: Evidence to be admissible must, however, be
substantial compliance with this rule. It is true that the credible, substantial and satisfactory
best evidence to identify a piece of land for registration
purposes is the original tracing cloth plan from the Bureau
of Lands, but blueprint copies and other evidence could Insufficient proofs of possession
also provide sufficient identification. In the case of
Republic v. Ludolfo y Muoz, respondent submitted, among 1. Mere casual cultivation of portions of the land by
other things, the following supporting documents: (1) a claimant.
blueprint copy of the survey plan approved by the Bureau
of Lands; and (2) the technical descriptions duly verified Reason: Possession is not exclusive and notorious so
and approved by the Director of Lands (G.R. No. 151910, as to give rise to a presumptive grant from the State.
October 15, 2007).
2. Possession of other persons in the land applied for
Q: Under what instance may presentation of the impugns the exclusive quality of the applicants
original tracing cloth plan be dispensed with? possession.
3. Mere failure of fiscal representing the State to cross-
A: If the survey plan is approved by the Director of Lands examine the applicant on the claimed possession.
and its correctness has not been overcome by clear, strong 4. Tax declaration of land sought to be registered which
and convincing evidence, the presentation of the tracing is not in the name of applicant but in the name of the
cloth plan may be dispensed with. Thus, original tracing deceased parents of an oppositor.
cloth plan need not be presented in evidence. (Republic v.
Ludolfo y Muoz, G.R. No. 151910, Oct. 15, 2007). Reason: Possession of applicant is not completely
adverse or open, nor is it truly in the concept of an
NOTE: Under LRA Circular 05-2000, only a certified copy owner.
of the original tracing cloth plan need be forwarded to the
LRA. 5. Holding of property by mere tolerance of the owner.
Although mere blue print copies were presented in court Reason: Holder is not in the concept of owner and
as evidence, the original tracing cloth plan was attached to possessory acts no matter how long do not start the
the application for registration and was available to the running of the period of prescription.
court for comparison. Hence, the approval of registration
was proper (Republic v. IAC, G.R. No. L-70594, Oct. 10, 1986) 6. Where applicants tacked their possession to that of
their predecessor-in-interest but they did not present
Conflict between areas and boundaries him as witness or when no proofs of what acts of
ownership and cultivation were performed by the
GR: Boundaries prevail over area. predecessor.
XPNs: Q: Exequiel Ampil, as representative of heirs of the late

1. Boundaries relied upon do not identify land beyond Albina Ampil, filed a complaint for ejectment against
doubt. Perfecto Manahan, et al. Allegedly, Albina was the
2. Boundaries given in the registration plan do not owner of 2 adjoining residential lots located in
coincide with outer boundaries of the land covered Bulacan as evidenced by tax declarations. They
and described in the muniments of title. asserted that Albina allowed Perfecto and his family to
occupy a portion of said properties on the condition
Proof of possession that they would vacate the same should the need to
use it arise. Despite requests however, Perfecto and
To prove possession, it is not enough to simply declare his family refuse to vacate the property. Respondents
ones possession and that of the applicants predecessors- aver that they had been in peaceful and continuous
in-interest to have been adverse, continuous, open, public, possession of the property in the concept of an owner

2 0 15 G O L D E N N O T E S
sine time immemorial and that Albina was never the
owner of the property. Who between the petitioners A: No. The records reveal that the subject property was
and the respondents have the better right to the declared for taxation purposes by the respondents only for
physical possession of the disputed property? the year 1994. While belated declaration of a property for
taxation purposes does not necessarily negate the fact of
A: The petitioners have the better right to the property possession, tax declarations or realty tax payments of
in question. The bare allegation of respondents that they property are, nevertheless, good indicia of possession in the
had been in peaceful and continuous possession of the lot concept of an owner, for no one in his right mind would be
in question because their predecessor-in-interest had been paying taxes for a property that is not in his actual or, at
in possession thereof in the concept of an owner from time least, constructive possession. (Republic v. Alconaba, G.R.
immemorial, cannot prevail over the tax declarations and No. 155012, Apr. 14, 2004)
other documentary evidence presented by petitioners. In
the absence of any supporting evidence, that of the Proofs to establish private ownership of land
petitioners deserves more probative value. A perusal of
the records shows that respondents occupation of the lot 1. Spanish title, in case of impending cases.
in question was by mere tolerance. From the minutes of
the meeting in the Barangay Lupon, Perfecto admitted that NOTE: However, Spanish titles are now inadmissible
Albina permitted them to use the lots on the condition that and ineffective as proof of ownership in land
they would vacate the same should Albina need it (Heirs of registration proceedings filed after Aug. 16, 1976. It is
Albina G. Ampil, namely Precious A. Zavalla, Eduardo Ampil, mere indicia of a claim of ownership that the holder
et al. vs. Teresa Manahan and Mario Manahan G.R. No. has a claim of title over the property.
175990. October 11, 2012).
2. Tax declaration and tax payments.
Q: Mauricio and Carmencita testified to establish their
claim over the subject lots. When the application was NOTE: While tax declarations are not conclusive proof
granted, the OSG appealed, arguing that weight should of ownership, they constitute good indicia of
not be given to the self-serving testimonies of the two; possession in the concept of owner and a claim of title
that their tax declaration is not sufficient proof that over the subject property for no one in his right mind
they and their parents have been in possession of the would be paying taxes for a property that is not in his
property for at least thirty years, said tax declaration actual or constructive possession.(Charles L. Ong v.
being only for the year 1994 and the property tax Republic of the Philippines, G.R. No. 175746, March 12,
receipts presented by them were all of recent dates. 2008 and Republic of the Philippines v. Teodoro P.
Are the said pieces of evidence sufficient to establish Rizalvo, Jr. G.R. No. 172011, March 7, 2011)
actual possession of land for the period required by
law thus warranting the grant of the application? Even if belatedly declared for taxation purposes, it
does not negate possession especially if there is no
A: No. Their bare assertions of possession and occupation other claimant of the land.
by their predecessors-in-interest are hardly "the well-nigh
incontrovertible" evidence required in cases of this nature. Mere failure of the owner of the land to pay the realty
Proof of specific acts of ownership must be presented to tax does not warrant a conclusion that there was
substantiate their claim. They cannot just offer general abandonment of his right to the property.
statements which are mere conclusions of law than factual
evidence of possession. 3. Other kinds of proof. e.g. Testimonial evidence (i.e.
accretion is on a land adjacent to a river).
The law speaks of possession and occupation. Possession is
broader than occupation because it includes constructive NOTE: Any evidence that accretion was formed
possession. When, therefore, the law adds the word through human intervention negates the claim.
occupation, it seeks to delimit the all encompassing effect
of constructive possession. Taken together with the words 4. Presidential issuances and legislative acts.
open, continuous, exclusive and notorious, the word
occupation serves to highlight the fact that for an applicant NOTE: It is constitutive of a fee simple title or
to qualify, his possession must not be a mere fiction. absolute title in favor of the grantee.
Actual possession of a land consists in the manifestation of Q: Agustin executed an Affidavit of Transfer of Real
acts of dominion over it of such a nature as a party would Property where Ducat is to perform all the necessary
naturally exercise over his own property (Republic v. procedures for the registration and acquisition of title
Alconaba, G.R. No. 155012, Apr. 14, 2004). over several parcels of land possessed and occupied by
Agustin. Before Ducat was able to accomplish his task,
NOTE: Well-nigh incontrovertible evidence refers to the Agustin died and Bernardo administered the
degree of proof of registrable rights required by law in properties. Ducat then filed an Application for Free
registration proceedings. Patent over the land, which was granted. The parcels
of land were registered in the names of Ducat and
Q: Are tax declarations presented by them sufficient Kiong. The heirs of Bernardo sought the reconveyance
proof of possession and occupation for the requisite of the land with damages but did not question the
number of years?

CIVIL LAW
authenticity of the agreement. Who is the rightful Decree of registration
owner of the property?
It is a document prepared in the prescribed form by the
A: The spouses Ducat and Kiong. The Affidavit of LRA Administrator, signed by him in the name of the court,
Transfer of Real Property proved Ducats ownership of the embodying the final disposition of the land by the court
property. It stated that Ducat bought the subject property and such other data found in the record, including the
from Cecilio and Bernardo. The heirs did not question the name and other personal circumstances of the applicant,
authenticity and due execution of said document. It the technical description of the property, liens and
constitutes an admission against interest made by encumbrances affecting it, and such other matters as
Bernardo, petitioners' predecessor-in-interest. determined by the court in its judgment.
Bernardo's admission against his own interest is binding Q: In a registration case, the court rendered a decision
on his heirs. The heirs' predecessor-in-interest recognized granting Reyes application, hence the Director of
Ducat and Kiong as the legal owner of the lot in dispute. Lands appealed. Reyes moved for the issuance of a
decree of registration pending appeal. May his motion
Thus, there is no proof that the titling of the subject be granted?
property was fraudulently obtained by Ducat and Kiong in
their names (Heirs of Bernardo Ulep v. Sps. Cristobal Ducat A: No. Innocent purchasers may be misled into purchasing
and Flora Kiong, G.R. No. 159284, Jan. 27, 2009). real properties upon reliance on a judgment which may be
reversed on appeal. A Torrens title issued on the basis of a
Insufficient proofs to establish private ownership or judgment that is not final is a nullity as it violates the
right over land explicit provisions of the LRA, which requires that a decree
shall be issued only after the decision adjudicating the title
1. Compromise agreement among parties to a land becomes final and executor (Dir. of Lands v. Reyes, G.R. No.
registration case where they have rights and interest L-27594, Nov. 28, 1975).
over the land and allocated portions thereof to each of
them. Q: After final adjudication in a land registration
proceeding, Pepito and his family took possession of
NOTE: Assent of Director of Lands and Director of the land subject of the registration proceedings. Don
Forest Management to compromise agreement did Ramon moved for their summary ouster from the land.
not and could not supply the absence of evidence of Rule on his motion.
title required of the applicant.
A: It should be denied. Persons who are not parties to
2. Decision in an estate proceeding of a predecessor-in- registration proceedings who took possession of the land
interest of an applicant which involves a property after final adjudication of the same cannot be summarily
over which the decedent has no transmissible rights, ousted by a mere motion. The remedy is to resort to the
and in other cases where issue of ownership was not courts of justice and institute a separate action for
definitely passed upon. unlawful entry or detainer or for reinvidicatory action, as
3. Survey plan of an inalienable land. the case may be. Regardless of any title or lack of title of
said person, he cannot be ousted without giving him a day
NOTE: Such plan does not convert such land into in court in a proper independent proceeding.
alienable land, much less private property.
Scope of decree of registration
Q: After due hearing for registration, what will the
court do? Only claimed property or a portion thereof can be
adjudicated. A land registration court has no jurisdiction to
A: If the court, after considering the evidence and report of adjudge a land to a person who has never asserted any
the LRA, finds that the applicant or the oppositor has right of ownership thereof.
sufficient title proper for registration, it shall render
judgment confirming the title of the applicant, or the Partial Judgment in land registration proceedings
oppositor, to the land or portions thereof, as the case may
be (Sec. 29, P.D. 1529). Where only a portion of the land, subject of registration is
contested, the court may render partial judgment provided
JUDGMENT AND DECREE OF REGISTRATION that a subdivision plan showing the contested land and
uncontested portions approved by the Director of Lands is
Q: What must a judgment in land registration previously submitted to the court.
proceedings contain?
Effect of a decree of registration
A: When judgment is rendered in favor of the plaintiff, the
court shall order the entry of a new certificate of title and The decree of registration binds the land, quiets title,
the cancellation of the original certificate and owners subject only to such exceptions or liens as may be provided
duplicate of the former registered owner. by law.
It is conclusive upon all persons including the national

government and all branches thereof. Such conclusiveness

2 0 15 G O L D E N N O T E S
does not cease to exist when the title is transferred to a title that the land shall be and always remain registered
successor. land. A title under Act 496 is indefeasible and to preserve
that character, the title is cleansed anew with every
NOTE: Title once registered cannot be impugned, altered, transfer for value (De Jesus v. City of Manila, G.R. No. L-
changed, modified, enlarged or diminished, except in a 26816, Feb. 28, 1967; Laperal v. City of Manila, G.R. No. L-
direct proceeding permitted by law. 16991, Mar. 31, 1964; Penullar v. PNB, G.R. No. L-32762 Jan.
27, 1983).
Res judicata in land registration proceedings
Q: Suppose the government agency concerned joined C
The principle of res judicata applies to all cases and in filing the said action against the defendants, would
proceedings, including land registration and cadastral that change the result of the litigation? Explain. (1990
proceedings. Bar Question)
Q: In 1950s, the Government acquired a big landed A: Even if the government joins C, this will not alter the
estate in Central Luzon from the registered owner for outcome of the case so much because of estoppel as an
subdivision into small farms and redistribution of express provision in Sec. 45, Act 496 and Sec. 31, PD 1529
bonafide occupants. F was a former lessee of a parcel of that a decree of registration and the certificate of title
land, five hectares in area. After completion of the issued in pursuance thereof shall be conclusive upon and
resurvey and subdivision, F applied to buy the said against all persons, including the national government and
land in accordance with the guidelines of the all branches thereof, whether mentioned by name in the
implementing agency. Upon full payment of the price in application or not.
1957, the corresponding deed of absolute sale was
executed in his favor and was registered, and in 1961, a Reopening of judgment or decree of registration
new title was issued in his name. In 1963, F sold the
said land to X; and in 1965 X sold it to Y, new titles were The court has no jurisdiction or authority to reopen the
successively issued in the names of the said purchasers. judgment or decree of registration, nor impair the title or
other interest of a purchaser holding a certificate for value
In 1977, C filed an action to annul the deeds of sale to F, and in good faith, or his heirs and assigns, without his or
X and Y and their titles, on the ground that he (C) had their written consent.
been in actual physical possession of the land, and that
the sale to F and the subsequent sales should be set Effects of the entry of the decree of registration in the
aside on the ground of fraud. Upon motion of National Land Titles and Deeds Registration Authority
defendants, the trial court dismissed the complaint, (NALDTRA)
upholding their defenses of their being innocent
purchasers for value, prescription and laches. Plaintiff 1. This serves as the reckoning date to determine the 1-
appealed. year period from which one can impugn the validity of
the registration.
Is the said appeal meritorious? Explain your answer 2. 1 year after the date of entry, it becomes
(1990 Bar Question) incontrovertible, and amendments will not be allowed
except clerical errors. It is deemed conclusive as to the
A: The appeal is not meritorious. The trial court ruled whole world.
correctly in granting defendant's motion to dismiss for the 3. Puts an end to litigation.
following reasons:
1. While there is the possibility that F, a former lessee of WRIT OF POSSESSION
the land was aware of the fact that C was the bona fide
occupant thereof and for this reason his transfer Writ of possession
certificate of title may be vulnerable, the transfer of the
same land and the issuance of new TCTs to X and Y A courts written order, in the name of a state or other
who are innocent purchasers for value render the competent legal authority, issued to recover possession of
latter's titles indefeasible. A person dealing with land. (Blacks Law Dictionary, 9th edition, 2009)
registered land may safely rely on the correctness of
the certificate of title and the law will not in any way Q: In what instances may a writ of possession issue?
oblige him to go behind the certificate to determine the
condition of the property in search for any hidden A:
defect or inchoate right which may later invalidate or
diminish the right to the land. This is the mirror 1. In a land registration proceeding, which is a
principle of the Torrens System of land registration. proceeding in rem;
2. In an extrajudicial foreclosure of a realty mortgage;
2. The action to annul the sale was instituted in 1977 or 3. In a judicial foreclosure of mortgage; and
more than (10) years from the date of execution 4. In execution sales
thereof in 1957, hence, it has long prescribed.
Q: How may possession of property be obtained?
Under Sec. 45, Act 496, the entry of a certificate of title
shall be regarded as an agreement running with the land, A: Possession of the property may be obtained by filing an
and binding upon the applicant and all his successors in ex parte motion with the RTC court of the province or

CIVIL LAW
place where the property is situated. Upon filing of the in case he is deprived of possession over the land
motion and the required bond, it becomes a ministerial subject of the registration proceedings?
duty of the court to order the issuance of a writ of
possession in favor of the purchaser. After the expiration A: Yes, if it is against:
of the one-year period without redemption being effected 1. The person who has been defeated in a registration
by the property owner, the right of the purchaser to the case; and
possession of the foreclosed property becomes absolute 2. Any person adversely occupying the land or any
(PNB v. Sanao Marketing Corporation, G.R. No. 153951, July portion thereof during the land registration
29, 2005). proceedings up to the issuance of the final decree.
Q: PNCB purchased a parcel of land in a foreclosure However, if it is against persons who took possession of
sale and applied for a writ of possession after the lapse the land after final adjudication of the same in a
of more than 1 year. On appeal, however, it was held registration proceeding, in which case, the remedy is to file
that the writ of possession cannot be issued because a separate action for:
the foreclosure sale, upon which it is based, was 1. Unlawful entry;
infirm. Is said ruling correct? 2. Unlawful detainer; or
3. Reivindicatory action, as the case may be, and only
A: No. Any question regarding the regularity and validity after a favorable judgment can the prevailing party
of the sale, as well as the consequent cancellation of the secure a writ of possession (Bernas v. Nuevo, G.R. No.
writ, is to be determined in a subsequent proceeding as L-58438, Jan. 31, 1984)
outlined in Sec. 8, Act 3135, as amended by Act 4118. Such
question is not to be raised as a justification for opposing Prescription of a writ of possession
the issuance of the writ of possession, since, under the Act,
the proceeding is ex parte. GR: A petition for the issuance of a writ of possession does
not prescribe
As the purchaser of the properties in the extra-judicial
foreclosure sale, the PNCB is entitled to a writ of XPN: If a party has once made use of the benefit of a writ of
possession therefore. The basis of this right to possession possession, he cannot again ask for it, if afterwards he
is the purchasers ownership of the property. Mere filing of loses possession of the property obtained by virtue of the
an ex parte motion for the issuance of the writ of original writ.
possession would suffice, and no bond is required. (Sulit v.
CA, G.R. No. 119247, Feb. 17, 1997; Agcaoili, Registration Issuance of a writ of possession in a reconstitution
Decree and Related Laws, p. 508-509) case
Q: Against whom may a writ of possession be issued? Issuance of a writ of possession cannot be issued in
reconstitution case. Reconstitution does not confirm or
A: In a registration case, a writ of possession may be adjudicate ownership over the property covered by the
issued against: reconstituted title as in original land registration
1. The person who has been defeated in a registration proceedings where, in the latter, a writ of possession may
case; and be issued to place the applicant-owner in possession.
2. Any person adversely occupying the land or any
portion thereof during the land registration DECREE OF CONFIRMATION AND REGISTRATION
proceedings up to the issuance of the final decree.
Decree of confirmation and registration
Q: Yano filed an application for registration which was
granted. Consequently, a writ of possession was It is issued by LRA after finality of judgment, and contains
issued. Vencelao, who occupies the land, contends that technical description of land. It is subject only to an appeal.
he was not the defeated oppositor in the case, hence a
writ of possession may not be issued against him. May It is conclusive evidence of the ownership of the land
a writ of possession be issued against Vencelao? referred to therein and becomes indefeasible and
incontrovertible after one year from the issuance of the
A: Yes. In a registration case, the judgment confirming the decree.
title of the applicant and ordering the registration in his
name necessarily carried with it the delivery of possession Decree of confirmation and registration v. decree of
which is an inherent element of the right of ownership. registration.
A writ of possession may be issued not only against the Decree of confirmation and registration of title is issued
person who has been defeated in a registration case but pursuant to the Public Land Act, where the presumption is
also against anyone unlawfully and adversely occupying that the land applied for pertains to the State, and that the
the land or any portion thereof during the land registration occupants and possessors only claim an interest in the
proceedings up to the issuance of the final decree. same by virtue of their imperfect title or continuous, open,
(Vencelao v. Yano, G.R. No. 25660, Feb. 20, 1993) and notorious possession
Q: If the court granted the registration, must the Decree of registration is issued pursuant to the Property
applicant move for the issuance of a writ of possession Registration Decree, where there already exists a title

2 0 15 G O L D E N N O T E S
which is confirmed by the court (Limcoma Multi-Purpose title of the third-party defendant considered a direct
Cooperative v. Republic, G.R. No. 167652, July 10, 2007). attack on the title?
Doctrine of non-collateral attack of a decree or title A: If the object of the third-party complaint is to nullify the
title of the third-party defendant, the third-party
A decree of registration and registered title cannot be complaint constitutes a direct-attack on the title because
impugned, enlarged, altered, modified, or diminished the same is in the nature of an original complaint for
either in collateral or direct proceeding, after the lapse of cancellation of title.
one year from the date of its entry.
Q: If an attack is made thru a counterclaim, should it
Q: Under what instance, will such doctrine not apply? be disregarded for being a collateral attack?
A: Prohibition against collateral attack does not apply to A: No. A counterclaim is also considered an original
spurious or non-existent titles, since such titles do not complaint, and as such, the attack on the title is direct and
enjoy indefeasibility. Well-settled is the rule that the not collateral.
indefeasibility of a title does not attach to titles secured by
fraud and misrepresentation. In view of these REMEDIES IN REGISTRATION PROCEEDINGS
circumstances, it was as if no title was ever issued in this
case to the petitioner and therefore this is hardly the Remedies of an aggrieved party in registration
occasion to talk of collateral attack against a title. (Heirs of proceedings
Leoncio C. Oliveros, represented by Aurora B. Oliveros, et al.
vs San Miguel Corporation, et al., G.R. No. 173531. February 1. Relief from judgment
1, 2012). 2. Appeal
3. Action for Damages
Direct attack v. Collateral attack 4. Action for Compensation from the Assurance Fund
DIRECT ATTACK COLLATERAL ATTACK NOTE: If the property has already passed into the
It is made when, in another action hands of an innocent purchaser for value, the remedy
to obtain a different relief, an attack is to file action for damages from the person who
The issues are allegedly registered the property from fraud, or if he
on the judgment is made as an
raised in a direct had become insolvent or if the action is barred by
incident in said action.
proceeding in an prescription, to file an action for recovery against the
action instituted for Assurance fund within a period of 6 years from the
e.g. Torrens title is questioned in
that purpose. time the right to bring such action accrues.
the ordinary civil action for
recovery of possession
5. Action for Reconveyance
Q: Valentins homestead application was approved. 6. Cancellation suits
After 19 years of possession, his occupation was 7. Criminal Action
interrupted when Arcidio forcibly entered the land. He 8. Annulment of judgment
filed an action for recovery of possession which was 9. New trial
granted. 10. Quieting of title
11. Petition for Review (of a Decree)
In his appeal, may Arcidio seek the nullity of Valentins
title, invoking as defense the ruling of the Director of RECONVEYANCE
Lands in an administrative case that Valentin has
never resided in said land and declared that the Action for reconveyance
homestead patent was improperly issued to him?
It is an action seeking to transfer or reconvey the land
A: No, a collateral attack is not allowed. It was erroneous from the registered owner to the rightful owner. It is a
for Arcidio to question the Torrens OCT issued to Valentin legal and equitable remedy granted to the rightful owner
in an ordinary civil action for recovery of possession filed of land which has been wrongfully or erroneously
by the registered owner Valentin of the said lot, by registered in the name of another for the purposes of
invoking as affirmative defense in his answer the Order of compelling the latter to transfer or reconvey the land to
the Bureau of Lands issued pursuant to the investigatory him (Spouses Exequiel and Eusebia Lopez v. Spouses
power of the Director of Lands under Section 91 of Public Eduardo and Marcelina Lopez, G.R. No. 161925, Nov. 25,
Land Law (CA No. 141 as amended). Such a defense 2009).
partakes of the nature of a collateral attack against a
certificate of title brought under the operation of the Purpose of an action for reconveyance?
Torrens system of registration pursuant to Sec. 122, Land
Registration Act, now Sec. 103, P.D. 1259 (Ybanez v. IAC, An action for reconveyance does not aim or purport to re-
G.R. No. 68291, Mar. 6, 1991). open the registration proceedings and set aside the decree
of registration but only to show that the person who
Q: In a case for recovery of possession based on secured the registration of the questioned property is not
ownership, is a third-party complaint to nullify the the real owner thereof. The action, while respecting the

CIVIL LAW
decree as incontrovertible, seeks to transfer or reconvey annulment of the patent OCT, which in essence is an action
the land from the registered owner to the rightful owner. for reconveyance the remedy of the rightful owner of the
erroneously registered property. It is thus barred by
This action may be filed even after the lapse of 1 year from prescription (Rementizo v. Heirs of Vda. De Madarieta, G.R.
entry of the decree of registration as long as the property No. 170318, Jan. 15, 2009).
has not been transferred or conveyed to an innocent
purchaser for value. NOTE: In an action for reconveyance, the decree of
registration is respected as incontrovertible but what is
Basic allegations to support an action for sought instead is the transfer of the property wrongfully or
reconveyance erroneously registered in anothers name to its rightful
owner or to one with a better right. The person in whose
All that must be alleged in the complaint are: (1) that the name the land is registered holds it as a mere trustee.
plaintiff was the owner of the land; and (2) that the
defendant had illegally dispossessed him of the same. Q: Juan, et. al. seek reconveyance of the property,
imputing fraud to Ines, without adducing evidence,
Q: What are the grounds and their corresponding saying that she used a forged affidavit to obtain title
period for filing an action for reconveyance? over the property despite full knowledge that she
owned only 1/5 portion thereof. Note that when Ines
A: applied for a free patent over the property, Juan, et. al.
GROUNDS PRESCRIPTIVE PERIOD filed their claims, but when the Bureau of Lands
4 years from the discovery of the denied their claims, they did not contest such denial
fraud (deemed to have taken place any further. Should the reconveyance be granted?
from the issuance of the original
certificate of title) A: No. It appears that they were notified of Ines
application for free patent and were duly afforded the
Fraud NOTE: The State has an opportunity to object to the registration and to
imprescriptible right to cause the substantiate their claims, which they failed to do and they
reversion of a piece of property never contested the order of the Bureau of Lands
belonging to the public domain if title disregarding their claims. This could only mean that they
has been acquired through either agreed with the order or decided to abandon their
fraudulent means. claims.
10 years from the date of the
issuance of the OCT or TCT. Also, they failed to prove fraud in the execution of the
affidavit used by Ines to obtain title to the disputed
Implied or property. No evidence was adduced by them to
It does not apply where the person
Constructive substantiate their allegation that their signatures therein
enforcing the trust is in actual
Trust were forged. It is not for private respondents to deny
possession of the property because
he is in effect seeking to quiet title to forgery. The burden of proof that the affidavit of waiver is
the same which is imprescriptible. indeed spurious rests on petitioners. Yet, even as they insist
Express Not barred by prescription on forgery, they never really took serious efforts in
Trust establishing such allegation by preponderant evidence.
Void Imprescriptible Mere allegations of fraud are not enough. Intentional acts
Contract to deceive and deprive another of his right or in some
manner injure him, must be specifically alleged and proved
Q: In 1987, an Emancipation Patent OCT was issued in (Brusas v. CA, G. R. No. 126875, Aug. 26, 1999).
Remys favor. In 1998, Madarieta filed a Complaint for
Annulment and Cancellation of the OCT against Remy Q: On September 10, 1965, Melvin applied for a free
before the DARAB, alleging that the Department of patent covering two lots - Lot A and Lot B - situated in
Agrarian Reform (DAR) mistakenly included her Santiago, Isabela. Upon certification by the Public Land
husbands lot as part of Luspos property where Inspector that Melvin had been in actual, continuous,
Remys house was constructed and that it was only on open, notorious, exclusive and adverse possession of
1997 that she discovered such mistake. Is Madarietas the lots since 1925, the Director of Land approved
action barred by prescription? Melvin's application on 04 June 1967. On December 26,
1967, Original Certificate of Title (OCT) No. P-2277 was
A: Yes. Considering that there appears to be a mistake in issued in the name of Melvln.
the issuance of the subject emancipation patent, the
registration of the title to the subject property in Remys On September 7, 1971, Percival filed a protest alleging
name is likewise erroneous, and consequently, Remy holds that Lot B which he had been occupying and cultivating
the property as a mere trustee. An action for reconveyance since 1947 was included in the Free Patent issued in
based on an implied or constructive trust prescribes in 10 the name of Melvin. The Director of Lands ordered the
years from the issuance of the Torrens title over the investigation of Percival's protest. The Special
property. The title over the subject land was registered in Investigator who conducted the investigation found
Remys name in 1987 while Madarieta filed the complaint that Percival had been in actual cultivation of Lot B
to recover the subject lot only in 1998. More than 11 years since 1947.
had lapsed before Madarieta instituted the action for

2 0 15 G O L D E N N O T E S
On November 28, 1986, the Solicitor General filed in the legitimate owner of the land, discovered the
behalf of the Republic of the Philippines a complaint for fraudulent registration obtained by Rommel. She filed
cancellation of the free patent and the OCT issued in a complaint against Rommel for reconveyance and
the name of Melvin and the reversion of the land to caused the annotation of a notice of lis pendens on the
public domain on the ground of fraud and certificate of title issued to Rommel. Rommel now
misrepresentation in obtaining the free patent. On the invokes the indefeasibility of his title considering that
same date, Percival sued Martin for the reconveyance one year has already elapsed from its issuance. He also
of Lot B. seeks the cancellation of the notice of lis pendens.
Melvin filed his answers interposing the sole defense in Will Rachelles suit for reconveyance prosper? Explain.
both cases that the Certificate of Title issued in his (1995 Bar Question)
name became incontrovertible and indefeasible upon
the lapse of one year from the issuance of the free A: Yes, Rachelles suit will prosper because all the
patent. elements of an action for reconveyance are present,
namely:
Given the circumstances, can the action of the Solicitor 1. Rachelle is claiming dominical rights over the
General and the case for reconveyance filed by Percival property;
possibly prosper? (1997 Bar Question) 2. Rommel procured his title to the land by fraud;
3. The action was brought within the statutory period of
A: If fraud be discovered in the application which led to the four years from discovery of the fraud and not later
issuance of the patent and Certificate of Title, this Title than 10 years from the date of registration of
becomes ipso facto null and void. Thus, in a case where a Rommels title; and
person who obtained a free patent, knowingly made a false 4. Title to the land has not yet passed into the hands of
statement of material and essential facts in his application an innocent purchaser for value.
for the same, by stating therein that the lot in question was
part of the public domain not occupied or claimed by any Rommel can invoke the indefeasibility of his title if
other person, his title becomes ipso facto canceled and Rachelle had filed a petition to re-open or review the
consequently rendered null and void. decree of registration. But Rachelle instead filed an
ordinary action in personam for reconveyance. In the latter
It is to the public interest that one who succeeds In action, indefeasibility is not a valid defense, because in
fraudulently acquiring title to public land should not be filing such action, Rachelle is not seeking to nullify or to
allowed to benefit therefrom and the State, through the impugn the indefeasibility of Rommels title. She is only
Solicitor General, may file the corresponding action for asking the court to compel Rommel to reconvey the title to
annulment of the patent and the reversion of the land her as the legitimate owner of the land.
involved to the public domain (Dinero v. Director of Lands;
Kayaban v. Republic L-33307, Aug. 20, 1973; Director of DAMAGES
Lands vs. Animas, L-37682, Mar. 29, 1974).
Q: When may an action for damages be resorted to in
With respect to Percival's action for reconveyance, it would land registration cases?
have prescribed, having been filed more than ten (10) years
after registration and issuance of an OCT in the name of A: After one year from date of the decree and if
Melvin, were it not for the inherent infirmity of the latter's reconveyance is not possible because the property has
title. Hence, under the facts, the statute of limitations will passed to an innocent purchaser for value and in good
not apply to Percival because Melvin knew that a part of the faith, the aggrieved party aggrieved party may bring an
land covered by his title actually belonged to Percival. So, ordinary action for damages only against the applicant or
instead of nullifying in toto the title of Melvin, the court, in persons responsible for the fraud or were instrumental in
the exercise of equity and jurisdiction, may grant prayer for depriving him of the property.
the reconveyance of Lot B to Percival who has actually
possessed the land under a claim of ownership since 1947. Prescription of action for damages in land registration
After all, if Melvin's title is declared void ab initio and the cases
land is reverted to the public domain, Percival would just
the same be entitled to preference right to acquire the land An ordinary action for damages prescribes in ten (10)
from the government. Besides, well settled is the rule that years after the issuance of the Torrens title over the
once public land has been in open, continuous, exclusive property.
and notorious possession under a bona fide claim of
acquisition of ownership for the period prescribed by Sec. CANCELLATION SUIT
48, Public Land Act, the same ipso jure ceases to be public
and in contemplation of law acquired the character of Cancellation suit
private land. Thus, reconveyance of the land from Melvin to
Percival would be the better procedure. (Vital v. Anore, G.R. It is an action for cancellation of title brought by a private
No. L-4136, Feb. 29, 1952; Pena, Land Titles and Deeds, p. individual, alleging ownership as well as the defendants
427, 1982 ed) fraud or mistake, as the case may be, in successfully
obtaining title over a disputed land claimed by the plaintiff.
Q: Rommel was issued a certificate of title over a
parcel of land in Quezon City. One year later, Rachelle,

CIVIL LAW
Q: When is resort to a cancellation suit proper? 5. The registered owner has been married, or registered
as married, the marriage has terminated and no right
A: or interest of heirs or creditors will thereby be
1. When two certificates of title are issued to different affected;
persons covering the same parcel of land in whole or 6. A corporation, which owned registered land and has
in part been dissolved, has not conveyed the same within 3
2. When certificate of title is issued covering a non- years after its dissolution; or
registrable property 7. There is a reasonable ground for the amendment or
3. Other causes such as when the certificate of title is alteration of title.
issued pursuant to a judgment that is not final or
when it is issued to a person who did not claim and Requisites for the amendment or correction of title
applied for the registration of the land covered.
1. It must be filed in the original case;
Q: What are the rules as regards cancellation of 2. By the registered owner or a person in interest;
certificates of title belonging to different persons over 3. On grounds enumerated;
the same land? 4. All parties must be notified;
5. There is unanimity among them; and
A: Where two certificates are issued to different persons 6. Original decree must not be opened.
covering the same land, the title earlier in date must
prevail. The latter title should be declared null and void
and ordered cancelled. QUIETING OF TITLE
Prior est temporae, prior est in jura Action for quieting of title
It is a principle which means he who is first in time is It is an action that is brought to remove clouds on the title
preferred in right. to real property or any interest therein, by reason of any
instrument, record, claim, encumbrance, or proceeding
Q: Pablo occupied a parcel of land since 1800. In 1820, which is apparently valid or effective but is in truth and in
he was issued a certificate of title over said land. In fact invalid, ineffective, voidable or unenforceable, and
1830, however, the land was reclassified as alienable may be prejudicial to said title.
and disposable, as it was originally a forest land. In
1850, Pedro was able to obtain a certificate of title Quieting of title is a common law remedy for the removal
over the same land. Upon learning of such, Pablo of any cloud upon, doubt, or uncertainty affecting title to
sought to have Pedros title declared null and void. real property. Whenever there is a cloud on title to real
Decide. property or any interest in real property by reason of any
instrument, record, claim, encumbrance, or proceeding
A: As a general rule, the earlier in date must prevail. that is apparently valid or effective, but is, in truth and in
However, this principle cannot apply if it is established fact, invalid, ineffective, voidable, or unenforceable, and
that the earlier title was procured through fraud or is may be prejudicial to said title, an action may be brought
otherwise jurisdictionally flawed (Republic v. CA and Guido, to remove such cloud or to quiet the title. In such action,
et. al., G.R. No. 84966, Nov. 21, 1991). The rule is valid only the competent court is tasked to determine the respective
absent any anomaly or irregularity tainting the process of rights of the complainant and the other claimants, not only
registration. Where the inclusion of land in the certificate to place things in their proper places, and make the
of title of prior date is a mistake, the mistake may be claimant, who has no rights to said immovable, respect and
rectified by holding the latter of the two certificates to be not disturb the one so entitled, but also for the benefit of
conclusive (Legarda v. Saleeby, G.R. No. 8936, Oct. 2, 1915). both, so that whoever has the right will see every cloud of
Since the earlier title was issued when the disputed land doubt over the property dissipated, and he can thereafter
was still a non-registrable property, the same may be fearlessly introduce any desired improvements, as well as
challenged through a cancellation suit and may be declared use, and even abuse the property (Phil-Ville Development
as null and void. Pedros title must prevail. and Housing Corporation v. Maximo Bonifacio, et al., G.R. No.
167391, June 8, 2011).
Grounds for amendment or correction of certificate of
title Basis of an action for quieting of title
When: n action for quieting of title is essentially a common law

1. Registered interests of any description, whether remedy grounded on equity. The competent court is tasked
vested, contingent or inchoate have terminated and to determine the respective rights of the complainant and
ceased; other claimants, not only to place things in their proper
2. New interests have arisen or been created which do place, to make the one who has no rights to said
not appear upon the certificate; immovable respect and not disturb the other, but also for
3. Any error, omission or mistake was made in entering the benefit of both, so that he who has the right would see
a certificate or any memorandum thereon or on any every cloud of doubt over the property dissipated, and he
duplicate certificate; could afterwards without fear introduce the improvements
4. The name of any person on the certificate has been he may desire, to use, and even to abuse the property as he
changed;

2 0 15 G O L D E N N O T E S
deems best (Dionisio Mananquil, et al. v. Roberto Moico; G.R. A: A reconstituted title, by itself, does not determine or
No. 180076. November 20, 2012). resolve the ownership of the land covered by the lost or
destroyed title. The reconstitution of a title is simply the
Persons who may file an action to quiet title re-issuance of a lost duplicate certificate of title in its
original form and condition. It does not determine or
4. Registered owner; resolve the ownership of the land covered by the lost or
5. A person who has an equitable right or interest in the destroyed title. A reconstituted title, like the original
property; or certificate of title, by itself does not vest ownership of the
6. The State. land or estate covered thereby (Alonso, et. al. v. Cebu
Country Club Inc., G.R. No. 130876, Dec. 5, 2003).
Requisites in order that an action for quieting of title
may prosper Q: Where the title to the land was lost, does it mean
that the land ceased to be registered land?
1. The plaintiff or complainant has a legal or equitable
title or interest in the real property subject of the A: No. The fact that the title to the land was lost does not
action; mean that the land ceased to be a registered land before
2. The deed, claim, encumbrance or proceeding claimed the reconstitution of its title.
to be casting cloud on his title must be shown to be in
fact invalid or inoperative despite prima facie Q: May a writ of possession be issued in a petition for
appearance of validity or legal efficacy (Phil-Ville reconstitution?
Development and Housing Corporation v. Maximo
Bonifacio, et al., G.R. No. 167391, June 8, 2011) (Joaquin A: No, because, reconstitution does not adjudicate
G. Chung, Jr. et al., v. Jack Daniel Mondragon et al., GR ownership over the property. A writ of possession is
No. 179754, November 21, 2012). issued to place the applicant-owner in possession.
Q: May a person who obtains registration through Q: What must be shown before the issuance of an
fraud be held criminally liable? order for reconstitution?
A: Yes. The State may criminally prosecute for perjury the A:

party who obtains registration through fraud, such as by 1. That the certificate of title had been lost or destroyed;
stating false assertions in the application for registration, 2. That the documents presented by petitioner are
sworn answer required of applicants in cadastral sufficient and proper to warrant reconstitution of the
proceedings, or application for public land and patent. lost or destroyed certificate of title;
3. That the petitioner is the registered owner of the
REMEDY IN CASE OF LOSS OR property or had an interest therein;
DESRUCTION OF CERTIFICATE OF TITLE 4. That the certificate of title was in force at the time it
was lost or destroyed; and
Remedy in case a person lost his certificate of title 5. That the description, area and boundaries of the
property are substantially the same as those
1. If what is lost is the OCT or TCT Reconstitution of contained in the lost or destroyed certificate of title
certificate of title; (Republic of the Philippines v. Apolinaria Catarroja, et
2. If, however, it is the duplicate of the OCT or TCT al., G.R. No. 171774, Feb. 12, 2010).
Replacement of lost duplicate certificate of title.
Jurisdictional requirements in petitions for
Reconstitution of certificate of title reconstitution of title
The restoration of the instrument which is supposed to Notice thereof shall be:
have been lost or destroyed in its original form and 1. Published twice in successive issues of the Official
condition, under the custody of Register of Deeds. Gazette;
2. Posted on the main entrance of the provincial building
Purpose of reconstitution of title and of the municipal building of the municipality or
city, where the land is situated; and
To have the same reproduced, after proper proceedings, in 3. Sent by registered mail to every person named in said
the same form they were when the loss or destruction notice
occurred.
NOTE: The above requirements are mandatory and
The reconstitution or reconstruction of a certificate of title jurisdictional.
literally denoted restoration of the instrument which is
supposed to have been lost or destroyed in its original Kinds of reconstitution of title
form and condition
1. Judicial partakes the nature of a land registration
Q: Does reconstitution determine ownership of land proceeding in rem. The registered owners, assigns, or
covered by a lost or destroyed certificate of title? any person having an interest in the property may file
a petition for that purpose with RTC where property

CIVIL LAW
is located. RD is not the proper party to file the Accordingly, the Catarrojas inherited these lands from
petition. their parents. Allegedly, the LRA issued a certification
2. Administrative may be availed of only in case of: confirming that the land registration court issued a
a. Substantial loss or destruction of the original Decree covering the lots. A copy of the decree however
land titles due to fire, flood, or other force was no longer available in the records. It was also
majeure as determined by the Administrator of claimed that the owners duplicate copy of the title had
the Land Registration Authority been lost while with their parents. If you were the
b. The number of certificates of title lost or judge, will you grant the petition for reconstitution of
damaged should be at least 10% of the total title?
number in the possession of the Office of the
Register of Deeds A: In Republic v. Intermediate Appellate Court, applied the
c. In no case shall the number of certificates of title principle of ejusdem generis in interpreting Section 2(f) of
lost or damaged be less than 500 R.A. 26. Any other document refers to reliable
d. Petitioner must have the duplicate copy of the documents of the kind described in the preceding
certificate of title (R.A. 6732) enumerations. This Court is not convinced that the above
documents of the Catarrojas fall in the same class as those
NOTE: The law provides for retroactive application thereof enumerated in paragraphs (a) to (e). None of them proves
to cases 15 years immediately preceding 1989. that a certificate of title had in fact been issued in the name
of their parents. Accordingly, the documents must come
Q: From what sources may a certificate of title be from official sources which recognize the ownership of the
reconstituted? owner and his predecessors-in-interest. None of the
documents presented in this case fit such description
A: (Republic of the Philippines v. Apolinaria Catarroja, et al.,
Judicial reconstitution G.R. No. 171774, Feb. 12, 2010).
For OCT (in the following order): Q: If what is lost or destroyed is the DUPLICATE TITLE,
1. Owners duplicate of the certificate of title is reconstitution the proper remedy?
2. Co-owners, mortgagees or lessees duplicate of said
certificate A: No. When the duplicate title of the landowner is lost, the
3. Certified copy of such certificate, previously issued by proper petition is not reconstitution of title, but one filed
the Register of Deeds with the court for issuance of new title in lieu of the lost
4. Authenticated copy of the decree of registration or copy.
patent, as the case may be, which was the basis of the
certificate of title Persons entitled to a Duplicate Certificate of Title
5. Deed or mortgage, lease or encumbrance containing
description of property covered by the certificate of 1. Registered owner
title and on file with the Registry of Deeds, or an 2. Each co-owner
authenticated copy thereof
6. Any other document which, in the judgment of the Requirements for the replacement of lost duplicate
court, is sufficient and proper basis for reconstitution certificate of title
For TCT (in the following order): 1. Due notice under oath shall be sent by the owner or
1. Owners duplicate of the certificate of title by someone in his behalf to the Register of Deeds of
2. Co-owners, mortgagees or lessees duplicate of said the province or city where the land lies as soon as the
certificate loss or theft is discovered.
3. Certified copy of such certificate, previously issued by 2. Petition for replacement should be filed with the RTC
the Register of Deeds of the province or city where the land lies.
4. Deed of transfer of other document containing 3. Notice to Solicitor General by petitioner is not
description of property covered by the transfer imposed by law but it is the Register of Deeds who
certificate of title and on file with the Registry of should request for representation by the Solicitor
Deeds, or an authenticated copy thereof General.
5. Deed or mortgage, lease or encumbrance containing 4. A proceeding where the certificate of title was not in
description of property covered by the certificate of fact lost or destroyed is null and void for lack of
title and on file with the Registry of Deeds, or an jurisdiction and the newly issued duplicate is null and
authenticated copy thereof void.
6. Any other document which, in the judgment of the
court, is sufficient and proper basis for reconstitution SURRENDER OF
WITHHELD DUPLICATE CERTIFICATE OF TITLE
Administrative reconstitution
1. Owners duplicate of the certificate of title Grounds for surrender of withheld duplicate
2. Co-owners, mortgagees or lessees duplicate of said certificate of title
certificate
1. When it is necessary to issue a new certificate of title
Q: Apolinario Catarroja et al., filed a petition for pursuant to any involuntary instrument which divests
reconstitution of title covering 2 lots in Cavite. the title of the registered owner against his consent;

2 0 15 G O L D E N N O T E S
2. Where a voluntary instrument cannot be registered the Public Land Act (Rellosa v. Gaw Chee Hun, G.R. No. L-
by reason of the refusal or failure of the holder to 1411, Sept. 29, 1953).
surrender the owners duplicate certificate of title; or
3. Where the owners duplicate certificate is not Action for reversion v. Action for cancellation of title?
presented for amendment or alteration pursuant to a
court order. ACTION FOR REVERSION ACTION FOR
CANCELLATION
AMENDMENT OR CORRECTION OF CERTIFICATE OF Filed by the government Initiated by a private party
TITLE through the Solicitor usually in a case where there
General are 2 titles issued to different
Grounds for amendment or correction of certificate of persons for the same lot
title
Q: In the remedy of action for cancellation of title, does
When: the land revert back to the mass of public domain?
1. Registered interests of any description, whether
vested, contingent or inchoate have terminated and A: No. In this action, the land does not revert to the mass of
ceased; the public domain, but is declared as lawfully belonging to
2. New interests have arisen or been created which do the party whose certificate of title is held superior over the
not appear upon the certificate; other.
3. Any error, omission or mistake was made in entering
a certificate or any memorandum thereon or on any
duplicate certificate; Q: Who initiates the action for reversion?
4. The name of any person on the certificate has been
changed; A: It is instituted by the Solicitor General, who shall
5. The registered owner has been married, or registered represent the government, its agencies, and
as married, the marriage has terminated and no right instrumentalities, and its officials and agents in any
or interest of heirs or creditors will thereby be litigation, proceeding, investigation or matter requiring the
affected; services of a lawyer. It shall represent the government in
6. A corporation, which owned registered land and has all registration and related proceedings and institute
been dissolved, has not conveyed the same within 3 actions for the reversion to the State of Lands of the public
years after its dissolution; or domain and improvements thereon and all lands held in
7. There is a reasonable ground for the amendment or violation of the Constitution.
alteration of title.
Application of reversion
Requisites for the amendment or correction of title
Generally, reversion applies in all cases where lands of
1. It must be filed in the original case; public domain and the improvements thereon and all lands
2. By the registered owner or a person in interest; are held in violation of the Constitution.
3. On grounds enumerated;
4. All parties must be notified; Grounds for reversion of lands covered by a patent
5. There is unanimity among them; and
6. Original decree must not be opened. 1. Violation of Sec.s 118, 120, 121 and 122, Public Land
Act (e.g. alienation or sale of homestead executed
REVERSION within the 5 year prohibitory period)
2. When land patented and titled is not capable of
Reversion registration
3. Failure of the grantee to comply with the conditions
It is an action instituted by the government, through the imposed by law to entitle him to a patent grant
Solicitor General, for cancellation of certificate of title and 4. When the area is an expanded area
the consequential reversion of the land covered thereby to 5. When the land is acquired in violation of the
the State. Constitution (e.g. land acquired by an alien may be
reverted to the State)
Reversion connotes restoration of public land fraudulently
awarded or disposed of to the mass of the public domain Q: Luis filed a complaint for annulment of title
and may again be the subject of disposition in the manner involving a foreshore land which was granted in
prescribed by law to qualified applicants. Flores favor, alleging that his application therefor was
granted by the government. Is Luis the real party in
Reversion v. Escheat proceeding interest with authority to file a complaint for
annulment of title of foreshore land?
An action for reversion is slightly different from escheat
proceeding, but in its effects they are the same. They only A: No. In all actions for the reversion to the Government of
differ in procedure. Escheat proceedings may be instituted lands of the public domain or improvements thereon, the
as a consequence of a violation of the Constitution which Republic of the Philippines is the real party in interest. The
prohibits transfers of private agricultural lands to aliens, action shall be instituted by the Solicitor General or the
whereas an action for reversion is expressly authorized by officer acting in his stead, in behalf of the Republic of the

CIVIL LAW
Philippines. Petitioners must first lodge their complaint Extent of authority of cadastral courts
with the Bureau of Lands in order that an administrative
investigation may be conducted under Sec. 91, Public Land The cadastral court is not limited to merely adjudication of
Act (Manese v. Sps. Velasco, G.R. No. 164024, Jan. 29, 2009). ownership in favor of one or more claimants. If there are
no successful claimants, the property is declared public
Private persons have no right or interest over land land.
considered public at the time the sales application was
filed. They have no personality to question the validity of Cadastral courts do not have the power to determine and
the title (Vicente Cawis v. Hon. Antonio Cerilles, G.R. No. adjudicate title to a lot already covered by homestead
170207, April 19, 2010). patent to a person other than a patentee.
NOTE: Indefeasibility of title, prescription, laches and Cadastral court possesses no authority to award damages.
estoppel do not bar reversion suits.
NOTE: A parcel of forest land is within the exclusive
CADASTRAL LAND REGISTRATION jurisdiction of the Bureau of Forestry and beyond the
power and jurisdiction of the cadastral court to register
Cadastral registration under the Torrens system.
It is a proceeding in rem, initiated by the filing of a petition SUBSEQUENT REGISTRATION

for registration by the government, not by the persons
claiming ownership of the land subject thereof, and the Subsequent registration
latter are, on the pain of losing their claim thereto, in effect
compelled to go to court to make known their claim or It is where incidental matters after original registration
interest therein, and to substantiate such claim or interest. may be brought before the land registration court by way
of motion or petition filed by the registered owner or a
Purpose of cadastral registration party in interest.
Here, the government does not seek the registration of Q: After registering his land, what conveyances may
land in its name. The objective of the proceeding is the the registered owner do?
adjudication of title to the lands or lots involved in said
proceeding. Furthermore, it is to serve public interest by A: An owner of registered land may convey, mortgage,
requiring that the titles to the lands be settled and lease, charge or otherwise deal with the same in
adjudicated (Sec 1 of Act. No. 2259) accordance with existing laws. He may use such forms of
deeds, mortgages, leases or other voluntary instruments as
Q: Explain the process for the filing of Petition for are sufficient in law.
Registration.
NOTE: G.R. Such deed, mortgage, lease, or other voluntary
A: The Director of Lands, represented by the Solicitor instrument shall operate only as a contract between the
General, shall institute original registration proceedings by parties and as evidence of authority to the Register of
filing the necessary petition in the Regional Trial Court of Deeds to make registration. It is the act of registration
the place where the land is situated against the holders, which shall operate to convey or affect the land insofar as
claimants, possessors, or occupants of such lands or any third persons are concerned, and in all cases, the
part thereof, stating that public interest requires that the registration shall be made in the office of the Register of
title to such lands be settled and adjudicated and praying Deeds for the province or city where the land lies. The act
that such titles be settled and adjudicated. of registration creates a constructive notice to the whole
world of such voluntary or involuntary instrument or
Procedure in cadastral registration court writ or process. (Sec. 52, PD 1529)
1. Cadastral survey XPN: A will purporting to convey or affect registered land

2. Filing of petition shall take effect as a conveyance or bind the land, not
3. Publication of notice of initial hearing merely as a contract or evidence of authority of the RD to
4. Filing of answer make registration (Sec. 51, PD 1529).
5. Hearing of case
6. Decision VOLUNTARY DEALINGS
7. Issuance of decree & certificate of title
Necessity of registration of voluntary dealings
Contents of the petition
Voluntary Dealings are not required to be registered.
Petition shall contain: Registration is not a requirement for validity of the
a. Description of the lands contract as between the parties. However, the act of
b. Plan thereof registration shall be the operative act to convey or affect
c. Such other data as to facilitate notice to all occupants the land insofar as third parties are concerned.
and persons having claim or interest therein

2 0 15 G O L D E N N O T E S
Requirements for registrability of deeds and other equitable condition or limitation expressed therein, or
voluntary acts of conveyance to create or declare a trust or other equitable interests
in such land without transfer, the particulars of the
1. Presentation of owners duplicate certificate trust, condition, limitation or other equitable interest
whenever any duly executed voluntary instrument is shall not be entered on the certificate; but only a
filed for registration; memorandum thereof shall be entered by the words
2. Inclusion of one extra copy of any document of "in trust", or "upon condition", or other apt words,
transfer or alienation of real property, to be furnished and by a reference by number to the instrument
to the city or provincial assessor; authorizing or creating the same. A similar
3. Payment of prescribed registration fees and requisite memorandum shall be made upon the original
documentary stamps; and instrument creating or declaring the trust or other
4. Evidence of full payment of real estate tax as may be equitable interest with a reference by number to the
due. certificate of title to which it relates and to the volume
and page in the registration book in which it is
Effect of registration of such voluntary dealings registered (Sec. 65, P.D. 1529).
It: 2. If the instrument creating or declaring a trust or other

1. Creates a lien that attaches to the property in favor of equitable interest contains an express power to sell,
the mortgagee; and mortgage or deal with the land in any manner, such
2. Constitutes constructive notice of his interest in the power shall be stated in the certificate of title by the
property to the whole world. words "with power to sell", or "power to mortgage",
or by apt words of description in case of other powers
Rule on carry over of encumbrances (Sec. 66, P.D. 1529).
If, at the time of any transfer, subsisting encumbrances or 3. If a new trustee of registered land is appointed by a
annotations appear in the registration book, they shall be court of competent jurisdiction, a new certificate may
carried over and stated in the new certificate or be issued to him upon presentation to the Register of
certificates; except so far as they may be simultaneously Deeds of a certified copy of the order or judicial
released or discharged (Sec. 59, P.D. 1529). appointment and the surrender for cancellation of the
duplicate certificate (Sec. 67, P.D. 1529).
Q: If the property that was the subject of mortgage was
subsequently foreclosed, must a new certificate of title 4. Whoever claims an interest in registered land by
be automatically issued in favour of the purchaser? reason of any implied or constructive trust shall file
for registration with the Register of Deeds a sworn
A: The answer must be qualified. statement thereof containing a description of the land,
the name of the registered owner and a reference to
1. No right of redemption - the certificate of title of the the number of the certificate of title. Such claim shall
mortgagor shall be canceled, and a new certificate not affect the title of a purchaser for value and in good
issued in the name of the purchaser. faith before its registration (Sec. 68, P.D. 1529).
2. There is right of redemption - the certificate of title of INVOLUNTARY DEALINGS

the mortgagor shall not be canceled, but the
certificate of sale and the order confirming the sale Necessity of registration of involuntary dealings
shall be registered by a brief memorandum thereof
made by the Register of Deeds upon the certificate of Involuntary dealings, unlike the voluntary dealings,
title. requires the registration. It is the act of registration which
creates a constructive notice to the whole world of such
In the event the property is redeemed, the certificate or instrument or court writ or process and is the operative
deed of redemption shall be filed with the Register of act that conveys ownership or affects the land insofar as
Deeds, and a brief memorandum thereof shall be made by third persons are concerned.
the Register of Deeds on the certificate of title of the
mortgagor. Involuntary dealings that must be registered
If the property is not redeemed, the final deed of sale 1. Attachment

executed by the sheriff in favor of the purchaser at a 2. Adverse claim
foreclosure sale shall be registered with the Register of 3. Notice of lis pendens
Deeds; whereupon the title of the mortgagor shall be
canceled, and a new certificate issued in the name of the Writ of attachment
purchaser (Sec. 63, P.D. 1529).
It is used primarily to seize the debtors property in order
Rule on registration in case the property conveyed is to secure the debt or claim of the creditor in the event that
held in trust a judgment is rendered.
1. If a deed or other instrument is filed in order to

transfer registered land in trust, or upon any

CIVIL LAW
Effect of the non-recording of a writ of attachment Q: What claims may be registered as adverse claims?
An attachment levied on real state not duly recorded in the A: Any claim of part or interest in registered land that are
Registry of Property is not an encumbrance on the adverse to the registered owner, arising subsequent to the
attached property, nor can such attachment unrecorded in date of the original registration (Sec. 70, PD 1529)
the registry, serve as a ground for decreeing the
annulment of the sale of the property at the request of NOTE: A mere money claim cannot be registered as an
another creditor. adverse claim.
Adverse claim Effect of the registration of an adverse claim
It is a notice to third persons that someone is claiming an It renders the adverse claim effective and any transaction
interest on the property or has a better right than the regarding the disputed land shall be subject to the
registered owner thereof, and that any transaction outcome of the dispute.
regarding the disputed land is subject to the outcome of
the dispute. Effect of non-registration of an adverse claim
Purpose of adverse claim The effect of non-registration or invalid registration of an

adverse claim renders it ineffective for the purpose of
The purpose of annotating the adverse claim on the title of protecting the claimants right or interest on the disputed
the disputed land is to apprise third persons that there is a land, and could not thus prejudice any right that may have
controversy over the ownership of the land and to arisen thereafter in favor of third parties.
preserve and protect the right of the adverse claimant
during the pendency of the controversy. Limitations to the registration of an adverse claim
Q: When is a claim of interest adverse? 1. No second adverse claim based on the same ground
may be registered by the same claimant.
A: 2. A mere money claim cannot be registered as an
1. Claimants right or interest in registered land is adverse claim.
adverse to the registered owner;
2. Such right or interest arose subsequent to the date of Q: May an adverse claim exist concurrently with a
original registration; or subsequent annotation of a notice of lis pendens?
3. No other provision is made in the decree for the
registration of such right or claim. A: Yes, an adverse claim may exist concurrently with a
subsequent annotation of a notice of lis pendens. When an
Formal requisites of an adverse claim for purposes of adverse claim exists concurrently with a notice of lis
registration pendens, the notice of adverse claim may be validly
cancelled after the registration of such notice, since the
1. Adverse claimant must state the following in writing: notice of lis pendens also serves the purpose of the adverse
a. His alleged right or interest; claim.
b. How and under whom such alleged right of
interest is acquired; Lifespan of a registered adverse claim
c. Description of the land in which the right or
interest is claimed; and The adverse claim shall be effective for a period of thirty
d. Certificate of title number (30) days from the date of registration and it may be
2. Such statement must be signed and sworn to before a cancelled.
notary public; and
3. Claimant shall state his residence or place to which all Effect of the expiration of the period of effectivity of an
notices may be served upon him. adverse claim
Registration of adverse claim The expiration does not ipso facto terminate the claim. The
cancellation of the adverse claim is still necessary to
By filing a sworn statement with the Register of Deeds of render it ineffective; otherwise, the inscription will remain
the province where the property is located, setting forth annotated and shall continue as a lien to the property.
the basis of the claimed right together with other data
pertinent thereto. Q: May the RD cancel an adverse claim?
NOTE: Entry of the adverse claim filed on the day book is A: The RD cannot, on its own, automatically cancel the
sufficient without the same being annotated at the back of adverse claim.
the corresponding certificate of title (Director of Lands v.
Reyes, G.R. No. L-27594, Feb. 27, 1976) NOTE: Before the lapse of 30-day period, the claimant may
file a sworn petition withdrawing his adverse claim, or a
petition for cancellation of adverse claim may be filed in
the proper Regional Trial Court

2 0 15 G O L D E N N O T E S
Q: What must an interested party do if he seeks the Q: When may a notice of lis pendens be made and
cancellation of a registered adverse claim? when may it not be resorted to?
A: The interested party must file with the proper court a A:

petition for cancellation of adverse claim, and a hearing NOTICE OF LIS PENDENS
must also first be conducted. When applicable When Inapplicable
1. Recover possession of 1. Attachments
Notice of lis pendens real estate 2. Levy or execution
2. Quieting of title 3. Proceedings on
Lis pendens literally means a pending suit. The doctrine of 3. Remove clouds upon title probate or wills
lis pendens refers to the jurisdiction, power or control 4. For Partition 4. Administration of
which a court acquires over property involved in a suit, 5. Any other proceeding of the real estate of
pending the continuance of the action, and until final any kind in court directly deceased person
judgment. affecting title to the land 5. Proceedings for the
or its use or occupation recovery of money
It merely creates a contingency and not a lien. It does not or the building thereon judgments
produce any right or interest which may be exercised over
the property of another. It only protects the applicants Effects of the annotation of notice of lis pendens
rights which will be determined during trial.
The filing of notice of lis pendens has 2 effects:
NOTE: It is not a lien or encumbrance under our civil law. 1. It keeps the subject matter of litigation within the
It is mere cautionary notice to prospective buyers of power of the court until the entry of the final
certain property that said property is under litigation. The judgment to prevent the defeat of the final judgment
annotation of a notice of lis pendens at the back of the by successive alienation; and
original copy of the certificate of title on file with the 2. It binds a purchaser, bona fide or not, of the land
Register of Deeds is sufficient to constitute constructive subject of the litigation to the judgment or decree that
notice to purchasers or other persons subsequently the court will promulgate subsequently.
dealing with the same property. One who deals with
property subject of a notice of lis pendens cannot invoke Q: What statutory liens affecting title are not barred
the right of a purchaser in good faith neither can he even though not noted in the title?
acquire better rights that those of his predecessors-in-
interest. A:
1. Liens, claims or rights arising or existing under the
Basis for such notice laws and the Constitution, not required by law to
appear of record in the RD;
Such announcement is founded upon public policy and 2. Unpaid real estate taxes levied and assessed within
necessity, the purpose of which is to keep the properties in two (2) years immediately preceding the acquisition
litigation within the power of the court until the litigation of any right over the land by an innocent purchaser
is terminated and to prevent the defeat of the judgment or for value without prejudice to right of the government
decree by subsequent alienation (Isabelita Cunanan et al., to collect taxes payable before that period from the
v. Jumping Jap Trading Corporation et al., G.R. No. 173834, delinquent taxpayer alone;
April 24, 2009). 3. Public highway or private way established or
recognized by law or any government irrigation canal
Purposes of a notice of lis pendens or lateral thereof; and
4. Any Disposition of the property or limitation on the
To: use thereof by virtue of laws or regulations on
1. Protect the rights of the party causing the registration agrarian reform (Sec. 44, PD 1529).
of the lis pendens; and
2. Advise third persons who purchase or contract on the Q: When may a notice of lis pendens be cancelled?
subject property that they do so at their peril and
subject to the result of the pending litigation. A: A notice of lis pendens may be cancelled in the following
cases before final judgment upon order of the court:
NOTE: It is an announcement to the whole world that a 1. When it is shown that the notice is for the purpose of
particular real property is in litigation, serving as a molesting the adverse party;
warning that one who acquires an interest over said 2. Where the evidence so far presented by the plaintiff
property does so at his own risk, or that he gambles on the does not bear out the main allegations of the
result of the litigation over the said property. The filing of a complaint;
notice of lis pendens charges all strangers with a notice of 3. When it is shown that it is not necessary to protect the
the particular litigation referred to therein and, therefore, right of the party who caused the registration thereof;
any right they may thereafter acquire on the property is 4. Where the continuances of the trial are unnecessarily
subject to the eventuality of the suit (Isabelita Cunanan et delaying the determination of the case to the
al., v. Jumping Jap Trading Corporation et al., G.R. No. prejudice of the defendant;
173834, April 24, 2009). 5. Upon verified petition of the party who caused the
registration thereof; or

CIVIL LAW
6. It is deemed cancelled after final judgment in favor of
defendant, or other disposition of the action, such as NON-REGISTRABLE PROPERTIES
to terminate all rights of the plaintiff to the property
involved. Non-registrable lands
Cancellation of lis pendens even during the pendency These are properties of public dominion which, under
of the case existing legislation, are not the subject of private
ownership and are reserved for public purposes.
Though ordinarily a notice of lis pendens cannot be
cancelled while the action is still pending and NOTE: That properties of the public dominion are not
undetermined, the proper court has discretionary power susceptible to prescription and that only properties of the
to cancel it under peculiar circumstances, as for instance, State that are no longer earmarked for public use,
where the evidence so far presented by the plaintiffs does otherwise known as patrimonial, may be acquired by
not bear out the main allegations of his complaint, and prescription are fundamental, even elementary, principles
where the continuances of the trial, for which the plaintiffs in this jurisdiction. In Heirs of Mario Malabanan v.
is responsible are unnecessarily delaying the Republic, the Supreme Court, in observance of the
determination of the case to the prejudice of the foregoing, clarified the import of Section 14(2) and made
defendants (Baranda v. Gustillo, G.R. No. L-81163, Sept. 26, the following declarations: (a) the prescriptive period for
1988). purposes of acquiring an imperfect title over a property of
the State shall commence to run from the date an official
Q: When is a notice of lis pendens deemed cancelled? declaration is issued that such property is no longer
intended for public service or the development of national
A: Under Section 77 of P.D. 1529, a notice of lis wealth; and (b) prescription will not run as against the
pendens shall be deemed cancelled only upon the State even if the property has been previously classified as
registration of a certificate of the clerk of court in which alienable and disposable as it is that official declaration
the action or proceeding was pending stating the manner that converts the property to patrimonial (Republic of the
of disposal thereof if there was a final judgment in favor of Philippines vs. Metro Index Realty and Development
the defendant or the action was disposed of terminating Corporation; G.R. No. 198585, July 2, 201).
finally all rights of the plaintiff over the property in
litigation (Isabelita Cunanan et al., v. Jumping Jap Trading Reason behind their non-registrability
Corporation et al., G.R. No. 173834, April 24, 2009).
They are intended for public use, public service or
Q: Rommel was issued a certificate of title over a development of the national wealth. They are outside the
parcel of land in Quezon City. One year later, Rachelle, commerce of men and, therefore, not subject to private
the legitimate owner of the land, discovered the appropriation.
fraudulent registration obtained by Rommel. She filed
a complaint against Rommel for reconveyance and Q: Which lands are non-registrable?
caused the annotation of a notice of lis pendens on the
certificate of title issued to Rommel. Rommel now A:
invokes the indefeasibility of his title considering that 1. Property of public domain or those intended for
one year has already elapsed from its issuance. He also public use, public service or development of the
seeks the cancellation of the notice of lis pendens. national wealth.
2. Forest or timber lands
May the court cancel the notice of lis pendens even 3. Water sheds
before final judgment is rendered? Explain. (1995 Bar 4. Mangrove swamps
Question) 5. Mineral lands
6. Parks and plazas
A: A notice of lis pendens may be cancelled even before 7. Military or naval reservations
final judgment upon proper showing that the notice is for 8. Foreshore lands
the purpose of molesting or harassing the adverse party or 9. Reclaimed lands
that the notice of lis pendens is not necessary to protect 10. Submerged areas
the right of the party who cause it to be registered. (Sec. 77, 11. River banks
PD 1529) 12. Lakes
13. Reservations for public and semi-public purposes
In this case, it is given that Rachelle is the legitimate owner 14. Others of similar character
of the land in question. It can be said, therefore, that when
she filed her notice of lis pendens her purpose was to Q: In 1913, Gov. Gen. Forbes reserved a parcel of land
protect her interest in the land and not just to molest for provincial park purposes. Sometime thereafter, the
Rommel. It is necessary to record the lis pendens to protect court ordered said land to be registered in Ignacio
her interest because if she did not do it, there is a Palomos name. What is the effect of the act of Gov. Gen
possibility that the land will fall into the hands of an Forbes in reserving the land for provincial park
innocent purchaser for value and in that event, the court purposes?
loses control over the land making any favorable judgment
thereon moot and academic. For these reasons, the notice A: As part of the reservation for provincial park purposes,
of lis pendens may not be cancelled. they form part of the forest zone. It is elementary in the law

2 0 15 G O L D E N N O T E S
governing natural resources that forest land cannot be Q: Can land be partly mineral and partly agricultural?
owned by private persons. It is not registrable and
possession thereof, no matter how lengthy, cannot convert A: The rights over the land are indivisible and that the land
it into private property, unless such lands are reclassified itself cannot be half agricultural and half mineral. The
and considered disposable and alienable (Sps. Palomo, et. classification of land must be categorical; the land must be
al. v. CA, et. al., G.R. No. 95608, Jan. 21, 1997). either completely mineral or completely agricultural.
Q: Under what instance is a forested area classified as Watershed

a forest land?
It is a land area drained by a stream or fixed body of water
A: A forested area classified as forest land of the public and its tributaries having a common outlet for surface
domain does not lose such classification simply because runoff.
loggers or settlers may have stripped it of its forest
cover. Parcels of land classified as forest land may actually Watershed reservation
be covered with grass or planted with crops
by kaingin cultivators or other farmers. Forest lands do It is a forest land reservation established to protect or
not have to be on mountains or in out-of-the-way places. improve the conditions of the water yield thereof or
The classification of land is descriptive of its legal nature reduce sedimentation.
or status and does not have to be descriptive of what the
land actually looks like (Vicente Yu Chang and Soledad Yu Q: Public Reclamation Authority (formerly Philippine
Chang v. Republic, G.R. No. 171726, Feb. 23, 2011). Estate Authority or PEA), reclaimed several portions of
the foreshore and offshore areas of Manila Bay. In
Foreshore land 2003, the Paraaque City Treasurer issued Warrants
of Levy of PRAs reclaimed propertied. PRA filed a
A strip of land that lies between the high and low water petition for prohubiton with prayer for TRO. The RTC
marks and is alternatively wet and dry according to the dismiss PRAs petition and ruled that PRA was not
flow of tide. It is that part of the land adjacent to the sea, exempt from payment of real property taxes as it was
which is alternately covered and left dry by the ordinary organized as a stock corporation. Is the ruling correct?
flow of tides.
A: The subject lands are reclaimed lands, specifically
NOTE: Seashore, foreshoreland, and/or portions of the portions of the foreshore and offshore areas of Manila Bay.
territorial waters and beaches, cannot be registered. Even As such, these lands remain public lands and form part of
alluvial formation along the seashore is part of the public the public domain. In the case of Chavez v. Public Estates
domain and, therefore, not open to acquisition by adverse Authority and AMARI Coastal Development Corporation, the
possession by private persons. Court held that foreshore and submerged areas irrefutably
belonged to the public domain and were inalienable unless
Mangrove swamps reclaimed, classified as alienable lands open to disposition
and further declared no longer needed for public service.
These are mud flats, alternately washed and exposed by The fact that alienable lands of the public domain were
the tide, in which grows various kindred plants which will transferred to the PEA (now PRA) and issued land patents
not live except when watered by the sea, extending their or certificates of title in PEAs name did not automatically
roots deep into the mud and casting their seeds, which also make such lands private. This Court also held therein that
germinate there. These constitute the mangrove flats of the reclaimed lands retained their inherent potential as areas
tropics, which exist naturally, but which are also, to some for public use or public service (Republic of the Philippines,
extent cultivated by man for the sake of the combustible represented by the Philippine Reclamation Authority (PRA)
wood of the mangrove and like trees as well as for the vs. City of Paraaque; G.R. No. 191109, July 18, 2012.)
useful nipa palm propagated thereon (Montano v. Insular
Government, G.R. No. 3714, Jan. 26, 1909). DEALINGS WITH UNREGISTERED LANDS
Q: Are mangrove swamps disposable? Q: Is the transfer of an unregistered land valid?
A: No. Mangrove swamps or manglares are forestall and A: Yes. It is valid only between the parties and does not
not alienable agricultural land. bind third persons. Sec. 113 of P.D. 1529 states that no
deed, conveyance, mortgage, lease, or other voluntary
Mineral lands instrument affecting land not registered under the Torrens
system shall be valid, except as between the parties
Mineral land means any land where mineral resources are thereto, unless such instrument shall have been recorded
found. Mineral resources, on the other hand, mean any in the manner herein prescribed in the office of the
concentration of mineral/rocks with potential economic Register of Deeds for the province or city where the land
value. lies.

CIVIL LAW
Functions of the RD, LRA and the courts in land registration
RD LRA COURTS
1. Registration of an instrument presented 1. Assistance to the Jurisdiction over:
for registration dealing with real or Department of Agrarian
personal property which complies with Reform, the Land Bank, and 1. Applications for original
the requisites for registration other agencies in the registration of title to lands,
2. See to it that said instrument bears the implementation of the land including improvements and
proper documentary and stamps and reform program of the interests therein
that the same are properly cancelled government 2. Petitions filed after original
3. If the instrument is not registerable: 2. Assistance to courts in registration, with power to hear
4. deny the registration thereof and inform ordinary and cadastral land and determine all questions
the presentor of such denial in writing, registration proceedings arising upon such application or
stating the ground or reason therefore, 3. Central repository of petitions.
and records relative to the
5. advising him of his right to appeal by original registration of lands
consulta in accordance with Sec. 117 of titled under the Torrens
PD 1529 system, including the
6. Prepare and keep an index system which subdivision and
contains the names of all registered consolidation plans of titled
owners and lands registered lands.
4. Adjudicate appeal en
consulta cases

2 0 15 G O L D E N N O T E S
TORTS AND DAMAGES
TORTS AND DAMAGES
(a) Not arising from an act or omission complained
TORTS of as a felony, e.g., culpa contractual or
obligations arising from law under Article 31 of
PRINCIPLES the Civil Code (such as breach of contract or tort),
intentional torts under Articles 32 and 34,
Tort and culpa aquiliana under Article 2176 of the
Civil Code.
It is a civil wrong wherein one persons conduct causes a (b) Where the injured party is granted a right to file
compensable injury the person, property or recognized an action independent and distinct from the
interest of another, in violation of a duty imposed by law. criminal action under Article 33 of the Civil Code
(in cases of defamation, fraud and physical
NOTE: The term tort was not used by the Code injuries).
Commission and instead used the term quasi-delict
because it is broader in coverage as it covers in common NOTE: Either of these liabilities may be enforced against
law countries, acts which are intentional or malicious, the offender subject to the caveat under Article 2177 of the
which latter acts in the general plan of the Philippine legal Civil Code that the plaintiff cannot recover damages twice
system are governed by the Penal Code. However, the case for the same act or omission of the defendant (Santos v.
of Barredo v. Garcia made no distinction between Pizardo, G.R. No. 151452, July 29, 2005).
intentional and negligent injuries as it declared that quasi
delict include punishable and non-punishable acts or Tortious Act
omission (Pineda, 2009).
A wrongful act. It is the commission or omission of an act
Tort v. Breach of Contract by one, without right, whereby another receives, some
direct or indirect injury, in person, property, or reputation.
Breach of contract is not in itself a tort. It holds that the (De Leon, 2012).
fields of tort and contract are entirely distinct because
contract duties are created by the promises of the parties, GR: An action for damages can only be maintained by the
while tort duties are imposed as rules of law. On this view, person directly injured, not by one alleging the collateral
the province of torts is wrongs and the province of injury.
contract is agreements or promises. This perception is that
the fields of tort and contract hardly touch each other, XPN: there are instances where an injury to one may
much less overlap (De Leon, 2012). operate to the injury of another, e.g. a lone parent cannot
sue for the injury suffered by his child, but may maintain
There may exist dual liabity in torts and contracts. Under an action in his own right for any damage suffered
such circumstances, the general rule is that the plaintiff associated to the injury.
may elect which to pursue (Ibid).
Remedies for Torts (CPR):
Main functions of punishing tort
1. Compensatory actions for sum of money for the
1. Compensation and Restitution To compensate damage suffered.
persons sustaining a loss or harm as a result of 2. Preventive prayer for injunction, and a writ of
anothers act or omission, placing the cost of that preliminary injuction, and a temporary restraining
compensation on those who, in justice ought to bear order, injoining the defendant from continuing the
it. doing of the tortious conduct.
2. Prevention To prevent future losses and harm. 3. Restitution to disgorge gains that the defendant
wrongfully obatained by tort.
Major purposes of imposing liability arising from tort
CLASSIFICATION OF TORTS
1. To provide a peaceful means for adjusting the rights
of parties who might otherwise take the law into their General Classification
own hands.
2. Deter wrongful conduct. 1. Property torts They embrace all injuries and
3. Encourage socially responsible behavior. damages to property, whether realty or personalty.
4. Restore injured parties to their original condition 2. Personal torts They include all injuries to the person,
insofar as the court can do this by compensating them whether to the body, reputation or feelings (De Leon,
for their injury. 2012).
Civil liabilities which may arise due to an act or According to manner of commission
omission of one, causing damage to another
1. Negligent torts It involves voluntary acts or
1. Civil liability ex delicto, under Article 100 of the omissions which results in injury to others, without
Revised Penal Code. intending to cause the same.
2. Independent civil liabilities, such as those:

CIVIL LAW
2. Intentional torts The actor desires to cause the Liability of Tortfeasors
consequences of his act or believes the consequences
are substantially certain to result therefrom. The responsibility of two or more persons who are liable
for quasi-delict is solidary (Art. 2194, NCC).
NOTE: This refers to a tort or wrong perpetuated
by one who intends to do that which the law has The sharing as between such solidary debtors is prorata
declared wrong as contrasted with negligence in (Singapore Airlines Limited vs. Court of Appeals, et al., G.R.
which the tortfeasor fails to exercise that degree No. 107356, March 31, 1995).
of care in doing what is otherwise permissible
(Blacks Law Dictionary, 2004). Liability of the owner of a vehicle in case of an accident
3. Strict liability The person is made liable independent In motor vehicle mishaps, the owner is solidarily liable
of fault or negligence upon submission of proof of with his driver, if the former, who was in the vehicle, could
certain facts. have, by the use of the due diligence, prevented the
misfortune. It is disputably presumed that a driver was
According to scope negligent, if he had been found guilty or reckless driving or
violating traffic regulations at least twice within the next
1. General the catch-all provisions on torts provided preceding two months (Art. 2184, NCC).
for in the Civil Code i.e. Articles 19, 20 and 21. The
effect is that there is a general duty owed to every Car owner not present in the vehicle
person not to cause harm either willfully or
negligently. Articles 19, 20, and 21 are provisions on If the car owner is not present in the vehicle and the driver
human relations that were intended to expand the was negligent, the injured party may still sue said owner
concept of torts in this jurisdiction by granting under Article 2180 (5) for imputed liability.
adequate legal remedy for the untold number of moral
wrongs which is impossible for human foresight to If no knowledge of owner of vehicle not liable
specifically provide for in the statutes. (Aquino, 2005,
citing PNB v. CA, G.R. No. L-27155. May 18, 1978). An owner of a vehicle cannot be held liable for an accident
involving the said vehicle if the same was driven without
2. Specific torts - It includes trespass, assault and battery, his consent or knowledge and by a person not employed
negligence, products liability, and intentional by him (Duavit vs. CA, G.R. No. 82318, May 18, 1989).
infliction of emotional distress. As defined, torts fall
into three different categories: intentional, negligent NOTE: Malfunction or loss of break is not a fortuitous
and liability (manufacturing and selling defective event. The carrier remains liable (Thermochem, Inc. v.
products), product liability tort. Naval, G.R. No. 131541, October 20, 2000).
a. Art. 19, 20, 21 (catch-all provisions) Liability of proprietors of buildings

b. Unjust enrichment (Arts. 22, 23, 2142 & 2143)
c. Violation of right of privacy and family relations 1. The proprietor of a building or structure is
d. Dereliction of official duty of public officers responsible for the damages resulting from its total or
e. Unfair competition partial collapse, if it should be due to the lack of
f. Malicious prosecution necessary repairs (Art. 2190, NCC).
g. Violation of rights and liberties of another person 2. Proprietors shall also be responsible for damages
h. Nuisance caused:
THE TORTFEASOR a. By the explosion of machinery which has not

been taken care of with due diligence, and
Persons liable for quasi-delict the inflammation of explosive substances
which have not been kept in a safe and
Defendants in tort cases can either be natural or artificial adequate place;
beings. b. By excessive smoke, which may be harmful
to persons or property;
Pursuant to vicarious liability, a corporation may be held c. By the falling of trees situated at or near
directly and primary liable for tortious acts of its officers highways or lanes, if not caused by force
or employees (Art. 2180, NCC). majeure;
3. By emanations from tubes, canals, sewers or deposits
A corporation may be held civilly liable in the same of infectious matter, constructed without precautions
manner as natural persons (PNB v. CA, G.R. No. L-27155, suitable to the place (Art. 2191, NCC).
May 18, 1978).
Liability for collapse of a building
NOTE: With respect to close corporations, the
stockholders who are personally involved in the operation The owner of the building is the one liable for damages
of the corporation may be personally liable for corporate when a building collapses. However, the engineer or
torts under Section 100 of the Corporation Code. architect who drew up the plans and specifications for the
building is liable for damages if within 15 years from the

2 0 15 G O L D E N N O T E S
TORTS AND DAMAGES
completion of the structure, the same should collapse by Where the concurrent or successive negligent acts or
reason of a defect in those plans and specifications, or due omissions of two or more persons, although acting
to the defects in the ground. The contractor may also be independently, are in combination the direct and
held liable if the edifice falls, within the same period, on proximate cause of a single injury to a third person (Sabido
account of defects in the construction of the use of v. Custodio, G.R. No. L-21512, August 31, 1966).
materials of inferior quality furnished by him, or due to
any violation of the terms of the contract (Art. 1723, NCC). 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
Rules on liability for collapse of a building of another vehicle, the drivers as well as the owners of the
two vehicles are jointly and severally liable for damages
1. The collapse of the building must be within 15 years (Tiu v. Arriesgado, G.R. No. 138060, September 1, 2004).
from the completion of the structure.
2. The prescriptive period is 10 years following the ACT OR OMISSION AND ITS MODALITIES
collapse.
3. If the engineer or architect supervises the Quasi-Delict
construction, he shall be solidarily liable with the
contractor. Whoever by act or omission causes damage to another,
4. The liability applies to collapse or ruin, not to minor there being fault or negligence, is obliged to pay for the
defects. damage done. Such fault or negligence, if there is no pre-
5. Even if payment has been made, an action is still existing contractual relation between the parties (Art.
possible (Ibid). 2176, NCC).
When a building collapses during an earthquake Elements of Quasi-Delict
GR: No one can be held liable in view of the fortuitous 1. Damage to the Plaintiff;
event if the proximate cause of the collapse of the building
is an earthquake. NOTE: It is the loss, hurt or harm which results from
injury. It differs from damages which term refers to
XPN: if the proximate cause is the defective designing or the recompense or compensation awarded for the
construction, or directly attributable to the use of inferior damage suffered (Si Ping Bun v. CA, G.R. No. 120554,
or unsafe material, it is clear that liability exists (Art. 1723, September 21, 1999).
NCC; Juan F. Nakpil & Sons v. CA, No. L-47896, October 3,
1986). 2. Negligence, by act or omission, of which defendant, or
some person for whose acts, must respond, was
Liability of Cities and Municipalities guilty;
3. Connection of cause and effect between such
Cities and municipalities shall be subsidiarily liable for the negligence and damage (FGU Insurance Corp. v. CA,
neglect of duty of a member of a city or municipal police G.R. No. 118889, March 23, 1998).
force (Art. 34, NCC).
Act
NOTE: The defense of having observed the diligence of a
good father of a family to prevent the damage is not It is any bodily movement tending to produce some effect
available to the city or municipality. in the external world, it being unnecessary that the same
be actually produced, as the possibility of its production is
Joint Tortfeasors sufficient (People v. Gonzales, G.R No. 80762, March 19,
1990).
Two or more persons who act together in committing a
wrong, or contribute to its commission, or assist or Fault or Negligence
participate therein actively and with common intent, so
that injury results to a third person from the joint It consists in the omission of that diligence which is
wrongful act of the wrongdoers. (De Leon, 2012). required by the nature of the obligation and corresponds
with the circumstances of the persons, of the time and of
Test for Joint Tortfeasors the place (Art. 1173, NCC).
Whether a plaintiff has a single cause of action against NOTE: Responsibility arising from negligence in the
such tortfeasors or whether he has onle a several cause of performance of every kind of obligation is demandable, but
action against each of them (PNB v. CA, G.R. No. L-27155, such liability may be regulated by the courts, according to
May 18, 1978). the circumstances (Art. 1172, NCC)
NOTE: They are solidarily liable for the damage caused Foreseeability of harm
(Art. 2194, NCC, Metro Manila Transit Corporation v. CA,
G.R. No. 126395, Novermber 16, 1998). Foreseeability of the harm is therefore an indispensable
requirement. Thus, in a case where the Test to determine
Concurrent Negligence of Two or More Persons existence of negligence, the actor could not have
reasonably foreseen the harm that would befall him, it was

CIVIL LAW
ruled that he was not guilty of negligence (Civil Aeronautics Presumption of negligence on persons indirectly
Administration vs. Court of Appeals, et al., G.R. No. L-51806, responsible
November 8, 1988).
The presumption of law is that there was negligence on the
Rule when negligence shows bad faith part of the master or employer either in the selection of
the servant or employee (culpa in eligendo) or in the
When negligence shows bad faith, responsibility arising supervision over him after the selection (culpa vigilando),
from fraud is demandable in all obligations (Art. 1171, or both.
NCC). Furthermore, in case of fraud, bad faith, malice or
wanton attitude, the obligor shall be responsible for all NOTE: A presumption which is juris tantum, not juris et de
damages which may be reasonably attributed to the non- jure, and can be rebutted only by showing proof of having
performance of the obligation (Art. 2201, NCC). exercised and observed all the diligence of a good father of
a family (diligentissimi patris familias) (Tamagro v. CA, G.R.
NOTE: If the fault was committed with the intention to No. 85044, June 3, 1992).
cause the damage (like malicious mischief), it is dolo and
the act becomes a criminal act. (Pineda, 2009). Nature of responsibility of Vicarious Obligor
When is negligence excused Primary and direct, not subsidiary. He is solidarily liable
with the tortfeasor. His responsibility is not conditioned
GR: Negligence is excused when events that transpired upon the insolvency of or prior recourse against the
were unforeseen or, which though foreseen, were negligent tortfeasor (De Leon Brokerage v. CA, G.R. 15247,
inevitable. Feb. 28, 1962).
XPN: Persons Vicariously Liable (F-GOES-T)

1. In cases specified by law;
2. When declared by stipulation; 1. Father, or in case of death or incapacity, mother:
3. When the nature of the obligation requires the a. Damage caused by minor children
assumption of risk b. Living in their company
2. Guardians:
Q: Rosa was leasing an apartment in the city. Because a. For minors or incapacitated persons
of the Rent Control Law, her landlord could not b. Under their authority
increase the rental as much as he wanted to, nor c. Living in their company
terminate her lease as long as she was paying her rent. 3. Owners and managers of establishments:
In order to force her to leave the premises, the a. For their employees
landlord stopped making repairs on the apartment, b. In the service of the branches in which they are
and caused the water and electricity services to be employed, or;
disconnected. The difficulty of living without c. On the occasion of their functions
electricity and running water resulted in Rosa's 4. Employers:
suffering a nervous breakdown. She sued the landlord a. Damages caused by employees and household
for actual and moral damages. Will the action prosper? helpers
(1996 Bar Question) b. Acting within the scope of their assigned tasks
c. Even if the employer is not engaged in any
A: Yes, based on quasi-delict under the human relations business or industry
provisions of the NCC (Articles 19, 20 and 21) because the 5. State acting through a special agent and not when
act committed by the lessor is contrary to morals. the damage has been caused by the official to whom
the task done properly pertains.
Moral damages are recoverable under Article 2219(10) in
relation to Article 21. Although the action is based on 6. Teachers or heads of establishments:
quasi-delict and not on contract, actual damages may be a. Of arts and trades
recovered if the lessee is able to prove the losses and b. For damages caused by their pupils and students
expenses she suffered. or apprentices
c. So long as they remain in their custody (Art.
Principle of Vicarious Liability or Law on Imputed 2180, NCC).
Negligence
The actual tortfeasor is not exempted from liability
Under Art. 2180, a person is not only liable for torts
committed by him, but also for torts committed by others The minor, ward, employee, special agent, pupil, students
with whom he has a certain relation or for whom he is and apprentices who actually committed the delictual acts
responsible (NCC). are not exempted by the law from personal responsibility.
They may be sued and made liable alone as when the
NOTE: A person or juridical entity is made liable solidarily person responsible for them or vicarious obligor proves
with a tortfeasor simply by reason of his relationship with that he exercised the diligence of a good father of a family
the latter. 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).

2 0 15 G O L D E N N O T E S
TORTS AND DAMAGES
Common Defenses Adopted Children
If the defendant has proven that they have observed all the Judicially adopted children are considered legitimate
diligence of a good father of a family to prevent damage, children of their adopting parents (Sec. 17, RA 8552).
they shall not be responsible for damges.
Thus, adopters are civilly liable for their tortuous/criminal
VICARIOUS LIABILITY: PARENTS acts if the children live with them and are minors.
Basis of vicarious liability of the parents Mother is not simultaneously liable with the father
This liability is made natural as a logical consequence of The mother is not simultaneously liable with the father. It
the duties and responsibilities of parents exercising is only in the case of death or incapacity of the father, that
parental authority which includes controlling, disciplining the mother may be held liable.
and instructing their children. In this jurisdiction the
parents liability is vested by law which assumes that when NOTE: Consequently, the wife as a co-defendant with the
a minor or unemancipated child living with their parent, husband or if impleaded alone while the husband is alive
commits a tortuous act, the parents are presumed and well, may move to dismiss the case filed against her
negligent in the performance of their duty to supervise the for being premature (Romano v. Parinas, G.R. No. L-10129,
children under their custody. (Tamagro v. CA, G.R. No. April 22, 1957).
85044, June 3, 1992).
Illegitimate Child
Requisites of vicarious liability of the parents (21-CL)
As for an illegitimate child, if he is acknowledged by the
1. The child is below 21 years of age father and live with the latter, the father shall be
2. The child Committed a tortuous act to the damage and responsible. However, if he is not recognized by the
prejudice of another person putative father but is under the custody and supervision of
3. The child Lives in the company of the parent the mother, it is the latter who is the one vicariously liable
concerned whether single or married (Pineda, 2009). (Pineda, 2009).
Minors v. Incapacitated Persons VICARIOUS LIABILITY: GUARDIANS
Minor Incapacitated Persons Guardians are liable for damages caused by the minors or
Those who are below 21 persons beyond 21 years incapacitated persons who are under their authority and
years and not to those of age but are live in their company (Art. 2180, NCC).
below 18 years incapacitated such as
those who are insane or If the minor or insane person causing damage has no
NOTE: R.A. 6809 did not imbecile. parents or guardian, the minor or insane person shall be
amend Article 236 of the answerable with his own property in an action against him
Family Code with regard to where a guardian ad litem shall be appointed (Art. 2182,
age NCC).
Nothing in this code shall be construed to derogate from
the duty or responsibility of parents and guardians for NOTE: The rules on vicarious liability of parents applies
children and wards below 21 years of age mentioned in the same to vicarious liability of guardians.
the second and third paragraphs of Art. 2180 of the Civil
Code (R.A. 6809). De facto guardians covered by Art. 2180
Thus, under the Family Code, there is no more alternative De facto guardians are relatives and neighbors who take
qualification as to the civil liability of parents. The liability upon themselves the duty to care and support orphaned
of both father and mother is now primary and not children without passing through judicial proceedings
subsidiary. (Libi vs. IAC, G.R. No. 70890, September 18,
1992). NOTE: They are liable for acts committed by children
while living with them and are below 21 years of age, the
Vicarious liability of other persons exercising parental law being applied by analogy. (Pineda, 2009).
authority
VICARIOUS LIABILITY:
In default of the parents or a judicially appointed guardian, OWNERS AND MANAGERS OF ESTABLISHMENTS
parental authority shall be exercised by the following AND ENTERPRISES
persons in the order indicated:
The owners and managers of an establishment or
1. Surviving grandparents; enterprise are likewise responsible for damages caused by
2. Oldest sibling, over 21 years old unless unfit or their employees in the service of the branches in which the
unqualified; latter are employed or on the occasion of their functions
3. Childs actual custodian, over 21 years old unless unfit (Art. 2180, NCC, par. 4.)
or disqualified.

CIVIL LAW
Employers shall be liable for the damages caused by their Remedies of the injured party in pursuing the civil
employees and household helpers acting within the scope liability of the employer for the acts of his employees
of their assigned tasks, even though the former are not
engaged in any business or industry (Ibid., par. 5). 1. If he chooses to file a civil action for damages based on
quasi-delict under Article 2180 and succeeds in
Owners and managers proving the negligence of the employee, the liability of
the employer is primary, direct and solidary. It is not
The terms owners and managers are used in the sense of conditioned on the insolvency of the employee (Metro
employer and do not include the manager of a Manila Transit Corp. v. CA, G.R. No. 118069, Nov. 16,
corporation who himself is just an employee (Phil. Rabbit 1998).
Bus Lines v. Phil. American Forwarders, Inc., G.R. No. L- 2. If he chooses to file a criminal case against the offender
25142, March 25, 1975). and was found guilty beyond reasonable doubt, the
civil liability of the employer is subsidiary. The
To make the employer liable under Art. 2180, it must be employer cannot use as a defense the exercise of the
established that the injurious or tortuous act was diligence of a good father of a family.
committed at the time the employee was performing his
functions(Marquez v. Castillo, 68 Phil 568, No. 46237, NOTE: Once there is a conviction for a felony, final in
September 27, 1939). character, the employer under Article 103 of the RPC, is
subsidiary liable, if it be shown that the commission
NOTE: However, a manager who is not an owner but who thereof was in the discharge of the duties of the employee.
assumes the responsibility of supervision over the A previous dismissal of an action based on culpa aquiliana
employees of the owner may be held liable for the acts of could not be a bar to the enforcement of the subsidiary
the employees (Pineda, 2009). liability required by Art. 103 RPC (Jocson, et al. v. Glorioso,
G.R. L-22686, Jan. 30, 1968).
Requisites before an employer may be held liable
under Article 2180 (4) for the act of its employees Vicarious liability Owners and Managers of
Establishment under Article 2180 (5)
1. The employee was chosen by the employer personally
or through another; GR: It is required that the employee must be performing
2. The service is to be rendered in accordance with his assigned task at the time that the injury is caused.
orders which the employer has the authority to give
all times; XPN: However, it is not necessary that the task performed
3. That the illicit act of the employee was on the by the employee is his regular job or that which was
occasion or by reason of the functions entrusted to expressly given to him by the employer. It is enough that
him (Jayme v. Apostol, G.R. No. 163609, November 27, the task is indispensable to the business or beneficial to
2008). the employer (Filamer Christian Institute v. IAC, G.R. No.
75112, August 7, 1992).
VICARIOUS LIABILITY: EMPLOYERS
NOTE: It is not required that the employer is engaged in
Employer some kind of industry or work. (Castilex Industrial
Corporation v. Vasquez, G.R. No. 132266 December 21,
An employer includes any person acting directly or 1999).
indirectly in the interest of an employer in relation to an
employee and shall include the government and all its When a criminal case is filed against the offender, before
branches, subdivisions and instrumentalities, all the employers subsidiary liability is exacted, there must
government owned or controlled corporations and be proof that:
institutions, as well as non-profit private institutions, or
organizations (Art. 97, P.D. 442). 1. They are indeed the employer of the convicted
employee;
Presumption on the negligence of the employer 2. The former are engaged in some kind of industry;
3. The crime was committed by the employees in the
The employer is presumed to be negligent and the discharge of their duties;
presumption flows from the negligence of the employee. 4. That the execution against the latter has not been
Once the employees fault is established, the employer can satisfied due to insolvency (Philippine Rabbit Bus
then be made liable on the basis of the presumption that Lines, Inc. v. People, G.R. No. 147703, April 14, 2004).
the employer failed to exercise diligentissimi patris familias
in the selection and supervision of its employees (LRTA v.
Navidad, G.R. 145804, February 6, 2003).

2 0 15 G O L D E N N O T E S
TORTS AND DAMAGES
Vicarious liability Owners and Managers of company, the former was, nevertheless, engaged in his
Establishment v. Vicarious liability of Employers own affairs or carrying out a personal purpose when he
went to a restaurant at 2:00 a.m. after coming out from
Owners/Managers Employers (Par 5) work. The time of the accident (also 2:00 a.m.) was outside
(Par 4) normal working hours.
Requires engagement in The employers need not
business on the part of be engaged in business or Defenses available to an employer
the employers as the law industry.
speaks of establishment 1. Exercise of due diligence in the selection and
or enterprise supervision of its employees (except in criminal
action);
Covers negligent acts of Covers negligent acts of 2. The act or omission was made outside working hours
employees committed employees acting within and in violation of companys rules and regulations.
either in the service of the scope of their
the branches or in the assigned tasks
occasion of their Q: Would the defense of due diligence in the selection
functions and supervision of the employee available to the
employer in both instances? (1997 Bar Question)
Q: OJ was employed as professional driver of MM
Transit bus owned by Mr. BT. In the course of his work, A: The defense of diligence in the selection and supervision
OJ hit a pedestrian who was seriously injured and later of the employee under Article 2180 of the Civil Code is
died in the hospital as a result of the accident. The available only to those primarily liable thereunder, but not
victims heirs sued the driver and the owner of the bus to those subsidiary liable under Article 103 of the Revised
for damages. Is there a presumption in this case that Penal Code (Yumul v. Juliano, G.R. No. 47690, Apr., 28,
Mr. BT, the owner, had been negligent? If so, is the 1941).
presumption absolute or not? (2004 Bar Question)
Employers liability under Art. 2180 NCC v. Employers
A: Yes, there is a presumption of negligence on the part of liability under Art. 100 Revised Penal Code
the employer. However, such presumption is rebuttable.
The liability of the employer shall cease when they prove CIVIL CODE RPC
that they observed the diligence of a good father of a Liability is direct, Liability is subisidiary
family to prevent damage (Article 2180, NCC). When the primary, and solidary -
employee causes damage due to his own negligence while the employer may be
performing his own duties, there arises the juris tantum sued even without suing
presumption that the employer is negligent, rebuttable the employee
only by proof of observance of the diligence of a good Diligence of a good father Diligence of a good father
father of a family (Delsan Transport Lines v, C&tA of a family is a defense of a family is not a
Construction, G.R. No. 156034, October 1, 2003). Likewise, if defense
the driver is charged and convicted in a criminal case for Employer is liable even if Petitioner must prove
criminal negligence, BT is subsidiarily liable for the not engaged in business that the employer is
damages arising from the criminal act. engaged in business
Proof of negligence is by Proof beyond reasonable
Q: After working overtime up to midnight, Alberto, an mere preponderance of doubt is required
executive of an insurance company drove a company evidence
vehicle to a favorite Videoke bar where he had some
drinks and sang some songs with friends to "unwind". Q: Arturo sold his Pajero to Benjamin for P1M.
At 2:00 a.m., he drove home, but in doing so, he Benjamin took the vehicle but did not register the sale
bumped a tricycle, resulting in the death of its driver. with the Land Transportation Office. He allowed his
May the insurance company be held liable for the son Carlos, a minor who did not have a driver's license,
negligent act of Alberto? Why? (2001 Bar Question) to drive the car to buy pan de sal in a bakery. On the
way, Carlos driving in a reckless manner, sideswiped
A: No. The insurance company is not liable because when Dennis, then riding a bicycle. As a result, he suffered
the accident occurred, Alberto was not acting within the serious physical injuries. Dennis filed a criminal
assigned tasks of his employment. complaint against Carlos for reckless imprudence
resulting in serious physical injuries.
It is true that under Art. 2180 (5), employers are liable for
damages caused by their employees who were acting 1. Can Dennis file an independent civil action against
within the scope of their assigned tasks. However, the Carlos and his father Benjamin for damages based
mere fact that Alberto was using a service vehicle of the on quasi-delict?
employer at the time of the injurious accident does not 2. Assuming Dennis' action is tenable, can Benjamin
necessarily mean that he was operating the vehicle within raise the defense that he is not liable because the
the scope of his employment. In Castilex Industrial vehicle is not registered in his name? (2006 Bar
Corporation v. Vasquez (G.R. No. 132266, December 21, Question)
1999), the Supreme Court held that notwithstanding the
fact that the employee did some overtime work for the

CIVIL LAW
A:
1. Yes. Dennis can file an independent civil action VICARIOUS LIABILITY: TEACHERS AND HEADS OF
against Carlos and his father for damages based on ESTABLISHMENTS OF ARTS AND TRADES
quasi-delict there being an act or omission causing
damage to another without contractual obligation. Teachers or directors of arts and trades are liable for any
Under Section 1 of Rule 111 of the 2000 Rules on damages caused by their pupils or apprentices while they
Criminal Procedure, what is deemed instituted with are under their custody, but this provision only applies to
the criminal action is only the action to recover civil an institution of arts and trades and not to any academic
liability arising from the act or omission punished by educational institution. (Exconde vs. Capuno, et al., G.R. No.
law. An action based on quasi-delict is no longer L-10134, June 29, 1957)
deemed instituted and may be filed separately
(Section 3, Rule 111, Rules of Criminal Procedure). Basis of the teachers vicarious liability
2. No, Benjamin cannot raise the defense that the vehicle They acting in Loco Parentis (in place of parents). However
is not registered in his name. His liability, vicarious in teachers are not expected to have the same measure of
character, is based on Article 2180 because he is the responsibility as that imposed on parent for their influence
father of a minor who caused damage due to over the child is not equal in degree. The parent can instill
negligence. While the suit will prosper against the more lasting discipline on the child than the teacher and so
registered owner, it is the actual owner of the private should be held to a greater accountability than the teacher
vehicle who is ultimately liable (See Duavit v.CA, G.R. or the head for the tort committed by the child.
No. L-29759, May 18, 1989).The purpose of car
registration is to reduce difficulty in identifying the Rationale of vicarious liability of school heads and
party liable in case of accidents (Villanueva v. teachers
Domingo, G.R. No. 144274, Sept. 14, 2004).
The rationale of school heads and teachers liability for
VICARIOUS LIABILITY: STATE tortuous acts of their pupil and students, so long as they
remain in custody, is that they stand, to a certain extent, as
Aspects of liability of the State to their pupils and students, in loco parentis and are called
upon to exercise reasonable supervision over the conduct
1. Public/Governmental Where the State is liable only of the child. This is expressly provided for in Articles 349,
for the tortuous acts of its special agents. 350 and 352 of the Civil Code (Pineda, 2009).
2. Private/Non-governmental When the State is
engaged in private business or enterprise, it becomes Application vicarious liability of 2180 not limited to
liable as an ordinary employer (NIA v. Fontanilla, G.R. schools of arts and trade
No. 61045, Deccember 1, 1989).
The application of Article 2180 is not limited to school of
NOTE: The State is only liable for the negligent acts of its arts and trades. It applies to all, including academic
officers, agents and employees when they are acting as institutions where the teacher-in-charge is liable for the
special agents. The State has voluntarily assumed liability acts of his students. In the case of establishments of arts
for acts done through special agents (Pineda, 2009). and trades, it is the head thereof, and only he, who shall be
liable (Amadora v CA, No. L-47745, April 15, 1988).
Special Agent
NOTE: There is really no substantial difference between
A special agent is one who receives a definite and fixed the academic and non-academic schools in so far as torts
order or commission, foreign to the exercise of the duties committed by their students are concerned. The same
of his office. vigilance is expected from the teacher over the student
under their control and supervision, whatever the nature
An employee who on his own responsibility performs of the school where he is teaching.
functions inherent in his office and naturally pertaining
thereto is not a special agent (Meritt v. Government of the Age of student immaterial
Philippine Islands, No. 11154, March 21, 1916).
Even if the student has already reached the age of majority,
NOTE: Where the government commissions a private the liability can be imputed to the teacher-in-charge.
individual for a special governmental task, it is acting Under Article 2180, age does not matter. Unlike the parent
through a special agent within the meaning of the who will be liable only if the child is still a minor, the
provision. (Largo, 2007). teacher is held answerable by the law for the act of the
student regardless of the age of the student liable
Liability of Provinces, Cities and Municipalities (Amadora v CA, No. L-47745, April 15, 1988).
As for local government units, provinces, cities and Limitation to the liability of teachers and heads of
municipalities shall be liable for damages for the death of, Schools
or injuries suffered by, any person by reason of the
defective condition of roads, streets, bridges, public Teachers and Heads of schools are only liable if the
buildings, and other public works under their control or students remain in schools. If they are no longer in such
supervision (Art. 2189, NCC).

2 0 15 G O L D E N N O T E S
TORTS AND DAMAGES
premises, their responsibility shall attach no more. Their PROXIMATE CAUSE
parents become responsible for them
(Pineda, 2009). Proximate cause
A student is in custody of the school authorities Proximate cause is that cause, which, in natural and
continuous sequence, unbroken by any efficient
The student is in the custody of the school authorities as intervening cause, produces the injury, and without which
long as he is under the control and influence of the school the result would not have occurred.
and within its premises, whether the semester has not
ended, or has ended or has not yet begun. The term When the plaintiff's own negligence was the immediate
custody signifies that the student is within the control and proximate cause of his injury, he cannot recover
and influence of the school authorities. The teacher in damages. But if his negligence was only contributory, the
charge is the one designated by the dean, principal, or immediate and proximate cause of the injury being the
other administrative superior to exercise supervision over defendant's lack of due care, the plaintiff may recover
the pupils or students in the specific classes or sections to damages, but the courts shall mitigate the damages to be
which they are assigned. It is not necessary that at the time awarded (Art. 2179, NCC).
of the injury, the teacher is physically present and in a
position to prevent it. Proximate, immediate, intervening, remote and
concurrent causes distinguished
Article 218 of the Family Code v. Article 2180 of the
New Civil Code PROXIMATE INTERVENING REMOTE CONCURRENT
CAUSE CAUSE CAUSE CAUSE
ARTICLE 218 of the ARTICLE 2180 of the One that
Family Code New Civil Code It is the destroys the
School, its administrators, Teachers, head of cause which, causal
teachers engaged in child establishment in arts and Causes brought
in natural connection
care are made expressly trades are made expressly That cause about by the
and between the
liable liable which some acts and
continuous negligent act
independent omissions of
Liability of school, its sequence, and injury and
No such express solidary force merely third persons
administrators, teachers is unbroken by thereby
nor subsidiary liability is took which makes
solidary and parents are any efficient negatives
stated advantage of the defendant
made subsidiary liable intervening liability.
to still liable.
Students involved must be Students involved are not cause,
accomplish Here, the
a minor necessarily minors produces the NOTE:
something proximate
injury, and Foreseeable
not the cause is not
NOTE: The nature of the liability of the persons without Intervening
natural effect necessarily the
enumerated under Art. 218 of the Family Code is which the causes cannot
thereof. sole cause of
principally and solidary. result would be considered
the accident.
not have sufficient
Defenses available occurred. intervening
causes.
Their responsibility will cease when they prove that they
observed all the diligence of a good father of a family to NOTE: Proximate cause is not necessarily the immediate
prevent damage. As regards the employer, if he shows to cause; it s not necessarily the nearest time, ditance or
the satisfaction of the court that in the selection and in the space.(People v. Elizalde 59 Off. Gaz. 1241).
supervision of his employees he has exercised the care and
diligence of a good father of a family, the presumption is Tests to determine whether a cause is proximate
overcome and he is relieved from liability (Layugan v. IAC,
G.R. No. L-49542, Sept. 12, 1980). 1. Cause-In-Fact Test It is necessary that there is proof
that defendants conduct is a factor in causing
Q: A 15-year-old high school student stabs his plaintiffs damage.
classmate who is his rival for a girl, while they were a. But For Test / Sine Qua Non Test
going out of the classroom after their last class. Who b. Substantial Factor Test
may be held liable? (2005 Bar Question) a. Necessary and Sufficient Test (Aquino,
2005)
A: Under Section 218 of the Family Code, the school, its 2. Policy test The law limits the liability of the
administrators and teachers, or the individual, entity or defendant to certain consequences of his action; if the
institution engaged in child care shall have special parental damage or injury to the plaintiff is beyond the limit of
authority and responsibility over the minor child while the liability fixed by law, the defendants conduct
under their supervision, instruction or custody. Authority cannot be considered the proximate cause of the
and responsibility shall apply to all authorized activities damage.
whether inside or outside the premises of the school,
entity or institution. NOTE: Such limit of liability is determined by
applying these subtests of the policy test:
a. Foreseeability Test;

CIVIL LAW
b. Natural and Probable Consequence Test; superseding and preclude liability (De Leon, 2012).
c. Natural and Ordinary or Direct Consequences
Test; A prudent man placed in the position of the defendant
d. Hindsight Test; would have recognized that the course which he will
e. Orbit of Risk Test; pursue was fraught with risk and he should therefore
f. Substantial Factor Test (Aquino, 2005). foresee the impending harm that will result if he continues
(Suarez, 2011).
CAUSE-IN-FACT TEST
Efficient Intervening Cause
But for Test (Novus Actus Interviens)
This is also known as the sine qua non test. It considers An efficient intervening cause is one which destroys the
whether the injury would not have occurred but for the causal connection between the negligent act and the injury
defendant's negligent act. Defendants conduct is the cause and thereby negatives liability (Morril v.Morril, 60 ALR 102,
in fact of the injury if the damage would not have resulted 104 NJL 557).
had there been no negligence on the part of the defendant. When Efficient Intervening Cause is not applicable
The conduct of the defendant is not the cause of the event There is no efficient intervening cause if the force created
if the event would have occurred without it (Suarez, 2011). by the negligent act or omission have either:
1. Remained active itself; or
Substantial factor test 2. Created another force which remained active until it
directly caused the result; or
It makes the negligent conduct the cause-in-fact of the 3. Created a new active risk of being acted upon by the
damage if it was a substantial factor in producing the active force that caused the result (57 Am. Jur. 2d 507).
injuries. It is important in cases where there are
concurrent causes (Aquino, 2005). Cause v. Condition
Principle of concurrent causes Cause is the active force while condition is the passive
situation. The former is the active cause of the harm and
Where the concurrent or successive negligent acts or the latter is the existing conditions upon which the cause
omissions of two or more persons, although acting operated.
independently, are in combination with the direct and
proximate cause of a single injury to a 3rd person, and it is NOTE: If the defendant has created only a passive static
impossible to determine what proportion each contributed condition which made the damage possible, the defendant
to the injury, either of them is responsible for the whole is said not to be liable. (Phoenix Construction, Inc. v. IAC,
injury, even though his act alone might not have caused the G.R. No. L-65295, March 10, 1987).
entire injury.
Unforseen and Unexpected Act or Cause
Necessary and sufficient test
The intervention of an unforseen and unexpected cause is
The act or omission is a cause-in-fact if it is a necessary not sufficient to relieve the wrongdoer from consequences
element of a sufficient set. of negligence if such negligence directly and proximately
cooperates with the independent cause in the resulting
Natural and probable test injury (Africa v. Caltex, G.R. No. L-12986, March 31, 1966).
Where the defendants liability is recognized only if the LEGAL INJURY

harm or injury suffered is the natural and probable
consequence of his act or omission complained of (Banzon Injury, Damage and Damages
v. CA, 175 SCRA 297).
Injury The illegal invasion of a legal right
POLICY TEST The loss, hurt, or harm which results
Damage
from the injury
Foreseeability test The recompense or compensation
Damages
awarded for the damage suffered
The defendant is not liable for injurious consequences
which could not have been foreseen or reasonably Right
anticipated under all the facts as they existed. Liability is
limited to the original risk he has created. A right is a legally enforceable claim of one person against
another, that the other shall do a given act, or shall not do a
NOTE: This test is essentially similar to the next test. The given act (Pineda, 2011).
forceability test is limited by the additional requirement
that there be superseding intervening force. Intervening Kinds of rights
forces are new forces which join with the defendants
negligence to injure the plaintiff. Highly improbable and 1. Natural Rights Those which grow out of the nature
extraordinary intervening forces are generally found of man and depend upon personality.

2 0 15 G O L D E N N O T E S
TORTS AND DAMAGES
1. Contractual negligence (culpa contractual) - there is a
E.g. right to life, liberty, privacy, and good reputation. pre-existing obligation, and the negligence is not the
2. Political Rights Consist in the power to participate, source of the obligation, but merely an incident
directly or indirectly, in the establishment or resulting in its breach or non-fulfillment.
administration of government.
2. Civil negligence (culpa aquiliana) - there is no pre-
E.g. right of suffrage, right to hold public office, right existing contractual obligation, and the negligence
of petition. itself is the direct and independent source of
obligation of the party guilty thereof.
3. Civil Rights Those that pertain to a person by virtue NOTE: It is called tort or quasi-delict
of his citizenship in a state or community.
3. Criminal (culpa criminal) - if it results in the
E.g. commission of the crime (De Leon, 2012).
1. Property rights,
2. Marriage, Different causes of action based on the same act or
3. Equal protection of laws, omission
4. Freedom of contract, trial by jury;
5. Rights of personalty or human rights; A pre-existing contractual relation between the parties
6. Family rights; and does not, however, preclude the existence of culpa
7. Patrimonial rights aquiliana, or even culpa criminal based on the same act or
omission.
Available remedies for a person whose rights have
been violated Tort arising from Breach of Contract
Legal remedies are either preventive or compensatory. A quasi-delict can be the cause for breaching a contract
that might thereby permit the application of principles
NOTE: Every remedy in a certain sense is preventive applicable to tort even when there is a pre-existing
because it threatens certain undesirable consequences to contract between the plaintiff and the defendant
those who violate the rights of others.
This rule can govern only where the act or omission
Test for Cause of Action in Torts complained of would constitute an actionable tort
independently of the contract. (Far East Bank and Trust
Whether the defendant owed the plaintiff any legal duty to Company vs. Court of Appeals, G.R. No. 108164, February 23,
do or not to do something, which the defendant wrongfully 1995).
did not do, or which he wrongfully did, respectively, in
violation of plaintiffs legal right or rights. Materiality of Motive
Requisites (LOW) Conduct which does not, either by itself or because of the
manner of its exercise, constitute an invasion of the rights
1. A Legal right in favor of plaintiff; of another is not tortious, however bad or malicious the
2. A correlative legal Obligation on the part of defendant actors motives. Although they may make a bad act worse,
to respect or not to violate such right; and malicious motives, cannot make that a wrong which is, in
3. A Wrong, e.g. an act or omission in violation of said its own essence, lawful.
legal right and duly with consequent injury or dmage
to the plaintiff (De Leon, 2012). NOTE: Where an act is, either inherently or because of the
manner of performance, an unprivileged invasion of right,
NOTE: The law affords no remedy for damages resulting the absence of malice or the presence of a good motive
from an act which does not amount to a legal injury or does not render it any the less a tort. If the conduct is
wrong. These situations are often called damnum absque outside the zone of privilege, it is tortious regardless of
injuria. (BPI Express Card Corporation vs. Court of Appeals, motive (De Leon, 2012).
G.R. No. 120639,September 1998).
Materiality of Intent
Concurrence of Causes of Action
Liability in tort for an injury is determined by conduct, and
An act or omission may give rise to an action based on law, can arise regardless of the mental state or intent to commit
contract, quasi-contract, delict or quasi-delict (Art. 1157, an unlawful act (Ibid).
NCC).
INTENTIONAL TORTS
Cause of action based on fault or negligence
Intentional tort
A person may incur liability for damages caused by his
fault or negligence to one with whom either he has a pre- Intentional tort is a tort or wrong perpetrated by one who
existing contractual relation or he has no contractual intends to do that which the law has declared wrong as
relationship. contrasted with negligence in which the tortfeasor fails to

CIVIL LAW
exercise that degree of care in doing what is otherwise Torts committed against property
permissible (Blacks Law Dictionary, 1990).
1. Trespass to land,
Intentional torts are those which involve malice or bad 2. Trespass to chattels, and
faith. 3. Conversion
Intent from the point of view of torts Torts that cause injury to relations
Refers either to a persons desire that certain 1. Family relations

consequences result from his actions or even his a. Alienation of affection
knowledge that those results are substantially certain to b. Loss of consortium
occur as a result of his actions (Garratt v. Dailey, 46 Wash c. Criminal conversation (adultery)
2d 197, 1955). 2. Social relations
a. Meddling with or disturbing family relations
Doctrine of transferred intent b. Intriguing to cause another to be alienated from
his friends
It arises when a person intends to commit a tort against 3. Economic relations
one person and injury to another results instead. For a. Interference with contractual relations
intentional tort purposes, the intent will be deemed to be b. Unfair competition
transferred from the intended victim to the actual one (U.S. 4. Political relations
v. Maisa, 8 Phil 597). a. Violation of right to suffrage
Violation of other political rights (freedom of speech,
Seven major intentional torts (FITTED CAB) press, assembly and petition, etc.)
1. False Imprisonment (Dignitary Tort) Major defenses to intentional torts

2. Trespass to land (DODD SLASH CORN)
3. Trespass to chattels (Trover)
4. Intentional Infliction of Emotional Distress 1. Defense of Others
5. Conversion 2. Defense of land/chattels
6. Assault 3. Discipline
7. Battery 4. Self defense
Intentional physical harms giving rise to tort liability 5. Legal Authority
6. Shoplifter Detention
1. Battery 7. Consent
2. Assault 8. Recapture of Chattels
3. False Imprisonment 9. Necessity
4. Trespass to land
5. Trespass to Chattels INTENTIONAL PHYSICAL HARM
6. Conversion
Battery (Physical Injury)
Intentional non-physical harms giving rise to tort
liability A person commits battery of another if he acts intending
to cause a harmful or offensive contact with the person or
1. Violation of personal dignity a third person or an iminent apprehension of such a
2. Infliction of emotional distress contact.
3. Violation of privacy
a. Appropriation NOTE: Battery is different from criminal law of physical
b. Intrusion injuries for the former has no criminal intent.
c. public disclosure of private facts
d. false light in the public eye Basis for tort liability
4. Malicious prosecution
5. Defamation It is the intentional, unprivileged, and either harmful or
6. Fraud or misrepresentation offensive contact with the person or a third person or an
7. Seduction imminent apprehension of such a contact.
8. Unjust dismissal
9. Violation of rights committed by public officers Elements
Torts committed against persons 1. There must be a voluntary act;

2. That the person either (a) intended to cause a harmful
1. Assault, or offensive contact with his body or with the body of
2. Battery, some third person or (b) intended to cause a third
3. False imprisonment, person to have apprehension of such harmful or
4. Intentional infliction of emotional distress, and offensive contact;
5. Fraud 3. That a harmful or offensive contact with the body of a
person actually resulted;

2 0 15 G O L D E N N O T E S
TORTS AND DAMAGES
4. That the person in some sensed caused the harmful Elements (LICA3)
or offensive contact, either because he himself
touched another person or because he set in motion 1. That a person committed a voluntary Act;
some force that actually did the touching; 2. That the persons act created in another person an
5. That the person did not consent to the contact. Apprehension of immediate harmful or offensive
contact with the latters person;
Actual contact is necessary in battery 3. That the person Intended to cause either a harmful or
offensive contact or an apprehension of such a
Unlike assault, battery involves an actual contact. The contact;
contact can be by one person (the tortfeasor) of another 4. That there was a Causal connection between the
(the victim), or the contact may be by an object brought attacker and the other persons apprehension;
about by the tortfeasor. For example, the intentional 5. The victim Lacks consent.
contact by a car is a battery.
Liability of an actor for tort based on assault
Unlike criminal law, which recognizes degrees of various
crimes involving physical contact, there is but a single tort 1. He acts intending to cause a harmful or offensive
of battery. Lightly flicking a person's ear is battery, as is contact with the person of the other, or an imminent
severely beating someone with a tire iron. Neither is there apprehension of such a contact, and
a separate tort for a battery of a sexual nature. 2. The other is thereby put in such imminent
apprehension.
Some rules in determining liability for tort based on
battery NOTE: Assault requires intent. Actual ability to carry out
the apprehended contact is not necessary.
1. The victim of a battery need not be aware of the act at
the time for the tort to have occurred. When an act is not considered as an assault
2. Battery is a form of trespass to the person and as such
no actual damage (e.g. injury) needs to be proved. An act intended as a step toward the infliction of a future
Only proof of contact (with the appropriate level of contact, which is so recognized by the other, does not
intention or negligence) needs to be made. make the actor liable for an assault under the rule.
3. If there is an attempted battery, but no actual contact,
that may constitute a tort of assault. Harmful contact
4. Battery need not require body-to-body contact.
Touching an object "intimately connected" to a person While the law varies by jurisdiction, contact is often
(such as an object he or she is holding) can also be defined as "harmful" if it objectively intends to injure,
battery. disfigure, impair, or cause pain.
5. A contact may constitute a battery even if there is a
delay between the defendant's act and the contact to Offensive Act
the plaintiff's injury.
The act is deemed "offensive" if it would offend a
Eggshell skull theory reasonable persons sense of personal dignity.
It is a legal doctrine that says the wrongdoer takes the Imminence in assault
victim in the condition he/she finds him. There is no
allowance for an already weakened state of the injured "Imminence" is judged objectively and varies widely on the
party. If a defendant negligently injures someone, the facts; it generally suggests there is little to no opportunity
defendant is responsible for all the consequences, whether for intervening acts.
they were foreseeable or not.
Apprehension and Fear
NOTE: The term implies that if a person had a skull as
delicate as that of the shell of an egg, and a tortfeasor who The state of "apprehension" should be differentiated from
was unaware of the condition injured that person's head, the general state of fear, as apprehension requires only
causing the skull unexpectedly to break, the defendant that the person be aware of the imminence of the harmful
would be held liable for all damages resulting from the or offensive act.
wrongful contact, even if the tortfeasor did not intend to
cause such a severe injury. Actual contact is not necessary in assault
ASSAULT (GRAVE THREAT) As distinguished from battery, assault need not to involve
actual contactit only needs intent and the resulting
Assault in the context of torts apprehension. Assault may also be committed by words
alone, but this rarely happens. For example, if a person
It is the tort of acting intentionally and voluntarily causing says to another to duck, intending to make the latter think
the reasonable and imminent apprehension of an that he is about to be hit, that is an assault even though the
immediate harmful or offensive contact. former makes no gesture.

CIVIL LAW
NOTE: A battery can occur without a preceding assault, Anybody who builds, plants or sows on the land of another
such as if a person is struck in the back of the head. Fear is knowing full well that there is a defect in his title is liable
not required, only anticipation of subsequent battery. for damages. The liability is in addition to the right of the
landowner in good faith to appropriate what was built,
Defenses in assault planted or sown or to remove the same.
Assault can be justified in situations of self-defense or NOTE: Liability for damages under the above-cited
defense of a third party where the act was deemed provisions of the RPC and the NCC requires intent or bad
reasonable. It can also be justified in situations where faith (Aquino, 2005).
consent can often be implied (i.e. sports competitions).
Elements (PAPI)
FALSE IMPRISONMENT
(DIGNITARY TORT/ILLEGAL DETENTION) 1. The defendant committed a voluntary Act against the
plaintiff
Elements of false imprisonment as a basis for tort 2. The defendant Physically invaded the real property
liability (CACAI) owned by the plaintiff
3. Intent
1. An Act or omission on the part of defendant that 4. The plaintiff had the immediate right to the
confines or restrains plaintiff Possession of the land (as an owner living there or as
2. That plaintiff is confined or restrained to a bounded a tenant renting it)
area;
3. Intent NOTE: The possession of real property is not affected by
4. Causation acts of a possessory character which are merely tolerated
5. Awareness of the defendant of the confinement that (NPC v. Campos, Jr., G.R. No. 143643, June 27, 2003).
the defendant was actually harmed by it
Possessor in bad faith liable
Moral damages may be awarded to a victim of illegal arrest
and detention, especially if the victim is a minor, the One in possession of land, knowing that his claim of title
accused poked a knife at her, forcibly took her from school, thereto is defective, is liable to the owner for an amount
tied her hands and placed scotch tape on her mouth equal to a reasonable rent therefore during the term of his
(People v. Bisda, G.R. No. 140895, July 17, 2003). occupation (Lerma v. De la Cruz, G.R. No. 3287, March 2,
1907).
NOTE: The restraint need not be physical in order to be
liable for false imprisonment. While it is true that physical TRESPASS TO CHATTELS (TROVER)
restraint is the classic form of false imprisonment, it can
take the form of threats or duress such as threats to harm Trover
the person or his family if he leaves the premises.
Trespass to chattels is where a person intentionally
Freedom from arbitrary illegal detention interferes with personal property in someone elses
possession.
Any public officer or employee, or any private individual,
who directly or indirectly obstructs, defeats, violates or in It may also cover cases where the defendant deprived the
any manner impedes or impairs any of the following rights plaintiff of personal property for the purpose of obtaining
and liberties of another person shall be liable for damages: possession of a real property (Magbanaua vs. IAC, G.R. Nos.
xxx L-66870-72, June 29, 1985).
(4) Freedom from arbitrary or illegal detention (Art. 32, In the field of tort, trespass extends to all cases where a
NCC). person is deprived of his personal property even in the
absence of criminal liability (Aquino, 2005).
TRESPASS TO LAND
Elements (PAI)
Trespass to land
1. The defendant took a voluntary Act which interfered
Trespass to real property is a tort that is committed when with the plaintiffs right of possession in the chattel. It
a person unlawfully invades the real property of another could either be dispossession (taking possession to
(Aquino, 2005). the exclusion of the owner) or intermeddling
(touching or harming it without removing it from the
The Revised Penal Code punishes different forms of owners possession)
trespass. On the other hand, Art. 451 of the Civil Code 2. The defendant Intended the interference
provides that damages may be awarded to the real owner 3. The plaintiff either Possessed or had the immediate
if he suffered such damages because he was deprived of right to possess the same
possession of his property by a possessor in bad faith or by
a person who does not have any right whatsoever over the NOTE: Damages must be proven if the act is
property. intermeddling, but if the act is dispossession, actual
damages need not be proven.

2 0 15 G O L D E N N O T E S
TORTS AND DAMAGES
INFLICTION OF EMOTIONAL DISTRESS
CONVERSION
Emotional Distress
Conversion
Emotional distress mean is any highly unpleasant mental
It is an intentional interference with the plaintiffs personal reaction such as extreme grief, shame, humiliation,
property that is so substantial that it is fair to require the embarrassment, anger, disappointment, worry, nausea,
defendant to pay the propertys full value. mental suffering and anguish, shock, fright, horror, and
chagrin (Aquino, 2005).
Elements (DIP)
Requisites (ICE-D)
1. An act by the defendant that substantially interferes
with plaintiff's right of possession in a chattel in a The plaintiff must show that:
sufficiently serious fashion as justify the payment the 1. The conduct of the defendant was intentional or in
chattel's full value. (Dominion and Control) reckless disregard of the plaintiff;
2. Intent on the part of the defendant 2. The conduct was extreme and outrageous;
3. Plaintiff was either in Possession of the chattel or had 3. There was a causal connection between the
the immediate right to possess it defendants conduct and the plaintiffs mental
distress; and
Conversion may include 4. The plaintiffs mental distress was extreme and
severe (MVRS Publications Inc. v. Islamic Dawah
1. Cases where the defendant deprived the plaintiff of Council of the Philippines, G.R. No. 135306, January 28,
personal property for the purpose of obtaining 2003).
possession of a real property, as when a landlord
deprived his tenants of water in order for them to NOTE: Even if there was no intentional infliction of
vacate the lot they were cultivating. emotional distress in one case, the SC recognized the
2. Unjustified deprivation of access to property such as possibility that one may be made liable for the tort of
unjustified disconnection of electricity service. intentional infliction of emotional distress.
Conversion v. Trespass to chattels Extreme and outrageous conduct
It is the seriousness of the damage. In conversion claim, Extreme and outrageous conduct is conduct that is so
damage to the personal property is so egregious as to outrageous in character, and so extreme in degree, as to go
merit the defendants paying its full value in damages. beyond all possible bounds of decency, and to be regarded
Thus, not all trespasses to chattels are conversions, but all as atrocious, and utterly intolerable in civilized society
conversions are trespass to chattels (Cf. U.S. v. Calimag, 12 (Aquino, 2005).
Phil 687).
Emotional distress v. Defamation
INTENTIONAL NON-PHYSICAL HARMS
Emotional Distress
Defamation
VIOLATION OF PERSONAL DIGNITY as Tort Action
Properly belongs to Calls for the application of the
Rule with regard to the right of a person to his dignity, the reactive harm relational harm principle (which
personality, privacy and peace of mind principle (includes includes harm to social
ijuries to individual relationships in the community
Every person shall respect the dignity, personality, privacy emotional in the form of defamation) (MVRS
and peace of mind of his neighbors and other persons. The tranquility). Publications Inc. v. Islamic
following and similar acts, though they may not constitute Dawah Council of the Philippines,
a criminal offense, shall produce a cause of action for G.R. No. 135306, January 28,
damages, prevention and other relief: 2003).
1. Prying into the privacy of another's residence; NOTE: An emotional distress tort action is personal in
2. Meddling with or disturbing the private life or family nature. It is a civil action filed by an individual to assuage
relations of another; the injuries to his emotional tranquility due to personal
3. Intriguing to cause another to be alienated from his attacks on his character.
friends;
4. Vexing or humiliating another on account of his Parasitic damage for emotional distress
religious beliefs, lowly station in life, place of birth,
physical defect, or other personal condition (Art. 26, These are damages which depend on the existence of
NCC). another tort (Aquino, 2005).

CIVIL LAW
Mere words suffice for a claim of infliction of likeness (Carlisle v. Fawcett Publications, 201 Cal. App.2d
emotional distress 733, 20 Cal, Rptr. 405).
Intentional inflicton of emotional distress is the intentional The tort of commercial appropriation of likeness has been
or reckless infliction by extreme and outrageous of sevre held to protect various aspects of an individuals identity
mental distress, even in the absence of physical harm. from commercial exploitation:
1. Name
VIOLATION OF PRIVACY 2. likeness
3. Achievements
Zones of privacy under the NCC, RPC, Rules of Court, 4. Identifying characteristics
and special laws 5. Actual performances
6. Fictitious characters created by a performer
1. That every person shall respect the dignity, 7. Phrases and other things associated with an
personality, privacy and peace of mind of his individual.
neighbors and other persons and any act of a person
of meddling and prying into the privacy of another is
punishable as an actionable wrong;
2. That a public officer or employee or any private Intrusion
individual shall be liable for damages for any violation
of the rights and liberties of another person, and Intrusion consists in the intrusion upon the plaintiffs
recognizes the privacy of letters and other private solitude or seclusion.
communications;
3. The RPC makes a crime the: It includes:
i. Violation of secrets by an officer, 1. The conduct of the defendant was intentional or in
ii. Revelation of trade and industrial secrets, and reckless disregard of the plaintiff;
iii. Trespass to dwelling. 2. Prying into the privacy of ones home;
4. Invasion of privacy is likewise an offense in special 3. Invading his home; (Ford Motor Co. v. Williams, 108
laws such as the: Ga.App. 21, 132, S.E.2d 206)
i. Anti-wiretapping law; and 4. Invading ones privacy by looking from outside;
ii. Secrecy of bank deposits act; and 5. Eavesdropping; (LaCrone v. Ohio Bell Tel. Co., 114 Ohio
5. The Rules of Court provisions on privileged App. 299, 182 N.E.2d 340, 59 O.O2d 236) or
communication. 6. Persistent and unwanted telephone calls.
Standard to be applied in determining the existence of The tort of intrusion upon a persons solitude protects a
a violation of the right to privacy persons sense of locational and psychological privacy.
The right to privacy is not a guaranty to hermitic seclusion. Intrusion in public places
The standard to be applied is that of a person of ordinary
sensibilities. It is relative to the customs of the time and Generally, there is no invasion of the right to privacy when
place, and is determined by the norm of an ordinary a journalist records, photographs, or writes about
person. something that occurs in public places. However, while
merely watching a person in public places is not a
NOTE: The essence of privacy is the right to be let alone violation, one does not automatically make public
(Ople v. Torres, G.R. No. 127685, July 23, 1998). everything that he does in public. It should not be
tantamount to harassment or overzealous shadowing.
Two-part test in determining the reasonableness of a
persons expectation of privacy This protection is not limited to public figures. Everyone is
protected.
1. Whether by his conduct, the individual has exhibited
an expectation of privacy; and Intrusion and administrative investigation
2. Whether this expectation is one that society
recognizes as reasonable. There is no intrusion when an employer investigates its
employee or when a school investigates its student. In the
Four general classes of tort actions for invasion of latter case, the investigation may cover an alleged offense
privacy committed outside the school premises (Aquino, 2005).
1. Appropriation; Intrusion and public records

2. Intrusion;
3. Public disclosure of private facts; and Generally, there is no intrusion into the right of privacy of
4. False light in the public eye (Pineda, 2009). another if the information sought is a matter of public
record. This is especially true in case the persons who are
Appropriation invoking the right to privacy are public officers and the
matter involved is of public concern.
Appropriation consists of appropriation, for the
defendants benefit or advantage, of the plaintiffs name or

2 0 15 G O L D E N N O T E S
TORTS AND DAMAGES
However, if the matter sought to be revealed does not
involve anything of public concern, there can be a violation False light in the public eye v. Defamation
or the right to privacy (Ibid.).
False light Defamation
Public disclosure of private facts in the public eye
The gravamen of the claim The gravamen of the claim
It consists of a cause of action in publicity, of a highly is the embarrassment of a is the reputational harm
objectionable kind, given to private information about the person in being made into
plaintiff, even though it is true and no action would lie for something he is not
defamation (Melvin v. Reid, 112 Cal.App. 285, 297 P. 91). The statement should be Publication in defamation
actually made public is satisfied if a letter is sent
The interest sought to be protected in this tort is the right to a third person
to be free from unwarranted publicity, from the wrongful The defendant may still be What is published lowers
publicizing of the private affairs and activities of an held liable even if the the esteem in which the
individual which are outside the realm of legitimate statements tell something plaintiff is held
concern (Ayer Productions, Ltd. Pty. vs Hon. Ignacio good about the plaintiff
Capulong, GR No. L-82380, April 29, 1988).
MALICIOUS PROSECUTION
Elements (POD)
Tort action for malicious prosecution
1. There must be a public Disclosure;
2. The facts disclosed must be a Private fact; It is an action for damages brought by one against another
3. The matter be one which would be Offensive and whom a criminal prosecution, civil suit, or other legal
objectionable to a reasonable person of ordinary proceedings has been instituted maliciously and without
sensibilities. probable cause, after the termination of such prosecution,
suit or proceeding in favor of defendant therein.
Public figure (Magbanua v. Junsay, G.R. No. 132659, Febuary 20, 2007).
Public figure is a person who, by his accomplishments, The gist of the action is the putting of legal process in
fame or mode of living, or by adopting a profession or force, regularly, for the mere purpose of vexation or injury
calling which gives the public a legitimate interest in his (Drilon vs. Court of Appeals, et al., G.R. No. 107019, March
doings, his affairs, and his character, has become a public 20, 1997).
personage
Basis of such action
However, a governmental agency or officer tasked with,
and acting in, the discharge of public duties is not vested The statutory recognition of an action for damages based
with a right to privacy. Said right belongs only to on malicious prosecution (false accusation or denuncia
individuals acting in a private capacity (Aquino, 2005). falsa) is found in Article 2219(8) of the Civil Code which
allows recovery of moral damages for malicious
Rule on publication of facts derived from official prosecution. Article 21 and 2176 of the same Code may
proceedings also be invoked to justify the action (Lagman, et al. vs.
Intermediate Appellate Court, et al., G.R. No. L-72281,
GR: If the facts published are not declared by law to be October 28, 1998).
confidential, it is not tortuous
NOTE: Malicious prosecution, both in criminal and civil
XPN: Article 357 of the Revised Penal Code prohibits cases, requires the elements of: (1) malice, and (2) absence
publication of certain acts referred to in the course of of probable cause. (Yasona v. De Ramos, G.R. No. 156339,
official proceedings. It punishes any reporter, editor, or October 6, 2004).
manager of a newspaper, daily or magazine, who shall
publish facts connected with private life of another and Presence of Probable Cause
offensive to the honor, virtue, and reputation of said
person, even though said publication be made in The presence of probable cause signifies, as a legal
connection with or under the pretext that it is necessary in consequence, the absence of malice.The absence of malice,
the narration of any judicial or administrative proceedings therefore, involves good faith on the part of the defendant.
wherein such facts have been mentioned. (Ibid.). This good faith may even be based on mistake of law.
False light in the public eye Acquittal
It consists of publicity which places the plaintiff in false Acquittal presupposes that a criminal information is filed
light in the public eye (Norman v. City of Las Vegas, 64 Nev. in court and final judgment is rendered dismissing the case
38, 177 P.2d 442). against the accused. It is not enough that the plaintiff is
discharged on a writ of habeas corpus and granted bail.
The interest to be protected in this tort is the interest of Such discharge is not considered the termination of the
the individual in not being made to appear before the action contemplated to warrant the institution of a
public in an objectionable false light or false position.

CIVIL LAW
malicious prosecution suit against those responsible for Persons should have free resort to the courts. The law does
the filing of the information against him. not impose a penalty on the right to litigate (Pineda, 2009).
Nevertheless, it is believed that prior acquittal may However, the repeated filing of a complaint all of which
include dismissal by the prosecutor after preliminary were dismissed shows malicious prosecution entitling the
investigation. injured party to an award of moral damages (Hawpia v. CA,
No. L-20047, June 30, 1967).
Elements
DEFAMATION
In criminal cases
Defamation
1. The fact of the prosecution and the further fact that
the defendant was himself the prosecutor, and that Defamation, which includes libel and slander, means
the action was terminated with an acquittal; injuring a persons character, fame or reputation through
2. That in bringing the action, the prosecutor acted false and malicious statements. (Figueroa v. People, G.R. No.
without probable cause; 159813, August 9, 2006).
3. The prosecutor was actuated or impelled by legal
malice (Yasona v. Ramos, G.R. 156339, Oct. 6, 2004). NOTE: Actual damages need not be proved, at least where
the publication is libelous per se, or where the amount of
To constitute malicious prosecution, there must be proof damages is more or less nominal.
that the prosecution was prompted by a sinister design to
vex and humiliate a person, and that it was initiated Basis of defamation
deliberately, knowing that the charges were false and
groundless (Pineda, 2009). In case of defamation, fraud, and physical injuries, a civil
action for damages, entirely separate and distinct from the
Prosecutor criminal action, may be brought by the injured party. Such
civil action shall proceed independently of the criminal
The term prosecutor includes the complainant who prosecution, and shall require only a preponderance of
initiated the case; the prosecutor himself; any other public evidence. (Art. 33, NCC).
officer authorized to file and prosecute the criminal case.
Reason for liability
NOTE: Mere witnesses are not included, but are liable for
false testimony or perjury for their falsehoods. The liability imposed for defamation is brought about by
the desire to protect the reputation of every individual.
In civil cases The enjoyment of reputation is one of those rights
necessary to human society that underlie the whole
1. The defendant filed a civil action against the plaintiff scheme of civilization. It is as much a constitutional right
previously; as the possession of life, liberty or property (Worcester v.
2. The action was dismissed for clear lack of merit or for Ocampo, 22 Phil 42).
being baseless, unfounded, and malicious;
3. The defendant who filed the previous complaint as Requistes (DIP-M)
plaintiff was motivated by ill-will or sinister design;
4. The present plaintiff suffered injury or damage by 1. It must be Defamatory;
reason of the previous complaint filed against him 2. It must be Malicious;
(Pineda, 2009). 3. It must be given in Publicity; and
4. The victim must be Identifiable (Alonzo v. CA, G.R. No.
NOTE: A disbarment proceeding being judicial in character 110088, February 1, 1995 ).
may therefore be the basis for a subsequent action for
malicious prosecution (Ponce vs. Legaspi, et al., G.R. No. NOTE: in publicity is the communication of the
79184, May 6, 1992). defamatory matter to some third person or persons.
When an action for malicious prosecution premature Kinds of Defamation
If the action filed by a party is still pending trial, the filing 1. Libel - is a defamation committed by means of writing,
by the defendant of an action based on malicious printing, lithography, engraving, radio, phonograph,
prosecution anchored on the first case is premature. Its painting or theatrical or cinematographic exhibition,
dismissal is in order (Cabacungan v. Corrales, No. L-6629, or any similar means.
September 30, 1954). 2. Slander - is an oral defamation.
3. Slander by deed - is a crime committed by any person
No liability for malicious prosecution in case a suit is who performs an act that costs dishonor, discredit or
unsuccessful contempt upon the offended party in the presence of
other person or persons.
The mere filing of a suit does not render the plaintiff liable
for malicious prosecution should he be unsuccessful.

2 0 15 G O L D E N N O T E S
TORTS AND DAMAGES
Imputation of criminal intent unfeeling and hardened mind Is this libelous? Give
reasons.
Imputation of criminal intention is not libelous because
intent to commit a crime is not a violation of law. A: No. Blockhead means a person deficient in
understanding. Mental pachyderm refers to a distorted
Publication must be read as a whole mind, a mind that is insensible, unfeeling, senseless,
harderned, callous. It will be seen that whether the
In actions for damages for libel, it is axiomatic that the defendant is a blockhead or possessed of a mental
published work must be examined as a whole (Arafiles v. pachyderm is a question that reasonably pertains to the
Philippine Journalist, Inc., G.R. No. 141485, June 30, 2005). subject of inquiry in the civil case, namely whether his
claim of good faith im mentioning things defamatory, is an
Effect if the publication was by reason of an honest impsosture or a truth (Pople v. Aquino, No. L-23908,
mistake October 29, 1966).
It only serves to mitigate liability where the article is R.A. 4200 or the Anti-Wiretapping Law
libelous per se.
It is illegal for any person not authorized by all the parties
Defense of expressing his opinion or belief to any private communication to secretly record such
communication by means of a tape recorder (Ramirez v.
Allegation that the offender merely expresses his opinion CA, G.R. No. 93833, September 28, 1995).
or belief is not a defense in defamation cases. In order to
escape criminal responsibility, it is not enough for the NOTE: use of a telephone extension for
offender to say that he expresses therein no more than his puprosesmofoverhearing a private conversation without
opinion or belief. The communication must be made in the authorizing does not violate R.A. 4200.
performance of a legal, moral, or social duty.
Retraction
Doctrine of Privileged Communication
When a periodical gives currency, whether innocently or
A communication that is protected by law from compelled otherwise, to a false and defamatory statement concerning
disclosure in a legal pro-ceeding, or that cannot be used any person, it is under both a legal and moral duty to check
against the person who made it. (Blacks Law Dictionary, the propagation of such statement as soon as practicable
2004). by publishing a retraction.
Statements made in the course of judicial proceedings are Effect of retraction as regards liability for defamation
absolutely privileged. The rationale is to allow lawyers and
judges and witnesses to speak their minds freely and Retraction may mitigate the damages provided that it
exercise their respective functions without incurring the contains an admission of the falsity of the libelous
risk of a criminal prosecution or an action for damages. publication and evince a desire to repair the wrong
(Navarrate v. Genereso, G.R. No. 124245, February 15, occasioned thereby.
2000).
FRAUD OR MISREPRESENTATION
Two kinds of Privileged Communication (FORMERLY DECEIT)
1. Absolutely Privileged not actionable even if the Elements of misrepresentation in torts cases (DJ-MIC-
author acted in bad faith. F)
2. Qualifiedly Privileged not actionable unless found to
have been made without good intention or justifiable 1. Affirmative Misrepresentation of a material fact;
motive. 2. Defendant knew that statement being made was
False;
No liability thereof if the defamatory imputations were 3. Intent;
made in a privileged communication 4. Causation;
5. Justifiable reliance; and
An absolutely privileged communication is one for which, 6. Damages
by reason of the occasion on which it is made, no remedy is
provided for the damages in a civil action for slander or NOTE: There is sexual fraud when the accused
libel. represented that he was single and the complainant agreed
to marry him based on this representation. Thereafter, the
Doctrine of Fair Comment accused heartlessly abandoned her (Manuel v. People, G.R.
No. 165842, November 29, 2005).
The discreditable imputation directed against a public
person in his public capacity, is not actionable. Fraud under Article 33
Q: A lawyer wrote in his pleadings in a civil case, the It includes:

following words: the defendant is a blockhead with a
mental pachyderm and possessed of an insensible 1. Violation of the Anti-Trust Receipts Law;

CIVIL LAW
2. Estafa under the RPC deemed to have violated Art. 1701, NCC which prohibits
3. Half-Truths, if the withholding of that which is not acts of oppression by either capital or labor against the
stated makes that which is stated absolutely false. other, and Art. 21 (Quisaba v. Sta. Ines-Melale Veneer and
Opinion Plywood, Inc., No. L-38088, August 30, 1974).
GR: Mere opinion does not constitute fraud VIOLATION OF RIGHTS COMMITTED
BY PUBLIC OFFICERS
XPN: When made by an expert and the other party relied
on the formers special knowledge (Art. 1341). Instances where a public officer can be liable for
damages
SEDUCTION
When a member of a city or municipal police force refuses
Seduction or fails to render aid or protection to any person in case of
danger to life or property, such peace officer shall be
Seduction, by itself, is an act which is contrary to morals, primarily liable for damages (Art. 34, NCC).
good customs and public policy. The defendant is liable if
he employed deceit, enticement, superior power or abuse An action may be brought by any person suffering from
of confidence in successfully having sexual intercourse material or moral loss because a public servant refuses or
with another (Aquino, 2005) neglects, without just cause to perform his official duty
(Art. 27, NCC).
Sexual Assault
Requisites
The defendant would be liable for all forms of sexual
assault. These include rape, acts of lasciviousness and 1. defendant is a public officer charged with the
seduction. performance of a duty in favor of the plaintiff;
2. he refused or neglected without just cause to perform
NOTE: Gender is immaterial in seduction and sexual such duty (ministerial);
assault. 3. plaintiff sustained material or moral loss as
consequence of such non-performance; and
When there is no seduction 4. the amount of such damages, if material
There is no seduction where the plaintiff, of adult age, Intention of making public officers liable under Art 34,
maintained intimate sexual relations with the defendant, NCC
with repeated acts of intercourse, such conduct is
incompatible with the idea of seduction. Voluntariness and Art. 34 is intended to afford a remedy against police
mutual passion, though there was artful persuasions and officers who connive with bad elements, are afraid of them
wiles without fulfilling the promise of marriage is not or simply indifferent to duty.
actionable (Tanjanco v. CA, No. L-18630, December 17,
1966). Public officials ought to act with the highest degree of
excellence, professionalism, intelligence and skill and for
UNJUST DISMISSAL failure to act with such, he may be held liable for
exemplary damages in his personal capacity (Sison v. CA,
Rule on dismissal of employees G.R. No. 124086, June 26, 2006).
It is a basic rule that an employer has a right to dismiss an Superior officer may be held liable for violation of his
employee in the manner and on the grounds provided for subordinates
under the NCC. If the dismissal is for a valid cause, his
dismissal is consistent with the employers right to protect A distinction should be made with respect to those acts
his interest in seeing to it that his employees are done withtin the scope of official authority and acts done
performing their jobs with honesty, integrity and good withou or in excess of official authority. Superior officer
faith (Marilyn Bernardo v. NLRC, G.R. No. 105819, March 15, may be held liable for violation of his subordinates.
1996).
NOTE: Local Government Units and their official s are not
NOTE: However, such exercise of the right to terminate exempt from liability for death or injury to persons or
must be consistent with the general principles provided damage to property (Sec. 24, R.A. 7160).
for under Articles 19 and 21 of the New Civil Code. If there
is non-compliance with said provisions, the employer may While a subordinate officer may be held liable for
be held liable for damages. executing unlawful orders of his superior officer, there are
certain cicumstances which would warrant his
Rule when dismissal was done oppresively execulpation from liability like he was led to believed that
there was a legal basis to do a certain act. (Lim v. Ponce de
The right to dismiss an employee should not be confused Leon, No. L-22554, August 29, 1975).
with the manner in which the right is exercised and the
effects flowing therefrom. If the dismissal is done anti-
socially or oppressively then the employer should be

2 0 15 G O L D E N N O T E S
TORTS AND DAMAGES
INTERFERENCE WITH RELATIONS
Some cases where there is no tort liability for
Four kinds of interference alienation of affections
Interference with: 1. A woman cannot be made liable for alienation of the

1. Family relations; affections of the husband (of another woman) for
2. Social relations; being merely the object of the affections of said
3. Economic relations; and husband. To be liable, she must have done some active
4. Political relations. acts calculated to alienate the affections of the
husband. She must, in a sense, be the pursuer, not
FAMILY RELATIONS merely the pursued;
2. A prostitute is not liable for alienation of affections of
ALIENATION OF AFFECTION the husband for having sexual intimacies with him on
a chance occasion.
Alienation of affection 3. When there is no more affection to alienate.
Alienation of affection consists of depriving one spouse of LOSS OF CONSORTIUM

the affection, society, companionship and comfort of the
other (Aquino, 2005). Loss of consortium
The Family Code imposes on the spouses the obligation to A spouse has a legal obligation to live with his or her
live together, observe mutual love, respect and fidelity, and spouse. If a spouse does not perform his or her duty to the
render mutual help and support (Art. 68, FC). Interference other, he may be held liable for damages for such omission
with such may result in the tort liability of alienation of because the same is contrary to law, morals and good
affection. customs.
The gist of the tort is an interference with one spouses Moral damages were awarded because of the wifes refusal
mental attitude toward the other and the conjugal to perform her wifely duties, her denial of consortium and
kindness of marital relations resulting in some actual desertion of her husband. Her acts constitute a willful
conduct which materially affects it. infliction of injury upon her husbands feelings in a manner
contrary to morals, good customs or public policy
Scope of alienation of affection (Tenchaves v. Escao, G.R. No. L-19671, July 26, 1966).
Alienation of affections extends to all cases of wrongful Desertion by a spouse

interference in the family affairs of others whereby one
spouse is induced to leave the other spouse or to conduct A spouse has a legal obligation to live with his/her spouse.
himself or herself in a manner that the comfort of married Failure of spouse to perform duty to the other entitles the
life is destroyed (Thomas M. Cooley and D. Avery Haggard, other to damages, fo such omission is contrary to law,
Treatise on the Law of Torts, Vol. 2, 1932 Ed., p.6). morals, good customs and public policy.
Persons liable for alienation of affection CRIMINAL CONVERSATION (ADULTERY)
The defendant who purposely entices the spouse of Adultery

another, to alienate his or her affections with his or her
spouse, even if there are no sexual intimacies is liable for Adultery is committed by any married woman who shall
damages under this article. Likewise, a person who have sexual intercourse with a man not her husband and
prevented the reconciliation of spouses after their by the man who has carnalknowledge of her knowing her
separation is liable for alienation of affections. to be married, even if the marriage was subsequently
declared void (Art. 333, RPC).
NOTE: It is not necessary that there is adultery or the
spouse is deprived of household services. Concubinage
Liability of parents for alienation of affections Concubinage is committed by a husband who shall
1. Keep a mistress in the conjugal dwelling;
Parents may be liable for alienation of affections. However, 2. Have sexual intercourse with her, under scandalous
parents are presumed to act for the best interest of their circumstances, with a woman not his wife; or
child. The law recognizes the right of a parent to advise 3. Cohabit with her in any other place (Art. 334, RPC).
his/her child and when such advise is given in good faith,
the act, even if it results in separation, does not give the Liability for adultery or concubinage
injured party a right of action (Aquino, 2005).
Liability for adultery or concubinage based on the law on
NOTE: An action for alienation of affection against the torts not only moral damages but also for other
parents of one consort is does not lie in the absence of appropriate damages.
proof of malice (Tenchaves v. Escao, G.R. No. L-19671, July
26, 1966).

CIVIL LAW
There is no legal basis for the imposition of moral damages
in case of Bigamy (People v. Bondoc, .GR. No. 22573-R, April The interference is penalized because it violates the
21, 1959). property rights of a party in a contract to reap the benefits
that should result therefrom (Lagon vs. CA, G.R. No. 119107,
SOCIAL RELATIONS March 18, 2005).
The following and similar acts, though they may not NOTE: A party who has not taken part in it cannot sue or
constitute a criminal offense, shall produce a cause of be sued for performance or for cancellation thereof, unless
action for damages, prevention and other relief: he shows that he has a real interest affected thereby. (De
Leon, 2012).
1. Prying into the privacy of another's residence;
2. Meddling with or disturbing the private life or family Elements
relations of another
3. Intriguing to cause another to be alienated from his 1. Existence of a valid contract;
friends; 2. Knowledge on the part of the third person of the
4. Vexing or humiliating another on account of his existence of the contract;
religious beliefs, lowly station in life, place of birth, 3. Interference of the third person without legal
physical defect, or other personal condition (Art. 26, justification or excuse (So Ping Bun v. CA, G.R. No.
NCC). 120554, September 21, 1999).
NOTE: The enumeration is not limited because the acts Rule regarding the extent of recovery against
mentioned are just examples of acts violative of a persons defendant found guilty of interference with
rights to dignity, personality, privacy, and peace of mind. contractual relations
Other similar acts are also covered within the scope of
the article. Such defendant cannot be held liable for more than the
amount for which the party who induced to break the
Unauthorized use of a picture contract can be held liable (Daywalt v. La Corporacion, G.R.
No. L-13505, Febuary 4, 1919).
The unauthorized use of a picture of the residence of the
plaintiff for advertisement or promotional gain of arealty NOTE: It would seem that the rule is consistent with the
corporation without the consent of the former and which provisions of Article 2202 of the New Civil Code only if the
advertisement has embarrassed the latter (as another contracting party who was induced to break the contract
family appeared as owner thereof) is an actionable wrong was in bad faith.
under Article 26 (St. Louis Realty Corp. v. CA, G.R. No. L-
46061, November 14, 1988). However, when there is good faith, the party who
breached the contract is only liable for consequences that
Disturbance of Private Life or Family Realtions of can be foreseen (Art. 2201, NCC).
another
Nature of the liability of the intermeddler
A woman cannot be made liable for alienation of the
affections of the husband (of another) for being merely the The liability of the intermeddler is solidary because the
object of the affections of said husband. To be liable, she former has committed a tortuous act or quasi-delict where
must have done some active acts calculated to alienate the liability is solidary (Art. 2941, NCC).
affections of the husband.
Malice of the intermeddler
She must, in a sense, be a pursuer, not merely the
pursued (Loper v. Askin, 164 N.Y.S. 1036). GR: Malice is essential to make the intermeddler liable.
Intriguing to cause another to be alienated from his XPN: If the intention of the intermeddler is honest and
friends laudable such as when the interference is intended to
protect the contracting party he is intermeddling for, from
a person who committed affirmative acts intended to danger to his life or property, he should not be made liable
alienate the existing friendship of one with his friends is for damages for the breach of the contract.
liable for damages (Pineda, 2009).
Interference with prospective advantage
ECONOMIC RELATIONS
If there is no contract yet and the defendant is only being
INTERFERENCE WITH sued for inducing another not to enter into a contract with
CONTRACTUAL RELATIONS the plaintiff, the tort committed is appropriately called
interference with prospective advantage.
Interference with contractual relations
Any third person who induces another to violate his

contract shall be liable for damages to the other
contracting parties (Art. 1314, NCC).

2 0 15 G O L D E N N O T E S
TORTS AND DAMAGES
Rule on business interruption damages 2. The profit which the defendant actually made out of
the infringement
Liability recognized 3. Reasonable percentage based upon the amount of
gross sales of the defendant of the value of services in
1. A business owner whose business was interrupted as connection with which the mark or trade names was
a result of a contractors delay in completing a issued in the infringement of the complainant.
construction project could recover economic damages
from the contractor even though the business owner Elements
had not suffered physical injury or property damage
2. A business owner is entitled to recover for business 1. That the offender gives his goods the general
damages interruption unaccompanied by physical appearance of the goods of another manufacturer or
damage against a supplier of electrical power as a dealer;
result of the wrongful termination of the business 2. That the general appearance is shown; (a) in the
electrical services goods themselves, or in the (b) wrapping of their
3. A business owner who did not sustain any property packages, or in the (c) device or words therein, or (d)
damage as a result of a pollution of a waterway but in any other feature of their appearance;
who suffered an interruption of their business could 3. That the offender offers to sell or sells these goods or
recover damages from those responsible for the gives other persons a chance or opportunity to do the
pollution same with a like purpose; and
4. Economic damages could also be recovered against 4. that there is actual intent to decieve the public or
people who cause the obstruction of a wharf or defraud a competitior (NBI-Microsoft Corp. v. Hwang,
landing G.R. No. 147043, June 21, 2005).
5. A threat of a chemical explosion
6. A tenant in a building who caused leaking sewer line Test of unfair competition
Liability not recognized The true test of unfair competition is whether certain
goods have been intentionally clothed with an appearance
1. A business owner cannot maintain a negligence action which is likely to deceive the ordinary purchaser
for economic damage die to business interruption exercising ordinary care, and not whether a certain limited
unaccompanied by personal injury or property class of purchasers with special knowledge not possessed
damages against the party causing the interruption by the ordinary purchaser could avoid mistake by the
2. A plaintiff cannot recover in negligence for purely exercise of this special knowledge (U.S. v. Manuel, No. 1099,
economic loss in the absence of physical injury against December 27, 1906).
a defendant who has negligently caused the closing of
a public bridge or river Unfair competition included in Article 28
3. A motel owner and waitress employed thereby could
not maintain a claim for purely economic damages 1. Passing off or disparagement of products (R.A. 8293,
arising out of a contractor or fabricator of steel bars Sec. 168);
used in the construction of a bridge which was closed 2. Interference with contractual relations;
when cracks were discovered 3. Interference with prospective advantage;
4. The owners of a barge or tugboat which collided with 4. Fraudulent misappropriation against a competition;
a bridge resulting in the closing of the bridge for two and
months could not be held liable on the theory of 5. Monopolies and predatory pricing
negligence for the loss of business by two shores
which resulted from the loss of access by customers Predatory pricing
who were unable to cross the bridge.
It is a practice of selling below costs in the short run in the
UNFAIR COMPETITION hope of obtaining monopoly gains later, after driving the
competition from the market.
Unfair competition
POLITICAL RELATIONS
It consists in employing deception or any other means
contrary to good faith by which any person shall pass off Any public officer or employee, or any private individual,
the goods manufactured by him or in which he deals, or his who directly or indirectly obstructs, defeats, violates or in
business, or services for those of the one having any manner impedes or impairs any of the
established goodwill, or committing any acts calculated to following rights and liberties of another person shall be
produce such result (Sec. 29(2), R.A. No. 166). liable to the latter for damages:
Basis of the award of damages in case of unfair 1. Freedom of religion;

competition 2. Freedom of speech;
3. Freedom to write for the press or to maintain a
It could either be: periodical publication;
4. Freedom from arbitrary or illegal detention;
1. The reasonable profit which the complainant would 5. Freedom of suffrage;
have made had the defendant not infringed his rights

CIVIL LAW
6. The right against deprivation of property without due Judges liability for damages
process of law;
7. The right to a just compensation when private GR: Judges are exempted from damages, if by performing
property is taken for public use; their duties in good faith, they happen to violate or impair
8. The right to the equal protection of the laws; the rights and liberties mentioned in Article 32.
9. The right to be secure in one's person, house, papers,
and effects against unreasonable searches and XPN: If the judges act or omission constitutes a violation
seizures; of the Revised Penal Code or other penal statute, the judge
10. The liberty of abode and of changing the same; is liable for damages aside from criminal liability (Pineda,
11. The privacy of communication and correspondence; 2009).
12. The right to become a member of associations or
societies for purposes not contrary to law; DEFENSES
13. The right to take part in a peaceable assembly to
petition the government for redress of grievances; Defense on interference
14. The right to be free from involuntary servitude in any
form; The defendants are free from liability if they can prove that
15. The right of the accused against excessive bail; at the time of the commission, the plaintiff knew of the act
16. The right of the accused to be heard by himself and of interference or omission.
counsel, to be informed of the nature and cause of the
accusation against him, to have a speedy and public Defense of privilege in torts cases
trial, to meet the witnesses face to face, and to have
compulsory process to secure the attendance of To say that an act is privileged connotes that the actor
witness in his behalf; owes no legal duty to refrain from such contact.
17. Freedom from being compelled to be a witness
against one's self, or from being forced to confess Consensual v. Non-consensual privilege
guilt, or from being induced by a promise of immunity
or reward to make such confession, except when the Consensual privileges depend on the plaintiff agreeing to
person confessing becomes a State witness; the defendants otherwise tortious act. On the other hand,
18. Freedom from excessive fines, or cruel and unusual non-consensual privileges shield the defendant from
punishment, unless the same is imposed or inflicted in liability for otherwise tortious conduct even if the plaintiff
accordance with a statute which has not been objects to the defendants conduct.
judicially declared unconstitutional; and
19. Freedom of access to the courts (Art. 32, NCC). Consent as a defense in torts cases and its basis
NOTE: The violation of a persons rights under Article III of Typically, one cannot hold another liable in tort for actions
the 1987 Constitution as contemplated in Art. 32 to which one has consented. This is frequently
constitutes constitutional tort. summarized by the phrase "volenti non fit injuria" ("to a
willing person, no injury is done" or "no injury is done to a
Purpose of Article 32 person who consents"). It operates when the claimant
either expressly or implicitly consents to the risk of loss or
Its purpose is to provide a sanction to the deeply cherished damage.
rights and freedoms enshrined in the Constitution. (Pineda,
2009) NOTE: Consent is willingness in fact for the conduct to
occur.
Status of those responsible
Some rules in determining whether consent is present
Those who are directly and indirectly responsible for as a defense
transgression of political rights are joint tortfeasors
(Aberca v. Ver, G.R. No. L-69866 April 15, 1988). 1. It need not be communicated to the defendant;
2. In determining whether plaintiff consented, defendant
NOTE: That the privilege of writ of habeas corpus has been must reasonably interpret her overt act and
suspended is no defense in an action for damages based on manifestations of her feelings;
violation of constitutional rights. (Ibid.)
NOTE: The defendants subjective state is based on
Good faith not a defense in action for damages founded the plaintiffs objective actions.
on violation of constitutional rights
3. Plaintiff has burden of proof to show intent to commit
To be liable under Article 32 of the New Civil Code it is the act, lack of consent, and harm.
enough that there is a violation of the constitutional rights
of the plaintiffs and it is not required that defendants Consent not a defense if the plaintiff or offended party
should have acted with malice or bad faith. (Largo, 2007). is a minor
For one to surrender the right to be free from intentional

interference by others, one must have the mental capacity
to consent. Defendant can be liable despite the fact that the

2 0 15 G O L D E N N O T E S
TORTS AND DAMAGES
plaintiff was subjectively willing and communicated that Proof of a party claiming self-defense
willingness to the defendant.
A party claiming self-defense must prove not only that he
Conduct that injures another does not make the actor acted honestly in using force, but that his fears were
liable to the other, even though the other has not reasonable under the circumstances, and the means of self-
consented to it if defense were reasonable.
1. An emergency makes it necessary or apparently The self-defense privilege extends to protecting total
necessary to act before there is opportunity to obtain strangers as well.
consent or one empowered to consent for him, and
2. The actor has no reason to believe that the other Self-defense made by an intervener
would decline.
The force that may be used by an intervener to repel an
Consent will not shield the defendant from liability if it attack on another is measured by the force that the other
is procured by means of fraud or duress. could lawfully use.
Courts invalidate consent procured by duress when If the intervener is mistaken, even reasonably mistaken,
defendants threaten the plaintiff or plaintiffs loved ones the privilege is unavailable if it would not be available to
with physical harm. the person to be protected.
Self-defense as a defense The interveners mistake need only be reasonable; there is

no need to show that the victim also had the privilege to
An actor is privileged to use reasonable force, not intended defend himself.
or likely to cause death or serious bodily harm, to defend
himself against unprivileged harmful contract which he Extent of the privilege to defend his property from
reasonably believes that another is about to inflict. intrusions
An actor is privileged to defend himself against another by An actor is privileged to use reasonable force, not intended
force likely to cause death or serious bodily harm when he or likely to cause death or serious bodily harm, to prevent
reasonably believes that: or terminate anothers intrusion upon the actors land if:
1. The other is about to inflict upon him an intentional
contact and 1. The intrusion is not privileged;
2. He is thereby put in peril of death or serious bodily 2. The actor reasonably believes that the intrusion can
harm which can safely be prevented only by be prevented only by the force used; and
immediate use of such force. 3. The actor has first requested the other to desist or the
actor believes such request will be useless or
NOTE: Court requires objective and subjective belief substantial harm will be done before it can be made.
(reasonable person could have seen the situation as
dangerous and subject believed that he was in danger). The intentional infliction which is intended or likely to
cause death or serious bodily harm, for the purpose of
Privilege of self-defense preventing or terminating the others intrusion upon the
actors possession of land, is privileged only if the actor
Exists even if the actor believes he can avoid defending reasonably believes that the intruder is likely to cause
himself by death or serious bodily harm.
1. Retreating within his dwelling place, or Q: The owner or lawful possessor of a thing has the
2. Permitting the other to intrude upon his dwelling right to exclude any person from the enjoyment and
place, or disposal thereof. For this purpose, he may use such
3. Abandoning an attempt to effect a lawful arrest. force as may be reasonably necessary to repel or
prevent an actual or threatened unlawful physical
Does not exist if the actor believes that he can avoid invasion or usurpation of his property (Art. 429, NCC).
defending himself by Is the owners right provided for in the said article an
absolute right?
1. Retreating in any place other than his dwelling place
or A: No. In the following instances, this right may not be
2. Relinquishing the exercise of any right other than his invoked by the owner:
privilege to prevent intrusion onto his dwelling place. 1. One may sacrifice the personal property of another to
save his life or the lives of his fellows;
NOTE: The actor is not privileged to use any means of self- 2. One is privileged by necessity to trespass when there
defense which is intended or likely to cause a bodily harm is a serious threat to life and no other lifesaving
in excess of that which the actor correctly or reasonably option is available; and
believes to be necessary for his protection. 3. The owner of property may not eject a trespasser if
the trespasser requires entry to protest himself and
his property from harm.

CIVIL LAW
NOTE: In these instances, intrusion is said to be privileged.
The necessity privilege to enter the land of another in Test of negligence
order to avoid serious harm is coupled with an obligation
on the part of the entrant to pay for whatever harm he The test is would a prudent man, in the position of the
caused. tortfeasor, foresee harm to the person injured as a
reasonable consequence of the course about to be
Recapture of property pursued? If so, the law imposes a duty on the actor to take
precaution against its mischievous results, and failure to
In order for recapture of chattels to be raised as a defense, do so constitutes negligence (Picart v. Smith, G.R. No. 12219
two things must concur: first, possession by the owner, March 15, 1918).
and, second, a purely wrongful taking or conversion,
without a claim of right (Kirby v. Foster, 298 F.3d 219). Degrees of negligence
If personal property is involved, recapture of chattels is a 1. Simple negligence Want of slight care and diligence
proper defense, if it is a real property, recapture of land is only
a defense. Such recapture of land defense is most 2. Gross negligence There is a glaringly obvious want of
frequently present in landlord-tenant disputes. It is diligence and implies conscious indifference to
generally held by the courts that no privilege exists for a consequences (Amadeo v. Rio Y Olabarrieta, Inc., G.R.
landowner to forcibly enter the tenant's premises or No. L-6870 May 24, 1954); pursuing a course of
interfere with the tenant's person or property. conduct which would probably and naturally result to
injury (Marinduque Iron Mines Agents, Inc. v. The
Discipline as a defense in intentional torts Workmens Compensation Commission, G.R. No. L-8110
June 30, 1954).
Based on a person's status or profession, he may be
entitled to use reasonable force in order to discipline Circumstances to be considered in determining
others. If a person such as a teacher, parent, or military whether an act is negligent
official commits a tort which results in injury to a plaintiff,
as long as certain conditions are met, the defense of 1. Person Exposed to the Risk A higher degree of
discipline will excuse him from liability. diligence is required if the person involved is a child.
2. Emergency The actor confronted with an emergency
Necessity as a defense is not to be held up to the standard of conduct
normally applied to an individual who is in no such
Necessity is a tort defense that is used under unusual, situation.
emergency circumstances where a defendant injures a 3. Social Value or Utility of Action Any act subjecting an
plaintiff in order to prevent a greater harm. The defendant innocent person to unnecessary risk is a negligent act
must prove that the harm inflicted on the plaintiff's person if the risk outweighs the advantage accruing to the
or property was less than the harm that was prevented. actor and even to the innocent person himself.
4. Time of the day May affect the diligence required of
Legal authority as a defense the actor (Art. 1173); e.g. a driver is required to
exercise more prudence when driving at night
May be invoked by the following: 5. Gravity of the Harm to be Avoided Even if the odds
1. Any person who acts in the fulfillment of a duty or in that an injury will result are not high, harm may still
the lawful exercise of a right or office because an be considered foreseeable if the gravity of harm to be
officer of the law is protected by the legal system avoided is great.
when making an arrest, permitting that he properly 6. Alternative Cause of Action If the alternative
followed the legal process. presented to the actor is too costly, the harm that may
2. Any person who acts in obedience to an order issued result may still be considered unforeseeable to a
by a superior for some lawful purpose (Art. 11(5-6), reasonable man. More so if there is no alternative
RPC). thereto.
NOTE: Under the RPC, a justifying circumstance relieves 7. Place A man who should occasion to discharge a gun
the offender not only from criminal liability but also from on an open and extensive marsh, or in a forest would
civil liability be required to use less circumspection and care, then
if he were to do the same thing in an inhabited town,
NEGLIGENCE village or city.
8. Violation of Rules and Statutes
Negligence a. Statutes
b. Administrative Rules
Negligence is the omission of that degree of diligence c. Private Rules of Conduct
which is required by the nature of the obligation and 9. Practice and Custom A practice which is dangerous
corresponding to the circumstances of the persons, time to human life cannot ripen into a custom which will
and place (Art. 1173, NCC). protect anyone who follows it (Yamada v. Manila
Railroad, G.R. No. 10073, Dec. 24, 1915).

2 0 15 G O L D E N N O T E S
TORTS AND DAMAGES
Quamtum of proof on negligence
If the law or contract does not state the diligence which is
The quantum of proof is preponderance of evidence (Rule to be observed in the performance, that which is expected
133 (1), Rules of Court). of a good father of a family shall be required (Art. 1173 (2),
NCC).
Burden of proof
NOTE: In English law, he is sometimes referred to as the
GR: Plantiff alleging damage due to negligent acts in his man on top of a Clapham omnibus (Aquino, 2005)
complaint has the burden of proving such negligence
Concept of a good father of the family (pater familias)
XPN: When the rules or the law provide for cases when
negligence is presumed. He is not and is not supposed to be omniscient of the
future; rather, he is one who takes precautions against any
Disputable presumptions of negligence harm when there is something before him to suggest or
warn him of the danger or to foresee it (Picart v. Smith, G.R.
1. Motor vehicle mishaps a driver is presumed No. L-12406, Mar. 15, 1918).
negligent if he:
a. was found guilty of reckless driving or The law requires a man to possess ordinary capacity to
violtiong traffic regulations at least avoid harming his neighbors unless a clear and manifest
twice within the preceeding two incapacity is shown; but it does not generally hold him
months (Art. 2184, NCC); or liable for unintentional injury unless, possessing such
b. was violating any traffic regulation at capacity, he might ought to have forseen the danger
the time of the mishap (Art. 2185, NCC). (Corliss v. Manila Railroad Co., G.R. No. L-21291, March 28,
2. Possession of dangerous weapons or substances, 1969).
results in death or injury, except when the possession
or use thereof is indespensable in his occupation or Rule in case of fault or negligence of an obligor
business (Art. 2188, NCC).
3. Common carrier are presumed to have been at fault or 1. Art. 1173 - provides that the fault or negligence of the
acted negligently in case of death or injuries to obligor consists in the omission of that diligence
passengers. Unless they prove that they observed which is required by the nature of the obligation and
extraordinary dilligence (Art. 1733 and 1755, NCC). corresponds with the circumstances of the persons, of
the time and of the place. When negligence shows bad
Intoxication not negligence per se faith, the provisions of Articles 1171 and 2201,
paragraph 2, shall apply (NCC).
Mere intoxication is not negligence per se nor establishes NOTE: Art. 1171, responsibility arising from fraud is
want of ordinary care. But it may be one of the demandable in all obligations. Any waiver of an action
circumstances to be considered to prove negligence for future fraud is void.
(Wright v. MERALCO, GR No. L-7760, October 1, 1914).
2. Art. 2201 - In contracts and quasi-contracts, the
Doctrine of Comparative Negligence damages for which the obligor who acted in good faith
is liable shall be those that are the natural and
The negligence of both the plaintiff and the defendant are probable consequences of the breach of the
compared for the purpose of reaching an equitable obligation, and which the parties have foreseen or
apportionment of their respective liabilities for the could have reasonably foreseen at the time the
damages caused and suffered by the plaintiff (Pineda, obligation was constituted.
2009) NOTE: In case of fraud, bad faith, malice or wanton
attitude, the obligor shall be responsible for all
The relative degree of negligence of the parties is damages which may be reasonably attributed to the
considered in determining whether, and to what degree, non-performance of the obligation. (Ibid.)
either should be responsible for his negligence
(apportionment of damages). Concept of Good Faith
NOTE: Under the modified form, the plaintiff can recover Good faith refers to the state of the mind which is
only if his negligence is less than or equals that of the manifested by the acts of the individual concerned. It
defendant. Expressed in terms of percentages, a plaintiff consists of the intention to abstain from taking an
who is charged with 80% of the total negligence, can unconscionable and unscrupulous advantage of another.
recover only 20% of his damages (De Leon, 2012). (DBP v. CA, et al., G.R. No. 137916, December 8, 2004).
GOOD FATHER OF A FAMILY OR Application of standard of diligence to children

REASONABLY PRUDENT MAN
GR: The action of a child will not necessarily be judged
General standard of diligence provided for under the according to the standard of an adult.
NCC
Bonus Pater Familias or that of a good father of a family.

CIVIL LAW
XPN: If the minor is mature enough to understand and control him; and
appreciate the nature and consequences of his actions. In The fear that an insanity defense would lead to
such a case, he shall be considered to have been negligent. false claims of insanity to avoid liability
(Bruenig v. American Family Insurance Co., 173
NOTE: R.A. 9344 (Juvenile Justice and Welfare Act of N.W. 2d 619[1970]).
2006): 15 years of age or younger age of absolute
irresponsibility. NOTE: Under the RPC, an insane person is exempt from
Nevertheless, absence of negligence does not absolutely criminal liability. However, by express provision of law,
excuse the child from liability, as his properties, if any, can there may be civil liability even when the actor is
be held subsidiarily liable. Nor will such absence of exempt from criminal liability. An insane person is still
negligence excuse the childs parents vicarious liability. liable with his property for the consequences of his acts,
though they performed unwittingly (US v. Baggay, Jr.
Diligence before the fact G.R. No. 6706, Sept. 1, 1911).
Employers
The conduct that should be examined in negligence cases That degree of care as mandated by the Labor Code or
is prior conduct or conduct prior to the injury that resulted other mandatory provisions for proper maintenance of
or, in proper cases, the aggravation thereof. the work place or adequate facilities to ensure the safety
of the employees.
STANDARD OF CARE
NOTE: Failure of the employer to comply with
STANDARD OF CONDUCT or mandatory provisions may be considered negligence
DEGREE OF CARE REQUIRED per se.
In General Employees
If the law or contract does not state the diligence which Employees are bound to exercise due care in the
is to be observed in the performance, that which is performance of their functions for the employers.
expected of a good father of a family shall be required Liability may be based on negligence committed while
(Article 1173, 2nd paragraph, NCC). in the performance of the duties of the employee
(Araneta v. De Joya, G.R. No. 83491, Aug. 27, 1990).
NOTE: Diligence of a good father of a family - bonos Owners, Proprietors and
pater familias - A reasonable man is deemed to have Possessors of Property
knowledge of the facts that a man should be expected to GR: The owner has no duty to take reasonable care
know based on ordinary human experience (PNR v. IAC, towards a trespasser for his protection or even to
GR No. 7054, Jan. 22, 1993). protect him from concealed danger.
Persons who have Physical Disability
GR: A weak or accident prone person must come up to XPN:
the standard of a reasonable man, otherwise, he will be 1. Visitors Owners of buildings or premises owe a duty
considered as negligent. of care to visitors.
2. Tolerated Possession - Owner is still liable if the
XPN: If the defect amounts to a real disability, the plaintiff is inside his property by tolerance or by
standard of conduct is that of a reasonable person under implied permission. However, common carriers may
like disability. be held liable for negligence to persons who stay in
Experts and Professionals their premises even if they are not passengers
GR: They should exhibit the case and skill of one who is 3. Doctrine of Attractive Nuisance
ordinarily skilled in the particular field that he is in. 4. State of Necessity A situation of present danger to
legally protected interests, in which there is no other
NOTE: This rule does not apply solely or exclusively to remedy than the injuring of anothers also legally
professionals who have undergone formal education. protected interest.
Doctors
XPN: When the activity, by its very nature, requires the If a General Practitioner Ordinary care and diligence in
exercise of a higher degree of diligence the application of his knowledge and skill in the practice
e.g. Banks; Common carriers of his profession
Insane Persons
The insanity of a person does not excuse him or his If a Specialist The legal duty to the patient is generally
guardian from liability based on quasi-delict (Arts. 2180 considered to be that of an average physician.
and 2182, NCC). This means that the act or omission of
the person suffering from mental defect will be judged Lawyers
using the standard test of a reasonable man. An attorney is bound to exercise only a reasonable
degree of care and skill, having reference to the business
The bases for holding a permanently insane person he undertakes to do (Adarne v. Aldaba, Adm. Case No. 80,
liable for his torts are as follows: June 27, 1978).
Where one of two innocent person must suffer a
loss it should be borne by the one who occasioned it;
To induce those interested in the estate of the
insane person (if he has one) to restrain and

2 0 15 G O L D E N N O T E S
TORTS AND DAMAGES
UNREASONABLE RISK OF HARM NOTE: Proof of possession of dangerous weapons or
substances required.
Elements to be considered to determine if a person has
exposed himself to an unreasonable great risk 4. Article 1756 - In case of death or injuries of
passengers, common carriers are presumed to have
1. Magnitude of the risk; been at fault or acted negligently, unless they prove
2. Principal object; that they observed extraordinary diligence prescribed
3. Collateral object; in Articles 1733 and 1755.
4. Utility of the risk; and
5. Necessity of the risk 5. Captain of the ship doctrine - A surgeon is likened to a
captain of the ship, in that it is his duty to control
If the magnitude of the risk is very great and the principal everything going on in the operating room. Thus,
object, very valuable, yet the value of the collateral object negligence committed during the operation is
and the great utility and necessity of the risk attributable to him.
counterbalanced those considerations, the risk is made
reasonable (Prosser and Keeton, Law of Torts, 1984 Ed., NOTE: the negligence of an employee gives rise to the
p.173, citing Terry, Negligence, 24 Harv. L. Rev. 40,42). negligence of the employer due to the dilligence of the
selection of employees rule (Poblete v. Fabros, No. L-29803,
NOTE: In the Philippines, the courts do not use any September 14, 1979).
formula in determining if the defendant committed a
negligent act or omission. What appears to be the norm is Negligence is proven by
to give negligence a common sense, intuitive
interpretation (Aquino, 2005). 1. Direct evidence
2. Circumtantial evidence
In the field of negligence, interests are to be balanced only 3. Res ipsa loquitur
in the sense that the purposes of the actor, the nature of
his act and the harm that may result from action or RES IPSA LOQUITUR
inaction are elements to be considered. Some may not be
considered depending on the circumstances. Res ipsa loquitur
The following are circumstances to be considered: The thing speaks for itself. Rebuttable presumption or
inference that defendant was negligent, which arises upon
1. Time proof that instrumentality causing injury was in
2. Place defendants exclusive control, and that the accident was
3. Emergency one which ordinarily does not happen in absence of
4. Gravity of harm to be avoided negligence. (Blacks Law Dictionary, 2004).
5. Alternative course of action
6. Social value or utility of activity However, res ipsa loquitur is not a rule of substantive law
7. Person exposed to the risk (Ibid). and, as such, does not create nor constitute an
independent or separate ground of liability. Instead, it is
PRESUMPTION OF NEGLIGENCE considered as merely evidentiary or in the nature of a
procedural rule (Professional Services v. Agana, G.R. No.
Persons are generally presumed to have taken ordinary 127590, January 31, 2007).
care of his concerns. There are however exceptions when
negligence is presumed: NOTE: it is also known as the Doctrine of Common
Knowledge
1. Article 2184 - It is disputably presumed that a driver
was negligent, if he had been found guilty of reckless Requisites for the application of the doctrine
driving or violating traffic regulations at least twice
within the next preceding two months. Resort to the doctrine may be allowed only when:
2. Article 2185 - Unless there is proof to the contrary, it 1. The event is of a kind which does not ordinarily occur
is presumed that a person driving a motor vehicle has in the absence of negligence;
been negligent if at the time of the mishap, he was 2. other responsible causes, including the conduct of the
violating any traffic regulation. plaintiff and third persons, are sufficiently eliminated
by the evidence; and
NOTE: Proof of traffic violation required. 3. the indicated negligence is within the scope of the
defendants duty to the plaintiff. (FGU Insurance Corp.
3. Article 2188 - There is prima facie presumption of vs. G. P. Sarmiento Trucking Co., G.R. No. 141910,
negligence on the part of the defendant if the death or August 6, 2002).
injury results from his possession of dangerous
weapons or substances, such as firearms and poison, Thus, it is not applicable when an unexplained accident
except when possession or use thereof is may be attributable to one of several causes, for some of
indispensable in his occupation or business. which the defendant could not be responsible (Ibid).

CIVIL LAW
When doctrine is applicable active intervention or neglect, the failure to act the whole
occurrence is humanized and removed from the rules
All that the plaintiff must prove is the accident itself; no applicable to acts of God (Southern College, Inc. v. CA, G.R.
other proof of negligence is required beyond the accident No. 126389, July 10, 1998).
itself. It relates to the fact of an injury that sets out an
inference to the cause thereof or establishes the plaintiffs NOTE: the relation of cause and effect must clearly be
prima facie case. The doctrine rests on inference and not shown.
on presumption. (Perla Compania de Seguros, Inc. vs. Sps.
Sarangaya, G.R. No. 147746, October 25, 2005). Requisites
Three uses and applications of the doctrine 1. the event must be independent of human will;
2. the occurrence must render it impossible for the debtor
1. In medical negligence cases; to fulfill the obligaton in a normal manner;
2. In the exercise of abuse of judicial discretion cases 3. the obligor must be free from participation in, or
which will result in dismissal of the judge; and aggravation of the injury to the creditor. It must be
3. In practical instances impossible to foresee, or if it could be forseen, must have
Some cases where doctrine was held inapplicable been impossible to avoid (MIAA v. ALA Industries Corp., G.R.
No. 147349, February 13, 2004).
1. Where there is direct proof of absence or presence of
negligence; Liability in case furtuitous event and negligence
2. Where other causes, including the conduct of the concurs
plaintiff and third persons, are not sufficiently
eliminated by the evidence; When act of God combines with the negligence of man
3. When one or more requisite is absent (Aquino, 2005). which results in injury, the defendant is liable for injury
(Ilocos Norte Electric Co. v. CA, G.R. No. 53401, November 6,
Test of Forseeability 1989.
The court will place itself in the actors position to see if a DAMNUN ABSQUE INJURIA
prudent man could have forseen the resulting harm if the (DAMAGE WITHOUT PREJUDICE)
conduct is pursued (Ibid).
A person who only exercises his legal rights does no injury.
DEFENSES AGAINST NEGLIGENCE If damages result from such exercise of legal rights, the
consequences must be borne by the injured person alone.
1. Due Diligence The law affords no remedy for damages resulting from an
2. Accident or Fortuitous event act which does not amount to a legal injury or wrong.
3. Damnum Absque Injuria
4. Presumption of Regularity NOTE: When the conjuction of damage and wrong is
5. Sudden peril doctrine/Emergency rule wanting there is no damnum absque injuria (Lagon v. CA,
6. Assumption of Risk G.R. No. 119107, March 18, 2005).
7. Contributory Negligence
8. Volenti non fit injuria Liability Without Fault different from Damnum Absque
9. Last Clear Chance Injuria
10. Prescription
11. Waiver Liability without Fault includes:
12. Double Recovery
a. Strict Liability there is strict liability if one is
DUE DILIGENCE made independent of fault, negligence or intent
after establishing certain facts specified by law. It
In order that due dilligence as a defense may be availed of includes liability for conversion and for injuries
in the selection and supervision of employees, the mere caused by animals, ultra-hazardous activities and
formulation of company policies is not enough: it is nuisance.
necessary that they must be complied with (Metro Manila b. Product Liability is the law which governs the
Transit Corp. V. CA, G.R. No. 104408, June 21, 1993). liability of manufacturers and sellers for damages
resulting from defective products (Aquino, 2005).
NOTE: There is no hard or fast rule on the quantum of
evidence needed to prove due to observance of all the PRESUMPTION OF REGULARITY
dilligence of a good father of a family. Actual
implementation and monitoring of consistente compliance Mistakes committed by public officers are not actionable
with said rules is required. absent any clear showing of malice or gross negligence
amounting to bad faith (Farolan v. Solmac Marketing Corp.,
ACCIDENT OR FOTUITOUS EVENT G.R. No. 83589, March 13, 1991).
An event which takes place by accident and could not have SUDDEN PERIL DOCTRINE
been forseen. When the effect is found to be partly the (EMERGENCY RULE)
result of the participation of man, whether it be from

2 0 15 G O L D E N N O T E S
TORTS AND DAMAGES
GR: One who suddenly finds himself in a place of danger, 2007 citing, and Harper and James, The Law of Torts.
and is required to act without time to consider the best Little, Brown and Co., 1956, v. 2, p. 1167).
means that may be adopted to avoid the impending
danger, is not guilty of negligence, if he fails to adopt what CONTRIBUTORY NEGLIGENCE
subsequently and upon reflection may have been a better
method, unless the emergency in which he finds himself is It is conduct on the part of the injured party, contributing
brought about by his own negligence (Mc Kee v. IAC, G.R. as a legal cause to the harm he has suffered, which falls
No. 68102-3, July 16, 1992). below the standard to which he is required to conform for
his own protection (Valenzuela v. CA, G.R. No. 115024, Feb.
XPN: The emergency was brought about by the 7, 1996).
individuals own negligence (Valenzuaela v. CA, G.R. No.
115024, Febuary 7, 1996). NOTE: A child under nine (9) years of age is conclusively
presumed incapable of contributory negligence as a matter
NOTE: Emergency rule exempts common carriers from of law (Jarco Marketing Corp. v. CA, G.R. No. 129792,
liability. December 21, 1999).
ASSUMPTION OF RISK Principle of contributory negligence cannot apply in

criminal cases through reckless imprudence
Assumption of Risk Doctrine
The principle of contributory negligence cannot be used as
The doctrine assumes that a plaintiff who voluntarily defense in criminal cases through reckless imprudence
assumes a risk of harm from the negligent conduct of the because one cannot allege the negligence of another to
defendant cannot recover from such harm. (De Leon, citing evade the effects of his own negligence (People v. Quinones,
57 Am. Jur. 2d 663). 44 O.G. 1520; People v. Orbeto, C.A. 430 O.G. 3173).
Elements VOLENTI NON FIT INJURIA
1. The plaintiff must know that the risk is present; (to which a person assents is not esteemed in law as
2. He must further understand its nature; and injury) refers to self-inflicted injury or to the consent to
3. His choice to incur it is free and voluntary. injury which precludes the recovery of damages by one
who has knowingly and voluntarily exposed himself to
Kinds of assumption of risk danger, even if he is not negligent in doing so (Nikko Hotel
Manila Garden, et al. vs. Reyes, G.R. No. 154259, February 28,
1. Express waiver of the right to recover; 2005).
2. Implied assumption
a. Dangerous Conditions - A person who, knowing LAST CLEAR CHANCE
that he is exposed to a dangerous condition, (DOCTRINE OF DISCOVERED PERIL)
voluntarily assumes the risk of such dangerous
condition may not recover from the defendant Doctrine of Last Clear Chance
who maintained such dangerous condition.
b. Contractual Relations - There may be an implied This is also called as the Humanitarian Negligence
assumption of risk if the plaintiff entered into Doctrine. Where both parties are negligent but the
contractual relations with the defendant. By negligent act of one succeeds that of the other by an
entering into a relationship freely and voluntarily appreciable interval of time, the one who has the last
where the negligence of the defendant is obvious, reasonable opportunity to avoid the impending harm and
the plaintiff may be found to accept and consent fails to do so, is chargeable with the consequences, without
to it, and to undertake to look out for himself and reference to the prior negligence of the other party (Picart
to relieve the defendant of the duty. vs Smith, 37 Phil. 809).
c. Dangerous Activities - A person who voluntarily
participates in dangerous activities assumes the The doctrine of last clear chance is a theory adopted to
risks which are usually present in such activities. mitigate the harshness of the contributory negligence of
d. Defendants negligence - When the plaintiff is the plaintiff (Phoenix Construction Inc. v. IAC, No. L-65295,
aware of the risk created by the defendants March 10, 1987).
negligence, yet he voluntarily proceed to
encounter it, there is implied assumption of risk Requisites
on the part of the plaintiff.
a) Plaintiff is placed in danger by his own negligent acts
When rule does not apply and he is unable to get out from such situation by any
means;
However, a person is excused from the force of the rule, b) Defendant knows that the plaintiff is in danger and
that when he voluntarily assents to a known danger he knows or should have known that the plaintiff was
must abide by the consequences, if an emergency is found unable to extricate himself therefrom; and
to exist or if the life or property of another is in peril, or c) Defendant had the last clear chance or opportunity to
when he seeks to rescue his endangered property (Largo, avoid the accident through the exercise of ordinary

CIVIL LAW
care but failed to do so, and the accident occurred as a PRESCRIPTION
proximate result of such failure (Pineda, 2009).
The act of establishing authoritative rules. The effect of the
Instances when doctrine not applicable lapse of time in creating and destroying rights (Blacks Law
Dictionary, 2004).
1. When the injury or accident cannot be avoided by the
application of all means at hand after the peril has Articles Period
been discovered; (Pantranco North Expressway v. 10 years written contract; obligation
Baesa, G.R. Nos. 79050-51, November 14, 1989) 1144
created by law and upon judgement
2. If the defendants negligence is a concurrent cause
1146 6 years oral contract and quasi-contract
and which was still in operation up to the time the
All kinds of actions, when there is no special
injury was inflicted;
1150 provision shall be counted from the day
3. Where the plaintiff, a passenger, filed an action
they may be brought
against a carrier based on contract; (Bustamante v. CA,
G.R. No. 89880, February 6, 1991)
WAIVER
4. If the actor, though negligent, was not aware of the
danger or risk brought about by the prior fraud or
It is a legally enforceable claim of one person against
negligent act;
another, that the other shall do a given act, or shall not do a
5. In case of a collapse of a building or structure. (De Roy
given act. (Pineda, 2011).
v. CA, G.R. No. L-41154, January 29, 1988)
6. Where both parties are negligent; (Philippine National
Requisites
Railways v. Brunty, G.R. No. 169891, November 2, 2006)
7. In case of collision, it applies in a suit between the
1. existence of a right;
owners and drivers of colliding vehicles and not
2. knowledge of the evidence thereof; and
where a passenger demands responsibility from the
3. an intention to relinquish it
carrier to enforce its contractual obligations (Tiu v.
(Valderama v. Macalde, G.R. No. 165005, September 16,
Arriesgado, G.R. No. 138060, September 1, 2004).
2005).
NOTE: There is a different rule in case of collision of
DOUBLE RECOVERY
vessels.
Prohibition against Double Recovery
Q: Mr and Mrs R own a burned-out building, the
firewall of which collapsed and destroyed the shop
Responsibility for fault or negligence under the preceeding
occupied by the family of Mr and Mrs S, which resulted
article is entirely separate and distinct from the civil
in injuries to said couple and the death of their
liability arising from negligence inder the Penal Code. But
daughter. Mr and Mrs S had been warned by Mr & Mrs
the plaintiff cannot recover damages twice for the same act
R to vacate the shop in view of its proximity to the
or omission of the defendant (Art. 2177, NCC).
weakened wall but the former failed to do so. Mr &
Mrs S filed against Mr and Mrs R an action for recovery
SPECIAL LIABILITY ON PARTICULAR ACTIVITIES
of damages the former suffered as a result of the
collapse of the firewall. In defense, Mr and Mrs R rely
PRODUCTS LIABILITY
on the doctrine of last clear chance alleging that Mr
and Mrs S had the last clear chance to avoid the
Product and service liability
accident if only they heeded the formers warning to
vacate the shop, and therefore Mr and Mrs Rs prior
Product Liability is the law which governs the liability of
negligence should be disregarded. If you were the
manufacturers and sellers for damages resulting from
judge, how would you decide the case? (1990 Bar
defective products. It is meant to protect the consumers by
Question)
providing safeguards when they purchase or use consumer
products. (Aquino, 2005)
A: I would decide in favor of Mr & Mrs S. The proprietor
of a building or structure is responsible for the damages
General principles to determine product liability
resulting from its total or partial collapse, if it should be
due to the lack of necessary repairs (Art. 2190, NCC) As
1. Regardless of the ground on which liability is
regards the defense of last clear chance, the same is not
asserted, whether negligence, breach of warranty or
tenable because according to the SC in one case (De Roy v.
strict liability in tort, a manufacturer or seller of a
CAL-80718, Jan 29, 1988) the doctrine of last clear chance
product cannot be held liable for injury allegedly
is not applicable to instances covered by Art 2190 of the
caused in the absence of proof that the product was
Civil Code. Further, in Phoenix Construction, Inc. v.
defective when it left the defendants possession or
Intermediate Appellate Court (G.R. L-65295, March 10,
control and that the injury was proximately caused by
1987) the Supreme Court held that the role of the common
the product
law "last clear chance" doctrine in relation to Art. 2179 of
2. Misuse of the product is a bar to recovery in a
the Civil Code is merely to mitigate damages within the
products liability case based on strict liability in tort
context of contributory negligence.
3. Privity of contract is not a requisite to recovery in a
products liability case based on breach of warranty

2 0 15 G O L D E N N O T E S
TORTS AND DAMAGES
used, although no contractual relation exists (Art. 2187.
Consumer Act (RA 7394) NCC).
It prohibits fraudulent sales acts or practices. Chapter I of Requisites to cover on account of hidden defects
Title III expressly provides for protection against defective,
unfair and unconscionable sales acts and practices. The Act 1. The defect must be hidden;
likewise contains provisions imposing warranty 2. The defect must exist at the time the sale was made;
obligations on the manufacturers and sellers. This Act also 3. The defect must ordinarily have been excluded;
imposes liability for defective service independently of 4. The defect must be important (it must render thing
fault. unfit or considerably decrease fitness); and
5. The action must be instituted within the statute if
Persons made liable under the Consumer Act limitations (Nutrimix Feeds Corporation v. CA, G.R. No.
152219, October 25, 2004).
The strict liability under the Act is imposed on the
manufacturer. Doctrine of Limited Liability
A manufacturer is any person who manufactures, A stipulation that limits liability is valid so long as it is not
assembles or processes consumer products, except that if against public policy. The liability of the common carrier
the goods are manufactured, assembled or processed for shall not exceed the value of the goods as that appearing in
another person who attaches his own brand name to the the bill of lading (Edgar Cokaliong Shipping Lines, Inc. v.
consumer products, the latter shall be deemed the UCPB General Insurance Co. Inc., G.R. No. 146018, June 25,
manufacturer. In case of imported products, the 2006).
manufacturers representatives or, in his absence, the
importer shall be deemed the manufacturer (Art. 4, RA STRICT LIABILITY
7394).
There is strict liability if one is made independent of fault,
Kinds of defects in product negligence or intent after establishing certain facts
specified by law. It includes liability for conversion and for
1. Manufacturing defect defects resulting from injuries caused by animals, ultra-hazardous activities and
manufacture, construction, assembly and erection. nuisance.
2. Design defect defects resulting from design and
formulas. POSSESSOR AND USER OF AN ANIMAL
3. Presentation defect defects resulting from handling,
making up, presentation or packing of the products. Liability for damages caused by the animals
4. Absence of Appropriate Warning defect resulting
from the insufficient or inadequate information on the GR: The possessor or whoever makes use of the animal is
use and hazards of the products. liable independent of fault.
Defenses of a manufacturer and supplier XPN: When the damage is caused by force majeure or by
the person who suffered the damage.
Art. 97 of the Consumer Act provides that the
manufacturer shall not be liable when it evidences: Rules on liability of owners for damage caused by his
1. That it did not place the product on the market; animals
2. That although it did place the product on the market
such product has no defect; 1. An owner is strictly liable for reasonably foreseeable
3. That the consumer or the third party is solely at fault. damage done by a trespass of his animals.
2. An owner is strictly liable to licensees and invitees for
NOTE: On the other hand, Art. 99 of said Act provides that injuries caused by wild animals as long as the injured
the supplier shall not be liable when it is proven person did nothing to bring about the injury.
1. That there is no defect in the service rendered; 3. An owner is not strictly liable for injuries caused by
2. That the consumer or the third party is solely at fault. domestic animals unless he has knowledge of that
particular animal's dangerous propensities that are
Remedies of a consumer in the Consumer Act not common to the species.
4. Strict liability will generally not be imposed in favor of
Sec. 60 of the law expressly provides that the court may trespassers in the absence of the owner's negligence.
grant injunction restraining the conduct constituting the An exception is recognized for injuries inflicted by
contravention of illegal sales act and practices and/or vicious watchdogs.
actual damages and such other orders as it thinks fit to
redress injury to the person affected by such conduct. Wild Beast Theory
Product Liability by Manufacturers A person who for his own purposes brings on his land and
collects and keeps there anything likely to do mischief if it
Manufacturers and processors of foodstuffs, drinks, toilet escapes, must keep it at his peril, and if he does not do so,
articles and similar goods shall be liable for death or is prima facie answerable for all the damages which is the
injuries caused by any noxious or harmful substances natural consequence of its escape. It is therefore

CIVIL LAW
unnecessary for the plaintiff to prove negligence, and it is come in contact with it individuals only
no defense for a defendant to prove that he has taken all Remedies are indictable Actionable, either for their
possible precautions to prevent the damage (Ryland v. abatement or for damages,
Fletcher, L.R. 1 Ex. 265) or both
Complainant need not Complainant in private
Owner liable if victim is a stranger have property or use nuisance seeks to protect
interest in any property his own, current interest in
The owner of an animal is not liable for injury caused by it affected by the defendants the undisturbed
ti its caretaker. However, he may be held liable if the conduct enjoyment of or benefit
victim is a stranger (Afialde v. Hisole, No. L-2075, November from property
29, 1949).
Doctrine of Attractive Nuisance
Q: Primo owns a pet iguana, which he keeps in a man-
made pond enclosed by a fence situated in his One who maintains on his premises dangerous
residential lot. A typhoon knocked down the fence of instrumentatlities or appliances of a character likely to
the pond and the iguana crawled out of the gate of attract children in play, and who fails to exercise ordinary
Primos residence. N, a neighbor who was passing by, care to prevent them from playing therefrom is liable to a
started throwing stones at the iguana, drawing the child of tender years who is injured thereby, even if the
iguana to move towards him. N panicked and ran but child is a trespasser.
tripped on something and suffered a broken leg. Is
anyone liable for Ns injury? Explain. (2010 Bar DAMAGES
Question)
GENERAL CONSIDERATIONS
A: No one is liable. The possessor of an animal or whoever
may make use of the same is responsible for the damage Damages
which it may cause, although it may escape or be lost. This
responsibility shall cease only in case the damage should In legal contemplation, the term damages is the sum of
come from force majeure or from the fault of the person money which the law awards or imposes as a pecuniary
who has suffered damage (Art. 2183,NCC). compensation, a recompense or satisfaction for an injury
done or wrong sustained as a consequence either of a
NUISANCE breach of a contractual obligation or a tortuous act (MEA
Builders, Inc. v. CA, G.R. No. 121484, January 31, 2005).
Definition
NOTE: A complaint for damages is personal in nature
Any act, omission, establishment, business, condition of (personal action)
property, or anything else which condition of property, or
anything else which: Damages can only be paid with money
1. Hinders or impairs the user of property; Damages can only be paid with money and not palay
2. Annoys or offends the senses; because palay is not a legal tender currency in the
3. Schocks, defies or disregards decency or morality; philippines (Vda. Simeon Borlado v. CA, G.R. No. 114118,
4. Injuries or endangers the healsts or safety of other; or August 28, 2001).
5. Obstructs or interferes with the free passage of any
public highway or street, or any body of water. Kinds of damages (MENTAL)
Whether rights of property, of health, of comfort are so 1. Moral
injuriously affected by the noise that the sufferer is 2. Exemplary
subjected to a loss which goes beyond the reasonable limit 3. Nominal
imposed by him by the condtion of living (Velasco v. 4. Temperate
MERALCO, No. L-18390, August 6, 1971). 5. Actual
6. Liquidated
Two fields of liability
1. Public Nuisance - the doing of or the failure to do

something that injuriously affects safety, health, or
morals of the public, or works some substantial
annoyance, inconvenience, or injury to the public
2. Private Nuisance - one which violates only private
rights and produces damage to but one or a few
persons, and cannot be said to be public
Public v. Private Nuisance
Public Nuisance Private Nuisance

Affects the public at large Affects the individual or a
or such of them as may limited number of

2 0 15 G O L D E N N O T E S
TORTS AND DAMAGES
ACTUAL/
MORAL NOMINAL
COMPENSATORY
According to purpose
Actual or compensatory damages simply Awarded only to enable the injured Vindicating or recognizing the injured
make good or replace the loss caused by party to obtain means, diversion or partys right to a property that has been
the wrong. amusement that will alleviate the moral violated or invaded (Tan v. Bantegui, G.R.
suffering he has undergone, by reason of No. 154027, October 24, 2005).
defendants culpable action (Robleza v.
CA, G.R. No. 80364, June 28, 1989).
According to manner of determination
Claimant must produce competent proof No proof of pecuniary loss is necessary. No proof of pecuniary loss is necessary.
or the best evidence obtainable such as The assessment is left to the discretion Proof that a legal right has been violated
receipts to justify an award therefore. of the court according to the is what is only required. Usually
Actual or compensatory damages circumstances of each case. However, awarded in the absence of proof of
cannotbe presumed but must be proved there must be proof that the defendant actual damages.
with reasonable certainty (People v. caused physical suffering, mental
Ereno, G.R. No. 124706, February 22 , anguish, moral shock, etc. (Compania
2000). Maritima v. Allied Free Workers Union,
G.R. No. L-31379, Aug. 29, 1988).
Actual damages must be substantiated GR: Factual basis must be alleged. Aside
by documentary evidence, such as from the need for the claimant to
receipts, in order to prove expenses satisfactorily prove the existence of the
incurred as a result of the death of the factual basis of the damages, it is also
victim or the physical injuries sustained necessary to prove its causal relation to
by the victim (Philippine Hawk the defendants act (People v. Manero,
Corporation v. Vivian Tan Lee, G.R. No. G.R. Nos. 86883-85, Jan. 29, 1993).
166869, Feb. 16, 2010).
XPN: Criminal cases. Moral damages
may be awarded to the victim in criminal
XPN: Damages for loss of earning proceedings in such amount as the court
capacity may be awarded despite the deems just without need for pleading or
absence of documentary evidence when: proof of the basis thereof (People v.
(1) the deceased is self-employed and Paredes, G.R. No. 136105. October 23,
earning less than the minimum wage 2001). The amount of P50,000 is usually
under current labor laws, in which case, awarded by the Court in case of the
judicial notice may be taken of the fact occurrence of death
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).
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.

CIVIL LAW
EXEMPLARY/
TEMPERATE LIQUIDATED
CORRECTIVE
According to purpose
When the court is convinced that there Liquidated damages are frequently Exemplary or corrective damages are
has been such a loss, the judge is agreed upon by the parties, either by intended to serve as a deterrent to
empowered to calculate moderate way of penalty or in order to avoid serious wrongdoings (People v. Orilla,
damages rather than let the controversy on the amount of damages. G.R. Nos. 148939-40, February 13, 2004).
complainant suffer without redress
(GSIS v. Labung-Deang, G.R. No. 135644,
September 17, 2001).
According to manner of determination
May be recovered when the court finds If intended as a penalty in obligations 1. That the claimant is entitled to moral,
that some pecuniary loss has been with a penal cause, proof of actual temperate or compensatory damages;
suffered but its amount cannot, from the damages suffered by the creditor is not and
nature of the case, be proved with necessary in order that the penalty may
certainty. No proof of pecuniary loss is be demanded (Art. 1228, NCC). 2. That the crime was committed with 1
necessary. or more aggravating circumstances, or
No proof of pecuniary loss is necessary. the quasi-delict was committed with
gross negligence, or in contracts and
quasi-contracts the act must be
accompanied by bad faith or done in
wanton, fraudulent, oppressive or
malevolent manner.
No proof of pecuniary loss is necessary.
Special/Ordinary
Special Special Special
ACTUAL AND COMPENSATORY DAMAGES Article 2200. In other words, there are two components to
actual damages (RCPI vs. CA, No. L-55194, February 26,
Actual or compensatory damages 1981).
Actual damages are such compensation or damages for an Purpose of the law in awarding actual damages
injury that will put the injured party in the position in
which he had been before he was injured. They pertain to Its purpose is to repair the wrong that has been done, to
such injurues or losses that are actually sustained and compensate for the injury inflicted, and not to impose a
susceptible of measurement (Filipinas (Pre-Fab Bldg.) penalty (Algarra v. Sandejas, G.R. No. 8385, March 24,
Systems, Inc. v. MRT Development Corp., G.R. Nos. 167829- 1914).
30, November 13, 2007).
When victim is unknown
NOTE: To recover damages, the amount of loss must not
only be capable of proof but must actually be proven. The fact that the victim remains unknown and no heirs
have come forward, does not warrant the elimination of
Kinds of Actual or compensatory damages civil indemnity (People v. Guzman, G.R. No. 8385, April 25,
1994).
1. Damnun Emergens/Dano Emergente (actual damages)
all the natural and consequence of act or omission Proving the loss
complained of classified as one for the loss of what a
person already possesses GR: Loss must be proved before one can be entitled to
damages
2. Lucrum Cessans/Lucro Cesante (compensatory
damages) for failure to recaive, as benefit, that XPN: Loss need not be proved in the following cases:
which would have pertained to him (expected profits)
(Calibre Traders, Inc. v. Bayer Philippines, Inc., G.R. No. 1. Liquidated damages previously agreed upon (Art.
161431, October 13, 2010). 2226, NCC)
NOTE: Both actual and compensatory damages can be

granted at the same time to the plaintiff as provided under

2 0 15 G O L D E N N O T E S
TORTS AND DAMAGES
NOTE: Liquidated damages take the place of actual Docketing fees must be based on allegation of actual
damages except when additional damages are damages
incurred.
The amount of damages claimed must be alleged not only
2. Forfeiture of bonds in favor of the government for the in the body of the complaint, petition or answer but also in
purpose of promoting public interest or policy (Far the prayer portion therof. (Siapno v. Manalo, G.R. No.
Eastern Surety and Insurance Co. v. CA, No. L-12019, 132260, August 30, 2005).
October 16, 1958)
3. Loss is presumed (Manzanares v. Moreta, No. 12306, Such other relief as this Honorable Court may deem
October 22, 1918) reasonable
4. When the penalty clause is agreed upon in the
contract between the parties (Art. 1226, NCC). The prayer for such other relief as this Honorable Court
may deem reasonable ay include actual damages although
Civil liability ex delicto v. Actual or compensatory not alleged in the answer, if and when they are proved
damages distinguished (Heirs of Basilisa Justiva v. Gustilo, No. L-16396, January 31,
1963).
Civil Indemnity Actual or Compensatory
Ex Delicto Damages NOTE: it is broad enough to comprehend an application as
well for nominal damages and even exemplary damages.
Can be awarded without To be recoverable must
need of further proof additionally be established
Aricle 21 of NCC cannot be used as a basis for award of
than the fact of with reasonable degree of
actual damages
commission of the certainty (People v. Dianos,
felony. G.R. No. 119311, October
Article 21 of the NCC cannot be used asa basis for award of
07, 1998)
actual damages when there is a pre-existing contractual
relation between the parties (ACI Philippines, Inc. v. Coquia,
How to ascertain amount of actual and compensatory
G.R. No. 174466, July 14, 2008).
damage (Evidence of Actual Damage)
Abrazaldo Doctrine
The amount of the damages should be determined with
reaosnable certainty. It cannot be simply based on the
It holds that where the amount of the actual damage
mere allegation of a witness without any tangible claim,
cannot shown that the heirs are entitiled thereto,
such as receipts or other documentary proofs to support
temperate damages may be awarded. (People v. Abrazaldo,
such claim (Consolidated Industrial Gases, Inc. v. Alabang
G.R. No. 124392, February 7, 2003).
Medical Center, Inc., G.R. No. 181983, November 13, 2013).
NOTE: Such temparate damages, taking into account
NOTE: Rule applies to civil and criminal cases (People v.
current jurisprudence fixing the indemnity for death at
Abao y Caares, G.R. No. 188323, February 21, 2011).
P50, 000, should be one half thereof, which is P25, 000
(Ibid).
GR: Documentary evidence should be presented to
substantiate the claim for damages for loss of earning
Determination of amount of damages recoverable
capacity
Much is left to the discretion of the court considering the
XPN: Damages for loss of earning capacity may be
moral and material damages involved. There can be no
awarded despite the absence of documentary evidence
exact or uniform rule for measuring the value of a human
when:
life.
1. the deceased is self-employed and earning less than
The life expectancy of the deceased or of the beneficiary,
the minimum wage under current labor laws, in which
whichever is shorter, is an important factor. Other factors
case, judicial notice may be taken of the fact that in
that are usually considered are:
the deceased's line of work no documentary evidence
is available; or
1. Pecuniary loss to plaintiff or beneficiary;
2. the deceased is employed as a daily wage worker
2. Loss of support;
earning less than the minimum wage under current
3. Loss of service;
labor laws (Philippine Hawk Corporation v. Vivian Tan
4. Loss of society;
Lee, G.R. 166869, Feb. 16, 2010).
5. Mental suffering of beneficiaries; and
6. Medical and funeral expenses.
If amount admitted by a party
NOTE: The formula that has gained acceptance over time
Even if there are no receipts and yet the amount claimed is
has limited recovery to net earning capacity. The premise
admitted by a party, it should be granted (People v.
is obviously that net earning capacity is the persons
Abolidor, G.R. No. 133380, February 13, 2004).
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).

CIVIL LAW
Computation of Unearned Income ATTORNEYS FEES AND EXPENSES OF LITIGATION
Formula: Two concepts of Attorneys fees
Net Earning Capacity(x) = Life Expectancy X (Gross Annual 1. Ordinary reasonable compensation paid to a lawyer
Income LESS Living Expenses) by this client for the legal services he has rendered to
(People vs. Asilan, G.R. No. 188322, April 11, 2012). the latter
2. Extraordinary indemnity for damages ordered by the
Legend: court to be paid by the losing party in a litigation to
the prevailing party. They are actual damages due to
Net Earning Capacity = Life Expectancy x (Gross Annual the plaintiff (Art. 2208, NCC).
Income Living Expenses)
Life Expectancy = 2/3 x (80 Age of the Deceased) Payable not only to the lawyer but to the client, unless
Living Expenses = 50% of gross annual income they have agreed that the award shall pertain to the
lawyer as additional compensation or as part therof
Basis of Life Expectancy (Benedicto v. Villaflores, G.R. No. 185020, October 6,
2010).
Life expectancy shoud not be based on the retirement age
of government emplotees, which is pegged at 65. In NOTE: In all cases, the attorneys fees and expenses of
calculatung the life expectancy of an individual for the litigation must be reasonable.
purpose of determining loss of earning capicity under Art.
2206 (1) of the NCC, it is assumed that the deceased would
have earned income even after retirement from a ORDINARY EXTRAORDINARY
particular job (Smith Bell Dodwell Shipping Agencey Corp. v. Nature
Borja, G.R. No. 143008, June 10, 2002). The reasonable
An indemnity for damages
compensation paid to a
Heirs cannot claim as damages the full amount of ordered by the court to be
lawyer for the legal services
earnings of the deceased paid by the losing to the
rendered to a client who
prevailing party in litigation
has engaged him
Said damages consist, not of the full amount of his Basis
earnings, but of the support they received or would have The fact of employment of Any cases authorized by
received from him had he not died in consequence of the the lawyer by the client law
negligence of the bus' agent. Stated otherwise, the amount To whom payable
recoverable is not loss of the entire earning, but rather the Lawyer Client
loss of that portion of the earnings which the beneficiary
would have received. In other words, only net earnings, not Recovery of attorneys fees as actual damages
gross earning, are to be considered.
GR: They are not recoverable
In fixing the amount of that support, the "necessary
expenses of his own living" should be deducted from his XPN: (SWISS- MUD- ERC)
earnings. Earning capacity, as an element of damages to 1. Stipulation between parties
one's estate for his death by wrongful act, is necessarily his 2. Recovery of Wages of household helpers, laborers and
net earning capacity or his capacity to acquire money, less skilled workers
the necessary expense for his own living (Villa Rey Transit, 3. Actions for Indemnity under workmen's
Inc. v. CA, et al., G.R. No. L-25499, Feb. 18, 1970). compensation and employer liability laws
4. Legal Support actions
Medical Expenses are in the nature of actual damage 5. Separate civil action to recover civil liability arising
from crime
Medical expenses are in the nature of actual damages 6. Malicious prosecution
which should be duly proved and the award for actual 7. Clearly Unfounded civil action or proceeding against
damages cannoot be made on the basis of the doctors plaintiff
prescription alone (People v. Enguito, G.R. No. 128812, Feb 8. When Double judicial costs are awarded
28, 2000). 9. When Exemplary damages are awarded
10. Defendant acted in gross & evident bad faith in
Adjustment fees do not constitute actual damages Refusing to satisfy plaintiff's just & demandable claim
11. When defendant's act or omission Compelled plaintiff
Adjustment fees and expense of drivers in the recovery of to litigate with 3rd persons or incur expenses to
cargo lost at sea done voluntarily, though unsuccessfully, protect his interest
does not constitute actual damages (Schmitz Transport &
Brokerage Corp. v. Transport Venture, Inc., G.R. No. 150255, NOTE: If not pleaded and prayed for in the complaint,
April 22, 2005). attorneys fees are barred (Tin Po v. Bautista, No. L-55514,
March 17, 1981).
Furthermore, moral damages and attorneys fees cannot be

consolidated for they are different in nature and each must

2 0 15 G O L D E N N O T E S
TORTS AND DAMAGES
be separately determined (Philippine Veterans Bank v. ii) Defendant has done his best to lessen the
NLRC, G.R. No. 130439, October 26, 1999). plaintiffs injury or loss.
3. For Quasi-delicts:
EXTENT OR SCOPE OF ACTUAL DAMAGES a. That the loss would have resulted in any event
because of the negligence or omission of another,
IN CONTRACTS AND QUASI-CONTRACTS and where such negligence or omission is the
immediate and proximate cause of the damage or
Amount of actual damages injury;
b. Defendant has done his best to lessen the
The amount of actual damages should be that which would plaintiffs injury or loss (Pineda, 2009).
put the plaintiff in the same position as he would have
been if he had not sustained the wrong for which he is now IN CRIMES AND QUASI-DELICTS
getting compensation or reparation:
Art. 2206 provides that the amount of damages for death
1. Property value at the time of destruction, or market caused by a crime or quasi-delict shall be at least P75, 000,
value, plus, in proper cases, damages for the loss of even though there may have been mitigating
use during the period before replacement, value of circumstances (People v. Tabarnero, G.R. No. 168169,
use of premises, in case of mere deprivation of February 24, 2010).
possession.
2. Personal injury- medical expenses; If the qualifying In addition to the amount to be awarded, the defendant
circumstance is present to justify the imposition of shall also be liable for the following
death penalty, the civil indemnity should be no less
than P75,000. If the rape is simple rape, the civil 1. Loss of the earning capacity of the deceased, and the
indemnity is P50,000 (People v. Baago, G.R. No. indemnity shall be paid to the heirs of the latter; such
128384, June 29, 1999). indemnity shall in every case be assessed and
awarded by the court, unless the deceased on account
NOTE: Civil indemnity is mandatory upon the finding of permanent physical disability not caused by the
of the fact of rape and is automatically imposed upon defendant, had no earning capacity at the time of his
the accused without need of proof other than the fact death;
of the commission of the rape (American Home
Assurance Co v. Chua, G.R. No. 130421, June 28, 1999). 2. If the deceased was obliged to give support according
to the provisions of Article 291, the recipient who is
3. Death Wake and burial expenses, P P75,000 by way not an heir called to the decedent's inheritance by the
of civil indemnity ex delicto which requires no proof law of testate or intestate succession, may demand
other than the fact of death of the victim and the support from the person causing the death, for a
assailants responsibility therefor (People v. period not exceeding five years, the exact duration to
Tabarnero, G.R. No. 168169, February 24, 2010). be fixed by the court;
4. Physical Injuries Moral damages of P30,000 may be
recovered by way of civil indemnity (Guillang v. NOTE: The article only mentioned heir. Consequently,
Bedania. G.R. No. 162987, May 21, 2009). it cannot speak of devisees and legatees who are
receiving support from the deceased.
Mitigation of Actual Damages
3. The spouse, legitimate and illegitimate descendants
Actual damages can be mitigated in the following cases: and ascendants of the deceased may demand moral
damages for mental anguish by reason of the death of
1. For Contracts: the deceased.
a. Violation of terms of the contract by the plaintiff
himself; NOTE: The petitioner has correctly relied on the holding in
b. Enjoyment of benefit under the contract by the Receiver for North Negros Sugar Company, Inc. v. Ybaez,
plaintiff himself; G.R. No. L-22183, August 30, 1968, to the effect that in case
c. Defendant acted upon advice of counsel in cases of death caused by quasi-delict, the brother of the deceased
where the exemplary damages are to be awarded was not entitled to the award of moral damages based on
such as under Articles 2230, 2231 and 2232; Article 2206 of the Civil Code (Sulpicio Lines Inc. v. Curso,
d. Defendant has done his best to lessen the G.R. No. 157009, Mar. 17, 2010).
plaintiffs injury or loss.
IMPOSITION OF INTERESTS
NOTE: Award of compensatory damages for breach of
ccontract may be ordered executed pending appeal If the obligation consists in the payment of a sum of
(Radio Communicatio of the Philippines, Inc. v. Lantin, money, and the debtor incurs in delay, the indemnity for
No. L-59320, January 31, 1985 ). damages, there being no stipulation to the contrary, shall
be the payment of the interest upon, and in the absence of
2. For Quasi-contracts: stipulation, the legal interest, which is 6% per annum (Art.
i) In cases where exemplary damages are to be 2209, NCC).
awarded such as in Article 2232;

CIVIL LAW
Interest adjuudged upon demand with reasonable Payment in breach regardless of source
certainty
When an obligation, regardless of its source, i.e., law
No interest shall be adjudged on unliquidated claims or contracts, quasi-contract delicts or quasi-delicts, is
damages except when or until the demand can be breached, the contravenor can be held liable for payment
established with reasonable certainty (Solid Homes, Inc. v. of interest in the concept of actual and compensatory
IAC, G.R. No. 74269, November 27, 2006). damages (Ibid).
INTEREST Effectivity of 6% Legal interest per annum
Guidelines regarding the manner of computing legal Consequently, the 12% per annum legal interest shall
interest apply only until June 30, 2013. Come July 1, 2013 the new
rate of 6% per annum shall be the prevailing rate of
1. Breach of obligation consisting in payment of a sum interest when applicable (Nacar vs. Gallery Frames and/or
of money (i.e., a loan or forbearance of money) Felipe Bordey, Jr., G.R. No. 189871, August 13, 2013).
a) The interest due should be that which may have
been stipulated in writing MORAL DAMAGES
b) The interest due shall itself earn legal interest
from the time it is judicially demanded Moral damages
c) Absence of stipulation, the interest is to be
computed from default (e.i. from judicial or extra It includes physical suffering, mental anguish, fright,
judicial demand) under and subject to the serious anxiety, besmirched reputation, wounded feelings,
provisions of Article 1169 of NCC. moral shock, social humiliation, and similar injury (Art.
2217, NCC).
NOTE: Rate of interest shall be 6% per annum, in
the absence of express contract as to such rate of It is awarded to enable the injured party to obtain means,
interest including the rate allowed in judgements diversions or amusement that will serve to alleviate the
(BSP Cir. No. 799, Series of 2013 amending Section moral suffering he has undergone by reason of the
2 of Circular No. 905, Series of 1982). defendants culpable action (Prudenciado v. Alliance
2. Breach of obligation not consisting in payment of a Transport System, Inc., 148 SCRA 440).
sum of money
a) An interest on the amount of damages awarded NOTE: Moral damages applies both to natural and juridical
may be imposed at the discretion of the court at persons. It is only when a juridical person has good
the rate of 6% per annum reputaiton that is debased, resulting in social humiliation,
b) No interest, however, shall be adjudged on that moral damages may be awarded (San Fernando
unliquidated claims or damages except when or Regala Trading, Inc. v. Cargil Philippines, Inc., G.R. No.
until the demand can be established with 178008, October 9, 2013).
reasonable certainty
c) Where the demand is established with Nature of moral damages
reasonable certainty, the interest shall begin to
run from the time the claim is made judicially or Moral damages must be understood to be in the concept of
extrajudicially grants, not punitive or corrective in nature, calculated to
compensate the claimant for the injury suffered
NOTE: when such certainty cannot be so (Comsavings Bank [now GSIS Family Savings Bank] v.
reasonably established at the time the demand is Capistranom, G.R. No. 170942, August 28, 2013).
made, the interest shall begin to run only from
the date the judgment of the court is made (at Act or omission must be with bad faith
which time the quantification of damages may be
deemed to have been reasonably ascertained). The rule is settled that moral damages cannot be awarded
The actual base for the computation of legal in the absence of a wrongful act or omission or fraud or
interest shall, in any case, be on the amount bad faith (Siasat v. Intermediate Appellate Court, No. L-
finally adjudged. 67889, October 9, 1985).
3. When the judgment of the court awarding a sum of
money becomes final and executory Elements required for recovery
the rate of legal interest, whether the case falls 1. An injury clearly sustained by the claimant;
under paragraph 1 or paragraph 2, above, shall be 2. A culpable act or omission factually established;
12% per annum from such finality until its 3. The act or omission must be the proximate result of
satisfaction, this interim period being deemed to be the physical suffering, mental anguish, fright, serious
by then an equivalent to a forbearance of credit anxiety, bismerched reputation, wounded feelings,
(Eastern Shipping Lines, Inc. v. CA, G.R. No. 97412, moral shock, social humiliation and similar injury ;
July 12, 1994). and wrongful act or omission of the defendant as the
proximate cause of the injury sustained by the
claimant;

2 0 15 G O L D E N N O T E S
TORTS AND DAMAGES
4. The award of damages predicated on any of the cases 1. Willful acts contrary to morals, good customs or
stated in Art. 2219 (Amado v. Salvador, G.R. No. public policy
171401, December 13, 2007). 2. Disrespect to the dignity, personality, privacy and
peace of mind of neighbors and other persons
Court given discretion to determine moral damages 3. Refusal or neglect of a public servant to perform his
official duty without just cause
Trial courts are given discretion to determine moral 4. Unfair competition in enterprise or in labor
damages and the Court of Appealscan only modify or 5. Civil action for damages against accused acquitted on
cahange the amount awarded when they are palpably and reasonable doubt
scandalously excessive so as to indicate that it was the 6. Violation of civil rights
result of passion, prejudice or corruption on the part of the 7. Civil action for damages against city or municipal
trial court (Yuchengco v. Manila Chronicle Publishing Corp., police force
G.R. No. 184315, November 28, 2011). 8. When the trial court finds no reasonable ground to
believe that a crime has been committed after a
Each case must be governed by its own peculiar preliminary investigation or when the prosecutor
circumstances (Fontana Resort and Country Club, Inc. v. refuses or fails to institute criminal proceedings.
Tan, G.R. No. 154670, January 20, 2012).
Moral damages may be awarded in cases referred to in the
When victim bearing a child chapter on human relations of the Civil Code whitout need
of proof that the wrongful act complained of had caused
An award for the death of a person does not cover the case any physical injury upon the conplainant (Padilo v. Rural
of an unborn foetus that is not endowed with personality. Bank of Nabunturan, Inc., G.R. No. 199338, January 21,
The damges recoverable by the parents of an unborn child 2013).
are limited to moral damages for the illegal arrest of the
normal development of the foetus on account of distress Cases where moral damages is mandatory without
and anguish attendant to its loss (Galuz v. CA, No. L-16439, need of any proof
July 20, 1961).
1. Rape cases
Recovery of moral damages 2. Murder cases
GR: To recover moral damages, the plaintiff must allege NOTE: same rule applies in frustrated murder cases
and prove:
3. Homicide
1. The factual basis for moral damages and In Robbery and other common crimes, the grant of moral
2. The causal relation to the defendants act damages is not automatic, unlike in rape cases (People v.
Tano, G.R. No. 133872, May 5, 2000).
XPN: Moral damages may be awarded to the victim in
criminal proceedings without the need for pleading of Civil indemnity different from moral damages in rape
proof or the basis thereof.
In rape cases, civil indemnity is different from moral
Moral damages may be recovered in the following and damages. It is distinct from and should not be
analogous cases denominated as moral damages which are based on
different jural foundations and assessed by the court in the
1. A criminal offense resulting in physical injuries; exercise of sound discretion (People v. Caldona, G.R. No.
2. Quasi-delicts causing physical injuries; 126019, March 1, 2001).
3. Seduction, abduction, rape, or other lascivious acts;
4. Adultery or concubinage; NOTE: In criminal proceedings for rape, plaintiff may not
5. Illegal or arbitrary detention or arrest; prove the factual basis for moral damages as well as the
6. Illegal search; causal relation to the defendants act.
7. Libel, slander or any other form of defamation;
8. Malicious prosecution; Amount of award in qualified rape
9. Acts mentioned in Article 309; and
10. Actions referred to in Articles 21, 26, 27, 28, 29, 30, The recent judicial prescription is that the indemnification
32, 34, and 35 (Art. 2219, NCC). for a rape victim is P75, 000 if the crime is committed or
effectively qualified by any circumstances under which the
NOTE: Art. 2219, NCC provides for criminal offenses death penalty is authorized by the applicable amendatory
resulting from physical injuries and quasi-delicts causing laws (People v. Relanes, G.R. No. 175831, April 12, 2011).
physical injuries.
Psychologically incapacity and moral damages
Tortuous acts referred to in chapter of human
relations of the NCC By declaring petitioner as psychologically incapacitated,
the possibility of awarding moral damages was negated,
The plaintiff may recover moral damages: 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

CIVIL LAW
damages cannot stand since the Civil Code provides that Nature of Temparate Damages
exemplary damages are imposed in addition to moral,
temperate, liquidated or compensatory damages The allowance of temparate damages when actual
(Buenaventura v. CA, G.R. No. 127358, March 31, 2005). damages were not adequately proven is ultimately a rule
drawn from equity, the principle affording relief to those
NOMINAL DAMAGES definitely injured who are unable to prove how definite the
injury (People v. De los Santos, G.R. No. 207818, July 23,
Nominal Damages 2014).
Nominal damages are adjuced in order that a right of the Rationale behind the temperate or moderate damages
plaintiff, which has been wiolated or invaded by the
defendant, may be vindicated or recognized, and not for The rationale behind temparate damges is precisely that
the purpose of indemnfying the plaintiff for any loss from the nature of the case, definite proof of pecuniary loss
suffered by him (Art. 2221, NCC). cannot be offered. When the court is convinced that there
has been such loss, the judge is empowered to calcutlate
Purpose of nominal damages moderate damages, rather than let the complainant suffer
without redress from the defendants wrongful act (GSIS v.
In order that a right of the plaintiff which has been violated Labung-Deang, G.R. No. 135644, September 17, 2001).
or invaded by the defendant may be vindicated or
recognized, and not for the purpose of indemnifying the Elements of Temperate Damages
plaintiff for any loss suffered by him.
1. Some pecuniary loss;
Elements of Nominal Damages 2. Loss is incapable of pecuniary estimation;
3. The damages awarded are reasonable.
1. Plaintiff has a right;
2. Such right is violated; LIQUIDATED DAMAGES
3. The purpose of awarding damages is to vindicate or
recognize the right violated. Liquidated damages
Cases where nominal damages are awarded Liquidated damages are fixed damages previously agreed
by the parties to the contract and payable to the innocent
The court may award nominal damages in every obligation party in case of breach by the other (Pineda, 2009).
arising from any source enumerated in Article 1157, or in
every case where any property right has been invaded Liquidated damages are those that the parties agree to be
(Art. 2222, NCC). paid in case of a breach. Under Philippine laws, they are in
the nature of penalties. They are attached to the obligation
The adjudication of nominal damages shall preclude in order to ensure performance. As a precondition to such
further contest upon the right invovled and all accessory award, however, there must be proof of the fact of delay in
questions, as between the parties to the suit, or their the performance of the obligation (Suatengco v. Reyes, G.R.
respective heirs and assigns (Article 2223, NCC). No. 162729, December 17, 2007).
Nominal damages are small sums fixed by the court Nature of Liquidated Damages
without regard to the extent of the harm done to the
injured party. They are damages in name only and are In case liquidated damages have been agreed upon, no
allowed simply in recognition of a technical injury based proof of loss is necessary in order that such liquidated
on a violation of a legal right. damages may be recovered (Scott Consultants & Resource
Devt Corp., Inc. vs. CA, G.R. No. 112916, March 16, 1995).
NOTE: Nominal damages cannot co-exist with
compensatory damages. Nominal damges are adjuced in NOTE: Attorneys fee is in the concept of actual damages
order that a right of theplaintiff, which has been violated except that when it is stipulated and therefore in the form
or invaded by the defendant, may be vindicated or of liquidated damages no proof of pecuniary loss is
recognized, and not for the purpose of indemnifying the required (Article 2216) (Santiago vs. Dimayuga, G.R. No. L-
plaintiff for any loss suffered by him (LRTA v. Navidad, G.R. 17883, December 30, 1961).
No. 145804, February 6, 2003).
Liquidated damages v. Penalties
TEMPERATE OR MODERATE DAMAGES
Liquidated Damages Penalties
Temperate damages Purpose
It is sum inserted in a It is sum onserted in
Temperate damages are those damages, which are more contract as a measure of acontract as apunishment
than nominal but less than compensatory, and may be compensation for its breach for default, or by way pf
recovered when the court finds that some pecuniary loss security for actual damages
has been suffered but its amount cannot be proved with which may be sustained
certainty (Art. 2224, NCC). because of non-
performance

2 0 15 G O L D E N N O T E S
TORTS AND DAMAGES
Nature 3. Contracts and Quasi-contracts when defendant acted
Its essence is a genuine An agreement to pay a in wanton, fraudulent, reckless, oppressive, or
covenanted pre-estimate of stipulated sum on breach of malevolent manner (Art. 2232, NCC)
damages contract irrespective of the
damage sustained (De Leon, Requirements for an award of exemplary damages
2012).
Legal Results 1. The claimants right to exemplary damages has been
There is no difference between a penalty and liquidated established
damages, as far as legal results are concerned (Lambert vs. 2. Their determination depends upon the amount of
Fox, 26 Phil. 588) compensatory damages that may be awarded to the
claimant
Liquidated damages may be equitably reduced when 3. The act must be accompanied by bad faith or done in
wanton, fraudulent, oppressive or malevolent manner
1. Iniquitous or unconscionable (Mendoza v. Gomez, G.R. No. 160110, June 18, 2014).
2. Partial or irregular performance
Award in Crime v. Award in Quasi-Delict
When principal obligation is void
Award in Crime Award in Quasi-Delict
The nullity of the penal clause does not carry with it that of An aggravating May be granted if the
the principal obligation. circumstance, whether defendant acted with gross
ordinary or qualfying negligence (BPI Investment
The nullity of the principal obligation carries with it that of (People v. Vergara Y Oriel Corp. v. D.G. Carreon
the penal clause (Art. 1230, NCC). and Inocencio Y Paulino, G.R. Commercial Corp., G.R. No.
No. 177763, July 3, 2013). 126524, November 29,
Rule governing in case of breach of contract 2001).
when the breach of contract committed by the defendant is NOTE: In quasi-contracts, award of exemplary damages is
not the one contemplated by the parties in agreeing upon discretionary (Benguet Electric Cooperative, Inc. v. CA, G.R.
the liquidated damages, the law shall determine the No. 127326, December 23, 1999).
measure of damages, and not the stipulation (Art. 2228,
NCC). DAMAGES IN CASE OF DEATH
EXEMPLARY OR CORRECTIVE DAMAGES Damages that can be recovered in case of death (MEA-
I3)
Exemplary damages
1. Moral damages
Exemplary damages or corrective damages are imposed, 2. Exemplary damages
by way of example or correction for the public good, in 3. Attomey's fees and expenses for litigation
addition to the moral, temperate, liquidated or 4. Indemnity for death
compensatory damages (Art. 2229, NCC). 5. Indemnity for loss of earning capacity
6. Interest in proper cases
NOTE: They are also known as punitive or vindictive
damages Rules when crimes and quasi-delict has caused death
Rationale behind exemplary damages The amount of damages for death caused by a crime or
quasi-delict shall be at least three thousand pesos, even
The rationale behind exemplary damages is to provide an though there may have been mitigating circumstances. In
example or correction for the public good and not to enrich addition:
the victim (Rana v. Wong, G.R. No. 192862, June 30, 2014). 1. The defendant shall be liable for the loss of the
earning capacity of the deceased, and the indemnity
Cases where exemplary damages may be imposed as shall be paid to the heirs of the latter; such indemnity
accessory damages shall in every case be assessed and awarded by the
court, unless the deceased on account of permanent
GR: Exemplary damages cannot be recovered as a matter physical disability not caused by the defendant, had
of right (Art. 2233, NCC) no earning capacity at the time of his death;
2. If the deceased was obliged to give support according
XPN: They can be imposed in the following cases: to the provisions of Article 291, the recipient who is
not an heir called to the decedent's inheritance by the
1. Criminal offense when the crime was committed law of testate or intestate succession, may demand
with one or more aggravating circumstances (Art. support from the person causing the death, for a
2230, NCC) period not exceeding five years, the exact duration to
2. Quasi-delicts when the defendant acted with gross be fixed by the court;
negligence (Art. 2231, NCC) 3. The spouse, legitimate and illegitimate descendants
and ascendants of the deceased may demand moral

CIVIL LAW
damages for mental anguish by reason of the death of MISCELLANEOUS RULES
the deceased (Art. 2206, NCC).
Duty of the injured party
NOTE: The plaintiff is entitled to the amount that he spent
during the wake and funeral of the deceased. However, it The injured party is obligated to undertake measures that
has been ruled that expenses after the burial are not will alleviate and not aggravate his condition after the
compensable. infliction of the injury or nuisance. The injured party has
the burden of explaining why he did not do so (Art. 2203,
GRADUATION OF DAMAGES NCC).
Rules in graduation of damages in torts cases Co-existence of Damages
Generally, the degree of care required is graduated Damages that Damages that
Damages that must
according to the danger a person or property attendant cannot must
co-exist
upon the activity which the actor pursues or the co-exist stand alone
instrumentality he uses. The greater the danger the Exemplary Damages
greater the degree of care required. Nominal
must co-exist with
Damages cannot
Moral, Temperate, Nominal
However, foreseeability is not the same as probability. co-exist with
Liquidated or Damages
Even if there is lesser degree of probability that damage Exemplary
Compensatory
will result, the damage may still be considered foreseeable. Damages
Damages
NOTE: The test as respects foreseeability is not the

balance of probabilities, but the existence, in the situation
in hand, of some real likelihood of some damage and the
likelihood is of such appreciable weight and moment to
induce, or which reasonably should induce, action to avoid
it on the part of a person or a reasonably prudent mind.
Rules in graduation of damages in crimes
In crimes, the damages to be adjudicated may be

respectively increased or lessened according to the
aggravating or mitigating circumstances (Art. 2204, NCC).
Reduction of damages in quasi-delict cases
In quasi-delict the contributory negligence of the plaintiff

shall reduce the damages he may recover (Art. 2214, NCC).
Reduction of damages in contracts, quasi-contracts

and quasi-delicts
The court can equitably mitigate the damages in contract,

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
5. That since the filing of the action, the defendant has
done his best to lessen the plaintiffs loss or injury
(Art. 2215, NCC).
Liquidated damages, whether intended as an indemnity or

a penalty, shall be equitably reduced if they are iniquitous
or unconscionable (Art. 2227, NCC).

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CIVIL LAW

2015 GOLDEN NOTES

ADDRESS: Academics Committee

TEL. NO.: (02) 731-4027

No portion of this material may be copied or reproduced in books, pamphlets,

Printed in the Philippines, June 2015.

CIVIL LAW STUDENT COUNCIL

ATTY. AL CONRAD B. ESPALDON

MA. SALVE AURE M. CARILLO SECRETARY GENERAL

RAFAEL LORENZ SANTOS

CIVIL LAW COMMITTEE

JUDGE MYRA B. QUIAMBAO

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

ATTY. ARTHUR B. CAPILI

ATTY. ELGIN MICHAEL C. PEREZ

JUDGE PHILIP A. AGUINALDO

LENY G. GADANIA, R.G.C.

THE RISK OF USE, MISUSE OR

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

Include: Conflict of Laws (Private International Law) 7

II. Human Relations (Arts. 19-22, Civil Code) 10

I. Persons and Personality (Civil Code) 13

II. Marriage (Family Code) 16

Exclude: Muslim Code (P.D. 1083)

III. Legal Separation (Family Code) 34

Exclude: A.M. No. 02-11-11-SC, or the Rule on Legal Separation

V. Property Relations of the Spouses (Family Code) 42

VI. The Family 57

VII. Paternity and Filiation (Family Code) 60

A. Domestic Adoption Act of 1998 (R.A. No. 8552) 67

B. Inter-Country Adoption Act of 1995 (R.A. No. 8043) 70

Exclude: Articles 183-188, 191-193 (Family Code)

IX. Support (Family Code) 71

X. Parental Authority (Family Code) 75

Include: Child Abuse Law (R.A. No. 7610)

XII. Summary Judicial Proceedings in Family Law Cases 80

XIII. Retroactivity of the Family Code (Art. 256) 81

Exclude: Arts. 254-255, 257 (Family Code)

XIV. Funerals (Arts. 305-310, Civil Code) 81

Exclude: Care and Education of Children (Arts. 356-363, Civil Code)

XV. Use of Surnames 82

XVII. Civil Registrar 88

IV. Accession 100

V. Quieting of Title to or Interest in and Removal or Prevention of Cloud over Title to or

VI. Co-ownership 114

VII. Possession 122

VIII. Usufruct 130

IX. Easements 136

XI. Modes of Acquiring Ownership 147

II. No prescription applicable 158

III. Prescription or limitation of actions 159

II. Elements of an Obligation 160

III. Different Kinds of Prestations 160

IV. Classification of Obligations 160

V. Sources of Obligations 162

VI. Nature and Effect of Obligations 167