I.

EFFECT AND APPLICATION OF LAWS

A. When Law Takes Effect; Publication (Civil
Code, art. 2) G. Judicial Decision (Civil Code, art. 8)
B. Ignorance of the Law; (Civil Code, art. 3) H. Duty to Render Judgment (Civil Code, art. 9)
Ignorance of Fact I. Interpretation of Doubtful Statutes (Civil
C. Retroactivity of Laws (Civil Code, art. 4); Code, art. 10)
Vested Rights Principle J. Custom (Civil Code, arts. 11-12)
D. Mandatory, Prohibitory and Permissive K. Legal Periods (Civil Code, art. 13, as
Laws (Civil Code, art. 5) amended by Book I, chapter 8, sec. 31 of
E. Waiver of Rights (Civil Code, art. 6) the Administrative Code of 1987 (E.O. No.
292))
F. Repeal of Laws (Civil Code, art. 7)
L. Generality Principle of Penal Laws (Civil
Code, art. 14)
M. Conflict of Laws (Civil Code, arts. 15-18)
not only to those of general application, for
strictly speaking all laws relate to the people in
general albeit there are some that do not apply to
them directly.
Laws shall take effect after fifteen days following the
completion of their publication in the Official Gazette or in
a newspaper of general circulation in the Philippines,
unless it is otherwise provided. This Code shall take effect
one year after such publication. (Art. 2, NCC, as amended
by E.O 200)
• Publication is indispensable in every case,
but the legislature may in its discretion
provide that the usual fifteen-day period
shall be shortened or extended.
• If the law provides for a different period
shorter or longer than the fifteen-day
period, then such shorter or longer period,
as the case may be, will prevail.
• If the law provides that it shall take effect
immediately, it shall take effect immediately
after publication with the fifteen-day period
being dispensed with.

Illustration:
An example is the Civil Code which did not
become effective after fifteen days from its
publication in the Official Gazette but "one
year after such publication." The general rule
did not apply because it was "otherwise
provided.”
• When a statute does not explicitly provide
for its effectivity, it shall take effect only
after the expiration of the fifteen-day period
following the completion of its publication
either in the Official Gazette or in a
newspaper of general circulation in the
Philippines.
• Publication is intended to enable the people
to become familiar with the statute. No one
shall be charged with notice of the statute’s
provision until the completion of publication.

TAÑADA V. TUVERA
G.R. NO. L-63915 APRIL 24, 1985
En Banc
• It is not correct to say that under the
disputed clause (“unless otherwise
provided”) that publication may be
dispensed with. The reason is that such
omission would offend due process insofar
as it would deny the public knowledge of
the laws that are supposed to govern it.
• Publication must be in full or it is no
publication at all, since its purpose is to
inform the public of the contents of the
laws.
• The term "laws" should refer to all laws and
 A. WHEN
When LAW
publication TAKES EFFECT; PUBLICATION
is required internal in nature
1. All laws 2. Letters of instructions issued by administrative
(CIVIL CODE, ART. 2)
2. Presidential decrees and executive orders superiors concerning the rules or guidelines to
promulgated by the President be followed by their subordinates in the
3. Administrative rules and regulations performance of their duties
must also be published if their purpose is 3. Municipal ordinances are not covered by
to enforce or implement existing law Article 2 of the Civil Code but by the Local
pursuant to a valid delegation Government Code
4. Circulars issued by the Monetary Board
must be published if they are meant not Art. 3. Ignorance of the law excuses no one from
merely to interpret but to "fill in the compliance therewith.
details" of the Central Bank Act, which
that body is supposed to enforce. Ignorance of the law or ignorantia legis neminem excusat
(Tañada vs. Tuvera, G.R. No. L-63915 • If there is valid publication pursuant to Article
December 29, 1986) 2 NCC, the law becomes effective and no one
• Circulars and regulations, especially can interpose the defense of ignorance. If
like the Circular No. 20 of the Central there is no valid publication, ignorance is a
Bank in question, which prescribes a defense.
penalty for its violation should be • A legal principle holding that a person who is
published before becoming effective, unaware of a law may not escape liability for
this, on the general principle and violating that law merely because one was
theory that before the public is bound unaware of its content.
by its contents, especially its penal
provisions, a law, regulation or Ignorance of fact
circular must first be published and Ignorance of fact may excuse a person from
the people officially and specifically liability, especially under penal laws. (People v.
informed of said contents and its Ah Chong, G.R. No. L- 5272, March 19, 1910) In
penalties. (People vs. Que Po Lay, G.R. addition, under property law, mistake on a
No. L-6791, March 29, 1954) doubtful or difficult question of law may be the
basis of good faith (Art. 526, NCC). In contract
When publication is not required law, mistake of fact, may furthermore, vitiate
1. Interpretative regulations and those that consent in a contract and make it voidable. (Art.
are merely 1390, NCC)

B. IGNORANCE OF THE LAW;

(CIVIL CODE, ART. 3) IGNORANCE OF FACT
 IGNORANCE OF LAW IGNORANCE OF FACT General Rule: Acts executed against the provisions of
Lack of knowledge pertains to mandatory or prohibitory laws shall be void.
Laws of the land Fact or facts
insofar as they apply constituting or relatingExceptions:
to the act, relation, to the subject matter1. When the law:
duty, or matter on hand. 2. Authorizes its validity.
under consideration. 3. Makes the act valid, but punishes the violator.
As to nature of mistake 4. Makes the act merely voidable.
5. Makes the act merely unenforceable.
A person having full Facts which really exist
6. Declares the nullity of the act but recognizes legal
knowledge of the facts are unknown.
effects as arising from it.
come to an erroneous
conclusion as to its
Mandatory law
legal
A law or a provision in a statute is said to be mandatory
effects.
when disobedience to it, or want of exact compliance
Good faith as a defense with it, will make the act done under the statute
Not applicable Applicable absolutely void.
Laws Covered
Art. 3 of the NCC covers all kinds of domestic laws, whether
civil or penal, substantive or remedial. However, the article Prohibitory law
is limited to mandatory and prohibitory laws, where A law or a provision in a statute is said to be prohibitory
ignorance could not be used as an excuse for “non- when it forbids a certain action.
compliance”. It does not include laws which are merely
permissive. Permissive law
A law which neither mandatorily requires nor forbids the
Non-applicability to Foreign laws performance of an act.
Ignorance of a foreign law is a mistake of fact. There is no
presumption of knowledge of foreign laws. It must be E. WAIVER OF RIGHTS (CIVIL CODE, ART. 6)
alleged and proved as a matter of fact; otherwise, the
Art. 6. Rights may be waived, unless the waiver is contrary
doctrine of processual presumption will apply.
to law, public order, public policy, morals, or good
customs, or prejudicial to a third person with a right
C. RETROACTIVITY OF LAWS
recognized by law.
(CIVIL CODE, ART. 4); VESTED RIGHTS
PRINCIPLE General Rule: Rights may be waived.
Art. 4. Laws shall have no retroactive effect, unless the
contrary is provided. Exceptions:

Exceptions: 1. If waiver is:

• When the law itself expressly provides for its a.Contrary to law, public order, public policy, morals or
retroactivity good customs; or
• When the law is penal insofar as it favors the accused, b.Prejudicial to a third person with a right recognized
provided that the accused is not a habitual delinquent by law.
(Art 22 RPC) 2. If the right is:
• When the law is procedural so long as it does not a.A natural right, such as right to life;
affect or change vested rights; b. Inchoate, such as future inheritance.
• When the law creates new substantive rights
• When the law is interpretative of other laws A person may waive any matter which affects his
property, and any alienable right or privilege of which he
Limitations on Retroactivity is the owner or which belongs to him or to which he is
1. Ex post facto law legally entitled, whether secured by contract, conferred
2. Laws that impair obligations and contracts with statute, or guaranteed by the Constitution, provided
3. Laws that prejudice vested rights such rights and privileges rest in the individual, are
intended for his sole benefit, do not infringe on the rights
Non-retroactivity of Judicial Decisions of others, and further provided the waiver of the right or
Judicial decisions have no retroactive effect. When a privilege is not forbidden by law, and does not contravene
doctrine of the Supreme Court is overruled and a different public policy. (Cruz & Co., Inc. v. HR Const. Corp., G.R. No.
view is adopted, the new doctrine should be applied 187521, 14 Mar. 2012)
prospectively and should not apply to parties who had
relied on the old doctrine and acted on the faith thereon. Requisites of a valid waiver
(Co v. CA, G.R. No. 100776, 28 Oct. 1993) 1. Waiving party must actually have the right he is
renouncing;
2. He must have full capacity to make the waiver;
D. MANDATORY, PROHIBITORY AND 3. Waiver must be clear and unequivocal;
PERMISSIVE LAWS (CIVIL CODE, ART. 5) 4. Waiver must not be contrary to law, public order,
Art. 5. Acts executed against the provisions of mandatory or public policy, morals, or good customs, or prejudicial
prohibitory laws shall be void, except when the law itself to a third person with a right recognized by law; and
authorizes their validity. 5. When formalities are required, they must be
complied with.
10
 F. REPEAL OF LAWS (CIVIL CODE, ART. 7) Every statute, regulation shall be measured against the
Constitution. If a law is inconsistent or against the
Art. 7. Laws are repealed only by subsequent ones, and their Constitution, then such will be declared as null and void (Art.
violation or non-observance shall not be excused by disuse, 7(3), NCC).
or custom or practice to the contrary. When the courts
declare a law to be inconsistent with the Constitution, the General Rule:
former shall be void and the latter shall govern. If a law is unconstitutional, it does not produce any legal
effect and would not give rise to rights and obligations.
Administrative or executive acts, order and regulations shall
be valid only when they are not contrary to the laws or the Exception:
Constitution.
Doctrine of Operative Fact
Every statute, regulation shall be measured against the If the law or statute is deemed unconstitutional, the Doctrine
Constitution. If a law is inconsistent or against the of Operative Fact operates. In the case of Mandanas v.
Constitution, then such will be declared as null and void. Ochoa (G.R. No. 119802, 10 April 2019), the SC said that the
doctrine of operative fact recognizes the existence of the law
Ways of repealing laws or executive act prior to the determination of its
1. Express - If the law expressly provides for repeal of unconstitutionality as an operative fact that produced
previously law; the new law designated or identified the consequences that cannot always be erased, ignored or
specific law or provisions of the old law to be abolished disregarded. In short, it nullifies the void law or executive act
[i.e. Family Code, Art. 254. Titles III, IV, V, VI, VIII, IX, XI, but sustains its effects. It provides an exception to the
and XV of Book 1 of Republic Act No. 386, otherwise general rule that a void or unconstitutional law produces no
known as the Civil Code of the Philippines, as amended, effect. But its use must be subjected to great scrutiny and
and Articles 17, 18, 19, 27, 28, 29, 30, 31, 39, 40, 41, circumspection, and it cannot be invoked to validate an
unconstitutional law or executive act, but is resorted to only
and 42 of Presidential Decree No. 603, otherwise known
as a matter of equity and fair play. It applies only to cases
as the Child and Youth Welfare Code]; the repeal here is
where extraordinary circumstances exist, and only when the
not conditioned on the inconsistencies between the old
extraordinary circumstances have met the stringent
and new laws, but merely based on the expressed
conditions that will permit its application.
legislative intent in the new law repealing an old law.
2. Implied - If the provisions of the subsequent law are
Art.G.8.JUDICIAL DECISION
Judicial decisions (CIVIL
applying CODE, ART.
or interpreting 8) or
the laws
incompatible or inconsistent with those of the previous
the Constitution shall form part of the legal system of the
law, provided, it is impossible to reconcile the two laws
Philippines.
[i.e. Administrative Code of 1987, Book VII, Sec. 27.
Repealing clause. — All laws, decrees, orders, rules and
Judicial Decisions are not laws but have the force and effect
regulation, or portions thereof, inconsistent with this of laws. The Judiciary merely applies or interprets the laws.
Code are hereby repealed or modified accordingly]. A
repealing clause like Sec. 27 is not an express repealing Nonetheless, although not laws, the decisions of the
clause because it fails to identify or designate the laws Supreme Court applying or interpreting the laws or the
to be abolished. Thus, the provision above only impliedly Constitution form part of the legal system in the country. They
repealed all laws inconsistent with the Administrative have the force and effect of laws (People v. Jabinal, L-30061,
Code of 1987. (CIR vs. Primetown Property Corp., G.R. February 27, 1974).
No. 162155, August 28, 2007)
The doctrines formulated by the decisions of the Supreme
Requisites of an Implied Repeal Court are what we call jurisprudence. These doctrines
1. The old and new laws cover the same subject matter; amplify and supplement the written law (In re: Shoop, 41
2. The new law is inconsistent with the previous law; Phil. 213).
3. The inconsistency between the old and new laws could
not be reconciled. The decisions referred to in Art. 8 of the NCC are only those
enunciated by the Supreme Court.
NOTE: Implied repeals are NOT to be favored because they
rest only on the presumption that because the old and the Pesca vs. Pesca, G.R. No. 136921, April 17, 2001
new laws are incompatible with each other, there is an The "doctrine of stare decisis," ordained in Article 8 of the
intention to repeal the old. Civil Code, expresses that judicial decisions applying or
interpreting the law shall form part of the legal system of the
Instances of Implied Repeal Philippines. The rule follows the settled legal maxim - "legis
1. When the provisions in the two acts on the same subject interpretado legis vim obtinet" - that the interpretation
matter are irreconcilably contradictory, in which case, placed upon the written law by a competent court has the
the later act, to the extent of the conflict, constitutes an force of law. The interpretation or construction placed by the
implied repeal of earlier one; and courts establishes the contemporaneous legislative intent of
2. When the later act covers the whole subject of the the law. The latter as so interpreted and construed would
earlier one and is clearly intended as a substitute; thus, thus constitute a part of that law as of the date the statute is
it will operate to repeal the earlier law. (Lledo v. Lledo, enacted. It is only when a prior ruling of this Court finds itself
A.M. No. P-95-1167, 09 Feb. 2010) later overruled, and a different view is adopted, that the new
doctrine may have to be applied prospectively in favor of
Administrative or executive acts, order and regulations shall parties who have relied on the old doctrine and have acted in
be valid only when they are not contrary to the laws or the good faith in accordance therewith under the familiar rule of
Constitution (Art. 7(2), NCC). "lex prospicit, non respicit."

11
 H. DUTY TO RENDER JUDGMENT K. LEGAL PERIODS (CIVIL CODE, ART. 13, AS
(CIVIL CODE, ART. 9) AMENDED BY BOOK I, CHAPTER 8, SEC. 31 OF
Article 9. No judge or court shall decline to render THE ADMINISTRATIVE CODE OF 1987
judgment by reason of the silence, obscurity or (E.O. NO. 292))
insufficiency of laws.
Art. 13. When the laws speak of years, months, days or
nights, it shall be understood that years are of three hundred
NOTE: This duty, however, is not a license for courts to
sixty-five days each; months, of thirty days; days, of twenty-
engage in judicial legislation. The duty of the courts is to
four hours; and nights from sunset to sunrise.
apply or interpret the law, not to make or amend it. The
court has the duty to decide the case. If the law is vague, If months are designated by their name, they shall be
apply rules on statutory construction. If it is criminal computed by the number of days which they respectively
prosecution and there is no law penalizing the act, the have.
court must dismiss the case following the maxim “nullum
In computing a period, the first day shall be excluded, and
crimen, nulla poena sine lege.” (There is no crime when the last day included.
there is no law punishing it). The court has the duty to
render judgment. YEAR
• twelve (12) calendar months (Revised Administrative
I. INTERPRETATION OF DOUBTFUL Code; Lex posteriori derogat priori; Commissioner of
STATUTES (CIVIL CODE, ART. 10) Internal Revenue v. Primetown Property Group, Inc., 558
Phil. 182, 190, 2007)
Article 10. In case of doubt in the interpretation or MONTHS
application of laws, it is presumed that the lawmaking • thirty (30) days; unless months are designated their
body intended right and justice to prevail. name. If designated by their name, it shall be computed
by the number of days which they respectively have.
SALVACION V. CENTRAL BANK
G.R. NO. 94723, AUGUST 21, 1997 DAYS
En Banc • 24 hours;
• Nights from sunset to sunrise.
The application of the law depends on the extent of its
justice. Eventually, if we rule that the questioned Section LEGAL PERIOD
113 of Central Bank Circular No. 960 which exempts from • In computing a period, the first day is excluded, and the
attachment, garnishment, or any other order or process last day included.
of any court, legislative body, government agency or any
administrative body whatsoever, is applicable to a foreign CIR V. PRIMETOWN PROPERTY CORP.
transient, injustice would result specially to a citizen G.R. NO. 162155, AUGUST 28, 2007
aggrieved by a foreign guest like accused Greg Bartelli. A. Corona
This would negate Article 10 of the New Civil Code which Section 31, Chapter VIII, Book I Administrative Code of 1987:
provides that "in case of doubt in the interpretation or "Year" shall be understood to be twelve calendar months;
application of laws, it is presumed that the lawmaking xxx A calendar month is "a month designated in the calendar
without regard to the number of days it may contain.” To
body intended right and justice to prevail. Simply stated,
illustrate, one calendar month from December 31, 2007 will
when the statute is silent or ambiguous, this is one of
be from January 1, 2008 to January 31, 2008; one calendar
those fundamental solutions that would respond to the
month from January 31, 2008 will be from February 1, 2008
vehement urge of conscience.
until February 29, 2008. Two-year prescriptive period
(reckoned from the time respondent filed its final adjusted
J. CUSTOM (CIVIL CODE, ARTS. 11-12) return on April 14, 1998) consisted of 24 calendar months.
xxx 1st month (April 15, 1998 to May 14, 1998) to 24th
month
Article 11. Customs which are contrary to law, public (March 15, 2000 to April 14, 2000). We therefore hold that
order or public policy shall not be countenanced. respondent's petition (filed on April 14, 2000) was filed on
the last day of the 24th calendar month from the day
Article 12. A custom must be proved as a fact, according respondent filed its final adjusted return. Hence, it was filed
to the rules of evidence. within the reglementary period.

‘Custom’ defined L. GENERALITY PRINCIPLE OF PENAL LAWS

Juridical rule which results from a constant and continued (CIVIL CODE, ART. 14)
uniform practice by the members of social community,
with respect to a particular state of facts, and observed Art. 14. Penal laws and those of public security and safety
with a conviction that it is juridically obligatory. shall be obligatory upon all who live or sojourn in the
Philippine territory, subject to the principles of public
Requisites before the Courts can consider Customs international law and to treaty stipulations.
1. It must be proved as a fact • Generality of penal laws refer to the principle that
2. Plurality and Uniformity of acts criminal laws of a country govern all persons within the
3. General practice by a great mass of people country regardless of their nationality, religion, beliefs,
4. Continued practice for a long period of time etc., subject to exceptions based on public international
law and treaty stipulations.
5. General conviction that the practice is the proper rule
• Territoriality Principle - penal laws are enforceable only
of conduct
within the Philippine territory.
6. Conformity with law, morals or public policy
12
 M. CONFLICT OF LAWS • 1st par of Art 16 NCC is lex rei sitae - Real property
(CIVIL CODE, ARTS. 15-18) as well as personal property is subject to the law
of the country where it is situated.
That part of the law of each state or nation which • 2nd par of Art 16 is lex nationalii - the national law
determines whether, in dealing with a legal situation of the decedent shall govern the order of
involving a foreign element, the law of some other state or succession, amount of successional rights and
nation will be recognized, given effect, or applied. intrinsic validity of testamentary provision in both
testate and intestate successions, whatever may
1. JURISDICTION; FORUM NON CONVENIENS be the nature of the property and regardless of
the country wherein said property may be found.
Forum non conveniens literally translates to "the forum is
inconvenient." xxx Consistent with the principle of comity, a c. Lex Contractus - means the law of the place where
tribunal's desistance in exercising jurisdiction on account of a contract was made.
forum non conveniens is a deferential gesture to the
tribunals of another sovereign. It is a measure that prevents d. Lex Loci Celebrationis - law of the place of ceremony
the former's having to interfere in affairs which are better
(Art. 17); roughly translated as "the law of the land
and more competently addressed by the latter. Further,
(lex loci) where the contract was celebrated”; a
forum non conveniens entails a recognition not only that
conflict of law principle that comes into play when
tribunals elsewhere are better suited to rule on and resolve a
controversy, but also, that these tribunals are better
there are issues on the forms and solemnities of a
positioned to enforce judgments and, ultimately, to dispense contract that is celebrated elsewhere than the place
justice. Forum non conveniens prevents the embarrassment of citizenship of the parties.
of an awkward situation where a tribunal is rendered • Art. 17 NCC is lex loci celebrationis - The forms and
incompetent in the face of the greater capability — both solemnities of contracts, wills, and other public
analytical and practical — of a tribunal in another instruments shall be governed by the laws of the
jurisdiction. (Saudia vs. Rebesencio, G.R. No. 198587, January country in which they are executed. When the acts
14, 2015) referred to are executed before the diplomatic or
consular officials of the Republic of the Philippines
Under the doctrine of forum non conveniens, a Philippine in a foreign country, the solemnities established by
court in a conflict-of-laws case may assume jurisdiction if it Philippine laws shall be observed in their
chooses to do so, provided, that the following requisites are execution. Prohibitive laws concerning persons,
met: their acts or property, and those which have for
(1) that the Philippine Court is one to which the parties may their object public order, public policy and good
conveniently resort to; customs shall not be rendered ineffective by laws
(2) that the Philippine Court is in a position to make an or judgments promulgated, or by determinations
intelligent decision as to the law and the facts; and or conventions agreed upon in a foreign country.
(3) that the Philippine Court has or is likely to have power to
enforce its decision. e. Lex Domicilii - law of the domicile of the party (Art.
829 of the Civil Code – makes revocation done
2. CHOICE OF LAW; DOCTRINE OF RENVOI; outside Philippines valid according to law of the place
DOCTRINE OF PROCESSUAL PRESUMPTION where will was made or lex domicilii)
Choice of Law - Jurisdiction and choice of law are two
f. Lex Fori - law of the forum; that is, the positive law of
distinct concepts. Jurisdiction considers whether it is fair to
the state, country or jurisdiction of whose judicial
cause a defendant to travel to this state; choice of law asks
system of the court where the suit is brought or
the further question whether the application of a substantive
law which will determine the merits of the case is fair to both
remedy is sought is an integral part.
parties. The power to exercise jurisdiction does not
automatically give a state constitutional authority to apply g. Lex Loci Delicti - law of the place where the crime
forum law. While jurisdiction and the choice of the lex fori took place
will often, coincide, the "minimum contacts" for one do not
always provide the necessary "significant contacts" for the h. Lex Loci Solutionis - law of the place of solution; the
other. The question of whether the law of a state can be law of the place where payment or performance of a
applied to a transaction is different from the question of contract is to be made.
whether the courts of that state have jurisdiction to enter a
judgment. (Saudia vs. Rebesencio, G.R. No. 198587, January Doctrine of Renvoi
14, 2015) Takes place when the conflicts rule of forum makes a
reference to a foreign law, but the foreign law is found to
Choice of Law Rules: contain a conflict rule that returns or refers the matter
a. Lex Nationalii – law of nationality of the contracting party back to the law of forum.
(Art. 15); Article 15 NCC, Art. 15. Laws relating to family
rights and duties, or to the status, condition and legal Doctrine of Processual Presumption
capacity of persons are binding upon citizens of the Foreign law, whenever applicable, shall be proved by the
Philippines, even though living abroad. Also known as proponent, otherwise, such law shall be presumed to be
the Nationality Principle refers to the law of the exactly as the law of forum. Where a foreign law is not
nationality of the person which determines his family pleaded or, even if pleaded, is not proved, the
rights and duties, status, condition, and legal capacity. presumption is that foreign law is the same as ours.
a. Lex Rei Sitae - law of the place where the thing or
subject matter is situated (Art. 16);
13
3. RECOGNITION AND ENFORCEMENT OF FOREIGN
JUDGMENT

BPI V. GUEVARRA
G.R. NO. 167052, MARCH 11, 2015
J. Leonardo-de Castro
• Recognition and enforcement of a foreign judgment or
final order requires only proof of fact of the said
judgment or final order.
• It is the party attacking the foreign judgment or final
order that is tasked with the burden of overcoming its
presumptive validity.
• A foreign judgment or final order may only be repelled on
grounds external to its merits, particularly, want of
jurisdiction, want of notice to the party, collusion, fraud,
or clear mistake of law or fact.
• In the Philippines, a judgment or final order of a foreign
tribunal cannot be enforced simply by execution. Such
judgment or order merely creates a right of action, and its
non-satisfaction is the cause of action by which a suit can
be brought upon for its enforcement.
• An action for the enforcement of a foreign judgment or
final order in this jurisdiction is governed by Rule 39,
Section 48 of the Rules of Court, which provides:
SEC. 48. Effect of foreign judgments or final orders. - The effect
of a judgment or final order of a tribunal of a foreign country,
having jurisdiction to render the judgment or final order is as
follows:
(a) In case of a judgment or final order upon a specific thing,
the judgment or final order is conclusive upon the title to
the thing; and
(b) In case of a judgment or final order against a person, the
judgment or final order is presumptive evidence of a
right as between the parties and their successors in
interest by a subsequent title.
In either case, the judgment or final order may be repelled by
evidence of a want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact.

MINORU FUJIKI V. MARINAY

G.R. NO. 196049, JUNE 26, 2013
J. Carpio
• A petition to recognize a foreign judgment declaring a
marriage void does not require re-litigation under a
Philippine court of the case as if it were a new petition for
declaration of nullity of marriage. Philippine courts
cannot presume to know the foreign laws under which
the foreign judgment was rendered. They cannot
substitute their judgment on the status, condition and
legal capacity of the foreign citizen who is under the
jurisdiction of another state. Thus, Philippine courts can
only recognize the foreign judgment as a fact according to
the rules of evidence.
• Section 48(b), Rule 39 of the Rules of Court provides that
a foreign judgment or final order against a person creates
a "presumptive evidence of a right as between the parties
and their successors in interest by a subsequent title."
• Moreover, Section 48 of the Rules of Court states that
"the judgment or final order may be repelled by evidence
of a want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact." Thus,
Philippine courts exercise limited review on foreign
judgments. Courts are not allowed to delve into the
merits of a foreign judgment.
• Once a foreign judgment is admitted and proven in a
Philippine court, it can only be repelled on grounds
external to its merits, i.e., "want of jurisdiction, want of
notice to the party, collusion, fraud, or clear mistake of
law or fact."
• The rule on limited review embodies the policy of
efficiency and the protection of party expectations, as
well as respecting the jurisdiction of other states.
14
 II. HUMAN RELATIONS
A. Abuse of Rights (Civil Code, arts. 19-22)
B. Unjust Enrichment (Civil Code, arts. 22-23 C. Thoughtless Extravagance (Civil Code, art.
and 2142-2143) 25)
D. Tortious Interference (Civil Code, art. 1314)
A. ABUSE OF RIGHTS
• A mere breach of a promise to marry is not an actionable
CIVIL CODE, ARTS. 19-22) wrong, as long as it is not of such extent as would
palpably and unjustifiably contradict good customs. An
Art. 19. Every person must, in the exercise of his rights and in
individual has the autonomy to choose whom to marry, or
the performance of his duties, act with justice, give everyone
whether to marry at all. They must be free to make that
his due, and observe honesty and good faith.
choice without any fear of legal retribution or liability. The
decision on whether to marry is one that should be freely
Art. 20. Every person who, contrary to law, willfully or
chosen, without the pressures of a possible civil suit
negligently causes damage to another, shall indemnify the
should a person realize that their intended partner is not
latter for the same.
right for them. (Guevarra, et al. v. Banach, G.R. No.
214016, November 24, 2021)
Art. 21. Any person who wilfully causes loss or injury to
another in manner that is contrary to morals, good customs
Instances where SC awarded damages:
or public policy shall compensate the latter for the damage.
• Act constitutes tort, under Article 21 NCC, in the sense
that it is wilful and that it is contrary to morals, good
TOCOMS PHILIPPINES INC. V. PHILIPS ELECTRONICS
customs or public policy, or in that there is an abuse of
AND LIGHTING, INC.
rights.
G.R. NO. 214046, FEBRUARY 05, 2020
• Seduction (Baksh vs. CA - Article 21 may be applied in a
J. A. Reyes, Jr.
breach of promise to marry where the woman is a victim
• Article 19 of the Civil Code is commonly referred to as the
of moral seduction)
principle of abuse of rights, sets certain standards which
• Expenses were incurred upon the faith of the promise to
must be observed not only in the exercise of one's rights
marry. (Wassmer vs. Velez - While a breach of promise to
but also in the performance of one's duties. To act with
marry is not actionable, walking out of a wedding two
justice; to give everyone his due; and to observe honesty
days prior, after all had been prepared, was quite
and good faith.
different. The defendant's act was deemed "palpably and
• A right, though by itself legal because recognized or
unjustifiably contrary to good customs," for which the
granted by law as such, may nevertheless become the
award of damages was proper.)
source of some illegality. When a right is exercised in a
manner which does not conform with the norms
enshrined in Article 19 and results in damage to another, B. UNJUST ENRICHMENT
a legal wrong is thereby committed for which the (CIVIL CODE, ARTS. 22-23 AND 2142-2143)
wrongdoer must be held responsible.
• Failure to discharge such duties in Article 19 is Art. 22. Every person who through an act of performance by
compensable under Article 20 if the act is "contrary to another, or any other means, acquires or comes into
law"; and under Article 21 if the act is legal but "contrary possession of something at the expense of the latter without
to morals, good customs, or public policy." just or legal ground, shall return the same to him.
• Article 19 has three elements, namely: (i) the existence of
a legal right or duty; (ii) an exercise of such right or Art. 23. Even when an act or event causing damage to
discharge of such duty in bad faith, and (iii) such exercise another’s property was not due to the fault or negligence of
of right or discharge of duty was made with the sole the defendant, the latter shall be liable for indemnity if
intent of prejudicing or injuring another. through the act or event he was benefited.
• There is no hard and fast rule which can be applied to
determine whether or not the principle of abuse of rights Art. 2142. Certain lawful, voluntary and unilateral acts give
may be invoked. The question of whether or not the rise to the juridical relation of quasi-contract to the end that
principle of abuse of rights has been violated, resulting in no one shall be unjustly enriched or benefited at the expense
damages under Articles 20 and 21 or other applicable of another.
provision of law, depends on the circumstances of each
case. Art. 2143. The provisions for quasi-contracts in this Chapter
do not exclude other quasi-contracts which may come within
1. ACTS CONTRA BONOS MORES the purview of the preceding article.
• Unjust enrichment exists when a person unfairly retains a
Article 21 refers to acts contra bonos mores and has the benefit, money, or property against the fundamental
following elements: (1) an act which is legal; (2) but which is principles of justice, equity, and good conscience. The
contrary to morals, good custom, public order or public principle against unjust enrichment is embodied in Article
policy; and (3) is done with intent to injure. 22 of the Civil Code, which provides that a person who
acquires or comes into possession of something at the
2. BREACH OF PROMISE OF MARRIAGE expense of another without just or legal ground must return
it.
• A breach of promise to marry is not an actionable wrong. • To be applicable, Article 22 requires that: (a) a person is
Civil law does not hold a person liable for failing to honor benefited without a valid basis or justification, and (b)
a promise of marriage. such benefit is derived at another's expense or damage.

15
NPC V. BENECO Also, the Court succinctly discussed in National Transmission
G.R NO. 218378, JUNE 14, 2021 Corporation v. Misamis Oriental I Electric Cooperative, Inc.,
J. M. Lopez (Misamis Oriental) that the contract between the parties
National Power Corporation (NPC) supplies power to prevails over the principle of unjust enrichment, thus:
Benguet Electric Cooperative (BENECO) under a franchise
agreement. NPC and BENECO entered into a Contract of Sale The claim that Moresco I was unjustly enriched at the expense
of Electricity and a Transition Contract for the Supply of of petitioner is equally untenable for a simple reason. Because a
Electricity. NPC set the Current Transformer Ratio (CTR) at contract exists between the parties, the obligations arising
75/5, which fixed the multiplier at 5,196.31. It was later therefrom have the force of law between the parties and must
discovered that the correct CTR should have been 150/5. be complied with in good faith. xxx
BENECO argued that it is not liable for the underbilling
because NPC failed to discover the error in the metering Here, NPC and BENECO executed a Contract of Sale of
device. NPC demanded payment for the underbilling, but Electricity and a Transition Contract for the Supply of Electricity
BENECO refused to pay. to govern their rights and obligations in the supply of electric
power and energy. Therefore, any action that one may bring
Ruling: BENECO is liable for the underbilling representing the against the other shall be based on the provisions of their
power bills corrected within the 90-day period based on contract. The principle of unjust enrichment will not apply.
Section 25 of the Transition Contract, not the principle of • Under Article 2142 of the Civil Code, certain lawful,
unjust enrichment. voluntary and unilateral acts give rise to the juridical relation
of quasi-contract to the end that no one shall be unjustly
Unjust enrichment exists when a person unfairly retains a enriched or benefited at the expense of another. (American
benefit, money, or property against the fundamental Power Conversion Corporation v. Lim, G.R. No. 214291, 11
principles of justice, equity, and good conscience. The January 2018)
principle against unjust enrichment is embodied in Article 22 • A quasi-contract involves a juridical relation that the law
creates on the basis of certain voluntary, unilateral and
of the Civil Code, which provides that a person who acquires
lawful acts of a person, to avoid unjust enrichment. The Civil
or comes into possession of something at the expense of
Code provides an enumeration of quasi-contracts, but the
another without just or legal ground must return it. To be
list is not exhaustive and merely provides examples.”
applicable, Article 22 requires that: (a) a person is benefited
(Metropolitan Bank and Trust Company v. Absolute
without a valid basis or justification, and (b) such benefit is
Management Corporation, G.R. No. 170498, 09 January
derived at another's expense or damage. 2013)

In University of the Philippines v. Philab Industries Inc., (G.R. C. THOUGHTLESS EXTRAVAGANCE

No. 152411), the Court's discussion of the principle of unjust (CIVIL CODE, ART. 25)
enrichment and the elements required for its application is
instructive: ART. 25. Thoughtless extravagance in expenses for pleasure or
display during a period of acute public want or emergency may
Unjust enrichment claims do not lie simply because one be stopped by order of the courts at the instance of any
party benefits from the efforts or obligations of others, but government or private charitable institution.
instead it must be shown that a party was unjustly enriched
in the sense that the term unjustly could mean illegally or Requisites:
unlawfully. 1. There must be an acute public want or emergency.
2. Thoughtless extravagance in expenses for pleasure or
Moreover, to substantiate a claim for unjust enrichment, the display.
claimant must unequivocally prove that another party 3. Government or private charitable institution files the action
knowingly received something of value to which he was not seeking to stop the thoughtless extravagance.
entitled and that the state of affairs are such that it would be
unjust for the person to keep the benefit. x x x. D. TORTIOUS INTERFERENCE
(CIVIL CODE, ART. 1314)
In order that accion in rem verso may prosper, the essential
Article 1314. Any third person who induces another to violate
elements must be present: (1) that the defendant has been
his contract shall be liable for damages to the other contracting
enriched, (2) that the plaintiff has suffered a loss, (3) that
party.
the enrichment of the defendant is without just or legal
ground, and (4) that the plaintiff has no other action based on Tortious interference refers "to a situation where a third person
contract, quasi-contract, crime or quasi-delict. induces a party to renege on or violate [their] undertaking
under a contract. "Induce" here means "a person causes
An accion in rem verso is considered merely an auxiliary another to choose one course of conduct by persuasion or
action, available only when there is no other remedy on intimidation." In forbidding tortious interference, the law aims
contract, quasi-contract, crime, and quasi-delict. If there is to respect the property rights of contracting parties by providing
an obtainable action under any other institution of positive a cause of action ex delicto based on an "unlawful interference
law, that action must be resorted to, and the principle of by one person of the enjoyment by the other of [their] private
accion in rem verso will not lie. xxx property. (GMA v. Cruz-Valdez & ABS-CBN, G.R. No. 205498, 10
May 2021)
Thus, the principle of unjust enrichment does not Elements of tortious interference:
automatically apply when one party benefits from the efforts (1) existence of a valid contract;
or obligations of another. It is necessary to show that the (2) knowledge on the part of the third person of the existence
enrichment of one party is without a just or legal ground, of contract;
and that the plaintiff has no other action against the other (3) interference of the third person is without legal justification
party. In other words, there is no unjust enrichment when or excuse.
the person who benefited has a valid claim to such benefit.
xxx

16
 III. PERSONS AND FAMILY RELATIONS
A. Natural Persons
B. Juridical Persons (Civil Code, arts. 44-47) I. Voidable Marriages; Effects and Remedies
(Family Code, arts. 45-54)
C. Domicile; Residence (Civil Code, arts. 50-
51) J. Legal Separation (Family Code, art. 55-67)
D. Surnames (Civil Code, arts. 364-380; Family K. Property Relations Between Spouses
Code, arts. 176, 189 and 193; R.A. No. (Family Code, arts. 74-81)
9048; L. Rights and Obligations Between Husband
R.A. No. 10172) and Wife (Family Code, arts. 68-73)
E. Absentees (Civil Code, arts. 381-396) M. The Family; Family Home (Family Code,
F. Marriage; General Principles (Family Code, arts. 149-162)
art. 1) N. Paternity and Filiation
G. Mixed Marriages (Family Code, art. 26) O. Parental Authority (Family Code, arts. 209-
H. Void Marriages; Effects and Remedies 233)
(Family Code, arts. 35-44 and 50-54)

A. NATURAL PERSONS 2. COMMENCEMENT AND END OF CIVIL

PERSONALITY – CIVIL CODE, ARTS. 40-42
- Refers to human beings
BIRTH determines personality
1. CAPACITY TO ACT; RESTRICTIONS – CIVIL
DEATH extinguishes personality
CODE, ARTS. 37-39
Provisional/Presumptive Civil Personality (Art. 40
Article 37. Juridical capacity, which is the NCC)
fitness to be the subject of legal relations,
• A conceived child shall be considered born
is inherent in every natural person and is
for all purposes favorable to it, provided it
lost only through death. Capacity to act, which
is born later with the conditions specified
is the power to do acts with legal effect, is
in Article 41 of the NCC.
acquired and may be lost.
• ‘Favorable to it’ - ie. become a donee,
receive support, successional right.
'Capacity to Act' defined
• Capacity to Act is the “power to do acts
Art. 41 NCC - Foetus is considered born for
with legal effects.” civil purposes:
• Juridical Capacity which is “the fitness to
• With intrauterine life of less than 7 months:
be the subject of legal relations.” Must survive for at least 24 hours after
• Civil Personality is the aptitude of being its complete delivery from the maternal
the subject of rights and obligations. It is womb.
synonymous with juridical capacity. • With intrauterine life of at least 7 months: If born
alive, it shall be considered born even if it
BAR QUESTION (1996) dies within 24 hours after complete
delivery.
Distinguish Juridical Capacity vs. Capacity to BAR QUESTION (2014)
Act. Mario executed his last will and testament
SUGGESTED ANSWER
where he
JURIDICAL CAPACITY is the fitness to be the acknowledges the child being conceived by
subject
legal of
relations while CAPACITY TO ACT is the his live-in partner Josie as his own child; and
to do acts with legal effect. that his house and lot in Baguio City be given
The former is inherent in every natural person to his unborn conceived child.
only through death while the latter is merely Are the acknowledgement and the donation mortis
and may be lost even before death. (Art. 37, causa valid? Why?
SUGGESTED ANSWER
NCC)
RESTRICTIONS ON CAPACITY TO ACT Yes, the acknowledgement is considered valid
(Arts. 38 & 39 NCC) because
a. Minority a will may still constitute a document which
b. Imbecility contains an admission of illegitimate filiation.
c. Prodigality The donation mortis causa is also valid
d. Deaf-Mute because although unborn, a fetus has a
presumptive personality for all purposes
e. Civil Interdiction
favorable to it provided it be born under
f. Insanity BAR QUESTION (2012)
g. Family Relations
h. Alienage Ricky donated Php1 Million to the unborn
child of his
i. Trusteeship
pregnant girlfriend, which she accepted.
j. Penalty
After six (6) months of pregnancy, the fetus
k. Insolvency was born and baptized as Angela. However,
l. Absence Angela died 20 hours after birth. Ricky
sought to recover the Php1 Million.
17
 SUGGESTED ANSWER B. JURIDICAL PERSONS
Yes, Ricky is entitled to recover the (CIVIL CODE, ARTS. 44-47)
P1,000,000.00.
A fetus enjoys presumptive civil personality Juridical Persons
for purposes favorable to it provided it is An abstract being, formed for the realization of
born later in accordance with the provision collective purposes, to which the law has
of the New Civil Code. While the donation is granted capacity for rights and obligations.
favorable to the fetus, the donation did not
take effect because the fetus was not born in Article 44. The following are juridical persons:
accordance with the NCC. (1) The State and its political subdivisions;
To be considered born, the fetus that had an (2) Other corporations, institutions and entities
intrauterine life of less than seven (7) for public interest or purpose, created by
law; their personality begins as soon as
months should live for 24 hours from its
they have been constituted according to
complete delivery from the mother’s womb.
law;
Since Angela had an intrauterine life of less (3) Corporations, partnerships and
than seven (7) months but did not live for 24 associations for private interest or purpose
hours, she was not considered born and, to which the law grants a juridical
therefore, did not become a person. Not personality, separate and distinct from that
3. PROOF OF DEATH – CIVIL CODE, ART. 43; male survived Same sex –
RULES OF COURT, RULE 131, SEC. 3 (jj) older survived
5. Under 15 or over 60 vs. between 15 to 60 –
Art. 43 NCC - If there is a doubt, as between between
two or more persons who are called to 15 to 60 survived.
succeed each other, as to which of them
died first, whoever alleges the death of
one prior to the other, shall prove the
same; In the absence of proof, it is
presumed that they died at the same time
and there shall be no transmission of rights
from one to the other.

Rule 131, sec. 3 (kk) ROC - That if there is a

doubt, as between two or more persons who
are called to succeed each other, as to
which of them died first, whoever alleges the
death of one prior to the other, shall prove
the same; in the absence of proof, they shall
be considered to have died at the same
time.

Burden of Proof:
Whoever alleges the death of one prior to
the other shall prove the same;

Absent such proof:

Presumption is they all died at the same
time. There shall be no transmission of
successional rights.

REQUISITES:
- The parties are heirs to one another
- There is no proof as to who died first
- There is doubt as to who died first

Rule 131, sec. 3 (jj) ROC - That except for

purposes of succession, when two persons
perish in the same calamity, such as wreck,
battle, or conflagration, and it is not shown
who died first, and there are no particular
circumstances from which it can be inferred,
the survivorship is determined from the
probabilities resulting from the strength and
the age of the sexes, according to the
following rules:
1. Both under 15 - the older survived;
2. Both above 60 - the younger survived;
3. Under 15 vs. Above 60 – under 15
survived;
4. Both over 15 and
under 60 Diff sex -
Article 45. Juridical persons mentioned in and other assets shall be applied to similar
Nos. 1 and 2 of the preceding article are purposes for the benefit of the region,
governed by the laws creating or province, city or municipality which during the
recognizing them. existence of the institution derived the
principal benefits from the same.
Private corporations are regulated by
laws of general application on the • Juridical persons are governed by laws creating
subject. them
or by laws of general application or the NCC.
Partnerships and associations for private • They may acquire and possess property of
interest or purpose are governed by the all kinds, as well as incur obligations and
provisions of this Code concerning bring civil or criminal actions, in conformity
partnerships. with the laws and regulations of their
organization.
Article 46. Juridical persons may acquire • Upon the dissolution, their property and
and possess property of all kinds, as well other assets shall be disposed of in
as incur obligations and bring civil or pursuance of law or the charter creating
criminal actions, in conformity with the them. If nothing has been specified, shall
laws and regulations of their be applied to similar purposes for the
organization. benefit of the region, province, city or
municipality which during the existence of
Article 47. Upon the dissolution of the institution derived the principal benefits
corporations, institutions and other from the same.
entities for public interest or purpose
mentioned in No. 2 of article 44, their Article 50. For the exercise of civil rights and
property and other assets shall be
the fulfillment of civil obligations, the
disposed of in pursuance of law or the
domicile of natural persons is the place of
charter creating them. If nothing has
been specified on this point, the property their habitual residence.

18

C. DOMICILE;
RESIDENCE (CIVIL CODE,
ARTS. 50-51)
Article 51. When the law creating or recognizing POE-LLAMANZARES V. COMELEC
them, or any other provision does not fix the
G.R. NO. 221697, MARCH 08, 2016
domicile of juridical persons, the same shall be
En Banc
understood to be the place where their legal
representation is established or where they Three requisites to acquire a new domicile:
exercise their principal functions. 1. Residence or bodily presence in a new locality;
2. an intention to remain there; and
Domicile 3. an intention to abandon the old domicile.
Permanent home, the place to which, • To successfully effect a change of
whenever absent for business or pleasure, domicile, one must demonstrate an
one intends to return and depends on facts actual removal or an actual change of
and circumstances in the sense that they domicile; a bona fide intention of
disclose intent. abandoning the former place of
residence and establishing a new one
Requisites: and definite acts which correspond with
• fact of residing or personal presence in a the purpose.
• Animus manendi coupled with animus
particular
non revertendi. The purpose to remain in
place
or at the domicile of choice must be for
• intention to remain in said place permanently
an indefinite period of time; the change
(animus manendi)
of residence must be voluntary; and the
residence at the place chosen for the
Domicile of Juridical Persons new domicile must be actual.
• generally fixed in the law creating or
recognizing them D. SURNAMES (CIVIL CODE, ARTS. 364-380;
• if domicile had not been fixed, then the
domicile is in the place where their legal FAMILY CODE, ARTS. 176, 189 AND 193;
representation is established or where they R.A. NO. 9048; R.A. NO. 10172)
exercise their principal functions.
• Legitimate and legitimated children shall
MACALINTAL V. COMELEC principally use the surname of the father.
G.R. NO. 157013, JULY 10, 2003 (Art. 364)
• An adopted child shall bear the surname of
J. Austria-Martinez
the adopter. (Art. 365)
Domicile vs. Residence
• Children conceived before the decree
• Domicile means an individual’s “permanent
annulling a voidable marriage shall
home,” “a place to which, whenever absent
principally use the surname of the father.
for business or for pleasure, one intends to
• Illegitimate children shall bear the surname
return, and depends on facts and
of the mother.
circumstances in the sense that they
disclose intent.”
ALANIS III V. CA
• Domicile includes the twin elements of “the
fact of residing or physical presence in a G.R. NO. 216425, November 11, 2020
fixed place” and animus manendi, or the J. Leonen
intention of returning there permanently. • Abdulhamid Ballaho was born and
• ‘Residence’ is used to indicate a place of registered as Anacleto Ballaho Alanis III, the
abode, whether permanent or temporary; legitimate child of Mario Alanis and Jarmila
‘domicile’ denotes a fixed permanent Ballaho. All his records show his name as
residence to which, when absent, one has Abdulhamid Ballaho; he never used his
the intention of returning. registered name. In line with this he filed a
• A man may have a residence in one place petition to change his name and surname to
and a domicile in another. be known and registered as Abdulhamid
• Residence is not domicile, but domicile is Ballaho.
residence coupled with the intention to • RTC denied the Petition. It noted that the
remain for an unlimited time. mere fact that petitioner has been using a
• A man can have but one domicile for the different name and has become known by it
same purpose at any time, but he may have is not a valid ground for change of name. It
numerous places of residence. also held that to allow him to drop his last
name was to disregard the surname of his
UGDORACION V. COMELEC natural and legitimate father, in violation of
G.R. NO. 179851, APRIL 18, 2008 the Family Code and Civil Code, which
provide that legitimate children shall
J. Nachura
principally use their fathers' surnames.
Classifications of Domicile:
• ARTICLE 174. Legitimate children shall have the
1. domicile of origin, which is acquired by
right:
every person at birth;
(1) To bear the surnames of the father and
2. domicile of choice, which is acquired upon
the mother, in conformity with the
abandonment of the domicile of origin; and
provisions of the Civil Code on Surnames.
3. domicile by operation of law, which the law
• In turn, Article 364 of the Civil Code provides:
attributes to a person independently of his
• ARTICLE 364. Legitimate and legitimated
residence or intention.
children shall principally use the surname of
the father.
The general rule is that the domicile of origin
• The Regional Trial Court's application of
is not easily lost; it is lost only when there is
Article 364 of the Civil Code is incorrect.
an actual removal or change of domicile, a
• Indeed, the provision states that legitimate
bona fide intention of abandoning the former
children shall "principally" use the surname
residence and establishing a new one, and
of the father, but "principally" does not
acts which correspond with such purpose.
 mean "exclusively." ensuring the fundamental equality of
• This gives ample room to incorporate women and men before the law, and no
into Article 364 the State policy of discernible reason to ignore it.

19
A married woman may use: preceding article, no person shall use different
1. Her maiden first name and surname and names and surnames.
add her
husband’s name, or
2. Her maiden first name and husband’s
surname, or
3. Her husband’s full name, but prefixing
a word indicating that she is his wife,
such as “Mrs.” (Art 370, NCC)
4. Fourth option is to use maiden name and
disregard Article 370 since it used “may”,
which means use is optional.

Annulled Marriage
• If wife is the guilty party, she shall resume
her maiden name and surname.
• If the wife is the innocent spouse, she
may resume her maiden name and
surname. She may also choose to
continue employing her husband’s
surname, unless:
a. The court decrees otherwise, or
b. She or the former husband is married
again to another person

Legally Separated
The wife shall continue using her name
and surname as employed before
separation.

Death of Husband
A widow may use the deceased husband’s
surname as though he were still living, in
accordance with Article 370.

Identity of Names
• In case of identity of names and
surnames, a younger person shall be
obliged to use such additional name or
surname as will avoid confusion.
• In case of identity of names and surnames
between ascendants and descendants, the
word “Junior” can be used only by a son.
• Grandsons and other direct male
descendants shall either:
a. Add a middle name or the mothers’
surname, or
b. Add the Roman numerals II, III, and so
on.

Changing, Usurpation & Pen Names

ARTICLE 376. No person can change his

name or
surname without judicial authority.

ARTICLE 377. Usurpation of a name and

surname may be the subject of an action for
damages and other relief.

ARTICLE 378. The unauthorized or unlawful use

of another person’s surname gives a right of
action to the latter.

ARTICLE 379. The employment of pen names

or stage names is permitted, provided it is
done in good faith and there is no injury to
third persons. Pen names and stage names
cannot be usurped.

ARTICLE 380. Except as provided in the

ADMINISTRATIVE CORRECTION OF CLERICAL • In the appointment of a representative,
ERROR AND CHANGE OF FIRST NAME/ NICKNAME the spouse present shall be preferred
- RA 9048, when there is no legal separation.
as further amended by RA 10172 - • If the absentee left no spouse, any
Authority to Correct Clerical or competent person may be appointed by
Typographical Error and Change of First the court.
Name or Nickname.
• No entry in a civil register shall be DECLARATION OF ABSENCE
changed or corrected without a judicial
order, except:
1. clerical or typographical errors Judicial Declaration of Absence
2. change of first name or nickname • 2 years having elapsed without any news,
3. the day and month in the date of or since receipt of last news, or 5 years in
birth or sex of a person where it is case absentee left a person in charge
patently clear that there was a • At the instance of any of the following:
clerical or typographical error or  Spouse present;
mistake in the entry which can be  Heirs instituted in the will;
corrected or changed by the  Relatives who may succeed by intestacy;
concerned city or municipal civil  Those who have interest over
registrar or consul general in absentee’s property which is
accordance with the provisions of conditioned on his death.
this Act and its implementing rules • Declaration of absence shall take effect
and regulations. (Sec. 1, RA only 6 months after publication.
10172)
• No correction must involve the change
PRESUMPTION OF DEATH (Art. 390 & 391)
of NATIONALITY, AGE, OR STATUS of the
petitioner.” (Sec. 2, RA 10172)

Provisional Measures in Case of Absence E. ABSENTEES (CIVIL CODE, ARTS. 381-396)

• When a person disappears from his
domicile, his whereabouts being
Art. 390 - After an absence of seven years, it
unknown, and without leaving an
being unknown whether or not the absentee
agent to administer his property, the
still lives, he shall be presumed dead for all
judge, at the instance of an
purposes, except for those of succession.
interested party, a relative, or a
friend, may appoint a person to
The absentee shall not be presumed dead
represent him in all that may be
for the purpose of opening his succession till
necessary.
after an absence of ten years. If he
• This same rule shall be observed
disappeared after the age of seventy- five
when under similar circumstances
years, an absence of five years shall be
the power conferred by the absentee
sufficient in order that his succession may
has expired.
be opened.

20
Art. 391 - The following shall be presumed compromised.
dead for all purposes, including the division 4. Moreover, a court action to declare a person
of the estate among the heirs: presumptively dead under Articles 390 and
(1) A person on board a vessel lost during a 391 of the Civil Code would be unnecessary.
sea voyage, or an aeroplane which is The presumption in the said articles is already
missing, who has not been heard of for established by law.
four years since the loss of the vessel or
aeroplane;
(2) A person in the armed forces who has F. MARRIAGE; GENERAL PRINCIPLES
taken part in war, and has been missing (FAMILY CODE, ART. 1)
for four years; *EXCLUDE: MUSLIM CODE (P.D. NO. 1083)
“Marriage” defined
(3) A person who has been in danger of
• Marriage is a special contract of permanent
death under other circumstances and his
union between a man and a woman entered
existence has not been known for four into in accordance with law for the
years. establishment of conjugal and family life.
• It is the foundation of the family and an
MATIAS V. REPUBLIC inviolable social institution whose nature,
G.R. NO. 230751, APRIL 25, 2018 consequences, and incidents are governed
J. VELASCO, JR. by law and not subject to stipulation, except
The petition for the declaration of that marriage settlements may fix the
presumptive death filed by petitioner is not property relations during the marriage
an action that would have warranted the within the limits provided by this Code.
application of Article 41 of the FC because MARRIAGE CONTRACT v. ORDINARY CONTRACT
petitioner was not seeking to remarry. A Marriage Contract Ordinary Contract
reading of Article 41 of the FC shows that An ordinary contract
the presumption of death established Only two (2) persons
may be
therein is only applicable for the purpose of of the opposite sex
entered into by any
contracting a valid subsequent marriage may enter into a
number of persons,
under the said law. contract of marriage.
whether of the same or
Given that her petition for the declaration of different sex.
presumptive death was not filed for the The parties are free
purpose of remarriage (but to claim death to
benefits as surviving spouse), petitioner was The nature, establish such
clearly relying on the presumption of death consequences and stipulations, terms
under either Article 390 or Article 391 of the incidents of marriage and conditions as
Civil Code as the basis of her petition. are governed by law they may deem
Articles 390 and 391 of the Civil Code and not subject to convenient provided
express the general rule regarding stipulation. that they are not
contrary to law,
presumptions of death for any civil purpose.
morals, good
A petition whose sole objective is to have a customs, public order
person declared presumptively dead under or public policy.
the Civil Code is not regarded as a valid suit Cannot be
and no court has any authority to take Parties may, by mutual
revoked,
cognizance of the same. agreement, terminate
dissolved or
1. Articles 390 and 391 of the Civil an ordinary contract.
terminated by the
Code merely parties, but only by
express rules of evidence that only the sovereign power
allow a court or a tribunal to presume of the State.
that a person is dead upon the
establishment of certain facts. 1. ESSENTIAL AND FORMAL REQUISITES – FAMILY
2. Since Articles 390 and 391 of the Civil CODE, ARTS. 1-3, 5-11, 20-21, 26 AND 31-35
Code merely express rules of evidence, *EXCLUDE: DUTIES OF A CIVIL REGISTRAR –
an action brought exclusively to declare FAMILY CODE, ARTS. 12-19 AND 23-25
a person presumptively dead under
either of the said articles actually 2. EFFECTS OF ABSENCE, DEFECT OR
presents no actual controversy that a IRREGULARITY – FAMILY CODE, ART. 4
court could decide. In such action, there
would be no actual rights to be enforced, ESSENTIAL REQUISITES
no wrong to be remedied nor any status a.)Legal capacity of the contracting parties:
to be established. i. A male and a female;
3. A judicial pronouncement declaring a ii. At least 18 years of age
person presumptively dead under Article iii. Must not be suffering from any legal
390 or Article impediment
391 of the Civil Code, in an action iv. Relationship
exclusively based thereon, would never b.)Consent freely given by the contracting
really become "final" as the same only parties before the solemnizing officer.
confirms the existence of a prima facie
or disputable presumption. The 2. FORMAL REQUISITES
function of a court to render decisions a. Authority of the solemnizing officer
that is supposed to be final and binding b. A valid marriage license
between litigants is thereby c. Marriage ceremony
 render the marriage void ab initio.
Effect of Absence of Essential or Formal
Requisites The absence of any of the Effect of Defect in the Essential Requisite of Consent
essential or formal requisites shall A defect in the essential requisite of consent
shall render the marriage voidable.

21
Effect of Irregularity in the Formal Requisites SUGGESTED ANSWER
An irregularity in the formal requisite/s shall not The marriage of Brad and Angelina should be
affect the validity of the marriage but the party declared
responsible for the irregularity shall be civilly, void. One of the formal requisites of a
criminally and administratively liable.
marriage is a marriage license, the total
absence of which will render the marriage
WHO ARE AUTHORIZED TO SOLEMNIZE MARRIAGES?
void. The absence of the marriage license
1. Any incumbent member of the Judiciary;
2. Any priest, rabbi, imam, or minister of any was certified by the local civil registrar who
church or religious sect is the official custodian of these documents
3. Ship captain or airplane chief (for marriage in and who is in the best position to certify as
articulo mortis); to the existence of these records. (Republic v.
4. A military commander of a unit, who is BAR QUESTION (2008)
a commissioned officer; Roderick and Faye were high school
5. Consul-general, consul or vice-consul; sweethearts.
6. Mayors (under the Local Government Code) When Roderick was 18 and Faye, 16 years
old, they started to live together as husband
MARRIAGE LICENSE and wife without the benefit of marriage.
‘Valid Marriage License’ When Faye reached 18 years of age, her
• A marriage license shall be issued by the parents forcibly took her back and arranged
local civil registrar of the city or municipality for her marriage to Brad. Although Faye lived
where either contracting party habitually with Brad after the marriage, Roderick
resides. continued to regularly visit Faye while Brad
• A marriage license is valid for a period of was away at work.
120 days from the date of its issuance. It is During their marriage, Faye gave birth to a
deemed automatically cancelled at the baby girl Laica. When Faye was 25 years old,
expiration of said period. Brad discovered her continued liaison with
• A marriage license is valid anywhere in the Philippines
Roderick and in one of their heated
arguments, Faye shot Brad to death. She lost
PARENTAL CONSENT
no time in marrying her true love Roderick,
If any party is below 21, parental consent must
without a marriage license, claiming that
be exhibited to the local civil registrar.
Otherwise, marriage is voidable.
they have been continuously cohabiting for
more than 5 years.
PARENTAL ADVICE
Was the marriage of Roderick and Faye valid?
If any party is between 21 and 25, parental SUGGESTED ANSWER
advice is required. Otherwise, license shall No, the marriage of Roderick and Faye is not
only be issued after 3 months from completion valid.
of publication of the application. Art. 4, FC provides that the absence of any
of the essential or formal requisites renders
Marriages Exempt from the License Requirement the marriage void ab initio. However, no
1. Marriage in articulo mortis (In case either license shall be necessary for the marriage
or both of the contracting parties are at the of a man and a woman who have lived
point of death) together as husband and wife for at least 5
2. Marriage in remote places (If the residence
years and without any legal impediment to
of either party is so located that there is no
marry each other. This five-year period is
means of transportation to enable such
party to appear personally before the local characterized by exclusivity and continuity.
civil registrar) In the present case, the marriage of Roderick
3. Marriage among Muslims and members of and Faye cannot be considered as a
ethnic cultural communities marriage of exceptional character, because
4. Marriage of a man and a woman who have there were 2 legal impediments during their
been living together as husband and wife cohabitation: minority on the part of Faye,
for at least 5 years and without any legal
impediment to marry each other. In lieu of
a marriage license, the parties must
execute an Affidavit of Cohabitation.
BAR QUESTION (2017)
BAR QUESTION (2016) State whether the following marital unions are valid,
void, or voidable:
Brad and Angelina had a secret marriage
before a Marriage of Zoren and Carmina who did not
pastor whose office is located in Arroceros secure a marriage license prior to their
Street, City of Manila. They paid money to wedding, but lived together as husband and
the pastor who took care of all the wife for 10 years without any legal
documentation. When Angelina wanted to go impediment to marry.
SUGGESTED ANSWER
to the U.S., she found out that there was no The marriage between Zoren and Carmina
marriage license issued to them before their is valid
marriage. because it is one of those exempt from the
Since their marriage was solemnized in 1995 license requirement under the Family Code
after the effectivity of the Family Code, (Article 34). No license shall be necessary for
Angelina filed a petition for judicial the marriage of a man and a woman who
declaration of nullity on the strength of a have lived together as husband and wife for
certification by the Civil Registrar of Manila at least five years without any legal
that, after a diligent and exhaustive search, impediment to marry each other. Zoren and

22
MARRIAGE CEREMONY validly obtained abroad by the alien spouse
• There is no prescribed form or religious capacitating him or her to remarry, the
rite for the solemnization of a marriage. Filipino spouse shall have capacity to
• Minimum requirements constituting a remarry under Philippine law.
marriage ceremony:
i. the appearance of the contracting
parties before the solemnizing officer,
and
ii. their personal declaration that they
take each other as husband and wife
in the presence of not less than two
witnesses of legal age.

VENUE OF MARRIAGE CEREMONY

Art. 8. The marriage shall be solemnized
publicly in the chambers of the judge or in
open court, in the church, chapel or temple,
or in the office the consul- general, consul or
vice-consul, as the case may be, and not
elsewhere, except in cases of marriages
contracted on the point of death or in
remote places, or where both of the parties
request the solemnizing officer in writing in
which case the marriage may be solemnized
at a house or place designated by them in
a sworn statement to that effect.

General Rule: Marriage shall be solemnized

publicly in the chambers of the judge or in
open court, in the church, chapel or temple,
or in the office the consul- general, consul or
vice-consul.
Except: In cases of marriages contracted:
a. on the point of death;
b. in remote places;
c. where both of the parties request the
solemnizing
officer in writing.

Note:
• Marriage is still valid if not complied.
• Mere irregularity in marriage ceremony.

Marriage certificate
• A marriage contract is the best
documentary evidence of a marriage.
• Its absence is not, however, proof that no
marriage took place because other
evidence may be presented to prove
the fact of marriage.
• The mere fact that no record of the
marriage exists in the registry of marriage
does not invalidate said marriage, as long
as in the celebration thereof, all requisites
for its validity are present.

G. MIXED MARRIAGES (FAMILY CODE, ART. 26)

Art. 26. All marriages solemnized outside
the Philippines, in accordance with the
laws in force in the country where they
were solemnized, and valid there as such,
shall also be valid in this country, except
those prohibited under Articles 35 (1), (4),
(5)
and (6), 36, 37 and 38.

Where a marriage between a Filipino

citizen and a foreigner is validly
celebrated and a divorce is thereafter
Marriages solemnized abroad

General Rule: If the marriage is valid

abroad, it is also valid in the Philippines
(lex loci celebrationis)

Exceptions (Art. 26 (1) FC; Art. 15 NCC

Nationality Rule; last par., Art 17 NCC):
1. Art 35 (1) -lack of legal capacity
2. Art 35 (4) - bigamous or polygamous
marriage
3. Art 35 (5) - mistake as to identity
4. Art 35 (6) – non-compliance with
registration requirements
5. Art 36 – psychological incapacity
6. Art 37 – incestuous marriage
7. Art 38 – void due to public policy

Mixed Marriage is a marriage between a

Filipino and a Foreign national.

Foreign Divorce
• Philippines has no Divorce.
• Divorce may only be recognized in
case of mixed marriage.

Art. 26 (2). Where a marriage between a

Filipino citizen and a foreigner is validly
celebrated and a divorce is thereafter
validly obtained abroad by the alien
spouse capacitating him or her to
remarry, the Filipino spouse shall have
capacity to remarry under Philippine
law.

Explanation:
Article 26 (2) only requires that there be
a divorce validly obtained abroad. It
“does not demand that the alien spouse
should be the one who initiated the
proceeding wherein the divorce decree
was granted. It does not distinguish
whether the Filipino spouse is the
petitioner or the respondent in the
foreign divorce proceeding. xxx A
Filipino who initiated a foreign divorce
proceeding is in the same place and in
like circumstances as a Filipino who is at
the receiving end of an alien-initiated
proceeding.” (Republic vs. Manalo, G.R.
No. 221029, April 24, 2018)
 BAR QUESTION (2019)
F, a Filipina, married J, a Japanese, in the
Philippines. After three (3) years, they had a
falling out and thus, separated. Soon after, F
initiated a divorce petition in Japan which
was not opposed by J, because under
Japanese law, a grant of divorce will
capacitate him to remarry. F’s divorce
petition was then granted by the
Japanese court with finality.
May the legal effects of the divorce decree be
recognized in the Philippines, and consequently,
capacitate F to remarry here? Explain.
SUGGESTED ANSWER

Yes, the legal effects of the divorce

decree may be recognized in the
Philippines, and consequently,
capacitate F to remarry.

23
 SUGGESTED ANSWER (CONT.)
The Supreme Court held that the Family
Code does
not distinguish as to who between the SUGGESTED ANSWER
Filipino and foreign spouse in a mixed It shall be considered void even if it was
marriage initiated the divorce petition. celebrated
What is important is that the divorce was after David obtained a judicial decree
secured in accordance with the national annulling his previous marriage to Elsa. The
law of the foreign spouse, and the same law requires that in case the marriage is
capacitated the foreign spouse to remarry. annulled, the parties to the dissolved
Here, F initiated a divorce petition in Japan marriage must first comply with the
and obtained a favorable judgment which requirements of recording the judgement of
capacitated her Japanese husband to annulment in the appropriate civil registry
remarry. Thus, the legal effects of the and undertake the partition, liquidation, and
divorce obtained by F may be recognized distribution of the presumptive legitimes of
in the Philippines which may capacitate F their common children before contracting a
to remarry here. (Republic v. Manalo, subsequent marriage. The partition,
G.R. No. 221029, April 24, 2018) liquidation, and distribution of the
presumptive legitimes must likewise be
H. VOID MARRIAGES; EFFECTS AND recorded in the appropriate registries of
property. The failure of the parties to comply
REMEDIES PSYCHOLOGICAL INCAPACITY (Article 36)
with these requirements would render their
(FAMILY CODE, ARTS. 35-44 AND 50-54) • Marriage contracted by any party who, at
marriage void under
the time of celebration, was
Article 53 of the Family Code.
Void marriages are found in various psychologically incapacitated to comply
provisions of the FC, to wit: Articles 4, 35, 36, with the essential marital obligations of
37, 38, 40, 41, 44 and 53 in relation to marriage
Article 52 • Psychological incapacity is a legal concept
not medical
ABSENCE OF ESSENTIAL OR FORMAL REQUISITE • Totality of evidence; Clear and convincing
(Article 4) evidence.
The absence of any of the essential or formal • Juridical antecedence - Must be existing at
requisites shall render the marriage void ab the time of celebration although overt
initio, except as stated in Article 35 (2) manifestations may emerge only after the
marriage
MARRIAGES CONSIDERED VOID FROM THE • Gravity - “Mild characterological
BEGINNING (Article 35) peculiarities, mood changes, occasional
1. Those contracted by minors emotional outbursts are excluded. The
2. Lack of authority of solemnizing officer psychological incapacity cannot be mere
(unless either or both parties believing in “refusal, neglect, or difficulty, much less
good faith that the solemnizing officer had ill- will.”
the legal authority to do so) • Incurable in the legal sense - incapacity is
3. Absence of marriage license (unless so
exempted) enduring and persistent
4. Bigamous or polygamous marriages
(except valid bigamous marriage under QUIOGUE, JR. V. QUIOGUE
Article 41 on presumptive death) G.R. NO. 203992, AUGUST 22, 2022
5. Mistake of party as to the identity of the J. M. Lopez
other. This case is a Petition for Review on
6. Subsequent marriages that are void Certiorari under Rule 45 of the Rules of
under Article 53 (failure to comply with Court assailing the Decision and Resolution
requirements under Art. 52) of the Court of Appeals (CA) which dismissed
the Petition for Declaration of Nullity of
VOID SUBSEQUENT MARRIAGE DUE TO NON- Marriage filed by Antonio Quiogue, Jr.
COMPLIANCE WITH ART. 52 (Art. 53) (Antonio), petitioner. Antonio and Maria Bel
Article 53. Either of the former spouses may Quiogue (Maribel), respondent, were
marry again after compliance with the married and have four children. They have
requirements of Article 52, otherwise, the been separated in fact after Maribel drove
subsequent marriage shall be null and void. Antonio out of their conjugal home.

Article 52. The judgment of annulment or of Antonio claimed that he and Maribel are
absolute nullity of the marriage, the partition both psychologically incapacitated to comply
and distribution of the properties of the with the basic marital obligations. A witness
spouses and the delivery of the children's for Antonio, Dr. Valentina Del Fonso Garcia
presumptive legitimes shall be recorded in (Dr. Garcia), conducted a mental status
the appropriate civil registry and registries assessment and clinical psychiatric
of property; otherwise, the same shall not interviews with Antonio and Maribel and
affect third persons. recommended that marital nullification be
strongly considered by the court on the
ground of psychological incapacity.

The Regional Trial Court (RTC) found sufficient

grounds to declare the marriage between infidelity of Antonio and his irreconcilable
petitioner and Maribel void. Thereafter, differences with his wife Maribel do not
CA reversed the ruling of the RTC and constitute psychological incapacity under
agreed with the Solicitor General that the Article 36 of the Family Code.

24
SC ruled that Antonio’s chronic infidelity is a neither a mental incapacity nor a personality
form of psychological incapacity which is a disorder in a strict medical sense, although one's
ground for nullity of marriage. clinical mental or personality disorder can be its root
cause.
The Court states that to be considered as a
form of psychological incapacity, infidelity
must satisfy the requirements of (1) gravity or
severity, (2) antecedence, and (3) legal
incurability or persistence during the marriage.
In this case, as for the severity of Antonio’s
infidelity, he thinks that his illicit affairs are
minor incidents which Maribel should have
overlooked or dealt with differently and he
does not consider Maribel as a partner. Hence,
there is a constant need for him to look for
affection outside the marriage. As to
antecedence, his affairs are not casual
mistakes as these were shown to be deeply
rooted in his psychopathology which was in
place even before his marriage.

And lastly, Antonio's incapacity is incurable. It

is persistent throughout the marriage and is
specifically directed at his wife Maribel.
Antonio did not have ample affection and
commitment towards Maribel even at the
outset.

Therefore, the totality of evidence thus points

to Antonio's psychological incapacity as the
cause to nullify his marriage to Maribel.

DEDICATORIA V. DEDICATORIA
G.R. NO. 250618, JULY 20, 2022
J. M. Lopez
Jennifer and Ferdinand were married.
However, Jennifer filed a Petition for
Declaration of Nullity of Marriage due to
Ferdinand's psychological incapacity.

Dr. Montefalcon (Montefalcon), a clinical

psychologist, conducted psychological tests on
Jennifer, as well as clinical interviews on
Ferdinand’s sister, Teresita, and the couple’s
long-time common friend, Anarose. Ferdinand
was invited for a psychological assessment,
but to no avail. With the available resources,
Montefalcon diagnosed Ferdinand to be
suffering from Dependent Personality Disorder,
rendering him incapacitated to perform his
marital obligations.

The RTC found the totality of the evidence

presented, consisting of the collateral
interviews and the assessment of the expert
witness on the psychological condition of the
parties, sufficient. The CA found no sufficient
evidence to prove the juridical antecedence,
gravity, and incurability of Ferdinand's
psychological incapacity.

The SC ruled that the totality of evidence

presented in this case — the testimonies of
Jennifer, Anarose, and clinical psychologist
Montefalcon — is sufficient to sustain a finding
that Ferdinand is psychologically
incapacitated. Jennifer's cause of action is
grounded upon Article 36 of the Family Code.
In Tan-Andal, the Court settled the varying
guidelines in determining the existence of
psychological incapacity as a ground to declare
a marriage void. The Court clarified that such
requirement does not require proof that the
psychological incapacity roots from a medically-
identified mental incapacity or psychological incapacity
as previously required in Molina. Psychological
incapacity has always been a legal concept — it is
DOCTRINES: SUGGESTED ANSWER
In the case of Tan-Andal, the Court
states that the spouse of the person Yes. Jon and Jane can marry each other; Jon
alleged to be psychologically is an illegitimate child of Andrew while Jane is
a child of Elena from a previous relationship.
incapacitated may be interviewed by
Thus, their marriage is not one of the
the psychologist since he or she is in
prohibited marriages enumerated under Art.
the best position to describe his or her
38 of the FC.
spouse's inability to comply with
marital obligations.

Notwithstanding, there is no legal and

25
jurisprudential requirement that the person
to be declared psychologically incapacitated
be personally examined by a physician. What
matters is that the totality of evidence
presented establishes the party's
psychological condition. The psychiatric
evaluations of psychiatrists are
reliable even when the subject was
not interviewed.

INCESTUOUS MARRIAGES (Article 37)

Marriages between:
1. Ascendants and descendants of any
degree; and
2. Between brothers and sisters,
whether of full or half blood
(whether the relationship between
the parties be legitimate or
illegitimate)

VOID MARRIAGES FOR REASONS OF PUBLIC

POLICY (Article 38)
Marriages between
1. Collateral blood relatives, whether
legitimate or illegitimate, up to the
fourth civil degree
2. Step-parents and step-children
3. Parents-in-law and children-in-law
4. Adopting parent and the adopted child
5. Surviving spouse of the adopting
parent and the adopted child
6. Surviving spouse of the adopted
child and the adopter
7. Adopted child and a legitimate
child of the adopter
8. Adopted children of the same adopter.
9. Parties where one, with the intent to
marry the other killed that other
person’s spouse or his or her own
spouse.
BAR QUESTION (2008)
Despite several relationships with different
women,
Andrew remained unmarried. His first
relationship with Brenda produced a daughter,
Amy, now 30 years old. His second, with Carla,
produced two sons: Jon and Ryan. His third,
with Elena, bore him no children although
Elena has a daughter Jane, from a previous
relationship. His last, with Fe, produced no
biological children but they informally
adopted without court proceedings, Sandy,
now 13 years old, whom they consider as
their own. Sandy was orphaned as a baby
and was entrusted to them by the midwife who
attended to Sandy’s birth. All the children,
including Amy, now live with Andrew in his
house.
Can Jon and Jane legally marry?
 already dead
4. Spouse present must institute a summary
proceeding for the declaration of presumptive
death of the absentee, without prejudice to
the effect of reappearance of the absent
spouse.

INVOKING ABSOLUTE NULLITY FOR REMARRIAGE

(Article 40)
Art. 40. The absolute nullity of a previous marriage
may be invoked for purposes of remarriage on
the basis solely of a final judgment declaring
such previous marriage void.

LUISITO G. PULIDO v. People of the PHILIPPINES | G.R.

No. 220149, JULY 27, 2021 (BIGAMY - PROOF OF VOID
AB INITIO MARRIAGE WITHOUT NEED OF JUDICIAL
DECLARATION OF NULLITY)

Summary:
• The parties are not required to obtain a
judicial declaration of nullity of a void ab
initio of the first or subsequent marriages in
order to raise it as a defense in a bigamy
case. The same rule applies to all marriages
celebrated under the Civil Code and the
Family Code.
• Article 40 of the Family Code did not amend
Article 349 of the RPC, and thus, did not
deny the accused the right to collaterally
attack the validity of a void ab initio
marriage in the criminal prosecution for
bigamy.
• However, if the first marriage is merely
voidable, the accused cannot interpose an
annulment decree as a defense in the
criminal prosecution for bigamy since the
voidable first marriage is considered valid
and subsisting when the second marriage
was contracted. The crime of bigamy,
therefore, is consummated when the second
marriage was celebrated during the
subsistence of the voidable first marriage.
The same rule applies if the second
marriage is merely considered as voidable.

ABSENCE OR SEPARATION IN FACT

• Mere absence of a spouse will not result in
dissolution.
• Separation in fact will not also result in
dissolution.
• Marriages can only be dissolved through
a court
action.

Death – extinguishes marriage; the surviving

spouse may marry again.
Missing – a court action is necessary to declare
missing spouse as presumptively dead.

VOID BIGAMOUS MARRIAGE, AND EXCEPTION ON

ACCOUNT OF PRESUMPTIVE DEATH (Article 41)
• Art 35 (4) all bigamous marriages are void
• Judicial Declaration of presumptive Death
1. Absence of 2 years or 4 years of
missing spouse
2. Spouse present wishes to remarry
3. Spouse present has a well-founded
belief that the absent spouse was
 BAR QUESTION (2012)
PERIOD OF DISAPPEARANCE declaration of his presumptive death before
Write
✓ 4 YEARS “TRUE” if the statement is true or “FALSE” if the she married Adolf.
✓ 2 YEARS in case the
statement is false. If statement
of danger is FALSE, state the
of death
reason.
under Art. 391 of the Civil Code: The absence of the said judicial declaration
Amor
(1) A gave
person birthontoboard
Thelma a when
vesselshelostwas 15 incapacitated Ana from contracting her
years
duringold.a sea
Thereafter,
voyage, Amor
or an met David and
aeroplane second marriage, making it void ab initio
they got is
which married
missing; when she was 20 years old.
David
(2) A had a son,
person in Julian, with his
the armed ex- who
forces
girlfriend
has taken
married.
(3)
Sandra.
part inJulian
war; and Thelma can get
A person who has been in danger of
26
death underSUGGESTED ANSWER
other circumstances.
TRUE. Julian and Thelma can get married.
MarriageOR SEPARATION IN FACT
ABSENCE
‘Well-founded Belief’
• In determining the existence of a
“well-founded belief,” the belief of the
present spouse must be the result of
proper and honest to goodness
inquiries and efforts to ascertain the
whereabouts of the absent spouse
and whether the absent spouse is still
alive or is already dead.
• Active search not passive one

Failure to Secure Declaration of Presumptive

Death Under Art. 41, FC
✓ If he/she contracts a subsequent
marriage without such declaration:
i. The subsequent marriage is itself void;
and;
ii. He/she may be prosecuted for the crime of
bigamy

BAR QUESTION (2008)

Ana Rivera had a husband, a Filipino citizen like
her, who
was among the passengers on board a
commercial jet plane which crashed in the
Atlantic Ocean ten (10) years earlier and had
never been heard of ever since. Believing that
her husband had died, Ana married Adolf
Cruz Staedtler, a divorced German national
born of a German father and a Filipino
mother residing in Stuttgart.
To avoid being required to submit the required
certificate of capacity to marry from the
German embassy in Manila, Adolf stated in
the application for marriage license that he
was a Filipino citizen. With the marriage
license stating that Adolf was a Filipino, the
couple got married in a ceremony officiated
by the Parish Priest of Calamba, Laguna in a
beach in Nasugbu, Batangas, as the local
parish priest refused to solemnize marriages
except in his church.
Is the marriage valid? Explain fully.
SUGGESTED ANSWER
No, the marriage is invalid. Article 41 of the
Family Code
allows the present spouse to contract a
subsequent marriage during the subsistence of
his previous marriage provided that:
(a) that the spouse present has a well-
founded belief that the absent spouse
was already dead, and
(b) present spouse instituted a summary
proceeding for the declaration of the
presumptive death of absent spouse.

Otherwise, the second marriage shall be null and

void. In the instant case, the death of Ana’s
husband is not confirmed since no dead
body was found. Thus, following Art. 41, Ana
should have first secured a judicial
 PRESUMPTION BAR QUESTION (2017)
OF VALIDITY
State whether the
• Every marriage enjoys following marital union of
the presumption is validity.
valid, void, or • Before contracting a second marriage,
voidable. there must be a prior judgment
Eli and Fely’s marriage solemnized seven years
declaring the previous marriage void.
after the disappearance of Chona, Eli’s
previous spouse, after the plane she had
• If he/she contracts a subsequent
boarded crashed in the West Philippine Sea. marriage without securing a judicial
Is the marriage valid? Explain fully. declaration of nullity of the prior
SUGGESTED ANSWER marriage, the subsequent marriage is
The marriage between Eli and Fely which was itself void.
solemnized
seven years after the disappearance of Eli’s  PROPERTY REGIME IS GOVERNED BY CO-
former wife, Chona, is void unless Ely had OWNERSHIP either under Art. 147 or 148 of
secured a declaration of presumptive death of the
Chona from a competent court prior to the
Family Code
celebration of the subsequent marriage.
Article 41 of the Family Code considers void a
marriage contracted by any person during the I. VOIDABLE MARRIAGES; EFFECTS
subsistence of his/her previous marriage AND REMEDIES (FAMILY CODE, ARTS.
unless prior to the celebration of the 45-54)
subsequent marriage, the prior spouse had
been absent for four consecutive years and the *EXCLUDE: A.M. NO. 02-11-10-SC AND
spouse present had a well-founded belief that subsequent R.A. NO. 6955
marriage under Article 53 shall
the absent spouse is already dead. In case the likewise be legitimate. (Art. 54, FC)
disappearance of the spouse occurred under
circumstances where there is danger of death
AUTOMATIC TERMINATION OF 2ND MARRIAGE
 By the recording of the affidavit of
reappearance of the absent spouse.
 At the civil registry of the residence of the
parties to the subsequent marriage.
 With due notice to the parties of the
subsequent
marriage.
 Unless there is a judgment annulling the
previous marriage or declaring it void ab
initio.
 Without prejudice to fact of
reappearance being judicially determined
if disputed.

VOID SUBSEQUENT MARRIAGE WHICH WAS

CONTRACTED AFTER DECLARATION OF
PRESUMPTIVE DEATH (Article 44)
“If both spouses of the subsequent
marriage acted in bad faith, said marriage
shall be void ab initio xxx”

EFFECTS AND REMEDIES

 ACTION OR DEFENSE FOR DECLARATION
OF NULLITY SHALL NOT PRESCRIBE
• No prescriptive period in asking for
declaration of nullity.
• Heirs may attack the validity of
marriage in proceedings for settlement
of estate to determine successional
rights. (Lucila David & Heirs of Aguas v.
Calilung, G.R. No. 241036, January 26,
2021)

 STATUS OF CHILDREN UNDER A VOID

MARRIAGE
General Rule: Under a void marriage,
children are considered as Illegitimate.
Exceptions:
1. Children conceived or born before the
judgment of annulment or absolute
nullity under Article 36 has become final
and executory shall be considered
legitimate.
2. Children conceived or born of the
Art. 45 Voidable Marriages
A marriage may be annulled for any of
the following causes, existing at the
time of the marriage:
(1) 18 years old but below 21
without parental consent
(2) Insanity
(3) Vitiated consent due to Fraud
(4) Vitiated consent due to Force,
intimidation or undue influence
(5) Impotency
(6) Sexually transmissible Disease

Four Circumstances of Fraud (Art. 47)

(1) Non-disclosure of a previous
conviction by final judgment of the
other party of a crime involving
moral turpitude;
(2) Concealment by the wife of the fact
that at the time of the marriage,
she was pregnant by a man other
than her husband;
(3) Concealment of sexually
transmissible disease, regardless of
its nature, existing at the time of
the marriage; or
(4) Concealment of drug addiction,
habitual alcoholism or
homosexuality or lesbianism
existing at the time of the marriage.
No other misrepresentation or
deceit as to character, health, rank,
fortune or chastity shall constitute
such fraud as will give grounds for
action for the annulment of
marriage.

ARTICLE 45 VS. ARTICLE 46 OF THE FC ON

STD AS GROUND FOR ANNULMENT
 Article 45 Article 46
Affliction Concealment
Ground of Annulment
The fact of being The act of
afflicted concealing
because it
constitutes
fraud
Concealment
Not necessary Necessary
Nature of the disease
Must be serious and Does not have to be
incurable serious and incurable

27
 BAR QUESTION (2017)
State whether the following marital unions are
valid, void, or voidable.
Ador and Becky’s marriage wherein Ador was
afflicted
with AIDS prior to the marriage.
SUGGESTED ANSWER
The marriage of Ador and Becky is a voidable
marriage
under paragraph (6) of Article 45 of the
Family Code which provides that a
marriage is voidable if either party was
afflicted with a sexually transmissible
disease found to be serious and appears
incurable. Since Ador was afflicted with
AIDS even prior to the marriage, which is a
serious and incurable sexually
transmissible disease, his marriage to
Becky is considered voidable.
GROUNDS | WHO MAY FILE THE CASE & WHEN five years from celebration of marriage.
• Article 47, Family Code: PRESCRIPTION
1) Lack of parental consent – spouse whose • Article 47, Family Code: NOT FILED BY
parent or guardian did not give his or her PROPER
consent, within five years after attaining PERSON
the age of twenty-one, or by the parent or
guardian or person having legal charge of
the minor, at any time before such party
has reached the age of twenty-one;
UNLESS after attaining the age of twenty-
one, such party freely cohabited with the
other and both lived together as husband
and wife.

2) Insanity - by the sane spouse, who had no

knowledge of the other's insanity; or by
any relative or guardian or person having
legal charge of the insane, at any time
before the death of either party, or by
the insane spouse during a lucid interval
or after regaining sanity;
UNLESS such party after coming to
reason, freely cohabited with the other
as husband and wife

3) Fraud - by the injured party, within five

years after the discovery of the fraud;
UNLESS such party afterwards, with full
knowledge of the facts constituting the
fraud, freely cohabited with the other as
husband and wife

4) Force, Intimidation, Undue Influence - by

the injured party, within five years from
the time the force, intimidation or
undue influence disappeared or ceased;
UNLESS the same having disappeared or
ceased, such party thereafter freely
cohabited with the other as husband
and wife

5) Impotency and STD - by the injured party,

within five years from the celebration of
marriage.

GROUNDS FOR DENIAL

• Article 45, Family Code: CONVALIDATION
Note: Voidable marriages due to
incurable Impotency and STD cannot be
convalidated, but action may prescribe
 impotence. Physical incapacity to consummate
is a valid ground for the annulment of marriage
if such incapacity was existing at the time of
the marriage, continues and appears to be
incurable. The marriage may be annulled on
this ground within five years from its
shall order the prosecuting attorney or fiscal
celebration, and cohabitation upon
assigned to appear on behalf of the State to
knowledge of impotency will not result
take steps to prevent collusion between the
in
parties, and to take care that evidence is
convalidation.
not fabricated or suppressed.
• No judgmentBAR QUESTION
shall be based (2011)
on stipulation of
Baldo,
facts aorrejected
confession suitor, intimidated Judy into
of judgment.
•marrying
During the pendency, in the absence of
him. Whileagreement,
written she wantedCourt to question the validity
shall provide for
of support
their ofmarriage two years
spouses and custody and after the
support
intimidation ceased, Judy decided
of common children. (Arts. 48 & 49, FC) in the
meantime to freely cohabit with Baldo. After
more than
EFFECTS 5 years
OF DECREE following their wedding,
OF ANNULMENT
Judy
1. wants to offile
Termination the amarital
case bond;
for annulment of
marriage
2. Children against Baldo or
conceived on born
groundbefore
of lacktheof
consent.
judgmentWill her action prosper?
of annulment has become final
(A) and Yes, the are
executory action for
considered annulment
legitimate; is
imprescriptible.
3. Absolute community property regime or
(B)No,
the since thepartnership
conjugal marriage was merelyregime
property voidable
is
andterminated
Judy ratified it by freely cohabiting
or dissolved and the same shall with
Baldo after the Forfeiture
be liquidated. force and ofintimidation had
guilty spouse’s
ceased.
share in net profits.
(C)No,
4. The since the action
innocent prescribed
spouse may 5 years from
revoke the
thedesignation
date of the celebration
of the otherofspouse
the marriage.
who acted
PENDENCY OF CASE AND ROLE OF
in bad faith as beneficiary in the insurance
PUBLIC PROSECUTORS
policy, whether or not the designation is
• In cases of annulment or declaration of
revocable.
absolute nullity of marriage, the court

28
5. The spouse who contracted the marriage It is where offended party agreed to the
in bad faith, shall be disqualified to commission of the offense. This is given in
inherit from the innocent spouse by advance or prior to commission.
testate or intestate succession;
6. Donation Propter Nuptias – remains Valid,
except donee spouse acted in bad faith,
it is revoked by operation of law.

J. LEGAL SEPARATION
(FAMILY CODE, ART. 55-67)
*EXCLUDE: A.M. NO. 02-11-11-SC
• Legal separation is a remedy available to
parties in a valid but failed marriage for
the purpose of obtaining a decree from
the court entitling him or her certain
reliefs such as the right to live separately
from each other (without affecting the
marital bond that exists between them),
the dissolution and liquidation of their
absolute community or conjugal
partnership property regime and the
custody of their minor children.
• It is in the nature of bed and board
separation.

GROUNDS FOR LEGAL SEPARATION (Art. 55)

a. Repeated physical violence or grossly
abusive conduct against petitioner,
common child, or a child of the
petitioner;
b. Attempt to corrupt or induce petitioner, a
common child or a child of the petitioner
to engage in prostitution, or connivance
in such corruption or inducement;
c. Attempt by respondent against the life of
the petitioner;
d. Final judgment sentencing respondent to
imprisonment of more than 6 years, even
if pardoned;
e. Drug addiction or habitual alcoholism of
respondent;
f. Physical violence or moral pressure to
compel petitioner to change religious or
political affiliation;
g. Bigamous marriage subsequently
contracted by
respondent in the Philippines or abroad;
h. Sexual infidelity or perversion;
i. Lesbianism or homosexuality;
j. Abandonment of petitioner by
respondent without justifiable cause for
more than a year.

DEFENSES

Condonation
• It is forgiveness of the offense by the
innocent spouse, express or implied,
subject to the condition shall not be
repeated.
• Having sex with the spouse after
knowledge of the
other’s infidelity (Ginez vs. Bugayong)
• Every adulterous act of the wife is a
separate ground for legal separation and
condonation of one does not necessarily
mean condonation of the others (People
vs. Zapata).

Consent
Connivance prescribed, the prescriptive period being 5
It implies an agreement, express or years, if Christian’s affair with another woman
implied, by both spouses to the ground was ended when Nikki decided to live with him
for legal separation. again, Nikki’s action will not prosper on
account of condonation. However, if such affair
Collusion is still continuing, Nikki’s action would prosper
It also implies an agreement of spouses because the 5-year prescriptive period will be
counted from the latest act of sexual infidelity.
whereby one will commit or appear to
Every act of sexual
commit, or to be represented in court liaison is a ground for legal separation.
as having committed, an offense which
is a ground for legal separation, or to BAR QUESTION (2012)
suppress evidence of valid defense, for Write “TRUE” if the statement is true or
the purpose of enabling the other to “FALSE” if the
obtain a legal separation. statement is false. If the statement is FALSE,
state the reason.
If a man commits several acts of sexual
Mutual recrimination (in pari delicto) infidelity, particularly in 2002, 2003, 2004,
When both parties have given ground 2005, the prescriptive
for legal period to file for legal separation runs from 2002.
separation. SUGGESTED ANSWER
FALSE. The five-year prescriptive period for
Prescription filing legal
• When the action is not filed within separation runs from the occurrence of sexual
the period fixed by law. infidelity committed in 2002 runs from 2002, for
• An action for legal separation shall the sexual infidelity committed in 2003, the
be filed within five (5) years from the prescriptive period runs from 2003 and so on.
time of the occurrence of the cause The action for legal separation for the last act
(Art. 57, FC). of sexual infidelity in 2005 will prescribe in
2010.
BAR QUESTION (2011)
After they got married, Nikki discovered that PROCEDURE, EFFECTS OF FILING, EFFECTS OF
Christian was PENDENCY
having an affair with another woman. But Nikki
decided to give it a try and lived with him for two
(2) years. Immediately Entitled to Live Separately
After two (2) years, Nikki filed an action • After the filing of petition for legal
for legal separation, the spouses shall be entitled
separation on the ground of Christian’s sexual to live separately from each other.
infidelity. Will the action prosper? Explain. • The court, in the absence of agreement,
SUGGESTED ANSWER shall designate either of them or a third
Although the action for legal separation has person to administer the absolute
not yet community or conjugal partnership
property. (Art. 61, FC)
29
Cooling-Off Period 7. The innocent spouse may revoke donations
• An action for legal separation shall be in she/he made in favor of the offending spouse.
no case tried before 6 months shall have Action to revoke must be brought within 5
elapsed since the filing of the petition. years from finality of decree of legal
(Art. 58, FC). separation. (Art 64, FC)
• To enable the contending spouses to 8. Obligation to give support ceases, but court
settle differences. In other words, it is for may order the guilty spouse to give support to
possible reconciliation the innocent spouse. (Art. 198, FC)
Except: There is no cooling-off period if the
grounds alleged are those under R.A. 9262
(VAWC).

Steps Toward Reconciliation

No legal separation may be decreed unless
the Court has taken steps toward the
reconciliation of the spouses and is fully
satisfied, despite such efforts, that
reconciliation is highly improbable. (Art. 59,
FC).

Support and Custody

• During the pendency of the action for
legal separation, the provisions of Article
49 shall likewise apply to the support of
the spouse and the custody and support
of common children. (Art. 62, FC).
• Court shall provide for support of spouses
and custody and support of common
children.
• Paramount consideration to the moral and
material welfare of children and their
choice of parent with whom they wish to
remain.
• Shall also provide for visitation rights of
the other parent. (Art 49, FC)

Role of Fiscal
 No decree of legal separation shall be
based upon a stipulation of facts or a
confession of judgement.
 The court should order the prosecuting
attorney or fiscal to take steps to prevent
collusion between the parties and to take
care that the evidence is not fabricated or
suppressed. (Art 60, FC)

EFFECTS OF DECREE OF LEGAL SEPARATION

1. The spouses are entitled to live
separately but the marriage bond is not
severed.
2. ACP/GCP shall be dissolved and
liquidated. Offending spouse forfeits
share in net profits. Regime of complete
separation.
3. Custody of minor children shall be
awarded to innocent spouse, subject to
Art. 213 FC.(Court will designate, take
into account relevant considerations,
especially the choice of the child over 7
years unless the parent chose is unfit.
Tender age presumption.)
4. Offending spouse is disqualified to inherit
from innocent spouse by intestate
succession.
5. Provisions in the will of innocent spouse
which favors offending spouse shall be
revoked by operation of law. (Art 63, FC)
6. Innocent spouse may revoke the
designation of the offending spouse as a
beneficiary in any insurance policy, even
when stipulated as irrevocable. (Art 64,
FC)
Reconciliation the following order:
 If the spouses should reconcile, a (1) By marriage settlements executed
corresponding joint manifestation before the marriage;
under oath duly signed by them shall (2) By the provisions of this Code; and
be filed with the court in the same
(3) By the local custom. (Art. 74, FC)
proceeding for legal separation.
 The legal separation proceedings, if
still pending, shall thereby be 1. DONATION PROPTER NUPTIAS; VOID
terminated at whatever stage. Final DONATIONS – FAMILY CODE, ARTS. 82-83, 86- 87,
decree shall be set aside. 43(3) AND 50
 Reconciliation does not automatically
revive the former property regime. DONATION PROPTER NUPTIAS
 If the spouses want to revive the - Also known as donation by reason of marriage.
previous property regime, they must
execute an agreement under oath to
revive the former property regime, Requisites:
which agreement shall be submitted in 1. Made before the celebration of the marriage;
court, together with a verified motion for 2. Made in consideration of marriage; and
its approval. (Arts. 66-67, FC) 3. Made in favor of one or both of the
future spouses.
SY V. EUFEMIO 4. Governed by ordinary donations
G.R. NO. L-30977, JANUARY 31, 1972 (formalities of ordinary donation must be
J. J.B.L. Reyes observed).
Effect of Death of One of the
Parties Abates the Action: ✓ Donation of future property is
 The death of one of the parties before governed by testamentary succession
final decree in an action for legal and formalities of will.
separation abates the action.
 An action for legal separation which ✓ Limitation on value: If agreed property
involves nothing more than the bed- regime in the marriage settlement is a
and-board separation of the spouses regime other than absolute community
(there being no absolute divorce in property, the donation in the marriage
this jurisdiction) is purely personal.
settlement should not be more than 1/5 of
 Being personal in character, it follows
that the death of one party to the
the present property of donor- future
action causes the death of the action spouse. This means that if the property
itself — actio personalis moritur cum regime agreed upon is ACP, there is no
persona. limitation on the value of donation.

The property relationship between K. PROPERTY RELATIONS BETWEEN SPOUSES

husband and wife shall be governed in (FAMILY CODE, ARTS. 74-81)

30
Grounds for revocation of donations propter Arts. 66, 67, 128, 135, and 136 of the FC.
nuptias (Article 86)
1. Non-celebration of marriage a. Absolute Community of Property Regime –
2. Celebration of marriage without parental Family Code, arts. 84 and 88-104
consent;
3. Annulment of marriage with donee
acting in bad faith;
4. Legal separation with donee as the guilty
party;
5. Fulfillment of resolutory condition; and
6. Acts of ingratitude (Article 765, NCC).

ARTICLE 765. The donation may also be

revoked at the instance of the donor, by
reason of ingratitude in the following cases:
(1) If the donee should commit some offense
against the person, the honor or the
property of the donor, or of his wife or
children under his parental authority;
(2) If the donee imputes to the donor any
criminal offense, or any act involving
moral turpitude, even though he should
prove it, unless the crime or the act has
been committed against the donee
himself, his wife or children under his
authority;
(3) If he unduly refuses him support when
the donee is legally or morally bound to
give support to the donor.

VOID DONATIONS BETWEEN THE SPOUSES

General Rule: Every donation or grant of
gratuitous advantage, direct or indirect,
between the spouses during marriage shall
be VOID.

Exception: moderate gifts which the spouses

may give each other on the occasion of any
family rejoicing. The prohibition shall also
apply to persons living together as husband
and wife without valid marriage. (Article 87,
FC)

2. MARRIAGE SETTLEMENTS – FAMILY CODE,

ARTS. 75-81

MARRIAGE SETTLEMENT
• It is a contract entered into by a man and
a woman who intend or plan to get
married fixing the property regime that
will govern their present and future
properties during their marriage.
• It is also called ante-nuptial or pre-nuptial
agreement.

Requisites of a valid marriage settlement

a. In writing;
b. Signed by the parties;
c. Executed before the celebration of
marriage;
d. Signed by parent/guardian - If
18-21, civil
interdiction, disability (Arts 78 and 79,
FC)
e. Registration (to bind 3rd persons). (Art. 77,
FC)

Modification of the marriage settlement

There can be no modification of marriage
settlement during marriage in the absence
of court approval, subject to provisions of
A property regime wherein the spouses Properties Excluded Under the Absolute Community
are considered co-owners of all property (Art. 92, FC)
brought into the marriage as well as 1. Property acquired during the marriage by
those acquired during the marriage, gratuitous title and its fruits as well as
which are not otherwise excluded from income thereof unless the grantor
the community either by the provisions expressly provided that they shall form
of the Family Code or by the marriage part of the community property;
settlement. 2. Property for personal and exclusive use of
either spouses, except jewelry which shall
Commencement: The absolute community form part of the absolute community
of property between spouses shall because of their monetary value;
commence at the precise moment that 3. Property acquired before the marriage by
the marriage is celebrated. Any one with legitimate descendants by former
stipulation, express or implied, for the marriage and its fruits and income, if any;
commencement of the community 4. Those excluded by the marriage settlement.
regime at any other time shall be void.
(Art. 88, FC) Properties Included in the Absolute Community
1. All the property owned by the spouses at the
Note: ACP is the default property regime time
under the FC in the absence of a valid of celebration of marriage or acquired thereafter;
marriage settlement providing for
2. Property acquired during the marriage by
another kind of property regime.
gratuitous title, if expressly made to form
part of the community property by the
Waiver of rights (Art. 89, FC)
donor, testator or grantor;
• No waiver of rights, shares and effects
of the absolute community of property
3. Jewelry or properties with monetary value; and
during the marriage can be made 4. Winnings in gambling.
except in case of judicial separation of
property. CHARGES UPON AND OBLIGATIONS OF THE
• When the waiver takes place upon a ABSOLUTE COMMUNITY PROPERTY
judicial separation of property, or after 1. Support of the spouses, their common
the marriage has been dissolved or children, and legitimate children of either
annulled, the same shall appear in a spouses;
public instrument and shall be 2. All debts and obligations contracted
recorded as provided in Article 77. during the marriage by:
• The creditors of the spouse who made a. the designated administrator-spouse
such waiver may petition the court to for the benefit of the community
rescind the waiver to the extent of the b. by both spouses;
amount sufficient to cover the amount
c. by one spouse with the consent of the
of their credits.
other.

31
3. Debts and obligations contracted by either other spouse or the authority of the court without
spouse without the consent of the other to which the disposition or encumbrance is VOID.
the extent that the family may have been However, the transaction shall be construed as a
benefited; continuing offer on the part of the consenting spouse
4. All taxes, liens, charges, and expenses, and the third person, and may be perfected as binding
including major or minor repairs, upon the contract upon the acceptance by the other spouse or
community property; authorization by the court before the offer is withdrawn
5. All taxes and expenses for mere preservation by either or both offerors.
made during the marriage upon the separate
property of either spouse used by the family;
6. Expenses to enable either spouse to
commence or complete a professional or
vocational course or other activity for self-
improvement;
7. Ante-nuptial debts of either spouse insofar as
they have redounded to the benefit of the
family;
8. The value of what is donated or promised by
both spouses in favor of their common
legitimate children for the exclusive purpose of
commencing or completing a professional or
vocational course or other activity for self-
improvement;
9. Payment, in case of absence or insufficiency
of the exclusive property of the debtor-
spouse, of:
a. ante-nuptial debts that did not redound to
the benefit of the family;
b. support of illegitimate children of either
spouse, and
c. liabilities incurred by either spouse by
reason of a crime or a quasi-delict.
Note: The payment of which shall be
considered as advances to be deducted from
the share of the debtor- spouse upon
liquidation of the community.
10. Expenses of litigation between the spouses.
However, if the suit is found to be
groundless, it cannot be charged against
the absolute community (Art. 94,FC).

Administration of Community Property (Art. 96, FC)

General Rule: The administration of community
property belongs to both spouses jointly. In case
of disagreement, the decision of the husband
shall prevail. but subject to recourse to the court
by the wife for proper remedy.
Note: Prescriptive period for recourse is within 5
years from the date of the contract implementing
such decision.

Exceptions:
1. Agreement that only one of the spouses shall
administer the community property;
2. If one spouse is incapacitated or otherwise
unable to participate in the administration of
the common properties, capacitated or able
spouse may assume sole powers of
administration without the need of court
approval or authorization;
3. If a spouse, without just cause, abandons the
other or fails to comply with his or her
obligations to the family, the aggrieved
spouse may petition the court for sole
administration;
4. During the pendency of the legal separation
case, the court may designate either of the
spouses as sole administrator.
Note: Administration does not include:
1. Disposition;
2. Alienation; and
3. Encumbrance of the conjugal or community
property

SPS. ANTONIO V. CA
G.R. NO. 125172, JUNE 25, 1998
J. Panganiban
Sale or Disposition of Community Property (Art. 96, FC)
Alienation or encumbrance of community
property must have the written consent of the
Disposition by last will (Art 97, FC) Code)
Either spouse may dispose by will of his or
her interest in the community property. Dissolution of the ACP (Art. 99, FC)
1. Death;
Prohibited/allowed donation without consent of 2. Legal Separation;
other (Art. 98, FC) 3. Annulment;
• Neither spouse may donate any 4. Declaration of nullity under Article 40;
community property without the consent 5. Judicial separation of property during
of the other. marriage (Article 135-136, FC).
• However, either spouse may, without the
consent of the other, make moderate b. Conjugal Partnership of Gains Regime – Family
donations from the community property Code, arts. 105-133
for charity or on occasions of family
rejoicing or family distress.
It is a property regime wherein the husband and the
BAR QUESTION (2012) wife
Danny and Elsa were married in 2002. In place in a common fund:
2012, Elsa left
1. All proceeds, product, fruits and income
the conjugal home and her two minor children of their separate properties;
with Danny to live with her paramour. In 2015, 2. Those acquired by either or both of them through:
Danny sold without Elsa’s consent a parcel of a. Efforts; or
land registered in his name that he had b. By Chance. (Art. 106, FC)
purchased prior to the marriage. Danny used
the proceeds of the sale to pay for his This regime is applicable regime in case of a
children’s tuition fees. Is the sale valid, void, or valid marriage settlement between the
voidable? Explain your answer. spouses providing for CPG, or if the marriage
SUGGESTED ANSWER was celebrated before the effectivity of the
The sale made by Danny is void. The parties Family Code and the parties do not have any
were married marriage settlement. CPG is the default
after the effectivity of the Family Code where property regime under the NCC, where ACP is
the default property regime is absolute the default property regime under the FC.
community of property. The facts did not
mention that the parties executed a marriage Exclusive property of the spouses (Art. 109, FC)
settlement, hence, the default property regime 1. Those brought into the marriage as his/her own;
of absolute community of property shall 2. Those acquired during the marriage by
govern their property relations. Under this
gratuitous
property regime, all properties which each of
title;
the spouses own at the time of the celebration
3. Those acquire by right of redemption,
of the marriage as well as whatever they may
barter, or exchange with exclusive
acquire thereafter shall form part of the
property;
absolute community. And sale of a
4. That purchased with exclusive money
community property by one spouse without
consent of the other is void. (Art. 96, Family of either spouse.

32
Conjugal Partnership Property (Art. 117, FC) the Civil Code. The wife may file an action for
(1) Those acquired by onerous title during the annulment of contract within 10 years from the
marriage with conjugal funds; transaction; and
(2) Those obtained from the labor, industry,
work or profession of either or both of the
spouses;
(3) Fruits of conjugal property due or received
during the marriage and net fruits of separate
property;
(4) Share of either spouse in hidden treasure;
(5) Those acquired through occupation such as
fishing or hunting;
(6) Livestock in excess of the number of each
kind brought to the marriage; and
(7) Those acquired by chance, such as
winnings from gambling or betting.

STRONG FORT WAREHOUSING CORP V. BANTA

G.R. NO. 222369 & 222502, NOVEMBER 16, 2020
J. Lopez
Facts:
Antonio obtained loans which were secured by a
Real Estate Mortgage covering conjugal
properties. Strong Fort argues that the subject
deeds of mortgage should remain valid with
respect to the conjugal properties that belong to
Antonio. The SC ruled that the real estate
mortgage with respect to the conjugal properties
covered by the mortgage that belong to Antonio
is void since there is no consent from his wife.
Doctrine:
Any disposition or encumbrance of a conjugal
property by one spouse must be consented to,
by the other; otherwise, it is void. Prior to the
liquidation of the conjugal partnership, the interest
of each spouse in the conjugal assets is
inchoate, a mere expectancy, which
constitutes neither a legal nor an equitable
estate, and does not ripen into a title until it
appears that there are assets in the
community as a result of the liquidation and
settlement. The interest of each spouse is limited
to the net remainder resulting from the
liquidation of the affairs of the partnership
after its dissolution. Thus, the right of the
husband or wife to one- half of the conjugal
assets does not vest until the dissolution and
liquidation of the conjugal partnership, or after
dissolution of the marriage, when it is finally
determined that, after settlement of conjugal
obligations, there are net assets left which can
be divided between the spouses or their
respective heirs.

ALEXANDER V. SPOUSES ESCALONA

G.R. NO. 256141, JULY 19, 2022
J. Lopez
Facts:
Spouses Jorge and Hilaria Escalona, who were
married in 1960, acquired unregistered parcels
of land known as Lot Nos. 1 and 2 during their
marriage. In 1998, Jorge waived his right over
Lot No. 1 in favor of his illegitimate child,
Reygan Escalona, who relinquished his right
over the said lot to Belinda Alexander. In
2005, Reygan and Belinda entered into a Deed
of Absolute Sale covering both lots.
Doctrine:
The Court holds that more than the date of the
marriage of the spouses, the applicable law must
be reckoned on the date of the alienation or
encumbrance of the conjugal property made
without the consent of the other spouse, to wit:
1. The alienation or encumbrance of the
conjugal property, without the wife’s consent,
made BEFORE the effectivity of the Family
Code, is not void but merely voidable. The
applicable laws are Articles 166 and 173 of
2. The alienation or encumbrance of the entire property of the respective property shall be
conjugal property, without the authority vested only upon reimbursement.
of the court or the written consent of
the other spouse, made AFTER the Presumption of inclusion of property in the Conjugal
effectivity of the Family Code is void. Partnership of Gains
The applicable law is Article 124 of the All property acquired during the marriage,
Family Code without prejudice to vested whether the acquisition appears to have been
rights in the property acquired before made, contracted or registered in the name of
August 3, 1988. Unless the transaction one or both spouses, is presumed to be conjugal,
is accepted by the non-consenting unless the contrary is proved.
spouse or is authorized by the court, an
action for declaration of nullity of the Property bought through INSTALLMENT (Article 118, FC)
contract may be filed before the 1. If full ownership was vested before the marriage – it
continuing offer on the part of the shall belong to the buyer spouse.
consenting spouse and the third person 2. If full ownership was vested during the marriage – it
becomes ineffective. shall belong to the conjugal partnership.
Note: In either case, any amount advanced by the
Alienation of exclusive properties of either spouse partnership or by either or both spouses shall be
Either spouse may mortgage, encumber, reimbursed by the owner/s upon liquidation of
alienate or otherwise dispose of his or her the partnership.
exclusive property. (FC, Art. 111 as
amended by R.A.10572) CHARGES UPON AND OBLIGATIONS OF THE CPG (Art.
121, FC)
RULES IN CASES OF IMPROVEMENT OF EXCLUSIVE (1) Support of the spouses, their common
PROPERTY (ARTICLE 120) children, and the legitimate children of either
Reverse accession spouse;
if the cost of the improvement and the (2) Debts and obligations contracted by one
resulting increase in value is more than the without the consent of the other to the extent
value of the principal property at the time that the family benefited;
of the improvement, the entire property (3) Debts and obligations contracted during the
becomes conjugal. marriage by an administrator-spouse for the
benefit of the family, or both spouses or by
Accession one of them with the consent of the other;
if the cost of the improvement and the (4) Taxes, liens, charges, and expenses,
resulting increase in value is equal to or including major or minor repairs upon the
less than the value of the principal property conjugal property;
at the time of the improvement, the entire (5) Taxes and expenses for mere preservation
property becomes exclusive property of the made during the marriage of separate
respective spouse. property;
(6) Expenses for professional, vocational, or
Note: In either case, there shall be other activity for self-improvement of either
reimbursement upon the liquidation of the spouse;
conjugal partnership and ownership of (7) Ante-nuptial debts to the extent the family
has been benefited;

33
(8) Value of what is donated or promised to regime of absolute community or conjugal partnership
common legitimate children for professional, or any agreed regime.
vocation or self- improvement courses; and
(9)Expenses of litigation between the spouses
unless the suit is found to groundless.

Note: If the conjugal partnership is insufficient to

cover the foregoing liabilities, spouses shall be
solidarily liable for the unpaid balance with their
separate properties.

Levy On Conjugal Property

If levy was made on the conjugal property by
reason of the husband being the guarantor, the
levy is improper.

General Rule: The payment of personal debts

contracted by the husband or the wife before or
during the marriage shall not be charged to the
conjugal partnership except as they redounded to
the benefit of the family (Art. 122 FC).

CHARGES AGAINST THE SEPARATE PROPERTY (CPG MAY

ADVANCE SUBJECT TO REIMBURSEMENT DURING
LIQUIDATION, ART. 122 FC):
1. Personal debts of either spouse contracted
before the marriage which did not redound to
the benefit of the family; and
2. Support of the illegitimate children of either
spouse;
3. Fines and indemnities arising from delicts and
quasi- delicts.

Administration of the Conjugal Partnership of Gains (Art.

124 FC)
General Rule: The administration and enjoyment of
the conjugal partnership shall belong to both
spouses jointly. In case of disagreement, the
decision of the husband shall prevail subject to
recourse to the court by the wife for proper
remedy.

Note: Prescriptive period for recourse is 5 years

from the date of the contract implementing such
decision.

Exceptions:
1. If one spouse is incapacitated or otherwise
unable to participate in the administration of
the common properties – capacitated or able
spouse may assume sole powers of
administration.
2. If a spouse without just cause abandons the
other or fails to comply with his or her
obligations to the family, the aggrieved
spouse may petition the court for sole
administration.
3. During the pendency of a legal separation
case, the court may designate either of the
spouse as sole administrator.

But administration does not include:

a. Disposition
b. Alienation; or
c. Encumbrance of the conjugal or community
property.

Dissolution of Conjugal Partnership of Gains

1. Death;
2. Legal Separation;
3. Annulment
4. Declaration of Nullity under Article 40;
5. Judicial separation of property during
marriage (Article 135-136, FC).

c. Separation of Property Regime – Family Code,

arts. 143-146

Effect of Separation in Fact Between Husband and Wife

General Rule: Such separation does not affect the
Exceptions: or civil, due or received during the marriage
1. Spouse who leaves the conjugal home from his or her separate property (Article 145,
or refuses to live therein, without just FC).
cause, has no right to be supported;
2. When consent of one spouse to any Liabilities of the spouses for family expenses under the
transaction of the other is required by regime of separation of property (Article 145, FC)
law, judicial authorization must be  Both spouses shall bear the family expenses in
obtained; proportion to their income.
3. If community property is insufficient,  In case of insufficiency or default thereof, in
the separate property of both spouses proportion to the current market value of their
shall be solidarily liable for the support separate properties.
of the family.
3. JUDICIAL SEPARATION OF PROPERTY – FAMILY
Complete Separation of Property (CSOP) CODE, ARTS. 134-142
The system of CSOP will govern the
property relations between the spouses
• In the absence of an express declaration in the
only in the following cases:
marriage settlements, the separation of
1. When it is expressly provided for in the
property between spouses during the
marriage settlement;
marriage shall not take place except by
2. When it is so decreed by the court (Legal
judicial order.
Separation,
• Such judicial separation of property may either
Judicial Sep of Property); be voluntary or for sufficient cause. (Art. 134,
3. Mandatory regime of complete separation FC).
of property -- By failure of the surviving
spouse to liquidate the absolute
Sufficient causes for Judicial Separation of Property (Art.
community or conjugal partnership of
135, FC)
gains of a previous marriage which has
(1) Spouse has been sentenced to a penalty
been terminated by death within the one-
which carries Civil interdiction;
year period required by law prior to
contracting another marriage. The (2) Spouse has been judicially declared an absentee;
subsequent marriage is mandatorily (3) Loss of parental authority of spouse as
governed by a regime of complete decreed by the court;
separation (Arts. 103 & 130, FC). (4) Abandonment or failure to comply with
family obligations;
(5) Administrator spouse has abused authority; and
Rights of the spouses under the regime of separation
(6) Separation in fact for one year and
of property
reconciliation is highly improbable.
1. Each spouse shall own, dispose of,
possess, administer and enjoy his or her
Note: In cases provided in 1, 2 and 3, the
own separate estate, without need of
presentation of the final judgment against the
the consent of the other.
guilty or absent spouse shall be enough bases for
2. Each spouse shall own all earnings from
the grant of the decree of judicial separation of
his or her profession, business or
property.
industry and all fruits, natural, industrial

34
Effects of Judicial Separation of Property Between
Revival of previous property regime
Spouses
1. The absolute community or conjugal • If the spouses opted for voluntary
partnership is dissolved; separation of property, the parties
2. The liability of the spouses to creditors may agree to the revival even in the
shall be solidary with their separate absence of a reason/ground.
properties; • However, a subsequent voluntary
3. Mutual obligation to support each other separation of property is no longer
continues, except when there is legal allowed. Voluntary separation of
separation;
4. Rights previously acquired by creditors property under Art. 136 may only be
are not prejudiced. availed of once.
• If the separation of property is for a
Voluntary Separation of Property (Art. 136 FC) sufficient cause, the revival of the
• The spouses will jointly file the petition in previous property regime depends
court for approval. upon the cessation of the ground
• In case of voluntary agreement for the which was the basis of the judicial
separation of property, the law does not
require specific reasons to justify the
order.
court in approving the same.
• The law leaves the matter to the A subsequent judicial separation of
discretion of the court. property for a sufficient cause may be
• It will take effect only once approved or allowed so long as there is a new
decreed by the court. ground to rely on.

4. PROPERTY REGIME OF UNIONS WITHOUT MARRIAGE – FAMILY CODE, ARTS. 147-148

BASIS ARTICLE 147 ARTICLE 148
With legal impediment caused
1. Parties without legal
by: Adulterous relationships;
impediment to marry;
Applicability Bigamous / polygamous
2. Void marriage on the marriages; Incestuous void
ground of marriages under Art. 37; Void
psychological incapacity. marriages by reason of public
policy (Art. 38, FC)
1. The man and the woman 1. The man and the woman must
must be be incapacitated to marry each
capacitated to marry each other; other; or they do not live
As to requisites exclusively with each other as
2. Lived exclusively with each
other as husband and wife; husband and wife; and
and 2. Their union is without the
3. Their union is without the benefit of marriage/void marriage.
benefit of marriage/void
marriage.
Separately owned by the parties.
As to Salary/Wages Owned in equal shares. If any is married, his/her salary
pertains to the ACP/ CPG of the
legitimate marriage.

Property exclusively Belongs to party upon proof Belongs to such party upon
acquired of acquisition through proof of acquisition through
exclusive funds exclusive funds.
Property acquired by
both through their Owned in common in proportion
Governed by rules on co-
work or industry to their respective contributions.
ownership.
during cohabitation

Actual joint contribution of

Efforts in the care and money, property or industry shall
Share maintenance of family and be owned by them in common
household are considered equal proportion. Contributions are
contribution presumed equal in the absence
of proof to the contrary.
(If BF) If one is validly married to
1. Common children another – share accrue to the
2. Default/waiver by any or all of ACP/CPG of existing in the
Forfeiture the common children or their marriage.
descendants, each vacant
 share to respective surviving
descendants If (BF) is not validly married to
3. Innocent party another or both in (BF) –
forfeited in the manner provided
in the last par. of Art. 147.

35
Sale, disposition, encumbrance (Art. 147, FC) family and household, is her consent to the sale a
Neither party can encumber or dispose by acts prerequisite to its validity?
inter vivos of his or her share in the property
acquired during cohabitation and owned in Yes, even if Dorothy was not working and did not
common, without the consent of the other, contribute money for the acquisition of the lot,
until after the termination of their her consent would still be necessary because
cohabitation. Any disposition, sale or under Article 147, a party who did not contribute
encumbrance without consent of the other is in the acquisition of the property acquired during
VOID. cohabitation shall still be deemed to have
contributed jointly in its acquisition if his or her
BAR QUESTION (2012)
efforts consisted in the care and maintenance of
In December 2000, Michael and Anna, after the family and household.
obtaining a
valid marriage license, went to the Office of
the Mayor of Urbano, Bulacan, to get married. L. RIGHTS AND OBLIGATIONS BETWEEN
The Mayor was not there, but the Mayor’s
secretary asked Michael and Anna and their HUSBAND AND WIFE
witnesses to fill up and sign the required (FAMILY CODE, ARTS. 68-73)
marriage contract forms. The secretary then *EXCLUDE: R.A. NO. 7192; R.A. NO. 8187;
told them to wait, and went out to look for the R.A. NO. 9710
Mayor who was attending a wedding in a Essential marital obligations (Art. 68, FC)
neighboring municipality. When the secretary (1) To live together,
caught up with the Mayor at the wedding (2) To observe mutual love, respect, and fidelity;
reception, she showed him the marriage and
contract forms and told him that the couple
(3) To render mutual help and support.
and their witnesses were waiting in his office.
The Mayor forthwith signed all the copies of
the marriage contract, gave them to the Family domicile (Art. 69, FC)
secretary who returned to the Mayor’s office. Husband and wife shall fix the family
She then gave copies of the marriage contract domicile. In case of disagreement, the court
to the parties, and told Michael and Anna that shall decide.
they were already married. Thereafter, the
couple lived together as husband and wife, and Court may exempt a spouse from living with the
had three sons. other
(C) What property regime governs the properties • If he/she should live abroad, or
acquired by the couple? Explain. • there are other valid and compelling
SUGGESTED ANSWER reasons for the exemption.
The marriage being void due to absence of However, such exemption shall not apply if
marriage
the same is not compatible with the solidarity
cerremony, the property relationship that
governed their union is special co-ownership
of the family.
under Article 147 of the Family Code. This is on
the assumption that there was no Mutual Support (Art. 70, FC)
impediment for them to validity marry each other. Spouses are jointly responsible for the
support of the family. Such support shall be
BAR QUESTION (2016)
Bernard and Dorothy lived together as common-law
satisfied in the following order:
spouses • First, from the community property or
although they are both capacitated to marry. conjugal property;
After one year of cohabitation, Dorothy went • Second, from the income or fruits of the
abroad to work in Dubai as a hair stylist and separate properties of the spouses
regularly sent money to Bernard. With the • Third, from the separate properties of the
money, Bernard bought a lot. For a good price, spouses.
Bernard sold the lot. Dorothy came to know about
the acquisition and sale of the lot and filed a suit
to nullify the sale because she did not give her Joint management of household (Art. 71, FC)
consent to the sale. The management of the household shall be
Will Dorothy’s suit prosper? the right and the duty of both spouses. The
SUGGESTED ANSWER expenses for such management shall be
Yes, Dorothy’s suit will prosper. Under Article paid in accordance with the provisions of
147, if the Article 70.
parties who are capacitated to marry each other
lived exclusively with each other as husband and
wife without the benefit of marriage or under a Remedy of an aggrieved spouse (Art. 72, FC)
void marriage, their wages and salaries shall be When one of the spouses neglects his or her
owned by them in equal shares and the property duties to the conjugal union or commits acts
acquired by both of them through their work or which tend to bring danger, dishonor or
industry shall be governed by the rules of co- injury to the other or to the family, the
ownership. Clearly, Dorothy and Bernard’s union aggrieved party may apply to the court for
is covered by Article 147 and neither party can relief.
encumber or dispose by acts inter vivos of his or
her share in the property acquired during
cohabitation and owned in common without the
Exercise of profession, occupation, business or
consent of activity (Art. 73, FC, as amended by RA 10572)
the other, until after the termination of the • General rule: Either spouse may exercise
cohabitation. any legitimate profession, occupation,
Suppose Dorothy was jobless and did not contribute business or activity without the consent
money to the acquisition of the lot and her efforts of the other.
consisted mainly in the care and maintenance of the • Exception: Non-consenting spouse may object
 on
valid, serious, and moral grounds.

In case of disagreement, the court shall decide

whether or not:
(1) The objection is proper; and
(2) Benefit has accrued to the family
prior to the objection or thereafter.
 If benefit accrued prior to a valid
objection – resulting obligations shall
be enforced against the community or
conjugal property.
 If benefit accrued thereafter –
resulting obligations shall be enforced
against the separate property of
spouse who has not obtained consent.

36
 • For purposes of availing of the benefits of a
family home, a person may constitute, or be the
beneficiary of, only one family home. (Art. 161,
FC)
‘Family’ - The family, being the foundation of the
nation, is a basic social institution which
public policy cherishes and protects.
Consequently, family relations are governed by
law and no custom, practice or agreement
destructive of the family shall be recognized or
given effect. (Art. 149, FC)

Family Relations include:

1. Between husband and wife;
2. Between parents and children;
3. Among other ascendants and descendants;
4. Among brothers and sisters, whether of
the full or half-blood (Art.150, FC)
 The law governs family relations.
 No custom, practice or agreement which is
destructive of the family shall be recognized
or given any effect.

Condition Precedent in suit between family members

(Art. 151, FC)
No suit between members of the same family
shall prosper unless it should appear from the
verified complaint or petition that earnest
efforts toward a compromise have been made,
but that the same have failed. If it is shown
that no such efforts were in fact made, the
same case must be dismissed.

Except: Cases which may not be the

subject of compromise under Art. 2035 NCC:
(1) The civil status of persons;
(2) The validity of a marriage or a legal
separation;
(3) Any ground for legal separation;
(4) Future support;
(5) The jurisdiction of courts;
(6) Future legitime.

FAMILY HOME
The family home, constituted jointly by the
husband and the wife or by an unmarried
head of a family, is the dwelling house where
they and their family reside, and the land on
which it is situated. (Art. 152 FC)

Establishment of Family Home

• The family home is deemed constituted
on a house and lot from the time it is
occupied as a family residence. From the
time of its constitution and so long as any
of its beneficiaries actually resides therein,
the family home continues to be such and
is exempt from execution, forced sale or
attachment except as hereinafter
provided and to the extent of the value
allowed by law. (Art. 153, FC)
• The family home must be part of the
properties of the absolute community or the
conjugal partnership, or of the exclusive
properties of either spouse with the
latter’s consent. It may also be
constituted by an unmarried head of a
family on his or her own property. (Art. 156,
FC)
• Nevertheless, property that is the subject
of a conditional sale on installments
where ownership is reserved by the vendor
only to guarantee payment of the purchase
price may be constituted as a family
home.
Note: A house built on a rented land execution.
cannot be made a family home because • The court shall so order if it finds that the
the house and the lot must be owned by actual value of the family home exceeds the
the person who constitutes it. It is in the maximum amount allowed by law as of the
nature of the family home to be time of its constitution. If the increased
permanent. If built on a rented land, actual value exceeds the maximum allowed
there is M.
noTHE
element ofFAMILY
FAMILY; permanence
HOME as in Article
the owner of the lot may evict the family 157 and results from subsequent voluntary
(FAMILY CODE, ARTS. 149-162)
when the lease period has terminated or improvements introduced by the person or
for possible non-payment of rentals. persons constituting the family home, by the
owner or owners of the property, or by any of
BAR QUESTION (2011) the beneficiaries, the same rule and
Spouses A and B leased a piece of land procedure shall apply.
belonging fo B's
parents for 25 years. The spouses built their
house on it worth P300,000.00. Subsequently, 37
in a case that C filed against A and B, the court
found the latter liable to C for P200, 000.
When the sheriff was attaching their house for
the satisfaction of the judgment, A and B
claimed that it was exempt from execution,
being a family home.
Is this claim correct?
SUGGESTED ANSWER
No. since the land does not belong to A and B.
if cannot
quality as a family home.
Beneficiaries of the Family Home
(1) The husband and wife, or an unmarried
person who is the head of a family; and
(2) Their parents,
(3) ascendants,
(4) Descendants
(5) brothers and sisters, whether the
relationship be legitimate or
illegitimate, who are living in the family
home and who depend upon the head
of the family for legal support. (Art. 154
FC)

Family Home is exempt from Execution, Forced Sale or

Attachment (Art. 155, FC)
Exceptions:
(1) For non-payment of taxes;
(2) For debts incurred prior to the constitution of
the family
home;
(3) For debts secured by mortgages on
the premises before or after such
constitution; and
(4) For debts due to laborers, mechanics,
architects, builders, materialmen and
others who have rendered service or
furnished material for the construction of
the building.

Value of Family Home that is Exempt (Art. 157, FC)

The actual value of the family home shall not
exceed, at the time of its constitution, the
amount of the three hundred thousand
pesos in urban areas, and two hundred
thousand pesos in rural areas, or such
amounts as may hereafter be fixed by
law.
• PHP 300,000 for URBAN AREAS.
• PHP 200,000 for RURAL AREAS

Remedy of Creditors (Art. 160, FC)

• When a creditor whose claims is not
among those mentioned in Article 155
obtains a judgment in his favor, and he
has reasonable grounds to believe that the
family home is actually worth more than
the maximum amount fixed in Article
157, he may apply to the court which
rendered the judgment for an order
directing the sale of the property under
• At the execution sale, no bid below the void under Art. 36; and
value allowed for a family home shall be b. Children of marriages which are declared void
considered. The proceeds shall be applied under Art. 53.
first to the amount mentioned in Article 157,
and then to the liabilities under the
judgment and the costs. The excess, if any,
shall be delivered to the judgment debtor.

Disposal of Family Home (Art. 158, FC)

The family home may be sold, alienated,
donated, assigned or encumbered by the
owner or owners thereof with the written
consent of the person constituting the same,
the latter’s spouse, and a majority of the
beneficiaries of legal age. In case of conflict,
the court shall decide.

Dissolution of Family Home; Prohibition on Partition

(Art. 159, FC)
The family home shall continue despite the
death of one or both spouses or of the
unmarried head of the family for a period of
ten years or for as long as there is a minor
beneficiary, and the heirs cannot partition the
same unless the court finds compelling
reasons therefor. This rule shall apply
regardless of whoever owns the property or
constituted the family home.

N. PATERNITY AND FILIATION

1. CONCEPTS OF PATERNITY, FILIATION AND

LEGITIMACY – FAMILY CODE, ART. 163

Paternity refers to the “civil status of a father in

relation to the child”

Filiation is the “relationship or tie which exists

between parents and their children.” Filiation
may be by nature or adoption. Natural filiation
may be legitimate or illegitimate. (Art. 163,
FC)

Legitimacy is the status of a child born to parents

who are legally married to each other.

2. LEGITIMATE AND ILLEGITIMATE CHILDREN –

FAMILY CODE, ARTS. 164-165 AND 167-169

Legitimate Children
• Children conceived or born during the
marriage of the parents are legitimate.
• Children conceived as a result of artificial
insemination of the wife with the sperm of
the husband or that of a donor or both are
likewise legitimate children of the husband
and his wife, provided, that both of them
authorized or ratified such insemination in a
written instrument executed and signed by
them before the birth of the child. The
instrument shall be recorded in the civil
registry together with the birth certificate of
the child. (Art. 164, FC)

Illegitimate Children
Children conceived and born outside a valid
marriage are illegitimate, unless otherwise
provided in this Code. (Art. 165, FC)

Exceptions: Born outside of a valid marriage

(void marriages) but considered as legitimate
child:
a. Children of marriages which are declared
Presumption of Legitimacy - The child shall be their brothers and sisters, in conformity with
considered legitimate although the mother the provisions of this Code on Support; and
may have declared against its legitimacy or 3. To be entitled to the legitimate and other
may have been sentenced as an adulteress. successional
(Art. 167, FC) rights granted to them by the Civil Code. (Art. 174
FC)
Presumptions in case mother contracted marriage
within 300days from termination of previous
marriage, in absence of proof to the contrary: (Art. 38
168, FC)
(1) A child born before 180 days after the
solemnization of the subsequent marriage
is considered to have been conceived
during the former marriage, provided it be
born within 300 days after the termination
of the former marriage;
(2) A child born after 180 days following the
celebration of the subsequent marriage is
considered to have been conceived during
such marriage, even though it be born
within the 300 days after the termination
of the former marriage.
• The legitimacy or illegitimacy of a child
born after three hundred days following
the termination of the marriage shall be
proved by whoever alleges such
legitimacy or illegitimacy. (Art. 169, FC)

a. Proof of Filiation – Family Code, arts. 172, 173

and 175

Proof of Filiation of Legitimate Children

PRIMARY PROOFS
(1) The record of birth appearing in the civil
register or a final judgment; or
(2) An admission of legitimate filiation in a
public document or a private handwritten
instrument and signed by the parent
concerned.

SECONDARY PROOFS
(1) The open and continuous possession of the
status of a legitimate child; or
(2) Any other means allowed by the Rules of
Court and special laws. (FC, Art. 172 [2])

When can the child bring an action to claim his status

as legitimate child?
The child can bring the action during his or her
lifetime. (FC, Art. 173) In other words, the
action does not prescribe as long as he lives.
Note: If the child dies during minority or in
state of insanity, the heirs may bring the
action for the child after the latter’s death. In
these cases, the heirs shall have a period of
five years within which to institute the action.
(FC, Art. 173)

Proof of illegitimate filiation of Illegitimate children

• The same way and on the same evidence as
legitimate
children.
• The action must be brought on the same
period specified in article 173, except when
the action is based on the 2nd paragraph of
Article 172 (secondary proofs of filiation), in
which case the action may be brought
during the lifetime of the alleged parent.

b. Rights of Legitimate Children – Family

Code, art. 174

1. To bear the surnames of the father and the

mother, in conformity with the provisions
of the Civil Code on Surnames;
2. To receive support from their parents,
their ascendants, and in proper cases,
c. Rights of Illegitimate Children – Family Code, action;
art. 176 as amended by R.A. No. 9255 (2) If he should die after the filing of the
complaint without having desisted therefrom; or
1. Use the surname and shall be under the (3) If the child was born after the death of the
parental authority of their mother; husband.
2. Entitled to support in conformity with this (Art. 177 FC)
Code.
3. The legitime of each illegitimate child shall
consists of one-half of the legitime of a
legitimate child. (Art. 176 FC)
RA 9255 - Illegitimate children may optionally use the
father’s surname provided that Filiation has been
recognized by the father through:
a. Record of birth appearing in the civil register;
b. Admission in public document; OR
c. Private handwritten instrument is made by
the father.
d. Action to Impugn Legitimacy – Family Code,
arts. 166 and 170- 171
Grounds to Impugn Legitimacy
1) That it was physically impossible for the
husband to have sexual intercourse with
his wife within the first
120 days of the 300 days which
immediately preceded the birth of the child
because of:
(a) the physical incapacity of the husband
to have sexual intercourse with his wife;
(b) the fact that the husband and wife were
living separately in such a way that
sexual intercourse was not possible; or
(c) serious illness of the husband, which
absolutely prevented sexual
intercourse;
2) That it is proved that for biological or other
scientific reasons, the child could not have
been that of the husband, except in the
instance provided in the second paragraph
of Article 164; or
3) That in case of children conceived through
artificial insemination, the written
authorization or ratification of either parent
was obtained through mistake, fraud,
violence, intimidation, or undue influence.

PRESCRIPTIVE PERIOD IN IMPUGNING LEGITIMACY

Art. 170. The action to impugn the legitimacy of
the child shall be brought within one year from
the knowledge of the birth or its recording in
the civil register, if the husband or, in a proper
case, any of his heirs, should reside in the city
or municipality where the birth took place or
was recorded.

If the husband or, in his default, all of his heirs

do not reside at the place of birth as defined in
the first paragraph or where it was recorded,
the period shall be two years if they should
reside in the Philippines; and three years if
abroad. If the birth of the child has been
concealed from or was unknown to the
husband or his heirs, the period shall be
counted from the discovery or knowledge of
the birth of the child or of the fact of
registration of said birth, whichever is earlier.

WHO MAY IMPUGN LEGITIMACY

General Rule: HUSBAND
Exception: Art. 171. The heirs of the husband
may impugn the filiation of the child within the
period prescribed in the preceding article only
in the following cases:
(1) If the husband should die before the
expiration of the period fixed for bringing his
 BAR QUESTION (2012)
The husband may impugn the legitimacy of his
child but
not on the ground that:
a) the wife is suspected of infidelity.
b) the husband had a serious illness that
prevented him from engaging in sexual
intercourse.
c) they were living apart.
d) he is physically incapable of sexual
intercourse.
SUGGESTED ANSWER
a)the wife is suspected of infidelity.
3. LEGITIMATED CHILDREN – FAMILY
CODE, ARTS. 177-182; R.A. NO. 9858
*EXCLUDE: A.M. NO. 06-11-5-SC
a. Rights of Legitimated Children – Family Code,
art. 179
b. Action to Impugn Legitimacy – Family
Code, art. 182

LEGITIMATED CHILDREN
Children conceived and born outside
of wedlock of parents without
impediment to marry at the time of
conception or were so disqualified
only because either or both of them
were below 18 years of age (FC, Art.
177, RA 9858)

Rights of Legitimated Children -

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

How Legitimation Takes Place -

Legitimation shall take place by a
subsequent valid marriage between
parents. The annulment of a voidable
marriage shall not affect the
legitimation. (Art. 178, FC)
• The effects of legitimation shall
retroact to the time of the child’s
birth (Art. 180, FC)
• The legitimation of children who
died before the celebration of the
marriage shall benefit their
descendants. (Art. 181, FC)

Action to Impugn Legitimation

Legitimation may be impugned only by
those who are prejudiced in their
rights, within five years from the time
their cause of action accrues. (Art. 182,
FC)

In addition to absence of requisites of

legitimation, apply by analogy the
grounds in impugning legitimacy in
Article 166, whenever applicable.
 BAR QUESTION (2009)
TRUE or FALSE. Answer TRUE if the
statement is true,
or FALSE if the statement is false.
Explain your answer in not more than two
(2) sentences. (5%)
xxx
[e] A dead child can be legitimated.
SUGGESTED ANSWER
TRUE. To be legitimated, the law does not
require a
child to be alive at the time of the marriage
of his/her parents (Article 177, FC).
Furthermore, Art. 181 of the Family Code
which states that “[Th]e legitimation of
children who died before the celebration of
marriage will benefit their descendants,”
does not preclude instances where such
legitimation will benefit no one but the
child’s ascendants, or other relatives.

39
 BAR QUESTION (2010)
ORDOÑA V. THE LOCAL CIVIL REGISTRAR OF PASIG
In 1997, B and G started living together without
G.R. NO. 215370, NOVEMBER 09, 2021
the benefit
En Banc
of marriage. The relationship produced one
offspring, Venus. The couple acquired a
The case involves a mother's petition to
residential lot in Parañaque. After four (4)
correct her child's birth certificate and
establish his true filiation. The petitioner is years or in 2001, G having completed her 4-
Richelle Busque Ordoña, who was married to year college degree as a fulltime student, she
Ariel O. Libut, but separated from him due to and B contracted marriage without a license.
his illicit relationship. The petitioner had an The marriage of B and G was, two years later,
intimate relationship with Allan D. Fulgueras, declared null and void due to the absence of a
which resulted in her pregnancy and the birth marriage license. Is Venus legitimate,
of a son named Alrich Paul Ordoña Fulgueras. illegitimate, or legitimated? Explain briefly.
The birth certificate of Alrich Paul reflected SUGGESTED ANSWER
Allan as father of the child, and Fulgueras as Venus is illegitimate. She was conceived and
surname. The petitioner claimed that Allan is born outside
not the biological father and sought to change a valid marriage. Thus, she is considered
the child's last name to her maiden name and illegitimate (Art 165, Family Code). The
delete the entries regarding the father's subsequent marriage of her parents did not
information in the birth certificate. result in legitimation because said marriage
was later on declared null and void due to
The RTC and CA denied the petition. The absence of a marriage license. Under Article
Supreme Court upheld the lower courts' 178 of the Family Code, "legitimation shall
decisions, stating that legitimacy and filiation take place by a subsequent valid marriage
cannot be collaterally attacked in a petition for between parents. The annulment of a voidable
correction of entries in the birth certificate. marriage shall not affect the legitimation." The
Article 164 of the Family Code provides that Article's application is limited to voidable
"children conceived or born during the
marriages. It follows that when the subsequent
marriage of the parties are legitimate." Here,
marriage is null or void, the legitimation must
petitioner admitted to being in a valid and
also be null and void.
subsisting marriage with Ariel when she
conceived and gave birth to Alrich Paul. Thus, BAR QUESTION (2010)
Alrich Paul is presumed to be a legitimate child Spouses B and G begot two offsprings. Albeit
of petitioner and Ariel. they had
serious personality differences, the spouses
As a result, there is now an absurd and continued to live under one roof. B begot a son
unremedied situation that Alrich Paul remains by another woman. G also begot a daughter by
to be illegitimate in the birth certificate and another man.
will use the surname of Allan while possessing, (A) If G gives the surname of B to her daughter by another
man, what can B do to protect their legitimate children's
at the same time, a legitimate status, one
interests? Explain.
that is conferred on him by law. SUGGESTED ANSWER
(A) B can impugn the status of G's daughter by
Giving clarity to Alrich Paul's situation is another man
attended by a scarcity of remedies. as his legitimate daughter on the ground that for
biological reason he could not have been the
First, the mother who was in a valid and father of the child, a fact that may be proven by
subsisting marriage at the time of conception the DNA test. Having been born during the
or giving birth to her child is prohibited under marriage between B and G, G's daughter by
Article 167 of the Family Code from impugning another man is presumed as the child of B under
the legitimacy of her child. The proscription Article 164 of the Family Code. In the same action
remains even if the mother is an estranged to impugn, B can pray for the correction of the
wife. status of the said child in her record of birth.
BAR QUESTION (2010)
Second, the child who was conceived or born
during a valid and existing marriage has no (B) If B acquiesces to the use of his surname by G's
right to impugn his own legitimacy under the daughter by another man, what is/are the
Family Code. He cannot choose his own consequence/s? Explain.
filiation. SUGGESTED ANSWER
(B) If B acquiesces and does not file the action
Third, it is only the father, or in exceptional to impugn
circumstances, his heirs, who may impugn the the legitimacy of the child within the
child's legitimacy on grounds provided under prescriptive period for doing so in Article 170
Article 166 of the Family Code within the of the Family Code, G's daughter by another
periods provided under Article 170 in relation man shall be conclusively presumed as the
to Article 171 of the Family Code. Upon the legitimate daughter of B by G.
expiration of the periods, the status conferred BAR QUESTION (2010)
by the presumption becomes fixed and can no X and Y are living together as husband and wife
longer be questioned. without the
benefit of a marriage. They begot a child Z who
The hands of the Court are tied as it may only married A. Z and A has a child named B. In
entertain the impugnation of a child's 1989, Z died. In 1990, X and Y got married. In
presumed legitimacy in a direct action filed by 1991, a son named ZZ of X and Y was born. When
the proper party and within the prescribed
period under the law. In light of these, the
Court finds the present case as an opportune
moment to highlight the absence of a remedy
in favor of a mother in establishing the true
filiation of her child. Ultimately, the Court's
observations are directed to the Legislature
inasmuch as the Court is careful not to tread
on the realm of judicial legislation.

40
 BAR QUESTION (2009)
Four children, namely: Alberto, Baldomero,
Caridad, and
Dioscoro, were born to the spouses Conrado
and Clarita de la Costa. The children’s birth
certificates were duly signed by Conrado,
showing them to be the couple’s legitimate
children. Later, one Edilberto de la Cruz
BAR QUESTION (2008) executed a notarial document acknowledging
Roderick and Faye were high school Alberto and Baldomero as his illegitimate children
sweethearts. When with Clarita. Edilberto died leaving substantial
Roderick was 18 and Faye, 16 years old, they properties. In the settlement of his estate,
started to live together as husband and wife Alberto and Baldomero intervened claiming
without the benefit of marriage. When Faye shares as the deceased’s illegitimate children.
reached 18 years of age, her parents forcibly The legitimate family of Edilberto opposed the
took her back and arranged for her marriage to claim. Are Alberto and Baldomero entitled to share
Brad. Although Faye lived with Brad after the in
marriage, Roderick continued to regularly visit the estate of Edilberto? Explain
Faye while Brad was away at work. During their SUGGESTED ANSWER
marriage, Faye gave birth to a baby girl, Laica. No, Alberto and Baldomero are not entitled to
When Faye was 25 years old, Brad discovered share in
her continued liason with Roderick and in one of Edilberto’s estate. They are not related at all to
their heated arguments, Faye shot Brad to Edilberto. They were born during the marriage
death. of Conrado and Clarita, hence, are considered
legitimate children of the said spouses. This
She lost no time in marrying her true love status is conferred on them at birth by law.
Roderick, without a marriage license, claiming Under Philippine law, a person cannot have
that they have been continuously cohabiting more than one natural filiation. The legitimate
for more than 5 years. filiation of a person can be changed only if the
(A) What is the filiation status of Laica? legitimate father will successfully impugn such
(B) Can Laica bring an action to impugn her own status status. In the problem, therefore, the filiation
on the ground that based on DNA results, Roderick of Alberto and Baldomero as the legitimate
is her biological father? children of Conrado cannot be changed by their
(C) Can Laica be legitimated by the marriage of her recognition by Edilberto as his illegitimate
biological parents? children. Before they can be conferred the
SUGGESTED ANSWER status of Edilberto’s illegitimate children,
(A) Laica is legitimate because children
Conrado must first impugn their legitimacy.
conceived or born Since Conrado has not initiated any action to
during the marriage of the parents are impugn their legitimacy, they continue to be
presumed to be legitimate (Art. 164, FC).
the legitimate children of Conrado. They
Laica is presumed the legitimate child of Brad
cannot be the illegitimate children of Edilberto
and Faye.
at the same time. Not being the illegitimate
(B) No. Laica cannot bring an action to impugn
children of Edilberto, they have no right to
her own status. In a case decided by the
Supreme Court it was ruled that impugning inherit from
him.
the legitimacy of the child is a strictly
personal
4. ADOPTED right of husband, except: (a) when
CHILDREN
the husband died before the expiration of
the period fixed for bringing the action; (b)
a. Domestic
if he should die after the filing of the Administrative Adoption and
complaint, without having desisted Alternative Child Care Act – R.A. No. 11642
therefrom, or (c) if the child was born after
the death of the husband. Laica's case does Domestic Administrative Adoption and Alternative Child
not fall under any of the exceptions. (Liyao Care Act (REPUBLIC ACT NO. 11642) took effect on
Jr. v. Tanhoti-Liyao, G.R. No. 138961, 07 January 28, 2022
AN ACT March 2002)
STRENGTHENING ALTERNATIVE CHILD CARE BY PROVIDING FOR AN ADMINISTRATIVE PROCESS
OF(C) No. Laica
DOMESTIC cannot be
ADOPTION, legitimated FOR
REORGANIZING by THE
the PURPOSE THE INTER-COUNTRY ADOPTION BOARD
(ICAB) INTO THEBAR NATIONAL AUTHORITY
QUESTION (2008) FOR CHILD CARE (NACC), AMENDING FOR THE PURPOSE
REPUBLIC ACT NO. 8043, REPUBLIC
Gianna was born to Andy and Aimee, who at ACT NO. 11222, AND REPUBLIC ACT NO. 10165, REPEALING
REPUBLIC
the time ACT NO. 8552, AND REPUBLIC ACT NO. 9523, AND APPROPRIATING FUNDS THEREFOR
Gianna's birth were not married to each other.
RA While
11642 repealed/
Andy was amended
singletheatfollowing:
the time, Aimee was
still in the process of securing a judicial • Repealed RA 8552 “Domestic Adoption Act”
declaration of nullity on her marriage to her ex- • Repealed RA 9523 “Act requiring DSWD certification
husband. Gianna's birth certificate, which was to
signed by both Andy and Aimee, registered the declare a child legally available for adoption”
status of Gianna as "legitimate", her surname • Amended RA 8043 “Inter-country Adoption Act”
carrying that of Andy's and that her parents • Amended RA 11222 “Rectification of Simulated
were married to each other. Assuming that Aimee Birth
is successful in declaring her former marriage void, Act”
and Andy and Aimee subsequently • Amended RA 10165 “Foster Care Act of 2012”
married each other, would Gianna be legitimated? • RA 11642 removes the judicial process for
SUGGESTED ANSWER adoption, as this would now be handled
No. Gianna cannot be legitimated by the administratively by the National Authority for
subsequent Child Care (NACC).
marriage of Andy and Aimee. Art. 177 of the • The Inter-Country Adoption Board (ICAB) will
FC provides that "only children conceived and be re- organized to a one-stop quasi-judicial
agency on alternative child care known as the
National Authority for Child Care (NACC),
attached to the Department of Social Welfare
and Development (DSWD).

41
• The NACC will exercise all powers and guardianship and clearance of financial
functions relating to alternative child care, accountabilities;
including declaring a child legally available 3. The foster parent with respect to the foster child;
for domestic administrative and inter- 4. Philippine government officials and employees
country adoption, foster care, kinship care, deployed or stationed abroad; Provided, That they
family- like care, or residential care. are able to bring the child with them; and,
• "All duties, functions, and responsibilities of
the ICAB, the DSWD, and those of other
government agencies relating to alternative
child care and adoption are hereby
transferred to the NACC,"
• "The best interest of the child shall be the
paramount consideration in the enactment
of alternative care, custody, and adoption
policies”
• Under RA 11642, The NACC is tasked to
ensure that petitions and other matters
involving alternative child care are “simple,
expeditious and inexpensive, and will
redound to the best interest of the child
involved.”

JURISDICTION OF NACC
• The NACC shall have the original and
exclusive jurisdiction over all matters
pertaining to alternative child care,
including declaring a child legally available
for adoption; domestic administrative
adoption; adult adoption; foster care under
RA No. 10165 (Foster Care Act of 2012);
adoptions under RA 11222 (Simulated Birth
Rectification Act); and, inter-country
adoption under RA 8043 (Inter-country
Adoption Act).
• The NACC shall also have the power to
impose penalties in case of any violation of
RA 11642. (Section 6, RA 11642)

ADOPTION
Refers to the socio-legal process of providing a
permanent facility to a child whose parents
had voluntarily given up their parental rights,
permanently transferring all rights and
responsibilities, along with filiation, making the
child a legitimate child of the adoptive parents;
Provided, That adult adoption shall also be
covered by benefits of this Act.

In the interest of clarity, adoption shall cease

to be part of alternative child care and
becomes parental care as soon as the process
is completed. (Section , RA 11642)

DOMESTIC ADOPTION
Refers to an administrative adoption proceeding
where the Order of Adoption is issued within the
Philippines and is undertaken between a
Filipino child and eligible adoptive parents.

WHO MAY ADOPT

1. Any Filipino citizen at least 25 years of age,
who is in possession of full civil capacity
and legal rights; has not been convicted of
any crime involving moral turpitude; is of
good moral character and can model the
same; is emotionally and psychologically
capable of caring for the children; at least
16 years older than the adoptee; and who
is in a position to support and care for the
adopted children in keeping with the means
of the family; Provided, That the requirement of
16-year difference between the age of the
adopted and the adoptee may be waived
when the adopter is the biological parent of
the adoptee, or is the spouse of the
adoptee’s parent;
2. The legal guardians with respect to their
ward after the termination of the
5. Foreign nationals who are permanent
or habitual residents of the Philippines WHO MAY BE ADOPTED
for at least 5 years possessing the 1. Any child who has been issued a Certificate
same qualifications as above stated Declaring the Child Legally Available for
for Filipino nationals prior to the filing Adoption (CDCLAA)
of the petition. Provided, That they 2. The legitimate child one spouse by the other
come from a country with diplomatic spouse;
relations with the Republic of the 3. An illegitimate child by a qualified adopter to
Philippines and that the laws of the improve status of legitimacy;
adopter’s country will acknowledge 4. A Filipino of legal age if, prior to the
the Certificate of Adoption as valid, adoption, said person has been consistently
acknowledge the child as a legal child considered and treated by the adopters as
of the adopters, and allow entry of their own child for a period of at least three
the child into such country as an (3) years;
adoptee; 5. A foster child;
Provided further, That the requirements 6. A child whose adoption has been previously
of 5-year residency may be waived for rescinded;
the following: 7. A child whose biological or adoptive parents
a. A former Filipino citizen, habitually have died. Provided, no proceedings shall be
residing in the Philippines, who initiated within 6 months from death of
seeks to adopt a relative within parents;
the 4th civil degree of 8. A relative of the adopter. (Section 22, RA 11642)
consanguinity or affinity;
b. One who seeks to adopt the Joint Adoption by Spouses:
legitimate child of the Filipino Spouses shall jointly adopt, EXCEPT:
spouse; a. If one spouse seeks to adopt the legitimate
c. One who is married to a Filipino child of the other; or
and seeks to adopt jointly with the b. If one spouse seeks to adopt own illegitimate
spouse a relative within the 4th child; Provided, That the other spouse has
degree of consanguinity or affinity signified consent thereto; or
of the Filipino spouse; c. If the spouses are legally separated from each other.
BAR QUESTION (2014)
Spouses Esteban and Maria decided to raise
their two (2) 42
nieces, Faith and Hope, both minors, as their own
children after the parents of the minors died in a
vehicular accident. Ten (10) years after, Esteban
died. Maria later on married her boss Daniel, a
British national who had been living in the
Philippines for two (2) years. With the permission
of Daniel, Maria filed a petition for the adoption of
Faith and Hope. She did not include Daniel as her
co-petitioner because for Maria, it was her former
husband Esteban who raised the kids. If you are
the judge, how will you resolve the petition?
SUGGESTED ANSWER
I will dismiss the petition for adoption. The rule is
that the
husband and wife must jointly adopt and there
are only three recognized exceptions to joint
adoption by the husband and wife: 1) if one
spouse seeks to adopt the legitimate child of the
other; 2) if one spouse seeks to adopt his or her
own illegitimate child; 3) if the spouses are
Consent Necessary to the Adoption have reciprocal rights of succession without
1. The adoptee, if 10 years of age or over distinction from legitimate filiations. However, if the
2. The biological parents of the child, if adoptees and their biological parents have left a
known, or the legal guardian or the proper will, the law on testamentary succession shall
government instrumentality which has govern. (Section 43)
legal custody of the child, except in case of
a Filipino of legal age if, prior to the
adoption, said person has been
consistently considered and treated as
their own child by the adopter for at least 3
years.
3. The legitimate or adopted children, 10 years
of age or over of the adopters, if any;
4. The illegitimate children, 10 years of age or
over, of the adopter if living with said
adopter or over whom the adopter
exercises parental authority and the
latter’s spouse, if any; and,
5. The spouse, if any, of the person adopting
or to be adopted. (Section 23)
BAR QUESTION (2010)
Spouses Rex and Lea bore two children now
aged 14 and
8. During the subsistence of their marriage,
Rex begot a child by another woman. He is
now 10 years of age.
On Lea’s discovery of Rex’s fathering a child by
another woman, she filed a petition for legal
separation which was granted. Rex now wants
to adopt his illegitimate child. Whose consent is
needed for Rex’s adoption of his
illegitimate child?
SUGGESTED ANSWER
The consent of the 14-year-old legitimate child,
of the 10-
year-old
RIGHTS OFillegitimate
AN ADOPTEDchild, and of the biological
(Effects of Adoption)
1. LEGITIMACY – the adoptee shall be considered
legitimate child of the adopter for all intents
and purposes and such is entitled to all the
rights and obligations provided by law to
legitimate children born to them without
discrimination of any kind. To this end, the
adoptee is entitled to love, guidance, and
support in keeping with the means of the
family.
• The legitimate filiation that is created
between the adopter and adoptee shall be
extended to the adopter’s parents,
adopter’s legitimate siblings, and legitimate
descendants.
• The adopter is also given the right to choose
the name by which the child is to be known,
consistent with the best interest of the
child. (Section 41)

2. PARENTAL AUTHORITY – upon the

issuance of the Order of Adoption, adoption
shall cease as an alternative care and
becomes parental care. Adoptive parents
shall now have full parental authority over
the child. Except in cases where the
biological parent is the spouse of the
adopter, all legal ties between the biological
parents and the adoptee shall be severed
and the same shall then be vested on the
adopters.
• In case spouses adopt jointly, or one spouse
adopts the legitimate child of the other,
joint parental authority shall be exercised
by the spouse. (Section 42)

3. SUCCESSION – In testate and intestate

succession, the adopters and the adoptee shall
Order of Adoption law.
• The Order of Adoption issued by the
NACC shall have the same effect as a WHO MAY BE ADOPTED
Decree of Adoption issued under the 1. Filipino children [Sec.3(a)];
Domestic Adoption Act of 1998 2. Below 15 years old [Sec. 3(b)]; and
• A motion for reconsideration may be 3. Who are legally free, meaning children who
filed within 15 calendar days from an have been voluntarily or involuntarily
order denying the petition to NACC, committed to the DSWD [Sec.3(f) and Sec
through the Executive Director. (8)].
• Judicial Recourse – Order of Adoption
may be appealed to the Court of
Appeals within 10 calendar days
from receipt, of from the denial of
43
motion for reconsideration. Rule 43
of the Rules of Court shall apply
suppletorily.

INSTANCES AND EFFECTS OF RESCISSION

Adoption may be rescinded only upon
petition of the
adoptee with the NACC on any of the following
grounds:
• Repeated physical or verbal
maltreatment by the adopter despite
having undergone counseling;
• Sexual abuse or violence;
• Abandonment and failure to comply
with parental obligations
• Adoption being for the best interest of
the child, shall not be subject to
rescission by the adopter. The adopter
may disinherit the adoptee for cause
under Art 919 of the Civil Code.

b. Inter-Country Adoption Act – R.A. No. 8043

Refers to the socio-legal process of

adopting a child by a foreign national or
a Filipino citizen habitually a resident
outside Philippine territory which
complies with the principles in the Hague
Convention of 1993.

WHEN ALLOWED?
Inter-Country Adoption as the Last Resort.
— Only when child cannot adopted in
the Philippines, and inter- country
adoption is in the best interest of the
child. (Sec 7, RA 8043)

WHO MAY ADOPT?

1. Any alien residing abroad;
2. Filipino Citizen residing abroad.

Qualifications of an adopter under R.A. 8043:

1. At least 27 years old;
2. At least 16 years older than the
adoptee (except: biological parent or
spouse of adoptee’s biological parent)
3. If married, spouse must jointly adopt;
4. Has not been convicted of crime
involving moral
turpitude;
5. Eligible to adopt under his/her national law;
6. Is in the position to provide proper
care and support and necessary
moral values and example;
7. Agrees to uphold the child’s rights
under UN Convention;
8. His/her country has diplomatic
relations with the Philippines;
9. Possesses all qualificationsand
none of
disqualifications under Philippine
c. Simulated Birth Rectification Act – R.A. No. It comprises everything indispensable for
11222 sustenance, dwelling, clothing, medical
attendance, education and transportation, in
- grants amnesty to those who simulated birth keeping with the financial capacity of the family
records in the Philippines, allowing for the including the education of the person entitled to
rectification of the child's status and filiation, be supported until he completes his education or
while imposing penalties for certain acts training for some profession, trade or vocation,
related to adoption. even beyond the age of majority.

Objectives of the Act:

• To grant amnesty and allow the rectification
of simulated birth records for the best
interest of the child.
• To fix the status and filiation of a child
whose birth was simulated, giving them the
benefits of adoption and ensuring their
rights.
• To exempt those who simulated birth
records from criminal, civil, and
administrative liability if they file a petition
for adoption within 10 years.
• To provide a simpler and less costly
administrative adoption proceeding for
children who have been living with the
person simulating their birth for at least 3
years.
• To educate and inform the public about
simulated births and encourage them to avail
of the benefits of the Act.

Rectification of Simulated Births

• Persons who simulated the birth of a child
prior to the Act's effectivity will not be
criminally, civilly, or administratively liable if
the simulation was for the best interest of
the child.
• The person or persons must file a petition
for adoption with an application for
rectification of the simulated birth record
within 10 years from the Act's effectivity.
• Adult adoptees are also entitled to the
benefits of the
Act.
• Administrative proceedings can be used for
the adoption and rectification of simulated
birth records if the child has been living with
the person for at least 3 years before the
Act's effectivity.

The grant of amnesty is subject to the following

conditions:
• that the simulation of birth was for the best
interest of the child, and the child has been
consistently considered and treated as the
grantee/s’ own; and
• that a petition for adoption with an
application for rectification of the simulated
birth shall be applied for within 10 years
from the date of effectivity of the law on
March 29, 2019.

Those who meet the above-stated conditions may

avail of administrative proceedings for the adoption
and rectification of the simulated birth record if the
following conditions are also present:
• that the child has been living with the
person/s qualified to avail of the amnesty for
at least three (3) years before March 29,
2019; and
• that a certificate declaring the child legally
available for adoption (CDCLAA) is issued by
the DSWD in favor of the child.

O. SUPPORT (FAMILY CODE, ARTS. 194-208)

SUPPORT
Transportation – includes expenses going to deducted from the share of the spouse.
and from school, or to from place of work.
(Article 194, FC). (2010 BAR) 3. Regime of Separation of property
both spouses shall bear the family expenses in
WHO ARE OBLIGED TO GIVE SUPPORT proportion to their income, in case of
(1) The spouses; insufficiency or default, the current market
(2) Legitimate ascendants and descendants; value of the exclusive property.
(3) Parents and their legitimate children and
the legitimate and illegitimate children of 4. Order of Support
the latter; Order of liability to give support
(4) Parents and their illegitimate children and Whenever two or more persons are obliged to
the legitimate and illegitimate children of give support, the liability shall devolve in the
the latter; following persons in the order herein provided:
(5) Legitimate brothers and sisters, whether of a. Spouse;
full or half- blood; and b. Descendants in the nearest degree;
(6) Brothers and sisters not legitimately c. Ascendants in the nearest degree;
related, whether of the full or half-blood, d. Brothers and sisters. (Art. 199, FC)
except only when the need for support of When the obligation falls upon two or more
the brother or sister, being of age, is due persons, the payment shall be divided between
to a cause imputable to the claimant’s them in proportion to the resources of each.
fault or negligence.
Order of Preference
SOURCE OF SUPPORT When two or more recipients at the same time
claim support from one and the same person
1. ACP/CPG legally obliged to give it, should the latter not
spouses and children. After nullity, have sufficient means to satisfy all claims, the
annulment, legal separation, separate order established in the preceding article (Art.
properties of the parties. 199 on Order of Liability) shall be followed,
unless the concurrent obligees should be the
2. Separate Property spouse and a child subject to parental authority,
ascendant, descendants, brothers and in which case the child shall be preferred. (Art.
sisters. Subsidiary ACP/CPG, but shall be 200, FC) BAR QUESTION (2011)
Illegitimate brothers and sisters, whether of full or
half-blood,
are bound to support each other, EXCEPT when:
(A) the brother or sister who needs support lives 44
in another place.
(B) such brothers and sisters are not
recognized by their father.
(C) the brother or sister in need stops
schooling without valid reason.
(D) the need for support of a brother or sister,
already of age,
is due to the latter's fault.
SUGGESTED ANSWER
(D) the need for support of a brother or sister,
 age, unless unfit or disqualified.
Whenever the appointment of a judicial guardian
over the property of the child becomes necessary,
the same order of preference shall be observed.

PARENTAL AUTHORITY
• It is the natural right and duty of parents
over the person and property of their
unemancipated children, parental authority
and responsibility shall include the caring
for and rearing them for civic consciousness
and efficiency and the development of their
moral, mental and physical character and
well-being (Article 209, FC).
• Parental authority and responsibility may
not be renounced or transferred except in
the cases authorized by law. (Article 210,
FC).

Joint Exercise of Parental Authority

• Father and mother shall jointly exercise
parental authority
• In case of disagreement:
• General Rule: Father’s decision prevails
• XPN: unless there is a judicial order to the
contrary (Article 211, FC)
• Absence/death of either parent –
present/surviving parent shall exercise
parental authority. Remarriage will not
affect parental authority unless the court
appoints another person to be the guardian
of the person or property of the children.
(Article 212, FC)

Separation of Parents
• Parent designated by the court
• “Tender age presumption” - If child under 7
years old, the mother shall exercise
parental authority unless there is
compelling reason to separate child from
the mother
• Maternal preference rule – based on
universally recognized rule that the mother
is the natural custodian of her young.
• Child over 7, consider child’s choice, unless
the parent chosen is unfit.
• Only the exercise of parental authority is
given when custody is awarded; other
spouse still retains parental authority, which
may be exercised through visitorial rights.

Death, Absence, Unsuitability of Both Parents

Art. 214. In case of death, absence or
unsuitability of the parents, substitute parental
authority shall be exercised by the surviving
grandparent.
• In case several survive, the one designated
by the court, taking into account the same
consideration mentioned in the preceding
article, shall exercise the authority

SUBSTITUTE PARENTAL AUTHORITY

Art. 216. In default of parents or a judicially
appointed guardian, the following person shall
exercise substitute parental authority over the
child in the order indicated:
(1) The surviving grandparent, as provided in
Art. 214;
(2) The oldest brother or sister, over twenty-
one years of age, unless unfit or
disqualified; and
(3) The child's actual custodian, over twenty-
one years of
SPECIAL PARENTAL AUTHORITY
P. PARENTAL AUTHORITY property or the annual income of the child
 The school, its administrators and exceeds P50,000, the parent concerned
(FAMILY CODE, ARTS. 209-233)
teachers, or the individual, entity or shall be required to furnish a bond in such
*EXCLUDE:
institution A.M. NO. in
engaged 03-02-05-SC;
child care A.M.
shall amount as the court may determine, but not
NO.
have03-04-04-SC; R.A. NO.
special parental 8972, ASand
authority less than ten per centum (10%) of the value
responsibility over the minor child
AMENDED; of the property or annual income, to
while under their supervision, guarantee the performance of the
R.A. or
instruction NO. 8980; R.A. NO. 9231
custody. obligations prescribed for general
 Authority and responsibility shall apply guardians.
to all authorized activities whether
inside or outside the premises of the
school, entity or institution.
 The parents, judicial guardians or the 45
persons exercising substitute parental
authority over said minor shall be
subsidiarily liable.
 Defense: exercised the proper diligence
required under the particular
circumstances. (Articles 218 and 219,
FC)
 Articles 218 and 219 refer to minor.

Art. 2180, NCC - Teacher or heads of

establishments of arts and trades shall
be liable for damages caused by their
pupils and students or apprentices so
long as they remain in their custody.

EFFECTS OF PARENTAL AUTHORITY

Rights and duties of parents/those
with parental authority:
a. To keep them in their company,
educate & provide for their upbringing
b. To give them love, affection, advice,
companionship & understanding;
c. Provide them with moral & spiritual guidance;
d. To enhance, protect & preserve
their physical & mental health;
e. To furnish them with good educational
materials;
f. To represent them in all matters
affecting their interests;
g. To demand from them respect and obedience;
h. To impose discipline on them as may
be required under circumstances;
i. To perform such other duties as
imposed by law upon parents &
guardians.

Vicarious Liability or Doctrine of Imputed Negligence

 Parents and other persons exercising
parental authority shall be civilly liable
for the injuries and damages caused
by acts or omissions of their
unemancipated children living in their
company and under their parental
authority subject to appropriate
defenses provided by law.
 Defense: show exercised the due
diligence of a good father of a family.
 Liability is due to failure to supervise in
order to
prevent them from causing damage or injury.

Parental Authority Upon the property of the child

(Art. 225, FC)
• The father and the mother shall jointly
exercise legal guardianship over the
property of the unemancipated
common child without the necessity of
a court appointment. In case of
disagreement, the father’s decision
shall prevail, unless there is a judicial
order to the contrary.
• Where the market value of the
• A verified petition for approval of the bond BAR QUESTION (2006)
shall be filed in the proper court of the place Under Article 213 of the Family Code, no child
under 7
where the child resides, or, if the child
years of age shall be separated from the
resides in a foreign country, in the proper
mother unless the court finds compelling
court of the place where the property or any reasons to order otherwise.
part thereof is situated. (1) Explain the rationale of this provision.
(2) Give at least 3 examples of “compelling
Ownership and use of Child’s property reasons” which justify the taking away from
• The property of the unemancipated child the mother’s custody of her child under 7
earned or acquired with his work or years of age.
industry or by onerous or gratuitous title SUGGESTED ANSWER
shall belong to the child in ownership and (1) The rationale of the 2nd paragraph of Article
shall be devoted exclusively to the latter’s 213 of the
support and education, unless the title or Family Code is to ensure that a child below
transfer provides otherwise. 7 years old shall not be separated from his
• The right of the parents over the fruits mother due to his basic need for her loving
and income of the child’s property shall care, because the maternal affection and
be limited primarily to the child’s support care during the early years of the child are
and secondarily to the collective daily generally needed by the child more than
needs of the family. (Art. 226, FC) paternal care (Hontiveros v. IAC, G.R. No.
64982, October 23, 1984; Espiritu v. C.A.,
Termination of Parental Authority G.R. No. 115640, March 15,1995).
(2) Three examples of compelling reasons are:
PERMANENT termination of Parental
authority: (Art. 228, FC) a. The mother is insane;
b. The mother is sick with a disease that is
(1) Upon the death of the parents;
communicable and might endanger the
(2) Upon the death of the child; or health and life of the child; and,
(3) Upon emancipation of the child c. The mother has been maltreating the child;
(4) If the person exercising parental
BAR QUESTION (2003)
authority has subjected the child or
If during class hours, while the teacher was
allowed him to be subjected to sexual chatting with
abuse, such person shall be permanently other teachers in the school corridor, a 7 year
deprived by the court of such authority. old male pupil stabs the eye of another boy
(Art. 232, FC) with a ball pen during a fight, causing
permanent blindness to the victim, who could
Termination of Parental Authority, unless be liable for damages for the boy’s injury: the
subsequently revived: (Art. 229, FC) teacher, the school authorities, or the guilty
Unless subsequently revived by a final boy’s parents? Explain.
judgment, parental authority also SUGGESTED ANSWER
terminates: The school, its administrators, and teachers
(1) Upon adoption of the child; have special
(2) Upon appointment of a general guardian; parental authority and responsibility over the
(3) Upon judicial declaration of minor child while under their supervision,
abandonment of the child in a case filed instruction or custody (Article 218, FC). They
for the purpose; are principally and solidarily liable for the
(4) Upon final judgment of a competent court damages caused by the acts or omissions of
divesting the party concerned of parental the unemancipated minor unless they
authority; or exercised the proper diligence required under
the circumstances (Article 219, FC). In the
(5) Upon judicial declaration of absence or
problem, the teacher and the school
incapacity of the person exercising
authorities are liable for the blindness of the
parental authority. victim, because the student who caused it was
under their special parental authority and they
Suspension of Parental Authority were negligent. They were negligent because
1. Conviction of the parent or the person they were chatting in the corridor during the
exercising the same of a crime which class period when the stabbing incident
carries with it the penalty of civil occurred. The incident could have been
interdiction. The authority is prevented had the teacher been inside the
automatically reinstated upon service of classroom at that time. The guilty boy’s
the penalty or upon pardon or amnesty of parents are subsidiarily liable under Article
the offender. (Art. 230, FC) 219 of
2. The court in an action filed for the the Family Code.
purpose in a related case may also BAR QUESTION (2003)
suspend parental authority if the parent Distinguish briefly but clearly between:
or the person exercising the same: Substitute
(a) Treats the child with excessive parental authority and special parental
harshness or cruelty; authority.
(b) Gives the child corrupting orders, SUGGESTED ANSWER
counsel or example; In substitute parental authority, the parents
(c) Compels the child to beg; or
(d) Subjects the child or allows him
to be subjected to acts of
lasciviousness.
Note: The grounds enumerated above are
deemed to include cases which have
resulted from culpable negligence of the
parent or the person exercising parental
authority.

46
 IV. PROPERTY, OWNERSHIP, AND
ITS MODIFICATION
A. Classification of Property of all kinds adhered to the soil;
B. Ownership (Civil Code, arts. 427-439) (8) Mines, quarries, and slag dumps, while the
C. Right of Accession; Movables and matter thereof forms part of the bed, and
Immovable (Civil Code, arts. 440-475) waters either running or stagnant;
D. Quieting of Title (Civil Code, arts. 476-481)
E. Co-Ownership (Civil Code, arts. 484-501);
Condominium Act (R.A. No. 4726, as
amended)

PROPERTY
• All things which are or may be the object
of appropriation. (Art. 414,NCC)
• It is an object or a right which is
appropriated or susceptible of
appropriation by man, with capacity to
satisfy human wants and needs.

PROPERTY vs. THING

• Concept of THING is broader than the
concept of PROPERTY.
• PROPERTY refers only to those which are
or may be the object of appropriation.
• THING refers to all objects, including
those which are not or may not be
appropriated.
• THING is the genus while PROPERTY is the
species.
• Civil Code uses the terms interchangeably.

What are the requisites for a thing to be considered

as a property?
1. Utility – Capacity to satisfy human wants.
2. Substantivity / Individuality – It has a
separate and autonomous existence. It
can exist by itself and not merely as a
part of a whole.
3. Appropriability – Susceptibility
to
ownership/possession, even if not yet
actually appropriated.
BAR QUESTION
TRUE OR FALSE:
All rights are considered as property
SUGGESTED ANSWER
FALSE. Not all rights are considered property.
Strictly speaking, property is an economic
concept which
pertains to all things useful to human
activity. There are however, rights belonging
to an individual which while protected by
law, are not considered property like the
right to life, liberty and the pursuit of
happiness.

A. CLASSIFICATION OF PROPERTY

1. IMMOVABLES AND MOVABLES – CIVIL CODE,

ARTS. 414-418

Categories of immovables under Article 415:

1. By Nature (1&8)
Those that cannot be moved from place to
place.
(1) Land, buildings, roads and constructions
F. Possession (Civil Code, arts. 523-561) use, exploitation or perfection of such
G. Actions to Recover Ownership immovable.
(4) Statues, reliefs, paintings or other objects for
and Possession of Real use or ornamentation, placed in buildings or
Property on lands by the owner of the immovable in
H. Easements; Easement of Right of Way such a manner that it reveals the intention to
(Civil Code, arts. 613-619 and 649-657) attach them permanently to the tenements;
(5) Machinery, receptacles, instruments or
I. Nuisance (Civil Code, arts. 694-707) implements intended by the owner of the
tenement for an industry or works which may
be carried on in a building or on a piece of
land, and which tend directly to meet the
2. By Incorporation (2, 3 & 7) needs of the said industry or works;
Those which are attached to an immovable in (6) Animal houses, pigeon-houses, beehives, fish
such a manner as to form an integral part ponds or breeding places of similar nature, in
thereof. case their owner has placed them or preserves
(2) Trees, plants, and growing fruits, while they them with the intention to have them
are attached to the land or form an integral permanently attached to the land, and forming
part of an immovable; a permanent part of it; the animals in these
(3) Everything attached to an immovable in a places are included;
fixed manner, in such a way that it cannot
be separated therefrom without breaking 4. By Analogy (10)
the material or deterioration of the object; Those which are considered immovables by
(7) Fertilizer actually used on a piece of land; operation of law (contracts for public works and
servitudes and other real rights over immovable
3. By Destination (4, 5, 6, & 9) property)
Those which are placed in an immovable for (10) Contracts for public works, and servitudes and
other real rights over immovable property.
BAR QUESTION (2019)
Mr. E leased a piece of land from Mr. F to be
used for his
sawmill business for a period of ten (10) years.
Consequently,
47
Mr. E placed heavy machineries thereon to be
used for his
aforementioned business, with the intention of
removing
them after the expiration of the lease period. Are Mr.
E's heavy
machineries considered real properties under the
Civil Code?
Explain.
SUGGESTED ANSWER
No, the machineries placed by Mr. E shall not be
considered
real properties under the Civil Code. For
machineries to be
considered as real properties, they must have
been placed by
the owner of the tenements and intended to be
Tests to determine whether a property is a movable As a rule, a painting is movable because
property under art 416. it can be
1. Test of Exclusion - It is everything that is not transported from one place to another
included in Art. 415, without causing damage to the thing. Under
2. By reason of a Special law - It is movable the Civil Code, a painting can be immobilized
based on special law
by destination if it is placed by the owner of
3. Test of Mobility - The property is capable of
being carried from place to place without
the tenement in a building with the intention of
injuring the real property to which it may in permanently attaching it thereto.
the meantime be attached QUESTION and ANSWER
1) Those movables susceptible of BRIEFLY EXPLAIN IF THE FOLLOWING PROPERTIES
appropriation which are not included in ARE MOVABLES OR IMMOVABLES:
the preceding article (Art 415);
2) Real property which by any special
1. Trees and plants attached to the soil
provision of law is considered as
Answer: By express provision of law, trees
personal property
and plants adhered to soil are immovable
3) Forces of nature which are brought
property.
under control
by science
4) In general, all things which can be 2. Vegetables in a hydroponics garden made of
transported from place to place without plastic bottles filled with water.
impairment of the real property to Answer: These are movables as they can be
which they are fixed. moved from one place to another.

Important Doctrines: 3. Steel pipe system used in transporting

• A Building is an immovable even if not erected petroleum products.
by the owner of the land. The only criterion is Answer: Based on jurisprudence, steel pipe
union or incorporation with the soil. system is considered immovable by
• Parties to a contract may by agreement incorporation, because they are attached to
treat as personal properties that which by the land in such a way that it cannot be
nature would be real property; and it is a separated therefrom without dismantling
familiar phenomenon to see things the steel pipes which were welded to form
classified as real property for purposes of the pipeline.
taxation which on general principle might
be considered personal property.
4. Machineries used in a Bus terminal by a Bus
• The human body, whether alive or dead, is
Company for maintenance of buses
neither real nor personal property, for it is
not even property at all, in that it generally Answer: Movables, since they are not
cannot be appropriated. Under certain principally used for the industry carried out
conditions, the body of a person or parts in a building or on a piece of land.
thereof may be subject matter of a
transaction. (See RA No. 349, RA No. 7170, 5. Fertilizer for use on a piece of land.
RA No. 7719). Answer: Movables. They will become
immovables if
A building which would be immediately already placed on the soil.
demolished may be considered personal
property, for the true object of the contract 2. PUBLIC DOMINION; PATRIMONIAL; PRIVATE –
would be the materials. CIVIL CODE, ARTS. 419-425
QUESTION
Anna and Hans entered into a contract of Property of Public Dominion (Art. 420)
lease for the 1. Those intended for public use (generally
use of the lot owned by Hans. Anna open for use by the public
thereafter constructed a building on the indiscriminately) such as roads, canals,
property. She placed inside the building rivers, torrents, port and bridges
machineries principally used for her wine constructed by the State, banks, shores,
business. In the contract, Anna agreed to roadsteads, and others of similar
turn over to Hans all the buildings and character;
improvements upon the expiration of the 2. Those which are not for public use but
lease, except for the machineries. Are intended for
machineries movable or immovable public service
properties? Explain. 3. Those intended for the development of
SUGGESTED ANSWER the national wealth
The machineries are movables. They
were not Characteristics:
immobilized by destination because only the 1. Outside the commerce of man
lessee placed them into the building, and not 2. Inalienable
the owner of the real property. 3. Cannot be acquired by prescription
QUESTION 4. Not subject to attachment or execution
Mark owns a painting. He wants to know if a 5. Cannot be burdened with easements.
painting
may be categorized as an immovable Patrimonial Property of the State
property under the Civil Code. Explain • Property of the State owned by it in its
SUGGESTED ANSWER private or proprietary capacity. The State
 has the same rights over this kind of
property as a private individual in
relation to his own private property.
• Patrimonial by nature - All other property
of the State, which is not public
dominion in Art. 420, is patrimonial
property. (Art. 421)
• Converted Patrimonial - Property of public
dominion, when no longer intended for
public use or for public service, shall
form part of the patrimonial property of
the State (Art. 422)

48
REPUBLIC V. PASIG RIZAL CO., INC. use and to the fruits have been denied; Full
G.R. NO. 213207, FEBRUARY 15, 2022 ownership – Usufruct
En Banc 3. Sole ownership. It is where the ownership is
• While lands of the public domain under the vested in only one person;
Constitution pertain to all lands owned or held by 4. Co-ownership. It is where the ownership is vested
the State both in its public and private in 2 or more persons. There is the unity of the
capacity, lands forming part of the public property, and plurality of the subjects.
dominion under the Civil Code pertain only
to those which are intended for public use,
public service, or the development of
national wealth, and excludes patrimonial
property.
• Therefore, property of public dominion and
patrimonial property, as defined by the Civil
Code, both fall within the scope of public
domain contemplated under the 1987
Constitution. Excepted from the scope of
public domain are lands subject of a claim of
ownership based on native title as explicitly
recognized in Cariño v. Insular Government.
• The proper interpretation of Article 422 in
relation to Articles 420 and 421 is that
"converted" patrimonial property can only
come from property of public dominion under
Article 420. Hence, "converted" patrimonial
property should not be understood as a subset
of patrimonial property "by nature" under
Article 421.
• In effect, the classification of agricultural
land as alienable and disposable serves as
unequivocal proof of the withdrawal by the
State of the said land from the public
dominion, and its "conversion" to
patrimonial property.
• The clear intention of such conversion is to
open the land to private acquisition or
ownership. Again, as keenly observed by
Justice Gaerlan, such converted patrimonial
property remains within the broader
constitutional concept of public domain
precisely as alienable and disposable land of
the public domain.
• Clearly, any specific property of the State
may either be outside or within the
commerce of man; it cannot be both.
• Prior to the classification of such property to
alienable and disposable, agricultural lands
(being property of public dominion) are
beyond the commerce of man.
• It is the classification of agricultural lands as
alienable and disposable which places them
within the commerce of man, and renders
them capable of being the subject matter of
contracts (such as a patent, the latter being
a contract between the State and the
grantee). In turn, the power to classify (and
re-classify) land is vested solely in the
Executive Department.
• Once a parcel of land forming part of public
dominion is classified as alienable and
disposable, they become subject to private
acquisition but only through the prescribed
modes of acquisition of ownership.

Private Property - Property of private ownership,

besides the patrimonial property of the State,
provinces, cities, and municipalities, consists
of all property belonging to private persons,
either individually or collectively. (Art. 425)

B. OWNERSHIP (CIVIL CODE, ARTS. 427-439)

Kinds of Ownership
1. Full ownership. This includes all the rights of an
owner; Naked ownership + Usufruct
2. Naked ownership. It is where the rights to the
Attributes of Ownership owner may enclose or fence his land or
1. Right to enjoy (jus utendi) tenements by means of walls, ditches, live
2. Right to the fruits (jus fruendi) or dead hedges, or by any other means
3. Right to abuse (jus abutendi) without detriment to servitudes constituted
4. Right to dispose (jus dispodendi) thereon. (Art. 430)
5. Right to recover (jus vindicandi) b. to repel intrusions even with force (Art. 429)
6. Right to accessories (jus accessiones)
7. Right to possess (jus possidendi) Principle of Self-Help, Art. 429, NCC
This principle authorizes an owner or lawful
Right to Enjoy: possessor of a property to use reasonable
a. to possess (jus possidendi) counterforce to prevent or stop another person
from taking the former’s property. There must
b. to use (jus utendi)
be no delay in the pursuit, otherwise, his
c. to the fruits (jus fruendi) and
recourse will be to go to the court for the
accessories (jus accessiones)
recovery of property.
d. to abuse (jus abutendi)
- Actual possession under claim of
ownership raises a disputable Requisites:
presumption of ownership. The true 1. The force must be employed by the owner or
owner must resort to judicial process for lawful
the recovery of the property. (Art. 433) possessor;
2. There must be an actual or threatened
Right to Dispose: physical invasion or usurpation of
a. to destroy property;
b. to alienate 3. The invasion or usurpation must be unlawful; and
4. The force employed must be reasonably
c. to transform
necessary to repel the invasion or
d. to encumber
usurpation.
Right to Vindicate:
State of Necessity (Art. 432)
a. to recover
• The owner of a thing has no right to prohibit
In an action to recover, the property must interference of another with the same if,
be identified, and the plaintiff must rely on
• The interference is necessary to avert an
the strength of his title and not on the
imminent danger, and
weakness of the defendant’s claim. (Art.
• The threatened damage, compared to the
434)
damage arising to the owner from the
interference, is much greater.
Right to Exclude: • The owner may demand compensation from
a. to enclose, fence and delimit - Every the person benefited for the damage to him.

49
Surface Rights (Art. 437) Code). The act of Francisco and his men
The owner of a parcel of land is the owner of constitute an abuse of rights because even if
its surface and of everything under it, and he he has the right to recover possession of his
can construct thereon any works or make any property, he must act with justice and give the
plantations and excavations which he may lessees their day in court and observe honesty
deem proper, without detriment to servitudes and good faith. (Article 19, Civil Code). Owner
and subject to special laws and ordinances. He must resort to
cannot complain of the reasonable legal process to recover possession.
requirements of aerial navigation.
Limitations upon the Right of Ownership
1. General limitation imposed by the State in the
exercise of its inherent powers – Police power,
Taxation, Eminent domain
• Eminent Domain - No person shall be
deprived of his property except by
competent authority and for public use
and always upon payment of just
compensation. Should this requirement
be not first complied with, the courts
shall protect and, in a proper case,
restore the owner in his possession.
(Art. 435)
• Police Power - When any property is
condemned or seized by competent
authority in the interest of health, safety
or security, the owner thereof shall not
be entitled to compensation, unless he
can show that such condemnation or
seizure is unjustified. (Art. 436)
2. Limitations imposed by specific provisions of the
law - legal easement, zoning regulations,
building code, rent control, urban and
agrarian reform, subdivision regulations,
escheat.
• The owner of a thing cannot make use
thereof in such manner as to injure the
rights of a third person. (Art. 431)
3. Limitations imposed by the transferor of the
property – donation, usufruct, no partition
4. Limitations imposed by the owner himself -
voluntary servitudes, mortgages, pledges,
lease and deed of restrictions.
5. Limitations inherent in the property – co-
ownership
BAR QUESTION (2014)
Spouses Magtanggol manages and operated a
gasoline
station on a 1,000 sq.m. lot which they leased
from Francisco Bigla-awa. The contract was for
a period of three
(3) years. When the contract expired,
Francisco asked the Spouses to peacefully
vacate the premises. The Spouses ignored the
demand and continued with the operation of
the gasoline station.
One month after, Francisco, with the aid of a
group of armed men, caused the closure of the
gasoline station by constructing fences around
it.
Was the act of Francisco and his men lawful? Why?
(4%)
SUGGESTED ANSWER
No, the act of Francisco was not lawful. Even if
the lessee’s
right to occupy the premises has expired, the
lessor cannot physically oust the lessee from
the leased premises if the latter refuses to
vacate. The lessor must go through the proper
channels by filing an appropriate case for
unlawful detainer or recovery of possession.
Every person has a right to be respected in his
possession and should he be disturbed therein,
he shall be protected in or restored to said
possession by the means established by the
laws and the Rules of Court (Article 539, Civil
 BAR QUESTION (2014) other similar income
Can a property owner demand just
compensation from EXCEPTIONS: If the thing is:
the government for damages suffered in a. in possession of a possessor in good faith;
the State’s b. subject to a usufruct;
exercise of: c. leased; or
A. Police power? Explain. d. in possession of an antichretic creditor
B. Power of eminent domain? Explain.
SUGGESTED ANSWER
A. For damages suffered by the owner 50
resulting from the
State’s exercise of police power, the owner
cannot recover compensation because the
power is exercised for the promotion of the
general welfare.
B. For damages suffered by the owner
resulting from the State’s exercise of
eminent domain, the owner has the
constitutional right to ask for
compensation. This is consistent with the
constitutional provision that no property
may be taken by the State for public use
without payment of just compensation.
HIDDEN TREASURE (Arts. 438-439)
It is any hidden and unknown deposit of
money, jewelry or other precious objects,
the lawful ownership of which does not
appear (Art. 439)

Ownership of hidden treasure

GR: If the finder is the owner of the land,
building, or other property where it is
found, the entire hidden treasure belongs
to him.
EXCEPTION: If the finder is not the owner or
is a stranger who is not a trespasser
(includes the lessee or usufructuary), he is
entitled to ½ thereof (Art 566, NCC).
- If found to be of interest found be of
interest to science or the arts, the State
may acquire them at their just price, which
shall be divided in conformity with the
above-stated rule

Requisites for a Finder to be entitled to a share in

hidden treasure:
1. Discovery was made on the property of
Another, or of
the State or any of its political subdivisions;
2. Made by Chance - The finder had no
intention to search for the treasure;
There is no agreement between the
owner of the property and the finder for
the search of the treasure.
3. He is not a Trespasser or Agent of the
landowner (Art. 438(2), NCC).
C. RIGHTRight
OF of
ACCESSION; MOVABLES
Accession - the AND to the
right pertaining
IMMOVABLE
owner(CIVIL CODE,over
of a thing ARTS. 440-475) which is
everything
produced thereby (accession discreta), or
which is incorporated or attached thereto
(accession continua), either naturally or
artificially (Art. 440, NCC).

Accession Discreta (produced by the property)

To the owner belong the Natural, Industrial and
Civil fruits
• Natural Fruits – spontaneous product of the soil
and
young and other products of animals
• Industrial Fruits – produced by lands of any
kind through cultivation or labor
• Civil Fruits – rent of buildings, price of
leases of land and other property and
amount of perpetual or life annuities or
Rules regarding intrusions or extensions of branches 1. ACCESSION INDUSTRIAL
and roots Accession brought about by human industry and
1. Branches — adjacent owner has the may take the form of building, planting or sowing.
right to demand that they be cut off.
2. Roots — he may cut them off himself

Art. 680. If the branches of any tree should

extend over a neighboring estate, tenement,
garden or yard, the owner of the latter shall
have the right to demand that they be cut off
insofar as they may spread over his property,
and, if it be the roots of a neighboring tree
which should penetrate into the land of
another, the latter may cut them off himself
within his property.

Rules as to Fruits
• If the fruits still hang on the tree, they are
still owned by the tree owner.
• It is only after they have naturally fallen
that they belong to the owner of the
invaded land

Art. 681. Fruits naturally falling upon adjacent

land belong to the owner of said land.

Accession Continua (incorporated or attached to the

property)
The right pertaining to the owner of a thing
over everything that is incorporated or
attached thereto either naturally or artificially;
by external forces.

Reasons: Economic convenience is better

attained in a state of single ownership than in
a co-ownership, and natural justice demands
that the owner of the principal should also own
the accessory

Basic principles in accession continua

1. He who is in Bad faith is liable for damages.
2. Accessory follows the principal
3. Union or incorporation must generally be
effected in such a manner that to separate
the principal from the accessory would
result in substantial Damage to either or
diminish its value.
4. To the Owner of the thing belongs the
extension or increases to such thing.
5. Bad faith of one party Neutralizes the bad
faith of the other so that they shall be
considered in good faith.
6. He who is in good faith may be held
responsible but not penalized.
7. No one shall unjustly Enrich himself at
the expense of another.

Accession continua with respect to Immovables

1. Accession Industrial – building, planting,
sowing
2. Accession Natural – alluvium, avulsion,
change of river beds and formation of
islands

Accession continua with respect to Movables

1. Adjunction or conjunction
2. Mixture
3. Specification

ACCESSION CONTINUA WITH RESPECT

TO IMMOVABLES (Arts. 448, 449, 452,
454)
Article 448 LAND OWNER vs. B/P/S (OWNER OF 3. LO in bad faith, BPS in good faith
MATERIALS) • BPS – right to ask for reimbursement plus
1. Both in good faith damages; absolute right to ask for removal
• LO – right to appropriate; right to demand plus damages
price of land if value is not considerably • LO - no right, liable for damages.
higher than the building/tree; right to
rent from sower; right to rent from BP in 4. LO in bad faith, BPS in bad faith.
forced lease if value of land is - Treated as both acted in good faith
considerably higher than the
building/tree. Art. 447 – Land owner (is also the BPS) vs. Owner of
• BPS – right of reimbursement of Materials
necessary and useful expense if LO 1. LO in good faith, OM in good faith
chose to appropriate; right of retention • LO – obliged to pay value of materials
• OM – right of limited removal; right to reimbursement
2. LO in good faith, BPS in bad faith
• LO – right to appropriate plus damages;
2. LO in bad faith, OM in good faith
right to ask for removal plus damages;
• LO – obliged to pay value of materials plus damages
absolute right to demand price of land
plus damages. • OM – absolute right of removal; right to
• BPS - no right except necessary expenses, reimbursement
liable for plus damages.
damages BAR QUESTION (2013)
Ciriaco Realty Corporation (CRC) sold to the
spouses Dela
Cruz a 500-square meter land (Lot A) in
Paranaque. The land now has a fair market value
of P1,200,000. CRC likewise sold to the spouses 51
Rodriguez , a 700-square meter land (Lot B)
which is adjacent to Lot A. Lot B has a present fair
market value of P1,500,000. The spouses Dela
Cruz constructed a house on Lot B, relying on the
representation of the CRC sales agent that it is
the property they purchased. Only upon the
completion of their house did the spouses Dela
Cruz discover that they had built on Lot B owned
by the spouses Rodriguez, not on Lot A that they
purchased. They spent 1,000,000 for the house.
As their lawyer advise the spouses Dela Cruz on their
rights and obligations under the given circumstances, and
the recourses and options open to them to protect
their
interests.
SUGGESTED ANSWER
I will advise spouses dela Cruz that they have the
right to retain
possession of the premises until spouses
Rodriguez exercise any of the options under
Article 448 of the Civil Code (Technogas
Manufacturing vs. CA, G.R. No. 108894, February
10, 1997). Spouses Dela Cruz are builders in good
faith because before constructing their house,
they exercised due diligence by asking the agent of
CRC the location of Lot A. They relied on the
information given by the agent who is presumed
to know the identity of the lot they purchased
(Pleasantville vs. CA, G.R. No. 79688, February 1,
1996 (253 SCRA10).
The owner of the land on which anything has been
built in good faith by another has the right to
appropriate as his own the works, sowing or
planting, after payment of the indemnity or to oblige
2. ACCESSION NATURAL torrent segregates from an estate on its bank a
- accession that occurs by operation of nature known portion of land and transfers it to
another estate, the owner of the land to which
Forms of accession natural the segregated portion belonged retains the
(i) Alluvium ownership of it, provided that he removes the
(ii) Avulsion same within two years. (Art. 459)
(iii) Change of course of rivers
(iv) Formation of islands

(i) ALLUVIUM
• To the owners of lands adjoining the banks
of rivers belong the accretion which they
gradually receive from the effects of the
current of the waters. (Art. 457)
• The soil deposited or added to the lands
adjoining the banks of rivers, and
gradually received as an effect of the
current of the waters.

Accretion
• Process by which the soil is deposited.
• A broader term than alluvium

Requisites:
1. The deposit should be gradual and
imperceptible
2. Cause is the current of river
3. Cannot be done artificially or man-made
causes
4. That the land where accretion takes
place is adjacent to the bank of the
river.

There can be no acquisition of soil

deposited on the shores of the sea
• it belongs to the State as property of public
domain
• 4 bodies of water – rivers, lakes, creeks or
torrents
• Laguna de Bay is a lake
• Manila Bay is a sea (Heirs of Navarro vs IAC,
G.R. No. 68166 February 12, 1997)

HEIRS OF NAVARRO v. IAC

G.R. NO. 68166, FEBRUARY 12, 1997
J. Hermosisima, Jr.
Accretion as a mode of acquiring property
under said Article 457, requires the
concurrence of the following requisites: (1)
that the accumulation of soil or sediment be
gradual and imperceptible; (2) that it be the
result of the action of the waters of the river;
and (3) that the land where the accretion
takes place is adjacent to the bank of the
river. Accretion is the process whereby the
soil is deposited, while alluvium is the soil
deposited on the estate fronting the river
bank; the owner of such estate is called the
riparian owner. xxx The alluvium, by
mandate of Article 457 of the Civil Code, is
automatically owned by the riparian owner
from the moment the soil deposit can be
seen but is not automatically registered
property, hence, subject to acquisition
through prescription by third persons.

(ii) AVULSION
• A known portion of land is segregated
from one estate by the forceful current of
a river, creek or torrent and transferred to
another.
• Whenever the current of a river, creek or
Requisites: owner if [NCC 465]:
1. Segregation and transfer of land is  Formed through successive
sudden and abrupt; accumulation of alluvial deposits in
2. Caused by the current of the water; and non-navigable and non- floatable rivers
3. The portion of land transported must  Islands belong to owners of margins of
be known and identifiable. banks nearest to each of them
*** owner of segregated portion land retains ownership  single island, owner of nearer margin
provided he removes within 2 years shall be the sole owner
 If in the middle, to be divided longitudinally
Rule on avulsion of uprooted trees (Art. 460) in
• The owner of the tree retains ownership halves
BUT the owner must claim them within
a period of 6 months;
• It will belong to the owner of the land
upon which they may be cast, if the 52
owners do not claim it within 6
months.
NOTE: The claim does not require actual
recovery. It can be recovered on the
basis of prescriptive period for acquiring
movables which is four years.
ALLUVIUM AVULSION
Sudde or abrup
Gradual and
n t
imperceptible. proces
s.
Identifiable and
Soil cannot be identified.
Verifiable.
Belongs to the owner of Real propert by
the y
propert to whic it is incorporation and
y h
attached. destination.

(iii) CHANGE IN THE COURSE OF RIVER (Arts.

461- 462)
Requisites:
(1) Change in the natural course of the
waters of the
river; and
(2) Such change causes the
abandonment of the river beds.
• abandoned river bed ipso facto belong
to the owners whose lands are
occupied by the new course in
proportion to the area lost.
• owners of the land adjoining the
abandoned bed shall have the right
to acquire the same by paying the
value thereof, which value shall not
exceed the value of the area
occupied by the new bed.
• new bed becomes property of public
dominion.

(iv) FORMATION OF ISLANDS (Arts. 464-465)

• They belong to the State if:
(1) Capable Formed on the seas
within the jurisdiction of the
Philippines.
(2) Formed on lakes, or
(3) Formed on navigable or floatable rivers:
a) of affording a channel or
passage for ships and
vessels;
b) Must be sufficient not only to
float bancas and light boats,
but also bigger watercraft;
c) Deep enough to allow
unobstructed
movements of ships and
vessels.
• They belong to the nearest riparian
ACCESSION CONTINUA IN MOVABLE PROPERTY 2. Mixture caused by an owner in bad faith:
(INDUSTRIAL) The owner in bad faith not only forfeits the thing
belonging to him but also becomes liable to pay
(i) ADJUNCTION OR CONJUNCTION indemnity for the damages caused to the other
Process by virtue of which 2 movable things owner.
belonging to different owners are united in
such a way that they form a single object. (iii) SPECIFICATION
• Takes place whenever the work of a person
Different kinds of adjunction is done on the material of another, and such
a. Inclusion/engraftment material, as a consequence of the work
b. Soldadura/ soldering itself, undergoes a transformation.
c. Escritura/ writing • It is the giving of new form to another’s
d. Pintura/ painting material through application of labor. The
e. Weaving/ tejido material undergoes a transformation or
change of identity. The labor is the principal
Requisites: and the materials used is the accessory.
(1) 2 movables;
(2) Belonging to different owners; Art. 474 - Worker vs. Owner of Materials:
(3) United forming a single object; Sentimental value shall be duly appreciated (Art. 475)
(4) Separation would impair their nature or
result in substantial injury to either thing. 1. Worker and owner of the materials in good faith:
• The worker becomes the owner of the
Rules in Adjunction: work/transformed thing but he must
1. If separation is possible – separate (no indemnify the owner of the material for its
accession) value.
2. If separation not possible Exception: If the material is more precious or
a) Both in Good faith – Accessory follows the of more value than the work/transformed
principal, with reimbursement. thing, the owner of the material may
*** If accessory is more precious than choose:
principal, owner of accessory may a. To appropriate the new thing to himself but
demand separation even though the must pay for the value of the work or
other will suffer injury labor, OR
b) Bad faith (accessory) – owner loses b. To demand indemnity for the material.
accessory with liability to pay damages
c) Bad faith (principal) – owner of accessory 2. Worker in bad faith but the owner of the materials
may choose between (1) in good faith:
reimbursement plus damages or (2) • The owner of the material has the option either:
separation plus damages. a. To appropriate the work to himself without
paying
Tests to determine the principal the maker, plus damages OR
1. Rule of Importance and Purpose - That to which b. To demand the value of the material, plus
the other has been united as an ornament, damages. Limitation: The first option is not
or for its use or perfection. (Art. 467) available in case the value of the work, for
2. If it cannot be determined in Art 467 - that of artistic or scientific reasons, is considerably
greater VALUE - (Art. 468, NCC) more than that of the material, to prevent
3. If two things are of EQUAL VALUE - That of unjust enrichment. Only the second option
greater VOLUME. is available.

(ii) COMMIXTION OR CONFUSION 3. Owner of the materials in bad faith but the worker
Takes place when two or more things is in good faith:
belonging to different owners are mixed or • The owner of the material is in bad faith
combined with the respective identities of the when he does not object to the employment
component parts destroyed or lost. of his materials. Accordingly, he shall lose
his materials and shall have the obligation to
Kinds: The mixture may be voluntary or by chance. indemnify the worker for the damages he may
(1) Commixtion or the mixture of solid things have suffered.
belonging to different owners.
(2) Confusion or the mixture of liquid things 4. Both owners are in bad faith:
belonging to different owners. • Their rights shall be determined as though both
acted
1. Mixture by will of both the owners, both in good faith in good faith.
or by chance:
a. Their rights shall first be governed by their
stipulations. D. QUIETING OF TITLE
b. If the things mixed are of the same kind (CIVIL CODE, ARTS. 476-481)
and quality, there is no conflict of rights,
and the mixture can easily be divided • Quieting of title is a common law remedy
between the 2 owners. for the removal of any cloud upon or
c. If the things mixed are of different kind and doubt or uncertainty with respect to title
quality, in the absence of a stipulation, to real property.
each owner acquires a right or interest in • Its purpose is to secure an adjudication
the mixture in proportion to the value of his that a claim of title to or an interest in
material as in co-ownership. property, adverse to that of the
complainant, is invalid, so that the
complainant and those claiming hostile claim. (Heirs of Tappa v. Heirs of
under him may be forever Bacud, G.R. No. 187633, April 4, 2016)
afterward free from any danger of

53
• Whenever there is a cloud on title to real proceeding;
property or any interest therein, by • Which is apparently valid or effective;
reason of any instrument, record, claim, or • But is, in truth and in fact, invalid, ineffective,
encumbrance or proceeding which is voidable, or unenforceable, or extinguished (or
apparently valid or effective but is in truth terminated) or barred by extinctive
and in fact invalid, ineffective, voidable, or prescription; and
unenforceable, and may be prejudicial to • May be prejudicial to the title. (Heirs of Tappa v.
said title, an action may be brought to Heirs of Bacud, G.R. No. 187633, April 4, 2016)
remove such cloud or to quiet the title. An
action may also be brought to prevent a
cloud from being cast upon title to real
property or any interest therein. (Art. 476)
• There may also be an action to quiet title or
remove a cloud therefrom when the
contract, instrument or other obligation has
been extinguished or has terminated, or has
been barred by extinctive prescription. (Art.
478)

Requisites:
a. The plaintiff has a legal or an equitable title
to or interest in the real property subject of
the action; and
b. The deed, claim, encumbrance or
proceeding claimed to be casting cloud on
his title must be shown to be in fact invalid
or inoperative despite its prima facie
appearance of validity or legal efficacy.

Legal or Equitable Title (Art. 477)

• The plaintiff must have legal or equitable
title to, or interest in, the real property
subject of the action for quieting of title. In
the absence of such legal or equitable title,
or interest, there is no cloud to be
prevented or removed.
• It is not necessary that the person seeking
to quiet his title be the registered owner of
the property. He need not be in possession
of said property.
• “Title” is not limited to the certificate of
registration under the Torrens System (i.e.
OCT or TCT). It was held that title to real
property refers to that upon which
ownership is based. It is the evidence of
the right of the owner or the extent of his
interest, by which means he can maintain
control and, as a rule, assert a right to
exclusive possession and enjoyment of
the property. It can connote acquisitive
prescription by possession in the concept
of an owner. (Evangelista, et al. v.
Santiago, G.R. No. 157447, April 29, 2005)

Cloud on Title
• A “cloud on title” is an outstanding
instrument, record, claim, encumbrance or
proceeding which is actually invalid or
inoperative, but which may nevertheless
impair or affect injuriously the title to that
property.
• The matter complained of must have prima
facie appearance of validity or legal
efficacy. The cloud on title is a semblance of
title which appears in some legal form but
which is in fact unfounded. The invalidity or
inoperativeness of the instrument is not
apparent on the face of such instrument,
and it has to be proved by extrinsic
evidence. (Evangelista, et al. v. Santiago,
G.R. No. 157447, April 29, 2005)

A cloud on a title exists when

• There is an instrument (deed or contract) or
record or claim or encumbrance or
SPOUSES VELARDE V. HEIRS OF CANDARI • In the case of ownership and other real
G.R. NO. 190057 | OCTOBER 17, 2022 rights over immovable property, they are
J. M. Lopez acquired by ordinary prescription through
According to the New Civil Code, two possession in good faith and with just title
indispensable requisites must concur for for a period of 10 years.
an action for quieting of title to prosper, • On the other hand, ownership and other
namely: (1) the plaintiff has a legal or an real rights over immovable also prescribe
equitable title to or interest in the real through uninterrupted adverse possession
property subject of the action; and (2) thereof for 30 years, without need of title or
the deed, claim, encumbrance, or of good faith (extraordinary acquisitive
proceeding claimed to be casting cloud prescription).
on their title must be shown to be in fact
invalid or inoperative despite its prima If the plaintiff is in possession of the property, the
facie appearance of validity or legal action is imprescriptible.
efficacy. In this case, the heirs of Rationale: A person in actual possession of a
Isagani’s cause of action is grounded piece of land under claim of ownership may
upon their claims of ownership. What wait until his possession is disturbed or his title
they perceive as clouds over their title is attacked before taking steps to vindicate his
were Concepcion’s intrusive acts of right, and his undisturbed possession gives
dominion over the properties. Such him the continuing right to seek the aid of a
physical intrusion is not a ground for court of equity to ascertain and determine the
quieting of title. The heirs of Isagani do nature of the adverse claim of a third party
not seek mere removal of cloud over and its effect on his title. (Rumarate v.
their title; instead, they seek to recover Hernandez, 487 SCRA 317 (2006))
full possession of the properties which is
an accion reivindicatoria. Therefore, the CO-OWNERSHIP
action is not for quieting of title but of an • Ownership of an undivided thing or right
accion reivindicatoria. belongs to different persons
• Right of common dominion which two or
PRESCRIPTIVE PERIOD more persons have in a spiritual part of a
If the plaintiff is not in possession of the property. thing which is not materially or physically
• The action prescribes after 30 years. divided.
This is pursuant to Article 1141 of the
Civil Code which provides that real
Characteristics of Co-Ownership
actions over immovables prescribe
after 30 years. • There must be more than one subject or owner
• Nevertheless, the 30-year prescriptive • There is one physical whole divided into ideal
period is without prejudice to what is shares
established for the acquisition of • Each ideal share is definite in amount
ownership and other real rights by but is not physically segregated from the
prescription. rest

54

E. CO-OWNERSHIP (CIVIL CODE,

ARTS. 484-501); CONDOMINIUM ACT
(R.A. NO. 4726, AS AMENDED)
Sources of Co-Ownership desire it to be intended.
1. By law
2. By contract
3. By chance
4. By occupation or occupancy
5. By succession or will

Rights of Co-owners
1. Right to Share in the Benefits as well as the Charges
• Proportional to their interests; Stipulation to
the contrary is void;
• Portion belonging to the co-owners is
presumed equal.

2. Right to use the thing owned in common

• Use the thing in accordance with the
purpose for which it is intended.
• Use it in such a way as to not injure the
interest of the co-ownership or prevent the
other co-owners from using it according to
their right.
• If co-owner exclusively uses property owned
in common, he is liable to pay rentals for
other co- owners’ share

Contribution for expenses

• The share of the co-owners, in the
benefits as well as in the charges, shall be
proportional to their respective interests.
Any stipulation in a contract to the
contrary shall be void.T
• he portions belonging to the co-owners in
the co- ownership shall be presumed equal,
unless the contrary is proved. (Art. 485)
• Each co-owner shall have a right to compel
the other co-owners to contribute to the
expenses of preservation of the thing or
right owned in common and to the taxes.
Any one of the latter may exempt himself
from this obligation by renouncing so much
of his undivided interest as may be
equivalent to his share of the expenses
and taxes. No such waiver shall be made if
it is prejudicial to the co-ownership. (Article
488)
• Repairs for preservation may be made at
the will of one of the co-owners, but he
must, if practicable, first notify his co-
owners of the necessity for such repairs.
(Article 489)
• Expenses to improve or embellish the thing
shall be decided upon by a majority.

Decisions affecting co-ownership

1. Acts of preservation, maintenance, necessary
repairs
• Any co-owner may decide, but he must, if
practicable, first notify the other co-
owners;
• Anyone may exempt himself from
contribution by renouncing his interest
unless waiver is prejudicial to co-ownership

2. Acts of administration or management

• Majority of the co-owners; majority of
interest (controlling);

3. Acts of alterations, encumbrance or alienations

• Unanimous consent of all
• Alteration is an act by virtue of which a co-
owner changes the thing from the state in
which the others believe it should remain,
or withdraws it from the use to which they
Effects of alteration without the express or implied • The deed of sale shall not be recorded in the
consent of co-owners Registry of Property, unless accompanied by
A co-owner who makes an alteration an affidavit of the vendor that he has given
without the express or implied consent of written notice thereof to all possible
the others shall: redemptioners. (Art. 1623)
1. Lose what he has spent;
2. Obliged to Demolish the improvements done; PAZ GALVEZ V. HON. COURT OF APPEALS
and G.R. NO. 157954, MARCH 24, 2006
3. Pay for the loss and damages the J. Chico-Nazario
community property or other co-owners • The purpose of Article 1067 (of the old Civil
may have suffered. Code, now Article 1088 of the present Civil
Code) is to keep strangers to the family out
Distinctions between right to property owned in of a joint ownership, if, as is often the case,
common and full ownership over the ideal share the presence of outsiders be undesirable
• A co-owner has full ownership of his and the other heir or heirs be willing and in a
share (undivided interest) and the position to repurchase the share sold (De
fruits and benefits arising therefrom. Jesus vs. Manlapus, 81 Phil. 144). While
• Being the full owner thereof he may there should be no question that an heir
alienate, assign or mortgage it; he can may dispose his right before partition
also substitute another person in the (Rivero vs. Serrano [CA] 46 O.G. 642;
enjoyment of his share, except only Wenceslao vs. Calimon, 46 Phil. 906;
when personal rights are involved. Hernaez vs. Hernaez, 32 Phil. 214), a co-heir
• Others may seek for partition at any would have had to pay only the price for
time, the same is imprescriptible. which the vendee acquired it (Hernaez vs.
Hernaez, Ibid.).
Right of Redemption/Pre-emption • It is a one-way street. It is always in favor of
• A co-owner of a thing may exercise the the
right of redemption in case the shares of redemptioner since he can compel the
all the other co- owners or of any of vendee to sell to him but he cannot be
them, are sold to a third person. compelled by the vendee to buy the alienated
• If the price of the alienation is grossly property.
excessive, the redemptioner shall pay • In another case, this Court reiterated that:
only a reasonable one. Legal redemption is in the nature of a
• Should two or more co-owners desire privilege created by law partly for reasons of
to exercise the right of redemption, public policy and partly for the benefit and
they may only do so in proportion to convenience of the redemptioner, to afford
the share they may respectively have him a way out of what might be a
in the thing owned in common. (Art. disagreeable or [an] inconvenient
1620) association into which he has been thrust.
• The right of legal pre-emption or (10 Manresa, 4th Ed., 317.) It is intended to
redemption shall not be exercised minimize co-ownership. The law grants a co-
except within thirty days from the notice owner the exercise of the said right of
in writing by the prospective vendor, redemption when the shares of the other
or by the vendor, as the case may be. owners are sold to a "third person.“

55
• The rule on redemption is liberally guilty of laches in the exercise of their redemption
construed in favor of the original owner of right. Absent these factors, the strict letter of the
the property and the policy of the law is to law must apply – the written notice from the seller
aid rather than defeat him in the exercise of remains to be an indispensable requirement to
his right of redemption. commence the running of the 30-day redemption
period.
HERMELINA RAMA V. SPOUSES NOGRA
G.R. NO. 219556. SEPTEMBER 14, 2021
J. Lopez
The focal point of the controversy is the 30-
day written notice requirement under Article
1623 of the New Civil Code, which states:

ART. 1623. The right of legal pre-emption or

redemption shall not be exercised except
within thirty days from the notice in writing by
the prospective vendor, or by the vendor, as
the case may be. The deed of sale shall not be
recorded in the Registry of Property, unless
accompanied by an affidavit of the vendor that
he has given written notice thereof to all
possible redemptioners.
xxxx
The Court has been consistent in ruling that
the required written notice by the seller is
mandatory and indispensable for the 30-day
redemption period to commence. In the oft-
cited case of De Conejero v. Court of Appeals,
the Court explained:

With regard to the written notice, we agree

with petitioners that such notice is
indispensable, and that, in view of the terms in
which Article 1623 of the Philippine Civil Code
is couched, mere knowledge of the sale,
acquired in some other manner by the
redemptioner, does not satisfy the statute. The
written notice was obviously exacted by the
Code to remove all uncertainty as to the sale,
its terms and its validity, and to quiet any
doubts that the alienation is not definitive. The
statute not having provided for any
alternative, the method of notification
prescribed remains exclusive.

In Verdad v. Court of Appeals, the Court was

more emphatic on the mandatory character of
the written notice:
The written notice of sale is mandatory. This
Court has long established the rule that
notwithstanding actual knowledge of a co-
owner, the latter is still entitled to a written
notice from the selling co-owner in order to
remove all uncertainties about the sale, its
terms and conditions, as well as its efficacy
and status.
xxxx
Moreover, actual knowledge of the sale and its
particulars would likewise not suffice to
disregard the explicit requirement of written
notice under the law. Such actual knowledge
must, be coupled with laches on the part of
the redemptioner. Laches has been defined as
"the failure or neglect, for an unreasonable
and unexplained length of time, to do that
which, by exercising due diligence, could or
should have been done earlier." It is not
concerned only with the mere lapse of time,
but with the inequity caused by the relief-
seeker's inaction.

In sum, the explicit requirement of written

notice may only be dispensed with upon a
showing that the co- owners already had
sufficient knowledge of the sale and they were
Art. 1088. Should any of the heirs sell his • No co-owner shall be obliged to remain in
hereditary rights to a stranger before the co- ownership.
the partition, any or all of the co-heirs • Action to demand partition is imprescriptible.
may be subrogated to the rights of the
purchaser by reimbursing him for the Exceptions:
price of the sale, provided they do so 1. When partition would render the thing
within the period of one month from Unserviceable; or
the time they were notified in writing of 2. When the thing is essentially Indivisible;
the sale by the vendor. 3. When partition is prohibited by Law by
reason of their origin or juridical nature-
Modes of Extinguishment of Co-Ownership ex. party walls and fences;
1. Consolidation or merger in one co-owner; 4. When the co-owners Agree to keep the
2. Acquisitive prescription in favor of a property undivided for a period of time but
third person or a co-owner who not more than 10 yrs;
repudiates; 5. When partition is Prohibited by the
3. Loss or destruction of thing co-owned; transferor (donor / testator) but not more
4. Sale of thing co-owned; than 20 yrs;
5. Termination of period agreed upon; 6. When a co-owner possessed the property
6. Expropriation; as an Exclusive owner for a period
7. Judicial or extra-judicial Partition. sufficient to acquire it through
prescription. (Acquisitive Prescription)
7. When Co-owners may agree that it be
PARTITION (Art. 494) Allotted to one of them reimbursing the
• Every co-owner has the right to demand others;
partition. 8. If they cannot agree, they may Sell the
thing and distribute the proceeds.
BAR QUESTION (2014)
X, Y, Z are siblings who inherited a 10-
storey building
from their parents. They agreed in writing to 56
maintain it as a co-owned property for
leasing out and to divide the net profits
among themselves equally for a period of 20
years. On the 8th year, X wanted to get out
of the co- ownership so he could get his 1/3
share in the property. Y and Z refused,
saying X is bound by their agreement to keep
the co-ownership for 20 years. Are Y and Z,
correct?
SUGGESTED ANSWER
Y and Z are partly correct. The law provides
that none of
the co-owners shall be obliged to remain in
the co- ownership and it is the right of a co-
owner to ask for partition of the co-ownership
anytime. One exception to the rule is if the
co-owners agree to keep the thing undivided
which period shall not exceed ten years.
In this case, the agreement to keep the thing
CONDOMINIUM ACT, R.A. No. 4726, as amended encumber his condominium and to have the
• A condominium is an interest in real same appraised independently of the other
property consisting of separate interest in a condominiums but any obligation incurred by
unit in a residential, industrial or such condominium owner is personal to him;
commercial building and an undivided
interest in common, directly or indirectly, in
the land on which it is located and in other
common areas of the building.
• Title to the common areas, including the
land, or the appurtenant interests in such
areas, may be held by a corporation specially
formed for the purpose (known as the
"condominium corporation") in which the
holders of separate interest shall
automatically be members or shareholders,
to the exclusion of others, in proportion to
the appurtenant interest of their respective
units in the common areas. (Sec. 2, RA
4726)

UNIT - A part of the condominium project

intended for any type of independent use or
ownership, including one or more rooms or
spaces located in one or more floors (or part or
parts of floors) in a building or buildings and such
accessories as may be appended thereto.

Project - means the entire parcel of real

property divided or to be divided in
condominiums, including all structures
thereon.

Common areas - means the entire project

excepting all units separately granted or held
or reserved.

Rules regarding Transfer and Conveyance (Sec. 5 of

R.A. No. 4726)
General Rule: Any transfer or conveyance of a
unit or an apartment, office or store or other
space therein, shall include the transfer or
conveyance of the undivided interests in the
common areas or, in a proper case, the
membership or shareholdings in the
condominium corporation.
Exception: Where the common areas are
• Owned by the owners of separate units as
co-owners thereof - Shall only be conveyed
or transferred to Filipino citizens or
corporations having at least 60 percent of
the capital stock belonging to them (except
for hereditary succession with respect to
aliens)
• Held by a corporation - the transfer or
conveyance is valid only when the
concomitant transfer of the appurtenant
membership or stockholding in the
corporation will not cause the alien interest
in such corporation to exceed the limits
imposed by existing laws.

Rights of a Condominium Owner

• An exclusive easement for the use of the air
space encompassed by the boundaries of
the unit as it exists at any particular time
and as the unit may lawfully be altered or
reconstructed from time to time;
Note: It shall be automatically terminated in
any air space upon destruction of the unit
as to render it untenantable.
• Right to an equal share (one for each unit)
in common areas;
• Exclusive right to paint, repaint, tile, wax,
paper or otherwise refinish and decorate the
inner surfaces of the walls, ceilings, floors,
windows and doors bounding his own unit;
• Exclusive right to mortgage, pledge or
• Absolute right to sell or dispose of his • A judgment for ownership, therefore, does
condominium unless the master deed not necessarily include possession as a
contains a requirement that the necessary incident. (Heirs of R. Soriano v.
property be first offered to the Court of Appeals, 153 SCAD 86, 363 SCRA
condominium owners within a 87 [2001].)
reasonable period of time before the • Just as possession is a definite proof of
same is offered to outside parties. ownership, neither is non-possession
inconsistent with ownership. (Medina vs.
Rules regarding Partition Greenfield Dev. Corp., 443 SCRA 150
General Rule: An action may be brought by [2004].)
one or more such persons for partition
thereof by sale of the entire project, as
if the owners of all of the 57
condominiums in such project were co-
owners of the entire project in the
same proportion as their interests in the
common areas.

Exceptions:
A partition shall be made only upon a showing:
• Three years after damage or destruction
– renders the material part unfit for its
use and such project had not been
rebuilt or repaired substantially;
• Damage or destruction has rendered
ONE HALF OR MORE of the units
untenantable and such owners having
more than 30 percent interest in the
common areas are opposed to the
repair and restoration;
• The project has been in existence in
excess of 50 years, rendering it
obsolete and uneconomical and such
owners having more than 50 percent
interest are opposed to the repair,
restoration or remodeling of such
project;
• The project or material thereof has
been condemned or expropriated and
that the project is no longer viable;
• The conditions for such partition with
restrictions as
provided under RA 4726 have been met.
• A condominium corporation shall not,
during its existence, sell, exchange,
lease or otherwise dispose of the
common areas owned or held by it in
the condominium project unless
authorized by the affirmative vote of
all the stockholders or members.

POSSESSION - is the holding of a thing or F. POSSESSION (CIVIL CODE, ARTS. 523-561)

the enjoyment of a right

Requisites of Possession
1. CORPUS or the possession in fact or
holding or
control of a thing or right;
2. ANIMUS POSSIDENDI or the deliberate
intention to possess the thing or right.

Possession v. Ownership
• OWNERSHIP confers certain rights to the
owner, among which are the right to
enjoy the thing owned and the right to
exclude other persons from possession
thereof while POSSESSION is defined as
the holding of a thing or the
enjoyment of a right. Literally, to
possess means to actually and
physically occupy a thing with or
without right.
• A person may be declared owner but
he may not be entitled to possession.
Rule in case of conflict in possession • possessor of the thing or right, by his actions, is
Art. 538 - Possession as a fact cannot be considered or is believed by other people as the
recognized at the same time in two owner, regardless of the good or bad faith of the
personalities EXCEPT in co-possession. possessor
(i) The present possessor shall be preferred; • If a person possesses in the concept of owner—he
(ii) If there are two possessors, the may
LONGER in possession; eventually become the owner by prescription
(iii) If dates are the same, the one who
presents a TITLE;
(iv) If all conditions are equal – the thing shall be
placed in judicial deposit pending
determination of its possession or ownership
through proper proceedings Note: Every
possessor has a right to be respected in his
possession; and should he be disturbed
therein he shall be protected in or restored to
said possession by the means established by
the laws and the Rules of Court.
(Art. 539)

Presumptions in favor of Possessor:

1. Of good faith
2. Of continuity of initial good faith
3. Of enjoyment in the same character in
which possession was acquired until the
contrary is proved
4. Of non-interruption in favor of the present
possessor
5. Of continuous possession by the one who
recovers possession of which he was
wrongfully deprived
6. Of extension of possession of real
property to all movables contained therein

Doctrine of Constructive Possession

• Possession in the eyes of the law does not
mean that a man has to have his feet on
every square meter of ground before it can
be said that he is in possession.
• The general rule is that the possession and
cultivation of a portion (e.g., 1/4) of a tract
of land under claim of ownership of all is
constructive possession of all.
• The doctrine does not apply where the
possession is wrongful or the part allegedly
constructively possessed is in the adverse
possession of another.

Classes of Possession
1. In one’s own name – where possessor claims
the thing for himself.
2. In the name of another – for whom the thing is
held by the possessor.
3. In the concept of an owner – possessor of the
thing or right, by his actions, is considered
or is believed by other people as the
owner, regardless of the good or bad faith
of the possessor.
4. In the concept of holder – possessor holds it
merely to keep or enjoy it, the ownership
pertaining to another person; possessor
acknowledges in another a superior right
which he believes to be ownership.

A possessor merely in the concept of holder cannot

acquire property by acquisitive prescription—one
cannot recognize the right of another and at the
same time claim adverse possession.
Examples:
1. Lessees
2. Trustees
3. Antichrectic creditors
4. Agents
5. Depositaries

POSSESSION IN THE CONCEPT OF AN OWNER

 RELEVANCE OF GOOD FAITH AND BAD FAITH 547)
Possessor in Good Faith • Expenses for pure luxury or mere pleasure
• One who is not aware that there exists shall not be refunded to a possessor in good
in his title or mode of acquisition any faith, but the latter may remove them if it
flaw which invalidates it. (Art. 526, can be done without damage to the
NCC) principal thing UNLESS the one who
• Mistake upon a doubtful or difficult recovers possession opted to appropriate
question of law may be the basis of the same by paying reimbursement.
good faith (Art. 525) • Possessor in good faith shall not be liable for
• A possessor in the concept of owner the deterioration or loss of the thing EXCEPT if
has in his favor the legal presumption he is guilty of fraud or negligence.
that he possesses with a just title and
he cannot be obliged to show or prove Possessor in Bad Faith
it. (Art. 541) • One who is not in good faith, or one who is
• A possessor in good faith is entitled to aware that there exists in his title or mode
the fruits received before possession is of acquisition any flaw which invalidates it.
legally interrupted. (Art. 544) • Possessor in bad faith is entitled only to
• Natural and industrial fruits are reimbursement of necessary expenses.
considered • For ornamental expenses, a possessor in
received from the time they are gathered or bad faith may remove them if it can be
severed done without damage to the principal thing
• Civil fruits are deemed to accrue daily UNLESS the one who recovers possession
• Necessary expenses shall be refunded opted to appropriate the same by paying
to every possessor BUT only a their value at the time he enters into
possessor in good faith may RETAIN possession. (Art. 549)
the thing until he has been reimbursed • Possessor in bad faith shall be liable for
therefor. deterioration or loss of the thing in every case,
• Useful expenses shall be refunded even if due to fortuitous event (Art 552)
only to a possessor in good faith with
the same right of retention. (Art. 546) Summary of Rules on Fruits Gathered and Pending
• Refund either amount of expenses Fruits, Expenses and Deterioration/Loses
or the increase in value that the A. Fruits
thing may have acquired by reason 1. GF is entitled to fruits received while his
thereof possession is in good faith.
• Possessor in good faith may remove Pending - GF and legitimate possessor shall share in
the useful improvements if it can be the net harvest in proportion to the time of their
done without damage to the possession.
principal thing UNLESS the one who
2. BF – Required to reimburse the legitimate
recovers possession opted to possessor of fruits received or could have
appropriate the same by paying received.
reimbursement in Art 546. (Art.
Pending - BF, no right.

58
B. Expenses finding has taken place.
1. NECESSARY – those which are incurred
for the preservation of the thing.
• GF – Reimbursement, Retention
• BF – Reimbursement only

2. USEFUL – incurred for the greater

productivity or utility of the thing.
• GF – Reimbursement, Retention, Limited
Removal
• BF – None

3. ORNAMENTAL – or pure luxury, incurred

for convenience and enjoyment of the
possessor.
• GF – Limited Removal
• BF – Limited Removal

C. Deterioration or Loss
1. GF – not liable unless due to fraudulent
intent or negligence
2. BF – always liable whether due to fault,
negligence or fortuitous event

RULES FOR MOVABLES

General Rule: Possession of Movables in good
faith is equivalent to TITLE.
Requisites:
a. possession is in good faith
b. the owner has voluntarily parted with the
possession of the thing
c. possessor is in the concept of owner
• One who has lost or has been unlawfully
deprived of it, may recover it from
whomsoever possesses it, ordinarily,
without reimbursement. (reimburse the
price paid if possessor acquired the
thing in good faith and at a public sale).

Summary of Rules on Recovery or Non-recovery of

possession
1. Owner may recover without reimbursement
a. From possessor in bad faith
b. From possessor in good faith — if owner
has lost or has been unlawfully deprived

2. Owner may recover but should reimburse

a. If the possessor acquired the object in good
faith at a public sale or auction

3. Owner cannot recover, even if he offers to reimburse

a. If the possessor acquired it in good faith
and for value by purchase from a
merchant’s store, fairs, or markets in
accordance with the Code of Commerce
b. If owner by his own conduct is precluded
form denying the seller’s authority to sell
c. If possessor had obtained the goods
because he was an innocent purchaser for
value and holder of a negotiable document
of title.
d. If recovery is no longer possible because of
prescription.
e. If the possessor is now the owner of the
thing in accordance with the principle of
finder-keepers recognized in Art. 719 of the
Civil Code.

Finder-keepers (Art. 719)

• Whoever finds a movable, which is not
treasure, must return it to its previous
possessor. If the latter is unknown, the
finder shall immediately deposit it with the
mayor of the city or municipality where the
• The finding shall be publicly or by tolerance of the plaintiff;
announced by the mayor for two (ii) eventually, such possession became
consecutive weeks in the way he illegal upon notice by plaintiff to
deems best. defendant of the termination of the latter's
• If the movable cannot be kept without right of possession;
deterioration, or without expenses (iii) thereafter, the defendant remained in
which considerably diminish its value, possession of the property and deprived
it shall be sold at public auction eight the plaintiff of the enjoyment thereof; and
days after the publication. (iv) within one year from the last demand on
• Six months from the publication having defendant to vacate the property, the
elapsed without the owner having plaintiff instituted the complaint for
appeared, the thing found, or its value, ejectment
shall be awarded to the finder. The
finder and the owner shall be obliged,
as the case may be, to reimburse the 59
expenses.
• If the owner should appear in time, he
shall be obliged to pay, as a reward to
the finder, one-tenth of the sum or of
the price of the thing found. (Art. 720)

Modes of losing possession (Art. 555)

A possessor may lose his possession:
a. By the abandonment of the thing;
b. By an assignment made to another
either by onerous or gratuitous title;
c. By the destruction or total loss of the
thing, or because it goes out of
commerce;
d. By the possession of another, subject
to the provisions of Article 537, if the
new possession has lasted longer
than one year. But the real right of
possession is not lost till after the
lapse of ten years.

G. ACTIONS TO RECOVER OWNERSHIP AND

POSSESSION OF REAL PROPERTY
1. ACCION INTERDICTAL

• It is a summary action to recover

physical or material possession and is
cognizable by the proper municipal trial
court or metropolitan trial court. It must
be brought within one year from the
time the cause of action arises.
• It comprises two distinct causes of
action, namely, forcible entry
(detentacion) and unlawful detainer
(desahuico).

Forcible Entry:
• Lawful possessor deprived through
(Force, Intimidation, Strategy, Threats,
Stealth). Prior physical possession
must be alleged.
• Prescription: 1 year from
dispossession (force, intimidation,
threats) or from knowledge of
dispossession (strategy, stealth).
• In forcible entry, one is deprived of the
physical possession of real property by
means of force, intimidation, strategy,
threats, or stealth, whereas in unlawful
detainer, one illegally withholds
possession after the expiration or
termination of his right to hold
possession under any contract,
express or implied.

Unlawful Detainer:
Jurisdictional facts of unlawful detainer:
(i) initially, possession of property by
the defendant was by contract with
GALACGAC V. BAUTISTA • In an accion reivindicatoria, the cause of action of
G.R. NO. 221384, NOVEMBER 09, 2020 the plaintiff is to recover possession by virtue of
J. Lopez his ownership of the land subject of the dispute.
A complaint for unlawful detainer must (Heirs of Cullado vs. Gutierrez, G.R. No. 212938,
sufficiently allege and prove the following key July 30, 2019)
jurisdictional facts, to wit: (1) initially,
possession of property by the defendant was
by contract with or by tolerance of the
plaintiff; (2) eventually, such possession
became illegal upon notice by plaintiff to
defendant of the termination of the latter's
right of possession; (3) thereafter, the
defendant remained in possession of the
property and deprived the plaintiff of the
enjoyment thereof; and (4) within one year from
the last demand on defendant to vacate the
property, the plaintiff instituted the
complaint for ejectment.

Distinctions between forcible entry and unlawful

detainer
An action for forcible entry is distinguished
from an unlawful detainer case, such that in
the former, the possession of the defendant is
illegal from the very beginning, whereas in the
latter action, the possession of the defendant
is originally legal but became illegal due to the
expiration or termination of the right to
possess.

2. ACCION PUBLICIANA

• It is an ordinary civil proceeding to recover

the better right of possession, except in
cases of forcible entry and unlawful
detainer. What is involved here is not
possession de facto but possession de jure.
• Accion publiciana is a plenary action to
recover the better right of possession
(possession de jure), which should be brought
in the proper inferior court or Regional Trial
Court (depending upon the assessed value of
the property) when the dispossession has
lasted for more than one year. The issue in an
accion publiciana is the "better right of
possession" of real property independently of
title. This "better right of possession" may or
may not proceed from a Torrens title. Thus, a
lessee, by virtue of a registered lease contract
or an unregistered lease contract with a term
longer than one year may file, as against the
owner or usurper, an accion publiciana if he
has been dispossessed for more than one
year. In the same manner, a registered owner
or one with a Torrens title can likewise file an
accion publiciana to recover possession if the
one-year prescriptive period for forcible entry
and unlawful detainer has already lapsed.
(Miranda vs. Mallari, G.R. No. 218343,
November 28, 2018)

3. ACCION REIVINDICATORIA

• It is an action to recover real property based

on ownership. Here, the object is the
recovery of the dominion over the property
as owner. This action has a prescription
period of 30 years.
• Accion reivindicatoria or accion de
reivindicacion or reivindicatory action,
which is an action for recovery of ownership
which must be brought in the proper inferior
court or Regional Trial Court (depending
upon the assessed value of the property).
 Reconveyance vs. Quieting SUGGESTED ANSWER
• An action for reconveyance is one There are three remedies for recovery of
that seeks to transfer property, possession of
wrongfully registered by another, to immovable, to wit: accion interdictal, accion
its rightful and legal owner. publiciana and accion reivindicatoria.
• Reconveyance is an action distinct I will advise Jacob to file an accion
from an action for quieting of title, publiciana against Liz. It is an ordinary civil
which is filed whenever there is a proceeding to determine the better right of
cloud on title to real property or any possession of realty independently of the title.
interest therein, by reason of any Since the possession of Liz was illegal from the
instrument, record, claim, start, the proper remedy should have been a
encumbrance or proceeding which is forcible entry case (Zacarias vs. Anacay G.R.
apparently valid or effective but is in No. 201354, September 24, 2014). However,
truth and in fact, invalid, ineffective, because the action is to be filed more than one
voidable, or unenforceable, and may year from discovery of unlawful possession by
be prejudicial to said title for stealth, Jacob can no longer avail of the
purposes of removing such cloud or remedy of forcible entry but he could still
to quiet title (Ney v. Quijano. G.R. recover
possession by an accion publiciana.
No. 178609, August 4, 2010).
H. EASEMENTS; EASEMENT BAROF RIGHT OF
QUESTION WAY
(2017) EASTMENT OR SERVITUDE
(CIVIL CODE, ARTS.
Jacob 613-619
has owned a AND
farm 649-657)
land in Ramos, Tarlac. Although the terms servitude and easement
In 2012, are sometimes used as synonyms, the two
Liz surreptitiously entered and cultivated the concepts differ. A SERVITUDE relates to the
property. In 2014, Jacob discovered Liz’s servient estate or the burdened land,
presence in and cultivation of the property. whereas an EASEMENT refers to the
Due to his being busy attending to his dominant estate, which is the land benefited
business in Cebu, he tolerated Liz’s by the right.
cultivation of the property. Subsequently,
December 2016, Jacob wanted to regain It is an encumbrance imposed upon an immovable
possession of the property; hence, he sent a
for the benefit of:
letter to Liz demanding that she vacate the
1. Another immovable belonging to a different owner;
property. Liz did not vacate despite the
or
demand.
2. A community or one or more persons to
Jacob comes to enlist your legal assistance to whom the encumbered estate does not
bring an action against Liz to recover the belong by virtue of which the owner is
possession of the property. What remedies obliged to abstain from doing or to permit a
are available to Jacob to recover possession of certain thing to be done on his estate (Arts.
his property under the 613- 614, NCC)
circumstance? Explain your answer (4%)

60
 BAR QUESTION (1995) 5. DUTY
What is Easement? Distinguish easement from 3. EXERCISE 4. EXISTENCE TO
usufruct.
SERVIENT
SUGGESTED ANSWER OWNER
An EASEMENT or servitude is an encumbrance CONTINUOUS APPARENT POSITIVE
imposed use is those which impose upon
upon an immovable for the benefit of another incessant, not are made the owner of
immovable dependent on known and the
belonging to a different owner. (Art. 613, NCC). act of man are servient
USUFRUCT gives a right to enjoy the property continually estate
of another with the obligation of preserving its
kept in view the obligation
form and substance, unless the title
by external of allowing
constituting it or the law otherwise provides
signs that something to
(Art. 562, NCC).
reveal the use be done or of
and doing
The distinctions between usufruct and easement
enjoyment of it himself.
are:
a) Usufruct includes all uses of the property
the
same
and for all purposes, including jus fruendi.
DISCONTINUOUS NON APPARENT NEGATIVE
Easement is limited to a specific use.
those which no prohibits
b) Usufruct may be constituted on immovable or
are used at the
movable property. Easement may be
constituted only on an immovable property. intervals and external owner of
c) Easement is not extinguished by the death of depend upon indication the servient
the owner of the dominant estate while the Modesacts of
of Acquiring of
Easement:
man
usufruct is extinguished by the death of the 1. If continuous and existence estate from
apparent
usufructuary unless a contrary intention a. By title (contract, will, etc.), the title governs.
appears. doing
b. By prescription—ten years something
d) An easement contemplates two (2) estates
belonging to two (2) different owners; a 2. If discontinuous and apparent—only which by
he title
usufruct contemplates only one property 3. If continuous and non-apparent—only by title
could lawfully
(real or personal) whereby the usufructuary 4. If discontinuous and non-apparent—only do by title
uses and enjoys the property as well as its if
fruits, while another owns the naked title easementand
Counting of Prescriptive Period (for continuous
Parties to an Easement apparent easement only)
1. Dominant estate – Refers to the immovable a. Positive easement - The period is counted
for which the easement was established. from the day when the owner of the
2. Servient estate – The estate which provides dominant estate begins to exercise it
the service or benefit. b. Negative easement- From the day a notarial
prohibition is made on the servient estate
CHARACTERISTICS
1. It is a real right but will affect third persons EASEMENT OF RIGHT OF WAY - Easement of right
only when duly registered of way is an easement or a privilege by
2. It is enjoyed over another immovable, which one person or a particular class of
never on one’s persons is allowed to pass over another’s
own property land as access to public highway.
3. It involves two neighboring estates (in case
of real easements)
Note: An easement of Right of Way while
4. It is inseparable from the estate to which it
apparent is discontinuous, since the use of
is attached, and, therefore, cannot be
ROW is dependent upon the acts of men.
alienated independently of the estate
Hence, it could not be acquired by
5. It is indivisible for it is not affected by the
division of the estate between two or more prescription no matter how long period of
persons use thereof.
6. It is a right limited by the needs of the
dominant owner or estate, without Who may demand the establishment of a right of
possession way?
7. It cannot consist in the doing of an act 1. The owner of the dominant estate; or
unless the act is accessory in relation to a 2. Any person with the real right to cultivate
real easement or use the dominant estate e.g. a
8. It is a limitation on the servient owner’s usufructuary, a de jure possessor.
rights of ownership for the benefit of the
dominant owner; and, therefore, it is not Requisites for establishing a compulsory easement
presumed of right of way:
1. Estate is surrounded by other
KINDS OF EASEMENTS
immovables without adequate access to
1. Beneficiary:
public highway;
• Real – in favor of another immovable
2. Isolation was not due to the proprietor’s own act;
• Personal – in favor of community or persons
to whom the encumbered estate do not 3. Payment of proper indemnity;
belong. 4. Must be established at the point least
prejudicial to the servient estate. Insofar
2. Source: as consistent with the first rule, where
• Legal – by law (either public use or benefit of the distance from the dominant estate
private persons) to a public highway is shortest.
• Voluntary – by agreement
61
 BAR QUESTION (2017)
I. NUISANCE (CIVIL CODE, ARTS. 694-707)
Tyler owns a lot that is enclosed by the lots of
Riley to the
North and East, of Dylan to the South, and of A nuisance is defined as "any act, omission,
Reece to the West. The current route to the establishment, business, condition of property,
public highway is a kilometer's walk through the or anything else which:
northern lot of Riley, but the route is a rough road (1) Injures or endangers the health or safety of others;
that gets muddy during the rainy season, and is or
inconvenient because it is only 2.5 meters wide. (2) Annoys or offends the senses; or
Tyler's nearest access to the public highway (3) Shocks, defies or disregards decency or morality;
would be through the southern lot of Dylan. May or
Dylan be legally required to afford to Tyler a (4) Obstructs or interferes with the free
right of way through his passage of any public highway or street,
property? Explain your answer.
or any body of water; or
SUGGESTED ANSWER
No, Dylan may not be legally required to afford (5) Hinders or impairs the use of property. (Art. 694)
Tyler a right
of way through his property. The establishment Classification of Nuisance
of an easement of right of way over the 1. Public (or common) – One that affects a
servient estate has the following requisites: community or neighborhood or any
• The dominant estate must be surrounded by considerable number of persons although
other immovables and is without adequate the extent of the annoyance, danger or
outlet damage upon individuals may be unequal.
• to a public highway; 2. Private – Is one which affects an individual or
• The isolation of the dominant estate must not few persons only.
be due to the proprietor's own acts; 3. Nuisance per se – a nuisance at all times or
• The easement must be established at a one which "affects the immediate safety of
point least prejudicial to the servient estate persons and property and may be
where the distance from the dominant summarily abated under the undefined law
estate to the public highway may be the of necessity”
shortest; 4. Nuisance per accidens – That kind of nuisance
• There must be payment of proper indemnity. by reason of location, surrounding or in a
The true test of whether the easement of right manner it is conducted or managed, or that
of way must be established on another's which "depends upon certain conditions
property isadequacy of the outlet to the public and circumstances, and its existence being
highway and not the convenience of the dominant a question of fact, it cannot be abated
Exceptions to the requirement of indemnity without due hearing thereon in a tribunal
1. Whenever a piece of land acquired by sale, authorized to decide whether such a thing
exchange or partition, is surrounded by does in law constitute a nuisance."
other estates of the vendor, exchanger, or
co-owner, he shall be obliged to grant a ATTRACTIVE NUISANCE
right of way without indemnity. (Art. 652) • One who maintains on his premises
2. In case of a simple donation, when the land dangerous instrumentalities or appliances of
of the donor becomes isolated, the donor a character likely to attract children in play,
shall not be liable for indemnity. (Art. 653) and who fails to exercise ordinary care to
prevent children from playing therewith or
Extinguishment as Legal Easement of Right of Way resorting thereto, is liable to a child of
1. The owner has joined the dominant estate tender years who is injured thereby, even if
to another abutting the public road. the child is technically a trespasser in the
2. A new road is opened giving access to the premises.
isolated • As a general rule, bodies of water, whether
estate. natural or artificial, are not attractive
*Extinguishment is not automatic. The owner of the nuisances they being merely duplication
servient estate must ask for such extinguishment. of nature, unless unusual condition or
artificial features are added so as to
EXTINGUISHMENT OF EASEMENTS increase a possible invitation to danger to
1. By merger in the same person of the children at play. (Hidalgo Enterprises Inc.
ownership of the dominant and servient v. Balandan, 91 Phil 488)
estates; • Other examples of attractive nuisances
2. By non-user for ten years; with respect to include abandoned or unused large
discontinuous easements, this period shall appliances or equipment or any parts
be computed from the day on which they thereof, unsafe edifice, unsecured or
ceased to be used; and, with respect to abandoned excavation areas, and any other
continuous easements, from the day on instrumentality or appliance which may
which an act contrary to the same took prove a hazard for minors.
place;
3. When either or both of the estates fall into ALETA V. SOFITEL
such condition that the easement cannot G.R. NO. 228150, JANUARY 11, 2023
be used; SAJ Leonen
4. By the expiration of the term or the The records show that there were two slides
fulfillment of the condition, if the easement installed with slopes ending at the kiddie pool.
is temporary or conditional; Taking Hidalgo into consideration, although
5. By the renunciation of the owner of the the swimming pool alone may not be
dominant estate;
considered as an attractive nuisance, the
6. By the redemption agreed upon between the
kiddie pool's close proximity to the slides
owners of the dominant and servient estates
formed an unusual condition or artificial
feature intended to attract children. In swimming pool's waters makes it an
other words, the installation of the attractive nuisance.
slides with slopes ending over the

62
By this reason, respondent was duty • If an alleged nuisance is later declared by
bound to undertake protective measures the courts to be not a real nuisance.
to ensure the children's safety. It was
respondent's responsibility to guarantee
that appropriate safeguards were in place
within the attractive nuisance in order to
protect children against the injury from
unknown or unseen dangers.

REMEDIES
(i) Against a public nuisance are:
1. A prosecution under the Penal Code or
any local ordinance: or
2. A civil action; or
3. Abatement, without judicial proceedings.
• The district health officer shall take care
that one or all of the remedies against a
public nuisance are availed of. (Art.
700)
• If a civil action is brought by reason of
the maintenance of a public nuisance,
such action shall be commenced by the
city or municipal mayor. (Art. 701)
• The district health officer shall
determine whether or not abatement,
without judicial proceedings, is the best
remedy against a public nuisance. (Art.
702)
• A private person may file an action on
account of a public nuisance, if it is
especially injurious to himself. (Art. 703)
• Any private person may abate a public
nuisance which is especially injurious to
him by removing, or if necessary, by
destroying the thing which constitutes
the same, without committing a breach
of the peace, or doing unnecessary
injury, provided that all requisites of
summary abatement are complied with.
(Art. 704)

Requisites of Summary Abatement of Nuisance

(Art. 704)
a. That demand be first made upon the
owner or possessor of the property to
abate the nuisance;
b. That such demand has been rejected;
c. That the abatement be approved by the
district health officer and executed with
the assistance of the local police; and
d. That the value of the destruction does not
exceed three thousand pesos.

(ii) Against a private nuisance are:

(1) A civil action; or
(2) Abatement, without judicial proceedings.
• Any person injured by a private
nuisance may abate it by removing, or if
necessary, by destroying the thing
which constitutes the nuisance, without
committing a breach of the peace or
doing unnecessary injury. However, it is
indispensable that the procedure for
extrajudicial abatement of a public
nuisance by a private person be
followed.
• A private person or a public official
extrajudicially abating a nuisance shall be
liable for damages:
• If he causes unnecessary injury; or
(iii) Right to demand damages abate a nuisance in that property started by
• Aside from the remedy of summary a former owner or possessor is liable
abatement which should be taken therefor in the same manner as the one who
under the parameters stated in created it. The abatement of a nuisance
Articles 704 (for public nuisances) and does not preclude the right of any person
706 (for private nuisances) of the Civil injured to recover damages for its past
Code, a private person whose existence.
property right was invaded or
unreasonably interfered with by the Note:
act, omission, establishment, business • Right to bring an action to abate a public
or condition of the property of another or private nuisance does not prescribe
may file a civil action to recover (Art. 1143)
personal damages. • Lapse of time cannot legalize a nuisance,
• Abatement may be judicially sought whether private or public. (Art. 698)
through a civil action therefor if the
pertinent requirements under the
Civil Code for summary abatement,
or the requisite that the nuisance is
a nuisance per se, do not concur. To 63
note, the remedies of abatement
and damages are cumulative;
hence, both may be demanded.
(LINDA RANA vs. TERESITA LEE
WONG, SPS. SHIRLEY LEE ONG and
RUBEN ANG ONG,
represented by their Attorney-in-
fact WILSON UY, and SPS.
ROSARIO and. WILSON UY, G.R.
No. 192861, June 30, 2014)
• The abatement of a nuisance does not
preclude the right of any person
injured to recover damages for its
past existence. (Art. 697)

Summary abatement of Nuisance Per Se

• It is a standing jurisprudential rule
that unless a nuisance is a nuisance
per se, it may not be summarily
abated. In Lucena Grand Central
Terminal, Inc. v. Jac Liner, lnc., the
Court, citing other cases on the
matter, emphasized the need for
judicial intervention when the
nuisance is not a nuisance per se, to
wit:
In Estate of Gregoria Francisco v. Court of
Appeals, this Court held:
Respondents can not seek cover
under the general welfare clause
authorizing the abatement of
nuisances without judicial
proceedings. That tenet applies to a
nuisance per se, or one which
affects the immediate safety of
persons and property and may be
summarily abated under the
undefined law of necessity. The
storage of copra in the quonset
building is a legitimate business. By
its nature, it can not be said to be
injurious to rights of property, of
health or of comfort of the
community. If it be a nuisance per
accidens it may be so proven in a
hearing conducted for that purpose.
It is not per se a nuisance warranting
its summary abatement without judicial
intervention. (LINDA RANA vs. TERESITA
LEE WONG, supra.)

Liability of successive owner for failure to

abate nuisance (Art. 696)
Every successive owner or possessor
of property who fails or refuses to
 V. DIFFERENT MODES OF ACQUIRING
OWNERSHIP
A. Occupation (Civil Code, arts. 713-720)
B. Donation (Civil Code, arts. 725-773)
C. Prescription (Civil Code, arts. 1106-1155)

Art. 712. Ownership is acquired by occupation best.

and by intellectual creation.

Ownership and other real rights over property

are acquired and transmitted by law, by
donation, by estate and intestate succession,
and in consequence of certain contracts, by
tradition. They may also be acquired by means
of prescription.

Modes of Acquiring Ownership

1. Occupation
2. Law
3. Donation
4. Tradition
5. Intellectual creation
6. Prescription
7. Succession

A. OCCUPATION (CIVIL CODE, ARTS. 713-720)

• is the acquisition of ownership by seizing
corporeal thing that have no owner, made
with the intention of acquiring them, and
accomplished according to legal rules.
• Things appropriable by nature which are
without an owner, such as animals that are
the object of hunting and fishing, hidden
treasure and abandoned movables, are
acquired by occupation. (Art. 713)

Requisites of Occupation (Arts. 713-720)

1. There must be seizure of a thing,
2. Which must be a corporeal personal property,
3. Which must be susceptible of
appropriation by nature,
4. The thing must be without an owner, and
5. There must be an intention to appropriate.
6. The requisites or conditions laid down by law
must be
complied with.

Things Susceptible of Occupation

1. Things that are without an owner – res
nullius; abandoned (Art 719)
NOTE: Stolen property cannot be
subject of occupation
2. Animals that are the object of hunting
and fishing (Arts 715-717)
3. Hidden treasures (Art 718)

Specific Examples
1. hunting and fishing - The right to hunt and to
fish is regulated by special laws. (Art. 715)
2. finding of movables which do not have an
owner
3. finding of abandoned movables - Finder-
keeper (Art. 719-720) Whoever finds a
movable, which is not treasure, must
return it to its previous possessor. If the
latter is unknown, the finder shall
immediately deposit it with the mayor of
the city or municipality where the finding
has taken place. The finding shall be
publicly announced by the mayor for two
consecutive weeks in the way he deems
• If the movable cannot be kept without
deterioration, or without expenses which
considerably diminish its value, it shall be
sold at public auction eight days after the
publication.
• Six months from the publication having
elapsed without the owner having
appeared, the thing found, or its value,
shall be awarded to the finder. The finder
and the owner shall be obliged, as the case
may be, to reimburse the expenses.
• If the owner should appear in time, he shall
be obliged to pay, as a reward to the finder,
one-tenth of the sum or of the price of the
thing found. (Art. 720)
4. finding of hidden treasure - He who by
chance discovers hidden treasure in
another’s property shall have the right
granted him in article 438 of this Code.
(Art. 718)
5. catching of swarm of bees that has
escaped from its owner, under certain
conditions - the owner of a swarm of bees
shall have a right to pursue them to
another’s land, indemnifying the possessor
of the latter for the damage. If the owner
has not pursued the swarm, or ceases to
do so within two consecutive days, the
possessor of the land may occupy or retain
the same. (Art. 716)
6. catching of domesticated animals that
have escaped from their owners, under
certain conditions - The owner of
domesticated animals may also claim
them within twenty days to be counted
from their occupation by another person.
This period having expired, they shall
pertain to him who has caught and kept
them. (Art. 716)
7. catching of pigeons without fraud or artifice
8. transfer of fish to another breeding place
without fraud or artifice - Pigeons and fish
which from their respective breeding
places pass to another pertaining to a
different owner shall belong to the latter,
provided they have not been enticed by
some article or fraud. (Art. 717)

Real property cannot be acquired by occupation

The ownership of a piece of land cannot be
acquired by occupation (Art. 714)
 Reason is that when the land is without an
owner, it pertains to the State.
 It can be implied that by virtue of this
provision, lands whether originally with an
owner, belong to the State.
 An abandoned land (on with an owner
before) becomes patrimonial land of the
State susceptible of acquisition thru
acquisitive prescription.
 BAR QUESTION (2007)
Occupation v. possession. (5%)
SUGGESTED ANSWER
• Occupation is a mode of acquiring
ownership which
involves some form of holding (Articles 712
& 713, New Civil Code). Possession is the
holding of a thing or the enjoyment of a
right. (Article 532, NCC).
• Occupation can take place only with respect to
property without an owner, while possession
can refer to all kinds of property, whether with
or without an owner.
• Occupation in itself, when proper, confers
ownership; but possession does not by itself
give rise to ownership. (II
Tolentino, Civil Code, 1992 ed., p. 489).

64
 B. DONATION (CIVIL CODE, ARTS. 725-773) Void donations
1) Those made between persons who were
guilty of adultery or concubinage at the time
of the donation;
Art. 725. Donation is an act of liberality whereby 2) Those made between persons found guilty
a person disposes gratuitously of a thing or
of the same criminal offense, in consideration
right in favor of another, who accepts it.
thereof;
3) Those made to a public officer or his
Requisites of Donation:
wife,
1. Donor must have Capacity to make the
descendants and ascendants, by reason of his
donation
office.
2. He must have donative Intent (animus
donandi)
3. There must be Delivery in certain cases
4. Donee must Accept or consent to the
donation during the lifetime of the donor
and of the donee in case of donation inter
vivos (Art. 746, NCC); whereas in case of
donation mortis causa, acceptance is made
after donor’s death because they partake
of a will (Art. 728, NCC)

Necessity of Acceptance
Acceptance by the donee is required because
no one can be compelled to accept the
generosity of another.

Who may be a donor?

• To be a donor, the law requires that a person
must be in possession of the capacity to
contract and the capacity to dispose of his
property and is not specifically prohibited
to make a donation.
• Donations inter vivos are to a certain extent
contractual in nature, and are a mode by
which property is alienated or disposed of.
Hence, those who cannot give consent to a
contract cannot be donors; and donation
made by one who does not have the free
disposal of the thing donated and to
alienate it shall not be valid.

Who may be a done?

• Generally, all persons, whether natural or
artificial, may be donees. A donee need not
be sui juris, with complete legal capacity to
bind himself by contract. (see Arts. 38, 39.)
As long as he is “not specially disqualified
by law,’’ he may accept donations. Thus,
donations may be made to Incapacitated
persons such as minors and others who
cannot enter into a contract (Art. 741.); so
also to conceived and unborn children. (Art.
742.)
• The law does not require that the donee
must possess capacity to act, which is
defined as “the power to do acts with legal
effect,” it being sufficient that he must
possesses juridical capacity or “the fitness
to be the subject of legal relations.” So long
as the donee possesses juridical capacity
and not specially disqualified by law, he
may accept donations.

Determination of Capacity
• Capacity of both donor and donee is
determined at the time of perfection of the
donation
• Under this view, if the donor is capacitated
at the time he makes the donation, his
subsequent incapacity does not affect the
validity of the donation and, it will be
perfected even though he is incapacitated
at the time of acceptance
 In the case referred to in No. 1, the spouse, parents, or children;
action for declaration of nullity may be v. Any physician, surgeon, nurse,
brought by the spouse of the donor or health officer or druggist who took
donee; and the guilt of the donor and care of the testator during his last
donee may be proved by illness;
preponderance of evidence in the vi.Individuals, associations and
same action. (Art. 739) corporations not permitted by law to
4) Those made in favor of persons who inherit.
are incapacitated to succeed by will 5) Void Donation between spouses/
(Art. 740) common law (Art. 87, FC)
The following are incapable of succeeding (Art. • Every donation or grant of gratuitous
1027): advantage, direct or indirect, between
i. The priest who heard the the spouses during the marriage shall
confession of the testator during be void, except moderate gifts which
his last illness, or the minister of the spouses may give each other on
the gospel who extended spiritual aid the occasion of any family rejoicing.
to him during the same period; • The prohibition shall also apply to
ii. The relatives of such priest or persons living together as husband
minister of the gospel within the and wife without a valid marriage.
fourth degree, the church, order,
chapter, community, organization, CLASSIFICATIONS
or institution to which such priest 1. Simple — the cause is pure liberality (no
or minister may belong; strings attached) | FORM: That of
iii. A guardian with respect to donations
testamentary dispositions given by 2. Remuneratory — the donor "gives
a ward in his favor before the final something to reward past or future
accounts of the guardianship have services or because of future charges
been approved, even if the testator or burdens, when the value of said
should die after the approval services, burdens or charges is less
thereof; nevertheless, any than the value of the donation.” |
provision made by the ward in FORM: The form of donation should be
favor of the guardian when the followed with respect to the value
latter is his ascendant, descendant, exceeding the value of the burden
brother, sister, or spouse, shall be imposed (Art. 733)
valid; 3. Onerous - when it is "subject to burdens,
iv.Any attesting witness to the charges, or future services equal (or
execution of a will, the spouse, more) in value than that of the thing
parents, or children, or any one donated | FORM: Form of contracts (Art.
claiming under such witness, 733)

65
FORMALITIES FOR DONATIONS OF REAL PROPERTY provisions
(a) If the deed of donation and the • ‘Inter Vivos Donations’ - When the donor intends
acceptance are in the same instrument: that the donation shall take effect during the
The instrument must be a public lifetime of the donor, though the property shall
document not be delivered till after the donor’s death.
(b) If the deed of donation and the (Art. 729)
acceptance are NOT in the same
instrument:
1. The donation must be in a public
instrument or document.
2. The document must specify the
property donated and the charges, if
any. Note: A donation which does not
identify the land donated is of no
effect and is therefore void for
absence of object.
3. The acceptance in a separate
instrument
must be in a public instrument.
4. The donor shall be notified in
authentic form of the fact that
acceptance is being made or has
been made in a separate public
instrument.
5. The fact that there has been a
notification must be noted in both
instruments.

FORMALITIES FOR DONATION OF PERSONAL

PROPERTY
• Maybe made orally or in writing.
• If value exceeds Php5,000, the donation
& acceptance must be in writing
• If value does not exceed Php5,000, the
donation may be done orally provided
there is simultaneous delivery of the thing
to the donee who accepted the same. (Art
748)

NOTE:
• For donation mortis causa – observe
formalities of wills
• For onerous donations – form is governed by
ordinary obligations and contracts

Conditional Donations
• Illegal or impossible conditions in simple
and remuneratory donations shall be
considered as not imposed. (Art. 727)
• When a person donates something,
subject to the resolutory condition of the
donor's survival, there is a donation inter
vivos. (Article 731)
• Donations which are to take effect inter
vivos shall be governed by the general
provisions on contracts and obligations in
all that is not determined in this Title. (Art.
732)
• Donations with an onerous cause shall be
governed by the rules on contracts and
remuneratory donations by the provisions
of the present Title as regards that portion
which exceeds the value of the burden
imposed. (Art. 733)

DISTINCTIONS BETWEEN MORTIS CAUSA AND

INTER VIVOS DONATIONS
• ‘Mortis Causa Donation’ - Donations which are
to take effect upon the death of the donor
partake of the nature of testamentary
 INTER VIVOS MORTIS CAUSA disposition is the right of disposition
completely is not transferred to
takes effect during takes effect after the
transferred to the the donee while the
the lifetime of the death of the donor
donee (although donor is still alive.
donor
certain reservations
must follow must follow the
as to usufruct, for
the formalities of wills
example,
formalities of or codicils
may be made)
donations (if (holographic or notarial)
acceptance by donee
ordinary and simple)
mortis causa can only
can be revoked at any
acceptance by donee be done after the
time and for any
must be during donor’s death; any
reason while the donor
lifetime of donor. prior acceptance is
is still alive (just as a
immaterial or void.
cannot be revoked will is
(There can as a rule
except for grounds essentially
be no contract relating
provided for by law revocable). In other
to
words, this donation is
future
revocable ad mutuum,
inheritance.)
i.e., at the discretion
of the grantor or the SOME INTER VIVOS DONATIONS
so-called “donor” The following donations have been held to be
inter vivos:
simply because he
1) A donation where the causes of
has revocation have been specified.
changed his mind. 2) A donation where the donor reserved for
In case the legitime is himself a lifetime usufruct of the
in case of impairment impaired, donations property, for if he were still the owner,
of the legitime, mortis causa (since there would be no need of said
donations inter vivos they partake of the reservation.
3) A donation where the donor warrants the
are preferred to nature of, or are
title to the thing which he is donating —
donations mortis really, legacies or there would be no need of warranty were
causa (priority in devises) are reduced he not be transferring the title.
time is priority in ahead of donations 4) Where the donor immediately transferred
right) inter vivos, the latter the ownership, possession and
being administration of the property to the
preferred. donee, but stipulated that the right of the
donee to harvest and alienate the fruits
the right of would begin only after the donor’s death.
66
 SOME MORTIS CAUSA DONATIONS clearly appears. (Art. 758)
The following have been held to be mortis
causa:
1) Where the donor has reserved (expressly
or impliedly) the option to revoke the
donation at any time before death, even
without the consent of the donee.
2) Where the donation will be void if the
transferee dies ahead of the transferor.
3) If before the donor’s death, it is
revocable at his will.
4) If the donor retains full or naked
ownership and control over the property
while he is still alive.
5) If what was in the meantime transferred
to the donee was merely the
administration of the property.
6) If title will pass only after donor’s death.

General Rule: The fixing of an event or the

imposition of a suspensive condition, which
may take place beyond the natural
expectation of life of the donor, does not
destroy the nature of the act as a donation
inter vivos.
XPN: unless a contrary intention appears.
(Art. 730, NCC)
BAR QUESTION (2011)
X and Y were to marry in 3 months.
Meantime, to
express his affection, X donated a house and
lot to Y, which donation X wrote in a letter to
Y. Y wrote back, accepting the donation and
took possession of the property. Before the
wedding however, Y suddenly died of heart
attack. Can Y’s heirs get the property?
SUGGESTED ANSWER
No. Since the donation and its acceptance are
LIMITATIONS
• As a mode of acquiring ownership,
donation results in an effective transfer of
title over the property from the donor to
the donee and is perfected from the
moment the donor is made aware of the
acceptance by the donee (Art. 734.),
provided that the donee is not disqualified
or prohibited by law from accepting the
donation. (Art. 738.)
• Once the donation is accepted, it is
generally considered irrevocable, and the
donee becomes owner of the property,
except on account of officiousness, failure
of the donee to comply with the charge
imposed on the donation, or ingratitude.
(Heirs of R. Florencio v. Heirs T. De Leon,
425 SCRA 447 [2004].)
• The effect of donation is to reduce the
patrimony or asset of the donor and to
increase that of the donee. Hence, the
giving of a mortgage or any other security
does not constitute a donation.
• When the donation imposes upon the
donee the obligation to pay the debts of
the donor, if the clause does not contain
any declaration to the contrary, the
former is understood to be liable to pay
only the debts which appear to have been
previously contracted. In no case shall the
donee be responsible for the debts
exceeding the value of the property
donated, unless a contrary intention
• There being no stipulation transpired between Spouses Patenia and
regarding the payment of debts, the respondents was a donation of an
the donee shall be responsible immovable property that requires strict
therefor only when the donation has compliance with Article 749 of the Civil
been made in fraud of creditors. The Code, to wit:
donation is always presumed to be
in fraud of creditors, when at the Art. 749. In order that the donation of the
time thereof the donor did not immovable may be valid, it must be made
reserve sufficient property to pay his in a public document,specifying therein
debts prior to the donation. (Art. the property donated and the value of the
759) charges which the donee must satisfy.

Limitations Imposed By Law in making The acceptance may be made in the same
Donations Inter Vivos deed of donation or in a separate public
1. Donor must Reserve sufficient document, but it shall not take effect
means for his support and for his unless it is done during the lifetime of the
relatives who are entitled to be donor.
supported by him (Art. 750, NCC).
2. Donation cannot comprehend If the acceptance is made in a separate
Future property except donations instrument, the donor shall be notified
between future husband and wife thereof in an authentic form, and this step
(See Art. 84 FC). shall be noted in both instruments.
3. No person may give by way of
donation More than he may give by Unlike ordinary contracts, which are
will. perfected by the concurrence of the
requisites of consent, object and cause,
PATENIA-KINATAC-AN V. PATENIA-DECENA solemn contracts like donations of
G.R. NO. 238325, JUNE 15, 2020 immovable property are valid only when
J. Lopez they comply with legal formalities. Absent
As a rule, contracts are obligatory in the solemnity requirements for validity,
whatever form they may have been the mere intention of the parties and
entered into, provided all the concurrence to the agreement will not
essential requisites for their validity give rise to a contract. In Abellana v. Sps.
are present. When, however, the law Ponce, we ruled that an oral donation of a
requires that a contract be in some real property is void and an action to
form to be valid, that requirement is declare its inexistence does not prescribe.
absolute and indispensable. Its non- Also, in Sumipat v. Banga, the donation
observance renders the contract void was patently void because the donees'
and of no effect. 16 Here, what acceptance is not manifested either in the
deed itself or in a separate document.

67
 BAR QUESTION (2011)
Josefa executed a Deed of Donation covering a one hectare rice land in favor of her daughter,
Jennifer. The deed
specifically provides that: “For and in consideration of the love and service Jennifer has shown
and given to me, I hereby freely, voluntarily, and irrevocably donate to her my one hectare rice
land covered by TCT No. 11550, located in San Fernando, Pampanga. This donation shall take
effect upon my death.” The deed also contained Jennifer’s signed acceptance, and an attached
notarized declaration by Josefa and Jennifer that the land will remain in Josefa’s possession and
cannot be alienated, encumbered, sold or disposed of while Josefa is still alive. Advise Jennifer
on
whether the deed is a donation inter vivos or mortis causa and explain the reasons supporting your advice.
SUGGESTED ANSWER
I will advise Jennifer that the deed of donation executed in her favor by Josefa is a donation inter
vivos. A donation mortis
causa is revocable during the lifetime of the donor. On the other hand, an inter vivos donation
once accepted, is generally irrevocable. The law further requires that if it involves immovable
property, it must be in a public document and there must be a deed of acceptance which must be
in the same deed of donation. If the acceptance is in a separate instrument, it has to be noted in
both instruments (Article 749).

In the case presented, the deed of acceptance clearly signifies that it is a donation inter vivos
because a donation mortis causa need not be accepted by the donee during the lifetime of the
donor, in fact, it would be premature to accept a donation mortis causa if the donor is still alive.

The fact that the donation made by Josefa was irrevocable and that there is an acceptance
clause indicate that it is a
donation inter vivos.

Also, the prohibition on alienation during Josefa’s lifetime all the more indicates that the donation
BAR QUESTION (1999)
B donated to M a parcel of land in 1980. B made the deed of donation, entitled “Donation Inter
Vivos,” in a public
instrument and M accepted the donation in the same document. It was provided in the deed that
the land donated shall be immediately delivered to M and that M shall have the right to enjoy the
fruits fully. The deed also provided that B was reserving the right to dispose of said land during his
(B’s) lifetime, and that M shall not register the deed of donation until after B’s death.
Upon B’s death, W, B’s widow and sole heir, filed an action for the recovery of the donated land,
contending that the donation made by B is a donation mortis causa and not a donation inter
vivos. Will said action prosper? Explain your
answer.
SUGGESTED ANSWER
Yes, the action will prosper. The donation is a donation mortis causa because the reservation is
to dispose of all the property donated and, therefore, the donation is revocable at will. Accordingly,

BAR QUESTION (1990)

Ernesto donated in a public instrument a parcel of land to Demetrio, who accepted it in the same
document. It is there
declared that the donation shall take effect immediately, with the donee having the right to
take possession of the land and receive its fruits but not to dispose of the land while Ernesto is
alive as well as for ten years following his death. Moreover, Ernesto also reserved in the same
deed his right to sell the property should he decide to dispose of it at any time – a right which he
did not exercise at all. After his death, Ernesto’s heirs seasonably brought an action to recover
the property, alleging that the donation was void as it did not comply with the formalities of a
will. Will the suit prosper? Will
said action prosper? Explain your answer.
SUGGESTED ANSWER
Yes, the suit will prosper as the donation did not comply with the formalities of a will. In this
instance, the fact that the
donor did not intend to transfer ownership or possession of the donated property to the donee
until the donor’s death, would result in a donation mortis causa and in this kind of disposition,
the formalities of a will should be complied with, otherwise, the donation is void. In this
Instance, donation mortis causa embodied only in a public instrument without the formalities of a
will could not have transferred ownership of disputed property to another.

One of the essential distinctions between a donation inter vivos and a donation mortis causa is that
while the former is irrevocable, the latter is revocable. In the problem given, all the clauses or
conditions mentioned in the deed of donation, except one, are consistent with the rule of
irrevocability and would have sustained the view that the donation is inter vivos and therefore valid.
The lone exception is the clause which reserves the donor’s right to sell the property at any time
before his death. Such a reservation has been held to render the donation revocable and, therefore,
becomes a donation mortis causa (Puig vs. Penqflorida, 15 SCRA 276, at p.286).That the right was not
exercised is immaterial; its reservation was an implied recognition of the donor’s power to nullify
the donation anytime he wished to do so.
Consequently, it should have been embodied in a last will and testament. The suit for nullity will
thus prosper.

68
 Secondary – Legitimate parents & other
legitimate ascendants, Illegitimate parents

REDUCTION AND REVOCATION (Art. 760)

Every donation inter vivos, made by a
person having no children or descendants,
legitimate or legitimated by subsequent
marriage, or illegitimate, may be revoked or
reduced by the happening of any of these
events:
(1) BIRTH - If the donor, after the donation,
should have legitimate or legitimated or
illegitimate children, even though they
be posthumous;
(2) REAPPEARANCE - If the child of the donor,
whom the latter believed to be dead
when he made the donation, should turn
out to be living;
(3) ADOPTION - If the donor should
subsequently adopt a minor child.

Prescriptive Period: 4 years from Birth,

Reappearance, Adoption (Art. 763)

Note:
• The donation shall be revoked or reduced
insofar as it exceeds the portion that may
be freely disposed of by will, taking into
account the whole estate of the donor at
the time of the birth, appearance or
adoption of a child. (Art. 761)
• If, there being two or more donations,
the disposable portion is not sufficient
to cover all of them, those of the more
recent date shall be suppressed or
reduced with regard to the excess. (Art.
773)
• Inofficious donation - A donation is
inofficious or excessive when its amount
impairs the legitimes of the compulsory
heirs. Donations must be charged only
against the disposable free portion. If its
amount exceeds the same, the excess is
void for being inofficious.
• Legitime - is that part of the testator’s
property which he cannot dispose of
because the law has reserved it for
certain heirs who are called compulsory
heirs (Art 886)
• Compulsory heirs – are those for whom
the law has reserved a portion of the
testator’s estate which is known as the
legitime. Primary – Legitimate children and
legit descendants, surviving spouse,
illegitimate children & descendants;
 REVOCATION BAR FORQUESTION (1993)
NON-COMPLIANCE honor or the property of the donor, or
On January 21, 1986, A executed a deed of of his wife or children under his
WITH CONDITION (Art. 764)
donation inter
The donation
• vivos shallofbe
of a parcel revoked
land to Dr. at
B the
who had
parental authority;
earlier constructed thereon a buildingthe
instance of the donor, when in which (2) If the donee imputes to the donor any
donee failson
researches to the
comply withdisease
dreaded any of AIDS
the were criminal offense, or any act involving
conditions
being which the
conducted. Theformer
deed, imposed
acknowledged moral turpitude, even though he should
upon the
before latter.public, was handed over by A
a notary prove it, unless the crime or the act
• to Dr. B who period:
Prescriptive received4 it. A few
years fromdays after, A
the has been committed against the donee
flew to Davao City. Unfortunately,
noncompliance with the condition the airplane himself, his wife or children under his
•heRight
was ridingto crashed
revoke on landing
may killing
be him. authority;
Twotransmitted to the heirs of the Dr. B,
days after the unfortunate accident. (3) If he unduly refuses him support when
upon advice of a lawyer, executed a deed the donee is legally or morally bound to
donor, and may be exercised
acknowledged before a notary public accepting
give support to the donor.
theagainst the Is
donation. donee’s heirs. effective? Explain
the donation
your
REVOCATION
answer. DUE TO INGRATITUDE (Art. 765) Prescriptive Period: 1 year, to be counted from
(1) If the donee should ANSWER
SUGGESTED commit some the time the donor had knowledge of the
No,offense againstis the
the donation not person, The lawfact and it was possible for him to bring the
effective.the
requires that the action. (Art. 769)
separate acceptance of the donee of an
immovable must be done in a public document REVOCATION REDUCTION

Failure of the 69
Birth, appearance, donor to reserve
or adoption of a sufficient means
child (Art. 760); for support of
himself or
dependent
relatives (Art.
750.);

Failure of the
Non-fulfillment of donor to reserve
condition imposed sufficient
by the donor (Art. property to pay
764.); off his existing
debts (Art. 759.);
Inofficiousness,
that is, the
Ingratitude of donation
the exceeds that
donee. (Art. 765) which the donor
can give by will
(Arts. 752, 771.);
and

Birth,
REQUISITES BAR QUESTION (2019) OF EXTRAORDINARY ACQUISITIVE
X and Y
PRESCRIPTION: were in a live-in relationship for the
longest time, and
1. were
Capacity to acquire by prescription.
already blessed with a child, Z. They finally
decided to get married on March 15, 2020, When 2. The object must be susceptible of prescription.
X’s parents found about the news, they were 3. The possession must be in the concept of
thrilled and thus, donated in favor of Z, the family the owner, public, peaceful, continuous,
heirloom, particularly, a gold ring valued at and uninterrupted; and,
P250,000.00 which X and Y orally accepted on 4. The period of possession must be 8 years if
behalf of their minor child. One day, X and Y got object is movable, or 30 years if it is
into a serious quarrel, which resulted in them immovable.
setting aside their marriage plans.
(a) Is the donation to Z valid? Explain. (3%) DISTINCTIONS BETWEEN ACQUISITIVE AND
(b) Assuming that the donation to Z is valid, may EXTINCTIVE PRESCRIPTION
X’s parents revoke the donation on the ground
that the marriage of X with Y did not push ACQUISITIVE EXTINCTIVE
through? Explain. (3%)
PRESCRIPTION PRESCRIPTION
SUGGESTED ANSWER
(a) No, it is a void donation. This is an ordinary relationship between one does not look to
donation inter
the
occupant and the land the
act of the possessor
vivos, not a donation proper nuptias. The Civil
Code provides that if the value of the personal in
terms of possession but the neglect of
to
property donated exceeds five thousand is
capable of producing the
owner
pesos, the donation and the acceptance shall legal
consequences; it is
be made in writing; otherwise, the donation
shall be void. A piece of jewelry like the family the
possessor who is the
heirloom here which is a gold ring, valued at actor
P250,000.00, is a personal property. Here, the requires possession requires inaction of
acceptance was made orally; therefore, the by a
claimant who is not the
owner or neglect of
donation is void (Article 748). the
owner one a right to bring
with
(b) No, because it is an ordinary donation, not a his
donation propter nuptias. The ground that the action
marriage did not push through may only be
raised to revoke donations by reason of
applicable to applies to all kinds
marriage which is defined by Article 126 of ownership
and other real rights of
rights, whether real
the Family Code, as those which are made or
personal
before its celebration, in consideration of the
vests ownership or produces the
other
real rights in the extinction
of rights or bars a
occupant right of
action
C. PRESCRIPTION
(CIVIL CODE, ARTS. 1106- results in the results in the loss
1155) one acquires ownership and
By PRESCRIPTION acquisition
of
5. ownership
The possession must of
or other be aby
real or virtue
personal
of aright,
just title;
other real rights through the lapse of time in real andin a person as
rights or
bars the cause of
the manner and under the conditions laid down well
6. The
as the period
loss ofof said action
possession must said
to enforce be four
right years if
by law. In the same way, right and actions are object
ownership or real
lost by prescription. (Art. 1106, NCC) is movable, or 10 years if it is immovable.
rights
another in
Kinds of prescription:
can be proven under should be
1. Acquisitive prescription - one acquires
the
general issue without affirmatively
pleaded and proved
ownership and other real rights through the
lapse of time in the manner and under the its
being to
bar the action or
conditions laid down by law. pleaded claim
the of
adverse party
a. Ordinary acquisitive prescription:
requires possession of things in good
faith and with just title for the time
fixed by law
b. Extraordinary acquisitive
prescription: acquisition
of ownership and other real rights
without need of title or of good faith or
any other condition.
2. Extinctive prescription - rights and actions are
lost through the lapse of time in the
manner and under the conditions laid down
by law.

REQUISITES OF ORDINARY ACQUISITIVE

PRESCRIPTION:
1. Capacity to acquire by prescription
2. The object must be susceptible of
prescription
3. The possession must be in the concept of
the owner, public, peaceful, continuous,
and uninterrupted.
4. The possession must be in good faith.
Prescription of Ownership and other Real
Rights (Art. 1126)
Against a title recorded in the Registry
of Property, ordinary prescription of
ownership or real rights shall not take
place to the prejudice of a third person,
except in virtue of another title also
recorded; and the time shall begin to
run from the recording of the latter.
As to lands registered under the Land
Registration Act, the provisions of that
special law shall govern.

Ownership of land covered by Torrens Title is

not subject of acquisitive prescription
A title once registered under the
torrens system cannot be defeated
even by adverse, open and notorious
possession; neither can it be defeated
by prescription. It is notice to the whole
world and as such all persons are
bound by it and no one can plead
ignorance of the registration. [Doronio
vs. Heirs of Fortunato Doronio,
G.R. No. 169454; December 27, 2007]

70
PERSONS AGAINST WHOM PRESCRIPTION DOES NCC)
NOT RUN (Arts. 1108-110) 2. action upon a quasi-contract (Art 1146 NCC)
1. Against minors and other incapacitated
persons who have no parents, guardians
or other legal representatives
2. Against absentees who have no
administrators
3. Against persons living abroad who have
no managers or administrators
4. Against the State and its subdivision
except as regards patrimonial property
5. Between husband and wife, even though
there be separation of property agreed
upon in the marriage settlements or by
judicial decree.
6. Between parents and children, during the
minority
or insanity of the latter
7. Between guardian and ward during the
continuance of the guardianship
8. Between co-owners/ co-heirs (Art 494)

PRESCRIPTION OF ACTIONS
Prescription of action/ limitation of action is
the time within which an action may be
brought or some act done to preserve the
right.

HOW ACTIONS PRESCRIBE - As provided in Article

1139, actions prescribe by mere lapse of
time fixed by law. This is extinctive
prescription referred to in the second
paragraph of Article 1106

PERIODS OF PRESCRIPTION
Recovery of Movables
• Good Faith - 4 years
• Bad Faith - 8 years

Recovery of Immovables
• Good Faith - 10 years
• Bad Faith - 30 years

Life time
1. Action for annulment of marriage based
on insanity (Art 47 FC)
2. Action to claim legitimacy (Art 173 FC)
3. Action to compel acknowledgement of
illegitimate child (Art 175 FC)

30 years
action for recovery of immovables from
time possession is lost if possessor is in
bad faith (Art 1141 NCC)

10 years
1. action for recovery of immovables from
time possession is lost if possessor is in
good faith (Art 1141 NCC)
2. action upon a mortgage contract
3. action upon a written contract
4. action upon an obligation created by law
5. action upon a judgement

8 years
action to recover movables from time
possession is lost if possessor is in bad faith
(Arts 1132, 1140 NCC)

6 years
1. action upon an oral contract (Art 1145
5 years 40 days
1. Action to claim legitimacy if child Redhibitory action based on defects of animals
should die during minority or insanity (Art
(Art 173 FC) 1577 NCC)
2. Action for declaration of incapacity
of heir (Art 1040 NCC)
3. Action for warranty of solvency of
debtor if credit is assigned to a co- 71
heir during partition (Art 1095 NCC)
4. All other actions where periods are
not fixed by law (Art 1149 NCC)
5. Action for annulment of marriage
based on lack of parental consent,
fraud, force or intimidation,
impotency, sexually transmissible
disease (Art 47 FC)
6. Action for legal separation (Art 55 FC)
7. Action to claim acknowledgement if
illegitimate child died during minority
or insanity (Art 175 FC)

4 years
1. Action for revocation or reduction of
donation based on supervening birth,
appearance or adoption of child (Art
763 NCC)
2. Action for revocation of donation
based on nonfulfillment of condition
(Art 764 NCC)
3. Action for recovery of movable if
possessor is in good faith (Art 1132)
4. Action upon a quasi-delict (Art 1146 NCC)
5. Action for rescission of rescissible
contracts (Art 1389 NCC)
6. Action for annulment of voidable
contracts (Art 1391 NCC)

3 years
Action to impugn legitimacy if husband is
abroad (Art 170 FC)

2 years
Action to impugn legitimacy if husband
is in the Philippines but not residing in
the same place of birth or registration
(Art 170 FC)

1 year
1. Action by husband to impugn child’s
legitimacy if he is residing in the
same place where birth took place or
is recorded (Art 170 FC)
2. Action for revocation of donation for
acts of ingratitude (Art 769 NCC)
3. Action for forcible entry and unlawful
detainer (Art
1147 NCC)
4. Action for defamation (Art 1147 NCC)
5. Action for rescission or damages if
immovable sold is encumbered with
nonapparent burden or servitude (Art
1560 NCC)

6 months
• Action for reduction of price or for
rescission in case of breach of sale of
real estate either with a statement of
its area at a certain price for a unit of
measure or number (Arts 1543, 1539
NCC) or for lump sum (Arts 1543,
1542 NCC)
• Action for warranty against hidden
defects of thing sold (Art 1571 NCC)
Interruption of Prescription of Actions in favor of a co-owner or co-heir against his co-
Art. 1154. The period during which the obligee owners or co-heirs so long as he expressly or
was prevented by a fortuitous event from impliedly recognizes the co-ownership. Peter has
enforcing his right is not reckoned against him. never openly claimed sole ownership of the
The prescription of actions is interrupted property nor had
1. When they are filed before the court; he notified Senen of his having repudiated the co-
2. When there is a written extrajudicial demand ownership.
by the creditors;
3. When there is any written acknowledgement
of the debt by the debtor (Art 1155 NCC)

BANICO V. STAGER
G.R. NO. 232825, SEPTEMBER 16, 2020
J. Lopez
The period to file an action for reformation of
instrument is interrupted on account of written
acknowledgement of the obligation.

A suit for reformation of an instrument may be

barred by lapse of time. The prescriptive period
for actions based upon a written contract and for
reformation of an instrument is ten years. In
holding that Ulysses' cause of action is time-
barred, the CA explained that the complaint was
filed on July 9, 2002, or more than ten years from
the execution of the deed on February 8, 1992,
or beyond the prescriptive period for bringing
actions based upon a written contract. We do not
agree.

The prescription of actions is interrupted when

they are filed before the court, when there is a
written extrajudicial demand by the creditors,
and when there is any written acknowledgment
of the debt by the debtor. The effect of
interruption is to renew the obligation and to
make the full period of prescription run again.
Whatever time of limitation might have already
elapsed from the accrual of the cause of action is
negated and rendered inefficacious. Interruption
should not be equated with suspension where the
past period is included in the computation being
added to the period after prescription is
resumed.

As discussed earlier, Ulysses brought the dispute

before the barangay where Lydia honored the
transaction over the 800- square meter lot and
presented a notarized Deed of Absolute Sale
dated December 6, 2001, containing the
accurate description of the lot. This is
tantamount to an explicit acknowledgement of
the obligation to execute an amended deed of
sale. Applying the above precepts, the ten-year
prescriptive period commenced to run anew from
December 6, 2001. Thus, the complaint filed on
July 9, 2002, is well within the prescriptive
period.
BAR QUESTION (2011)
Senen and Peter are brothers. Senen migrated to
Canada early
while still a teenager. Peter stayed in Bulacan to
take care of their widowed mother and continued
to work on the Family farm even after her death.
Returning to the country some thirty years after he
had left, Senen seeks a partition of the farm to
get his share as the only co-heir of Peter. Peter
interposes his opposition, contending that
acquisitive prescription has already set in and
that estoppel lies to bar the action for partition,
citing his continuous possession of the property
for at least 10 years, for almost 30 years in fact. It
is undisputed that Peter has never openly claimed
sole ownership of the property. If he ever had the
intention to do so, Senen was completely
ignorant of it. Will Senen’s action prosper?
Explain.
SUGGESTED ANSWER
Senen’s action will prosper. Article 494 of the New
Civil Code provides that “no prescription shall run
 BAR QUESTION (2011) matter of time; laches is principally a question of
In 1955, Ramon and his sister Rosario inherited a inequity of permitting a claim to be enforced, this
parcel of inequity being founded on some change in the
land in Albay from their parents. Since Rosario condition of the property or the relation of the
parties. Prescription is statutory; laches is not.
was gainfully employed in Manila, she left Ramon
Laches applies in equity, whereas prescription
alone to possess and cultivate the land. However,
applies at law. Prescription is based on fixed time
Ramon never shared the harvest with Rosario laches is not. (Simeon Miguel et al v. Catalino,
and was even able to sell one-half of the land in G.R. No. L-23072, November 29, 1968)
1985 by claiming to be the sole heir of his
parents. Having reached retirement age in 1990
Rosario returned to the province and upon
learning what had transpired, demanded that the
remaining half of the land be given to her as her 72
share. Ramon opposed, asserting that he has
already acquired ownership of the land by
prescription, and that Rosario is barred by laches
from demanding partition and reconveyance.
Decide the conflicting claims.
SUGGESTED ANSWER
Ramon is wrong on both counts: prescription and
laches. His
possession as co-owner did not give rise to
acquisitive prescription. Possession by a co-owner
is deemed not adverse to the other co-owners but
is, on the contrary, deemed beneficial to them
(Pongon v. GA, 166 SCRA 375). Ramon’s
possession will become adverse only when he has
repudiated the co-ownership and such
repudiation was made known to Rosario.
Assuming that the sale in 1985 where Ramon
claimed he was the sole heir of his parents
amounted to a repudiation of the co-ownership,
the prescriptive period began to run only from
that time. Not more than 30 years having lapsed
since then, the claim of Rosario has not as yet
prescribed. The claim of laches is not also
meritorious. Until the repudiation of the co-
ownership was made known to the other co-
owners, no right has been violated for the said
co-owners to vindicate. Mere delay in vindicating
the right, standing alone, does not constitute
laches.

DISTINCTIONS BETWEEN EXTINCTIVE PRESCRIPTION

AND LACHES
"There is laches when a party was negligent
or has failed "to assert a right within a
reasonable time," thus giving rise to the
presumption that he or she has abandoned it.
Laches has set in when it is already
inequitable or unfair to allow the party to
assert the right (Sps. Aboitiz v. Sps. Po (G.R.
No. 208450 and 208497, June 5, 2017)

Elements of Laches
(1) the conduct of the defendant or one
under whom he claims, gave rise to the
situation complained of;
(2) here was delay in asserting a right after
knowledge of the defendant's conduct
and after an opportunity to sue;
(3) defendant had no knowledge or
notice that the complainant would
assert his right;
(4) here is injury or prejudice to the
defendant in the event relief is accorded
to the complainant.

Defense of Laches
• based on equity.
• It is not based on the title of the party
invoking it, but on the right holder's "long
inaction or inexcusable neglect" to assert
his claim.

Laches v. Prescription
Laches is different from the statute of
limitations. Prescription is concerned with the
fact of delay, whereas laches is concerned
with the effect of delay. Prescription is a
 VI. LAND TITLES AND DEEDS
A. Regalian Doctrine (1987 CONST., art. XII, not more than twenty-five years, and under such
sec. 2) terms and conditions as may be provided by law. In
cases of water rights for irrigation, water supply
B. Nationality Restrictions on Land Ownership fisheries, or industrial uses other than the
(1987 CONST., art. XII, secs. 7-8) development of water power, beneficial use may be
C. Registry of Property (Civil Code, arts. 708- the measure and limit of the grant.”
711)
D. Torrens System; Certificate of Title (P.D.
No. 1529, secs. 39 and 44)
E. Original Registration
F. Confirmation of Imperfect Titles (R.A. No.
11573)

A. REGALIAN DOCTRINE
(1987 CONST., ART. XII, SEC.
2)
• Private title to land must be traced to some
grant, express or implied, from the Spanish
Crown or its successors, the American
Colonial Government, and thereafter, the
Philippine Republic
• In a broad sense, the term refers to royal
rights, or those rights to which the King has
by virtue of his prerogatives
• In Spanish law, it refers to a right which the
sovereign has over anything in which a
subject has a right of property or
propriedad. These were rights enjoyed
during feudal times by the King as the
sovereign.
• The theory of jure regalia was therefore
nothing more than a natural fruit of
conquest
• All lands of the public domain belong to the
State, which is the source of any asserted
right to ownership of land.
• All lands not appearing to be clearly
within private
ownership are presumed to belong to the
State.
• General Rule: Public land remains part of
the inalienable public domain. XPN: Unless
it is shown to have been reclassified or
alienated to a private person by the State
• To overcome this presumption,
incontrovertible evidence must be
established that the land subject of the
application is alienable or disposable.
• The Regalian doctrine extends not only to
land but also to all natural wealth that may
be found in the bowels of the earth.

Regalian Doctrine Enshrine In Philippine Laws and

Constitution (Sec 2, 1987 Constitution)
“All lands of the public domain, waters,
minerals, coal, petroleum, and other mineral
oils, all forces of potential energy, fisheries,
forests or timber, wildlife, flora and fauna, and
other natural resources are owned by the
State. With the exception of agricultural lands,
all other natural resources shall not be
alienated. The exploration, development, and
utilization of natural resources shall be under
the full control and supervision of the State.
The State may directly undertake such
activities, or it may enter into co-production,
joint venture, or production- sharing
agreements with Filipino citizens, or
corporations or associations at least sixty per
centum of whose capital is owned by such
citizens. Such agreements may be for a period
not exceeding twenty-five years, renewable for
G. Subsequent Registration (P.D. No. area." Here, the Compromise Agreement
1529, secs. 51-53) obliged PRA to transfer the reclaimed land to
H. Non-Registrable Properties (Civil Central Bay's qualified assignee. Yet, this
scheme grants Central Bay beneficial
Code, art. 420) ownership or equitable title defined as "a title
I. Dealings with Unregistered Lands derived through a valid contract or relation,
(P.D. No. 1529, sec. 113) and based on recognized equitable principles;
J. Assurance Fund (P.D. No. 1529, the right in the party, to whom it belongs, to
secs. 93- 102) have the legal title transferred to him.”
K. Reconstitution of Title (P.D. No.
1529, sec. 110) 73

Except
The agricultural lands of public domain
which alone may be alienated, forest or
timber, and mineral lands, as well as all
other natural resources must remain with
the State, the exploration, development
and utilization of which shall be subject
to its full control and supervision albeit
allowing it to enter into co-production,
joint venture or production-sharing
agreements, or into agreements with
foreign-owned corporations involving
technical or financial assistance for large-
scale exploration, development, and
utilization.

What is needed to declassify a forest land into

alienable or disposable land for agricultural or
other purposes?
A positive act of the government is
needed to declassify a forest land into
alienable or disposable land for
agricultural or other purposes. Absent
any positive act of the government to
classify a land of public domain into
alienable or disposable land for
agricultural or other purposes, it remains
with the State. (FCBPFAI v. DENR and
DAR | G.R. No. 247866 | September 15,
2020)

Bureau of Forestry v. CA 153 SCRA 351 (1987)

As provided for under Sec. 6 of CA 141,
which was lifted from Act 2874, the
classification or reclassification of
public lands into alienable or
disposable, mineral, or forest lands is
now a prerogative of the Executive
Department of the government and not the
courts. With these rules, there should be
no more room for doubt that it is not the
court which determines the
classification of lands of the public
domain into agricultural, forest or
mineral but the Executive Branch of
the government, through the Office of
the President.

CENTRAL BAY RECLAMATION AND DEVELOPMENT

CORP. V. COMMISSION ON AUDIT
G.R. NO. 252940, APRIL 5, 2022
J. Lopez
The proscription against corporate
ownership of alienable lands is absolute
and clear. Apropos is Section 3, Article XII
of the 1987 Constitution which provides
that private corporations "may not hold
such alienable lands of the public domain
except by lease, for a period not
exceeding twenty-five years, renewable for
not more than twenty-five years, and not
to exceed one thousand hectares in
Indeed, the provision in the Compromise Citizenship may be a transferee of private lands,
Agreement allowing conveyance to "Central subject to limitations provided by law." Section 5
Bay's qualified assignee" clearly means that of Republic Act No. 8179 (An Act Amending the
Central Bay will hold the reclaimed land other Foreign Investments Act of 1991) also states:
than by lease which the constitutional ban
seeks to avoid. Further, the stipulation
presupposes that Central Bay, as an assignor,
is qualified by law to exercise ownership of the
land and transfer it to another party. On this
score, the Court reiterates that an assignee
cannot acquire greater rights than those
pertaining to the assignor. The assignee is
merely subrogated to the rights and
obligations of the assignor. The assignee is
bound by exactly the same conditions that
B. NATIONALITY
held RESTRICTIONS
the assignor under ON LAND
the original parties'
transaction. OWNERSHIP
(1987 CONST., ART. XII, SECS. 7-8)

GR:
• Filipino citizens, whether residing in the
Philippines or abroad, are generally entitled
to own land in the country.
• Corporations or Associations at least 60%
Filipino- Owned: Corporations or
associations at least 60% owned by Filipino
citizens are also eligible to acquire and hold
land, subject to certain limitations.

XPN:
• Condominiums: Foreigners are allowed to
own condominium units, provided that the
foreign ownership does not exceed 40% of
the total units in the condominium project.
• Long-term Lease: Foreigners can enter into
long-term lease agreements for residential
or commercial properties for an initial
period of up to 50 years, renewable for
another 25 years.
• Foreigners cannot acquire lands except
through hereditary succession (intestate not
by will);
• i.e. the default laws on inheritance which
are not transfers of ownership by way of a
last will and testament.
• Former Filipino Citizens: Foreigners who
were former Filipino citizens can acquire
land up to a maximum area of 5,000 square
meters for residential purposes and 3
hectares for business or commercial
purposes.

SIMUNDAC-KEPPEL V. KEPPEL
G.R. NO. 202039, AUGUST 14, 2019
C.J. Bersamin
• Section 7, Article XII of the 1987
Constitution states that: "Save in cases of
hereditary succession, no private lands shall
be transferred or conveyed except to
individuals, corporations, or associations
qualified to acquire or hold lands of the
public domain." It seems clear, however,
that the lower courts were too quick to
pronounce that Georg, being a German
citizen, was automatically disqualified from
owning lands in the Philippines.
• At best, an alien could have enjoyed a
limited right to own lands. Section 8, Article
XII of the Constitution provides:
"Notwithstanding the provisions of Section 7
of this Article, a natural-born citizen of the
Philippines who has lost his Philippine
• Sec. 10. Other Rights of Natural Born area and vice versa.
Citizen Pursuant to the Provisions of
Article XII, Section 8 of the Purpose - The Registry of Property has for its
Constitution. - Any natural born citizen object the inscription or annotation of acts and
who has lost his Philippine citizenship contracts relating to the ownership and other
and who has the legal capacity to rights over immovable property. (Art. 708)
enter into a contract under Philippine
Effect of failure to register - The titles of ownership, or
laws may be a transferee of a private
of other rights over immovable property, which
land up to a maximum area of five
are not duly inscribed or annotated in the
thousand (5,000) square meters in the Registry of Property shall not prejudice third
case of urban land or three (3) persons. (Art. 709)
hectares in the case of rural land to be
used by him for business or other Effect of Non-Registration on the Immediate Parties to a
purposes. Transaction
• In the case of married couples, one of As between the parties to a sale, registration is
them may avail of the privilege herein not necessary to make it valid and effective,
granted: Provided, That if both shall for such notice is equivalent to registration. To
avail of the same, the total area hold otherwise would make the Torrens System a
acquired shall not exceed the shield for the commission of fraud by the
maximum herein fixed. vendor or his heirs who would then be able to
• In case the transferee already owns reconvey the property to other persons. Indeed,
urban or rural land for business or registration is intended to protect the buyer
other purposes, he shall still be against claims of third persons arising from
entitled to be a transferee of subsequent alienations by the vendor, and is
additional urban or rural land for certainly not necessary to give effect as
business or other purposes which between the parties to the contract. (Manuel v.
when added to those already owned PNB, L-9664, July 31, 1957; Monge v. Angeles,
by him shall not exceed the maximum L-9558, May 24, 1957; Galanza v. Nuesa, 50
O.G. 4213).
areas herein authorized.
• A transferee under this Act may
Public records - The books in the Registry of
acquire not more than two (2) lots Property shall be public for those who have a
which should be situated in different known interest in ascertaining the status of the
municipalities or cities anywhere in the immovables or real rights annotated or inscribed
Philippines: Provided, That the total therein. (Art. 710)
land area thereof shall not exceed five
thousand (5,000) square meters in the Governing Laws - For determining what titles are
case of urban land or three (3) subject to inscription or annotation, as well as the
hectares in the case of rural land for form, effects, and cancellation of inscriptions and
use by him for business or other annotations, the manner of keeping the books in
purposes. A transferee who has the Registry, and the value of the entries
already acquired urban land shall be contained in said books, the provisions of the
disqualified from acquiring rural land Mortgage Law, the Land Registration Act, and
other special laws shall govern. (Art. 711)

C. REGISTRY OF PROPERTY
(CIVIL CODE, ARTS. 708-711)

74
Purposes of Registration and Publicity registered, with very few exceptions, should not
(a) to give true notice of the true status of real thereafter be impugned, altered, changed,
property and real rights thereto; modified, enlarged, or diminished, except in
(b) to prejudice third persons (unless they some direct proceeding permitted by law.
have actual knowledge of the transaction Otherwise all security in registered titles would
concerned) (Art. 709; Tuason v. Reyes, 48 be lost. (Legarda v. Saleeby | G.R. No. L-8936 |
Phil. 844); October 2, 1915).
(c) to record acts or contracts (transmissions
and modifications of ownership and other
real rights over real properties);
(d) to prevent the commission of frauds, thus
insuring the effectivity of real rights over
real property.
Note: Registration is not a mode of acquiring
ownership.
D. TORRENS SYSTEM;CERTIFICATE OF TITLE
(P.D. NO. 1529, SECS. 39 AND 44)

• Is a system for registration of land under

which, upon the landowner’s application,
the court may, after appropriate
proceedings, direct the issuance of a
certificate of title. It is a system of
registration by which title recorded become
absolute, indefeasible and imprescriptible.
Rights acquired under this system are
guaranteed by the government which
provides an assurance fund to answer for
damages to be suffered by persons thru the
operation of this system.
• The primary and fundamental purpose of the
torrens system is to quiet title. If the
holder of a certificate cannot rest secure
in this registered title then the purpose of
the law is defeated. If those dealing with
registered land cannot rely upon the
certificate, then nothing has been gained
by the registration and the expense
incurred thereby has been in vain. If the
holder may lose a strip of his registered
land by the method adopted in the present
case, he may lose it all. (Legarda vs.
Saleeby , G.R. No. L-8936 | October 2,
1915)

Nature of the Torrens System

The Torrens system in the Philippines is
judicial in character and not merely
administrative in nature. “Judicial proceedings
for the registration of land throughout the
Philippines shall be in rem and shall be based
on the generally accepted principles
underlying the Torrens system (Sec. 2, P.D.
1529)

Protection given to the Torrens Certificate of Title to

Land
Holders are entitled to protections under:
1. The Property Registration Decree; and/ or
2. The Civil Code of the Philippines.

CERTIFICATE OF TITLE
• A certificate of title is the transcript of the
decree of registration made by the Registrar
of Deeds in the registry. (Philippine National
Bank vs. Tan Ong Zse | G.R. No. L-27991 |
December 24, 1927)
• The certificate of registration accumulates
in open document a precise and correct
statement of the exact status of the fee
held by its owner.
• The certificate, in the absence of fraud, is
the evidence of title and shows exactly the
real interest of its owner. The title once
 Kinds of Certificate of Title free of all
1. Original Certificate of Title (OCT) encumbrances
2. Transfer Certificate of Title (TCT) May hold
3. Condominium Certificate of Title (CCT) except
the
Duplicate Certificate of Title those same subject
The following are entitled to a duplicate noted on said to more
certificate of title: certificate, and encumbranc
1. Registered Owner es, such as
any of the
2. Co-owner
encumbrances prior
Original Certificate of Title Distinguished from specifically interests
Transfer Certificate of Title enumerated in which
Sec. 39, Act though
ORIGINAL CERTIFICATE OF TITLE DISTINGUISHED
FROM TRANSFER CERTIFICATE OF TITLE 496 unregistered,
(now Sec. 44, he had
OCT TCT P.D. knowledge of
Issued for the 1529) which at the time
first may of the
time after the Issued after be subsisting purchase.
land the
has cancellation
of 75
been
adjudicated and the

original
decreed in the certificate of
name of its title when
owner the
in original or land is
initial
registration transferred by
proceedings by the

registered
the Registrar of owner by
As to issuance

Deeds where reason of

the sale
land lies or otherwise
pursuant or
to the decree subsequently.
of
registration.
To convey
the
To place the land
land already
for the first under
time
the
under the
operation of
operation of
the Torrens
the
system from
Torrens
As to Legal Effect

system one
(Section 45, Act person to
496) another (Sec.
50, Act
496,
now Sec.
51,
P.D. 1529).
Holds the land
Enforceability of Certificate of Title: Authority);
• valid and enforceable against the whole 5. Publication of a notice of the filing of the
world by the fact that it was issued pursuant application and date and place of the hearing
to a decree of registration based upon final in the Official Gazette;
judgment promulgated by a court of 6. Service of notice upon contiguous owners,
competent jurisdiction after due publication, occupants and those known to have interests
notice and hearing, provided that the said in the property by the sheriff.
decree has not been reopened within one
year from the date of its issuance on the
ground of actual fraud.
• Once registered, cannot be defeated, even
by adverse, open, and notorious possession.
• Once registered, cannot be defeated by
prescription.
• A conclusive evidence of the ownership of the
land referred to therein.
• After the expiration of the one (1) year
period from the issuance of the decree of
registration upon which it is based, it
becomes incontrovertible.

XPN: burdens on the land registered which

continue to exist and remain in force although
not noted in the title (Statutory Liens)
1. liens, claims or rights arising or existing
under the laws and Constitution of the
Philippines which are not by law required to
appear of record in the Registry of Deeds in
order to be valid against subsequent
purchasers or encumbrances of record.
2. unpaid real estate taxes levied and
assessed within two years immediately
preceding the acquisition of any right over
the land by an innocent purchaser for
value, without prejudice to the right of the
government to collect taxes payable before
that period from the delinquent taxpayer
alone.
3. any public highway or private way
established or recognized by law, or any
government irrigation canal or lateral
thereof, if the certificate of title does not
state that the boundaries of such highway
or irrigation canal or lateral thereof have
been determined.
4. any disposition of the property or limitation
on the use thereof by virtue of, or pursuant
to, Presidential Decree No. 27 or any other
law or regulation on agrarian reform.

Remedy For a Lost Duplicate Certificate of Title

If a duplicate certificate is lost or destroyed, or
cannot be produced by a person applying for
the entry of a new certificate to him, or for the
registration of any instrument, a sworn
statement of the fact of such loss or
destruction may be filed by the registered
owner or other person in interest and
registered (Sec. 109, P.D. 1529).

E. ORIGINAL REGISTRATION

Requisites in ordinary land registration proceedings:

1. Survey of land by the Bureau of Lands or a
duly licensed private surveyor;
2. Filing of application for registration by the
applicant;
3. Setting of the date for the initial hearing of
the application by the Court;
4. Transmittal of the application and the date
of initial hearing with all the documents or
other evidences attached thereto by the
Clerk of Court to the Land Registration
Commission (now Land Registration
7. Filing of answer to the application by bona fide claim of ownership for at least
any person whether named in the notice twenty (20) years immediately preceding
or not; the filing of the application for
8. Hearing of the case by the Court; confirmation of title except when
9. Promulgation of judgment by the Court; prevented by war or force majeure. They
10. Issuance of the decree by the Court shall be conclusively presumed to have
declaring the decision final and performed all the conditions essential to
instructing the Land Registration a Government grant and shall be
Authority to issue a decree of entitled to a certificate of title under this
confirmation and registration; section. Note: Possession must be
11. Entry of the decree of registration in the • Open – apparent
Land Registration Authority; • Continuous – uninterrupted and not occasional
12. Sending of copy of the decree of • Exclusive – dominion over the land
registration to the corresponding • Notorious – must be generally known
Register of Deeds; and 2. Those who have acquired ownership of
13. Transcription of the decree of private lands or abandoned riverbeds by
registration in the registration book and right of accession or accretion under the
issuance of the owner’s duplicate provisions of existing laws.
original certificate of title to the 3. Those who have acquired ownership of
applicant by the Register of Deeds, upon land in any other manner provided for by
payment of the prescribed fees. law.
• Where the land is owned in common,
1. WHO MAY APPLY – P.D. NO. 1529, SECS. 14, all the co- owners shall file the
AS AMENDED BY R.A. NO. 11573; C.A. NO. application jointly.
141, AS AMENDED; R.A. NO. 8371, SEC. 12 • Where the land has been sold under
pacto de retro, the vendor a retro may
WHO MAY APPLY file an application for the original
RA 11573. Sec. 6 amending Sec. 14 of PD 1529 registration of the land: Provided,
however, That should the period for
The following persons may file in the proper Court of
redemption expire during the
First Instance an application for registration of title
pendency of the registration
to land, whether personally or through their duly proceedings and ownership to the
authorized representatives: property consolidated in the vendee a
1) Those who by themselves or through retro, the latter shall be substituted for
their predecessors-in-interest have the applicant and may continue the
been in open, continuous, proceedings.
exclusive and notorious possession • A trustee on behalf of the principal may
and occupation of alienable and apply for original registration of any land
disposable lands of the public domain held in trust by the trustee, unless
not covered by existing prohibited by the instrument creating
certificates of title or patents under a the trust.

76
Requisites and Process in ordinary land registration notice, the same being included in the general
proceedings: description "To all whom it may concern".
1. Survey of land by the Bureau of Lands or a
duly licensed private surveyor;
2. Filing of application for registration by the
applicant;
3. Setting of the date for the initial hearing of
the application by the Court;
4. Transmittal of the application and the date
of initial hearing with all the documents or
other evidences attached thereto by the
Clerk of Court to the Land Registration
Commission (now Land Registration
Authority);
5. Publication of a notice of the filing of the
application and date and place of the
hearing in the Official Gazette;
6. Service of notice upon contiguous owners,
occupants and those known to have
interests in the property by the sheriff.
7. Filing of answer to the application by any
person whether named in the notice or not;
8. Hearing of the case by the Court;
9. Promulgation of judgment by the Court;
10. Issuance of the decree by the Court
declaring the decision final and instructing
the Land Registration Authority to issue a
decree of confirmation and registration;
11. Entry of the decree of registration in the
Land Registration Authority;
12. Sending of copy of the decree of
registration to the corresponding Register
of Deeds;
13. Transcription of the decree of registration
in the registration book and issuance of the
owner’s duplicate original certificate of title
to the applicant by the Register of Deeds,
upon payment of the prescribed fees.

2. DECREE OF REGISTRATION – P.D. NO. 1529,

SEC. 31

Every decree of registration issued by the

Commissioner shall:
• Bear the date, hour and minute of its entry,
and shall be signed by him.
• It shall state whether the owner is married
or unmarried, and if married, the name of
the husband or wife: Provided, however, that
if the land adjudicated by the court is
conjugal property, the decree shall be
issued in the name of both spouses.
• If the owner is under disability, it shall state
the nature
of disability, and if a minor, his age.
• It shall contain a description of the land as
finally determined by the court, and shall set
forth the estate of the owner, and also, in
such manner as to show their relative
priorities, all particular estates,
mortgages, easements, liens,
attachments, and other encumbrances,
including rights of tenant-farmers, if any,
to which the land or owner's estate is
subject, as well as any other matters
properly to be determined in pursuance of
this Decree.
• The decree of registration shall bind the
land and quiet title thereto, subject only to
such exceptions or liens as may be provided
by law.
• It shall be conclusive upon and against all
persons, including the National Government
and all branches thereof, whether
mentioned by name in the application or
3. REVIEW OF DECREE OF REGISTRATION entertained if the property is already
– P.D. NO. 1529, SEC. 32 acquired by an innocent purchaser for
value.
• The decree of registration shall not • Innocent Purchaser for Value is one who
be reopened or revised by reason of buys property and pays a full and fair
absence, minority, or other disability price for it, at the time of the purchase
of any person adversely affected or before any notice of some other
thereby, nor by any proceeding in person’s claim on interest to it.
any court for reversing judgments, (Francisco H. Lu v. Sps Manipon | G.R.
subject, however, to the right of any No. 147072 | May 7, 2002)
person, including the government • An “innocent purchaser for value’’ is
and the branches thereof, deprived deemed, under the Torrens system, to
of land or of any estate or interest include an innocent lessee, mortgagee or
therein by such adjudication or other encumbrances for value.
confirmation of title obtained by
actual fraud, to file in the proper Elements of an innocent purchaser for value:
Court of First Instance a petition for 1. One who buys property and pays a full and fair price
reopening and review of the decree for it; and
of registration not later than one • A purchaser who acquires real property at
year from and after the date of the less than the fair market value should be
entry of such decree of registration, wary of any defect in title. While
but in no case shall such petition be generally, purchase at less than the fair
entertained by the court where an market value is allowed by law, if
innocent purchaser for value has circumstances exist that call for the
acquired the land or an interest cancellation of the sale due to the void
therein, whose rights may be nature of the transaction; then the sale
prejudiced. may be nullified. (Sps. Cusi v. Domingo |
• Upon the expiration of said period of one G.R. No. 195825
year, the | February 27, 2013)
decree of registration and the
certificate of title issued shall 2. Purchases property before any notice of some other
become incontrovertible. person’s interest.
• Any person aggrieved by such • A purchaser cannot close his eyes to
decree of registration in any case facts which should put a reasonable
may pursue his remedy by action for man upon his guard, and then claim
damages against the applicant or that he acted in good faith under the
any other persons responsible for belief that there was no defect in the
the fraud. title of the vendor. He must further
show that he exercised reasonable
4. INNOCENT PURCHASER FOR VALUE; RIGHTS – precaution by inquiring beyond the
P.D. NO. 1529, SEC. 32 certificates of title. Failure to exercise
such, rendered him a buyer in bad faith.
• Petition for review of decree, even if (Uy v. Fule | G.R. No. 164961 | June 30,
filed within one year, cannot be 2014)

77
JIMENEZ V. JIMENEZ ET AL. the time of the sale, the buyer was not aware of any
G.R. NO. 228011, FEBRUARY 10, 2021 claim or interest of some other person in the
J. Lopez property, or of any defect or restriction in the title of
In Cavite Development Bank v. Lim, the Court the seller or in his capacity to convey title to the
explained the doctrine of mortgagee in good property.
faith as follows:
There is, however, a situation where, despite the fact
that the mortgagor is not the owner of the
mortgaged property, his title being fraudulent, the
mortgage contract and any foreclosure sale arising
therefrom are given effect by reason of public policy.
This is the doctrine of "the mortgagee in good faith"
based on the rule that all persons dealing with
property covered by a Torrens Certificate of Title, as
buyers or mortgagees, are not required to go beyond
what appears on the face of the title. The public
interest in upholding the indefeasibility of a certificate
of title, as evidence of the lawful ownership of the
land or of any encumbrance thereon, protects a buyer
or mortgagee who, in good faith, relied upon what
appears on the face of the certificate of title.

The doctrine applies when the following

requisites concur, namely: (a) the mortgagor is
not the rightful owner of, or does not have valid
title to, the property; (b) the mortgagor
succeeded in obtaining a Torrens title over the
property; (c) the mortgagor succeeded in
mortgaging the property to another person; (d)
the mortgagee relied on what appears on the
title and there exists no facts and
circumstances that would compel a reasonably
cautious man to inquire into the status of the
property; and (e) the mortgage contract was
registered. All these requisites were satisfied
in this case, viz.: (a) Damian was found to
have no valid title to the property as his title
was derived from a forged Deed of Donation;
(b) he was able to obtain TCT No. N- 217728;
(c) he succeeded in mortgaging the property
to Calubad and Keh; (d) Calubad and Keh
found nothing on TCT No. N-217728 that would
have notified them of Damian's invalid title. In
fact, Calubad and Keh even went beyond the
title and conducted an ocular inspection,
whereby they confirmed that Damian was in
possession and occupation of the property;
and (e) the mortgage contract was registered.
Thus, the courts a quo did not err in ruling that
Calubad and Keh were mortgagees in good
faith.

CHUA V. REPUBLIC,
G.R. NO. 253305, AUGUST 02, 2023
J. Hernando
A buyer for value in good faith is one who buys
property of another, without notice that some
other person has a right to, or interest in, such
property and pays full and fair price for the
same, at the time of such purchase, or before
he has notice of the claim or interest of some
other persons in the property. He buys the
property with the well-founded belief that the
person from whom he receives the thing had
title to the property and capacity to convey it.

To prove good faith, a buyer of registered and

titled land need only show that he relied on
the face of the title to the property. He need
not prove that he made further inquiry for he
is not obliged to explore beyond the four
corners of the title. Such degree of proof of
good faith, however, is sufficient only when
the following conditions concur: first, the seller
is the registered owner of the land; second,
the latter is in possession thereof; and third, at
Absent one or two of the foregoing the filing of the application for confirmation of
conditions, then the law itself puts the title except when prevented by war or force
buyer on notice and obliges the latter to majeure. They shall be conclusively presumed
exercise a higher degree of diligence by to have performed all the conditions essential
scrutinizing the certificate of title and to a Government grant and shall be entitled to
examining all factual circumstances in a certificate of title under the provisions of this
order to determine the seller's title and Chapter.
capacity to transfer any interest in the
property. Under such circumstance, it is Proof that the Land is Alienable and Disposable
no longer sufficient for said buyer to (Section 7)
merely show that he relied on the face of For purposes of judicial confirmation of
the title; he must now also show that he imperfect titles filed under Presidential Decree
exercised reasonable precaution by No. 1529, a duly signed certification by a duly
inquiring beyond the title. Failure to designated DENR geodetic engineer that the
exercise such degree of precaution land is part of alienable and disposable
makes him a buyer in bad faith. agricultural lands of the public domain is

RA 11573 - AN ACT IMPROVING THE CONFIRMATION F. CONFIRMATION OF IMPERFECT TITLES

PROCESS FOR IMPERFECT LAND TITLES (R.A. NO. 11573)
• It simplifies the procedure and
requirements in granting land titles. sufficient proof that the land is alienable. Said
• It shortened the required period of certification shall be imprinted in the approved
possession for confirmation of survey plan submitted by the applicant in the
imperfect titles to 20 years. land registration court. The imprinted
• Purpose of the Law: to simplify, update certification in the plan shall contain a sworn
and harmonize similar and related statement by the geodetic engineer that the land
provisions of land laws in order to is within the alienable and disposable lands of
simplify and remove ambiguity in its the public domain and shall state the applicable
interpretation and implementation. It is Forestry Administrative Order, DENR
also the policy of the State to provide Administrative Order, Executive Order,
land tenure security by continuing Proclamations and the Land Classification Project
judicial and administrative titling Map Number covering the subject land.
processes.
Should there be no available copy of the Forestry
Administrative Order, Executive Order or
Who may apply for Judicial Confirmation of Imperfect
Proclamation, it is sufficient that the Lad
Title
Classification (LC) Map Number, Project Number,
Those who by themselves or through their
and date of release indicated in the land
predecessors-in- interest have been in
classification map be stated in the sworn
open, continuous, exclusive, and
statement declaring that said land classification
notorious possession and occupation of
map is existing in the inventory of LC Map
alienable and disposable agricultural
records of the National Mapping and Resource
lands of the public domain, under a bona
Information Authority (NAMRIA) and is being
fide claim of ownership, for at least
used by the DENR as land classification map.
twenty (20) years immediately preceding

78
 REPUBLIC V. PASIG RIZAL CO., INC. (PRCI)
G.R. NO. 213207, FEBRUARY 15, 2022
En Banc
• In 1958, Manuel Dee Ham had the Subject Property surveyed and declared in his name for
tax purposes. After Manuel's death, the property was inherited by his wife and children,
who transferred ownership to the Dee Ham family corporation, PRCI.
• PRCI began paying the property taxes, and in 2009, Esperanza executed an Affidavit formalizing
the transfer.
• In 2010, Esperanza, as President of PRCI, filed an application for original registration of
title over the Subject Property. The RTC rendered a judgment confirming and affirming
PRCI's title to the property under PD 1529, also known as the Property Registration
Decree. CA affirmed the RTC Decision and denied Republic’s Motion for Reconsideration.
Thus, this instant case.
• The SC remanded the case to the CA for reception of evidence on the Subject Property's
land classification status in accordance with Section 7 of RA 11573. Thereafter, the CA is
directed to resolve PRCI's application for land registration with utmost dispatch following
the guidelines set forth in this Decision.

Important points discussed in Republic v. PRCI case:

• While lands of the public domain under the Constitution pertain to all lands owned or held
by the State both in its public and private capacity, lands forming part of the public
dominion under the Civil Code pertain only to those which are intended for public use,
public service, or the development of national wealth, and excludes patrimonial property.
• Therefore, property of public dominion and patrimonial property, as defined by the Civil
Code, both fall within the scope of public domain contemplated under the 1987
Constitution. Excepted from the scope of public domain are lands subject of a claim of
ownership based on native title as explicitly recognized in Cariño v. Insular Government
• The proper interpretation of Article 422 in relation to Articles 420 and 421 is that
"converted" patrimonial property can only come from property of public dominion under
Article 420. Hence, "converted" patrimonial property should not be understood as a
subset of patrimonial property "by nature" under Article 421.
• In effect, the classification of agricultural land as alienable and disposable serves as
unequivocal proof of the withdrawal by the State of the said land from the public
dominion, and its "conversion" to patrimonial property.
• The clear intention of such conversion is to open the land to private acquisition or
ownership. Again, as keenly observed by Justice Gaerlan, such converted patrimonial
property remains within the broader constitutional concept of public domain precisely as
alienable and disposable land of the public domain
• Clearly, any specific property of the State may either be outside or within the commerce
of man; it cannot be both. Prior to the classification of such property to alienable and
disposable, agricultural lands (being property of public dominion) are beyond the
commerce of man. It is the classification of agricultural lands as alienable and disposable
which places them within the commerce of man, and renders them capable of being the
subject matter of contracts (such as a patent, the latter being a contract between the
State and the grantee).
• In turn, the power to classify (and re-classify) land is vested solely in the Executive
Department. Once a parcel of land forming part of public dominion is classified as
alienable and disposable, they become subject to private acquisition but only through the
prescribed modes of acquisition of ownership.
• In Malabanan, the requirements for original registration under then Section 14(2) were: (i)
a declaration that the land subject of the application is alienable and disposable; (ii) an
express government manifestation that said land constitutes patrimonial property, or is
"no longer retained" by the State for public use, public service, or the development of
national wealth; and (iii) proof of possession for the period and in the manner prescribed
by the Civil Code for acquisitive prescription, reckoned from the moment the property
subject of the application becomes patrimonial property of the State.
• The second Malabanan requirement, that is, the express government manifestation that
the land constitutes patrimonial property, was anchored on the premise that "all lands
owned by the State, although declared alienable or disposable, remain as [property of
public dominion] and ought to be used only by the Government." However, this premise
was not meant to be adopted in absolute terms.
• Once property of public dominion is classified by the State as alienable and disposable
land of the public domain, it immediately becomes open to private acquisition, since
"[a]lienable lands of the public domain x x x [form] part of the patrimonial [property] of
the State." The operative act which converts property of public dominion to patrimonial
property is its classification as alienable and disposable land of the public domain, as this
classification precisely serves as the manifestation of the State's lack of intent to retain
the same for some public use or purpose.
• Consequently, those who seek registration on the basis of title over land forming part of
the public domain must overcome the presumption of State ownership. To do so, the
applicant must establish that the land subject of the application is alienable or disposable
and thus susceptible of acquisition and subsequent registration. However, once the
presumption of State ownership is discharged by the applicant, the burden to refute the
applicant's claim that the land in question is patrimonial in nature necessarily falls on the
State. For while the burden to prove that the land subject of the application is alienable
and disposable is placed on the applicant, the burden to prove that such land is retained
for public service or for the development of the national wealth, notwithstanding its
previous classification as alienable and disposable, rests, as it should, with the State.

79
• Where the property subject of the application had not been utilized by the State, and the latter
had not manifested any intention to utilize the same, proof of conversion into patrimonial
property requires the establishment of a negative fact — the lack of intent on the part of
the State to retain the property and utilize the same for some public purpose. In such
situations, what precludes the conversion of property of public dominion to patrimonial
property is an existing intention to use the same for public purpose, and not one that is
merely forthcoming.
• In other words, placing on the applicant the burden to prove the State's lack of intent to retain
the property would be unreasonable, and totally beyond the text and purpose of PD 1529.
Further, this renders illusory the legal provisions in the Civil Code for the acquisition of
property. After all, it is the State which has the capacity to prove its own intent to use
such property for some public purpose in the absence of any overt manifestation thereof
through prior use, occupation, or express declaration.
• Jurisprudence instructs that when the plaintiff's case depends upon the establishment of a
negative fact, and the means of proving the fact are equally within the control of each party, the
burden of proof is placed upon the party averring the negative fact. Conversely, if the means
to prove the negative fact rests easily, if not only, upon the defendant, the plaintiff should
not be made to bear the burden of proving it.
• In cases where land held by the State has not been previously utilized for some public
purpose, the State has no prior use to abandon or withdraw the land from. It would
therefore be unreasonable to require the applicant to present a law or executive
proclamation expressing such abandonment for there never will be one. The imposition of this
additional requirement in cases where the land so possessed had never been utilized by
the State has dire consequences for those who have occupied and cultivated the land in
the concept of owners for periods beyond what is required by law.
• However, and to be clear, where the property subject of the application had been
previously utilized by the State for some public purpose, proof of conversion requires the
establishment of a positive fact — the abandonment by the State of its use and the
consequent withdrawal of the property from the public dominion. To establish this positive
fact, it becomes incumbent upon the applicant to present an express government
manifestation that the land subject of his application already constitutes patrimonial
property, or is no longer retained for some public purpose. It is within this context that
the second requirement espoused in Malabanan was crafted. This second requirement
covered "converted" patrimonial property of the State, or those falling within the scope of
Article 422 of the Civil Code.
• Notably, Section 6 of RA 11573 shortens the period of possession required under the old
Section 14(1). Instead of requiring applicants to establish their possession from "June
12, 1945, or earlier", the new Section 14(1) only requires proof of possession "at least
twenty (20) years immediately preceding the filing of the application for confirmation of
title except when prevented by war or force majeure.“
• Equally notable is the final proviso of the new Section 14(1) which expressly states that
upon proof of possession of alienable and disposable lands of the public domain for the period
and in the manner required under said provision, the applicant/s "shall be conclusively
presumed to have performed all the conditions essential to a Government grant and shall be
entitled to a certificate of title under this section." This final proviso unequivocally confirms
that the classification of land as alienable and disposable immediately places it within the
commerce of man, and renders it susceptible to private acquisition through adverse
possession.

Guidelines on the application of RA 11573 as discussed in Republic v. PRCI case:

1. RA 11573 shall apply retroactively to all applications for judicial confirmation of title which
remain pending as of September 1, 2021, or the date when RA 11573 took effect. These
include all applications pending resolution at the first instance before all Regional Trial
Courts, and applications pending appeal before the Court of Appeals.
2. Applications for judicial confirmation of title filed on the basis of the old Section 14(1) and
14(2) of PD 1529 and which remain pending before the Regional Trial Court or Court of
Appeals as of September 1, 2021 shall be resolved following the period and manner of
possession required under the new Section 14(1). Thus, beginning September 1, 2021,
proof of "open, continuous, exclusive and notorious possession and occupation of
alienable and disposable lands of the public domain not covered by existing certificates
of title or patents under a bona fide claim of ownership for at least twenty (20) years
immediately preceding the filing of the application for confirmation" shall be sufficient for
purposes of judicial confirmation of title, and shall entitle the applicant to a decree of
registration.
3. In the interest of substantial justice, the Regional Trial Courts and Court of Appeals are
hereby directed, upon proper motion or motu proprio, to permit the presentation of
additional evidence on land classification status based on the parameters set forth in
Section 7 of RA 11573.
a. Such additional evidence shall consist of a certification issued by the DENR geodetic
engineer which (i) states that the land subject of the application for registration has
been classified as alienable and disposable land of the public domain; (ii) bears
reference to the applicable Forestry Administrative Order, DENR Administrative Order,
Executive Order, or proclamation classifying the land as such; and (iii) indicates the
number of the LC Map covering the land.
b. In the absence of a copy of the relevant issuance classifying the land as alienable and
disposable, the certification must additionally state (i) the release date of the LC Map;
and (ii) the Project Number. Further, the certification must confirm that the LC Map
forms part of the records of NAMRIA and is precisely being used by the DENR as a
land classification map.
c. The DENR geodetic engineer must be presented as witness for proper authentication of the
certification in
accordance with the Rules of Court.

80
 Rural Bank of Ormoc City, Inc. | G.R. No. L-40177
| February 12 1976)

Conveyance and other dealings by registered owner.

An owner of registered land may:
1) convey,
2) mortgage,
3) lease,
4) charge or otherwise deal with the
same in accordance with existing laws.

General Rule: It shall operate only as a contract

between the parties and as evidence of
authority to the Register of Deeds to make
registration (Sec. 51)
XPN: In order to bind the land, such
conveyance, mortgage, lease, lien,
attachment, order, judgment, instrument or
entry affecting registered land must be
registered, filed or entered in the office of the
Register of Deeds for the province or city
where the land to which it relates lies,
thereafter, it shall be constructive notice to all
persons from the time of such Registering,
filing or entering. (Sec. 52)

1. VOLUNTARY DEALINGS – P.D. NO. 1529, SECS.

55-59

General Rule: A voluntary instrument can be

registered only when the owner’s duplicate
certificate is presented with such instrument.
XPN: In cases provided by law, and upon order
of the court, for causes shown, the same may
be registered even without a showing of such.

Consequence of showing the owner’s duplicate

certificate with the voluntary instrument:
There is vested a conclusive authority from the
registered owner to the Register of Deeds to
enter a new certificate or to make
memorandum of registration in accordance of
such instrument.

2. INVOLUNTARY DEALINGS – P.D. NO. 1529,

SECS. 69, 74 AND 76; ADVERSE CLAIMS AND
NOTICE OF LIS PENDENS – P.D. NO. 1529, SECS.
70 AND 77

INVOLUNTARY DEALINGS
• It is intended to create or preserve any
lien, status,
right, or attachment upon registered land.
• Transactions affecting land in which
cooperation of registered owner is not
needed, or even against his will.

ADVERSE CLAIMS
• Is a notice to third persons that someone is
claiming an interest on the property or has
a better right than the registered owner
thereof. The disputed land is subject to the
outcome of the dispute.
• The annotation of an adverse claim is a
measure designed to protect the interest of
a person over a piece of real property where
the registration of such interest or right is
not otherwise provided for by the Land
Registration Act, and serves as a notice and
warning to third parties dealing with said
property that someone is claiming an
interest on the same or a better right than
the registered owner thereof. (Lucio C.
Sanchez, Jr., vs. Hon. Court of Appeals and
• An adverse claim arises whenever a court also finds the claim to be frivolous, it
personG.claims any part or
SUBSEQUENT interest averse
REGISTRATION may fine the claimant the amount of not
to the registered owner's interest; less than 1,000 pesos nor more than 5,000
(P.D. NO. 1529,
arising subsequent SECS. 51-53)
to registration. pesos, in its discretion.
• Diaz-Duarte v. Ong, 298 SCRA 388 (1998) -
Claim is adverse when: For this purpose, the interested party must
1. A claimant’s right or interest in file with the proper court a petition for
registered land is adverse to the cancellation of adverse claim, and a hearing
registered owner; must also first be conducted.
2. Such right arose subsequent to date of • The Register of Deeds cannot on its own
original registration
automatically cancel the adverse claim.
3. No other provision is made in the
Decree for the registration of such right
or claim (Sec. 70, PD 1529, Sanchez v. 81
CA, 69 SCRA 327 (1976)
• A mere money claim cannot be
registered as an adverse claim
• Actual knowledge is equivalent to
registration of
adverse claim.
• No 2nd adverse claim based on the
same ground may be registered by
the same claimant.

How annotated?
• The adverse claimant shall execute an
affidavit which shall state his claim to
any part or interest in the registered
land adverse to the registered owner.
• The affidavit shall be filed with the
Register of Deeds; who, after
examination of the claim may annotate
the adverse claim on the registered land.

Requisites
1. The adverse claimant must state the following
in writing:
a. his alleged right or interest;
b. how and under whom such alleged
right or interest is acquired;
c. the description of the land in which the
right or
interest is claimed; and
d. the number of the certificate of title;
2. The statement must be signed and
sworn to before a notary public or other
officer authorized to administer oath;
and
3. The claimant should state his residence
or the place to which all notices may be
served upon him. Non- compliance with
the above requisites renders the
adverse claim non-registrable and
ineffective.

Effects
Any potential buyer of land shall be
considered to have been alerted of any
defect in the title The individual shall be
considered in bad faith if he purchases land
despite the annotation.

Period of Effectivity; When Cancelled

• The adverse claim shall be effective
for a period of 30 days from the date
of registration and it may be cancelled
after the lapse of 30 days, upon the
filing by the party in-interest of a
verified petition for such purpose
• Before the lapse of said 30 days, upon
the filing by the claimant of a sworn
petition withdrawing his adverse claim
• Before the lapse of the 30-day period,
when a party-in- interest files a
petition in the proper RTC for the
cancellation of the adverse claim and,
after notice and hearing, the court
finds that the claim is invalid. If the
NOTICE OF LIS PENDENS 6. No judgment, and no proceeding to vacate or
reverse any judgment, shall have any effect
Lis Pendens upon registered land as against persons other
Lis pendens literally means a pending suit than the parties thereto.
Doctrine that refers to the jurisdiction, power
or control which a court acquires over a
property involved in a suit, pending the
continuance of the action, until final judgment

Purpose of Lis Pendens

• To constructively advise, or warn all people
who deal with the property that they so deal
with it at their own risk, and whatever rights
they may acquire in the property in any
voluntary transaction are subject to the
results of the action, and may well be
inferior and subordinate to those which may
be finally determined and laid down therein.
[Heirs of Marasigan v. IAC, 152 SCRA 253
(1987)]
• It merely creates a contingency and not a
lien.
• To protect the rights of the party causing
the registration of the lis pendens
• To advise third persons who purchase or
contract on the subject property that they do
so at their peril and subject to the result of the
pending litigation
• May involve actions that deal not only with
title or possession of a property but also
with the use and occupation of a property
• The litigation must directly involve a specific
property which is necessarily affected by
the judgment
• The notice of lis pendens is a notice to the
whole world that a particular real property is
in litigation. The inscription serves as a
warning that one who acquires interest over
litigated property does so at his own risk, or
that he gambles on the result of the
litigation over the property
• A purchaser who buys registered land with
full notice of the fact that it is in litigation
between the vendor and third party stands
in the shoes of his vendor and his title is
subject to the incidents and results of the
pending litigation

Section 76 of the Presidential Decree 1529

“Notice of lis pendens. No action to recover
possession of real estate, or to quiet title
thereto, or to remove clouds upon the title
thereof, or for partition, or other proceedings of
any kind in court directly affecting the title to
land or the use or occupation thereof or the
buildings thereon, and no judgment, and no
proceeding to vacate or reverse any judgment,
shall have any effect upon registered land as
against persons other than the parties thereto,
unless a memorandum or notice stating the
institution of such action or proceeding and
the court wherein the same is pending, as well
as the date of the institution thereof, together
with a reference to the number of the
certificate of title, and an adequate description
of the land affected and the registered owner
thereof, shall have been filed and registered.”

What must be registered?

1. Action to recover possession of real estate·
2. To quiet title thereto.
3. To remove clouds upon the title thereof.
4. Partition;
5. Other proceedings of any kind in court
directly affecting the title to land or the use
or occupation thereof or the buildings
thereon; and
How registered: 12. Alluvial deposit along river when manmade
Registration shall be effected through a
memorandum or notice stating:
(a) the institution of such action or 82
proceeding and the court wherein the
same is pending,
(b) the date of the institution thereof,
(c) a reference to the number of the certificate of
title,
(d) an adequate description of the land
affected and the registered owner
thereof, shall have been filed and
registered. (Sec. 76, P.D. No. 1529)

How cancelled
• The cancellation of the notice of lis
pendens under the first paragraph of
Section 77 involves the filing of a
motion in the court where the action
(Which is the source of the lis
pendens) is pending· Thus, the court
may order the removal of the annotation
even while the case is pending.
• A notice of lis pendens may be cancelled
when the annotation is:
• only for purpose of molesting an adverse party;
• not necessary to protect the title of the
party who caused it to be recorded;
• When the consequences of the trial are
unnecessarily delaying the
determination of the case to the
prejudice of the other party.
• Register of Deeds may also cancel by
verified petition of party who caused
such registration
• Deemed cancelled when certificate is
issued by clerk of court stating manner
of disposal of proceeding that is
registered

Lis Pendens has no Application To The Following:

• Preliminary attachment;
• Proceedings for the probate of wills;
• Levies on execution;
• Proceedings for administration of
estate of deceased persons; and
• Proceedings in which the only object is
the recovery of a money judgment.

Property of Public Dominion H. NON-REGISTRABLE PROPERTIES

• Properties of public dominion have (CIVIL CODE, ART. 420)
been described as those which, under
existing legislation, are not the subject
of private ownership and are reserved
for public purposes (Republic vs. Court
of Appeals, 131 SCRA 532, 537 (1984)
• According to the Civil Code, the following
things are property of public dominion:
• Land intended for public use or service
not available for private appropriation;
• Those which belong to the State, without
being for public use, and are intended
for some public service or for the
development of the national wealth.

Specific kinds of non-registrable properties:

1. Forest or timberland, public forest, forest
reserves
2. Mangrove swamps
3. Mineral lands
4. Foreshore land and Seashore
5. Navigable rivers, streams and creeks
6. Lakes
7. Military Reservations
8. Other kinds of Reservations
9. Watershed
10. Grazing lands
11. Previously titled land
 I. DEALINGS WITH UNREGISTERED LANDS J. ASSURANCE FUND
(P.D. NO. 1529, SEC. 113) (P.D. NO. 1529, SECS. 93-
102)
General Rule: No deed, conveyance, mortgage, received for recording as shown in the Primary
lease, or other voluntary instrument affecting Entry Book, returning to the registrant or person in
land not registered under the Torrens system interest the duplicate of the instrument, with
shall be valid, except as between the parties appropriate annotation, certifying that he has
thereto. recorded the instrument after reserving one copy
XPN: Unless such instrument shall have been thereof to be furnished the provincial or city
recorded in the manner herein prescribed in assessor as required by existing law.
the office of the Register of Deeds for the
province or city where the land lies. (Sec. 113)

Duty of Register of Deeds: (Sec. 113)

1. Keep a Primary Entry Book and a
Registration Book containing the following
particulars:
1. Entry Number
2. Names of the parties
3. The nature of the document
4. The date, hour and minute it was
presented and received

2. Ensure that the recording of the

deed and other instruments relating to
unregistered lands shall be effected by any
of annotation on the space provided
therefor in the Registration Book, after the
same shall have been entered in the
Primary Entry Book.

3. If, on the face of the instrument, it appears

that it is sufficient in law, the Register of
Deeds shall forthwith record the instrument in
the manner provided herein.

4. In case the Register of Deeds refuses its

administration to record, said official shall
advise the party in interest in writing of the
ground or grounds for his refusal, and the
latter may appeal the matter to the
Commissioner of Land Registration in
accordance with the provisions of Section 117
of this Decree, without prejudice to a third
party with a better right.

5. After recording on the Record Book,

endorse among other things, upon the
original of the recorded instruments, the file
number and the date as well as the hour
and minute when the document was
received for recording as shown in the
Primary Entry Book, returning to the
registrant or person in interest the duplicate
of the instrument, with appropriate
annotation, certifying that he has recorded
the instrument after reserving one copy
thereof to be furnished the provincial or city
assessor as required by existing law.

6. In case the Register of Deeds refuses its

administration to record, said official shall
advise the party in interest in writing of the
ground or grounds for his refusal, and the
latter may appeal the matter to the
Commissioner of Land Registration in
accordance with the provisions of Section 117
of this Decree, without prejudice to a third
party with a better right.

7. After recording on the Record Book,

endorse among other things, upon the
original of the recorded instruments, the file
number and the date as well as the hour
and minute when the document was
NATURE OF ASSURANCE FUND defendant, the remaining amount unpaid is to
It is the special fund which is created under be paid by the National Treasurer out of the
the Torrens system for the compensation of Assurance Fund. In the latter case, the
certain persons for losses sustained by Government of the Republic of the Philippines
operations under the system. is subrogated to the rights of the plaintiff
against any other parties or entities (Sec. 99)
CONDITIONS FOR COMPENSATION FROM
ASSURANCE FUND
Action of Compensation From Funds 83
This action is civil in character and may be
in the form of the ordinary complaint for
damages. The action for recovery of
damages from the Assurance Fund may be
availed of in case of insolvency of the party
who procured the wrongful registration.

Requisites
1. That a person sustains loss or damage, or
is deprived of any estate or interest in
land
2. On account of the bringing of land
under the operation of the Torrens
system arising after original
registration,
3. Through fraud, error, omission, mistake
or misdescription in a certificate of title
or entry or memorandum in the
registration book,
4. Without negligence on his part, and
5. He is barred or precluded from bringing
an action for the recovery of such land
or estate or interest therein.
6. The action has not prescribed.

Jurisdiction
The Regional Trial Court of the place where
the land is located shall be vested with
jurisdiction over the claims of an individual
for recovery against the Assurance Fund.
(Sec. 95)

Period to File
6 years from the time the right to bring
such action first accrued: (Sec. 102)

Filed Against
1. Registrar of Deeds
2. the National Treasurer and
3. other persons as co-defendants when:
“such action is brought to recover for
loss or damage or for deprivation of
land or any interest therein arising
through fraud, negligence, mistake or
misfeasance of persons other than court
personnel, the Registrar of Deeds, his
deputy or other employees of the
registry’’ (Sec. 96)

How judgment satisfied: (Secs. 97-99)

• If there are defendants other than the
National Treasurer and the Register of
Deeds and judgment is entered for the
plaintiff and against the National
Treasury, the Register of Deeds and any
of the other defendants, execution shall
first issue against such defendants other
than the National Treasurer and the
Register of Deeds. (Sec. 97)
• If at any time the Assurance Fund is not
sufficient to satisfy such judgment, the
National Treasurer shall make up for the
deficiency from any funds available in
the treasury not otherwise appropriated.
(Sec. 98)
• If the execution is returned unsatisfied,
wholly or partly, and the officer returning
the same certifies that the amount
cannot be collected from the land or
personal property of such other
Measure of Damages 1. That the certificate of title has been lost
The maximum amount of damages or destroyed;
recoverable as compensation from the 2. That the petitioner is the registered owner or
Assurance Fund is not the assessed value has an interest therein; and
nor the actual value at the time of recovery 3. That the certificate of title was in force at the
but an amount not more than the fair time it was lost or destroyed.
market value of the land at the time he
suffered the loss, damage or deprivation
thereof (Sec. 97)

PRESCRIPTIVE PERIOD
The plaintiff has a period of six years from
the time the right of action accrues within
which to bring the action against the
Assurance Fund. In a case, a complaint filed
more than ten years after the property had
been registered was ordered dismissed

SPS. STILIANOPOULOS V. REGISTER OF DEEDS

G.R. NO. 224678, JULY 03, 2018
En Banc
“The constructive notice rule on registration
should not be made to apply to title holders
who have been unjustly deprived of their
land without their negligence. The actual title
holder cannot be deprived of his or her
rights twice – first, by fraudulent registration
of the title in the name of the usurper and
second, by operation of the constructive
notice rule upon registration of the title in
the name of the innocent purchaser for
value. As such, prescription, for purposes of
determining the right to bring an action
against the Assurance Fund, should be
reckoned from the moment the innocent
purchaser for value registers his or her title
and upon actual knowledge thereof of the
original title holder/claimant. As above-
discussed, the registration of the innocent
purchaser for value's title is a prerequisite
for a claim against the Assurance Fund on
the ground of fraud to proceed, while actual
knowledge of the registration is tantamount
to the discovery of the fraud. More
K. RECONSTITUTION
significantly, OF TITLE
this interpretation preserves
(P.D. NO. 1529, SEC. 110) law, and
and actualizes the intent of the
provides some form of justice to innocent
original title holders.”

Reconstitution of lost or destroyed original of

Torrens title
• Original copies of certificates of title lost
or destroyed in the offices of Register of
Deeds as well as liens and
encumbrances affecting the lands
covered by such titles shall be
reconstituted judicially in accordance
with the procedure prescribed in
Republic Act No. 26 insofar as not
inconsistent with this Decree. (Section
110, PD 1529)
• Reconstitution is the restoration of the
instrument or title allegedly lost or
destroyed in its original form and
condition (Anciano v. Caballes | G.R. No L-
5040
| September 29, 1953)

Elements:
Contents of a Petition for Judicial Reconstitution of the in rem reconstitution proceedings.
Said petition shall allege the following:
1. that the owner’s duplicate of the THE GOVERNMENT OF THE PHILIPPINES V. ABALLE
certificate of title had been lost or G.R. NO. 147212, MARCH 24, 2006
destroyed; J. Austria-Martinez
2. that no co-owner’s, mortgagee’s or Jurisprudence dictates that these
lessee’s duplicate had been issued requirements must be complied with before
or, if any had been issued, the same the court can act on the petition and grant
had been lost or destroyed; the reconstitution of title prayed for.
3. the location, area and boundaries of the Specifically, the requirement of actual notice
property; to the occupants and the owners of the
4. the nature and description of the adjoining property is itself mandatory to vest
building or improvements, if any, jurisdiction upon the court in a petition for
which do not belong to the owner of reconstitution of title, and essential in order
the land, and the names and to allow said court to take the case on its
addresses of the owners of such merits. The non-observance of the
buildings or improvements; requirement invalidates the whole
5. the names and addresses of the reconstitution proceedings in the trial court.
occupants or persons in possession of
the property, of the owners of the
adjoining properties and of all persons 84
who may have interest in the
property;
6. a detailed description of the
encumbrances, if any, affecting the
property; and
7. a statement that no deeds or other
instruments affecting the property
have been presented for
registration, or if there be any, the
registration thereof has not been
accomplished, as yet.

Jurisdictional requirements:
1. Publication & Posting - notice of the
petition must be published twice in
successive issues of the Official
Gazette, and posted on the main
entrance of the provincial building
and of the municipal building of the
municipality or city in which the land
is situated, at least thirty days prior to
the date of hearing;
2. The notice state among other
things, the number of the lost or
destroyed certificates of title if
known, the name of the registered
owner, the name of the occupants
or persons in possession of the
property, the owner of the adjoining
properties and all other interested
parties, the location, area and
boundaries of the property, and the
date on which all persons having
any interest therein must appear
and file their claim of objection to
the petition;
3. Service of a copy of the notice - by
registered mail or otherwise to every
person named therein (i.e. the
occupants or persons in possession
of the property, the owner of the
adjoining properties and all other
interested parties) whose address is
known at least thirty days prior to
the date of the hearing; and
4. At the hearing, petitioner submits
proof of publication, posting and
service of the notice as directed by
the court.
Jurisdictional requirements of (a)
publication, (b) posting, and (c) service
of notice are mandatory. They provide
constructive notice to the whole world
Sources of Reconstitution: other person having an interest in the property.
1. For original certificates of title: (Section 2 of RA No. 26) • Section 10, RA 26: Nothing shall prevent any
(a) The owner's duplicate of the certificate of title; registered owner or person in interest from filing the
(b) The co-owner's, mortgagee's, or lessee's petition mentioned in section five of this Act directly
duplicate of the certificate of title; with the proper Court of First Instance, based on
(c) A certified copy of the certificate of title, sources enumerated in sections 2(a), 2(b), 3(a), 3(b)
previously issued by the register of deeds or and/or 4(a) of this Act.
by a legal custodian thereof;
(d) An authenticated copy of the decree of
registration or patent, as the case may be,
pursuant to which the original certificate of
title was issued;
(e) A document, on file in the registry of deeds,
by which the property, the description of
which is given in said document, is
mortgaged, leased or encumbered, or an
authenticated copy of said document
showing that its original had been
registered; and
(f) Any other document which, in the judgment
of the court, is sufficient and proper basis
for reconstituting the lost or destroyed
certificate of title.

2. For transfer certificates of title: (Section 3 of RA No. 26)

(a) The owner's duplicate of the certificate of title;
(b) The co-owner's, mortgagee's, or lessee's
duplicate of the certificate of title;
(c) A certified copy of the certificate of title,
previously issued by the register of deeds or
by a legal custodian thereof;
(d) The deed of transfer or other document, on
file in the registry of deeds, containing the
description of the property, or an
authenticated copy thereof, showing that its
original had been registered, and pursuant to
which the lost or destroyed transfer
certificate of title was issued;
(e) A document, on file in the registry of deeds,
by which the property, the description of
which is given in said document, is
mortgaged, leased or encumbered, or an
authenticated copy of said document
showing that its original had been
registered; and
(f) Any other document which, in the judgment
of the court, is sufficient and proper basis
for reconstituting the lost or destroyed
certificate of title.

3. For liens and encumbrances: (Section 4 of RA No. 26)

(a) Annotations or memoranda appearing on the
owner's, co-owner's, mortgagee's or lessee's
duplicate;
(b) Registered documents on file in the registry
of deeds, or authenticated copies thereof
showing that the originals thereof had been
registered; and
(c) Any other document which, in the judgment
of the court, is sufficient and proper basis
for reconstituting the liens or
encumbrances affecting the property
covered by the lost or destroyed certificate
of title.

Where to file:
• Section 12, RA 26: Petitions for
reconstitution from sources enumerated in
sections (2(c), 2(d), 2(e), 2(f), 3(c), 3(d), 3(e)
and/or 3(f) of this Act, shall be filed with the
proper Court of First Instance, by the
registered owner, his assigns, or any person
having an interest in the property.
• Section 5, RA 26: Petitions for reconstitution
from sources enumerated in sections 2(a),
2(b), 3(a), 3(b), and/or 4(a) of this Act may
be filed with the register of deeds concerned
by the registered owner, his assigns, or
HEIRS OF BUENDIA V. BRUNO owner himself. In fact, in Heirs of Eulalio
G.R. NO. 262854, OCTOBER 4, 2023 Ragua v. Court of Appeals, the Court
Reconstitution of title partakes of a pronounced that a tax declaration is not a
land registration proceeding. In Rep. of reliable source for the reconstitution of a
the Phils. v. Santua, this Court certificate of title.
underscored that "a reconstitution of
title does not pass upon the ownership At most, the tax declaration can only be
of the land covered by the lost or prima facie evidence of possession or a
destroyed title, but merely determines claim of ownership, which however is not the
whether a re-issuance of such title is issue in a reconstitution proceeding. A
proper." reconstitution of title does not pass upon the
ownership of the land covered by the lost or
One of the requisites for the court to destroyed title but merely determines
acquire jurisdiction over the petition for whether a re-issuance of such title is proper.
reconstitution of title is that there must
be "clear proof that the title sought to
be restored was indeed issued to the 85
petitioner." In this respect, R.A. No. 26
enumerates certain sources which the
law considers as valid and sufficient
bases for reconstitution of a transfer
certificate of title: xxx

In this case, the heirs of Buendia

sought for the reconstitution of the four
unnamed TCTs on the basis of
a) Approved Subdivision Plan LRC-PSD-
5550 and the corresponding technical
description thereof; and b) tax
declaration covering the subject lots,
which fall under the term "any other
document" in Section 3 (f) of R.A. No.
26.

Jurisprudence explains that the term

"any other document" in Section 3 (f)
of R.A. No. 26, should be interpreted to
refer to documents similar to those
mentioned in Section 3 (a), (b), (c), (d),
(e), applying the principle of ejusdem
generis. As can be gathered therefrom,
documents listed in Section 3 (a), (b),
(c), (d), (e) are documents that had
been issued or on file with the Register
of Deeds. The same documents also
indicate the particulars of a certificate
of title or the circumstances
surrounding its issuance.

The case at bench presents a similar

factual backdrop in Santua, where this
Court was confronted with the issue
"should the courts grant a petition for
reconstitution of a certificate of title on
the basis of a tax declaration, survey
plan and technical description?

In Santua, this Court ruled that tax

declarations, technical descriptions and
lot plans are not valid bases of
reconstitution. Elaborating on this
point, this Court thus reasoned:

The tax declaration obviously does not

serve as a valid basis for reconstitution.
For one, we cannot safely rely on Tax
Declaration No. 15003-816 as evidence
of the subject property being covered
by TCT No. T-22868 in the name of
respondent because a tax declaration
is executed for taxation purposes only
and is actually prepared by the alleged
As for the survey plan and technical the trial court cannot acquire jurisdiction over the
descriptions, the Court has previously petition for reconstitution.
dismissed the same as not the documents
referred to in Section 3(f) but merely Along this line, in Castillo v. Rep. of the Phils., this
additional documents that should Court belabored that the manner by which courts
accompany the petition for reconstitution as obtain jurisdiction to hear cases involving
required under Section 12 of RA 26 and Land reconstitution of title is anchored on a strict
Registration Commission Circular No. 35. compliance with the requirements of R.A. No. 26,
Moreover, a survey plan or technical as borne by the fact that:
description prepared at the instance of a
party cannot be considered in his favor, the
same being self-serving. Further, in Lee v.
Republic, the Court declared the
reconstitution based on a survey plan and
technical descriptions void for lack of factual
support.

Guided by the foregoing pronouncements,

this Court finds that the heirs of Buendia
failed to present a valid basis for the
reconstitution of the four unnamed TCTs.
Without a valid source for reconstitution, it
cannot be ascertained whether the lost or
destroyed TCTs have, in fact, been issued to
Felicisima or her predecessor-in- interest
and such titles were in force at the time it
was lost or destroyed, which is necessary for
the RTC to acquire jurisdiction over the
petition for reconstitution. Perforce, the
petition for reconstitution should have been
dismissed for lack of jurisdiction.

Even on the assumption that the petition for

reconstitution was anchored on valid
sources, the heirs of Buendia failed to
observe the procedure under Sections 12
and 13 of R.A. No. 26, which laid down the
guidelines for the judicial reconstitution of
original or transfer certificates of title where
the source document upon which the
petition for reconstitution is based falls
under either Sections 2 (f) or 3 (f) of the
same law.

xxxx

To recall, the four subject TCTs include a

portion of Lot 10-O of subdivision plan PSD-
5550 covered by an emancipation patent
issued by the DAR in the name of Bruno.
Bruno, as the grantee of an emancipation
patent, is presumed to be in possession of
the subject property, yet he did not receive
any actual notice of the proceedings in LRC
Case No. P-335-2011.

It is beyond cavil that under Sections 12 and

13 of R.A. No. 26, the occupants, owners of
the adjoining properties and all other
interested parties should be notified of the
petition for reconstitution. In Denila v.
Republic, this Court underscored the
importance of mailing the notice to the
actual occupants of the property covered by
the certificates of title to be reconstituted:
"(a) to safeguard against spurious and
unfounded land ownership claims; (b) to
apprise all interested parties of the
existence of such action; and
(c) to give them enough time to intervene in
the proceeding." In Denila, this Court
stressed that non- compliance with the
notice of hearing requirement is fatal and
Liberal construction of the Rules of Court jurisdiction to take cognizance of a case, it
does not apply to land registration cases. lacks authority over the whole case and all its
Indeed, to further underscore the aspects. All the proceedings before the trial
mandatory character of these court, including its order granting the petition
jurisdictional requirements, the Rules of for reconstitution, are void for lack of
Court do not apply to land registration jurisdiction.
cases. In all cases where the authority of
the courts to proceed is conferred by a Moreover, "strict observance of the rules is
statute, and when the manner of vital to prevent parties from exploiting
obtaining jurisdiction is prescribed by a reconstitution proceedings as a quick but
statute, the mode of proceeding is illegal way to obtain Torrens certificate of titles
mandatory, and must be strictly over parcels of land which turn out to be
complied with, or the proceeding will be already covered by existing titles."
utterly void. When the trial court lacks

86
 VII. WILLS AND SUCCESSION
A. General Provisions (Civil Code, arts. 774- with the formalities prescribed by law, to control
782) to a certain degree the disposition of his estate,
to take effect after his death.
B. Testamentary Succession

A. GENERAL PROVISIONS
(CIVIL CODE, ARTS. 774-782)
‘Succession’ - Mode of acquisition by virtue of
which property, rights and obligations to the
extent of the value of the inheritance of a
person are transmitted through his death to
another or others either by his will or by
operation of law. (Art 774 NCC)

‘Inheritance’ - includes all the property, rights

and obligations of a person which are not
extinguished by his death. (Art 776 NCC) The
inheritance of a person includes not only the
property and the transmissible rights and
obligations existing at the time of his death,
but also those which have accrued thereto
since the opening of the succession. (Art 781
NCC)

‘Decedent’ - person whose property is

transmitted through succession; if he left a
will, he is also called testator. (Art 775 NCC)

‘Heir’ - a person called to succession either by

the provision of a will or by operation of law.
Devisees are persons to whom gift of real
property is given in a will, while legatees are
persons given the gift of personal property in a
will. (Art 782 NCC)

Succession occurs at the moment of death

• Article 440. The possession of hereditary
property is deemed to be transmitted to the
heir without interruption from the instant of
the death of the decedent, in case the
inheritance be accepted.”
• Article 777. The rights to the succession are
transmitted from the moment of the death
of the decedent.
• Relevant Provisions of the Rules of Court:
Rule 88-90 of the Rules of Court; Rule 90,
pay debts first before distribution. Money
debts are actually paid by the heirs because
the residue for distribution is diminished;
From moment of death, heir acquires vested
right over inheritance. (Estate Hemady vs.
Luzon Surety [1956])

Kinds of Succession
a. Testate or Testamentary Succession - refers to a
situation where the person dies leaving a
last will.
b. Intestate or Legal Succession - refers to a
situation where the person died without a
last will; the share in the inheritance is
called “intestate share.
c. Mixed Succession - partly by will and partly by
operation of law.

B. TESTAMENTARY SUCCESSION

1. WILLS – CIVIL CODE, ARTS. 783-795

‘Wills’
A will is an act whereby a person is permitted,
C. Intestate Succession different interpretations, in case of
D. Provisions Common to Testate and doubt, that interpretation by which the
disposition is to be operative shall be
Intestate Succession (Civil Code, arts.
preferred.
1015- 1105)

CHARACTERISTICS OF A WILL 87
1. Strictly personal
2. Unilateral and individual act
3. Formal and solemn
4. Mortis causa
5. Ambulatory and revocable

NON-DELEGABILITY OF TESTAMENTARY POWER

General Rule: The duration or efficacy of the
designation of heirs, devisees or legatees,
or the determination of the portions which
they are to take, when referred to by name,
cannot be left to the discretion of a third
person. (Art. 785 NCC)

‘Strictly Personal’
a. Execution cannot be left in whole or in
part to the discretion of third person
b. Duration or efficacy of institution of heirs
or portions to be given cannot be left to
the discretion of third person
XPN: Testator may entrust to a third
person the distribution of specific property
or sums of money left to a specified class
or cause and the designation of persons,
institutions and establishments to which
property or money is to be given (Art 786
NCC)

Kinds of Wills:
1. Notarial will – Articles 804-806, & 807-808
in special cases
2. Holographic – Articles 804 & 810

Interpretation (Arts. 788-789)

GR: When the words of the will are clear,
they shall be taken in their ordinary or
grammatical sense.
XPN: It appears that the testator intended to
give another meaning to them.

GR: Words which are technical shall be

interpreted in
their technical sense.
XPN:
a. When it indicates a contrary intention on
the part of the testator; or
b. It (satisfactorily) appears that the will
was solely drafted by the testator, and
he was unacquainted with the technical
sense of the language used therein.
• If the error or ambiguity appears from
the context of the will or from
extrinsic evidence (intrinsic),
mistakes and omissions must be
corrected. This is excluding the oral
declarations of the testator as to his
intention.
• If the ambiguity arises upon the face
of the will (extrinsic), as to the
application of its provisions, the
testator’s intention is to be
ascertained from the words of the
will, taking into consideration the
circumstances under which it was
made. This also excludes the oral
declarations of the testator.
• Testacy is preferred to intestacy. If a
testamentary disposition admits of
Can oral declarations be used in interpretation of 2) In a language or dialect is known to the testator.
wills? • Oral wills are not recognized in the Civil Code.
No. It is expressly provided in the law that • The provisions of Art. 804 are mandatory.
oral declarations are excluded to be used in Thus, failure to comply with the two
interpreting wills. Because to do so would requirements nullifies the will.
result in fraud, as the words of a dead man
can be distorted or perjured. This is to
prevent prevarication by the witnesses
whose testimony as to the oral declarations
of the testator may no longer be disputed by
the latter whose lips have been sealed by
death.

APPLICABLE LAW AS TO FORM AND SUBSTANCE OF

A WILL
• As to FORM or extrinsic validity – the law in
force at
the time of execution of the will. (Art. 795)
• As to SUBSTANCE or intrinsic validity – governed
by the law in force at the time of
decedent’s death.

2. TESTAMENTARY CAPACITY – CIVIL CODE, ARTS.

796-803

Refers to the ability as well as the power to make a

will.
1. All persons not expressly prohibited by law
2. 18 years old and above
3. Sound mind
Juridical persons cannot execute wills due
to the requirement of soundness of mind.

‘Sound mind’
• To be of sound mind, it is not necessary
that the testator be in full possession of
all his reasoning faculties, or that his mind
be wholly unbroken, unimpaired, or
unshattered by disease, injury or other
cause. [Article 799 NCC]
• It shall be sufficient if the testator was
able at the time of making the will to
know the nature of the estate to be
disposed of, the proper objects of his
bounty, and the character of the
testamentary act.

‘Presumption of Sanity’
• A testator is presumed to be of sound
mind at the time of the execution of the
will in the absence of proof to the
contrary. [Art 800 NCC]
• The burden of proof that the testator
was not of sound mind at the time of
making his dispositions is on the person
who opposes the probate of the will.

‘Presumption of Insanity’
if the testator, one month, or less, before
making his will was publicly known to be
insane, the person who maintains the
validity of the will must prove that the
testator made it during a lucid interval.

3. NOTARIAL AND HOLOGRAPHIC WILLS; JOINT

WILL – CIVIL CODE, ARTS. 804-819

Common Requirements for both notarial and

holographic wills
1) In Writing
Formal Requisites of Notarial Wills public (Article 806).
1. The will must be in writing (Article 804);
2. It must be in the language or dialect Additional Requirements
known to the testator; If testator is deaf or deaf-mute, must either:
3. The will must be signed by the 1. Read will personally, if able to do so;
testator or by another person in his 2. Otherwise, he shall designate 2 persons
presence or under his express to read it & communicate to him the
direction (Article 805); contents. (Art 807 NCC)
4. That the signing by the testator
or by the person under his express If testator is blind, the will shall be read to him twice:
direction and in his presence must 1. Once by one of the subscribing witnesses, and
be done in the presence of at least 2. Again by the notary public before whom it
3 instrumental witnesses; is acknowledged. (Art 808 NCC)
5. That the will is attested and
subscribed by at least 3 credible Attestation Clause - Constitutes a certification
witnesses in the presence of the by the witnesses that requirements of law
testator and of each and every one have been complied with. It must state:
of them; a. the number of pages used upon which the
6. That the will must be signed by the will is written
testator and by at least 3 credible b. the fact that the testator signed the will
witnesses on the left hand margin on and every page thereof, or caused some
each and every page; other person to write his name, under his
7. That the will must be numbered express direction, in the presence of the
correlatively in letters; instrumental witnesses.
8. That the signing by the 3 c. that the latter witnessed and signed the
witnesses must be done in the will and all the pages thereof in the
presence of the testator and each and presence of the testator and of one
every one of them; another. If the attestation clause is in a
9. There must be an Attestation clause language not known to the witnesses, it
stating therein the number of pages shall be interpreted to them.
upon which the will is written, a
statement that the testator signed ‘SUBSTANTIAL COMPLIANCE RULE’
the will or another person signed • In the absence of bad faith, forgery, or fraud,
the will under the express direction or undue and improper pressure and
of the testator; influence, defects and imperfections in
10. The will is signed at the left margin the form of attestation or in the language
by the testator and the 3 used therein shall not render the will invalid
instrumental witnesses in the if it is proved that the will was in fact
presence of the testator and of one executed and attested in substantial
another; compliance with all the requirements of
11. The will must be acknowledged before a Article 805. (Art. 809)
notary

88
• What is imperative for the allowance of safely disregarded. But the total number of
a will despite the existence of omissions pages, and whether all persons required to sign
is that such omissions must be supplied did so in the presence of each other must
by an examination of the will itself, substantially appear in the attestation clause,
without the need of resorting to being the only check against perjury in the
extrinsic evidence. "However, those probate proceedings.
omissions which cannot be supplied
except by evidence aliunde would result
in the invalidation of the attestation
clause and ultimately, of the will itself.”
• An examination of the will in question
reveals that the attestation clause
indeed failed to state the number of
pages comprising the will.
• However, as was the situation in
Taboada, this omission was supplied in
the Acknowledgment. It was specified
therein that the will is composed of four
pages, the Acknowledgment included.
(MARGIE SANTOS MITRA VS. PERPETUA
L. SABLAN--GUEVARRA, REMEGIO L.
SABLAN, ET AL. [G.R. No. 213994, April
18, 2018 ])

KUCSKAR V. SEKITO, JR.,

G.R. NO. 237449, DECEMBER 2, 2020
J. Lopez
Obviously, Aida's will cannot pass as
holographic because it is not entirely in
her handwriting. At most, the will may be
classified as a notarial will. However, an
examination of the will reveals that only
two witnesses attested its execution. The
witnesses did not sign on each and every
page of the will. The attestation clause
failed to state the total number of pages.
Worse, Aida and the witnesses did not
acknowledge the will before a notary
public. It bears emphasis that the CA
adopted the substantial compliance rule in
allowing the will despite the defects in its
attestation clause. In Taboada v. Hon.
Rosal and Azuela v. Court of Appeals, the
Court permitted the probate although the
number of pages was not stated in the
attestation clause but elsewhere in the
will. In Lopez v. Lopez, however, We held
that the attestation must state the
number of pages used upon which the will
is written. The purpose is to safeguard
against possible interpolation, or omission
of one, or some of its pages and prevent
any increase or decrease in the pages.
Further, the substantial compliance rule
applies only to imperfections which can be
explained through examination of the will
itself, thus:

x x x The rule must be limited to

disregarding those defects that can be
supplied by an examination of the will
itself: whether all the pages are
consecutively numbered; whether the
signatures appear in each and every page;
whether the subscribing witnesses are
three or the will was notarized. All these
are facts that the will itself can reveal, and
defects or even omissions concerning
them in the attestation clause can be
Assuming the CA correctly appreciated
substantial compliance with the IN THE MATTER OF THE PETITION FOR THE
formalities of the attestation clause PROBATE OF THE LAST WILL AND TESTAMENT OF
under Art. 805, the same cannot be CECILIA ESQUERRA COSICO, THELMA ESQUERRA
applied to the requirement of GUIA V JOSE M. COSICO, JR., MANUEL M. COSICO,
acknowledgment under Art. 806. To MINERVA
reiterate, Aida and the witnesses did M. COSICO AND ELANOR M. COSICO-CHAVEZ
not acknowledge the will before a G.R. NO. 246997, MAY 5, 2021
notary public. The CA did not even J. Lazaro-Javier
bother to discuss this requirement. While the law imposes the requirement only
Viewed from this light, we cannot, by when the testator is blind, the Court has
any stretch of imagination, accept the expanded its coverage to those who are
supposed validity of the will absent total illiterate. The case of Alvarado elucidates:
compliance with the requisite “The rationale behind the requirement of
acknowledgement. The CA likewise, reading the will to the testator if he is blind or
cannot conveniently rely on Aida's incapable of reading the will himself (as when
Revocable Living Trust in allowing the he is illiterate), is to make the provisions
will. The living trust simply provides the thereof known to him, so that he may be able
proportion of the United States and to object if they are not in accordance with his
Philippine shares to be given to the wishes. Clear from the foregoing is that Art.
beneficiaries. Also, the living trust was 808 applies not only to blind testators but also
presented to the District Court, Clark to those who, for one reason or another, are
Country, Nevada, which is a distinct "incapable of reading their wills.“
proceeding from the probate of the will
here in the Philippines. Hence, the
HOLOGRAPHIC WILL
living trust is evidence aliunde that is
a will that is entirely written, dated and
not allowed to fill a void or to supply
signed by the hand of the testator himself.
missing details that should appear in
the will itself.
Requisites of valid holographic will
1. In writing;
Lastly, Linda's failure to object at the
2. Executed in a language or dialect known
onset of the probate proceedings does
to the testator;
not relieve the proponent of the will
3. Entirely written, dated & signed by the
from establishing that it complied with
hand of the testator himself.
the legal formalities. Estoppel is not
applicable in probate proceedings
because they involve public interest. Witness during probate (Art. 811)
Otherwise, the truth as to the • If probate of holographic will is not
circumstances surrounding the contested, 1 witness is enough.
execution of a testament may not be • If contested, atleast 3 witnesses.
ascertained which is inimical to public • Absence of witness, expert testimony may
policy. be
resorted to.

89
Additional dispositions after the testator’s signature G.R. No. L-32213, November 26, 1973
(Arts. 812-813) J. Esguerra
• the dispositions of the testator written ISSUE: Whether the notary public may act as the
below his signature must be dated and third
signed by him in order to make them valid witness.
as testamentary dispositions.
• When a number of dispositions appearing in
a holographic will are signed without being
dated, and the last disposition has a
signature and a date, such date validates
the dispositions preceding it, whatever be
the time of prior dispositions.

Alternations and Insertions (Art. 814)

In case of any insertion, cancellation, erasure
or alteration in a holographic will, the testator
must authenticate the same by his full
signature.

Formality of will executed abroad by Filipino (Art. 815)

When a Filipino is in a foreign country, he is
authorized to make a will in any of the forms
established by the law of the country in which
he may be. Such will may be probated in
the Philippines.

Formality of will executed abroad by alien (Art. 816)

The will of an alien who is abroad produces
effect in the Philippines if made with the
formalities prescribed by:
a. the law of the place in which he resides, or
b. according to the formalities observed in his
country, or
c. in conformity with those which this Code
prescribes.

Formality of will executed in the Philippines by alien

(Art. 817)
A will made in the Philippines by a citizen or
subject of another country, which is executed
in accordance with the law of the country of
which he is a citizen or subject, and which
might be proved and allowed by the law of his
own country, shall have the same effect as if
executed according to the laws of the
Philippines.

Joint Wills (Arts. 818-819)

• Two or more persons cannot make a will
jointly, or in the same instrument, either for
their reciprocal benefit or for the benefit of
a third person.
• Joint wills executed by Filipinos in a foreign
country shall not be valid in the Philippines,
even though authorized by the laws of the
country where they may have been
executed.

4. WITNESSES TO A NOTARIAL WILL;

QUALIFICATIONS AND DISQUALIFICATIONS –
CIVIL CODE, ARTS. 820-824

WITNESSES TO A NOTARIAL WILL (QUALIFICATION AND

DISQUALIFICATIONS)
Credible Witnesses
1. Of sound mind;
2. 18 years or more;
3. Not blind, deaf or dumb;
4. Able to read and write;
5. Domiciled in the Philippines;
6. Has not been convicted of falsification,
perjury or false testimony.

CRUZ V. VILLASOR
RULING: The notary public before whom (2) The will must clearly describe and identify
the will was acknowledged cannot be the same, stating among other things the
considered as the third instrumental number of pages thereof;
witness since he cannot acknowledge (3) It must be identified by clear and
before himself his having signed the will. satisfactory proof as the document or
To acknowledge before means to avow; paper referred to therein; and
to own as genuine, to assent, to admit; (4) It must be signed by the testator and the
and "before" means in front or preceding witnesses on each and every page,
in space or ahead of. Consequently, if the except in case of voluminous books of
third witness were the notary public account or inventories.
himself, he would have to avow assent,
or admit his having signed the will in
front of himself. This cannot be done 90
because he cannot split his personality
into two so that one will appear before
the other to acknowledge his
participation in the making of the will. To
permit such a situation to obtain would
be sanctioning a sheer absurdity.

IN THE MATTER OF THE PETITION FOR THE

PROBATE OF THE WILL OF CONSUELO
SANTIAGO GARCIA VS. NATIVIDAD GARCIA
SANTOS
G.R. NO. 204793, JUNE 8, 2020
J. Hernando
ISSUE: Whether lawyers may act as
witnesses to execution of wills.
RULING: Lawyers are not disqualified from
being witnesses to a will; the subscribing
witnesses testified to the due execution
of the will. Article 820 of the Civil Code
provides that, "[a]ny person of sound
mind and of the age of eighteen years or
more, and not blind, deaf or dumb, and
able to read and write, may be a witness
to the execution of a will mentioned in
Article 805 of this Code." Here, the
attesting witnesses to the will in question
are all lawyers equipped with the
aforementioned qualifications.

Legatee or Devisee (including spouse, or parent,

or child) as witness (Art. 823)
The will is valid but the legacy or devise
is void, unless there are three other
competent witnesses to such will.

Creditor may act as witness - A mere charge

on the estate of the testator for the
payment of debts due at the time of the
testator’s death does not prevent his
creditors from being competent
witnesses to his will (Art. 824)

5. CODICILS AND INCORPORATION BY

REFERENCE – CIVIL CODE, ARTS. 825-827

Codicil - is supplement or addition to a

will, made after the execution of a will
and annexed, to be taken as a part
thereof, by which disposition made in the
original will is explained, added to, or
altered. (Art. 825)
• It must be executed with formalities of
a valid will to be effective. (Art. 826)

Requisites of Incorporation by Reference (Art. 827)

If a will, executed as required by this
Code, incorporates into itself by
reference any document or paper, the
following requisites must be present:
(1) The document or paper referred to in
the will must be in existence at the
time of the execution of the will;
6. CONFLICT RULES – CIVIL CODE, ARTS. 16-17 namely, the revoking will is valid. If, the condition
not fulfilled, the revocation by overt act did not
• Please see Articles 15, 16, 17 NCC and materialize.
Renvoi under
I. EFFECTIVITY AND APPLICATION OF LAWS
(page 13)

7. REVOCATION OF WILLS – CIVIL CODE, ARTS.

828-834

‘Revocation’ - an act of the mind terminating the

potential capacity of a will to operate at
the death of the testator manifested by some
outward and visible act or sign symbolic
thereof.
• A will may be revoked by the testator at
any time before his death. Any waiver or
restriction of this right is void. (Art. 828)

Different Modes of Revocation

1. By implication or operation of law - legal
separation, annulment of marriage,
preterition, unworthiness
2. By overt act (burning, tearing, obliterating) -
Animus revocandi and corpus
3. By a revoking will or codicil - new will must be
valid

Revocation outside of Philippines by a person who

does not have his domicile in this country is
valid when it is done according to:
(i) the law of the place where the will was
made, or
(ii) according to the law of the place in which
the testator had his domicile at the time;
• If the revocation takes place in this country,
it is valid when it is in accordance with the
provisions of this Code. (Art. 829)

IMPLIED REVOCATION - Subsequent wills which do

not revoke the previous ones in an express
manner, annul only such dispositions in the
prior wills as are inconsistent with or contrary
to those contained in the later wills. (Art. 831)

EXPRESS REVOCATION - A revocation made in a

subsequent will shall take effect, even if the
new will should become inoperative by reason
of the incapacity of the heirs, devisees or
legatees designated therein, or by their
renunciation. (Art. 832)

Effect on the Recognition of a Non-Marital Child

• The recognition of an illegitimate child does
not lose its legal effect, even though the will
wherein it was made should be revoked.
(Art. 834)
• Under the Family Code, admission of
illegitimate filiation in a will would constitute
proof of illegitimate filiation. Basically, the
principle laid down in Article 834 remains
unaltered regarding these admissions
contained in wills.

Revocation Based on a False Cause

A revocation of a will based on a false cause or
an illegal cause is null and void. (Art. 833)

Theory of Dependent Relative Revocation

DE MOLO V MODO, ET AL.
G.R. NO. L-2538, SEPTEMBER 21, 1951
En Banc
• The revocation by destruction or overt act is
good only if the condition is fulfilled,
• This doctrine is usually applied where making a will, at the time of its execution;
the testator cancels or destroys a will (3) If it was executed through force or under
or executes an instrument intended to duress, or the influence of fear, or threats;
revoke a will with a present intention (4) If it was procured by undue and improper
to make a new testamentary pressure and influence, on the part of the
disposition as a substitute for the old, beneficiary or of some other person;
and the new disposition is not made or, (5) If the signature of the testator was procured by
if made, fails of effect for same reason. fraud;
The doctrine is not limited to the (6) If the testator acted by mistake or did not
existence of some other document, intend that the instrument he signed
however, and has been applied where should be his will at the time of affixing his
a will was destroyed as a consequence signature thereto.
of a mistake of law.

8. REPUBLICATION AND REVIVAL OF WILLS –

CIVIL CODE, ARTS. 835-837
91
Republication
• The testator cannot republish, without
reproducing in a subsequent will, the
dispositions contained in a previous
one which is void as to its form. (Art.
835)
• The execution of a codicil referring to a
previous will has the effect of
republishing the will as modified by the
codicil. (Art. 836)

Revival
• If after making a will, the testator makes
a second will expressly revoking the first,
the revocation of the second will does
not revive the first will, which can be
revived only by another will or codicil.
(Art. 837)

9. ALLOWANCE AND DISALLOWANCE OF WILLS –

CIVIL CODE, ARTS. 838-839

Probate - The act of proving before a

competent court the due execution of a
will by a person with testamentary
capacity and the approval of the will by
said court
• Probate of the will is MANDATORY - No will
shall pass either real or personal
property unless it is proved and
allowed in accordance with the Rules
of Court. (Art. 838)
• Ante-mortem probate - the testator
himself may, during his lifetime,
petition the court having jurisdiction for
the allowance of his will.
• Post-mortem probate – probate of the will
after death of the testator
• Conclusive on due execution - subject to the
right of appeal, the allowance of the
will, either during the lifetime of the
testator or after his death, shall be
conclusive as to its due execution.

Matters to be proved during probate:

1. Whether the instrument which is
offered for probate is the last will and
testament of the decedent
2. Whether the will has been executed in
accordance
with the formalities prescribed by law
3. Whether the testator had
testamentary capacity at the time of
the execution of the will

Grounds for disallowance of a will (Art. 839)

(1) If the formalities required by law have
not been complied with;
(2) If the testator was insane, or
otherwise mentally incapable of
10. INSTITUTION AND SUBSTITUTION OF HEIRS – • General Rule: shall be considered as not written;
CIVIL CODE, ARTS 840-870 • XPN: it appears from the will that the testator
would not have made such institution if he had
INSTITUTION OF HEIRS known the falsity of such cause. (Art. 850, NCC)
is an act by virtue of which a testator
designates in his will the person or persons
who are to succeed him in his property and
transmissible rights and obligations.

Limitations on the institution of heirs

• Will not containing an Institution of Heir (Art.
841)
• A will shall be valid even though it should
not contain an institution of an heir, or such
institution should not comprise the entire
estate, and even though the person so
instituted should not accept the inheritance
or should be incapacitated to succeed.

Rule for Testamentary Dispositions

In case a Will does not contain an Institution of
Heir, the testamentary dispositions made in
accordance with law shall be complied with
and the remainder of the estate shall pass to
the legal heirs. (764)

Designation of Heir
a. The testator shall designate the heir by his
name and surname, and when there are
two persons having the same names,
b. He shall indicate some circumstance by
which the instituted heir may be known.
c. Even though the testator may have
omitted the name of the heir, should he
designate him in such manner that there
can be no doubt as to who has been
instituted, the institution shall be valid.
(Art. 843)

Effect of Error in Name (Art. 844)

General Rule: An error in the name, surname,
or circumstances of the heir shall not vitiate
the institution when it is possible, in any
other manner, to know with certainty the
person instituted.

Effect of Similarities in Name (Art. 844)

General Rule: If among persons having the
same names and surnames, there is a
similarity of circumstances in such a way
that, even with the use of other proof, the
person instituted cannot be identified, none of
them shall be an heir.

Unknown person (Art. 845)

Every disposition in favor of an unknown
person shall be void, unless by some event or
circumstance his identity becomes certain.
However, a disposition in favor of a definite
class or group of persons shall be valid.

Effect of Institution Without Designation

Heirs instituted without designation of shares
shall inherit in equal parts (Art. 846, NCC)

Institution of Brothers and Sisters

• General Rule: If the testator should institute
his brothers and sisters, and he has some of
full blood and others of half blood, the
inheritance shall be distributed equally
• XPN: a different intention appears. (Art. 848,
NCC)

Statement of a False Cause

Collective Institution heirs during the lifetime of the testator,
• there is a disposition made in upon the death of the testator, the values
general terms in favor of the testator’s of these donations are brought back to the
relatives value of the estate through collation.
• When the testator institutes some (iv) Preterition annuls the institution of an heir BUT
heirs individually and others does not affect devise and legacy if not inofficious.
collectively. (v) If the omitted compulsory heirs should die before
• General Rule: Those collectively the testator, the institution shall be effectual,
designated shall be considered as without prejudice to the right of representation.
individually instituted.
• XPN: unless it clearly appears that the SUBSTITUTION OF HEIRS
intention of the testator was otherwise Substitution of heirs is the appointment of
(Article 847, NCC) another heir, so that he may enter into the
inheritance in default of the heir originally
Article 959 of the Civil Code instituted.
“A disposition made in general terms in
favor of the testator's relatives shall be
understood to be in favor of those 92
nearest in degree.”

Proscription Against Successive Institution

When the testator calls to the succession
a person and his children they are all
deemed to have been instituted
simultaneously and not successively.
(Art. 849)

Proportionate Increase or Decrease (Arts. 852-853)

• If it was the intention of the testator
that the instituted heirs should
become sole heirs to the whole estate,
or the whole free portion, as the case
may be, and each of them has been
instituted to an aliquot part of the
inheritance and their aliquot parts
together do not cover the whole
inheritance, or the whole free portion,
each part shall be increased
proportionally.
• If each of the instituted heirs has been
given an aliquot part of the
inheritance, and the parts together
exceed the whole inheritance, or the
whole free portion, as the case may
be, each part shall be reduced
proportionally.

PRETERITION (Art. 854)

• Omission in the testator’s will of one,
some or all of the compulsory heirs in
the direct line, whether living at the
time of the execution of the will or
born after the death of the testator.

Requisites:
(i) Omitted heir is compulsory heir in the direct line
1. The children whether legitimate or
illegitimate
2. The parents in the absence of the
children.
• A spouse is a compulsory heir
but NOT in the direct line
• By fiction of law, an adopted
child is a compulsory heir in the
direct line
(ii) Omission must be total and complete in character
• If there was a donation given to the
compulsory heir during the lifetime of
the testator, and such heir is omitted
from the will, there is no preterition
because he is not omitted from the
inheritance.
• There must be omission from the
inheritance, not merely from the will.
The donations made to compulsory
Kinds 11. DISPOSITIONS WITH A CONDITION OR TERM –
1. Simple or common; CIVIL CODE, ARTS. 871-885
2. Brief or compendious;
3. Reciprocal; Impossible or Illegal Conditions (Art. 873)
4. Fideicommissary. • Impossible conditions and those contrary to
law or good customs shall be considered AS
Appointment of Substitute Heirs NOT IMPOSED and shall in no manner
The testator may appoint one or more substitute heir prejudice the heir, even if the testator
or heirs instituted in case of: should otherwise provide.
a. Predecease • Reason: in testamentary disposition, the
condition is not as important as the
b. Renunciation
generosity and liberality of the testator.
c. Incapacity
Vague Wording of Conditions
Purposes of Substitution If a condition is so vaguely worded that even
1. To avoid intestate succession; after applying rules on construction and
2. To prevent the descent of the estate of interpretation, it is still meaningless,
the testator to whom the testator contradictory, or cannot be understood, the
does not want to succeed him in his conditions will be regarded as an impossible
property whether by right of condition and should therefore be disregarded.
representation, or by right of accretion or
by right of intestate succession; When is the time to be considered on whether a
3. To allow the testator greater freedom to condition is impossible or illegal?
help or reward those who by reasons of Time when the condition is supposed to be fulfilled.
services rendered are more worthy of
his affection and deserving of his If the disposition is subject to a:
bounty than intestate heirs; 1. Suspensive term – The legal heirs can enjoy
4. To enable the testator to make possession of the property until the
arrangements for his succession in the expiration of the period but they must put
up a bond (caucion muciana) in order to
manner most convenient for him;
protect the right of the instituted heir.
5. To realize some honorable purpose of the
2. Resolutory term – The legal heirs can enjoy
testator like the maintenance of the possession of the property but when the
property within his property because in term arrives, he must give it to the legal
substitution, the testator to some heirs. The instituted heir does not have to
extent may preserve the property within file a bond.
the confines of his own immediate
family and prevent the estate from General Rule: No Charge, Condition or
descending to the other legal heirs like Substitution on Legitimes (Art 872 & 905)
the brothers or sisters. XPN: The testator can validly impose a prohibition
against the partition of the legitime for a period
You can have a substitute for a legatee not exceeding 20 years. (Art 1083)
or devisee because Article 857 applies to • Art 1083 provides: Every co-heir has a right to
the free portion and not to the legitime demand the division of the estate, unless the
testator should have expressly forbidden its
Fideicommissary Substitution partition, in which case the priod of indivision
A fideicommisary substitution is one by shall not exceed 20 years as provided in Art
494.
virture of which the fiduciary or first heirs is
• This power of prohibition applies to legitime.
entrusted with the obligation to preserve
• Even though forbidden by the testator, the
and transmit to a second heir called the co ownership terminates when any of the
fideicommissary the whole a part of the cause for which partnership is dissolved
inheritance. The power to appoint a takes place, or when the court finds for a
fideicommissary substitute is also part of the compelling reasons that division should be
testator’s freedom of disposition. ordered, upon petition of one of the co-
heirs.
Requisites of Fideicommissary Substitution
a. First heir (fiduciary) called to enjoy that The Condition Not to Marry:
estate and entrusted with the obligation Absolute Prohibition
to preserve and to transmit to a second 1. To contract a 1st marriage Absolute void
heir (fideicommissary) the whole or part and may be disregarded or considered not
of the inheritance. imposed Reason: contrary to good morality
b. Second heir must not go beyond one and public policy
degree from the 1st heir 2. To remarry
c. Both must be living when testator died • General Rule: It shall be void if it is contrary
d. Cannot burden the legitime. to morality and public policy
• XPN: valid
 When imposed on the widow or
The nullity of the fideicommissary
widower by the deceased spouse
substitution does not prejudice the validity  When imposed on the widow or
of the institution of the heirs first widower by the ascendants or
designated; the fideicommissary clause shall descendants of the deceased spouse
simply be considered as not written. [Article (not the ascendants or descendant of
868, NCC] the widow or widower)
• Rationale: justified because of
sentimental and
economic reasons.

93
Relative Prohibition Legitime - is that part of the testator’s property
1. To contract a 1st marriage which he cannot dispose of because the law has
2. To remarry reserved it for certain heirs who are called
• Valid: relative prohibition to marry a compulsory heirs (Art 886)
particular girl or at a particular time or
for a number of years
• XPN: unless impossible or illegal
• Invalid: when condition becomes
onerous or burdensome like don’t
marry for 60 years or don’t marry in
Asia (the prohibition is actually an
absolute)

A stopping of a usufruct, allowance, or personal

prestation the moment the heir, legatee, or devisee
marries or remarries – JUSTIFIED since the law
allow their giving for the time during which
the person remains unmarried or in
widowhood

Disposicion Captatoria (Art. 875)

Any disposition made upon the condition
that the heir shall make some provision in
his will in his favor of the testator or of any
other person shall be void.
• Note: Both the condition and disposition are
VOID.
• Rationale: This is also called legacy-hunting
disposition. It tends to make the
execution of a will a contractual act,
hence, void.

‘Modal Institution’
• Also called Institution Modal or Institucion
SubModo
• Is not a condition but when and if it is
violated, the instituted heir is supposed to
forfeit the inheritance; to return indeed
anything he may have received together
with its fruits and interest, if he should
disregard this obligation. (Art. 882)
• When the institution of an heir is made,
for a certain purpose or cause (Art 871)
• The statement of the object of the
institution or the application of the
property left by the testator or the charge
imposed upon him (Art 882) – such
statement shall not be considered a
condition unless it appears that such was
the intention.
• “Modo” also signifies every onerous
disposition by which the obligor imposed
upon another and thus limited his
promise, such as demanding a loan in
exchange for what the other person
receives. The condition can be imposed
only on the free portion, never on the
legitime (Art 904)

12. COMPULSORY HEIRS; LEGITIME – CIVIL CODE,

ARTS. 886-914

Compulsory Heirs - are those for whom the law

has reserved a portion of the testator’s
estate which is known as the legitime.
1. Legitimate children and descendants;
2. Surviving spouse;
3. Illegitimate children & descendants;
4. Legitimate parents & other legitimate
ascendants;
5. Illegitimate parents
How to Compute the Exact Amount of Legitime • Get legitime of illegitimate children from free
(Art. 908) portion
To determine the legitime, the value of after surviving spouse is paid
the property left at the death of the • NEVER REDUCE the legitime of legitimate
testator shall be considered, deducting children and surviving spouse because they
all debts and charges, which shall not are the preferred compulsory heirs.
include those imposed in the will. To • Legitime of illegitimate children will be
the net value of the hereditary estate, reduced pro- rata and without preference
shall be added the value of all among them if the estate is insufficient
donations by the testator that are
subject to collation, at the time he Collation in Connection With the Computation of
made them. Legitime

Steps in the computation and distribution Adding

of hereditary estate Mathematical process of addition the value
1. Gross value of the estate of thing donated to the net value of the
2. Deduct debts and charges hereditary estate
3. Add to the net estate value of donation
inter vivos Charging
(collation) Imputation of value of donation inter vivos
4. Determine legitime based on rules against either the legitim or disposable free
5. Impute donation inter vivos portion depending on who is the done
(collation), against the legitime if
donee is a compulsory heir, against Return
the free portion if stranger The act of restoring to the common mass of
6. Distribute remaining after the hereditary estate, either actually or
satisfaction of legitime based on fictitiously, any property or right, received by
will. gratuitous title (advance of legitime if
compulsory/ officious or inofficious donation)
Basic Rules on Legitime
• Legitimate children always get ½ of estate Not Collationable
• Legitimate parents always get ½ (if • Legacy or devise in favor of compulsory heir -
not excluded by legit child) charge to free portion not legitime
• No representation in the ascending line • Donation inter vivos stated not collationable -
• Legitime of spouse is same as 1 charge to free portion not legitime
legit child, except when there is only • Expenses for support, education, medical
one child, give ¼ taken from free attendance - not to be considered in
portion computation of estate

94
 LEGITIME OF COMPULSORY HEIRS

SURVIVING HEIR LEGITIME REMARKS

• Illegitimate children ⅓ Remaining ⅓ is free portion; Art. 894, NCC

• Surviving spouse ⅓
• Illegitimate children ¼ Art. 899 NCC; testator may freely th
dispose of remaining ⅛ of the estate e
• Surviving spouse ⅛
• Legitimate parents ½
• Illegitimate children ¼
• Legitimate parents ½
• Legitimate parents ½
• Surviving spouse ¼ taken from the free portion; Art. 893, NCC
• Illegitimate parents ¼
• Surviving spouse ¼
• Illegitimate children alone ½ Divided by illegitimate children; Remainder
is a free portion (Art. 901, NCC)

• Legitimate parents alone ½ remaining half is free portion (Arts. 889, 890,
NCC)
• Illegitimate parents alone ½
• Surviving spouse alone ½; ⅓; ½ • remaining half is free portion; Art.900, NCC
• reduced to ⅓ if marriage is in articulo
mortis, and spouse who was in articulo
mortis dies within 3 months from marriage.
• Unless, they have been living as husband
and wife for more than 5 years, spouse will
still get ½ legitime.

• Legitimate children alone ½ Divided by number of legitimate children;

Remainder is free portion

• One legitimate child ½ Remaining ¼ is free portion (Art. 892, NCC)

(descendant)
• Surviving spouse ¼

• Two or more legitimate ½ Divided by number of children)

children (or their
descendants)
• Surviving spouse (=) Equal to the share of one child remainder is
free portion (Art. 892, NCC)

• Legitimate child ½
• Illegitimate child ½ of each legitimate child (Art.176, Family Code)
Remainder is free portion (Art.892, NCC)

• Brothers and sisters

(nephews and nieces, in Not entitled to anything since they are not compulsory heirs;
Testator may
case of deceased siblings) choose to give them something out of the free portion.

95
 LEGITIME V. INTESTATE SHARE
SURVIVING HEIR LEGITIME INTESTATE SHARE
Illegitimate children 1/3 1/2
Surviving spouse 1/3 1/2
(Remaining 1/3 is free
portion; Art. 894, NCC)
Illegitimate children 1/4 1/4
Surviving spouse 1/8 1/4
Legitimate parents 1/2 1/2
(Art. 899, NCC; testator may
freely
dispose of the remaining 1/8
of the estate.)
Illegitimate children 1/4 1/2
Legitimate parents 1/2 1/2
Legitimate parents 1/2 1/2
Surviving spouse 1/4 (taken from the free 1/2
portion) (Art. 893, NCC)
Illegitimate parents 1/4 1/2
Surviving spouse 1/4 1/2
Illegitimate children alone 1/2 (divided by number of All
illegitimate children)
Remainder is free portion (Art.
901,
NCC)
Legitimate parents alone 1/2; remaining half is free All
portion
(Arts. 889 and 890, NCC)
Illegitimate parents alone 1/2 All
Surviving spouse alone 1/2; 1/3; 1/2 All
Legitimate children alone 1/2 (divided by number of All
legitimate children)
Remainder is free portion (Art.
888,
NCC)
One legitimate child 1/2 1/2
(or descendant) 1/4 1/2
Surviving spouse Remaining 1/4 is free portion
(Art.
892, NCC)
Two or more legitimate 1/2 (divided by the number of Consider spouse as one
children (or their children) legitimate child and divide
descendants) estate by total number
Surviving spouse Equal to the share of one
child Remainder is free
portion (Art. 892, NCC)
Legitimate child 1/2 1 is to ½ or 2:1 or 10:5
Illegitimate child 1/2 of each legitimate child
(Art. 176, Family Code)
Remainder is free portion (Art.
892,
NCC)
Surviving spouse 1/2 (remaining half is free 1/2
portion; Art. 900, NCC) 1/2 (divided by the number
Brothers and sisters (nephews Not entitled to anything of brothers and sisters;
and nieces, in case of since they are not nephews and nieces of
deceased siblings) compulsory heirs; testator deceased siblings divide
may choose to give them among themselves the
something out of the free share that pertains to their
portion parents)
Art. 1001, NCC
96
Impairment of the Legitime 13. DISINHERITANCE – CIVIL CODE, ARTS. 915-923
• Heir is entitled to the completion of
legitime DISINHERITANCE
• Legitime passes by operation of law. A compulsory heir may, in consequence of
• System of legitime is a limitation on a disinheritance, be deprived of his legitime,
testator's power to dispose his estate in for causes expressly stated by law.
a will. Legitime can never be impaired. Disinheritance can only be effected through
• Compulsory heir may be denied of a will wherein the legal cause therefor shall
legitime only through a valid be specified. (Arts. 913 & 916 NCC)
disinheritance.
Grounds for Disinheritance
Testamentary dispositions that impair or 1. Article 919 – children and other descendants
diminish the legitime of the compulsory 2. Article 920 – parents and other ascendants
heirs shall be reduced, insofar as they 3. Article 921 – Spouse
may be inofficious or excessive. (Art. 907)
[Sempio-Dy]

OF PARENTS, LEGITIMATE OR
OF CHILDREN, LEGITIMATE OR
ILLEGITIMATE OF SPOUSES
ILLEGITIMATE
(ART. 920) (8 GROUNDS, WITH (ART. 921) (6 GROUNDS)
(ART. 919) (8 GROUNDS)
2,3,4,5 & 7 SAME WITH ART. 919)

1. Conviction of attempt - Same, Art. 920 (2)- - Same, Art. 921 (1) -
against life of testator, his
spouse, descendant or
ascendant.
2. Has accused testator of a - Same, Art. 920 (3)- - Same, Art. 921 (2) -
crime punishable by 6 yrs. or
more if found to be
groundless.
3. Conviction of adultery - Same, Art. 920 (4)- Art. 921 (4) - When he/she
or concubinage with has given ground for legal
testator's spouse. separation (even if no case is
filed).
4. Caused the testator to - Same, Art. 920 (5)- -Same, Art. 921 (3) -
make a will or change one
already made by fraud,
violence, intimidation or
undue influence.

5. Refusal to support the Art. 920 (7) - Refusal to Art. 921 (6) – Unjustified
testator support children and refusal to
w/o justifiable cause. descendants w/o justifiable support the children or other
cause spouse

6. Maltreatment of testator by Art. 920 (8) - Attempt against

word or deed (conviction not life of other parent, unless
necessary) there is reconciliation.

7. Leading dishonorable Art. 920 (6) Loss of Art. 921 (5) - When spouse
or disgraceful life. parental authority for has given ground for loss of
causes specified by law parental authority

8. Conviction of crime Art. 920 (1) Abandonment of

punishable by civil children and descendants and
interdiction. inducing daughters to live
corrupt or immoral lives or
attempted against their virtue

97
Requisites for the Various Grounds for Disinheritance discharging, he may even be authorized by the court to
1. Valid will; Disinheritance can be made only alienate personal and real properties, in order to obtain the
in a will. There is no disinheritance in legal money or things needed. (See Secs. 1 and 2, Rule 81, Rules
succession. The will must be valid and of Court).
admitted to probate.
2. Compulsory heir is clearly identified; Only
compulsory heirs can be disinherited, so
brothers and sisters cannot be the subject
of disinheritance.
3. Based on cause/s sanctioned by law;
4. Total, includes not only the legitime, but
also the free portion. If partial,
disinheritance is not valid, and the heir
gets his or her legitime;
5. Unconditional; and
6. Cause is true & existing.

Preterition vs. Disinheritance - Preterition is the

TACIT deprivation of the legitime as
distinguished from disinheritance which is an
EXPRESS deprivation of the legitime.

Ineffective Disinheritance
• When one or some requisite/s is/are lacking
• In preterition, the whole institution of heirs
is annulled. In invalid disinheritance, the
disinherited heir still gets his legitime.
• If will is revoked, disinheritance becomes
ineffective.
• Reconciliation renders disinheritance
ineffective.

Reconciliation
• Subsequent reconciliation deprives the
testator of the right to disinherit, and any
disinheritance already made becomes
ineffectual.
• Reconciliation needs no special form. It can
be express or implied. In UNWORTHINESS
(Art. 1033), condonation must be in writing.
• If ground for disinheritance is also a ground
for unworthiness, like abandonment of
children or an attempt against the life of the
testator, the heir cannot also inherit.
• But reconciliation extinguishes
unworthiness as an incapacity, because
incapacity is only the presumed will of the
testator.

14. LEGACIES AND DEVISES – CIVIL CODE, ARTS.

924-959

Legacy and Devise Distinguished

• Legacy is a gift or bequest by will of
personal property, whereas a devise is a
testamentary disposition of real estate
(Black’s Law Dictionary, 5th Ed.)
• A person who receives by will a gift of a
specified item of personal property is a
legatee, while a devisee is one who receives
by will an individualized item of real
property. (Paguirigan)

Who Has the Duty of Giving the Legacies and Devises?

It depends.
a. As a general rule, if no one is charged with this
duty, it is the estate which must give the
legacies and devises. The estate is of
course represented by the executor, or the
administrator with a will annexed.

Note: Under the Rules of Court, this officer is bound

to discharge the devises and legacies. (Rule 81, Sec.
1{b}). As a matter of fact, for this purpose of
b. If the testator gives this duty to the the second case, by giving the legatee
compulsory heirs, or to the legatees an acquittance, should he request one.
and devisees, they must comply • In both cases, the legacy shall comprise
with their duties, subject to the all interests on the credit or debt which
limitations imposed by law. may be due the testator at the time of his
death.
Note: The testator is allowed to charge them
with this duty because the right to dispose Alternative Legacies or Devises (Article 940)
presumes the right. • One which provides that, among several
things mentioned, only one is to be given.
Legacy or Devise of Encumbered Property (Art. 934) • The choice is with the heir, or the
• If the testator should bequeath or executor or administrator.
devise something pledged or • If the heir, legatee, or devisee who is
mortgaged to secure a recoverable bound to give the gift dies, the right
debt before the execution of the will, passes to their heirs.
the estate is obliged to pay the debt, • The choice, once made, is irrevocable.
unless the contrary intention • Apply rules on obligations in general.
appears. The same rule applies when
the thing is pledged or mortgaged Legacy of generic property (Art. 941)
after the execution of the will. • Legacy of generic personal property is
• Any other charge, perpetual or valid even if there are no things of the
temporary, with which the thing same kind in the estate. The estate will
bequeathed is burdened, passes with simply have to acquire what is given by
it to the legatee or devisee. If the legacy.
thing bequeathed should be subject • But devise of indeterminate real property
to a usufruct, the legatee or devisee is valid only if there is an immovable
shall respect such until it is legally property of the same kind in the estate at
extinguished. (Art 946 NCC) the time of testator’s death.
• The right to choose the legacy belongs to
Legacy of Credit (Art. 935) the executor or administrator who shall
• The legacy of a credit against a third deliver a thing which is neither of inferior
person or of the remission or release or superior quality.
of a debt of the legatee shall be • If the choice is given to the heir, legatee,
effective only as regards that part of or devisee, he may choose whatever he
the credit or debt existing at the prefers (need not be of medium quality)
time of the death of the testator (Art. 942).
• In the first case, the estate shall • If the heir, legatee, or devisee cannot
comply with the legacy by assigning make the choice, the right passes to his
to the legatee all rights of action it heirs (Art. 943)
may have against the debtor. In • Finality of choice – irrevocable, once made.

98
Legacy for Education (Article 944) 3. The thing must be owned by the testator, and
• Lasts until the legatee is of age, or not by another person (Art. 930)
beyond the age of majority in order that XPN: Thing owned by the stranger is still valid if
he may finish some professional, there
vocational, or general course, provided is an order to acquire the same (Art. 930-931)
he pursues his course diligently.
• Amount - that fixed by the testator; If the
testator did not fix the amount, it is
fixed in accordance with the social
standing and circumstances of the
legatee and the value of the estate.

Legacy of support (Article 944)

• It lasts during the lifetime of the legatee.
• If the testator used to give the legatee a
sum of money for support, give same
amount, unless it is markedly
disproportionate to the estate.
• If the testator did not fix the amount,
consider the social standing and
circumstances of the legatee and the
value of the estate.

Order of Payment of Legacies and Devises if

estate is not sufficient
1. Remuneratory
• Those which testator gives because of
his moral obligation to compensate
certain persons for services which do
not constitute recoverable debts, like
legacy to one who saved the life of the
testator.
• Entitled to preference because they
are moral obligations of the testator.
2. Those declared by the testator as
preferential.
3. For support
4. For education.
5. Legacy or devise of specific, determinate
thing in the estate.
6. Others, pro rata. (Art 950)
• Mistake as to name of thing given is
of no consequence, if thing can be
identified. (Art. 958)

Acceptance or Repudiation of legacy or devise:

General Rule: Acceptance may be total or
partial. XPN: If the legacy/devise is partly
onerous and partly gratuitous, the
recipient can not accept
the gratuitous part and renounce
the onerous part. Any other combination
however is permitted.
• Heirs of legatee or devisee can accept
the gift if the legatee or devisee dies
after the death of the testator, not
before.
• Legacy or devise not accepted shall be
merged into the mass of the estate
(intestacy), except in substitution or
accretion (Art 956).
• If a compulsory heir is also a legatee or
devisee, he can accept either or both the
legacy/devise and the legitime, or waive
both (Art. 955).

Requisites for Validity

1. The will must be valid
2. The thing must be within the commerce
of man. (Art. 924)
Property Not Owned by the Testator (3) Total loss - If the thing is totally lost during
• General Rule: The legacy or devise of a the
thing belonging to another person is lifetime or after the death of the testator.
void, if the testator erroneously
believed that the thing pertained to Disposition in favor of testator's relatives (Art. 959):
him. (a) Limited to 5th degree relatives of the testator.
• XPN: If the thing bequeathed, though (b) Nearer excludes the farther.
not belonging to the testator when he (c) No preference as to lines. Grandson and
made the will, afterwards becomes his, sister are both relatives within second
by whatever title, the disposition shall degree. What is important is nearness of
take effect. (Art. 930)
degree.
Acquisition of Thing Belonging to Another
Legal Succession – is the kind of succession
• General Rule: If the testator orders that a prescribed by law (and presumed by it to be
thing belonging to another be acquired the desire of the deceased) which takes place
in order that it be given to a legatee or when the expressed will of the decedent has
devisee, the heir upon whom the not been set down in a will.
obligation is imposed or the estate must
acquire it and give the same to the
legatee or devisee; 1. CAUSES OF INTESTACY AND RELATIONSHIP –
• XPN: If the owner of the thing refuses CIVIL CODE, ARTS. 960-969
to alienate the same, or demands an
excessive price therefor, the heir or CAUSES OF INTESTACY
the estate shall only be obliged to give Legal or intestate succession takes place:
the just value of the thing. (Art. 931) 1. If a person dies without a will, or with a
void will, or one which has subsequently
Ineffective Legacies/Devises lost its validity;
Legacy or Devise shall be without effect: 2. When the will does not institute an heir to,
(1) Transformation - If the testator or dispose of all the property belonging to
transforms the thing such that it does the testator. In such case, legal succession
not retain its original form or shall take place only with respect to the
denomination; property of which the testator has not
(2) Alienation - If the testator alienates the disposed.
thing by any title or for any cause. 3. If the suspensive condition attached to the
Reacquisition of the thing by the institution of heir does not happen or is not
testator does not make the legacy or fulfilled, or if the heir dies before the testator,
devise valid, unless it is effected by or repudiates the inheritance, there being no
right of repurchase (pacto de retro) substitution, and no right of accretion takes
OR reversion is caused by the place;
annulment was vitiation of consent on 4. When the heir instituted is incapable of
the grantor’s part, either by reason of succeeding, except in cases provided in
incapacity or of duress. this Code. (Art. 960, NCC)

99

C. INTESTATE SUCCESSION
DETERMINATION OF HEIRS represented, and acquires the rights which the
Intestate Heirs, just like compulsory heirs, latter would have if he were living or if he could
are determined by law. have inherited.” (Article 970, NCC)

Who are intestate heirs?

1. Legitimate children or descendants
2. Illegitimate children or descendants
3. Legitimate parents or ascendants
4. Illegitimate parents
5. Surviving spouse
6. Brothers and sisters, nephews and nieces
7. Other collateral relatives up to the 5th
degree
8. The State.

RELATIONSHIP
‘Direct or Collateral’
ARTICLE 964. A series of degrees forms a line,
which may be either direct or collateral.
• A direct line is that constituted by the series
of degrees among ascendants and
descendants.
• A collateral line is that constituted by the
series of degrees among persons who are
not ascendants and descendants, but who
come from a common ancestor.

‘Ascending or Descending’
The direct line is either descending or
ascending.
• Descending - unites the head of the
family with those who descend from him.
• Ascending - binds a person with those from
whom he descends. [Art. 965]

Degrees of Relationship (Art. 963)

“Proximity of relationship is determined by
the number of generations. Each generation
forms a degree.”
• ARTICLE 966. In the line, as many degrees
are counted as there are generations or
persons, excluding the progenitor.
• In the direct line, ascent is made to the
common ancestor. Thus, the child is one
degree removed from the parent, two
from the grandfather, and three from the
great-grandparent.
• In the collateral line, ascent is made to
the common ancestor and then descent is
made to the person with whom the
computation is to be made. Thus, a
person is two degrees removed from his
brother, three from his uncle, who is the
brother of his father, four from his first
cousin, and so forth.

‘Full or Half Blood Relationship’

Full blood relationship is that existing
between persons who have the same father
and the same mother. Half blood relationship
is that existing between persons who have the
same father, but not the same mother, or
the same mother, but not the same father.
[Article 967, NCC]

2. RIGHT OF REPRESENTATION – CIVIL CODE,

ARTS. 970-977

Right of Representation
It is “a right created by fiction of law, by
virtue of which the representative is raised
to the place and degree of the person
When does representation exist given the right to choose the name by
a) In testate succession: which the child is to be known,
• Exists in predecease, consistent with the best interest of the
incapacity, and child.
disinheritance. e. The representative must himself be capable
• Covers only the legitime, which of
goes to the representative by succeeding the decedent (Art. 973).
operation of law. f. The representative must at least be
• There is no right to represent a voluntary conceived at the time succession opens.
heir. g. When there is representation, the heirs
b) In intestate succession: inherit per stirpes, not per capita (Art. 974).
That is, all those in a group inherit in equal
• Exists also in predecease and
shares, because per stirpes means
incapacity.
inheritance by group.
• Covers all that the person h. A renouncer may not be represented but
represented could have he can represent the person whose
inherited. inheritance he has renounced.

Lines where representation obtain

• With respect to the legitime
 in the direct descending line only 100
(Article 972,
NCC)
• With respect to intestacy –
1. in the direct descending line (Article 972,
NCC)
2. in one instance in the collateral
line; i.e. nephews and nieces
representing brothers and sisters
of the deceased. (Article 975,
NCC)

Rules to remember
a. The representative succeeds not the
person represented but the one
whom the person represented would
have succeeded (Art. 971).
b. The right of representation takes
place only in the direct descending
line: never in the ascending line (Art.
972).
c. In the collateral line, representation
takes place only in favor of children of
brothers and sisters, whether full or
half blood (Art. 972, second par.).
Hence, grandnephews and
grandnieces do not represent.
d. There is representation in favor of the
adopted (see Sections 41 and 43 of
new law RA 11642)
• Section 43 In testate and Intestate
succession, the adopters and the
adoptee shall have reciprocal rights
of succession without distinction
from legitimate filiations. However,
if the adoptees and their biological
parents have left a will, the law on
testamentary succession shall
govern.
• Section 41 Legitimacy. – The
adoptee shall be considered the
legitimate child of the adopter for
all intents and purposes and as
such is entitled to all the rights and
obligations provided by law to
legitimate children born to them
without discrimination of any kind.
To this end, the adoptee is entitled
to love, guidance, and support in
keeping with the means of the
family. The legitimate filiation that
is created between the adopter and
the adoptee shall be extended to
the adopter’s parents, adopter’s
legitimate siblings, and legitimate
descendants. The adopter is also
i. Illegitimate children may represent their degree.; A half-sister excludes all other relatives.
legitimate parents (Art. 922), as r) State – All
exception to the iron-curtain rule – see
G.R. Nos. 208912 and 209018, Aquino v. IMPORTANT RULES IN LEGAL SUCCESSION
Aquino, December 7, 2021 INTESTACY
j. Iron Curtain Rule: Article 992. An EXCLUSION AND CONCURRENCE
illegitimate child has no right to inherit ab Intestacy operates on the same principles as
intestato from the legitimate children and succession to the legitime. There are two
relatives of his father or mother; nor shall principles, operating sometimes simultaneously,
such children or relatives inherit in the sometimes singly: exclusion and concurrence.
same manner from the illegitimate child.
k. When nephews and nieces survive with
brothers or sisters, they inherit by
representation. If they alone survive,
they inherit in equal portions or per
capita.

3. ORDER OF INTESTATE SUCCESSION – CIVIL

CODE, ARTS. 978-1014

ORDER OF INTESTATE SUCCESSION

I. Legitimate Children/Descendants
II. Illegitimate Children/Descendants
III. Legitimate Parents/Ascendants
IV. Illegitimate Parents
V. Surviving Spouse
VI. Brothers, sisters, nephews, nieces
VII. Other Collaterals – to the 5th degree
VIII. State

Sharing in Intestate Succession [Sempio-Dy]

a) Legitimate children alone – All
b) Legitimate children – Surviving spouse – SS
gets the same share as one legitimate
child. If there is only one child, they
divide ½, ½.
c) Legitimate children and illegitimate
children – Proportion of 10-5, provided the
legitimes of the legitimate children are not
impaired.
d) Legitimate children – illegitimate children –
surviving spouse: Legitimate children and
illegitimate children – Proportion of 10-5;
Surviving spouse – Same share as one
legitimate child
e) One legitimate child – surviving spouse –
illegitimate children: One legitimate child -
½; Surviving spouse -
¼; Illegitimate children - ¼
f) Illegitimate child alone – All.
g) Illegitimate children and surviving spouse –
½, ½.
h) Surviving spouse alone – All.
i) Legitimate parents alone – All.
j) Legitimate parents, surviving spouse,
illegitimate children – ½, ¼, ¼.
***Remember that when there are
legitimate children, ascendants are
excluded.
k) Legitimate parents and illegitimate
children – 1/2,
1/2
l) Legitimate parents and surviving spouse –
1/2, 1/2
m) Surviving spouse and illegitimate parents –
1/2, 1/2
n) Illegitimate parents alone – All.
o) Surviving spouse, brothers and sisters –
1/2, 1/2
p) Brothers and sisters, nephews and nieces –
All.
q) Other collaterals – All. Nearer excludes the
farther.; Does not extend beyond 5th
I. Legitimate children: 3. Are excluded by legitimate parents,
1. Exclude parents, collaterals & State illegitimate parents, surviving spouse,
2. Concur with surviving spouse and brothers & sisters, and nephews & nieces.
illegitimate children
3. Are excluded by no one VIII. State
1. Excludes no one
II. Illegitimate children: 2. Concurs with no one
1. Exclude illegitimate parents, collaterals & 3. Is excluded by every one
State
2. Concur with surviving spouse, RULE OF PROXIMITY
legitimate children, & legitimate The Rule of Proximity of Degree
parents Relatives nearer or nearest in degree exclude
3. Are excluded by no one the more distant ones, saving the right of
representation when proper (Article 962, NCC).
III. Legitimate parents
RULE OF PREFERENCE OF LINES
1. Exclude collaterals & State
The three lines of relationship are:
2. Concur with illegitimate children & surviving
1. the descending;
spouse
2. the ascending; and
3. are excluded by legitimate children
3. the collateral.
The law lays down an order of preference
IV. Illegitimate parents
among these lines, such that the descending
1. Exclude collaterals & State
excludes the ascending and the collateral, and
2. Concur with surviving spouse the ascending excludes and collateral.
3. Are excluded by legitimate children &
illegitimate children THE RULE OF EQUALITY OF SHARES - Relatives in
the same degree shall inherit in equal
VI. Brothers and Sisters, Nephews and Nieces shares.
1. Exclude all other collaterals & the State Exceptions:
2. Concur with surviving spouse 1) the rule of preference of lines, supra;
3. Are excluded by legitimate 2) the distinction between legitimate and
children, illegitimate children, illegitimate filiation (the ratio is 2:1)
legitimate parents, and illegitimate 3) the rule of division by line in the ascending
parents line (Article 987, par. 2)
4) the distinction between full or half-blood
VII. Other Collaterals relationship among brothers and sisters, as
1. Exclude collaterals in remoter degrees & the well as nephews and nieces (Arts. 1006
state and 1008)
2. Concur with collaterals in the same degree. 5) Representation

101
TREYES V LARLAR establishes that right. What they seek is the
G.R. NO. 232579, SEPTEMBER 08, 2020 enforcement and protection of the right granted to
En Banc them under Article 1001 in relation to Article 777 of
Facts: the Civil Code by asking for the nullification of the
Dr. Nixon Treyes's (Dr. Nixon) wife Rosie Larlar Affidavits of Self-Adjudication that disregard and
Treyes passed away without having any violate their right as intestate heirs.
children and without leaving a will. Antonio,
Emilio, Heddy, Rene, Celeste, Judy, and seven
siblings whom Rosie left behind (Larlar, et al.).
Rosie had 14 real estate properties under
marital ownership with Dr. Nixon at the time of
her passing. Afterwards, Dr. Nixon signed two
affidavits of self- adjudication in which he
claimed to be the only heir and transferred
Rosie's inheritance to himself. Larlar, et al.
thus filed a complaint with the RTC seeking
the nullification of the affidavits, the
cancellation of TCTs, the reconveyance of
ownership and possession, the partition, and
damages.
Meanwhile, Dr. Nixon submitted a motion to
dismiss the
case on a number of grounds, including lack of
subject- matter jurisdiction and consequently a
lack of real parties in interest since there is no
court declaration of heirship yet in favor of
Larlar et al.
After the RTC rejected the Omnibus Motion,
Treyes petitioned the Court of Appeals (CA) for
certiorari in accordance with Rule 65.
However, the CA rejected this. Thus, the
current petition.

Issue:
Whether a prior determination of the status as
a legal or compulsory heir in a separate
special proceeding is a prerequisite to an
ordinary civil action seeking for the protection
and enforcement of ownership rights given by
the law of succession.

Ruling:
No. In the instant case, it is readily apparent
from the allegations in the Complaint filed by
the private respondents that the action was
not instituted for the determination of their
status as heirs, as it was their position that
their status as heirs was already established
ipso jure without the need of any judicial
confirmation.

Instead, what the Complaint alleges is that the

private respondents' rights over the subject
properties, by virtue of their being siblings of
the deceased, must be enforced by annulling
the Affidavits of Self-Adjudication and ordering
the reconveyance of the subject properties.

The private respondents do not really seek in

their Complaint the establishment of their
rights as intestate heirs but, rather, the
enforcement of their rights already granted by
law as intestate heirs finds basis in Article 777
of the Civil Code, which states that the rights
of succession are transmitted from the
moment of the death of the decedent.

Hence, subject to the required proof, without

any need of prior judicial determination, the
private respondents siblings of Rosie, by
operation of law, are entitled to one- half of
the inheritance of the decedent. Thus, in filing
their Complaint, they do not seek to have their
right as intestate heirs established, for the
simple reason that it is the law that already
Given the clear dictates of the Civil Code their status as such. The ruling of the trial court
that the rights of the heirs to the shall only be in relation to the cause of action
inheritance vest immediately at the of the ordinary civil action, i.e., the nullification
precise moment of the decedent's death of a deed or instrument, and recovery or
even without judicial declaration of reconveyance of property, which ruling is binding
heirship, and the various Court En Banc only between and among the parties.
and Division decisions holding that no
prior judicial declaration of heirship is SUCCESSIONAL BARRIER (THE “IRON CURTAIN RULE”)
necessary before an heir can file an • embodied in Article 992 of the Civil Code,
ordinary civil action to enforce ownership creates an absolute bar that operates
rights acquired by virtue of succession bilaterally.
through the nullification of deeds • It prohibits an illegitimate child to succeed
divesting property or properties forming intestate from the legitimate descendants,
part of the estate and reconveyance and collateral relative of his legitimate
thereof to the estate or for the common parent, and vice versa.
benefit of the heirs of the decedent, the
Court hereby resolves to clarify the AQUINO V. AQUINO
prevailing doctrine. G.R. NOS. 208912 AND 209018, DECEMBER 7, 2021
En Banc
Accordingly, the rule laid down in Ypon, Issue:
Yaptinchay, Portugal, Reyes, Heirs of Whether or not a nonmarital grandchild may
Gabatan v. Court of Appeals, and other inherit ab intestato from his or her marital
similar cases, which requires a prior grandparent by right of representation.
determination of heirship in a separate
special proceeding as a prerequisite. Ruling:
Yes, a nonmarital grandchild may inherit ab
Before one can file an ordinary civil intestato from his or her marital grandparents
action to enforce ownership rights by right of representation.
acquired by virtue of succession, is
abandoned. xxx
Henceforth, the rule is: unless there is a This Court abandons the presumption in In re
pending special proceeding for the Grey, Corpus, Diaz, and In re Suntay, among
settlement of the decedent's estate or for others, that nonmarital children are products
the determination of heirship, the of illicit relationships or that they are
compulsory or intestate heirs may automatically placed in a hostile environment
commence an ordinary civil action to perpetrated by the marital family. We are not
declare the nullity of a deed or instrument, duty bound to uncritically parrot archaic
and for recovery of property, or any other prejudices and cruelties, to mirror and amplify
action in the enforcement of their oppressive and regressive ideas about the
ownership rights acquired by virtue of status of children and family life. The best
succession, without the necessity of a interest of the child should prevail.
prior and separate judicial declaration of

102
This Court has recognized that the alleged 1. Unity of object
resentment and hostility presumed by Article 2. Plurality of subject
992 can be proven by evidence to be non- • two or more persons are called to the
existent. Particular facts of a case may show same inheritance or same portion
that the decedent's will does not distinguish
between marital and nonmarital relatives,
precluding a rigid application of Article 992.

This Court abandons the presumption in In re

Grey, Corpus, Diaz, and In re Suntay, among
others, that nonmarital children are products
of illicit relationships or that they are
automatically placed in a hostile environment
perpetrated by the marital family. We are not
duty bound to uncritically parrot archaic
prejudices and cruelties, to mirror and amplify
oppressive and regressive ideas about the
status of children and family life. The best
interest of the child should prevail.

Applying Article 982 in situations where the

grandchild's right to inherit from their
grandparent is in issue is more in accord with
our State policy of protecting children's best
interests and our responsibility of complying
with the United Nations Convention on the
Rights of the Child.

To emphasize, this ruling will only apply when

the nonmarital child has a right of
representation to their parent's share in her
grandparent's legitime. It is silent on collateral
relatives where the nonmarital child may
inherit by themself. We are not now ruling on
the extent of the right of a nonmarital child to
inherit in their own right. Those will be the
subject of a proper case and, if so minded,
may also be the subject of more enlightened
and informed future legislation.

“Both marital and nonmarital children, whether

born from a marital or nonmarital child, are
blood relatives of their parents and other
ascendants.” Thus, a nonmarital child’s right
of representation should be governed by
Article 982 of the Civil Code, which does not
differentiate based on the birth status of
grandchildren and other direct descendants.
D. PROVISIONS COMMON TO TESTATE AND
INTESTATE SUCCESSION
(CIVIL CODE, ARTS. 1015-
1105)
I. RIGHT OF ACCRETION
It is a right by virtue of which, when two or
more persons are called to the same
inheritance, devise or legacy, the part
assigned to one who renounces or cannot
receive his share or who died before the
testator is added or incorporated to that of
his co-heirs, co- devisees, or co-legatees.

Basis
The right of accretion is based upon the
presumed will of the decedent. Thus, the
testator can expressly provide that there
shall be no accretion among persons who
would otherwise be entitled thereto.
Conversely, the testator may validly provide
for accretion in a case where no accretion
would take place under the provisions of the
law. [Tolentino]

Requisites for Accretion

 3. Vacant portion 1026, 1027 [6])
• one of persons thus called die • A child not yet conceived, or abortive infants
before the testator, or renounce (Art.
the inheritance, or be incapacitated 1025)
to receive it- b) Relative
• Happens i. Because of possible undue influence (Art.
when: 1027).
a. repudiation. ii. Because of public policy and morality
b. predeceased. (Art. 1028 in relation to Art. 739).
c. incapacity. iii. Because of unworthiness (Art. 1032)
d. non-fulfillment of suspensive
condition. (i) Incapacity by Reason of Possible Undue Influence
e. particular heir cannot be identified a. The priest who heard the last confession of
the testator during his last illness, or the minister of
Rules of Accretion the gospel who extended spiritual aid to him during
1. The heirs to whom the portion goes by the same period;
the right of accretion take it in the referring only to the free portion and not the
same proportion that they inherit. legitime of the heir
[Art. 1019, CC] XPN: if the priest is a compulsory heir of the
2. The heirs to whom the inheritance decedent, we cannot take away their
accrues shall succeed to all the legitime. Only his share from free portion will
rights and obligations which the heir be taken in case of undue influence.
who renounced or could not receive it
would have had. [Art. 1020, CC] b. The relatives of such priest or minister of the gospel
within the fourth degree, the church, order, chapter,
II. CAPACITY TO SUCCEED
community, organization, or institution to which such
In order that a person can inherit either by will
priest or minister may belong.
or by intestacy, the following requisites must
concur:
c. A guardian with respect to testamentary dispositions
A. Heir, legatee or devisee must be
living or in existence at the moment given by a ward in his favor before approval of
succession opens; guardian’s final accounts
B. That such heir, legatee or devisee • XPN: when the guardian is the compulsory
must not be incapacitated or heir of the ward, in which case the
disqualified by law to succeed. disposition is VALID
• XPN: Relatives of the guardian.
KINDS OF INCAPACITY
a) Absolute – cannot inherit from anybody d. Any attesting witness to the decedent’s will,
• Individuals, corporations, and his/her spouse, children, and parents.
associations not permitted by law • XPN: brother, sister, grandchildren, and other
or their charter to inherit (Art. descendants of the attesting witness.

103
e. Any physician, surgeon, nurse, health officer or The act by which the person called to succeed by
druggist who took care of the testator during his last universal title either by the testator or by law
illness manifests his will of making his own the
• Care should be continuing or regular, universality of the rights and obligations which are
not isolated service transmitted to him. [Tolentino]
• XPN: Relatives of the health workers.

f. Individuals, associations, and corporations not

permitted by law to inherit.
This incapacity does not include the legitime
or intestacy, because heirs inherit by law.

(ii) Incapacity by Reason of Morality

1. Spouse who committed adultery or
concubinage
• there need no criminal conviction
• as long as you can prove
2. Concubine
3. Those made between persons who
committed the same criminal offense, in
consideration thereto [Arts. 739 and 1028,
NCC)

(iii) Incapacity by Reason of Unworthiness and Effects

of Condonation
Article 1032. The following are incapable of
succeeding by reason of unworthiness:
1. Parents who have abandoned their children or
induced their daughters to lead a corrupt or
immoral life, or attempted against their virtue;
2. Any person who has been convicted of an
attempt against the life of the testator, his
or her spouse, descendants, or ascendants;
3. Any person who has accused the testator of
a crime for which the law prescribes
imprisonment for six years or more, if the
accusation has been found groundless;
4. Any heir of full age who, having knowledge
of the violent death of the testator, should
fail to report it to an officer of the law within
a month, unless the authorities have
already taken action; this prohibition shall
not apply to cases wherein, according to
law, there is no obligation to make an
accusation;
5. Any person convicted of adultery or
concubinage with the spouse of the
testator;
6. Any person who by fraud, violence,
intimidation, or undue influence should
cause the testator to make a will or to
change one already made;
7. Any person who by the same means
prevents another from making a will, or from
revoking one already made, or who
supplants, conceals, or alters the latter’s
will;
8. Any person who falsifies or forges a
supposed will of the decedent. (756, 673,
674a)

Cause of unworthiness is without effect if there is

condonation (Art. 1033):
• Implied condonation: If, having knowledge of
the act of unworthiness, the testator gave
the person concerned an inheritance, legacy
or devise.
• Express condonation: If, not knowing of the act
of unworthiness at the time of the execution
of the will, but having known of the same
subsequently, the testator condones it in
writing, public or private.

III. ACCEPTANCE AND REPUDIATION

‘Acceptance’
‘Repudiation’ heirs in whose favor renunciation is made
The manifestation by an heir of his desire would get right by accretion, inheritance is
not to succeed to the rights and not deemed acceptance. Acceptance is
obligations transmitted to him. also presumed if heir fails to accept or
[Tolentino] repudiate within 30 days after issuance of
order of distribution of estate, he is
Characteristics [Arts. 1041–1042, 1056, CC] deemed to have accepted.
1) Acceptance and repudiation must be
voluntary and free [Art. 1041, CC] Form of repudiation
2) They are irrevocable except if there Repudiation must always be EXPRESS. It is
is vitiation of consent or an unknown more usual to accept than to repudiate; hence,
will appears [Art. 1056, CC] while acceptance may be presumed,
3) They have a retroactive effect [Art. 1042, repudiation requires formalities.
CC] • There can be partial acceptance and
partial repudiation.
REQUISITES: [Art. 1043, CC] • Even the legitime may be repudiated,
a) Certainty of death of the decedent because no one can be compelled to accept
b) Certainty of the right to the inheritance the generosity of another.
This can be done by means of a:
Forms of Acceptance i. public instrument;
Acceptance of an inheritance, legacy or devise ii. authentic instrument;
may be: iii. petition in court.
1. Express;
2. Must be made in a public or private Effects of Repudiation Compared to Predecease and
document OR tacit; Incapacity
3. One resulting from acts by which the Descendants of the heirs who predeceased or
intention to accept is necessarily are incapacitated may represent the latter in
implied, or which one would have no succession, but Heirs who repudiates their
right to do except in the capacity of share may not be represented (Art. 977)
an heir.
Key points:
Examples of implied acceptance (Art. 1050): • Repudiation of inheritance is a voluntary act
1. If heir sells, donates, or assigns by the individual, while predecease and
right to a stranger, or to his co-heirs incapacity are circumstances that affect the
or any of them. person involuntarily.
2. If heir renounces right, even • The effects of repudiation primarily impact
gratuitously, for the benefit of one or the repudiating individual and the
more of his co-heirs. redistribution of assets, while predecease
3. If heir renounces right for a price in and incapacity primarily affect the
favor of co-heirs indiscriminately; but succession of assets and the legal
if renunciation is gratuitous and co- representation of the individual.

104
• Creditors may accept the inheritance in 2. Donation to the spouse of a child should not be
case repudiation prejudices them (Art brought to collation (Art. 1066). Meaning, this is
1052), while in predecease and incapacity, chargeable against the free portion, not the
only the heirs in the descending line of legitime of the child.
those who predeceased or incapacitated
may accept the inheritance. (Art. 972)
• Heirs in Two Capacities: [Art. 1055, CC]
1) If a person is called to the same
inheritance as an heir by will and by law
and he repudiates the inheritance in his
capacity as a testamentary heir, he will
be considered to have also repudiated
the inheritance as a legal heir.
2) If he repudiates it as a legal heir, without
knowledge of his being a testamentary
heir, he may still accept it in the latter
capacity.

IV. COLLATION
Collation refers to the act of restoring to the
common mass of the hereditary estate, either
actually or fictitiously, any property or right,
which a donee may have received by way of
donation or any other gratuitous title from the
decedent, during the lifetime of the latter.

Relevant provision is Art. 908 (Formula in computing

the Legitime)
To determine the legitime, the value of the
property left at the death of the testator shall
be considered, deducting all debts and
charges, which shall not include those
imposed in the will. To the net value of the
hereditary estate, shall be added the value of
all donations by the testator that are subject
to collation, at the time he made them.
• Collation refers to the subsequent act of
charging or imputing the value of the thing
donated against the legitime of the
compulsory heir to whom the donation was
made, or against the free portion.
• All donations inter vivos, whether given to
compulsory heirs or to strangers, must be
reduced if found inofficious.
• Only the value of the thing donated at the
time of the donation should be collated (Art.
1071).
• Compulsory heirs must bring to collation
any property received as donation or by
gratuitous title, in order to determine the
legitime (Art. 1061).
• G.R. Charge against the legitime.
• Except, the decedent has provided that it is
non- collationable (meaning, it will be
charged against the free portion, not the
legitime)
• If donation was given to stranger, charge
against the free portion.

Meaning of “not collationable”:

• First, property or value should be computed
or added, but should be charged to the free
portion (not to the legitime).
• Second, property should not be computed or
charged to the estate at all, because it is
not part of the estate. (Art. 1067), like
expenses for support of education,
medical attendance, customary gifts.

Donations that are not collationable:

1. Parents are not obliged to bring to collation
in the inheritance of their own parents or
ascendants properties which had been
donated by the latter to their children (Art.
1065).
3. Expenses for support, education, rejected by the heirs, in which case the
medical attendance even in court will decide the conflict.
extraordinary illness, • While a co-heir can demand the division of
apprenticeship, ordinary equipment, the estate at anytime, a right that does not
or customary gifts are not subject to prescribe and also applies to a co-legatee or
collation (Art. 1067). Totally co-devisee, the testator can prohibit the
excluded in the computation of the division for a period not exceeding 20 years, which
estate for being part of legal applies even to the legitime, except-
support. i. For causes that dissolve a partnership; or
 But payment by parents of a ii. when the court finds compelling reason
child's debts, election expenses, to order a partition upon the petition of a
fines, and similar expenses are co-heir (or co- legatee or co-devisee)
collationable (Art. 1069). (Art. 1083).
4. Expenses of parents in giving • After the partition, each heir acquires
children professional, vocational, or exclusive
other career shall not be brought to ownership of the property or share adjudicated to
collation unless the parents so provide him.
or unless they impair the legitime.
But when collation is required, the
sum that the child would have spent
had he lived with the parents must
105
be deducted (Art. 1068).
5. Wedding gifts by parents and
ascendants consisting of jewelry,
clothing, and outfit, shall not be
reduced as inofficious except insofar
as they may exceed one- tenth of the
sum which is disposable by will.
(Art. 1170)

Other rules:
• The surviving spouse is a compulsory
heir, but she is not included in Art.
1061 (where donation is chargeable
against the legitime) because
donations during the marriage are null
and void.
• Donation propter nuptias to a future
spouse is donation to a stranger and
must be imputed to the free portion
because at that time, the donee was
not yet a spouse, hence, not a
compulsory heir.
• If the donee repudiates the
inheritance, the donation shall be
charged to the free portion.
• 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.
This means that the legacy or devise
should be imputed to the free portion,
not to the legitime. (Art. 1063)

V. PARTITION
• Co-ownership governs where there are
two or more heirs. The whole estate of
the decedent is, before partition,
owned in common by such heirs,
subject to the payment of the debts of
the deceased (Art. 1078, NCC).
• In partition, the thing itself may be
divided, or its value (Art. 1079).
• Partition made by the decedent inter
vivos or by will shall be respected,
provided it does not prejudice the
legitime of compulsory heirs (Art.
1080).
• A person may, by an act inter vivos or
mortis causa, entrust the power to
make partition of his estate after his
death to any person ( Art. 1081) called
a mandatary, provided: (i) The
mandatary should not be a co-heir; (ii)
the partition by the mandatary may be
Legal redemption among co-heirs (Art. 1088).
• Takes place when any heir sells his
hereditary rights to a stranger before
partition.
• If the buyer is a co-heir, there is no right of
redemption.
• At least one co-heir must demand redemption;
but two heirs may redeem in proportion to
their shares in the inheritance.
• The demand must be made within one
month from notice in writing of the sale by
the vendor.

Rescission or nullity of the partition:

• Partition may be rescinded or annulled for
the same causes as contracts (Art. 1097)
• Partition, judicial or extrajudicial, may also
be rescinded on account of lesion (Art.
1098) when a co- heir receives a thing the
value of which is less by at least ¼ than the
share to which he is entitled;
• If partition was made by the testator, action
lies only when legitime of compulsory heirs
is prejudiced, or when it appears, or may be
reasonably presumed, that intention of
testator was otherwise (Art. 1099).

Preterition of compulsory heir in the partition (Art.

1105):
• Partition shall not be rescinded unless bad
faith or fraud on the part of the other heirs
is proved.
• The culpable heirs shall share in the
damages of the prejudiced compulsory heir
proportionately.

106
 VIII. OBLIGATIONS AND CONTRACTS
A. Obligations
B. Contracts
C. Estoppel (Civil Code, arts. 1431-1439)

A. OBLIGATIONS the third person, the obligor cannot recover

what he has paid. (Article 1425)

1. CIVIL AND NATURAL OBLIGATIONS – CIVIL

CODE, ARTS. 1423-1430

CIVIL OBLIGATIONS
Those that are based on positive law and
give a right of action to compel their
performance.

NATURAL OBLIGATIONS
Those that are not based on positive law but
on equity and natural law, do not grant a
right of action to enforce their performance,
but after voluntary fulfillment by the obligor,
they authorize the retention of what has
been delivered or rendered by reason
thereof. [Article 1423]. They refer to
obligations without a sanction, susceptible of
voluntary performance, but not through
compulsion by legal means.

Distinguished from civil obligations

• Civil obligations are based on positive law
 Natural obligations are based on
equity and natural law
• Civil obligations are enforceable by court
action
 Natural obligations are not enforceable
by court action

Different Natural Obligations (Arts. 1423-1430 NCC):

1. Prescribed civil action

• When a right to sue upon a civil obligation
has lapsed by extinctive prescription, the
obligor who voluntarily performs the
contract cannot recover what he has
delivered or the value of the service he
has rendered. (Article 1424).
• The voluntary performance or payment by
the obligor despite prescription thereof
converts it to a natural obligation.

Requisites
1. a civil obligation;
2. the right of action over such civil
obligation having lapsed;
3. the lapse being due to extinctive
prescriptive; and
4. performance or payment done
voluntarily. The effect of this is that the
obligor can no longer recover what he
has delivered or the value of the service
he rendered.

2. Reimbursement for payment by third person for

a prescribed civil obligation
When without the knowledge or against the
will of the debtor, a third person pays a debt
which the obligor is not legally bound to pay
because the action thereon has prescribed,
but the debtor later voluntarily reimburses
Requisites 3. the debt exceeds the value of the heir's share.
1. a debt;
2. the right of action over the debt having 5. Payment of legacy by intestate heir
prescribed; When a will is declared void because it has
3. payment made by a third person; not been executed in accordance with the
4. such payment being against the will or formalities required by law, but one of the
without the knowledge of the debtor; intestate heirs, after the settlement of the
and debts of the deceased, pays a legacy in
5. debtor's act of reimbursing the third compliance with a clause in the defective
person for the payment made. In this will, the payment is effective and
case, the debtor can no longer recover irrevocable. (Article 1430)
what he has paid; this is a natural
obligation. Requisites
1. there is a will;
3. Voluntary performance despite failed action 2. the will provides a legacy;
When, after an action to enforce a civil 3. the will is declared void due to formalities; and
obligation has failed, the 4. an intestate heir nevertheless pays the legacy.
defendant voluntarily performs
the obligation, he cannot demand the 2. GENERAL PROVISIONS – CIVIL CODE, ARTS.
return of what he has delivered or the
1156-1162
payment of the value of the service he
has rendered. (Article 1428)
DEFINITION OF OBLIGATIONS
• It is a juridical relation whereby a person
4. Payment by heir of decedent’s debt exceeding
(creditor) may demand from another
the estate (debtor) the observance of a determinate
When a testate or intestate heir voluntarily conduct (prestation).
pays a debt of the decedent exceeding the • Art. 1156 provides that an obligation is
value of the property which he received by the juridical necessity to give, to do or not
will or by the law of intestacy from the to do.
estate of the deceased, the payment is
valid and cannot be rescinded by the payer. “Juridical Necessity” - Obligation is a juridical
(Article 1429) necessity because in case of non-
compliance, the courts of justice may be
Requisites called upon to enforce its fulfillment or, in default
1. the decedent incurred a debt; thereof, the economic value that it
2. his heir voluntary pays the debt; and represents.

107
ESSENTIAL ELEMENTS • The civil liability of the accused does not arise
1. Active Subject (Obligee or Creditor) - the person from or is not based upon the crime which the
who can demand the fulfillment of the accused is acquitted.
obligation;
2. Passive Subject (Obligor or Debtor) - the person
from whom the obligation is juridically
demandable;
3. Object - the prestation or the particular
conduct required to be observed by the
debtor (to give, to do or not to do);
4. Juridical Tie or Vinculum Juris - the efficient
cause established by the various sources of
obligations (law, contracts, quasi-contracts,
delicts and quasi- delicts);

SOURCES OF OBLIGATION
OBLIGATIONS ARISE FROM:
1) Law;
2) Contracts;
3) Quasi-contracts;
4) Acts or omissions punished by law; and
5) Quasi-delicts. [Article 1157]

1. LAW
• When they are imposed by the law itself.
• Obligations derived from law are NOT
PRESUMED.
• Only those expressly determined by the
New Civil Code or in special laws are
demandable.
• Example: The mutual obligation of spouses
to support each other pursuant to the
provisions of the Family Code.

2. CONTRACTS
• Arises from the stipulation of the parties.
[Article 1306]
• Obligations arising from contract have the
force of law between the contracting parties
and should be complied with in good faith.
[Article 1159]
• Example: The obligation to repay a loan by
virtue of an agreement.
• NOTE: Obligations arising from CONTRACT
need NOT always be EXPRESS (unlike those
from LAW, they may be IMPLIED).

3. QUASI-CONTRACTS
• Certain LAWFUL, VOLUNTARY and
UNILATERAL acts give rise to the juridical
relation of quasi-contract to the end that no
one shall be unjustly enriched or benefited
at the expense of another. [Article 2142]
• Obligations derived from quasi-contracts
based on the presumed will of the parties
are demandable.
• Subject to the provisions of Chapter 1, Title
XVII of the Civil Code. [Article 1160]
• Example: The obligation to return money
paid by
mistake or which is not due. [Article 2154]
Kinds of Quasi-Contract
• Negotorium Gestio (Arts. 2144-2153)
• Solutio Indebiti (Arts. 2154-2163)
• Other Cases (Arts. 2164-2175)

4. DELICT
• Every person criminally liable is also
civilly liable [Article 100, RPC]
• Instances where acquittal does not
extinguish civil liability:
• The acquittal is based on reasonable doubt
• The court declares that the liability of the
accused is only civil.
COLLADO V. DELA VEGA Eduardo the total amount of P2,905,000.00.
G.R. NO. 219511, DECEMBER 2, 2020
J. Lopez Effect of the death of the accused pending appeal of his
In this case, the RTC held that there was no conviction:
preponderant evidence to hold Victoria If death of the accused occurred DURING the pendency of
civilly liable while the CA ruled otherwise. his appeal but BEFORE the finality of judgment:
Considering these conflicting findings 1. Criminal liability is extinguished.
warranting the examination of evidence, 2. Civil liability ex delicto is extinguished.
this Court will entertain the factual issue on 3. Civil liability from other sources of obligation
whether substantial evidence exists to survives and may be recovered only through
prove that Victoria is civilly liable despite a civil action.
her acquittal.
5. QUASI-DELICT (CULPA ACQUILIANA)
As a rule, every person criminally liable is • Art. 2176. Whoever by act or omission
also civilly liable. However, an acquittal will causes damage to another, there being fault
not bar a civil action in the following cases: or negligence, is obliged to pay for the
(1) where the acquittal is based on damage done. Such fault or negligence, if
reasonable doubt as only preponderance of there is no pre-existing contractual relations
evidence is required in civil cases; (2) between the parties is called quasi-delict.
where the court declared that the • Obligations derived from quasi-delicts shall be
accused's liability is not criminal, but only governed by the provisions of Chapter 2, Title
civil in nature; and (3) where the civil XVII of this Book, and by special laws. [Article
liability does not arise from, or is not based 1162]
upon the criminal act of which the accused • Example: Motor vehicle recklessly driven by
was acquitted. Here, the RTC acquitted Arnel suddenly hit a pedestrian, Mike, who
Victoria because her guilt was not proven was then crossing the street. Mike suffered
beyond reasonable doubt. Thus, any civil injuries requiring medical attention. Arnel is
liability survived because only liable for damages caused to Mike based on
preponderant evidence is necessary to quasi-delict, there being fault which is the
establish it. proximate cause of injuries and there is no
pre-existing contract between them.
Notably, however, the RTC did not
explain the facts why it exonerated VDM TRADING, INC. V. CARUNGCONG,
Victoria from civil liability. It also did not G.R. NO. 206709, FEBRUARY 06, 2019
mention that the act or omission from
J. Caguioa
which the civil liability may arise did not
A quasi-delict has the following elements:
at all exist. The RTC simply stated in the
a) the damage suffered by the plaintiff;
dispositive portion of the decision that
there was no preponderant evidence to b) the act or omission of the defendant
prove Victoria's civil liability. In contrast, supposedly constituting fault or negligence;
the CA reviewed the testimonial and and
documentary evidence in support of its c) the causal connection between the act
conclusion that Victoria is liable to pay and the damage sustained by the
d) plaintiff, or proximate cause.

108
3. BAR QUESTION (2019) NATURE AND EFFECT OF OBLIGATIONS – CIVIL
In January 2018, Mrs. A, a married woman on
CODE, ARTS. 1163-1178
her sixth
(6th) month of pregnancy, was crossing a
REAL OBLIGATIONS
street when she was suddenly hit by a car
being recklessly driven by Mr. X. As a result, The obligation to give or deliver:
Mrs. A sustained serious injuries and further, • Obligations to deliver a determinate or specific
suffered an unintentional abortion. Mrs. A was thing
hospitalized for two (2) months, during which • Obligations to deliver an indeterminate or generic
she incurred thing
₱400,000.00 in medical fees. Her expenses
were all duly substantiated by official receipts. PERSONAL OBLIGATIONS
During the two (2)- month period of her This involves the obligation to do or not to do:
confinement, she was unable to report for work • Positive Personal Obligation
and earn any salary, which was established at • Negative Personal Obligation
the rate of ₱50,000.00 per month. Mrs. A then
filed a civil case for damages against Mr. X. DETERMINATE THING v. GENERIC THING
Based on the case filed by Mrs. A, what is the source of
Mr. X's obligation DETERMINATE THING GENERIC THING
to her as a result of his acts? Explain.
SUGGESTED ANSWER A thing is considered A thing is generic if
The source of Mr. X’s liability is quasi-delict. determinate when it has it has been
Under the been particularly designated merely
Civil Code, whoever by act or omission causes designated or physically by its class.
damage to another, there being fault or segregated from all
negligence, is obliged to pay for the damages.
others of the same class
Such fault or negligence, if there is no pre-
existing contractual relations between the or species.
parties is called a quasi-delict. A concrete, One whose
particularized object, determination is
Here, there is no pre-existing contractual
indicated by its own confined to that of
relations between Mrs. A and Mr. X who are
strangers, and the damage was caused by Mr. individuality. its nature, to the
X’s negligence genus to which it
pertains.
BAR QUESTION (1977)
Taxi driver D, driving recklessly, killed Example: Honda Civic Exampl
pedestrian P and his with plate No. WRX 204 e: a
passenger Y. Discuss the source of the and engine No. 223456 horse;
obligation of D and a chair;
of his employer to P and to Y, and the defense a gadget.
available to the employer.
SUGGESTED ANSWER IN OBLIGATIONS TO GIVE DETERMINATE THING
There are three overlapping sources of the 1) Obligee may compel the delivery of the
obligation of D thing, that itself which was promised.
and of his employer. They are: • General Rule: Obligor cannot substitute it.
(1) Under the Revised Penal Code: • XPN: Unless the obligee agrees OR the
The heirs of P and Y may proceed against D right has been reserve such as in
and his employer under the Penal Code. In this alternative obligations [Article 1244, Art
case, the source of the liability of D and of his 1165]
employer is the crime committed by D (culpa 2) Obligor must take care of the thing with
criminal). The liability of D is direct and the proper diligence of a good father of a
primary (Art. 100, RPC); the liability of his family. Unless the law or stipulation of the
employer is subsidiary (Art. 103, RPC). The parties requires another standard of care
latter cannot relieve himself of liability by [Article 1163]
proving due diligence of a good father of a 3) Obligation to deliver a determinate thing
family. This is so because of the very nature of includes that of delivering all its accessions
his obligation. and accessories, even though they may not
(2) Under the Civil Code: have been mentioned [Article 1166]
a. Heirs of P: The heirs of pedestrian P may 4) The creditor has the right to the fruits of the
proceed against both D and his employer, thing from the time the obligation to deliver
or against the latter only. In this case, the arises. However, he shall have no real right
source of the liability of D and his employer over it until the same has been delivered to
is the quasi-delict (culpa aquiliana) him. [Article 1164]
committed by D (Arts. 2176, 2180, CC).
b. The liability of both is direct and primary. IN OBLIGATIONS TO GIVE INDETERMINATE/ GENERIC
D’s employer can relieve himself of liability THING
by proving due diligence of a good father of 1) Obligor must deliver a thing of the quality specified.
a family in the selection and supervision of • If none is fixed, he must deliver one of
his drivers (Art. 2180, CC). average quality.
c. Heirs of Y: On the other hand, the heirs of Y • Neither can the obligor deliver a thing
may proceed against D’s employer only. of inferior quality nor the obligee
The source of the liability of D’s employer, demand one of superior quality.
• The purpose of the obligation and other
circumstances shall be taken into
consideration. [Article 1246]
2) The creditor may ask that the obligation be
complied
with at the expense of the debtor. [Article 1165]

109
IN OBLIGATIONS TO DO
2. NEGLIGENCE
• If a person is obliged to do something, it must
be done as promised.
• The fault or negligence of the obligor
• It cannot be substituted by another act or consists in the omission of that diligence
forbearance against the obligee’s will [Article which is required by the nature of the
1244] obligation and corresponds with the
• If obligor fails to do it, it shall be executed at circumstances of the persons, of the time
his cost; and of the place.
• Obligor may not be compelled to do it personally • When negligence shows bad faith, the
or by himself (Constitutional right against provisions of Art 1171 (on fraud) shall
involuntary servitude); apply.
• Same rule if he does it in contravention of the
tenor of the obligation (COTOTO) Article 1172. Responsibility arising from
• Poorly done be UNDONE [Article 1167] negligence in the performance of every kind of
obligation is also demandable, but such
IN OBLIGATIONS NOT TO DO liability may be regulated by the courts,
Article 1168. When the obligation consists in not according to the circumstances.
doing, and the obligor does what has been
forbidden him, it shall be undone at his expense.
3. DEFAULT
PERFORMANCE OF OBLIGATIONS • Breach of obligation based on time of performance.
• ‘Standard Norm’ - Article 19. Every person must, • Those obliged to deliver or to do something
in the exercise of his rights and in the incur in delay (”mora”) from the time the
performance of his duties, act with justice, obligee judicially or extrajudicially demands
give everyone his due, and observe honesty from them the fulfillment of their obligation.
and good faith. [Article 1169]
• Subject to such exceptions or qualifications as • Mere non-performance of the obligation on
the law or the parties themselves may provide, the time fixed does not necessarily put the
obligations must be complied with PRECISELY obligor in default.
(“identity of the obligations”) and COMPLETELY • No demand – No delay
(“integrity of obligations”) as promised or
required.
• A demand before maturity date is ineffective.
• Those who in the performance of their
obligations are guilty of fraud, negligence, or Instances When Demand Is Not Necessary To Render
delay, and those who in any manner the Obligor In Default:
contravene the tenor thereof, are liable for • When the obligation or the law expressly so
damages. [Article 1170] declares;
• When from the nature and the
MODES OF VOLUNTARY BREACH OF OBLIGATION circumstances of the obligation it appears
1. Fraud that the designation of the time when the
2. Negligence
thing is to be delivered or the service is to be
3. Default
rendered was a controlling motive for the
4. Contravention of tenor of the obligation
establishment of the contract; or
1. FRAUD • When the demand would be useless, as
• It is the deliberate and intentional evasion of when the obligor has rendered it beyond his
the normal fulfillment of obligations. power to perform.
• Malice or bad faith in the performance of
obligation (distinguished from fraud in the SSS V. MOONWALK DEVELOPMENT AND HOUSING
celebration of contracts – deceit CORPORATION
• Responsibility arising from fraud is G.R. NO. 73345, APRIL 7, 1993
demandable in all obligations. J. Campos, Jr.
• Any waiver of an action for future fraud is void. This case does not fall within any of the
[Article 1171]
instances when demand is not necessary to
render the obligor in default. SSS is not excused
CIVIL FRAUDS DISTINGUISHED
from making a demand. It has been established
that at the time of payment of the full obligation,
Moonwalk has long been delinquent in meeting
its monthly arrears and in paying the full amount
of the loan itself as the obligation matured
sometime in January, 1977. But mere
FRAUD/ DOLO IN delinquency in payment does not necessarily
CAUSAL FRAUD mean delay in the legal concept.
THE
PERFORMANCE
In order that the debtor may be in default it is
Present only during the Present only during thenecessary
performance of a pre- time of birth or that the following requisites be present:
existing obligation. perfection of the 1. that the obligation be demandable and
obligation. already liquidated;
Purpose is to evade the Purpose is to secure the 2. that the debtor delays performance; and
normal fulfillment of the consent of the other to 3. that the creditor requires the performance
obligation. enter into a contract. judicially and extrajudicially.
Default generally begins from the moment the
Results in the non- Results in the vitiation creditor demands the performance of the obligation.
fulfillment or breach of of consent.
the obligation.
Kinds of Default
Gives rise to a right of Gives rise to a right of • Mora solvendi - Delay on the part of the debtor
the obligee to recover an innocent party to to perform his obligation.
damages from the annul the contract.
• Mora accipiendi - Delay of the creditor in • Compensatio morae - Delay of the parties or
accepting delivery of the thing which obligors
is the object of the obligation. in reciprocal obligation.

110
RULES ON DEFAULT 4. CONTRAVENTION OF THE TENOR OF THE
1. Unilateral Obligation
OBLIGATION
• Demand is necessary.
• The faithful observance of an obligation
• No demand = No delay.
according to its tenor is mandated by law.
• General Rule: Mere expiration of the period
fixed by the parties will not cause delay. • Unexcused failure there of renders the
• XPN: (a) Express stipulation that demand obligor liable for losses and damages
is not necessary; (b) The law EXPRESSLY caused thereby. [Article 1170]
so declares (i.e., taxes); (c) Time is of • Includes not only any illicit act which
the essence of the contract – the impairs the strict and faithful fulfillment of
designation of time when the thing is to be the obligation, but also every kind of
delivered or the service is to be defective performance.
rendered was a controlling motive for
the establishment of the contract; (d) CATHAY PACIFIC AIRWAYS VS. VASQUEZ
Demand would be useless as when the G.R. NO. 150843, MARCH 14, 2003
obligor has rendered it beyond his power
C. J. Davide, Jr.
to perform.
In this case Cathay upgraded the seats of
2. Reciprocal Obligation
• Fulfillment by both parties should be Sps.
simultaneous; Vasquez, from business class to first class.
• Neither party incurs in delay if the other Under the law the debtor is bound to deliver
does not comply or is not ready to the thing or service contracted. Although the
comply in a proper manner with what is debtor in this case provided for a better
incumbent upon him. seat, it is still considered breach for being in
• General Rule: From the moment one of the contravention of the tenor of the obligation.
parties fulfills his obligation, delay by the Cathay was adjudged liable for payment of
other begins (Art. 1169) damages.
• XPN: When different dates for the
performance of obligation is fixed by the INVOLUNTARY BREACH OF OBLIGATION
parties; Demand is necessary in such
Fortuitous Event
cases.
• Extraordinary events not foreseeable or
avoidable.
• It is any extraordinary event which cannot
BAR QUESTION (2015) be foreseen, or which, though foreseen, is
X, a dressmaker, accepted clothing materials inevitable. In other words, it is an event
from Karla which is either impossible to foresee or
to make two dresses for her. On the day X was impossible to avoid.
supposed to deliver Karla's dresses, X called
• The essence of a fortuitous event consists of
up Karla to tell her that she had an urgent
being a happening independent of the will
matter to attend to and will deliver them the
of the obligor and which happening, makes
next day. That night, however, a robber broke
into her shop and took everything including the normal fulfillment of the obligation
Karla's two dresses. X claims she is not liable impossible.
to deliver Karla's dresses or to pay for the
clothing materials considering she herself was Liability in case of Fortuitous Event
a victim of the robbery which was a • General Rule: No person shall be responsible
fortuitous event and for those events which could not be
over which she had no control. Do you agree? foreseen (accident), or which, though
Why? (3%) foreseen, were inevitable (force majeure).
SUGGESTED ANSWER [Article 1174]
No, I do not agree with the contention of X. • Except in cases:
The law
 Expressly specified by law (i.e. delay)
provides that except when it is otherwise
declared by stipulation, or when the law [Article 552 (2), 1165 (3), 1268, 1942,
provides, or the nature of the obligation requires 2147, 2148 and 2159];
the assumption of risk, no person shall be liable  When it is otherwise declared by stipulation,
for those events which could not be foreseen or or
which though foreseen were inevitable (Article  When the nature of the obligation
1174, Civil Code). Based on the facts, X was requires the assumption of risk. [Article
supposed to deliver the dress the day 1174]
immediately before the robbery. Demand is  When the object of the prestation is generic.
dispensed with in this case, since demand
would be useless because X already stated that Some Exceptions Expressly Specified by Law
she cannot perform the obligation on the agreed • Article 552 – The obligor is a possessor in bad
time. Thus, X cannot invoke fortuitous event as faith;
a defense because she had already incurred • Article 1165 – The obligor delays or has
in delay at the time of the occurrence of the loss.
promised to deliver the same thing to two
or more persons who do not have the
ALTERNATIVE:
same interest;
Yes, I agree that X is not liable since the loss
was due to a fortuitous cause. The rule is that • Article 2147 – The negotiorum gestor or
before the debtor may be put in default, there officious manager who undertakes risky
must first be a judicial or extrajudicial demand transactions, prefers his interest to that of
by the creditor. (Article 1169, Civil Code}. the owner, fails to return the property
This is true even if a period may have been upon demand by the owner, or assumes
 management in bad faith; • Article 1268 – When the obligation to deliver
• Article 1979 – The depositary who a determinate thing proceeds from a
uses the thing without the criminal offense, unless prior to its loss
depositor’s permission, delays its the person who should receive it refused
return, or allows others to use it. acceptance without justification.

111
Requisites of a Fortuitous Event 1. Creditor must have right of return against debtor;
Whether an act of man or an act of God, to constitute a 2. The debt is due and demandable;
fortuitous event, it is essential that: 3. There is a failure of the debtor to collect his own
• The event must be independent of the will of debt from 3rd persons, either through malice or
the debtor; negligence;
• The event must be either unforeseeable or 4. Debtor's assets are insufficient;
inevitable; 5. The right of action is not purely personal.
• The event must have prevented the
debtor from complying with his obligation in a
normal manner;
• The debtor must be free from any
participation in the aggravation of the injury
resulting to the creditor.

REMEDIES OF AGGRIEVED PARTY FOR BREACH OF

OBLIGATION

A. PRINCIPAL REMEDIES
1. Specific performance in obligations to give
specific things, substitute performance in
an obligation to do (since the obligor
cannot be compelled to do it himself) or to
deliver generic things, or equivalent
performance for damages.
2. Rescission (Resolution) of a reciprocal
obligation, unless there is a just cause to fix
a period.
3. Damages - Those in the performance of
their obligation are guilty of fraud,
negligence or delay and those who in any
manner contravene the tenor thereof are
liable for damages.

Positive Personal Obligation

• The creditor may not compel the debtor to
perform the act required against the latter’s
will because it amounts to involuntary
servitude.
• Remedy in case of non-performance: If a
person is obliged to do something fails to do
it, the same shall be executed at his cost.
• This same rule shall be observed if he does it
in contravention of the tenor of the obligation .
Furthermore it may be decreed that what has
been poorly done be undone. (Art 1167)

Negative Personal Obligation

When the obligation consists in not doing, and
the obligor does what has been forbidden him,
it shall also be undone at his expense. [Article
1168]

On performance and rescission (resolution)

• The remedies are not cumulative but
alternative.
• If fulfillment becomes impossible, the
injured party may still seek rescission after
he has chosen fulfillment.
• The court shall likewise decree rescission
where fulfillment is prohibited by lawful
authority.
• The right to rescind is NOT ABSOLUTE. If the
court finds that the breach is slight and
casual and not so substantial and
fundamental as to defeat the object of the
parties, it may instead grant a period.
• Without a just cause, there would be no
reason to fix a period. [Article 1191]

B. SUBSIDIARY REMEDIES
Where principal remedies are unavailable or
ineffective.

1) Accion subrogatoria/Subrogatory Action [Article

1171] - An action against the debtor’s debtor.
Requisites:
2) Accion Pauliana/Rescissory Action [Article 4. DIFFERENT KINDS OF OBLIGATIONS – CIVIL
1171, Article 1381] - An action to rescind
contracts entered into by the debtor in
CODE, ARTS. 1179-1230
fraud of creditors.
1) PURE OBLIGATIONS
• Every obligation whose performance does
Requisites
not depend upon a future or uncertain
1. There is a credit in favor of plaintiff;
event, or upon a past event unknown to the
2. The debtor has performed an act
parties, is demandable at once.
subsequent to the contract, giving
• It is one which is not subject to any
advantage to other persons;
condition and no specific date is mentioned
3. The creditor is prejudiced by the
for its fulfillment and is, therefore,
debtor's act which are in favor of 3rd
immediately demandable.
parties and rescission will benefit the
creditor;
2) CONDITIONAL OBLIGATIONS
4. The creditor has no other legal remedy;
• In conditional obligations, the acquisition of
5. The debtor's acts are fraudulent.
rights, as well as the extinguishment or loss
of those already acquired, shall depend
C. OTHER REMEDIES: upon the happening of the event which
• Attach and execute debtor's property constitutes the condition.
which is not • Condition - It is a future and uncertain
exempt [Article 2236] event, or past event unknown to the parties,
• Accion directa [Article 1729, Article 1652] upon the happening of which the effectivity
• Replevin, garnishment, receivership, etc. or extinguishment of an obligation (or rights)
depends.
TRANSMISSIBILITY OF OBLIGATIONS • The acquisition of rights (SUSPENSIVE), as
General Rule: All rights acquired by virtue of well as the extinguishment or loss of those
an obligation are transmissible. [Article already acquired (RESOLUTORY), shall
1178] depend upon the happening of the event
Exceptions: which constitutes the condition. [Article
a) prohibited by law; 1181]
b) prohibited by stipulations; and • When the debtor binds himself to pay when
c) purely personal. his means permit him to do so, the obligation
shall be deemed to be one with period.
Article 1178. Subject to the laws, all rights [Article 1181]
acquired in virtue of an obligation are SUSPENSIVE V. RESOLUTORY CONDITION
transmissible, if there has been no
stipulation to the contrary. SUSPENSIVE CONDITION RESOLUTORY CONDITION

when the acquisition of when the obligation is at

rights or demandability once due and
of the obligation must demandable, but the right 112
await the occurrence of is extinguished or lost
the condition. upon the fulfillment of the
condition.
JAVIER AND JAVIER V. CA CORPORATION
G.R. NO. L-48194. MARCH 15, 1990 G.R. NO. 242074, NOVEMBER 10, 2021
J. Regalado J. Carandang
When a contract is subject to a suspensive A "potestative condition" is a condition the
condition, its birth or effectivity can take place fulfillment of which depends exclusively upon the
only if and when the event which constitutes will of the debtor, in which case, the conditional
the condition happens or is fulfilled. If the obligation is void. Article 1182 of the Civil Code
suspensive condition does not take place, the reads:
parties would stand as if the conditional
obligation had never existed.

FULFILLMENT OF SUSPENSIVE CONDITION

• The condition that some event will happen
at a determinate time shall extinguish the
obligation as soon as the time expires or it
has become indubitable that the event will
not take place [Article 1184]
• The condition that some event will not
happen at a determinate time shall render
the obligation effective from the moment
the time indicated has elapsed, or if it has
become evident that the event cannot
occur.
• If no time has been fixed, the condition shall
be deemed fulfilled at such time as may
have probably been contemplated, bearing
in mind the nature of the obligation [Article
1185]

DOCTRINE OF CONSTRUCTIVE FULFILLMENT OF

SUSPENSIVE CONDITION
The condition shall be deemed fulfilled when
the obligor voluntarily prevents its fulfillment.
[Article 1186]

INTERNATIONAL HOTEL CORPORATION V. FRANCISCO

B. JOAQUIN, JR. AND RAFAEL SUAREZ
G.R. NO. 158361, APRIL 10, 2013
J. Bersamin
Constructive fulfillment of a suspensive
condition, whose application calls for two
requisites, namely: (a) the intent of the obligor
to prevent the fulfillment of the condition, and
(b) the actual prevention of the fulfillment.
Mere intention of the debtor to prevent the
happening of the condition, or to place
ineffective obstacles to its compliance, without
actually preventing the fulfillment, is
insufficient.

KINDS OF CONDITION
• Potestative - fulfillment of the condition
depends on the will of a party to the
obligation
• Casual - fulfillment of the condition
depends on chance and/or the will of a
third person/stranger
• Mixed - partly potestative and partly casual.

Obligation with Potestative Condition

1. When it depends exclusively to the
will of the
Creditor— VALID.
2. When it depends exclusively upon the will
of the Debtor in case of a suspensive
condition— VOID.
3. When it depends exclusively upon the will
of the Debtor in case of a resolutory
condition— VALID.
4. When it is imposed not on the birth of the
obligation but on its fulfillment—the
condition is VOID but not the pre-existing
obligation.

YUPANGCO V O.J. DEVELOPMENT AND TRADING

Article 1182. When the fulfillment of the
condition depends upon the sole will of
the debtor, the conditional obligation
shall be void. If it depends upon chance
or upon the will of a third person, the
obligation shall take effect in conformity
with the provisions of this Code.

Case law distinguishes between a

potestative condition imposed on the
birth of the obligation and a potestative
condition imposed on the obligation's
fulfillment. In the latter scenario, only
the condition is voided, leaving
unaffected the obligation itself.

In this case, the condition found in the

Second MOA, that is, the full payment of
the obligation through the best efforts of
OJDTC and Oscar is a pure potestative
condition, dependent on the sole will or
discretion of OJDTC and Oscar. However,
the said condition is imposed not on the
inception or birth of the
contract/obligation as the Second MOA
was already perfected and even partially
executed (OJDTC and Oscar provided for
partial payment in the same document).

Rather, the condition is imposed on the

performance or fulfillment of OJDTC and
Oscar's obligation to reimburse or pay
their outstanding obligation with
petitioner. Hence, conformably with

VIII. OBLIGATIONS AND CONYTACTS

jurisprudence, only the condition
providing for payment on a "best effort"
basis is treated as void, the obligation to
return petitioners' money is unaffected.
Simply put, the obligation of OJDTC and
Oscar to pay petitioners is considered as
unconditional.
 BAR QUESTION (2000)
Pedro promised to give his grandson a car if the
latter will
pass the bar examinations. When his grandson
passed the said examinations, Pedro refused to
give the car on the ground that the condition
was a purely potestative one. Is he correct or not?
SUGGESTED ANSWER
No, he is not correct. First of all, the condition is
not purely
potestative, because it does not depend on the
sole will of one of the parties. Secondly, even if
it were, it would be valid because it depends
on the sole will of the creditor (obligee) and
not of the debtor (obligor).
BAR QUESTION (1997)
In two separate documents signed by him, Juan
Valentino
“obligated” himself each to Maria and to Perla,
thus – ‘To Maria, my true love, I obligate
myself to give you my one and only horse
when I feel like It.’ – and – ‘To Perla, my true
sweetheart, I obligate myself to pay you the
P500.00 I owe you when I feel like it.’ Months
passed but Juan never bothered to make good
his promises. Maria and Perla came to consult
you on whether or not they could recover on
the basis of the foregoing settings.
What would your legal advice be?
SUGGESTED ANSWER
I would advise Maria not to bother running after
Juan for
the latter to make good his promise. Under the
Civil Code, Juan’s promise to Maria is void
because it is a conditional obligation which
depends upon the sole will of the obligor. (Art.
1182)

As regards Perla, the document is an express

acknowledgment of a debt, and the promise to
pay what he owes her when he feels like it is
equivalent to a promise to pay when his means
permits him to do so. It is deemed to be one
with an indefinite period, hence, the amount is
recoverable after Perla asks the court to fix the
period. (Arts. 1180, 1197[2]).

113
IMPOSSIBLE CONDITIONS EFFECT OF LOSS, DETERIORATION, AND
• Impossible conditions, those contrary to IMPROVEMENT IN REAL OBLIGATION
good customs or public policy and those 1. Loss
prohibited by law shall annul the obligation • Without Debtor’s Fault—the obligation
which depends upon them. shall be extinguished.
• If the obligation is divisible, the part thereof • With Debtor’s Fault—he shall be obliged
which is not affected by the impossible to pay damages
condition or unlawful condition shall be 2. Deterioration
valid. • Without debtor’s fault—the impairment is
• The condition not to do an impossible thing to be borne by the creditor
shall be considered as not having been • With debtor’s fault—the creditor may
agreed upon. choose between the rescission of the
• In law on donations and in testamentary obligation and it fulfillment, with
succession, such conditions are simply indemnity for damages in either case.
disregarded. 3. Improvement
• Obligations which are made to depend on • By it’s nature or by time—the improvement
casual or mixed conditions are VALID. shall
inure to the benefit of the creditor.
Effects of Impossible Conditions • At the expense of the debtor—he shall
1. Conditional obligation is void – both obligation have no other right than that granted to
and condition are void the usufructuary. Hence: the debtor can
2. Conditional obligation is valid – if condition is only ask reimbursement for necessary
negative, it is disregarded and obligation is expenses [Article 546], remove the
rendered pure and valid improvements without injuring the
3. Only the affected obligation is void – if the principal property, or off-set the value
obligation is divisible, the part not affected against damage sustained by the property.
by the impossible condition shall be valid
4. Only the condition is void – if obligation is pre- RESCISSION OF RECIPROCAL OBLIGATIONS
existing, not depending on fulfillment of General Rule: The power to rescind obligations is
the condition which is impossible for its implied in reciprocal ones, in case one of the
existence, only the condition is void obligors should not comply with what is
5. Condition considered not imposed – if incumbent upon him. [Article 1191]
impossible/unlawful condition is attached
for a simple or remuneratory donation as Remedy of Injured Party
well as to a testamentary disposition, a) Fulfillment of the obligation with the
condition is considered not imposed while payment of damages.
the obligation
BAR is valid. (2003)
QUESTION b) Rescission of the obligation with the payment of
Are the following obligations valid, why, and if damages.
they are c) Rescission, after fulfillment, if the latter
valid, when is the obligation demandable in each should become impossible.
case? General Rule: The court shall decree the
a) If the debtor promises to pay as soon as rescission
he has the C claimed.
means to pay; XPN: Unless there be just cause authorizing the
b) If the debtor promises to pay when he likes; fixing of period.
c) If the debtor promises to pay when he
becomes a lawyer; When Rescission Is Not Permitted
d) If the debtor promises to pay if his son, Rescission will not be permitted for slight or
who is sick casual breach of the contract, but only for
with cancer, does not die within one year. such breaches as are so substantial and
SUGGESTED ANSWER fundamental as to defeat the object of the
a)The obligation is valid. It is an obligation parties in making the agreement.
subject to an Art. 1191 does NOT apply to the following:
indefinite period because the debtor binds • Contracts of partnership where a partner
himself to pay when his means permit him to fails to pay the whole amount which he has
do so. (Article 1180, NCC).The creditor must bound to contribute to the common fund
file an action in court to fix the period, and [Article 1786 and 1788]
when the definite period as set by the court • Sales of real or personal property by
arrives, the obligation to pay becomes installments. (governed by Recto Law and
demandable (Article 1197, NCC). Maceda Law)
• Action for rescission is not required upon
b) The obligation “to pay when he likes” is an breach of compromise agreement; Art. 2041
obligation with a suspensive condition. confers upon the party concerned the
Considering that the fulfillment of the authority to regard it as rescinded and to
suspensive condition is subject to the sole will insist upon the original demand.
of the debtor, the conditional obligation is void.
(Article 1182, NCC). 3. OBLIGATION WITH A TERM OR PERIOD
• Obligations whose demandability or
c) The obligation is valid. It is subject to a extinguishment are subject to the expiration
suspensive condition, i.e. the future and of a term or period.
uncertain event of his becoming a lawyer. The • A term or period is an interval of time,
performance of this obligation does not which, exerting an influence on an
depend solely on the will of the debtor but also obligation as a consequence of a juridical
on other factors outside the debtor’s control. act, either suspends its demandability or
produces extinguishment. It is an event
which must necessarily happen. (Future and
 Certain) himself to pay when his means permit him to
• Article 1180. When the debtor binds do so, the obligation shall be deemed to be
one with a period.

114
Benefit of Term or Period duration of the term or period depends exclusively
Whenever in an obligation a period is upon the will of the debtor; consequently, the only
designated, it is presumed to have been remedy of the creditor is to bring an action against
established for the benefit of both the creditor the debtor in accordance with Art. 1197 of the Civil
Code for the purpose of asking the court to fix the
and the debtor. [Article 1196]
duration of the term or period. It is only after the
duration of the term or period has been fixed by the
Instances When Debtor Loses The Benefit Of The Term court that any other action involving the fulfilment
or Period or performance of the obligation can be
• When after the obligation has been maintained. This has always been the
contracted, he becomes insolvent. consistent doctrine in this jurisdiction
• XPN: Unless he gives a guaranty or security
for the debt
• Whenever he does not furnish to the
creditor the guaranties or securities which
he has promised.
• When by his own acts he has impaired said
guarantees or securities after their
establishment and when through a
fortuitous event they disappear.
• XPN: Unless he immediately gives new ones
equally satisfactory.
• When the debtor violates any undertaking in
consideration of which the creditor agreed
to the period.
• When the debtor attempts(2013)
BAR QUESTION to
Gary is a tobacco trader and also a lending
abscond.
investor. He sold
tobacco leaves to Homer for delivery within a
month, although the period for delivery was not
guaranteed. Despite Gary's efforts to deliver on
time, transportation problems and government red
tape hindered his effort, and he could only deliver
after 30 days. Homer refused to accept the late
delivery and to pay on the ground that the agreed
term had not been complied with.
As lending investor, Gary granted a P1,000,000 loan
to Isaac to be paid within two years from execution
of the contract. As security for the loan, Isaac
promised to deliver to Gary his Toyota Innova within
seven (7) days, but Isaac failed to do so. Gary was
thus compelled to demand payment for the loan
before the end of the agreed two-year term.
(1) Was Homer justified in refusing to accept the tobacco
leaves?
(2) Can Gary compel Isaac to pay his loan even before the
end of the two-year period?
SUGGESTED ANSWER
1)No. Homer was not justified in refusing to accept
the delivery.
It is clear that the period for delivery was not
guaranteed. Obligations arising from contracts have
the force of law between the contracting parties and
must be complied with in good faith. There is
nothing stated in the facts which would indicate that
Gary acted in bad faith or deliberately delayed the
delivery.

2) Yes, Gary can compel Isaac to immediately

pay the loan. Isaac lost his right to make use of the
period because he failed to furnish the guaranty or
security in consideration of which Gary agreed to
the period. As a result, the obligation which was
originally with a period became immediately
demandable
BAR QUESTION (1973)
D borrowed P2, 000.00 from C in 1958. The debt is
evidenced by
a promissory note executed by D wherein he
promised to pay as soon as he has money or as
soon as possible. C has made repeated demands
upon D for payment, but up to now no payment has
been made. Suppose that C will bring an action against D for
payment of the debt, will the action prosper?
SUGGESTED ANSWER
No, the action will not prosper. In similar cases
decided by the
Supreme Court (Gonzales vs. Jose, 66 Phil. 369;
Patente vs. Omega, 49 OG 4846) it was held, that
where the debtor promises to pay his obligation as
soon as he has money or as soon as possible, the
When Court may Fix Period 4. ALTERNATIVE OR FACULTATIVE
a) If the obligation does not fix a period, • Simple Obligation - If there is only one prestation.
but from its nature and circumstances If there are several prestations, it could be
it can be inferred that a period was Conjunctive or Distributive.
intended; • For Distributive, it could be Alternative or Facultative.
b) If the duration of the period depends
upon the will of the debtor; and ALTERNATIVE OBLIGATION
c) If the debtor binds himself to pay when • A person alternatively bound by different
his means permit him to do so (Art prestations
1180 shall completely perform one of them. [Article 1199]
d) If fixing the period is justified. [Article 1191] • The creditor cannot be compelled to
receive part of one or part of the other
Note: undertaking.
When obligation is demandable at once:
• Pure obligations (Art. 1179, par. 1) Right of Choice
• Obligations with a resolutory condition (Art. The right of choice belongs to the debtor.
1179, par. The creditor may exercise the right only when
2) the same has been expressly granted to him.
• Obligations with a resolutory term (Art. 1193,
par. 2) Effect of Loss
• Obligations with a condition not to do an When choice belongs to the debtor:
impossible thing (Art. 1183, par. 2) 1. Loss by reason of fortuitous event
BAR QUESTION (1991) a) All are lost – obligation is extinguished.
M and N were very good friends. N borrowed b) Some but not all are lost – debtor shall choose
P10, 000.00 from among the remainder
from M. Because of their close relationship, the c) Only one remains – deliver that which
promissory note executed by N provided that remains. Obligation becomes simple.
he would pay the loan “whenever his means
permit.” Subsequently, M and N quarreled. M
now asks you to collect the loan because he is
in dire need of money. What legal action, if any,
would you
take in behalf of M?
SUGGESTED ANSWER
“M” must bring an action against “N’’ for the
purpose of
asking the court to fix the duration of the term or
period for payment. According to the Civil Code,
when the debtor binds himself to pay when his
means permit him to do so, the obligation shall
be deemed to be one with a period. (Arts. 1180
and 1197)
Normally, before an action for collection may
be maintained by “M” against “N,’’ the former
must first bring an action asking the court to fix
the period of payment. However, a case
combining such action with that of an action for
collection may be allowed if it can be shown
that a separate action for collection would be a
mere formality because no additional proofs
other than the admitted facts will be presented
and would serve no purpose other than to delay.
Here, there is no legal obstacle to such course
of action. (Borromeo vs. Court of Appeals, 47
SCRA 65)
115
2. Loss due to debtor’s fault the portion pertaining to others.
a) All are lost – creditor shall have a right to • Payment made by one of the solidary
recover value of the last thing which debtors
disappeared or service which become extinguishes the obligation.
impossible, with indemnity for damages.
b) Some but not all are lost – debtor shall choose
from among the remainder without
damages.
c) Only one remains – deliver that which remains

3. Loss due to creditor’s fault

a) Some but not all are lost – debtor may perform
any from those that remains OR ask for
rescission of contract with damages.
b) All are lost – obligation is extinguished.

When choice belongs to creditor

1. Due to fortuitous event
a) All are lost – obligation is extinguished.
b) Some but not all are lost – the creditor shall
choose from among the remainder.
c) Only one remains – deliver that which
remains. Obligation becomes simple.

2. Due to debtor’s fault

a) All are lost – creditor may claim the value of
any of the prestations lost, with indemnity
for damages.
b) Some but not all are lost – creditor may claim
any of those subsisting without a right to
damages, OR value of the thing lost with
right to damages.

FACULTATIVE OBLIGATION
• When only one prestation has been agreed
upon, but the obligor may render another in
substitution, the obligation is called
facultative. [Article 1206]
• Substitution becomes effective only from
the time it has been communicated to the
creditor.
• Choice belongs to the debtor.

Effect of Loss of Substitute

The loss or deterioration of the thing intended as
a substitute, through the negligence of the
obligor, does not render him liable. But once the
substitution has been made, the obligor is liable
for the loss of the substitute on account of his
delay, negligence or fraud.

5. JOINT AND SOLIDARY OBLIGATIONS

Obligations with multiple parties could either
be Joint or Solidary.

Joint Obligations
• Obligacion Mancomunada
• Each of the debtors liable only for their
proportionate share of the debt
• Each of the creditors entitled only for their
proportionate part of the credit from each
debtor
• The whole obligation is to be paid or fulfilled
proportionately by different debtors or
demanded proportionately by different
creditors.

Solidary Obligations
• Obligacion Solidaria
• Each one of the debtors is bound to render
and/or each one of the creditors has a right
to demand entire compliance with the
prestation.
• Each one of the debtors answers not only
for the portion affecting him, but also for
ART. 1211. Solidarity may exist although distinct from one another, subject to the Rules of
the creditors and the debtors may not be Court governing the multiplicity of suits. Take the
bound in the same manner and by the credit of P12, 000 for instance. Since there are two
same period and conditions. creditors there will also be two credits of P6, 000 for
each creditor. In the case of the debt of P12, 000,
since there are three debtors there will also be three
ART. 1212. Each one of the solidary
debts of P4,000 against each debtor. Now, as far as
creditors may do whatever may be useful
A, the first creditor, is concerned, if he wants to
to the others, but not anything which collect his credit of P6,000, he must proceed against
may be prejudicial to the latter. all the debtors. Thus he will be able to collect P2,
• Mere extension of time for payment given 000.00 from X, P2, 000 from Y, another P2, 000 from Z.
by the creditor to a solidary debtor, The same is true in the case of B, the second creditor
does not release others from the
obligation.
• If prejudicial, the solidary creditor who 116
effected the novation shall reimburse
the others for damages incurred by
them;
• If beneficial and the creditor who
effected the novation is able to secure
performance shall be liable to the
others for the share;

NOVATION in SOLIDARY OBLIGATIONS

• If effected by substituting another
person in place of the debtor, the
solidary creditor who effected the
novation is liable for the acts of the
new debtor;
• In novation by subrogation, when a
third person is subrogated to the rights
of the other creditors, the creditor
effecting the novation is liable for their
share in the credit. But if the creditor
subrogates a third person in his place
such amounts to an assignment of his
rights which he cannot do without the
consent of other creditors.

REMISSION in SOLIDARY OBLIGATIONS

• Total remission - obligation is totally
extinguished but the solidary debtor who
obtained it does not entitle him to
reimbursement from his co-debtors.
• Partial remission for the benefit of one
of the debtors and it covers only part
of his share but his character as a
solidary debtor is not affected.
• Creditor/s responsible for the remission
are liable to reimburse others for the
share in the obligation corresponding to
them

DEFENSES in SOLIDARY OBLIGATIONS

1. Defenses which arise from the nature of the
obligation.
2. Defenses personal to the debtor
being sued or pertaining only to his
share.
3. Defenses which belong to another debtor.
BAR QUESTION (1971)
X, Y and Z owe A and B P12,000 in a joint obligation.
How many
obligations exist in this case, who are the parties
in each obligation and for how much? Why?
SUGGESTED ANSWER
There are six obligations in the above case. The
parties and the
amount of each obligation are:
(1) X as debtor for P2,000 in favor of A as creditor;
(2) X as debtor for P2,000 in favor of B as creditor;
(3) Y as debtor for P2,000 in favor of A as creditor;
(4) Y as debtor for P2,000 in favor of B as creditor;
(5) Z as debtor for P2,000 in favor of A as creditor;
(6) Z as debtor for P2,000 in favor of B as creditor.
The answer is based on Art. 1208 of the Civil Code
which declares that if the obligation is joint, the
credit or debt shall be presumed to be divided into
as many equal shares as there are creditors or
debtors, the credits or debts being considered as
 BAR QUESTION (2001) SAMPLE QUESTION
Four foreign medical students rented the AA, BB, CC and DD are joint debtors of
apartment of creditor EE for
Thelma for a period of one year. After one P200,000 payable on January 15, 2020. Last
semester, three of them returned to their home January 15, 2020, EE demanded payment of the
country and the fourth transferred to a entire loan from DD. DD only paid P50,000. Can
boarding house. Thelma discovered that they EE demand from AA the payment of
left unpaid telephone bills in the total amount the remaining P150,000 unpaid obligation?
of P80,000.00. The lease contract provided that Explain.
the lessees shall pay for the telephone services SUGGESTED ANSWER
in the leased premises. Thelma demanded that No, EE cannot demand from AA the payment
the fourth student pay the entire amount of the of the
unpaid telephone bills, but the latter is willing remaining P150,000 unpaid obligation because
to pay only one fourth of it. Who is correct? Why? the obligation is joint.
SUGGESTED ANSWER In a joint obligation, each of the debtors is liable
The fourth student is correct. only for a proportionate part of the debt. Since
His liability is only joint, hence, pro rata. AA is a joint debtor, he is liable only for his
There is solidary liability only when the obligation proportionate part of debt, and creditor EE is
expressly so states or when the law or nature of entitled to demand only a proportionate part of
the obligation requires solidarity (Art. 1207, CC). the credit. There being four debtors, EE can only
The contract of lease in demand P50,000 from AA, representing his
the problem does not, in any way, stipulate proportionate share in
solidarity. the debt. (Article 1207 of the New Civil Code)
BAR QUESTION (2012) BAR QUESTION (2003)
Buko, Fermin and Toti are solidary debtors A,B,C,D, and E made themselves solidarily
under a loan indebted to X for
obligation of P 300,000.00 which has fallen due. the amount of P50,000.00. When X demanded
The creditor has, however, condoned Fermin’s payment from A, the latter refused to pay on the
entire share in the debt. Since Toti has become following grounds.
insolvent, the creditor makes a demand on Buko a) B is only 16 years old.
to pay the debt. How much, if any, may Buko be b) C has already been condoned by X
compelled to pay? c) D is insolvent.
a)P 200.000.00 d) E was given by X an extension of 6 months
without the consent of the other four co-
b)P 300,000.00
debtors.
c)P 100,000.00 State the effect of each of the above defenses
d)P 150,000.00 put up by A on his obligation to pay X, if such
SUGGESTED ANSWER defenses are found to be
a)P 200.000.00 true.
BAR QUESTION (1998) SUGGESTED ANSWER
Joey, Jovy and Jojo are solidary debtors under (a) A may avail the minority of B as a defense,
a loan but only for B’s
obligation of P300,000.00 which has fallen due. share of P 10,000.00. A solidary debtor may avail
The creditor has, however, condoned Jojo’s entire himself of any defense which personally belongs
share in the debt. Since Jovy has become to a solidary co- debtor, but only as to the share
insolvent, the creditor makes a demand on Joey of that co- debtor.
to pay the debt.
1) How much, if any, may Joey be compelled to (b) A may avail of the condonation by X of C’s
pay? share of P 10,
2) To what extent, if at all, can Jojo be 000.00. A solidary debtor may, in actions filed
by the creditor, avail himself of all defenses which
compelled by Joey to contribute to such
are derived from the nature of the obligation and
payment? of those which are personal to him or pertain to
SUGGESTED ANSWER his own share. With respect to those which
1. Joey can be compelled to pay only the personally belong to others, he may avail
remaining himself thereof only as regards that part of the
balance of P200,000, in view of the remission debt for which the latter are responsible.
of Jojo’s (Article 1222, NCC).
share by the creditor. (Art. 1219, Civil Code)
(c)A may not interpose the defense of insolvency
2. Jojo can be compelled by Joey to contribute of D as a defense. Applying the principle of
P50,000. The Civil Code provides that when mutual guaranty among solidary debtors, A
one of the solidary debtors cannot, because of guaranteed the payment of D’s share and of all
his insolvency, reimburse his share to the the other co-debtors. Hence, A cannot avail of the
debtor paying the obligation, such share shall defense of D’s insolvency.
be borne by all his co-debtors, in proportion to
the debt of each. (d)The extension of six (6) months given by X to
Since the insolvent debtor’s share which Joey E may be availed of by A as a partial defense but
paid was P100,000, and there are only two only for the share of E, there is no novation of the
remaining debtors– namely Joey and Jojo – obligation but only an act of liberality granted to
these two shall share equally the burden of E alone
reimbursement. Jojo may thus be compelled by
DIVISIBLE
Joey to&contribute
INDIVISIBLEP50,000.00.
OBLIGATIONS(Art. 1217. par. 3)
• Obligations to give definite things and those which are not susceptible of partial performance
shall be deemed BARtoQUESTION (2012)
be indivisible.
• When the obligation has for its object the
execution of a certain number of days of
work, the accomplishment of work by
 metrical units, or analogous things which by
their nature are susceptible of partial
performance, it shall be divisible.
• However, even though the object or service
may be physically divisible, an obligation is
indivisible if so provided by law or intended
by the parties.
• In obligations not to do, divisibility or
indivisibility shall be determined by the
character of the prestation in each
particular case.

117
SPS. LAM V KODAK PHILIPPINES, LTD. to enforce the credit.
G.R. NO. 167615, JANUARY 11, 2016 • In case one of the debtors refused – converted into
J. Leonen indemnity to pay the value of the thing or service
• The Letter Agreement contained an due, where each debtors will pay their proportionate
indivisible obligation. Through the specified share, and damages to be shouldered by the debtor
terms and conditions, the tenor of the Letter at fault.
Agreement indicated an intention for a single
transaction. This intent must prevail even
though the articles involved are physically
separable and capable of being paid for and
delivered individually, consistent with the New
Civil Code:
• Article 1225. For the purposes of the
preceding articles, obligations to give
definite things and those which are not
susceptible of partial performance shall be
deemed to be indivisible.
• When the obligation has for its object the
execution of a certain number of days of
work, the accomplishment of work by
metrical units, or analogous things which by
their nature are susceptible of partial
performance, it shall be divisible.
• However, even though the object or service
may be physically divisible, an obligation is
indivisible if so provided by law or intended
by the parties. (Emphasis supplied)
• In Nazareno v. Court of Appeals, the
indivisibility of an obligation is tested
against whether it can be the subject of
partial performance: An obligation is
indivisible when it cannot be validly
performed in parts, whatever may be the
nature of the thing which is the object
thereof. The indivisibility refers to the
prestation and not to the object thereof. In
the present case, the Deed of Sale of
January 29, 1970 supposedly conveyed the
six lots to Natividad. The obligation is clearly
indivisible because the performance of the
contract cannot be done in parts, otherwise
the value of what is transferred is
diminished. Petitioners are therefore
mistaken in basing the indivisibility of a
contract on the number of obligors. There is
no indication in the Letter Agreement that
the units petitioners ordered were covered
by three (3) separate transactions.
• The factors considered by the Court of Appeals
are mere incidents of the execution of the
obligation, which is to deliver three units of
the Minilab Equipment on the part of
respondent and payment for all three on the
part of petitioners. The intention to create an
indivisible contract is apparent from the
benefits that the Letter Agreement afforded to
both parties. Petitioners were given the 19%
discount on account of a multiple order, with
the discount being equally applicable to all
units that they sought to acquire. The
provision on "no downpayment" was also
applicable to all units. Respondent, in turn,
was entitled to payment of all three Minilab
Equipment units, payable by installments.

JOINT INDIVISIBLE OBLIGATION [ARTICLE 1209]

• The obligation is joint as to parties but
indivisible as to compliance.
• Obligation preserves its character of being
joint in case of plurality of subjects
notwithstanding its indivisibility of the
object or prestation.

Consequences of Joint Indivisible Obligation

• Can be enforced only by proceeding against
all debtors.
• Collective action of all creditors is necessary
 SAMPLE QUESTION and the satisfaction of the penalty at the
AA, BB, CC and DD are joint debtors of same time.
creditor EE for XPN: The creditor may only be entitled to
the delivery on January 15, 2020 of a both rights if the same has been clearly
determinate horse that won the 2019 racing granted to him.
competition. Last January 15, 2020, EE
demanded the delivery of the horse upon all When court may reduce the penalty
of the joint debtors. While AA, BB, and CC Judge may reduce penalty:
were ready to deliver, DD however refused • Principal obligation has been partly/
to comply with the obligation. irregularly complied;
What is/are the legal implication/s of DD’s • Even if no performance, the penalty may
refusal. Explain. also be reduced if iniquitous/
SUGGESTED ANSWER unconscionable. [Article 1229]
If anyone of the debtors in a joint indivisible
obligation
should fail to comply with his undertaking, the 118
obligation is converted into one of indemnity
for damages.
However, debtors AA, BB and CC who were
ready to comply with what is incumbent upon
them shall not contribute to the indemnity
beyond the corresponding portion of the price
of the thing or of the value of the service in
which the obligation consists.
On the other hand, debtor DD who failed or
refused to comply with his undertaking shall
pay not only his share of such price or value,
but also all of the damages suffered by the
creditor EE as a result of the nonfulfillment
of the obligation. (Article 1224, New Civil
Code)
6) OBLIGATIONS WITH A PENAL CLAUSE
It is one with an accessory undertaking
by virtue of which the obligor assumes
a greater liability in case of breach of
obligation.

‘Penal Clause’
• It is an accessory undertaking to
assume greater liability in case of
breach. It has a double function:
• to provide for liquidated damages, and;
• to strengthen the coercive force of
the obligation by the threat of
greater responsibility in the event of
breach.
• It is intended to prevent the obligor
from defaulting in the performance
of his obligation. Thus, if there
should be default, the penalty may
be enforced.

General Rule: The penalty shall substitute

the indemnity for damages and
payment of interest
XPN:
• When there is express stipulation to the
contrary;
• When the obligor refuses to pay the
penalty, in which case the creditor is
entitled to interest in the amount of
penalty;
• When the obligor is guilty of fraud

General Rule: The penalty is not a

substitute for the performance of the
obligation.
XPN: When expressly reserved for the debtor.

General Rule: The creditor cannot

demand the fulfillment of the obligation
SSS VS. MOONWALK DEVELOPMENT AND HOUSING 2. Tendered By The Proper Party
CORPORATION • The creditor is not bound to accept payment
G.R. NO. 73345, APRIL 7, 1993 or performance by a third person who has
J. Campos, Jr. no interest in the fulfillment of the
• A penal clause is an accessory obligation, unless there is a stipulation to
undertaking to assume greater liability in the contrary. (1236)
case of breach. It has a double function: (1) • From the debtor himself or from his duly
to provide for liquidated damages, and (2) authorized representative;
to strengthen the coercive force of the • From a third person who has been authorized
obligation by the threat of greater by the parties to make payment;
responsibility in the event of breach. • From a third person who has an interest in
• From the foregoing, it is clear that a penal the fulfillment of the obligation (guarantor,
clause is intended to prevent the obligor surety, creditor paying a preferred creditor)
from defaulting in the performance of his
obligation. Thus, if there should be default, Effect of Payment by a Third Person not interested in the
the penalty may be enforced. fulfillment
1. The creditor is not bound to accept payment,
unless
5. EXTINGUISHMENT OF OBLIGATIONS – CIVIL there is a stipulation to the contrary
CODE, ARTS. 1231-1304 2. If creditor accepted the payment:
• Without knowledge or against the will of the
Modes of Extinguishment of Obligations: debtor – the payor may demand
1. Payment/performance reimbursement only up to the amount
2. Loss of the thing due beneficial to the debtor; payor has no
3. Condonation or remission of debt right of subrogation
4. Confusion or merger • With knowledge or consent of debtor – payor has
5. Compensation rights of full reimbursement and
6. Novation subrogation (Art 1236)
3. If payor does not intend to be reimbursed, it
7. Annulment, Rescission, Fulfillment of a
is deemed to be a donation which requires
resolutory condition, Prescription.
the debtor’s consent; the payment,
however, is in any case valid as to the
1. PAYMENT creditor who has accepted. [Article 1238]

‘Payment’ defined Incapacitated Payor

Payment means not only the delivery of • In obligations to give, payment made by one
money but also the performance, in any who does not have the free disposal of the
other manner, of an obligation. [Article thing due and capacity to alienate it shall
1232] not be valid, without prejudice to the
provisions of article 1427 under the Title on
Requisites of Payment: "Natural Obligations.” (Article 1239)
1. Integrity (Must be complete and regular); • 1427 – Article 1427. When a minor between
2. Tendered by the proper party; eighteen and twenty-one years of age, who
has entered into a contract without the
3. Paid to proper person;
consent of the parent or guardian, voluntarily
4. Party must have capacity to pay; pays a sum of money or delivers a fungible
5. Capacity of recipient; thing in fulfillment of the obligation, there shall
6. Identity of prestation must be preserved; be no right to recover the same from the
7. Tendered in the proper place. obligee who has spent or consumed it in good
faith.
1. Integrity (Must Be Complete And Regular) • Dead letter since age of majority now is 18.
A debt shall not be understood to have been • In either case the debtor may later ratify or
paid unless the thing or service in which the validate the payment previously made. This
obligation consists has been completely right belongs to the debtor not the creditor.
delivered or rendered, as the case may be.
(1233) 3. Paid To Proper Person
General Rule: Partial performance is breach, an Payment shall be made to the person in whose
offer of partial performance can be refused by favor the obligation has been constituted, or
the creditor. Debtor cannot be also demanded his successor in interest, or any person
to make partial payments. authorized to receive it. (1240)
XPN: Partly liquidated (1248)
Effect of Payment to Unauthorized Persons in Obligation
to Give
Exceptions to the rule of integrity:
General Rule: It shall NOT be valid, even though
• Substantial performance in good faith - If made in good faith.
the obligation has been substantially
XPN:
performed in good faith, the obligor may Payment redounded to the benefit of the
recover as though there had been a strict creditor. Payment to the possessor of the credit,
and complete fulfillment, less damages made in good faith
suffered by the obligee. (1234) Debtor pays previous creditor without notice of
• Waiver by creditor - When the obligee the assignment of credit made by the latter.
accepts the performance, knowing its
incompleteness or irregularity, and Presumption of Benefit to the Creditor
without expressing any protest or • If after the payment, the third person acquires
objection, the obligation is deemed fully the
complied with. (1235) creditor’s rights;
• Application of Payment (1254). • If the creditor ratifies the payment to the third person;
• If by the creditor’s conduct, the debtor has been led to believe that the third person
had authority to receive the payment.

119
Incapacitated Creditor • Place stipulated by the parties
Payment to a person who is incapacitated to • If there is no stipulation, obligation is to deliver
administer his property shall be valid if he a determinate thing, payment shall be made at
has kept the thing delivered, or insofar as the place where the thing might be at the time
the payment has been beneficial to him. the obligation was constituted.
(Article 1241) • In any other case, the payment shall be made
at the
Payment by debtor after judicial order to retain the domicile of the debtor.
debt
Payment made to the creditor by the debtor
after the latter has been judicially ordered to
retain the debt shall not be valid. (Article
1243)

4. Identity Of Payment
• The debtor of a thing cannot compel the
creditor to receive a different one,
although the latter may be of the same
value as, or more valuable than that
which is due.
• In obligations to do or not to do, an act or
forbearance cannot be substituted by
another act or forbearance against the
obligee's will. (1244)
• When the obligation consists in the
delivery of an indeterminate or generic
thing, whose quality and circumstances
have not been stated, the creditor cannot
demand a thing of superior quality.
Neither can the debtor deliver a thing of
inferior quality. The purpose of the
obligation and other circumstances shall
be taken into consideration. (1246)
• Cathay Pacific Airways, Ltd. vs. Sps.
Vazquez 399 SCRA 207 – business class to
first class

Exceptions:
• Dacion en pago
• Novation

Debts In Money
• The payment of debts in money shall be
made in the currency stipulated, and if it
is not possible to deliver such currency,
then in the currency which is legal tender
in the Philippines.
• The delivery of promissory notes payable to
order, or bills of exchange or other
mercantile documents shall produce the
effect of payment only when they have
been cashed, or when through the fault of
the creditor they have been impaired.
(1249)
• In case an extraordinary inflation or
deflation of the currency stipulated should
supervene, the value of the currency at
the time of the establishment of the
obligation shall be the basis of payment,
unless there is an agreement to the
contrary. (1250)
• Extraordinary inflation or deflation exists
when there is a decrease or increase in
purchasing power of the currency which is
unusual or beyond the common fluctuation
in value of said currency, not reasonable
foreseen or was beyond the contemplation
of the parties. This requires an official
pronouncement or declaration by
competent authorities. (Telengtan Bros. vs
US Lines, 483 SCRA 458)

5. Tendered In The Proper Place

APPLICATION OF PAYMENT credits.
Designation of the debt to which the on sales. Obligation is
payment must be applied when the Unless there is a extinguished up to the
debtor has several obligations of the stipulation to the value of the property
same kind in favor of the same creditor. contrary, cession conveyed, unless
shall only release the stipulation that
Requisites of Application of Payment debtor from conveyance shall
• There must be only one debtor and only one responsibility for the extinguish entire
creditor; net proceeds of the obligation.
• There must be two or more debts of the same thing assigned.
kind;
• All the debts must be due, except if
there is stipulation to the contrary OR 120
application of payment is made by the
party for whose benefit the term has
been constituted
• Amount paid by the debtor is
insufficient to cover the total amount
of all the debts.

Rules on Application of Payment

• Debtor has the right to select which of
his debts he is paying. He must
indicate at the time of making
payment, and not afterwards, which
particular debt is being paid;
• The right to make the application once
exercised is irrevocable unless the
creditor consents to the change;
• If not, the creditor makes the
application, by so stating in the receipt
that he issues, unless there is cause
for invalidating the contract;
• If the creditor has not also made the
application, or the application is not
valid, the application is made by
operation of law;
• If debt produces interest, the payment
is not to be applied to the principal
unless the interests are covered;
• When no application can be inferred
from the circumstances of payment,
it is applied: (a) to the most onerous
debt of the debtor; or (b) if debts due
are of the same nature and burden,
to all the debts in proportion.

Limitations on Application of Payment

• In Article 1248, the creditor has the
right to refuse partial payment - the
creditor cannot be compelled partially
to receive the prestations in which the
obligation consists. Neither may the
debtor be required to make partial
payments.
• Article 1253 - If the debt produces
interest, payment of the principal shall
not be deemed to have been made
until the interests have been covered.
• Also, debtor cannot apply payment to
a debt which is not yet liquidated. He
cannot choose a debt with a period
(established for the creditor’s benefit)
before the period has arrived.
PAYMENT BY CESSION DATION IN PAYMENT
Consists in It requires delivery and
the transmission of
abandonment of the ownership of a thing
totality of the owned by the debtor
property of the to the creditor as an
debtor in favor of the accepted equivalent of
creditors in order the performance of the
that the same may obligation.
be applied for the
satisfaction of their Governed by the law
Tender Of Payment And Consignation obligation. There is no dispute that a valid tender of
‘Tender of payment’ payment had been made by respondent. Absent
It is the act of offering to the creditor what is due however a valid consignation, mere tender will not
him, together with the demand for the creditor to suffice to extinguish her obligation and consummate
accept it. To be valid, the tender of payment the acquisition of the subject properties.
must be a "fusion of intent, ability, and capability
to make good such offer, which must be absolute
and must cover the amount due.“

‘Consignation’
It is the act of depositing the thing due with the
court or judicial authorities whenever the creditor
cannot accept or refuses to accept without just
cause payment and it generally requires a prior
tender of payment.

When Consignation alone is sufficient

• When the creditor is absent or unknown, or
does not
appear at the place of payment;
• When he is incapacitated to receive the
payment at the time it is due;
• When, without just cause, he refuses to give a
receipt;
• When two or more persons claim the same right
to collect;
• When the title of the obligation has been lost.

Requisites of effective consignation

• There is a debt due.
• Creditor to whom tender of payment was
made refused to accept it without justifiable
cause, or he was absent, incapacitated of
because several persons are claiming or title
to obligation has been lost.
• (1st Notice) Previous notice of consignation
has been given to person interested in the
performance of obligation.
• Amount is placed at the disposal of court.
• (2nd Notice) After consignation, person
interested was
notified of the action.
• STRICT COMPLIANCE is required
• Prior to acceptance by creditor or declaration
by court, debtor may withdraw the thing or
sum deposited allowing the debt to remain
• If creditor allowed withdrawal, he will lose
preference over the thing or sum deposited.
• If valid, expenses are chargeable against the
creditor. If invalid, expenses shall be against
the debtor, and accrual of interest continues.

B.E. SAN DIEGO, INC. V AZUL

G.R. NO. 169501, JUNE 8, 2007
J. Velasco Jr.
It must be borne in mind however that a mere
tender of payment is not enough to extinguish an
obligation. In Meat Packing Corporation of the
Philippines v. Sandiganbayan, we distinguished
consignation from tender of payment and
reiterated the rule that both must be validly done
in order to effect the extinguishment of the
obligation, thus:

Consignation is the act of depositing the thing due

with the court or judicial authorities whenever the
creditor cannot accept or refuses to accept
payment, and it generally requires a prior tender
of payment. It should be distinguished from
tender of payment. Tender is the antecedent of
consignation, that is, an act preparatory to the
consignation, which is the principal, and from
which are derived the immediate consequences
which the debtor desires or seeks to obtain.
Tender of payment may be extrajudicial, while
consignation is necessarily judicial, and the
priority of the first is the attempt to make a
private settlement before proceeding to the
solemnities of consignation. Tender and
consignation, where validly made, produces the
effect of payment and extinguishes the
2. LOSS OF THE THING DUE Effect of Partial Loss of a Specific Thing
• A thing is lost “when it perishes, or • Courts may determine whether, under the
goes out of commerce, or disappears in given circumstances, such loss is so important
such a way that its existence is as to extinguish the obligation. [Article 1264]
unknown or (even if known) it cannot • Neither partial loss of the thing nor extreme
be recovered”. [Article 1189] difficulty in an obligation to do authorize the
• In obligations to do, the equivalent term of courts to remake or revise the contract;
loss is circumstances may only serve to release the
“impossibility”. debtor from his obligation in whole or in part.
• In contracts, where the impossibility of things
ART 1262. An obligation which consists in the and services occur prior to perfection, no
delivery of a determinate thing shall be obligation is deemed constituted and loss
extinguished if it should be lost or prevents the contract from acquiring
destroyed without the fault of the debtor, obligatory force. [Articles 1348 & 1409]
and before he has incurred in delay.
Presumption of Fault In Case of Loss of Thing in
When Loss of Thing Will Not Extinguish Liability Possession of the Debtor
There are cases, however, when the loss of the specific General Rule: Whenever the thing is lost in the
thing even in the absence of fault and delay will not possession of the debtor, it shall be presumed
exempt the debtor from liability. They are: that the loss was due to his fault.
1) when the law so provides [Articles 1170, XPN: Unless there is proof to the contrary,
1165 [par. 3], and without prejudice to the provisions of Article
1165. This presumption does not apply in case of
1263];
earthquake, flood, storm or other natural
2) when the stipulation so provides;
calamity. [Article 1265]
3) when the nature of the obligation
requires the assumption of risk [par. 2;
CO V COURT OF APPEALS
Article 1174]; and
4) when the obligation to deliver a G.R. NO. 124922 JUNE 22, 1998
specific thing arises from a crime. J. Martinez
[Article 1268] Assuming further that there was no delay, still
working against private respondent is the legal
presumption under Article 1265 that its
Effect of Loss of a Generic Thing
possession of the thing at the time it was lost
In an obligation to deliver a generic thing,
was due to its fault. This presumption is
the loss or destruction of anything of the
reasonable since he who has the custody and
same kind does not extinguish the
care of the thing can easily explain the
obligation. [Article 1263]
circumstances of the loss. The vehicle owner has
no duty to show that the repair shop was at fault.
General Rule: The debtor can still be
All that petitioner needs to prove, as claimant, is
compelled to deliver a thing of the same
the simple fact that private respondent was in
kind. The creditor, however, cannot
possession of the vehicle at the time it was lost.
demand a thing of superior quality and
In this case, private respondent's possession at
neither can the debtor deliver a thing of
the time of the loss is undisputed.
inferior quality. [Article 1246]

121
Consequently, the burden shifts to the part. It would be doing violence to the intention of
possessor who needs to present controverting the parties to hold the obligor still responsible. (see
evidence sufficient enough to overcome that Report of the Code Commission, p. 133.)
presumption. Moreover, the exempting
circumstances — earthquake, flood, storm or
other natural calamity — when the presumption of
fault is not applicable do not concur in this case.
Accordingly, having failed to rebut the
presumption and since the case does not fall
under the exceptions, private respondent is
answerable for the loss. Xxx

It must likewise be emphasized that pursuant

to Articles 1174 and 1262 of the New Civil
Code, liability attaches even if the loss was
due to a fortuitous event if "the nature of the
obligation requires the assumption of risk".
Carnapping is a normal business risk for those
engaged in the repair of motor vehicles. For
just as the owner is exposed to that risk so is
the repair shop since the car was entrusted to
it.

Impossibility of Performance
The debtor in obligations to do shall also be
released when prestation becomes legally or
physically impossible without the fault of the
obligor. (1266)

Effect of Impossibility of Performance

General Rule: Obligations arising from contracts
have the force of law between the contracting
parties and should be complied with in good
faith. [Article 1159]
XPN: The debtor in obligations to do shall also be
released when the prestation becomes legally or
physically impossible without the fault of the
obligor. [Article 1266]

If Obligor Has No Fault

An obligation to do so becomes legally or
physically impossible which will result in the
extinction of the debtor’s obligation after
restitution of what he may have received, if
any, in advance from the other contracting
party.

Liability Of The Debtor For Impossibility Of Performance

The debtor incurs no liability for his inability to
perform.

When Must Impossibility Take Place

This impossibility must take place after the
constitution of the obligation.
• If the obligation is impossible from the very
beginning, the obligation is void. [Article
1183 and 1348] In such a case, there is no
obligation to be extinguished.
• Note: Article 1266 makes express reference
to obligations to do or personal obligations.
In obligations not to do, impossibility of
performance can hardly take place.

Effect of Difficulty of Performance

When the service has become so difficult as to
be manifestly beyond the contemplation of the
parties, the obligor may also be released
therefrom, in whole or in part. [Article 1267]

Doctrine of Unforeseen Events/ Rebus Sic Stantibus

• performance of the prestation, though not
impossible, has become so manifestly and
extremely difficult as to be beyond the
contemplation of the parties.
• When the performance of the service has
become so difficult as to be manifestly beyond
the contemplation of both parties, the court is
authorized to release the obligor in whole or in
PHILIPPINE NATIONAL • There is no need for an assignment by the
CONSTRUCTION debtor. The rights of action of the debtor
CORPORATION V COURT OF APPEALS are transferred to the creditor from the
G.R. NO. 116896, MAY 5, 1997 moment the obligation is extinguished, by
J. Davide, Jr. operation of law to protect the interest of
• It is a fundamental rule that the latter by reason of the loss. [Article
contracts, once perfected, bind both 1269]
contracting parties, and obligations
arising therefrom have the force of Rule if Obligation Arises from a Criminal Offense
law between the parties and should • General Rule: When the debt of a thing
be complied with in good faith. But certain and determinate proceeds from a
the law recognizes exceptions to the criminal offense, the debtor shall not be
principle of the obligatory force of exempted from the payment of its price,
contracts. One exception is laid whatever may be the cause of loss.
down in Article 1266 of the Civil • XPN: Unless the thing having been offered by
Code. Petitioner cannot, however, him to the person who should receive it,
successfully take refuge in the said the latter refused without justification to
article, since it is applicable only to accept it. [Article 1268]
obligations "to do," and not to
obligations "to give."
• The obligation to pay rentals or 122
deliver the thing in a contract of
lease falls within the prestation "to
give"; hence, it is not covered within
the scope of Article 1266.
• At any rate, the unforeseen event
and causes mentioned by petitioner
are not the legal or physical
impossibilities contemplated in the
said article. Besides, petitioner failed
to state specifically the
circumstances brought about by "the
abrupt change in the political climate
in the country" except the alleged
prevailing uncertainties in
government policies on
infrastructure projects.
• The principle of rebus sic stantibus
neither fits in with the facts of the
case. Under this theory, the parties
stipulate in the light of certain
prevailing conditions, and once
these conditions cease to exist, the
contract also ceases to exist.
• This theory is said to be the basis of
Article 1267 of
the Civil Code, which provides:
• Art. 1267. When the service has
become so difficult as to be
manifestly beyond the contemplation
of the parties, the obligor may also
be released therefrom, in whole or in
part.
• This article, which enunciates the
doctrine of unforeseen events, is not,
however, an absolute application of
the principle of rebus sic stantibus,
which would endanger the security
of contractual relations. The parties
to the contract must be presumed to
have assumed the risks of
unfavorable developments. It is
therefore only in absolutely
exceptional changes of
circumstances that equity demands
assistance for the debtor.

Right of Creditor To Proceed Against Third Persons

• The creditor is given the right to
proceed against the third person
responsible for the loss.
Article 1174 of the Civil Code of the Philippines Renunciation of principal debt shall extinguish the
• General Rule: No person shall be responsible accessory obligations. The waiver of the accessory
for those events which could not be shall leave the principal in force. [Article 1273]
foreseen, or which, though foreseen, were
inevitable
• XPN:
a) it is specified by law;
b) it is otherwise declared by stipulation;
and
c) the obligation requires the assumption of
risk.

To exempt the obligor from liability for a breach of an

obligation due to force majeure, the following
requisites must likewise concur:
• the cause of the breach of the obligation
must be independent of the will of the
debtor;
• the event must be either unforeseeable
or
unavoidable;
• the event must be such as to render it
impossible for the debtor to fulfill his
obligation in a normal manner; and
• the debtor must be free from any
participation in, or aggravation of the injury
to the creditor.

REQUISITES
In order that an obligation to give may be extinguished by
the loss of the thing, the following requisites must be
present:
• The obligation is to deliver a specific or
determinate thing;
• The loss of the thing occurs without the
fault of the debtor; and
• The debtor is not guilty of delay. [Article
1262]
XPN:
• When the law so provides;
• When the stipulation so provides;
• When the nature of the obligation
requires an assumption of risk;
• Loss of the thing is partly due to the
fault of the debtor;
• Loss of the thing occurs after the debtor
incurred in delay;
• When the debtor promised to deliver the
same thing to two persons who do not have
the same interest;
• When the obligation to deliver arises from a
criminal offense; and
• When the object of the obligation is generic.

3. CONDONATION
‘Condonation’ defined
• An act of liberality of the obligee, without
receiving any price or equivalent, renounces
the enforcement of the obligation, is
extinguished in its entirety or part.
• May be made expressly or impliedly.

Requisites of Condonation
• It must be gratuitous;
• It must be accepted by the obligor;
• The obligation must be demandable at the
time of remission;
• Parties must have the capacity;
• Not inofficious; and
• If it is made expressly, must comply with
the forms of donation

Effect of Renunciation to Principal Debt

Effect of Delivery Of Private Document obligation.
Evidencing a Credit XPN: Except as regards the share
• Implies the renunciation of the action corresponding to the creditor or debtor in
which the former had against the whom the two characters concur. [Article
latter [Article 1271] 1277]
• Note: Delivery of a private document
evidencing a credit must be made 5. COMPENSATION
voluntarily by the creditor to the ‘Compensation’ defined
debtor. • It is the extinguishment to the concurrent
amount of the debts of two persons who,
Presumption of Voluntary Delivery in their own right, are reciprocally
• Whenever a private document in principal debtors and creditors of each
which the debt appears is found in other.
possession of the debtor, it shall be • It involves the simultaneous balancing of
presumed that the creditor delivered two obligations in order to totally
it voluntarily unless the contrary is extinguish them if they are of the same
proved. [Article 1272] amount or to the extent in which the
• Note: Possession of the instrument of amount of one is covered by that of the
credit by the other, if of different amounts.
creditor is prima facie proof of non-
payment. When Shall Compensation Take Place
Compensation shall take place when two
4. CONFUSION persons, in their own right, are creditors and
‘Confusion’ defined debtors of each other. [Article 1278]
It is the merger of the characters of the
creditor and the debtor in one and the Amount of Compensation
same person by virtue of which the a) Total Compensation - Compensation may be
obligation is extinguished. total if two debts are of the same
amount.
Requisites of Confusion b) Partial Compensation - Partial if two debts
a. It must take place in the person of vary in amounts
the principal creditor and principal Compensation shall only be to the extent of
debtor. the concurrent amount.
b. It must be complete and definite
because if not complete the Kinds of Compensation
obligation still subsists. a) Legal – by operation of law
b) Conventional – by agreement, mutual set-
General Rule: Confusion does not extinguish off of obligations
a joint c) Judicial – by judgment of court

123
REQUISITES OF LEGAL COMPENSATION • It is the substitution or change of an obligation by
1. The parties must be creditors and debtors another, which extinguishes or modifies the first,
of each other in their own right. either by changing its object or principal
2. The parties must be bound principally. conditions, by or substituting another in place of
3. Both debts consist of a sum of money, or if the debtor, or by subrogating a third person in
the things due are consumable, they be of the rights of the creditor.
the same kind, and also the same quality
if the latter has been stated.
4. Both debts must be due, liquidated and
demandable.
5. Over neither of them there be retention or
controversy, commenced by third persons
and communicated in due time to the
debtor.

Effect When All Requisites of Legal Compensation

Occur
• Compensation takes place by operation of
law
• Extinguishes both debts to the concurrent
amount, even though the creditors and
debtors are not aware of compensation and
even though the debts may be payable at
different places, but there shall be
indemnity for expenses of exchange or
transportation to the place of payment.
(Arts 1290 & 1286 NCC)

COMPENSATION OF RESCISSIBLE AND VOIDABLE

DEBTS
General Rule: When one or both debts are
rescissible or voidable, they may be
compensated against each other. before the
debts are judicially rescinded or avoided.
[Article 1284]

Example:
Q: A owes B 10,000 pesos. B owes A 5,000, but
this loan was obtained when B was still 16
years old. Can there be legal compensation?
A: Yes, there could be legal compensation. The
debt of A is valid but that of B is voidable.
Before the debt of B is annulled, both debts
may be compensated against each other up to
the concurrent amount of 5,000 if all the
requisites for legal compensation are present.

Obligations Which Cannot Be Compensated

NON-COMPENSABLE DEBTS
Expressed in Articles 1287 and 1288 of the
Civil Code. The obligations which cannot be
compensated are as follows:
1. Contract of depositum - A special real
contract whereby the depositor entrusts to
the depository something for safe keeping.
2. Contract of commodatum - A gratuitous
contract whereby one of the parties
delivers to another something not
consumable so that the latter may use the
same for a certain time and return it.
3. Future support due by gratuitous title - The
right to receive support cannot be waived
nor transferred because support is
necessary for subsistence and the right is
purely personal to the recipient.
4. Civil liability arising from a penal offense
cannot be compensated.

6. NOVATION
• It is a change in the elements of an
obligation.
• It is the total or partial extinction of an
obligation through the creation of a new one
which substitutes it.
CONCEPT OF NOVATION ‘Express Novation’
It is the extinguishment of an When the new obligation declares in
obligation by the substitution or unequivocal terms that the old obligation is
change of: extinguished
• An obligation by a subsequent one
which extinguishes or modifies the ‘Implied Novation’
first either by changing the object or • When the new obligation is on every point
principal conditions; incompatible with the old one.
• By substituting another in the place of the • When not expressed, incompatibility is
debtor; required so as to ensure that the parties
• By subrogating a third person in the did really intend such novation despite
rights of the creditor (Art 1291 NCC) their failure to express it in categorical
terms.
Kinds of Novation According to Subject
1. Real or Objective Novation — occurs Essential Requisites of Novation
when there is a change of the a) The existence of a previous valid obligation;
object or principal conditions of an b) The intention or agreement and capacity
existing obligation; of the parties to extinguish or modify the
2. Personal or Subjective Novation — occurs obligation;
when there is a change of either the c) The extinguishment or modification
person of the debtor or of the of the
creditor in an existing obligation; obligation; and
3. Mixed — occurs when the object or d) The creation or birth of a valid new obligation.
principal condition of the obligation
and the debtor or the creditor or both General Rule: There can be no novation unless
the parties, are changed. It is a two distinct and successive binding
combination of real and personal contracts take place, between the same
novations. parties with the second designed to replace
the preceding convention.
NATURE OF NOVATION
• Extinctive Novation - It is EXTINCTIVE CCC INSURANCE CORPORATION V KAWASAKI STEEL
when the old obligation is extinguished CORPORATION
by the creation of a new one that G.R. NO. 156162, JUNE 22, 2015
takes place of the former;
J. Leonardo-De Castro
• Modificatory Novation - It is
• It is well-settled that novation is never
MODIFICATORY when the old
presumed - novatio non praesumitur. As
obligation subsists, as amended, to
the party alleging novation, the onus of
the extent it remains compatible
showing clearly and unequivocally that
with the novatory agreement.
novation had indeed taken place rests on
CCCIC.
EXPRESS AND IMPLIED NOVATION

124
• There are two ways which could indicate, in • If the payment was made with the consent of the
fine, the presence of novation and thereby original debtor or on his own initiative (delegacion),
produce the effect of extinguishing an the new debtor is entitled to reimbursement and
obligation by another which substitutes the subrogation under Article 1237.
same. The first is when novation has been
explicitly stated and declared in unequivocal
terms. The second is when the old and the
new obligations are incompatible on every
point.
• The test of incompatibility is whether or not
the two obligations can stand together, each
one having its independent existence. If they
cannot, they are incompatible and the latter
obligation novates the first. Corollarily,
changes that breed incompatibility must be
essential in nature and not merely accidental.
• The incompatibility must take place in any of
the essential elements of the obligation, such
as its object, cause or principal conditions
thereof; otherwise, the change would be
merely modificatory in nature and insufficient
to extinguish the original obligation.
• CCCIC failed to discharge the burden of
proving novation of the Consortium
Agreement by the Agreement dated August
24, 1989. The Court failed to see the presence
of the essential requisites for a novation of
contract, specifically, the irreconcilable
incompatibility between the old and new
contracts.

Novation of an Obligation by Substituting the Person of

the Debtor
Entails the replacement of the debtor by a third
person.

Effect of a Valid Substitution

When validly made, it releases the debtor from
the obligation which is then assumed by the
third person as the new debtor.

EXPROMISION AND DELEGACION DISTINGUISHED

Two Forms of Novation by Substitution of the Debtor
1) Expromission
• The initiative does NOT come from the original
debtor.
• It may be made WITHOUT original debtor’s
knowledge or against his will
• Consent of the creditor and the third person is
required
• Insolvency of the new debtor in expromission
• If substitution is without the knowledge or
against the will of the original debtor, the new
debtor’s insolvency or non-fulfillment of the
obligation shall not give rise to any liability on
the part of the original debtor. [Article 1294]
2) Delegacion
• The debtor initiates and offers the
substitution of a new debtor.
• The creditor accepts.
• A third person consents to the substitution
and assumes the obligation.
• Insolvency of the new debtor in delegacion:
• The insolvency of the new debtor, who has
been proposed by the original debtor and
accepted by the creditor, shall not revive the
action of the latter against the original obligor,
except when said insolvency was already
existing and of public knowledge, or known to
the debtor, when he delegated his debt.
(Article 1295 NCC)

Right of New Debtor Who Pays

• In expromission, payment by the new
debtor gives him the right to beneficial
reimbursement under the second paragraph
of Article 1236.
Consent of Creditor Necessary to Substitution. party. But mere acceptance of payments for
• In both the two modes of substitution, the benefit of a debtor, whose obligation the
the consent of the creditor is an third party has assumed, in the absence of
indispensable requirement. facts unmistakably showing an intention to
• It is not enough for the debtor to make the third party alone liable, does not
merely assign his debt to a third constitute a novation consisting in the
person, or for the latter to assume the substitution of a new debtor in lieu of the
debt of the former; the consent of the old one.
creditor to the substitution of the
debtor is essential and must be had. LEGAL AND CONVENTIONAL SUBROGATION
‘Novation by Subrogation’
ROMAGO, INC. V. ASSOCIATED BANK • It is the transfer of all rights of the
G.R. NO. 223450, FEBRUARY 22, 2023 creditor to a third person, who substitutes
J. Leonen him in all his rights.
Novation must be clear and express. • When a third person is subrogated to the
While the creditor's consent to a change rights of the other creditors, the creditor
in debtor may be derived from clear and effecting the novation is liable for their
unequivocal acts of acceptance, such share in the credit. But if the creditor
acts must be wholly consistent with the subrogates a third person in his place, such
release of the original debtor. Thus, amounts to an assignment of his rights
acceptance of payment from a third which he cannot do without the consent of
person will not necessarily release the other creditors.
original debtor from their obligation.
Legal Subrogation — Takes place without
Moreover, when the contracts are part of agreement but by operation of law as a result
a commercial transaction and reduced to of certain acts performed by the parties.
writing, novation cannot be implied
simply from a creditor's inaction. Silence Conventional Subrogation — that which takes
is, at best, ambiguous in the presumption place by agreement of the parties.
that both parties are diligent agents in a
commercial transaction. Legal Subrogation is Presumed
a) When a creditor pays another creditor who
Creditor has right to refuse payment by third person is preferred, even without the debtor’s
without interest in obligation. knowledge;
• It is also consistent with the rule that a b) When a third person, not interested in the
creditor cannot be compelled to obligation, pays with the express or tacit
accept payment or performance by a approval of the debtor;
third person who has no interest in the c) When even without the knowledge of the
fulfillment of the obligation. [Article debtor, a person interested in the
1236, par. 2] fulfillment of the obligation pays, without
• The creditor, however, may accept, if prejudice to the effects of confusion as to
he so wishes, payment from a third the latter’s share. [Article 1302]

125
VICENTE G. HENSON JR., V. UCPB GENERAL any defense which a wrongdoer has against the
INSURANCE CO., INC. insured is good against the insurer subrogated to the
G.R. NO. 223134, AUGUST 14, 2019 rights of the insured," and this would clearly include
J. Perlas-Bernabe the defense of prescription.
To better understand the concept of legal
subrogation under Article 2207 of the Civil
Code as a form of "equitable assignment," it B. •CONTRACTS
A contract is a meeting of minds between two
deserves mentioning that there exist intricate persons whereby one binds himself, with
differences between assignment and respect to the other, to give something or to
subrogation, both in their legal and render some service. [Article 1305]
conventional senses. • One or more persons bind himself or
themselves with respect to another or
An assignment of credit has been defined as others, or reciprocally, to the fulfillment of a
an agreement by virtue of which the owner of prestation to give, to do, or not to do.
a credit (known as the assignor), by a legal
cause - such as sale, dation in payment or
1. ESSENTIAL REQUISITES OF CONTRACT – CIVIL
exchange or donation - and without need of the
debtor's consent, transfers that credit and its CODE, ART. 1318
accessory rights to another (known as the
assignee), who acquires the power to enforce a. Consent – Civil Code, arts. 1319-1346
it, to the same extent as the assignor could
have enforced it against the debtor. ‘Consent’ defined
Subrogation is the transfer of all the rights of It is the conformity of wills and with respect to
the creditor to a third person, who substitutes contracts, it is the agreement of the will of one
him in all his rights. It may either be legal or contracting party with that of another or
conventional. others, upon the object and terms of the
contract.
Legal subrogation is that which takes place
without agreement but by operation of law Consent is manifested by:
because of certain acts. The meeting of the offer and the acceptance upon
the thing and the cause which are to constitute
Conventional subrogation is that which takes the contract. [Article 1319]
place by agreement of parties.
Requisites
This Court has consistently adhered to the 1. Must be manifested by the concurrence of
distinctions between an assignment of credit, the offer and acceptance; [Articles 1319-
legal subrogation and a conventional 1326]
subrogation. 2. Parties must possess the necessary legal
capacity; [Articles 1327-1329] and
Assignment of credit the consent of the debtor 3. Must be intelligent, free, spontaneous,
is not necessary in order that the assignment and real. [Articles 1330-1346]
may fully produce the legal effects. What the
law requires in an assignment of credit is not FERRER V. ST. MARY'S PUBLISHING
the consent of the debtor, but merely notice to G.R. NO. 258486, AUGUST 2, 2023
him as the assignment takes effect only from J. Lopez
the time he has knowledge thereof. Article 1318 of the Civil Code states that a
contract is a meeting of minds between two
Conventional Subrogation requires an agreement persons, whereby one party binds himself or
among the parties concerned - the original herself, with respect to the other, to give
creditor, the debtor, and the new creditor. It is a something or to render some service. By this
new contractual relation based on the mutual definition, the existence of a contract rests on
agreement among all the necessary parties. the presence of three essential requisites: 1)
the consent of the contracting parties; 2) the
Legal Subrogation produces the same effects object; and 3) the consideration.
as assignment and also, no new obligation is
created between the subrogee/new creditor and There is consent when there is acceptance of
debtor. the offer, the thing, and the cause, which are
to constitute the contract. Indeed, a contract is
In sum, as legal subrogation is not equivalent consensual in nature which is perfected upon
to conventional subrogation, no new obligation the concurrence of the offer and the
is created by virtue of the insurer's payment acceptance. Once perfected, a contract is
under Article 2207 of the Civil Code; also, as binding and obligatory between the
legal subrogation is not the same as an contracting parties.
assignment of credit (as the former is in fact,
called an "equitable assignment"), no privity of
‘Offer’ defined
contract is needed to produce its legal effects.
It is a proposal made by one party (offerer) to
another to enter into a contract. It is more than
Accordingly, "the insurer can take nothing by
an expression of desire or hope. It is really a
subrogation but the rights of the insured, and is
promise to act or to refrain from acting on
subrogated only to such rights as the insured
condition that the terms thereof are accepted
possesses.
by the person (offeree) to whom it is made.
The rights of the insurer against the wrongdoer
cannot rise higher than the rights of the insured Offer Must Be Certain
against such wrongdoer, since the insurer as • The offer must be certain or definite and
subrogee, in contemplation of law, stands in the clear, and not vague or speculative so that the
place of the insured and succeeds to whatever liability (or the rights) of the parties may be
rights he may have in the matter. Therefore, exactly fixed because it is necessary that
 the acceptance be identical with the offer and the acceptance upon the thing and
offer to create a contract without any the cause which are to constitute the
further act on the part of the offeror. contract. The offer must be certain and the
• is manifested by the meeting of the acceptance absolute. (Art 1319)

126
‘Acceptance’ defined • It is accepted from the time acceptance is
It is the manifestation by the offeree of his communicated to him. [Article 1322]
assent to the terms of the offer. Without • Article 1322 applies only if the offer is made
acceptance, there can be no meeting of the through the agent and the acceptance is
minds between the parties. [Article 1305] communicated through him.
A mere offer produces no obligation.

Acceptance of Offer Must be Absolute

The acceptance of an offer must be absolute,
unconditional or unqualified, that is, it must be
identical in all respects with that of the offer so
as to produce the consent or meeting of the
minds necessary to perfect a contract.

Qualified Acceptance
• Merely constitutes a counter-offer or a new
proposal which, in law, is considered a
rejection of the original offer and an attempt
by the parties to enter into a contract on a
different ba sis.
• A qualified acceptance must, in turn, be
accepted absolutely in order that there will
be a contract.

Acceptance Made By Letter Or Telegram

• General Rule: Acceptance made by letter or
telegram does not bind the offeror.
• XPN: Except from the time it came to his
knowledge. The contract, in such a case, is
presumed to have been entered into in the
place where the offer was made.

Form of acceptance of offer

An acceptance may be:
1. Express - may be oral or written;
2. Implied - one that is inferred from act or
conduct.
[Article 1320]

Acceptance By Silence or Inaction.

General Rule: Silence cannot be construed as
acceptance. The acceptance must be
affirmatively and clearly made and evidenced
by words or some acts or conduct
communicated to the offeror.
XPN:
a) where the parties agree expressly or
impliedly, that it shall amount to
acceptance;
b) where specific provisions of law so declare;
and
c) where under the circumstances such
silence constitutes estoppel. [Article
1431]

Matters That May Be Fixed By The Offeror

• Time
• When the offeror has not fixed a period for
the offeree to accept the offer, and the offer
is made to a person present, the
acceptance must be made immediately;
hence, the offeree cannot complain that he
was not given a reasonable period within
which to accept or reject the offer of the
offeror.
• Place
• Manner of acceptance [Article 1321]

General Rule: All matters fixed must be complied

with otherwise the offer shall be deemed
terminated.
XPN: An acceptance departing from the terms
of the offer constitutes a counter-offer.

Offer Made Through An Agent

When Offer Becomes Ineffective ratified.
a. Upon the death of either party before
acceptance is conveyed; Vices of Consent
b. Civil interdiction of either party before a) Violence
acceptance is conveyed; b) Intimidation
c. Insanity, of either party before c) Mistake
acceptance is conveyed; or d) Fraud
d. Insolvency of either party before e) Undue Influence [Article 1330]
acceptance is conveyed.

Business Advertisements Of Things For Sale

• Business advertisements of things for
sale are not definite offers, acceptance
of which will not perfect a contract but
are merely invitations to the reader to
make an offer or only as proposals.
(1325)
• Advertisement for bidders is mere
invitation to submit proposals.
Advertiser is not bound to accept the
highest or lowest bidder unless the
contrary appears. (1326)
BAR QUESTION (1991)
"K" & Co. published in the newspaper an
"Invitation To Bid"
inviting proposals to supply labor and materials
for a construction project described in the
invitation. "L", "M", and "N" submitted bids. When
the bids were opened, it appeared that "L"
submitted the lowest bid. However, "K" & Co.
awarded the contract "N", the highest bidder,
on the ground that he was the most
experienced and responsible bidder. "L" brought
an action against "K" & Co, to compel the award to
him and to recover damages. Is "L's" position
meritorious?
SUGGESTED ANSWER
“L's” position is not meritorious. According to
the Civil
Code, advertisements for bidders are simply
invitations to make proposals, and the
advertiser is not bound to accept the highest or
lowest bidder, unless the contrary appears (Art.
1326). It is clear that the general rule applies in
the instant case. In its advertisements, "K" &
Co., for instance, did not state that it will award
the contract to the lowest bidder. Therefore, in
awarding the contract to “N", the
defendant company acted in accordance with its
rights.
The following cannot give consent to a contract:
1. Unemancipated minors
• They refer to those persons who
have not yet reached the age of
majority (18 years) and are still
subject to parental authority.
2. Insane or demented persons, and
• Insane during lucid interval – valid
• Under state of drunkenness or hypnotic
spell –
voidable (1328)
3. Deaf-mutes who do not know how to write.
• They are persons who are deaf and dumb.
• Deaf-mutes who do not know how to
write cannot give consent to a
contract; If the deaf-mute knows how
to write, the contract is valid for then
he is capable of giving intelligent
consent.

Rule When Incapable Parties Enter Into a Contract

1. If one of the parties is incapable of giving
consent:
Voidable.
2. If both parties are incapable of
giving consent: Unenforceable unless
127
Article 1339. Failure to disclose facts, when there correction (1331)
is a duty to reveal them, as when the parties • There is no mistake if the party knew the doubt,
are bound by confidential relations, constitutes contingency or risk affecting the object of the
fraud. contract (1333)
• Mutual error as to legal effect of the agreement
Article 1340. The usual exaggerations in trade, when the real purpose of the parties is
when the other party had an opportunity to frustrated may vitiate consent. (1334)
know the facts, are not in themselves
fraudulent.

Article 1341. A mere expression of an opinion

does not signify fraud, unless made by an
expert and the other party has relied on the
former's special knowledge.

Vices of Declaration (vicios de la declaracion)

Simulation of Contracts

Requisites of Fraud under Art. 1338:

1. One party must have employed fraud or
insidious words or machinations
2. It must have been serious;
3. It induced the other party to enter into a
contract;
4. It must have been employed by one
contracting party upon the other, and not
employed by both contracting parties or by
third persons;
5. Damage or injury resulted to the other
party;
6. It must be made in bad faith, i.e. with
knowledge of its falsify

Simulation of Contracts (Arts. 1345-1346)

• A deliberate declaration contrary to the will
of the parties.
• Agreement of the parties to the apparently
valid act.
• The purpose is to deceive or to hide from
third persons although it is not necessary
that the purpose be illicit or for purposes of
fraud.

Kinds of simulation of contract:

1. Absolute (simulados) – parties do not intend
to be bound by the contract at all. Status:
VOID
2. Relative (disimulados) – parties conceal their
true agreement. It binds the parties to
their real agreement, when it does not
prejudice a third person and is not
intended for any purpose contrary to law,
morals, good customs, public order or
public policy.

Article 1342. Misrepresentation by a third

person does not vitiate consent, unless such
misrepresentation has created substantial
mistake and the same is mutual.

Article 1343. Misrepresentation made in good

faith is not fraudulent but may constitute
error.

‘Mistake’ defined
• Refer to substance of the thing which is the
object of the contract or to those conditions
that principally moved one or both parties
to enter into contract.
• Mistake as to identity or qualifications will
vitiate consent only when such have been
the principal cause of the contract
• Simple mistake if account shall give rise to
BURDEN OF PROOF public order or public policy.
Article 1332. When one of the parties is
unable to read, or if the contract is in a Article 1353. The statement of a false cause in
language not understood by him, and contracts shall render them void, if it should
mistake or fraud is alleged, the person not be proved that they were founded upon
enforcing the contract must show that another cause which is true and lawful.
the terms thereof have been fully
explained to the former.

b. Object – Civil Code, arts. 1347-1349

128
The thing, right or service which is the
subject matter of the obligation arising
from the contract.

Requisites:
1. Must be within the commerce of man;
2. Should be real or possible;
3. Should be licit; and
4. Should be determine, or at least
possible of determination as to its
kind.

Things Which Cannot Be the Object of Contracts

(Art. 1347-1349)
General Rule: All things or services may be
the object of contracts.
Exceptions:
1. Things outside the commerce of men;
2. Intransmissible rights;
3. Future inheritanceexcept in cases
expressly authorized by law.
4. Services contrary to law, morals,
good customs, public order or public
policy;
5. Impossible things or services;
6. Objects not possible of determination as to
their kind.

c. Cause – Civil Code, arts. 1350-1355

Cause’ or ‘Consideration’ defined

It is the immediate, direct or most
proximate reason which explains and
justifies the creation of an obligation
through the will of the contracting
parties.

Essential Requisites of Cause

a) Existing at the time of the celebration of the
contract;
b) Licit or lawful; and
c) True
Cause or consideration is the WHY of the
contract. It is the essential reason which
moves the contracting parties to enter
into the contract.

Article 1350. In onerous contracts the cause

is understood to be, for each contracting
party, the prestation or promise of a
thing or service by the other; in
remuneratory ones, the service or benefit
which is remunerated; and in contracts of
pure beneficence, the mere liberality of
the benefactor.

Article 1351. The particular motives of the

parties in entering into a contract are
different from the cause thereof.

Article 1352. Contracts without cause, or

with unlawful cause, produce no effect
whatever. The cause is unlawful if it is
contrary to law, morals, good customs,
Article 1354. Although the cause is not stated The following agreements have been held to
in the contract, it is presumed that it exists contravene the principle of autonomy of contracts:
and is lawful, unless the debtor proves the • Sale of land covered by a homestead patent
contrary. within the
Article 1355. Except in cases specified by law, 5-year prohibitory period, as being contrary to law.
lesion or inadequacy of cause shall not
invalidate a contract, unless there has been
fraud, mistake or undue influence.

2. PRINCIPLES OF CONTRACTS – CIVIL CODE,

ARTS. 1159 AND 1305-1317
a. Obligatory Force

Principle of Obligatory Force

Articles 1159 & 1315 of the Civil Code
• Article 1159. Obligations arising from
contracts have the force of law between the
contracting parties and should be complied
with in good faith.
• Article 1315. Contracts are perfected by mere
consent, and from that moment the parties
are bound not only to the fulfillment of what
has been expressly stipulated but also to all
the consequences which, according to their
nature, may be in keeping with good faith,
usage and law.
• A contract, once perfected, has the force of
law between the parties, with which they
are bound to comply in good faith, and
neither one may, without consent of the
other, renege therefrom.
• Contracts are the law and, as a result,
courts must enforce them between the
contracting parties.
• Courts cannot make a contract or a
stipulation if there is none.

IP E-GAME VENTURES, INC. V TAN

G.R. NO. 239576, JUNE 30, 2021
J. J. Lopez
It is well-established that a contract is the
law between the parties. Obligations arising
from contracts have the force of law
between the contracting parties and should
be complied with in good faith. "Unless the
stipulations in a contract are contrary to law,
morals, good customs, public order, or
public policy, the same are binding as
between the parties." From the moment the
contract is perfected, the parties are bound not
only to the fulfillment of its stipulations, but
also the consequences which, according to
their nature, may be in keeping with good
faith, usage, and law.

b. Autonomy
Principle of Autonomy of Contracts [Article 1306]
• Contracting parties may establish such
stipulations, clauses, terms, conditions as
they may deem convenient, provided they
are not contrary to law, morals, good
customs, public order or public policy.
[Article 1306]
• 2 aspects: (1) freedom to decide whether or
not one should enter into contractual
relationship at all; (2) freedom to stipulate
upon whatever terms the parties wish and
agree.

Limitation on freedom to stipulate on specific terms:

Stipulations should not be contrary to law,
morals, good customs, public order, or public
policy.
• A promise of marriage where carnal the parties who entered into it, and cannot
knowledge is the consideration of the favor or prejudice a third person, even if he is
promise as being contrary to morals. aware of such contract and has acted with
• Employment contract providing that knowledge thereof. Indeed, "where there is no
within 5 years from termination, the privity of contract, there is likewise no
employee cannot work with another obligation or liability to speak about."
company without the written
permission of the employer as being EXCEPTIONS TO THE RULE ON PRIVITY OF CONTRACTS
an unreasonable restraint and Exceptions to the rule of relativity:
contrary to public policy 1. Beneficial stipulation/stipulation pour autrui
• Waiver of right to transfer to another – A beneficial stipulation in favour of a third
school in a scholarship grant as being person.
contrary to public order and public 2. When the third person comes into
policy. possession of the object of a contract
creating real rights; (Art. 1312)
c. Relativity 3. Where the contract is entered into in order
to defraud a creditor; (Art. 1313) Here, the
Principle of Relativity of Contracts (Art. 1311) creditor may ask for its rescission.
General Rule: Contracts take effect only 4. Where the third person induces a
between parties, their assigns and heirs. contracting party to violate his contract
• Transmissible/ transferrable (Art. 1314). Such third person can be held
Note: When rights under a contract are liable for damages.
assignable and assigned as such, the 5. Accion Directa – Art 1652 when lessor may
assignee may be harmed or affected. The sue sub- lessee for rent due from lessee
same goes for heirs of a contracting
party who has died. Requisites in Stipulation Pour Autrui:
1. there is a stipulation in favor of a third person;
Exception to rule of transferability of 2. the stipulation is a part, not the whole, of
obligations to heirs and assigns the contract;
Not transmissible by: 3. the contracting parties clearly and
1. law, deliberately conferred a favor to the third
2. by stipulation, person — the favor is not an incidental
3. or by nature (purely personal). benefit;
4. the favor is unconditional and uncompensated;
5. the third person communicated his or her
ASIAN TERMINAL, INC. VS. PADOSON
acceptance of the favor before its
STAINLESS STEEL CORPORATION
revocation; and
G.R. NO. 211876, JUNE 25, 2018
6. the contracting parties do not represent, or are
J. Tijam
not
The basic principle of relativity of
authorized by, the third party.
contracts is that contracts can only bind

129
 BAR QUESTION (1980) BAR QUESTION (2002)
O, a very popular movie star, was under Printado is engaged in the printing business.
contract with P Suplico
Movie Productions to star exclusively in the supplies printing paper to Printado pursuant to
latter’s films for two years. O was prohibited by an order agreement under which Suplico binds
the contract to star in any film produced by himself to deliver the same volume of paper
another producer. X Film Co. induced O to break every month for a period of 18 months, with
her contract with P Movie Productions by giving Printado in turn agreeing to pay within 60 days
her twice her salary. P Movie Productions sued X after each delivery. Suplico has been faithfully
Film Co. for damages. X Film Co. contended that delivering under the order agreement for 10
it had a right to compete for the services of O and months but thereafter stopped doing so,
because Printado has not made any payment
that her contract with P Movie Productions was in
at all. Printado has also a standing contract
restraint of trade and a restriction on her freedom
with publisher Publico for a printing of 10,000
of contract. Whose contention would you sustain?
volumes of school textbooks. Suplico was
SUGGESTED ANSWER
aware of said printing contract. After printing
The contention of P Movie Productions should be
1,000 volumes, Printado fails to perform under
sustained.
its printing contract with Publico. Suplico sues
According to the Civil Code, any third person
Printado for the value of unpaid deliveries under
who induces another to violate his contract shall
their order agreement. At the same time,
be liable for damages to the other contracting
Publico sues Printado for damages for breach
party. In the law of torts, we call this
“interference with contractual relation.’’ of contract with respect to their own printing
However, in order that it will be actionable, it is agreement. In the suit filed by Suplico, Printado
necessary that the following requisites must counters that: A) Suplico cannot demand
concur: (a) the existence of a valid contract; payment for deliveries made under their order
(b) knowledge on the part of the third person of agreement until Suplico has completed
the existence of such contract; and (c) performance under said contract; B) Suplico
interference by the third person without legal should pay damages for breach of contract;
justification or excuse. All of these requisites and C) Sulpico should be liable for Printado’s
are present in the case at bar. breach of his contract with Publico because the
order agreement between Suplico and
BAR QUESTION (1991) Printado was for the benefit of
Roland, a basketball star, was under contract for
Publico. Are the contentions of Printado tenable?
one year to
SUGGESTED ANSWER
play-for-play exclusively for Lady Love, Inc.
However, even before the basketball season No, the contentions of Printado are untenable.
could open, he was offered a more attractive pay Printado
plus fringes benefits by Sweet Taste, Inc. Roland having failed to pay for the printing papers
accepted the offer and transferred to Sweet covered by the delivery invoices on time,
Taste. Lady Love sues Roland and Sweet Taste Suplico has the right to cease making further
for breach of contract. Defendants claim that the delivery. It is clear that Suplico did not violate
restriction to play for Lady Love alone is void, the order agreement (Integrated Packaging
hence, unenforceable, as it constitutes an undue Corporation v. Court of Appeals, (333 SCRA
interference with the right of Roland to enter into 170, F.R. No. 115117, June 8, 2000). Suplico
contracts and the impairment of his freedom to cannot be held liable for damages, for breach
play and enjoy basketball. of contract, as it was not he who violated the
Can Roland be bound by the contract he entered Into order agreement, but Printado.
with Lady Love or can he disregard the same? Is he liable Suplico cannot be held liable for Printado’s
at all? breach of contract with Publico. He is not party
How about Sweet Taste? Is it liable to Lady Love? to the agreement entered into by and between
SUGGESTED ANSWER Printado and Publico. Theirs is not a stipulation
Roland is bound by the contract he entered into pour autrui. Such contracts do not affect third
with Lady persons like Suplico because of the basic civil
Love and he cannot disregard the same, under law principle of relativity of contracts which
the principle of obligatoriness of contracts. provides that contracts can only bind the
Obligations arising from contracts have the force parties who entered it, and it cannot favor or
of law between the parties. prejudice a third person, even if he is aware
of such contract and has acted with the knowledge
Yes, Roland is liable under the contract as far as thereof.
Lady Love is concerned. He is liable for damages
under Article 1170 of the Civil Code since d. Consensuality
he
contravened the tenor of his obligation. Not
CONCEPT
being aAND COVERAGE
contracting party, Sweet Taste is not bound
by the contract but It can be held liable under General Rule: Contracts are perfected by the
Art. 1314. The basis of its liability Is not meeting of the minds of the contracting
prescribed by contract but is founded on quasi- parties. They are obligatory in any form (oral or
delict, assuming that Sweet Taste knew of the written) as long as parties have agreed to
contract. Article 1314 of the Civil Code provides undertake their obligations under the contract.
that any third person who induces another to It is indispensable in any contract that the
violate his contract shall be liable for damages to parties thereto give their consent
the other contracting party.
Article 1305. A contract is a meeting of minds
Roland is bound by the contract he entered into
between two persons whereby one binds
with Lady Love and he cannot disregard the
same, under the principle of obligatoriness of himself, with respect to the other, to give
contracts. Obligations arising from contracts have something or to render some service.

Article 1315. Contracts are perfected by mere

consent, and from that moment the parties are
bound not only to the fulfillment of what has
been expressly stipulated but also to all the
consequences which, according to their
nature, may be in keeping with good faith,
usage and law.

Article 1316. Real contracts, such as deposit,

pledge and commodatum, are not perfected
until the delivery of the object of the
obligation.

130
 EXCEPTIONS Contract of Adhesion
1. Real Contracts A contract of adhesion is one wherein one
2. Example: Deposit, Commodatum party imposes a ready¬-made form of contract on
3. Formal Contracts the other in which almost all of the provisions
4. Contracts covered under the Statute of are drafted by one party, thereby reducing the
Frauds. participation of the other to affixing its signature or
to adhering to the contract. However, the
contract of adhesion is not invalid per se but is
e. Mutuality as binding as any other contract. The Court only
struck down contracts of adhesion as void when
Mutuality (Art. 1308) the weaker party has been imposed upon in
Article 1308. The contract must bind both dealing with the dominant bargaining party as to be
contracting parties; its validity or compliance reduced to the alternative of taking it or leaving
cannot be left to the will of one of them. it, being completely deprived of the opportunity
• Principle flows from legal tie (vinculum juris) to bargain on equal footing. (Villa Crista Monte
• Reason why a suspensive condition whose Realty & Development Corporation vs.
fulfillment depends solely on the will of the Equitable PCI, And The Ex-officio Sheriff Of
debtor is void (Article 1182) Quezon City And/Or His Deputy Or Authorized
• Validity or fulfillment may be left to (1) the Representatives G.R. No. 208336, November 21,
will of a third person, whose decision shall 2018)
not be binding until made known to both the
contracting parties (Art. 1309) or (2) chance. QUIAMBAO V. CHINA BANKING CORPORATION
• Determination of third person shall not be G.R. NO. 238462, MAY 12, 2021
binding until it has been made known to the J. Lopez
parties. In a contract of adhesion, one imposes a ready-
made contract to the other whose sole
• It shall not be obligatory if it is evidently
participation is either to accept or reject the
inequitable – the courts may decide what is
agreement. The parties do not bargain on equal
equitable under the circumstances. footing in the execution of this kind of contract
• Example: Loan contract provides that lender given that the debtor is limited "to take it or
can increase or decrease the interest every leave it" option and there is no room for
year as it may deem necessary. negotiation. However, such contract is not
• Escalation clauses are not invalid per se for entirely prohibited. The one adhering is free to
as long as they are not solely potestative give his consent inasmuch as he is also free to
but based on reasonable and valid reject it completely. Inarguably, the amendments
standards. to the REM are contracts of adhesion. It was
China Banking Corporation which drafted and
Article 1308 of the Civil Code expresses what is prepared the standard forms on which Elena and
known in law as the principle of mutuality of Daniel merely affixed their signatures. At the
contracts. It provides that "the contract must trial, it was established that Elena and Daniel
bind both the contracting parties; its validity or signed the amendments to the REM in blank.
compliance cannot be left to the will of one of They presented pro forma blank documents that
them." This binding effect of a contract on both China Banking BAR QUESTION (2018)
Corporation is giving to all
parties is based on the principle that the Newlyweds
borrowers forSam and Sienna
signature. had contracted
Corollarily, with
any ambiguity
Sangria Hotel
in the provisions of these documents must be
obligations arising from the contracts have the
for their wedding
interpreted againstreception. The Corporation.
China Banking couple was so
force of law between the contracting parties, and unhappy with the service, claiming, among other
there must be mutuality between them based things, that there was an unreasonable delay in the
essentially on their equality under which it is service of dinner and that certain items promised
repugnant to have one party bound by the were unavailable. The hotel claims that, while there
contract while leaving the other free therefrom. was a delay in the service of the meals, the same
The ultimate purpose is to render void a contract was occasioned by the sudden increase of guests to
containing a condition which makes its fulfillment 450 from the guaranteed expected number of 350,
dependent solely upon the uncontrolled will of as stated in the Banquet and Meeting Services
one of the contracting parties. (Allied Banking Contract. In the action for damages for breach of
BAR QUESTION (2016) contract instituted by the couple, they claimed that
Corp. v. CA, G.R. No. 124290, January 16, 1998)
B Bank, a large universal bank, regularly the Banquet and Meeting Services Contract was a
extends revolving contract of adhesion since they only provided the
credit lines to business establishments under number of guests and chose the menu. On the other
what it terms as socially responsible banking hand, the hotel's defense was that the proximate
cause of the complainant's injury was the
and private business partnership relations. All unexpected increase in their guests, and this was
loans that are extended to clients have a SUGGESTED ANSWER
common "Escalation Clause”, to wit: “B Bank Yes, it is a contract of adhesion. It is one wherein
hereby reserves its right to make successive one party
increases in interest rates in accordance with imposes a ready-made form of contract on the other
the bank’s adopted policies as approved by the in which almost all of the provisions are drafted by
one party, thereby reducing the participation of the
Monetary Board; Provided that each successive other to affixing its signature or to adhering to the
increase shall be with the written assent of the contract.
depositor.” X, a regular client of the bank,
contends that SUGGESTED ANSWER
the "Escalation Clause" is unfair, ALTERNATIVE
No, a contract of adhesion is not invalid per se as
The ”escalation clause” is valid because each they are binding as ordinary contracts. While the
successive Court has occasionally struck down contracts of
increase shall be with the written assent of the adhesion as void, it did so only when the weaker
depositor. This stipulation does not violate the party has been imposed upon in dealing with the
principle of mutuality of contracts and it would dominant bargaining party and reduced to the
only have been void if the supposed consent is alternative of taking it or leaving it, completely
given prior to the increase in interest rate. deprived of the opportunity to bargain on equal
131
 3. REAL VS. CONSENSUAL CONTRACTS; FORMS, expressed in the instrument purporting to
REFORMATION AND INTERPRETATION – CIVIL embody the agreement;
CODE, ARTS. 1356-1379 c. When by reason of fraud, mistake,
inequitable conduct or accident.
REAL V. CONSENSUAL
• Consensual contracts are perfected upon
meeting of the minds.
• Real Contracts require delivery for
perfection.

Article 1315. Contracts are perfected by mere

consent, and from that moment the parties are
bound not only to the fulfillment of what has
been expressly stipulated but also to all the
consequences which, according to their
nature, may be in keeping with good faith,
usage and law.

Article 1316. Real contracts, such as deposit,

pledge and commodatum, are not perfected
until the delivery of the object of the
obligation.

REFORMATION OF INSTRUMENTS
• Article 1359. When, there having been a
meeting of the minds of the parties to a
contract, their true intention is not
expressed in the instrument purporting to
embody the agreement, by reason of
mistake, fraud, inequitable conduct or
accident, one of the parties may ask for the
reformation of the instrument to the end
that such true intention may be expressed.
• If mistake, fraud, inequitable conduct, or
accident has prevented a meeting of the
minds of the parties, the proper remedy is
not reformation of the instrument but
annulment of the contract.
• Remedy by means of which a written
instrument is reformed so as to express or
conform to the real intention of the parties
when some error or mistake has been
committed.

Requisites of Reformation of Instruments

1. Meeting of the minds of the parties;
2. Their true intention is not expressed
in the instrument;
3. Failure to express true intention is due to
mistake, fraud, inequitable conduct or
accident; and
4. Clear and convincing proof of mistake,
accident, relative simulation, fraud, or
inequitable conduct.

REFORMATION V. ANNULMENT

REFORMATION ANNULMENT
Presupposes that The contract was not
there is a valid validly entered into
contract but the as when their minds
document/instrument did not meet or if the
executed does not consent was vitiated
express their true
intention
Gives life to the Involves a complete
contract by making nullification of the
the instrument contract
conform to the true
When Parties May Ask For Reformation
a. When there has been meeting of the
minds of the parties to a contract;
b. When their true intention is not
Rule In Case Mistake 1991, Lydia offered to sell the entire lot to
a) Must be mutual and refer not to the Ulysses Rudi Banico but he only agreed to buy
agreement itself but to the manner an area suitable for building a beach resort.
the true agreement is reflected or Accordingly, Ulysses' lawyer drafted a Deed of
expressed in the instrument. (1361) Absolute Sale over the 800-sq m portion of the
b) May be ordered at the instance of land for P350,000.00. On February 8, 1992,
either parties or his successors in Lydia and Ulysses signed the contract.
interest, otherwise it may only be
brought by the petition of the injured Upon payment of the purchase price, Ulysses
party or his heirs and assigns. [1368] took possession of the flat terrain and hired a
surveyor. However, Ulysses discovered that
Instances When There Can Be No Reformation: the land described in the deed of sale refers to
• Simple donations inter vivos wherein the elevated and rocky portion and not the flat
no condition is imposed; area which he bought and occupied. Ulysses
• Wills; confronted Lydia who promised to make
• When the real agreement is void. [Article necessary corrections. At that time, Lydia
1366] convinced Ulysses to buy an additional 400-
square meter portion of Lot No. 199 that is
Other Instances When Reformation Is Not The Remedy adjacent to the flat terrain for P160,000.00 on
• If mistake, fraud, inequitable conduct installment basis. Ulysses agreed on the
or accident has prevented a meeting condition that Lydia will amend the deed of
of the minds of the parties, the proper sale reflecting the correct location, area and
remedy is the annulment of the consideration.
contract. [Article 1359]
• When one of the parties brought an On October 19, 1992, the parties entered into
action to enforce the instrument a contract to sell over the 400-square meter
[Article 1367] - no subsequent lot. Ulysses gave initial payment and Lydia
reformation can be asked by him issued the corresponding receipt. Meantime,
based on the Principle of Estoppel. Ulysses began constructing the resort and paid
the remaining amount. In 1997, Ulysses asked
Lydia to prepare the amended deed of sale but
RUDI V STAGER
she refused because he still has an unpaid
G.R. NO. 232825, SEPTEMBER 16, 2020
balance of P12,000.00. Yet, Ulysses
J. Lopez
maintained that he already paid Lydia more
Facts: than P160,000.00.
Lydia Stager owns a 6,100-square
meter (sq m) real property identified as
Issue:
Lot No. 199 and situated in Barangay
WoN the Deed of Absolute Sale between Lydia
Manoc-Manoc, Boracay Island. The land
and Ulysses failed to reflect the true intention
adjoins the sea on its eastern part and
of the parties allowing reformation of the
is generally flat at the center but has
instrument.
an elevated rocky northern part. In

132
Ruling:
All the requisites for an action for reformation How to determine intention
of instruments to prosper are present. Intention to be determined according to
circumstances. Their contemporaneous and
First, there was a meeting of minds between subsequent acts shall be principally considered. (Art
the contracting parties. In executing the Deed 1371)
of Absolute Sale dated February 8, 1992, Lydia
conveyed the 800-sq m portion of Lot No. 199
to Ulysses who accepted it in consideration of
P350,000.00.

Second, the written instrument did not

express the true intention of the parties. It
bears emphasis that Ulysses bought an area
suitable for building a beach resort. Upon
payment of the purchase price, Ulysses
occupied the flat terrain, surveyed it and
began constructing the resort. Verily,
Ulysses would not possess the flat terrain if
it was not the lot sold to him. Besides, the flat
terrain is a proper location for building the resort
and not the elevated rocky northern part. At
any rate, Lydia should have objected when
Ulysses occupied the flat terrain if it were
true that she was still the owner of such
area.

Quite the contrary, Lydia promised to rectify

the erroneous description of the lot in the
deed of sale. She did not protest the
construction of the resort and instead, offered
Ulysses an additional 400-sq m portion of Lot
No. 199 that is adjacent to the flat terrain.
Moreover, Lydia acknowledged the transaction
over the 800-sq m lot before the barangay and
presented a notarized Deed of Absolute Sale
dated December 6, 2001, containing the
accurate description of the flat terrain. At this
juncture, we stress that Lydia never rebutted
these acts and even admitted them in her
answer.

Third, there is a mistake in identifying the

exact location of the lot which caused the
failure of the instrument to disclose the
parties' real agreement.

In Quiros v. Arjona, this Court held that the

inability to identify the exact location of the
inherited property did not negate the principal
object of the contract. This is an error
occasioned by the failure of the parties to
describe the subject property, which is
correctible by reformation and does not
indicate the absence of the principal object as
to render the contract void. In that case, the
object is determinable as to its kind and can
be determined without need of a new contract.

INTERPRETATION OF A CONTRACT
It is the determination of the meaning of the
terms or
words used by the parties in their contract.

Literal or plain meaning rule

It is a cardinal rule in the interpretation of
contracts that if the terms of a contract are
clear and leave no doubt upon the intention of
the contracting parties, the literal meaning of
its stipulation shall control.

Intention prevails
If words clearly appear to be contrary to the
evident intention of the parties, INTENTION
shall prevail. (Art 1370)
General Terms Rules when doubts cannot be settled
Even if the terms used in the 1. Doubts refer to incidental circumstances of
contract/agreement may be general, the a gratuitous contract, the least
interpretation should NOT ever be far transmission of rights and interests shall
from the intention of the parties. (Art prevail.
1372) 2. If the contract is onerous, the doubt shall
be settled in favor of the greatest
Construe in favor of validity/effectivity reciprocity of interests.
• When an agreement is susceptible of 3. If the doubts are cast upon the principal
several meanings, one of which would object of the contract in such a way that it
render it effectual, it should be given cannot be known what may have been the
that interpretation. intention or will of the parties, the contract
• If one interpretation makes a contract shall be null and void. (Art 1378)
valid or effective and the other makes
it illegal or meaningless, the former 4. DEFECTIVE CONTRACTS
interpretation is one which is
warranted. (Art 1373) a. Rescissible – Civil Code, arts. 1380-1389

Various stipulations read in harmony ‘Rescissible Contracts’ defined

• A contract must be interpreted as a Contracts which are valid but defective because
whole and the intention of the parties of injury or damage to either of the contracting
parties or to third persons, as a consequence of
is to be gathered from the entire
which it may be rescinded by means of a proper
instrument and not from particular
action for rescission.
words, phrases, or clauses.
• All provisions should, if possible, be so Article 1381. The following contracts are rescissible:
interpreted as to harmonize with each 1) Those which are entered into by guardians
other. (Art 1374 NCC) whenever the wards whom they represent
suffer lesion by more than one-fourth of the
Meaning in keeping with nature and object value of the things which are the object
of agreement thereof;
Words used in a contract which are 2) Those agreed upon in representation of
susceptible to two or more meanings absentees, if the latter suffer the lesion
shall be understood to follow that stated in the preceding number;
meaning which is most in keeping with 3) Those undertaken in fraud of creditors when
the nature and object of the agreement. the latter cannot in any other manner collect
(Art 1375 NCC) the claims due them;
4) Those which refer to things under litigation if
they have been entered into by the defendant
Construe against party who caused obscurity
without the knowledge and approval of the
The interpretation of obscure words or
litigants or of competent judicial authority;
stipulations in a contract shall not favor 5) All other contracts specially declared by law to
the party who caused the obscurity (Art be
1377) subject to rescission.

133
Article 1382. Payments made in a state of of creditors
insolvency for obligations to whose fulfillment is known as accion pauliana.
the debtor could not be compelled at the time
they were effected, are also rescissible.

Contracts that are rescissible (Arts. 1381-1382)

A. Lesion
1. Those entered into by guardians where the
ward suffers lesion of more than ¼ of the
value of the things which are objects
thereof.
2. Those agreed upon in representation of
absentees, if the latter suffer lesion by
more than ¼ of the value of the things
which are subject thereof.

B. Fraud
1. Those undertaken in fraud of creditors
when the latter cannot in any manner
claim what are due them. (accion pauliana)
2. Those which refer to things under litigation
if they have been entered into by the
defendant without the knowledge and
approval of the litigants and the court.
3. Payments made in a state of insolvency for
obligations whose fulfillment the debtor
could not be compelled at the time they
were effected.

Effect If Contract Entered Into By Guardian

If contract was entered into by guardian upon
securing court approval, the contract is not
rescissible notwithstanding alleged lesion. (Art.
1386)

If the guardian entered into a contract that

requires court approval and the same was not
secured, the contract is unenforceable under
Art. 1403 (1), irrespective of whether there is
lesion or not because it was entered into in the
name of another without authority.

Requisites of rescission:
1. Contract must be rescissible under
Arts. 1381 and 1382.
2. Party asking for rescission must have no
other legal means to obtain reparation for
the damages suffered by him. [Article
1383]
3. Person demanding rescission must be able
to return whatever he may be obliged to
restore if rescission is granted. [Article
1385]
4. Things which are the object of the contract
must not have passed legally to the
possession of a third person acting in
good faith [Article 1385]; and
5. Action must be brought within four years.
[Article 1389]

Requisites before a contract entered into in FRAUD

OF CREDITORS may be rescinded:
1. There is a credit existing prior to the
celebration contract;
2. There is fraud, or at least, the intent to
commit fraud to the prejudice of the
creditor seeking rescission;
3. Creditor cannot in any legal manner collect
his credit; and
4. Object of the contract must not be legally
in the possession of a third person who
did not act in bad faith.
5. The action to rescind contracts in fraud
PRESUMED IN FRAUD OF CREDITORS requires the existence of creditors at the
Article 1387. All contracts by virtue of time of the alleged fraudulent alienation,
which the debtor alienates property by and this must be proved as one of the bases
gratuitous title are presumed to have of the judicial pronouncement setting aside
been entered into in fraud of creditors, the contract. Without any prior existing
when the donor did not reserve sufficient debt, there can neither be injury nor fraud.
property to pay all debts contracted While it is necessary that the credit of the
before the donation. plaintiff in the accion pauliana must exist
• Alienations by onerous title are also prior to the fraudulent alienation, the date
presumed fraudulent when made by of the judgment enforcing it is immaterial.
persons against whom some judgment Even if the judgment be subsequent to the
has been rendered in any instance or alienation, it is merely declaratory, with
some writ of attachment has been retroactive effect to the date when the
issued. The decision or attachment credit was constituted.
need not refer to the property • For this presumption of fraud to apply, it must
alienated, and need not have been be
obtained by the party seeking the established that the donor did not leave
rescission. adequate properties which creditors might
• In addition to these presumptions, the have recourse for the collection of their
design to defraud creditors may be credits existing before the execution of the
proved in any other manner donation. Petitioner's alleged credit existed
recognized by the law of evidence. only a year after the deed of donation was
executed. She cannot, therefore, be said to
SIGUAN V. LIM have been prejudiced or defrauded by such
G.R. NO. 134685, NOVEMBER 19, 1999 alienation.
C. J. Davide, Jr.
• The action to rescind contracts in b. Voidable – Civil Code, arts. 1390-1402
fraud of creditors is known as accion
pauliana. For this action to prosper, Those which possess all the essential elements
the following requisites must be for validity but the consent is vitiated either by
present: (1) the plaintiff asking for lack of legal capacity of one of the contracting
rescission has a credit prior to the parties or by mistake violence, intimidation,
alienation, although demandable later; undue influence or fraud even though there
(2) the debtor has made a subsequent may have been no damage to the contracting
contract conveying a patrimonial parties.
benefit to a third person; (3) the
creditor has no other legal remedy to Cause - The following contracts are voidable or
satisfy his claim; (4) the act being annullable:
impugned is fraudulent; (5) the third 1. Those where ONE of the parties is
person who received the property incapable of giving consent to a contract;
conveyed, if it is by onerous title, has 2. Those where the consent is vitiated by
been an accomplice in the fraud. mistake, violence, intimidation, undue
• The general rule is that rescission influence of fraud (Art. 1390)

134
Fraud has been defined to include an • Further, the statute does not apply to actions
inducement through insidious machination. which are neither for specific performance of the
Insidious machination refers to a deceitful contract nor for the violation thereof. Take note
scheme or plot with an evil or devious purpose. that the provision mentions “unenforceable by
Deceit exists where the party, with intent to action.” The prohibition, thus, applies on actions
deceive, conceals or omits to state material which spring from the enforcement of the
facts and, by reason of such omission or contract.
concealment, the other party was induced to
give consent that would not otherwise have
been given. (R.S. Tomas v. Rizal Cement
Comp. G.R.No.173155)

Prescriptive Period for Action for Annulment

• Contracts entered into by incapacitated
person – within 4 years from the time
guardianship ceases;
• Where consent is vitiated by violence,
intimidation or undue influence – within 4
years from the time such violence,
intimidation or undue influence ceases;
• Where consent is vitiated by mistake or fraud
– within 4 years from the time of the discovery
of such mistake or fraud. [Article 1391]
Who May Institute Action For Annulment
General Rule: Action for annulment may be
instituted by all who are thereby obliged
principally or subsidiarily. A stranger to the
contract cannot institute an action for
annulment. [Article 1397]
Requisites For Action For Annulment:
a) Plaintiff must have interest in the contract;
b) Plaintiff is the victim and not the party
responsible for the vice or defect.
Ratification
• May be effected expressly or tacitly.
• It is understood that there is tacit ratification
if, with knowledge of the reason which
renders the contract voidable and such
reason having ceased, the person who has a
right to invoke it should execute an act
which necessarily implies and intention to
waive his right.
• It does not require conformity of the party who
has no right to bring the action.
• It cleanses the contract from all its defect
from the moment it was constituted.

Effects of Annulment
• In contract has not yet been consummated
parties shall be released from the
obligations arising therefrom;
• If the contract has already been
consummated, rules provided in Articles
1398-1402 shall govern.
• Arts. 1398-1399 – Obligation of mutual
restitution.
• Arts. 1400-1402 – Effect of failure to make
restitution.

c. Unenforceable – Civil Code, arts. 1403-1408

Those which cannot be enforced by proper

action unless
they are ratified, because, either:
1. They are entered into without or in excess
of authority (Art 1403 (1); Art. 1317);
2. They do not comply with the Statute of frauds
(Art. 1403 (2), see supra under Forms of
Contracts ;
3. Both contracting parties do not possess the
required legal capacity.

Note:
• The Statute of frauds applies only to
EXECUTORY CONTRACTS, not to those that are
partially or completely fulfilled.
Reason Contracts Become Unenforceable the contract.
1. They are entered into without or in
excess of authority [Article 1403 (1); Ratification of Contracts Infringing the Statute of Frauds
Article 1317]; Such contracts may be ratified by:
2. They do not comply with the Statute of • Failure to object to the presentation of oral
frauds [Article 1403 (2)]; evidence to prove such contracts; or
3. Both contracting parties do not • Acceptance of benefits under these contracts.
possess the required legal capacity. [Article 1405]
• Note: The unenforceability of a contract can
STATUTE OF FRAUDS only be assailed by parties thereto (Art. 1408).
a) An agreement that by its terms is not to This defense is personal to the party to the
be performed within a year from the agreement.
making thereof;
b) A special promise to answer for the d. Void – Civil Code, arts. 1409-1422
debt, default, or miscarriage of another;
c) An agreement made in consideration of In general, they are those which lack absolutely
marriage, other than a mutual promise either in fact or in law one or some of the
to marry; [Note: marriage settlements elements essential for its validity.
must be in writing for validity under the
Family Code]
Note: The defense of illegality of contract is not
d) An agreement for the sale of goods, available to third persons whose interests are not
chattels or things in action, at a price directly affected (Art. 1421)
not less than five hundred pesos;
e) An agreement for the leasing for a
A contract which is the direct result of a previous
longer period than one year, or for the
illegal contract, is also void and inexistent (Art.
sale of real property or of an interest
1422)
therein;
f) A representation as to the credit of a third
Contracts which are INEXISTENT and VOID AB INITIO
person.
1. Those whose cause, object or purpose is
contrary to law, morals, good customs, public
Application of Statute of Frauds order or public policy;
Applies to: Executory Contracts 2. Those which are absolutely simulated or fictitious;
3. Those whose cause or object did not exist at
Does not apply to: the time of the transaction;
• Contracts that are partially or completely 4. Those whose object is outside the commerce of men;
fulfilled; 5. Those which contemplate an impossible service;
• Actions which are neither for specific 6. Those where the intention of the parties
performance of the contract nor for the relative to the principal object of the contract
violation thereof. cannot be ascertained; and
• Note: The provision mentions 7. Those expressly prohibited or declared void by
“unenforceable by action.” The law.
prohibition, thus, applies on actions [Article 1409]
which spring from the enforcement of

135
Other Contracts Which Are Deemed Void XPN:
A contract which is the direct result of a • Payment of usurious interest.
previous illegal contract [Article 1422] • Payment of money or delivery of
property for an illegal purpose, where
Illegality of Contract the party who paid or delivered
The defense of illegality of contract is not repudiates the contract before the
available to third persons whose interests are purpose has been accomplished, or
not directly affected. [Article 1421] before any damage has been caused to
a third person
Summary of the Civil Effects of a Void Contract • Payment of money or delivery of property
• Neither party may seek to enforce a void made by an incapacitated person
contract, irrespective of the reason that • Agreement or contract is not illegal per se
made it void. but merely prohibited by law, and the
• Neither party may seek the aid of the law prohibition is designed for the plaintiff’s
or the courts, and both parties shall be protection
deemed in pari delicto. • Payment of any amount in excess of the
maximum price of any article or
Principle of In Pari Delicto [Articles 1411-1417] commodity fixed by law
General Rule: When the defect of a void • Contract whereby a laborer undertakes to
contract consists in the illegality of the work longer than the maximum number of
cause or object of the contract, and both of hours fixed by law
the parties are at fault or in pari delicto, the • Contract whereby a laborer accepts a
law refuses them any remedy and leaves wage lower than the minimum wage fixed
them where they are. by law
• In case of divisible contracts, the legal
terms may be enforced separately from
the illegal terms

VOID VOIDABLE RESCISSIBLE UNENFORCEABLE

As to cause of defect
Defect is caused by
Defect is caused by Defect is caused by Defect is caused by excess or lack of
lacking absolutely vitiation of consent or injury/damage either authority, does not
either in fact or in law in the legal capacity to one of the parties comply with the
one or some of the of one of the or to a third person. Statute of Frauds, or
elements of validity. contracting parties. both contracting
parties are
legally incapacitated.
As to effect
Valid and enforceable Valid and enforceable
GR: does not produce Cannot be enforced
until annulled by a until rescinded by a
any legal effect. by a proper action in
competent competent
court.
court. court.
As to prescription
Corresponding
Action/defense for
Action for annulment action for recovery if
the declaration of Action for rescission
or defense of there was total or
nullity or inexistence may
annullability may partial performance
does not prescribe. prescribe.
prescribe. under No. 1 or 3
of Art.
1403 may prescribe.
As to curability
Not cured by Cured by prescription Cured by prescription Not cured by
prescription prescription
As to ratification
Cannot be ratified Can be ratified Need not be ratified Can be ratified
Can be ratified
Assailed by a Assailed by a
contracting party or a Assailed only by contracting party or a Assailed only by
third party whose a third party who is a
rights are directly prejudiced or
affected. contracting party. damaged by contracting party.
the contract.
Direct or collateral attack
Direct or collateral Direct Direct Direct or collateral

136
 C. ESTOPPEL or obligation to speak
• A mere promise to perform or to omit at some
future time does not necessarily result in
Estoppel (Article 1431) estoppel (promissory estoppel); for this to
Estoppel is a condition or a state by virtue of exist, the promise must have been relied upon
which an admission or representation is and prejudice would result unless estoppel is
rendered conclusive upon the person applied
making it, and cannot be denied or
disproved as against the person relying
thereon.

Concept of Estoppel
• Estoppel is a bar which precludes a
person from denying or asserting
anything to the contrary of that which
has, in contemplation of law, been
established as the truth, either by the acts
of judicial or legislative officers or by his
own deed or representation, either
expressed or implied.
• It concludes the truth in order to prevent
fraud and falsehood, and imposes silence
on a party only when in conscience and
honesty he should not be allowed to
speak.

Kinds of Estoppel
1. Technical Estoppels
• Estoppel by record – the preclusion to deny
the truth of matters set forth in a record,
whether judicial or legislative, and also to
deny the facts adjudicated by a court of
competent jurisdiction
Example: the conclusiveness of a judgment
on the parties to a case
• Estoppel by deed – a bar which precludes one
party to a deed and his privies from
asserting as against the other party and
his privies any right or title in derogation
of the deed, or from denying the truth of
any material facts asserted in it; - a
written instrument is necessary for there
to be estoppel by deed

2. Equitable Estoppel or Estoppel in Pais

• It arises when one by his acts,
representations or admissions, or by his
silence when he ought to speak out,
intentionally or through culpable
negligence, induces another to believe
certain facts to exist, and such other
rightfully relies and acts on such belief, so
that he will be prejudiced if the former is
permitted to deny the existence of such
facts.
• It takes place in a situation where because if
a party’s action or omission, he is denied
the right to plead or prove an otherwise
important fact.

This may be estoppel:

• by conduct or by acceptance of benefits
• by representation or concealment
• by silence
• by omission
• by laches

Some doctrines:
• Conduct because of ignorance or mistake
does not result in estoppel
• Just because a person is silent does not
necessarily mean that he will be in
estoppel; there should have been a duty
Elements of Estoppel in Pais inaction but also some unfair injury would
In relation to the party sought to be estopped: result to him unless the action is held barred.
1. Conduct amounting to false representation
or concealment of material facts or at Instances of Estoppel under the Civil Code
least calculated to convey the impression 1. When a person who is not the owner of the
that the facts are otherwise than and thing sells or alienates and delivers it, and
consistent with those which the party later the seller or grantor acquires title
subsequently attempts to assert; thereto, such title passes by operation of law
2. Intent or at least expectation that this to the buyer or grantee (Art 1434)
conduct shall be acted upon, or at least 2. If a person in representation of another sells
influence the other party; or alienates a thing, the former cannot
3. Knowledge, actual or constructive, of the real subsequently set up his own title as against
facts the buyer or grantee (Art 1435)
3. A lessee or a bailee is estopped from
In relation to the party claiming the estoppel: asserting title to the thing leased or
1. Lack of knowledge or of the means of received, as against the lessor or bailor (Art
knowing the truth as to the facts in 1436)
question; 4. One who has allowed another to assume
2. Reliance, in good faith, upon the conduct or apparent ownership of personal property for
statement the purpose of making any transfer of it,
as to the facts in question; cannot, if he received the sum for which a
3. Action or inaction based thereon of such pledge has been constituted, set up his own
character as to change the position or title to defeat the pledge of property made by
status of the party claiming the estoppel the other to a pledgee who received the same
to his injury, detriment, or prejudice in good faith and for value (Art 1438)
5. Estoppel Against Owner: When in a contract
Admissions between third persons concerning immovable
A party may be estopped to insist upon a property, one of them is misled by a person
claim, assert an objection, or take a position with respect to the ownership of real right
which is inconsistent with an admission over the real estate, the latter is precluded
which he had previously made and in from asserting his legal title or interest
reliance upon which the other party has therein, provided all these requisites are
changed his position. present:
a) There must be fraudulent representation
or wrongful concealment of facts known
Silence or Inaction
to the party estopped;
This is sometimes referred to as estoppel by
b) The party precluded must intend that
“standing by” the other should act upon the facts as
or “laches.” misrepresented;
Mere innocent silence will not work an c) The party misled must have been
estoppel. There must also be some element unaware of the true facts; and
of turpitude or negligence connected with d) The party defrauded must have acted
the silence by which another is misled to his in
injury. But one who invokes this doctrine of
accordance with the misrepresentation. (Art
estoppel must show not only unjustified
1437)

137
6. An estoppel operates on the parties to the
transaction out of which it arises and their
privies.
7. The State is not estopped by mistake or
error on the part of its officials or agents;
the erroneous application and enforcement
of the law by public officers does not
prevent a subsequent correct application of
the statute.

Nature of Laches
Laches is failure or neglect, for an
unreasonable and unexplained length of time,
to do that which, by exercising due diligence,
could or should have been done earlier; it is
negligence or omission to assert a right within
a reasonable time, warranting a presumption
that the party entitled to assert it either has
abandoned or declined to assert it.

Elements of Laches
1. Conduct on the part of the defendant or of
one under whom he claims, giving rise to
the situation complained of;
2. Unreasonable delay in asserting
complainant’s rights after he had
knowledge of the defendant’s conduct and
after he has had an opportunity to sue;
3. Lack of knowledge or notice on the part of
the defendant that the complainant would
assert the right on which he bases his suit;
4. Injury or prejudice to the defendant in the
event relief is accorded to the complainant.

PRESCRIPTION V. LACHES
PRESCRIPTION LACHES
 Concerned  Concerned with the
with the effect
fact of of delay
delay  Principally a question
 A matter of inequity founded on
of time some change in the
 Statutory condition of the
 Applies property or the
relation of the parties
to law  Not statutory
 Based on  Applies to equity
a fixed  Not based on a fixed
time time

138
 VII.CONTRACT OF SALE
A. Nature and Form (Civil Code, arts. 1458- is desired which is not exactly what is proposed in the
1488) offer, such acceptance is not sufficient to generate
consent because any modification or variation from the
B. Capacity to Buy or Sell (Civil Code, arts. terms of the offer annuls the offer.
1489-1492)
C. Obligations of the Vendor (Civil Code, arts.
1459-1505)
D. Double Sale (Civil Code, art. 1544)
E. Effects of Loss of Thing Sold (Civil Code,
arts. 1493-1494)

A. NATURE AND FORM

(CIVIL CODE, ARTS. 1458-1488)
‘Contract of Sale’
By the contract of sale one of the contracting
parties obligates himself to transfer the
ownership and to deliver a determinate thing,
and the other to pay therefor a price certain in
money or its equivalent. A contract of sale
may be absolute or conditional. (Art. 1458
NCC)

ESSENTIAL REQUISITES
The essential elements of a contract of sale are the
following:
1. Consent or meeting of the minds - consent
to transfer ownership in exchange for the
price;
2. Determinate subject matter; and
3. Price certain in money or its equivalent.

1. CONSENT
meeting of the minds to transfer the
ownership in exchange for the price.
the seller must agree to receive a purchase
price certain from the buyer to whom he shall
deliver the thing purchased and,
the buyer must agree to pay a purchase price
certain to the seller who binds himself to
deliver to the buyer the thing purchased.
Article 1319. Consent is manifested by the
meeting of the offer and the acceptance upon
the thing and the cause which are to
constitute the contract. The offer must be
certain and the acceptance absolute. A
qualified acceptance constitutes a counter-
offer.

The buyer and the seller must agree on the

following:
a) the purchase price; and
b) the thing to be sold and paid for.

PALATTAO V. COURT OF APPEALS

G.R. No. 131726, May 7, 2002
J. Ynares-Santiago
Contracts that are consensual in nature, like a
contract of sale, are perfected upon mere
meeting of the minds. Once there is concurrence
between the offer and the acceptance upon the
subject matter, consideration, and terms of
payment, a contract is produced. The offer must
be certain. To convert the offer into a contract,
the acceptance must be absolute and must not
qualify the terms of the offer; it must be plain,
unequivocal, unconditional, and without variance
of any sort from the proposal. A qualified
acceptance, or one that involves a new proposal,
constitutes a counter-offer and is a rejection of
the original offer. Consequently, when something
F. Recto Law (Civil Code, art. 1484) Sale of a thing Sale of mere hope
G. Maceda Law (R.A. No. 6552) having potential or expectancy.
H. Rights of Unpaid Seller (Civil Code, existence.
arts. 1525-1535) Uncertainty is with Uncertainty is with
I. Conventional Redemption (Civil Code, regard to the quantity regard to the
arts. 1601 and 1606-1618); Legal and quality of the existence of the thing.
Redemption (Civil Code, arts. 1619- thing and not the
1623) existence of the thing.
J. Equitable Mortgage (Civil Code, arts. Object is a future Object is a present
1602- 1605) thing, which must be thing, which is the
determinate or hope or expectancy.
2. SUBJECT MATTER specific.
• determinate thing which is the object of the Sale is subject to a Sale is effective even
contract. suspensive condition – if the thing does not
• The seller and the buyer must agree to that the thing will come into existence,
sell and buy a thing certain. exist. Such that if it since the subject
• If they cannot agree as to which thing does not exist, there is matter is the hope
is to be sold and bought, there is no no contract for lack of itself, unless it is a
meeting of the minds. an object. vain hope.

Requisites for a Valid Subject Matter 3. PRICE CERTAIN IN MONEY OR ITS EQUIVALENT
• Within the commerce of men Requisites for a Valid Consideration
• Must be licit • Certain or ascertainable at the time of perfection
• Existing, Future, Contingent • In money or its equivalent
• Determinate or Determinable • Real

Article 1460. NCC states that the "requisite Payment of the Price
that the thing be determinate is satisfied The vendor shall not be bound to deliver the
if at the time the contract is entered into, thing sold, if the vendee has not paid him the
the thing is capable of being made price, or if no period for the payment has been
determinate without the necessity of a fixed in the contract.
new or further agreement between the
parties" General Rule: Delivery must be simultaneous
with the payment of the price
EMPTIO REI SPERATAE V. EMPTIO SPEI XPN: Even without payment, delivery must be
EMPTIO REI SPERATAE EMPTIO SPEI made if a period for payment has been fixed
by the parties.

139
Effect of non-payment of price preparation of the Deed and if its terms were not in
Non-payment of price does not cancel or consonance with his expectations, he could have
avoid the sale, as the sale is still considered easily insisted on the provisions he wanted. Thus,
perfected. But it is a cause for either: the RTC was correct in its findings.
a. Specific performance or
b. Rescission.

Effect of Inadequacy of Price

General Rule: Mere inadequacy of the price does
not affect the validity of the sale.
XPN:
1. Fraud, mistake, or undue influence
indicative of a defect in consent
2. Parties really intended a donation or some
other act
or contract
3. In Judicial Sale, where the inadequacy is
shocking to the conscience of man.

Effect where price is simulated

• Absolutely simulated – the sale is void
• False Price – relatively simulated; parties
are bound by true agreement.
• Where the deed of sale states that the
purchase price has been paid but in fact
has never been paid, the deed of sale is
null and void ab initio for lack of
consideration. Moreover, Art. 1471 of the
Civil Code, provides that “if the price is
simulated, the sale is void” (Catindig v.
Vda. De Meneses, Roxas v. CA, G.R. No.
165851, February 2, 2011)

CHINGKOE V. CHINGKOE
G.R. NO. 244076, MARCH 16, 2022
J. Lopez
Settled is the rule that notarized documents
enjoy the presumption of regularity which can
be overturned only by clear and convincing
evidence. Being duly notarized, the Deed of
Sale carries with it the presumption of
regularity, authenticity, and due execution. "It
has been the consistent rule that without
clear, convincing, and more than preponderant
evidence to controvert the presumption of
regularity, the evidentiary weight conferred
upon such public document with respect to its
execution, as well as the statements and the
authenticity of the signatures thereon, stand."
xxx

Given that Faustino failed to overturn the

presumption of regularity in favor of the Deed
of Sale, the attestation of payment in it
sufficiently proves that Felix has fully paid the
purchase price. Invariably, Faustino cannot
now be allowed to disavow the contractual
effects of the notarized deed. It is true that
parol evidence may be admitted to challenge
the contents of an agreement "where a
mistake or imperfection of the writing, or its
failure to express the true intent and
agreement of the parties, or the validity of the
agreement is put in issue by the pleadings."
However, evidence must be clear and
convincing and of sufficient credibility as to
overturn the written agreement. The flimsy
protestations of Faustino are not substantiated
by any compelling evidence. As borne out by
the notarized deed, a perfected contract of
sale was forged between the parties, and
Faustino received in full the payment of
P3,130,000.00 from Felix for the sale of the
subject property. Faustino even caused the
THREE STAGES XPN:
1. Negotiation – covers the period when 1. There has been partial performance/execution
parties indicate their interest but no 2. There has been failure to object to
concurrence of offer and presentation of evidence aliunde as to
acceptance. the existence of a contract without being
2. Perfection – meeting of the minds in writing and which is covered by the
upon the object and price. Statute of Fraud.
3. Consummation – parties perform their 3. When sales are effected through
respective undertakings. electronic commerce.

STATUTE OF FRAUDS | ART. 1403 (2) Public instrument is not required for validity of Sale
While contract of sale is consensual, of a piece of land
the Statute of Frauds requires certain The provision of Article 1358 of the Civil
sales transaction to be in writing or Code on the necessity of a public document
evidenced by some note or is only for convenience, not for validity or
memorandum, and subscribed by the enforceability. It is not a requirement for the
party charged, or by his agent to be validity of the contract of sale of a parcel of
enforceable: land that this be embodied in a public
a) An agreement that by its terms is instrument. Thus, the non-appearance of the
not to be performed within a year parties before the notary public who
from the making thereof; notarized the deed does not necessarily
b) An agreement for the sale of goods, nullify nor render the parties’ transaction
chattels or things in action, at a void ab initio. (Penalosa vs. Santos, 363
price not less than five hundred SCRA 545)
pesos, unless the buyer accept and
receive part of such goods and Note: Statute of Frauds that requires the sale
chattels, or the evidences, or some of land or any interest therein to be in
of them, of such things in action or writing for enforceability.
pay at the time some part of the • If sale is already enforceable due to
purchase money; but when a sale is doctrine of part performance (Statute of
made by auction and entry is made Frauds only applies to executory
by the auctioneer in his sales book, contracts), the remedy is under Article
at the time of the sale, of the 1357 of the Civil Code;
amount and kind of property sold, • right to compel the other to execute the
terms of sale, price, names of the proper public instrument so that a valid
purchasers and person on whose contract can be registered; this applies to
account the sale is made, it is a cases where contract is valid and
sufficient memorandum; and, enforceable, but specific form (public
c) An agreement for the sale of real instrument) is required for convenience
property or of an (registration).
interest therein.

140
 BAR QUESTION (1988)
One-half of a parcel of land belonging to A and B was 2. OPTION CONTRACT
sold by X to
Y for the amount of P1,500.00. The sale was OPTION CONTRACT
executed verbally. One year later, A and B sold the An accepted unilateral promise to buy or to sell a
entire land to X. Is the sale executed verbally by X determinate thing for a price certain is binding
to Y valid and binding? Reasons upon the promisor if the promise is supported by
SUGGESTED ANSWER a consideration distinct from the price. (Art.
The sale, although not contained in a public instrument1479, NCC)
or formal
writing, is nevertheless valid and binding for the
time-honored rule is that even a verbal contract of SPS. LITONJUA V. L&R CORPORATION
sale of real estate produces legal effects between G.R. No. 130722, March 27, 2000
the parties. In the premises, Art. 1434 of the Civil En Banc
Code, which declares that when a person who is not An accepted unilateral promise which specifies
the owner of a thing sells or alienates and delivers the thing to be sold and the price to be paid,
1. CONTRACT OF SALE VS. CONTRACT TO SELL when coupled with a valuable consideration
distinct and separate from the price, is what
CONTRACT TO SELL may properly be termed a perfected contract
A contract to sell may be defined as a bilateral of option. This contract is legally binding, and
contract whereby the prospective seller, while in sales, it conforms with the second
expressly reserving the ownership of the subject paragraph of Article 1479.
property despite delivery thereof to the
prospective buyer, binds himself to sell the said Observe, however, that the option is not the
property exclusively to the prospective buyer contract of sale itself. The optionee has the
upon fulfillment of the condition agreed upon, right, but not the obligation, to buy. Once the
that is, full payment of the purchase price. option is exercised timely, i.e., the offer is
accepted before a breach of the option, a
CORONEL V. COURT OF APPEALS bilateral promise to sell and to buy ensues and
G.R. NO. 103577OCTOBER 07, 1996 both parties are then reciprocally bound to
J. Melo comply with their respective undertakings.
• A contract to sell may not be considered as a
contract of sale because the first essential A negotiation is formally initiated by an offer.
element (Consent or meeting of the minds,
An imperfect promise (policitacion) is merely
that is, consent to transfer ownership in
an offer. Public advertisements or solicitations
exchange for the price) is lacking.
• In a contract to sell, the prospective seller
and the like are ordinarily, construed as mere
explicitly reserves the transfer of title to the invitations to make offers or only as proposals.
prospective buyer, meaning, the prospective These relations, until a contract is perfected,
seller does not as yet agree or consent to are not considered binding commitments.
transfer ownership of the property subject of Thus, at any time prior to the perfection of the
the contract to sell until the happening of an contract, either negotiating party may stop the
event, which for present purposes we shall negotiation. The offer, at this stage, may be
take as the full payment of the purchase price. withdrawn; the withdrawal is effective
• What the seller agrees or obliges himself to do is immediately after its manifestation, such as by
to fulfill his promise to sell the subject property its mailing and not necessarily when the
when the entire amount of the purchase price is offeree learns of the withdrawal.
delivered to him.
• In other words, the full payment of the Where a PERIOD is given to the offeree within which to
purchase price partakes of a suspensive
accept the offer, the following rules generally govern.
condition, the non-fulfillment of which prevents
the obligation to sell from arising and thus,
1.
If the period is not itself founded upon or
ownership is retained by the prospective seller supported by a consideration, the offeror is
without further remedies by the prospective still free and has the right to withdraw the
buyer. offer before its acceptance, or, if an
acceptance has been made, before the
CONTRACT TO SELL CONTRACT OF SALE offeror's coming to know of such fact, by
communicating that withdrawal to the
The ownership is The title passes to the offeree. The right to withdraw, however, must
reserved to the seller and buyer upon the not be exercised whimsically or arbitrarily;
is not to pass until full delivery of the thing otherwise, it could give rise to a damage
payment of the price. sold. claim under Article 19 of the Civil Code which
The title remains in the The vendor has lost ordains that "every person must, in the
vendor if the vendee does and cannot recover exercise of his rights and in the performance
not comply with the the ownership of the of his duties, act with justice, give everyone
condition precedent of thing sold until and his due, and observe honesty and good faith.
making payment at the unless the contract of 2. If the period has a separate consideration, a
time specified in the sale itself is resolved contract
contract. and set aside. of "option" is deemed perfected, and it
In case of non-payment In case of non- would be a breach of that contract to
of price, there can be no payment of price, an withdraw the offer during the agreed
action for specific action for specific period. The option, however, is an
performance but only for performance or for independent contract by itself, and it is to
damages. rescission can be filed be distinguished from the projected main
by injured party. agreement (subject matter of the option)
which is obviously yet to be concluded. If,
Failure to fully pay the
in fact, the optioner-offeror withdraws the
price is not a breach but
an event that prevents the
offer before its acceptance (exercise of the
obligation of the vendor to option) by the optionee-offeree, the latter
convey title from may not sue for specific performance on
the proposed contract ("object" of the
option) since it has failed to reach its offeror, however, renders himself liable for
own stage of perfection. The optioner- damages for breach of the option.

141
3. RIGHT OF FIRST REFUSAL 4. EARNEST MONEY IN CONTRACT OF SALE AND
CONTRACT TO SELL
It is a contractual grant, not for the sale of a
property, but for the first priority to buy the
• Earnest money is something of value given by
property in the event the owner decides to sell
the buyer to the seller to show that the buyer
the same. is really in earnest, and to bind the bargain.
It is based on the current offer to sell of the • It is actually a partial payment of the
seller or offer to purchase of any prospective purchase price and is considered as proof of
buyer. Only after the optionee fails to exercise the perfection of the contract.
its right of first priority under the same terms
and within the period contemplated could the Art. 1482. Whenever earnest money is given in a
owner validly offer to sell the property to a contract of sale, it shall be considered as part
third person, again, under the same terms as of the price and as proof of the perfection of
offered to the optionee (Paranaque Kings the contract.
Enterprises, Inc. v. CA, G.R. No. 111538,
February 26, 1997). OPTION MONEY EARNEST MONEY
Separate and Partial payment and
RIVIERA FILIPINA, INC. vs. CA distinct part of the purchase
G.R. No. 117355 - April 5, 2002 consideration from the price
J. De Leon, Jr. purchase
In order to have full compliance with the price
Sale is not yet Given only when there
contractual right granting petitioner the first
perfected is a perfected sale
option to purchase, the sale of the properties
for the price for which they were finally sold to The would-be-buyer is Buyer is bound to pay
not required to buy the balance of the price
a third person should have likewise been first
offered to the former. Further, there should be RIZALINO V. PARAISO DEVELOPMENT CORPORATION
identity of terms and conditions to be offered G.R. No. 157493, February 5, 2007
to the buyer holding a right of first refusal if J. Chico-Nazario
such right is not to be rendered illusory. Lastly, • Earnest Money and Option Money Distinguished
the basis of the right of first refusal must be From Each Other
the current offer to sell of the seller or offer to • Earnest Money in a Contract To Sell
purchase of any prospective buyer. "Earnest money" and "option money" are not the same but
distinguished thus:
Thus, the prevailing doctrine is that a right of a) earnest money is part of the purchase price,
first refusal means identity of terms and while option money is the money given as a
conditions to be offered to the lessee and all distinct consideration for an option contract;
other prospective buyers and a contract of b) earnest money is given only where there is
sale entered into in violation of a right of first already a sale, while option money applies to a
BAR QUESTION (1996)
refusal of another person, while valid, is sale not yet perfected; and,
Ubaldo is the owner of a building which hasc) when earnest money is given, the buyer is
rescissible.
been leased bound to pay the balance, while when the would-
by Remigio for the past 20 years. Ubaldo has be buyer gives option money, he is not required
repeatedly assured Remigio that if he should to buy, but may even forfeit it depending on the
decide to sell the building, he will give Remigio terms of the option.
the right of first refusal. On June 30, 1994, • Earnest money, under Article 1482 of the Civil
Ubaldo informed Remigio that he was willing to Code, is ordinarily given in a perfected
sell the building for P5 Million. The following day, contract of sale. However, earnest money may
Remigio sent a letter to Ubaldo offering to buy also be given in a contract to sell.
• In a contract to sell, earnest money is
the building at P4.5 Million. Ubaldo did not
generally intended to compensate the seller
reply. One week later, Remigio received a
for the opportunity cost of not looking for any
letter from Santos informing him that the other buyers. It is a show of commitment on
building has been sold to him by Ubaldo for P5 the part of the party who intimates his or her
Million, and that he will not renew Remigio's willingness to go through with the sale after a
lease when it expires. Remigio filed an action specified period or upon compliance with the
against Ubaldo and Santos for cancellation of conditions stated in the contract to sell.
the sale, and to compel Ubaldo to execute a • Opportunity cost is defined as "the cost of the
deed of absolute sale in his favor, based on his foregone alternative." In a potential sale, the
right of first refusal. seller reserves the property for a potential
(a) Will the action prosper? Explain. buyer and foregoes the alternative of
(b) If Ubaldo had given Remigio an option to searching for other offers.
purchase the building instead of a right of • This Court, in Philippine National Bank v.
first refusal, will your answer be the same? Court of Appeals, construed earnest money
Explain. given in a contract to sell as "consideration for
[seller's] promise to reserve the subject property
SUGGESTED ANSWER
for [the buyer]." The seller, "in excluding all
(a) No, the action to compel Ubaldo to execute other prospective buyers from bidding for the
the deed of subject property ... [has given] up what may
absolute sale will not prosper. The right of first have been more lucrative offers or better
refusal implies that the offer of the person in deals.”
whose favor that right was given must conform • Earnest money, therefore, is paid for the
with the same terms and conditions as those seller's benefit. It is part of the purchase price
given to the offeree. In this case, however, while at the same time proof of commitment
Remigio was offering only P4.5 Million instead by the potential buyer. Absent proof of a clear
of P5 Million. agreement to the contrary, it is intended to be
forfeited if the sale does not happen without
(b)Yes, the answer will be the same. The action the seller's fault. For this reason, the Court, in
Racelis v. Javier, ruled that "[t]here is no
unjust enrichment on the part of the could have found other offers or a better deal.
seller should the initial payment be The earnest money given by respondents is
deemed forfeited. After all, the owner the cost of holding this search in abeyance."

142
 B. CAPACITY TO BUY OR C. OBLIGATIONS OF THE VENDOR
SELL (CIVIL CODE, ARTS. 1489- (CIVIL CODE, ARTS. 1459-1505)
1492)
CAPACITY TO BUY AND SELL • One party is incapacitated – voidable
General Rule: All persons who are
authorized to obligate themselves, may In case of Necessaries referred to in Art 290
enter into a contract of sale. Disqualifications: Where necessaries are those sold and delivered
1. Husband and wife cannot sell property to a minor or other person without capacity to
to each act, he must pay a reasonable price therefor. (Art
other; Except: Separation of property 1489, NCC)
2. The following cannot acquire by purchase,
even at public or judicial auction, either in
person or through another:
a) Guardian, the property of the person
or persons who may be under his
guardianship
b) Agents, the property whose
administration or sale may have been
entrusted to them, unless the consent
of the principal has been given;
c) Executors and administrators, the
property of the estate under
administration.
d) Public officers and employees, the
property of the State or of any
subdivision thereof, or of any
government-owned or controlled
corporation, or institution, the
administration of which has been
intrusted to them; this provision shall
apply to judges and government
experts who, in any manner
whatsoever, take part in the sale.
e) Justices, judges, prosecuting
attorneys, clerks of superior and
inferior courts, and other officers and
employees connected with the
administration of justice, the property
and rights in litigation or levied upon
an execution before the court within
whose jurisdiction or territory they
exercise their respective functions;
this prohibition includes the act of
acquiring by assignment and shall
apply to lawyers, with respect to the
property and rights which may be the
object of any litigation in which they
may take part by virtue of their
profession.
f) Any others specially disqualified by
law. (Arts 1490-1491)

Kinds of Incapacity
1. Absolute – in case of persons who cannot
bind themselves
2. Relative – when certain persons, under
certain circumstances, cannot buy
certain property (Wolfson v. Estate of
Martinez, G.R. No. L-5970, October 13,
1911)
3. Special Disqualification – Art 1491-1492, NCC

Absolute Incapacity
• Minors
• Insane or Demented
• Deaf-mutes who do not know how to write
• Civil Interdiction
• Judicially declared incompetent

Effect of Incapacity
• Both parties are incapacitated –
unenforceable
The vendor has the obligation to: normally done where the object is bulky
• Transfer ownership of the thing sold or difficult to move.
• Deliver the thing including • Quasi-traditio - In case of incorporeal rights,
accessions and accessories the vendee use his rights as new owner
• Warrant the thing against eviction and with the consent of the vendor.
hidden defects
• Take care of the thing pending delivery PUBLIC INSTRUMENT
• Pay for the expenses, unless otherwise • Article 1498. When the sale is made
stipulated through a public instrument, the
execution thereof shall be equivalent to
Delivery of the subject matter the delivery of the thing which is the
Article 1497. The thing sold shall be object of the contract, if from the deed the
understood as delivered, when it is contrary does not appear or cannot
placed in the control and possession of clearly be inferred.
the vendee. • With regard to movable property, its
delivery may also be made by the delivery
Two types of Delivery of the keys of the place or depository
1. Actual – physical delivery where it is stored or kept.
2. Constructive – execution of public • Article 1501. With respect to incorporeal
instrument, traditio symbolica, property, the provisions of the first
traditio constitutum possessorium, paragraph of article 1498 [execution of
traditio brevi manu, traditio longa public instrument] shall govern. In any
manu, and quasi-traditio other case wherein said provisions are not
applicable, the placing of the titles of
• Traditio Symbolica - Parties make use of ownership in the possession of the vendee
a token symbol to represent the or the use by the vendee of his rights,
thing delivered. with the vendor's consent, shall be
• Traditio Constitutum Possesorium - Vendor understood as a delivery.
continues in possession of the thing
sold not as owner but in some other “ON SALE OR RETURN”
capacity. Article 1502. When goods are delivered to the
• Traditio brevi manu - Vendee has buyer "on sale or return" to give the buyer
already in the possession of the an option to return the goods instead of
thing sold by virtue of another title. paying the price, the ownership passes to
• Traditio longa manu - This form of the buyer on delivery, but he may revest the
delivery is effected by the seller ownership in the seller by returning or
pointing out the object that will be tendering the goods within the time fixed in
sold to the buyer, with the intention the contract, or, if no time has been fixed,
that ownership shall pass. This is within a reasonable time.

143
“ON APPROVAL OR ON TRIAL OR ON SATISFACTION” when the loss occurs thru a fortuitous event only
Article 1502. xxx holds true when the obligation consists in the
When goods are delivered to the buyer on delivery of a determinate thing and there is no
approval or on trial or on satisfaction, or other stipulation holding him liable even in case of
similar terms, the ownership therein passes to fortuitous event. It does not apply when the
the buyer: obligation is pecuniary in nature.
(1) When he signifies his approval or
acceptance to the seller or does any other
act adopting the transaction;
(2) If he does not signify his approval or
acceptance to the seller, but retains the
goods without giving notice of rejection,
then if a time has been fixed for the return
of the goods, on the expiration of such
time, and, if no time has been fixed, on the
expiration of a reasonable time. What is a
reasonable time is a question of fact.

RISK OF LOSS/RES PERIT DOMINO

• The owner bears the loss
• When the loss occurred before perfection of
sale, the thing perishes with the owner –
Res perit domino (NCC, Art. 1504)
• When the loss occurred after perfection but
before delivery, the risk of loss is borne by
the seller because it is delivery that
transfers ownership except contrary
stipulation in the contract.
• When the loss occurred after delivery, the
buyer bears the risk of the loss (Res perit
domino)

Article 1504. Unless otherwise agreed, the goods

remain at the seller’s risk until the ownership
therein is transferred to the buyer. But when
ownership therein is transferred to the buyer,
the goods are at the buyer’s risk whether
actual delivery has been made or not, except
that:
(1) Where delivery of the goods has been
made to the buyer or to a bailee for the
buyer, in pursuance of the contract and the
ownership in the goods has been retained
by the seller merely to secure performance
by the buyer of his obligations under the
contract, the goods are at the buyer's risk
from the time of such delivery;
(2) Where actual delivery has been delayed
through the fault of either the buyer or seller
the goods are at the risk of the party in fault.

GAISANO CAGAYAN, INC. V. INSURANCE COMPANY

OF NORTH AMERICA
G.R. No. 147839, June 8, 2006
J. Austria-Martinez
Petitioner argues that IMC bears the risk of
loss because it expressly reserved
ownership of the goods by stipulating in the
sales invoices that "[i]t is further agreed that
merely for purpose of securing the payment
of the purchase price the above described
merchandise remains the property of the
vendor until the purchase price thereof is
fully paid.”

The present case clearly falls under paragraph

(1), Article 1504 of the Civil Code. xxx Thus,
when the seller retains ownership only to
insure that the buyer will pay its debt, the risk
of loss is borne by the buyer. Accordingly,
petitioner bears the risk of loss of the goods
delivered.

The rationale for this is that the rule that an

obligor should be held exempt from liability
Under Article 1263 of the Civil Code, "[i]n be observed that "S" had already delivered the
an obligation to deliver a generic thing, the car to "X", the third party depositary or bailee. It
loss or destruction of anything of the same was agreed that ownership is retained by "S" until
kind does not extinguish the obligation." If delivery to "X". Therefore, in effect, there was
the obligation is generic in the sense that already a transfer of the right of ownership over
the object thereof is designated merely by the car to "B". Consequently, "B" shall assume
its class or genus without any particular the fortuitous loss of the car. As a matter of fact,
designation or physical segregation from all even if it was agreed that "S" shall retain the
others of the same class, the loss or ownership of the car until the purchase price has
destruction of anything of the same kind been paid by "B", the end result will still be the
even without the debtor's fault and before same. Since eventually, the purpose is to secure
he has incurred in delay will not have the performance by the buyer of his obligation to pay
effect of extinguishing the obligation. This the purchase price, by express mandate of the
rule is based on the principle that the law, the fortuitous loss of the car shall be
genus of a thing can never perish. Genus assumed by "B". (Note: The above answer is
nunquan perit. An obligation to pay money based on Art.
is generic; therefore, it is not excused by 1504 of the Civil Code.)
fortuitous loss of any specific property of
the debtor.
144
Lost in part only
The vendee may choose between
withdrawing from the contract and
demanding the remaining part, paying its
price in proportion to the total sum agreed
upon

Specific Goods
Where the parties purport a sale of specific
goods, and the goods without the
knowledge of the seller have perished in
part or have wholly or in a material part so
deteriorated in quality as to be
substantially changed in character, the
buyer may at his option treat the sale:
1. As avoided; or
2. As valid in all of the existing goods or
in so much thereof as have not
deteriorated, and as binding the buyer
to pay the agreed price for the goods in
which the ownership will pass, if the
sale was divisible.
BAR QUESTION (1999)
A granted B the exclusive right to sell his brand of
Maong pants
in Isabela, the price for his merchandise payable
within 60 days from delivery, and promising B a
commission of 20% on all sales. After the delivery
of the merchandise to B but before he could sell
any of them, B’s store in Isabela was completely
burned without his fault, together with all of A's
pants. Must B
pay A for his lost pants? Why?
SUGGESTED ANSWER
The contract between A and B is a sale not an
agency to sell
because the price is payable by B upon 60 days
from delivery even if B is unable to resell it. As a
buyer, ownership passed to B upon delivery and,
under Art. 1504 of the Civil Code, the thing
perishes for the owner. Hence, B must still pay
the price.
BAR QUESTION (1981)
"S", an American resident of Manila, about to
leave on a
vacation, sold his car to "B" for U.S. $2,000.00,
the payment to be made ten days after delivery
to "X", a third party depositary agreed upon, who
shall deliver the car to "B" upon receipt by "X" of
the purchase price. It was stipulated that
ownership is retained by "S" until delivery of the
car to "X". Five days after delivery of the car to
"X", it was destroyed in a fire which gutted the
house of "X", without the fault of either "X" or
"B". Is buyer "B" still legally obligated to pay the
purchase price? Explain.
SUGGESTED ANSWER
"B" is still legally obligated to pay the purchase
price. It must
 D. DOUBLE SALE (CIVIL CODE, ART. 1544) some other person in the property
Note: PRIOR TEMPORE, POTIOR JURE - This
principle applies in a situation where Art. 1544 is
• When the same object of the sale is sold to inapplicable due to absence of requisite/s.
different vendees.
• Governed by Article 1544 of the Civil Code. Requisite: The only requisite of this rule is priority
in time. The only one who can invoke this is the
Art. 1544. If the same thing should have been first vendee.
sold to different vendees, the ownership shall
be transferred to the person who may have
first taken possession thereof in good faith, if it
should be movable property.
Should it be immovable property, the
ownership shall belong to the person acquiring
it who in good faith first recorded it in the
Registry of Property.
Should there be no inscription, the
ownership shall pertain to the person who in
good faith was first in the possession; and,
in the absence thereof, to the person who
presents the oldest title, provided there is good
faith.
Requisites:
a) 2 or more sales transactions must
constitute valid sales transactions;
b) 2 or more sales transactions must pertain
to exactly the same subject matter;
c) 2 or more buyers at odds over the rightful
ownership of the subject matter must each
represent conflicting interests; and
d) 2 or more buyers at odds over the rightful
ownership of the subject matter must have
bought from the very same seller.
CHENG V. GENATO
G.R. NO. 129760, DECEMBER 29, 1998
J. Martinez
Requisites of Double Sale
• The two (or more) sales transactions in the
issue must pertain to exactly the same
subject matter, and must be valid sales
transactions.
• The two (or more) buyers at odds over the
rightful ownership of the subject matter
must each represent conflicting interests;
and
• The two (or more) buyers at odds over the
rightful ownership of the subject matter
must each have bought from the very same
seller.
EFFECT OF DOUBLE SALE
1. Movable – Owner who is first to possess in
good faith shall be preferred
2. Immovable
a) First to register in good faith
b) No registration – first to possess in good
faith
c) No registration & no possession in good
faith –
person who presents oldest title in good
faith Note: Art. 1544 of the Civil Code has no
application to lands not registered with the
Torrens system. If the sale is not registered, it is
binding only as between the seller and the
buyer, it does not affect innocent third
persons. Further, this does not also apply to
contract to sell.
’Purchaser in Good Faith’ defined
One who buys the property without notice that
some other person has a right to, or interest in
such property; and pays a full and fair price for
the same at the time of such purchase, or
before he has notice of the claim or interest of
 BAR QUESTION (2001) someone else, acted in bad faith.
On June 15, 1995, Jesus sold a parcel of (Article
registered 1544, NCC)
land to Jaime. On June 30, 1995, he sold
the same land to Jose. Who has a better right E. EFFECTS OF LOSS OF THING SOLD
if: (CIVIL CODE, ARTS. 1493-1494)
a. the first sale is registered ahead of
the second sale, with knowledge of the Loss of Object Before Sale
latter. Why?; Refers to a case of loss of the object even
b. the second sale is registered ahead of before the
the first perfection of the contract.
sale, with knowledge of the latter? Why?
SUGGESTED ANSWER Effect of Loss of Object Before Sale
(a) The first buyer has the better right if his • General Rule: The contract shall be void in
sale was case of loss of object before the
first to be registered, even though the contract has been perfected.
first buyer knew of the second sale. The • Rationale: Because there is no cause or
fact that he knew of the second sale at consideration.
the time of his registration does not
make him as acting in bad faith Who bears the loss of the object?
because the sale to him was ahead in The seller will have to bear the loss.
time, hence, has a priority in right.
What creates bad faith in the case of COMPLETELY LOST V. PARTIALLY LOST
double sale of land is knowledge of a
COMPLETELY LOST PARTIALLY LOST
previous sale.
Contract shall be Withdrawal/Avoided (or
deemed rescission of the
(b) The first buyer is still to be preferred, void contract)
where the second sale is registered Specific
ahead of the first sale but with performance as
knowledge of the latter. This is because to remainder by
the second buyer, who at the time he payment
registered his sale knew that the or proportional price
property had already been sold to
 BAR QUESTION (2012)
Which phrase most accurately
completes the
statement – If at the time the contract of
sale is perfected, the thing which is the
object of the contract has been entirely
lost:
a)the buyer bears the risk of loss.
b)the contract shall be without any effect.
c) the seller bears the risk of loss.
d)the buyer may withdraw from the contract.
SUGGESTED ANSWER
b) the contract shall be without any
effect. (Basis
Article 1493 NCC)

145
 F. RECTO LAW (CIVIL CODE, ART. 1484) • Sales to tenants under R.A. No. 3844, as
amended by
Recto Law (Sale of Personal Property in Installment) R.A. No. 6389.
• This covers contracts of sale of personal
property by installment (Act No. 4122). It
is also applied to contracts purporting to
be leases of personal property with option
to buy, when the lessor has deprived the
lessee of the possession or enjoyment of
the thing (PCI Leasing and Finance Inc. v.
Giraffe- X Creative Imaging, Inc. G.R. No.
142618, July 12, 2007)
• Note: Recto law applies only to sale
payable in installments and not to sale
where there is an initial payment and the
balance is payable in the future, because
such is a straight sale, not a sale by
installments.

Alternative remedies of the Seller:

• Specific performance – Exact fulfillment
should the buyer fail to pay. If availed,
the unpaid seller cannot anymore
choose other remedies.
• Rescission – Cancel the sale if buyer fails to
pay 2 or more installments.
• Foreclosure on chattel mortgage if buyer fails to
pay 2 or more installments. He shall have
no further action against the purchaser to
recover any unpaid balance of the price.
Any agreement to the contrary shall be
void.

Effect of filing a case for specific performance

• The seller can collect from the buyer for the
sum of money the buyer failed to pay. In
case the sum collected is insufficient,
the court can still order for the levy of
the property subject of the sale
transaction to cover the balance.
• Moreover, if the action instituted is for
specific performance and the mortgaged
property is subsequently attached and
sold, the sale thereof does not amount to
a foreclosure of the mortgage; the seller-
creditor is entitled to a deficiency
judgment (Industrial Finance Corp v.
Ramirez, G.R. No. L-43821, May 26, 1977)

G. MACEDA LAW (R.A. NO. 6552)

Republic Act No. 6552 or also known as Realty

Installment Buyer Act.
Legislation written by Ernesto Maceda and was
approved on August 26, 1972.

Purpose of the Law

To protect property owners from unfavorable
terms that may occur from sale transactions
funded by an installment agreement by
describing the rights of the buyers regarding
refund entitlement and grace periods.

Transactions Covered
All transactions or contracts involving the sale
or financing of real estate on installment
payments, including residential condominium
apartments [Sec. 3, Maceda Law]

Exclusions to Coverage
• Industrial Lots
• Commercial Buildings
Features of Maceda Law contract. [Sec. 5, Maceda Law]. The deed
1. After paying installment for at least 2 of sale or assignment shall be done by
years, buyer is entitled to a mandatory notarial act.
grace period of 1 month for every year 3. The buyer shall have the right to pay in
of installment to pay unpaid installment advance any installment or the full unpaid
without interest balance of the purchase price any time
2. In case installments paid were less than without interest and to have such full
2 years, seller shall give buyer a grace payment of the purchase price annotated
period of not less than 60 days. in the certificate of title covering the
3. If buyer fails to pay at expiration of property. [Sec. 6, Maceda Law]
grace period, seller may cancel
contract after 30 days from notice of PRYCE PROPERTIES CORP. V. NOLASCO
cancellation through Notarial Notice of G.R. NO. 203990, AUGUST 24, 2020
Cancellation. (Rillo v. CA, G.R. No. J. Hernando
125347, June 19, 1997). Basic remedies of a defaulting buyer under Section 6
4. After the lapse of the grace period, of RA 6552:
seller may cancel the contract provided  Claim refund or pay in advance or in full.
he pays the buyer the CASH • It has been held that in the absence of a
SURRENDER VALUE which is equivalent lawful rescission of a contract governed
to 50% of all payments, and after five by RA 6552, the same remains valid and
years of installment an additional 5% for subsisting.
every year but not to exceed 90% of • We affirm the courts below in directing
total payments made. the refund of the deposit payments made
5. The cancellation of the contract takes by Nolasco to Pryce. While this buyer's
effect 30 days from service of notarial option to claim refund is not explicitly
notice of cancellation and upon mentioned in RA 6552, equity
payment of the cash surrender value considerations have already filled up this
legal vacuum as declared in Orbe. In the
General Rule: Stipulation in any contract said case, the buyer therein failed to
which is contrary to the provisions of make at least two years of installment
Maceda Law shall be declared null and void. payments in consideration of a purchase
[Sec. 7, Maceda Law] of a lot. The seller, however, failed to
cancel their contract through a valid
Other Rights of Buyer notarial act and sold the lot in issue to a
1. The buyer shall have the right to sell his third person. The Court, finding the
rights or assign the same to another provisions of RA 6552 applicable to the
person. [Sec. 5, Maceda Law] transaction, ordered the refund of the
2. The buyer shall have the right to amounts actually paid by the buyer,
reinstate the contract by updating the justifying the same with equitable
account during the grace period and reasons as laid out by relevant
before actual cancellation of the jurisprudence.

146
 • The price is payable on a certain day,
irrespective of delivery or of transfer of title and
the buyer wrongfully neglects or refuses to pay
such price
UNPAID SELLER • The goods cannot readily be resold for a
The seller of goods is deemed to be an unpaid seller when: reasonable price, and the buyer wrongfully
1. The whole of the price has not been paid or refuses to accept the goods, whether or not
tendered. ownership has passed.
2. A bill of exchange or other negotiable
instrument has been received as conditional
payment, and the condition on which it was
received has been broken by reason of the
dishonor of the instrument, the insolvency of
the buyer, or otherwise.

REMEDIES OF UNPAID SELLER

a. Possessory lien
• Seller not bound to deliver object of the
contract of sale if buyer has not paid him
the price.
• This is a lien on the goods, or the right to
retain them for the price while he is in
possession of them.
• Instances:
 When the goods sold without
stipulation as to credit.
 Goods sold on credit, but term of
credit has expired.
 Buyer becomes insolvent. (Art 1527)

b. Stoppage in Transitu
• It is a right which the seller of goods on
credit has to recall them or retake them
while they are in the possession of a carrier
or other middleman who received them for
delivery to the buyer, on discovery of
insolvency of the buyer. (Art 1530)
• Requisites:
a. Unpaid seller
b. Title of goods must have passed to the
buyer;
c. Goods must be in transit
d. Insolvent buyer
e. Seller must either actually take
possession of the goods sold or give
notice of his claim to the carrier or
other person in possession;

c. Special right of resale

• Unpaid seller may exercise this right if he
has a right of lien or he has stopped the
goods in transitu in the following authorized
causes:
a. Goods are perishable;
b. Stipulated the right of resale in case
of default,
or
c. Buyer in default for unreasonable time.
(Art 1533)

d. Special right to rescind

• Unpaid seller may exercise having the right
of lien or he has stopped the goods in
transitu may rescind the transfer of title
and resume ownership in the following
cases:
a. Seller expressly reserved right to
rescind in case of buyer’s default;
b. Buyer’s default for an unreasonable
length of time (Art 1597)

e. Instances when the Seller may maintain an Action for

the Price
• The ownership of the goods has passed to
the buyer and he wrongfully neglects or
refuses to pay for the goods according to
the terms of the contract of sale
f. InstanceH. RIGHTS
when OF UNPAID
the Seller SELLER
may maintain an • Period to redeem expired (+there is a suit on
Action for(CIVIL
Damages the nature of the contract: 30 Days from final
CODE, ARTS. 1525- judgment (Art 1606)
The buyer wrongfully neglects or refuses
to accept 1535)
and pay for the goods

In General, sales are extinguished by the same I. CONVENTIONAL REDEMPTION

causes as all other obligations: (CIVIL CODE, ARTS. 1601 AND 1606-1618);
1. Payment/performance
2. Prescription LEGAL REDEMPTION
3. Loss of thing due (CIVIL CODE, ARTS. 1619-1623)
4. Condonation/remission Effect if no redemption was made
5. Confusion/merger
Art. 1607. In case of real property, the
6. Compensation
consolidation of ownership in the vendee by
7. Rescission
virtue of the failure of the vendor to comply
8. Annulment
with the provisions of article 1616 shall not be
9. Novation
recorded in the Registry of Property without a
10. Fulfillment of the Resolutory condition
judicial order, after the vendor has been duly
11. Redemption (Conventional or Legal)
heard
CONVENTIONAL REDEMPTION
Conventional redemption shall take place SPS. VELARDE V. HEIRS OF CONCEPCION
when the vendor reserves the right to G.R. NO. 190057, OCTOBER 17, 2022
repurchase the thing sold, with the J. M. Lopez
obligation to comply with the provisions of "The essence of a pacto de retro sale is that
article 1616 and other stipulations which title and ownership of the property sold are
may have been agreed upon. (Art 1601, immediately vested in the vendee a retro,
NCC) subject [only] to the resolutory condition of
repurchase by the vendor a retro within the
Requisites for a Vendor to Avail the Right of Repurchase stipulated period." Once the vendor a retro
Vendor must return to the vendee: fails to redeem the property within the agreed
a. The price of the sale period, absolute ownership is vested upon the
b. The expenses of the contract, and any vendee a retro by operation of law. Here, as
other legitimate payments made by agreed upon under the Deed of Sale with Right
reason of the sale; of Repurchase, Concepcion had five years or
c. The necessary and useful expenses until 1983 to repurchase the properties, but as
made on the thing sold. [Article 1616] admitted in the quitclaim and waiver of rights,
she failed to do so. Without anything more
Period of redemption required from both parties, thus, irrevocable
• When there is a period agreed upon: title to the properties were automatically
not to exceed 10 years transferred to Isagani in 1983 since the
• No period agreed upon: 4 years. resolutory condition was not fulfilled.

147
For instance, our pronouncement in Spouses Justice Edgardo
Cruz v. Leis, is highly-instructive: Paras, is highly instructive:
It bears stressing that notwithstanding Article 1607, the
recording in the Registry of Property of the consolidation
of ownership of the vendee is not a condition sine qua
non to the transfer of ownership. Petitioners are the
owners of the subject property since [none of the
vendors with right to repurchase] redeemed the same
within the one-year period stipulated in the "Kasunduan."
The essence of a pacto de retro sale is that title and
ownership of the property sold are immediately vested in
the vendee a retro, subject to the resolutory condition of
repurchase by the vendor a retro within the stipulated
period. Failure thus of the vendor a retro to perform said
resolutory condition vests upon the vendee by operation
of law absolute title and ownership over the property
sold. As title is already vested in the vendee a retro, his
failure to consolidate his title under Article 1607 of the
Civil Code does not impair such title or ownership for the
method prescribed thereunder is merely for the purpose
of registering the consolidated title.

LEGAL REDEMPTION
It is the right to be subrogated, upon the same
terms and conditions stipulated in the
contract, in the place of one who acquires a
thing by purchase or dation in payment, or
by any other transaction whereby ownership
is transmitted by onerous title.

INSTANCES OF LEGAL REDEMPTION

1. Sale of a co-owner of his share to a
stranger (NCC,
Art. 1620);
2. When a credit or other incorporeal right in
litigation is sold (NCC, Art. 1634)
3. Sale of an heir of his hereditary rights to a
stranger (NCC, Art. 1088)
4. Sale of adjacent rural lands not
exceeding 1 hectare (NCC, Art. 1621)
5. Sale of adjacent small urban lands bought
merely for speculation (NCC, Art. 1622)

NOTICE REQUIREMENT
Art. 1623. The right of legal pre-emption or
redemption shall not be exercised except
within thirty days from the notice in writing by
the prospective vendor, or by the vendor, as
the case may be. The deed of sale shall not be
recorded in the Registry of Property, unless
accompanied by an affidavit of the vendor that
he has given written notice thereof to all
possible redemptioners.
"The right of redemption of co-owners
excludes that of
adjoining owners."

Note: Knowledge is insufficient – the mere

fact that the redemptioner is already aware
of the existence of the sale will not excuse
the written notice. (Barcellano v. Banas et.
al. G.R. No. 165287, September 14, 2011)

RAMA & LAURON V. SPS. NOGRA & SPS. RAMA

G.R. NO. 219556, SEPTEMBER 14, 2021
J. M. Lopez
Indeed, Article 1623 is clear. A cardinal rule in
statutory construction is that when the law is
clear and free from any doubt or ambiguity,
there is no room for construction or
interpretation;

Our ruling in Barcellano v. Bañas, citing

Justice Edgardo Paras, referring to the origins of showing that the co-owners already had sufficient
the requirement, would explain in his knowledge of the sale and they were guilty of
commentaries on the New Civil Code that despite laches in the exercise of their redemption right.
actual knowledge, the person having the right to Absent these factors, the strict letter of the
redeem is STILL entitled to the written notice. law must apply — the written notice from
Both the letter and the spirit of the New Civil the seller remains to be an indispensable
Code argue against any attempt to widen the requirement to commence the running of
scope of the "written notice" by including therein the 30-day redemption period.
any other kind of notice such as an oral one, or
‘Equitable Mortgage’ defined
by registration. If the intent of the law has been One which, although lacking in some
to include verbal notice or any other means of formality, or form, or words, or other
information as sufficient to give the effect of this requisites demanded by a statute, reveals
notice, there would have been no necessity or the intention of the parties to charge real
reason to specify in the article that said notice property as security for a debt, and contains
be in writing, for under the old law, a verbal nothing impossible or contrary to law.
notice or mere information was already deemed
sufficient. Requisites for Presumption of Equitable Mortgage to
Arise
Time and time again, it has been a. The parties entered into a contract
repeatedly declared by this Court that denominated as a contract of sale.
where the law speaks in clear and b. The intention of the parties was to secure an
categorical language, there is no room existing
for interpretation. There is only room debt by way of mortgage.
for application. Where the language of
a statute is clear and unambiguous, the REPUELA V. ESTATE OF THE SPS. LARAWAN
law is applied according to its express G.R. NO. 219638. DECEMBER 07, 2016
terms, and interpretation should be J. Mendoza
resorted to only where a literal • There is no single conclusive test to
interpretation would be either determine whether a deed of sale, absolute
impossible or absurd or would lead to on its face, is really a simple loan
an injustice. The law is clear in this accommodation secured by a mortgage.
case, there must first be a written • Article 1602, in relation to Article 1604 of
notice to the family of Bañas. the Civil Code, however, enumerates several
instances when a contract, purporting to
be, and in fact styled as, an absolute sale,
In sum, the explicit requirement of written
is presumed to be an equitable mortgage.
notice may only be dispensed with upon a

148

J. EQUITABLE MORTGAGE
(CIVIL CODE, ARTS. 1602-1605)
Cases Wherein The Contract Shall Be Presumed To BAR QUESTION (1979)
Be An Equitable Mortgage In a document dated June 10, 1960 and
1. When the price of a sale with right to expressly
repurchase is unusually inadequate; denominated "Deed of Sale with Right to
2. When the vendor remains in possession Repurchase," AB sold his land to CD.
as lessee or otherwise; Substantially, the document provided among
3. When upon or after the expiration of the others: "I, AB, being in great need of money,
right to repurchase another instrument hereby sell my 10- hectare coconut land to
extending the period of redemption or CD for P2,000.00. It is agreed that I have
granting a new period is executed; the right to repurchase this land in 10
4. When the purchaser retains for himself years. If I fail to buy back the property, I
a part of the purchase price; shall deliver possession thereof to CD."
5. When the vendor binds himself to pay the Upon failure of AB to repurchase the
taxes
on the thing sold; property, CD, in 1971, consolidated his
6. In any other case where it may be fairly title and files an action to recover
inferred that the real intention of the possession. AB files an answer offering to
parties is that the transaction shall return the P2,000.00 plus interest at the
secure the payment of a debt or the legal rate. Will the action of CD prosper? Why?
performance of any other obligation. SUGGESTED ANSWER
[Article 1602] The action of CD will not prosper. The
contract in the
Note: In case of doubt, a contract instant case is not a true contract of sale
with right of repurchase. The purchase price
purporting to be a sale with right to
is unusually inadequate and the vendor is
repurchase and absolute sale shall be
still in possession of the property. There is
construed as an equitable mortgage.
now a presumption that the real covenant or
agreement is an equitable mortgage. This is
Pacto De Retro Sale
strengthened by the fact that AB, the
• The title and ownership of the property
vendor, was in dire straights: he was in great
sold is immediately vested in the vendee
need of money. The land, therefore, is
a retro, subject to the restrictive
merely the security for the loan.
condition of repurchase by the vendor a
retro within the period provided.
ALTERNATIVE ANSWER:
• The payment of the repurchase price
The action of CD will not prosper. Whether
does not merely render the document
we look at the deed of sale as a true
null and void but there is the obligation
contract of sale with right of repurchase or
on the part of the vendee to sell back
a mere contract of equitable mortgage,
the property.
the effect in the instant case will be the
• A sale with pacto de retro transfers the
same. If it is a true contract of sale with
legal title to the vendee and this, in the
right of repurchase, according to the Civil
absence of an agreement to the contrary,
Code, the vendor may still exercise the
carries with it the right of possession.
right to repurchase within thirty days from
the time final judgment was rendered in a
Effect of Inadequacy of Price in a Pacto de Retro
civil action on the basis that the contract
Sale was a true sale with right to repurchase. If
The inadequacy of the price cannot be it is a mere equitable mortgage because of
considered a ground for rescinding the
contract.

Pacto de retro vs. Equitable mortgage

• In pacto de retro – ownership is immediately
transferred to the vendee, subject only to
the right of the vendor to repurchase
within a stipulated period.
• In equitable mortgage – although lacking in
the required formality of mortgage
reveals the intention to burden a property
as security for a debt. Non-payment gives
right to the creditor to foreclose.
• Nomenclature is not controlling, even if
denominated as pacto de retro, decisive
factor is the intention of the parties.
• Pactum Commissorium - A stipulation for
automatic vesting of title over the
security in the creditor in case of
debtor’s default. This is void. The proper
remedy is foreclosure of the mortgage. If
there is no foreclosure, the debtors
retain ownership (Vasquez v. CA, G.R.
No. 144882, February 5, 2005)
149
 X. CONTRACT OF LEASE
A. General Provisions (Civil Code, arts. 1642-1645)
B. Rights and Obligations of Lessor and Lessee (Civil Code, arts. 1654-1679)
C. Sublease and Assignment of Lease (Civil Code, arts. 1649-1652)
government-owned or controlled corporation,
or institution, the administration of which has
been intrusted to them; this provision shall
apply to judges and government experts who, in
‘Contract of Lease’ any manner whatsoever, take part in the sale;
It is a contract by which the owner
temporarily grants the use of his property or
the rendering of some service to another
who undertakes to pay some rent,
compensation or price.
A contract where one of the parties binds
himself to give to another the enjoyment or
use of a thing for a price certain, and for a
period which may be definite or indefinite.
However, no lease for more than ninety-nine
years shall be valid.

ESSENTIAL ELEMENTS OF LEASE (Consent, Object,

Consideration)

1. CONSENT
• General Rule: No person can be
compelled to
become a lessee against his will.
• XPN: In industrial accession where both the
landowner and the builder, planter or
sower acted in good faith. The builder or
planter can be compelled to pay
reasonable rent if they cannot be obliged
by the landowner to buy the land because
its value is considerably more than that of
the building or trees. In case of sower, he
can also he compelled to pay proper rent
by the landowner (NCC, Art. 448).

PERSONS DISQUALIFIED TO BE LESSEES

1. Husband and wife
General Rule: Husband and wife cannot lease
to each other their separate properties
XPN:
• If a separation of property was agreed
upon in the marriage settlement.
• If there has been a judicial separation
under Art. 135
of the Family Code; (Art. 1490 NCC)
Note: The prohibition applies even to
common law spouses. For otherwise said
spouses would be placed in a better position
than legitimate spouses.

2. Persons referred to under Art. 1491 of NCC -

because of fiduciary relationships.
a) The guardian, the property of the person
or persons who may be under his
guardianship;
b) Agents, the property whose
administration or sale may have been
intrusted to them, unless the consent of
the principal has been given;
c) Executors and administrators, the
property of the estate under
administration;
d) Public officers and employees, the
property of the State or of any
subdivision thereof, or of any
 e) Justices, judges, prosecuting have to be consumed. This cannot be done by
attorneys, clerks of superior and the lessee since ownership over them is NOT
inferior courts, and other officers and transferred to the lessee by the contract of
employees connected with the lease.
administration of justice, the property XPN:
and rights in litigation or levied upon • If they are merely to be exhibited as for
an execution before the court within display
whose jurisdiction or territory they purposes; or,
exercise their respective functions; • If they are accessory to an industrial
this prohibition includes the act of establishment
acquiring by assignment and shall (e.g. oil in an industrial firm)
apply to lawyers, with respect to the
property and rights which may be the 3. CAUSE OR CONSIDERATION
object of any litigation in which they • The cause or consideration in lease
may take part by virtue of their contracts refers to rentals (for things),
profession; royalties (for rights), or compensation (for
f) Any others specially disqualified by law.
A. GENERAL PROVISIONS services).
(CIVIL CODE, • Money, fruits or some other useful thing, the
2. OBJECT ORARTS. 1642-1645)
SUBJECT MATTER (Arts. 1642-1645) important thing is that what is given by the
lessee has value.
Lease of Things – one of the parties binds
himself to give to another the enjoyment FORM OF LEASE CONTRACT
or use of a thing for a price certain, and General Rule: Lease may be made orally
for a period which may be definite or XPN: If the lease of real property is made for
indefinite. However, no lease for more more than one year, it must be in writing, in
than ninety-nine years shall be valid. compliance with the Statute of Frauds [NCC,
Art. 1403 (2)(e)]
Lease of Work or Service – one of the parties
binds himself to execute a piece of work or PURPOSE OF RECORDING A LEASE
to render to the other some service for a • A lease DOES NOT have to be recorded in
price certain, but the relation of principal the Registry of Property to be binding
and agent does not exist between them.
between the parties. Registration is useful
only for the purposes of notifying strangers
LEASE OF CONSUMABLE GOODS to the transaction (NCC, Art. 1648).
General Rule: Consumable Goods cannot be • Registration is not essential for the validity
the subject matter of a contract of lease of the contract but is needed to make it
of things (NCC, Art. 1648, 1st part) effective regarding third persons.
Reason: To use or enjoy them, they will

150
EFFECTS IF THE LEASE OF REAL PROPERTY IS NOT i. Order repairs at the lessor's cost
REGISTERED ii. Sue for damages
1. The lease is not binding on innocent third iii. Suspend the payment of the rent; or
persons such as a purchaser (Salonga, et iv. Ask for rescission, in case of substantial
al. v- Acuña, C.A., 54 O.G. 2943); damage to him
2. Naturally, such an innocent third person is
allowed to terminate the lease in case he
buys the property from the owner-lessor.
(NCC, Art 1676) (2009 BAR);
3. When a third person already knows of the
existence and duration of the lease, he is
bound by such lease even if it has not been
recorded. The reason is simple: actual
knowledge is, for this purpose, equivalent
to registration (Quimson v. Suarez, G.R.
No. L-21381, April 5 1924; and Gustilo v.
Maravilla, G.R. No. L-2338 December 12,
1925).

Note: But if the sale is fictitious and was only

resorted to for the purpose of extinguishing
the lease, the supposed vendee cannot
terminate the lease. The sale is presumed
fictitious if at that time the supposed vendee
demands the termination of the lease, the sale
is not recorded in the Registry of Property (Art.
1676, 3rd paragraph, NCC).
B. RIGHTS AND OBLIGATIONS OF LESSOR
AND LESSEE (CIVIL CODE, ARTS. 1654-1679)

OBLIGATIONS OF LESSOR AND LESSEE

Obligations of the Lessor (1654)

1. Delivery of the property in such condition
as to render it fit for the use intended.
2. Making of necessary repairs to keep the
thing suitable for use, unless there is
contrary stipulation.
3. Maintain the lessee in peaceful and
adequate enjoyment of the lease for the
duration of the contract. (Art. 1654)
4. Pay the lessee one-half of the value of the
improvements at the time of the
termination of the lease when the lessee
makes, in good faith, useful improvements
which are suitable to the use for which the
lease is intended, without altering the form
or substance of the property leased. (Art.
1678)

OBLIGATIONS OF LESSEE
1. To pay the price of the lease according to
the terms
stipulated.
2. Use the thing leased as a diligent father of
the family.
3. Pay expenses for the deed of lease. (Art.
1657)
4. To inform the lessor within the shortest
possible time:
a. Every usurpation or untoward act which
any third person may have committed
or may be openly preparing to carry out
upon the thing leased.
b. Need of all necessary repairs in order
to keep it suitable for the use to which it
has been devoted. (Art. 1663)
Effects if the lessee failed to notify the lessor:
The lessee shall be liable for the damages
which, through his negligence, may be
suffered by the proprietor.

Effects if the lessor fail to make urgent repairs

The lessee may:
5. Return the thing leased upon the 1. Lessee may suspend the payment of the
termination of the lease, as he rent in case the lessor fails to make the
received it, save what has been lost necessary repairs or to maintain the
or impaired by the lapse of time, or lessee in peaceful and adequate
by ordinary wear and tear, or from enjoyment of the property leased. (Art.
an inevitable cause (Art. 1665) 1658)
Note: In the absence of a 2. In case of breach, aggrieved party may
statement concerning the condition ask for the rescission of the contract and
of the thing at the time the lease was indemnification for damages, or damages
constituted, the law presumes only, allowing the contract to remain in
that the lessee received it in good force. (Art.1659)
condition, unless there is proof to
the contrary. (Art. 1666) RIGHTS OF LESSOR AND LESSEE
6. Responsible for the deterioration or
loss of the thing leased, UNLESS he Rights of the Lessor:
proves that it took place without his 1. Right to continue same business - The
fault. Lessee is liable for the lessor of a business or industrial
deterioration caused by members of establishment may continue engaging in
his household and by guests and the same business or industry to which
visitors. (Arts. 1667 & 1668) the lessee devotes the thing leased,
Note: This burden of proof on the unless there is a stipulation to the
lessee does not apply when the contrary. (Art. 1656)
destruction is due to earthquake, 2. Right to eject the Lessee in cases
flood, storm or other natural provided under Art. 1673.
calamity. (Art. 1667) Grounds for ejectment:
a. When period agreed upon, or period
Rules if urgent repairs are necessary (Art. 1662) in Articles 1682 and 1687 has
1. If repairs last for NOT MORE THAN expired;
40 days, Lessee is obligated to b. Lack of payment of price stipulated;
tolerate the work. c. Violation of any conditions agreed
2. If repairs last for MORE THAN 40 upon in the contract;
days Lessee can ask for reduction of d. Lessee devotes the thing leased to
the rent in proportion to the time any use or service not stipulated, or
(including the 1st 40 days he was he fails to observe diligence of a good
deprived of possession/use) father of a family in the use thereof.
Note: In either case, rescission may be 3. Limited right to alter form of the thing
availed in case of dwelling place, and leased - The lessor cannot alter the form
the property becomes uninhabitable. of the thing leased in such a way as to
impair the use to which the thing is
Remedies in case of breach of obligations: devoted under the terms of the lease.
(Art. 1661)

151
Rights of the Lessee: Art. 1679. If nothing has been stipulated concerning
1. Right to peaceful and adequate the place and the time for the payment of the
enjoyment of the lease for the duration of lease, the provisions or Article 1251 shall be
the contract. (Art. 1654). observed as regards the place; and with respect
2. Right to terminate the lease if dwelling to the time, the custom of the place shall be
place is in dangerous condition - If a followed.
dwelling place or any other building
intended for human habitation is in such a
condition that its use brings imminent and
serious danger to life or health, the lessee
may terminate the lease at once by
notifying the lessor, even if at the time the
contract was perfected the former knew of
the dangerous condition or waived the
right to rescind the lease on account of this
condition. (Art. 1660)
3. Right to file direct action against the
intruder in case of a mere act of trespass
which a third person may cause on the use
of the thing leased. (Art. 1664)
4. Freedom to choose between a
proportional reduction of the rent and a
rescission of the lease in cases of partial
destruction brought by fortuitous events.
(Art. 1655)
5. Suspend payment in case the lessor fails
to make the necessary repairs or to
maintain the lessee in peaceful and
adequate enjoyment of the property
leased. (Art. 1658)
6. Right to make use of the periods
established in Articles 1682 and 1687.
7. Right to sublease the property, provided that
it is not prohibited.
• A lessee may generally sublease the
property in the absence of express
prohibition because the lessee remains
a party to the lease even if he has
already created a sublease thereon.
e.g. He still must pay rent to the lessor
• Two leases and two distinct judicial
relations:
 between the lessor and the lessee
 between the sublessor (lessee) and
the sublessee
8. Right to be reimbursed of one-half of the
value of the improvements at the time of
termination of lease, when such useful
improvements is made in good faith and
which are suitable to the use for which the
lease is intended. (Art. 1678)
9. Right to remove the improvements, even
though the principal thing may suffer
damage thereby, if the lessor refuses to
reimburse him of the useful improvements
mentioned in the next preceding item. (Art.
1678)

Rights to Improvement
1. If Lessee in good faith makes USEFUL
improvements: lessor shall pay ½ of the
value; if Lessor refuses, Lessee may
remove even though it will cause
damage to the principal thing. He shall
not cause any more impairment than
necessary.
2. Ornamental expenses: Lessee not entitled to
reimbursement; he may remove provided
no damage is caused to the principal thing,
and if Lessor does not chose to retain by
paying their value at the time the lease is
extinguished.

Place and time for the payment of lease:

Venue of payment in Art. 1251: If the lessee continues in possession of the
1. Place designated in the obligation thing leased for 15 days with the acquiescence
2. There being no express stipulation of the lessor, notwithstanding the expiration of
and if the undertaking is to deliver a the contract of lease, it is understood that
determinate thing - wherever the there is an implied new lease, not for the
thing might be at the moment the period of the original contract, but for the time
obligation was constituted. established by Article 1682 and 1687. The
3. In any other case, the place of other terms of the contract shall be revived.
payment shall be the domicile of the
debtor. Possession in Bad Faith
Art. 1671. If the lessee continues enjoying the
TERM OF LEASE CONTRACT thing after the expiration of the contract, over
General Rule: The law does not allow the lessor's objection, the former shall be
perpetual lease. There must be a period subject to the responsibilities of a possessor in
which may either be definite or bad faith.
indefinite. No lease for more than 99
years shall be valid. Right of a purchaser to terminate the lease
Art. 1676. The purchaser of a piece of land
When no period is fixed: which is under a lease that is not recorded in
a) In case of lease of rural lands (Art. the Registry of Property may terminate the
1682) - all the time necessary for the lease, save when there is a stipulation to the
gathering of the fruits which the whole contrary in the contract of sale, or when the
estate leased may yield in one year, or purchaser knows of the existence of the lease.
which it may yield once, although two
or more years have to elapse for the If the buyer makes use of this right, the lessee
purpose. may demand that he be allowed to gather the
b) In case of lease of urban lands (Art. fruits of the harvest which corresponds to the
1687); - from year to year, if the rent current agricultural year and that the vendor
agreed upon is annual; from month to indemnify him for damages suffered.
month, if it is monthly; from week to
week, if the rent is weekly; and from If the sale is fictitious, for the purpose of
day to day, if the rent is to be paid extinguishing the lease, the supposed vendee
daily; or cannot make use of the right granted in the
c) Lease during the lifetime of one of the first paragraph of this article. The sale is presumed
parties - A lease of things during the to be fictitious if at the time the supposed vendee
lifetime of one of the parties is valid, demands the termination of the lease, the sale is not
which is considered one for life, recorded in the Registry of Property.
ending upon the death of the party
who could have terminated the Art. 1677. The purchaser in a sale with the right
contract. of redemption cannot make use of the power
to eject the lessee until the end of the period
Implied new lease (Tacita reconduccion) for the redemption.

152
PMO V. NOCOM ET AL. BAR QUESTION (2014)
G.R. NO. 250477, NOVEMBER 09, 2020 Isaac leased the apartment of Dorotea for two
J. Lopez (2) years.
Indeed, a fine distinction exists between a Six (6) months after, Isaac subleased a
stipulation to renew a lease and one to extend it portion of the apartment due to financial
beyond the original term. A renewal clause creates difficulty. Is the sublease contract valid?
an obligation to execute a new lease for the a. Yes, it is valid for as long as all the
additional period. It connotes the cessation of the elements of a
old agreement and the emergence of a new one. On valid sublease contract are present.
the other hand, an extension clause operates of
b. Yes, it is valid if there is no express
its own force to create an additional term. It does
not require the execution of a new contract
prohibition for subleasing in the lease
between the parties. In this case, the contract.
compromise agreement did not require the c. No, it is void if there is no written
parties to enter into another lease contract. Quite consent on the part of the lessor.
the contrary, the agreement confirmed, ratified d. No, it is void because of breach of
and validated the existing amended contract of the lease
lease. Verily, the compromise agreement leaves no contract.
room for equivocation or interpretation. As such, no
amount of extraneous sources are necessary in BAR QUESTION (2013)
order to ascertain the parties' intent. Relatively, Anselmo is the registered owner of a land and
the heirs of Mariano cannot unduly stretch the a house
import of the PMO's letter dated February 24, that his friend Boboy occupied for a nominal
2011 beyond its nature as a mere demand to pay rental and on the condition that Boboy would
the increase in monthly rental. The letter cannot vacate the property on demand. With
also be taken as detached and isolated from the Anselmo's knowledge, Boboy introduced
other acts of the PMO that are incompatible with renovations consisting of an additional
the theory of renewal. Particularly, PMO's bedroom, a covered veranda, and a concrete
reminder about the expiration of the contract, its
block fence, at his own expense.
refusal to accept rental payment, and demand to
peacefully vacate the building, render renewal
Subsequently, Anselmo needed the property
out of the question. Taken together, the parties to as his residence and thus asked Boboy to
the compromise agreement vividly intended for vacate and turn it over to him. Boboy,
an extension of the lease period, and not renewal despite an extension, failed to vacate the
of the contract. property, forcing Anselmo to send him a
written demand to vacate. In his own written
MAÑAS V. NICOLASORA reply, Boboy signified that he was ready to
G.R. NO. 208845, FEBRUARY 03, 2020 leave but Anselmo must first reimburse him
J. Leonen the value of the improvements he introduced
on the property as he is a builder in good

X. CONTRACT OF LEASE
Article 1643 of the Civil Code provides:
Article 1643. In the lease of things, one of the faith. Anselmo refused, insisting that Boboy
parties binds himself to give to another the cannot ask for reimbursement as he is a
enjoyment of use of a thing for a price certain, mere lessee.
and for a period which may be definite or SUGGESTED ANSWER
indefinite. However, no lease for more than Boboy's claim that he is a builder in good
ninety-nine years shall be valid. faith has no
Based on Article 1643, the lessor's main basis. A builder in good faith is someone who
obligation is to allow the lessee to enjoy the
occupies the property in the concept of an
use of the thing leased. Other contract
stipulations unrelated to this— for instance, owner. The provisions on builder-planter-
the right of first refusal—cannot be presumed sower under the Civil Code cover cases in
included in the implied contract renewal. The which the builder, planter and sower believe
law itself limits the terms that are included in themselves to be owners of the land, or at
implied renewals. One cannot simply presume least, to have a claim of title thereto.
that all conditions in the original contract are
also revived; after all, a contract is based on As Boboy is a lessee of the property, even if
the meeting of the minds between parties. he was paying nominal rental, Article 1678 is
applicable. Under this provision, if the lessee
CJH DEVELOPMENT CORPORATION V. ANICETO makes, in good faith, useful improvements
G.R. NO. 224006, JULY 06, 2020 which are suitable to the use for which the
J. Leonen lease is intended, without altering the form
Clearly, there was an implied lease between or substance of the property leased, the
the parties. When the lease expired on May 17,
lessor upon the termination of the lease shall
2007, CJH Development acquiesced to Aniceto's
continued occupancy. It did not send a notice pay the lessee one-half of the value of
to vacate and even accepted Aniceto's improvements at that time. Should the lessor
monthly payments until February 28, 2008. As refuse to reimburse said amount, the lessee
it was paid monthly, the implied lease ran on a may remove the improvements, even though
month-to-month renewal, in accordance with the principal thing may suffer damage
Article 1687 of the Civil Code. It follows that thereby
the lease would be terminated by the end of
each month, and CJH Development may ALTERNATIVE
choose not to renew the lease and demand No. Boboy cannot be held liable for
repossession of the premises.
In sending the notice to vacate on January 30,
2008, CJH Development signified that it no longer
wished to continue the lease. By then, the
month- to-month implied lease was terminated.
The lessee can no longer insist on staying in the
premises against the lessor's will because there
is no longer a contract of lease to speak of.

153
 BAR QUESTION (2018)
C. SUBLEASE AND ASSIGNMENT OF LEASE
Simon owned a townhouse that he rented out to
Shannon, (CIVIL CODE, ARTS. 1649-1652)
a flight attendant with Soleil Philippine Airlines
Assignment of Lease
(SPA). They had no written contract but merely
• Lessee
agreed oncannot assign
a three the lease
(3)- year lease. contract
Shannon without
had the consent of the lessor, unless there is a
stipulation
been usingtothe the townhouse
contrary. (Art.
as 1649)
her base in
Manila and had been paying rentals for more • When in the contract of lease of things
than a year when she accepted a better job there is no express prohibition, the lessee
offer from Sing Airlines. This meant that may sublet the thing leased, in whole or in
Singapore was going to be her new base and part, without prejudice to his
so she decided, without informing Simon, to responsibility for the performance of the
sublease the townhouse to Sylvia, an office contract toward the lessor. (Art. 1650)
clerk in SPA.
a. Can Simon compel Shannon to reduce the Effect of Assignment of Lease
SUGGESTED ANSWER
(a) Yes, Simon can compel Shannon to Original lessee’s personality disappears and
reduce the there remains only in the juridical relation
agreement into writing. While an agreement for two persons: the lessor and the assignee
the leasing of real property for a longer period (who is converted into a lessee)
than one year is covered by the Statute of
Frauds, thus, requiring a written memorandum General Rule: A lease cannot be assigned to
of its essential provisions under Article 1403, a third person without the lessor’s
Civil Code, the contract was taken out of the consent.
operation of the Statute of Frauds under the XPN: If there was a stipulation in the lease
Doctrine of Part Performance. The statute of contract between the lessor and the lessee
frauds applies only to executory contracts, and that the latter is allowed to assign the lease
not to contracts that are already executed to a third person.
partially or fully. Under Article 1357 of the Civil Rationale: Assignment of a lease constitutes
Code, the contracting parties may compel each novation.
other to observe the form of contract required
by law if the contract is valid and enforceable.
Right of Lessee to Sublease
(b) No, it does not constitute a ground for General Rule: A lessee may sublease the
terminating the lease. In the contract of lease leased property in the absence of express
of things, if there is no express prohibition, the prohibition in the contract of lease.
lessee may sublet the thing leased (Article Rationale: Lessee is still a party to the
1650, Civil Code). contract of lease.

X. CONTRACT OF LEASE
In this contract, there appears to be no Note: Prohibition of the lessee to sublease the property
prohibition regarding subleasing; thus, there is will only be in effect if it is expressly stated in the
no violation of the contract which can be used contract of lease. If it is implied, lessee is still allowed
as a ground for terminating the contract. The to sublease the property.
act of a lessee in subleasing the thing without
SUBLEASE VS. ASSIGNMENT
SUBLEASE ASSIGNMENT
BAR QUESTION (2001)
the lessee retains an interest in the lease; he remains a party to the the lessee makes an
On January 1, 1980, Nestor leased the
contract absolute transfer of
fishpond of Mario
for a period of three years at a monthly his interest as lessee;
rental of P1,000.00, with an option to thus, he dissociates
purchase the same during the period of the the sublessee does himself from the
lease for the price of P500,000.00. After the not have any direct original contract of
expiration of the three-year period, Mario action against the lease
allowed Nestor to remain in the leased lessor the assignee has a
premises at the same rental rate. On June can be done even direct action against
15, 1983, Nestor tendered the amount of without the the lessor
P500,000.00 to Mario and demanded that the permission of the
latter execute a deed of absolute sale of the lessor (unless there cannot be done unless
fishpond in his favor. Mario refused, on the be an express the lessor consents
ground that Nestor no longer had an option to prohibition)
buy the fishpond. Nestor filed an Liability of sublessee toward lessor
action for specific performance. Will the action Although the sublessee is not the party to
prosper or not? Why? the contract of lease, the sublessee is still
SUGGESTED ANSWER
directly liable to the lessor for acts
No, the action will not prosper. appertaining to the use and preservation of
the property.
The implied renewal of the lease on a month-
to-month basis did not have the effect of
Direct action by the lessor
extending the life of the option to purchase
The lessor may bring an action directly
which expired at the end of the original lease
against the sublessee if he does not use and
period. The lessor is correct in refusing to sell
preserve the thing leased in accordance with
on the ground that the option had expired
since implied new lease only renewed the the agreement between the lessor and the
lessee or with the nature of the property.
154
Subsidiary liability of sublessee to lessor
Sublessee is subsidiarily liable to the lessor for
any rent due from the lessee. However, the
sublessee shall not be responsible beyond the
amount of rent due from him, in accordance
with the terms of the sublease, at the time of
the extra-judicial demand by the lessor.

Payments of rent in advance by the

sublessee shall be deemed not to have been
made, so far as the lessor's claim is
concerned, unless said payments were
effected in virtue of the custom of the place.

Advance Payment
General Rule: Payment in advance is disregarded insofar
as the lessor is concerned
XPN: if justified by the custom of the place.
Rationale: To prevent a collusion between the
sublessor, who may be insolvent, and the
sublessee. The lessor should not be
prejudiced.

Effect if the Lessee is Ousted/Ejected from the

Property
The sublessee should also be ousted. This is
because the right of the sublessee to remain
depends on the right of lessee himself to
remain.

155
 XI. AGENCY
A. Nature, Form, and Kinds (Civil Code, arts. 1868-1883)
B. Obligations of Agent and Principal (Civil Code, arts. 1864-1918)
C. Extinguishment (Civil Code, arts. 1919-1932)
• Personal acts;
• Acts not allowed by law
• Not allowed by stipulations
Contract of Agency
By the contract of agency, one person binds
himself to render some service or to do
something in representation or on behalf of
another, with the consent or authority of the
latter (NCC, Art 1868)

Note: The essence of agency is representation.

For a Contract of Agency to exist, it is essential
that the principal consents that the agent shall
act on the former’s behalf and the agent
consents so as to act.

Characteristics of Agency
1. Bilateral – if it is for compensation, it
gives rise to reciprocal rights and
obligations.
2. Unilateral – if gratuitous, it creates
obligations for only one of the parties.
3. Nominate – it has its own name
4. Consensual – it is perfected by mere
consent.
5. Principal – it can stand by itself without
need of another contract
6. Preparatory and progressive – it is entered
into means for other purposes that deal
with the public in particular manner for the
agent to enter into juridical acts with the
public in the name of the principal.
(Villanueva and Villanueva vs Tiansay,
2015)
7. Generally onerous
8. Representative relation – the agent acts for
and on behalf of the principal on the
matters within the scope of his authority
and said acts have the same legal effect as
if they were personally executed by the
principal.
9. Fiduciary and revocable – for the creation
of legal relationship of representation by
the agent on behalf of the principal, the
powers of the former are essentially
derived from the latter. Neither the
principal nor the agent can be legally made
to remain in the relationship when they
choose to have it remained
Presumption
Agency is never presumed. The relation
between principal and agent must exist as a
fact with the burden of proof resting upon the
person alleging the agency.

PARTIES TO A CONTRACT OF AGENCY

1. Principal (Mandante) - One whom the agent
represents and from whom he derives his
authority; he is the person represented.
2. Agent (Mandatario) - One who acts for and
represents another; he is the person acting
in a representative capacity
ACTS THAT A PRINCIPAL MAY DELEGATE TO HIS AGENT
General Rule: what a man may do in person, he
may do through another.
XPN:
FORM OF APPOINTMENT OF AN AGENT • He must have capacity to act
A. NATURE, FORM, AND
General Rule: There are no formal
KINDS (CIVIL CODE, ARTS.
requirements Note: if a person is capacitated to act for
governing1868-1883)
the appointment of an agent himself or his own right, he can act through an
XPN: when the law requires a specific form. agent.
Example: when sale of land or any interest
therein is through an agent, the authority JOINT PRINCIPALS
of the latter must be in writing; Two or more persons appoint an agent for a
otherwise, the sale shall be void. (Art. common transaction or undertaking. The
1874) liability of the joint principals is solidary.
• If principal specially informs another
that a third person is his agent - Third Requisites for solidary liability of joint principals
person is a duly authorized agent with a. There are two or more principals;
respect to the person who received b. They have all concurred in the
the special information appointment of the same agent;
• If principal states by public c. Agent is appointed for a common
advertisement that he has given a transaction or undertaking.
power of attorney to a third person -
RESPONSIBILITY OF TWO OR MORE AGENTS
Third person is a duly authorized
agent with regard to any person. General Rule: The agents are jointly liable.
Note: Revocation requires same manner - XPN: Solidarity has been expressly stipulated,
The power shall continue to be in full wherein each of the agents becomes solidarily
force until the notice is rescinded in the liable for the non- fulfillment of the agency and
same manner in which it was given. (Art. negligence of his fellow agent.
1873) RULE ON THE EXECUTION OF AGENCY
General Rule: the agent is bound by his
NATURE OF THE RELATIONSHIP BETWEEN PRINCIPAL acceptance to carry out the agency, in
AND AGENT accordance with the instruction of the principal
It is fiduciary in nature that is based on and is liable for damages which, through his
trust and confidence. The agent is non-performance, the principal may suffer
estopped from asserting or acquiring XPN: if its execution could manifestly result in
an interest adverse to that of his loss or damage to the principal.
principal
ACCEPTANCE OF APPOINTMENT
QUALIFICATION OF A PRINCIPAL No formalities like in appointment - There are no
• Natural or juridical persons; and formal requirements governing the acceptance
of appointment by an agent.

156
ARTICLE 1870. Acceptance by the agent may also act be urgent and indispensable for the
be express, or implied from his acts which preservation of the things which are under
carry out the agency, or from his silence or administration;
inaction according to the circumstances.

Other examples of implied acceptance:

1. Between persons who are present if the
principal delivers his power of attorney to
the agent and the latter receives it without
any objection. (Art. 1871)
2. Between persons who are absent -
a. When the principal transmits his power
of attorney to the agent, who receives it
without any objection;
b. When the principal entrusts to him by
letter or telegram a power of attorney
with respect to the business in which he
is habitually engaged as an agent, and
he did not reply to the letter or
telegram. (Art. 1872)

CLASSIFICATION OF AGENCY AS TO AUTHORITY

CONFERRED
Agency Couched In General or Specific Terms
Couched in General Terms
• Comprises only acts of administration, even
if the principal should state that he
withholds no power or that the agent may
execute such acts as he may consider
appropriate, or even though the agency
should authorize a general and unlimited
management. [Article 1877]
• Examples of Acts of Administration
 To lease real property to another person
for one year or less, provided the lease
is not registered. [Article 1878, No. 8 by
implication]
 To make customary gifts for charity or to
employees in the business managed by
the agent. [Article 1878, No. 6]
 To borrow money if it is urgent and
indispensable for the preservation of the
things under administration. [Article
1878, No. 7]

Couched in Specific Terms

• ‘Special Power of Attorney (SPA)’
• This refers to a clear mandate (express or
implied) specifically authorizing the
performance of the act, and must therefore
be distinguished from an agency couched in
general terms.

Cases Wherein Special Power Of Attorney Is

Necessary:
1. To make such payments as are not
usually
considered as acts of administration;
2. To effect novations which put an end to
obligations already in existence at the time
the agency was constituted;
3. To compromise, to submit questions to
arbitration, to renounce the right to appeal
from a judgment, to waive objections to the
venue of an action or to abandon a
prescription already acquired;
4. To waive any obligation gratuitously;
5. To enter into any contract by which the
ownership of an immovable is transmitted
or acquired either gratuitously or for a
valuable consideration;
6. To make gifts, except customary ones for
charity or those made to employees in the
business managed by the agent;
7. To loan or borrow money, unless the latter
8. To lease any real property to another in favor of the person with whom he has
person for more than one year; contracted, as if the transaction were his
9. To bind the principal to render some own.
service without compensation; Except: when the contract involves things
10. To bind the principal in a contract of belonging to the principal.
partnership; This is without prejudice to the actions
11. To obligate the principal as a guarantor or between the principal and agent. (Art.
surety; 1883)
12. To create or convey real rights
over immovable property; INSTANCES WHEN THE AGENT MAY INCUR PERSONAL
13. To accept or repudiate an inheritance; LIABILITY
14. To ratify or recognize obligations 1. Agent exceeds his authority
contracted before the agency; 2. Acts of the agent prevented the
15. Any other act of strict dominion. [Article performance on the part of the principal;
and
1878]
3. When a person acts as agent without
LIMITATIONS ON SPA authority or without a principal; and
1. A special power to sell excludes the 4. A person who acts as an agent of an
power to incapacitated principal unless the third
person was aware of the incapacity at the
mortgage.
time of the making of the contract.
2. A special power to mortgage does
not include the power to sell. AGENCY BY NECESSITY
3. A special power to compromise does • Agency cannot be created by necessity.
not authorize submission to • What is created instead is additional
arbitration. authority in an agent appointed and
LIMITATIONS ON AGENT’S ACTION authorized before the emergency arose. By
virtue of the existence of an emergency,
1. He must act within the scope of his
the authority of an agent is
authority
correspondingly enlarged in order to cope
2. He may do such acts as may be
with the exigencies or the necessities of
conducive to the accomplishment of
the moment.
the purpose of the agency (Art. 1881)
3. His authority shall not be considered REQUISITES FOR THE ADDITIONAL AUTHORITY OF
exceeded should it have been AGENT IN CASES OF NECESSITY
performed in a manner more 1. Real existence of emergency;
advantageous to the principal than 2. Inability of the agent to communicate
that specified by him. (Art.1882) with the principal;
4. Agent acting in his own name: 3. Exercise of additional authority is for the
• the principal has no right of action principal’s
against the persons with whom the
protection; and
agent has contracted; neither have
4. Adoption of fairly reasonable means, premises
such persons against the principal.
• the agent is the one directly bound duly
considered.

157
RULE REGARDING DOUBLE AGENCY 8. Duty to render an accounting (stipulation on
General Rule: it is disapproved by law for being exemption is void)
against public policy and sound morality.
• Every agent is bound to render an account
XPN: where the agent acted with full knowledge
of his transactions and to deliver to the
and consent of the principals.
principal whatever he may have received by
virtue of the agency, even though it may
RIGHT OF RETENTION BY LEGAL PLEDGE not be owing to the principal
Instances when the agent may retain in pledge the object • Every stipulation exempting the agent from
of the agency (Legal Pledge) the obligation to render an account shall be
1. If the principal fails to reimburse the agent void (Art. 1891)
the necessary sums, including interest,
which the latter advanced for the execution 9. Be responsible in certain cases for the acts of the
of the agency substitute appointed by him.
2. If the principal fails to indemnify the agent
• Agent may appoint a substitute, UNLESS
for all damages which the execution of the
prohibited
agency may have caused the latter,
• Agent is responsible for acts of substitute in case:
without fault or negligence on his part
1) When he was not given the power to appoint
one
B. OBLIGATIONS OF AGENT AND PRINCIPAL 2) When he was given such power, but
(CIVIL CODE, ARTS. 1864-1918) without designating the person, and the
person appointed was notoriously
OBLIGATIONS OF AN AGENT
incompetent or insolvent.
1. Carry out agency. • All acts of the substitute appointed against
• If appointment was accepted, he should the prohibition of the principal shall be void
carry out the agency (Art. 1892)
• He is liable for the damages which, • In the cases mentioned in Nos. 1 and 2,
through his non- performance, the the principal may furthermore bring an
principal may suffer (Art. 1883) action against the substitute with respect to
• The agent is responsible not only for fraud, the obligations which the latter has
but also for negligence, which shall be contracted under the substitution. (Art.
judged with more or less rigor by the 1893)
courts, according to whether the agency
was or was not for a compensation. (Art. 10. Joint liability of 2 or more agents UNLESS solidarity
1909) is stipulated
• The responsibility of two or more agents,
2. NOT to carry out the agency even though they have been appointed
He should not carry out the agency if its simultaneously, is not solidary, if solidarity
execution would manifestly result in loss or has not been expressly stipulated. (Art.
damage to the principal (Art. 1888) 1894)
• If solidarity has been agreed upon, each of
the agents is responsible for the non-
3. Act in accordance with the instructions of the
fulfillment of the agency, and for the fault or
principal. negligence of his fellow agents, except
• Follow the principal’s instructions when fellow agents acted beyond the scope
• If there is none, do all that a good father of their authority (Art. 1895)
of a family would do, as required by the
nature of the business (Art. 1887) 11. Duty to pay interest on sums personally used
The agent owes interest on the sums he has
4. Finish the business even after death of the applied to his own use from the day on which
principal he did so, and on those which he still owes
He must also finish the business already after the extinguishment of the agency. (Art.
begun on the death of the principal, should 1896)
delay entail danger (Art. 1884)
12. Liability on Contracts:
5. If appointment is declined, he should take care of • The agent is not personally liable to the
goods with ordinary diligence party with whom he contracts UNLESS:
• He is bound to observe the diligence of a 1) He expressly binds himself; or
good father of a family in the custody and 2) He exceeds the limits of the authority
without giving such party sufficient
preservation of the goods forwarded to
notice of his powers (Art. 1897)
him by the owner until the latter should
• The principal cannot set up the ignorance of
appoint an agent.
the agent as to circumstances whereof he
• The owner shall as soon as practicable
himself was, or ought to have been, aware
either appoint an agent or take charge of (Art. 1899)
the goods. (Art. 1885) • If the agent contracts in the name of the
principal, exceeding the scope of his
6. If allowed to borrow authority, and the principal does not ratify
Agent may become the creditor at current the contract, it shall be void if the party with
interest rate whom the agent contracted is aware of the
limits of the powers granted by the
7. If allowed to lend at interest principal. In this case, however, the agent
Agent may not become the debtor unless is liable if he undertook to secure the
principal consents (Art 1890) principal’s ratification. (Art. 1898)
13. Third person may require proof of authority principal may require the presentation of
• A third person with whom the agent the power of attorney, or the instructions as
wishes to contract on behalf of the regards the agency.

158
• Private or secret orders and instructions of when it is borne in mind that knowledge of the
the principal do not prejudice third persons agent is imputed to the principal even though the
who have relied upon the power of attorney agent never communicated such knowledge to the
or instructions shown them. (Art. 1902) principal.
• So far as third persons are concerned, an
act is deemed to have been performed
within the scope of the agent's authority, if
such act is within the terms of the power of
attorney, as written, even if the agent has in
fact exceeded the limits of his authority
according to an understanding between the
principal and the agent. (Art. 1900)
• A third person cannot set up the fact that
the agent has exceeded his powers, if the
principal has ratified, or has signified his
willingness to ratify the agent's acts. (Art.
1901)

14. Responsible for the goods as described in the

consignment
The commission agent shall be responsible for
the goods received by him in the terms and
conditions and as described in the
consignment, unless upon receiving them he
should make a written statement of the
damage and deterioration suffered by the
same. (Art. 1903)

15. To distinguish/ designate goods with countermarks

The commission agent who handles goods of
the same kind and mark, which belong to
different owners, shall distinguish them by
countermarks, and designate the merchandise
respectively belonging to each principal. (Art.
1904)

16. Not allowed to sell on credit

The commission agent cannot, without the
express or implied consent of the principal, sell
on credit. Should he do so, the principal may
demand from him payment in cash, but the
commission agent shall be entitled to any
interest or benefit, which may result from such
sale. (Art. 1905)

17. Duty to notify principal if allowed to sell on credit

Should the commission agent, with
authority of the principal, sell on credit, he
shall so inform the principal, with a
statement of the names of the buyers.
Should he fail to do so, the sale shall be
deemed to have been made for cash insofar as
the principal is concerned. (Art. 1906)

18. Duty to timely collect credits

The commission agent who does not collect
the credits of his principal at the time when
they become due and demandable shall be
liable for damages, unless he proves that he
exercised due diligence for that purpose. (Art.
1907)

19. With Guarantee Commission bear risk of

collection
Should the commission agent receive on a
sale, in addition to the ordinary commission,
another called a guarantee commission, he
shall bear the risk of collection and shall pay
the principal the proceeds of the sale on the
same terms agreed upon with the purchaser.
(Art. 1907)

Theory of Imputed Knowledge

The importance of the duty to give information
of material facts becomes readily apparent
Exceptions to the theory of imputed knowledge estopped to deny his agency both as
1. The agent’s interests are adverse to against his asserted principal and the third
those of the principal. persons interested in the transaction in
2. The agent’s duty is not to disclose the which he engaged.
information, as where he is informed 2. Estoppel of principal
by way of confidential information. a. As to agent
3. The person claiming the benefit of the b. As to sub agent
rule colludes with the agent to c. As to third person
defraud the principal.
Doctrine of Apparent Authority
Obligations of a person who declines an agency The principal is liable only as to third persons
A person who declines an agency is still who have been led reasonably to believe by the
bound to observe the diligence of a good conduct of the principal that such actual
father of the family in the custody and authority exists, although none has been given.
preservation of goods forwarded to him by
the owner. This is based on equity. OBLIGATIONS OF A PRINCIPAL
1. Comply with obligations contracted by the agent
Breach of loyalty of the agent • The principal must comply with all the
• In case of breach of loyalty, the agent is obligations which the agent may have
NOT entitled to commission. contracted within the scope of his
• The forfeiture of the commission will authority.
take place regardless of whether the • As for any obligation wherein the agent
principal suffers any injury by reason of has exceeded his power, the principal is
such breach of loyalty. It does not even not bound, EXCEPT:
matter if the agency is for gratuitous 1) When he ratifies it expressly or
one, or that the principal obtained tacitly. (Art. 1910)
better results, or that usage and customs 2) He is solidarily liable with the agent if
allow a receipt of such a bonus. he allowed him to act as though he had
full powers (Art. 1911)
Agency by Estoppel 2. Duty to advance funds
It is when one leads another to believe • He must advance to the agent, should
that certain person is his agent, when as the latter so request, the sums
a matter of fact such is not true, and the necessary for the execution of the
latter acts on such misrepresentation, the agency. (Art. 1912)
former cannot disclaim liability, for he 3. Legal Pledge (Agent)
has created an agency by estoppel. • The agent may retain in pledge the things
which are the object of the agency until
Rules regarding estoppel in agency the principal effects the reimbursement
1. Estoppel of agent - one professing to and pays the indemnity for funds
act as agent for another may be advanced and damages caused by
execution of agency. (Art. 1914)

159
4. Reimburse the agent for all advances made by him of obligations in general whenever they are
even if the business or undertaking was not applicable, like loss of the thing and novation.
successful provided the agent is free from fault.
• General Rule: principal is liable for the
expenses incurred by the agents.
• XPN:
1) If the agent acted in contravention of
the principal’s instructions, unless
principal should wish to avail himself
of the benefits derived from the
contract.
2) When the expenses were due to the
fault of the agent.
3) When the agent incurred them with
knowledge that an unfavorable result
would ensue, if the principal was not
aware thereof; or
4) When it was stipulated that the
expenses would be borne by the
agent, or that the latter would be
allowed only a certain sum.

Two persons deal separately with Principal and Agent-

Earlier is preferred
• When two persons contract with regard to
the same thing, one of them with the agent
and the other with the principal, and the
two contracts are incompatible with each
other, that of prior date shall be preferred,
without prejudice to the provisions of article
1544 on Double Sale. (An. 1916)
• if the agent has acted in good faith, the
principal shall be liable in damages to the
third person whose contract must be
rejected. If the agent acted in bad faith,
he alone shall be responsible. (Art. 1917)

Liability for tort committed by the agent

General Rule: where the fault or crime committed
by the agent who is not in the performance of an
obligation of the principal, the latter is not
bound by the illicit acts of the agent, even if it
is done in connection with the agency.
XPN:
1. Where the tort was committed by the
agent because of defective instructions
from the principal or due to lack of
necessary vigilance or supervision on his
part; or
2. When the tort consists in the performance
of an act which is within the powers of an
agent but becomes criminal only because
of the manner in which the agent has
performed it; the principal is civilly liable to
3rd persons who acted in good faith.
C. EXTINGUISHMENT
(CIVIL CODE, ARTS. 1919-1932)

MODES OF EXTINGUISHMENT
1. By agreement to extinguish
2. By its revocation
3. By the withdrawal of the agent;
4. By the death, civil interdiction, insanity or
insolvency of the principal or of the agent.
5. By the dissolution of the firm or
corporation which entrusted or accepted
the agency;
6. By the accomplishment of the object or
purpose of the agency.
7. By the expiration of the period for which
the agency was constituted.

Note: the list is not exclusive: may also be

extinguished by the modes of extinguishment
REVOCATION OF AGENCY there would no longer be any basis for the
General Rule: agency is revocable at will representation previously conferred. But the
by the principal. principal must act in good faith and not merely
XPN: an agency is irrevocable. to avoid his obligation to the agent.
1. If a bilateral contract depends upon it. XPN: the only desire of the principal is for him
2. If it is the means of fulfilling an and the agent to manage the business
obligation already contracted. together.
3. If partner is appointed manager and
his removal from the management REVOCATION OF AGENCY WHEN THE AGENT IS
is unjustifiable. APPOINTED BY TWO OR MORE PRINCIPALS
4. If it has been constituted in the When two or more principals have granted a
common interest of the principal power of attorney for a common transaction,
and the agent, or in the interest of a any one of them may revoke the same
third person who has accepted the without the consent of the others.
stipulation in his favor.
5. Stipulation pour atrui. NECESSITY OF NOTICE OF REVOCATION
XPN to the XPN: When the agent acts to 1. As to the agent – express notice is not always
defraud the necessary; sufficient notice if the party
principal. to be notified actually knows, or has
reason to know, a fact indicating that his
KINDS OF REVOCATION authority has been terminated/suspended;
Revocation may either be: revocation without notice to the agent will
a. express or not render invalid an act done in pursuance
b. implied. of the authority.
2. As to 3rd persons – express notice is necessary.
A contract of agency is impliedly revoked a. As to former customers – actual notice
when the principal: must be given to them because they
1. Appoints a new agent for the same always assume the continuance of the
business or transaction. agency relationship
2. Directly manages the business b. As to other persons- notice by
entrusted to the agent publication is enough.
3. After granting the general power of
attorney to an agent, which results in WHEN THE AGENT CAN WITHDRAW FROM THE
the revocation of the former as AGENCY
regards the special matter involved in The agent may renounce or withdraw from the
the latter. agency at any time, without the consent of
the principal, even in violation of the latter’s
EFFECT OF DIRECT MANAGEMENT BY THE PRINCIPAL contractual rights; subject to liability for
General Rule: the agency is revoked for breach of contract or for tort.

160
Note: The duties and responsibilities of the BAR QUESTION (2014)
withdrawing agent. Joe Miguel, a well-known treasure hunter in
1. If the principal should suffer damage by Mindanao,
reason of the withdrawal by the agent, the executed a Special Power of Attorney (SPA)
latter must indemnify the principal therefor, appointing his nephew, John Paul, as his
unless the agent should base his withdrawal attorney-in-fact. John Paul was given the power
upon the impossibility of continuing the to deal with treasure-hunting activities on Joe
performance of the agency without grave Miguel's land and to file charges against those
who may enter it without the latter's authority.
detriment to himself.
Joe Miguel agreed to give John Paul forty
2. The agent must continue to act until the
percent (40%) of the treasure that may be
principal has had reasonable opportunity
found on the land. Thereafter, John Paul filed a
to take the necessary steps to meet the
case for damages and injunction against Lilo
situation even if he should withdraw from for illegally entering Joe Miguel's land.
the agency. Subsequently, he hired the legal services of
Atty. Audrey agreeing to give the latter thirty
KINDS OF WITHDRAWAL BY THE AGENT percent (30%) of Joe Miguel's share in
1. Without just cause – the law imposes upon whatever treasure that may be found in the
the agent the duty to give due notice to land. Dissatisfied however with the strategies
the principal and to indemnify the implemented by
principal should the latter suffer damage John Paul, Joe Miguel unilaterally revoked the
by reason of such withdrawal. SPA granted to John Paul. Is the revocation proper?
2. With just cause – if the agent withdraws SUGGESTED ANSWER
from the agency for a valid reason as No, the revocation was not proper. As a rule,
when the withdrawal is based on the a contract
impossibility of continuing with the of agency may be revoked by the principal
agency without grave detriment to at will. However, an agency ceases to be
himself or is due to a fortuitous event, revocable at will if it is coupled with an
the agent cannot be held liable. interest or if it is a means of fulfilling an
obligation already contracted (Art. 1927). In
DEATH OF PRINCIPAL TO THE CONTRACT OF the case at bar, the agency may be deemed an
AGENCY agency coupled with an interest not only
General Rule: Agency is extinguished. because of the fact that John Paul expects to
Exceptions:
• The agency shall remain in full force and
effect even after the death of the principal, if
it has been constituted in the common BAR QUESTION (2013)
interest of the latter and of the agent, or in Jo-Ann asked her close friend, Aissa, to
the interest of a third person who has buy some
accepted the stipulation in his favor. (Art groceries for her in the supermarket. Was
1930) there a nominate contract entered into between Jo-
• Anything done by the agent, without Ann and Aissa? In the affirmative, what was it?
knowledge of the death of the principal or of Explain.
any other cause which extinguishes the SUGGESTED ANSWER
agency, is valid and shall be fully effective Yes, there was a nominate contract. On the
with respect to third persons who may have assumption
contracted with him in good faith. (Art 1931) that Aissa accepted the request of her close
friend Jo- Ann to buy some groceries for her
LOPEZ V. HON. COURT OF APPEALS in the supermarket, what they entered into
G.R. NO. 163959, AUGUST 1, 2018 was a nominate contract of Agency.
J. Bersamin
One of the modes of extinguishing a contract of Article 1868 of the New Civil Code provides
agency is by the death of either the principal or that by the contract of agency a person
the agent. In Rallos v. Felix Go Chan & Sons binds himself to render some service or to do
Realty Corporation, the Court declared that
because death of the principal extinguished the
agency, it should follow a fortiori that any act
BAR QUESTION (2004)
of the agent after the death of his principal
As an agent, AL was given a guarantee
should be held void ab initio unless the act fell
commission,
under the exceptions established under Article
in addition to his regular commission, after
1930 and Article 1931 of the Civil Code. The
he sold 20 units of refrigerators to a
exceptions should be strictly construed. In
other words, the general rule is that the death customer, HT Hotel. The customer,
of the principal or, by analogy, the agent however, failed to pay for the units sold.
extinguishes the contract of agency, unless any AL’s principal, DRBI, demanded from AL
of the circumstances provided for under Article payment for the customer’s accountability.
1930 or Article 1931 obtains; in which case, AL objected, on the ground that his job was
notwithstanding the death of either principal or only to sell and not to collect payment for
agent, the contract of agency continues to units bought by the customer. Is AL’s objection
exist. valid? Can DRBI collect from him or not? Reason.
SUGGESTED ANSWER
DEATH OF AGENT No, AL’s objection is not valid and DRBI can
collect from
If the agents dies, his heirs must notify the
principal thereof, and in the meantime
adopt such measure as the circumstances
may demand in interest of the latter.

161
 BAR QUESTION (2001)
Richard sold a large parcel of land in Cebu to
Leo for P100
million payable in annual installments over a
period of ten years, but title will remain with
Richard until the purchase price is fully paid.
To enable Leo to pay the price, Richard gave
him a power-of-attorney authorizing him to
subdivide the land, sell the individual lots, and
deliver the proceeds to Richard, to be applied
to the purchase price. Five years later, Richard
revoked the power of attorney and took over
the sale of the subdivision lots himself. Is the
revocation valid or not? Why?
SUGGESTED ANSWER
The revocation is not valid. The power of attorney
given to
the buyer is irrevocable because it is coupled
with an interest: the agency is the means of
fulfilling the obligation of the buyer to pay the
price of the land (Article 1927, CC). In other
words, a bilateral contract (contract to buy
and
sell the land) is dependent on the agency.
BAR QUESTION (2004)
CX executed a special power of attorney
authorizing DY to
secure a loan from any bank and to mortgage
his property covered by the owner’s certificate
of title. In securing a loan from MBank, DY did
not specify that he was acting for CX in the
transaction with said bank. Is CX liable for the bank
loan? Why or why not? Justify your answer.
SUGGESTED ANSWER
CX is liable for the bank loan because he
authorized the
mortgage on his property to secure the loan
contracted by DY. If DY later defaults and fails
to pay the loan, CX is liable to pay. However,
his liability is limited to the extent of the value
of the said property.

ALTERNATIVE
CX is not personally liable to the bank loan
because it was contracted by DY in his
personal capacity. Only the property of CX is
liable. Hence, while CX has authorized the
mortgage on his property to secure the loan of
DY, the bank cannot sue CX to collect the loan
in case DY defaults thereon. The bank can only
foreclose the property of CX. And if the
proceeds of the foreclosure are not sufficient
to pay the loan in full, the bank cannot run
after CX for the deficiency.
162
 XII. CREDIT TRANSACTIONS
A. Mutuum and Commodatum (Civil Code, arts. 1933-1961)
B. Deposit (Civil Code, arts. 1962-2009)
C. Guaranty and Suretyship (Civil Code, arts. 2047-2081)
D. Real Estate Mortgage (Civil Code, arts. 2124-2126 and 2128-2131)
E. Personal Property Security Act (R.A. No. 11057)

Credit Transactions • Delivery is necessary in view of the purpose of

Refer to all transactions involving the purchase the contract which is to TRANSFER either the use
or loan of goods, services, or money in the or ownership of the thing loaned.
present with a promise to pay or deliver in the
future.
A. MUTUUM AND COMMODATUM
(CIVIL CODE, ARTS. 1933-1961)

Mutuum and Commodatum

Article 1933. By the contract of loan, one of
the parties delivers to another, either
something not consumable so that the latter
may use the same for a certain time and
return it, in which case the contract is
called a commodatum; or money or other
consumable thing, upon the condition that the
same amount of the same kind and quality
shall be paid, in which case the contract is
simply called a loan or mutuum.
• Commodatum is essentially gratuitous.
• Simple loan may be gratuitous or with a
stipulation to pay interest.
• In commodatum the bailor retains the
ownership of the thing loaned, while in
simple loan, ownership passes to the
borrower.

Characteristics of the Contract of Loan

1. Real contract – delivery is essential for
perfection of the loan BUT a promise to
lend, being consensual, is binding upon
the parties
2. Unilateral contract – once the subject
matter has
been delivered, only the borrower has the
obligation

Considerations of the Contract of Loan

• As to borrower – the acquisition of the thing
• As to lender – the right to demand its return
or its equivalent

KINDS OF LOANS
1. COMMODATUM - Where the bailor (lender)
delivers to the bailee (borrower) a non-
consumable thing so that the latter may
use it for a certain time and return the
identical thing
2. MUTUUM OR SIMPLE LOAN - Where the
lender delivers to the borrower money or
other consumable thing upon the condition
that the latter will pay the same amount of
the same kind and quality

Article 1934. An accepted promise to deliver

something by way of commodatum or simple
loan is binding upon parties, but the
commodatum or simple loan itself shall not be
perfected until the delivery of the object of the
contract.
• Mutuum and Commodatum are REAL
CONTRACTS which require delivery for
perfection.
COMMODATUM 3. Subject matter
Kinds of Commodatum: • generally non-consumable goods but
1. Ordinary Commodatum - Use by the if the consumable goods are noT for
bailee of the thing is for a certain consumption, such may be the
period of time (Art. 1933) subject of the commodatum, as when
2. Precarium - One whereby the bailor merely for exhibition (Art. 1936)
may demand the thing loaned at 4. Bailor need not be the owner of the thing loaned
will; (Art 1938)
It exists in cases where: • it is sufficient that he has a possessory
a. neither the duration of the interest
contract nor the use to which • a mere lessee or usufructuary may
the thing loaned should be lend but the borrower or bailee
devoted has been stipulated. himself may not lend nor lease the
b. if the use of the thing is merely thing loaned to him to a third person
tolerated by (Art. 1932[2])
the owner. (Art. 1947) 5. Purely personal
a. Death of either party terminates the
NATURE OF COMMODATUM contract UNLESS there is stipulation
1. Cause to the contrary
• essentially gratuitous (otherwise, b. Generally, bailee can neither lend nor
if there Is compensation, it might lease the object to a 3rd person in the
be lease) absence of some agreement to that
• commodatum is similar to effect
donation in that it confers a c. Use of the thing loaned may extend to
benefit to the recipient; the the bailee’s household (who are not
presumption is that the bailor has considered 3rd persons) except:
loaned the thing for having no 1. when there is a contrary stipulation
need therefore (Art. 1946) 2. nature of the thing forbids such use
2. Purpose 6. Enjoyment of fruits
• temporary use of the thing • a stipulation to make use of fruits is
loaned but not its fruits, unless valid, but it is never presumed. The
stipulated or is incidental enjoyment of the fruits must only be
(otherwise, if the bailee is not incidental to the use of the thing
entitled to the use of the thing, it itself, for if it is the main cause, the
might be deposit) contract may be one of usufruct.

163
OBLIGATIONS OF THE BAILEE (Arts 1941-1945) save the latter
1. To pay for the Ordinary expenses for the d. Lends the subject matter to a 3rd person – he lends or
use and preservation of the thing loaned leases the thing to a third person who is not a
(Art. 1941) member of his household
2. To pay for all Other expenses e. Delay - he keeps it longer than the period
XPN: Other than those referred to in Art. stipulated or after the accomplishment of the
1941 and 1949 (refund of extraordinary use for which the commodatum has been
expenses in full, or in half (if incurred constituted.
while bailee in actual use) (Art. 1950)
Reason: Bailee makes use of the thing.
Expenses for ostentation are to borne by
the bailee because they are not necessary
for the preservation of the thing.
For Extraordinary expenses for
preservation, bailor must reimburse the
bailee, since he is the one who profits from
said expenses.
3. To take good Care of the thing with the
diligence of a
good father of a family (Art. 1163)
4. To be liable for Loss, except due to a
fortuitous event UNLESS under exceptional
circumstances (Art 1942)
5. The bailee has NO RIGHT to Retain the
thing loaned as security for claims he has
against the bailor, even though they may be
by reason of extraordinary expenses (Art.
1944)
Reasons:
a. Ownership remains in bailor – the bailee
acquires only the use of thing, the
ownership of which remains w/ the
bailor;
b. Only temporary use given to bailee – the
bailee would be violating the bailor’s trust
in him to return the thing as soon as the
period stipulated expires or the purpose
has been accomplished.
XPN to Right of Retention: Claim for damages
suffered because the bailor did not advise
bailee of the flaws known to him (Arts.
1951; 1944)
6. A bailee does not answer for the
Deterioration of the thing loaned due only to
the use thereof and without his fault;
7. Liability when there are 2 or more bailees:
The presumption is that they are solidarily
liable (Art. 1945)
Reason for the presumption: to safeguard
effectively the right of the bailor. The law
presumes that the bailor takes into account
the personal integrity and responsibility of
all the bailees and that, therefore, he
would not have constituted the
commodatum if there were only one bailee.

BAILEE’S LIABILITY FOR LOSS EVEN DUE

TO FORTUITOUS EVENT
General Rule: the bailee is not liable for loss or
damage due to a fortuitous event (Art. 1174)
Rationale: the bailor retains the ownership of
the thing
loaned.
XPN: (Art. 1942 – punishes the bailee for his
improper acts although they may not be the
proximate cause of the loss)
a. Bad faith – if the bailee devotes the thing to
any purpose different from that for which it
has been loaned
b. Has been delivered with Appraisal - the thing
loaned has been delivered with appraisal of
its value, UNLESS there is a stipulation
exempting the bailee from responsibility in
case of a fortuitous event
c. Ingratitude - being able to save the thing
borrowed or his own thing, he chose to
OBLIGATIONS OF THE BAILOR a thing, at the request of another person, gives
1. Primary obligation of the bailor: the latter the thing for use as long as the owner
General Rule: To allow the bailee the use of shall please.
the thing loaned for the duration of the
period stipulated or until the 3. To refund the extraordinary expenses (Art. 1949)
accomplishment of the purpose for w/c General Rule on reimbursement: Notice should be
the commodatum was constituted given by the bailee to the bailor regarding
XPN: the bailor may demand the return or such extraordinary expenses
its temporary use upon: Rationale: notice is required because it is possible
a. bailor has an URGENT NEED FOR THE that the bailor may not want to incur the
THING (Art. 1946) – the contract is extraordinary expense at all.
suspended XPN: where the extraordinary expenses are so
Reason: the right of the bailor is based on the urgent that the reply to the notification cannot be
fact that commodatum is essentially awaited w/o danger.
gratuitous
a. bailee commits AN ACT OF INGRATITUDE (Art. 4. If the extraordinary expenses arise from the actual
1948) use of the thing and even though bailee acted w/o fault,
• if the bailee should commit an offense the expenses will be borne equally by both the bailor
against the person, the honor or the and the bailee (50-50) (Art. 1949)
property of the bailor, or of the wife or Reasons:
children under his parental authority a. the bailee pays ½ because of the benefit derived
• if the bailee imputes to the bailor any from
criminal offense, or any act involving the use of the thing loaned to him;
moral turpitude, even though he should b. the bailor pays the other ½ because he is
prove it, unless the crime or the act has the owner and the thing will be returned to
been committed against the bailee him
himself, his wife, or children under his
authority; and XPN: Stipulation to the contrary that provide for a
• if the bailee unduly refuses the bailor different apportionment of such expenses or that
support when the bailee is legally or they shall be borne by the bailee or bailor alone
morally bound to give support to the
bailor 5. The depreciation caused by the reasonable and
Reason: the person who commits any of the natural use of the thing is borne by the bailor (Art.1943)
acts of ingratitude makes himself unworthy
Reason: The parties to the contract know that
of the trust reposed upon him by the bailor.
the thing borrowed cannot be used without
deterioration due to ordinary wear and tear.
2. May demand the thing at will when the XPN:
contract is precarium a. when there is a stipulation to the contrary;\
‘Precarium’ defined b. when the bailee is guilty of fault or negligence;
a kind of commodatum where the bailor
c. if he devotes the thing to any purpose different
may demand the thing at will. It has been
from
defined as a contract by which the owner of
that for which has been loaned.

164
6. To pay damages for known hidden flaws (Art. 1951) default (either failure to pay upon extra-judicial
Requisites: (the following must concur) demand or upon judicial demand whichever is
a. there is a flaw or defect in the thing loaned appropriate and subject to the provisions of
b. the flaw or defect is hidden Article 1169 of the Civil Code)
c. the bailor is aware thereof
d. he does not advise the bailee of the same
e. the bailee suffers damages by reason of
the flaw or defect
XPN: when the defect is not known to the
bailor, he is not liable because commodatum is
gratuitous.

7. The bailor has no right of abandonment for

expenses and damages (Art. 1952)
Reason: The expense and/or damages may
exceed the
value of the thing loaned.

MUTUUM
Contract whereby one of the parties delivers to
another money or other fungible thing w/ the
understanding that the same amount of the
same kind and quality shall be paid. (Art.
1933)

NATURE OF MUTUUM
a. bilateral - borrower’s promise to pay is the
consideration for the lender’s obligation to
furnish the loan
b. no criminal liability upon failure to pay

SUBJECT MATTER
a. fungible or consumable-depending on the
intent of the parties, that the return of the
thing is equivalent only and not the
identical thing
b. Money
c. if the transfer of ownership is on a non-
fungible thing (irreplaceable), with the
obligation of the other to give other thing by
agreement, it is a barter

When is a thing considered consumable?

It is consumable when used in a manner
appropriate for its purpose or nature, like
gasoline, rice, money, fruit, firewood, etc.

PAYMENT OF LOAN INTEREST

General Rule: No interest shall be due unless it
has been expressly stipulated in writing (Art.
1956)
XPN: Indemnity for damages – the debtor in
delay is liable to pay legal interest as
indemnity for damages even in the absence of
a stipulation for the payment of interest.
• Interest as indemnity for damages is
payable only in case of default or non-
performance of contract (Art. 2209).

Basis for computation for indemnity:

Eastern Shipping Lines vs. Court of Appeals, as
modified by Nacar vs. Gallery Frames based
on BSP-MB Circular No. 799 dated June 21,
2013 which lowered the legal rate of interest
from 12% to 6%.

Rules on Interest
I. When obligation breached is Monetary Obligation, ex.
Loans of forbearance of money:
a. Interest due shall be that stipulated in
writing; Interest due shall earn legal
interest of 6% from date of judicial demand
(filing of the case)
b. If no stipulation in writing, interest shall be
6% per annum to be computed from
II. When obligation breached is Non- Deposit
Monetary Obligation • A contract of deposit is constituted from the
a. If already liquidated, rate of interest moment a person receives a thing belonging
shall be 6% per annum, demandable to another, with the obligation of safely
from date of judicial or extra- judicial keeping it and of returning the same. (Art.
demand (Art. 1169, Civil Code) 1962)
b. If unliquidated, no interest • If the safekeeping of the thing delivered is not
the principal purpose of the contract, there is
XPN: When later on established with
no deposit but some other contract.
certainty. Interest shall still be 6% per
annum demandable from the date of CHARACTERISTICS
judgment because on such date, it is 1. real - because it is perfected only by the
already deemed that the amount of delivery of the subject matter BUT an
damages is already ascertained. agreement to constitute a deposit is
binding and enforceable, since it is merely
III. Compounded Interest consensual
• This is applicable to both monetary 2. unilateral - if gratuitous, because only the
and non-monetary obligations depositary has the obligation
• 6% per annum computed against 3. bilateral - if with compensation, because it gives rise
award of damages (interest) granted to
by the court. To be computed from obligations on the part of both depositary and
the date when the court’s decision depositor
becomes final and executory until the
award is fully satisfied by the losing CREATION OF DEPOSIT (Art. 1964)
party. may be constituted judicially or extrajudicially
1. By virtue of a court order; or
IV. Prospective Application 2. By law
• The 6% per annum rate of legal 3. By the will of the parties
It is essential that the depositary is not the owner of
interest shall be applied prospectively;
the property deposited (Art. 1962)
• Final and executory judgments
awarding damages prior to July 1, KINDS OF DEPOSIT
2013 shall apply the 12% rate; 1. Judicial - when an attachment or seizure of
• Final and executory judgments property in litigation is order
awarding damages on or after July 1, 2. Extrajudicial (Art. 1967)
2013 shall apply the 12% rate for a. voluntary- delivery is made by the will of
unpaid obligations until June 30, 2013; the depositor or by two or more persons
unpaid obligations with respect to said each of whom believes himself entitled to
judgments on or after July 1, 2013 the thing deposited;
shall still incur the 6% rate. b. necessary- made in compliance with a
legal obligation, or on the occasion of any
B. DEPOSIT (CIVIL CODE, ARTS. 1962-2009) calamity, or by travelers in hotels and
inns (Arts 1996-2004) or by travelers with
common carriers (Arts 1734-1735)

165
DEPOSIT IS GENERALLY GRATUITOUS: (Art. 1965) qualification.
General Rule: A deposit is generally gratuitous. XPN: The depositary is authorized by express
XPN: stipulation.
a. when there is a contrary stipulation
b. where depositary is engaged in the
business of storing goods
c. Property is saved from destruction
without knowledge of the owner
d. Judicial deposit

DEPOSITOR IS THE OWNER OF THE THING

General Rule: The depositor must be the owner
of the thing deposited (not required to prove
ownership).
XPN: It may belong to another person
than the
depositor.
when two or more persons claiming to be
entitled to a thing may deposit the same with
a third person. In such case, the third person
assumes the obligation to deliver to the one to
whom it belongs.
Interpleader – the action to compel the
depositors to settle their conflicting claims.
Here one of the depositors is not the owner.

SUBJECT MATTER OF DEPOSIT (Art. 1966)

General Rule: only movable or personal property
may be the object of deposit, whether
voluntary or necessary.
XPN: In judicial deposit, it may cover both
movable and immovable property.

FORM OF CONTRACT OF DEPOSIT:

• A contract of deposit may be entered into
orally or in
writing. (Art. 1969)
• BUT Delivery of the thing deposited is
required for perfection. (It is a real
contract, hence, delivery is required for
perfection.)

OBLIGATIONS OF THE DEPOSITARY

1. Two primary obligations (Art. 1972)
a. Safekeeping of the object;
b. Return of the thing when required –
even though a specified term or time
for such may have been stipulated in
the contract.
Degree of Care – same diligence as he would
exercise over his property.
Reasons:
1. Essential requisite of judicial relation which
involves the depositor’s confidence in his
good faith and trustworthiness;
2. The presumption that the depositor took
into account the diligence which the
depositary is accustomed with respect to
his own property.
The depositary cannot excuse himself from
liability in the event of loss by claiming that
he exercised the same amount of care
toward the thing deposited as he would
towards his own if such care is less than that
required by the circumstances.

2. Obligation not to transfer deposit (Art. 1973)

General Rule: the depositary is not allowed to
deposit the thing with a third person.
Reason: A deposit is founded on trust and
confidence and it can be supposed that the
depositor, in choosing the depositary, has
taken into consideration the latter’s
Liabilities: Depositary is liable for loss permitted to commingle grain or other
of the thing deposited when: articles of the same kind and quality.
a. He transfers the deposit with a third Effects:
person without authority although a. The various depositors of the mingled
there is no negligence on his part goods shall own the entire mass in
and the third person; common.
b. He deposits the thing with a third b. Each depositor shall be entitled to such
person who is manifestly careless or portion of the entire as the amount
unfit although authorized, even in deposited by him bears the whole.
the absence of negligence; or XPN: When there is a stipulation to the contrary.
c. The thing is lost through the
negligence of his employees
whether the latter are manifestly
careless or not.
166
Exemption from liability: The thing is lost
without the negligence of the third
person with whom he was allowed to
deposit the thing if such third person is
not “manifestly careless or unfit.

3. Obligation not to change the way of

deposit (Art. 1974)
General Rule: Depositary may not change
the way of the deposit
XPN: If there are circumstances
indicating that the depositor would
consent to the change.

This is a situation wherein the

depositary would reasonably
presume that the depositor would
agree to the change if he knows of
the facts of the situation.
Requisites
a. The depositary must notify the
depositor of such change and
b. Must wait for the reply of the
depositor to such change.
XPN: If the delay of the reply would cause
danger.

4. Obligation to collect on the choses in

action deposited (Art. 1975)
If the thing deposited should earn
interest, the depositary is under the
obligation to:
a. Collect the interest as it becomes due;
b. Take such steps as may be
necessary to preserve its value and
the right corresponding to it.
The depositary is bound to collect the
capital, as well as the interest, when
due.

Contract of rent of safety deposit boxes

(Art. 1975) A contract for the rent of
safety deposit boxes is not an
ordinary contract of lease of things ,
but a special kind of deposit; hence, it
is not to be strictly governed by the
provisions on deposit. The prevailing rule
in the US is that the relation
between a bank renting out safety
deposit boxes and its customer with
respect to the contents of the box is
that of bailor and bailee.

5. Obligation not to commingle things if

so stipulated (Art. 1976)
General Rule: The depositary is
6. Obligation not to make use of the things unless
deposited (Art. 1977) proven otherwise;
General Rule: Deposit is for safekeeping of the c. Keep the secret of the deposit when the seal
subject matter and not for its use. or
XPN: lock is broken, with or without his fault.
a. Expressly authorized by the depositor;
b. Such use is necessary for its preservation
but limited for the purpose only.
• Effect of unauthorized use: Liability for
damages
• Effects of authorized use: (Art. 1978)
c. If the thing deposited is non-consumable:
General Rule: The contract loses the
character of a deposit and acquires that
of a commodatum despite the fact that
the parties may have denominated it as
a deposit.
XPN: Safekeeping is still the principal
purpose of the contract.
d. If the thing deposited is money or other
consumable thing:
General Rule: Converts the contract into a
simple loan or mutuum.
XPN: Safekeeping is still the principal
purpose of the contract, but it becomes
an irregular deposit. Bank deposits are in
the nature of irregular deposits but they
are really loans governed by the law on
loans.

7. Liability for loss through fortuitous event (Art.

1979)
General Rule: The depositary is not liable
for loss
through fortuitous event without his fault.
XPN:
a. If it is so stipulated;
b. If he uses the thing without the
depositor’s
permission
c. If he delays in its return;
d. If he allows others to use it, even though
he himself may have been authorized to
use the same.

Note: Liability for loss without

fortuitous event: Depositary
• presumed at fault (Art. 1265)
• in possession

8. Relation between bank and depositor (Art. 1980)

Fixed, savings, and current deposits of
money in banks and similar institutions
shall be governed by the provisions
concerning simple loan.
a. Contract of loan – deposits in banks are
really loans because the bank can use
the same for its ordinary transactions
b. Relation of creditor and debtor – the relation
between a depositor and a bank is that of
a creditor and a debtor.

9. Obligation when the thing deposited is closed

and sealed (Art. 1981)
The depositary has the obligation to:
a. return the thing deposited when
delivered closed and sealed in the same
condition;
b. pay for damages should the seal or lock
be broken through his fault, which is
presumed
10. When depositary justified in opening closed XPN: When a demand, judicial or
and sealed subject matter (Art. 1982) extrajudicial, for its return has been made
a. The depositary is presumed by one of them in which case delivery
authorized to do so if the key has should be made to him.
been delivered to him; c. Return to one of the depositors stipulated - if by
b. When the instructions of the stipulation, the thing should be returned to
depositor as regards the deposit one of the depositors, the depositary is
cannot be executed without opening bound to return it only to the person
the box or receptacle. (Necessity) designated although he has not made any
demand for its return.
11. Obligation to return products, accessories
and accessions (Art. 1983) 16. Obligation to return to the person to whom return
must be made. (Art. 1986)
12. Obligation to pay interest on sums a. The depositary is obliged to return the
converted for personal use (Art. 1983) thing deposited, when required, to:
• The depositor;
13. The depositary who receives the thing in • To his heirs or successors; or
deposit cannot require that the depositor prove • To the person who may have been designated
his ownership over the thing (Art. 1984) in
the contract.
14. Where third person appears to be the owner b. If the depositor was incapacitated at the
time of making the deposit, the property
(Art. 1984)
must be returned to:
The depositary may be relieved from liability when:
• His guardian or administrator;
a. He advised the true owner of the thing of the
• To the depositor himself should he
deposit.
acquire capacity.
b. If the owner, inspite of such c. Even if the depositor had capacity at the
information, does not claim it within time of making the deposit but he
the period of one month (30 days) subsequently loses his capacity during the
deposit, the thing must be returned to his
15. Obligation of the depositary when there are legal representative.
two or more depositors. (Art. 1985)
a. Divisible thing and joint depositors – each one 17. Obligation to return at the place of return (Art. 1987)
of the depositors can demand only his – same as the general rule of law regarding the place
share -p- pp[proportionate thereto. of payment. (Art. 1251)
b. Indivisible thing and solidary depositors – General Rule: At the place agreed upon by the
rules on active solidarity parties, transportation expenses shall be borne
General Rule: The depositary may return the by the depositor. XPN: In the absence of
thing to stipulation, at the place where the thing
any one of the solidary depositors deposited might be even if it should not be the
same place where the original deposit was made.

167
18. Obligation to return upon demand/ arrival of the without advice from the depositor.
time of return. (Art. 1988)
General Rule: The thing deposited must be
returned to the depositor UPON DEMAND, even
though a specified period or time for such return
may have been fixed.
XPN:
a. When the thing is judicially attached
while in the
depositary’s possession
b. When notified of the opposition of a third
person to the return or the removal of the
thing deposited.

19. Right of the depositary to return the thing deposited.

(Art. 1989)
Note: in this case, it is the depositary who is
returning the deposit WITH OR WITHOUT THE
DEMAND of the depositor General Rule: The
depositary may return the thing deposited
notwithstanding that a period has been fixed for
the deposit if:
a. The deposit is gratuitous;
b. The reason is justifiable.

Remedy if depositor refuses to receive the thing

The depositary may deposit the thing at the
disposal of the judicial authority.

Exception: When the deposit is for a valuable

consideration, the depositary has no right to
return the thing before the expiration of the time
designated even if he should suffer
inconvenience as a consequence.

20. Depositary’s liability in case of loss by force

majeure or government order. (Art. 1990)
Depositary is not liable in cases of loss by force
majeure or by government order. However, he
has the duty to deliver to the depositor money or
another thing he receives in place of the thing.

21. Liability in case of alienation of the depositary’s

heir. (Art. 1991)
When alienation is done in GOOD FAITH:
a. Return the value of the thing deposited
b. Assign the right to collect from the buyer.
The heir does not need to pay the actual price
of the thing deposited.

When alienation is done in BAD FAITH:

a. Liable for damages;
b. Pay the actual price of the thing deposited.

22. Depositary may retain the thing in pledge until the

full payment of what may be due him by reason of the
deposit. (Art. 1994)
The thing retained serves as security for the
payment of what may be due to the depositary by
reason of the deposit. (see Art. 1965, 1992,
1993).

OBLIGATIONS OF THE DEPOSITOR

1. Obligation to pay expenses of preservation.
(Art. 1992)
2. Obligation to pay losses incurred due to
character of thing deposited. (Art. 1993)
General Rule: The depositary must be reimbursed
for loss suffered by him because of the character
of the thing deposited.
XPN:
a. Depositor was not aware of the danger;
b. Depositor was not expected to know the
dangerous character of the thing;
c. Depositor notified the depositary of such
dangerous character;
d. Depositary was aware of the danger
3. Effect of death of depositor or usufruct when the usufructuary does not
depositary. (Art. 1995) give proper security for their
a. Deposit gratuitous – death of either conservation
of the depositor or depositary 2. It takes place on the occasion of any calamity,
extinguishes the deposit such as fire, storm, flood, pillage, shipwreck, or
(personal in nature). By the word other similar events. (deposito miserable)
“extinguished,” the law really • There must be a causal relation
means that the depositary is not between the calamity and the
obliged to continue with the constitution of the deposit.
contract of deposit. • Possession of movables passes from
b. Deposit for compensation – not one person to another by accident or
extinguished by the death of fortuitously through force of
either party. circumstance, and which law imposes
upon the recipient the obligations of a
RIGHT OF RETENTION (Art. 1994) bailee
• Depositary has a right to retain the • Article 2168 – quasi-contract, owner of
thing in pledge until full payment of property saved bound to pay just
what may be due him by reason of compensation
the deposit 3. Made by passengers with common carriers.
• This is an example of pledge created (Art. 1754) - as to those baggage the
by operation of law (Art. 2121) passengers or their agents carry
• RULE is different in Commodatum, 4. Made by travelers in hotels or inns. (Art. 1998)
bailee has no right of retention Before keepers of hotels or inns may
except Art 1951 (bailor knows flaws be held responsible as depositaries with
in the thing did not advise bailee of regard to the effects of their guests, the
such, Art 1944 gives bailee right to following must concur:
retain the thing until he is Elements
compensated for damages suffered. a. They have been previously informed
about the effects brought by the guests;
NECESSARY DEPOSIT vs. VOLUNTARY DEPOSIT and
• Voluntary deposit is made by the b. The latter have taken the precautions
free will of the depositor; prescribed regarding their
• In Necessary deposit, this freedom safekeeping.
of choice is absent; Extent of liability
a. Liability in hotel rooms which come
NECESSARY DEPOSIT (Art. 1996) under the term “baggage” or articles
A deposit is necessary when: such as clothing as
1. It is made in compliance with a legal are ordinarily used by travelers
obligation; Example: Art 586 – deposit b. Include those lost or damages in hotel
with bank or public institution of annexes
bonds or instruments of credit such as vehicles in the hotel’s garage.
payable to order or bearer given in

168
When hotel-keeper liable: (Art. 2000 – 2002)
Note: Hotelkeeper is liable REGARDLESS of the
amount of care exercised in the following C. GUARANTY AND SURETYSHIP (CIVIL CODE,
cases: ARTS. 2047-2081)
GUARANTY
a. The loss or injury to personal property is
An accessory contract whereby a person called
caused by his servants or employees as
the guarantor binds himself to the creditor to
well as by strangers (Art. 2000).
fulfill the obligation of the principal debtor in
b. The loss is caused by the act of a thief or
case the latter should fail to do.
robber done without the use of arms and
irresistible force. (Art. 2001)
Guaranty not presumed (Art. 2055)
Reason: Hotel-keeper is apparently negligent.
Guaranty requires the expression of consent
on the part of the guarantor to be bound. It
When hotel-keeper not liable:
cannot be presumed because of the existence
a. The loss or injury is caused by force
of a contract or principal obligation.
majeure, like flood, fire, theft or robbery by
a stranger (not the hotel-keeper’s servant
Guaranty covered by the Statute of Frauds (Art. 1403)
or employee) with the use of firearms or
• Guaranty must not only be expressed but
irresistible force.
must so be reduced into writing.
XPN: Unless the hotel-keeper is guilty of
• Hence, it shall be unenforceable by action,
fault or negligence in failing to provide
unless the same or some note or
against the loss or injury from this cause.
memorandum thereof be in writing, and
b. The loss is due to the acts of the guests,
subscribed by the party charged, or by his
his family, servants, visitors.
agent; evidence, therefore, of the agreement
c. The loss arises from the character of the
cannot be received without the writing, or a
things brought into the hotel.
secondary evidence of its contents.
• It need not appear in a public document.
Exemption or Diminution of Liability
The hotel-keeper cannot free himself from
Obligation
responsibility by posting notices to the effect
1. of the Guarantor – pay or perform the obligation
that he is not liable for the articles brought by
if the debtor fails to do.
the guest. (Art. 2003)
2. of the Creditor – pay the guarantor the
compensation
Limited Liability Stipulation is VOID
Any stipulation between the hotel-keeper and stipulated.
the guest whereby the responsibility of the
former (as set forth in Art. 1998-2001) is Qualifications of a Guarantor
suppressed or diminished shall be VOID. (Art. i. Possesses integrity
2003) ii. Has the capacity to bind himself
iii. Has sufficient property to answer for the
Hotel-keeper’s right to retain obligation which he guarantees
The hotel-keeper has a right to retain the iv. Subject to the jurisdiction of the court of
things brought into the hotel by the guest, as the place where the obligation is to be
a security for credits on account of: complied with
a. Lodging;
b. supplies usually furnished to hotel guests. Privileges given to the guarantor
Reason: It is given to hotel-keepers to i. Benefit of excussion
compensate them for the liabilities imposed ii. Benefit of division
upon them by law. The right of retention
recognized in this article is in the nature of a Excussion
pledge created by operation of law. Right of the guarantor to have the properties
of the debtpr exhausted first before the
SEQUESTRATION OR JUDICIAL DEPOSIT guarantor can be made liable to the creditor
When judicial deposit takes place:
• Judicial deposit takes place when an For the benefit of Excussion, the guarantor must:
attachment or seizure of property in i. Set it up against the creditor upon the
litigation is ordered by a court. (Art. 2005) latter’s
• Nature: Auxiliary to a case pending in court. demand for payment from him
• Purpose: To maintain the status quo during ii. Point out to the creditor the available
the pendency of the litigation or to insure properties of the debtor in the Philippines
the right of the parties to the property in sufficient to cover the amount of debt.
case of a favorable judgment.
The guarantor is not entitled to excussion when:
Depositary of sequestered property: person appointed i. Guarantor has expressly renounced the benefit
of
by the court. (Art. 2007) s n judicial deposit is remedial or procedural in
Obligations: i nature. (Art. 2009)
a. To take care of the property with the n
diligence of a good father of the family. c
(Art. 2008) e
b. He may not be relieved of his responsibility l
until the litigation is ended or the court so a
orders. (Art. 2007) w

Applicable law: The Rules of Court are applicable o

ii. e arantor solidarily binds himself with the
xc principal debtor
iii. iv. us If the debtor is insolvent
si Principal debtor has absconded or cannot be
v. o sued within the Philippines
n When it may be presumed that execution
vi. G will not result in the satisfaction of the
u judgment credit Guarantor failed to point
out leviable properties of the debtor

169
Benefit of division SURETYSHIP
Requisites: Suretyship is a contract where a person binds
i. There are several guarantors himself solidarily with the principal debtor. (Art.
ii. They guaranteed only one debtor 2047 par. 2)
iii. One debt
Nature and extent of suretyship
Division is not available when: i. Primarily and absolutely liable
i. Waived by the guarantor ii. Pays if debtor does not pay
ii. Guarantor solidarily binds himself iii. Insurer of the debt
with the principal debtor
iii. the debtor is insolvent Nature of surety’s undertaking
iv. Principal debtor has absconded 1. Liability is contractual and accessory but
v. When it may be presumed that direct:
execution will not 2. Liability is limited by terms of contract
result in the satisfaction of the judgment 3. Liability arises only if principal debtor is held
credit liable
a. In the absence of collusion, the surety
Continuing guaranty is bound by a judgment against the
i. Not limited to a single transaction principal event though he was not a
ii. Contemplates a future course of dealing party to the proceedings;
covering a series of transactions b. The creditor may sue, separately or
iii. Prospective in application. together, the principal debtor and the
surety;
Rights of Guarantor c. A demand or notice of default is not
1. before payment required to fix the surety’s liability
a. to receive compensation Exception: Where required by the
provisions of the contract of suretyship
b. to demand relief from the guaranty
NOTE: Surety is not entitled to exhaustion
against unlike guarantors
creditor’s action 4. Undertaking is to creditor, not to debtor
c. to demand security against The surety makes no covenant or
debtor’s agreement with the principal that it will
insolvency fulfill the obligation guaranteed for the
2. after payment benefit of the principal. The surety’s
a. to seek reimbursement undertaking is that the principal shall
b. to be subrogated to the rights of the fulfill his obligation and that the surety
creditor shall be relieved of liability when the
obligation secured is performed.
Debtor must indemnify guarantor for: Exception: Unless otherwise expressly
i. Total amount of debt provided. NOTE: Surety is not entitled to
ii. Legal interests notice of principal’s default
iii. Expenses incurred after notifying the 5. Prior demand by the creditor upon
debtor that payment had been principal not required Surety is not
demanded from him exonerated by neglect of creditor to sue
principal.
iv. Damages
SPS. ONG V. PCIB
EXTINGUISHMENT OF GUARANTY
1. Same grounds as the modes of G.R. NO. 160466, JANUARY 17, 2005
extinguishment for ordinary obligation J. Puno
(Payment, Loss, Condonation, Merger, • There is a sea of difference in the rights
Compensation, Novation and liabilities of a guarantor and a surety.
A guarantor insures the solvency of the
2. Extension of payment
debtor while a surety is an insurer of the
3. Negligence of the creditor
debt itself. A contract of guaranty gives
4. Failure to send notice of default rise to a subsidiary obligation on the part
5. Death of the guarantor. It is only after the
6. Creditor voluntarily accepts immovable creditor has proceeded against the
or other property in payment of the debt, properties of the principal debtor and the
even if the creditor should afterwards debt remains unsatisfied that a guarantor
lose the same through eviction. can be held liable to answer for any
unpaid amount. This is the principle of
GUARANTY VS. WARRANTY excussion
• In suretyship contract, however, the benefit
of excussion is not available to the surety as
he is principally liable for the payment of the
debt. As the surety insures the debt itself,
GUARANTY WARRANTY he obligates himself to pay the debt if the
principal debtor will not pay, regardless of
Contract by which a An undertaking that the whether or not the latter is financially
person is bound to title, quality, or capable to fulfill his obligation. Thus, a
another for the quantity of the subject creditor can go directly against the surety
although the principal debtor is solvent absolutely bound with the principal debtor
and is able to pay or no prior demand for the payment of the debt and is
is made on the principal debtor. A deemed as an original promissor and
surety is directly, equally and debtor from the beginning.

170
GUARANTY VS. SURETYSHIP • The interest may be in the form of fruits of
the mortgaged property, without the contract’s
GUARANTY SURETYSHIP losing its nature of a contract of mortgage.
Liability depends upon Assumes liability as a
KINDS OF MORTGAGE
an independent regular party to the
agreement to pay the Undertaking. 1. Voluntary – one which is agreed to between
obligation if the primary the parties or constituted by the will of the
debtor fails to do so. owner of the property on which it is
created.
Engagement is a Charged as an 2. Legal – one required by law to be executed
collateral undertaking. original in favor of certain persons (Arts. 2125,
Promisor. 2083)
3. Equitable – one which, although it lacks the
Secondarily liable – he Primarily liable –
proper formalities of a mortgage shows the
contracts to pay if, by undertakes directly for
intention of the parties to make the
the use of due the payment
without reference
property as a security for a debt (provisions
diligence, the debt
cannot be paid. to the solvency governing equitable mortgage - arts 1365,
of the principal, and is 1450, 1454, 1602, 1603, 1604 and 1607)
so responsible at once
the latter makes default, ESSENTIAL REQUISITES OF MORTGAGE
without any demand by 1. constituted to secure the fulfillment of a
the creditor upon the principal obligation
principal whatsoever or 2. mortgagor is the absolute owner of the thing
any notice of default. mortgaged
Only binds himself to Undertakes to pay if the 3. the persons constituting mortgage have
pay if the principal principal does not pay, free disposal of their property, and in the
cannot or unable to without regard to his absence thereof, that they be legally
pay. ability to do so. authorized for the purpose
4. cannot exist without a valid obligation
Insurer of the solvency Insurer of the debt. 5. when the principal obligation becomes due,
of the debtor. the thing in which the mortgage consists
may be alienated for the payment to the
Does not contract that Pay the creditor without creditor.
the principal will pay, qualification if the 6. appears in a public document duly
but simply that he is principal debtor does recorded in the Registry of Property to be
able to do so. not pay. Hence, the validly constituted
responsibility or
obligation assumed by
PUBLIC INSTRUMENT AND RECORDING
the surety is greater or
• It is indispensable in order that a mortgage
more onerous than that
may be validly constituted that it appears in
a public instrument duly recorded in the
Registry of Property
• If in private instrument – no valid mortgage
is constituted, but it is still binding upon the
parties.

Article 2125. In addition to the requisites stated

D. REAL ESTATE MORTGAGE in article 2085, it is indispensable, in order
(CIVIL CODE, ARTS. 2124-2126 that a mortgage may be validly constituted,
AND 2128-2131) that the document in which it appears be
recorded in the Registry of Property. If the
instrument is
Contract of Mortgage the contract of mortgage.
It is a contract whereby the debtor secures to • It is not an essential requisite that the principal of
the creditor the fulfillment of a principal the credit bears interest, or that the interest as
obligation, specially subjecting to such compensation for the use of the principal and the
security immovable property or real rights enjoyment of its fruits be in the form of a certain
over immovable property in case the principal percent thereof.
obligation is not complied with at the time
stipulated.

OBJECTS OF REAL MORTGAGE

1. Immovables
2. Alienable real rights in accordance with the
laws, imposed upon immovables
future property cannot be object of mortgage

IMPORTANT POINTS
• As a general rule, the mortgagor retains
possession of the property, because by the
mortgage, the debtor merely subjects the
property to a LIEN but ownership thereof is
not parted with.
• Mortgagor may deliver said property to the
mortgagee without altering the nature of
not recorded, the mortgage is
nevertheless binding between the
parties. The persons in whose favor the
law establishes a mortgage have no
other right than to demand the execution
and the recording of the document in
which the mortgage is formalized.

MOBIL OIL PHILIPPINES V. DIOCARES

G.R. NO. L-26371, SEPTEMBER 30, 1969
En Banc
SC held that the lower court erred when
it did not order the foreclosure of an
unrecorded mortgage. Even if the
instrument was not recorded, "the
mortgage is nevertheless binding
between the parties." The law cannot be
any clearer. Effect must be given to it as
written. The mortgage subsists; the
parties are bound. As between them, the
mere fact that there is as yet no
compliance with the requirement that it
be recorded cannot be a bar to
foreclosure.

PARADIGM DEVELOPMENT CORPORATION OF THE

PHILIPPINES V. BANK OF THE PHILIPPINE ISLANDS
G.R. NO. 191174, JUNE 7, 2017
J. J. Reyes
The registration of the REMs, even if contrary to
the supposed intent of the parties, did not affect
the validity of the mortgage contracts.

171
Even assuming that the parties indeed agreed • There is court intervention;
to register only one of the two REMs, the • Decisions are appealable;
subsequent registration of both REMs did not • Order of the court cuts off all rights of the parties
affect an already validly executed REM if there impleaded;
was no other basis for the declaration of its • There is equity of redemption except on banks
nullity. That the REMs were intended merely which
as "partial security" does not make PDCP's provides for a right of redemption;
argument more plausible because as aptly
observed by the CA, the PDCP's act of
surrendering all the titles to the properties to
FEBTC clearly establishes PDCP' s intent to
mortgage all of the four properties in favor of
FEBTC to secure Sengkon's obligation under
the Credit Line. The Court notes that the
principal debtor, Sengkon, has several
obligations under its Omnibus Line
corresponding to the several credit sub-
facilities made available to it by FEBTC. As
found by the trial court, PDCP intended to be
bound only for Sengkon' s availments under
the Credit Line sub-facility and not for just any
of Sengkon's availments. Hence, it is in this
sense that the phrase "partial security" should
be logically understood.
EFFECT OF MORTGAGE
1. creates real rights, a lien inseparable from
the property mortgaged, enforceable
against the whole world
2. creates merely an encumbrance –
mortgage does not involve a transfer,
cession or conveyance of property but only
constitutes a lien thereon. A mere
mortgagee cannot eject an occupant of the
property mortgaged

EXTENT OF MORTGAGE
• Not limited to the property itself but also
extends to all its accessions, improvements,
growing fruits and rents or income (Art.
2102) as well as to proceeds of insurance
should the property be destroyed, or
expropriation value of the property should it
be expropriated.
• TO EXCLUDE accessions, accessories and
improvements subsequently introduced,
there must be a stipulation to that effect

STIPULATION FORBIDDING ALIENATION IS VOID

ARTICLE 2130 – ANY STIPULATION PROHIBITING
THE OWNER FROM ALIENATING THE
MORTGAGED PROPERTY SHALL BE VOID
• Mortgagee can simply withhold consent
• If alienated, transferee is bound to respect
the encumbrance which is a lien on the
property

FORECLOSURE OF MORTGAGE
it is the remedy available to the mortgagee by
which he subjects the mortgaged property to
the satisfaction of the obligation to secure
which the mortgage was given.

KINDS OF FORECLOSURE
1. Judicial – governed by Rule 68 of the Rules of
Court
2. Extrajudicial – governed by Act No. 3135

JUDICIAL FORECLOSURE - A proceeding for judicial

foreclosure of mortgage is an action quasi in
rem. It is based on a personal claim against a
specific property of the defendant. Its purpose
is to have the property seized and sold by
court order to the end that the proceeds
thereof be applied to the payment of plaintiff’s
claim.
• Period of redemption starts from the power.
finality of the judgment until order of
The special power or authority to sell finds support
confirmation;
in civil law. Foremost, in extrajudicial foreclosure,
• No need for a special power of attorney
the sale is made through the sheriff by the
in the contract of mortgage.
mortgagees acting as the agents of mortgagors-
owners. Hence, there must be a written authority
EXTRAJUDICIAL FORECLOSURE
from the mortgagor-owners in favor of the
An extrajudicial foreclosure may only be
mortgagees. Otherwise, the sale would be void.
effected if in the mortgage contract
Moreover, a special power of attorney is
covering a real estate, a clause is
necessary before entering "into any contract by
incorporated therein giving the mortgagee
which the ownership of an immovable is
the power, upon default of the debtor, to
transmitted or acquired either gratuitously or for
foreclose the mortgage by an extrajudicial
a valuable consideration." Thus, the written
sale of the mortgaged property.
authority must be a special power of attorney to
• No court intervention; sell.
• Not appealable, it is immediately executory;
• Foreclosure does not cut off right of all parties Here, it is undisputed that no special power to
involved; sell was attached to the real estate mortgage.
• There is right of redemption; TCLC relied on the express provision of paragraph
• Period to redeem starts from date of 3 of the agreement allowing it "to take any legal
registration of certificate of sale; action as may be necessary to satisfy the
• Special power of attorney in favor of mortgage debt." Yet, the CA construed the
mortgagee to sell is needed in the provision as a mere grant of authority to foreclose
contract. but not to sell the property. On this point, we find
reversible error on the part of the appellate court.
THE COMMONER LENDING CORPORATION v. SPS. Indeed, while it has been held that a power of
VILLANUEVA sale will not be recognized as contained in
G.R. NO. 235260, AUGUST 27, 2020 mortgage unless it is given by express grant and
J. Lopez in clear and explicit terms, and that there can be
Specifically, in extrajudicial foreclosure of no implied power of sale where a mortgage holds
real estate mortgage, a special power to by a deed absolute in form, it is generally held
sell the property is required which must that no particular formality is required in the
be either inserted in or attached to the creation of the power of sale. Any words are
deed of mortgage. Apropos is Section 1 sufficient which evince an intention that the sale
of Act No. 3135,19 as amended by Act may be made upon default or other contingency.
No. 4118, thus: In this case, paragraph 3 of the real estate
Section 1. When a sale is made under a mortgage sufficiently incorporated the required
special power inserted in or attached to any special power of attorney to sell. It expressly
real estate mortgage hereafter made as provides that the mortgaged property shall be
security for the payment of money or the foreclosed, judicially or extra judicially, upon
fulfillment of any other obligation, the failure to satisfy the debt, and that TCLC, the
provisions of the following section shall mortgagee, is appointed as attorney-in-fact of
govern as lo the manner in which the sale Spouses Villanueva, the mortgagors, to do any
and redemption shall be effected, whether legal action as may be necessary to satisfy the
or not provision for the same is made in the mortgage debt. xxx

172
 EXTRA-JUDICIAL JUDICIAL FORECLOSURE WAIVER OF SECURITY BY CREDITOR
1. Mortgagee may waive right to foreclose his
FORECLOSURE (ACT 3135) (RULE 68)
mortgage and maintain a personal action for
No complaint is filed; Complaint is filed with recovery of the indebtedness
the 2. Mortgagee cannot have both remedies
courts;
There is a right of No right of redemption Note: Foreclosure retroacts to the date of
redemption. Mortgagor except when registration of mortgage
has a right of mortgagee is a banking
redemption for 1 institution; equity of STIPULATION OF UPSET PRICE OR “TIPO”
A stipulation of minimum price at which the
year from registration redemption only (90
property shall be sold to become operative in
of the sale to the event of a foreclosure sale at public
120 days, and any auction is NULL and VOID.
time before
confirmation of BPI V. REYES
foreclosure sale); G.R. NO. 182769, FEBRUARY 1, 2012
Mortgagee has to Mortagagee can move J. Leonardo-De Castro
file a for It bears also to stress that the mode of forced
separate action to deficiency judgment in sale utilized by petitioner was an extrajudicial
recover any deficiency; the same action foreclosure of real estate mortgage which is
governed by Act No. 3135, as amended. An
Buyer at public Buyer at public
examination of the said law reveals nothing to
auction becomes auction becomes the effect that there should be a minimum bid
absolute owner only absolute owner only price or that the winning bid should be equal
after finality of an after confirmation of to the appraised value of the foreclosed
action for the sale; property or to the amount owed by the
consolidation of mortgage debtor.
ownership;
Mortgagee is given a Mortgagee need not be What is clearly provided, however, is that a
NATURE OF JUDICIAL FORECLOSURE PROCEEDINGS mortgage debtor is given the opportunity to
1. quasi in rem action redeem the foreclosed property within the
2. foreclosure is only the result or incident of term of one year from and after the date of
the failure to pay debt sale. In the case at bar, other than the mere
3. survives death of mortgagor inadequacy of the bid price at the foreclosure
sale, respondent did not allege any irregularity
NATURE OF POWER OF FORECLOSURE in the foreclosure proceedings nor did she
BY EXTRAJUDICIAL SALE prove that a better price could be had for her
1. conferred for mortgagee’s protection property under the circumstances.
2. an ancillary stipulation
3. a prerogative of the mortgagee Thus, even if we assume that the valuation of
the property at issue is correct, we still hold
that the inadequacy of the price at which it
Note: Stipulation of upset price in mortgage
was sold at public auction does not invalidate
contract is void.
the foreclosure sale.
RIGHT OF MORTGAGEE TO RECOVER DEFICIENCY
Moreover, we fail to see any unjust enrichment
1. Mortgagee is entitled to recover deficiency resulting from upholding the validity of the
2. If the deficiency is embodied in a foreclosure sale and of the right of the
judgment, it is petitioner to collect any deficiency from
referred to as deficiency judgment. respondent. Unjust enrichment exists when a
3. Action for recovery of deficiency may be person unjustly retains a benefit to the loss of
filed even during redemption period. another, or when a person retains money or
4. Action to recover prescribes after 10 years property of another against the fundamental
from the time the right of action accrues principles of justice, equity and good
governance. As discussed above, there is a
EFFECT OF INADEQUACY OF PRICE IN FORECLOSURE
strong legal basis for petitioners claim against
SALE
respondent for the balance of her loan
1. Where there is right to redeem obligation.
General Rule: Inadequacy of price is
immaterial because the judgment debtor
REDEMPTION
may redeem the property
it is a transaction by which the mortgagor
XPN: the price is so inadequate as to shock
reacquires or buys back the property which
the conscience of the court taking into
may have passed under the mortgage or
consideration the peculiar circumstances
divests the property of the lien which the
2. Property may be sold for less than its fair
mortgage may have created.
market value upon the theory that the lesser
the price the easier for the owner to redeem
3. The value of the mortgaged property has KINDS OF REDEMPTION
no bearing on the bid price at the public 1. EQUITY OF REDEMPTION
auction, provided that the public auction ‘Equity of Redemption’ defined
was regularly and honestly conducted. right of the mortgagor to redeem the
mortgaged property after his default in the
performance of the conditions of the mortgage
but before the sale of the mortgaged property
or confirmation of sale; *applies to judicial
foreclosure of real mortgage

173
2. RIGHT OF REDEMPTION expenses as a result of the custody of the property
“Right of Redemption’ defined less the income received. Obviously, both the CA
right of the mortgagor to redeem the property and the RTC did not adhere to the letters of the law
within a certain period after it was sold for the and committed mistakes in their computation.
satisfaction of the debt; applies only to
extrajudicial foreclosure of real mortgage
Note: the right of redemption, as long as within
the period prescribed, may be exercised
irrespective of whether or not the mortgagee EQUITY OF REDEMPTION RIGHT OF REDEMPTION
has subsequently conveyed the property to The right of A right granted to a
some other party (Sta. Ignacia Rural Bank, Inc defendant debtor
v. CA, 230 SCRA 513 [1994]) mortgagor to mortgagor, his
extinguish the successor in interest or
BPI V. LCL mortgage and retain any judicial creditor or
G.R. NO. 243396. SEPTEMBER 14, 2021 ownership of the judgment creditor or
J. Lopez property by paying any person having a lien
On the correct computation of the redemption the debt within on the property
price, the Court had ruled that Section 78 of 90 to 120 days after subsequent to the
Republic Act (RA) No. the entry of judgment mortgage or deed of
337 or the "General Banking Act," as or even after the trust under which the
amended, (now Section 47 of RA No. 8791 or foreclosure sale but property is sold to
the "General Banking Law of 2000") shall prior to confirmation. repurchase the property
govern in cases where the mortgagee is a within one year even
bank, and not the Rules of Court in relation to after the confirmation of
Section 6 of Act No. 3135,30 as amended by the sale and even after
Act No. 4118.31 In Ponce de Leon v. the registration of the
Rehabilitation Finance Corp., the Court certificate of foreclosure
explained that Section 78 of RA No. 337 had the sale.
effect of amending Section 6 of Act No. 3135 May be exercised There is no right
insofar as the redemption price is concerned even of
when the mortgagee is a bank, or a banking or after the foreclosure redemption in a judicial
credit institution. The conflict between the sale provided it is foreclosure of mortgage
two laws must be resolved in favor of RA No. 337 made before the sale under Rule 68. This
for being a special and subsequent is confirmed by order right of redemption
legislation. The ruling was cited and applied in of the court. exists only in
the cases of Sy v. Court of Appeals, Union Bank extrajudicial
of the Phils. v. Court of Appeals, Allied foreclosures where
Banking Corporation v. Mateo, and GE Money there is always a right
Bank, Inc. v. Sps. Dizon. of redemption within
In this case, the mortgagee BPI is a banking one year from the date
institution. Hence, Section 78 of RA No. 337, of sale(Sec. 3, Act
as further amended by Presidential Decree No. 3135), but interpreted
1828 the effective law at the time the contract by the Court to mean
of loan and the deed of real estate mortgage one year from the
were executed in 1997, shall govern in registration of the sale.
computing the redemption price for the May also exist in General rule: In
foreclosed properties, viz.: favor or judicial
other encumbrances. foreclosures there is
SEC. 78. x x x. In the event of foreclosure, whether If subsequent lien only an equity of
judicially or extrajudicially, of any mortgage on real estate holders are not redemption which can
which is security for any loan granted before the passage impleaded as parties be exercised prior to the
of this Act or under the provisions of this Act, the in the foreclosure suit, confirmation of
mortgagor or debtor whose real property has been sold at the judgment in favor the
public auction, judicially or extrajudicially, for the full or of the foreclosing foreclosure sale. This
partial payment of an obligation to any bank, banking or mortgagee does not means that after the
credit institution, within the purview of this Act shall have bind the other lien foreclosure sale but
the right, within one year after the sale of the real estate holders. In this case, before its confirmation,
as a result of the foreclosure of the respective mortgage, their equity of the mortgagor may
to redeem the property by paying the amount fixed by the redemption exercise his right of pay
court in the order of execution, or the amount due under the proceeds of the sale
remains unforeclosed. and prevent the
the mortgage deed, as the case may be, with interest
A separate confirmation of the sale.
thereon at the rate specified in the mortgage, and all the
foreclosure
costs, and judicial and other expenses incurred by the proceeding has to be
bank or institution concerned by reason of the execution brought against them
and sale and as a result of the custody of said property to require them to
less the income received from the property. x x x. redeem from the first
Applying the above provision pertaining to mortgagee or from
extrajudicial foreclosure, the redemption price the party acquiring
must consist of the following: (1) the principal the title to the
obligation or the amount due under the mortgaged property.
mortgage deed; (2) interest at the rate If not by banks, Exception: there is a
specified in the mortgage; (3) expenses of the right of
foreclosure, i.e., Judicial Commission, mortgagors merely redemption if the
Publication Fee, and Sheriffs Fee; and (4) other have an equity of foreclosure is in favor of
redemption, which is banks as mortgagees,
simply their right, as whether the foreclosure
mortgagor, to be judicial or
extinguish the extrajudicial. This right
mortgage and retain of redemption is
ownership of the explicitly provided in
property by paying Sec. 47 of the General
the secured debt prior Banking Law of 2000.
to the confirmation of While the law mentions
the foreclosure sale. the redemption period
to be one year counted
from the date of
registration of the
certificate in the
Registry of Property

174
 PERIOD OF REDEMPTION Forms of Security Interest
1. Extra-judicial Foreclosure (Act No. 3135) • Tangible asset
• Natural person – 1 year from registration of • Investment property
the certificate of sale with Registry of Deeds
• Deposit account
• Juridical person – same rule as natural person
(1 year)
Creation of a Security Interest
• It is created by a security agreement.
If Mortgagee is PNB, a bank or banking institution:
• It may provide for the creation of a security
• Natural person – 1 year from registration of
interest in a future property, but security
the certificate of sale with Registry of Deeds
interest in that property is created only
• Juridical person – 3 months (90 days) after
when the grantor acquires rights in it or the
foreclosure or before registration of
power to encumber it.
certificate of foreclosure whichever is earlier
(Sec. 117 of General Banking Law)
Security Agreement
A security agreement must be contained in a
2. Judicial Foreclosure – before confirmation of the
sale by the court (only equity of redemption) written contract signed by the parties. It may
consist of one or more writings that, taken
Except : Mortgagee is PNB, a bank or banking
institution. Sec. 47, General Banking Law - together, establish the intent of the parties to
confers right of the mortgagor to redeem create a security interest.
the property sold on foreclosure after The security agreement shall likewise provide
confirmation by the court of the foreclosure for the language to be used in agreements and
sale – which right may be exercised by the notices. The grantor shall be given the option
following: to have the agreement and notices in Filipino.
• NATURAL PERSONS - within a period of one
year, counted from the date of registration Description of Collateral may be:
of the certificate of sale in the Registry of a. Specific
Property b. General
• JURIDICAL PERSONS – within a period of 3
months after the foreclosure sale or until Sufficient Description of Collateral
the registration of the certificate of sale, As long as it reasonable identifies the collateral
which ever comes first.
E. PERSONAL PROPERTY SECURITY ACT Example of Sufficient Description
(R.A. NO. 11057) • "all personal property"
• "all equipment"
• "all inventory"
An Act Strengthening the Secured
• "all personal property within a generic category"
Transactions Legal Framework in the
Philippines, Which Shall Provide for the
Creation, Perfection, Determination of Priority, PERFECTION OF SECURITY INTEREST
Establishment of a Centralized Notice Registry, A security interest shall be perfected when it
and Enforcement of Security Interests in has been created and the secured creditor has
Personal Property, and for Other Purposes taken one of the means of perfection;
On perfection, a security interest becomes
effective against third parties.
Purpose
It is the policy of the State to promote
economic activity by increasing access to least Means of Perfection
cost credit, particularly for micro, small, and i. Registration of a notice with the Registry;
medium enterprises (MSMEs), by establishing Notice - a statement of information that is
a unified and modern legal framework for registered in the Registry relating to a
securing obligations with personal property. security interest or lien. The term includes
an initial notice.,
Scope of the Act
Applies to all transactions of any form that
secure an obligation with movable collateral,
Except:
interests in aircrafts subject to Republic Act
No. 9497, or
the "Civil Aviation Authority Act of 2008", and, amendment notice, and termination
interests in ships subject to Presidential ii. notice; Possession of the collateral by the
Decree No. 1521, or the "Ship Mortgage secured creditor; Control of
Decree of 1978". iii. investment property and
deposit account.
PARTIES in PPS
1. GRANTOR
• The person who grants a security interest in
collateral to secure its own obligation or PERFECTION OF SECURITY INTEREST IN:
that of another person;
• A buyer or other transferee of a collateral ANY TANGIBLE INVESTMENT DEPOSIT
that acquires ASSET PROPERTY ACCOUNT
its right subject to a security interest; By By By
• A transferor in an outright transfer of an Registration Registration Registration
accounts By Possession By Control By Control
receivable; or 2. SECURED CREDITOR
• A lessee of goods; a person that has a security interest.
SECURITY INTEREST Perfection by Control
A property right in collateral that secures a. The creation of the security interest in
payment or other performance of an obligation favor of the deposit-taking institution or
of the Grantor to the Secured Creditor. the intermediary;
b. The conclusion of a control agreement; or
c. For an investment property that is an
electronic security not held with an
intermediary, the notation of the security
interest in the books maintained by or on
behalf of the issuer for the purpose of
recording the name of the holder of the
securities.

175
1) With respect to securities, means an agreement in writing among the grantor, secured
agreement in writing among the issuer or the creditor, and intermediary, according to which the
intermediary, the grantor and the secured commodity intermediary will apply any value
creditor, according to which the issuer or the distributed on account of the commodity contract
intermediary agrees to follow instructions as directed by the secured creditor without further
from the secured creditor with respect to the consent by the commodity customer or grantor;
security, without further consent from the
grantor;
2) With respect to rights to deposit account,
means an agreement in writing among the
deposit-taking institution, the grantor and the
secured creditor, according to which the
deposit-taking institution agrees to follow
instructions from the secured creditor with
respect to the payment of funds credited to
the deposit account without further consent
from the grantor;
3) With respect to commodity contracts, means
an agreement in writing among the grantor,
secured creditor, and intermediary, according
to which the commodity intermediary will
apply any value distributed on account of the
commodity contract as directed by the
secured creditor without further consent by
the commodity customer or grantor.
DEPOSIT-TAKING INSTITUTION
GENERAL RULE: it is not required that a deposit-
taking institution or an intermediary enter into a
control agreement, even if the grantor so
requests.
XPN: If they entered into such an agreement, they
shall not be required to confirm the existence of
the agreement to another person unless
requested to do so by the grantor.
CONTINUITY OF SECURITY INTEREST
GENERAL RULE: Security Interest shall continue in
collateral notwithstanding (1) sale, (2) lease, (3)
license, (4) exchange, or (5) other disposition of
the collateral.
XPN: If the party who obtains, in the ordinary
course of business, any movable property
containing a security interest shall take the same
free of such security interest provided he was in
good faith [Sec 21, Ibid], or agreed upon by the
parties.
Good faith shall not exist if the security interest
in the movable property was registered prior to
his obtaining the property.
Commodity contract
a commodity futures contract, an option on a
commodity futures contract, a commodity option,
or another contract if the contract or option is:
1. Traded on or subject to the rules of a board of
trade that has been designated as a contract
market for such a contract; or
2. Traded on a foreign commodity board of trade,
exchange, or market, and is carried on the
books of a commodity intermediary for a
commodity customer;
Control Agreement
(1) With respect to securities - means an agreement
in writing among the issuer or the
intermediary, the grantor and the secured
creditor, according to which the issuer or the
intermediary agrees to follow instructions
from the secured creditor with respect to the
security, without further consent from the
grantor;
(2) With respect to rights to deposit account - means an
agreement in writing among the deposit-
taking institution, the grantor and the
secured creditor, according to which the
deposit-taking institution agrees to follow
instructions from the secured creditor with
respect to the payment of funds credited to
the deposit account without further consent
from the grantor;
(3) With respect to commodity contracts - means an
Non-inter mediated securities Security Interest.—
securities other than securities credited (a) A security interest in an account receivable
to a securities account and rights in shall be effective notwithstanding any
securities resulting from the credit of agreement between the grantor and the
securities to a securities account; account debtor or any secured creditor
limiting in any way the grantor’s right to
Right to Proceeds and Commingled Funds and Money create a security interest.
a) A security interest in personal (b) Nothing in this section shall affect any
property shall extend to its obligation or liability of the grantor for
identifiable or traceable proceeds. breach of the agreement in subsection (a).
b) Where proceeds in the form of funds (c) Any stipulation limiting the grantor’s right
credited to a deposit account or to create a security interest shall be void.
money are commingled with other (d) This section shall apply only to accounts
funds or money: receivable arising from:
1. The security interest shall extend (1) A contract for the supply or lease of
to the commingled money or goods or services other than financial
funds, notwithstanding that the services;
proceeds have ceased to be (2) A construction contract or a contract for
identifiable to the extent they the sale or lease of real property; and
remain traceable: (3) A contract for the sale, lease or license
2. The security interest in the of
commingled funds or money shall intellectual property.
be limited to the amount of the
proceeds immediately before they Perfection in Proceeds
were commingled: and a. Upon disposition of collateral, a security
3. If at any time after the interest shall extend to proceeds of the
commingling, the balance credited collateral without further act and be
to the deposit account or the continuously perfected, if the proceeds are
amount of the commingled money in the form of money, accounts receivable,
is less than the amount of the negotiable instruments or deposit
proceeds immediately before they accounts.
were commingled, the security b. Upon disposition of the collateral, if the
interest against the commingled proceeds are in a form different from
funds or money shall be limited to money, accounts receivable, negotiable
the lowest amount of the instruments or deposit accounts, the
commingled funds or money security interest in such proceeds must be
between the time when the perfected by one of the means applicable to
proceeds were commingled and the relevant type of collateral within fifteen
the time the security interest in (15) days after the grantor receives such
the proceeds is claimed. proceeds; otherwise, the security interest
in such proceeds shall not be effective
Section 10. Contractual Limitation on the against third parties.
Creation of a

176
Change in Means of Perfection b) A security interest in an instrument or negotiable
A security interest shall remain perfected document that is perfected by possession of the
despite a change in the means for achieving instrument or the negotiable document shall
perfection: Provided, That there was no time have priority over a security interest in the
when the security interest was not perfected. instrument or negotiable document that is
perfected by registration of a notice in the
Assignment of Security Interest Registry.
If a secured creditor assigns a perfected
security interest, an amendment notice may
be registered to reflect the assignment.

Determination of Priority of Security Interests and

Liens in the Same Collateral
determined according to time of registration of
a notice or perfection by other means, without
regard to the order of creation of the security
interests and liens.

Priority for Investment Property and Deposit Accounts

a) A security interest in a deposit account
with respect to which the secured creditor
is the deposittaking institution or the
intermediary shall have priority over a
competing security interest perfected by
any method.
b) A security interest in a deposit account or
investment property that is perfected by a
control agreement shall have priority over
a competing security interest except a
security interest of the deposit-taking
institution or the intermediary.
c) The order of priority among competing
security interests in a deposit account or
investment property that were perfected
by the conclusion of control agreements
shall be determined on the basis of the
time of conclusion of the control
agreements.
d) Any rights to set-off that the deposit-taking
institution may have against a grantor’s
right to payment of funds credited to a
deposit account shall have priority over a
security interest in the deposit account.
e) A security interest in a security certificate
perfected by the secured creditor’s
possession of the certificate shall have
priority over a competing security interest
perfected by registration of a notice in the
Registry.
f) A security interest in electronic securities
not held with an intermediary perfected by a
notation of the security interests in the books
maintained for that purpose by or on behalf
of the issuer shall have priority over a
security interest in the same securities
perfected by any other method.
g) A security interest in electronic securities
not held with an intermediary perfected by
the conclusion of a control agreement shall
have priority over a security interest in the
same securities perfected by registration of
a notice in the Registry.
h) The order of priority among competing
security interests in electronic securities not
held with an intermediary perfected by the
conclusion of control agreements is
determined on the basis of the time of
conclusion of the control agreements.
Priority Rules for Tangible Assets
a) A security interest in a security certificate
perfected by the secured creditor’s
possession of the certificate shall have
priority over a competing security interest
perfected by the registration of a notice in
the Registry
c) A perfected security interest in livestock in the movable property was registered prior to
securing an obligation incurred to his obtaining the property.
enable the grantor to obtain food or
medicine for the livestock shall have Effect of the Grantor’s Insolvency on the Priority of a
priority over any other security interest Security Interest.
in the livestock, if the secured creditor The security interest shall remain perfected and
providing credit for food or medicine retain the priority it had before the
gives written notification to the holder commencement of the insolvency proceedings.
of the conflicting perfected security
interest in the same livestock before the Purchase Money Security Interest
grantor receives possession of the food a) A purchase money security interest in
or medicine. equipment and its proceeds shall have
priority over a conflicting security interest, if
Priority Rules for Specific a notice relating to the purchase money
Cases By Operation of security interest is registered within three (3)
Laws business days after the grantor receives
a) Priority and Right of Retention – A person possession of the equipment.
who provides services or materials with b) A purchase money security interest in
respect to the goods, in the ordinary consumer goods that is perfected by
course of business, and retains registration of notice not later than three (3)
possession of the goods shall have business days after the grantor obtains
priority over a perfected security possession of the consumer goods shall have
interest in the goods until the payment priority over a conflicting security interest.
thereof. (Section 20, Chapter 4 of RA c) A purchase money security interest in
No. 11057) inventory, intellectual property or livestock
b) Effect of Grantor’s Insolvency – Subject to the shall have priority over a conflicting perfected
applicable insolvency law, a security security interest in the same inventory,
interest perfected prior to the intellectual property or livestock if:
commencement of insolvency 1. The purchase money security interest is
proceedings in respect of the grantor perfected when the grantor receives
shall remain perfected and retain the possession of the inventory or livestock,
priority it had before the or acquires rights to intellectual property;
commencement of the insolvency and
proceedings. 2. Before the grantor receives possession of
c) During the insolvency proceedings, the the inventory or livestock, or acquires
perfected security interest shall rights in intellectual property, the
constitute a lien over the collateral. purchase money secured creditor gives
(Section 6.04, Rule VI of IRR) written notification to the holder of the
conflicting perfected security interest in
Transferee Exceptions the same types of inventory, livestock, or
Any party who obtains, in the ordinary intellectual property. The notification sent
course of business, any movable property to the holder of the conflicting security
containing a security interest shall take the interest may cover multiple transactions
same free of such security interest between the purchase money secured
provided he was in good faith. No such creditor and the grantor without the need
good faith shall exist if the security interest to identify each transaction.

177
d) The purchase money security interest in of registration of the notice shall be reckoned
equipment or consumer goods perfected from the date the notice was registered.
timely in accordance with subsections (a)
and (b), shall have priority over the rights
of a buyer, lessee, or lien holder which
arise between delivery of the equipment or
consumer goods to the grantor and the
time the notice is registered.

Livestock
A perfected security interest in livestock
securing an obligation incurred to enable the
grantor to obtain food or medicine for the
livestock shall have priority over any other
security interest in the livestock, except for a
perfected purchase money security interest in
the livestock, if the secured creditor providing
credit for food or medicine gives written
notification to the holder of the conflicting
perfected security interest in the same
livestock before the grantor receives
possession of the food or medicine.

Fixtures, Accessions, and Commingled Goods

A perfected security interest in a movable
property which has become a fixture, or has
undergone accession or commingling shall
continue provided the movable property
involved can still be reasonably traced. In
determining ownership over fixtures,
accessions, and commingled goods, the
provisions of Book II of Republic Act No. 386 or
the "Civil Code of the Philippines" shall apply.

Establishment of Electronic Registry

a. The Registry shall be established in and
administered
by the LRA.
b. The Registry shall provide electronic means
for registration and searching of notices.

Public Record
a. Information contained in a registered
notice shall be considered as a public
record.
b. Any person may search notices
registered in the Registry.
c. The electronic records of the Registry
shall be the official records.

Sufficiency of Notice
a) An initial notice of security interest shall
not be rejected:
1. If it identifies the grantor by an
identification number, as further
prescribed in the regulations;
2. If it identifies the secured creditor or an
agent of
the secured creditor by name;
3. If it provides an address for the grantor
and secured creditor or its agent;
4. If it describes the collateral: and
5. If the prescribed fee has been tendered,
or an arrangement has been made for
payment of fees by other means.
b) If the Registry rejects to register a notice, it
shall promptly communicate the fact of and
reason for its rejection to the person who
submitted the notice.
c) Each grantor must authorize the
registration of an initial notice by signing a
security agreement or otherwise in writing.
d) A notice may be registered before a
security agreement is concluded. Once a
security agreement is concluded, the date
e) A notice of lien may be registered by c) Provides the new information.
a lien holder without the consent of d) An amendment notice that adds collateral
the person against whom the lien is that is not proceeds must be authorized by
sought to be enforced. the grantor in writing.
f) Description of the collateral in a e) An amendment notice that adds a grantor
notice shall be entered in English. must be authorized by the added grantor in
writing.
One Notice Sufficient for Security Interests f) An amendment notice shall be effective
Under Multiple Security Agreements only as to each secured creditor who
The registration of a single notice may authorizes it.
relate to security interests created by the g) An amendment notice that adds collateral
grantor under one (1) or more than one or a grantor shall be effective as to the
security agreement. added collateral or grantor from the date of
its registration.
Effectiveness of Notice
Continuation of Notice
a) A notice shall be effective at the a) The period of effectiveness of a notice may
time it is be continued by registering an amendment
discoverable on the records of the Registry. notice that identifies the initial notice by its
b) A notice shall be effective for the registration number.
duration of the term indicated in the b) Continuation of notice may be registered
notice unless a continuation notice is only within six (6) months before the
registered before the term lapses. expiration of the effective period of the
c) A notice substantially complying with notice.
the requirements of this Chapter shall
be effective unless it is seriously Termination of Effectiveness of a Notice
misleading. a) The effectiveness of a notice may be
d) A notice that may not be retrieved in terminated by registering a termination
a search of the Registry against the notice that:
correct identifier of the grantor shall 1. Identifies the initial notice by its
be ineffective with respect to that registration number; and
grantor. 2. Identifies each secured creditor who
authorizes the registration of the
Seriously Misleading Notice termination notice.
A notice that does not provide the b) A termination notice terminates
identification number of the grantor shall effectiveness of the notice as to each
be seriously misleading. authorizing secured creditor.

Amendment of Notice Registry Duties

a) A notice may be amended by the a) For each registered notice, the Registry shall:
registration of an amendment notice 1. Assign a unique registration number;
that: 2. Create a record that bears the number
b) Identifies the initial notice by its assigned to the initial notice and the
registration number; and date and time of registration; and
3. Maintain the record for public inspection.

178
b) The Registry shall index notices by the notice;
identification number of the grantor and, c. The collateral described in the notice includes an
for notices containing a serial number of a item or kind of property that is not a collateral
motor vehicle, by serial number. under a security agreement between the
c) The Registry shall provide a copy of the secured creditor and the grantor;
electronic record of the notice, including d. No security agreement exists between the parties;
the registration number and the date and or
time of registration to the person who e. The security interest is extinguished in
submitted it. accordance
d) The Registry shall maintain the capability with this Act.
to retrieve a record by the identification
number of the grantor, and by serial
number of a motor vehicle.
e) The Registry shall maintain records of
lapsed notices for a period of ten (10)
years after the lapse.
f) The duties of the Registry shall be merely
administrative in nature. By registering a
notice or refusing to register a notice, the
Registry does not determine the
sufficiency, correctness, authenticity, or
validity of any information contained in the
notice.

Search of Registry Records and Certified Report

a) The Registry shall communicate the
following information to any person who
requests it:
1. Whether there are in the Registry any
unlapsed notices that indicate the
grantor's identification number or
vehicle serial number that exactly
matches the relevant criterion provided
by the searcher;
2. The registration number, and the date
and time of registration of each notice;
and
3. All of the information contained in each
notice.
b) If requested, the Registry shall issue a
certified report of the results of a search
that is an official record of the Registry and
shall be admissible into evidence in judicial
proceedings without extrinsic evidence of
its authenticity.
Section 37. Disclosure of Information.—
a. The secured creditor must provide to the
grantor at its request:
1. The current amount of the unpaid secured
obligation; and
2. A list of assets currently subject to a
security interest.
b. The secured creditor may require payment
of a fee for each request made by the
grantor in subsection (a) in this section, but
the grantor is entitled to a reply without
charge once every six (6) months.
c. A security interest in a deposit account
shall not:
1. Affect the rights and obligations of the
deposit- taking institution without its
consent; or
2. Require the deposit-taking institution to
provide any information about the
deposit account to third parties.
When the Grantor May Demand Amendment or
Termination of Notice
General Rule: A grantor may give a written
demand to the secured creditor to amend or
terminate the effectiveness of the notice if:
a. All the obligations under the security
agreement to which the registration relates
have been performed and there is no
commitment to make future advances;
b. The secured creditor has agreed to release
part of the collateral described in the
Matters That May be Required by Demand order made under subsection (a) of this
Upon receipt of the demand submitted section as soon as reasonably practicable
under Section 39, the secured creditor after receiving the order.
must register, within fifteen (15) working
days, an amendment or termination Enforcement of Security Interest Secured Creditor’s
notice: Rights
a. Terminating the registration in a case Right of Redemption
within subsections (a), (d) or (e) of Any person who is entitled to receive a
Section 39; notification of disposition is entitled to redeem
b. Amending the registration to release the collateral by paying or otherwise
some property that is no longer performing the secured obligation in full,
collateral in a case within subsection including the reasonable cost of enforcement.
(c) of Section 39 or that was never General Rule: The right of redemption may be exercised
collateral under a security agreement XPN:
between the secured creditor and the 1) The person entitled to redeem has not,
grantor in a case within subsection (c) after the default, waived in writing the right
of Section 39. to redeem;
2) The collateral is sold or otherwise disposed
Noncompliance with Demand of, acquired or collected by the secured
If the secured creditor fails to comply creditor or until the conclusion of an
with the demand within fifteen (15) agreement by the secured creditor for that
working days after its receipt, the person purpose; and
giving the demand under Section 39 may 3) The secured creditor has retained the collateral.
ask the proper court to issue an order
terminating or amending the notice as Right of Higher-Ranking Secured. Creditor to Take
appropriate. Over Enforcement
a. Even if another secured creditor or a lien
Compulsory Amendment or Termination by holder has commenced enforcement, a
secured creditor whose security-interest
Court Order
has priority over that of the enforcing
a) The court may, on application by the
secured creditor or lien holder shall be
grantor, issue an order that the notice
entitled to take over the enforcement
be terminated or amended in
process.
accordance with the demand, which
b. The right referred to in subsection (a) of this
order shall be conclusive and binding-
section may be invoked at any time before
on the LRA: Provided, That the secured
the collateral is sold or otherwise disposed
creditor wrho disagrees with the order
of, or retained by the secured creditor or until
of the court may appeal the order.
the conclusion of an agreement by the
b) The court may make any other order
secured creditor for that purpose.
it deems proper for the purpose of
c. The right of the higher-ranking secured
giving effect to an order under
creditor to take over the enforcement
subsection (a) of this section.
process shall include the right to enforce
c) The LRA shall amend or terminate a
the rights by any method available to a
notice in accordance with a court
secured creditor under this Act.

179
Expedited Repossession of the Collateral secured creditor, apply the balance of the
a) The secured creditor may take possession deposit account to the obligation secured by the
of the collateral without judicial process if deposit account; and
the security agreement so stipulates: d. In other cases of security interest in a deposit
Provided, That possession can be taken account perfected by control, instruct the
without a breach of the peace. deposit- taking institution to pay the balance of
b) If the collateral is a fixture, the secured the deposit account to the secured creditor’s
creditor, if it has priority over all owners account.
and mortgagees, may remove the fixture
from the real property to which it is
affixed without judicial process. The
secured creditor shall exercise due care
in removing the fixture.
c) If, upon default, the secured creditor
cannot take possession of collateral
without breach of the peace, the secured
creditor may proceed as follows:
1. The secured creditor shall be entitled to
an expedited hearing upon application
for an order granting the secured
creditor possession of the collateral.
Such application shall include a
statement by the secured creditor,
under oath, verifying the existence of
the security agreement attached to the
application and identifying at least one
event of default by the debtor under the
security agreement;
2. The secured creditor shall provide the
debtor, grantor, and, if the collateral
is a fixture, any real estate
mortgagee, a copy of the application,
including all supporting documents
and evidence for the order granting
the secured creditor possession of the
collateral; and
3. The secured creditor is entitled to an
order granting possession of the
collateral upon the court finding that a
default has occurred under the security
agreement and that the secured
creditor has a right to take possession
of the collateral. The court may direct
the grantor to take such action as the
court deems necessary and appropriate
so that the secured creditor may take
possession of the collateral: Provided,
That breach of the peace shall include
entering the private residence of the
grantor without permission, resorting to
physical violence or intimidation, or
being accompanied by a law
enforcement officer when taking
possession or confronting the grantor.

Recovery in Special Cases

Upon default, the secured creditor may
without judicial process:
a. Instruct the account debtor to make
payment to the secured creditor, and apply
such payment to the satisfaction of the
obligation secured by the security interest
after deducting the secured creditor’s
reasonable collection expenses. On request
of the account debtor, the secured creditor
shall provide evidence of its security
interest to the account debtor when it
delivers the instruction to the account
debtor;
b. In a negotiable document that is perfected
by possession, proceed as to the
negotiable document or goods covered by
the negotiable document;
c. In a deposit account maintained by the
Right to Dispose of Collateral the collateral, the secured creditor shall
a. After default, a secured creditor may notify:
sell or otherwise dispose of the 2) The grantor may waive the right to be notified.
collateral, publicly or privately, in its 3) A notification of disposition is sufficient
present condition or following any if it identifies the grantor and the
commercially reasonable preparation secured creditor; describes the
or processing. collateral; states the method of
b. The secured creditor may buy the intended disposition; and states the
collateral at any public disposition, or time and place of a public disposition or
at a private disposition but only if the the time after which other disposition is
collateral is of a kind that is to be made.
customarily sold on a recognized 4) The requirement to send a notification
market or the subject of widely under this section shall not apply if the
distributed standard price quotations. collateral is perishable or threatens to
decline speedily in value or is of a type
Commercial Reasonableness Required customarily sold on a recognized
a. In disposing of collateral, the secured b. The grantor may waive the right to be notified.
creditor shall act in a commercially c. A notification of disposition is sufficient if it
reasonable manner. identifies the grantor and the secured
b. A disposition is commercially creditor; describes the collateral; states the
reasonable if the secerned creditor method of intended disposition; and
disposes of the collateral in states the time and place of a public
conformity with commercial practices disposition or the time after which other
among dealers in that type of disposition is to be made.
property. d. The requirement to send a notification
c. A disposition is not commercially under this section shall not apply if the
unreasonable merely because a collateral is perishable or threatens to
better price could have been obtained decline speedily in value or is of a type
by disposition at a different time or by customarily sold on a recognized market.
a different method from the time and
method selected by the secured Application of Proceeds
creditor. a. The proceeds of disposition shall be applied
d. If a method of disposition of collateral in the following order:
has been approved in any legal 1) The reasonable expenses of taking,
proceeding, it is conclusively holding, preparing for disposition, and
commercially reasonable. disposing of the collateral, including
reasonable attorneys’ fees and legal
Notification of Disposition expenses incurred by the secured
a. Not later than ten (10) days before creditor;
disposition of the collateral, the 2) The satisfaction of the obligation
secured creditor shall notify: secured by the security interest of the
1) Not later than ten (10) days before enforcing secured creditor; and
disposition of

180
 3) The satisfaction of obligations secured
by any subordinate security interest or
hen in the collateral if a written demand
and proof of the interest are received
before distribution of the proceeds is
completed.
b. The secured creditor shall account to the
grantor for any surplus, and, unless otherwise
agreed, the debtor is liable for any
deficiency.

Rights of Buyers and Other Third Parties

• If a secured creditor sells the collateral, the
buyer shall acquire the grantor’s right in the
asset free of the rights of any secured
creditor or lien holder.
• If a secured creditor leases or licenses the
collateral, the lessee or licensee shall be
entitled to the benefit of the lease or license
during its term.
• If a secured creditor sells, leases or licenses
the collateral not in compliance with this
Chapter, the buyer, lessee or licensee of the
collateral shall acquire the rights or benefits
described in subsections (a) and
(b) of this section: Provided, That it had no
knowledge of a violation of this Chapter that
materially prejudiced the rights of the
grantor or another person.

Retention of Collateral by Secured Creditor

a. After default, the secured creditor may
propose to the debtor and grantor to take
all or part of the collateral in total or partial
satisfaction of the secured obligation, and
shall send a proposal to:
1. The debtor and the grantor;
2. Any other secured creditor or lien holder
who, five
(5) days before the proposal is sent to
the debtor and the grantor, perfected
its security interest or lien by
registration; and
3. Any other person with an interest in the
collateral who has given a written
notification to the secured creditor
before the proposal is sent to the
debtor and the grantor.
b. The secured creditor may retain the
collateral in the case of:
1. A proposal for the acquisition of the
collateral in full satisfaction of the
secured obligation, unless the secured
creditor receives an objection in writing
from any person entitled to receive
such a proposal within twenty (20) days
after the proposal is sent to that
person; or
2. A proposal for the acquisition of the
collateral in partial satisfaction of the
secured obligation, only if the secured
creditor receives the affirmative
consent of each addressee of the
proposal in writing within twenty (20)
days after the proposal is sent to that
person.

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 XIII. COMPROMISE AGREEMENT
Compromise Agreement Nature of the Contract
It is a contract whereby the parties, by making • A compromise is a consensual contract, and as
reciprocal concessions, avoid a litigation or put such, it is perfected upon the meeting of the
an end to one already commenced. [Article minds of the parties to the contract.
2028]

Characteristics of a Compromise
a. Consensual
b. Reciprocal
c. Nominate
d. Onerous
e. Accessory (in the sense that a prior
conflict is presupposed)
f. Once accepted, it is binding on the parties,
provided there is no vitiated consent.
g. It is the settlement of a controversy
principally, and is, but merely incidentally,
the settlement of a claim.

Kinds of Compromises
1. Judicial - to end a pending litigation
2. Extrajudicial - to prevent a litigation from
arising

Judicial Compromise - A compromise agreement

that is intended to resolve a matter already
under litigation is normally called a judicial
compromise. Once it is stamped with judicial
imprimatur, it becomes more than a mere
contract binding upon the parties. Having the
sanction of the court and entered as its
determination of the controversy, it has the
force and effect of any other judgment. Such
agreement has the force of law and is
conclusive between the parties. It transcends
its identity as a mere contract binding only
upon the parties thereto, for it becomes a
judgment that is subject to execution in
accordance with the Rules.
• Thus, a compromise agreement that has
been made and duly approved by the court
attains the effect and authority of res
judicata, although no execution may be
issued unless the agreement receives the
approval of the court where the litigation is
pending and compliance with the terms of
the agreement is decreed (Viesca v.
Gilinsky, G.R. No. 171698, July 4,2007).
• Courts as a rule may not impose upon the
parties a Judgment different from their
compromise agreement. It would be an
abuse of discretion. (Municipal Board v.
Samahang Magsasaka, G.R. No. L-25818,
February 25, 1975)

Basic duty of the court whenever a suit is filed

The court shall endeavor to persuade the
litigants in a civil case to agree upon some fair
compromise. [Article 2029] Rationale: Litigation
must, if possible, be avoided or minimized.

Suspension of Civil Action or Proceeding

Every civil action or proceeding shall be suspended:
1. If willingness to discuss a possible
compromise is expressed by one or both
parties;
2. If it appears that one of the parties, before
the commencement of the action or
proceeding, offered to discuss a possible
compromise but the other party refused
the offer.
• A compromise is an agreement When Court Approval is Essential
between two or more persons who, for The court’s approval is necessary in compromises
preventing or putting an end to a entered into by:
lawsuit, adjust their respective a. Guardians
positions by mutual consent in the way b. Parents
they feel they can live with. Reciprocal c. Absentee’s representatives or Administrators
concessions are the very heart and life d. Executors of decedents’ estates. [Article 2032]
of every compromise agreement,
where each party approximates and
Rule for Compromise Entered Into by Juridical Persons
concedes in the hope of gaining
The form and the requisites for alienation of
balance by the danger of losing. It is,
property must be observed. [Article 2033].
in essence, a contract (Clark
Development Corporation v.
Mondragon Leisure and Resorts Offer of compromise in civil cases
Corporation et al, In civil cases, an offer of compromise is not an
G.R. No. 150986, March 2, 2007). admission of any liability, and is not admissible
in evidence against the offeror. Neither is
• Consent could be given not only by the
party himself but also by anyone duly evidence of conduct nor statements made in
authorized and acting for and in his compromise negotiations admissible, except
behalf evidence otherwise discoverable or offered for
another purpose, such as proving bias or
prejudice of a witness, negativing a contention
Coverage of a Compromise
of undue delay, or proving an eff ort to
• A compromise comprises only those
obstruct a criminal investigation or
objects which are definitely stated
prosecution. (REVISED RULES ON EVIDENCE,
therein, or which by necessary
Sec 28).
implication from its terms should be
deemed to have been included in the
Compromise Upon Civil Liability Arising From An
same (CIVIL CODE, Art. 2036).
• A general renunciation of rights is Offense
understood to refer only to those that There may be a compromise upon the civil
are connected with the dispute which liability arising from an offense; but such
was the subject of the compromise compromise shall not extinguish the public
(CIVIL CODE, Art. 2036). action for the imposition of the legal penalty
(Art. 2034).
General Rule: If a crime has been committed,
Mitigation of Damages
there can be a compromise on the civil liability
The courts may mitigate the damages
but not generally on the criminal liability.
to be paid by the losing party who has
shown a sincere desire for compromise. Rationale: Because the social and public interest
demands the punishment of the offender.
[Article 2031]

182
When Compromise is Allowed c. If it refers only to one thing to which one of the
If it arises under the Internal Revenue Code or parties has no right, as shown by the Newly-
any other law administered by the Bureau of discovered documents (Art. 2039).
Internal Revenue. d. If after a litigation has been decided by a final
judgment, a compromise should be agreed upon,
Offer of compromise in criminal cases either or both parties being unaware of the
In criminal cases, except those involving Existence of the final judgment, the compromise
quasi- offenses (criminal negligence) or may be rescinded (Art. 2040)
those allowed by law to be compromised, an
offer of compromise by the accused may be
received in evidence as an implied
admission of guilt (REVISED RULES ON
EVIDENCE, Sec 28).

Questions on Which There Can Be No Valid

Compromise
1. The civil status of persons;
2. The validity of a marriage or a legal
separation;
3. Any ground for legal separation;
4. Future support;
5. The jurisdiction of courts;
6. Future legitime. [Article 2035]

Res Judicata Effect of a Compromise

• A compromise has upon the parties the
effect and authority of res judicata; but
there shall be no execution except in
compliance with a judicial compromise (Art.
2037).
• If the compromise has the effect of a
novation, the surety is released from
liability. But if the compromise is merely a
reduction of the obligation, the surety is still
liable for the subsisting part (Morales v.
Fontanos, G.R. No. 43299, January 29,
1937).

Judgment On Compromise Generally Not Appealable

General Rule: A judgment on compromise is
not generally appealable and may therefore be
immediately executory.
XPN: Unless a motion is filed to set aside the error
on the ground of vitiated consent, in which
case an appeal may be taken from a court
order denying the motion to set aside the
compromise.
Reason for the rule: The reason for the rule is
that when both parties enter into an
agreement to end a pending litigation and
request that a decision be rendered approving
said agreement, it is only natural to presume
that such action constitutes an implicit, as
undeniable as an express, waiver of the right
to appeal against said decision. Thus, a
decision on a compromise agreement is final
and executory, and is conclusive between the
parties (Unirock Corporation vs Carpio and
Hardrock Aggregates Inc., G.R. No. 213421,
August 24, 2020).

Instances when Compromise may be

annulled/rescinded
a. A compromise in which there is Mistake,
fraud, violence, intimidation, undue
influence, or falsity of documents (Art.
2038).
b. The discovery of documents referring to
one or more but not to all of the questions
settled shall not itself be a cause for
annulment or rescission of the
compromise, unless said documents have
been concealed by one of the parties (Art.
2039).
Rule In Setting Up A Mistake Of Fact
One of the parties cannot set up a
183
mistake of fact as against the other if the
latter, by virtue of the compromise has
withdrawn from a litigation already
commenced. [Article 2038]

Discovery of Documents Referring to

Matters Compromised Upon
General Rule: The discovery of documents
referring to one or more but not to all of
the questions settled shall not itself be a
cause for annulment or rescission of the
compromise.
XPN: Unless said documents have been
concealed by one of the parties. [Article
2039]

Remedy if Compromise Agreement Is Not Fulfilled

If one of the parties fails or refuses to abide by the
compromise, the other party may either:
a) Enforce the compromise; or
b) Regard the compromise as rescinded
and insist upon his original demand.
[Article 2041]

Recovery of Damages
In either case, damages may be
recovered if there should be additional
injury caused by failure to abide by the
terms of the compromise.

No Necessity for Judicial Rescission

There is no necessity for a judicial
declaration of rescission, for the party
aggrieved may “regard” the compromise
agreement as already “rescinded.”
 XIV. QUASI-CONTRACTS
A. Negotiorium Gestio (Civil Code, arts. 2144-2153)
B. Solutio Indebiti (Civil Code, arts. 2154-2163)
C. Other Quasi-Contracts (Civil Code, arts. 2164-2175)

Article 2142. Certain lawful, voluntary and Requisites of Negotiorum Gestio

unilateral acts give rise to the juridical relation a. There must be voluntary assumption of
of quasi-contract to the end that no one shall agency or management by the gestor;
be unjustly enriched or benefited at the b. Business or property must be neglected
expense of another. or abandoned;
c. Agency/management must not be authorized
Article 2143. The provisions for quasi-contracts in by
this Chapter do not exclude other quasi- owner either expressly or impliedly;
contracts which may come within the purview
d. Assumption of agency/management must
of the preceding article.
be made in good faith.
Ratification of the management by the owner
‘Quasi-Contracts’ defined of the business produces the effects of an
• Are lawful, voluntary, and unilateral acts express agency, even if the business may not
which generally require a person to have been successful.
reimburse or compensate another in
accordance with the principle that no one
Responsibilities of the Officious Manager (Arts 2144,
shall be unjustly enriched or benefited at
2145, 2147, 2148, 2152, 2146)
the expense of another. [Article 2142]
• Quasi-contract may be described as a
1. Continue taking charge of the agency or
juridical relation that the law creates on the
management until the termination of the
basis of certain VOLUNTARY and
affairs and its incidents, but he may require
UNILATERAL, but LAWFUL, acts of a person,
the owner, if the latter is in a position to do
in the interest of equity and justice such as
so, to substitute the officious manager
the avoidance of what could otherwise be a
(CIVIL CODE, Art. 2144);
situation of unjust enrichment.
2. Perform his duties with all the diligence of
• Quasi-contracts are either nominate
a good father of a family, and pay the
(negotiorum gestio and solution indebiti) or
damages which through his fault or
innominate (Articles 2164-2175 NCC)
negligence may be suffered by the owner
of the property or business under
Bases for Quasi-Contracts
management, but the courts may however,
1. No one must unjustly enrich himself at
increase or moderate the indemnity
another’s according to the circumstances of each
expense; case (CIVIL CODE, Art. 2145);
2. If one benefits, he must reimburse; NOTE: A gestor is liable for the acts or
3. Justice and equity. negligence of his employees.
3. Be liable for the acts of his delegate if he
Kinds of Quasi-Contracts delegated to another person all or some of
1. Negotiorum Gestio – voluntary management of his duties, without prejudice to the direct
the property or affairs of another without the obligation of the delegate toward the
knowledge or consent of the latter. (Art. owner of the business (CIVIL CODE, Art.
2144-2153) 2146, par. 1);
2. Solutio Indebiti – juridical relation which is 4. Be personally liable for contracts which he
created when something is received when has entered into with third persons, even
there is no right to demand it and it was though he acted in the name of the owner,
unduly delivered by mistake. (Art. 2154- and there shall be no right of action
2163) between the owner and third persons
3. Other cases (Art. 2164-2175) except:
i. When the owner has expressly or tacitly
A. NEGOTIORIUM GESTIO ratified
(CIVIL CODE, ARTS. 2144-2153) the management, or
ii. When the contract refers to things
• It is the voluntary administration of the pertaining to the owner of the business
property, business or affairs of another, (CIVIL CODE Art. 2152) NOTE: The
without his consent or authority, that responsibility of two or more officious
creates an obligation for reimbursement managers shall be solidary, unless the
for the necessary expenses the gestor management was assumed to save the
had spent. things or business from
• Whoever voluntarily takes charge of the imminent danger (CIVIL CODE, Art. 2146, par. 2);
agency or management of the business or and
property of another, without any power 5. The officious manager shall be liable
from the latter, is obliged to for any fortuitous event:
continue the same until the termination of i. If he undertakes risky operations
the affair
which the owner was not accustomed
to embark upon;
ii. If he has preferred his own interest to that of
the
and its incidents, or to require the person c oncerned to substitute him, if the
 owner is in the position to do so. owner;
iii. If he fails to return the property or
Officious Manager business after demand by the owner:
A party who, in the absence of any contract i If he assumed the management in bad
whatsoever, officiously undertakes to do a faith (CIVIL CODE, Art. 2147);
service with respect to the property of v. Except when the management was
assumed to save the property or
another.
v. business from imminent danger-

184
 BAR QUESTION
a) If he is manifestly unfit to carry the In fear of reprisals from lawless elements
management; besieging
b) If by his intervention he prevented a more his barangay, X abandoned his fishpond,
competent person from taking up the fled to Manila and left for Europe. Seeking
management (CIVIL CODE, Art. 2148). that the fish in the fishpond were ready for
harvest, Y, who is in the business of
Responsibilities of the Owner (Arts 2150, 2151, managing fishponds on a commission
2152) basis, took possession of the property,
The owner of the property shall be liable harvested the fish and sold the entire
for obligations incurred in his interest, and harvest to Z. Thereafter, Y borrowed
shall reimburse the officious manager for money from W and used the money to buy
the necessary and useful expenses and for new supplies of fish fry and to prepare the
damages, which the latter may have fishpond for the next crop.
suffered in the performance of his duties a) What is the Juridical relation between X
in the following instances: and Y during X's absence?
1. When the owner of the property or b) Upon the return of X to the barangay,
business enjoyed the advantages of the what are the obligations of Y to X as
officious management although it may regards the contract with Z?
not have been expressly ratified by him c) Upon X's return, what are the obligations
(CIVIL CODE, Art. 2150, Par. 1) of X as regards Y's contract with W?
2. When the management has for its d) What legal effects will result if X
purpose the prevention of an imminent expressly ratifies Y's management? What
and manifest loss, although no benefit would be the obligations of X in favor of
may have been derived (CIVIL CODE, Art. Y?
2150, Par. 2). Explain all your answers.
3. Even if there had been no benefit to the SUGGESTED ANSWER
owner and there has been no imminent (a)The juridical relation is that of the quasi-
and manifest danger to the property of contract
business provided: of "negotiorum gestio". Y is the "gestor" or
a. The officious manager has acted in "officious manager" and X is the "owner"
good faith; and (Art. 2144, Civil Code).
b. The property or business is intact, ready to be
(b) Y must render an account of his
returned to the owner (CIVIL CODE, Art. 2151)
operations and deliver to X the price he
Extinguishment of management (Article 2153) received for the sale of the harvested fish
The management is extinguished: (Art. 2145, Civil Code).
1. When the owner repudiates it or puts an
end thereto; (c)X must pay the loan obtained by Y from W
2. When the officious manager withdraws because X must answer for obligations
from the management, subject to the contracted with third persons in the interest
provisions of article 2144; of the owner (Art. 2150, Civil Code)
3. By the death, civil interdiction, insanity or BAR QUESTION
insolvency of the owner or the officious (d)Express ratification by X provides the
While A was abroad, the manager of his
manager factory
NEGOTIORUM GESTIO V. IMPLIED AGENCY suddenly died and B and C, A's friends, took
NEGOTIORUM GESTIO IMPLIED AGENCY over its management, without his
As to necessity of authorization knowledge. However, since they were
Gestor should never The agent is businessmen themselves, they had to
have actually entrust most of their duties to X and as a
been authorized in authorized to assume result, the factory suffered considerable loss.
any manner the agency by virtue Are they liable for said losses?
of the acts of the If they are, why and whatANSWER
SUGGESTED is the nature of their
owner or by virtue of Here, B and C are liable for the acts of their
his silence, inaction, delegate.
or or
As to necessity of neglect hisabandonment
failure to Under the law, if the officious manager
Business or Neglect or delegates to another person all or some of
property abandonment his duties, he shall be liable for the acts of
should be neglected is not necessary. the delegate, without prejudice to the direct
or abandoned. obligation of the latter toward the owner of
Note: So long as the owner dos not know that another the business.
is acting on his behalf without authority, negotiorum
gestio exists, but once he becomes aware of such fact As to the nature of liability, it is only joint
and still he does not repudiate the acts of the agent, because the management of the business
the quasi-contract ceases to exist. It has become an was assumed to avoid an imminent danger.
implied agency. Under the law, the responsibility of two or
more officious managers shall be solidary,

185
 Rule if payee is in BAD FAITH
B. SOLUTIO INDEBITI
Whoever in bad faith accepts an undue payment shall:
(CIVIL CODE, ARTS. 2154- 1. Pay legal interest if a sum of money is involved,
2163) 2. Be liable for fruits received or which should
Solutio indebiti: Definition and Concept
have been received if the thing produces fruits
• Refers to payment by mistake. It is receiving
(damages).
payment by mistake that is not due or does
3. Be answerable for any loss or impairment of
not have such right to demand such payment.
the thing from any cause, and for damages to
It creates an obligation to return such
the person who delivered the thing, until it is
payment.
recovered. [Article 2159]
• It is the quasi-contract that arises when a
person is obliged to return whatever was
received by him through error or mistake or
received by him although there was no right
to demand it.
• If something is received when there is no
right to demand it, and it was unduly
delivered through mistake, the obligation to
return it arises.
• Mistake in payment (see Arts. 2154 – 2163)
• The responsibility of two or more payees,
when there has been mistake of payment, is
solidary (Art 2157)

Requisites for Solutio Indebiti

1. Receipt (not mere acknowledgment) of
something. (Art. 2154).
2. There was no right to demand it (because
the giver had no obligation).
3. The undue delivery was because of mistake
of fact or law.
Note: When the payment was not by mistake or
voluntary, but was made because of the
coercive process of the writ of execution,
solutio indebiti does NOT apply.
BAR QUESTION
"C", a Filipino resident of the U.S., sent to his
father "D” in
Manila $500.00 through "X" Bank which had a
branch in Manila. Due to mistake of the
employees of the Bank, "D" was paid
$5,000.00 instead of $500.00. Upon discovery
of the mistake, the Bank demanded from "D"
the return of the $4,500.00. "D" refused and
the Bank sued him.
Is the Bank entitled to recover from "D"?
SUGGESTED ANSWER
Yes, the Bank is entitled to recover the $4,500
from "D". We
have in this case an example of a quasi-
contract of solutio indebiti which arises
whenever a person unduly delivers a thing
through mistake to another who has no right to
demand it (Art 2154, Civil Code). Its requisites
are:
(1) There must be a payment or delivery made
by one person to another;
(2) The person who made the payment or
delivery was under no obligation to do so;
and
(3) The payment or delivery was made by
reason of mistake.
All of the above requisites are present in the
instant case.
Rule if payee is in GOOD FAITH
He who in good faith accepts an undue payment of a thing
certain and determinate shall:
1. Be responsible for the impairment or loss
of the same or its accessories and
accessions insofar as he has thereby been
benefited.
2. If he has alienated it, she shall return the
price or
assign the action to collect the sum. [Article
2160]
When mistake is presumed: • Yes, solutio indebiti is applicable because the
General Rule: It is presumed that there was a overpaid interest of P660,000 is not due.
mistake in the payment if something which The law provides when something is received
had never been due or had already been paid when there is no right to demand it, and it was
was delivered. [Article 2163] unduly delivered through mistake, the obligation
to return it arises. (Article 2154, Civil Code) Since
Burden Of Proof the interest was not validly reduced into writing,
He from whom the return is claimed may prove Siga-an had no right to receive it.
that the delivery was made out of liberality or
for any other just cause.

Right of payer when payment made because of doubt

186
• Payer may recover if he proves that it was
not due. [Article 2156]
• Solidary Liability of the Payees - The
responsibility of two or more payees, when
there has been payment of what is not
due, is solidary. [Article 2157]

Rule when property belongs to a third person:

The payee shall comply with the provisions of Article 1984
[Article 2158]
• Article 1984. The depositary cannot demand
that the depositor prove his ownership of
the thing deposited.
• Nevertheless, should he discover that the
thing has been stolen and who its true
owner is, he must advise the latter of the
deposit.
• If the owner, in spite of such information,
does not claim it within the period of one
month, the depositary shall be relieved of
all responsibility by returning the thing
deposited to the depositor.
• If the depositary has reasonable grounds to
believe that the thing has not been lawfully
acquired by the depositor, the former may
return the same.

Reimbursement for Improvement and Expenses

As regards the reimbursement for
improvements and expenses incurred by him
who unduly received the thing, the provisions
of Title V of Book II (Possession) shall govern.
[Article 2161]

Payee who destroys the evidences or proofs of his right in

good faith
Payee shall be exempt from the obligation to
restore who, believing in good faith that the
payment was being made of a legitimate and
subsisting claim, destroyed the document, or
allowed the action to prescribe, or gave up
the pledges, or cancelled the guaranties for
his right. [Article 2162]

Action of Person Who Paid Unduly

He who paid unduly may proceed only against
the true debtor or the guarantors with regard
to whom the action is still effective.
BAR QUESTION (2012)
Siga-an granted a loan to Villanueva in the amount
of P 540,
000.00. Such agreement was not reduced to writing.
Siga-an demanded interest which was paid by
Villanueva in cash and checks. The total amount
Villanueva paid accumulated to P 1, 200, 000.00.
Upon advice of her lawyer, Villanueva demanded for
the return of the excess amount of P660,000.00
which was ignored by Siga-an.
• Is the payment of interest valid? Explain. (3%)
• Is solutio indebiti applicable? Explain. (2%)
SUGGESTED ANSWER
• No, the payment of interest in invalid. The law
states that no
interest shall be due unless it has been expressly
stipulated in writing (Art. 1956, New Civil Code)
Hence, Villanueva is entitled to recover the
interests paid since it cannot legally be
demanded by Siga-an under an oral contract of
loan (Siga-an v. Villanueva, G.R. No. 173227,
January 20, 2009).
 C. OTHER QUASI-CONTRACTS
(CIVIL CODE, ARTS. 2164-
2175)
Support Given by a Stranger
General Rule: When, without the knowledge of
the person obliged to give support, it is given
by a stranger, the latter shall have a right to
claim the same from the former. XPN: Unless it
appears that he gave it out of piety and
without intention of being repaid. [Article
2164]

Funeral Expenses Borne By a Third Person

General Rule: When funeral expenses are borne
by a third person, without the knowledge of
those relatives who were obliged to give
support to the deceased, said relatives shall
reimburse the third person, should the latter
claim reimbursement. [Article 2165]

Services Rendered By a Physician or Other Persons

General Rule: The injured person receiving
treatment shall be liable to pay for the services
of the physician or other person aiding him.
XPN: Unless the service has been rendered out
of pure generosity. [Article 2167]

Rule When Property Is Saved During a Calamity

• The owner of the property shall be bound to
pay just compensation. [Article 2168]
• Calamity Includes:
 Fire;
 Flood;
 Storm; etc.

Rule When Government Undertakes Necessary Work

When the government, upon the failure of any
person to comply with health or safety
regulations concerning property, undertakes to
do the necessary work, even over his
objection, he shall be liable to pay the
expenses. [Article 2169]

Payment Made By a Third Person

When a third person, without the knowledge of
the debtor, pays the debt, he shall have a right
to be reimbursed to the extent payment had
benefited the debtor.
XIV. QUASI-CONTRACTS

Measure for Protection Decided Upon By a Community

Any one who objects to the plan and refuses to
contribute to the expenses but is benefited
by the project as executed against
lawlessness, fire, flood, storm or other calamity
shall be liable to pay his share of said
expenses. [Article 2174]

When Someone is Constrained to Pay Another’s Taxes

The person constrained to pay the taxes of
another shall be entitled to reimbursement
from the latter. [Article 2175]

187
 XV. TORTS AND DAMAGES
A. Common Principles F. Res Ipsa Loquitur
B. Classification of Torts G. Damnum Absque Injuria
C. The Tortfeasor; Joint and Direct Liabilities H. Defenses in Tort Actions
(Civil Code, art. 2194) I. Medical Negligence and Malpractice
D. Proximate Cause; Concept; Doctrine of Last J. Damages; Kinds of Damages; When May Be
Clear Chance Recovered (Civil Code, arts. 2197 and 2216)
E. Vicarious Liability (Civil Code, art. 2180; K. Damages in Case of Death
Family Code, art. 211) L. Duty of Injured Party

TORT CULPA AQUILANA V. CRIME

‘Tort’ defined
• It is a violation of a duty imposed by CULPA AQUILANA CRIME
general law or otherwise upon all persons
occupying the relation to each other that is Legal basis of liability
involved in a given transaction. There can be a quasi- There can be no
• Tort is a common law concept. In common
delict as long as crime unless there
law, tort is an unlawful violation of private
there is fault or is a law clearly
right, not created by contract, and which
gives rise to an action for damages.
negligence resulting punishing the act.
• A tort is an act or omission that gives rise in damage or injury
to injury or harm to another and amounts to to another.
a civil wrong for which courts impose Criminal Intent
liability.
• In the context of torts, "injury" is the Not necessary for Criminal intent is
invasion of any legal right, whereas "harm" quasi- delict to exist. essential for
is a loss or detriment in fact that an Fault or negligence criminal liability to
individual suffers without intent will exist.
suffice.
A. COMMON PRINCIPLES
Nature of Right Violated
Right violated is a Right violated is a
Quasi-Delict or Culpa Aquilana
private right. It is a public one. Crime
• It is extra-contractual obligations which
wrongful act against is a wrong against
arise only between parties not otherwise
a private individual. the State. Affects
bound by contact, whether express or
Only involves a public interest.
implied
private concern.
• The wrongful or negligent act or omission
which creates a vinculum juris and gives Liability
rise to an obligation between two persons
not formally bound by any other Civil liability only. Every person
obligation Every quasi-delict criminally liable is
gives rise to liability also civilly liable.
• Governed by Article 2176 of the Civil Code.
for damages. Includes both civil
Employer’s liability is and criminal liability
Elements of Quasi-Delict direct and primary (but some crimes
1. An act or omission under Art. 2180. like illegal
2. The presence of fault or negligence possession of
in the performance of the act firearm or
3. Injury - The illegal invasion of a legal right. prohibited
4. Causal connection between the substance do not
negligent act and the injury give rise to civil
5. No pre-existing contractual relation liability). The
employer’s liability
GR: There should be no pre-existing is subsidiary under
contractual relations between the persons
involved respondeat superior.
Exception: The act or omission is a tort
Weight of Evidence
independent
of the contract. Proof of the fault or The guilt of the
negligence require accused must be
1. TORTS VS. CRIMES only preponderance proved beyond
reasonable doubt.
Crime of evidence.
• A crime is an act committed or omitted in Sanction or Penalty
violation of a law forbidding or
commanding it and for which a Reparation Punishment is either
punishment is imposed upon conviction. imprisonment, fine
• Accused is presumed innocent until the or or both; sometimes
contrary is proven. The prosecution has indemnification of other accessory
 the burden of proving guilt beyond the penalties are
reasonable doubt. injury or damage. imposed.
• Criminal negligence is governed by Art.
365 of the Revised Penal Code.

188
 2. TORTS VS. CONTRACTS voluntary and negligent acts which may be
punishable by law.
Contract
It is a “meeting of minds between two persons
B. CLASSIFICATION OF TORTS
whereby one binds himself, with respect to the 1. Negligent Tort - Involves voluntary acts or
other, to give something, or render some omissions which result in injury to others,
service.” without intending to cause the same.
CULPA CONTACTUAL V. CULPA AQUILANA • The actor fails to exercise due care in
performing such acts or omissions.
CULPA CONTRACTUAL CULPA AQUILANA 2. Intentional Tort - Includes conduct where
the actor desires to cause the
The foundation of the It is a separate consequences of his act or believe the
liability of the source consequences are substantially certain
defendant is the of to result from it. They are in Chapter 2
contract of the Preliminary Title of the NCC
obligation entitled “Human Relations”, i.e. Arts.
independent of 19, 20, 21, 26.
contract • Distinguished from negligent tort –
negligence involves foreseeability of
In breach of contract In quasi-delict the risk NOT certainty of the harm.
committed through the 3. Strict Liability Tort - Where a person is made
the negligence of presumptive liable independent of fault or negligence
employee, the responsibility upon submission of proof of certain facts.
employer cannot for the • When strict liability is imposed,
erase his primary and negligence of conduct is generally not wrongful in
direct liability by his servants can itself, but the law imposes liability to
invoking exercise of be rebutted by compensate for damages suffered by
diligence of a good proof of the another.
There may be concurrence of causes of action • Doctrine that holds a person liable for
Ex: Common Carriers liability may arise ex any injuries or damages caused by
contractu, quasi ex-delicto and ex delicto their products, actions, or animals,
even if there is only a single act or omission. even if they had no intent to harm and
Either of these liabilities may be enforced were not at fault.
against the offender subject to Article 2177 –
plaintiff cannot recover damages twice for 1. NEGLIGENCE – CIVIL CODE, ARTS. 2176-2194
the same act or omission (proscription
against double recovery) ARTICLE 1173. The fault or negligence of the
obligor consists in the omission of that
ELCANO V. HILL diligence which is required by the nature
G.R. NO. L-24803 MAY 26, 1977 of the obligation and corresponds with the
J. Barredo circumstances of the persons, of the time and
We do hold, that Article 2176, where it refers of the place. When negligence shows bad
to "fault or negligence” covers not only acts faith, the provisions of articles 1171 and
"not punishable by law" but also acts 2201, paragraph 2, shall apply.
criminal (see Arts. 29 to 32 NCC) in
character, whether intentional and voluntary If the law or contract does not state the
or negligent. diligence which is to be observed in the
performance, that which is expected of a
Consequently, a separate civil action lies good father of a family shall be required.
against the offender in a criminal act,
whether or not he is criminally prosecuted • Negligence has been defined as the
and found guilty or acquitted, provided that failure to observe for the protection of
the offended party is not allowed, if he is the interests of another person that
actually charged also criminally, to recover degree of care, precaution, and vigilance
damages on both scores, and would be which the circumstances justly demand,
entitled in such eventuality only to the whereby such other person suffers
bigger award of the two, assuming the injury.
awards made in the two cases vary. • Involves voluntary acts or omissions which
result in injury to others, without
In other words, the extinction of civil liability intending to cause the same.
referred to in Par. (e) of Section 3, Rule • It is the failure to observe for the
111, refers exclusively to civil liability protection of the interest of another that
founded on Article 100 of the Revised Penal degree of care, precaution, and
Code, whereas the civil liability for the same vigilance that the circumstances justly
act considered as a quasi-delict only and not demand.
as a crime is not extinguished even by a • Negligence is the omission to do
declaration in the criminal case that the something which a reasonable man,
criminal act charged has not happened or guided upon those considerations which
has not been committed by the accused. ordinarily regulate the conduct to human
Briefly stated, We here hold, in reiteration of affairs, would do, or doing something
Garcia, that culpa aquiliana includes which a prudent and reasonable man
 would not do. observed in the performance, that which
• If the law or contract does not state is expected of a good father of a family
the diligence which is to be shall be required.

189
Test of Negligence cautious persons, with a due regard for all
The standard test in determining whether a the circumstances.” [Art. 1755, NCC]
person is negligent in doing an act whereby
injury or damage results to the person or
property of another is this: could a prudent
man, in the position of the person to whom
negligence is attributed, foresee harm to the
person injured as a reasonable consequence of
the course actually pursued? If so, the law
imposes a duty on the actor to refrain from
that course or to take precautions to guard
against its mischievous results, and the failure
to do so constitutes negligence.

Reasonable foresight of harm, followed by the

ignoring of the admonition born of this
provision, is always necessary before
negligence can be held to exist.

Reasonable foresight
• What an ordinarily prudent man will do under
the same circumstances can be determined
by asking the following: Could a prudent
man, in the case under consideration,
foresee harm as a result of the course
pursued? If so, it was the duty of the actor
to take precautions to guard against harm.
• Did the defendant in doing the alleged negligent act
use the reasonable care and caution which an
ordinarily prudent person would have used in the same
situation? If not, then he is guilty of negligence.

Circumstances to consider in determining negligence:

1. Time
2. Place
3. Emergency Rule
4. Gravity of Harm to be Avoided
5. Alternative Course of Action
6. Social value or utility of the activity
7. Person exposed to the risk

2. DEGREES OF DILIGENCE AND NEGLIGENCE;

PRESUMPTION

Standard of Care
It is the degree of care or competence that
one is expected to exercise in a particular
circumstance or role.

DEGREES OF DILIGENCE

1. Ordinary Diligence (Concept of Pater Familias)

• “The diligence of a good father of a family”
• A good father of a family means a person of
ordinary or average diligence.
• The law presumes or requires a man to
possess ordinary capacity to avoid harming
his neighbors, unless a clear and manifest
incapacity is shown.
• General Rule: If the diligence required to
comply with one's obligations is not
stipulated in the law or contract,
paterfamilias will follow. [Article 1173]

2. Extraordinary Diligence
• Extreme measure of care and caution which
persons of unusual prudence and
circumspection observe for securing or
preserving their own property or rights.
• Provided for by the law or stipulated.
a. Common Carriers - is “bound to carry the
passengers safely as far as human care
and foresight can provide, using utmost
(extraordinary) diligence of very
 b. Banks - are duty-bound to treat the or failing to do an act from which material
deposit accounts of their damage results by reason of inexcusable
depositors with the highest degree lack of precaution on the part of the person
of care where the fiduciary nature performing of failing to perform such act,
of their relationship with their taking into consideration his employment
depositors is concerned. But such or occupation, degree of intelligence,
degree of diligence is not expected physical condition and other circumstances
to be exerted by banks in regarding persons, time and place.
commercial transactions that do
not involve their fiduciary PRESUMPTION
relationship with their depositors. Proof of Negligence
General Rule:
3. Slight Diligence If the plaintiff alleged in his complaint that he
This standard of care can ONLY be was damaged because of the negligent acts of
applied if it is stipulated by the parties of the defendant, the plaintiff has the burden of
a contract. This standard of care usually proving such negligence.
applies on charters. The quantum of proof required is
preponderance of evidence (Rule 133 Revised
Degrees of Negligence Rules of Court)
1. Gross Negligence - Negligence where Exceptions:
there is “want of even slight care and • When the rules or the law provides for cases
diligence”. Entire want of care as to when
raise a presumption that the person negligence is presumed.
in fault is conscious of the probable • Presumptions of Negligence
consequences of carelessness, and • Res Ipsa Loquitur
is indifferent or worse, to the danger
or injury to person or property of others. Presumptions of Negligence
2. Simple negligence – Negligence where In motor vehicle mishaps, the owner is
there is lack of precaution on the part presumed negligent if he was in the vehicle
of the offender; and that the damage and he could have used due diligence to
impending to be caused is not prevent the misfortune. (Art. 2184 Civil Code)
immediate or the danger is not clearly XPN: If the owner was not in the motor vehicle,
manifest. Article 2184 does not apply. The provisions of
Article 2180 are applicable. [Article 2184]
Imprudence under the Revised Penal Code
1. Simple imprudence - consists in the lack It is disputably presumed that a driver was
of precaution displayed in those cases negligent if he had been found guilty of
in which the damage impending to be reckless driving or violating traffic regulations
caused is not immediate nor the at least twice for the next preceding two
danger clearly manifest. months. (Article 2184 Civil Code)
2. Reckless imprudence - consists in XPN: Unless there is proof to the contrary. [Article
voluntary, but without malice, doing 2185]

190
 The driver of a motor vehicle is presumed
3. INTENTIONAL – CIVIL CODE, ARTS. 19-35
negligent if at the time of the mishap, he
was violating any traffic regulation. (Article • Include conduct where the actor desires to
2185 Civil Code) cause the consequences of his act or
XPN: Unless there is proof to the contrary. believe the consequences are substantially
[Article 2185] certain to result from it.
• They are found in Chapter 2 of the Preliminary
Prima facie presumption of negligence of the Title of the NCC entitled “Human
defendant arises if death or injury results Relations”, i.e. Arts. 19, 20, 21, 26.
from his possession of dangerous weapons • Distinguished from negligent tort – negligence
or substance. involves foreseeability of the risk NOT
XPN: When such possession or use is certainty of the harm.
indispensable to his occupation or business.
(Article 2188 Civil Code) Abuse of Rights
Article. 19. Every person must, in the exercise of
Presumption of negligence of the common his rights and in the performance of his duties,
carrier arises in case of loss, destruction or act with justice, give everyone his due, and
deterioration of the goods, or in case of observe honesty and good faith.
death or injury of passengers.
XPN: Upon proof of exercise of extraordinary Standards to follow:
diligence. [Article 1735] 1. to act with justice;
2. to give everyone his due; and
Vicarious Liability - The responsibility treated in 3. to observe honesty and good faith.
Art. 2180 shall only cease when the persons
therein mentioned prove that they observed all Art. 20. Every person who, contrary to law,
wilfully or negligently causes damage to
the diligence of a good father of a family to
another, shall indemnify the latter for the
prevent damage. [2180]
BAR QUESTION (1996) same.
Marcial, who does not know how to drive,
has always Art. 21. Any person who wilfully causes loss or
been driven by Ben, his driver of ten years injury to another in a manner that is contrary
whom he had chosen carefully and has to morals, good customs or public policy shall
never figured in a vehicular mishap. One compensate the latter for the damage.
day, Marcial was riding at the back seat of
his Mercedes Benz being driven along EDSA ARDIENTE V. SPS. PASTORFIDE
by Ben. Absorbed in reading a book, Marcial G.R. NO. 161921, JULY 17, 2013
did not notice that they were approaching J. Peralta
the corner of Quezon Avenue, when the This article sets certain standards which must
traffic light had just turned yellow. Ben be observed not only in the exercise of one's
suddenly stepped on the gas to cross the rights, but also in the performance of one's
intersection before the traffic light could turn duties. The law recognizes a primordial
red. But, too late. Midway in the intersection, limitation on all rights; that in their exercise,
the traffic light changed, and a Jeepney full of the norms of human conduct set forth in
passengers suddenly crossed the car’s path. Article 19 must be observed.
A collision between the two vehicles was
inevitable. As a result, several jeepney A right, though by itself legal because
passengers were seriously injured. A suit for recognized or granted by law as such, may
damages based on culpa aquiliana was filed nevertheless become the source of some
against Marcial and Ben, seeking to hold illegality. When a right is exercised in a
them jointly and severally liable for such manner which does not conform with the
norms enshrined in Article 19 and results in
injuries. May Marcial
be held liable? Explain. damage to another, a legal wrong is thereby
SUGGESTED ANSWER committed for which the wrongdoer must be
held responsible.
Yes, Marcial should be held liable.
Art. 2164 NCC makes an owner of a motor
vehicle solidarily liable with the driver if, being LOMARDA v. FUDALAN
in the vehicle at the time of the mishap, he G.R. No. 246012, June 17, 2020
could have prevented it by the exercise of J. Perlas-Bernabe
due diligence. The traffic conditions along "Article 19, known to contain what is
EDSA at any time of day or night are such as to commonly referred to as the principle of abuse
require the observance of utmost care and of rights, sets certain standards which may be
total alertness in view of the large number of observed not only in the exercise of one's
vehicles running at great speed. Marcial was rights but also in the performance of one's
negligent in that he rendered himself oblivious duties." In this regard, case law states that "[a]
to the traffic hazards by reading a book instead right, though by itself legal because [it is]
MALAYAN
of focusing INSURANCE CO., VS. ALBERTO
his attention on the road and recognized or granted by law as such, may
G.R. No. 194320, February 1, 2012 nevertheless become the source of some
J. Velasco, Jr. illegality. When a right is exercised in a
manner which does not conform with the
It is worth mentioning that just like any other
norms enshrined in Article 19 and results in
disputable presumptions or inferences, the
damage to another, a legal wrong is thereby
presumption of negligence may be rebutted committed for which the wrongdoer must be
or overcome by other evidence to the held responsible."
contrary.
Art. 19 is the general rule which governs the
conduct of human relations. By itself, it is so that an actionable tort may arise when it is
not the basis of an actionable tort. Article alleged together with Article 20 or Article 21."
19 describes the degree of care required

191
DORAO V. SPS BBB AND CCC ARTICLE 31. When the civil action is based on an
G.R. NO. 235737, APRIL 26, 2023 obligation not arising from the act or omission
J. Leonen complained of as a felony, such civil action may
The best interest of a child cannot justify proceed independently of the criminal proceedings
forms of cruel or degrading punishment which and regardless of the result of the latter.
conflict with a child's human dignity, including
"punishment which belittles, humiliates,
denigrates, scapegoats, threatens, scares or
ridicules a child." A person who debases,
degrades, or demeans the child's intrinsic
worth and dignity as a human being can be
held liable for damages pursuant to Articles 21
and 26 of the Civil Code.

Art. 26. Every person shall respect the dignity,

personality, privacy and peace of mind of his
neighbors and other persons. The following
and similar acts, though they may not
constitute a criminal offense, shall produce a
cause of action for damages, prevention and
other relief:
1. Prying into the privacy of another’s
residence;
2. Meddling with or disturbing the private life or
family relations of another;
3. Intriguing to cause another to be alienated
from his friends;
4. Vexing or humiliating another on account
of his religious beliefs, lowly station in life,
place of birth, physical defect, or other
personal condition.

Other provisions on Intentional Torts are found in

Arts. 27-35 NCC.
ARTICLE 27. Any person suffering material or
moral loss because a public servant or
employee refuses or neglects, without just
cause, to perform his official duty may file an
action for damages and other relief against the
latter, without prejudice to any disciplinary
administrative action that may be taken.

ARTICLE 28. Unfair competition in agricultural,

commercial or industrial enterprises or in labor
through the use of force, intimidation, deceit,
machination or any other unjust, oppressive or
highhanded method shall give rise to a right of
action by the person who thereby suffers
damage.

ARTICLE 29. When the accused in a criminal

prosecution is acquitted on the ground that his
guilt has not been proved beyond reasonable
doubt, a civil action for damages for the same
act or omission may be instituted. Such action
requires only a preponderance of evidence.
Upon motion of the defendant, the court may
require the plaintiff to file a bond to answer for
damages in case the complaint should be
found to be malicious.

If in a criminal case the judgment of acquittal

is based upon reasonable doubt, the court
shall so declare. In the absence of any
declaration to that effect, it may be inferred
from the text of the decision whether or not
the acquittal is due to that ground.

ARTICLE 30. When a separate civil action is

brought to demand civil liability arising from a
criminal offense, and no criminal proceedings
are instituted during the pendency of the civil
case, a preponderance of evidence shall
likewise be sufficient to prove the act
complained of.
ARTICLE 32. Any public officer or employee, witnesses face to face, and to have
or any private individual, who directly or compulsory process to secure the
indirectly obstructs, defeats, violates or attendance of witness in his behalf;
in any manner impedes or impairs any of 17. Freedom from being compelled to be a
the following rights and liberties of witness against one’s self, or from being
another person shall be liable to the forced to confess guilt, or from being
latter for damages: induced by a promise of immunity or
1. Freedom of religion; reward to make such confession, except
2. Freedom of speech; when the person confessing becomes a
3. Freedom to write for the press or State witness;
to maintain a periodical publication; 18. Freedom from excessive fines, or cruel and
4. Freedom from arbitrary or illegal detention; unusual punishment, unless the same is
5. Freedom of suffrage; imposed or inflicted in accordance with a
6. The right against deprivation of statute which has not been judicially
property without due process of law; declared unconstitutional; and
7. The right to a just compensation when 19. Freedom of access to the courts.
private
property is taken for public use; In any of the cases referred to in this article,
8. The right to the equal protection of the laws; whether or not the defendant’s act or omission
9. The right to be secure in one’s constitutes a criminal offense, the aggrieved
person, house, papers, and effects party has a right to commence an entirely
against unreasonable searches and separate and distinct civil action for damages,
seizures; and for other relief. Such civil action shall
10. The liberty of abode and of changing the proceed independently of any criminal
same; prosecution (if the latter be instituted), and
11. The privacy of communication and may be proved by a preponderance of
correspondence; cd evidence.
12. The right to become a member of
associations or societies for purposes The indemnity shall include moral damages.
not contrary to law; Exemplary damages may also be adjudicated.
13. The right to take part in a
peaceable assembly to petition the The responsibility herein set forth is not
Government for redress of demandable from a judge unless his act or
grievances; omission constitutes a violation of the Penal
14. The right to be free from involuntary Code or other penal statute. Pnamei
servitude in any form;
15. The right of the accused against excessive ARTICLE 33. In cases of defamation, fraud, and
bail; physical injuries, a civil action for damages,
16. The right of the accused to be heard entirely separate and distinct from the criminal
by himself and counsel, to be action, may be brought by the injured party.
informed of the nature and cause of Such civil action shall proceed independently
the accusation against him, to have a of the criminal prosecution, and shall require
speedy and public trial, to meet the only a preponderance of evidence.

192
ARTICLE 34. When a member of a city or Manufacturers and processors of foodstuffs,
municipal police force refuses or fails to drinks, toilet articles and similar goods shall be
render aid or protection to any person in liable for death or injuries caused by any noxious
case of danger to life or property, such or harmful substances used, although no
peace officer shall be primarily liable for contractual relation exists between them and the
damages, and the city or municipality shall consumers.
be subsidiarily responsible therefor. The civil
action herein recognized shall be
independent of any criminal proceedings,
and a preponderance of evidence shall
suffice to support such action.

ARTICLE 35. When a person, claiming to be

injured by a criminal offense, charges
another with the same, for which no
independent civil action is granted in this
Code or any special law, but the justice of
the peace finds no reasonable grounds to
believe that a crime has been committed, or
the prosecuting attorney refuses or fails to
institute criminal proceedings, the
complainant may bring a civil action for
damages against the alleged offender. Such
civil action may be supported by a
preponderance of evidence. Upon the
defendant’s motion, the court may require
the plaintiff to file a bond to indemnify the
defendant in case the complaint should be
found to be malicious.

If during the pendency of the civil action, an

information should be presented by the
prosecuting attorney, the civil action shall
be suspended until the termination of the
criminal proceedings.

4. STRICT LIABILITY – CIVIL CODE, ARTS. 2183-

2193; R.A. NO. 7394, ARTS. 97-102

• Where a person is made liable

independent of fault or negligence upon
submission of proof of certain facts.
• When strict liability is imposed, conduct is
generally not wrongful in itself, but the
law imposes liability to compensate for
damages suffered by another.
• Doctrine that holds a person liable for any
injuries or damages caused by their
products, actions, or animals, even if they
had no intent to harm and were not at
fault.

Purpose of Strict Liability

• To protect the public and consumers from
injury caused by those products, actions,
or animals, and to remove the burden of
proof from an injured party.
• Neither negligence nor strict liability torts
require intent, but in a negligence case
there is a reasonable duty of care owed to
a person.
• In strict liability, there is a duty to
everyone because of the nature of the
activity.
• These absolute duties are required so that
persons are safe from extremely
hazardous circumstances because of
certain presumptions that people hold
every day.

1. STRICT LIABILITY TORT AGAINST

MANUFACTURERS AND PROCESSORS
Article 2187 Civil Code
2. STRICT LIABILITY TORT AGAINST Article 1711 Civil Code - Owners of enterprises and
ANIMAL POSSESSORS other employers are obliged to pay
Article 2183 Civil Code compensation for the death of or injuries to
The possessor of an animal or whoever their laborers, workmen, mechanics or other
may make use of the same is responsible employees, even though the event may have
for the damage which it may cause, been purely accidental or entirely due to a
although it may escape or be lost. This fortuitous cause, if the death or personal injury
responsibility shall cease only in case the arose out of and in the course of the
damage should come from force majeure employment. Xxx
or from the fault of the person who has
suffered damage. 4. STRICT LIABILITY TORT AGAINST LGUs
Article 2189. Provinces, cities and municipalities
BAR QUESTION (2010)
shall be liable for damages for the death of, or
Primo owns a pet iguana which he keeps in a injuries suffered by, any person by reason of
man-made
the defective condition of roads, streets,
pond enclosed by a fence situated in his bridges, public buildings, and other public
residential lot. A typhoon knocked down the works under their control or supervision.
fence of the pond and the iguana crawled out
of the gate of Primo’s residence. N, a neighbor
5. STRICT LIABILITY TORT AGAINST PROPRIETORS
who was passing by, started throwing stones
Article 2191. Proprietors shall also be
at the iguana, drawing the iguana to move
responsible for damages caused:
toward him. N panicked and ran but tripped on
(1) By the explosion of machinery which has
something and suffered a
not been taken care of with due diligence,
broken leg. Is anyone liable for N’s injuries? Explain.
SUGGESTED ANSWER and the inflammation of explosive
substances which have not been kept in a
No one is liable.
safe and adequate place;
(2) By excessive smoke, which may be
The possessor of an animal or whoever may
harmful to persons or property;
make use of the same is responsible for the
(3) By the falling of trees situated at or near
damage which it may cause, although it may
highways or lanes, if not caused by force
escape or be lost. This responsibility shall
majeure;
cease only in case the damage should come
(4) By emanations from tubes, canals, sewers
from force majeure or from the fault of the
or deposits of infectious matter,
person who has suffered damage (Art. 2183,
constructed without precautions suitable to
NCC).
the place.
N’s injury clearly resulted from his own act of
6. STRICT LIABILITY TORT AGAINST HEAD OF THE
throwing stones at the iguana and his
FAMILY
subsequent accidental tripping into something
Article 2193. The head of a family that lives in a
as he ran away from the iguana out of fear.
building or a part thereof, is responsible for
3. STRICT LIABILITY TORT AGAINST EMPLOYERS damages caused by things thrown or falling
from the same.

193
7. STRICT LIABILITY TORT AGAINST MANUFACTURERS under the express direction or authority of the
& SUPPLIERS under REPUBLIC ACT NO. 7394 or THE stockholders or members acting as a body, or,
CONSUMER ACT OF THE PHILIPPINES generally, from the directors as the governing
body.
ARTICLE 97. Liability for the Defective Products. —
Any Filipino or foreign manufacturer,
producer, and any importer, shall be liable
for redress, independently of fault, for
damages caused to consumers by defects
resulting from design, manufacture,
construction, assembly and erection,
formulas and handling and making up,
presentation or packing of their products, as
well as for the insufficient or inadequate
information on the use and hazards thereof.

ARTICLE 99. Liability for Defective Services. — The

service supplier is liable for redress,
independently of fault, for damages caused to
consumers by defects relating to the rendering
of the services, as well as for insufficient or
inadequate information on the fruition and
hazards thereof.
C. THE TORTFEASOR; JOINT AND DIRECT
LIABILITIES (CIVIL CODE, ART. 2194)

LIABILITY OF JOINT TORTFEASORS

• Under Article 2194 of the Civil Code, joint
tortfeasors are solidarily liable for the
resulting damage.
• In other words, joint tortfeasors are each
liable as principals, to the same extent and
in the same manner as if they had
performed the wrongful act themselves.

PHILIPPINE NATIONAL CONSTRUCTION

CORPORATION V. CA
G.R. NO. 159270, AUGUST 22, 2005
J. Callejo, Sr.
Where their concurring negligence resulted in
injury or damage to a third party, they become
joint tortfeasors and are solidarily liable for the
resulting damage under Article 2194 of the
Civil Code.

DIRECT LIABILITY
Natural Person
A natural person or human being has physical
existence.

Liability of Natural Persons

A. Personal Liability
General Rule: One is only responsible for his own
act or omission. Thus, a person will generally
be held liable ONLY for the torts committed by
himself and NOT by another.
B. Vicarious Liability
A person is not only liable for torts committed
by himself, but also for torts committed by
others with whom he has a certain relation or
for whom he is responsible. (Article 2180 Civil
Code)

Rationale: Persons become liable for their own

omission to comply with their duty to exercise
diligence in supervision/care over the persons
for whom they are responsible

Juridical Person
• Juridical person exists only in contemplation
of law.
• Juridical persons are also directly liable just
like natural persons whenever a tortuous
act is committed by an officer or agent
• A corporation is civilly liable in the cause. It is based upon mixed
same manner as natural persons for considerations of logic, common sense,
torts, because "generally speaking, policy and precedent.
the rules governing the liability of a • Plaintiff must establish a sufficient link
principal or master for a tort between the act or omission and the
committed by an agent or servant are damage or injury.
the same whether the principal or • The link must not be remote or far-fetched.
master be a natural person or a • The damage or injury must be a natural and
corporation, and whether the servant probable result of the act or omission.
or agent be a natural or artificial
person. All of the authorities agree
that a principal or master is liable for
every tort which he expressly directs 194
or authorizes, and this is just as true of
a corporation as of a natural person. A
corporation is liable, therefore,
whenever a tortious act is committed
by an officer or agent under express
direction or authority from the
stockholders or members acting as a
body, or, generally, from the directors
as the governing body.” (PNB v. CA,
G.R. No. L-¬27155, May 18, 1978)

Partnership Tort
There is partnership tort where:
1. By any wrongful act or omission of
any partner, acting in the ordinary
course of business of the partnership
or with authority of his co-partners,
loss or injury is caused to any person,
not being a partner in the partnership;
2. One partner, acting within the scope
of his apparent authority, receives
money or property from a third
person, and misapplies it; or
3. The partnership, in the course of its
business, receives money or
property, and it is misapplied by any
partner while it is in the custody of
the partnership.
Note: Partners are SOLIDARILY LIABLE
with the partnership for any penalty or
damage arising from a partnership tort.
(Articles 1822 and 1823 NCC)

PROXIMATE CAUSE D. PROXIMATE CAUSE;

• That cause, which, in natural and CONCEPT; DOCTRINE OF LAST
continuous sequence, unbroken by
CLEAR CHANCE
any efficient intervening cause,
produces the injury, and without
which the result would not have
occurred.
• That cause acting first and producing
the injury, either immediately or by
setting other events in motion, all
constituting a natural and continuous
chain of events, each having a close
causal connection with its immediate
predecessor, the final event in the
chain immediately effecting the
injury as natural and probable result
of the cause which first acted, under
such circumstances that the person
responsible for the first event should,
as an ordinarily prudent and
intelligent person, have reasonable
ground to expect at the moment of
his act or default that an injury to
some person might probably result
therefrom.

Determining Proximate Cause

• There is no exact mathematical
formula to determine proximate
 DOCTRINE OF LAST CLEAR CHANCE those of persons for whom one is responsible.
• Where both parties are negligent but the • The father and, in case of his death or
negligent act of one is appreciably later incapacity, the mother, are responsible for
the damages caused by the minor children
than that of the other, the one who has
who live in their company.
the last reasonable opportunity to avoid • Guardians are liable for damages caused by
the impending harm and fails to do so, is the minors or incapacitated persons who are
chargeable with the consequences of under their authority and live in their
the loss without reference to the prior company.
negligence of the other party • The owners and managers of an establishment
(Applicable Case: Picart v. Smith) or enterprise are likewise responsible for
• No recovery can be made if plaintiff is damages caused by their employees in the
the proximate case. service of the branches in which the latter are
employed or on the occasion of their functions.
• Recovery can be made (1990)
BAR QUESTION but such will be
• Employers shall be liable for the damages caused
mitigated if plaintiff
Mr. and Mrs. R own a burned-out is not the building,
proximatethe by their employees and household helpers acting
cause.
firewall of within the scope of their assigned tasks, even
Eachcollapsed
•which bears his and own loss if negligence
destroyed the shopof though the former are not engaged in any
parties is
occupied by the family of Mr. and Mrs. S, business or industry.
whichequal in degree.
resulted in injuries to said couple and • The State is responsible in like manner when
the death of their daughter. it acts through a special agent; but not
Instances when the doctrine is not applicable: when the damage has been caused by the
official to whom the task done properly
i.
Mr. In
andcase Mrs. ofS hadculpabeen contractual,
warned by where
Mr. &
pertains, in which case what is provided in
Mrs.neither
R to vacate
the contributory
the shop in negligence
view of its
of article 2176 shall be applicable.
proximity to thenorweakened
the plaintiff his last clearwall chance
but theto • Lastly, teachers or heads of establishments
former avoid failed
the toloss
do so.wouldMr. exonerate
& Mrs. S filed
the of arts and trades shall be liable for damages
against Mr. and
defendant from Mrs. R an action for
liability. caused by their pupils and students or
recovery
ii. The party of damages
charged the is
former suffered
required to as
acta apprentices, so long as they remain in their
result of the collapse of the firewall. In
instantaneously. custody.
defense,
iii. It doesMr. notandariseMrs.where R rely on the
a passenger The responsibility treated of in this article shall
doctrine
demands of last responsibility
clear chance alleging from that
the cease when the persons herein mentioned prove
Mr. carrier
and Mrs.toS had the last clear chance to that they observed all the diligence of a good
enforce its contractual
avoid the accident if only they heeded the father of a family to prevent damage.
obligations.
former’s
iv. If the warning to vacate
plaintiff was the shop, and
not negligent. Art. 211 (Family Code) The father and the mother
therefore Mr. and Mrs. R’s prior negligence shall jointly exercise parental authority over
should be disregarded. the persons of their common children. In case
E. VICARIOUS LIABILITY (CIVIL CODE, ART. 2180; of disagreement, the father’s decision shall
FAMILY
If youCODE, ART.
were the 211) how would you decide the
judge, prevail, unless there is a judicial order to the
case? State your reasons. contrary. Children shall always observe
SUGGESTED
‘Vicarious liability’ defined ANSWER respect and reverence towards their parents
Also known
•I would decide as imputed
in favor liability
of Mr. & Mrs. S. The and are obliged to obey them as long as the
A person
•proprietor of is not only liable for torts children are under parental authority.
a committed
building or by himself, is
structure butresponsible
also for for
torts committed by others with whom Art. 221 (Family Code) Parents and other persons
the damages resulting from its total or partial
he has a certain relation or for whom exercising parental authority shall be civilly liable
collapse, if it should be due to the lack of for the injuries and damages caused by the acts
he is responsible. (Article 2180 Civil
necessary
Code) repairs (Art 2190 Civil Code). As or omissions of their unemancipated children
regards the defense of “last clear chance,” living in their company and under their parental
the same
Rationale: is not become
Persons tenable liable
because according
for their authority subject to the appropriate defenses
own omission to comply with their duty (De
to the Supreme Court in one case to Roy provided by law.
v. CA, GRexercise
diligently L- 80718,care,Jan.control
29, 1988,and 157
SCRA 757) over
supervision the doctrine
the personsof last
for clear
whomchance Art. 219 (Family Code) Those given the authority and
they
is notareapplicable
responsible.
to instances covered by Art responsibility under the preceding Article (special
2190 of the Civil Code. Further, in Phoenix parental authority) shall be principally and
Concept of Vicarious Liability solidarily liable for damages caused by the acts
Art. 2180. The obligation imposed by or omissions of the unemancipated minor. The
article 2176 is demandable not only for parents, judicial guardians or the persons
one’s own acts or omissions, but also for exercising substitute parental authority over said
minor shall be subsidiarily liable.

195
The respective liabilities of those referred to in BAR QUESTION
the preceding paragraph shall not apply if it is Rommel’s private car, while being driven by
proved that they exercised the proper diligence the regular
required under the particular circumstances. family driver, Amado, hits a pedestrian causing
All other cases not covered by this and the the latter’s death. Rommel is not in the car
preceding articles shall be governed by the when the incident happened. Is Rommel liable for
provisions of the Civil Code on quasi-delicts. damages to the heirs of the deceased? Explain.
SUGGESTED ANSWER
Between Parents and Their Minor Children Yes, Rommel may be held liable for damages if
Principle of Parental Liability he fails to
• Parental liability is made a natural or logical prove that he exercised the diligence of a good
consequence of the duties and father of a family (Art. 2180, par. 5, NCC) in
responsibilities of parents — their parental selecting and supervising his family driver. The
authority — which includes the instructing, owner is presumed liable unless he proves the
controlling and disciplining of the child. defense of diligence. If the driver was
• Note: The responsibility of the parent ceases performing his assigned task when the incident
when he proves that he observed the happened, Rommel shall be solidarily liable
diligence of a good father of a family to with the driver in a case based on quasi-delict.
prevent damage.
In case the driver is convicted in a criminal
BAR QUESTION (2005) case for reckless imprudence, and he cannot
Under the law on quasi-delict, aside from the pay the civil liability, Rommel is subsidiarily
persons who
caused injury to persons, who is liable under this
circumstance: When a 7-year old boy injures his REYES V. DOCTOLERO
playmate while playing with his father’s rifle. Explain.G.R. NO. 185597, AUGUST 2, 2017
SUGGESTED ANSWER J. Jardeleza
The parents of the 7-year old boy who caused • Although the employer is not the actual
injury to his tortfeasor, the law makes him vicariously
playmate are liable under Article 219 of the liable on the basis of the civil law principle
Family Code since they exercise parental of pater familias for failure to exercise due
Between
authorityEmployers
over the and Employees
person of the boy. (Tamargo v. care and vigilance over the acts of one's
Liability of the Employers subordinates to prevent damage to another.
The liability of the employer under Article • However, the above rule is applicable only if
2180 is direct and immediate; it is not there is an employer-employee relationship.
conditioned upon prior recourse against the This employer- employee relationship
negligent employee and a prior showing of the cannot be presumed but must be
insolvency of such employee. sufficiently proven by the plaintiff. The
plaintiff must also show that the employee
General Rule: When an injury is caused by the was acting within the scope of his assigned
negligence of the employee, there instantly task when the tort complained of was
arises a presumption of law that there was committed. It is only then that the
negligence on the part of the master or defendant, as employer, may find it
employer either in the selection of the servant necessary to interpose the defense of due
or employee, or in the supervision over him diligence in the selection and supervision of
after selection or both. employees.

Defense against vicarious liability BPI V. CBP AND CITIBANK

Employers carry the burden of proof that there G.R. NO. 197593, OCTOBER 12, 2020
was no negligence on their part in the J. Hernando
selection and supervision of the employees, or Issue:
that at the time of the incident the employees W/N Central Bank of the Philippines is liable
were not discharging the assigned tasks or on for the bank fraud committed by its two
occasion of their functions. employees which resulted in losses to the
petitioner BPI.

BAR QUESTION (2001) Ruling:

After working overtime up to midnight, Alberto, anThe test of liability depends on whether or not the
executive employees, acting in behalf of CBP, were
of an insurance company drove a company performing governmental or proprietary functions.
vehicle to a favorite Videoke bar where he had some
drinks and sang some songs with friends to The State in the performance of its
“unwind”. At 2:00 a.m., he drove home, but in doing governmental functions is liable only for the
so, he bumped a tricycle, resulting in the death of
tortuous acts of its special agents. On the
its driver. May the insurance company be held
liable for the other hand, the State becomes liable as an
negligent act of Alberto? Why? ordinary employer when performing its
SUGGESTED ANSWER proprietary functions.
The insurance company is not liable because when
the accident Employers shall be liable for the damages
occurred, Alberto was not acting within the caused by their employees and household
assigned tasks of his employment. It is true that helpers acting within the scope of their
under Art. 2180 (par. 5), employers are liable for
assigned tasks, even though the former are
damages caused by their employees who were
acting within the scope of their assigned tasks. not engaged in any business or industry.
However, the mere fact that Alberto was using a
service vehicle of the employer at the time of the CBP's establishment of clearing house facilities
injurious accident does not necessarily mean that for its member banks to which Valentino and
Estacio were assigned as Bookkeeper governmental function.
and Janitor-Messenger, respectively, is a

196
As such, the State or CBP in this case, is shown to be under the management of the
liable only for the torts committed by its defendant, and the accident is such as in the
employee when the latter acts as a special ordinary course of things does not happen if
agent but not when the said employee or those who have the management used proper
official performs his or her functions that care, it affords reasonable evidence, in the
naturally pertain to his or her office. A absence of an explanation by the defendant, that
special agent is defined as one who receives the accident arose from want of care.”
a definite and fixed order or commission,
foreign to the exercise of the duties of his
office.

Evidently, both Valentino and Estacio are not

considered as special agents of CBP during
their commission of the fraudulent acts
against petitioner BPI as they were regular
employees performing tasks pertaining to
their offices, namely, bookkeeping and
janitorial-messenger. Thus, CBP cannot be
held liable for any damage caused to
petitioner BPI by reason of Valentino and
Estacio's unlawful acts.

Even on the assumption that CBP is

performing proprietary functions, still, it
cannot be held liable because Valentino and
Estacio acted beyond the scope of their
duties. Even assuming that CBP is an
ordinary employer, it still cannot be held
liable.

Article 2180 of the Civil Code provides that

an employer shall be liable for the damages
caused by their employees acting within the
scope of their assigned tasks. An act is
deemed an assigned task if it is "done by an
employee, in furtherance of the interests of
the employer or for the account of the
employer at the time of the infliction of the
injury or damage."

Obviously, Valentino and Estacio's

fraudulent acts of tampering with and
pilfering of documents are not in furtherance
of CBP's interests nor done for its account as
the said acts were unauthorized and
unlawful. F. RES IPSA LOQUITUR

‘Res Ipsa Loquitur’ Defined

It is a Latin phrase that literally means "the
thing or the transaction speaks for itself."
It is a maxim for the rule that the fact of the
occurrence of an injury, taken with the
surrounding circumstances, may permit an
inference or raise a presumption of
negligence, or make out a plaintiff's prima
facie case, and present a question of fact for
the defendant to meet with an explanation.
This rule is grounded on the superior logic of
ordinary human experience, and it is on the
basis of such experience or common
knowledge that negligence may be deduced
from the mere occurrence of the accident
itself. Hence, the rule is applied in
conjunction with the doctrine of common
knowledge.

LAYUGAN V. IAC
G.R. NO. 73998, NOVEMBER 14, 1988
J. Sarmiento
“Where the thing which causes injury is
Concept of Res Ipsa Loquitur • A person may have suffered physical hurt or
• Utilizing res ipsa loquitur is a matter of injury, but for as long as no legal injury or
evidence, a mode of proof, or a mere wrong has been done, there is no liability.
procedural convenience, since it • There is no liability even if there is damage
furnishes a substitute for, and relieves because there was no injury.
a plaintiff of the burden of producing a
specific proof of negligence.
• It is peculiar to the law of negligence
which recognizes that prima facie 197
negligence may be established without
direct proof and furnishes a substitute
for specific proof of negligence.
• It is based in part upon the theory that
the defendant in charge of the
instrumentality which causes the
injury either knows the cause of the
accident or has the best opportunity of
ascertaining it and that the plaintiff
has no such knowledge, and therefore
is compelled to allege negligence in
general terms and to rely upon the
proof of the happening of the accident
in order to establish negligence.

Elements for the Application of the Doctrine

1. The accident was of such character as
to warrant an inference that it would
not have happened except for the
defendant’s negligence
2. The accident must have been caused
by an agency or instrumentality
within the exclusive management or
control of the person charged with
the negligence complained of
3. The accident must not have been due
to any voluntary action or contribution
on the part of the person injured.

RAMOS V. CA
G.R. NO. 124354, DECEMBER 29, 1999
J. Kapunan
Control of Instrumentality which caused
the damage is the fundamental element.
Such element of control must be shown
to be within the dominion of the
defendant. In order to have benefit of
the rule, a plaintiff, in addition to proving
injury or damage, must show a situation
where it is applicable, and must establish
that the essential elements of the
doctrine were present in a particular
incident.

AFRICA V. CALTEX (PHIL.) INC.

G.R. NO. L-12986, MARCH 31, 1966
J. Makalintal
In this case, defendant Caltex was liable
for damage done to the property of its
neighbors when fire broke out in a Caltex
service station. The gasoline station, with
all its appliances, equipment and
employees, was under the control of the
defendant. The persons who knew how
the fire started were the defendant and
its employees, but they gave no
explanation whatsoever.

• Also known as damage without injury. G. DAMNUM ABSQUE INJURIA

• This arises only when the loss or harm was
not the
result of a violation of a legal duty.
• Damage results from a person's
exercising his legal rights.
• Although there was physical damage,
there was no legal injury as there was
no violation of legal right.
• There can be damage without injury. injured in contemplation of law. Thus, there must first
• In order that a plaintiff may maintain an action be the breach of some duty and the imposition of
for the injuries of which he complains, he must liability for that breach before damages may be
establish that such injuries resulted from a awarded; it is not sufficient to state that there should
breach of duty which the defendant owed to be tort liability merely because the plaintiff suffered
the plaintiff. some pain and suffering.
• Custodio v CA – However, the mere fact that
the plaintiff suffered losses does not give rise
to a right to recover damages. To warrant the
recovery of damages, there must be both a
right of action for a legal wrong inflicted by the
defendant, and damage resulting to the
plaintiff therefrom. Wrong without damage, or
damage without wrong, does not constitute a
cause of action, since damages are merely
part of the remedy allowed for the injury
caused by a breach or wrong.
• There is a material distinction between
damages and injury. Injury is the illegal
invasion of a legal right; damage is the loss,
hurt, or harm which results from the injury;
and damages are the recompense or
compensation awarded for the damage
suffered. Thus, there can be damage without
injury in those instances in which the loss or
harm was not the result of a violation of a
legal duty. These situations are often called
damnum absque injuria.

General Rule: There is no cause of action for acts

done by one person upon his own property in a
lawful and proper manner, although such acts
incidentally cause damage or an unavoidable loss
to another, as such damage or loss is damnum
absque injuria.

No award of Damages in a damnum absque injuria

• There is no basis for an award of damages.
• There must first be a breach of duty and
imposition of liability before damages may be
awarded.
• Note: The injured person alone bears the
consequences because the law affords no
remedy for damages resulting from an act that
does not amount to a legal injury or wrong.

SANGGACALA ET AL. V. NPC

G.R. NO. 209538, JULY 07, 2021
J. Leonen
The basis for an award of tort damages is a legal
injury to an individual, thus:
. . .To warrant the recovery of damages, there must
be both a right of action for a legal wrong
inflicted by the defendant, and damage
resulting to the plaintiff therefrom. Wrong
without damage, or damage without wrong,
does not constitute a cause of action, since
damages are merely part of the remedy
allowed for the injury caused by a breach or
wrong.

There is a material distinction between damages

and injury. Injury is the illegal invasion of a legal
right; damage is the loss, hurt, or harm which
results from the injury, and damages are the
recompense or compensation awarded for the
damage suffered. Thus, there can be damage
without injury in those instances in which the loss
or harm was not the result of a violation of a
legal duty. These situations are often called
damnum absque injuria.

In order that a plaintiff may maintain an action

for the injuries of which he complains, he must
establish that such injuries resulted from a
breach of duty which the defendant owed to the
plaintiff — a concurrence of injury to the plaintiff
and legal responsibility by the person causing it.
The underlying basis for the award of tort
damages is the premise that an individual was
 Damnum absque injuria, or damage Art. 2179. When the plaintiff’s own negligence
without injury, arises when the loss or was the immediate and proximate cause of
harm was not the result of a violation of his injury, he cannot recover damages. But if
a legal duty. When this occurs, the his negligence was only contributory, the
consequences must be borne by the immediate and proximate cause of the injury
injured person alone, since there is no being the defendant’s lack of due care, the
remedy for damages resulting from an plaintiff may recover damages, but the
act which does not amount to a legal courts shall mitigate the damages to be
injury or wrong. awarded.
H. DEFENSES
i.
IN TORT ACTIONS
Due Diligence to prevent the Damage
under
Article 2180
Art. 2214. In quasi-delicts, the contributory
ii. Acts of Public Officers in the negligence of the plaintiff shall reduce the
performance of their official duties damages that he may recover.
iii. Authority of the law under Art 5 of
the NCC and Art 11 of the RPC
Extent of Mitigation
iv. Damnum Absque Injuria
It is left to the discretion of the court to
v. Plaintiff’s negligence is the proximate determine the extent of the mitigation of the
cause defendant’s liability depending on the
vi. Contributory negligence of the Plaintiff circumstances.
vii. Fortuitous Event
viii. Plaintiff’s assumption of risk (b) ASSUMPTION OF RISK
ix. Prescription • Doctrine of Assumption of Risk is
x. Waiver consistent with the Latin maxim volenti
xi. Emergency Rule or Sudden Peril non fit injuria.
• The risk of a known danger.
(a) CONTRIBUTORY NEGLIGENCE • The general principle underlying the
1. An example of a partial defense defense of assumption of risk is that a
2. It is conduct on the part of the plaintiff who voluntarily assumes a risk of
injured party, contributing as a legal harm arising from the negligent or
cause to the harm he has suffered, reckless conduct of the defendant cannot
which falls below the standard to recover for such harm.
which he is required to conform for
his own protection. Elements of Assumption of Risk
3. This is stated in Article 2179 of the Civil a) The plaintiff must know that the risk is present.
Code. b) The plaintiff must further understand its nature.
4. This is also reiterated in Article c) The choice to incur it is free and voluntary.
2214 of the Civil Code

198
ESTERIA F. GARCIANO VS. CA
(c) FORTUITOUS EVENT
G.R. NO. 96126 AUGUST 10, 1992
J. Griño-Aquino
Art. 1174. Except in cases expressly specified by
Liability for damages under Articles 19, 20 and 21
of the Civil Code arises only from unlawful, willful
the law, or when it is otherwise declared by
or negligent acts that are contrary to law, or stipulation, or when the nature of the obligation
morals, good customs or public policy. xxx requires the assumption of risk, no person shall
The Court of Appeals was correct in finding that be responsible for those events which could not
petitioner's discontinuance from teaching was her be foreseen, or which, though foreseen, were
own choice. While the respondents admittedly inevitable.
wanted her service terminated, they actually did
nothing to physically prevent her from reassuming Essential Characteristics of a Fortuitous Event
her post, as ordered by the school's Board of a) The cause of the unforeseen and unexpected
Directors. That the school principal and Fr. Wiertz occurrence, or of the failure of the debtor to
disagreed with the Board's decision to retain her, comply with his obligation, must be
and some teachers allegedly threatened to resign independent of human will.
en masse, even if true, did not make them liable b) It must be impossible to foresee the event
to her for damages. They were simply exercising their which constitutes the ‘caso fortuito’ or if it
right of free speech or their right to dissent from the can be foreseen, it must be impossible to
Board's decision. Their acts were not contrary to avoid.
law, morals, good customs or public policy. They c) The occurrence must be such as to render it
did not "illegally dismiss" her for the Board's impossible
decision to retain her prevailed. She was ordered for the debtor to fulfill his obligation in a normal
to report for work on July 5, 1982, but she did not
manner.
comply with that order. Consequently, whatever
d) The obligor must be free from any
loss she may have incurred in the form of lost
earnings was self-inflicted. Volenti non fit injuria. participation in the aggravation of the injury
resulting to the creditor.
NIKKO HOTEL MANILA GARDEN VS. ROBERTO REYES, A.K.A.
"AMAY BISAYA" (d) EMERGENCY RULE OR SUDDEN PERIL
G.R. NO. 154259, FEBRUARY 28, 2005 "Under that rule, one who suddenly finds himself
J. Chico-Nazario in a place of danger, and is required to act
Petitioners Lim and Hotel Nikko contend that without time to consider the best means that
pursuant to the doctrine of volenti non fit injuria, may be adopted to avoid the impending danger,
they cannot be made liable for damages as is not guilty of negligence, if he fails to adopt
respondent Reyes assumed the risk of being asked what subsequently and upon reflection may
to leave (and being embarrassed and humiliated in appear to have been a better method, unless the
the process) as he was a "gate-crasher.“ emergency in which he finds himself is brought
The doctrine of volenti non fit injuria ("to which a about by his own negligence."
person assents is not esteemed in law as injury" )
refers to self- inflicted injury or to the consent to (e) PRESCRIPTION - An action based on quasi-delict
injury which precludes the recovery of damages by prescribes in four years from the date of the
one who has knowingly and voluntarily exposed accident. (Article 1146 Civil Code)
himself to danger, even if he is not negligent in
doing so.
I. MEDICAL NEGLIGENCE AND MALPRACTICE
As formulated by petitioners, however, this
Concept:
doctrine does not find application to the case at
bar because even if respondent Reyes assumed Tort Liability of medical practitioner for
the risk of being asked to leave the party, negligence can arise out of delict and quasi-
petitioners, under Articles 19 and 21 of the New delict. In addition, liability may also be based
Civil Code, were still under obligation to treat him on contract.
fairly in order not to expose him to unnecessary
ridicule and shame. The duty of the physician to bring skill and
care to the amelioration of the condition of his
Thus, the threshold issue is whether or not Ruby patient has its foundation in public
Lim acted abusively in asking Roberto Reyes, consideration which is inseparable from the
a.k.a. "Amay Bisaya," to leave the party where he nature and exercise of his calling upon which
was not invited by the celebrant thereof thereby the public reposes respect and confidence; any
becoming liable under Articles 19 and 21 of the Civil slip or breach in the performance of that duty,
Code. Parenthetically, and if Ruby Lim were so no matter how small, is corrosive of that public
liable, whether or not Hotel Nikko, as her employer, is faith. (Bernal et al v. Alonzo et al.)
solidarily liable with her
Medical Negligence and Malpractice
Medical malpractice is a particular form of
negligence which consists in the failure of a
physician or surgeon to apply to his practice of
BAR QUESTION (2012)
medicine that degree of care and skill which is
Roberto was in Nikko Hotel when he bumped into a
ordinarily employed by the profession generally
friend who
was then on her way to a wedding reception being
under similar conditions, and in like surrounding
held in said hotel. Roberto alleged that he was then circumstances.
invited by his friend to join her at the wedding
reception and carried the basket full of fruits which Standard of Care: Negligence in medical
she was bringing to the affair. At the reception, the malpractice consists in the failure of a
wedding coordinator of the hotel noticed him and physician or surgeon to apply to his practice of
asked him, allegedly in a loud voice, to leave as he medicine that degree of care and skill which is
was not in the guest list. He retorted that he had ordinarily employed by the profession
been invited to the affair by his friend, who however generally under similar conditions, and in like
denied doing so. Deeply embarrassed by the surrounding circumstances.
incident, Roberto then sued the hotel for damages
under Articles 19 and 21 of the Civil Code. Will Duty of Physician: The duty of the physician to
bring skill and care to the amelioration of public reposes respect and confidence; any slip
the condition of his patient has its or breach in the performance of that duty, no
foundation in public consideration which matter how small, is corrosive of that public
is inseparable from the nature and faith. (Batiquin v. CA)
exercise of his calling upon which the

199
Sources of Liability healthy part of the body which was not under, or
There are only five sources of obligations in the area, of treatment, removal of the wrong
under the New Civil Code. Medical malpractice part of the body when another part was intended,
is not a separate source of obligation. Hence, knocking out a tooth while a patient’s jaw was
any liability of a medical practitioner for under anesthetic for the removal of his tonsils,
negligence should arise out of any of the and loss of an eye while the patient plaintiff was
sources of obligation under the New Civil under the influence of anesthetic, during or
Code. following an operation for appendicitis, among
Tort liability of medical practitioner for others.
negligence can arise out of delict and quasi-
delict. Independently, liability may also arise
ex contractu because of the contract between
the doctor and the patient. As in all other
cases, the presence of the contract between
doctor and the patient does not bar the
existence of liability based on quasi-delict; the
negligence that breaches the contract may
also be tort. If a criminal case under Article 365 is
filed, the civil action arising from delict may
also be deemed instituted in the criminal case.

Elements of cause of action based on Quasi-Delict

1) Act or omission constituting fault or
negligence
2) Damage suffered by the injured party; and
3) The causal relation between the damage
and the act or omission.

Required Proof:
• Negligence of doctors usually requires
presentation of an expert witness to
establish the standard to be followed and
why the defendant doctor can be said to
have failed to follow the standard of care.
• However, in certain cases the Doctrine of
Res Ipsa Loquitur may also be applied as in
the case when a scissor is discovered inside
the body of the victim after surgical
operation.

DR. SOLIDUM VS. PEOPLE

G.R. NO. 192123, MARCH 10, 2014
J. Bersamin
Res Ipsa Loquitur in Medical Negligence
• Res ipsa loquitur is literally translated as
"the thing or the transaction speaks for
itself." The doctrine res ipsa loquitur means
that "where the thing which causes injury is
shown to be under the management of the
defendant, and the accident is such as in
the ordinary course of things does not
happen if those who have the management
use proper care, it affords reasonable
evidence, in the absence of an explanation
by the defendant, that the accident arose
from want of care." It is simply "a
recognition of the postulate that, as a
matter of common knowledge and
experience, the very nature of certain types
of occurrences may justify an inference of
negligence on the part of the person who
controls the instrumentality causing the
injury in the absence of some explanation
by the defendant who is charged with
negligence. It is grounded in the superior
logic of ordinary human experience and on
the basis of such experience or common
knowledge, negligence may be deduced
from the mere occurrence of the accident
itself.
• Thus, courts of other jurisdictions have
applied the
doctrine in the following situations: leaving
of a foreign object in the body of the patient
after an operation, injuries sustained on a
• Nevertheless, despite the fact that claim, a patient must prove that the
the scope of res ipsa loquitur has physician or surgeon either failed to do
been measurably enlarged, it does something which a reasonably prudent
not automatically apply to all cases physician or surgeon would have done, or
of medical negligence as to that he or she did something that a
mechanically shift the burden of reasonably prudent physician or surgeon
proof to the defendant to show that would not have done, and that the failure or
he is not guilty of the ascribed action caused injury to the patient. There
negligence. are thus four elements involved in medical
• In order to allow resort to the negligence cases, namely: duty, breach,
doctrine, therefore, the following injury, and proximate causation.
essential requisites must first be
satisfied, to wit: In Lucas v. Tuaño, this Court explains:
(1) the accident was of a kind that When a patient engages the services of a
does not ordinarily occur unless physician, a physician¬-patient
someone is negligent; relationship is generated. And in accepting
(2) the instrumentality or agency a case, the physician, for all intents and
that caused the injury was under purposes, represents that he has the
the exclusive control of the needed training and skill possessed by
person charged; and physicians and surgeons practicing in the
(3) the injury suffered must not same field; and that he will employ such
have been due to any voluntary training, care, and skill in the treatment of
action or contribution of the the patient. Thus, in treating his patient, a
person injured. physician is under a duty [to the former] to
exercise that degree of care, skill and
DE JESUS V. UYLOAN diligence which physicians in the same
G.R. NO. 234851, FEBRUARY 15, 2022 general neighborhood and in the same general
C.J. Gesmundo [Justice M. Lopez, Division line of practice ordinarily possess and
member] Distinction between medical exercise in like cases. Stated otherwise,
malpractice based on contract and based on the physician has the duty to use at least
quasi-delict; Elements of both; Prescriptive the same level of care that any other
periods reasonably competent physician would use to
Medical malpractice is a particular form treat the condition under similar
of negligence which consists in the circumstances.
failure of a physician or surgeon to
apply to his practice of medicine that Thus, where the complaint contains
degree of care and skill which is averments of the foregoing elements and
ordinarily employed by the profession the defendant doctor failed to observe such
generally, under similar conditions, and degree of care which caused damage or
in like surrounding circumstances. In harm to the plaintiff patient, the cause of
order to successfully pursue such a action is one for medical negligence under
the law on torts rather than contract.

200
The above complaint indeed states a negligent acts of his physicians thus fails.
categorical declaration of the case being Apparently, inclusion of the contract approach to
brought on the basis of a "medical contract seek damages from the defendant physicians was
between the Plaintiffs and Defendants Uyloan an afterthought intended to revive a stale claim.
and Ojeda" under the statement of cause of
action against said doctors. However, the rest
of the allegations and arguments unmistakably J. DAMAGES; KINDS OF DAMAGES; WHEN MAY
show that the cause of action is premised upon BE RECOVERED
the law and jurisprudence on damages in general
and medical negligence under the Civil Code
(CIVIL CODE, ARTS. 2197 AND 2216)
Damages Defined
provisions on quasi-delict. There is no mention at • Damages are the recompense or
all of any express promise on the part of the defendant compensation awarded for the injury
doctors to provide medical treatment or achieve a suffered.
specific result. The absence of an express agreement • Indemnification is meant to compensate
as basis for contractual liability is evident from a plain
for the injury inflicted and not to impose a
invocation of an implied contract between the parties.
penalty. A party is entitled to adequate
compensation only for such pecuniary loss
The fact that the physician-patient relationship is
actually suffered and duly proved.
consensual does not necessarily mean it is a
contractual relation, in the sense in which petitioner
employs this term by equating it with any other ‘DAMAGE’ AS OPPOSED TO ‘DAMAGES’
transaction involving exchange of money for services. • Damage is the loss, injury, or
Indeed, the medical profession is affected with deterioration caused by negligence or
public interest. Once a physician-patient accident of one person to another with
relationship is established, the legal duty of respect to another’s property. Damage is
care follows. The doctor accordingly becomes the occasion of damages.
duty-bound to use at least the same standard • Damages is the compensation in money
of care that a reasonably competent doctor for the loss or damage. It is an adequate
would use to treat a medical condition under compensation for the value of loss
similar circumstances. Breach of duty occurs suffered or profits which the obligee failed
when the doctor fails to comply with, or
to obtain.
improperly performs his duties under
professional standards. This determination is
• Indemnification is meant to compensate
both factual and legal, and is specific to each for the injury inflicted and not to impose a
individual case. If the patient, as a result of the penalty. A party is entitled to adequate
breach of duty, is injured in body or in health, compensation only for such pecuniary loss
actionable malpractice is committed, entitling actually suffered and duly proved.
the patient to damages.
KINDS OF DAMAGES
In the light of the foregoing, We hold that a mere Damages may be:
reference to an implied contract between the physician a. Actual or compensatory;
and the patient in general is insufficient for pleading a b. Moral;
cause of action under the contract theory of
c. Nominal;
professional malpractice. An action for medical
malpractice based on contract must allege an express
d. Temperate or moderate;
promise to provide medical treatment or achieve a e. Liquidated; or
specific result. The following discussion of f. Exemplary or corrective. [2197]
established rules on medical malpractice
culled from fairly recent American 1. ACTUAL AND COMPENSATORY DAMAGES –
jurisprudence highlights this point, viz.: CIVIL CODE, ARTS. 2199-2215
Absent an express contract, a physician does
not impliedly warrant the success of his or her
‘Actual and Compensatory Damages’ defined
treatment but only that he or she will adhere to
the applicable standard of care. Thus, there is • It is compensation for an injury that will
no cause of action for breach of implied put the injured party in the position where
contract or implied warranty arising from an it was before the injury. They pertain to
alleged failure to provide adequate medical such injuries or losses that are actually
treatment. This allegation clearly sounds in sustained and susceptible of
tort, not in contract; therefore, the plaintiff's measurement."
remedy is an action for malpractice, not • Actual damages constitute compensation
breach of contract. A breach of contract for sustained pecuniary loss.
complaint fails to state a cause of action if • Nevertheless, a party may only be
there is no allegation of any express promise
awarded actual damages when the
to cure or to achieve a specific result. A
physician's statements of opinion regarding pecuniary loss he or she had suffered
the likely result of a medical procedure are was duly proven.
insufficient to impose contractual liability, even
if they ultimately prove incorrect. Kinds of Actual/Compensatory Damages (Art 2200)
1. The loss of what a person already
Clearly, the cause of action in this case is one possesses or the loss suffered or actual
for medical malpractice or medical negligence loss. (daño emergente/damnum
premised on the "breach of [the defendant emergens)
doctors'] professional duties of skill and care, 2. The unrealized profits or the profits which
or their improper performance by a physician the complainant failed to obtain by
surgeon," whereby the plaintiff suffered injury
reason of the breach of contract or as a
and damages. Petitioner's attempt to present a
hybrid tort and contract claim arising from the result of the commission of a quasi-
 delict (lucro cesante) b. Must pray for the relief that claim for
loss be granted
Requisites c. Plaintiff must prove the loss
a. Must be pleaded and proved with certainty

201
Classes of Actual Damages
Attorney’s Fees and Litigation Expenses
a. Value of actual loss
General Rule: If there is no stipulation, then it
b. Lucrum Cesans (Loss of Profits)
cannot be recovered.
c. Loss of earning capacity
d. Interest XPN: It may be recovered in the following cases:
e. Injury to business standing or commercial 1. When exemplary damages are awarded;
credit 2. When the defendant’s act or omission
f. Attorney’s fees has compelled the plaintiff to litigate with
g. Indemnity for death third persons or to incur expenses to
protect his interest;
Extent and Measure of Damages 3. In criminal cases of malicious prosecution
In Contracts and Quasi Contracts (Art 2201) against the plaintiff;
i. Obligor in good faith – Liable for damages 4. In case of a clearly unfounded civil action
that are natural and probable or proceeding against the plaintiff;
consequences of the breach, and which 5. Where the defendant acted in gross and
the parties have foreseen. evident bad faith in refusing to satisfy the
ii. Obligor in bad faith – Responsible for all plaintiff’s plainly valid, just and
damages which may be reasonably demandable claim;
attributed to the non- performance of the 6. In actions for legal support;
obligation. 7. In actions for the recovery of wages of
In Crimes and Quasi Delicts (Art 2202) household helpers, laborers and skilled
i. Limited to a fair compensation for the workers;
harm done in case of tortious injury 8. In actions for indemnity under
ii. Same as the rule in measuring damages in workmen’s
contracts and quasi-contracts where the compensation and employer’s liability laws;
obligor acted in good faith, except that the 9. In a separate civil action to recover civil
accused or defendant must answer for liability arising from a crime;
such damages whether he has foreseen 10. When at least double judicial costs are awarded;
them or not. 11. In any other case where the court deems
iii. Accused/defendant is responsible not only it just and equitable that attorney’s fees
for the natural and probable consequences and expenses of litigation should be
of his act or omission but for all damages recovered. [Article 2208]
which may be reasonably attributed
Note: The attorney’s fees and expenses of
thereto.
litigation must be reasonable.
BAR QUESTION (2013)
A collision occurred at an intersection involving a S.C. MEGAWORLD CONSTRUCTION AND
bicycle and a DEVELOPMENT V. PARADA
taxicab. Both the bicycle rider (a businessman then G.R. NO. 183804, SEPTEMBER 11, 2013
doing his morning exercise) and the taxi driver J. Reyes
claimed that the other was at fault. Based on the Attorney’s fees as part of damages are not
police report, the bicycle crossed the intersection meant to enrich the winning party at the
first but the taxicab, crossing at a fast clip from the
expense of the losing litigant. They are not
bicycle's left, could not brake in time and hit the
awarded every time a party prevails in a suit
bicycle's rear wheel, toppling it and throwing the
bicycle rider into the sidewalk 5 meters away. The because of the policy that no premium
bicycle rider suffered a fractured right knee, should be placed on the right to litigate. The
sustained when he fell on his right side on the award of attorney’s fees is the exception
concrete side walk. He was hospitalized and was rather than the general rule. As such, it is
subsequently operated on, rendering him immobile necessary for the trial court to make findings
for 3 weeks and requiring physical rehabilitation for of facts and law that would bring the case
another 3 months. In his complaint for damages, within the exception and justify the grant of
the rider prayed for the award ofP1,000,000 actual such award. The matter of attorney’s fees
damages, P200,000 moral damages, P200,000 cannot be mentioned only in the dispositive
exemplary damages, P100,000 nominal damages portion of the decision. They must be clearly
and P50,000 attorney's fees. Assuming the police explained and justified by the trial court in
report to be correct and as the lawyer for the
the body of its decision.
bicycle rider, what evidence (documentary and
testimonial) and legal arguments will you present in
court to justify the damages that your client claims? Interest
(8%) • Award of interest in the concept of actual
SUGGESTED ANSWER and
I will base the claim of my client on quasi- delict compensatory damages.
under Article • The rate of interest, as well as the accrual
2176 of the Civil Code of the Philippines. The
requisites for a claim under quasi-delict to prosper
thereof is imposed as follows, following Nacar
are as follows: v Gallery Frames based on BSP MB
1. Act or omission, there being fault and negligence; Resolution No. 796 dated June 21, 2013.
2. Damage or injury; and • Bangko Sentral ng Pilipinas Monetary Board
3. Causal connection between the damage and Resolution No. 796 lowered the legal rate of
the act or omission. interest from 12% to 6%. Specifically, the
The case clearly involves a quasi-delict where my rules on interest are now as follows:
client, the bicycle rider, suffered injury as a result of
the negligence of the over- speeding taxi driver,
without fault on my client’s part. To prove actual
1. Monetary Obligations
damages, aside from the testimony of my client, I ex. Loans:
will present his hospital and medical bills. Receipts a. If interest stipulated in writing:
of the fees paid on the rehabilitation will also be i. rate of interest shall be that amount
presented. Furthermore, I will present income tax stipulated
ii. interest due shall earn legal judicial demand (filing of the case)
interest of 6% from date of

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b. if not stipulated in writing • Nevertheless, it must somehow be proportional to
i. shall run from date of default (either and
failure to pay upon extra-judicial in approximation of the suffering inflicted.
demand or upon judicial demand
whichever is appropriate and subject
to the provisions of Article 1169 of the
Civil Code)
ii. rate of interest shall be 6% per annum

2. Non-Monetary Obligations
a. If already liquidated, rate of interest shall
be 6% per annum, demandable from date
of judicial or extra- judicial demand (Art.
1169, Civil Code)
b. If unliquidated, no interest
XPN: When later on established with certainty,
interest shall still be 6% per annum
demandable from the date of judgment
because on such date, the amount of damages
is already deemed ascertained.

3. Compounded Interest
• This is applicable to both monetary and
non-monetary obligations;
• 6% per annum computed against award of
damages (interest) granted by the court. To
be computed from the date when the
court’s decision becomes final and
executory until the award is fully satisfied
by the losing party.

4. The 6% per annum rate of legal interest shall be

applied prospectively:
• Final and executory judgments awarding
damages prior to July 1, 2013 shall apply
the 12% rate;
• Final and executory judgments awarding
damages on or after July 1, 2013 shall apply
the 12% rate for unpaid obligations until
June 30, 2013; unpaid obligations with
respect to said judgments on or after July 1,
2013 shall still incur the 6% rate.

2. MORAL DAMAGES – CIVIL CODE, ARTS. 2217-

2220

‘Moral damages’ defined

• These are compensatory damages awarded
for mental pain and suffering or mental
anguish resulting from a wrong.
• Not punitive in nature.
• Designed to compensate and alleviate in
some way the physical suffering, mental
anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock,
social humiliation, and similar injury unjustly
caused a person.
• May be recovered if they are the proximate
result of the
defendant’s wrongful act or omission.
Moral Damages include:
1. Physical suffering
2. Mental anguish
3. Fright
4. Serious anxiety
5. Besmirched reputation
6. Wounded feelings
7. Moral shock
8. Social humiliation
9. Similar injury. [Article 2217]

Computation for the Award of Moral Damages

• Moral damages is incapable of
pecuniary computation;
Rationale: This is so because moral damages social humiliation which are basis of moral
are in the category of an award designed to damages. They can be experienced only by one
compensate the claimant for actual injury having a nervous system; a corporation has “no
suffered, not to impose a penalty on the feelings, no emotions, no senses.
wrongdoer.
XPN: where the corporation has a good reputation that
Art. 2218. In the adjudication of moral is debased, resulting in its social humiliation.
damages, the sentimental value of
property, real or personal, may be Moral damages in a:
considered. a. Quasi-Delict
• when an act or omission causes physical injuries,
Cases Wherein Moral Damages May be Recovered or;
1. A criminal offense resulting in physical • where the defendant is guilty of intentional tort.
injuries; b. Culpa Contractual
2. Quasi-delicts causing physical injuries; • When the defendant acted in bad faith or
3. Seduction, abduction, rape, or other lascivious was guilty of gross negligence (amounting
acts; to bad faith) or in wanton disregard of his
4. Adultery or concubinage; contractual obligation and, exceptionally,
5. Illegal or arbitrary detention or arrest; when the act of breach of contract itself is
6. Illegal search; constitutive of tort resulting in physical
7. Libel, slander or any other form of defamation; injuries.
8. Malicious prosecution; c. Culpa Criminal
• Moral damages could be lawfully due
9. Acts mentioned in article 309;
when the accused is found guilty of
10. Acts and actions referred to in articles 21,
physical injuries, lascivious acts, adultery
26, 27, 28, or concubinage, illegal or arbitrary
29, 30, 32, 34, and 35. detention, illegal arrest, illegal search, or
defamation. Malicious prosecution can also
Instances when moral damages may be awarded without give rise to a claim for moral damages.
evidence of Injury:
i. Rape Cases Conditions for the Award of Moral Damages
ii. Murder Cases 1. There must be an injury, whether physical,
iii. Broadcast is libelous per se mental or psychological, clearly sustained by
the claimant
Rights of a Juridical Person to recover moral damages 2. There must be a culpable act or omission
Generally, a juridical person is not factually established
entitled to moral damages. 3. The wrongful act or omission of the
defendant is the proximate cause of the
Rationale: A corporation, being an artificial injury sustained by the claimant;
person and having existence only in legal 4. The award of damages is predicated on any of the
contemplation, cannot experience physical cases
sufferings, mental anguish, fright, serious stated in Article 2219.
anxiety, wounded feelings, moral shock, or

203
3. NOMINAL DAMAGES – CIVIL CODE, ARTS. responsible for the damage to petitioner’s
2221- property and that petitioner suffered some
2223 form of pecuniary loss.

Recoverable where a legal right is

technically violated and must be vindicated
against an invasion that has produced no
actual present loss of any kind, or where,
from the nature of the case, there has been
some injury arising from a breach of
contract or legal duty but the amount
thereof has not been or cannot be shown.
Elements
i. Plaintiff has a right
ii. Rights of plaintiff is violated
iii. Purpose is to recognize the right violated.

4. TEMPERATE OR MODERATE DAMAGES – CIVIL

CODE, ARTS. 2224-2225

Those that are more than nominal but less

than compensatory damages [Article 2224]

When May Temperate Damages be Recovered

When some pecuniary loss has been
suffered but its amount can not be proved
with certainty.

Awarding of Temperate Damages

Must be reasonable under the circumstances
[Article 2225]

PHILTRANCO SERVICE ENTERPRISES, INC. V. PARAS

G.R. NO. 161909, APRIL 25, 2012
J. Bersamin
In awarding temperate damages in lieu of
actual damages, the CA did not err, because
Paras and Inland were definitely shown to
have sustained substantial pecuniary losses.
Clearly, the costs of Paras’ surgeries and
consequential rehabilitation, as well as the
fact that repairing Inland’s vehicle would no
longer be economical justly warranted the
CA to calculate temperate damages of
₱50,000.00 and ₱250,000.00 respectively
for Paras and Inland.
SEVEN BROTHERS SHIPPING CORP. V. DMC-
CONSTRUCTION
G.R. NO. 193914, NOVEMBER 26, 2014
C.J. Sereno
• Temperate or moderate damages may be
recovered when the court finds that some
pecuniary loss has been suffered but its
amount cannot, from the nature of the
case, be provided with certainty.
• Nominal damages are ‘recoverable where
a legal right is technically violated and
must be vindicated against an invasion
that has produced no actual present loss
of any kind or where there has been a
breach of contract and no substantial
injury or actual damages whatsoever have
been or can be shown.
• Thus, in Tan v. OMC Carriers, Inc.,
temperate damages were rightly awarded
because plaintiff suffered a loss, although
definitive proof of its amount cannot be
presented as the photographs produced
as evidence were deemed insufficient.
Established in that case, however, was
the fact that respondent’s truck was
• In Canada v. All Commodities TAN V. FIRST MALAYAN LEASING AND FINANCE CORP.
Marketing Corporation, temperate G.R. NO. 254510, JUNE 16, 2021
damages were also awarded wherein J. Caguioa
respondent’s goods did not reach the Computation for the Award of Liquidated Damages
Pepsi Cola Plant at Muntinlupa City as The amount of the liquidated damages is
a result of the negligence of petitioner purely contractual between the parties. The
in conducting its trucking and hauling courts will intervene only to equitably reduce
services, even if the amount of the the liquidated damages, whether intended as
pecuniary loss had not been proven. an indemnity or a penalty, if they are
• In Philtranco Services Enterprises, Inc. iniquitous or unconscionable.
v. Paras, the respondent was likewise
awarded temperate damages in an 6. EXEMPLARY OR CORRECTIVE DAMAGES – CIVIL
action for breach of contract of
CODE, ARTS. 2229-2235
carriage, even if his medical expenses
had not been established with
certainty. • They are also known as “punitive” or
• In People v. Briones, in which the “vindictive”
accused was found guilty of murder, damages.
temperate damages were given even if • Exemplary damages are mere additions
the funeral expenses for the victim which may or may not be granted at all
had not been sufficiently proven. depending upon the necessity of setting an
• Given these findings, we are of the example for public good as a form of
belief that temperate and not nominal deterrent to the repetition of the same act
damages should have been awarded, by anyone.
considering that it has been
established that respondent herein Art. 2229. Exemplary or corrective damages are
suffered a loss, even if the amount imposed, by way of example or correction for
thereof cannot be proven with the public good, in addition to the moral,
certainty. temperate, liquidated or compensatory
damages.
5. LIQUIDATED DAMAGES – CIVIL CODE, ARTS.
2226-2228 Awarding of Exemplary or Corrective Damages
a. Criminal Offenses - crime was committed with
Liquidated damages are those agreed one or more aggravating circumstances
upon by the parties to a contract, to be [Article 2230].
paid in case of breach thereof. b. Quasi-delicts - if the defendant acted with
gross negligence [Article 2231].
When liquidated damages may be equitably reduced: c. Contract and Quasi-Contracts - if the
i. In case of partial and irregular defendant acted in a wanton, fraudulent,
performance reckless, oppressive, or malevolent
ii. In case it is iniquitous or unconscionable manner [Article 2232].

204
Recovery of Exemplary Damages ALETA V. SOFITEL
This cannot be recovered as a matter of right;
G.R. NO. 228150. JANUARY 11, 2023
the court will decide whether or not they
SAJ Leonen
should be adjudicated [Article 2233].
In the absence of competent proof, this Court
denies petitioner's claim of actual damages.
Burden of Proof: The burden of proof is on the
However, temperate damages may be awarded
plaintiff to show that he is entitled to moral,
even in the absence of proof of actual
temperate or compensatory damages before
damages, provided that it has been proven
the court may consider the question of
whether or not exemplary damages should be that the injured party suffered some pecuniary
awarded. [Article 2234] loss. xxx

Is a person allowed to renounce exemplary damages? Here, a perusal of the records reveals that
No. A stipulation whereby exemplary petitioner and his children suffered some
damages are renounced in advance shall be pecuniary loss by reason of the incident. As
null and void [Article 2235 of the Civil Code]. alleged in the pleadings, the injuries that
petitioner's children sustained took two weeks
to physically heal. As compensation for the
RANA V. WONG
pecuniary loss which petitioner and his
G.R. NO. 192861, JUNE 30, 2014
children suffered, this Court awards temperate
J. Perlas-Bernabe
damages in the amount of ₱50,000.00.
Rationale Behind Exemplary Damages
The Court deems that an award of exemplary
Petitioner's prayer for moral damages is granted.
damages would be inappropriate since these
Moral damages refer to the compensation
damages are imposed only "by way of
awarded to an injured party, not for the purpose
example or correction for the public good, in
of penalizing the wrong doer, but as a means to
addition to the moral, temperate, liquidated or
"alleviate in some way the physical suffering,
compensatory damages.“
mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral
shock, social humiliation, and similar injury
BAR QUESTION (1994) unjustly caused a person."
On January 5, 1992, Nonoy obtained a
loan of
Article 2219 of the Civil Code categorically states
Pl,000,000.00 from his friend Raffy. The
that moral damages may be awarded in cases
promissory note did not stipulate any payment
for Interest. The note was due on January 5, 1993 involving "[q]uasi-delicts causing physical
but before this date the two became political injuries[.]" In awarding moral damages, courts
enemies. Nonoy, out of spite, deliberately are given the discretion to determine the amount
defaulted in paying the note, thus forcing Raffy to to be granted, taking into consideration the
sue him. circumstances of a particular case. While there is
1) What actual damages can Raffy recover? no fixed standard, "the amount should not be
2) Can Raffy ask for moral damages from Nonoy? palpably and scandalously excessive." Further, in
3) Can Raffy ask for nominal damages? fixing the amount, regard must be made to the
4) Can Raffy ask for temperate damages? injury suffered and the wrong committed.
5) Can Raffy ask for attorney’s fees? Taking into account the injuries sustained by
SUGGESTED ANSWER petitioner's children and respondent's
1)Raffy may recover the amount of the promissory concomitant failure to place sufficient
note of P1 safeguards to ensure the children's safety, this
million, together with interest at the legal rate Court finds the award of moral damages in the amount
from the date of judicial or extrajudicial demand. of ₱100,000.00 adequate to recompense for the
In addition, however, inasmuch as the debtor is in physical suffering and similar injuries sustained by
bad faith, he is liable for all damages which may
petitioner and his children.
be reasonably attributed to the non- performance
of the obligation. (Art. 2201(2), NCC).
In cases involving quasi-delicts, "exemplary
2) Yes, under Article 2220, NCC moral damages damages may be granted if the defendant acted
are recoverable in case of breach of contract with gross negligence." Recovery of
where the defendant acted fraudulently or in bad exemplary damages is not a matter of right
faith.
and is subject to the court's discretion.
3) Nominal damages may not be recoverable in
this case because Raffy may already be The prerequisites for the award of exemplary
indemnified of his losses with the award of actual damages was discussed in Kierulf v. Court of
and compensatory damages. NOMINAL Appeals:
DAMAGES are adjudicated only in order that a
right of the plaintiff, which has been violated or
Exemplary damages are designed to permit
invaded by the defendant may be vindicated or
the courts to mould behavior that has socially
recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by
deleterious consequences, and its imposition is
him. (Article 2231, Civil Code) required by public policy to suppress the
wanton acts of an offender. However, it cannot
4) Raffy may ask for, but would most likely be recovered as a matter of right. It is based
not be awarded temperate damages, for the entirely on the discretion of the court.
reason that his actual damages may already be Jurisprudence sets certain requirements before
compensated upon proof thereof with the exemplary damages may be awarded, to wit:
promissory note. TEMPERATE DAMAGES may be "(1) They may be imposed by way of example
awarded only when the court finds that some
or correction only in addition, among others, to
pecuniary loss has been suffered but its amount
compensatory damages, and cannot be
cannot, from the nature of the case, be proved
recovered as a matter of right, their
determination depending upon the may be awarded to the claimant;
amount of compensatory damages that

205
(2) the claimant must first establish his right to by receipts during the trial amount to less than the
moral, temperate, liquidated or compensatory sum allowed by the Court as temperate damages,
damages; and the award of temperate damages is justified in
(3)the wrongful act must be accompanied by lieu of actual damages which is of a lesser
bad faith, and the award would be allowed amount. Conversely, if the amount of actual
only if the guilty party acted in a wanton, damages proven exceeds, then temperate
fraudulent, reckless, oppressive or malevolent damages may no longer be awarded; actual
manner“ damages based on the receipts presented during
Here, the circumstances surrounding the case trial should instead be granted.
warrant the imposition of exemplary
damages.

As a luxury hotel which caters to an extensive

range of clientele, respondent ought to ensure
that adequate measures are in place to
guarantee the safety of its guests. By reason
of the insufficiency of the safety rules posted
and the lifeguards' failure to avert the injuries
sustained by petitioner's children, this Court
awards petitioner ₱50,000.00 as exemplary
damages.

Finally, on account of this dispute's

protracted litigation, P50,000.00 as attorney's
fees is awarded.

K. DAMAGES IN CASE OF DEATH

Art. 2206. The amount of damages for death

caused by a crime or quasi-delict shall be at
least three thousand pesos, even though there
may have been mitigating circumstances. In
addition:
(1) The defendant shall be liable for the loss of
the earning capacity of the deceased, and
the indemnity shall be paid to the heirs of
the latter; such indemnity shall in every
case be assessed and awarded by the
court, unless the deceased on account of
permanent physical disability not caused by
the defendant, had no earning capacity at
the time of his death;
(2) If the deceased was obliged to give support
according to the provisions of Article 291,
the recipient who is not an heir called to the
decedent's inheritance by the law of testate
or intestate succession, may demand
support from the person causing the death,
for a period not exceeding five years, the
exact duration to be fixed by the court;
(3) The spouse, legitimate and illegitimate
descendants and ascendants of the
deceased may demand moral damages for
mental anguish by reason of the death of
the deceased.
PEOPLE V. TOLENTINO
G.R. NO. 176385, FEBRUARY 26, 2008
J. Chico-Nazario
a. When death occurs due to a negligent act or
crime, the following damages may be
recovered:
b. Civil indemnity for death
c. Actual or compensatory damages
d. Moral damages
e. Exemplary damages
f. Attorney’s fees and expenses of litigation
g. Interest
h. Temperate damage in lieu of actual damages.

PEOPLE V. RACAL
G.R. NO. 224886, SEPTEMBER 4, 2017
J. Peralta
The trial court's award of actual damages in
the amount of P30,000.00 must be modified. The
settled rule is that when actual damages proven
The rationale for this rule is that it would be holds true, even if the defendant had not been
anomalous and unfair for the victim's heirs, given the opportunity to present evidence
who tried and succeeded in presenting because of a default order.
receipts and other evidence to prove actual
damages, to receive an amount which is
less than that given as temperate damages
to those who are not able to present any
evidence at all. In the present case,
Francisco's heirs were able to prove, and
were awarded, actual damages in the
amount of ₱30,000.00. Since, prevailing 206
jurisprudence now fixes the amount
of
₱50,000.00 as temperate damages in
murder cases, the Court finds it proper to
award temperate damages to Francisco's
heirs, in lieu of actual damages.

Doctrine of avoidable consequences L. DUTY OF INJURED PARTY

Art. 2203. The party suffering loss or injury
must exercise the diligence of a good
father of a family to minimize the damages
resulting from the act or omission in
question.
• Avoidable consequences doctrine is a
legal principle that places the
responsibility of minimizing damages
upon the person who has been injured.
The plaintiff after an injury or breach of
contract should make reasonable efforts
to mitigate the effects of the injury or
breach.
• Damages resulting from avoidable
consequences of the breach of a
contract or other legal duty are not
recoverable.

VELASCO V. MANILA ELECTRIC CO.

G.R. NO. L-18390, AUGUST 6, 1971
En Banc
Explanation of Art. 2203:
This codal rule clearly obligates the injured
party to undertake measures that will
alleviate and not aggravate his condition
after the infliction of the injury, and places
upon him the burden of explaining why he
could not do so.

Duty-Bound to Carry the Burden of Proof

• The claimant is duty-bound to point out
the specific facts that afford a basis for
measuring whatever compensatory
damages are borne.
• The burden of proof is on the party who
would be defeated if no evidence would
be presented on either side.
• The Injured Party must establish his case
by a preponderance of evidence which
means that evidence, as a whole,
adduced by one side is superior to that
of the other.
• The claimant must prove the actual
amount of loss with reasonable certainty
premised upon competent proof and on
the best evidence obtainable.

SPS. RAMOS VS. OBISPO

G.R. NO. 193804, FEBRUARY 27, 2013
J. Villarama
In civil cases, basic is the rule that the
party making allegations has the burden of
proving them by a preponderance of
evidence. Moreover, parties must rely on
the strength of their own evidence, not
upon the weakness of the defense offered
by their opponent. This principle equally