I.

EFFECT AND APPLICATION OF LAWS

A. When Law Takes Effect; Publication (Civil Code, art. 2)
B. Ignorance of the Law; (Civil Code, art. 3) Ignorance
of Fact
C. Retroactivity of Laws (Civil Code, art. 4); Vested
Rights Principle
D. Mandatory, Prohibitory and Permissive Laws (Civil
Code, art. 5)
E. Waiver of Rights (Civil Code, art. 6)
F. Repeal of Laws (Civil Code, art. 7)
G. Judicial Decision (Civil Code, art. 8)
H. Duty to Render Judgment (Civil Code, art. G)
I. Interpretation of Doubtful Statutes (Civil Code, art. 10)
J. Custom (Civil Code, arts. 11-12)
K. Legal Periods (Civil Code, art. 13, as amended by
Book I, chapter 8, sec. 31 of the Administrative Code
of 1G87 (E.O. No. 2G2))
L. Generality Principle of Penal Laws (Civil Code, art. 14)
M. Conflict of Laws (Civil Code, arts. 15-18)
1. Jurisdiction; Forum Non Conveniens
2. Choice of Law; Doctrine of Renvoi; Doctrine of
Processual Presumption
a. Lex Nationalii
b. Lex Rei Sitae
c. Lex Contractus
d. Lex Loci Celebrationis
e. Lex Domicilii
f. Lex Fori
g. Lex Loci Delicti
h. Lex Loci Solutionis
3. Recognition and Enforcement of Foreign Judgment

II. HUMAN RELATIONS

A. Abuse of Rights (Civil Code, arts. 1G-22)
1. Acts Contra Bonus Mores
2. Breach of Promise of Marriage
B. Unjust Enrichment (Civil Code, arts. 22-23 and
2142- 2143)
C. Thoughtless Extravagance (Civil Code, art. 25)
D. Tortious Interference (Civil Code, art. 1314)
 III. PERSONS AND FAMILY RELATIONS
A. Natural Persons
1. Capacity to Act; Restrictions – Civil Code, arts. 37-3G
2. Commencement and End of Civil Personality –
Civil Code, arts. 40-42
3. Proof of Death – Civil Code, art. 43; Rules of Court,
Rule 131, sec. 3 (jj)
B. Juridical Persons (Civil Code, arts. 44-47)
C. Domicile; Residence (Civil Code, arts. 50-51)
D. Surnames (Civil Code, arts. 364-380; Family Code, arts.
176, 18G and 1G3; R.A. No. G048; R.A. No. 10172)
E. Absentees (Civil Code, arts. 381-3G6)
F. Marriage; General Principles (Family Code, art. 1)
*Exclude: Muslim Code (P.D. No. 1083)
1. Essential and Formal Requisites – Family Code,
arts. 1-3, 5-11, 20-21, 26 and 31-35
*Exclude: Duties of a Civil Registrar – Family Code,
arts. 12-13 and 23-25
2. Effects of Absence, Defect or Irregularity – Family
Code, art. 4
G. Mixed Marriages (Family Code, art. 26)
H. Void Marriages; Effects and Remedies (Family Code,
arts. 35-44 and 50-54)
I. Voidable Marriages; Effects and Remedies (Family
Code, arts. 45-54)
*Exclude: A.M. No. 02-11-10-SC and R.A. No. C355
J. Legal Separation (Family Code, art. 55-67)
*Exclude: A.M. No. 02-11-11-SC
K. Property Relations Between Spouses (Family Code, arts.
74-81)
1. Donation Propter Nuptias; Void Donations – Family
Code, arts. 82-83, 86- 87, 43(3) and 50
2. Marriage Settlements – Family Code, arts. 75-81
a. Absolute Community of Property Regime –
Family Code, arts. 84 and 88-104
b. Conjugal Partnership of Gains Regime – Family
Code, arts. 105-133
c. Separation of Property Regime – Family Code,
arts. 143-146
3. Judicial Separation of Property – Family Code,
arts. 134-142
4. Property Regime of Unions Without Marriage – Family
Code, arts. 147-148
L. Rights and Obligations Between Husband and
Wife (Family Code, arts. 68-73)
*Exclude: R.A. No. 7132; R.A. No. 8187; R.A. No.
3710
M. The Family; Family Home (Family Code, arts.
14G- 162)
N. Paternity and Filiation
1. Concepts of Paternity, Filiation and Legitimacy
– Family Code, art. 163
2. Legitimate and Illegitimate Children – Family
Code, arts. 164-165 and 167-16G
a. Proof of Filiation – Family Code, arts. 172,
173 and 175
b. Rights of Legitimate Children – Family Code,
art. 174
c. Rights of Illegitimate Children – Family
Code, art. 176 as amended by R.A. No.
G255
d. Action to Impugn Legitimacy – Family
Code, arts. 166 and 170- 171
3. Legitimated Children – Family Code, arts.
177- 182; R.A. No. G858
*Exclude: A.M. No. 0C-11-5-SC
a. Rights of Legitimated Children – Family
Code, art. 17G
b. Action to Impugn Legitimacy – Family
Code, art. 182
4. Adopted Children
a. Domestic Administrative Adoption and
Alternative Child Care Act – R.A. No.
11642
b. Inter-Country Adoption Act – R.A. No. 8043
c. Simulated Birth Rectification Act – R.A.
No. 11222
O. Support (Family Code, arts. 1G4-208)
P. Parental Authority (Family Code, arts. 20G-233)
*Exclude: A.M. No. 03-02-05-SC; A.M. No. 03-04-
04-SC; R.A. No. 8372, as amended; R.A. No. 8380;
R.A. No. 3231
 IV. PROPERTY, OWNERSHIP, AND
ITS MODIFICATIONS
A. Classification of Property
1. Immovables and Movables – Civil Code, arts. 414-418
2. Public Dominion; Patrimonial; Private – Civil Code,
arts. 41G-425
B. Ownership (Civil Code, arts. 427-43G)
C. Right of Accession; Movables and Immovable (Civil Code,
arts. 440-475)
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)
F. Possession (Civil Code, arts. 523-561)
G. Actions to Recover Ownership and Possession of Real
Property
1. Accion Interdictal
2. Accion Publiciana
3. Accion Reivindicatoria
H. Easements; Easement of Right of Way (Civil Code, arts. 613-
61G and 64G-657)
I. Nuisance (Civil Code, arts. 6G4-707)

V. DIFFERENT MODES OF ACQUIRING

OWNERSHIP (Civil Code, art. 712)
A. Occupation (Civil Code, arts. 713-720)
B. Donation (Civil Code, arts. 725-773)
C. Prescription (Civil Code, arts. 1106-1155)

VI. LAND TITLES AND DEEDS

A. Regalian Doctrine (1G87 CONST., art. XII, sec. 2)
B. Nationality Restrictions on Land Ownership (1G87 CONST.,
art. XII, secs. 7-8)
C. Registry of Property (Civil Code, arts. 708-711)
D. Torrens System; Certificate of Title (P.D. No. 152G, secs.
3G and 44)
E. Original Registration
1. Who May Apply – P.D. No. 152G, secs. 14, as amended by
R.A. No. 11573; C.A. No. 141, as amended; R.A. No.
8371, sec. 12
2. Decree of Registration – P.D. No. 152G, sec. 31
3. Review of Decree of Registration – P.D. No. 152G, sec. 32
4. Innocent Purchaser for Value; Rights – P.D. No. 152G,
sec. 32
F. Confirmation of Imperfect Titles (R.A. No. 11573)
G. Subsequent Registration (P.D. No. 152G, secs. 51-53)
1. Voluntary Dealings – P.D. No. 152G, secs. 55-5G
2. Involuntary Dealings – P.D. No. 152G, secs. 6G, 74
and 76; Adverse Claims and Notice of Lis Pendens
– P.D. No. 152G, secs. 70 and 77
H. Non-Registrable Properties (Civil Code, art. 420)
I. Dealings with Unregistered Lands (P.D. No. 152G, sec. 113)
J. Assurance Fund (P.D. No. 152G, secs. G3-102)
K. Reconstitution of Title (P.D. No. 152G, sec. 110)

VII. WILLS AND SUCCESSION

A. General Provisions (Civil Code, arts. 774-782)
B. Testamentary Succession
1. Wills – Civil Code, arts. 783-7G5
2. Testamentary Capacity – Civil Code, arts. 7G6-803
3. Notarial and Holographic Wills; Joint Will – Civil
Code, arts. 804-81G
4. Witnesses to a Notarial Will; Qualifications and
Disqualifications – Civil Code, arts. 820-824
5. Codicils and Incorporation by Reference – Civil
Code, arts. 825-827
6. Conflict Rules – Civil Code, arts. 16-17
7. Revocation of Wills – Civil Code, arts. 828-834
8. Republication and Revival of Wills – Civil Code,
arts. 835-837
G. Allowance and Disallowance of Wills – Civil Code,
arts. 838-83G
10. Institution and Substitution of Heirs – Civil Code,
arts 840-870
11. Dispositions with a Condition or Term – Civil Code,
arts. 871-885
12. Compulsory Heirs; Legitime – Civil Code, arts. 886-
G14
13. Disinheritance – Civil Code, arts. G15-G23
14. Legacies and Devises – Civil Code, arts. G24-G5G
C. Intestate Succession
1. Causes of Intestacy and Relationship – Civil Code,
arts. G60-G6G
2. Right of Representation – Civil Code, arts. G70-G77
3. Order of Intestate Succession – Civil Code, arts. G78-
1014
D. Provisions Common to Testate and Intestate
Succession (Civil Code, arts. 1015- 1105)
 VIII. OBLIGATIONS AND CONTRACTS
A. Obligations
1. Civil and Natural Obligations – Civil Code, arts.
1423-1430
2. General Provisions – Civil Code, arts. 1156-1162
3. Nature and Effect of Obligations – Civil Code,
arts. 1163-1178
4. Different Kinds of Obligations – Civil Code, arts.
117G-1230
5. Extinguishment of Obligations – Civil Code, arts.
1231-1304
B. Contracts
1. Essential Requisites of Contract – Civil Code,
art. 1318
a. Consent – Civil Code, arts. 131G-1346
b. Object – Civil Code, arts. 1347-134G
c. Cause – Civil Code, arts. 1350-1355
2. Principles of Contracts – Civil Code, arts. 115G
and 1305-1317
a. Obligatory Force
b. Autonomy
c. Relativity
d. Consensuality
e. Mutuality
3. Real vs. Consensual Contracts; Forms,
Reformation and Interpretation – Civil Code,
arts. 1356-137G
4. Defective Contracts
a. Rescissible – Civil Code, arts. 1380-138G
b. Voidable – Civil Code, arts. 13G0-1402
c. Unenforceable – Civil Code, arts. 1403-1408
d. Void – Civil Code, arts. 140G-1422
C. Estoppel (Civil Code, arts. 1431-143G)

IX. CONTRACT OF SALE

A. Nature and Form (Civil Code, arts. 1458-1488)
1. Contract of Sale vs. Contract to Sell
2. Option Contract
3. Right of First Refusal
4. Earnest Money in Contract of Sale and Contract to
Sell
B. Capacity to Buy or Sell (Civil Code, arts. 148G-14G2)
C. Obligations of the Vendor (Civil Code, arts. 145G-
1505)
D. Double Sale (Civil Code, art. 1544)
E. Effects of Loss of Thing Sold (Civil Code, arts.
14G3- 14G4)
F. Recto Law (Civil Code, art. 1484)
G. Maceda Law (R.A. No. 6552)
H. Rights of Unpaid Seller (Civil Code, arts. 1525-1535)
I. Conventional Redemption (Civil Code, arts. 1601
and 1606-1618); Legal Redemption (Civil Code,
arts. 161G-1623)
J. Equitable Mortgage (Civil Code, arts. 1602-1605)

X. CONTRACT OF LEASE
A. General Provisions (Civil Code, arts. 1642-1645)
B. Rights and Obligations of Lessor and Lessee
(Civil Code, arts. 1654-167G)
C. Sublease and Assignment of Lease (Civil Code,
arts. 164G-1652)

XI. AGENCY
A. Nature, Form, and Kinds (Civil Code, arts. 1868-1883)
B. Obligations of Agent and Principal (Civil Code, arts.
1864-1G18)
C. Extinguishment (Civil Code, arts. 1G1G-1G32)

XII. CREDIT TRANSACTIONS

A. Mutuum and Commodatum (Civil Code, arts.
1G33- 1G61)
B. Deposit (Civil Code, arts. 1G62-200G)
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)

XIII. COMPROMISE AGREEMENT (Civil Code,

arts. 2028-2041)
 XV. TORTS AND DAMAGES
A. Common Principles
1. Torts vs. Crimes
2. Torts vs. Contracts
B. Classification of Torts
1. Negligence – Civil Code, arts. 2176-21G4
2. Degrees of Diligence and Negligence; Presumption
3. Intentional – Civil Code, arts. 1G-35
4. Strict Liability – Civil Code, arts. 2183-21G3;
R.A. No. 73G4, arts. G7-102
C. The Tortfeasor; Joint and Direct Liabilities (Civil
Code, art. 21G4)
D. Proximate Cause; Concept; Doctrine of Last Clear
Chance
E. Vicarious Liability (Civil Code, art. 2180; Family
Code, art. 211)
F. Res Ipsa Loquitur
G. Damnum Absque Injuria
H. Defenses in Tort Actions
I. Medical Negligence and Malpractice
J. Damages; Kinds of Damages; When May Be
Recovered (Civil Code, arts. 21G7 and 2216)
1. Actual and Compensatory Damages – Civil
Code, arts. 21GG-2215
2. Moral Damages – Civil Code, arts. 2217-2220
3. Temperate or Moderate Damages – Civil Code,
arts. 2224-2225
4. Liquidated Damages – Civil Code, arts. 2226-2228
5. Exemplary or Corrective Damages – Civil Code,
arts. 222G-2235
6. Damages in Case of Death
7. Duty of Injured Party
 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. G)
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 1G87 (E.O. No.
F. Repeal of Laws (Civil Code, art. 7) 2G2))
L. Generality Principle of Penal Laws (Civil
Code, art. 14)
M. Conflict of Laws (Civil Code, arts. 15-18)

A. WHEN LAW TAKES EFFECT; When publication is required

PUBLICATION 1. All laws
2. Presidential decrees and executive orders
(CIVIL CODE, ART. 2) promulgated by the President
Laws shall take effect after fifteen days following 3. Administrative rules and regulations must also
the completion of their publication in the Official be published if their purpose is to enforce or
implement existing law pursuant to a valid
Gazette or in a newspaper of general circulation in delegation
the Philippines, unless it is otherwise provided. 4. Circulars issued by the Monetary Board must be
This Code shall take effect one year after such published if they are meant not merely to
interpret but to "fill in the details" of the Central
publication. (Art. 2, NCC, as amended by E.O 200) Bank Act, which that body is supposed to
• Publication is indispensable in every case, but enforce. (Tañada vs. Tuvera, G.R. No. L-63915
the legislature may in its discretion provide December 29, 1986)
that the usual fifteen-day period shall be • Circulars and regulations, especially like the
shortened or extended. Circular No. 20 of the Central Bank in
• If the law provides for a different period question, which prescribes a penalty for its
shorter or longer than the fifteen-day period, violation should be published before
then such shorter or longer period, as the case becoming effective, this, on the general
may be, will prevail. principle and theory that before the public is
• If the law provides that it shall take effect bound by its contents, especially its penal
immediately, it shall take effect immediately provisions, a law, regulation or circular must
after publication with the fifteen-day period first be published and the people officially and
being dispensed with. specifically informed of said contents and its
penalties. (People vs. Que Po Lay, G.R. No. L-
6791, March 29, 1954)
Illustration:
An example is the Civil Code which did not When publication is not required
become effective after fifteen days from its 1. Interpretative regulations and those that are merely
publication in the Official Gazette but "one year
after such publication." The general rule did not internal in nature
apply because it was "otherwise provided.” 2. Letters of instructions issued by administrative
• When a statute does not explicitly provide for superiors concerning the rules or guidelines to be
its effectivity, it shall take effect only after the followed by their subordinates in the
expiration of the fifteen-day period following performance of their duties
the completion of its publication either in the 3. Municipal ordinances are not covered by Article
2 of the Civil Code but by the Local Government
Official Gazette or in a newspaper of general Code
circulation in the Philippines.
• Publication is intended to enable the people to Art. 3. Ignorance of the law excuses no LAW;
one from
become familiar with the statute. No one shall complianceB. IGNORANCE
therewith. OF THE
be charged with notice of the statute’s provision (CIVIL CODE, ART. 3) IGNORANCE OF
until the completion of publication. Ignorance
FACTof the law or ignorantia legis neminem excusat
• If there is valid publication pursuant to Article 2
TAÑADA V. TUVERA NCC, the law becomes effective and no one can
G.R. NO. L-63G15 APRIL 24, 1G85 interpose the defense of ignorance. If there is no
valid publication, ignorance is a defense.
En Banc • A legal principle holding that a person who is
• It is not correct to say that under the disputed unaware of a law may not escape liability for
clause (“unless otherwise provided”) that violating that law merely because one was
publication may be dispensed with. The reason unaware of its content.
is that such omission would offend due
process insofar as it would deny the public Ignorance of fact
knowledge of the laws that are supposed to Ignorance of fact may excuse a person from
govern it. liability, especially under penal laws. (People v. Ah
• Publication must be in full or it is no Chong, G.R. No. L- 5272, March 19, 1910) In
publication at all, since its purpose is to inform addition, under property law, mistake on a doubtful
the public of the contents of the laws. or difficult question of law may be the basis of good
• The term "laws" should refer to all laws and not faith (Art. 526, NCC). In contract law, mistake of
only to those of general application, for strictly fact, may furthermore, vitiate consent in a contract
speaking all laws relate to the people in and make it voidable. (Art. 1390, NCC)
general albeit there are some that do not
apply to them directly.

G
 General Rule: Acts executed against the
IGNORANCE OF LAW IGNORANCE OF FACT provisions of mandatory or prohibitory laws shall

I. EFFECT AND APPLICATION OF LAWS

Lack of knowledge pertains to be void.
Laws of the land insofar Fact or facts
as they apply to the constituting or relating Exceptions:
act, relation, duty, or to the subject matter 1. When the law:
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.
A person having full Facts which really exist 5. Makes the act merely unenforceable.
knowledge of the facts are unknown.
come to an erroneous 6. Declares the nullity of the act but recognizes
conclusion as to its legal effects as arising from it.
legal
effects. Mandatory law
Good faith as a defense A law or a provision in a statute is said to be
mandatory when disobedience to it, or want of
Not applicable Applicable
Laws Covered
exact compliance with it, will make the act done
Art. 3 of the NCC covers all kinds of domestic laws, under the statute absolutely void.
whether civil or penal, substantive or remedial.
However, the article is limited to mandatory and Prohibitory law
prohibitory laws, where ignorance could not be used A law or a provision in a statute is said to be
as an excuse for “non-compliance”. It does not prohibitory when it forbids a certain action.
include laws which are merely permissive.
Permissive law
Non-applicability to Foreign laws A law which neither mandatorily requires nor
Ignorance of a foreign law is a mistake of fact. forbids the performance of an act.
There is no presumption of knowledge of foreign
laws. It must be alleged and proved as a matter of E. WAIVER OF RIGHTS (CIVIL CODE,
fact; otherwise, the doctrine of processual ART. 6)
presumption will apply. Art. 6. Rights may be waived, unless the waiver is
contrary to law, public order, public policy, morals, or
good customs, or prejudicial to a third person with a
C. RETROACTIVITY OF
right recognized by law.
LAWS (CIVIL CODE, ART. 4);
VESTED RIGHTS General Rule: Rights may be waived.
Art. 4. Laws shallPRINCIPLE
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,
retroactivity morals or good customs; or
• When the law is penal insofar as it favors the b. Prejudicial to a third person with a right
accused, provided that the accused is not a recognized by law.
habitual delinquent (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
Limitations on Retroactivity which he is the owner or which belongs to him or to
1. Ex post facto law which he is legally entitled, whether secured by
2. Laws that impair obligations and contracts contract, conferred with statute, or guaranteed
3. Laws that prejudice vested rights by the Constitution, provided such rights and
privileges rest in the individual, are intended for
Non-retroactivity of Judicial Decisions his sole benefit, do not infringe on the rights of
Judicial decisions have no retroactive effect. others, and further provided the waiver of the right or
When a doctrine of the Supreme Court is overruled privilege is not forbidden by law, and does not
and a different view is adopted, the new contravene public policy. (Cruz s Co., Inc. v. HR
doctrine should be applied prospectively and Const. Corp., G.R. No. 187521, 14 Mar. 2012)
should not apply to parties who had relied on
the old doctrine and acted on the faith thereon. (Co Requisites of a valid waiver
v. CA, G.R. No. 100776, 28 Oct. 1663) 1. Waiving party must actually have the right
he is renouncing;
2. He must have full capacity to make the waiver;
D. MANDATORY, PROHIBITORY 3. Waiver must be clear and unequivocal;
AND PERMISSIVE LAWS (CIVIL 4. Waiver must not be contrary to law, public order,
Art. 5. Acts executed against the provisions of public policy, morals, or good customs, or
CODE,
mandatory or ART. 5) laws shall be void, except
prohibitory prejudicial to a third person with a right
when the law itself authorizes their validity. recognized by law; and
5. When formalities are required, they must
be complied with.

10
 substitute; thus, it will operate to repeal the earlier law.
(Lledo v. Lledo, A.M. No. P-65-1167, 06 Feb. 2010)
Art. 7. Laws are repealed only by subsequent ones,
and their violation or non-observance shall not be Administrative or executive acts, order and regulations shall
excused by disuse, or custom or practice to the be valid only when they are not contrary to the laws or
contrary. When the courts declare a law to be the Constitution (Art. 7(2), NCC).
inconsistent with the Constitution, the former shall
be void and the latter shall govern.

Administrative or executive acts, order and regulations

shall be valid only when they are not contrary to
the laws or the Constitution.

Every statute, regulation shall be measured

against the Constitution. If a law is inconsistent
or against the Constitution, then such will be
declared as null and void.

Ways of repealing laws

1. Express - If the law expressly provides for
repeal of previously law; the new law designated
or identified the specific law or provisions of the
old law to be abolished [i.e. Family Code, Art.
254. Titles III, IV, V, VI, VIII, IX, XI, and XV of Book
1 of Republic Act No. 386, otherwise known as
the Civil Code of the Philippines, as amended, and
Articles 17, 18, 16, 27, 28, 26, 30, 31, 36, 40,
41,
and 42 of Presidential Decree No. 603, otherwise
known as the Child and Youth Welfare Code]; the
repeal here is not conditioned on the
inconsistencies between the old and new laws,
but merely based on the expressed legislative
intent in the new law repealing an old law.
2. Implied - If the provisions of the subsequent
law are incompatible or inconsistent with those
of the previous law, provided, it is impossible to
reconcile the two laws [i.e. Administrative Code
of 1687, Book VII, Sec. 27. Repealing clause. —
All laws, decrees, orders, rules and regulation, or
portions thereof, inconsistent with this Code
are hereby repealed or modified accordingly].
A repealing clause like Sec. 27 is not an express
repealing clause because it fails to identify or
designate the laws to be abolished. Thus, the
provision above only impliedly repealed all laws
inconsistent with the Administrative Code of
1687. (CIR vs. Primetown Property Corp., G.R.
No. 162155, August 28, 2007)

Requisites of an Implied Repeal

1. The old and new laws cover the same subject
matter;
2. The new law is inconsistent with the previous law;
3. The inconsistency between the old and new
laws could not be reconciled.

NOTE: Implied repeals are NOT to be favored

because they rest only on the presumption that
because the old and the new laws are
incompatible with each other, there is an
intention to repeal the old.

Instances of Implied Repeal

1. When the provisions in the two acts on the same
subject matter are irreconcilably contradictory,
in which case, the later act, to the extent of the
conflict, constitutes an implied repeal of earlier
one; and
2. When the later act covers the whole subject
of the earlier one and is clearly intended as a
 Every statute, regulation shall be measured
against the Constitution. If a law is Judicial Decisions are not laws but have the force and
inconsistent or against the Constitution, then effect of laws. The Judiciary merely applies or
such will be declared as null and void (Art. 7(3), interprets the laws.
NCC).
Nonetheless, although not laws, the decisions of the
General Rule: Supreme Court applying or interpreting the laws or the
I. EFFECT AND APPLICATION OF LAWS

F. REPEAL OF LAWS (CIVIL CODE,

If a law is unconstitutional, it does not produce any Constitution form part of the legal system in the country.
ART. 7)
legal effect and would not give rise to rights and They have the force and effect of laws (People v.
obligations. Jabinal, L-30061, February 27, 1674).

Exception: The doctrines formulated by the decisions of the

Supreme Court are what we call jurisprudence. These
Doctrine of Operative Fact doctrines amplify and supplement the written law (In
If the law or statute is deemed unconstitutional, re: Shoop, 41 Phil. 213).
the Doctrine of Operative Fact operates. In the
case of Mandanas v. Ochoa (G.R. No. 116802, The decisions referred to in Art. 8 of the NCC are
10 April 2016), the SC said that the doctrine of only those enunciated by the Supreme Court.
operative fact recognizes the existence of the
law or executive act prior to the Pesca vs. Pesca, G.R. No. 136621, April 17, 2001
determination of its unconstitutionality as an The "doctrine of stare decisis," ordained in Article 8 of
operative fact that produced consequences the Civil Code, expresses that judicial decisions applying
that cannot always be erased, ignored or or interpreting the law shall form part of the legal
disregarded. In short, it nullifies the void law or system of the Philippines. The rule follows the settled
executive act but sustains its effects. It provides legal maxim - "legis interpretado legis vim obtinet" -
an exception to the general rule that a void or that the interpretation placed upon the written law
unconstitutional law produces no effect. But its by a competent court has the force of law. The
use must be subjected to great scrutiny and interpretation or construction placed by the courts
circumspection, and it cannot be invoked to establishes the contemporaneous legislative intent of
validate an unconstitutional law or executive act, the law. The latter as so interpreted and construed
but is resorted to only as a matter of equity and would thus constitute a part of that law as of the
fair play. It applies only to cases where date the statute is enacted. It is only when a prior
extraordinary circumstances exist, and only ruling of this Court finds itself later overruled, and a
when the extraordinary circumstances have different view is adopted, that the new doctrine may have
met the stringent conditions that will permit its to be applied prospectively in favor of parties who have
application. relied on the old doctrine and have acted in good
G. JUDICIAL DECISION (CIVIL CODE,
Art. 8. Judicial decisions applying or
ART. 8)interpreting the laws or the Constitution shall
faith in accordance therewith under the familiar rule of
form part of the legal system of the
"lex prospicit, non respicit."
Philippines.

11
 H. DUTY TO RENDER JUDGMENT K. LEGAL PERIODS (CIVIL CODE, ART.
(CIVIL CODE, ART. G) 13, AS
Article G. No judge or court shall decline to render AMENDED
2. Plurality and UniformityI,ofCHAPTER
BY BOOK acts 8, SEC.
judgment by reason of the silence, obscurity or 3. General practice31 by aOFgreat mass of people
insufficiency of laws. 4. THE ADMINISTRATIVE
Continued CODEofOF
practice for a long period time
5. General conviction that the practice is the proper
NOTE: This duty, however, is not a license for rule of conduct
courts to engage in judicial legislation. The duty 6. Conformity with law, morals or public policy
of the courts is to 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, apply rules
on statutory construction. If it is criminal
prosecution and there is no law penalizing the act, the
court must dismiss the case following the maxim
“nullum crimen, nulla poena sine lege.” (There is no
crime when there is no law punishing it). The
court has the duty to render judgment.

I. INTERPRETATION OF DOUBTFUL
STATUTES (CIVIL CODE,
ART. 10)
Article 10. In case of doubt in the interpretation
or application of laws, it is presumed that the
lawmaking body intended right and justice to
prevail.

SALVACION V. CENTRAL BANK

G.R. NO. G4723, AUGUST 21, 1GG7
En Banc
The application of the law depends on the
extent of its justice. Eventually, if we rule that the
questioned Section 113 of Central Bank Circular
No. 660 which exempts from attachment,
garnishment, or any other order or process of any
court, legislative body, government agency or
any administrative body whatsoever, is applicable
to a foreign transient, injustice would result
specially to a citizen aggrieved by a foreign
guest like accused Greg Bartelli. This would
negate Article 10 of the New Civil Code which
provides that "in case of doubt in the
interpretation or application of laws, it is presumed
that the lawmaking body intended right and justice
to prevail. Simply stated, when the statute is
silent or ambiguous, this is one of those
fundamental solutions that would respond to
the vehement urge of conscience.

J. CUSTOM (CIVIL CODE, ARTS. 11-

12)
Article 11. Customs which are contrary to law,
public order or public policy shall not be
countenanced.

Article 12. A custom must be proved as a fact,

according to the rules of evidence.

‘Custom’ defined
Juridical rule which results from a constant and
continued uniform practice by the members of
social community, with respect to a particular
state of facts, and observed with a conviction that
it is juridically obligatory.

Requisites before the Courts can consider

Customs
1. It must be proved as a fact
 J.Corona
Section 31, Chapter VIII, Book I Administrative Code of
1687: "Year" shall be understood to be twelve
Art. 13. When the laws speak of years, months, days calendar months; xxx A calendar month is "a month
or nights, it shall be understood that years are of designated in the calendar without regard to the
three hundred sixty-five days each; months, of thirty number of days it may contain.” To illustrate, one
days; days, of twenty-four hours; and nights from calendar month from December 31, 2007 will be from
sunset to sunrise. January 1, 2008 to January 31, 2008; one calendar
I. EFFECT AND APPLICATION OF LAWS

If months are designated by their name, they month from January 31, 2008 will be from February
shall be computed by the number of days 1, 2008 until February 26, 2008. Two-year
which they respectively have. prescriptive period (reckoned from the time
respondent filed its final adjusted return on April 14,
In computing a period, the first day shall be 1668) consisted of 24 calendar months. xxx 1st
excluded, and the last day included. month (April 15, 1668 to May 14, 1668) to 24th
month
YEAR (March 15, 2000 to April 14, 2000). We therefore
• twelve (12) calendar months (Revised hold that respondent's petition (filed on April 14,
Administrative Code; Lex posteriori derogat 2000) was filed on the last day of the 24th calendar
priori; Commissioner of Internal Revenue v. month from the day respondent filed its final adjusted
Primetown Property Group, Inc., 558 Phil. 182, return. Hence, it was filed within the reglementary
160, 2007) period.
MONTHS
• thirty (30) days; unless months are designated L. GENERALITY PRINCIPLE OF PENAL
their name. If designated by their name, it LAWS (CIVIL CODE, ART.
shall be computed by the number of days 14)
which they respectively have. Art. 14. Penal laws and those of public security and
safety shall be obligatory upon all who live or sojourn in
DAYS the Philippine territory, subject to the principles of
• 24 hours; public international law and to treaty stipulations.
• Nights from sunset to sunrise. • Generality of penal laws refer to the principle that
LEGAL PERIOD criminal laws of a country govern all persons
• In computing a period, the first day is excluded, within the country regardless of their nationality,
and the last day included. religion, beliefs, etc., subject to exceptions based on
public international law and treaty stipulations.
CIR V. PRIMETOWN PROPERTY CORP. • Territoriality Principle - penal laws are
G.R. NO. 162155, AUGUST 28, 2007 enforceable only within the Philippine territory.

12
 persons are binding upon citizens of the Philippines,
even though living abroad. Also known as the Nationality
Principle refers to the law of the nationality of the person
which determines his family rights and duties, status,
That part of the law of each state or nation which condition, and legal capacity.
determines whether, in dealing with a legal situation
involving a foreign element, the law of some other a. Lex Rei Sitae - law of the place where the thing or subject
state or nation will be recognized, given effect, or matter is situated (Art. 16);
applied.

1. JURISDICTION; FORUM NON

CONVENIENS

Forum non conveniens literally translates to "the

forum is inconvenient." xxx Consistent with the
principle of comity, a tribunal's desistance in
exercising jurisdiction on account of forum non
conveniens is a deferential gesture to the tribunals of
another sovereign. It is a measure that prevents the
former's having to interfere in affairs which are
better and more competently addressed by the
latter. Further, forum non conveniens entails a
recognition not only that tribunals elsewhere are
better suited to rule on and resolve a
controversy, but also, that these tribunals are
better positioned to enforce judgments and,
ultimately, to dispense justice. Forum non conveniens
prevents the embarrassment of an awkward
situation where a tribunal is rendered
incompetent in the face of the greater capability
— both analytical and practical — of a tribunal in
another jurisdiction. (Saudia vs. Rebesencio, G.R. No.
168587, January 14, 2015)

Under the doctrine of forum non conveniens, a Philippine

court in a conflict-of-laws case may assume
jurisdiction if it chooses to do so, provided, that the
following requisites are met:
(1) that the Philippine Court is one to which the
parties may conveniently resort to;
(2) that the Philippine Court is in a position to
make an intelligent decision as to the law and the
facts; and
(3) that the Philippine Court has or is likely to have
power to enforce its decision.

2. CHOICE OF LAW; DOCTRINE OF

RENVOI; DOCTRINE OF PROCESSUAL
PRESUMPTION

Choice of Law - Jurisdiction and choice of law are two

distinct concepts. Jurisdiction considers whether it is
fair to cause a defendant to travel to this state; choice of
law asks the further question whether the application of
a substantive law which will determine the merits of
the case is fair to both parties. The power to exercise
jurisdiction does not automatically give a state
constitutional authority to apply forum law. While
jurisdiction and the choice of the lex fori will often,
coincide, the "minimum contacts" for one do not
always provide the necessary "significant contacts"
for the other. The question of whether the law of a
state can be applied to a transaction is different from
the question of whether the courts of that state have
jurisdiction to enter a judgment. (Saudia vs.
Rebesencio, G.R. No. 168587, January 14, 2015)

Choice of Law Rules:

a. Lex Nationalii – law of nationality of the
contracting party (Art. 15); Article 15 NCC, Art. 15.
Laws relating to family rights and duties, or to
the status, condition and legal capacity of
 • 1st par of Art 16 NCC is lex rei sitae - property, and those which have for their
Real property as well as personal object public order, public policy and good
property is subject to the law of the customs shall not be rendered ineffective
country where it is situated. by laws or judgments promulgated, or by
• 2nd par ofOF
Art LAWS
16 is lex nationalii - the determinations or conventions agreed upon
I. EFFECT AND APPLICATION OF LAWS

M. CONFLICT
national law of the decedent shall in a foreign country.
(CIVIL CODE, ARTS. 15-18)
govern the order of succession,
amount of successional rights and e. Lex Domicilii - law of the domicile of the
intrinsic validity of testamentary party (Art. 826 of the Civil Code – makes
provision in both testate and intestate revocation done outside Philippines valid
successions, whatever may be the according to law of the place where will was
nature of the property and regardless made or lex domicilii)
of the country wherein said property
may be found. f. Lex Fori - law of the forum; that is, the positive
law of the state, country or jurisdiction of
c. Lex Contractus - means the law of the whose judicial system of the court where the
place where a contract was made. suit is brought or remedy is sought is an
integral part.
d. Lex Loci Celebrationis - law of the place
of ceremony (Art. 17); roughly translated g. Lex Loci Delicti - law of the place where the
as "the law of the land (lex loci) where the crime
contract was celebrated”; a conflict of law took place
principle that comes into play when
there are issues on the forms and h. Lex Loci Solutionis - law of the place of
solemnities of a contract that is solution; the law of the place where payment
celebrated elsewhere than the place of or performance of a contract is to be made.
citizenship of the parties.
• Art. 17 NCC is lex loci celebrationis - Doctrine of Renvoi
The forms and solemnities of Takes place when the conflicts rule of forum
contracts, wills, and other public makes a reference to a foreign law, but the foreign
instruments shall be governed by law is found to contain a conflict rule that returns or
the laws of the country in which they refers the matter back to the law of forum.
are executed. When the acts referred
to are executed before the diplomatic Doctrine of Processual Presumption
or consular officials of the Republic of Foreign law, whenever applicable, shall be proved
the Philippines in a foreign country, the by the proponent, otherwise, such law shall be
solemnities established by Philippine presumed to be exactly as the law of forum.
laws shall be observed in their Where a foreign law is not pleaded or, even if
execution. Prohibitive laws pleaded, is not proved, the presumption is that
concerning persons, their acts or foreign law is the same as ours.

13
3.RECOGNITION AND ENFORCEMENT OF

I. EFFECT AND APPLICATION OF LAWS

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
36, 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. 1G604G, 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 36 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. 1G-22) • A breach of promise to marry is not an actionable wrong.
B. Unjust Enrichment (Civil Code, arts. 22-23 Civil law does not hold a person liable for failing to honor
and 2142-2143) a promise of marriage.

A. ABUSE OF
RIGHTS CIVIL CODE,
ARTS. 1G-22)
Art. 1G. Every person must, in the exercise of his
rights and in the performance of his duties, act with
justice, give everyone his due, and observe honesty
and good faith.

Art. 20. Every person who, contrary to law, willfully

or negligently causes damage to another, shall
indemnify the latter for the same.

Art. 21. Any person who wilfully causes loss or

injury to another in manner that is contrary to morals,
good customs or public policy shall compensate the
latter for the damage.

TOCOMS PHILIPPINES INC. V. PHILIPS

ELECTRONICS AND LIGHTING, INC.
G.R. NO. 214046, FEBRUARY 05, 2020
J. A. Reyes, Jr.
• Article 16 of the Civil Code is commonly referred to
as the principle of abuse of rights, sets certain
standards which must be observed not only in
the exercise of one's rights but also in the
performance of one's duties. To act with justice;
to give everyone his due; and to observe honesty
and good faith.
• A right, though by itself legal because recognized or
granted by law as such, may nevertheless
become the source of some illegality. When a right
is exercised in a manner which does not conform
with the norms enshrined in Article 16 and results
in damage to another, a legal wrong is thereby
committed for which the wrongdoer must be
held responsible.
• Failure to discharge such duties in Article 16 is
compensable under Article 20 if the act is
"contrary to law"; and under Article 21 if the act is
legal but "contrary to morals, good customs, or
public policy."
• Article 16 has three elements, namely: (i) the
existence of a legal right or duty; (ii) an exercise
of such right or discharge of such duty in bad faith,
and (iii) such exercise of right or discharge of duty
was made with the sole intent of prejudicing or
injuring another.
• There is no hard and fast rule which can be
applied to determine whether or not the principle
of abuse of rights may be invoked. The question
of whether or not the principle of abuse of rights
has been violated, resulting in damages under
Articles 20 and 21 or other applicable provision
of law, depends on the circumstances of each
case.

1. ACTS CONTRA BONOS MORES

Article 21 refers to acts contra bonos mores and

has the following elements: (1) an act which is legal;
(2) but which is contrary to morals, good custom,
public order or public policy; and (3) is done with intent
to injure.

2. BREACH OF PROMISE OF MARRIAGE

 C. Thoughtless Extravagance (Civil deemed "palpably and unjustifiably contrary to
Code, art. 25) good customs," for which the award of damages
D. Tortious Interference (Civil Code, art. 1314) was proper.)
B. UNJUST ENRICHMENT
Art. 22. Every person who through an act of
(CIVIL CODE,
• A mere ARTS.
breach 22-23 ANDto2142-
of a promise marry is not
an actionable wrong, as long as it is not of performance by another, or any other means,
2143) acquires or comes into possession of something at
such extent as would palpably and
unjustifiably contradict good customs. An the expense of the latter without just or legal ground,
individual has the autonomy to choose shall return the same to him.
whom to marry, or whether to marry at all.
They must be free to make that choice without Art. 23. Even when an act or event causing
any fear of legal retribution or liability. The damage to another’s property was not due to the fault
decision on whether to marry is one that or negligence of the defendant, the latter shall be liable
should be freely chosen, without the for indemnity if through the act or event he was
pressures of a possible civil suit should a benefited.
person realize that their intended partner is
not right for them. (Guevarra, et al. v. Art. 2142. Certain lawful, voluntary and unilateral
Banach, G.R. No. 214016, November 24, acts give rise to the juridical relation of quasi-contract to
2021) the end that no one shall be unjustly enriched or
benefited at the expense of another.
Instances where SC awarded damages:
• Act constitutes tort, under Article 21 NCC, Art. 2143. The provisions for quasi-contracts in this
in the sense that it is wilful and that it is Chapter do not exclude other quasi-contracts which
contrary to morals, good customs or may come within the purview of the preceding article.
public policy, or in that there is an abuse • Unjust enrichment exists when a person unfairly
of rights. retains a benefit, money, or property against
• Seduction (Baksh vs. CA - Article 21 may the fundamental principles of justice, equity,
be applied in a breach of promise to marry and good conscience. The principle against
where the woman is a victim of moral unjust enrichment is embodied in Article 22 of the
seduction) Civil Code, which provides that a person who
• Expenses were incurred upon the faith of acquires or comes into possession of
the promise to marry. (Wassmer vs. Velez - something at the expense of another without just or
While a breach of promise to marry is not legal ground must return it.
actionable, walking out of a wedding two • To be applicable, Article 22 requires that: (a) a
days prior, after all had been prepared, was person is benefited without a valid basis or
quite different. The defendant's act was justification, and (b) such benefit is derived at
another's expense or damage.

15
NPC V. BENECO efforts or obligations of another. It is necessary to show
G.R NO. 218378, JUNE 14, 2021 that the enrichment of one party is without a just or legal
J. M. Lopez ground, and that the plaintiff has no other action against the
National Power Corporation (NPC) supplies power to other party. In other words, there is no unjust enrichment
Benguet Electric Cooperative (BENECO) under a when the person who benefited has a valid claim to such
franchise agreement. NPC and BENECO entered benefit. xxx
into a Contract of Sale of Electricity and a
Transition Contract for the Supply of Electricity.
NPC set the Current Transformer Ratio (CTR) at
75/5, which fixed the multiplier at 5,166.31. It
was later discovered that the correct CTR should
have been 150/5. BENECO argued that it is not
liable for the underbilling because NPC failed to
discover the error in the metering device. NPC
demanded payment for the underbilling, but
BENECO refused to pay.

Ruling: BENECO is liable for the underbilling

representing the power bills corrected within the
60-day period based on Section 25 of the
Transition Contract, not the principle of unjust
enrichment.

Unjust enrichment exists when a person unfairly

retains a benefit, money, or property against the
fundamental principles of justice, equity, and good
conscience. The principle against unjust enrichment is
embodied in Article 22 of the Civil Code, which
provides that a person who acquires or comes
into possession of something at the expense of
another without just or legal ground must return it. To
be applicable, Article 22 requires that: (a) a person is
benefited without a valid basis or justification, and
(b) such benefit is derived at another's expense
or damage.

In University of the Philippines v. Philab Industries Inc.,

(G.R. No. 152411), the Court's discussion of the
principle of unjust enrichment and the elements
required for its application is instructive:

Unjust enrichment claims do not lie simply because

one party benefits from the efforts or obligations of
others, but instead it must be shown that a party was
unjustly enriched in the sense that the term unjustly
could mean illegally or unlawfully.

Moreover, to substantiate a claim for unjust

enrichment, the claimant must unequivocally
prove that another party knowingly received
something of value to which he was not entitled
and that the state of affairs are such that it would be
unjust for the person to keep the benefit. x x x.

In order that accion in rem verso may prosper, the

essential elements must be present: (1) that the
defendant has been enriched, (2) that the plaintiff
has suffered a loss, (3) that the enrichment of the
defendant is without just or legal ground, and (4) that
the plaintiff has no other action based on contract, quasi-
contract, crime or quasi-delict.

An accion in rem verso is considered merely an

auxiliary action, available only when there is no
other remedy on contract, quasi-contract, crime, and
quasi-delict. If there is an obtainable action under any
other institution of positive law, that action must be
resorted to, and the principle of accion in rem verso
will not lie. xxx

Thus, the principle of unjust enrichment does not

automatically apply when one party benefits from the
 Also, the Court succinctly discussed in National 205468, 10 May 2021)
Transmission Corporation v. Misamis Oriental I
Elements of tortious interference:
Electric Cooperative, Inc., (Misamis Oriental)
(1) existence of a valid contract;
that the contract between the parties prevails
(2) knowledge on the part of the third person of the
over the principle of unjust enrichment, thus:
existence of contract;
(3) interference of the third person is without legal
The claim that Moresco I was unjustly enriched
II. HUMAN RELATIONS

justification or excuse.
at the expense of petitioner is equally untenable
for a simple reason. Because a contract exists
between the parties, the obligations arising
therefrom have the force of law between the
parties and must be complied with in good
16
faith. xxx

Here, NPC and BENECO executed a Contract

of Sale of Electricity and a Transition Contract for
the Supply of Electricity to govern their rights
and obligations in the supply of electric power
and energy. Therefore, any action that one
may bring against the other shall be based on
the provisions of their contract. The principle
of unjust enrichment will not apply.
• Under Article 2142 of the Civil Code,
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. (American Power Conversion
Corporation v. Lim, G.R. No. 214261, 11
January 2018)
• A quasi-contract involves a juridical relation
that the law creates on the basis of certain
voluntary, unilateral and lawful acts of a
person, to avoid unjust enrichment. The Civil
Code provides an enumeration of quasi-
contracts, but the list is not exhaustive and
merely provides examples.” (Metropolitan
Bank and Trust Company v. Absolute
Management Corporation, G.R. No.
170468, 06 January 2013)

C. THOUGHTLESS
EXTRAVAGANCE (CIVIL
ART. 25.
CODE, ART. 25)
Thoughtless extravagance in
expenses for pleasure or display during a period
of acute public want or emergency may be
stopped by order of the courts at the instance
of any government or private charitable
institution.

Requisites:
1. There must be an acute public want or emergency.
2. Thoughtless extravagance in expenses
for pleasure or display.
3. Government or private charitable institution
files the action seeking to stop the
thoughtless extravagance.
D.Article
TORTIOUS
1314. Any third person who induces
INTERFERENCE
another (CIVILshall be liable for
to violate his contract
damages to the
CODE, ART. 1314)other contracting party.
Tortious interference refers "to a situation where a
third person induces a party to renege on or
violate [their] undertaking under a contract.
"Induce" here means "a person causes
another to choose one course of conduct by
persuasion or intimidation." In forbidding
tortious interference, the law aims to respect
the property rights of contracting parties by
providing a cause of action ex delicto based on
an "unlawful interference by one person of the
enjoyment by the other of [their] private property.
(GMA v. Cruz-Valdez s ABS-CBN, G.R. No.
 III. PERSONS AND FAMILY RELATIONS
A. Natural Persons
B. Juridical Persons (Civil Code, arts. 44-47) I. Voidable Marriages; Effects and Remedies
C. Domicile; Residence (Civil Code, arts. 50- (Family Code, arts. 45-54)
51) J. Legal Separation (Family Code, art. 55-67)
D. Surnames (Civil Code, arts. 364-380; K. Property Relations Between Spouses
Family Code, arts. 176, 18G and 1G3; R.A. (Family Code, arts. 74-81)
No. G048; L. Rights and Obligations Between Husband
R.A. No. 10172) and Wife (Family Code, arts. 68-73)
E. Absentees (Civil Code, arts. 381-3G6) M. The Family; Family Home (Family Code,
F. Marriage; General Principles (Family Code, arts. 14G-162)
art. 1) N. Paternity and Filiation
G. Mixed Marriages (Family Code, art. 26) O. Parental Authority (Family Code, arts.
H. Void Marriages; Effects and Remedies 20G- 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. 37-3G
Provisional/Presumptive Civil Personality (Art. 40
Article 37. Juridical capacity, which is the NCC)
fitness to be the subject of legal relations, is
inherent in every natural person and is lost only • A conceived child shall be considered born
through death. Capacity to act, which is the for all purposes favorable to it, provided it is
power to do acts with legal effect, is acquired born later with the conditions specified in
and may be lost. Article 41 of the NCC.
• ‘Favorable to it’ - ie. become a donee,
receive support, successional right.
'Capacity to Act' defined
• Capacity to Act is the “power to do acts with Art. 41 NCC - Foetus is considered born for civil
legal effects.” purposes:
• Juridical Capacity which is “the fitness to be • With intrauterine life of less than 7 months:
the subject of legal relations.” Must survive for at least 24 hours after its
• Civil Personality is the aptitude of being the complete delivery from the maternal womb.
subject of rights and obligations. It is • With intrauterine life of at least 7 months: If
synonymous with juridical capacity. born alive, it shall be considered born even if it
dies within 24 hours after complete delivery.
BAR QUESTION (1GG6)
Distinguish Juridical Capacity vs. Capacity to Act. BAR QUESTION (2014)
Mario executed his last will and testament
SUGGESTED ANSWER where he acknowledges the child being
JURIDICAL CAPACITY is the fitness to be the conceived by his live-in partner Josie as his
own child; and that his house and lot in Baguio
subject of
legal relations while CAPACITY TO ACT is the City be given to his unborn conceived child.
to do acts with legal effect. Are the acknowledgement and the donation mortis
The former is inherent in every natural person and causa valid? Why?
only through death while the latter is merely
and may be lost even before death. (Art. 37, NCC) SUGGESTED ANSWER
RESTRICTIONS ON CAPACITY TO ACT Yes, the acknowledgement is considered valid
because a will may still constitute a document
(Arts. 38 s 3G NCC) which contains an admission of illegitimate
a. Minority filiation.
b. Imbecility The donation mortis causa is also valid
because although unborn, a fetus has a
c. Prodigality presumptive personality for all purposes
d. Deaf-Mute favorable to it provided it be born under
e. Civil Interdiction the conditions specified in Article 41.
f. Insanity BAR QUESTION (2012)
g. Family Relations
Ricky donated Php1 Million to the unborn child
h. Alienage of his pregnant girlfriend, which she accepted.
i. Trusteeship After six (6) months of pregnancy, the fetus 17
j. Penalty was born and baptized as Angela. However,
Angela died 20 hours after birth. Ricky sought
k. Insolvency to recover the Php1 Million.
l. Absence Is Ricky entitled to recover?
 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 for Juridical Persons
purposes favorable to it provided it is born An abstract being, formed for the realization of
later in accordance with the provision of the collective purposes, to which the law has granted
New Civil Code. While the donation is favorable capacity for rights and obligations.
to the fetus, the donation did not take effect

III. PERSONS AND FAMILY RELATIONS

because the fetus was not born in accordance Article 44. The following are juridical persons:
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 for
intrauterine life of less than seven (7) months public interest or purpose, created by law;
should live for 24 hours from its complete their personality begins as soon as they have
delivery from the mother’s womb. Since Angela been constituted according to law;
had an intrauterine life of less than seven (7) (3) Corporations, partnerships and associations
months but did not live for 24 hours, she was for private interest or purpose to which the
not considered born and, therefore, did not law grants a juridical personality, separate
become a person. Not being a person, she has and distinct from that
no juridical capacity to be a donee, making the of each shareholder, partner or member.
donation
ineffective.

3. PROOF OF DEATH – CIVIL CODE, ART. 43;

Article 45. Juridical persons mentioned in Nos. 1
RULES OF COURT, RULE 131, SEC. 3 (jj) and 2 of the preceding article are governed by the
laws creating or recognizing them.
Art. 43 NCC - If there is a doubt, as between
two or more persons who are called to succeed Private corporations are regulated by laws of
each other, as to which of them died first, general application on the subject.
whoever alleges the death of one prior to the
other, shall prove the same; In the absence of Partnerships and associations for private interest
proof, it is presumed that they died at the or purpose are governed by the provisions of this
same time and there shall be no transmission Code concerning partnerships.
of rights from one to the other.
Article 46. Juridical persons may acquire and
Rule 131, sec. 3 (kk) ROC - That if there is a possess property of all kinds, as well as incur
doubt, as between two or more persons who obligations and bring civil or criminal actions, in
are called to succeed each other, as to which conformity with the laws and regulations of their
of them died first, whoever alleges the death organization.
of one prior to the other, shall prove the same;
in the absence of proof, they shall be Article 47. Upon the dissolution of corporations,
considered to have died at the same time. institutions and other entities for public interest
or purpose mentioned in No. 2 of article 44, their
property and other assets shall be disposed of in
Burden of Proof: pursuance of law or the charter creating them. If
Whoever alleges the death of one prior to the nothing has been specified on this point, the
other shall prove the same; property and other assets shall be applied to
similar purposes for the benefit of the region,
Absent such proof: province, city or municipality which during the
existence of the institution derived the principal
Presumption is they all died at the same time. benefits from the same.
There shall be no transmission of successional
rights. • Juridical persons are governed by laws creating them
or by laws of general application or the NCC.
REQUISITES: • They may acquire and possess property of all
- The parties are heirs to one another kinds, as well as incur obligations and bring
- There is no proof as to who died first civil or criminal actions, in conformity with the
laws and regulations of their organization.
- There is doubt as to who died first • Upon the dissolution, their property and other
assets shall be disposed of in pursuance of law
Rule 131, sec. 3 (jj) ROC - That except for or the charter creating them. If nothing has
purposes of succession, when two persons been specified, shall be applied to similar
perish in the same calamity, such as wreck, purposes for the benefit of the region,
battle, or conflagration, and it is not shown who province, city or municipality which during the
existence of the institution derived the
died first, and there are no particular principal benefits from the same.
circumstances from which it can be inferred,
the survivorship is determined from the
probabilities resulting from the strength and C. DOMICILE; RESIDENCE
the age of the sexes, according to the
following rules: (CIVIL CODE, ARTS. 50-51)
1. Both under 15 - the older survived;
Article 50. For the exercise of civil rights and
2. Both above 60 - the younger survived; the fulfillment of civil obligations, the domicile
3. Under 15 vs. Above 60 – under 15 survived; of natural persons is the place of their habitual
4. Both over 15 and residence.
under 60 Diff sex -
male survived Same
sex – older survived
5. Under 15 or over 60 vs. between 15 to 60 –
between
15 to 60 survived.

18
Article 51. When the law creating or recognizing
them, or any other provision does not fix the POE-LLAMANZARES V. COMELEC
domicile of juridical persons, the same shall be G.R. NO. 2216G7, MARCH 08, 2016
understood to be the place where their legal En Banc
representation is established or where they
exercise their principal functions. Three requisites to acquire a new domicile:
1. Residence or bodily presence in a new locality;
Domicile 2. an intention to remain there; and
Permanent home, the place to which, whenever 3. an intention to abandon the old domicile.

III. PERSONS AND FAMILY RELATIONS

absent for business or pleasure, one intends to • To successfully effect a change of
return and depends on facts and circumstances domicile, one must demonstrate an actual
in the sense that they disclose intent. removal or an actual change of domicile; a
bona fide intention of abandoning the
Requisites: former place of residence and establishing
a new one and definite acts which
• fact of residing or personal presence in a correspond with the purpose.
particular • Animus manendi coupled with animus non
place revertendi. The purpose to remain in or at
the domicile of choice must be for an
• intention to remain in said place permanently indefinite period of time; the change of
(animus manendi) residence must be voluntary; and the
residence at the place chosen for the new
Domicile of Juridical Persons 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 FAMILY CODE, ARTS. 176, 18G AND 1G3;
domicile is in the place where their legal
representation is established or where they R.A. NO. G048; R.A. NO. 10172)
exercise their principal functions.
• Legitimate and legitimated children shall
principally use the surname of the father. (Art.
MACALINTAL V. COMELEC 364)
G.R. NO. 157013, JULY 10, 2003 • An adopted child shall bear the surname of
J. Austria-Martinez the adopter. (Art. 365)
Domicile vs. Residence • Children conceived before the decree
annulling a voidable marriage shall principally
• Domicile means an individual’s “permanent home,” “a use the surname of the father.
place to which, whenever absent for business • Illegitimate children shall bear the surname of
or for pleasure, one intends to return, and the mother.
depends on facts and circumstances in the
sense that they disclose intent.”
• Domicile includes the twin elements of “the ALANIS III V. CA
fact of residing or physical presence in a fixed G.R. NO. 216425, November 11, 2020
place” and animus manendi, or the intention J. Leonen
of returning there permanently.
• ‘Residence’ is used to indicate a place of • Abdulhamid Ballaho was born and registered
abode, whether permanent or temporary; as Anacleto Ballaho Alanis III, the legitimate
‘domicile’ denotes a fixed permanent residence child of Mario Alanis and Jarmila Ballaho. All his
to which, when absent, one has the intention records show his name as Abdulhamid
of returning. Ballaho; he never used his registered name. In
• A man may have a residence in one place and line with this he filed a petition to change his
a domicile in another. name and surname to be known and
• Residence is not domicile, but domicile is registered as Abdulhamid Ballaho.
residence coupled with the intention to remain • RTC denied the Petition. It noted that the mere
for an unlimited time. fact that petitioner has been using a different
• A man can have but one domicile for the same name and has become known by it is not a
purpose at any time, but he may have valid ground for change of name. It also held
numerous places of residence. that to allow him to drop his last name was to
disregard the surname of his natural and
legitimate father, in violation of the Family
UGDORACION V. COMELEC Code and Civil Code, which provide that
G.R. NO. 17G851, APRIL 18, 2008 legitimate children shall principally use their
J. Nachura fathers' surnames.
Classifications of Domicile: • ARTICLE 174. Legitimate children shall have the
right:
1. domicile of origin, which is acquired by every (1) To bear the surnames of the father and the
person at birth; mother, in conformity with the provisions of
2. domicile of choice, which is acquired upon the Civil Code on Surnames.
abandonment of the domicile of origin; and
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 is • The Regional Trial Court's application of Article
not easily lost; it is lost only when there is an 364 of the Civil Code is incorrect.
actual removal or change of domicile, a bona • Indeed, the provision states that legitimate
fide intention of abandoning the former children shall "principally" use the surname of
residence and establishing a new one, and acts the father, but "principally" does not mean
which correspond with such purpose. "exclusively."
• This gives ample room to incorporate into
Article 364 the State policy of ensuring the
fundamental equality of women and men
before the law, and no discernible reason to
ignore it.

1G
A married woman may use: ADMINISTRATIVE CORRECTION OF CLERICAL ERROR
1. Her maiden first name and surname and AND CHANGE OF FIRST NAME/ NICKNAME - RA G048,
add her as further amended by RA 10172 - Authority to Correct
husband’s name, or Clerical or Typographical Error and Change of
First Name or Nickname.
2. Her maiden first name and husband’s surname, • No entry in a civil register shall be changed or
or corrected without a judicial order, except:

III. PERSONS AND FAMILY RELATIONS

3. Her husband’s full name, but prefixing a 1. clerical or typographical errors
word indicating that she is his wife, such as 2. change of first name or nickname
“Mrs.” (Art 370, NCC) 3. the day and month in the date of birth or
4. Fourth option is to use maiden name and sex of a person where it is patently clear
disregard Article 370 since it used “may”, that there was a clerical or typographical
which means use is optional. error or mistake in the entry which can be
corrected or changed by the concerned
city or municipal civil registrar or consul
Annulled Marriage general in accordance with the provisions
• If wife is the guilty party, she shall resume of this Act and its implementing rules and
her maiden name and surname. regulations. (Sec. 1, RA 10172)
• If the wife is the innocent spouse, she may • No correction must involve the change of
resume her maiden name and surname. NATIONALITY, AGE, OR STATUS of the
She may also choose to continue employing petitioner.” (Sec. 2, RA 10172)
her husband’s surname, unless:
a. The court decrees otherwise, or E. ABSENTEES (CIVIL CODE, ARTS. 381-3G6)
b. She or the former husband is married
again to another person Provisional Measures in Case of Absence
• When a person disappears from his
Legally Separated domicile, his whereabouts being unknown,
The wife shall continue using her name and and without leaving an agent to administer
surname as employed before separation. his property, the judge, at the instance of an
interested party, a relative, or a friend, may
appoint a person to represent him in all that
Death of Husband may be necessary.
A widow may use the deceased husband’s • This same rule shall be observed when
surname as though he were still living, in under similar circumstances the power
accordance with Article 370. conferred by the absentee has expired.
• In the appointment of a representative, the
Identity of Names spouse present shall be preferred when
there is no legal separation.
• In case of identity of names and surnames, • If the absentee left no spouse, any
a younger person shall be obliged to use competent person may be appointed by the
such additional name or surname as will court.
avoid confusion.
• In case of identity of names and surnames
between ascendants and descendants, the word DECLARATION OF ABSENCE
“Junior” can be used only by a son.
• Grandsons and other direct male Judicial Declaration of Absence
descendants shall either:
a. Add a middle name or the mothers’ • 2 years having elapsed without any news, or
surname, or since receipt of last news, or 5 years in case
absentee left a person in charge
b. Add the Roman numerals II, III, and so • At the instance of any of the following:
on.  Spouse present;
 Heirs instituted in the will;
Changing, Usurpation s Pen Names
 Relatives who may succeed by intestacy;
 Those who have interest over absentee’s
ARTICLE 376. No person can change his property which is conditioned on his
name or death.
• Declaration of absence shall take effect
surname without judicial authority. only 6 months after publication.

ARTICLE 377. Usurpation of a name and PRESUMPTION OF DEATH (Art. 3G0 s 3G1)
surname may be the subject of an action for
damages and other relief.
Art. 3G0 - After an absence of seven years, it
being unknown whether or not the absentee
ARTICLE 378. The unauthorized or unlawful use still lives, he shall be presumed dead for all
of another person’s surname gives a right of purposes, except for those of succession.
action to the latter.
The absentee shall not be presumed dead for
ARTICLE 37G. The employment of pen names or the purpose of opening his succession till after
stage names is permitted, provided it is done an absence of ten years. If he disappeared after
in good faith and there is no injury to third the age of seventy- five years, an absence of
persons. Pen names and stage names cannot five years shall be sufficient in order that his
be usurped. succession may be opened.
ARTICLE 380. Except as provided in the
preceding article, no person shall use different
names and surnames.

20
 Art. 3G1 - The following shall be presumed dead “Marriage” defined
for all purposes, including the division of the • Marriage is a special contract of permanent
estate among the heirs: union between a man and a woman entered

III. PERSONS AND FAMILY RELATIONS

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

F. MARRIAGE; GENERAL PRINCIPLES

(FAMILY CODE, ART. 1)
*EXCLUDE: MUSLIM CODE (P.D. NO. 1083)

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 void. One of the formal requisites of a
responsible for the irregularity shall be civilly, marriage is a marriage license, the total
criminally and administratively liable. absence of which will render the marriage void.
The absence of the marriage license was
WHO ARE AUTHORIZED TO SOLEMNIZE MARRIAGES? certified by the local civil registrar who is the

III. PERSONS AND FAMILY RELATIONS

1. Any incumbent member of the Judiciary; official custodian of these documents and who
2. Any priest, rabbi, imam, or minister of any is in the best position to certify as to the
church or religious sect existence of these records. (Republic v. Castro,
3. Ship captain or airplane chief (for marriage in GR No. 103047, September 2, 1SS4).
articulo mortis);
4. A military commander of a unit, who is BAR QUESTION (2008)
a commissioned officer;
5. Consul-general, consul or vice-consul; Roderick and Faye were high school
sweethearts. When Roderick was 18 and Faye,
6. Mayors (under the Local Government Code) 16 years old, they started to live together as
husband and wife without the benefit of
MARRIAGE LICENSE marriage. When Faye reached 18 years of age,
‘Valid Marriage License’ her parents forcibly took her back and arranged
• A marriage license shall be issued by the local for her marriage to Brad. Although Faye lived
civil registrar of the city or municipality where with Brad after the marriage, Roderick
either contracting party habitually resides. continued to regularly visit Faye while Brad was
• A marriage license is valid for a period of 120 away at work.
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
Roderick and in one of their heated arguments,
• A marriage license is valid anywhere in the Philippines
Faye shot Brad to death. She lost no time in
marrying her true love Roderick, without a
PARENTAL CONSENT marriage license, claiming that they have been
If any party is below 21, parental consent must continuously cohabiting for more than 5 years.
be exhibited to the local civil registrar. Otherwise, Was the marriage of Roderick and Faye valid?
marriage is voidable.

PARENTAL ADVICE SUGGESTED ANSWER

If any party is between 21 and 25, parental
advice is required. Otherwise, license shall only No, the marriage of Roderick and Faye is not
be issued after 3 months from completion of valid.
publication of the application. Art. 4, FC provides that the absence of any of
the essential or formal requisites renders the
Marriages Exempt from the License Requirement marriage void ab initio. However, no license
1. Marriage in articulo mortis (In case either or shall be necessary for the marriage of a man
both of the contracting parties are at the and a woman who have lived together as
point of death) husband and wife for at least 5 years and
2. Marriage in remote places (If the residence of without any legal impediment to marry each
either party is so located that there is no other. This five-year period is characterized by
means of transportation to enable such party exclusivity and continuity.
to appear personally before the local civil In the present case, the marriage of Roderick
registrar) and Faye cannot be considered as a marriage
3. Marriage among Muslims and members of of exceptional character, because there were 2
ethnic cultural communities legal impediments during their cohabitation:
4. Marriage of a man and a woman who have been minority on the part of Faye, during the first
living together as husband and wife for at least 5
years and without any legal impediment to marry two years of cohabitation; and, lack of legal
each other. In lieu of a marriage license, the capacity, since Faye married Brad at the age of
parties must execute an Affidavit of Cohabitation. 18.
The absence of a marriage license made the
marriage BAR QUESTION (2017)
of Faye and Roderick void ab initio.
BAR QUESTION (2016) State whether the following marital unions are valid,
Brad and Angelina had a secret marriage void, or voidable:
before a pastor whose office is located in Marriage of Zoren and Carmina who did not
Arroceros Street, City of Manila. They paid secure a marriage license prior to their
money to the pastor who took care of all the wedding, but lived together as husband and
documentation. When Angelina wanted to go to wife for 10 years without any
the U.S., she found out that there was no legal impediment to marry.
marriage license issued to them before their SUGGESTED ANSWER
marriage.
Since their marriage was solemnized in 1995 The marriage between Zoren and Carmina is
after the effectivity of the Family Code, valid because it is one of those exempt from
Angelina filed a petition for judicial declaration the license requirement under the Family Code
of nullity on the strength of a certification by (Article 34). No license shall be necessary for
the Civil Registrar of Manila that, after a diligent the marriage of a man and a woman who have
and exhaustive search, the alleged marriage lived together as husband and wife for at least
license indicated in the marriage certificate five years without any legal impediment to 22
does not appear in the records and cannot be marry each other. Zoren and Carmina must
found. execute
Decide the case and explain. an affidavit to that effect.
MARRIAGE CEREMONY Where a marriage between a Filipino citizen and
• There is no prescribed form or religious rite a foreigner is validly celebrated and a divorce is
for the solemnization of a marriage. thereafter validly obtained abroad by the alien
• Minimum requirements constituting a spouse capacitating him or her to remarry, the
marriage ceremony: Filipino spouse shall have capacity to remarry
i. the appearance of the contracting parties under Philippine law.
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.
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):

III. PERSONS AND FAMILY RELATIONS

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 (201G)
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.) SUGGESTED ANSWER
The Supreme Court held that the Family It shall be considered void even if it was
Code does not distinguish as to who between celebrated after David obtained a judicial
the Filipino and foreign spouse in a mixed decree annulling his previous marriage to Elsa.
marriage initiated the divorce petition. What The law requires that in case the marriage is
is important is that the divorce was secured annulled, the parties to the dissolved marriage
in accordance with the national law of the must first comply with the requirements of
recording the judgement of annulment in the
foreign spouse, and the same capacitated

III. PERSONS AND FAMILY RELATIONS

appropriate civil registry and undertake the
the foreign spouse to remarry. Here, F partition, liquidation, and distribution of the
initiated a divorce petition in Japan and presumptive legitimes of their common children
obtained a favorable judgment which before contracting a subsequent marriage. The
capacitated her Japanese husband to remarry. partition, liquidation, and distribution of the
Thus, the legal effects of the divorce presumptive legitimes must likewise be
obtained by F may be recognized in the recorded in the appropriate registries of
Philippines which may capacitate F to property. The failure of the parties to comply
remarry here. (Republic v. Manalo, with these requirements would render their
G.R. No. 221029, April 24, 2018) marriage void under
Article 53 of the Family Code.

H. VOID MARRIAGES; EFFECTS AND

REMEDIES PSYCHOLOGICAL INCAPACITY (Article 36)
(FAMILY CODE, ARTS. 35-44 AND 50-54) • Marriage contracted by any party who, at the
time of celebration, was psychologically
incapacitated to comply with the essential
Void marriages are found in various provisions marital obligations of marriage
of the FC, to wit: Articles 4, 35, 36, 37, 38, 40,
41, 44 and 53 in relation to Article 52 • Psychological incapacity is a legal concept
not medical
• Totality of evidence; Clear and convincing
ABSENCE OF ESSENTIAL OR FORMAL evidence.
REQUISITE • Juridical antecedence - Must be existing at
(Article 4) the time of celebration although overt
The absence of any of the essential or formal manifestations may emerge only after the
requisites shall render the marriage void ab marriage
initio, except as stated in Article 35 (2) • Gravity - “Mild characterological peculiarities,
mood changes, occasional emotional
outbursts are excluded. The psychological
MARRIAGES CONSIDERED VOID FROM incapacity cannot be mere “refusal, neglect,
THE BEGINNING (Article 35) or difficulty, much less ill- will.”
1. Those contracted by minors • Incurable in the legal sense - incapacity is so
2. Lack of authority of solemnizing officer enduring and persistent
(unless either or both parties believing in
good faith that the solemnizing officer had
the legal authority to do so) QUIOGUE, JR. V. QUIOGUE
3. Absence of marriage license (unless G.R. NO. 203GG2, AUGUST 22, 2022
exempted) J. M. Lopez
4. Bigamous or polygamous marriages This case is a Petition for Review on Certiorari
(except valid bigamous marriage under under Rule 45 of the Rules of Court assailing
Article 41 on presumptive death) the Decision and Resolution of the Court of
5. Mistake of party as to the identity of the Appeals (CA) which dismissed the Petition for
other. Declaration of Nullity of Marriage filed by
Antonio Quiogue, Jr. (Antonio), petitioner.
6. Subsequent marriages that are void under Antonio and Maria Bel Quiogue (Maribel),
Article 53 (failure to comply with respondent, were married and have four
requirements under Art. 52) children. They have been separated in fact after
Maribel drove Antonio out of their conjugal
VOID SUBSEQUENT MARRIAGE DUE TO NON- home.
COMPLIANCE WITH ART. 52 (Art. 53)
Article 53. Either of the former spouses may Antonio claimed that he and Maribel are both
marry again after compliance with the psychologically incapacitated to comply with
requirements of Article 52, otherwise, the the basic marital obligations. A witness for
subsequent marriage shall be null and void. Antonio, Dr. Valentina Del Fonso Garcia (Dr.
Garcia), conducted a mental status
assessment and clinical psychiatric interviews
Article 52. The judgment of annulment or of with Antonio and Maribel and recommended
absolute nullity of the marriage, the partition that marital nullification be strongly considered
and distribution of the properties of the by the court on the ground of psychological
spouses and the delivery of the children's incapacity.
presumptive legitimes shall be recorded in the
appropriate civil registry and registries of
property; otherwise, the same shall not affect The Regional Trial Court (RTC) found sufficient
third persons.BAR QUESTION (2010) grounds to declare the marriage between petitioner
and Maribel void. Thereafter, CA reversed the
State whether the following marital union is valid, ruling of the RTC and agreed with the Solicitor
void, or voidable: General that the infidelity of Antonio and his
David, who married Lina immediately the day irreconcilable differences with his wife Maribel do
after obtaining a judicial decree annulling his not constitute psychological incapacity under
prior marriage Article 36 of the Family Code.
to Elsa.

24
SC ruled that Antonio’s chronic infidelity is a
form of psychological incapacity which is a DOCTRINES:
ground for nullity of marriage. In the case of Tan-Andal, the Court states that
the spouse of the person alleged to be
The Court states that to be considered as a form psychologically incapacitated may be
of psychological incapacity, infidelity must satisfy interviewed by the psychologist since he or
the requirements of (1) gravity or severity, (2) she is in the best position to describe his or
antecedence, and (3) legal incurability or her spouse's inability to comply with marital
persistence during the marriage. In this case, as obligations.

III. PERSONS AND FAMILY RELATIONS

for the severity of Antonio’s infidelity, he thinks
that his illicit affairs are minor incidents which
Maribel should have overlooked or dealt with Notwithstanding, there is no legal and
differently and he does not consider Maribel as a jurisprudential requirement that the person to be
partner. Hence, there is a constant need for him to
look for affection outside the marriage. As to declared psychologically incapacitated be
antecedence, his affairs are not casual mistakes personally examined by a physician. What
as these were shown to be deeply rooted in his
psychopathology which was in place even before matters is that the totality of evidence presented
his marriage. establishes the party's psychological condition.
The psychiatric evaluations of psychiatrists are
And lastly, Antonio's incapacity is incurable. It is reliable even when the subject was not
persistent throughout the marriage and is interviewed.
specifically directed at his wife Maribel. Antonio
did not have ample affection and commitment
towards Maribel even at the outset. INCESTUOUS MARRIAGES (Article 37)
Marriages between:
Therefore, the totality of evidence thus points to 1. Ascendants and descendants of any degree; and
Antonio's psychological incapacity as the cause
to nullify his marriage to Maribel. 2. Between brothers and sisters, whether of
full or half blood (whether the relationship
between the parties be legitimate or
DEDICATORIA V. DEDICATORIA illegitimate)
G.R. NO. 250618, JULY 20, 2022
J. M. Lopez VOID MARRIAGES FOR REASONS OF PUBLIC
Jennifer and Ferdinand were married. However,
Jennifer filed a Petition for Declaration of Nullity of POLICY (Article 38)
Marriage due to Ferdinand's psychological Marriages between
incapacity. 1. Collateral blood relatives, whether
legitimate or illegitimate, up to the fourth
Dr. Montefalcon (Montefalcon), a clinical civil degree
psychologist, conducted psychological tests on 2. Step-parents and step-children
Jennifer, as well as clinical interviews on
Ferdinand’s sister, Teresita, and the couple’s long- 3. Parents-in-law and children-in-law
time common friend, Anarose. Ferdinand was 4. Adopting parent and the adopted child
invited for a psychological assessment, but to no 5. Surviving spouse of the adopting parent
avail. With the available resources, Montefalcon and the adopted child
diagnosed Ferdinand to be suffering from
Dependent Personality Disorder, rendering him 6. Surviving spouse of the adopted child
incapacitated to perform his marital obligations. and the adopter
7. Adopted child and a legitimate child of
The RTC found the totality of the evidence the adopter
presented, consisting of the collateral interviews 8. Adopted children of the same adopter.
and the assessment of the expert witness on the 9. Parties where one, with the intent to marry
psychological condition of the parties, sufficient. the other killed that other person’s spouse
The CA found no sufficient evidence to prove the or his or her own spouse.
juridical antecedence, gravity, and incurability of
Ferdinand's psychological incapacity. BAR QUESTION (2008)
Despite several relationships with different
The SC ruled that the totality of evidence women, Andrew remained unmarried. His first
presented in this case — the testimonies of relationship with Brenda produced a daughter,
Jennifer, Anarose, and clinical psychologist Amy, now 30 years old. His second, with Carla,
Montefalcon — is sufficient to sustain a finding produced two sons: Jon and Ryan. His third, with
that Ferdinand is psychologically incapacitated. Elena, bore him no children although Elena has a
Jennifer's cause of action is grounded upon daughter Jane, from a previous relationship. His
Article 36 of the Family Code. In Tan-Andal, the last, with Fe, produced no biological children but
Court settled the varying guidelines in they informally adopted without court
determining the existence of psychological proceedings, Sandy, now 13 years old, whom
incapacity as a ground to declare a marriage void. they consider as their own. Sandy was orphaned
The Court clarified that such requirement does not as a baby and was entrusted to them by the
require proof that the psychological incapacity roots midwife who attended to Sandy’s birth. All the
from a medically-identified mental incapacity or children, including Amy, now live with Andrew in
psychological incapacity as previously required in his house.
Molina. Psychological incapacity has always been a Can Jon and Jane legally marry?
legal concept — it is neither a mental incapacity
nor a
personality disorder in a strict medical sense, SUGGESTED ANSWER
although Yes. Jon and Jane can marry each other; Jon is an
one's clinical mental or personality disorder can be illegitimate child of Andrew while Jane is a child
its root of Elena from a previous relationship. Thus, their
cause. marriage is not one of the prohibited marriages
enumerated under Art. 38 of the FC.

25
 BAR QUESTION (2012) PERIOD OF DISAPPEARANCE
Write “TRUE” if the statement is true or “FALSE” if the ✓ 4 YEARS
statement is false. If the statement is FALSE, state ✓ 2 YEARS in case of danger of death under Art.
the reason. 391 of the Civil Code:
Amor gave birth to Thelma when she was 15 (1) A person on board a vessel lost during a sea
years old. Thereafter, Amor met David and they voyage, or an aeroplane which is missing;
got married when she was 20 years old. David (2) A person in the armed forces who has taken

III. PERSONS AND FAMILY RELATIONS

had a son, Julian, with his ex- part in war;
girlfriend Sandra. Julian and Thelma can get (3) A person who has been in danger of death
married. under other circumstances.
SUGGESTED ANSWER
TRUE. Julian and Thelma can get married. ABSENCE OR SEPARATION IN FACT
Marriage between stepbrother and stepsister is ‘Well-founded Belief’
not among the • In determining the existence of a “well-founded
marriages prohibited under the Family Code. belief,” the belief of the present spouse must
INVOKING ABSOLUTE NULLITY FOR REMARRIAGE be the result of proper and honest to goodness
(Article 40) inquiries and efforts to ascertain the
Art. 40. The absolute nullity of a previous marriage whereabouts of the absent spouse and
may be invoked for purposes of remarriage on the whether the absent spouse is still alive or is
basis solely of a final judgment declaring such already dead.
previous marriage void. • Active search not passive one

LUISITO G. PULIDO v. People of the PHILIPPINES | Failure to Secure Declaration of Presumptive Death
G.R. No. 22014G, JULY 27, 2021 (BIGAMY - PROOF OF Under Art. 41, FC
VOID AB INITIO MARRIAGE WITHOUT NEED OF ✓ If he/she contracts a subsequent marriage
without such declaration:
JUDICIAL DECLARATION OF NULLITY)
i. The subsequent marriage is itself void; and;
Summary: ii. He/she may be prosecuted for the crime of bigamy
• The parties are not required to obtain a BAR QUESTION (2008)
judicial declaration of nullity of a void ab initio Ana Rivera had a husband, a Filipino citizen like
of the first or subsequent marriages in order to her, who was among the passengers on board a
raise it as a defense in a bigamy case. The commercial jet plane which crashed in the
same rule applies to all marriages celebrated Atlantic Ocean ten (10) years earlier and had
under the Civil Code and the Family Code. never been heard of ever since. Believing that
• Article 40 of the Family Code did not amend her husband had died, Ana married Adolf Cruz
Article 349 of the RPC, and thus, did not deny Staedtler, a divorced German national born of a
the accused the right to collaterally attack the
validity of a void ab initio marriage in the German father and a Filipino mother residing in
criminal prosecution for bigamy. Stuttgart.
• However, if the first marriage is merely To avoid being required to submit the required
voidable, the accused cannot interpose an certificate of capacity to marry from the German
annulment decree as a defense in the criminal embassy in Manila, Adolf stated in the application
prosecution for bigamy since the voidable first for marriage license that he was a Filipino citizen.
marriage is considered valid and subsisting With the marriage license stating that Adolf was
when the second marriage was contracted. a Filipino, the couple got married in a ceremony
The crime of bigamy, therefore, is officiated by the Parish Priest of Calamba, Laguna
consummated when the second marriage was in a beach in Nasugbu, Batangas, as the local
celebrated during the subsistence of the parish priest refused to solemnize marriages
voidable first marriage. The same rule applies except in his church.
if the second marriage is merely considered as Is the marriage valid? Explain fully.
voidable.

ABSENCE OR SEPARATION IN FACT SUGGESTED ANSWER

• Mere absence of a spouse will not result in No, the marriage is invalid. Article 41 of the
dissolution. Family Code allows the present spouse to
• Separation in fact will not also result in contract a subsequent marriage during the
subsistence of his previous marriage provided
dissolution. that:
• Marriages can only be dissolved through a (a) that the spouse present has a well-founded
court belief that the absent spouse was already
dead, and
action. (b) present spouse instituted a summary
proceeding for the declaration of the
Death – extinguishes marriage; the surviving presumptive death of absent spouse.
spouse may marry again.
Missing – a court action is necessary to declare
missing spouse as presumptively dead. 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
VOID BIGAMOUS MARRIAGE, AND EXCEPTION ON was found. Thus, following Art. 41, Ana should
ACCOUNT OF PRESUMPTIVE DEATH (Article 41) have first secured a judicial declaration of his
• Art 35 (4) all bigamous marriages are void presumptive death before she married Adolf.
• Judicial Declaration of presumptive Death
1. Absence of 2 years or 4 years of missing The absence of the said judicial declaration
spouse incapacitated Ana from contracting her second
2. Spouse present wishes to remarry marriage, making it void ab initio
3. Spouse present has a well-founded belief
that the absent spouse was 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. 26
 PRESUMPTION BAR QUESTION (2017)
OF VALIDITY
State whether
Everyormarriage the following marital union is valid,
• void, voidable.enjoys the presumption of validity.
Eli and Fely’s marriage solemnized seven years • Before contracting a second marriage,
after the disappearance of Chona, Eli’s previous there must be a prior judgment declaring
spouse, after the plane she had boarded crashed the previous marriage void.
in the West Philippine Sea. • If he/she contracts a subsequent

III. PERSONS AND FAMILY RELATIONS

Is the marriage valid? Explain fully. marriage without securing a judicial
declaration of nullity of the prior
marriage, the subsequent marriage is
SUGGESTED ANSWER itself void.
The marriage between Eli and Fely which was
solemnized seven years after the disappearance  PROPERTY REGIME IS GOVERNED BY CO-
of Eli’s former wife, Chona, is void unless Ely had
secured a declaration of presumptive death of OWNERSHIP either under Art. 147 or 148 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
subsistence of his/her previous marriage unless I. VOIDABLE MARRIAGES; EFFECTS
prior to the celebration of the subsequent
marriage, the prior spouse had been absent for AND REMEDIES (FAMILY CODE, ARTS.
four consecutive years and the spouse present
had a well-founded belief that the absent spouse 45-54)
is already dead. In case the disappearance of the Art. 45 Voidable Marriages
*EXCLUDE: A.M. NO. 02-11-10-SC AND
spouse occurred under circumstances where A marriage may be annulled for any of the
there is danger of death under Article 391 of the following causes,R.A. NO. at
existing 6G55
the time of the
Civil Code, an absence of only two years shall be marriage:
AUTOMATIC
sufficient forTERMINATION OF 2ND
purposes of filing the MARRIAGE
 By the
petition forrecording
declarationofofthe affidavit of
presumptive death. (1) 18 years old but below 21 without
reappearance of the absent spouse. parental consent
 At the civil registry of the residence of the (2) Insanity
parties to the subsequent marriage. (3) Vitiated consent due to Fraud
 With due notice to the parties of the (4) Vitiated consent due to Force,
subsequent intimidation or undue influence
marriage. (5) Impotency
 Unless there is a judgment annulling the (6) Sexually transmissible Disease
previous marriage or declaring it void ab
initio. Four Circumstances of Fraud (Art. 47)
 Without prejudice to fact of reappearance (1) Non-disclosure of a previous conviction by
being judicially determined if disputed. final judgment of the other party of a crime
involving moral turpitude;
VOID SUBSEQUENT MARRIAGE WHICH WAS (2) Concealment by the wife of the fact that at
CONTRACTED AFTER DECLARATION OF the time of the marriage, she was pregnant
by a man other than her husband;
PRESUMPTIVE DEATH (Article 44) (3) Concealment of sexually transmissible
“If both spouses of the subsequent marriage disease, regardless of its nature, existing at
acted in bad faith, said marriage shall be void the time of the marriage; or
ab initio xxx” (4) Concealment of drug addiction, habitual
alcoholism or homosexuality or lesbianism
EFFECTS AND REMEDIES existing at the time of the marriage.
 ACTION OR DEFENSE FOR DECLARATION No other misrepresentation or deceit as to
OF NULLITY SHALL NOT PRESCRIBE character, health, rank, fortune or chastity
• No prescriptive period in asking for shall constitute such fraud as will give
declaration of nullity. grounds for action for the annulment of
• Heirs may attack the validity of marriage marriage.
in proceedings for settlement of estate to
determine successional rights. (Lucila ARTICLE 45 VS. ARTICLE 46 OF THE FC ON STD AS
David C Heirs of Aguas v. Calilung, G.R. GROUND FOR ANNULMENT
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
subsequent marriage under Article 53 shall
likewise be legitimate. (Art. 54, FC)
 Article 45 Article 46
Affliction Concealment
Ground of Annulment
The fact of being The act of
concealing becauseit
afflicted 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 (2007)
Write “TRUE” if the statement is true or “FALSE” if the
statement is false. If the statement is FALSE, state
the reason.
The day after John and Marsha got married, John
BAR QUESTION (2017) told her that he was impotent. Marsha continued
State whether the following marital unions are to live with John for 2 years. Marsha is now
estopped from filing an
valid, void, or voidable. annulment case against John.
Ador and Becky’s marriage wherein Ador was SUGGESTED ANSWER
afflicted FALSE. Marsha is not estopped from filing an
with AIDS prior to the marriage. annulment case against John on the ground of his
impotence.
SUGGESTED ANSWER

III. PERSONS AND FAMILY RELATIONS

Physical incapacity to consummate is a valid
The marriage of Ador and Becky is a voidable ground for the annulment of marriage if such
marriage under paragraph (6) of Article 45 of incapacity was existing at the time of the
the Family Code which provides that a marriage, continues and appears to be incurable.
marriage is voidable if either party was The marriage may be annulled on this ground
afflicted with a sexually transmissible disease within five years from its celebration, and
found to be serious and appears incurable. cohabitation upon knowledge of impotency
Since Ador was afflicted with AIDS even prior will not result in
to the marriage, which is a serious and convalidation.
incurable sexually transmissible disease, his BAR QUESTION (2011)
marriage to Becky is Baldo, a rejected suitor, intimidated Judy into
considered voidable. marrying him. While she wanted to question the
validity of their marriage two years after the
intimidation ceased, Judy decided in the
GROUNDS | WHO MAY FILE THE CASE s WHEN meantime to freely cohabit with Baldo. After
more than 5 years following their wedding, Judy
1) Lack of parental consent – spouse whose wants to file a case for annulment of marriage
parent or guardian did not give his or her against Baldo on ground of lack of consent. Will
consent, within five years after attaining the her action prosper?
age of twenty-one, or by the parent or (A) Yes, the action for annulment is
guardian or person having legal charge of imprescriptible.
the minor, at any time before such party (B)No, since the marriage was merely voidable
has reached the age of twenty-one; and Judy ratified it by freely cohabiting with
UNLESS after attaining the age of twenty- Baldo after the force and intimidation had
one, such party freely cohabited with the ceased.
other and both lived together as husband (C)No, since the action prescribed 5 years from
the date of the celebration of the marriage.
and wife.
(D) Yes, because the marriage was celebrated
without
2) Insanity - by the sane spouse, who had no Judy's consent freely given.
knowledge of the other's insanity; or by any
relative or guardian or person having legal SUGGESTED ANSWER
charge of the insane, at any time before the (B) No, since the marriage was merely voidable
death of either party, or by the insane and Judy
spouse during a lucid interval or after ratified it by freely cohabiting with Baldo after the
regaining sanity; force
UNLESS such party after coming to reason, PENDENCY OF CASE AND ROLE OF PUBLIC
freely cohabited with the other as husband
and wife PROSECUTORS
• In cases of annulment or declaration of absolute
nullity of marriage, the court shall order the
3) Fraud - by the injured party, within five prosecuting attorney or fiscal assigned to appear
years after the discovery of the fraud; on behalf of the State to take steps to prevent
UNLESS such party afterwards, with full collusion between the parties, and to take care
knowledge of the facts constituting the that evidence is not fabricated or suppressed.
fraud, freely cohabited with the other as • No judgment shall be based on stipulation of
husband and wife facts or confession of judgment.
• During the pendency, in the absence of
written agreement, Court shall provide for
4) Force, Intimidation, Undue Influence - by the support of spouses and custody and support of
injured party, within five years from the common children. (Arts. 48 C 49, FC)
time the force, intimidation or undue
influence disappeared or ceased; EFFECTS OF DECREE OF ANNULMENT
UNLESS the same having disappeared or
ceased, such party thereafter freely 1. Termination of the marital bond;
cohabited with the other as husband and 2. Children conceived or born before the
wife judgment of annulment has become final and
executory are considered legitimate;
3. Absolute community property regime or the
5) Impotency and STD - by the injured party, conjugal partnership property regime is
within five years from the celebration of terminated or dissolved and the same shall be
marriage. liquidated. Forfeiture of guilty spouse’s share
in net profits.
4. The innocent spouse may revoke the
GROUNDS FOR DENIAL designation of the other spouse who acted in
• Article 45, Family Code: CONVALIDATION bad faith as beneficiary in the insurance
Note: Voidable marriages due to incurable policy, whether or not the designation is
Impotency and STD cannot be convalidated, revocable.
but action may prescribe five years from
celebration of marriage.
• Article 47, Family Code: PRESCRIPTION
• Article 47, Family Code: NOT FILED BY
PROPER
PERSON

28
5. The spouse who contracted the marriage in
bad faith, shall be disqualified to inherit Connivance
from the innocent spouse by testate or It implies an agreement, express or implied, by
intestate succession; both spouses to the ground for legal
6. Donation Propter Nuptias – remains Valid, separation.
except donee spouse acted in bad faith, it
is revoked by operation of law. Collusion
It also implies an agreement of spouses
whereby one will commit or appear to commit,

III. PERSONS AND FAMILY RELATIONS

J. LEGAL SEPARATION or to be represented in court as having
(FAMILY CODE, ART. 55-67) committed, an offense which is a ground for
legal separation, or to suppress evidence of
• Legal separationA.M.
*EXCLUDE: is aNO.
remedy available to
02-11-11-SC valid defense, for the purpose of enabling the
parties in a valid but failed marriage for the other to obtain a legal separation.
purpose of obtaining a decree from the court
entitling him or her certain reliefs such as
the right to live separately from each other Mutual recrimination (in pari delicto)
(without affecting the marital bond that exists When both parties have given ground for legal
between them), the dissolution and
liquidation of their absolute community or separation.
conjugal partnership property regime and
the custody of their minor children. Prescription
• It is in the nature of bed and board • When the action is not filed within the
separation. period fixed by law.
• An action for legal separation shall be filed
within five (5) years from the time of the
GROUNDS FOR LEGAL SEPARATION (Art. 55) occurrence of the cause (Art. 57, FC).
a. Repeated physical violence or grossly BAR QUESTION (2011)
abusive conduct against petitioner, After they got married, Nikki discovered that
common child, or a child of the petitioner; Christian was having an affair with another
b. Attempt to corrupt or induce petitioner, a woman. But Nikki decided to give it a try and lived
common child or a child of the petitioner to with him for two (2) years.
engage in prostitution, or connivance in After two (2) years, Nikki filed an action for legal
such corruption or inducement; separation on the ground of Christian’s sexual
c. Attempt by respondent against the life of infidelity.
the petitioner; Will the action prosper? Explain.
d. Final judgment sentencing respondent to SUGGESTED ANSWER
imprisonment of more than 6 years, even if Although the action for legal separation has not
pardoned; yet prescribed, the prescriptive period being 5
e. Drug addiction or habitual alcoholism of years, if Christian’s affair with another woman
respondent; was ended when Nikki decided to live with him
f. Physical violence or moral pressure to again, Nikki’s action will not prosper on account of
compel petitioner to change religious or condonation. However, if such affair is still
political affiliation; continuing, Nikki’s action would prosper because
g. Bigamous marriage subsequently the 5-year prescriptive period will be counted
from the latest act of sexual infidelity. Every act
contracted by of sexual
respondent in the Philippines or abroad; liaison is a ground for legal separation.
h. Sexual infidelity or perversion;
i. Lesbianism or homosexuality; BAR QUESTION (2012)
j. Abandonment of petitioner by respondent Write “TRUE” if the statement is true or “FALSE” if
without justifiable cause for more than a the statement is false. If the statement is FALSE,
state the reason.
year. If a man commits several acts of sexual infidelity,
particularly in 2002, 2003, 2004, 2005, the
DEFENSES prescriptive
period to file for legal separation runs from 2002.
Condonation SUGGESTED ANSWER
• It is forgiveness of the offense by the FALSE. The five-year prescriptive period for filing
innocent spouse, express or implied, subject legal separation runs from the occurrence of
to the condition shall not be repeated. sexual infidelity committed in 2002 runs from
2002, for the sexual infidelity committed in 2003,
• Having sex with the spouse after knowledge the prescriptive period runs from 2003 and so on.
of the The action for legal separation for the last act of
other’s infidelity (Ginez vs. Bugayong) sexual infidelity in 2005 will prescribe in 2010.
• Every adulterous act of the wife is a separate
ground for legal separation and condonation
of one does not necessarily mean PROCEDURE, EFFECTS OF FILING, EFFECTS OF
condonation of the others (People vs. PENDENCY
Zapata).
Immediately Entitled to Live Separately
Consent
• After the filing of petition for legal
It is where offended party agreed to the separation, the spouses shall be entitled to
commission of the offense. This is given in live separately from each other.
advance or prior to commission. • The court, in the absence of agreement,
shall designate either of them or a third
person to administer the absolute
community or conjugal partnership
property. (Art. 61, FC)

2G
Cooling-Off Period Reconciliation
• An action for legal separation shall be in no  If the spouses should reconcile, a
case tried before 6 months shall have corresponding joint manifestation under oath
elapsed since the filing of the petition. (Art. duly signed by them shall be filed with the
58, FC). court in the same proceeding for legal
• To enable the contending spouses to settle separation.
differences. In other words, it is for possible  The legal separation proceedings, if still
reconciliation pending, shall thereby be terminated at

III. PERSONS AND FAMILY RELATIONS

Except: There is no cooling-off period if the whatever stage. Final decree shall be set
grounds alleged are those under R.A. 9262 aside.
(VAWC).  Reconciliation does not automatically revive
the former property regime.
 If the spouses want to revive the previous
Steps Toward Reconciliation property regime, they must execute an
No legal separation may be decreed unless the agreement under oath to revive the former
Court has taken steps toward the property regime, which agreement shall be
reconciliation of the spouses and is fully submitted in court, together with a verified
satisfied, despite such efforts, that motion for its approval. (Arts. 66-67, FC)
reconciliation is highly improbable. (Art. 59,
FC). SY V. EUFEMIO
G.R. NO. L-30G77, JANUARY 31, 1G72
Support and Custody J. J.B.L. Reyes
• During the pendency of the action for legal Effect of Death of One of the Parties
separation, the provisions of Article 49 shall
likewise apply to the support of the spouse Abates the Action:
and the custody and support of common  The death of one of the parties before final
children. (Art. 62, FC). decree in an action for legal separation abates
• Court shall provide for support of spouses the action.
and custody and support of common  An action for legal separation which involves
nothing more than the bed-and-board
children. separation of the spouses (there being no
• Paramount consideration to the moral and absolute divorce in this jurisdiction) is purely
material welfare of children and their choice personal.
of parent with whom they wish to remain.  Being personal in character, it follows that the
• Shall also provide for visitation rights of the death of one party to the action causes the
other parent. (Art 49, FC) death of the action itself — actio personalis
moritur cum persona.
Role of Fiscal
 No decree of legal separation shall be based K. PROPERTY RELATIONS BETWEEN SPOUSES
upon a stipulation of facts or a confession of (FAMILY CODE, ARTS. 74-81)
judgement.
 The court should order the prosecuting
attorney or fiscal to take steps to prevent The property relationship between husband and
collusion between the parties and to take wife shall be governed in the following order:
care that the evidence is not fabricated or (1) By marriage settlements executed
suppressed. (Art 60, FC) before the marriage;
(2) By the provisions of this Code; and
EFFECTS OF DECREE OF LEGAL SEPARATION (3) By the local custom. (Art. 74, FC)
1. The spouses are entitled to live separately
but the marriage bond is not severed. 1. DONATION PROPTER NUPTIAS; VOID
2. ACP/GCP shall be dissolved and liquidated.
Offending spouse forfeits share in net DONATIONS – FAMILY CODE, ARTS. 82-83, 86-
profits. Regime of complete separation. 87,
3. Custody of minor children shall be awarded 43(3) AND 50
to innocent spouse, subject to Art. 213 FC.
(Court will designate, take into account
relevant considerations, especially the DONATION PROPTER NUPTIAS
choice of the child over 7 years unless the
parent chose is unfit. Tender age - Also known as donation by reason of marriage.
presumption.)
4. Offending spouse is disqualified to inherit Requisites:
from innocent spouse by intestate
succession. 1. Made before the celebration of the marriage;
5. Provisions in the will of innocent spouse 2. Made in consideration of marriage; and
which favors offending spouse shall be 3. Made in favor of one or both of the
revoked by operation of law. (Art 63, FC) future spouses.
6. Innocent spouse may revoke the designation 4. Governed by ordinary donations
of the offending spouse as a beneficiary in (formalities of ordinary donation must be
any insurance policy, even when stipulated observed).
as irrevocable. (Art 64, FC)
7. The innocent spouse may revoke donations
she/he made in favor of the offending ✓ Donation of future property is governed by
spouse. Action to revoke must be brought testamentary succession and formalities of
within 5 years from finality of decree of will.
legal separation. (Art 64, FC)
8. Obligation to give support ceases, but court ✓ Limitation on value: If agreed property regime
may order the guilty spouse to give in the marriage settlement is a regime other
support to the innocent spouse. (Art. 198, than absolute community property, the
FC) donation in the marriage settlement should
not be more than 1/5 of the present property
of donor- future spouse. This means that if the
property regime agreed upon is ACP, there is
no limitation on the value of donation.

30
Grounds for revocation of donations propter A property regime wherein the spouses are
nuptias (Article 86) considered co-owners of all property brought into
1. Non-celebration of marriage the marriage as well as those acquired during the
marriage, which are not otherwise excluded from
2. Celebration of marriage without parental the community either by the provisions of the
consent; Family Code or by the marriage settlement.
3. Annulment of marriage with donee acting

III. PERSONS AND FAMILY RELATIONS

in bad faith; Commencement: The absolute community of
4. Legal separation with donee as the guilty property between spouses shall commence at
the precise moment that the marriage is
party; celebrated. Any stipulation, express or implied,
5. Fulfillment of resolutory condition; and for the commencement of the community regime
6. Acts of ingratitude (Article 765, NCC). at any other time shall be void. (Art. 88, FC)

ARTICLE 765. The donation may also be Note: ACP is the default property regime under
revoked at the instance of the donor, by the FC in the absence of a valid marriage
reason of ingratitude in the following cases: settlement providing for another kind of property
regime.
(1) If the donee should commit some offense
against the person, the honor or the
property of the donor, or of his wife or Waiver of rights (Art. 8G, FC)
children under his parental authority; • No waiver of rights, shares and effects of the
(2) If the donee imputes to the donor any absolute community of property during the
criminal offense, or any act involving moral marriage can be made except in case of
turpitude, even though he should prove it, judicial separation of property.
unless the crime or the act has been • When the waiver takes place upon a judicial
committed against the donee himself, his separation of property, or after the marriage
wife or children under his authority; has been dissolved or annulled, the same shall
(3) If he unduly refuses him support when the appear in a public instrument and shall be
donee is legally or morally bound to give recorded as provided in Article 77.
support to the donor. • The creditors of the spouse who made such
waiver may petition the court to rescind the
waiver to the extent of the amount sufficient to
VOID DONATIONS BETWEEN THE SPOUSES cover the amount of their credits.
General Rule: Every donation or grant of
gratuitous advantage, direct or indirect, Properties Excluded Under the Absolute Community
between the spouses during marriage shall be
VOID. (Art. G2, FC)
1. Property acquired during the marriage by
gratuitous title and its fruits as well as income
Exception: moderate gifts which the spouses thereof unless the grantor expressly provided
may give each other on the occasion of any that they shall form part of the community
family rejoicing. The prohibition shall also property;
apply to persons living together as husband 2. Property for personal and exclusive use of
and wife without valid marriage. (Article 87, FC) either spouses, except jewelry which shall
form part of the absolute community because
2. MARRIAGE SETTLEMENTS – FAMILY of their monetary value;
3. Property acquired before the marriage by one
CODE, ARTS. 75-81 with legitimate descendants by former
marriage and its fruits and income, if any;
MARRIAGE SETTLEMENT 4. Those excluded by the marriage settlement.
• It is a contract entered into by a man and a
woman who intend or plan to get married Properties Included in the Absolute Community
fixing the property regime that will govern 1. All the property owned by the spouses at the
their present and future properties during
their marriage. time
• It is also called ante-nuptial or pre-nuptial of celebration of marriage or acquired thereafter;
agreement. 2. Property acquired during the marriage by
gratuitous title, if expressly made to form
Requisites of a valid marriage settlement part of the community property by the
a. In writing; donor, testator or grantor;
3. Jewelry or properties with monetary value; and
b. Signed by the parties;
c. Executed before the celebration of marriage; 4. Winnings in gambling.
d. Signed by parent/guardian - If 18-
21, civil interdiction, disability (Arts 78 CHARGES UPON AND OBLIGATIONS OF
and 79, FC) THE ABSOLUTE COMMUNITY
e. Registration (to bind 3rd persons). (Art. 77, PROPERTY
FC) 1. Support of the spouses, their common
children, and legitimate children of either
Modification of the marriage settlement spouses;
2. All debts and obligations contracted
There can be no modification of marriage during the marriage by:
settlement during marriage in the absence of a. the designated administrator-spouse
court approval, subject to provisions of Arts. for the benefit of the community
66, 67, 128, 135, and 136 of the FC. b. by both spouses;
a. Absolute Community of Property Regime – c. by one spouse with the consent of the other.
Family Code, arts. 84 and 88-104

31
3. Debts and obligations contracted by either
spouse without the consent of the other to the Disposition by last will (Art G7, FC)
extent that the family may have been Either spouse may dispose by will of his or her
benefited; interest in the community property.
4. All taxes, liens, charges, and expenses,
including major or minor repairs, upon the Prohibited/allowed donation without consent of other
community property;
5. All taxes and expenses for mere preservation (Art. G8, FC)
made during the marriage upon the separate • Neither spouse may donate any community
property without the consent of the other.

III. PERSONS AND FAMILY RELATIONS

property of either spouse used by the family;
6. Expenses to enable either spouse to commence • However, either spouse may, without the
or complete a professional or vocational course consent of the other, make moderate donations
or other activity for self-improvement; from the community property for charity or on
7. Ante-nuptial debts of either spouse insofar as occasions of family rejoicing or family distress.
they have redounded to the benefit of the BAR QUESTION (2012)
family;
8. The value of what is donated or promised by Danny and Elsa were married in 2002. In 2012,
both spouses in favor of their common legitimate Elsa left the conjugal home and her two minor
children for the exclusive purpose of children with Danny to live with her paramour. In
commencing or completing a professional or 2015, Danny sold without Elsa’s consent a parcel
vocational course or other activity for self- of land registered in his name that he had
improvement; purchased prior to the marriage. Danny used the
9. Payment, in case of absence or insufficiency of proceeds of the sale to pay for his children’s
the exclusive property of the debtor-spouse, of: tuition fees.
a. ante-nuptial debts that did not redound to Is the sale valid, void, or voidable? Explain your answer.
the benefit of the family; SUGGESTED ANSWER
b. support of illegitimate children of either The sale made by Danny is void. The parties were
spouse, and married after the effectivity of the Family Code
c. liabilities incurred by either spouse by where the default property regime is absolute
reason of a crime or a quasi-delict. community of property. The facts did not mention
Note: The payment of which shall be considered that the parties executed a marriage settlement,
as advances to be deducted from the share of hence, the default property regime of absolute
the debtor- spouse upon liquidation of the community of property shall govern their
community. property relations. Under this property regime, all
10. Expenses of litigation between the spouses. properties which each of the spouses own at the
However, if the suit is found to be groundless, it time of the celebration of the marriage as well as
cannot be charged against the absolute whatever they may acquire thereafter shall form
community (Art. 94,FC). part of the absolute community. And sale of a
community property by one spouse without
Administration of Community Property (Art. G6, FC) consent of the other is void. (Art. 96, Family Code)
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 Dissolution of the ACP (Art. GG, FC)
to the court by the wife for proper remedy. 1. Death;
Note: Prescriptive period for recourse is within 5 2. Legal Separation;
years from the date of the contract implementing
such decision. 3. Annulment;
4. Declaration of nullity under Article 40;
Exceptions: 5. Judicial separation of property during
1. Agreement that only one of the spouses shall marriage (Article 135-136, FC).
administer the community property;
2. If one spouse is incapacitated or otherwise b. Conjugal Partnership of Gains Regime –
unable to participate in the administration of
the common properties, capacitated or able Family Code, arts. 105-133
spouse may assume sole powers of
administration without the need of court
approval or authorization; It is a property regime wherein the husband and the
3. If a spouse, without just cause, abandons the wife
other or fails to comply with his or her
obligations to the family, the aggrieved spouse place in a common fund:
may petition the court for sole administration; 1. All proceeds, product, fruits and income of
4. During the pendency of the legal separation their separate properties;
case, the court may designate either of the 2. Those acquired by either or both of them through:
spouses as sole administrator. a. Efforts; or
Note: Administration does not include:
1. Disposition; b. By Chance. (Art. 106, FC)
2. Alienation; and
This regime is applicable regime in case of a
3. Encumbrance of the conjugal or community valid marriage settlement between the spouses
property providing for CPG, or if the marriage was
celebrated before the effectivity of the Family
Code and the parties do not have any marriage
SPS. ANTONIO V. CA settlement. CPG is the default property regime
G.R. NO. 125172, JUNE 25, 1GG8 under the NCC, where ACP is the default property
J. Panganiban regime under the FC.
Sale or Disposition of Community Property (Art. G6, FC)
Alienation or encumbrance of community property Exclusive property of the spouses (Art. 10G, FC)
must have the written consent of the other spouse or 1. Those brought into the marriage as his/her own;
the authority
of the court without which the disposition or 2. Those acquired during the marriage by gratuitous
encumbrance is VOID. However, the transaction title;
shall be construed as a continuing offer on the part 3. Those acquire by right of redemption,
of the consenting spouse and the third person, and barter, or exchange with exclusive property;
may be perfected as binding contract upon the 4. That purchased with exclusive money of
acceptance by the other spouse or authorization by either spouse.
the court before the offer is withdrawn by either or
both offerors.

32
Conjugal Partnership Property (Art. 117, FC) 2. The alienation or encumbrance of the conjugal
(1) Those acquired by onerous title during the property, without the authority of the court or
marriage with conjugal funds; the written consent of the other spouse, made
(2) Those obtained from the labor, industry, work AFTER the effectivity of the Family Code is void.
or profession of either or both of the spouses; The applicable law is Article 124 of the Family
(3) Fruits of conjugal property due or received Code without prejudice to vested rights in the
during the marriage and net fruits of separate property acquired before August 3, 1988.
property; Unless the transaction is accepted by the non-

III. PERSONS AND FAMILY RELATIONS

(4) Share of either spouse in hidden treasure; consenting spouse or is authorized by the court,
(5) Those acquired through occupation such as an action for declaration of nullity of the contract
fishing or hunting; may be filed before the continuing offer on the
(6) Livestock in excess of the number of each kind part of the consenting spouse and the third
brought to the marriage; and person becomes ineffective.
(7) Those acquired by chance, such as winnings
from gambling or betting. Alienation of exclusive properties of either spouse
Either spouse may mortgage, encumber, alienate or
STRONG FORT WAREHOUSING CORP V. BANTA otherwise dispose of his or her exclusive property.
(FC, Art. 111 as amended by R.A.10572)
G.R. NO. 22236G s 222502, NOVEMBER 16, 2020
J. Lopez RULES IN CASES OF IMPROVEMENT OF EXCLUSIVE
Facts: PROPERTY (ARTICLE 120)
Antonio obtained loans which were secured by a Reverse accession
Real Estate Mortgage covering conjugal properties.
Strong Fort argues that the subject deeds of if the cost of the improvement and the resulting
mortgage should remain valid with respect to the increase in value is more than the value of the
principal property at the time of the improvement,
conjugal properties that belong to Antonio. The SC the entire property becomes conjugal.
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 Accession
consent from his wife. if the cost of the improvement and the resulting
Doctrine: increase in value is equal to or less than the value
Any disposition or encumbrance of a conjugal of the principal property at the time of the
property by one spouse must be consented to, by improvement, the entire property becomes exclusive
the other; otherwise, it is void. Prior to the property of the respective spouse.
liquidation of the conjugal partnership, the interest
of each spouse in the conjugal assets is inchoate, a Note: In either case, there shall be reimbursement
mere expectancy, which constitutes neither a legal upon the liquidation of the conjugal partnership and
nor an equitable estate, and does not ripen into a ownership of entire property of the respective
title until it appears that there are assets in the property shall be vested only upon reimbursement.
community as a result of the liquidation and
settlement. The interest of each spouse is limited to Presumption of inclusion of property in the Conjugal
the net remainder resulting from the liquidation of Partnership of Gains
the affairs of the partnership after its dissolution. All property acquired during the marriage, whether
Thus, the right of the husband or wife to one- half the acquisition appears to have been made,
of the conjugal assets does not vest until the contracted or registered in the name of one or both
dissolution and liquidation of the conjugal spouses, is presumed to be conjugal, unless the
partnership, or after dissolution of the marriage, contrary is proved.
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 Property bought through INSTALLMENT (Article 118, FC)
respective heirs. 1. If full ownership was vested before the marriage –
it shall belong to the buyer spouse.
2. If full ownership was vested during the marriage –
ALEXANDER V. SPOUSES ESCALONA it shall belong to the conjugal partnership.
G.R. NO. 256141, JULY 1G, 2022 Note: In either case, any amount advanced by the
J. Lopez partnership or by either or both spouses shall be
reimbursed by the owner/s upon liquidation of the
Facts: partnership.
Spouses Jorge and Hilaria Escalona, who were
married in 1960, acquired unregistered parcels of CHARGES UPON AND OBLIGATIONS OF THE CPG (Art. 121,
land known as Lot Nos. 1 and 2 during their
marriage. In 1998, Jorge waived his right over Lot FC)
No. 1 in favor of his illegitimate child, Reygan (1) Support of the spouses, their common children,
Escalona, who relinquished his right over the said and the legitimate children of either spouse;
lot to Belinda Alexander. In 2005, Reygan and (2) Debts and obligations contracted by one
Belinda entered into a Deed of Absolute Sale without the consent of the other to the extent
covering both lots. that the family benefited;
Doctrine: (3) Debts and obligations contracted during the
marriage by an administrator-spouse for the
The Court holds that more than the date of the benefit of the family, or both spouses or by one
marriage of the spouses, the applicable law must of them with the consent of the other;
be reckoned on the date of the alienation or (4) Taxes, liens, charges, and expenses, including
encumbrance of the conjugal property made major or minor repairs upon the conjugal
without the consent of the other spouse, to wit: property;
1. The alienation or encumbrance of the conjugal (5) Taxes and expenses for mere preservation made
property, without the wife’s consent, made during the marriage of separate property;
BEFORE the effectivity of the Family Code, is not (6) Expenses for professional, vocational, or other
void but merely voidable. The applicable laws activity for self-improvement of either spouse;
are Articles 166 and 173 of the Civil Code. The (7) Ante-nuptial debts to the extent the family has
wife may file an action for annulment of been benefited;
contract within 10 years from the transaction;
and

33
(8) Value of what is donated or promised to common
legitimate children for professional, vocation or Exceptions:
self- improvement courses; and 1. Spouse who leaves the conjugal home or
(9)Expenses of litigation between the spouses unless refuses to live therein, without just cause, has no
the suit is found to groundless. right to be supported;
2. When consent of one spouse to any transaction
Note: If the conjugal partnership is insufficient to cover of the other is required by law, judicial
the foregoing liabilities, spouses shall be solidarily authorization must be obtained;
liable for the unpaid balance with their separate 3. If community property is insufficient, the
separate property of both spouses shall be

III. PERSONS AND FAMILY RELATIONS

properties.
solidarily liable for the support of the family.
Levy On Conjugal Property
Complete Separation of Property (CSOP)
If levy was made on the conjugal property by reason
of the husband being the guarantor, the levy is The system of CSOP will govern the property
improper. relations between the spouses only in the following
cases:
1. When it is expressly provided for in the
General Rule: The payment of personal debts marriage settlement;
contracted by the husband or the wife before or during
the marriage shall not be charged to the conjugal 2. When it is so decreed by the court (Legal Separation,
partnership except as they redounded to the benefit of Judicial Sep of Property);
the family (Art. 122 FC). 3. Mandatory regime of complete separation of
property -- By failure of the surviving spouse to
CHARGES AGAINST THE SEPARATE PROPERTY (CPG MAY liquidate the absolute community or conjugal
partnership of gains of a previous marriage which
ADVANCE SUBJECT TO REIMBURSEMENT DURING has been terminated by death within the one-
LIQUIDATION, ART. 122 FC): year period required by law prior to contracting
1. Personal debts of either spouse contracted before another marriage. The subsequent marriage is
the marriage which did not redound to the benefit mandatorily governed by a regime of complete
of the family; and separation (Arts. 103 C 130, FC).
2. Support of the illegitimate children of either
spouse; Rights of the spouses under the regime of separation of
3. Fines and indemnities arising from delicts and property
quasi- delicts. 1. Each spouse shall own, dispose of, possess,
administer and enjoy his or her own separate
Administration of the Conjugal Partnership of Gains (Art. estate, without need of the consent of the
124 FC) other.
2. Each spouse shall own all earnings from his or
General Rule: The administration and enjoyment of the her profession, business or industry and all
conjugal partnership shall belong to both spouses fruits, natural, industrial or civil, due or received
jointly. In case of disagreement, the decision of the during the marriage from his or her separate
husband shall prevail subject to recourse to the court property (Article 145, FC).
by the wife for proper remedy.

Note: Prescriptive period for recourse is 5 years from Liabilities of the spouses for family expenses under the
the date of the contract implementing such decision. regime of separation of property (Article 145, FC)
 Both spouses shall bear the family expenses in
Exceptions: proportion to their income.
 In case of insufficiency or default thereof, in
1. If one spouse is incapacitated or otherwise unable proportion to the current market value of their
to participate in the administration of the common separate properties.
properties – capacitated or able spouse may
assume sole powers of administration.
2. If a spouse without just cause abandons the other 3. JUDICIAL SEPARATION OF PROPERTY – FAMILY
or fails to comply with his or her obligations to the
family, the aggrieved spouse may petition the CODE, ARTS. 134-142
court for sole administration.
3. During the pendency of a legal separation case, • In the absence of an express declaration in the
the court may designate either of the spouse as marriage settlements, the separation of property
sole administrator. between spouses during the marriage shall not
take place except by judicial order.
But administration does not include: • Such judicial separation of property may either
be voluntary or for sufficient cause. (Art. 134,
a. Disposition FC).
b. Alienation; or
c. Encumbrance of the conjugal or community Sufficient causes for Judicial Separation of Property (Art.
property. 135, FC)
(1) Spouse has been sentenced to a penalty which
Dissolution of Conjugal Partnership of Gains carries Civil interdiction;
1. Death;
(2) Spouse has been judicially declared an absentee;
(3) Loss of parental authority of spouse as decreed
2. Legal Separation; by the court;
3. Annulment (4) Abandonment or failure to comply with
4. Declaration of Nullity under Article 40; family obligations;
5. Judicial separation of property during marriage (5) Administrator spouse has abused authority; and
(Article 135-136, FC). (6) Separation in fact for one year and
reconciliation is highly improbable.
c. Separation of Property Regime – Family Note: In cases provided in 1, 2 and 3, the
Code, arts. 143-146 presentation of the final judgment against the guilty
or absent spouse shall be enough bases for the
grant of the decree of judicial separation of
Effect of Separation in Fact Between Husband and Wife property.
General Rule: Such separation does not affect the
regime of absolute community or conjugal
partnership or any agreed regime.

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 may
2. The liability of the spouses to creditors agree to the revival even in the
shall be solidary with their separate absence of a reason/ground.
properties; • However, a subsequent voluntary

III. PERSONS AND FAMILY RELATIONS

3. Mutual obligation to support each other separation of property is no longer
continues, except when there is legal allowed. Voluntary separation of
separation; property under Art. 136 may only be
4. Rights previously acquired by creditors
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 order.
require specific reasons to justify the court
in approving the same. A subsequent judicial separation of
• The law leaves the matter to the discretion property for a sufficient cause may be
of the court.
• It will take effect only once approved or allowed so long as there is a new ground
decreed by the court. to rely on.

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

BASIS ARTICLE 147 ARTICLE 148
With legal impediment caused by:
1. Parties without legal Adulterous relationships;
impediment to marry; Bigamous / polygamous marriages;
Applicability 2. Void marriage on the ground Incestuous void marriages under
of Art. 37; Void marriages by reason
of public policy (Art. 38, FC)
psychological incapacity.

1. The man and the woman must 1. The man and the woman must
be incapacitated to marry each
be other; or they do not live
As to requisites capacitated to marry each other; exclusively with each other as
2. Lived exclusively with each husband and wife; and
other as husband and wife; 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. If
As to Salary/Wages Owned in equal shares. 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 proof
acquired of acquisition through of acquisition through exclusive
exclusive funds funds.
Property acquired
by both through Governed by rules on co-ownership. Owned in common in proportion to
their work or their respective contributions.
industry during
cohabitation
Actual joint contribution of money,
Efforts in the care and property or industry shall be
Share maintenance of family and 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 another

– share accrue to the ACP/CPG of
1. Common children existing in the marriage.
2. Default/waiver by any or all of
Forfeiture the common children or their
descendants, each vacant If (BF) is not validly married to
share to respective surviving another or both in (BF) – forfeited
descendants in the manner provided in the last
par. of Art. 147.
3. Innocent party

35
 Sale, disposition, encumbrance (Art. 147, FC)
Neither party can encumber or dispose by acts
inter vivos of his or her share in the property L. RIGHTS AND OBLIGATIONS BETWEEN
acquired during cohabitation and owned in HUSBAND AND WIFE
common, without the consent of the other, until
after the termination of their cohabitation. Any (FAMILY CODE, ARTS. 68-73)
disposition, sale or encumbrance without
consent of the other is VOID. *EXCLUDE: R.A. NO. 7132; R.A. NO. 8187;
BAR QUESTION (2012) R.A. NO. 3710

III. PERSONS AND FAMILY RELATIONS

In December 2000, Michael and Anna, after Essential marital obligations (Art. 68, FC)
obtaining a valid marriage license, went to the (1) To live together,
Office of the Mayor of Urbano, Bulacan, to get
married. The Mayor was not there, but the (2) To observe mutual love, respect, and fidelity; and
Mayor’s secretary asked Michael and Anna and (3) To render mutual help and support.
their witnesses to fill up and sign the required
marriage contract forms. The secretary then told
them to wait, and went out to look for the Mayor Family domicile (Art. 6G, FC)
who was attending a wedding in a neighboring Husband and wife shall fix the family domicile.
municipality. When the secretary caught up with In case of disagreement, the court shall decide.
the Mayor at the wedding reception, she showed
him the marriage contract forms and told him that
the couple and their witnesses were waiting in Court may exempt a spouse from living with the
his office. The Mayor forthwith signed all the other
copies of the marriage contract, gave them to the • If he/she should live abroad, or
secretary who returned to the Mayor’s office. She
then gave copies of the marriage contract to the • there are other valid and compelling reasons
parties, and told Michael and Anna that they for the exemption.
were already married. Thereafter, the couple However, such exemption shall not apply if the
lived together as husband and wife, and had same is not compatible with the solidarity of the
three sons. family.
(C) What property regime governs the properties
acquired by the couple? Explain. Mutual Support (Art. 70, FC)
Spouses are jointly responsible for the support
SUGGESTED ANSWER of the family. Such support shall be satisfied in
The marriage being void due to absence of the following order:
marriage cerremony, the property relationship • First, from the community property or
that governed their union is special co-ownership conjugal property;
under Article 147 of the Family Code. This is on • Second, from the income or fruits of the
the assumption that there was no separate properties of the spouses
impediment for them to validity marry each other. • Third, from the separate properties of the spouses.
BAR QUESTION (2016)
Bernard and Dorothy lived together as common-law Joint management of household (Art. 71, FC)
spouses although they are both capacitated to The management of the household shall be
marry. After one year of cohabitation, Dorothy went the right and the duty of both spouses. The
abroad to work in Dubai as a hair stylist and expenses for such management shall be paid
regularly sent money to Bernard. With the money, in accordance with the provisions of Article 70.
Bernard bought a lot. For a good price, Bernard sold
the lot. Dorothy came to know about the acquisition
and sale of the lot and filed a suit to nullify the sale Remedy of an aggrieved spouse (Art. 72, FC)
because she did not give her consent to the sale. When one of the spouses neglects his or her
Will Dorothy’s suit prosper? duties to the conjugal union or commits acts
which tend to bring danger, dishonor or injury to
SUGGESTED ANSWER the other or to the family, the aggrieved party
Yes, Dorothy’s suit will prosper. Under Article 147, if may apply to the court for relief.
the parties who are capacitated to marry each other
lived exclusively with each other as husband and Exercise of profession, occupation, business or
wife without the benefit of marriage or under a void
marriage, their wages and salaries shall be owned by activity (Art. 73, FC, as amended by RA 10572)
them in equal shares and the property acquired by • General rule: Either spouse may exercise any
both of them through their work or industry shall be legitimate profession, occupation, business
governed by the rules of co-ownership. Clearly, or activity without the consent of the other.
Dorothy and Bernard’s union is covered by Article 147
and neither party can encumber or dispose by acts • Exception: Non-consenting spouse may object on
inter vivos of his or her share in the property valid, serious, and moral grounds.
acquired during cohabitation and owned in common
without the consent of
the other, until after the termination of the cohabitation. In case of disagreement, the court shall decide
whether or not:
Suppose Dorothy was jobless and did not contribute (1) The objection is proper; and
money to the acquisition of the lot and her efforts (2) Benefit has accrued to the family prior to
consisted mainly in the care and maintenance of the the objection or thereafter.
family and household, is her consent to the sale a  If benefit accrued prior to a valid objection –
resulting obligations shall be enforced
prerequisite to its validity? against the community or conjugal property.
 If benefit accrued thereafter – resulting
Yes, even if Dorothy was not working and did not obligations shall be enforced against the
contribute money for the acquisition of the lot, her separate property of spouse who has not
consent would still be necessary because under obtained consent.
Article 147, a party who did not contribute in the
acquisition of the property acquired during
cohabitation shall still be deemed to have
contributed jointly in its acquisition if his or her
efforts consisted in the care and
maintenance of the family and household.
36
 Note: A house built on a rented land cannot be
M. THE FAMILY; FAMILY HOME made a family home because the house and the
lot must be owned by the person who constitutes
(FAMILY CODE, ARTS. 14G-162) it. It is in the nature of the family home to be
‘Family’ - The family, being the foundation of the permanent. If built on a rented land, there is no
nation, is a basic social institution which public element of permanence as the owner of the lot
policy cherishes and protects. Consequently, may evict the family when the lease period has
family relations are governed by law and no terminated or for possible non-payment of
custom, practice or agreement destructive of the rentals.

III. PERSONS AND FAMILY RELATIONS

family shall be recognized or given effect. (Art. BAR QUESTION (2011)
149, FC) Spouses A and B leased a piece of land belonging
fo B's parents for 25 years. The spouses built
Family Relations include: their house on it worth P300,000.00.
Subsequently, in a case that C filed against A and
1. Between husband and wife; B, the court found the latter liable to C for P200,
2. Between parents and children; 000. When the sheriff was attaching their house
for the satisfaction of the judgment, A and B
3. Among other ascendants and descendants; claimed that it was exempt from execution, being
4. Among brothers and sisters, whether of the a family home.
full or half-blood (Art.150, FC) Is this claim correct?
 The law governs family relations.
 No custom, practice or agreement which is SUGGESTED ANSWER
destructive of the family shall be recognized or No. since the land does not belong to A and B. if
given any effect. cannot
quality as a family home.
Condition Precedent in suit between family
members (Art. 151, FC) Beneficiaries of the Family Home
No suit between members of the same family (1) The husband and wife, or an unmarried person
shall prosper unless it should appear from the who is the head of a family; and
verified complaint or petition that earnest efforts (2) Their parents,
toward a compromise have been made, but that (3) ascendants,
the same have failed. If it is shown that no such
efforts were in fact made, the same case must (4) Descendants
be dismissed. (5) brothers and sisters, whether the relationship
be legitimate or illegitimate, who are living in
the family home and who depend upon the
Except: Cases which may not be the subject head of the family for legal support. (Art. 154
of compromise under Art. 2035 NCC: FC)
(1) The civil status of persons;
(2) The validity of a marriage or a legal separation; Family Home is exempt from Execution, Forced Sale or
(3) Any ground for legal separation; Attachment (Art. 155, FC)
(4) Future support; Exceptions:
(5) The jurisdiction of courts; (1) For non-payment of taxes;
(6) Future legitime. (2) For debts incurred prior to the constitution of the family
home;
FAMILY HOME (3) For debts secured by mortgages on the
The family home, constituted jointly by the premises before or after such constitution; and
husband and the wife or by an unmarried head of (4) For debts due to laborers, mechanics,
a family, is the dwelling house where they and architects, builders, materialmen and others
their family reside, and the land on which it is who have rendered service or furnished material
situated. (Art. 152 FC) for the construction of the building.

Establishment of Family Home Value of Family Home that is Exempt (Art. 157, FC)
The actual value of the family home shall not
• The family home is deemed constituted on a exceed, at the time of its constitution, the amount
house and lot from the time it is occupied as a of the three hundred thousand pesos in urban
family residence. From the time of its areas, and two hundred thousand pesos in rural
constitution and so long as any of its areas, or such amounts as may hereafter be fixed
beneficiaries actually resides therein, the family by law.
home continues to be such and is exempt
from execution, forced sale or attachment • PHP 300,000 for URBAN AREAS.
except as hereinafter provided and to the • PHP 200,000 for RURAL AREAS
extent of the value allowed by law. (Art. 153,
FC) Remedy of Creditors (Art. 160, FC)
• The family home must be part of the • When a creditor whose claims is not among
properties of the absolute community or the those mentioned in Article 155 obtains a
conjugal partnership, or of the exclusive judgment in his favor, and he has reasonable
properties of either spouse with the latter’s grounds to believe that the family home is
consent. It may also be constituted by an actually worth more than the maximum amount
unmarried head of a family on his or her own fixed in Article 157, he may apply to the court
property. (Art. 156, FC) which rendered the judgment for an order
• Nevertheless, property that is the subject of a directing the sale of the property under
conditional sale on installments where execution.
ownership is reserved by the vendor only to • The court shall so order if it finds that the actual
guarantee payment of the purchase price may value of the family home exceeds the maximum
be constituted as a family home. amount allowed by law as of the time of its
• For purposes of availing of the benefits of a constitution. If the increased actual value
family home, a person may constitute, or be exceeds the maximum allowed in Article
the beneficiary of, only one family home. (Art. 157 and results from subsequent voluntary
161, FC) improvements introduced by the person or
persons constituting the family home, by the
owner or owners of the property, or by any of the
beneficiaries, the same rule and procedure shall
apply.

37
• At the execution sale, no bid below the value
allowed for a family home shall be considered. Presumption of Legitimacy - The child shall be
The proceeds shall be applied first to the considered legitimate although the mother may
amount mentioned in Article 157, and then to have declared against its legitimacy or may have
the liabilities under the judgment and the been sentenced as an adulteress. (Art. 167, FC)
costs. The excess, if any, shall be delivered to
the judgment debtor. Presumptions in case mother contracted marriage within
300days from termination of previous marriage, in

III. PERSONS AND FAMILY RELATIONS

Disposal of Family Home (Art. 158, FC) absence of proof to the contrary: (Art. 168, FC)
The family home may be sold, alienated, (1) A child born before 180 days after the
donated, assigned or encumbered by the owner solemnization of the subsequent marriage is
or owners thereof with the written consent of the considered to have been conceived during the
person constituting the same, the latter’s former marriage, provided it be born within 300
spouse, and a majority of the beneficiaries of days after the termination of the former
legal age. In case of conflict, the court shall marriage;
decide. (2) A child born after 180 days following the
celebration of the subsequent marriage is
considered to have been conceived during such
Dissolution of Family Home; Prohibition on Partition marriage, even though it be born within the 300
(Art. 15G, FC) days after the termination of the former
The family home shall continue despite the death marriage.
of one or both spouses or of the unmarried head of • The legitimacy or illegitimacy of a child born
the family for a period of ten years or for as long after three hundred days following the
as there is a minor beneficiary, and the heirs termination of the marriage shall be proved
cannot partition the same unless the court finds by whoever alleges such legitimacy or
compelling reasons therefor. This rule shall apply illegitimacy. (Art. 169, FC)
regardless of whoever owns the property or
constituted the family home. a. Proof of Filiation – Family Code, arts. 172,
173 and 175
N. PATERNITY AND FILIATION
Proof of Filiation of Legitimate Children
PRIMARY PROOFS
1. CONCEPTS OF PATERNITY, FILIATION (1) The record of birth appearing in the civil
register or a final judgment; or
AND LEGITIMACY – FAMILY CODE, ART. 163 (2) An admission of legitimate filiation in a public
document or a private handwritten instrument
Paternity refers to the “civil status of a father in and signed by the parent concerned.
relation to the child”
SECONDARY PROOFS
Filiation is the “relationship or tie which exists (1) The open and continuous possession of the
between parents and their children.” Filiation may status of a legitimate child; or
be by nature or adoption. Natural filiation may (2) Any other means allowed by the Rules of Court
be legitimate or illegitimate. (Art. 163, FC) and special laws. (FC, Art. 172 [2])

Legitimacy is the status of a child born to parents When can the child bring an action to claim his status
who are legally married to each other. as legitimate child?
The child can bring the action during his or her
2. LEGITIMATE AND ILLEGITIMATE CHILDREN – lifetime. (FC, Art. 173) In other words, the action
does not prescribe as long as he lives.
FAMILY CODE, ARTS. 164-165 AND 167-16G 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
Legitimate Children shall have a period of five years within which to
• Children conceived or born during the institute the action. (FC, Art. 173)
marriage of the parents are legitimate.
• Children conceived as a result of artificial Proof of illegitimate filiation of Illegitimate children
insemination of the wife with the sperm of the
husband or that of a donor or both are likewise • The same way and on the same evidence as legitimate
legitimate children of the husband and his children.
wife, provided, that both of them authorized or • The action must be brought on the same period
ratified such insemination in a written specified in article 173, except when the action is
instrument executed and signed by them based on the 2nd paragraph of Article 172
before the birth of the child. The instrument (secondary proofs of filiation), in which case the
shall be recorded in the civil registry together action may be brought during the lifetime of the
with the birth certificate of the child. (Art. 164, alleged parent.
FC)
b. Rights of Legitimate Children – Family Code,
Illegitimate Children
art. 174
Children conceived and born outside a valid
marriage are illegitimate, unless otherwise
provided in this Code. (Art. 165, FC) 1. To bear the surnames of the father and the
mother, in conformity with the provisions of the
Civil Code on Surnames;
Exceptions: Born outside of a valid marriage 2. To receive support from their parents, their
(void marriages) but considered as legitimate ascendants, and in proper cases, their brothers
child: and sisters, in conformity with the provisions of
a. Children of marriages which are declared void this Code on Support; and
under Art. 36; and 3. To be entitled to the legitimate and other successional
b. Children of marriages which are declared void
under Art. 53. rights granted to them by the Civil Code. (Art. 174 FC)

38
c. Rights of Illegitimate Children – Family a)the wife is suspected of infidelity.
Code, art. 176 as amended by R.A. No. G255

1. Use the surname and shall be under the

parental authority of their mother;
2. Entitled to support in conformity with this Code.
3. The legitime of each illegitimate child shall
consists of one-half of the legitime of a
legitimate child. (Art. 176 FC)
RA G255 - 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 action;
(2) If he should die after the filing of the
complaint without having desisted therefrom;
or
(3) If the child was born after the death of the
husband.
(Art. 177 FC)
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
 III. PERSONS AND FAMILY RELATIONS
3. LEGITIMATED CHILDREN – FAMILY How Legitimation Takes Place - Legitimation
shall take place by a subsequent valid
CODE, ARTS. 177-182; R.A. NO. G858 marriage between parents. The annulment of
*EXCLUDE: A.M. NO. 06-11-5-SC a voidable marriage shall not affect the
a. Rights of Legitimated Children – Family Code, legitimation. (Art. 178, FC)
• The effects of legitimation shall retroact to
art. 17G the time of the child’s birth (Art. 180, FC)
b. Action to Impugn Legitimacy – Family • The legitimation of children who died before
Code, art. 182 the celebration of the marriage shall benefit
their descendants. (Art. 181, FC)
LEGITIMATED CHILDREN Action to Impugn Legitimation
Children conceived and born outside of Legitimation may be impugned only by those
wedlock of parents without impediment who are prejudiced in their rights, within five
to marry at the time of conception or years from the time their cause of action
were so disqualified only because either accrues. (Art. 182, FC)
or both of them were below 18 years of
age (FC, Art. 177, RA 9858)
In addition to absence of requisites of
legitimation, apply by analogy the grounds in
Rights of Legitimated Children - impugning legitimacy in Article 166, whenever
Legitimated children shall enjoy the applicable.
same rights as legitimate children. (Art.
179, FC)
 BAR QUESTION (200G)
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.

3G
 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 0G, 2021 the benefit of marriage. The relationship
En Banc produced one offspring, Venus. The couple
acquired a residential lot in Parañaque. After four
(4) years or in 2001, G having completed her 4-
The case involves a mother's petition to correct year college degree as a fulltime student, she
her child's birth certificate and establish his true and B contracted marriage without a license. The
filiation. The petitioner is Richelle Busque Ordoña, marriage of B and G was, two years later,
who was married to Ariel O. Libut, but separated

III. PERSONS AND FAMILY RELATIONS

declared null and void due to the absence of a
from him due to his illicit relationship. The marriage license. Is Venus legitimate,
petitioner had an intimate relationship with Allan illegitimate, or legitimated? Explain briefly.
D. Fulgueras, which resulted in her pregnancy
and the birth of a son named Alrich Paul Ordoña SUGGESTED ANSWER
Fulgueras. The birth certificate of Alrich Paul Venus is illegitimate. She was conceived and born
reflected Allan as father of the child, and outside a valid marriage. Thus, she is considered
Fulgueras as surname. The petitioner claimed illegitimate (Art 165, Family Code). The
that Allan is not the biological father and sought subsequent marriage of her parents did not
to change the child's last name to her maiden result in legitimation because said marriage was
name and delete the entries regarding the father's later on declared null and void due to absence of
information in the birth certificate. a marriage license. Under Article 178 of the
Family Code, "legitimation shall take place by a
The RTC and CA denied the petition. The subsequent valid marriage between parents. The
Supreme Court upheld the lower courts' annulment of a voidable marriage shall not affect
decisions, stating that legitimacy and filiation the legitimation." The Article's application is
cannot be collaterally attacked in a petition for limited to voidable marriages. It follows that
correction of entries in the birth certificate. Article when the subsequent marriage is null or void, the
164 of the Family Code provides that "children legitimation must also be null
conceived or born during the marriage of the and void.
parties are legitimate." Here, petitioner admitted
to being in a valid and subsisting marriage with
Ariel when she conceived and gave birth to Alrich
Paul. Thus, Alrich Paul is presumed to be a BAR QUESTION (2010)
legitimate child of petitioner and Ariel. Spouses B and G begot two offsprings. Albeit they
had serious personality differences, the spouses
continued to live under one roof. B begot a son by
As a result, there is now an absurd and another woman. G also begot a daughter by
unremedied situation that Alrich Paul remains to another man.
be illegitimate in the birth certificate and will use (A) If G gives the surname of B to her daughter by
the surname of Allan while possessing, at the another
same time, a legitimate status, one that is
conferred on him by law. man, what can B do to protect their legitimate
children's interests? Explain.
Giving clarity to Alrich Paul's situation is SUGGESTED ANSWER
attended by a scarcity of remedies. (A) B can impugn the status of G's daughter by
another man as his legitimate daughter on the
First, the mother who was in a valid and ground that for biological reason he could not have
subsisting marriage at the time of conception or been the father of the child, a fact that may be
proven by the DNA test. Having been born during the
giving birth to her child is prohibited under marriage between B and G, G's daughter by another
Article 167 of the Family Code from impugning man is presumed as the child of B under Article 164
the legitimacy of her child. The proscription of the Family Code. In the same action to impugn,
remains even if the mother is an estranged wife. B can pray for the
correction of the status of the said child in her record
Second, the child who was conceived or born of birth.
during a valid and existing marriage has no right to
impugn his own legitimacy under the Family BAR QUESTION (2010)
Code. He cannot choose his own filiation. (B) If B acquiesces to the use of his surname by G's
daughter by another man, what is/are the
Third, it is only the father, or in exceptional consequence/s? Explain.
circumstances, his heirs, who may impugn the SUGGESTED ANSWER
child's legitimacy on grounds provided under (B) If B acquiesces and does not file the action to
Article 166 of the Family Code within the periods impugn the legitimacy of the child within the
provided under Article 170 in relation to Article 171 prescriptive period for doing so in Article 170 of
of the Family Code. Upon the expiration of the the Family Code, G's daughter by another man
periods, the status conferred by the presumption shall be conclusively presumed as the
becomes fixed and can no longer be questioned. legitimate daughter of B by G.
The hands of the Court are tied as it may only BAR QUESTION (2010)
entertain the impugnation of a child's presumed X and Y are living together as husband and wife
legitimacy in a direct action filed by the proper without the benefit of a marriage. They begot a
party and within the prescribed period under the child Z who married A. Z and A has a child named B.
law. In light of these, the Court finds the present In 1989, Z died. In 1990, X and Y got married. In
case as an opportune moment to highlight the 1991, a son named ZZ of X and Y was born. When X
absence of a remedy in favor of a mother in and Y died intestate, ZZ executed an Extrajudicial
establishing the true filiation of her child. Settlement of Estate adjudicating to himself as the
Ultimately, the Court's observations are directed sole heir
to the Legislature inasmuch as the Court is of X and Y. Is ZZ correct?
careful not to tread on the realm of judicial SUGGESTED ANSWER
legislation. No. Art. 181 of the Family Code provides, "The
legitimation of children who died before the
celebration of the marriage shall benefit their
descendants." In the instant case, Z died before the
marriage of X and Y. The resulting Z's legitimation
shall benefit B, his descendant. Thus, B can
40
represent his father Z in the inheritance of his
grandparents. Since a legitimated child has the
same right as a legitimate child, B has now the right
to inherit by right of representation to ½ of the
estate
while the other ½ of the estate will be ZZ's
inheritance.
 BAR QUESTION (2008) BAR QUESTION (200G)
Roderick and Faye were high school sweethearts. Four children, namely: Alberto, Baldomero,
When Roderick was 18 and Faye, 16 years old, they Caridad, and Dioscoro, were born to the spouses
started to live together as husband and wife without Conrado and Clarita de la Costa. The children’s
the benefit of marriage. When Faye reached 18 birth certificates were duly signed by Conrado,
years of age, her parents forcibly took her back and showing them to be the couple’s legitimate
arranged for her marriage to Brad. Although Faye children. Later, one Edilberto de la Cruz executed
lived with Brad after the marriage, Roderick a notarial document acknowledging Alberto and
continued to regularly visit Faye while Brad was Baldomero as his illegitimate children with
away at work. During their marriage, Faye gave

III. PERSONS AND FAMILY RELATIONS

birth to a baby girl, Laica. When Faye was 25 years Clarita. Edilberto died leaving substantial
old, Brad discovered her continued liason with properties. In the settlement of his estate,
Roderick and in one of their heated arguments, Alberto and Baldomero intervened claiming
Faye shot Brad to death. shares as the deceased’s illegitimate children. The
legitimate family of Edilberto opposed the claim.
Are Alberto and Baldomero entitled to share in
She lost no time in marrying her true love Roderick, the estate of Edilberto? Explain
without a marriage license, claiming that they have
been continuously cohabiting for more than 5 years.
(A) What is the filiation status of Laica? SUGGESTED ANSWER
(B) Can Laica bring an action to impugn her own No, Alberto and Baldomero are not entitled to
status on the ground that based on DNA results, share in Edilberto’s estate. They are not related at
Roderick is her biological father? all to Edilberto. They were born during the
marriage of Conrado and Clarita, hence, are
(C) Can Laica be legitimated by the marriage of her considered legitimate children of the said
biological parents? spouses. This status is conferred on them at birth
by law. Under Philippine law, a person cannot
have more than one natural filiation. The
legitimate filiation of a person can be changed
SUGGESTED ANSWER only if the legitimate father will successfully
(A) Laica is legitimate because children conceived impugn such status. In the problem, therefore,
or born during the marriage of the parents are the filiation of Alberto and Baldomero as the
presumed to be legitimate (Art. 164, FC). Laica legitimate children of Conrado cannot be changed
is presumed the legitimate child of Brad and by their recognition by Edilberto as his illegitimate
Faye. children. Before they can be conferred the status of
(B) No. Laica cannot bring an action to impugn her Edilberto’s illegitimate children, Conrado must first
own status. In a case decided by the Supreme impugn their legitimacy. Since Conrado has not
Court it was ruled that impugning the legitimacy
of the child is a strictly personal right of initiated any action to impugn their legitimacy,
husband, except: (a) when the husband died they continue to be the legitimate children of
before the expiration of the period fixed for Conrado. They cannot be the illegitimate children
bringing the action; (b) if he should die after the of Edilberto at the same time. Not being the
filing of the complaint, without having desisted illegitimate children of Edilberto, they have no
therefrom, or (c) if the child was born after the right to inherit from
death of the husband. Laica's case does not fall him.
under any of the exceptions. (Liyao Jr. v.
Tanhoti-Liyao, G.R. No. 138961, 07 March 2002)
(C) No. Laica cannot be legitimated by the marriage
of her biological parents because only children 4. ADOPTED CHILDREN
conceived and born outside of wedlock of
parents who at the time of the conception of the
former were not disqualified by any impediment a. Domestic Administrative Adoption and
to marry each other may be legitimated (Art.
177, FC). In this case, there is an impediment Alternative Child Care Act – R.A. No. 11642
and that is, Faye is married to Brad at the
time of the conception of Laica. Domestic Administrative Adoption and Alternative Child
Care Act (REPUBLIC ACT NO. 11642) took effect on
January 28, 2022
AN ACT STRENGTHENING ALTERNATIVE CHILD CARE BY PROVIDING FOR AN ADMINISTRATIVE PROCESS OF
DOMESTIC ADOPTION, REORGANIZING FOR THE PURPOSE THE INTER-COUNTRY ADOPTION BOARD (ICAB) INTO
THE NATIONAL AUTHORITY FOR CHILD CARE (NACC), AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 8043,
REPUBLIC ACT NO. BAR QUESTION
11222, AND(2008)
REPUBLIC ACT NO. 10165, REPEALING REPUBLIC ACT NO. 8552, AND
REPUBLIC
Gianna ACT
was NO.
born9523, AND and
to Andy APPROPRIATING
Aimee, whoFUNDS
at theTHEREFOR
time Gianna's birth were not married to each other.
RAWhile
11642 Andy wasamended
repealed/ single atthe
the time, Aimee was still
following:
in the process of securing a judicial declaration of
nullity on her marriage to her ex-husband. Gianna's • Repealed RA 8552 “Domestic Adoption Act”
birth certificate, which was signed by both Andy and • Repealed RA 9523 “Act requiring DSWD certification to
Aimee, registered the status of Gianna as declare a child legally available for adoption”
"legitimate", her surname carrying that of Andy's
and that her parents were married to each other. • Amended RA 8043 “Inter-country Adoption Act”
Assuming that Aimee is successful in declaring • Amended RA 11222 “Rectification of Simulated Birth
her former Act”
marriage void, 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
adoption, as this would now be handled
SUGGESTED ANSWER administratively by the National Authority for
No. Gianna cannot be legitimated by the Child Care (NACC).
subsequent marriage of Andy and Aimee. Art. 177 • The Inter-Country Adoption Board (ICAB) will be
of the FC provides that "only children conceived and re- organized to a one-stop quasi-judicial agency
born outside of wedlock of parents who, at the time on alternative child care known as the National
of the conception of the former, were not Authority for Child Care (NACC), attached to the
disqualified by any impediment to marry each other Department of Social Welfare and Development
may be legitimated." In the present case, a legal (DSWD).
impediment was existing at the time of the
conception of Gianna. Her mother, Aimee, was still
in the process of securing judicial declaration of
nullity of her marriage to her 41
ex-husband.
• The NACC will exercise all powers and functions
relating to alternative child care, including 5. Foreign nationals who are permanent or
declaring a child legally available for domestic habitual residents of the Philippines for at least
administrative and inter-country adoption, foster 5 years possessing the same qualifications as
care, kinship care, family- like care, or residential above stated for Filipino nationals prior to the
care. filing of the petition. Provided, That they come
from a country with diplomatic relations with
• "All duties, functions, and responsibilities of the the Republic of the Philippines and that the laws

III. PERSONS AND FAMILY RELATIONS

ICAB, the DSWD, and those of other government of the adopter’s country will acknowledge the
agencies relating to alternative child care and Certificate of Adoption as valid, acknowledge
adoption are hereby transferred to the NACC," the child as a legal child of the adopters, and
• "The best interest of the child shall be the allow entry of the child into such country as an
paramount consideration in the enactment of adoptee;
alternative care, custody, and adoption policies” Provided further, That the requirements of 5-
• Under RA 11642, The NACC is tasked to ensure year residency may be waived for the following:
that petitions and other matters involving a. A former Filipino citizen, habitually residing
alternative child care are “simple, expeditious in the Philippines, who seeks to adopt a
and inexpensive, and will redound to the best relative within the 4th civil degree of
interest of the child involved.” consanguinity or affinity;
b. One who seeks to adopt the legitimate child
JURISDICTION OF NACC of the Filipino spouse;
• The NACC shall have the original and exclusive c. One who is married to a Filipino and seeks
jurisdiction over all matters pertaining to to adopt jointly with the spouse a relative
alternative child care, including declaring a child within the 4th degree of consanguinity or
legally available for adoption; domestic affinity of the Filipino spouse;
administrative adoption; adult adoption; foster
care under RA No. 10165 (Foster Care Act of WHO MAY BE ADOPTED
2012); adoptions under RA 11222 (Simulated 1. Any child who has been issued a Certificate
Birth Rectification Act); and, inter-country Declaring the Child Legally Available for
adoption under RA 8043 (Inter-country Adoption Adoption (CDCLAA)
Act).
• The NACC shall also have the power to impose 2. The legitimate child one spouse by the other spouse;
penalties in case of any violation of RA 11642. 3. An illegitimate child by a qualified adopter to
(Section 6, RA 11642) improve status of legitimacy;
4. A Filipino of legal age if, prior to the adoption,
said person has been consistently considered
ADOPTION and treated by the adopters as their own child
Refers to the socio-legal process of providing a for a period of at least three (3) years;
permanent facility to a child whose parents had 5. A foster child;
voluntarily given up their parental rights, 6. A child whose adoption has been previously rescinded;
permanently transferring all rights and
responsibilities, along with filiation, making the 7. A child whose biological or adoptive parents
child a legitimate child of the adoptive parents; have died. Provided, no proceedings shall be
Provided, That adult adoption shall also be covered initiated within 6 months from death of parents;
by benefits of this Act. 8. A relative of the adopter. (Section 22, RA 11642)

In the interest of clarity, adoption shall cease to beJoint Adoption by Spouses:

part of alternative child care and becomes parental Spouses shall jointly adopt, EXCEPT:
care as soon as the process is completed. (Section a. If one spouse seeks to adopt the legitimate
, RA 11642) child of the other; or
b. If one spouse seeks to adopt own illegitimate
DOMESTIC ADOPTION child; Provided, That the other spouse has
Refers to an administrative adoption proceeding signified consent thereto; or
where the Order of Adoption is issued within the c. If the spouses are legally separated from each other.
Philippines and is undertaken between a Filipino
child and eligible adoptive parents. BAR QUESTION (2014)
Spouses Esteban and Maria decided to raise their
WHO MAY ADOPT two (2) nieces, Faith and Hope, both minors, as
their own children after the parents of the minors
1. Any Filipino citizen at least 25 years of age, who died in a vehicular accident. Ten (10) years after,
is in possession of full civil capacity and legal Esteban died. Maria later on married her boss Daniel,
rights; has not been convicted of any crime a British national who had been living in the
involving moral turpitude; is of good moral Philippines for two (2) years. With the permission of
character and can model the same; is Daniel, Maria filed a petition for the adoption of Faith
emotionally and psychologically capable of and Hope. She did not include Daniel as her co-
caring for the children; at least 16 years older petitioner because for Maria, it was her former
than the adoptee; and who is in a position to husband Esteban who raised the kids. If you are
support and care for the adopted children in the judge, how will you resolve the
keeping with the means of the family; Provided, petition?
That the requirement of 16-year difference
between the age of the adopted and the SUGGESTED ANSWER
adoptee may be waived when the adopter is the
biological parent of the adoptee, or is the I will dismiss the petition for adoption. The rule is
spouse of the adoptee’s parent; that the husband and wife must jointly adopt and
there are only three recognized exceptions to joint
2. The legal guardians with respect to their ward adoption by the husband and wife: 1) if one spouse
after the termination of the guardianship and seeks to adopt the legitimate child of the other; 2) if
clearance of financial accountabilities; one spouse seeks to adopt his or her own
3. The foster parent with respect to the foster illegitimate child; 3) if the spouses are legally
child; separated.
4. Philippine government officials and employees The case of Maria and Daniel does not appear to fall
deployed or stationed abroad; Provided, That under any of the recognized exceptions,
they are able to bring the child with them; and, accordingly the petition
filed by the wife alone should be dismissed.

42
 Consent Necessary to the Adoption Order of Adoption
1. The adoptee, if 10 years of age or over • The Order of Adoption issued by the NACC
2. The biological parents of the child, if known, shall have the same effect as a Decree of
or the legal guardian or the proper Adoption issued under the Domestic Adoption
government instrumentality which has legal Act of 1998
custody of the child, except in case of a • A motion for reconsideration may be filed
Filipino of legal age if, prior to the adoption, within 15 calendar days from an order denying
said person has been consistently considered the petition to NACC, through the Executive
and treated as their own child by the adopter Director.

III. PERSONS AND FAMILY RELATIONS

for at least 3 years. • Judicial Recourse – Order of Adoption may be
3. The legitimate or adopted children, 10 years of appealed to the Court of Appeals within 10
age or over of the adopters, if any;
4. The illegitimate children, 10 years of age or calendar days from receipt, of from the denial
over, of the adopter if living with said adopter of motion for reconsideration. Rule 43 of the
or over whom the adopter exercises parental Rules of Court shall apply suppletorily.
authority and the latter’s spouse, if any; and,
5. The spouse, if any, of the person adopting or to INSTANCES AND EFFECTS OF RESCISSION
be adopted. (Section 23)
Adoption may be rescinded only upon petition of the
BAR QUESTION (2010) adoptee with the NACC on any of the following grounds:
Spouses Rex and Lea bore two children now aged • Repeated physical or verbal maltreatment by
the adopter despite having undergone
14 and counseling;
8. During the subsistence of their marriage, Rex • Sexual abuse or violence;
begot a child by another woman. He is now 10
years of age. • Abandonment and failure to comply with
On Lea’s discovery of Rex’s fathering a child by parental obligations
another woman, she filed a petition for legal • Adoption being for the best interest of the
separation which was granted. Rex now wants to child, shall not be subject to rescission by the
adopt his illegitimate child. Whose consent is adopter. The adopter may disinherit the
needed for Rex’s adoption of his adoptee for cause under Art 919 of the Civil
Code.
illegitimate child?
SUGGESTED ANSWER
The consent of the 14-year-old legitimate child, of b. Inter-Country Adoption Act – R.A. No. 8043
RIGHTS
the 10-OFyear-old
AN ADOPTEDillegitimate child, and of the
biological mother of the illegitimate child are Refers to the socio-legal process of adopting a
(Effects offor
needed Adoption)
the adoption. The consent of Lea is child by a foreign national or a Filipino citizen
no
1. longer required
LEGITIMACY because
– the adopteethere was
shall be considered habitually a resident outside Philippine territory
already
legitimatea final decree
child of theofadopter
legal separation.
for all intents and which complies with the principles in the Hague
purposes and such is entitled to all the rights and Convention of 1993.
obligations provided by law to legitimate children
born to them without discrimination of any kind.
To this end, the adoptee is entitled to love, WHEN ALLOWED?
guidance, and support in keeping with the means Inter-Country Adoption as the Last Resort. —
of the family. Only when child cannot adopted in the
• The legitimate filiation that is created between Philippines, and inter- country adoption is in the
the adopter and adoptee shall be extended to best interest of the child. (Sec 7, RA 8043)
the adopter’s parents, adopter’s legitimate
siblings, and legitimate descendants. WHO MAY ADOPT?
• The adopter is also given the right to choose
the name by which the child is to be known, 1. Any alien residing abroad;
consistent with the best interest of the child. 2. Filipino Citizen residing abroad.
(Section 41)

2. PARENTAL AUTHORITY – upon the issuance of Qualifications of an adopter under R.A. 8043:
the Order of Adoption, adoption shall cease as an 1. At least 27 years old;
alternative care and becomes parental care. 2. At least 16 years older than the adoptee
Adoptive parents shall now have full parental (except: biological parent or spouse of
authority over the child. Except in cases where adoptee’s biological parent)
the biological parent is the spouse of the 3. If married, spouse must jointly adopt;
adopter, all legal ties between the biological
parents and the adoptee shall be severed and 4. Has not been convicted of crime involving moral
the same shall then be vested on the adopters. turpitude;
• In case spouses adopt jointly, or one spouse 5. Eligible to adopt under his/her national law;
adopts the legitimate child of the other, joint
parental authority shall be exercised by the 6. Is in the position to provide proper care and
spouse. (Section 42) support and necessary moral values and
example;
3. SUCCESSION – In testate and intestate 7. Agrees to uphold the child’s rights under
succession, the adopters and the adoptee shall UN Convention;
have reciprocal rights of succession without 8. His/her country has diplomatic relations
distinction from legitimate filiations. However, if with the Philippines;
the adoptees and their biological parents have 9. Possesses all qualifications and none
left a will, the law on testamentary succession of disqualifications under
shall govern. (Section 43) Philippine law.

WHO MAY BE ADOPTED

1. Filipino children [Sec.3(a)];
2. Below 15 years old [Sec. 3(b)]; and
3. Who are legally free, meaning children who
have been voluntarily or involuntarily
committed to the DSWD [Sec.3(f) and Sec
(8)].

43
c. Simulated Birth Rectification Act – R.A. No. Transportation – includes expenses going to and
11222 from school, or to from place of work. (Article 194,
FC). (2010 BAR)
- grants amnesty to those who simulated birth
records in the Philippines, allowing for the WHO ARE OBLIGED TO GIVE SUPPORT
rectification of the child's status and filiation, while (1) The spouses;
imposing penalties for certain acts related to (2) Legitimate ascendants and descendants;
adoption.

III. PERSONS AND FAMILY RELATIONS

(3) Parents and their legitimate children and the
legitimate and illegitimate children of the latter;
Objectives of the Act: (4) Parents and their illegitimate children and the
• To grant amnesty and allow the rectification of legitimate and illegitimate children of the latter;
simulated birth records for the best interest of (5) Legitimate brothers and sisters, whether of full
the child. or half- blood; and
• To fix the status and filiation of a child whose (6) Brothers and sisters not legitimately related,
birth was simulated, giving them the benefits of whether of the full or half-blood, except only
adoption and ensuring their rights. when the need for support of the brother or
• To exempt those who simulated birth records sister, being of age, is due to a cause imputable
from criminal, civil, and administrative liability if to the claimant’s fault or negligence.
they file a petition for adoption within 10 years.
• To provide a simpler and less costly SOURCE OF SUPPORT
administrative adoption proceeding for children
who have been living with the person simulating
their birth for at least 3 years. 1. ACP/CPG
• To educate and inform the public about simulated spouses and children. After nullity, annulment, legal
births and encourage them to avail of the separation, separate properties of the parties.
benefits of the Act.
2. Separate Property
Rectification of Simulated Births ascendant, descendants, brothers and sisters.
• Persons who simulated the birth of a child prior Subsidiary ACP/CPG, but shall be deducted from the
to the Act's effectivity will not be criminally, share of the spouse.
civilly, or administratively liable if the simulation
was for the best interest of the child.
• The person or persons must file a petition for 3. Regime of Separation of property
adoption with an application for rectification of both spouses shall bear the family expenses in
the simulated birth record within 10 years from proportion to their income, in case of insufficiency
the Act's effectivity. or default, the current market value of the
• Adult adoptees are also entitled to the benefits of exclusive property.
the
4. Order of Support
Act.
• Administrative proceedings can be used for the Order of liability to give support
adoption and rectification of simulated birth Whenever two or more persons are obliged to give
records if the child has been living with the support, the liability shall devolve in the following
person for at least 3 years before the Act's persons in the order herein provided:
effectivity. a. Spouse;
b. Descendants in the nearest degree;
The grant of amnesty is subject to the following c. Ascendants in the nearest degree;
conditions: d. Brothers and sisters. (Art. 199, FC)
• that the simulation of birth was for the best When the obligation falls upon two or more
interest of the child, and the child has been persons, the payment shall be divided between
consistently considered and treated as the them in proportion to the resources of each.
grantee/s’ own; and
• that a petition for adoption with an application Order of Preference
for rectification of the simulated birth shall be
applied for within 10 years from the date of When two or more recipients at the same time claim
effectivity of the law on March 29, 2019. support from one and the same person legally
obliged to give it, should the latter not have
sufficient means to satisfy all claims, the order
Those who meet the above-stated conditions may avail established in the preceding article (Art. 199 on
of administrative proceedings for the adoption and Order of Liability) shall be followed, unless the
rectification of the simulated birth record if the concurrent obligees should be the spouse and a child
subject to parental authority, in which case the child
following conditions are also present: shall be preferred. (Art. 200, FC)
• 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 BAR QUESTION (2011)
• that a certificate declaring the child legally
available for adoption (CDCLAA) is issued by the Illegitimate brothers and sisters, whether of full or half-
DSWD in favor of the child. blood,
are bound to support each other, EXCEPT when:
O. SUPPORT (FAMILY CODE, ARTS. 1G4-208) (A) the brother or sister who needs support lives in
another place.
(B) such brothers and sisters are not recognized by
their father.
SUPPORT (C) the brother or sister in need stops schooling
without valid reason.
It comprises everything indispensable for (D) the need for support of a brother or sister, already
sustenance, dwelling, clothing, medical
attendance, education and transportation, in of age,
keeping with the financial capacity of the family is due to the latter's fault.
including the education of the person entitled to SUGGESTED ANSWER
be supported until he completes his education or (D) the need for support of a brother or sister, already
training for some profession, trade or vocation, of age,
even beyond the age of majority.

44
 P. PARENTAL AUTHORITY SPECIAL PARENTAL AUTHORITY
 The school, its administrators and teachers, or
(FAMILY CODE, ARTS. 20G- the individual, entity or institution engaged in
233) child care shall have special parental authority
and responsibility over the minor child while
*EXCLUDE: A.M. NO. 03-02-05-SC; A.M. under their supervision, instruction or custody.
NO. 03-04-04-SC; R.A. NO. 8372, AS  Authority and responsibility shall apply to all

III. PERSONS AND FAMILY RELATIONS

authorized activities whether inside or outside
AMENDED; the premises of the school, entity or
PARENTAL AUTHORITY institution.
• It is the natural right and duty of parents over  The parents, judicial guardians or the persons
the person and property of their exercising substitute parental authority over
unemancipated children, parental authority said minor shall be subsidiarily liable.
and responsibility shall include the caring for  Defense: exercised the proper diligence required
and rearing them for civic consciousness and under the particular circumstances. (Articles
efficiency and the development of their moral, 218 and 219, FC)
mental and physical character and well-being  Articles 218 and 219 refer to minor.
(Article 209, FC).
• Parental authority and responsibility may not Art. 2180, NCC - Teacher or heads of
be renounced or transferred except in the establishments of arts and trades shall be liable
cases authorized by law. (Article 210, FC). for damages caused by their pupils and students
or apprentices so long as they remain in their
Joint Exercise of Parental Authority custody.
• Father and mother shall jointly exercise
parental authority EFFECTS OF PARENTAL AUTHORITY
• In case of disagreement: Rights and duties of parents/those with parental
• General Rule: Father’s decision prevails authority:
• XPN: unless there is a judicial order to the a. To keep them in their company, educate C
contrary (Article 211, FC) provide for their upbringing
• Absence/death of either parent – b. To give them love, affection, advice,
present/surviving parent shall exercise companionship C understanding;
parental authority. Remarriage will not affect c. Provide them with moral C spiritual guidance;
parental authority unless the court appoints d. To enhance, protect C preserve their
another person to be the guardian of the physical C mental health;
person or property of the children. (Article e. To furnish them with good educational materials;
212, FC) f. To represent them in all matters affecting
their interests;
Separation of Parents g. To demand from them respect and obedience;
• Parent designated by the court h. To impose discipline on them as may be
• “Tender age presumption” - If child under 7 required under circumstances;
years old, the mother shall exercise parental i. To perform such other duties as imposed by
authority unless there is compelling reason to law upon parents C guardians.
separate child from the mother
• Maternal preference rule – based on Vicarious Liability or Doctrine of Imputed Negligence
universally recognized rule that the mother is  Parents and other persons exercising parental
the natural custodian of her young. authority shall be civilly liable for the injuries
• Child over 7, consider child’s choice, unless the and damages caused by acts or omissions of
parent chosen is unfit. their unemancipated children living in their
• Only the exercise of parental authority is company and under their parental authority
given when custody is awarded; other spouse subject to appropriate defenses provided by
still retains parental authority, which may be law.
exercised through visitorial rights.  Defense: show exercised the due diligence of
a good father of a family.
Death, Absence, Unsuitability of Both Parents  Liability is due to failure to supervise in order to
Art. 214. In case of death, absence or prevent them from causing damage or injury.
unsuitability of the parents, substitute parental
authority shall be exercised by the surviving
grandparent. Parental Authority Upon the property of the child
• In case several survive, the one designated by (Art. 225, FC)
the court, taking into account the same • The father and the mother shall jointly
consideration mentioned in the preceding exercise legal guardianship over the property
article, shall exercise the authority of the unemancipated common child without
the necessity of a court appointment. In case
SUBSTITUTE PARENTAL AUTHORITY of disagreement, the father’s decision shall
Art. 216. In default of parents or a judicially prevail, unless there is a judicial order to the
appointed guardian, the following person shall contrary.
exercise substitute parental authority over the • Where the market value of the property or the
child in the order indicated: annual income of the child exceeds P50,000,
(1) The surviving grandparent, as provided in Art. the parent concerned shall be required to
214; furnish a bond in such amount as the court
may determine, but not less than ten per
(2) The oldest brother or sister, over twenty-one centum (10%) of the value of the property or
years of age, unless unfit or disqualified; and annual income, to guarantee the performance
(3) The child's actual custodian, over twenty-one of the obligations prescribed for general
years of guardians.
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. 45
• 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
where the child resides, or, if the child resides under 7 years of age shall be separated from the
in a foreign country, in the proper court of the mother unless the court finds compelling reasons
place where the property or any part thereof to order otherwise.
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”

III. PERSONS AND FAMILY RELATIONS

• The property of the unemancipated child which justify the taking away from the
earned or acquired with his work or industry mother’s
or by onerous or gratuitous title shall belong custody of her child under 7 years of age.
to the child in ownership and shall be SUGGESTED ANSWER
devoted exclusively to the latter’s support (1) The rationale of the 2nd paragraph of Article
and education, unless the title or transfer 213 of the Family Code is to ensure that a child
provides otherwise. below 7 years old shall not be separated from
• The right of the parents over the fruits and his mother due to his basic need for her
income of the child’s property shall be limited loving care, because the maternal affection
primarily to the child’s support and and care during the early years of the child
secondarily to the collective daily needs of are generally needed by the child more than
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).
PERMANENT termination of Parental authority: (2) Three examples of compelling reasons are:
(Art. 228, FC) a. The mother is insane;
(1) Upon the death of the parents; b. The mother is sick with a disease that is
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 authority
has subjected the child or allowed him to be
subjected to sexual abuse, such person
shall be permanently deprived by the court BAR QUESTION (2003)
of such authority. (Art. 232, FC) If during class hours, while the teacher was
chatting with other teachers in the school
Termination of Parental Authority, unless corridor, a 7 year old male pupil stabs the eye of
another boy with a ball pen during a fight, causing
subsequently revived: (Art. 22G, FC) permanent blindness to the victim, who could be
Unless subsequently revived by a final liable for damages for the boy’s injury: the
judgment, parental authority also terminates: teacher, the school authorities, or the guilty
(1) Upon adoption of the child; boy’s
parents? Explain.
(2) Upon appointment of a general guardian; SUGGESTED ANSWER
(3) Upon judicial declaration of abandonment The school, its administrators, and teachers have
of the child in a case filed for the purpose; special parental authority and responsibility over
(4) Upon final judgment of a competent court the minor child while under their supervision,
divesting the party concerned of parental instruction or custody (Article 218, FC). They are
authority; or principally and solidarily liable for the damages
(5) Upon judicial declaration of absence or caused by the acts or omissions of the
incapacity of the person exercising parental unemancipated minor unless they exercised the
authority. proper diligence required under the
circumstances (Article 219, FC). In the problem,
Suspension of Parental Authority the teacher and the school authorities are liable
for the blindness of the victim, because the
1. Conviction of the parent or the person student who caused it was under their special
exercising the same of a crime which parental authority and they were negligent. They
carries with it the penalty of civil were negligent because they were chatting in the
interdiction. The authority is automatically corridor during the class period when the
reinstated upon service of the penalty or stabbing incident occurred. The incident could
upon pardon or amnesty of the offender. have been prevented had the teacher been inside
(Art. 230, FC) the classroom at that time. The guilty boy’s
2. The court in an action filed for the purpose parents are subsidiarily liable under Article 219 of
in a related case may also suspend parental the Family Code.
authority if the parent or the person
exercising the same:
(a) Treats the child with excessive BAR QUESTION (2003)
harshness or cruelty;
(b) Gives the child corrupting orders, Distinguish briefly but clearly between:
counsel or example; Substitute
(c) Compels the child to beg; or
(d) Subjects the child or allows him to parental authority and special parental authority.
be subjected to acts of lasciviousness. SUGGESTED ANSWER
In substitute parental authority, the parents lose
Note: The grounds enumerated above are their parental authority in favor of the substitute
deemed to include cases which have resulted who acquires it to the exclusion of the parents. In
special parental authority, the parents or anyone
from culpable negligence of the parent or the exercising parental authority does not lose
person exercising parental authority. parental authority. Those who are charged with
special parental authority exercise such authority
only during the time that the child is in their
custody or supervision. Substitute parental
authority displaces parental authority while 46
special parental authority concurs with parental
authority. Substitute parental authority may only
be exercised in the absence,
 IV. PROPERTY, OWNERSHIP, AND ITS
MODIFICATION
A. Classification of Property
B. Ownership (Civil Code, arts. 427-43G) F. Possession (Civil Code, arts. 523-561)
C. Right of Accession; Movables and G. Actions to Recover Ownership and
Immovable (Civil Code, arts. 440-475) Possession of Real Property
D. Quieting of Title (Civil Code, arts. 476-481) H. Easements; Easement of Right of Way
E. Co-Ownership (Civil Code, arts. 484-501); (Civil Code, arts. 613-61G and 64G-657)
Condominium Act (R.A. No. 4726, as I. Nuisance (Civil Code, arts. 6G4-707)
amended)

PROPERTY
2. By Incorporation (2, 3 & 7)
• All things which are or may be the object of
appropriation. (Art. 414,NCC) Those which are attached to an immovable in such a
manner as to form an integral part thereof.
• It is an object or a right which is (2) Trees, plants, and growing fruits, while they are
appropriated or susceptible of appropriation attached to the land or form an integral part of
by man, with capacity to satisfy human an immovable;
wants and needs. (3) Everything attached to an immovable in a fixed
manner, in such a way that it cannot be
separated therefrom without breaking the
PROPERTY vs. THING material or deterioration of the object;
• Concept of THING is broader than the (7)Fertilizer actually used on a piece of land;
concept of PROPERTY.
• PROPERTY refers only to those which are or 3. By Destination (4, 5, C, & 3)
may be the object of appropriation.
• THING refers to all objects, including those Those which are placed in an immovable for use,
exploitation or perfection of such immovable.
which are not or may not be appropriated. (4) Statues, reliefs, paintings or other objects for
• THING is the genus while PROPERTY is the use or ornamentation, placed in buildings or on
species. lands by the owner of the immovable in such a
manner that it reveals the intention to attach
• Civil Code uses the terms interchangeably. them permanently to the tenements;
(5) Machinery, receptacles, instruments or
implements intended by the owner of the
What are the requisites for a thing to be considered tenement for an industry or works which may be
as a property? carried on in a building or on a piece of land, and
1. Utility – Capacity to satisfy human wants. which tend directly to meet the needs of the said
industry or works;
2. Substantivity / Individuality – It has a (6) Animal houses, pigeon-houses, beehives, fish
separate and autonomous existence. It can ponds or breeding places of similar nature, in
exist by itself and not merely as a part of a case their owner has placed them or preserves
whole. them with the intention to have them
3. Appropriability – Susceptibility to permanently attached to the land, and forming a
ownership/possession, even if not yet permanent part of it; the animals in these places
actually appropriated. are included;
BAR QUESTION 4. By Analogy (10)
TRUE OR FALSE: Those which are considered immovables by operation
All rights are considered as property of law (contracts for public works and servitudes
SUGGESTED ANSWER and other real rights over immovable property)
(10) Contracts for public works, and servitudes and
FALSE. Not all rights are considered property. other real rights over immovable property.
Strictly speaking, property is an economic
concept which pertains to all things useful to BAR QUESTION (201G)
human activity. There are however, rights
belonging to an individual which while Mr. E leased a piece of land from Mr. F to be used
protected by law, are not considered property for his
like the sawmill business for a period of ten (10) years.
right to life, liberty and the pursuit of happiness. Consequently,
Mr. E placed heavy machineries thereon to be used
for his
A. CLASSIFICATION OF PROPERTY aforementioned business, with the intention of
removing
them after the expiration of the lease period. Are Mr.
E's heavy
1. IMMOVABLES AND MOVABLES – CIVIL machineries considered real properties under the Civil
CODE, ARTS. 414-418 Code?
Explain.
Categories of immovables under Article 415: SUGGESTED ANSWER
1. By Nature (1&8) No, the machineries placed by Mr. E shall not be
considered
Those that cannot be moved from place to place. real properties under the Civil Code. For machineries
(1) Land, buildings, roads and constructions of all to be
kinds adhered to the soil; considered as real properties, they must have been
(8) Mines, quarries, and slag dumps, while the placed by
matter thereof forms part of the bed, and the owner of the tenements and intended to be used
waters either running or stagnant;

47
 Tests to determine whether a property is a movable BRIEFLY EXPLAIN IF THE FOLLOWING
property under art 416. PROPERTIES ARE MOVABLES OR IMMOVABLES:
1. Test of Exclusion - It is everything that is not
included in Art. 415,
2. By reason of a Special law - It is movable 1. Trees and plants attached to the soil
based on special law Answer: By express provision of law, trees and
3. Test of Mobility - The property is capable of plants adhered to soil are immovable property.
being carried from place to place without
injuring the real property to which it may in
the meantime be attached 2. Vegetables in a hydroponics garden made of
1) Those movables susceptible of plastic bottles filled with water.
appropriation which are not included in Answer: These are movables as they can be
the preceding article (Art 415); moved from one place to another.
2) Real property which by any special
provision of law is considered as personal
property 3. Steel pipe system used in transporting petroleum
3) Forces of nature which are brought under products.
control Answer: Based on jurisprudence, steel pipe
by science system is considered immovable by
4) In general, all things which can be incorporation, because they are attached to the
transported from place to place without land in such a way that it cannot be separated
impairment of the real property to which therefrom without dismantling the steel pipes
they are fixed. which were welded to form the pipeline.

Important Doctrines: 4. Machineries used in a Bus terminal by a Bus

• A Building is an immovable even if not erected Company for maintenance of buses
by the owner of the land. The only criterion is Answer: Movables, since they are not principally
union or incorporation with the soil. used for the industry carried out in a building or
• Parties to a contract may by agreement treat on a piece of land.
as personal properties that which by nature
would be real property; and it is a familiar
phenomenon to see things classified as real 5. Fertilizer for use on a piece of land.
property for purposes of taxation which on
general principle might be considered Answer: Movables. They will become
personal property. immovables if
• The human body, whether alive or dead, is already placed on the soil.
neither real nor personal property, for it is not
even property at all, in that it generally cannot
be appropriated. Under certain conditions, the
body of a person or parts thereof may be
subject matter of a transaction. (See RA No.
349, RA No. 7170, RA No. 7719).

A building which would be immediately

demolished may be considered personal property,
for the true object of the contract would be the
materials.
QUESTION
Anna and Hans entered into a contract of lease
for the use of the lot owned by Hans. Anna
thereafter constructed a building on the
property. She placed inside the building
machineries principally used for her wine
business. In the contract, Anna agreed to turn
over to Hans all the buildings and
improvements upon the expiration of the lease,
except for the machineries. Are machineries
movable or immovable properties?
Explain.
SUGGESTED ANSWER
The machineries are movables. They were not
immobilized by destination because only the
lessee placed them into the building, and not
the owner of the
real property.
QUESTION
Mark owns a painting. He wants to know if a
painting may be categorized as an immovable
property under
the Civil Code. Explain
SUGGESTED ANSWER
As a rule, a painting is movable because it can
be transported from one place to another
without causing damage to the thing. Under
the Civil Code, a painting can be immobilized
by destination if it is placed by the owner of the
tenement in a building with the intention of
permanently attaching it thereto.
QUESTION and ANSWER
2. PUBLIC DOMINION; PATRIMONIAL; PRIVATE –
CIVIL CODE, ARTS. 41G-425

Property of Public Dominion (Art. 420)

1. Those intended for public use (generally
open for use by the public
indiscriminately) such as roads, canals,
rivers, torrents, port and bridges
constructed by the State, banks, shores,
roadsteads, and others of similar
character;
2. Those which are not for public use but
intended for
public service
3. Those intended for the development of
the national wealth

Characteristics:
1. Outside the commerce of man
2. Inalienable
3. Cannot be acquired by prescription
4. Not subject to attachment or execution
5. Cannot be burdened with easements.

Patrimonial Property of the State

• Property of the State owned by it in its
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. Attributes of Ownership
G.R. NO. 213207, FEBRUARY 15, 2022
1. Right to enjoy (jus utendi)
En Banc
• While lands of the public domain under the 2. Right to the fruits (jus fruendi)
Constitution pertain to all lands owned or held by 3. Right to abuse (jus abutendi)
the State both in its public and private capacity, 4. Right to dispose (jus dispodendi)
lands forming part of the public dominion under
the Civil Code pertain only to those which are 5. Right to recover (jus vindicandi)
intended for public use, public service, or the 6. Right to accessories (jus accessiones)
development of national wealth, and excludes 7. Right to possess (jus possidendi)
patrimonial property.
• Therefore, property of public dominion and
patrimonial property, as defined by the Civil Right to Enjoy:

IV. PROPERTY, OWNERSHIP, AND ITS MODIFICATION

Code, both fall within the scope of public domain a. to possess (jus possidendi)
contemplated under the 1987 Constitution.
Excepted from the scope of public domain are b. to use (jus utendi)
lands subject of a claim of ownership based on c. to the fruits (jus fruendi) and accessories (jus
native title as explicitly recognized in Cariño v. accessiones)
Insular Government. d. to abuse (jus abutendi)
• The proper interpretation of Article 422 in - Actual possession under claim of ownership
relation to Articles 420 and 421 is that raises a disputable presumption of ownership.
"converted" patrimonial property can only come The true owner must resort to judicial process
from property of public dominion under Article for the recovery of the property. (Art. 433)
420. Hence, "converted" patrimonial property
should not be understood as a subset of
patrimonial property "by nature" under Article Right to Dispose:
421. a. to destroy
• In effect, the classification of agricultural land as b. to alienate
alienable and disposable serves as unequivocal
proof of the withdrawal by the State of the said c. to transform
land from the public dominion, and its d. to encumber
"conversion" to patrimonial property.
• The clear intention of such conversion is to open
the land to private acquisition or ownership. Right to Vindicate:
Again, as keenly observed by Justice Gaerlan, a. to recover
such converted patrimonial property remains In an action to recover, the property must be
within the broader constitutional concept of identified, and the plaintiff must rely on the
public domain precisely as alienable and strength of his title and not on the weakness of
disposable land of the public domain. the defendant’s claim. (Art. 434)
• Clearly, any specific property of the State may
either be outside or within the commerce of
man; it cannot be both. Right to Exclude:
• Prior to the classification of such property to a. to enclose, fence and delimit - Every owner
alienable and disposable, agricultural lands may enclose or fence his land or tenements
(being property of public dominion) are beyond by means of walls, ditches, live or dead
the commerce of man. hedges, or by any other means without
• It is the classification of agricultural lands as detriment to servitudes constituted thereon.
alienable and disposable which places them (Art. 430)
within the commerce of man, and renders them
capable of being the subject matter of contracts b. to repel intrusions even with force (Art. 429)
(such as a patent, the latter being a contract
between the State and the grantee). In turn, the Principle of Self-Help, Art. 42G, NCC
power to classify (and re-classify) land is vested This principle authorizes an owner or lawful
solely in the Executive Department. possessor of a property to use reasonable
• Once a parcel of land forming part of public counterforce to prevent or stop another person
dominion is classified as alienable and from taking the former’s property. There must be
disposable, they become subject to private no delay in the pursuit, otherwise, his recourse
acquisition but only through the prescribed will be to go to the court for the recovery of
modes of acquisition of ownership. property.
Private Property - Property of private ownership,
besides the patrimonial property of the State, Requisites:
provinces, cities, and municipalities, consists of all 1. The force must be employed by the owner or lawful
property belonging to private persons, either possessor;
individually or collectively. (Art. 425)
2. There must be an actual or threatened
physical invasion or usurpation of property;
B. OWNERSHIP (CIVIL CODE, ARTS. 427-43G) 3. The invasion or usurpation must be unlawful; and
4. The force employed must be reasonably
necessary to repel the invasion or usurpation.
Kinds of Ownership
1. Full ownership. This includes all the rights of an State of Necessity (Art. 432)
owner; Naked ownership + Usufruct • The owner of a thing has no right to prohibit
2. Naked ownership. It is where the rights to the interference of another with the same if,
use and to the fruits have been denied; Full • The interference is necessary to avert an
ownership – Usufruct imminent danger, and
3. Sole ownership. It is where the ownership is • The threatened damage, compared to the
vested in only one person; damage arising to the owner from the
4. Co-ownership. It is where the ownership is interference, is much greater.
vested in 2 or more persons. There is the unity • The owner may demand compensation from
of the property, and plurality of the subjects. the person benefited for the damage to him.

4G
 Surface Rights (Art. 437) A. For damages suffered by the owner resulting
The owner of a parcel of land is the owner of its from the State’s exercise of police power, the
surface and of everything under it, and he can owner cannot recover compensation because
construct thereon any works or make any the power is exercised for the promotion of
plantations and excavations which he may deem the general welfare.
proper, without detriment to servitudes and B. For damages suffered by the owner resulting
subject to special laws and ordinances. He from the State’s exercise of eminent domain, the
cannot complain of the reasonable requirements owner has the constitutional right to ask for
of aerial navigation. compensation. This is consistent with the
constitutional provision that no property may
Limitations upon the Right of Ownership be taken by the State for public use
1. General limitation imposed by the State in the without payment of just compensation.
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 Code). The act of Francisco and
his men constitute an abuse of rights because
even if he has the right to recover possession of
his property, he must act with justice and give the
lessees their day in court and observe honesty and
good faith. (Article 19, Civil Code). Owner must
resort to
legal process to recover possession.

BAR QUESTION (2014)

Can a property owner demand just compensation
from the government for damages suffered in the
State’s exercise of:
A. Police power? Explain.
B. Power of eminent domain? Explain.
SUGGESTED ANSWER
TION
 IV. PROPERTY, OWNERSHIP, AND ITS MO
HIDDEN TREASURE (Arts. 438-43G)
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).
Right of Accession - the right pertaining to the C. RIGHT OF ACCESSION; MOVABLES AND
owner of a thing over everything which is
produced thereby (accession discreta), or IMMOVABLE (CIVIL CODE, ARTS. 440-475)
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
other similar income

EXCEPTIONS: If the thing is:

a. in possession of a possessor in good faith;
b. subject to a usufruct;
c. leased; or
d. in possession of an antichretic creditor

50
Rules regarding intrusions or extensions of Article 448 LAND OWNER vs. B/P/S (OWNER OF
branches and roots MATERIALS)
1. Branches — adjacent owner has the right to 1. Both in good faith
demand that they be cut off. • LO – right to appropriate; right to demand price of
2. Roots — he may cut them off himself land if value is not considerably higher than the
building/tree; right to rent from sower; right to
Art. 680. If the branches of any tree should extend rent from BP in forced lease if value of land is
over a neighboring estate, tenement, garden or considerably higher than the building/tree.
• BPS – right of reimbursement of necessary and
yard, the owner of the latter shall have the right useful expense if LO chose to appropriate; right
to demand that they be cut off insofar as they of retention
may spread over his property, and, if it be the

IV. PROPERTY, OWNERSHIP, AND ITS MODIFICATION

roots of a neighboring tree which should 2. LO in good faith, BPS in bad faith
penetrate into the land of another, the latter may
cut them off himself within his property. • LO – right to appropriate plus damages; right to
ask for removal plus damages; absolute right to
demand price of land plus damages.
Rules as to Fruits • BPS - no right except necessary expenses, liable for
• If the fruits still hang on the tree, they are still damages
owned by the tree owner.
• It is only after they have naturally fallen that 3. LO in bad faith, BPS in good faith
they belong to the owner of the invaded land
• BPS – right to ask for reimbursement plus
damages; absolute right to ask for removal plus
Art. 681. Fruits naturally falling upon adjacent damages
land belong to the owner of said land. • LO - no right, liable for damages.

Accession Continua (incorporated or attached to 4. LO in bad faith, BPS in bad faith.

the property) - Treated as both acted in good faith
The right pertaining to the owner of a thing over
everything that is incorporated or attached Art. 447 – Land owner (is also the BPS) vs. Owner of
thereto either naturally or artificially; by external
forces. Materials
1. LO in good faith, OM in good faith
Reasons: Economic convenience is better • LO – obliged to pay value of materials
attained in a state of single ownership than in a • OM – right of limited removal; right to reimbursement
co-ownership, and natural justice demands that
the owner of the principal should also own the 2. LO in bad faith, OM in good faith
accessory
• LO – obliged to pay value of materials plus damages
• OM – absolute right of removal; right to reimbursement
Basic principles in accession continua
plus damages.
1. He who is in Bad faith is liable for damages.
BAR QUESTION (2013)
2. Accessory follows the principal Ciriaco Realty Corporation (CRC) sold to the spouses
3. Union or incorporation must generally be Dela Cruz a 500-square meter land (Lot A) in
effected in such a manner that to separate Paranaque. The land now has a fair market value of
the principal from the accessory would result P1,200,000. CRC likewise sold to the spouses
in substantial Damage to either or diminish Rodriguez , a 700-square meter land (Lot B) which is
its value. adjacent to Lot A. Lot B has a present fair market value
4. To the Owner of the thing belongs the of P1,500,000. The spouses Dela Cruz constructed a
extension or increases to such thing. house on Lot B, relying on the representation of the
CRC sales agent that it is the property they purchased.
5. Bad faith of one party Neutralizes the bad Only upon the completion of their house did the
faith of the other so that they shall be spouses Dela Cruz discover that they had built on Lot B
considered in good faith. owned by the spouses Rodriguez, not on Lot A that
6. He who is in good faith may be held they purchased. They spent 1,000,000 for the house.
responsible but not penalized. As their lawyer advise the spouses Dela Cruz on their
7. No one shall unjustly Enrich himself at the rights and obligations under the given circumstances, and
expense of another.
the recourses and options open to them to protect
their
Accession continua with respect to Immovables interests.
1. Accession Industrial – building, planting, sowing
2. Accession Natural – alluvium, avulsion, SUGGESTED ANSWER
change of river beds and formation of islands I will advise spouses dela Cruz that they have the right
to retain possession of the premises until spouses
Accession continua with respect to Movables Rodriguez exercise any of the options under Article
448 of the Civil Code (Technogas Manufacturing vs.
1. Adjunction or conjunction CA, G.R. No. 108894, February 10, 1997). Spouses
2. Mixture Dela Cruz are builders in good faith because before
constructing their house, they exercised due diligence
3. Specification 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
ACCESSION CONTINUA WITH RESPECT purchased (Pleasantville vs. CA, G.R. No. 79688,
TO IMMOVABLES (Arts. 448, 44G, February 1, 1996 (253 SCRA10).
452, 454) 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
1. ACCESSION INDUSTRIAL of the indemnity or to oblige the builder to pay the
price of the land if its value is not considerably higher
Accession brought about by human industry and than the building or trees, or to ask the sower to pay
may take the form of building, planting or proper rent. I will also advise my clients that Rodriguez
sowing. may not compel them to remove the improvements
because it is not one of the options granted to the land
owner if
the builder is in good faith.
51
2. ACCESSION NATURAL Requisites:
- accession that occurs by operation of nature 1. Segregation and transfer of land is sudden
and abrupt;
Forms of accession natural 2. Caused by the current of the water; and
3. The portion of land transported must be
(i) Alluvium known and identifiable.
(ii) Avulsion *** owner of segregated portion land retains ownership
(iii) Change of course of rivers provided he removes within 2 years
(iv) Formation of islands
Rule on avulsion of uprooted trees (Art. 460)

IV. PROPERTY, OWNERSHIP, AND ITS MODIFICATION

(i) ALLUVIUM • The owner of the tree retains ownership BUT the
• To the owners of lands adjoining the banks owner must claim them within a period of 6
of rivers belong the accretion which they months;
gradually receive from the effects of the • It will belong to the owner of the land upon
which they may be cast, if the owners do not
current of the waters. (Art. 457) claim it within 6 months.
• The soil deposited or added to the lands NOTE: The claim does not require actual
adjoining the banks of rivers, and gradually recovery. It can be recovered on the basis of
received as an effect of the current of the prescriptive period for acquiring movables which
waters. is four years.
ALLUVIUM AVULSION
Accretion Sudden or abrup
Gradual and
• Process by which the soil is deposited. process t
imperceptible. .
• A broader term than alluvium
Soil cannot be identified. Identifiable and
Requisites: Verifiable.
1. The deposit should be gradual and Belongs to the owner of Real propert by
the y
imperceptible
propert to which it is incorporation and
2. Cause is the current of river y
3. Cannot be done artificially or man-made attached. destination.
causes
4. That the land where accretion takes (iii) CHANGE IN THE COURSE OF RIVER (Arts.
place is adjacent to the bank of the river.
4C1- 4C2)
There can be no acquisition of soil deposited Requisites:
on the shores of the sea (1) Change in the natural course of the waters of the
• it belongs to the State as property of public river; and
domain (2) Such change causes the abandonment of
• 4 bodies of water – rivers, lakes, creeks or the river beds.
torrents • abandoned river bed ipso facto belong to the
owners whose lands are occupied by the
• Laguna de Bay is a lake new course in proportion to the area lost.
• Manila Bay is a sea (Heirs of Navarro vs IAC, • owners of the land adjoining the abandoned
G.R. No. 68166 February 12, 1997) bed shall have the right to acquire the same
by paying the value thereof, which value
HEIRS OF NAVARRO v. IAC shall not exceed the value of the area
occupied by the new bed.
G.R. NO. 68166, FEBRUARY 12, 1GG7
J. Hermosisima, Jr. • new bed becomes property of public dominion.
Accretion as a mode of acquiring property
under said Article 457, requires the (iv)FORMATION OF ISLANDS (Arts. 4C4-4C5)
concurrence of the following requisites: (1) that • They belong to the State if:
the accumulation of soil or sediment be gradual (1) Capable Formed on the seas within
and imperceptible; (2) that it be the result of the jurisdiction of the Philippines.
the action of the waters of the river; and (3) (2) Formed on lakes, or
that the land where the accretion takes place
is adjacent to the bank of the river. Accretion is (3) Formed on navigable or floatable rivers:
the process whereby the soil is deposited, while a) of affording a channel or passage for
alluvium is the soil deposited on the estate ships and vessels;
fronting the river bank; the owner of such b) Must be sufficient not only to float
estate is called the riparian owner. xxx The bancas and light boats, but also
alluvium, by mandate of Article 457 of the Civil bigger watercraft;
Code, is automatically owned by the riparian c) Deep enough to allow
owner from the moment the soil deposit can unobstructed movements of
be seen but is not automatically registered ships and vessels.
property, hence, subject to acquisition through • They belong to the nearest riparian owner if
prescription by third persons. [NCC 465]:
 Formed through successive accumulation
of alluvial deposits in non-navigable and
(ii)AVULSION non- floatable rivers
• A known portion of land is segregated from  Islands belong to owners of margins of
one estate by the forceful current of a river, banks nearest to each of them
creek or torrent and transferred to another.  single island, owner of nearer margin shall
• Whenever the current of a river, creek or be the sole owner
torrent segregates from an estate on its  If in the middle, to be divided longitudinally in
bank a known portion of land and transfers it
to another estate, the owner of the land to halves
which the segregated portion belonged
retains the ownership of it, provided that he
removes the same within two years. (Art.
459)
52
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 is
Different kinds of adjunction done on the material of another, and such
material, as a consequence of the work itself,
a. Inclusion/engraftment undergoes a transformation.
b. Soldadura/ soldering • It is the giving of new form to another’s

IV. PROPERTY, OWNERSHIP, AND ITS MODIFICATION

c. Escritura/ writing material through application of labor. The
material undergoes a transformation or change
d. Pintura/ painting of identity. The labor is the principal and the
e. Weaving/ tejido materials used is the accessory.

Requisites: Art. 474 - Worker vs. Owner of Materials:

(1) 2 movables; Sentimental value shall be duly appreciated (Art. 475)
(2) Belonging to different owners;
(3) United forming a single object; 1. Worker and owner of the materials in good faith:
(4) Separation would impair their nature or • The worker becomes the owner of the
result in substantial injury to either thing. work/transformed thing but he must indemnify
the owner of the material for its value.
Rules in Adjunction: Exception: If the material is more precious or of
more value than the work/transformed thing,
1. If separation is possible – separate (no the owner of the material may choose:
accession) a. To appropriate the new thing to himself but
must pay for the value of the work or labor,
2. If separation not possible OR
a) Both in Good faith – Accessory follows the
principal, with reimbursement. b. To demand indemnity for the material.
*** If accessory is more precious than
principal, owner of accessory may demand 2. Worker in bad faith but the owner of the materials
separation even though the other will in good faith:
suffer injury
b) Bad faith (accessory) – owner loses • The owner of the material has the option either:
accessory with liability to pay damages a. To appropriate the work to himself without paying
c) Bad faith (principal) – owner of accessory the maker, plus damages OR
may choose between (1) reimbursement b. To demand the value of the material, plus
plus damages or (2) separation plus damages. Limitation: The first option is not
damages. available in case the value of the work, for
artistic or scientific reasons, is considerably
Tests to determine the principal more than that of the material, to prevent
1. Rule of Importance and Purpose - That to which unjust enrichment. Only the second option is
the other has been united as an ornament, or available.
for its use or perfection. (Art. 467)
2. If it cannot be determined in Art 467 - that of 3. Owner of the materials in bad faith but the worker
greater VALUE - (Art. 468, NCC) is in good faith:
3. If two things are of EQUAL VALUE - That of
greater VOLUME. • The owner of the material is in bad faith when
he does not object to the employment of his
materials. Accordingly, he shall lose his
(ii)COMMIXTION OR CONFUSION materials and shall have the obligation to
Takes place when two or more things belonging indemnify the worker for the damages he may
to different owners are mixed or combined with have suffered.
the respective identities of the component parts
destroyed or lost. 4. Both owners are in bad faith:
Kinds: The mixture may be voluntary or by chance. • Their rights shall be determined as though both
(1) Commixtion or the mixture of solid things acted
belonging to different owners. in good faith.
(2) Confusion or the mixture of liquid things
belonging to different owners.
D. QUIETING OF TITLE
1. Mixture by will of both the owners, both in good (CIVIL CODE, ARTS. 476-481)
faith or by chance:
a. Their rights shall first be governed by their
stipulations. • Quieting of title is a common law remedy for
b. If the things mixed are of the same kind and the removal of any cloud upon or doubt or
quality, there is no conflict of rights, and the uncertainty with respect to title to real
mixture can easily be divided between the 2 property.
owners. • Its purpose is to secure an adjudication that
c. If the things mixed are of different kind and a claim of title to or an interest in property,
quality, in the absence of a stipulation, each adverse to that of the complainant, is invalid,
owner acquires a right or interest in the so that the complainant and those claiming
mixture in proportion to the value of his under him may be forever afterward free
material as in co-ownership. from any danger of hostile claim. (Heirs of
Tappa v. Heirs of Bacud, G.R. No. 187633,
April 4, 2016)

53
• Whenever there is a cloud on title to real
property or any interest therein, by reason of SPOUSES VELARDE V. HEIRS OF CANDARI
any instrument, record, claim, or encumbrance G.R. NO. 1G0057 | OCTOBER 17, 2022
or proceeding which is apparently valid or J. M. Lopez
effective but is in truth and in fact invalid, According to the New Civil Code, two
ineffective, voidable, or unenforceable, and indispensable requisites must concur for an action
may be prejudicial to said title, an action may for quieting of title to prosper, namely: (1) the
be brought to remove such cloud or to quiet plaintiff has a legal or an equitable title to or
the title. An action may also be brought to interest in the real property subject of the action;
prevent a cloud from being cast upon title to and (2) the deed, claim, encumbrance, or
real property or any interest therein. (Art. 476) proceeding claimed to be casting cloud on their
• There may also be an action to quiet title or title must be shown to be in fact invalid or
remove a inoperative despite its prima facie appearance of

IV. PROPERTY, OWNERSHIP, AND ITS MODIFICATION

cloud therefrom when the contract, validity or legal efficacy. In this case, the heirs of
instrument or other obligation has been Isagani’s cause of action is grounded upon their
extinguished or has terminated, or has been claims of ownership. What they perceive as
barred by extinctive prescription. (Art. 478) clouds over their title were Concepcion’s intrusive
acts of dominion over the properties. Such
physical intrusion is not a ground for quieting of
Requisites: title. The heirs of Isagani do not seek mere
a. The plaintiff has a legal or an equitable title removal of cloud over their title; instead, they
to or interest in the real property subject of the seek to recover full possession of the properties
action; and which is an accion reivindicatoria. Therefore, the
b. The deed, claim, encumbrance or proceeding action is not for quieting of title but of an accion
claimed to be casting cloud on his title must reivindicatoria.
be shown to be in fact invalid or inoperative
despite its prima facie appearance of validity PRESCRIPTIVE PERIOD
or legal efficacy. If the plaintiff is not in possession of the property.
• The action prescribes after 30 years. This is
Legal or Equitable Title (Art. 477) pursuant to Article 1141 of the Civil Code
• The plaintiff must have legal or equitable title which provides that real actions over
to, or interest in, the real property subject of immovables prescribe after 30 years.
the action for quieting of title. In the absence • Nevertheless, the 30-year prescriptive period
of such legal or equitable title, or interest, is without prejudice to what is established for
there is no cloud to be prevented or removed. the acquisition of ownership and other real
• It is not necessary that the person seeking to rights by prescription.
quiet his title be the registered owner of the • In the case of ownership and other real rights
property. He need not be in possession of said over immovable property, they are acquired
property. by ordinary prescription through possession in
• “Title” is not limited to the certificate of good faith and with just title for a period of 10
registration under the Torrens System (i.e. OCT years.
or TCT). It was held that title to real property • On the other hand, ownership and other real
refers to that upon which ownership is based. rights over immovable also prescribe through
It is the evidence of the right of the owner or uninterrupted adverse possession thereof for
the extent of his interest, by which means he 30 years, without need of title or of good faith
can maintain control and, as a rule, assert a (extraordinary acquisitive prescription).
right to exclusive possession and enjoyment
of the property. It can connote acquisitive If the plaintiff is in possession of the property, the
prescription by possession in the concept of action is imprescriptible.
an owner. (Evangelista, et al. v. Santiago, G.R. Rationale: A person in actual possession of a
No. 157447, April 29, 2005) piece of land under claim of ownership may wait
until his possession is disturbed or his title is
Cloud on Title attacked before taking steps to vindicate his
• A “cloud on title” is an outstanding instrument, right, and his undisturbed possession gives him
record, claim, encumbrance or proceeding the continuing right to seek the aid of a court of
which is actually invalid or inoperative, but equity to ascertain and determine the nature of
which may nevertheless impair or affect the adverse claim of a third party and its effect
injuriously the title to that property. on his title. (Rumarate v. Hernandez, 487 SCRA
• The matter complained of must have prima 317 (2006))
facie appearance of validity or legal efficacy.
The cloud on title is a semblance of title which E. CO-OWNERSHIP (CIVIL CODE,
appears in some legal form but which is in fact
unfounded. The invalidity or inoperativeness ARTS. 484-501); CONDOMINIUM ACT
of the instrument is not apparent on the face (R.A. NO. 4726, AS AMENDED)
of such instrument, and it has to be proved by
extrinsic evidence. (Evangelista, et al. v.
Santiago, G.R. No. 157447, April 29, 2005) CO-OWNERSHIP
• Ownership of an undivided thing or right
A cloud on a title exists when belongs to different persons
• There is an instrument (deed or contract) or • Right of common dominion which two or
record or claim or encumbrance or more persons have in a spiritual part of a
proceeding; thing which is not materially or physically
• Which is apparently valid or effective; divided.
• But is, in truth and in fact, invalid, ineffective,
voidable, or unenforceable, or extinguished (or Characteristics of Co-Ownership
terminated) or barred by extinctive • There must be more than one subject or owner
prescription; and
• May be prejudicial to the title. (Heirs of Tappa • There is one physical whole divided into ideal
v. Heirs of Bacud, G.R. No. 187633, April 4, shares
2016) • Each ideal share is definite in amount but
is not physically segregated from the rest

54
Sources of Co-Ownership Effects of alteration without the express or implied
1. By law consent of co-owners
2. By contract A co-owner who makes an alteration without the
3. By chance express or implied consent of the others shall:
4. By occupation or occupancy 1. Lose what he has spent;
5. By succession or will 2. Obliged to Demolish the improvements done; and
3. Pay for the loss and damages the community
property or other co-owners may have
Rights of Co-owners suffered.
1. Right to Share in the Benefits as well as the
Charges Distinctions between right to property owned in

IV. PROPERTY, OWNERSHIP, AND ITS MODIFICATION

• Proportional to their interests; Stipulation to common and full ownership over the ideal share
the contrary is void; • A co-owner has full ownership of his share
• Portion belonging to the co-owners is (undivided interest) and the fruits and benefits
presumed equal. arising therefrom.
• Being the full owner thereof he may alienate,
2. Right to use the thing owned in common assign or mortgage it; he can also substitute
another person in the enjoyment of his share,
• Use the thing in accordance with the purpose except only when personal rights are involved.
for which it is intended. • Others may seek for partition at any time, the
• Use it in such a way as to not injure the same is imprescriptible.
interest of the co-ownership or prevent the
other co-owners from using it according to
their right. Right of Redemption/Pre-emption
• If co-owner exclusively uses property owned in • A co-owner of a thing may exercise the right
common, he is liable to pay rentals for other of redemption in case the shares of all the
co- owners’ share other co- owners or of any of them, are sold to
a third person.
• If the price of the alienation is grossly
Contribution for expenses excessive, the redemptioner shall pay only a
• The share of the co-owners, in the benefits as reasonable one.
well as in the charges, shall be proportional to • Should two or more co-owners desire to
their respective interests. Any stipulation in a exercise the right of redemption, they may only
contract to the contrary shall be void.T do so in proportion to the share they may
• he portions belonging to the co-owners in the respectively have in the thing owned in
co- ownership shall be presumed equal, unless common. (Art. 1620)
the contrary is proved. (Art. 485) • The right of legal pre-emption or redemption
• Each co-owner shall have a right to compel shall not be exercised except within thirty days
the other co-owners to contribute to the from the notice in writing by the prospective
expenses of preservation of the thing or right vendor, or by the vendor, as the case may be.
owned in common and to the taxes. Any one • The deed of sale shall not be recorded in the
of the latter may exempt himself from this Registry of Property, unless accompanied by
obligation by renouncing so much of his an affidavit of the vendor that he has given
undivided interest as may be equivalent to his written notice thereof to all possible
share of the expenses and taxes. No such redemptioners. (Art. 1623)
waiver shall be made if it is prejudicial to the
co-ownership. (Article 488) PAZ GALVEZ V. HON. COURT OF APPEALS
• Repairs for preservation may be made at the G.R. NO. 157G54, MARCH 24, 2006
will of one of the co-owners, but he must, if J. Chico-Nazario
practicable, first notify his co-owners of the
necessity for such repairs. (Article 489) • The purpose of Article 1067 (of the old Civil
• Expenses to improve or embellish the thing Code, now Article 1088 of the present Civil
shall be decided upon by a majority. Code) is to keep strangers to the family out of
a joint ownership, if, as is often the case, the
presence of outsiders be undesirable and the
Decisions affecting co-ownership other heir or heirs be willing and in a position to
1. Acts of preservation, maintenance, necessary repurchase the share sold (De Jesus vs.
Manlapus, 81 Phil. 144). While there should be
repairs no question that an heir may dispose his right
• Any co-owner may decide, but he must, if before partition (Rivero vs. Serrano [CA] 46
practicable, first notify the other co-owners; O.G. 642; Wenceslao vs. Calimon, 46 Phil. 906;
• Anyone may exempt himself from contribution Hernaez vs. Hernaez, 32 Phil. 214), a co-heir
by renouncing his interest unless waiver is would have had to pay only the price for which
prejudicial to co-ownership the vendee acquired it (Hernaez vs. Hernaez,
Ibid.).
2. Acts of administration or management • It is a one-way street. It is always in favor of
the redemptioner since he can compel the
• Majority of the co-owners; majority of interest vendee to sell to him but he cannot be
(controlling); compelled by the vendee to buy the alienated
property.
3. Acts of alterations, encumbrance or alienations • In another case, this Court reiterated that:
Legal redemption is in the nature of a privilege
• Unanimous consent of all created by law partly for reasons of public
• Alteration is an act by virtue of which a co- policy and partly for the benefit and
owner changes the thing from the state in convenience of the redemptioner, to afford him a
which the others believe it should remain, or way out of what might be a disagreeable or
withdraws it from the use to which they desire [an] inconvenient association into which he
it to be intended. has been thrust. (10 Manresa, 4th Ed., 317.) It
is intended to minimize co-ownership. The law
grants a co-owner the exercise of the said right
of redemption when the shares of the other
owners are sold to a "third person.“

55
• The rule on redemption is liberally construed
in favor of the original owner of the property Art. 1088. Should any of the heirs sell his
and the policy of the law is to aid rather than hereditary rights to a stranger before the
defeat him in the exercise of his right of partition, any or all of the co-heirs may be
redemption. subrogated to the rights of the purchaser by
reimbursing him for the price of the sale,
provided they do so within the period of one
HERMELINA RAMA V. SPOUSES NOGRA month from the time they were notified in
G.R. NO. 21G556. SEPTEMBER 14, 2021 writing of the sale by the vendor.
J. Lopez
The focal point of the controversy is the 30-day Modes of Extinguishment of Co-Ownership
written notice requirement under Article 1623 of
1. Consolidation or merger in one co-owner;

IV. PROPERTY, OWNERSHIP, AND ITS MODIFICATION

the New Civil Code, which states:
2. Acquisitive prescription in favor of a third
person or a co-owner who repudiates;
ART. 1623. The right of legal pre-emption or
redemption shall not be exercised except within 3. Loss or destruction of thing co-owned;
thirty days from the notice in writing by the 4. Sale of thing co-owned;
prospective vendor, or by the vendor, as the 5. Termination of period agreed upon;
case may be. The deed of sale shall not be
recorded in the Registry of Property, unless 6. Expropriation;
accompanied by an affidavit of the vendor that 7. Judicial or extra-judicial Partition.
he has given written notice thereof to all possible
redemptioners.
xxxx PARTITION (Art. 4G4)
The Court has been consistent in ruling that the
required written notice by the seller is mandatory • Every co-owner has the right to demand partition.
and indispensable for the 30-day redemption • No co-owner shall be obliged to remain in
period to commence. In the oft-cited case of De the co- ownership.
Conejero v. Court of Appeals, the Court • Action to demand partition is imprescriptible.
explained:

With regard to the written notice, we agree with Exceptions:

petitioners that such notice is indispensable, and 1. When partition would render the thing
that, in view of the terms in which Article 1623 of Unserviceable; or
the Philippine Civil Code is couched, mere 2. When the thing is essentially Indivisible;
knowledge of the sale, acquired in some other 3. When partition is prohibited by Law by
manner by the redemptioner, does not satisfy reason of their origin or juridical nature- ex.
the statute. The written notice was obviously party walls and fences;
exacted by the Code to remove all uncertainty as 4. When the co-owners Agree to keep the
to the sale, its terms and its validity, and to quiet property undivided for a period of time but
any doubts that the alienation is not definitive. not more than 10 yrs;
The statute not having provided for any 5. When partition is Prohibited by the
alternative, the method of notification prescribed transferor (donor / testator) but not more
remains exclusive. than 20 yrs;
6. When a co-owner possessed the property
In Verdad v. Court of Appeals, the Court was as an Exclusive owner for a period sufficient
more emphatic on the mandatory character of to acquire it through prescription.
the written notice: (Acquisitive Prescription)
The written notice of sale is mandatory. This 7. When Co-owners may agree that it be
Court has long established the rule that Allotted to one of them reimbursing the
notwithstanding actual knowledge of a co-owner, others;
the latter is still entitled to a written notice from 8. If they cannot agree, they may Sell the thing
the selling co-owner in order to remove all and distribute the proceeds.
uncertainties about the sale, its terms and
conditions, as well as its efficacy and status. BAR QUESTION (2014)
xxxx X, Y, Z are siblings who inherited a 10-storey
Moreover, actual knowledge of the sale and its building from their parents. They agreed in
particulars would likewise not suffice to disregard writing to maintain it as a co-owned property for
the explicit requirement of written notice under leasing out and to divide the net profits among
the law. Such actual knowledge must, be coupled themselves equally for a period of 20 years. On
with laches on the part of the redemptioner. the 8th year, X wanted to get out of the co-
Laches has been defined as "the failure or ownership so he could get his 1/3 share in the
neglect, for an unreasonable and unexplained
length of time, to do that which, by exercising property. Y and Z refused, saying X is bound by
due diligence, could or should have been done their agreement to keep the co-ownership for
earlier." It is not concerned only with the mere 20 years. Are Y and Z, correct?
lapse of time, but with the inequity caused by
the relief-seeker's inaction. SUGGESTED ANSWER
Y and Z are partly correct. The law provides that
In sum, the explicit requirement of written notice none of the co-owners shall be obliged to
may only be dispensed with upon a showing that remain in the co- ownership and it is the right
the co- owners already had sufficient knowledge of a co-owner to ask for partition of the co-
of the sale and they were guilty of laches in the ownership anytime. One exception to the rule is
exercise of their redemption right. Absent these
factors, the strict letter of the law must apply – if the co-owners agree to keep the thing
the written notice from the seller remains to be undivided which period shall not exceed ten
an indispensable requirement to commence the years.
running of the 30-day redemption period. In this case, the agreement to keep the thing
undivided shall be valid for ten years. Hence, X
must wait for said period to lapse before he
can demand for partition.
(Article 494, Civil Code) 56
CONDOMINIUM ACT, R.A. No. 4726, as amended • Absolute right to sell or dispose of his
• A condominium is an interest in real property condominium unless the master deed contains
consisting of separate interest in a unit in a a requirement that the property be first
residential, industrial or commercial building offered to the condominium owners within a
and an undivided interest in common, directly reasonable period of time before the same is
or indirectly, in the land on which it is located offered to outside parties.
and in other common areas of the building.
• Title to the common areas, including the land,
or the appurtenant interests in such areas, Rules regarding Partition
may be held by a corporation specially formed General Rule: An action may be brought by one or
for the purpose (known as the "condominium more such persons for partition thereof by sale of
corporation") in which the holders of separate the entire project, as if the owners of all of the
interest shall automatically be members or condominiums in such project were co-owners of

IV. PROPERTY, OWNERSHIP, AND ITS MODIFICATION

shareholders, to the exclusion of others, in the entire project in the same proportion as their
proportion to the appurtenant interest of their interests in the common areas.
respective units in the common areas. (Sec. 2,
RA 4726)
Exceptions:
UNIT - A part of the condominium project intended A partition shall be made only upon a showing:
for any type of independent use or ownership, • Three years after damage or destruction –
including one or more rooms or spaces located in renders the material part unfit for its use and
one or more floors (or part or parts of floors) in a such project had not been rebuilt or repaired
building or buildings and such accessories as may substantially;
be appended thereto. • Damage or destruction has rendered ONE
HALF OR MORE of the units untenantable and
Project - means the entire parcel of real property such owners having more than 30 percent
divided or to be divided in condominiums, interest in the common areas are opposed to
including all structures thereon. the repair and restoration;
• The project has been in existence in excess of
Common areas - means the entire project 50 years, rendering it obsolete and
excepting all units separately granted or held or uneconomical and such owners having more
reserved. than 50 percent interest are opposed to the
repair, restoration or remodeling of such
project;
Rules regarding Transfer and Conveyance (Sec. 5 of • The project or material thereof has been
R.A. No. 4726) condemned or expropriated and that the
General Rule: Any transfer or conveyance of a unit project is no longer viable;
or an apartment, office or store or other space • The conditions for such partition with restrictions as
therein, shall include the transfer or conveyance
of the undivided interests in the common areas provided under RA 4726 have been met.
or, in a proper case, the membership or • A condominium corporation shall not, during
shareholdings in the condominium corporation. its existence, sell, exchange, lease or
Exception: Where the common areas are otherwise dispose of the common areas
• Owned by the owners of separate units as co- owned or held by it in the condominium
owners thereof - Shall only be conveyed or project unless authorized by the affirmative
transferred to Filipino citizens or corporations vote of all the stockholders or members.
having at least 60 percent of the capital stock
belonging to them (except for hereditary F. POSSESSION (CIVIL CODE, ARTS. 523-561)
succession with respect to aliens)
• Held by a corporation - the transfer or POSSESSION - is the holding of a thing or the
conveyance is valid only when the
concomitant transfer of the appurtenant enjoyment of a right
membership or stockholding in the
corporation will not cause the alien interest in Requisites of Possession
such corporation to exceed the limits imposed 1. CORPUS or the possession in fact or holding or
by existing laws.
control of a thing or right;
Rights of a Condominium Owner 2. ANIMUS POSSIDENDI or the deliberate
intention to possess the thing or right.
• 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 Possession v. Ownership
the unit may lawfully be altered or • OWNERSHIP confers certain rights to the
reconstructed from time to time; owner, among which are the right to enjoy the
Note: It shall be automatically terminated in thing owned and the right to exclude other
any air space upon destruction of the unit as persons from possession thereof while
to render it untenantable. POSSESSION is defined as the holding of a
• Right to an equal share (one for each unit) in thing or the enjoyment of a right. Literally, to
common areas; possess means to actually and physically
• Exclusive right to paint, repaint, tile, wax, occupy a thing with or without right.
paper or otherwise refinish and decorate the • A person may be declared owner but he may
inner surfaces of the walls, ceilings, floors, not be entitled to possession.
windows and doors bounding his own unit; • A judgment for ownership, therefore, does not
• Exclusive right to mortgage, pledge or necessarily include possession as a necessary
encumber his condominium and to have the incident. (Heirs of R. Soriano v. Court of
same appraised independently of the other
condominiums but any obligation incurred by Appeals, 153 SCAD 86, 363 SCRA 87 [2001].)
such condominium owner is personal to him; • Just as possession is a definite proof of
ownership, neither is non-possession
inconsistent with ownership. (Medina vs.
Greenfield Dev. Corp., 443 SCRA 150 [2004].)

57
Rule in case of conflict in possession RELEVANCE OF GOOD FAITH AND BAD FAITH
Art. 538 - Possession as a fact cannot be
recognized at the same time in two personalities Possessor in Good Faith
EXCEPT in co-possession. • One who is not aware that there exists in his
(i) The present possessor shall be preferred; title or mode of acquisition any flaw which
invalidates it. (Art. 526, NCC)
(ii) If there are two possessors, the • Mistake upon a doubtful or difficult question of
LONGER in possession; law may be the basis of good faith (Art. 525)
(iii) If dates are the same, the one who presents a • A possessor in the concept of owner has in his
TITLE; favor the legal presumption that he possesses
(iv) If all conditions are equal – the thing shall be with a just title and he cannot be obliged to
placed in judicial deposit pending show or prove it. (Art. 541)

IV. PROPERTY, OWNERSHIP, AND ITS MODIFICATION

determination of its possession or ownership • A possessor in good faith is entitled to the
through proper proceedings Note: Every fruits received before possession is legally
possessor has a right to be respected in his interrupted. (Art. 544)
possession; and should he be disturbed therein • Natural and industrial fruits are considered
he shall be protected in or restored to said received from the time they are gathered or severed
possession by the means established by the
laws and the Rules of Court. • Civil fruits are deemed to accrue daily
(Art. 539) • Necessary expenses shall be refunded to
every possessor BUT only a possessor in good
faith may RETAIN the thing until he has been
Presumptions in favor of Possessor: reimbursed therefor.
1. Of good faith • Useful expenses shall be refunded only to a
possessor in good faith with the same right of
2. Of continuity of initial good faith retention. (Art. 546)
3. Of enjoyment in the same character in • Refund either amount of expenses or the
which possession was acquired until the increase in value that the thing may have
contrary is proved acquired by reason thereof
4. Of non-interruption in favor of the present • Possessor in good faith may remove the
possessor useful improvements if it can be done
5. Of continuous possession by the one who without damage to the principal thing
recovers possession of which he was UNLESS the one who recovers possession
wrongfully deprived opted to appropriate the same by paying
6. Of extension of possession of real property reimbursement in Art 546. (Art. 547)
to all movables contained therein • Expenses for pure luxury or mere pleasure shall
not be refunded to a possessor in good faith,
but the latter may remove them if it can be
Doctrine of Constructive Possession done without damage to the principal thing
• Possession in the eyes of the law does not UNLESS the one who recovers possession
mean that a man has to have his feet on every opted to appropriate the same by paying
square meter of ground before it can be said reimbursement.
that he is in possession. • Possessor in good faith shall not be liable for
• The general rule is that the possession and the deterioration or loss of the thing EXCEPT if
cultivation of a portion (e.g., 1/4) of a tract of he is guilty of fraud or negligence.
land under claim of ownership of all is
constructive possession of all.
• The doctrine does not apply where the Possessor in Bad Faith
possession is wrongful or the part allegedly • One who is not in good faith, or one who is
constructively possessed is in the adverse aware that there exists in his title or mode of
possession of another. acquisition any flaw which invalidates it.
• Possessor in bad faith is entitled only to
reimbursement of necessary expenses.
Classes of Possession • For ornamental expenses, a possessor in bad
1. In one’s own name – where possessor claims faith may remove them if it can be done
the thing for himself. without damage to the principal thing UNLESS
2. In the name of another – for whom the thing is the one who recovers possession opted to
held by the possessor. appropriate the same by paying their value at
3. In the concept of an owner – possessor of the the time he enters into possession. (Art. 549)
thing or right, by his actions, is considered or • Possessor in bad faith shall be liable for
is believed by other people as the owner, deterioration or loss of the thing in every case,
regardless of the good or bad faith of the even if due to fortuitous event (Art 552)
possessor.
4. In the concept of holder – possessor holds it
merely to keep or enjoy it, the ownership Summary of Rules on Fruits Gathered and Pending
pertaining to another person; possessor Fruits, Expenses and Deterioration/Loses
acknowledges in another a superior right
which he believes to be ownership. A. Fruits
1. GF is entitled to fruits received while his
A possessor merely in the concept of holder cannot possession is in good faith.
acquire property by acquisitive prescription—one Pending - GF and legitimate possessor shall share in
cannot recognize the right of another and at the the net harvest in proportion to the time of their
same time possession.
claim adverse possession. 2. BF – Required to reimburse the legitimate
Examples: possessor of fruits received or could have
1. Lessees received.
Pending - BF, no right.
2. Trustees
3. Antichrectic creditors
4. Agents
5. Depositaries

POSSESSION 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
• If a person possesses in the concept of owner—
he may
eventually become the owner by prescription
58
B. Expenses • The finding shall be publicly announced by the
1. NECESSARY – those which are incurred for mayor for two consecutive weeks in the way
the preservation of the thing. he deems best.
• GF – Reimbursement, Retention • If the movable cannot be kept without
• BF – Reimbursement only deterioration, or without expenses which
considerably diminish its value, it shall be sold
at public auction eight days after the
2. USEFUL – incurred for the greater publication.
productivity or utility of the thing. • Six months from the publication having
• GF – Reimbursement, Retention, Limited elapsed without the owner having appeared, the
Removal thing found, or its value, shall be awarded to
the finder. The finder and the owner shall be
• BF – None obliged, as the case may be, to reimburse the

IV. PROPERTY, OWNERSHIP, AND ITS MODIFICATION

expenses.
3. ORNAMENTAL – or pure luxury, incurred • If the owner should appear in time, he shall be
for convenience and enjoyment of the obliged to pay, as a reward to the finder, one-
possessor. tenth of the sum or of the price of the thing
• GF – Limited Removal found. (Art. 720)
• BF – Limited Removal
Modes of losing possession (Art. 555)
C. Deterioration or Loss A possessor may lose his possession:
1. GF – not liable unless due to fraudulent a. By the abandonment of the thing;
intent or negligence b. By an assignment made to another either by
2. BF – always liable whether due to fault, onerous or gratuitous title;
negligence or fortuitous event 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
RULES FOR MOVABLES provisions of Article 537, if the new
possession has lasted longer than one year.
General Rule: Possession of Movables in good But the real right of possession is not lost till
faith is equivalent to TITLE. after the lapse of ten years.
Requisites:
a. possession is in good faith
b. the owner has voluntarily parted with the
possession of the thing
G. ACTIONS TO RECOVER OWNERSHIP AND
c. possessor is in the concept of owner 1. ACCION INTERDICTAL
• One who has lost or has been unlawfully POSSESSION OF REAL PROPERTY
deprived of it, may recover it from
whomsoever possesses it, ordinarily, • It is a summary action to recover physical or
without reimbursement. (reimburse the material possession and is cognizable by the
price paid if possessor acquired the thing proper municipal trial court or metropolitan
in good faith and at a public sale). trial court. It must be brought within one year
from the time the cause of action arises.
• It comprises two distinct causes of action,
Summary of Rules on Recovery or Non-recovery of namely, forcible entry (detentacion) and
possession unlawful detainer (desahuico).
1. Owner may recover without reimbursement
a. From possessor in bad faith Forcible Entry:
b. From possessor in good faith — if owner has • Lawful possessor deprived through (Force,
lost or has been unlawfully deprived Intimidation, Strategy, Threats, Stealth). Prior
physical possession must be alleged.
• Prescription: 1 year from dispossession (force,
2. Owner may recover but should reimburse intimidation, threats) or from knowledge of
a. If the possessor acquired the object in good dispossession (strategy, stealth).
faith at a public sale or auction • In forcible entry, one is deprived of the
physical possession of real property by means
3. Owner cannot recover, even if he offers to of force, intimidation, strategy, threats, or
reimburse stealth, whereas in unlawful detainer, one
illegally withholds possession after the
a. If the possessor acquired it in good faith and expiration or termination of his right to hold
for value by purchase from a merchant’s possession under any contract, express or
store, fairs, or markets in accordance with implied.
the Code of Commerce
b. If owner by his own conduct is precluded
form denying the seller’s authority to sell Unlawful Detainer:
c. If possessor had obtained the goods because Jurisdictional facts of unlawful detainer:
he was an innocent purchaser for value and (i) initially, possession of property by the
holder of a negotiable document of title. defendant was by contract with or by
d. If recovery is no longer possible because of tolerance of the plaintiff;
prescription. (ii) eventually, such possession became illegal
e. If the possessor is now the owner of the thing upon notice by plaintiff to defendant of the
in accordance with the principle of finder- termination of the latter's right of
keepers recognized in Art. 719 of the Civil possession;
Code. (iii) thereafter, the defendant remained in
possession of the property and deprived the
Finder-keepers (Art. 71G) plaintiff of the enjoyment thereof; and
• Whoever finds a movable, which is not (iv) within one year from the last demand on
treasure, must return it to its previous defendant to vacate the property, the
possessor. If the latter is unknown, the finder plaintiff instituted the complaint for
shall immediately deposit it with the mayor of ejectment
the city or municipality where the finding has
taken place.
5G
GALACGAC V. BAUTISTA Reconveyance vs. Quieting
G.R. NO. 221384, NOVEMBER 0G, 2020 • An action for reconveyance is one that
J. Lopez seeks to transfer property, wrongfully
A complaint for unlawful detainer must registered by another, to its rightful and
sufficiently allege and prove the following key legal owner.
jurisdictional facts, to wit: (1) initially, possession • Reconveyance is an action distinct from an
of property by the defendant was by contract action for quieting of title, which is filed
with or by tolerance of the plaintiff; (2) whenever there is a cloud on title to real
eventually, such possession became illegal upon property or any interest therein, by reason of
notice by plaintiff to defendant of the termination any instrument, record, claim, encumbrance
of the latter's right of possession; (3) thereafter, or proceeding which is apparently valid or
the defendant remained in possession of the effective but is in truth and in fact, invalid,

IV. PROPERTY, OWNERSHIP, AND ITS MODIFICATION

property and deprived the plaintiff of the ineffective, voidable, or unenforceable, and
enjoyment thereof; and (4) within one year from may be prejudicial to said title for purposes
the last demand on defendant to vacate the of removing such cloud or to quiet title (Ney
property, the plaintiff instituted the complaint for v. Quijano. G.R. No. 178609, August 4,
ejectment. 2010).
BAR QUESTION (2017)
Distinctions between forcible entry and unlawful Jacob has owned a farm land in Ramos, Tarlac.
detainer In 2012, Liz surreptitiously entered and
An action for forcible entry is distinguished from cultivated the property. In 2014, Jacob
an unlawful detainer case, such that in the discovered Liz’s presence in and cultivation of
former, the possession of the defendant is illegal the property. Due to his being busy attending
from the very beginning, whereas in the latter to his business in Cebu, he tolerated Liz’s
action, the possession of the defendant is cultivation of the property. Subsequently,
originally legal but became illegal due to the December 2016, Jacob wanted to regain
expiration or termination of the right to possess. possession of the property; hence, he sent a
letter to Liz demanding that she vacate the
2. ACCION PUBLICIANA property. Liz did not vacate despite the
demand.
Jacob comes to enlist your legal assistance to
• It is an ordinary civil proceeding to recover the bring an action against Liz to recover the
better right of possession, except in cases of possession of the property. What remedies are
forcible entry and unlawful detainer. What is available to Jacob to recover possession of his
involved here is not possession de facto but
possession de jure. property under the
• Accion publiciana is a plenary action to circumstance? Explain your answer (4%)
recover the better right of possession
(possession de jure), which should be brought SUGGESTED ANSWER
in the proper inferior court or Regional Trial There are three remedies for recovery of
Court (depending upon the assessed value of possession of immovable, to wit: accion
the property) when the dispossession has interdictal, accion publiciana and accion
lasted for more than one year. The issue in an reivindicatoria.
accion publiciana is the "better right of
possession" of real property independently of I will advise Jacob to file an accion publiciana
title. This "better right of possession" may or against Liz. It is an ordinary civil proceeding to
may not proceed from a Torrens title. Thus, a determine the better right of possession of
lessee, by virtue of a registered lease contract realty independently of the title. Since the
or an unregistered lease contract with a term possession of Liz was illegal from the start, the
longer than one year may file, as against the proper remedy should have been a forcible
owner or usurper, an accion publiciana if he entry case (Zacarias vs. Anacay G.R. No.
has been dispossessed for more than one 201354, September 24, 2014). However,
year. In the same manner, a registered owner because the action is to be filed more than one
or one with a Torrens title can likewise file an year from discovery of unlawful possession by
accion publiciana to recover possession if the stealth, Jacob can no longer avail of the
one-year prescriptive period for forcible entry remedy of forcible entry but he could still
and unlawful detainer has already lapsed. recover
(Miranda vs. Mallari, G.R. No. 218343, possession by an accion publiciana.
November 28, 2018)

3. ACCION REIVINDICATORIA H. EASEMENTS; EASEMENT OF RIGHT OF WAY

(CIVIL CODE, ARTS. 613-61G AND 64G-657)
• It is an action to recover real property based
on ownership. Here, the object is the recovery EASTMENT OR SERVITUDE
of the dominion over the property as owner.
This action has a prescription period of 30 Although the terms servitude and easement
years. are sometimes used as synonyms, the two
• Accion reivindicatoria or accion de concepts differ. A SERVITUDE relates to the
reivindicacion or reivindicatory action, which is servient estate or the burdened land, whereas
an action for recovery of ownership which must an EASEMENT refers to the dominant estate,
be brought in the proper inferior court or which is the land benefited by the right.
Regional Trial Court (depending upon the
assessed value of the property).
• In an accion reivindicatoria, the cause of It is an encumbrance imposed upon an
action of the plaintiff is to recover possession immovable for the benefit of:
by virtue of his ownership of the land subject 1. Another immovable belonging to a different owner; or
of the dispute. (Heirs of Cullado vs. Gutierrez, 2. A community or one or more persons to
G.R. No. 212938, July 30, 2019) whom the encumbered estate does not
belong by virtue of which the owner is obliged
to abstain from doing or to permit a certain
thing to be done on his estate (Arts. 613-
614, NCC)

60
 BAR QUESTION (1GG5) 5. DUTY TO
What is Easement? Distinguish easement from 3. EXERCISE 4. EXISTENCE SERVIENT
usufruct. OWNER
SUGGESTED ANSWER
An EASEMENT or servitude is an encumbrance CONTINUOUS APPARENT POSITIVE
imposed upon an immovable for the benefit of
another immovable belonging to a different owner. use is those which impose upon
(Art. 613, NCC). incessant, not are made the owner of
USUFRUCT gives a right to enjoy the property of dependent on known and are the
another with the obligation of preserving its form act of man continually servient
and substance, unless the title constituting it or the kept in view by estate
law otherwise provides (Art. 562, NCC). external signs the obligation
that reveal the of allowing

IV. PROPERTY, OWNERSHIP, AND ITS MODIFICATION

use and something to
The distinctions between usufruct and easement are: enjoyment of be done or of
a) Usufruct includes all uses of the property and the doing
for all purposes, including jus fruendi. Easement same it himself.
is limited to a specific use. DISCONTINUOUS NON APPARENT NEGATIVE
b) Usufruct may be constituted on immovable or
movable property. Easement may be those which no prohibits
constituted only on an immovable property. are used at the
c) Easement is not extinguished by the death of intervals and external owner of
the owner of the dominant estate while usufruct depend upon indication of the servient
is extinguished by the death of the usufructuary the acts of existence estate from
unless a contrary intention appears. man doing
d) An easement contemplates two (2) estates something
belonging to two (2) different owners; a usufruct which he
contemplates only one property (real or could lawfully
personal) whereby the usufructuary uses and do
enjoys the property as well as its fruits, while if
another owns the naked title during the period Modes of Acquiring Easement: easement
of the usufruct. does
e) A usufruct may be alienated separately from the 1. If continuous and apparent not exist.
property to which it attaches, while an a. By title (contract, will, etc.), the title governs.
easement cannot be alienated separately from b. By prescription—ten years
the property to
which it attaches. 2. If discontinuous and apparent—only by title
3. If continuous and non-apparent—only by title
4. If discontinuous and non-apparent—only by title

Counting of Prescriptive Period (for continuous and

Parties to an Easement apparent easement only)
1. Dominant estate – Refers to the immovable for a. Positive easement - The period is counted
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
only when duly registered right of way is an easement or a privilege by
2. It is enjoyed over another immovable, never on which one person or a particular class of
one’s persons is allowed to pass over another’s land
own property 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 is apparent is discontinuous, since the use of
attached, and, therefore, cannot be alienated ROW is dependent upon the acts of men.
independently of the estate Hence, it could not be acquired by prescription
5. It is indivisible for it is not affected by the no matter how long period of use thereof.
division of the estate between two or more
persons
6. It is a right limited by the needs of the Who may demand the establishment of a right of
dominant owner or estate, without way?
possession
7. It cannot consist in the doing of an act unless 1. The owner of the dominant estate; or
the act is accessory in relation to a real 2. Any person with the real right to cultivate or
easement 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
presumed Requisites for establishing a compulsory easement
of right of way:
KINDS OF EASEMENTS 1. Estate is surrounded by other immovables
1. Beneficiary: without adequate access to 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 3. Payment of proper indemnity;
whom the encumbered estate do not belong. 4. Must be established at the point least
prejudicial to the servient estate. Insofar as
2. Source: consistent with the first rule, where the
• Legal – by law (either public use or benefit of
distance from the dominant estate to a
private persons) public highway is shortest.
• Voluntary – by agreement

61
 BAR QUESTION (2017)
Tyler owns a lot that is enclosed by the lots of Riley
I. NUISANCE (CIVIL CODE, ARTS. 6G4-707)
to the North and East, of Dylan to the South, and of
Reece to the West. The current route to the public A nuisance is defined as "any act, omission,
highway is a kilometer's walk through the northern establishment, business, condition of property, or
lot of Riley, but the route is a rough road that gets anything else which:
muddy during the rainy season, and is inconvenient
because it is only 2.5 meters wide. Tyler's nearest (1) Injures or endangers the health or safety of others; or
access to the public highway would be through the (2) Annoys or offends the senses; or
southern lot of Dylan. May Dylan be legally required (3) Shocks, defies or disregards decency or morality; or
to afford to Tyler a right of way through his (4) Obstructs or interferes with the free passage
property? Explain your answer. of any public highway or street, or any body

IV. PROPERTY, OWNERSHIP, AND ITS MODIFICATION

of water; or
SUGGESTED ANSWER (5) Hinders or impairs the use of property. (Art. 694)
No, Dylan may not be legally required to afford
Tyler a right of way through his property. The Classification of Nuisance
establishment of an easement of right of way over 1. Public (or common) – One that affects a
the servient estate has the following requisites: community or neighborhood or any
• The dominant estate must be surrounded by considerable number of persons although the
other immovables and is without adequate outlet
extent of the annoyance, danger or damage
• to a public highway; upon individuals may be unequal.
• The isolation of the dominant estate must not be 2. Private – Is one which affects an individual or
due to the proprietor's own acts; few persons only.
• The easement must be established at a point 3. Nuisance per se – a nuisance at all times or
least prejudicial to the servient estate where the
distance from the dominant estate to the public one which "affects the immediate safety of
highway may be the shortest; persons and property and may be summarily
abated under the undefined law of necessity”
• There must be payment of proper indemnity. 4. Nuisance per accidens – That kind of nuisance
The true test of whether the easement of right of by reason of location, surrounding or in a
way must be established on another's property manner it is conducted or managed, or that
isadequacy of the outlet to the public highway and
not the convenience of the dominant estate. The which "depends upon certain conditions and
facts state that Tyler has a right of way through circumstances, and its existence being a
Riley's property and the circumstance that it may question of fact, it cannot be abated without
be inconvenient because it is a rough road and it due hearing thereon in a tribunal authorized
becomes muddy does not justify the establishment to decide whether such a thing does in law
of the easement constitute a nuisance."
on another’s property.
ATTRACTIVE NUISANCE
• One who maintains on his premises dangerous
instrumentalities or appliances of a character
likely to attract children in play, and who fails
to exercise ordinary care to prevent children
Exceptions to the requirement of indemnity from playing therewith or resorting thereto, is
1. Whenever a piece of land acquired by sale, liable to a child of tender years who is injured
exchange or partition, is surrounded by other thereby, even if the child is technically a
estates of the vendor, exchanger, or co-owner, trespasser in the premises.
he shall be obliged to grant a right of way • As a general rule, bodies of water, whether
without indemnity. (Art. 652) natural or artificial, are not attractive
2. In case of a simple donation, when the land nuisances they being merely duplication of
of the donor becomes isolated, the donor shall nature, unless unusual condition or artificial
not be liable for indemnity. (Art. 653) features are added so as to increase a
possible invitation to danger to children at
Extinguishment as Legal Easement of Right of Way play. (Hidalgo Enterprises Inc. v. Balandan, 91
1. The owner has joined the dominant estate to Phil 488)
another abutting the public road. • Other examples of attractive nuisances
2. A new road is opened giving access to the include abandoned or unused large appliances
isolated or equipment or any parts thereof, unsafe
edifice, unsecured or abandoned excavation
estate. areas, and any other instrumentality or
*Extinguishment is not automatic. The owner appliance which may prove a hazard for
of the minors.
servient estate must ask for such extinguishment.
ALETA V. SOFITEL
EXTINGUISHMENT OF EASEMENTS G.R. NO. 228150, JANUARY 11, 2023
1. By merger in the same person of the SAJ Leonen
ownership of the dominant and servient The records show that there were two slides
estates; installed with slopes ending at the kiddie pool.
2. By non-user for ten years; with respect to Taking Hidalgo into consideration, although the
discontinuous easements, this period shall be swimming pool alone may not be considered as
computed from the day on which they ceased an attractive nuisance, the kiddie pool's close
to be used; and, with respect to continuous proximity to the slides formed an unusual
easements, from the day on which an act condition or artificial feature intended to attract
contrary to the same took place; children. In other words, the installation of the
3. When either or both of the estates fall into slides with slopes ending over the swimming
such condition that the easement cannot be
used; pool's waters makes it an attractive nuisance.
4. By the expiration of the term or the fulfillment
of the condition, if the easement is temporary
or conditional;
5. By the renunciation of the owner of the
dominant estate;
6. By the redemption agreed upon between the
owners of the dominant and servient estates

62
By this reason, respondent was duty bound to
undertake protective measures to ensure the (iii) Right to demand damages
children's safety. It was respondent's • Aside from the remedy of summary abatement
responsibility to guarantee that appropriate which should be taken under the parameters
safeguards were in place within the attractive stated in Articles 704 (for public nuisances)
nuisance in order to protect children against and 706 (for private nuisances) of the Civil
the injury from unknown or unseen dangers. Code, a private person whose property right
was invaded or unreasonably interfered with
by the act, omission, establishment, business
REMEDIES or condition of the property of another may
(i) Against a public nuisance are: file a civil action to recover personal damages.
• Abatement may be judicially sought through a

IV. PROPERTY, OWNERSHIP, AND ITS MODIFICATION

1. A prosecution under the Penal Code or any civil action therefor if the pertinent
local ordinance: or requirements under the Civil Code for
2. A civil action; or summary abatement, or the requisite that the
3. Abatement, without judicial proceedings. nuisance is a nuisance per se, do not concur.
• The district health officer shall take care To note, the remedies of abatement and
that one or all of the remedies against a damages are cumulative; hence, both may be
demanded. (LINDA RANA vs. TERESITA LEE
public nuisance are availed of. (Art. 700) WONG, SPS. SHIRLEY LEE ONG and RUBEN
• If a civil action is brought by reason of the ANG ONG,
maintenance of a public nuisance, such represented by their Attorney-in-fact WILSON
action shall be commenced by the city or UY, and SPS. ROSARIO and. WILSON UY, G.R.
municipal mayor. (Art. 701) No. 192861, June 30, 2014)
• The district health officer shall determine • The abatement of a nuisance does not
whether or not abatement, without judicial preclude the right of any person injured to
proceedings, is the best remedy against a recover damages for its past existence. (Art.
public nuisance. (Art. 702) 697)
• A private person may file an action on
account of a public nuisance, if it is Summary abatement of Nuisance Per Se
especially injurious to himself. (Art. 703)
• Any private person may abate a public • It is a standing jurisprudential rule that unless
a nuisance is a nuisance per se, it may not be
nuisance which is especially injurious to him summarily abated. In Lucena Grand Central
by removing, or if necessary, by destroying Terminal, Inc. v. Jac Liner, lnc., the Court,
the thing which constitutes the same, citing other cases on the matter, emphasized
without committing a breach of the peace, the need for judicial intervention when the
or doing unnecessary injury, provided that nuisance is not a nuisance per se, to wit:
all requisites of summary abatement are In Estate of Gregoria Francisco v. Court of Appeals,
complied with. (Art. 704)
this Court held:
Respondents can not seek cover under the
Requisites of Summary Abatement of Nuisance general welfare clause authorizing the
(Art. 704) abatement of nuisances without judicial
a. That demand be first made upon the proceedings. That tenet applies to a nuisance
per se, or one which affects the immediate
owner or safety of persons and property and may be
possessor of the property to abate the summarily abated under the undefined law of
nuisance; necessity. The storage of copra in the quonset
building is a legitimate business. By its
b. That such demand has been rejected; nature, it can not be said to be injurious to
c. That the abatement be approved by the rights of property, of health or of comfort of
district health officer and executed with the the community. If it be a nuisance per
assistance of the local police; and accidens it may be so proven in a hearing
d. That the value of the destruction does not conducted for that purpose. It is not per se a
exceed three thousand pesos. nuisance warranting its summary abatement
without judicial intervention. (LINDA RANA vs.
TERESITA LEE WONG, supra.)
(ii) Against a private nuisance are:
(1) A civil action; or Liability of successive owner for failure to abate
(2) Abatement, without judicial proceedings. nuisance (Art. 6G6)
• Any person injured by a private nuisance Every successive owner or possessor of property
may abate it by removing, or if necessary, who fails or refuses to abate a nuisance in that
by destroying the thing which constitutes property started by a former owner or possessor
the nuisance, without committing a breach is liable therefor in the same manner as the one
of the peace or doing unnecessary injury. who created it. The abatement of a nuisance
However, it is indispensable that the does not preclude the right of any person injured
procedure for extrajudicial abatement of a to recover damages for its past existence.
public nuisance by a private person be
followed. Note:
• A private person or a public official
extrajudicially abating a nuisance shall be • Right to bring an action to abate a public or
liable for damages: private nuisance does not prescribe (Art.
1143)
• If he causes unnecessary injury; or • Lapse of time cannot legalize a nuisance,
• If an alleged nuisance is later declared by whether private or public. (Art. 698)
the courts to be not a real nuisance.

63
 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 • If the movable cannot be kept without
and by intellectual creation. deterioration, or without expenses which
considerably diminish its value, it shall be sold at
Ownership and other real rights over property public auction eight days after the publication.
are acquired and transmitted by law, by • Six months from the publication having elapsed
donation, by estate and intestate succession, without the owner having appeared, the thing
and in consequence of certain contracts, by found, or its value, shall be awarded to the finder.
tradition. They may also be acquired by means The finder and the owner shall be obliged, as the
of prescription. case may be, to reimburse the expenses.
• If the owner should appear in time, he shall be
Modes of Acquiring Ownership obliged to pay, as a reward to the finder, one-
tenth of the sum or of the price of the thing
1. Occupation found. (Art. 720)
2. Law 4. finding of hidden treasure - He who by chance
discovers hidden treasure in another’s property
3. Donation shall have the right granted him in article 438
4. Tradition of this Code. (Art. 718)
5. Intellectual creation 5. catching of swarm of bees that has escaped
from its owner, under certain conditions - the
6. Prescription owner of a swarm of bees shall have a right to
7. Succession pursue them to another’s land, indemnifying
the possessor of the latter for the damage. If
A. OCCUPATION (CIVIL CODE, ARTS. 713-720) 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
• is the acquisition of ownership by seizing the same. (Art. 716)
corporeal thing that have no owner, made 6. catching of domesticated animals that have
with the intention of acquiring them, and escaped from their owners, under certain
accomplished according to legal rules. conditions - The owner of domesticated animals
• Things appropriable by nature which are may also claim them within twenty days to be
without an owner, such as animals that are counted from their occupation by another
the object of hunting and fishing, hidden person. This period having expired, they shall
treasure and abandoned movables, are pertain to him who has caught and kept them.
acquired by occupation. (Art. 713) (Art. 716)
7. catching of pigeons without fraud or artifice
Requisites of Occupation (Arts. 713-720) 8. transfer of fish to another breeding place
without fraud or artifice - Pigeons and fish which
1. There must be seizure of a thing, from their respective breeding places pass to
2. Which must be a corporeal personal property, another pertaining to a different owner shall
3. Which must be susceptible of appropriation belong to the latter, provided they have not
by nature, been enticed by some article or fraud. (Art. 717)
4. The thing must be without an owner, and
5. There must be an intention to appropriate. Real property cannot be acquired by occupation
The ownership of a piece of land cannot be
6. The requisites or conditions laid down by law acquired by occupation (Art. 714)
must be  Reason is that when the land is without an
complied with. owner, it pertains to the State.
 It can be implied that by virtue of this provision,
lands whether originally with an owner, belong
Things Susceptible of Occupation to the State.
1. Things that are without an owner – res  An abandoned land (on with an owner before)
nullius; abandoned (Art 719) becomes patrimonial land of the State
NOTE: Stolen property cannot be subject susceptible of acquisition thru acquisitive
of occupation prescription.
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 best.
 BAR QUESTION (2007)
Occupation v. possession. (5%)
SUGGESTED ANSWER
• Occupation is a mode of acquiring ownership
which involves some form of holding (Articles
712 C 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) In the case referred to in No. 1, the action
for declaration of nullity may be brought by
the spouse of the donor or donee; and the
guilt of the donor and donee may be
Art. 725. Donation is an act of liberality whereby a proved by preponderance of evidence in
person disposes gratuitously of a thing or right in the same action. (Art. 739)
favor of another, who accepts it.
4) Those made in favor of persons who are
incapacitated to succeed by will (Art. 740)
Requisites of Donation: The following are incapable of succeeding (Art.
1. Donor must have Capacity to make the donation 1027):
2. He must have donative Intent (animus donandi) i. The priest who heard the confession of
3. There must be Delivery in certain cases the testator during his last illness, or
4. Donee must Accept or consent to the donation the minister of the gospel who extended
during the lifetime of the donor and of the spiritual aid to him during the same

V. DIFFERENT MODES OF ACqUIRING OWNERSHIP

donee in case of donation inter vivos (Art. period;
746, NCC); whereas in case of donation ii. The relatives of such priest or minister
mortis causa, acceptance is made after of the gospel within the fourth degree,
donor’s death because they partake of a will
(Art. 728, NCC) the church, order, chapter, community,
organization, or institution to which
such priest or minister may belong;
Necessity of Acceptance iii. A guardian with respect to
Acceptance by the donee is required because no testamentary dispositions given by a
one can be compelled to accept the generosity of ward in his favor before the final
another. accounts of the guardianship have been
approved, even if the testator should
Who may be a donor? die after the approval thereof;
• To be a donor, the law requires that a person nevertheless, any provision made by
must be in possession of the capacity to the ward in favor of the guardian when
contract and the capacity to dispose of his the latter is his ascendant, descendant,
property and is not specifically prohibited to brother, sister, or spouse, shall be valid;
make a donation. iv.Any attesting witness to the execution
• Donations inter vivos are to a certain extent of a will, the spouse, parents, or
contractual in nature, and are a mode by
which property is alienated or disposed of. children, or any one claiming under
Hence, those who cannot give consent to a such witness, spouse, parents, or
contract cannot be donors; and donation made children;
by one who does not have the free disposal of v. Any physician, surgeon, nurse, health
the thing donated and to alienate it shall not officer or druggist who took care of the
be valid. testator during his last illness;
vi.Individuals, associations and
Who may be a done? corporations not permitted by law to
• Generally, all persons, whether natural or inherit.
artificial, may be donees. A donee need not be 5) Void Donation between spouses/ common
sui juris, with complete legal capacity to bind law (Art. 87, FC)
himself by contract. (see Arts. 38, 39.) As long • Every donation or grant of gratuitous
as he is “not specially disqualified by law,’’ he advantage, direct or indirect, between
may accept donations. Thus, donations may be the spouses during the marriage shall be
made to Incapacitated persons such as minors void, except moderate gifts which the
and others who cannot enter into a contract spouses may give each other on the
(Art. 741.); so also to conceived and unborn occasion of any family rejoicing.
children. (Art. 742.) • The prohibition shall also apply to
• The law does not require that the donee must persons living together as husband and
possess capacity to act, which is defined as wife without a valid marriage.
“the power to do acts with legal effect,” it
being sufficient that he must possesses
juridical capacity or “the fitness to be the CLASSIFICATIONS
subject of legal relations.” So long as the 1. Simple — the cause is pure liberality (no
donee possesses juridical capacity and not strings attached) | FORM: That of donations
specially disqualified by law, he may accept
donations. 2. Remuneratory — the donor "gives
something to reward past or future services
or because of future charges or burdens,
Determination of Capacity when the value of said services, burdens or
• Capacity of both donor and donee is charges is less than the value of the
determined at the time of perfection of the donation.” | FORM: The form of donation
donation should be followed with respect to the
• Under this view, if the donor is capacitated at value exceeding the value of the burden
the time he makes the donation, his
subsequent incapacity does not affect the imposed (Art. 733)
validity of the donation and, it will be 3. Onerous - when it is "subject to burdens,
perfected even though he is incapacitated at charges, or future services equal (or more)
the time of acceptance in value than that of the thing donated |
FORM: Form of contracts (Art. 733)
Void donations
1) Those made between persons who were
guilty of adultery or concubinage at the time
of the donation;
2) Those made between persons found guilty
of the same criminal offense, in consideration
thereof;
3) Those made to a public officer or his
wife,
descendants and ascendants, by reason of his
office.

65
FORMALITIES FOR DONATIONS OF REAL PROPERTY INTER VIVOS MORTIS CAUSA
(a) If the deed of donation and the acceptance
are in the same instrument: The instrument takes effect during takes effect after the
must be a public document the lifetime of the death of the donor
(b) If the deed of donation and the acceptance
are NOT in the same instrument: donor
1. The donation must be in a public must follow must follow the
instrument or document.
2. The document must specify the the formalities of wills
property donated and the charges, if formalities of or codicils
any. Note: A donation which does not donations (if (holographic or notarial)
identify the land donated is of no effect ordinary and simple)
and is therefore void for absence of
object. can be revoked at any
3. The acceptance in a separate time and for any reason
while the donor is still
instrument
alive (just as a will is

V. DIFFERENT MODES OF ACqUIRING OWNERSHIP

must be in a public instrument.
4. The donor shall be notified in authentic cannot be revoked essentially revocable).
form of the fact that acceptance is except for grounds In other words, this
being made or has been made in a provided for by law donation is revocable
separate public instrument. ad mutuum, i.e., at the
5. The fact that there has been a discretion of the
notification must be noted in both grantor or the so-called
instruments. “donor” simply
because he has
FORMALITIES FOR DONATION OF PERSONAL changed his mind.
PROPERTY
• Maybe made orally or in writing. In case the legitime is
• If value exceeds Php5,000, the donation C in case of impairment impaired, donations
acceptance must be in writing of the legitime, mortis causa (since
• If value does not exceed Php5,000, the donations inter vivos they partake of the
donation may be done orally provided there
is simultaneous delivery of the thing to the are preferred to nature of, or are really,
donee who accepted the same. (Art 748) donations mortis legacies or devises) are
causa (priority in time reduced ahead of
NOTE: is priority in right) donations inter vivos,
• For donation mortis causa – observe the latter being
formalities of wills preferred.
• For onerous donations – form is governed by the right of disposition
ordinary obligations and contracts
is completely the right of disposition
transferred to the is not transferred to the
Conditional Donations donee (although donee while the donor
• Illegal or impossible conditions in simple certain reservations as is still alive.
and remuneratory donations shall be
considered as not imposed. (Art. 727) to usufruct, for
• When a person donates something, subject example,
to the resolutory condition of the donor's may be made)
survival, there is a donation inter vivos. acceptance by donee
(Article 731)
• Donations which are to take effect inter mortis causa can only
vivos shall be governed by the general acceptance by donee be done after the
provisions on contracts and obligations in all must be during donor’s death; any prior
that is not determined in this Title. (Art. lifetime of donor. acceptance is
732) immaterial or void.
• Donations with an onerous cause shall be (There can as a rule be
governed by the rules on contracts and no contract relating
remuneratory donations by the provisions of
the present Title as regards that portion to future
which exceeds the value of the burden inheritance.)
imposed. (Art. 733)
SOME INTER VIVOS DONATIONS
DISTINCTIONS BETWEEN MORTIS CAUSA AND The following donations have been held to be
inter vivos:
INTER VIVOS DONATIONS 1) A donation where the causes of revocation
• ‘Mortis Causa Donation’ - Donations which have been specified.
are to take effect upon the death of the 2) A donation where the donor reserved for
donor partake of the nature of testamentary himself a lifetime usufruct of the property,
provisions for if he were still the owner, there would
• ‘Inter Vivos Donations’ - When the donor be no need of said reservation.
intends that the donation shall take effect 3) A donation where the donor warrants the title
during the lifetime of the donor, though the to the thing which he is donating — there
property shall not be delivered till after the would be no need of warranty were he not
donor’s death. (Art. 729) be transferring the title.
4) Where the donor immediately transferred
the ownership, possession and
administration of the property to the donee,
but stipulated that the right of the donee to
harvest and alienate the fruits would begin
only after the donor’s death.

66
 SOME MORTIS CAUSA DONATIONS • There being no stipulation regarding the
The following have been held to be mortis payment of debts, the donee shall be
causa: responsible therefor only when the donation
has been made in fraud of creditors. The
1) Where the donor has reserved (expressly donation is always presumed to be in fraud
or impliedly) the option to revoke the of creditors, when at the time thereof the
donation at any time before death, even donor did not reserve sufficient property to
without the consent of the donee. pay his debts prior to the donation. (Art.
2) Where the donation will be void if the 759)
transferee dies ahead of the transferor.
3) If before the donor’s death, it is revocable
at his will. Limitations Imposed By Law in making Donations
4) If the donor retains full or naked ownership Inter Vivos
and control over the property while he is
still alive. 1. Donor must Reserve sufficient means for
5) If what was in the meantime transferred to his support and for his relatives who are
the donee was merely the administration of entitled to be supported by him (Art. 750,
NCC).

V. DIFFERENT MODES OF ACqUIRING OWNERSHIP

the property.
2. Donation cannot comprehend Future
6) If title will pass only after donor’s death. property except donations between future
husband and wife (See Art. 84 FC).
General Rule: The fixing of an event or the 3. No person may give by way of donation
imposition of a suspensive condition, which More than he may give by will.
may take place beyond the natural
expectation of life of the donor, does not
destroy the nature of the act as a donation PATENIA-KINATAC-AN V. PATENIA-DECENA
inter vivos. G.R. NO. 238325, JUNE 15, 2020
XPN: unless a contrary intention appears. (Art. J. Lopez
730, NCC) As a rule, contracts are obligatory in whatever
form they may have been entered into,
BAR QUESTION (2011) provided all the essential requisites for their
X and Y were to marry in 3 months. Meantime, validity are present. When, however, the law
to express his affection, X donated a house requires that a contract be in some form to be
and lot to Y, which donation X wrote in a letter valid, that requirement is absolute and
to Y. Y wrote back, accepting the donation and indispensable. Its non-observance renders the
took possession of the property. Before the contract void and of no effect. 16 Here, what
wedding however, Y suddenly died transpired between Spouses Patenia and the
of heart attack. Can Y’s heirs get the property? respondents was a donation of an immovable
property that requires strict compliance with
SUGGESTED ANSWER Article 749 of the Civil Code, to wit:
LIMITATIONS
No. Since the donation and its acceptance are
• As
not in a mode of acquiring ownership, donation Art. 749. In order that the donation of the
results
public in an effective transfer of title over the
instrument. immovable may be valid, it must be made in a
property from the donor to the donee and is public document,specifying therein the
perfected from the moment the donor is property donated and the value of the charges
made aware of the acceptance by the which the donee must satisfy.
donee (Art. 734.), provided that the donee
is not disqualified or prohibited by law from The acceptance may be made in the same
accepting the donation. (Art. 738.) deed of donation or in a separate public
• Once the donation is accepted, it is document, but it shall not take effect unless it
generally considered irrevocable, and the is done during the lifetime of the donor.
donee becomes owner of the property,
except on account of officiousness, failure of
the donee to comply with the charge If the acceptance is made in a separate
imposed on the donation, or ingratitude. instrument, the donor shall be notified thereof
(Heirs of R. Florencio v. Heirs T. De Leon, in an authentic form, and this step shall be
425 SCRA 447 [2004].) noted in both instruments.
• The effect of donation is to reduce the
patrimony or asset of the donor and to Unlike ordinary contracts, which are perfected
increase that of the donee. Hence, the giving by the concurrence of the requisites of
of a mortgage or any other security does not consent, object and cause, solemn contracts
constitute a donation. like donations of immovable property are valid
• When the donation imposes upon the donee only when they comply with legal formalities.
the obligation to pay the debts of the donor, Absent the solemnity requirements for validity,
if the clause does not contain any the mere intention of the parties and
declaration to the contrary, the former is concurrence to the agreement will not give
understood to be liable to pay only the rise to a contract. In Abellana v. Sps. Ponce,
debts which appear to have been previously we ruled that an oral donation of a real
contracted. In no case shall the donee be property is void and an action to declare its
responsible for the debts exceeding the inexistence does not prescribe. Also, in
value of the property donated, unless a Sumipat v. Banga, the donation was patently
contrary intention clearly appears. (Art. void because the donees' acceptance is not
758) 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).

V. DIFFERENT MODES OF ACqUIRING OWNERSHIP

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 is inter
vivos because the fact that Josefa reserved the lifetime usufruct of the land shows that her intent is to
transfer the ownership of the donated property to Jennifer or else there would have been no need for
her to reserve the lifetime usufruct if it were a donation mortis causa.(Reyes vs. Mosqueda, 187 SCRA
661, 671 (1990); Concepcion vs. Concepcion, 91 Phil 823, 827
(1952)

BAR QUESTION (1GGG)

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, the
donation requires the execution of a
valid will, either notarial or holographic (Arts 755, 728 NCC).

BAR QUESTION (1GG0)

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
 BAR QUESTION (1GG3) REVOCATION FOR NON-COMPLIANCE WITH
On January 21, 1986, A executed a deed of
donation inter vivos of a parcel of land to Dr. B CONDITION (Art. 764)
who had earlier constructed thereon a building in • The donation shall be revoked at the
which researches on the dreaded disease AIDS instance of the donor, when the donee fails
were being conducted. The deed, acknowledged to comply with any of the conditions which
before a notary public, was handed over by A to the former imposed upon the latter.
Dr. B who received it. A few days after, A flew to • Prescriptive period: 4 years from the
Davao City. Unfortunately, the airplane he was
riding crashed on landing killing him. Two days noncompliance with the condition
after the unfortunate accident. Dr. B, upon advice • Right to revoke may be transmitted to the
of a lawyer, executed a deed acknowledged heirs of the donor, and may be exercised
before a notary public accepting the donation. Is against the donee’s heirs.
the donation effective? Explain your answer.
REVOCATION DUE TO INGRATITUDE (Art. 765)

V. DIFFERENT MODES OF ACqUIRING OWNERSHIP

(1) If the donee should commit some offense
SUGGESTED ANSWER against the person, the honor or the
No, the donation is not effective. The law requires property of the donor, or of his wife or
that the separate acceptance of the donee of an children under his parental authority;
immovable must be done in a public document (2) If the donee imputes to the donor any
during the lifetime of the donor (Art. 746 C 749, criminal offense, or any act involving
Civil Code) In this case, B executed the deed of moral turpitude, even though he should
acceptance before a notary public after the
donor had already died. prove it, unless the crime or the act has
been committed against the donee
himself, his wife or children under his
REDUCTION AND REVOCATION (Art. 760) authority;
Every donation inter vivos, made by a person (3) If he unduly refuses him support when the
having no children or descendants, legitimate donee is legally or morally bound to give
or legitimated by subsequent marriage, or support to the donor.
illegitimate, may be revoked or reduced by the
happening of any of these events: Prescriptive Period: 1 year, to be counted from
(1) BIRTH - If the donor, after the donation, the time the donor had knowledge of the fact
should have legitimate or legitimated or and it was possible for him to bring the action.
illegitimate children, even though they be (Art. 769)
posthumous;
(2) REAPPEARANCE - If the child of the donor,
whom the latter believed to be dead when REVOCATION REDUCTION
he made the donation, should turn out to
be living;
(3) ADOPTION - If the donor should Failure of the donor
subsequently adopt a minor child.
Birth, appearance, to reserve
Prescriptive Period: 4 years from Birth, or adoption of a sufficient means
Reappearance, Adoption (Art. 763) child (Art. 760); for support of
himself or
Note: dependent
• The donation shall be revoked or reduced relatives (Art.
insofar as it exceeds the portion that may be
freely disposed of by will, taking into 750.);
account the whole estate of the donor at the
time of the birth, appearance or adoption of Failure of the donor
a child. (Art. 761)
• If, there being two or more donations, the Non-fulfillment of to reserve
disposable portion is not sufficient to cover condition imposed sufficient property
all of them, those of the more recent date to pay off his
shall be suppressed or reduced with regard by the donor (Art.
to the excess. (Art. 773) 764.); existing debts (Art.
• Inofficious donation - A donation is 759.);
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 Inofficiousness,
amount exceeds the same, the excess is that is, the
void for being inofficious.
• Legitime - is that part of the testator’s Ingratitude of donation exceeds
property which he cannot dispose of the
because the law has reserved it for certain that which the
heirs who are called compulsory heirs (Art donee. (Art. 765)
886) donor can give by
• Compulsory heirs – are those for whom the will (Arts. 752,
law has reserved a portion of the testator’s
estate which is known as the legitime. 771.); and
Primary – Legitimate children and legit
descendants, surviving spouse, illegitimate
children C descendants; Secondary – Birth, appearance,
Legitimate parents C other legitimate or adoption of a
ascendants, Illegitimate parents child. (Art. 760.)

6G
REQUISITES BAR QUESTION (201G) OF EXTRAORDINARY ACQUISITIVE
X and Y were in a live-in relationship for the longest
PRESCRIPTION:
time, and were already blessed with a child, Z. They
1. finally decided
Capacity to getbymarried
to acquire on March 15, 2020,
prescription.
When X’s parents found about the news, they were 2. The object must be susceptible of prescription.
thrilled and thus, donated in favor of Z, the family
heirloom, particularly, a gold ring valued at 3. The possession must be in the concept of the
P250,000.00 which X and Y orally accepted on behalf owner, public, peaceful, continuous, and
of their minor child. One day, X and Y got into a uninterrupted; and,
serious quarrel, which resulted in them setting aside 4. The period of possession must be 8 years if
their marriage plans. object is movable, or 30 years if it is
(a) Is the donation to Z valid? Explain. (3%) immovable.
(b) Assuming that the donation to Z is valid, may X’s
parents revoke the donation on the ground that DISTINCTIONS BETWEEN ACQUISITIVE AND
the marriage of X
with Y did not push through? Explain. (3%) EXTINCTIVE PRESCRIPTION
SUGGESTED ANSWER
(a) No, it is a void donation. This is an ordinary ACQUISITIVE EXTINCTIVE
donation inter vivos, not a donation proper PRESCRIPTION PRESCRIPTION

V. DIFFERENT MODES OF ACqUIRING OWNERSHIP

nuptias. The Civil Code provides that if the value
of the personal property donated exceeds five
thousand pesos, the donation and the relationship between one does not look to
acceptance shall be made in writing; otherwise, the
occupant and the land the of the possessor
act
the donation shall be void. A piece of jewelry
like the family heirloom here which is a gold in
terms of possession but the neglect of
to
ring, valued at P250,000.00, is a personal
property. Here, the acceptance was made is
capable of producing the
owner
orally; therefore, the donation is void (Article legal
consequences; it is
748).
(b) No, because it is an ordinary donation, not a the
possessor who is the
donation propter nuptias. The ground that the
marriage did not push through may only be actor
requires possession by requires inaction of
raised to revoke donations by reason of marriage
which is defined by Article 126 of the Family a
claimant who is not the
owner or neglect of
Code, as those which are made before its the one a right to bring
celebration, in consideration of the same and in owner with
favor of one or both of the future spouses (Art. his
action
83, FC). Here, the donation was not made in
favor of one or both of the future spouses, but in
favor of their child. X’s parents, therefore, applicable to applies to all kinds
cannot revoke the donation on the ground that ownership
and other real rights of
rights, whether real
the marriage of X with Y did not push through.
or
personal
vests ownership or produces the
otherrights in the
real extinction
of rights or bars a right
occupant of
action
C. PRESCRIPTION
(CIVIL CODE, ARTS. 1106-1155) results in the results in the loss of
By PRESCRIPTION one acquires ownership and acquisition
of ownership or other a
real or personal right,
other real rights through the lapse of time in the real in a person as or
manner and under the conditions laid down by rights bars the cause of
law. In the same way, right and actions are lost well the loss of said
as action
to enforce said right
by prescription. (Art. 1106, NCC)
ownership or real rights
Kinds of prescription: in
another
1. Acquisitive prescription - one acquires
ownership and other real rights through the can be proven under should be
lapse of time in the manner and under the the
general issue without affirmatively
pleaded and proved
conditions laid down by law.
a. Ordinary acquisitive prescription: requires its
being to
bar the action or claim
Prescription of Ownership and other Real Rights
possession of things in good faith and pleaded of
the adverse party
with just title for the time fixed by law (Art. 1126)
b. Extraordinary acquisitive prescription: Against a title recorded in the Registry of
acquisition of ownership and other real Property, ordinary prescription of ownership or
rights without need of title or of good faith real rights shall not take place to the prejudice of
or any other condition. a third person, except in virtue of another title
2. Extinctive prescription - rights and actions are also recorded; and the time shall begin to run
lost through the lapse of time in the manner from the recording of the latter.
and under the conditions laid down by law. As to lands registered under the Land
Registration Act, the provisions of that special
law shall govern.
REQUISITES OF ORDINARY ACQUISITIVE
PRESCRIPTION: Ownership of land covered by Torrens Title is not
1. Capacity to acquire by prescription subject of acquisitive prescription
2. The object must be susceptible of A title once registered under the torrens system
prescription cannot be defeated even by adverse, open and
3. The possession must be in the concept of the notorious possession; neither can it be defeated
owner, public, peaceful, continuous, and by prescription. It is notice to the whole world
uninterrupted. and as such all persons are bound by it and no
4. The possession must be in good faith. one can plead ignorance of the registration.
[Doronio vs. Heirs of Fortunato Doronio,
5. The possession must be by virtue of a just
G.R. No. 169454; December 27, 2007]
title; and
6. The period of possession must be four years if
object
is movable, or 10 years if it is immovable.
70
PERSONS AGAINST WHOM PRESCRIPTION DOES 5 years
NOT RUN (Arts. 1108-110) 1. Action to claim legitimacy if child should die
1. Against minors and other incapacitated during minority or insanity (Art 173 FC)
persons 2. Action for declaration of incapacity of heir
who have no parents, guardians or other (Art 1040 NCC)
legal representatives 3. Action for warranty of solvency of debtor if
2. Against absentees who have no credit is assigned to a co-heir during partition
administrators (Art 1095 NCC)
4. All other actions where periods are not fixed
3. Against persons living abroad who have no by law (Art 1149 NCC)
managers or administrators 5. Action for annulment of marriage based on
4. Against the State and its subdivision lack of parental consent, fraud, force or
except as regards patrimonial property intimidation, impotency, sexually
5. Between husband and wife, even though transmissible disease (Art 47 FC)
there be separation of property agreed upon

V. DIFFERENT MODES OF ACqUIRING OWNERSHIP

in the marriage settlements or by judicial 6. Action for legal separation (Art 55 FC)
decree. 7. Action to claim acknowledgement if
illegitimate child died during minority or
6. Between parents and children, during the insanity (Art 175 FC)
minority
or insanity of the latter 4 years
7. Between guardian and ward during the 1. Action for revocation or reduction of donation
continuance of the guardianship based on supervening birth, appearance or
8. Between co-owners/ co-heirs (Art 494) adoption of child (Art 763 NCC)
2. Action for revocation of donation based on
nonfulfillment of condition (Art 764 NCC)
PRESCRIPTION OF ACTIONS 3. Action for recovery of movable if possessor is
Prescription of action/ limitation of action is in good faith (Art 1132)
the time within which an action may be 4. Action upon a quasi-delict (Art 1146 NCC)
brought or some act done to preserve the 5. Action for rescission of rescissible contracts
right. (Art 1389 NCC)
6. Action for annulment of voidable contracts
HOW ACTIONS PRESCRIBE - As provided in (Art 1391 NCC)
Article 1139, actions prescribe by mere lapse
of time fixed by law. This is extinctive 3 years
prescription referred to in the second
paragraph of Article 1106 Action to impugn legitimacy if husband is abroad
(Art 170 FC)
PERIODS OF PRESCRIPTION 2 years
Recovery of Movables Action to impugn legitimacy if husband is in the
• Good Faith - 4 years Philippines but not residing in the same place of
birth or registration (Art 170 FC)
• Bad Faith - 8 years

Recovery of Immovables 1 year

1. Action by husband to impugn child’s
• Good Faith - 10 years legitimacy if he is residing in the same place
• Bad Faith - 30 years where birth took place or is recorded (Art 170
FC)
2. Action for revocation of donation for acts of
Life time ingratitude (Art 769 NCC)
1. Action for annulment of marriage based on 3. Action for forcible entry and unlawful detainer (Art
insanity (Art 47 FC)
1147 NCC)
2. Action to claim legitimacy (Art 173 FC)
3. Action to compel acknowledgement of 4. Action for defamation (Art 1147 NCC)
illegitimate child (Art 175 FC) 5. Action for rescission or damages if
immovable sold is encumbered with
nonapparent burden or servitude (Art 1560
30 years NCC)
action for recovery of immovables from time
possession is lost if possessor is in bad faith 6 months
(Art 1141 NCC)
• Action for reduction of price or for rescission in
case of breach of sale of real estate either
10 years with a statement of its area at a certain price
1. action for recovery of immovables from for a unit of measure or number (Arts 1543,
time possession is lost if possessor is in 1539 NCC) or for lump sum (Arts 1543, 1542
good faith (Art 1141 NCC) NCC)
2. action upon a mortgage contract • Action for warranty against hidden defects of
thing sold (Art 1571 NCC)
3. action upon a written contract
4. action upon an obligation created by law 40 days
5. action upon a judgement Redhibitory action based on defects of animals (Art
1577 NCC)
8 years
action to recover movables from time
possession is lost if possessor is in bad faith
(Arts 1132, 1140 NCC) 71
6 years
1. action upon an oral contract (Art 1145 NCC)
2. action upon a quasi-contract (Art 1146 NCC)
 Interruption of Prescription of Actions In 1955, Ramon and his sister Rosario inherited a
Art. 1154. The period during which the obligee was parcel of land in Albay from their parents. Since
prevented by a fortuitous event from enforcing his Rosario was gainfully employed in Manila, she left
right is not reckoned against him. Ramon alone to possess and cultivate the land.
The prescription of actions is interrupted However, Ramon never shared the harvest with
Rosario and was even able to sell one-half of the land
1. When they are filed before the court; in 1985 by claiming to be the sole heir of his
2. When there is a written extrajudicial demand by parents. Having reached retirement age in 1990
the creditors; Rosario returned to the province and upon learning
3. When there is any written acknowledgement of what had transpired, demanded that the remaining
the debt by the debtor (Art 1155 NCC) half of the land be given to her as her share. Ramon
opposed, asserting that he has already acquired
BANICO V. STAGER ownership of the land by prescription, and that
Rosario is barred by laches from demanding
G.R. NO. 232825, SEPTEMBER 16, 2020 partition and
J. Lopez reconveyance. Decide the conflicting claims.
The period to file an action for reformation of
instrument is interrupted on account of written SUGGESTED ANSWER
acknowledgement of the obligation. Ramon is wrong on both counts: prescription and
laches. His possession as co-owner did not give rise
A suit for reformation of an instrument may be to acquisitive prescription. Possession by a co-
barred by lapse of time. The prescriptive period for owner is deemed not adverse to the other co-
actions based upon a written contract and for owners but is, on the contrary, deemed beneficial to
reformation of an instrument is ten years. In holding them (Pongon v. GA, 166 SCRA 375). Ramon’s
that Ulysses' cause of action is time-barred, the CA possession will become adverse only when he has
explained that the complaint was filed on July 9, repudiated the co-ownership and such repudiation
2002, or more than ten years from the execution of was made known to Rosario. Assuming that the sale
the deed on February 8, 1992, or beyond the in 1985 where Ramon claimed he was the sole heir
prescriptive period for bringing actions based upon of his parents amounted to a repudiation of the co-
a written contract. We do not agree. ownership, the prescriptive period began to run only
from that time. Not more than 30 years having
The prescription of actions is interrupted when they lapsed since then, the claim of Rosario has not as
are filed before the court, when there is a written yet prescribed. The claim of laches is not also
extrajudicial demand by the creditors, and when meritorious. Until the repudiation of the co-
there is any written acknowledgment of the debt by ownership was made known to the other co-owners,
the debtor. The effect of interruption is to renew no right has been violated for the said co-owners to
the obligation and to make the full period of vindicate. Mere delay in vindicating the right,
prescription run again. Whatever time of limitation standing alone, does not constitute
might have already elapsed from the accrual of the laches.
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 in favor
of a co-owner or co-heir against his co-owners or co-
heirs so long as he expressly or impliedly recognizes
the co-ownership. Peter has never openly claimed sole
ownership of the property nor had
he notified Senen of his having repudiated the co-
ownership.
BAR QUESTION (2011)
NT
 V. DIF
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 matter of
time; laches is principally a question of inequity
of permitting a claim to be enforced, this
inequity being founded on some change in the
condition of the property or the relation of the
parties. Prescription is statutory; laches is not.
Laches applies in equity, whereas prescription
applies at law. Prescription is based on fixed
time laches is not. (Simeon Miguel et al v.
Catalino, G.R. No. L-23072, November 29, 1968)

72
 VI. LAND TITLES AND DEEDS
A. Regalian Doctrine (1G87 CONST., art. XII,
sec. 2) G. Subsequent Registration (P.D. No. 152G,
B. Nationality Restrictions on Land secs. 51-53)
Ownership (1G87 CONST., art. XII, secs. 7- H. Non-Registrable Properties (Civil Code, art.
8) 420)
C. Registry of Property (Civil Code, arts. 708- I. Dealings with Unregistered Lands (P.D. No.
711) 152G, sec. 113)
D. Torrens System; Certificate of Title (P.D. J. Assurance Fund (P.D. No. 152G, secs. G3-
No. 152G, secs. 3G and 44) 102)
E. Original Registration K. Reconstitution of Title (P.D. No. 152G, sec.
F. Confirmation of Imperfect Titles (R.A. No. 110)
11573)
Except
A. REGALIAN DOCTRINE The agricultural lands of public domain which
(1G87 CONST., ART. XII, SEC. 2) alone may be alienated, forest or timber, and
mineral lands, as well as all other natural
resources must remain with the State, the
• Private title to land must be traced to some exploration, development and utilization of which
grant, express or implied, from the Spanish shall be subject to its full control and supervision
Crown or its successors, the American Colonial albeit allowing it to enter into co-production, joint
Government, and thereafter, the Philippine venture or production-sharing agreements, or
Republic into agreements with foreign-owned corporations
• In a broad sense, the term refers to royal involving technical or financial assistance for
rights, or those rights to which the King has by large-scale exploration, development, and
virtue of his prerogatives utilization.
• 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. What is needed to declassify a forest land into
These were rights enjoyed during feudal times alienable or disposable land for agricultural or other
by the King as the sovereign. purposes?
• The theory of jure regalia was therefore A positive act of the government is needed to
nothing more than a natural fruit of conquest declassify a forest land into alienable or
• All lands of the public domain belong to the disposable land for agricultural or other purposes.
State, which is the source of any asserted right Absent any positive act of the government to
to ownership of land. classify a land of public domain into alienable or
• All lands not appearing to be clearly within disposable land for agricultural or other
private purposes, it remains with the State. (FCBPFAI v.
ownership are presumed to belong to the State. DENR and DAR | G.R. No. 247866 | September 15,
• General Rule: Public land remains part of the 2020)
inalienable public domain. XPN: Unless it is
shown to have been reclassified or alienated to Bureau of Forestry v. CA 153 SCRA 351 (1G87)
a private person by the State As provided for under Sec. 6 of CA 141, which
• To overcome this presumption, was lifted from Act 2874, the classification or
incontrovertible evidence must be established reclassification of public lands into alienable or
that the land subject of the application is disposable, mineral, or forest lands is now a
alienable or disposable. prerogative of the Executive Department of the
• The Regalian doctrine extends not only to land government and not the courts. With these rules,
but also to all natural wealth that may be found there should be no more room for doubt that it is
in the bowels of the earth. not the court which determines the classification
of lands of the public domain into agricultural,
Regalian Doctrine Enshrine In Philippine Laws and forest or mineral but the Executive Branch of the
Constitution (Sec 2, 1G87 Constitution) government, through the Office of the President.
“All lands of the public domain, waters, minerals,
coal, petroleum, and other mineral oils, all forces CENTRAL BAY RECLAMATION AND DEVELOPMENT
of potential energy, fisheries, forests or timber, CORP. V. COMMISSION ON AUDIT
wildlife, flora and fauna, and other natural G.R. NO. 252G40, APRIL 5, 2022
resources are owned by the State. With the
exception of agricultural lands, all other natural J. Lopez
resources shall not be alienated. The exploration, The proscription against corporate ownership of
development, and utilization of natural resources alienable lands is absolute and clear. Apropos is
shall be under the full control and supervision of Section 3, Article XII of the 1987 Constitution
the State. The State may directly undertake such which provides that private corporations "may
activities, or it may enter into co-production, not hold such alienable lands of the public
joint venture, or production- sharing agreements domain except by lease, for a period not
with Filipino citizens, or corporations or exceeding twenty-five years, renewable for not
associations at least sixty per centum of whose more than twenty-five years, and not to exceed
capital is owned by such citizens. Such one thousand hectares in area." Here, the
agreements may be for a period not exceeding Compromise Agreement obliged PRA to transfer
twenty-five years, renewable for not more than the reclaimed land to Central Bay's qualified
twenty-five years, and under such terms and assignee. Yet, this scheme grants Central Bay
conditions as may be provided by law. In cases beneficial ownership or equitable title defined as
of water rights for irrigation, water supply "a title derived through a valid contract or
fisheries, or industrial uses other than the relation, and based on recognized equitable
development of water power, beneficial use may principles; the right in the party, to whom it
be the measure and limit of the grant.” belongs, to have the legal title transferred to
him.”

73
Indeed, the provision in the Compromise
Agreement allowing conveyance to "Central Bay's • Sec. 10. Other Rights of Natural Born Citizen
qualified assignee" clearly means that Central Pursuant to the Provisions of Article XII,
Bay will hold the reclaimed land other than by Section 8 of the Constitution. - Any natural
lease which the constitutional ban seeks to born citizen who has lost his Philippine
avoid. Further, the stipulation presupposes that citizenship and who has the legal capacity to
Central Bay, as an assignor, is qualified by law to enter into a contract under Philippine laws may
exercise ownership of the land and transfer it to be a transferee of a private land up to a
another party. On this score, the Court reiterates maximum area of five thousand (5,000) square
that an assignee cannot acquire greater rights meters in the case of urban land or three (3)
than those pertaining to the assignor. The hectares in the case of rural land to be used by
assignee is merely subrogated to the rights and him for business or other purposes.
obligations of the assignor. The assignee is bound • In the case of married couples, one of them
by exactly the same conditions that held the may avail of the privilege herein granted:
assignor under the original parties' transaction. Provided, That if both shall avail of the same,
the total area acquired shall not exceed the
maximum herein fixed.
• In case the transferee already owns urban or
rural land for business or other purposes, he
B. NATIONALITY RESTRICTIONS ON LAND shall still be entitled to be a transferee of
additional urban or rural land for business or
GR: OWNERSHIP other purposes which when added to those
(1G87citizens,
• Filipino CONST., whether
ART. XII, SECS. 7-8)in the
residing already owned by him shall not exceed the
maximum areas herein authorized.

VI. LAND TITLES AND DEEDS

Philippines or abroad, are generally entitled to
own land in the country. • A transferee under this Act may acquire not
• Corporations or Associations at least 60% more than two (2) lots which should be
Filipino- Owned: Corporations or associations situated in different municipalities or cities
at least 60% owned by Filipino citizens are anywhere in the Philippines: Provided, That
also eligible to acquire and hold land, subject the total land area thereof shall not exceed
to certain limitations. five thousand (5,000) square meters in the
case of urban land or three (3) hectares in the
case of rural land for use by him for business
XPN: or other purposes. A transferee who has
• Condominiums: Foreigners are allowed to own already acquired urban land shall be
condominium units, provided that the foreign disqualified from acquiring rural land area and
ownership does not exceed 40% of the total vice versa.
units in the condominium project.
• Long-term Lease: Foreigners can enter into C. REGISTRY OF PROPERTY
long-term lease agreements for residential or (CIVIL CODE, ARTS. 708-711)
commercial properties for an initial period of
up to 50 years, renewable for another 25
years. Purpose - The Registry of Property has for its object
• Foreigners cannot acquire lands except the inscription or annotation of acts and contracts
through hereditary succession (intestate not relating to the ownership and other rights over
by will); immovable property. (Art. 708)
• i.e. the default laws on inheritance which are
not transfers of ownership by way of a last will Effect of failure to register - The titles of ownership,
and testament. or of other rights over immovable property, which
• Former Filipino Citizens: Foreigners who were are not duly inscribed or annotated in the Registry
former Filipino citizens can acquire land up to of Property shall not prejudice third persons. (Art.
a maximum area of 5,000 square meters for 709)
residential purposes and 3 hectares for
business or commercial purposes. Effect of Non-Registration on the Immediate Parties to
a Transaction
SIMUNDAC-KEPPEL V. KEPPEL As between the parties to a sale, registration is not
G.R. NO. 20203G, AUGUST 14, 201G necessary to make it valid and effective, for such
C.J. Bersamin notice is equivalent to registration. To hold otherwise
• Section 7, Article XII of the 1987 Constitution would make the Torrens System a shield for the
states that: "Save in cases of hereditary commission of fraud by the vendor or his heirs who
succession, no private lands shall be would then be able to reconvey the property to
other persons. Indeed, registration is intended to
transferred or conveyed except to individuals, protect the buyer against claims of third persons
corporations, or associations qualified to arising from subsequent alienations by the vendor,
acquire or hold lands of the public domain." It and is certainly not necessary to give effect as
seems clear, however, that the lower courts between the parties to the contract. (Manuel v.
were too quick to pronounce that Georg, being PNB, L-9664, July 31, 1957; Monge v. Angeles, L-
a German citizen, was automatically 9558, May 24, 1957; Galanza v. Nuesa, 50 O.G.
disqualified from owning lands in the 4213).
Philippines.
• At best, an alien could have enjoyed a limited Public records - The books in the Registry of
right to own lands. Section 8, Article XII of the Property shall be public for those who have a
Constitution provides: "Notwithstanding the known interest in ascertaining the status of the
provisions of Section 7 of this Article, a natural- immovables or real rights annotated or inscribed
born citizen of the Philippines who has lost his therein. (Art. 710)
Philippine Citizenship may be a transferee of
private lands, subject to limitations provided
by law." Section 5 of Republic Act No. 8179 Governing Laws - For determining what titles are
(An Act Amending the Foreign Investments Act subject to inscription or annotation, as well as the
of 1991) also states: form, effects, and cancellation of inscriptions and
annotations, the manner of keeping the books in
the Registry, and the value of the entries contained
in said books, the provisions of the Mortgage Law,
the Land Registration Act, and other special laws
shall govern. (Art. 711)

74
Purposes of Registration and Publicity Kinds of Certificate of Title:
(a) to give true notice of the true status of real 1. Original Certificate of Title (OCT)
property and real rights thereto;
(b) to prejudice third persons (unless they have 2. Transfer Certificate of Title (TCT)
actual knowledge of the transaction 3. Condominium Certificate of Title (CCT)
concerned) (Art. 709; Tuason v. Reyes, 48
Phil. 844);
(c) to record acts or contracts (transmissions and Duplicate Certificate of Title
modifications of ownership and other real The following are entitled to a duplicate certificate of
rights over real properties);
(d) to prevent the commission of frauds, thus title:
insuring the effectivity of real rights over real 1. Registered Owner
property. 2. Co-owner
Note: Registration is not a mode of acquiring
ownership. Original Certificate of Title Distinguished from Transfer
Certificate of Title
D. TORRENS SYSTEM;CERTIFICATE OF TITLE
(P.D. NO. 152G, SECS. 3G AND 44) ORIGINAL CERTIFICATE OF TITLE DISTINGUISHED
FROM TRANSFER CERTIFICATE OF TITLE
• Is a system for registration of land under
which, upon the landowner’s application, the OCT TCT
court may, after appropriate proceedings,
direct the issuance of a certificate of title. It is Issued for the
a system of registration by which title recorded

VI. LAND TITLES AND DEEDS

become absolute, indefeasible and first
imprescriptible. Rights acquired under this time after the Issued after
system are guaranteed by the government
which provides an assurance fund to answer land the
for damages to be suffered by persons thru has been cancellation
the operation of this system.
• The primary and fundamental purpose of the of
torrens system is to quiet title. If the holder of adjudicated and the original
a certificate cannot rest secure in this
registered title then the purpose of the law is decreed in the certificate of
defeated. If those dealing with registered land
cannot rely upon the certificate, then nothing name of its title when
has been gained by the registration and the owner the
expense incurred thereby has been in vain. If
the holder may lose a strip of his registered in original or land is
land by the method adopted in the present initial
case, he may lose it all. (Legarda vs. Saleeby ,
G.R. No. L-8936 | October 2, 1915) registration transferred by
proceedings by the
Nature of the Torrens System
The Torrens system in the Philippines is judicial
in character and not merely administrative in registered
nature. “Judicial proceedings for the registration the Registrar of owner by
of land throughout the Philippines shall be in rem
and shall be based on the generally accepted Deeds where reason of
As to issuance

principles underlying the Torrens system (Sec. 2,

P.D. 1529) the sale
land lies or otherwise
Protection given to the Torrens Certificate of Title to pursuant or
Land to the decree subsequently.
Holders are entitled to protections under:
of
1. The Property Registration Decree; and/ or
2. The Civil Code of the Philippines. registration.
To convey
CERTIFICATE OF TITLE
• A certificate of title is the transcript of the To place the the
decree of registration made by the Registrar land land
of Deeds in the registry. (Philippine National
Bank vs. Tan Ong Zse | G.R. No. L-27991 | for the first already
December 24, 1927)
• The certificate of registration accumulates in time under
open document a precise and correct under the the
statement of the exact status of the fee held operation of
by its owner. operation of
• The certificate, in the absence of fraud, is the
the Torrens
the system from
evidence of title and shows exactly the real
interest of its owner. The title once registered, Torrens system
As to Legal Effect

with very few exceptions, should not (Section 45, Act one
thereafter be impugned, altered, changed,
modified, enlarged, or diminished, except in 496) person to
some direct proceeding permitted by law. another (Sec.
Otherwise all security in registered titles
would be lost. (Legarda v. Saleeby | G.R. No. L- 50, Act
8936 | October 2, 1915). 496,
now Sec.
51,
P.D. 1529).
Holds the land
Effect

free of all May hold

to

encumbrances the
except those same subject
 noted on said to more
certificate, and encumbrances
, such as
any of the prior
encumbrances interests
specifically which though
enumerated in unregistered,
person receiving

he had
Sec. 39, Act knowledge of
496 at the time of
(now Sec. 44, the purchase.
P.D.
1529) which
may
be subsisting

75
Enforceability of Certificate of Title: 7. Filing of answer to the application by any
• valid and enforceable against the whole world person whether named in the notice or not;
by the fact that it was issued pursuant to a 8. Hearing of the case by the Court;
decree of registration based upon final judgment
promulgated by a court of competent 9. Promulgation of judgment by the Court;
jurisdiction after due publication, notice and 10. Issuance of the decree by the Court declaring
hearing, provided that the said decree has not the decision final and instructing the Land
been reopened within one year from the date Registration Authority to issue a decree of
of its issuance on the ground of actual fraud. confirmation and registration;
• Once registered, cannot be defeated, even by 11. Entry of the decree of registration in the Land
adverse, open, and notorious possession. Registration Authority;
• Once registered, cannot be defeated by 12. Sending of copy of the decree of registration
prescription. to the corresponding Register of Deeds; and
• A conclusive evidence of the ownership of the 13. Transcription of the decree of registration in
land referred to therein. the registration book and issuance of the
• After the expiration of the one (1) year period owner’s duplicate original certificate of title
from the issuance of the decree of registration to the applicant by the Register of Deeds,
upon which it is based, it becomes upon payment of the prescribed fees.
incontrovertible.
1. WHO MAY APPLY – P.D. NO. 152G, SECS. 14,

VI. LAND TITLES AND DEEDS

XPN: burdens on the land registered which AS AMENDED BY R.A. NO. 11573; C.A. NO. 141,
continue to exist and remain in force although
not noted in the title (Statutory Liens) AS AMENDED; R.A. NO. 8371, SEC. 12
1. liens, claims or rights arising or existing
under the laws and Constitution of the
Philippines which are not by law required to WHO MAY APPLY
appear of record in the Registry of Deeds in RA 11573. Sec. 6 amending Sec. 14 of PD 152G
order to be valid against subsequent The following persons may file in the proper
purchasers or encumbrances of record.
2. unpaid real estate taxes levied and assessed Court of First Instance an application for
within two years immediately preceding the registration of title to land, whether personally or
acquisition of any right over the land by an through their duly authorized representatives:
innocent purchaser for value, without
prejudice to the right of the government to 1) Those who by themselves or through
collect taxes payable before that period from their predecessors-in-interest have been
the delinquent taxpayer alone. in open, continuous, exclusive and
3. any public highway or private way notorious possession and occupation of
established or recognized by law, or any alienable and disposable lands of thepublic
government irrigation canal or lateral thereof, domain not covered by existing
if the certificate of title does not state that the certificates of title or patents under a bona
boundaries of such highway or irrigation canal fide claim of ownership for at least twenty
or lateral thereof have been determined. (20) years immediately preceding the filing
4. any disposition of the property or limitation on of the application for confirmation of title
the use thereof by virtue of, or pursuant to, except when prevented by war or force
Presidential Decree No. 27 or any other law majeure. They shall be conclusively
or regulation on agrarian reform. presumed to have performed all the
conditions essential to a Government grant
Remedy For a Lost Duplicate Certificate of Title and shall be entitled to a certificate of title
under this section. Note: Possession must be
If a duplicate certificate is lost or destroyed, or
cannot be produced by a person applying for the • Open – apparent
entry of a new certificate to him, or for the • Continuous – uninterrupted and not occasional
registration of any instrument, a sworn statement • Exclusive – dominion over the land
of the fact of such loss or destruction may be
filed by the registered owner or other person in • Notorious – must be generally known
interest and registered (Sec. 109, P.D. 1529). 2. Those who have acquired ownership of
private lands or abandoned riverbeds by right
E. ORIGINAL REGISTRATION of accession or accretion under the provisions
of existing laws.
3. Those who have acquired ownership of land
in any other manner provided for by law.
• Where the land is owned in common, all
Requisites in ordinary land registration proceedings: the co- owners shall file the application
1. Survey of land by the Bureau of Lands or a jointly.
duly licensed private surveyor; • Where the land has been sold under pacto
2. Filing of application for registration by the de retro, the vendor a retro may file an
applicant; application for the original registration of
3. Setting of the date for the initial hearing of the land: Provided, however, That should
the application by the Court; the period for redemption expire during
4. Transmittal of the application and the date of the pendency of the registration
initial hearing with all the documents or other proceedings and ownership to the property
evidences attached thereto by the Clerk of consolidated in the vendee a retro, the
Court to the Land Registration Commission latter shall be substituted for the applicant
(now Land Registration Authority); and may continue the proceedings.
5. Publication of a notice of the filing of the • A trustee on behalf of the principal may
application and date and place of the hearing apply for original registration of any land
in the Official Gazette; held in trust by the trustee, unless
6. Service of notice upon contiguous owners, prohibited by the instrument creating the
occupants and those known to have interests trust.
in the property by the sheriff.

76
Requisites and Process in ordinary land registration
3. REVIEW OF DECREE OF REGISTRATION –
proceedings:
1. Survey of land by the Bureau of Lands or a P.D. NO. 152G, SEC. 32
duly licensed private surveyor;
2. Filing of application for registration by the • The decree of registration shall not be
applicant; reopened or revised by reason of absence,
3. Setting of the date for the initial hearing of minority, or other disability of any person
the application by the Court; adversely affected thereby, nor by any
4. Transmittal of the application and the date of proceeding in any court for reversing
initial hearing with all the documents or other judgments, subject, however, to the right of
evidences attached thereto by the Clerk of any person, including the government and
Court to the Land Registration Commission the branches thereof, deprived of land or of
(now Land Registration Authority); any estate or interest therein by such
5. Publication of a notice of the filing of the adjudication or confirmation of title obtained
application and date and place of the hearing by actual fraud, to file in the proper Court of
in the Official Gazette; First Instance a petition for reopening and
6. Service of notice upon contiguous owners, review of the decree of registration not later
occupants and those known to have interests than one year from and after the date of the
in the property by the sheriff. entry of such decree of registration, but in
7. Filing of answer to the application by any no case shall such petition be entertained
person whether named in the notice or not; by the court where an innocent purchaser
8. Hearing of the case by the Court; for value has acquired the land or an
interest therein, whose rights may be

VI. LAND TITLES AND DEEDS

9. Promulgation of judgment by the Court;
10. Issuance of the decree by the Court declaring prejudiced.
the decision final and instructing the Land • Upon the expiration of said period of one year, the
Registration Authority to issue a decree of decree of registration and the certificate of
confirmation and registration; title issued shall become incontrovertible.
11. Entry of the decree of registration in the Land • Any person aggrieved by such decree of
Registration Authority; registration in any case may pursue his
12. Sending of copy of the decree of registration remedy by action for damages against the
to the corresponding Register of Deeds; applicant or any other persons responsible
13. Transcription of the decree of registration in for the fraud.
the registration book and issuance of the
owner’s duplicate original certificate of title
to the applicant by the Register of Deeds, 4. INNOCENT PURCHASER FOR VALUE; RIGHTS –
upon payment of the prescribed fees. P.D. NO. 152G, SEC. 32

2. DECREE OF REGISTRATION – P.D. NO. • Petition for review of decree, even if filed
152G, SEC. 31 within one year, cannot be entertained if the
property is already acquired by an innocent
purchaser for value.
Every decree of registration issued by the • Innocent Purchaser for Value is one who
Commissioner shall: buys property and pays a full and fair price
• Bear the date, hour and minute of its entry, for it, at the time of the purchase or before
and shall be signed by him. any notice of some other person’s claim on
• It shall state whether the owner is married or interest to it. (Francisco H. Lu v. Sps
unmarried, and if married, the name of the Manipon | G.R. No. 147072 | May 7, 2002)
husband or wife: Provided, however, that if the • An “innocent purchaser for value’’ is deemed, under
land adjudicated by the court is conjugal the Torrens system, to include an innocent
property, the decree shall be issued in the lessee, mortgagee or other encumbrances
name of both spouses.
for value.
• If the owner is under disability, it shall state the
nature
Elements of an innocent purchaser for value:
of disability, and if a minor, his age.
• It shall contain a description of the land as 1. One who buys property and pays a full and
finally determined by the court, and shall set fair price for it; and
forth the estate of the owner, and also, in such • A purchaser who acquires real property at
manner as to show their relative priorities, all less than the fair market value should be
particular estates, mortgages, easements, wary of any defect in title. While generally,
liens, attachments, and other encumbrances, purchase at less than the fair market value
including rights of tenant-farmers, if any, to is allowed by law, if circumstances exist that
which the land or owner's estate is subject, as call for the cancellation of the sale due to
well as any other matters properly to be the void nature of the transaction; then the
determined in pursuance of this Decree. sale may be nullified. (Sps. Cusi v. Domingo |
• The decree of registration shall bind the land G.R. No. 195825
and quiet | February 27, 2013)
title thereto, subject only to such exceptions
or liens as may be provided by law.
• It shall be conclusive upon and against all 2. Purchases property before any notice of some other
persons, including the National Government person’s interest.
and all branches thereof, whether mentioned • A purchaser cannot close his eyes to facts
by name in the application or notice, the same which should put a reasonable man upon his
being included in the general description "To guard, and then claim that he acted in good
all whom it may concern". faith under the belief that there was no
defect in the title of the vendor. He must
further show that he exercised reasonable
precaution by inquiring beyond the
certificates of title. Failure to exercise such,
rendered him a buyer in bad faith. (Uy v.
Fule | G.R. No. 164961 | June 30, 2014)

77
JIMENEZ V. JIMENEZ ET AL. Absent one or two of the foregoing conditions,
G.R. NO. 228011, FEBRUARY 10, 2021 then the law itself puts the buyer on notice and
J. Lopez obliges the latter to exercise a higher degree of
In Cavite Development Bank v. Lim, the Court diligence by scrutinizing the certificate of title and
explained the doctrine of mortgagee in good faith examining all factual circumstances in order to
as follows: determine the seller's title and capacity to
transfer any interest in the property. Under such
There is, however, a situation where, despite circumstance, it is no longer sufficient for said
the fact buyer to merely show that he relied on the face of
that the mortgagor is not the owner of the the title; he must now also show that he
mortgaged property, his title being exercised reasonable precaution by inquiring
beyond the title. Failure to exercise such degree
fraudulent, the mortgage contract and any of precaution makes him a buyer in bad faith.
foreclosure sale arising therefrom are given
effect by reason of public policy. This is the F. CONFIRMATION OF IMPERFECT TITLES
doctrine of "the mortgagee in good faith" based (R.A. NO. 11573)
on the rule that all persons dealing with property
covered by a Torrens Certificate of Title, as RA 11573 - AN ACT IMPROVING THE CONFIRMATION
buyers or mortgagees, are not required to go PROCESS FOR IMPERFECT LAND TITLES
beyond what appears on the face of the title. • It simplifies the procedure and requirements in
The public interest in upholding the granting land titles.

VI. LAND TITLES AND DEEDS

indefeasibility of a certificate of title, as • It shortened the required period of possession
for confirmation of imperfect titles to 20 years.
evidence of the lawful ownership of the land • Purpose of the Law: to simplify, update and
or of any encumbrance thereon, protects a harmonize similar and related provisions of land
buyer or mortgagee who, in good faith, relied laws in order to simplify and remove ambiguity
in its interpretation and implementation. It is
upon what appears on the face of the also the policy of the State to provide land
certificate of title. tenure security by continuing judicial and
administrative titling processes.
The doctrine applies when the following requisites
concur, namely: (a) the mortgagor is not the Who may apply for Judicial Confirmation of Imperfect
rightful owner of, or does not have valid title to, Title
the property; (b) the mortgagor succeeded in Those who by themselves or through their
obtaining a Torrens title over the property; (c) the predecessors-in- interest have been in open,
mortgagor succeeded in mortgaging the continuous, exclusive, and notorious possession
property to another person; (d) the mortgagee and occupation of alienable and disposable
relied on what appears on the title and there agricultural lands of the public domain, under a
exists no facts and circumstances that would bona fide claim of ownership, for at least twenty
compel a reasonably cautious man to inquire into (20) years immediately preceding the filing of the
the status of the property; and (e) the mortgage application for confirmation of title except when
contract was registered. All these requisites were prevented by war or force majeure. They shall be
satisfied in this case, viz.: (a) Damian was found conclusively presumed to have performed all the
to have no valid title to the property as his title conditions essential to a Government grant and
was derived from a forged Deed of Donation; (b) shall be entitled to a certificate of title under the
he was able to obtain TCT No. N- 217728; (c) he provisions of this Chapter.
succeeded in mortgaging the property to
Calubad and Keh; (d) Calubad and Keh found Proof that the Land is Alienable and Disposable
nothing on TCT No. N-217728 that would have
notified them of Damian's invalid title. In fact, (Section 7)
Calubad and Keh even went beyond the title and For purposes of judicial confirmation of imperfect
conducted an ocular inspection, whereby they titles filed under Presidential Decree No. 1529, a
confirmed that Damian was in possession and duly signed certification by a duly designated DENR
occupation of the property; and (e) the mortgage geodetic engineer that the land is part of alienable
contract was registered. Thus, the courts a quo did and disposable agricultural lands of the public
not err in ruling that Calubad and Keh were domain is sufficient proof that the land is alienable.
mortgagees in good faith. Said certification shall be imprinted in the approved
survey plan submitted by the applicant in the land
registration court. The imprinted certification in the
CHUA V. REPUBLIC, plan shall contain a sworn statement by the
G.R. NO. 253305, AUGUST 02, 2023 geodetic engineer that the land is within the
J. Hernando alienable and disposable lands of the public domain
and shall state the applicable Forestry
A buyer for value in good faith is one who buys Administrative Order, DENR Administrative Order,
property of another, without notice that some other Executive Order, Proclamations and the Land
person has a right to, or interest in, such property Classification Project Map Number covering the
and pays full and fair price for the same, at the subject land.
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- Should there be no available copy of the Forestry
founded belief that the person from whom he Administrative Order, Executive Order or
receives the thing had title to the property and Proclamation, it is sufficient that the Lad
capacity to convey it. Classification (LC) Map Number, Project Number,
and date of release indicated in the land
classification map be stated in the sworn statement
To prove good faith, a buyer of registered and declaring that said land classification map is
titled land need only show that he relied on the existing in the inventory of LC Map records of the
face of the title to the property. He need not prove National Mapping and Resource Information
that he made further inquiry for he is not obliged Authority (NAMRIA) and is being used by the DENR
to explore beyond the four corners of the title. as land classification map.
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 the time of the sale, the
buyer was not aware of any claim or interest of
some other person in the property, or of any
defect or restriction in the title of the seller or in
his capacity to convey title to the property.

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

VI. LAND TITLES AND DEEDS

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.

7G
• 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

VI. LAND TITLES AND DEEDS

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
 • An adverse claim arises whenever a person
G. SUBSEQUENT REGISTRATION claims any part or interest averse to the
(P.D. NO. 152G, SECS. 51-53) registered owner's interest; arising subsequent to
registration.
Conveyance and other dealings by registered owner.
Claim is adverse when:
An owner of registered land may:
1. A claimant’s right or interest in registered land
1) convey, is adverse to the registered owner;
2) mortgage, 2. Such right arose subsequent to date of original
registration
3) lease, 3. No other provision is made in the Decree for the
4) charge or otherwise deal with the same registration of such right or claim (Sec. 70, PD
in accordance with existing laws. 1529, Sanchez v. CA, 69 SCRA 327 (1976)
• A mere money claim cannot be registered as
General Rule: It shall operate only as a contract an adverse claim
between the parties and as evidence of authority • Actual knowledge is equivalent to registration of
to the Register of Deeds to make registration adverse claim.
(Sec. 51) • No 2nd adverse claim based on the same
XPN: In order to bind the land, such conveyance, ground may be registered by the same
mortgage, lease, lien, attachment, order, claimant.
judgment, instrument or entry affecting

VI. LAND TITLES AND DEEDS

registered land must be registered, filed or
entered in the office of the Register of Deeds for How annotated?
the province or city where the land to which it • The adverse claimant shall execute an affidavit
relates lies, thereafter, it shall be constructive which shall state his claim to any part or interest
notice to all persons from the time of such in the registered land adverse to the registered
Registering, filing or entering. (Sec. 52) owner.
• The affidavit shall be filed with the Register of
Deeds; who, after examination of the claim may
1. VOLUNTARY DEALINGS – P.D. NO. 152G, annotate the adverse claim on the registered
SECS. land.
55-5G Requisites
1. The adverse claimant must state the following in
General Rule: A voluntary instrument can be
registered only when the owner’s duplicate writing:
certificate is presented with such instrument. a. his alleged right or interest;
XPN: In cases provided by law, and upon order of b. how and under whom such alleged right or
the court, for causes shown, the same may be interest is acquired;
registered even without a showing of such. c. the description of the land in which the right or
interest is claimed; and
Consequence of showing the owner’s duplicate d. the number of the certificate of title;
certificate with the voluntary instrument: 2. The statement must be signed and sworn to
There is vested a conclusive authority from the before a notary public or other officer
registered owner to the Register of Deeds to authorized to administer oath; and
enter a new certificate or to make memorandum 3. The claimant should state his residence or the
of registration in accordance of such instrument. place to which all notices may be served upon
him. Non- compliance with the above requisites
renders the adverse claim non-registrable and
2. INVOLUNTARY DEALINGS – P.D. NO. 152G, ineffective.
SECS. 6G, 74 AND 76; ADVERSE CLAIMS AND
NOTICE OF LIS PENDENS – P.D. NO. 152G, Effects
Any potential buyer of land shall be considered to
SECS. 70 AND 77 have been alerted of any defect in the title The
individual shall be considered in bad faith if he
INVOLUNTARY DEALINGS purchases land despite the annotation.
• It is intended to create or preserve any lien,
Period of Effectivity; When Cancelled
status, • The adverse claim shall be effective for a
right, or attachment upon registered land. period of 30 days from the date of registration
• Transactions affecting land in which and it may be cancelled after the lapse of 30
cooperation of registered owner is not needed, days, upon the filing by the party in-interest of
or even against his will. a verified petition for such purpose
• Before the lapse of said 30 days, upon the
ADVERSE CLAIMS filing by the claimant of a sworn petition
withdrawing his adverse claim
• Is a notice to third persons that someone is • Before the lapse of the 30-day period, when a
claiming an interest on the property or has a party-in- interest files a petition in the proper
better right than the registered owner thereof. RTC for the cancellation of the adverse claim
The disputed land is subject to the outcome of and, after notice and hearing, the court finds
the dispute. that the claim is invalid. If the court also finds
• The annotation of an adverse claim is a the claim to be frivolous, it may fine the
measure designed to protect the interest of a claimant the amount of not less than 1,000
person over a piece of real property where the pesos nor more than 5,000 pesos, in its
registration of such interest or right is not discretion.
otherwise provided for by the Land • Diaz-Duarte v. Ong, 298 SCRA 388 (1998) -
Registration Act, and serves as a notice and For this purpose, the interested party must file
warning to third parties dealing with said with the proper court a petition for cancellation
property that someone is claiming an interest of adverse claim, and a hearing must also first
on the same or a better right than the be conducted.
registered owner thereof. (Lucio C. Sanchez, Jr., • The Register of Deeds cannot on its own
vs. Hon. Court of Appeals and Rural Bank of automatically cancel the adverse claim.
Ormoc City, Inc. | G.R. No. L-40177 | February
12 1976)
81
NOTICE OF LIS PENDENS How registered:
Registration shall be effected through a
Lis Pendens memorandum or notice stating:
Lis pendens literally means a pending suit (a) the institution of such action or proceeding
and the court wherein the same is pending,
Doctrine that refers to the jurisdiction, power or
control which a court acquires over a property (b) the date of the institution thereof,
involved in a suit, pending the continuance of the (c) a reference to the number of the certificate of title,
action, until final judgment (d) an adequate description of the land affected
and the registered owner thereof, shall have
Purpose of Lis Pendens been filed and registered. (Sec. 76, P.D. No.
1529)
• 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 How cancelled
they may acquire in the property in any • The cancellation of the notice of lis pendens
voluntary transaction are subject to the results under the first paragraph of Section 77 involves
of the action, and may well be inferior and the filing of a motion in the court where the
subordinate to those which may be finally action (Which is the source of the lis pendens) is
determined and laid down therein. [Heirs of pending· Thus, the court may order the removal
Marasigan v. IAC, 152 SCRA 253 (1987)] of the annotation even while the case is pending.
• A notice of lis pendens may be cancelled when

VI. LAND TITLES AND DEEDS

• It merely creates a contingency and not a lien. the annotation is:
• To protect the rights of the party causing the
registration of the lis pendens • only for purpose of molesting an adverse party;
• To advise third persons who purchase or • not necessary to protect the title of the party
contract on the subject property that they do who caused it to be recorded;
so at their peril and subject to the result of the • When the consequences of the trial are
pending litigation unnecessarily delaying the determination of the
• May involve actions that deal not only with case to the prejudice of the other party.
title or possession of a property but also with • Register of Deeds may also cancel by verified
the use and occupation of a property petition of party who caused such registration
• The litigation must directly involve a specific • Deemed cancelled when certificate is issued by
property which is necessarily affected by the clerk of court stating manner of disposal of
proceeding that is registered
judgment
• The notice of lis pendens is a notice to the
whole world that a particular real property is in Lis Pendens has no Application To The Following:
litigation. The inscription serves as a warning • Preliminary attachment;
that one who acquires interest over litigated • Proceedings for the probate of wills;
property does so at his own risk, or that he
gambles on the result of the litigation over the • Levies on execution;
property • Proceedings for administration of estate of
• A purchaser who buys registered land with full deceased persons; and
notice of the fact that it is in litigation between • Proceedings in which the only object is the
the vendor and third party stands in the shoes recovery of a money judgment.
of his vendor and his title is subject to the
incidents and results of the pending litigation H. NON-REGISTRABLE PROPERTIES
(CIVIL CODE, ART. 420)
Section 76 of the Presidential Decree 152G
“Notice of lis pendens. No action to recover Property of Public Dominion
possession of real estate, or to quiet title thereto,
or to remove clouds upon the title thereof, or for • Properties of public dominion have been
partition, or other proceedings of any kind in court described as those which, under existing
directly affecting the title to land or the use or legislation, are not the subject of private
occupation thereof or the buildings thereon, and no ownership and are reserved for public purposes
judgment, and no proceeding to vacate or (Republic vs. Court of Appeals, 131 SCRA 532,
reverse any judgment, shall have any effect 537 (1984)
upon registered land as against persons other • According to the Civil Code, the following things
than the parties thereto, unless a memorandum are property of public dominion:
or notice stating the institution of such action or • Land intended for public use or service not
proceeding and the court wherein the same is available for private appropriation;
pending, as well as the date of the institution • Those which belong to the State, without being
for public use, and are intended for some public
thereof, together with a reference to the number service or for the development of the national
of the certificate of title, and an adequate wealth.
description of the land affected and the
registered owner thereof, shall have been filed and
registered.” Specific kinds of non-registrable properties:
1. Forest or timberland, public forest, forest reserves
What must be registered? 2. Mangrove swamps
1. Action to recover possession of real estate· 3. Mineral lands
2. To quiet title thereto. 4. Foreshore land and Seashore
3. To remove clouds upon the title thereof. 5. Navigable rivers, streams and creeks
4. Partition; 6. Lakes
5. Other proceedings of any kind in court 7. Military Reservations
directly affecting the title to land or the use 8. Other kinds of Reservations
or occupation thereof or the buildings 9. Watershed
thereon; and
6. No judgment, and no proceeding to vacate or 10. Grazing lands
reverse any judgment, shall have any effect 11. Previously titled land
upon registered land as against persons other 12. Alluvial deposit along river when manmade
than the parties thereto.

82
 I. DEALINGS WITH UNREGISTERED LANDS J. ASSURANCE FUND
(P.D. NO. 152G, SEC. 113) (P.D. NO. 152G, SECS. G3-102)
General Rule: No deed, conveyance, mortgage,
lease, or other voluntary instrument affecting NATURE OF ASSURANCE FUND
land not registered under the Torrens system It is the special fund which is created under the
shall be valid, except as between the parties Torrens system for the compensation of certain
thereto. persons for losses sustained by operations under
XPN: Unless such instrument shall have been the system.
recorded in the manner herein prescribed in the
office of the Register of Deeds for the province or CONDITIONS FOR COMPENSATION FROM ASSURANCE
city where the land lies. (Sec. 113) FUND
Action of Compensation From Funds
Duty of Register of Deeds: (Sec. 113) This action is civil in character and may be in the
1. Keep a Primary Entry Book and a Registration form of the ordinary complaint for damages. The
Book containing the following particulars: action for recovery of damages from the Assurance
1. Entry Number Fund may be availed of in case of insolvency of the
party who procured the wrongful registration.
2. Names of the parties
3. The nature of the document Requisites
4. The date, hour and minute it was

VI. LAND TITLES AND DEEDS

presented and received 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
2. Ensure that the recording of the deed and operation of the Torrens system arising after
other instruments relating to unregistered lands original registration,
shall be effected by any of annotation on the 3. Through fraud, error, omission, mistake or
space provided therefor in the Registration Book, misdescription in a certificate of title or entry or
after the same shall have been entered in the memorandum in the registration book,
Primary Entry Book. 4. Without negligence on his part, and
5. He is barred or precluded from bringing an action
3. If, on the face of the instrument, it appears for the recovery of such land or estate or
that it is sufficient in law, the Register of Deeds interest therein.
shall forthwith record the instrument in the 6. The action has not prescribed.
manner provided herein.
Jurisdiction
4. In case the Register of Deeds refuses its The Regional Trial Court of the place where the land
administration to record, said official shall advise is located shall be vested with jurisdiction over the
the party in interest in writing of the ground or claims of an individual for recovery against the
grounds for his refusal, and the latter may appeal Assurance Fund. (Sec. 95)
the matter to the Commissioner of Land
Registration in accordance with the provisions of
Section 117 of this Decree, without prejudice to a Period to File
third party with a better right. 6 years from the time the right to bring such action
first accrued: (Sec. 102)
5. After recording on the Record Book, endorse
among other things, upon the original of the Filed Against
recorded instruments, the file number and the 1. Registrar of Deeds
date as well as the hour and minute when the 2. the National Treasurer and
document was received for recording as shown in
the Primary Entry Book, returning to the registrant 3. other persons as co-defendants when:
or person in interest the duplicate of the “such action is brought to recover for loss or
instrument, with appropriate annotation, certifying damage or for deprivation of land or any
that he has recorded the instrument after interest therein arising through fraud,
reserving one copy thereof to be furnished the negligence, mistake or misfeasance of persons
provincial or city assessor as required by existing other than court personnel, the Registrar of
law. Deeds, his deputy or other employees of the
registry’’ (Sec. 96)
6. In case the Register of Deeds refuses its How judgment satisfied: (Secs. G7-GG)
administration to record, said official shall advise
the party in interest in writing of the ground or • If there are defendants other than the National
grounds for his refusal, and the latter may appeal Treasurer and the Register of Deeds and
the matter to the Commissioner of Land judgment is entered for the plaintiff and against
Registration in accordance with the provisions of the National Treasury, the Register of Deeds and
Section 117 of this Decree, without prejudice to a any of the other defendants, execution shall first
third party with a better right. issue against such defendants other than the
National Treasurer and the Register of Deeds.
(Sec. 97)
7. After recording on the Record Book, endorse • If at any time the Assurance Fund is not
among other things, upon the original of the sufficient to satisfy such judgment, the National
recorded instruments, the file number and the Treasurer shall make up for the deficiency from
date as well as the hour and minute when the any funds available in the treasury not otherwise
document was received for recording as shown in appropriated. (Sec. 98)
the Primary Entry Book, returning to the registrant • If the execution is returned unsatisfied, wholly or
or person in interest the duplicate of the partly, and the officer returning the same
instrument, with appropriate annotation, certifying certifies that the amount cannot be collected
that he has recorded the instrument after from the land or personal property of such other
reserving one copy thereof to be furnished the defendant, the remaining amount unpaid is to be
provincial or city assessor as required by existing paid by the National Treasurer out of the
law. Assurance Fund. In the latter case, the
Government of the Republic of the Philippines is
subrogated to the rights of the plaintiff against
any other parties or entities (Sec. 99)

83
Measure of Damages Contents of a Petition for Judicial Reconstitution
The maximum amount of damages Said petition shall allege the following:
recoverable as compensation from the
Assurance Fund is not the assessed value nor 1. that the owner’s duplicate of the certificate
the actual value at the time of recovery but an of title had been lost or destroyed;
amount not more than the fair market value of 2. that no co-owner’s, mortgagee’s or lessee’s
the land at the time he suffered the loss, duplicate had been issued or, if any had been
damage or deprivation thereof (Sec. 97) issued, the same had been lost or destroyed;
3. the location, area and boundaries of the property;
PRESCRIPTIVE PERIOD 4. the nature and description of the building or
improvements, if any, which do not belong to
The plaintiff has a period of six years from the the owner of the land, and the names and
time the right of action accrues within which to addresses of the owners of such buildings or
bring the action against the Assurance Fund. In improvements;
a case, a complaint filed more than ten years 5. the names and addresses of the occupants or
after the property had been registered was persons in possession of the property, of the
ordered dismissed owners of the adjoining properties and of all
persons who may have interest in the
SPS. STILIANOPOULOS V. REGISTER OF DEEDS property;
6. a detailed description of the encumbrances, if
G.R. NO. 224678, JULY 03, 2018 any, affecting the property; and

VI. LAND TITLES AND DEEDS

En Banc 7. a statement that no deeds or other
“The constructive notice rule on registration instruments affecting the property have been
should not be made to apply to title holders presented for registration, or if there be any,
who have been unjustly deprived of their land the registration thereof has not been
without their negligence. The actual title holder accomplished, as yet.
cannot be deprived of his or her rights twice –
first, by fraudulent registration of the title in the Jurisdictional requirements:
name of the usurper and second, by operation 1. Publication C Posting - notice of the petition
of the constructive notice rule upon must be published twice in successive issues
registration of the title in the name of the of the Official Gazette, and posted on the
innocent purchaser for value. As such, main entrance of the provincial building and
prescription, for purposes of determining the of the municipal building of the municipality
right to bring an action against the Assurance or city in which the land is situated, at least
Fund, should be reckoned from the moment thirty days prior to the date of hearing;
the innocent purchaser for value registers his 2. The notice state among other things, the
or her title and upon actual knowledge thereof number of the lost or destroyed certificates of
of the original title holder/claimant. As above- title if known, the name of the registered
discussed, the registration of the innocent owner, the name of the occupants or persons
purchaser for value's title is a prerequisite for in possession of the property, the owner of
a claim against the Assurance Fund on the the adjoining properties and all other
ground of fraud to proceed, while actual interested parties, the location, area and
knowledge of the registration is tantamount to boundaries of the property, and the date on
the discovery of the fraud. More significantly, which all persons having any interest therein
this interpretation preserves and actualizes the must appear and file their claim of objection
intent of the law, and provides some form of to the petition;
justice to innocent original title holders.” 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
K. RECONSTITUTION OF TITLE parties) whose address is known at least
Reconstitution of lost or destroyed original of thirty days prior to the date of the hearing;
Torrens title(P.D. NO. 152G, SEC. 110) and
• Original copies of certificates of title lost or 4. At the hearing, petitioner submits proof of
destroyed in the offices of Register of Deeds publication, posting and service of the notice
as well as liens and encumbrances affecting as directed by the court.
the lands covered by such titles shall be Jurisdictional requirements of (a) publication, (b)
reconstituted judicially in accordance with posting, and (c) service of notice are mandatory.
the procedure prescribed in Republic Act They provide constructive notice to the whole
No. 26 insofar as not inconsistent with this world of the in rem reconstitution proceedings.
Decree. (Section 110, PD 1529)
• Reconstitution is the restoration of the THE GOVERNMENT OF THE PHILIPPINES V. ABALLE
instrument or title allegedly lost or destroyed G.R. NO. 147212, MARCH 24, 2006
in its original form and condition (Anciano v. J. Austria-Martinez
Caballes | G.R. No L-5040
Jurisprudence dictates that these requirements
| September 29, 1953) must be complied with before the court can act
on the petition and grant the reconstitution of
Elements: title prayed for. Specifically, the requirement of
actual notice to the occupants and the owners of
1. That the certificate of title has been the adjoining property is itself mandatory to vest
lost or destroyed; jurisdiction upon the court in a petition for
2. That the petitioner is the registered owner or reconstitution of title, and essential in order to
has an interest therein; and allow said court to take the case on its merits.
3. That the certificate of title was in force at The non-observance of the requirement
the time it was lost or destroyed. invalidates the whole reconstitution proceedings
in the trial court.

84
Sources of Reconstitution:
HEIRS OF BUENDIA V. BRUNO
1.For original certificates of title: (Section 2 of RA No.
2c) G.R. NO. 262854, OCTOBER 4, 2023
(a) The owner's duplicate of the certificate of title;
Reconstitution of title partakes of a land
registration proceeding. In Rep. of the Phils. v.
(b) The co-owner's, mortgagee's, or lessee's Santua, this Court underscored that "a
duplicate of the certificate of title; reconstitution of title does not pass upon the
(c) A certified copy of the certificate of title,
previously issued by the register of deeds or by ownership of the land covered by the lost or
a legal custodian thereof; destroyed title, but merely determines whether a
(d) An authenticated copy of the decree of re-issuance of such title is proper."
registration or patent, as the case may be,
pursuant to which the original certificate of title One of the requisites for the court to acquire
was issued; jurisdiction over the petition for reconstitution of
(e) A document, on file in the registry of deeds, by title is that there must be "clear proof that the
which the property, the description of which is title sought to be restored was indeed issued to
given in said document, is mortgaged, leased or
encumbered, or an authenticated copy of said the petitioner." In this respect, R.A. No. 26
document showing that its original had been enumerates certain sources which the law
registered; and considers as valid and sufficient bases for
(f) Any other document which, in the judgment of reconstitution of a transfer certificate of title:
the court, is sufficient and proper basis for xxx
reconstituting the lost or destroyed certificate
of title.

VI. LAND TITLES AND DEEDS

In this case, the heirs of Buendia sought for
the reconstitution of the four unnamed TCTs on
2.For transfer certificates of title: (Section 3 of RA No. the basis of
2c) a) Approved Subdivision Plan LRC-PSD-5550
(a) The owner's duplicate of the certificate of title; and the corresponding technical description
(b) The co-owner's, mortgagee's, or lessee's thereof; and b) tax declaration covering the
duplicate of the certificate of title; subject lots, which fall under the term "any
(c) A certified copy of the certificate of title, other document" in Section 3 (f) of R.A. No. 26.
previously issued by the register of deeds or by
a legal custodian thereof; Jurisprudence explains that the term "any
(d) The deed of transfer or other document, on file other document" in Section 3 (f) of R.A. No. 26,
in the registry of deeds, containing the should be interpreted to refer to documents
description of the property, or an authenticated similar to those mentioned in Section 3 (a), (b),
copy thereof, showing that its original had been (c), (d), (e), applying the principle of ejusdem
registered, and pursuant to which the lost or
destroyed transfer certificate of title was generis. As can be gathered therefrom,
issued; documents listed in Section 3 (a), (b), (c), (d),
(e) A document, on file in the registry of deeds, by (e) are documents that had been issued or on
which the property, the description of which is file with the Register of Deeds. The same
given in said document, is mortgaged, leased or documents also indicate the particulars of a
encumbered, or an authenticated copy of said certificate of title or the circumstances
document showing that its original had been surrounding its issuance.
registered; and
(f) Any other document which, in the judgment of The case at bench presents a similar factual
the court, is sufficient and proper basis for
reconstituting the lost or destroyed certificate backdrop in Santua, where this Court was
of title. confronted with the issue "should the courts
grant a petition for reconstitution of a
certificate of title on the basis of a tax
3.For liens and encumbrances: (Section 4 of RA No. declaration, survey plan and technical
2c) description?
(a) Annotations or memoranda appearing on the
owner's, co-owner's, mortgagee's or lessee's
duplicate; In Santua, this Court ruled that tax
(b) Registered documents on file in the registry of declarations, technical descriptions and lot
deeds, or authenticated copies thereof showing plans are not valid bases of reconstitution.
that the originals thereof had been registered; Elaborating on this point, this Court thus
and reasoned:
(c) Any other document which, in the judgment of
the court, is sufficient and proper basis for The tax declaration obviously does not serve as
reconstituting the liens or encumbrances a valid basis for reconstitution. For one, we
affecting the property covered by the lost or
destroyed certificate of title. cannot safely rely on Tax Declaration No.
15003-816 as evidence of the subject property
being covered by TCT No. T-22868 in the
Where to file: name of respondent because a tax declaration
• Section 12, RA 26: Petitions for reconstitution is executed for taxation purposes only and is
from sources enumerated in sections (2(c), 2(d), actually prepared by the alleged owner himself.
2(e), 2(f), 3(c), 3(d), 3(e) and/or 3(f) of this Act, In fact, in Heirs of Eulalio Ragua v. Court of
shall be filed with the proper Court of First Appeals, the Court pronounced that a tax
Instance, by the registered owner, his assigns, or
any person having an interest in the property. declaration is not a reliable source for the
• Section 5, RA 26: Petitions for reconstitution reconstitution of a certificate of title.
from sources enumerated in sections 2(a), 2(b),
3(a), 3(b), and/or 4(a) of this Act may be filed At most, the tax declaration can only be prima
with the register of deeds concerned by the facie evidence of possession or a claim of
registered owner, his assigns, or other person ownership, which however is not the issue in a
having an interest in the property. reconstitution proceeding. A reconstitution of
• Section 10, RA 26: Nothing shall prevent any title does not pass upon the ownership of the
registered owner or person in interest from filing land covered by the lost or destroyed title but
the petition mentioned in section five of this Act
directly with the proper Court of First Instance, merely determines whether a re-issuance of
based on sources enumerated in sections 2(a), such title is proper.
2(b), 3(a), 3(b) and/or 4(a) of this Act.

85
As for the survey plan and technical Liberal construction of the Rules of Court does
descriptions, the Court has previously not apply to land registration cases. Indeed, to
dismissed the same as not the documents further underscore the mandatory character of
referred to in Section 3(f) but merely these jurisdictional requirements, the Rules of
additional documents that should accompany Court do not apply to land registration cases. In
the petition for reconstitution as required under all cases where the authority of the courts to
Section 12 of RA 26 and Land Registration proceed is conferred by a statute, and when the
Commission Circular No. 35. Moreover, a survey manner of obtaining jurisdiction is prescribed by
plan or technical description prepared at the a statute, the mode of proceeding is mandatory,
instance of a party cannot be considered in his and must be strictly complied with, or the
favor, the same being self-serving. Further, in proceeding will be utterly void. When the trial
Lee v. Republic, the Court declared the court lacks jurisdiction to take cognizance of a
reconstitution based on a survey plan and case, it lacks authority over the whole case and
technical descriptions void for lack of factual all its aspects. All the proceedings before the
support. trial court, including its order granting the
petition for reconstitution, are void for lack of
jurisdiction.
Guided by the foregoing pronouncements, this
Court finds that the heirs of Buendia failed to
present a valid basis for the reconstitution of Moreover, "strict observance of the rules is vital to
the four unnamed TCTs. Without a valid source prevent parties from exploiting reconstitution
proceedings as a quick but illegal way to obtain
for reconstitution, it cannot be ascertained Torrens certificate of titles over parcels of land
whether the lost or destroyed TCTs have, in

VI. LAND TITLES AND DEEDS

which turn out to be already covered by existing
fact, been issued to Felicisima or her titles."
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 the trial court
cannot acquire jurisdiction over the petition for
reconstitution.

Along this line, in Castillo v. Rep. of the Phils.,

this Court belabored that the manner by which
courts obtain jurisdiction to hear cases
involving reconstitution of title is anchored on
a strict compliance with the requirements of
R.A. No. 26, as borne by the fact that:

86
 VII. WILLS AND SUCCESSION
A. General Provisions (Civil Code, arts. 774-
782) C. Intestate Succession
B. Testamentary Succession D. Provisions Common to Testate and
Intestate Succession (Civil Code, arts.
A. GENERAL PROVISIONS 1015- 1105)
(CIVIL CODE, ARTS. 774-782) CHARACTERISTICS OF A WILL
‘Succession’ - Mode of acquisition by virtue of 1. Strictly personal
which property, rights and obligations to the 2. Unilateral and individual act
extent of the value of the inheritance of a person 3. Formal and solemn
are transmitted through his death to another or
others either by his will or by operation of law. 4. Mortis causa
(Art 774 NCC) 5. Ambulatory and revocable

‘Inheritance’ - includes all the property, rights and NON-DELEGABILITY OF TESTAMENTARY POWER
obligations of a person which are not General Rule: The duration or efficacy of the
extinguished by his death. (Art 776 NCC) The designation of heirs, devisees or legatees, or the
inheritance of a person includes not only the determination of the portions which they are to
property and the transmissible rights and take, when referred to by name, cannot be left to
obligations existing at the time of his death, but the discretion of a third person. (Art. 785 NCC)
also those which have accrued thereto since the
opening of the succession. (Art 781 NCC)
‘Strictly Personal’
a. Execution cannot be left in whole or in part to
‘Decedent’ - person whose property is transmitted the discretion of third person
through succession; if he left a will, he is also b. Duration or efficacy of institution of heirs or
called testator. (Art 775 NCC) portions to be given cannot be left to the
discretion of third person
‘Heir’ - a person called to succession either by XPN: Testator may entrust to a third person the
the provision of a will or by operation of law. distribution of specific property or sums of money
Devisees are persons to whom gift of real left to a specified class or cause and the
property is given in a will, while legatees are designation of persons, institutions and
persons given the gift of personal property in a establishments to which property or money is to
will. (Art 782 NCC) be given (Art 786 NCC)

Succession occurs at the moment of death Kinds of Wills:

• Article 440. The possession of hereditary 1. Notarial will – Articles 804-806, C 807-808 in
property is deemed to be transmitted to the special cases
heir without interruption from the instant of 2. Holographic – Articles 804 C 810
the death of the decedent, in case the
inheritance be accepted.”
• Article 777. The rights to the succession are Interpretation (Arts. 788-78G)
transmitted from the moment of the death of GR: When the words of the will are clear, they
the decedent. shall be taken in their ordinary or grammatical
• Relevant Provisions of the Rules of Court: Rule sense.
88-90 of the Rules of Court; Rule 90, pay XPN: It appears that the testator intended to give
debts first before distribution. Money debts another meaning to them.
are actually paid by the heirs because the
residue for distribution is diminished; From GR: Words which are technical shall be interpreted in
moment of death, heir acquires vested right
over inheritance. (Estate Hemady vs. Luzon their technical sense.
Surety [1956]) XPN:
a. When it indicates a contrary intention on the
Kinds of Succession part of the testator; or
b. It (satisfactorily) appears that the will was
a. Testate or Testamentary Succession - refers to solely drafted by the testator, and he was
a situation where the person dies leaving a unacquainted with the technical sense of the
last will. language used therein.
b. Intestate or Legal Succession - refers to a • If the error or ambiguity appears from the
situation where the person died without a last context of the will or from extrinsic
will; the share in the inheritance is called evidence (intrinsic), mistakes and
“intestate share. omissions must be corrected. This is
c. Mixed Succession - partly by will and partly by excluding the oral declarations of the
operation of law. testator as to his intention.
• If the ambiguity arises upon the face of the
B. TESTAMENTARY SUCCESSION 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
1. WILLS – CIVIL CODE, ARTS. 783-7G5 circumstances under which it was made.
This also excludes the oral declarations of
‘Wills’ the testator.
A will is an act whereby a person is permitted, • Testacy is preferred to intestacy. If a
with the formalities prescribed by law, to control testamentary disposition admits of
to a certain degree the disposition of his estate, to different interpretations, in case of doubt,
take effect after his death. that interpretation by which the disposition
is to be operative shall be preferred.

87
Can oral declarations be used in interpretation of Formal Requisites of Notarial Wills
wills? 1. The will must be in writing (Article 804);
No. It is expressly provided in the law that oral 2. It must be in the language or dialect known
declarations are excluded to be used in to the testator;
interpreting wills. Because to do so would 3. The will must be signed by the testator or by
result in fraud, as the words of a dead man can another person in his presence or under his
be distorted or perjured. This is to prevent express direction (Article 805);
prevarication by the witnesses whose 4. That the signing by the testator or by the
testimony as to the oral declarations of the person under his express direction and in his
testator may no longer be disputed by the latter presence must be done in the presence of
whose lips have been sealed by death. at least 3 instrumental witnesses;
5. That the will is attested and subscribed by at
APPLICABLE LAW AS TO FORM AND SUBSTANCE OF least 3 credible witnesses in the presence of
the testator and of each and every one of
A WILL them;
• As to FORM or extrinsic validity – the law in 6. That the will must be signed by the testator
force at and by at least 3 credible witnesses on the
left hand margin on each and every page;
the time of execution of the will. (Art. 795) 7. That the will must be numbered correlatively
• As to SUBSTANCE or intrinsic validity – in letters;
governed by the law in force at the time of 8. That the signing by the 3 witnesses must
decedent’s death. be done in the presence of the testator and
each and every one of them;
9. There must be an Attestation clause stating

VII. WILLS AND SUCCESSION

2. TESTAMENTARY CAPACITY – CIVIL CODE, ARTS. therein the number of pages upon which the
7G6-803 will is written, a statement that the
testator signed the will or another person
signed the will under the express direction
Refers to the ability as well as the power to make of the testator;
a will. 10. The will is signed at the left margin by the
1. All persons not expressly prohibited by law testator and the 3 instrumental witnesses
2. 18 years old and above in the presence of the testator and of one
another;
3. Sound mind 11. The will must be acknowledged before a notary
Juridical persons cannot execute wills due to
the requirement of soundness of mind. public (Article 806).

‘Sound mind’ Additional Requirements

• To be of sound mind, it is not necessary that If testator is deaf or deaf-mute, must either:
the testator be in full possession of all his 1. Read will personally, if able to do so;
reasoning faculties, or that his mind be 2. Otherwise, he shall designate 2 persons to
wholly unbroken, unimpaired, or read it C communicate to him the contents.
unshattered by disease, injury or other (Art 807 NCC)
cause. [Article 799 NCC]
• It shall be sufficient if the testator was able If testator is blind, the will shall be read to him twice:
at the time of making the will to know the
nature of the estate to be disposed of, the 1. Once by one of the subscribing witnesses, and
proper objects of his bounty, and the 2. Again by the notary public before whom it is
character of the testamentary act. acknowledged. (Art 808 NCC)

‘Presumption of Sanity’ Attestation Clause - Constitutes a certification by

• A testator is presumed to be of sound mind the witnesses that requirements of law have
at the time of the execution of the will in the been complied with. It must state:
absence of proof to the contrary. [Art 800 a. the number of pages used upon which the
NCC] will is written
• The burden of proof that the testator was b. the fact that the testator signed the will and
not of sound mind at the time of making his every page thereof, or caused some other
dispositions is on the person who opposes person to write his name, under his express
direction, in the presence of the instrumental
the probate of the will. witnesses.
c. that the latter witnessed and signed the will
‘Presumption of Insanity’ and all the pages thereof in the presence of
if the testator, one month, or less, before the testator and of one another. If the
making his will was publicly known to be attestation clause is in a language not known
insane, the person who maintains the validity to the witnesses, it shall be interpreted to
of the will must prove that the testator made it them.
during a lucid interval.
‘SUBSTANTIAL COMPLIANCE RULE’
3. NOTARIAL AND HOLOGRAPHIC WILLS; • In the absence of bad faith, forgery, or fraud, or
undue and improper pressure and influence,
JOINT WILL – CIVIL CODE, ARTS. 804-81G defects and imperfections in the form of
attestation or in the language used therein
Common Requirements for both notarial and shall not render the will invalid if it is proved
that the will was in fact executed and attested
holographic wills in substantial compliance with all the
1) In Writing requirements of Article 805. (Art. 809)
2) In a language or dialect is known to the
testator.
• Oral wills are not recognized in the Civil
Code.
• The provisions of Art. 804 are mandatory.
Thus, failure to comply with the two
requirements nullifies the will.

88
• What is imperative for the allowance of a Assuming the CA correctly appreciated
will despite the existence of omissions is substantial compliance with the formalities of the
that such omissions must be supplied by attestation clause under Art. 805, the same
an examination of the will itself, without cannot be applied to the requirement of
the need of resorting to extrinsic acknowledgment under Art. 806. To reiterate,
evidence. "However, those omissions Aida and the witnesses did not acknowledge the
which cannot be supplied except by will before a notary public. The CA did not even
evidence aliunde would result in the bother to discuss this requirement. Viewed from
invalidation of the attestation clause and this light, we cannot, by any stretch of
ultimately, of the will itself.” imagination, accept the supposed validity of the
• An examination of the will in question will absent total compliance with the requisite
reveals that the attestation clause indeed acknowledgement. The CA likewise, cannot
failed to state the number of pages conveniently rely on Aida's Revocable Living
comprising the will. Trust in allowing the will. The living trust simply
• However, as was the situation in Taboada, provides the proportion of the United States and
this omission was supplied in the Philippine shares to be given to the beneficiaries.
Also, the living trust was presented to the District
Acknowledgment. It was specified therein Court, Clark Country, Nevada, which is a distinct
that the will is composed of four pages, proceeding from the probate of the will here in
the Acknowledgment included. (MARGIE the Philippines. Hence, the living trust is
SANTOS MITRA VS. PERPETUA L. SABLAN-- evidence aliunde that is not allowed to fill a void
GUEVARRA, REMEGIO L. SABLAN, ET AL. or to supply missing details that should appear in
[G.R. No. 213994, April 18, 2018 ]) the will itself.

KUCSKAR V. SEKITO, JR., Lastly, Linda's failure to object at the onset of the

VII. WILLS AND SUCCESSION

probate proceedings does not relieve the
G.R. NO. 23744G, DECEMBER 2, 2020 proponent of the will from establishing that it
J. Lopez complied with the legal formalities. Estoppel is
Obviously, Aida's will cannot pass as not applicable in probate proceedings because
holographic because it is not entirely in her they involve public interest. Otherwise, the truth
handwriting. At most, the will may be as to the circumstances surrounding the
classified as a notarial will. However, an execution of a testament may not be ascertained
examination of the will reveals that only two which is inimical to public policy.
witnesses attested its execution. The
witnesses did not sign on each and every IN THE MATTER OF THE PETITION FOR THE
page of the will. The attestation clause failed PROBATE OF THE LAST WILL AND TESTAMENT OF
to state the total number of pages. Worse, CECILIA ESQUERRA COSICO, THELMA ESQUERRA
Aida and the witnesses did not acknowledge
the will before a notary public. It bears GUIA V JOSE M. COSICO, JR., MANUEL M. COSICO,
emphasis that the CA adopted the MINERVA
substantial compliance rule in allowing the M. COSICO AND ELANOR M. COSICO-CHAVEZ
will despite the defects in its attestation G.R. NO. 246GG7, MAY 5, 2021
clause. In Taboada v. Hon. Rosal and Azuela J. Lazaro-Javier
v. Court of Appeals, the Court permitted the
probate although the number of pages was While the law imposes the requirement only
not stated in the attestation clause but when the testator is blind, the Court has
expanded its coverage to those who are
elsewhere in the will. In Lopez v. Lopez, illiterate. The case of Alvarado elucidates: “The
however, We held that the attestation must rationale behind the requirement of reading the will
state the number of pages used upon which to the testator if he is blind or incapable of
the will is written. The purpose is to reading the will himself (as when he is illiterate),
safeguard against possible interpolation, or is to make the provisions thereof known to him,
omission of one, or some of its pages and so that he may be able to object if they are not in
prevent any increase or decrease in the accordance with his wishes. Clear from the
pages. Further, the substantial compliance foregoing is that Art. 808 applies not only to
rule applies only to imperfections which can blind testators but also to those who, for one
be explained through examination of the will reason or another, are "incapable of reading their
itself, thus: wills.“

x x x The rule must be limited to HOLOGRAPHIC WILL

disregarding those defects that can be a will that is entirely written, dated and signed
supplied by an examination of the will itself: by the hand of the testator himself.
whether all the pages are consecutively
numbered; whether the signatures appear in Requisites of valid holographic will
each and every page; whether the 1. In writing;
subscribing witnesses are three or the will
was notarized. All these are facts that the 2. Executed in a language or dialect known
to the testator;
will itself can reveal, and defects or even 3. Entirely written, dated C signed by the hand
omissions concerning them in the of the testator himself.
attestation clause can be safely disregarded.
But the total number of pages, and whether
all persons required to sign did so in the Witness during probate (Art. 811)
presence of each other must substantially • If probate of holographic will is not
appear in the attestation clause, being the contested, 1 witness is enough.
only check against perjury in the probate • If contested, atleast 3 witnesses.
proceedings. • Absence of witness, expert testimony may be
resorted to.

8G
Additional dispositions after the testator’s signature RULING: The notary public before whom the will
(Arts. 812-813) was acknowledged cannot be considered as the
• the dispositions of the testator written below third instrumental witness since he cannot
his signature must be dated and signed by him acknowledge before himself his having signed the
in order to make them valid as testamentary will. To acknowledge before means to avow; to
dispositions. own as genuine, to assent, to admit; and "before"
• When a number of dispositions appearing in a means in front or preceding in space or ahead of.
holographic will are signed without being Consequently, if the third witness were the
dated, and the last disposition has a signature notary public himself, he would have to avow
and a date, such date validates the assent, or admit his having signed the will in
dispositions preceding it, whatever be the front of himself. This cannot be done because he
time of prior dispositions. cannot split his personality into two so that one
will appear before the other to acknowledge his
Alternations and Insertions (Art. 814) participation in the making of the will. To permit
In case of any insertion, cancellation, erasure or such a situation to obtain would be sanctioning a
alteration in a holographic will, the testator must sheer absurdity.
authenticate the same by his full signature.
IN THE MATTER OF THE PETITION FOR THE
Formality of will executed abroad by Filipino (Art. PROBATE OF THE WILL OF CONSUELO SANTIAGO
815) When a Filipino is in a foreign country, he is GARCIA VS. NATIVIDAD GARCIA SANTOS
authorized to make a will in any of the forms G.R. NO. 2047G3, JUNE 8, 2020
established by the law of
the country in which he may be. Such will J. Hernando
may be probated in the Philippines. ISSUE: Whether lawyers may act as witnesses to
execution of wills.
RULING: Lawyers are not disqualified from being

VII. WILLS AND SUCCESSION

Formality of will executed abroad by alien (Art. 816)
witnesses to a will; the subscribing witnesses
The will of an alien who is abroad produces effect testified to the due execution of the will. Article
in the Philippines if made with the formalities 820 of the Civil Code provides that, "[a]ny person
prescribed by: of sound mind and of the age of eighteen years or
a. the law of the place in which he resides, or more, and not blind, deaf or dumb, and able to
b. according to the formalities observed in his read and write, may be a witness to the
country, or execution of a will mentioned in Article 805 of this
c. in conformity with those which this Code Code." Here, the attesting witnesses to the will in
prescribes. question are all lawyers equipped with the
aforementioned qualifications.
Formality of will executed in the Philippines by alien
Legatee or Devisee (including spouse, or parent, or
(Art. 817)
child) as witness (Art. 823)
A will made in the Philippines by a citizen or
subject of another country, which is executed in The will is valid but the legacy or devise is void,
accordance with the law of the country of which unless there are three other competent
he is a citizen or subject, and which might be witnesses to such will.
proved and allowed by the law of his own
country, shall have the same effect as if Creditor may act as witness - A mere charge on
executed according to the laws of the the estate of the testator for the payment of
Philippines. debts due at the time of the testator’s death does
not prevent his creditors from being competent
Joint Wills (Arts. 818-81G) witnesses to his will (Art. 824)
• Two or more persons cannot make a will
jointly, or in the same instrument, either for 5. CODICILS AND INCORPORATION BY
their reciprocal benefit or for the benefit of a REFERENCE – CIVIL CODE, ARTS. 825-827
third person.
• Joint wills executed by Filipinos in a foreign
country shall not be valid in the Philippines, Codicil - is supplement or addition to a will, made
even though authorized by the laws of the after the execution of a will and annexed, to be
country where they may have been executed. taken as a part thereof, by which disposition
made in the original will is explained, added to,
or altered. (Art. 825)
4. WITNESSES TO A NOTARIAL WILL; • It must be executed with formalities of a valid
QUALIFICATIONS AND DISQUALIFICATIONS – will to be effective. (Art. 826)
CIVIL CODE, ARTS. 820-824
Requisites of Incorporation by Reference (Art. 827)
If a will, executed as required by this Code,
WITNESSES TO A NOTARIAL WILL (QUALIFICATION AND incorporates into itself by reference any
DISQUALIFICATIONS) document or paper, the following requisites must
Credible Witnesses be present:
(1) The document or paper referred to in the will
1. Of sound mind; must be in existence at the time of the
2. 18 years or more; execution of the will;
3. Not blind, deaf or dumb; (2) The will must clearly describe and identify
the same, stating among other things the
4. Able to read and write; number of pages thereof;
5. Domiciled in the Philippines; (3) It must be identified by clear and satisfactory
6. Has not been convicted of falsification, proof as the document or paper referred to
perjury or false testimony. therein; and
(4) It must be signed by the testator and the
CRUZ V. VILLASOR witnesses on each and every page, except in
case of voluminous books of account or
G.R. No. L-32213, November 26, 1G73 inventories.
J. Esguerra
ISSUE: Whether the notary public may act as the
third G0
witness.
6. CONFLICT RULES – CIVIL CODE, ARTS. 16-17 • This doctrine is usually applied where the
testator cancels or destroys a will or executes an
instrument intended to revoke a will with a
• Please see Articles 15, 16, 17 NCC and Renvoi present intention to make a new testamentary
under disposition as a substitute for the old, and the
new disposition is not made or, if made, fails of
I. EFFECTIVITY AND APPLICATION OF LAWS effect for same reason. The doctrine is not
(page 13) limited to the existence of some other
document, however, and has been applied where
a will was destroyed as a consequence of a
7. REVOCATION OF WILLS – CIVIL CODE, ARTS. mistake of law.
828-834
8. REPUBLICATION AND REVIVAL OF WILLS – CIVIL
‘Revocation’ - an act of the mind terminating the CODE, ARTS. 835-837
potential capacity of a will to operate at the
death of the testator manifested by some
outward and visible act or sign symbolic thereof. Republication
• A will may be revoked by the testator at any • The testator cannot republish, without
time before his death. Any waiver or restriction reproducing in a subsequent will, the
of this right is void. (Art. 828) dispositions contained in a previous one which is
void as to its form. (Art. 835)
• The execution of a codicil referring to a previous
Different Modes of Revocation will has the effect of republishing the will as
1. By implication or operation of law - legal modified by the codicil. (Art. 836)
separation, annulment of marriage,
preterition, unworthiness Revival
2. By overt act (burning, tearing, obliterating) -

VII. WILLS AND SUCCESSION

• If after making a will, the testator makes a
Animus revocandi and corpus second will expressly revoking the first, the
3. By a revoking will or codicil - new will must be revocation of the second will does not revive the
first will, which can be revived only by another
valid will or codicil. (Art. 837)

Revocation outside of Philippines by a person who G. ALLOWANCE AND DISALLOWANCE OF WILLS –

does not have his domicile in this country is valid
when it is done according to: CIVIL CODE, ARTS. 838-83G
(i) the law of the place where the will was made,
or Probate - The act of proving before a competent
(ii) according to the law of the place in which court the due execution of a will by a person with
the testator had his domicile at the time; testamentary capacity and the approval of the will
• If the revocation takes place in this country, it by said court
is valid when it is in accordance with the • Probate of the will is MANDATORY - No will shall
provisions of this Code. (Art. 829) pass either real or personal property unless it is
proved and allowed in accordance with the Rules
of Court. (Art. 838)
IMPLIED REVOCATION - Subsequent wills which do • Ante-mortem probate - the testator himself may,
not revoke the previous ones in an express during his lifetime, petition the court having
manner, annul only such dispositions in the prior jurisdiction for the allowance of his will.
wills as are inconsistent with or contrary to those • Post-mortem probate – probate of the will after
contained in the later wills. (Art. 831) death of the testator
• Conclusive on due execution - subject to the right
EXPRESS REVOCATION - A revocation made in a of appeal, the allowance of the will, either during
subsequent will shall take effect, even if the new the lifetime of the testator or after his death,
will should become inoperative by reason of the shall be conclusive as to its due execution.
incapacity of the heirs, devisees or legatees
designated therein, or by their renunciation. (Art. Matters to be proved during probate:
832) 1. Whether the instrument which is offered for
probate is the last will and testament of the
Effect on the Recognition of a Non-Marital Child decedent
• The recognition of an illegitimate child does not 2. Whether the will has been executed in accordance
lose its legal effect, even though the will with the formalities prescribed by law
wherein it was made should be revoked. (Art. 3. Whether the testator had testamentary capacity
834) at the time of the execution of the will
• Under the Family Code, admission of
illegitimate filiation in a will would constitute
proof of illegitimate filiation. Basically, the Grounds for disallowance of a will (Art. 83G)
principle laid down in Article 834 remains (1) If the formalities required by law have not been
unaltered regarding these admissions complied with;
contained in wills. (2) If the testator was insane, or otherwise mentally
incapable of making a will, at the time of its
execution;
Revocation Based on a False Cause (3) If it was executed through force or under duress,
A revocation of a will based on a false cause or or the influence of fear, or threats;
an illegal cause is null and void. (Art. 833) (4) If it was procured by undue and improper
pressure and influence, on the part of the
Theory of Dependent Relative Revocation beneficiary or of some other person;
(5) If the signature of the testator was procured by fraud;
DE MOLO V MODO, ET AL. (6) If the testator acted by mistake or did not
G.R. NO. L-2538, SEPTEMBER 21, 1G51 intend that the instrument he signed should be
En Banc his will at the time of affixing his signature
• The revocation by destruction or overt act is thereto.
good only if the condition is fulfilled, namely,
the revoking will is valid. If, the condition not
fulfilled, the revocation by overt act did not
materialize. G1
10. INSTITUTION AND SUBSTITUTION OF HEIRS Collective Institution
– • there is a disposition made in general terms
CIVIL CODE, ARTS 840-870 in favor of the testator’s relatives
• When the testator institutes some heirs
individually and others collectively.
INSTITUTION OF HEIRS • General Rule: Those collectively designated
is an act by virtue of which a testator designates shall be considered as individually instituted.
in his will the person or persons who are to • XPN: unless it clearly appears that the
succeed him in his property and transmissible intention of the testator was otherwise (Article
rights and obligations. 847, NCC)

Limitations on the institution of heirs Article G5G of the Civil Code

• Will not containing an Institution of Heir (Art. “A disposition made in general terms in favor of
the testator's relatives shall be understood to be
841) in favor of those nearest in degree.”
• A will shall be valid even though it should not
contain an institution of an heir, or such Proscription Against Successive Institution
institution should not comprise the entire
estate, and even though the person so When the testator calls to the succession a
instituted should not accept the inheritance or person and his children they are all deemed to
should be incapacitated to succeed. have been instituted simultaneously and not
successively. (Art. 849)
Rule for Testamentary Dispositions
In case a Will does not contain an Institution of Proportionate Increase or Decrease (Arts. 852-853)
Heir, the testamentary dispositions made in • If it was the intention of the testator that the
instituted heirs should become sole heirs to the

VII. WILLS AND SUCCESSION

accordance with law shall be complied with and
the remainder of the estate shall pass to the whole estate, or the whole free portion, as the
legal heirs. (764) 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
Designation of Heir the whole inheritance, or the whole free
a. The testator shall designate the heir by his portion, each part shall be increased
name and surname, and when there are two proportionally.
persons having the same names, • If each of the instituted heirs has been given an
b. He shall indicate some circumstance by aliquot part of the inheritance, and the parts
which the instituted heir may be known. together exceed the whole inheritance, or the
c. Even though the testator may have omitted whole free portion, as the case may be, each
the name of the heir, should he designate part shall be reduced proportionally.
him in such manner that there can be no
doubt as to who has been instituted, the PRETERITION (Art. 854)
institution shall be valid. (Art. 843)
• Omission in the testator’s will of one, some or all of
the compulsory heirs in the direct line,
Effect of Error in Name (Art. 844) whether living at the time of the execution of
General Rule: An error in the name, surname, or the will or born after the death of the testator.
circumstances of the heir shall not vitiate the
institution when it is possible, in any other
manner, to know with certainty the person Requisites:
instituted. (i)Omitted heir is compulsory heir in the direct line
1. The children whether legitimate or illegitimate
Effect of Similarities in Name (Art. 844) 2. The parents in the absence of the children.
General Rule: If among persons having the same • A spouse is a compulsory heir but NOT
names and surnames, there is a similarity of in the direct line
circumstances in such a way that, even with the • By fiction of law, an adopted child is
use of other proof, the person instituted cannot be a compulsory heir in the direct line
identified, none of them shall be an heir. (ii)Omission must be total and complete in character
• If there was a donation given to the
Unknown person (Art. 845) compulsory heir during the lifetime of the
Every disposition in favor of an unknown person testator, and such heir is omitted from the
shall be void, unless by some event or will, there is no preterition because he is not
circumstance his identity becomes certain. omitted from the inheritance.
However, a disposition in favor of a definite class • There must be omission from the inheritance,
or group of persons shall be valid. not merely from the will. The donations made
to compulsory heirs during the lifetime of the
testator, upon the death of the testator, the
Effect of Institution Without Designation values of these donations are brought back
Heirs instituted without designation of shares shall to the value of the estate through collation.
inherit in equal parts (Art. 846, NCC) (iv) Preterition annuls the institution of an heir BUT
does not affect devise and legacy if not inofficious.
Institution of Brothers and Sisters (v) If the omitted compulsory heirs should die
• General Rule: If the testator should institute his before the testator, the institution shall be
brothers and sisters, and he has some of full
blood and others of half blood, the inheritance effectual, without prejudice to the right of
shall be distributed equally representation.
• XPN: a different intention appears. (Art. 848,
NCC) SUBSTITUTION OF HEIRS
Substitution of heirs is the appointment of another
Statement of a False Cause heir, so that he may enter into the inheritance in
default of the heir originally instituted.
• General Rule: shall be considered as not written;
• XPN: it appears from the will that the testator
would not have made such institution if he
had known the falsity of such cause. (Art. 850,
G2
NCC)
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
NOT IMPOSED and shall in no manner
Appointment of Substitute Heirs prejudice the heir, even if the testator should
The testator may appoint one or more otherwise provide.
substitute heir or heirs instituted in case of: • Reason: in testamentary disposition, the
condition is not as important as the generosity
a. Predecease and liberality of the testator.
b. Renunciation
c. Incapacity Vague Wording of Conditions
If a condition is so vaguely worded that even
after applying rules on construction and
Purposes of Substitution interpretation, it is still meaningless, contradictory,
1. To avoid intestate succession; or cannot be understood, the conditions will be
2. To prevent the descent of the estate of the regarded as an impossible condition and should
testator to whom the testator does not therefore be disregarded.
want to succeed him in his property
whether by right of representation, or by When is the time to be considered on whether a
right of accretion or by right of intestate condition is impossible or illegal?
succession; Time when the condition is supposed to be fulfilled.
3. To allow the testator greater freedom to

VII. WILLS AND SUCCESSION

help or reward those who by reasons of
services rendered are more worthy of If the disposition is subject to a:
his affection and deserving of his bounty 1. Suspensive term – The legal heirs can enjoy
than intestate heirs; possession of the property until the expiration
4. To enable the testator to make of the period but they must put up a bond
arrangements for his succession in the (caucion muciana) in order to protect the right
manner most convenient for him; of the instituted heir.
5. To realize some honorable purpose of the 2. Resolutory term – The legal heirs can enjoy
possession of the property but when the term
testator like the maintenance of the arrives, he must give it to the legal heirs. The
property within his property because in instituted heir does not have to file a bond.
substitution, the testator to some extent
may preserve the property within the General Rule: No Charge, Condition or
confines of his own immediate family and Substitution on Legitimes (Art 872 C 905)
prevent the estate from descending to XPN: The testator can validly impose a prohibition
the other legal heirs like the brothers or against the partition of the legitime for a period
sisters. not exceeding 20 years. (Art 1083)
• Art 1083 provides: Every co-heir has a right to
You can have a substitute for a legatee or demand the division of the estate, unless the
devisee because Article 857 applies to the testator should have expressly forbidden its
free portion and not to the legitime partition, in which case the priod of indivision
shall not exceed 20 years as provided in Art
494.
Fideicommissary Substitution • This power of prohibition applies to legitime.
A fideicommisary substitution is one by virture • Even though forbidden by the testator, the co
of which the fiduciary or first heirs is entrusted ownership terminates when any of the cause
with the obligation to preserve and transmit to for which partnership is dissolved takes place,
a second heir called the fideicommissary the or when the court finds for a compelling
whole a part of the inheritance. The power to reasons that division should be ordered, upon
appoint a fideicommissary substitute is also petition of one of the co-heirs.
part of the testator’s freedom of disposition.
The Condition Not to Marry:
Requisites of Fideicommissary Substitution Absolute Prohibition
a. First heir (fiduciary) called to enjoy that 1. To contract a 1st marriage Absolute void and
estate and entrusted with the obligation to may be disregarded or considered not
preserve and to transmit to a second heir imposed Reason: contrary to good morality
(fideicommissary) the whole or part of the and public policy
inheritance. 2. To remarry
b. Second heir must not go beyond one • General Rule: It shall be void if it is contrary
degree from the 1st heir to morality and public policy
c. Both must be living when testator died • XPN: valid
 When imposed on the widow or widower
d. Cannot burden the legitime. by the deceased spouse
 When imposed on the widow or widower
The nullity of the fideicommissary substitution by the ascendants or descendants of the
does not prejudice the validity of the deceased spouse (not the ascendants or
institution of the heirs first designated; the descendant of the widow or widower)
fideicommissary clause shall simply be • Rationale: justified because of sentimental and
considered as not written. [Article 868, NCC] economic reasons.

G3
Relative Prohibition How to Compute the Exact Amount of Legitime (Art.
1. To contract a 1st marriage G08)
2. To remarry To determine the legitime, the value of the
• Valid: relative prohibition to marry a property left at the death of the testator shall be
particular girl or at a particular time or considered, deducting all debts and charges,
for a number of years which shall not include those imposed in the will.
• XPN: unless impossible or illegal To the net value of the hereditary estate, shall
• Invalid: when condition becomes onerous be added the value of all donations by the
or burdensome like don’t marry for 60 testator that are subject to collation, at the time
years or don’t marry in Asia (the prohibition he made them.
is actually an absolute)
Steps in the computation and distribution of
A stopping of a usufruct, allowance, or personal hereditary estate
prestation the moment the heir, legatee, or 1. Gross value of the estate
devisee marries or remarries – JUSTIFIED since 2. Deduct debts and charges
the law allow 3. Add to the net estate value of donation inter vivos
their giving for the time during which the (collation)
person 4. Determine legitime based on rules
remains unmarried or in widowhood 5. Impute donation inter vivos (collation),
against the legitime if donee is a compulsory
Disposicion Captatoria (Art. 875) heir, against the free portion if stranger
6. Distribute remaining after satisfaction of
Any disposition made upon the condition that legitime based on will.

VII. WILLS AND SUCCESSION

the heir shall make some provision in his will in
his favor of the testator or of any other person
shall be void. Basic Rules on Legitime
• Note: Both the condition and disposition are • Legitimate children always get ½ of estate
VOID. • Legitimate parents always get ½ (if not
• Rationale: This is also called legacy-hunting excluded by legit child)
disposition. It tends to make the execution of • No representation in the ascending line
a will a contractual act, hence, void. • Legitime of spouse is same as 1 legit child,
except when there is only one child, give ¼
taken from free portion
‘Modal Institution’
• Get legitime of illegitimate children from free portion
• Also called Institution Modal or Institucion
SubModo after surviving spouse is paid
• Is not a condition but when and if it is • NEVER REDUCE the legitime of legitimate
violated, the instituted heir is supposed to children and surviving spouse because they
forfeit the inheritance; to return indeed are the preferred compulsory heirs.
anything he may have received together • Legitime of illegitimate children will be
with its fruits and interest, if he should reduced pro- rata and without preference
disregard this obligation. (Art. 882) among them if the estate is insufficient
• When the institution of an heir is made, for a
certain purpose or cause (Art 871) Collation in Connection With the Computation of
• The statement of the object of the institution Legitime
or the application of the property left by the
testator or the charge imposed upon him
(Art 882) – such statement shall not be Adding
considered a condition unless it appears Mathematical process of addition the value of
that such was the intention. thing donated to the net value of the hereditary
• “Modo” also signifies every onerous estate
disposition by which the obligor imposed
upon another and thus limited his promise, Charging
such as demanding a loan in exchange for
what the other person receives. The Imputation of value of donation inter vivos
condition can be imposed only on the free against either the legitim or disposable free
portion, never on the legitime (Art 904) portion depending on who is the done

12. COMPULSORY HEIRS; LEGITIME – CIVIL CODE, Return

The act of restoring to the common mass of the
ARTS. 886-G14 hereditary estate, either actually or fictitiously,
any property or right, received by gratuitous title
Compulsory Heirs - are those for whom the law (advance of legitime if compulsory/ officious or
has reserved a portion of the testator’s estate inofficious donation)
which is known as the legitime.
1. Legitimate children and descendants; Not Collationable
2. Surviving spouse; • Legacy or devise in favor of compulsory heir -
charge to free portion not legitime
3. Illegitimate children C descendants; • Donation inter vivos stated not collationable -
4. Legitimate parents C other legitimate charge to free portion not legitime
ascendants; • Expenses for support, education, medical
attendance - not to be considered in
5. Illegitimate parents computation of estate
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)

G4
 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

VII. WILLS AND SUCCESSION

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

legitimate ¼
(descendant)
• Surviving spouse
• 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.
G5
 LEGITIME V. INTESTATE SHARE
SURVIVING HEIR LEGITIME INTESTATE SHARE
Illegitimate 1/3 1/2
children
Surviving spouse 1/3 1/2
(Remaining 1/3 is free portion;
Art.
894, NCC)
Illegitimate 1/4 1/4
children
Surviving spouse 1/8 1/4
Legitimate 1/2 1/2
parents (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

VII. WILLS AND SUCCESSION

Legitimate 1/2 1/2
parents
Surviving spouse 1/4 (taken from the free portion) 1/2
(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 portion All
(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 (or 1/2 1/2
descendant)
1/4 1/2
Surviving spouse
Remaining 1/4 is free portion
(Art.
892, NCC)
Two or more legitimate children 1/2 (divided by the Consider spouse as one
(or their descendants) number of children) legitimate child and divide
Surviving spouse estate by total number
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 since of brothers and sisters;
and nieces, in case of they are not compulsory heirs; nephews and nieces of
deceased siblings) testator may choose to give deceased siblings divide
them something out of the among themselves the share
free portion that pertains to their
parents)
Art. 1001, NCC

G6
Impairment of the Legitime 13. DISINHERITANCE – CIVIL CODE, ARTS. G15-G23
• Heir is entitled to the completion of legitime
• Legitime passes by operation of law. DISINHERITANCE
• System of legitime is a limitation on a A compulsory heir may, in consequence of
testator's power to dispose his estate in a disinheritance, be deprived of his legitime, for
will. Legitime can never be impaired. causes expressly stated by law. Disinheritance
• Compulsory heir may be denied of can only be effected through a will wherein the
legitime only through a valid legal cause therefor shall be specified. (Arts.
disinheritance. 913 C 916 NCC)

Testamentary dispositions that impair or Grounds for Disinheritance

diminish the legitime of the compulsory 1. Article 919 – children and other descendants
heirs shall be reduced, insofar as they may
be inofficious or excessive. (Art. 907) 2. Article 920 – parents and other ascendants
3. Article 921 – Spouse
[Sempio-Dy]

OF PARENTS, LEGITIMATE OR
OF CHILDREN, LEGITIMATE OR OF SPOUSES
ILLEGITIMATE
ILLEGITIMATE (ART. G21) (6 GROUNDS)
(ART. G20) (8 GROUNDS,
(ART. G1G) (8 GROUNDS)
WITH 2,3,4,5 s 7 SAME WITH

VII. WILLS AND SUCCESSION

ART. G1G)

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 or - Same, Art. 920 (4)- Art. 921 (4) - When he/she has
concubinage with testator's given ground for legal
spouse. separation (even if no case is
filed).

4. Caused the testator to make - Same, Art. 920 (5)- -Same, Art. 921 (3) -
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
support children and
testator descendants w/o justifiable refusal to
w/o justifiable cause. cause support the children or other
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 or Art. 920 (6) Loss of Art. 921 (5) - When spouse has
disgraceful life. parental authority for given ground for loss of
causes specified by law parental authority

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

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

G7
Requisites for the Various Grounds for Disinheritance b. If the testator gives this duty to the
1. Valid will; Disinheritance can be made only in compulsory heirs, or to the legatees and
a will. There is no disinheritance in legal devisees, they must comply with their
succession. The will must be valid and duties, subject to the limitations imposed
admitted to probate. by law.
2. Compulsory heir is clearly identified; Only
compulsory heirs can be disinherited, so
brothers and sisters cannot be the subject of Note: The testator is allowed to charge them
disinheritance. with this duty because the right to dispose
3. Based on cause/s sanctioned by law;
4. Total, includes not only the legitime, but also presumes the right.
the free portion. If partial, disinheritance is
not valid, and the heir gets his or her Legacy or Devise of Encumbered Property (Art. G34)
legitime;
• If the testator should bequeath or devise
5. Unconditional; and something pledged or mortgaged to secure a
6. Cause is true C existing. recoverable debt before the execution of the
will, the estate is obliged to pay the debt,
Preterition vs. Disinheritance - Preterition is the unless the contrary intention appears. The
TACIT deprivation of the legitime as same rule applies when the thing is pledged
distinguished from disinheritance which is an or mortgaged after the execution of the will.
EXPRESS deprivation of the legitime. • Any other charge, perpetual or temporary,
with which the thing bequeathed is
Ineffective Disinheritance burdened, passes with it to the legatee or
devisee. If the thing bequeathed should be
• When one or some requisite/s is/are lacking subject to a usufruct, the legatee or devisee
• In preterition, the whole institution of heirs is shall respect such until it is legally
annulled. In invalid disinheritance, the extinguished. (Art 946 NCC)

VII. WILLS AND SUCCESSION

disinherited heir still gets his legitime.
• If will is revoked, disinheritance becomes
ineffective. Legacy of Credit (Art. G35)
• The legacy of a credit against a third person
• Reconciliation renders disinheritance or of the remission or release of a debt of the
ineffective. legatee shall be effective only as regards
that part of the credit or debt existing at the
Reconciliation time of the death of the testator
• Subsequent reconciliation deprives the testator • In the first case, the estate shall comply
of the right to disinherit, and any with the legacy by assigning to the legatee
disinheritance already made becomes all rights of action it may have against the
ineffectual. debtor. In the second case, by giving the
• Reconciliation needs no special form. It can be legatee an acquittance, should he request
express or implied. In UNWORTHINESS (Art. one.
1033), condonation must be in writing. • In both cases, the legacy shall comprise all
• If ground for disinheritance is also a ground interests on the credit or debt which may be
for unworthiness, like abandonment of due the testator at the time of his death.
children or an attempt against the life of the
testator, the heir cannot also inherit. Alternative Legacies or Devises (Article G40)
• But reconciliation extinguishes unworthiness
as an incapacity, because incapacity is only • One which provides that, among several
the presumed will of the testator. things mentioned, only one is to be given.
• The choice is with the heir, or the
executor or administrator.
14. LEGACIES AND DEVISES – CIVIL CODE, • If the heir, legatee, or devisee who is bound
ARTS. G24-G5G to give the gift dies, the right passes to their
heirs.
Legacy and Devise Distinguished • The choice, once made, is irrevocable.
• Legacy is a gift or bequest by will of personal • Apply rules on obligations in general.
property, whereas a devise is a testamentary
disposition of real estate (Black’s Law
Dictionary, 5th Ed.) Legacy of generic property (Art. G41)
• A person who receives by will a gift of a • Legacy of generic personal property is valid
specified item of personal property is a even if there are no things of the same kind
legatee, while a devisee is one who receives by in the estate. The estate will simply have to
will an individualized item of real property. acquire what is given by legacy.
(Paguirigan) • But devise of indeterminate real property is
valid only if there is an immovable property
Who Has the Duty of Giving the Legacies and Devises? of the same kind in the estate at the time of
It depends. testator’s death.
a. As a general rule, if no one is charged with this • The right to choose the legacy belongs to
duty, it is the estate which must give the the executor or administrator who shall
legacies and devises. The estate is of course deliver a thing which is neither of inferior or
represented by the executor, or the superior quality.
administrator with a will annexed. • If the choice is given to the heir, legatee, or
devisee, he may choose whatever he prefers
(need not be of medium quality) (Art. 942).
Note: Under the Rules of Court, this officer is • If the heir, legatee, or devisee cannot make
bound to discharge the devises and legacies. the choice, the right passes to his heirs (Art.
(Rule 81, Sec. 1{b}). As a matter of fact, for 943)
this purpose of discharging, he may even be • Finality of choice – irrevocable, once made.
authorized by the court to alienate personal
and real properties, in order to obtain the
money or things needed. (See Secs. 1 and 2,
Rule 81, Rules of Court).

G8
Legacy for Education (Article G44) Property Not Owned by the Testator
• Lasts until the legatee is of age, or beyond • General Rule: The legacy or devise of a thing
the age of majority in order that he may belonging to another person is void, if the
finish some professional, vocational, or testator erroneously believed that the thing
general course, provided he pursues his pertained to him.
course diligently. • XPN: If the thing bequeathed, though not
• Amount - that fixed by the testator; If the belonging to the testator when he made the
testator did not fix the amount, it is fixed in will, afterwards becomes his, by whatever
accordance with the social standing and title, the disposition shall take effect. (Art.
circumstances of the legatee and the value 930)
of the estate.
Acquisition of Thing Belonging to Another
Legacy of support (Article G44) • General Rule: If the testator orders that a thing
belonging to another be acquired in order that
• It lasts during the lifetime of the legatee. it be given to a legatee or devisee, the heir
• If the testator used to give the legatee a upon whom the obligation is imposed or the
sum of money for support, give same estate must acquire it and give the same to the
amount, unless it is markedly legatee or devisee;
disproportionate to the estate. • XPN: If the owner of the thing refuses to
• If the testator did not fix the amount, alienate the same, or demands an excessive
consider the social standing and price therefor, the heir or the estate shall only
be obliged to give the just value of the thing.
circumstances of the legatee and the value (Art. 931)
of the estate.
Ineffective Legacies/Devises
Order of Payment of Legacies and Devises if Legacy or Devise shall be without effect:
estate is not sufficient

VII. WILLS AND SUCCESSION

(1) Transformation - If the testator transforms the
1. Remuneratory thing such that it does not retain its original
• Those which testator gives because of form or denomination;
his moral obligation to compensate (2) Alienation - If the testator alienates the thing
by any title or for any cause. Reacquisition of
certain persons for services which do not the thing by the testator does not make the
constitute recoverable debts, like legacy legacy or devise valid, unless it is effected by
to one who saved the life of the testator. right of repurchase (pacto de retro) OR
• Entitled to preference because they are reversion is caused by the annulment was
moral obligations of the testator. vitiation of consent on the grantor’s part,
2. Those declared by the testator as either by reason of incapacity or of duress.
preferential. (3) Total loss - If the thing is totally lost during the
3. For support lifetime or after the death of the testator.
4. For education. Disposition in favor of testator's relatives (Art. G5G):
5. Legacy or devise of specific, determinate
thing in the estate. (a) Limited to 5th degree relatives of the testator.
6. Others, pro rata. (Art 950) (b) Nearer excludes the farther.
• Mistake as to name of thing given is of (c) No preference as to lines. Grandson and
no consequence, if thing can be sister are both relatives within second
identified. (Art. 958) degree. What is important is nearness of
degree.
Acceptance or Repudiation of legacy or devise: C. INTESTATE SUCCESSION
General Rule: Acceptance may be total or
partial. XPN: If the legacy/devise is partly Legal Succession – is the kind of succession
onerous and partly gratuitous, the recipient prescribed by law (and presumed by it to be the
desire of the deceased) which takes place when
can not accept the the expressed will of the decedent has not been
gratuitous part and renounce the onerous part. set down in a will.
Any other combination however is permitted.
• Heirs of legatee or devisee can accept the 1. CAUSES OF INTESTACY AND RELATIONSHIP –
gift if the legatee or devisee dies after the CIVIL CODE, ARTS. G60-G6G
death of the testator, not before.
• Legacy or devise not accepted shall be CAUSES OF INTESTACY
merged into the mass of the estate
(intestacy), except in substitution or Legal or intestate succession takes place:
accretion (Art 956). 1. If a person dies without a will, or with a void
• If a compulsory heir is also a legatee or will, or one which has subsequently lost its
devisee, he can accept either or both the validity;
legacy/devise and the legitime, or waive 2. When the will does not institute an heir to, or
dispose of all the property belonging to the
both (Art. 955). testator. In such case, legal succession shall
take place only with respect to the property
Requisites for Validity of which the testator has not disposed.
3. If the suspensive condition attached to the
1. The will must be valid institution of heir does not happen or is not
2. The thing must be within the commerce of fulfilled, or if the heir dies before the testator,
man. (Art. 924) or repudiates the inheritance, there being no
3. The thing must be owned by the testator, substitution, and no right of accretion takes
and not by another person (Art. 930) place;
4. When the heir instituted is incapable of
XPN: Thing owned by the stranger is still valid succeeding, except in cases provided in this
if there Code. (Art. 960, NCC)
is an order to acquire the same (Art. 930-931)

GG
DETERMINATION OF HEIRS When does representation exist
Intestate Heirs, just like compulsory heirs, are a) In testate succession:
determined by law.
• Exists in predecease, incapacity,
and disinheritance.
Who are intestate heirs? • Covers only the legitime, which goes to
1. Legitimate children or descendants the representative by operation of law.
2. Illegitimate children or descendants • There is no right to represent a voluntary heir.
3. Legitimate parents or ascendants b) In intestate succession:
4. Illegitimate parents • Exists also in predecease and incapacity.
5. Surviving spouse • Covers all that the person represented
could have inherited.
6. Brothers and sisters, nephews and nieces
7. Other collateral relatives up to the 5th Lines where representation obtain
degree • With respect to the legitime
8. The State.  in the direct descending line only (Article 972,
NCC)
RELATIONSHIP • With respect to intestacy –
‘Direct or Collateral’ 1. in the direct descending line (Article 972, NCC)
ARTICLE G64. A series of degrees forms a line, 2. in one instance in the collateral line; i.e.
which may be either direct or collateral. nephews and nieces representing
• A direct line is that constituted by the series brothers and sisters of the deceased.
of degrees among ascendants and (Article 975, NCC)
descendants.

VII. WILLS AND SUCCESSION

• A collateral line is that constituted by the Rules to remember
series of degrees among persons who are
not ascendants and descendants, but who a. The representative succeeds not the person
come from a common ancestor. represented but the one whom the person
represented would have succeeded (Art.
971).
‘Ascending or Descending’ b. The right of representation takes place only
The direct line is either descending or ascending. in the direct descending line: never in the
ascending line (Art. 972).
• Descending - unites the head of the family c. In the collateral line, representation takes
with those who descend from him. place only in favor of children of brothers and
• Ascending - binds a person with those from sisters, whether full or half blood (Art. 972,
whom he descends. [Art. 965] second par.). Hence, grandnephews and
grandnieces do not represent.
Degrees of Relationship (Art. G63) d. There is representation in favor of the
adopted (see Sections 41 and 43 of new law
“Proximity of relationship is determined by the RA 11642)
number of generations. Each generation forms a • Section 43 In testate and Intestate
degree.” succession, the adopters and the adoptee
• ARTICLE 966. In the line, as many degrees shall have reciprocal rights of succession
are counted as there are generations or without distinction from legitimate
persons, excluding the progenitor. filiations. However, if the adoptees and
• In the direct line, ascent is made to the their biological parents have left a will, the
common ancestor. Thus, the child is one law on testamentary succession shall
degree removed from the parent, two from govern.
the grandfather, and three from the great- • Section 41 Legitimacy. – The adoptee shall
grandparent. be considered the legitimate child of the
• In the collateral line, ascent is made to the adopter for all intents and purposes and as
common ancestor and then descent is made such is entitled to all the rights and
to the person with whom the computation is obligations provided by law to legitimate
to be made. Thus, a person is two degrees children born to them without
removed from his brother, three from his discrimination of any kind. To this end, the
uncle, who is the brother of his father, four adoptee is entitled to love, guidance, and
support in keeping with the means of the
from his first cousin, and so forth. family. The legitimate filiation that is
created between the adopter and the
‘Full or Half Blood Relationship’ adoptee shall be extended to the adopter’s
Full blood relationship is that existing between parents, adopter’s legitimate siblings, and
persons who have the same father and the legitimate descendants. The adopter is
same mother. Half blood relationship is that also given the right to choose the name by
existing between persons who have the same which the child is to be known, consistent
with the best interest of the child.
father, but not the same mother, or the same e. The representative must himself be capable
mother, but not the same father. [Article 967, of succeeding the decedent (Art. 973).
NCC] f. The representative must at least be
conceived at the time succession opens.
2. RIGHT OF REPRESENTATION – CIVIL CODE, g. When there is representation, the heirs
inherit per stirpes, not per capita (Art. 974).
ARTS. G70-G77 That is, all those in a group inherit in equal
shares, because per stirpes means
Right of Representation inheritance by group.
h. A renouncer may not be represented but he
It is “a right created by fiction of law, by virtue can represent the person whose inheritance
of which the representative is raised to the he has renounced.
place and degree of the person represented,
and acquires the rights which the latter would
have if he were living or if he could have
inherited.” (Article 970, NCC) 100
i. Illegitimate children may represent their sometimes singly: exclusion and concurrence.
legitimate parents (Art. 922), as exception to
the iron-curtain rule – see G.R. Nos. 208912
and 209018, Aquino v.
Aquino, December 7, 2021
j. Iron Curtain Rule: Article 992. An illegitimate
child has no right to inherit ab intestato from
the legitimate children and relatives of his
father or mother; nor shall such children or
relatives inherit in the same manner from the
illegitimate child.
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. G78-1014

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
degree.; A half-sister excludes all other
relatives.
r) State – All

IMPORTANT RULES IN LEGAL SUCCESSION

INTESTACY
EXCLUSION AND CONCURRENCE
Intestacy operates on the same principles as
succession to the legitime. There are two
principles, operating sometimes simultaneously,
I. Legitimate children: 2. Concur with collaterals in the same degree.
1. Exclude parents, collaterals C State 3. Are excluded by legitimate parents,
2. Concur with surviving spouse and illegitimate parents, surviving spouse,
illegitimate children brothers C sisters, and nephews C nieces.
3. Are excluded by no one
VIII. State
II. Illegitimate children: 1. Excludes no one
1. Exclude illegitimate parents, collaterals C State 2. Concurs with no one
2. Concur with surviving spouse, 3. Is excluded by every one
legitimate children, C legitimate
parents RULE OF PROXIMITY
3. Are excluded by no one The Rule of Proximity of Degree
Relatives nearer or nearest in degree exclude
III. Legitimate parents the more distant ones, saving the right of
1. Exclude collaterals C State representation when proper (Article 962, NCC).
2. Concur with illegitimate children C surviving RULE OF PREFERENCE OF LINES
spouse The three lines of relationship are:
3. are excluded by legitimate children 1. the descending;
2. the ascending; and
IV.Illegitimate parents 3. the collateral.
1. Exclude collaterals C State The law lays down an order of preference among
2. Concur with surviving spouse these lines, such that the descending excludes
3. Are excluded by legitimate children C the ascending and the collateral, and the
illegitimate children ascending excludes and collateral.

VII. WILLS AND SUCCESSION

THE RULE OF EQUALITY OF SHARES - Relatives in
VI. Brothers and Sisters, Nephews and Nieces the same degree shall inherit in equal shares.
1. Exclude all other collaterals C the State Exceptions:
2. Concur with surviving spouse 1) the rule of preference of lines, supra;
3. Are excluded by legitimate children, 2) the distinction between legitimate and
illegitimate children, legitimate parents, illegitimate filiation (the ratio is 2:1)
and illegitimate parents 3) the rule of division by line in the ascending
line (Article 987, par. 2)
VII. Other Collaterals 4) the distinction between full or half-blood
relationship among brothers and sisters, as
1. Exclude collaterals in remoter degrees C the well as nephews and nieces (Arts. 1006 and
state 1008)
5) Representation

101
TREYES V LARLAR Given the clear dictates of the Civil Code that the
G.R. NO. 23257G, SEPTEMBER 08, 2020 rights of the heirs to the inheritance vest
En Banc immediately at the precise moment of the
decedent's death even without judicial
Facts: declaration of heirship, and the various Court En
Dr. Nixon Treyes's (Dr. Nixon) wife Rosie Larlar Banc and Division decisions holding that no prior
Treyes passed away without having any children judicial declaration of heirship is necessary before
and without leaving a will. Antonio, Emilio, Heddy, an heir can file an ordinary civil action to enforce
Rene, Celeste, Judy, and seven siblings whom ownership rights acquired by virtue of succession
Rosie left behind (Larlar, et al.). Rosie had 14 real through the nullification of deeds divesting
estate properties under marital ownership with property or properties forming part of the estate
Dr. Nixon at the time of her passing. Afterwards, and reconveyance thereof to the estate or for
Dr. Nixon signed two affidavits of self- the common benefit of the heirs of the decedent,
adjudication in which he claimed to be the only the Court hereby resolves to clarify the prevailing
heir and transferred Rosie's inheritance to doctrine.
himself. Larlar, et al. thus filed a complaint with
the RTC seeking the nullification of the affidavits, Accordingly, the rule laid down in Ypon,
the cancellation of TCTs, the reconveyance of Yaptinchay, Portugal, Reyes, Heirs of Gabatan v.
ownership and possession, the partition, and Court of Appeals, and other similar cases, which
damages. requires a prior determination of heirship in a
Meanwhile, Dr. Nixon submitted a motion to separate special proceeding as a prerequisite.
dismiss the case on a number of grounds,
including lack of subject- matter jurisdiction and
consequently a lack of real parties in interest Before one can file an ordinary civil action to
since there is no court declaration of heirship yet enforce ownership rights acquired by virtue of
in favor of Larlar et al. succession, is abandoned.
After the RTC rejected the Omnibus Motion,

VII. WILLS AND SUCCESSION

Treyes petitioned the Court of Appeals (CA) for Henceforth, the rule is: unless there is a pending
certiorari in accordance with Rule 65. However, special proceeding for the settlement of the
the CA rejected this. Thus, the current petition. decedent's estate or for the determination of
heirship, the compulsory or intestate heirs may
Issue: commence an ordinary civil action to declare the
Whether a prior determination of the status as a nullity of a deed or instrument, and for recovery
legal or compulsory heir in a separate special of property, or any other action in the
proceeding is a prerequisite to an ordinary civil enforcement of their ownership rights acquired by
action seeking for the protection and virtue of succession, without the necessity of a
enforcement of ownership rights given by the law prior and separate judicial declaration of their
of succession. status as such. The ruling of the trial court shall
only be in relation to the cause of action of the
ordinary civil action, i.e., the nullification of a
Ruling: deed or instrument, and recovery or
No. In the instant case, it is readily apparent reconveyance of property, which ruling is binding
from the allegations in the Complaint filed by the only between and among the parties.
private respondents that the action was not
instituted for the determination of their status as SUCCESSIONAL BARRIER (THE “IRON CURTAIN RULE”)
heirs, as it was their position that their status as
heirs was already established ipso jure without • embodied in Article 992 of the Civil Code,
the need of any judicial confirmation. creates an absolute bar that operates
bilaterally.
• It prohibits an illegitimate child to succeed
Instead, what the Complaint alleges is that the intestate from the legitimate descendants,
private respondents' rights over the subject and collateral relative of his legitimate parent,
properties, by virtue of their being siblings of the and vice versa.
deceased, must be enforced by annulling the
Affidavits of Self-Adjudication and ordering the
reconveyance of the subject properties. AQUINO V. AQUINO
G.R. NOS. 208G12 AND 20G018, DECEMBER 7, 2021
The private respondents do not really seek in En Banc
their Complaint the establishment of their rights Issue:
as intestate heirs but, rather, the enforcement of
their rights already granted by law as intestate Whether or not a nonmarital grandchild may
heirs finds basis in Article 777 of the Civil Code, inherit ab intestato from his or her marital
which states that the rights of succession are grandparent by right of representation.
transmitted from the moment of the death of the
decedent. Ruling:
Yes, a nonmarital grandchild may inherit ab
Hence, subject to the required proof, without any intestato from his or her marital grandparents by
need of prior judicial determination, the private right of representation.
respondents siblings of Rosie, by operation of
law, are entitled to one- half of the inheritance of xxx
the decedent. Thus, in filing their Complaint, they
do not seek to have their right as intestate heirs This Court abandons the presumption in In re
established, for the simple reason that it is the Grey, Corpus, Diaz, and In re Suntay, among
law that already establishes that right. What they others, that nonmarital children are products of
seek is the enforcement and protection of the illicit relationships or that they are automatically
right granted to them under Article 1001 in placed in a hostile environment perpetrated by the
relation to Article 777 of the Civil Code by asking marital family. We are not duty bound to
for the nullification of the Affidavits of Self- uncritically parrot archaic prejudices and
Adjudication that disregard and violate their right cruelties, to mirror and amplify oppressive and
as intestate heirs. regressive ideas about the status of children and
family life. The best interest of the child should
prevail.

102
This Court has recognized that the alleged
resentment and hostility presumed by Article 3. Vacant portion
992 can be proven by evidence to be non- • one of persons thus called die before the
existent. Particular facts of a case may show that testator, or renounce the inheritance, or be
the decedent's will does not distinguish between incapacitated to receive it-
marital and nonmarital relatives, precluding a • Happens when:
rigid application of Article 992. a. repudiation.
This Court abandons the presumption in In re b. predeceased.
Grey, Corpus, Diaz, and In re Suntay, among c. incapacity.
others, that nonmarital children are products of d. non-fulfillment of suspensive condition.
illicit relationships or that they are automatically
placed in a hostile environment perpetrated by e. particular heir cannot be identified
the marital family. We are not duty bound to
uncritically parrot archaic prejudices and Rules of Accretion
cruelties, to mirror and amplify oppressive and 1. The heirs to whom the portion goes by the
regressive ideas about the status of children and right of accretion take it in the same
family life. The best interest of the child should proportion that they inherit. [Art. 1019, CC]
prevail. 2. The heirs to whom the inheritance
accrues shall succeed to all the rights and
obligations which the heir who renounced or
Applying Article 982 in situations where the could not receive it would have had. [Art.
grandchild's right to inherit from their grandparent 1020, CC]
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 II. CAPACITY TO SUCCEED
Nations Convention on the Rights of the Child. In order that a person can inherit either by will or
by intestacy, the following requisites must

VII. WILLS AND SUCCESSION

To emphasize, this ruling will only apply when concur:
the nonmarital child has a right of representation A. Heir, legatee or devisee must be living or in
to their parent's share in her grandparent's existence at the moment succession opens;
legitime. It is silent on collateral relatives where B. That such heir, legatee or devisee must not
the nonmarital child may inherit by themself. We be incapacitated or disqualified by law to
are not now ruling on the extent of the right of a succeed.
nonmarital child to inherit in their own right.
Those will be the subject of a proper case and, if KINDS OF INCAPACITY
so minded, may also be the subject of more
enlightened and informed future legislation. a) Absolute – cannot inherit from anybody
• Individuals, corporations, associations not
“Both marital and nonmarital children, whether born permitted by law or their charter to inherit
from a marital or nonmarital child, are blood (Art. 1026, 1027 [6])
relatives of their parents and other ascendants.” • A child not yet conceived, or abortive infants
Thus, a nonmarital child’s right of representation (Art.
should be governed by Article 982 of the Civil 1025)
Code, which does not differentiate based on the
birth status of grandchildren and other direct b) Relative
descendants. i. Because of possible undue influence (Art. 1027).
ii. Because of public policy and morality (Art.
1028 in relation to Art. 739).
D. PROVISIONS COMMON TO TESTATE AND iii. Because of unworthiness (Art. 1032)
INTESTATE SUCCESSION (i) Incapacity by Reason of Possible Undue Influence
I. RIGHT OF ACCRETION
(CIVIL CODE, ARTS. 1015- 1105) a. The priest who heard the last confession of
It is a right by virtue of which, when two or the testator during his last illness, or the minister of
more persons are called to the same
inheritance, devise or legacy, the part the gospel who extended spiritual aid to him during
assigned to one who renounces or cannot the same period;
receive his share or who died before the testator referring only to the free portion and not the
is added or incorporated to that of his co-heirs, legitime of the heir
co- devisees, or co-legatees. XPN: if the priest is a compulsory heir of the
decedent, we cannot take away their legitime.
Only his share from free portion will be taken in
Basis case of undue influence.
The right of accretion is based upon the
presumed will of the decedent. Thus, the b. The relatives of such priest or minister of the
testator can expressly provide that there shall
be no accretion among persons who would gospel within the fourth degree, the church, order,
otherwise be entitled thereto. Conversely, the chapter, community, organization, or institution to
testator may validly provide for accretion in a which such priest or minister may belong.
case where no accretion would take place
under the provisions of the law. [Tolentino] c. A guardian with respect to testamentary
dispositions given by a ward in his favor before
Requisites for Accretion approval of guardian’s final accounts
1. Unity of object • XPN: when the guardian is the compulsory heir
2. Plurality of subject of the ward, in which case the disposition is
VALID
• two or more persons are called to the
same inheritance or same portion • XPN: Relatives of the guardian.

d. Any attesting witness to the decedent’s will,

and his/her spouse, children, and parents.
• XPN: brother, sister, grandchildren, and other
descendants of the attesting witness.

103
e. Any physician, surgeon, nurse, health officer or ‘Repudiation’
druggist who took care of the testator during his The manifestation by an heir of his desire not to
last illness succeed to the rights and obligations
• Care should be continuing or regular, not transmitted to him. [Tolentino]
isolated service
• XPN: Relatives of the health workers. Characteristics [Arts. 1041–1042, 1056, CC]
1) Acceptance and repudiation must be
f. Individuals, associations, and corporations not voluntary and free [Art. 1041, CC]
permitted by law to inherit. 2) They are irrevocable except if there is
vitiation of consent or an unknown will
This incapacity does not include the legitime or appears [Art. 1056, CC]
intestacy, because heirs inherit by law.
3) They have a retroactive effect [Art. 1042, CC]
(ii) Incapacity by Reason of Morality
REQUISITES: [Art. 1043, CC]
1. Spouse who committed adultery or concubinage
a) Certainty of death of the decedent
• there need no criminal conviction
b) Certainty of the right to the inheritance
• as long as you can prove
2. Concubine Forms of Acceptance
3. Those made between persons who committed
the same criminal offense, in consideration Acceptance of an inheritance, legacy or devise may be:
thereto [Arts. 739 and 1028, NCC) 1. Express;
2. Must be made in a public or private
(iii) Incapacity by Reason of Unworthiness and document OR tacit;
Effects of Condonation 3. One resulting from acts by which the
intention to accept is necessarily implied, or

VII. WILLS AND SUCCESSION

Article 1032. The following are incapable of succeeding which one would have no right to do except
by reason of unworthiness: in the capacity of an heir.
1. Parents who have abandoned their children or
induced their daughters to lead a corrupt or Examples of implied acceptance (Art. 1050):
immoral life, or attempted against their virtue; 1. If heir sells, donates, or assigns right to a
2. Any person who has been convicted of an stranger, or to his co-heirs or any of them.
attempt against the life of the testator, his or 2. If heir renounces right, even gratuitously, for
her spouse, descendants, or ascendants; the benefit of one or more of his co-heirs.
3. Any person who has accused the testator of a 3. If heir renounces right for a price in favor of
crime for which the law prescribes co-heirs indiscriminately; but if renunciation is
imprisonment for six years or more, if the gratuitous and co-heirs in whose favor
accusation has been found groundless; renunciation is made would get right by
4. Any heir of full age who, having knowledge of accretion, inheritance is not deemed
the violent death of the testator, should fail to acceptance. Acceptance is also presumed if
report it to an officer of the law within a heir fails to accept or repudiate within 30
month, unless the authorities have already days after issuance of order of distribution of
taken action; this prohibition shall not apply to estate, he is deemed to have accepted.
cases wherein, according to law, there is no
obligation to make an accusation;
5. Any person convicted of adultery or Form of repudiation
concubinage with the spouse of the testator; Repudiation must always be EXPRESS. It is more
6. Any person who by fraud, violence, usual to accept than to repudiate; hence, while
intimidation, or undue influence should cause acceptance may be presumed, repudiation
the testator to make a will or to change one requires formalities.
already made; • There can be partial acceptance and
7. Any person who by the same means prevents partial repudiation.
another from making a will, or from revoking • Even the legitime may be repudiated, because
one already made, or who supplants, conceals, no one can be compelled to accept the
or alters the latter’s will; generosity of another.
8. Any person who falsifies or forges a supposed
will of the decedent. (756, 673, 674a) This can be done by means of a:
i. public instrument;
Cause of unworthiness is without effect if there is ii. authentic instrument;
condonation (Art. 1033): iii. petition in court.
• Implied condonation: If, having knowledge of
the act of unworthiness, the testator gave the Effects of Repudiation Compared to Predecease and
person concerned an inheritance, legacy or
devise. Incapacity
• Express condonation: If, not knowing of the act Descendants of the heirs who predeceased or
of unworthiness at the time of the execution are incapacitated may represent the latter in
of the will, but having known of the same succession, but Heirs who repudiates their share
subsequently, the testator condones it in may not be represented (Art. 977)
writing, public or private.
Key points:
III. ACCEPTANCE AND REPUDIATION • Repudiation of inheritance is a voluntary act
‘Acceptance’ by the individual, while predecease and
The act by which the person called to succeed by incapacity are circumstances that affect the
universal title either by the testator or by law person involuntarily.
manifests his will of making his own the • The effects of repudiation primarily impact the
universality of the rights and obligations which repudiating individual and the redistribution of
are transmitted to him. [Tolentino] assets, while predecease and incapacity
primarily affect the succession of assets and
the legal representation of the individual.

104
• Creditors may accept the inheritance in case
repudiation prejudices them (Art 1052), while 3. Expenses for support, education, medical
in predecease and incapacity, only the heirs in attendance even in extraordinary illness,
the descending line of those who predeceased apprenticeship, ordinary equipment, or
or incapacitated may accept the inheritance. customary gifts are not subject to collation
(Art. 972) (Art. 1067). Totally excluded in the
computation of the estate for being part of
• Heirs in Two Capacities: [Art. 1055, CC] legal support.
1) If a person is called to the same  But payment by parents of a child's debts,
inheritance as an heir by will and by law election expenses, fines, and similar
and he repudiates the inheritance in his expenses are collationable (Art. 1069).
capacity as a testamentary heir, he will 4. Expenses of parents in giving children
be considered to have also repudiated the professional, vocational, or other career shall
inheritance as a legal heir. not be brought to collation unless the parents
2) If he repudiates it as a legal heir, without so provide or unless they impair the legitime.
knowledge of his being a testamentary But when collation is required, the sum that
heir, he may still accept it in the latter the child would have spent had he lived with
capacity. the parents must be deducted (Art. 1068).
5. Wedding gifts by parents and ascendants
IV.COLLATION consisting of jewelry, clothing, and outfit,
Collation refers to the act of restoring to the shall not be reduced as inofficious except
common mass of the hereditary estate, either insofar as they may exceed one- tenth of the
actually or fictitiously, any property or right, which sum which is disposable by will. (Art. 1170)
a donee may have received by way of donation
or any other gratuitous title from the decedent, Other rules:

VII. WILLS AND SUCCESSION

during the lifetime of the latter. • The surviving spouse is a compulsory heir, but
she is not included in Art. 1061 (where
Relevant provision is Art. G08 (Formula in donation is chargeable against the legitime)
computing the Legitime) because donations during the marriage are
null and void.
To determine the legitime, the value of the • Donation propter nuptias to a future spouse is
property left at the death of the testator shall be donation to a stranger and must be imputed to
considered, deducting all debts and charges, the free portion because at that time, the
which shall not include those imposed in the will. donee was not yet a spouse, hence, not a
To the net value of the hereditary estate, shall compulsory heir.
be added the value of all donations by the • If the donee repudiates the inheritance, the
testator that are subject to collation, at the time donation shall be charged to the free portion.
he made them. • Property left by will (like a legacy or devise) is
• Collation refers to the subsequent act of not deemed subject to collation if the testator
charging or imputing the value of the thing has not otherwise provided, but the legitime
donated against the legitime of the shall in any case remain unimpaired. This
compulsory heir to whom the donation was means that the legacy or devise should be
made, or against the free portion. imputed to the free portion, not to the
• All donations inter vivos, whether given to legitime. (Art. 1063)
compulsory heirs or to strangers, must be
reduced if found inofficious.
• Only the value of the thing donated at the V.PARTITION
time of the donation should be collated (Art. • Co-ownership governs where there are two or
1071). more heirs. The whole estate of the decedent
• Compulsory heirs must bring to collation any is, before partition, owned in common by such
property received as donation or by gratuitous heirs, subject to the payment of the debts of
title, in order to determine the legitime (Art. the deceased (Art. 1078, NCC).
1061). • In partition, the thing itself may be divided, or
• G.R. Charge against the legitime. its value (Art. 1079).
• Except, the decedent has provided that it is • Partition made by the decedent inter vivos or
non- collationable (meaning, it will be charged by will shall be respected, provided it does not
against the free portion, not the legitime) prejudice the legitime of compulsory heirs
• If donation was given to stranger, charge (Art. 1080).
against the free portion. • 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.
Meaning of “not collationable”: 1081) called a mandatary, provided: (i) The
• First, property or value should be computed or mandatary should not be a co-heir; (ii) the
added, but should be charged to the free partition by the mandatary may be rejected by
portion (not to the legitime). the heirs, in which case the court will decide
• Second, property should not be computed or the conflict.
charged to the estate at all, because it is not • While a co-heir can demand the division of the
part of the estate. (Art. 1067), like expenses estate at anytime, a right that does not
for support of education, medical attendance, prescribe and also applies to a co-legatee or
customary gifts. co-devisee, the testator can prohibit the
division for a period not exceeding 20 years,
Donations that are not collationable: which applies even to the legitime, except-
1. Parents are not obliged to bring to collation in i. For causes that dissolve a partnership; or
the inheritance of their own parents or ii. when the court finds compelling reason to
ascendants properties which had been order a partition upon the petition of a co-
donated by the latter to their children (Art. heir (or co- legatee or co-devisee) (Art.
1065). 1083).
2. Donation to the spouse of a child should not • After the partition, each heir acquires
be brought to collation (Art. 1066). Meaning, exclusive
this is chargeable against the free portion,
not the legitime of the child. ownership of the property or share adjudicated to
him.

105
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

VII. WILLS AND SUCCESSION

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. 1431-143G)

A. OBLIGATIONS Requisites
1. a debt;
2. the right of action over the debt having prescribed;
1. CIVIL AND NATURAL OBLIGATIONS – CIVIL 3. payment made by a third person;
CODE, ARTS. 1423-1430 4. such payment being against the will or
without the knowledge of the debtor; and
CIVIL OBLIGATIONS 5. debtor's act of reimbursing the third person
for the payment made. In this case, the
Those that are based on positive law and give debtor can no longer recover what he has
a right of action to compel their performance. paid; this is a natural obligation.
NATURAL OBLIGATIONS 3. Voluntary performance despite failed action
Those that are not based on positive law but on When, after an action to enforce a civil
equity and natural law, do not grant a right of obligation has failed, the defendant
action to enforce their performance, but after voluntarilyperforms the
voluntary fulfillment by the obligor, they obligation, he cannot demand the return of what
authorize the retention of what has been he has delivered or the payment of the value of
delivered or rendered by reason thereof. [Article the service he has rendered. (Article 1428)
1423]. They refer to obligations without a
sanction, susceptible of voluntary performance,
but not through compulsion by legal means. 4. Payment by heir of decedent’s debt exceeding the
estate
Distinguished from civil obligations When a testate or intestate heir voluntarily
• Civil obligations are based on positive law pays a debt of the decedent exceeding the
value of the property which he received by will
 Natural obligations are based on equity or by the law of intestacy from the estate of the
and natural law deceased, the payment is valid and cannot be
• Civil obligations are enforceable by court rescinded by the payer. (Article 1429)
action
 Natural obligations are not enforceable by Requisites
court action
1. the decedent incurred a debt;
Different Natural Obligations (Arts. 1423-1430 NCC): 2. his heir voluntary pays the debt; and
3. the debt exceeds the value of the heir's share.
1. Prescribed civil action
• When a right to sue upon a civil obligation 5. Payment of legacy by intestate heir
has lapsed by extinctive prescription, the When a will is declared void because it has not
obligor who voluntarily performs the been executed in accordance with the
contract cannot recover what he has formalities required by law, but one of the
delivered or the value of the service he has intestate heirs, after the settlement of the
rendered. (Article 1424). debts of the deceased, pays a legacy in
• The voluntary performance or payment by compliance with a clause in the defective will,
the obligor despite prescription thereof the payment is effective and irrevocable.
converts it to a natural obligation. (Article 1430)

Requisites Requisites
1. a civil obligation; 1. there is a will;
2. the right of action over such civil obligation 2. the will provides a legacy;
having lapsed; 3. the will is declared void due to formalities; and
3. the lapse being due to extinctive prescriptive; 4. an intestate heir nevertheless pays the legacy.
and
4. performance or payment done voluntarily.
The effect of this is that the obligor can no 2. GENERAL PROVISIONS – CIVIL CODE, ARTS.
longer recover what he has delivered or 1156-1162
the value of the service he rendered.
DEFINITION OF OBLIGATIONS
2. Reimbursement for payment by third person for • It is a juridical relation whereby a person
a prescribed civil obligation (creditor) may demand from another (debtor)
When without the knowledge or against the the observance of a determinate conduct
will of the debtor, a third person pays a debt (prestation).
which the obligor is not legally bound to pay • Art. 1156 provides that an obligation is the
because the action thereon has prescribed, juridical necessity to give, to do or not to do.
but the debtor later voluntarily reimburses the
third person, the obligor cannot recover what he “Juridical Necessity” - Obligation is a juridical
has paid. (Article 1425) necessity because in case of non-compliance, the
courts of justice may be called upon to enforce
its fulfillment or, in default thereof, the economic
value that it represents.

107
ESSENTIAL ELEMENTS COLLADO V. DELA VEGA
1. Active Subject (Obligee or Creditor) - the G.R. NO. 21G511, DECEMBER 2, 2020
person who can demand the fulfillment of the
obligation; J. Lopez
2. Passive Subject (Obligor or Debtor) - the In this case, the RTC held that there was no
person from whom the obligation is juridically preponderant evidence to hold Victoria civilly liable
demandable; while the CA ruled otherwise. Considering these
3. Object - the prestation or the particular conflicting findings warranting the examination of
conduct required to be observed by the debtor evidence, this Court will entertain the factual issue
(to give, to do or not to do); on whether substantial evidence exists to prove
4. Juridical Tie or Vinculum Juris - the efficient that Victoria is civilly liable despite her acquittal.
cause established by the various sources of
obligations (law, contracts, quasi-contracts, As a rule, every person criminally liable is also
delicts and quasi- delicts); civilly liable. However, an acquittal will not bar a
civil action in the following cases: (1) where the
SOURCES OF OBLIGATION acquittal is based on reasonable doubt as only
preponderance of evidence is required in civil
OBLIGATIONS ARISE FROM: cases; (2) where the court declared that the
1) Law; accused's liability is not criminal, but only civil in
nature; and (3) where the civil liability does not
2) Contracts; arise from, or is not based upon the criminal act of
3) Quasi-contracts; which the accused was acquitted. Here, the RTC
4) Acts or omissions punished by law; and acquitted Victoria because her guilt was not proven
beyond reasonable doubt. Thus, any civil liability
5) Quasi-delicts. [Article 1157] survived because only preponderant evidence is
necessary to establish it.
1. LAW
• When they are imposed by the law itself. Notably, however, the RTC did not explain the facts
why it exonerated Victoria from civil liability. It also
• Obligations derived from law are NOT did not mention that the act or omission from which

VIII. OBLIGATIONS AND CONYTACTS

PRESUMED. the civil liability may arise did not at all exist. The
• Only those expressly determined by the New RTC simply stated in the dispositive portion of the
Civil Code or in special laws are demandable. decision that there was no preponderant evidence
• Example: The mutual obligation of spouses to to prove Victoria's civil liability. In contrast, the CA
support each other pursuant to the provisions reviewed the testimonial and documentary evidence
of the Family Code. in support of its conclusion that Victoria is liable to
pay Eduardo the total amount of P2,905,000.00.
2. CONTRACTS Effect of the death of the accused pending appeal of his
• Arises from the stipulation of the parties. [Article conviction:
1306] If death of the accused occurred DURING the
• Obligations arising from contract have the force pendency of his appeal but BEFORE the finality of
of law between the contracting parties and
should be complied with in good faith. [Article judgment:
1159] 1. Criminal liability is extinguished.
• Example: The obligation to repay a loan by 2. Civil liability ex delicto is extinguished.
virtue of an agreement. 3. Civil liability from other sources of obligation
• NOTE: Obligations arising from CONTRACT survives and may be recovered only through a
need NOT always be EXPRESS (unlike those civil action.
from LAW, they may be IMPLIED).
5. QUASI-DELICT (CULPA ACQUILIANA)
3. QUASI-CONTRACTS • Art. 2176. Whoever by act or omission causes
• Certain LAWFUL, VOLUNTARY and UNILATERAL damage to another, there being fault or
acts give rise to the juridical relation of quasi- negligence, is obliged to pay for the damage
contract to the end that no one shall be done. Such fault or negligence, if there is no pre-
unjustly enriched or benefited at the expense existing contractual relations between the
of another. [Article 2142] parties is called quasi-delict.
• Obligations derived from quasi-contracts based • Obligations derived from quasi-delicts shall be
on the presumed will of the parties are governed by the provisions of Chapter 2, Title
demandable. XVII of this Book, and by special laws. [Article
• Subject to the provisions of Chapter 1, Title 1162]
XVII of the Civil Code. [Article 1160] • Example: Motor vehicle recklessly driven by Arnel
• Example: The obligation to return money suddenly hit a pedestrian, Mike, who was then
crossing the street. Mike suffered injuries
paid by requiring medical attention. Arnel is liable for
mistake or which is not due. [Article 2154] damages caused to Mike based on quasi-delict,
there being fault which is the proximate cause of
Kinds of Quasi-Contract injuries and there is no pre-existing contract
• Negotorium Gestio (Arts. 2144-2153) between them.
• Solutio Indebiti (Arts. 2154-2163)
VDM TRADING, INC. V. CARUNGCONG,
• Other Cases (Arts. 2164-2175) G.R. NO. 20670G, FEBRUARY 06, 201G
J. Caguioa
4. DELICT
• Every person criminally liable is also civilly A quasi-delict has the following elements:
liable [Article 100, RPC] a) the damage suffered by the plaintiff;
• Instances where acquittal does not b) the act or omission of the defendant
extinguish civil liability: supposedly constituting fault or negligence; and
• The acquittal is based on reasonable doubt c) the causal connection between the act and
• The court declares that the liability of the the damage sustained by the
accused is only civil. d) plaintiff, or proximate cause.
• The civil liability of the accused does not arise
from or is not based upon the crime which the
accused is acquitted.

108
 BAR QUESTION (201G) 3. NATURE AND EFFECT OF OBLIGATIONS – CIVIL
In January 2018, Mrs. A, a married woman on her
sixth (6th) month of pregnancy, was crossing a CODE, ARTS. 1163-1178
street when she was suddenly hit by a car being
recklessly driven by Mr. X. As a result, Mrs. A REAL OBLIGATIONS
sustained serious injuries and further, suffered an
unintentional abortion. Mrs. A was hospitalized for The obligation to give or deliver:
two (2) months, during which she incurred • Obligations to deliver a determinate or specific thing
₱400,000.00 in medical fees. Her expenses were • Obligations to deliver an indeterminate or generic
all duly substantiated by official receipts. During
the two (2)- month period of her confinement, thing
she was unable to report for work and earn any
salary, which was established at the rate of PERSONAL OBLIGATIONS
₱50,000.00 per month. Mrs. A then filed a civil
case for damages against Mr. X. Based on the This involves the obligation to do or not to do:
case filed by Mrs. A, what is the source of Mr. X's • Positive Personal Obligation
obligation • Negative Personal Obligation
to her as a result of his acts? Explain.
SUGGESTED ANSWER DETERMINATE THING v. GENERIC THING
The source of Mr. X’s liability is quasi-delict.
Under the Civil Code, whoever by act or omission DETERMINATE THING GENERIC THING
causes damage to another, there being fault or
negligence, is obliged to pay for the damages. A thing is considered A thing is generic if it
Such fault or negligence, if there is no pre- determinate when it has has been designated
existing contractual relations between the parties been particularly merely by its class.
is called a quasi-delict. designated or physically
segregated from all
Here, there is no pre-existing contractual others of the same class
relations between Mrs. A and Mr. X who are
strangers, and the or species.
damage was caused by Mr. X’s negligence
A concrete, particularized One whose
BAR QUESTION (1G77) object, indicated by its determination is

VIII. OBLIGATIONS AND CONYTACTS

Taxi driver D, driving recklessly, killed pedestrian P own individuality. confined to that of its
and his passenger Y. Discuss the source of the
obligation of D and of his employer to P and to Y, nature, to the genus
and the defense available to to which it pertains.
the employer.
SUGGESTED ANSWER Example: Honda Civic Exampl
There are three overlapping sources of the with plate No. WRX 204 e: a
obligation of D and of his employer. They are: and engine No. 223456 horse;
(1)Under the Revised Penal Code: a chair;
The heirs of P and Y may proceed against D and a gadget.
his employer under the Penal Code. In this case,
the source of the liability of D and of his employer IN OBLIGATIONS TO GIVE DETERMINATE THING
is the crime committed by D (culpa criminal). The
liability of D is direct and primary (Art. 100, RPC); 1) Obligee may compel the delivery of the thing,
the liability of his employer is subsidiary (Art. 103, that itself which was promised.
RPC). The latter cannot relieve himself of liability • General Rule: Obligor cannot substitute it.
by proving due diligence of a good father of a • XPN: Unless the obligee agrees OR the
family. This is so because of the very nature of right has been reserve such as in
his obligation. alternative obligations [Article 1244, Art
(2)Under the Civil Code: 1165]
a. Heirs of P: The heirs of pedestrian P may 2) Obligor must take care of the thing with the
proceed against both D and his employer, or proper diligence of a good father of a family.
against the latter only. In this case, the source Unless the law or stipulation of the parties
of the liability of D and his employer is the requires another standard of care [Article
quasi-delict (culpa aquiliana) committed by D 1163]
(Arts. 2176, 2180, CC). 3) Obligation to deliver a determinate thing
b. The liability of both is direct and primary. D’s includes that of delivering all its accessions
employer can relieve himself of liability by and accessories, even though they may not
proving due diligence of a good father of a have been mentioned [Article 1166]
family in the selection and supervision of his 4) The creditor has the right to the fruits of the
drivers (Art. 2180, CC). thing from the time the obligation to deliver
c. Heirs of Y: On the other hand, the heirs of Y arises. However, he shall have no real right
may proceed against D’s employer only. The over it until the same has been delivered to
source of the liability of D’s employer, in this him. [Article 1164]
case, is the breach of his contract of carriage
with Y (culpa contractual). His liability is direct IN OBLIGATIONS TO GIVE INDETERMINATE/ GENERIC
and primary. He cannot relieve himself of THING
liability by proving due diligence of a good
father of a family (Art. 1759, CC). This is so 1) Obligor must deliver a thing of the quality specified.
because under our law on common carriers, • If none is fixed, he must deliver one of
we do not adhere to the principle of average quality.
respondent superior; we adhere to the • Neither can the obligor deliver a thing of
principle that there is always an implied duty inferior quality nor the obligee demand
of a common carrier to carry the passenger one of superior quality.
safely to his place of destination. However, • The purpose of the obligation and other
although not available as a defense, such circumstances shall be taken into
proof of due diligence may serve to consideration. [Article 1246]
mitigate the employer’s liability. 2) The creditor may ask that the obligation be
complied
with at the expense of the debtor. [Article 1165]

10G
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 consists
• It cannot be substituted by another act or in the omission of that diligence which is
forbearance against the obligee’s will [Article 1244] required by the nature of the obligation and
• If obligor fails to do it, it shall be executed at his corresponds with the circumstances of the
persons, of the time and of the place.
cost;
• Obligor may not be compelled to do it personally or
• When negligence shows bad faith, the
by himself (Constitutional right against involuntary provisions of Art 1171 (on fraud) shall apply.
servitude);
• Same rule if he does it in contravention of the tenor Article 1172. Responsibility arising from negligence
of the obligation (COTOTO) in the performance of every kind of obligation is
• Poorly done be UNDONE [Article 1167] also demandable, but such liability may be
regulated by the courts, according to the
circumstances.
IN OBLIGATIONS NOT TO DO
Article 1168. When the obligation consists in not
doing, and the obligor does what has been forbidden 3. DEFAULT
him, it shall be undone at his expense. • Breach of obligation based on time of performance.
• Those obliged to deliver or to do something
PERFORMANCE OF OBLIGATIONS incur in delay (”mora”) from the time the obligee
• ‘Standard Norm’ - Article 19. Every person must, in judicially or extrajudicially demands from them
the exercise of his rights and in the performance of the fulfillment of their obligation. [Article
his duties, act with justice, give everyone his due, 1169]
and observe honesty and good faith. • Mere non-performance of the obligation on the
• Subject to such exceptions or qualifications as the time fixed does not necessarily put the obligor
law or the parties themselves may provide, in default.
obligations must be complied with PRECISELY
(“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 delay, and those
who in any manner contravene the tenor thereof, Instances When Demand Is Not Necessary To

VIII. OBLIGATIONS AND CONYTACTS

are liable for damages. [Article 1170] Render the Obligor In Default:
• When the obligation or the law expressly so declares;
MODES OF VOLUNTARY BREACH OF OBLIGATION • When from the nature and the circumstances
1. Fraud of the obligation it appears that the
2. Negligence designation of the time when the thing is to be
delivered or the service is to be rendered was
3. Default a controlling motive for the establishment of
4. Contravention of tenor of the obligation the contract; or
• When the demand would be useless, as when
1. FRAUD the obligor has rendered it beyond his power
• It is the deliberate and intentional evasion of the to perform.
normal fulfillment of obligations.
• Malice or bad faith in the performance of obligation SSS V. MOONWALK DEVELOPMENT AND
(distinguished from fraud in the celebration of
contracts – deceit HOUSING CORPORATION
• Responsibility arising from fraud is demandable in G.R. NO. 73345, APRIL 7, 1GG3
all obligations. J. Campos, Jr.
• Any waiver of an action for future fraud is void.
[Article 1171] This case does not fall within any of the instances
when demand is not necessary to render the obligor
in default. SSS is not excused from making a
CIVIL FRAUDS DISTINGUISHED 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 delinquency in payment does not necessarily
mean delay in the legal concept.

FRAUD/ DOLO IN In order that the debtor may be in default it is necessary

CAUSAL FRAUD
THE that the following requisites be present:
PERFORMANCE 1. that the obligation be demandable and
already liquidated;
Present only during the Present only during the 2. that the debtor delays performance; and
performance of a pre- time of birth or 3. that the creditor requires the performance
existing obligation. perfection of the judicially and extrajudicially.
obligation. Default generally begins from the moment the
creditor demands the performance of the
Purpose is to evade the Purpose is to secure the obligation.
normal fulfillment of the consent of the other to
obligation. enter into a contract.
Kinds of Default
• Mora solvendi - Delay on the part of the debtor
Results in the non- Results in the vitiation to perform his obligation.
fulfillment or breach of the of consent. • Mora accipiendi - Delay of the creditor in
obligation. accepting delivery of the thing which is the
object of the obligation.
Gives rise to a right of Gives rise to a right of
the obligee to recover an innocent party to • Compensatio morae - Delay of the parties or obligors
damages from the debtor annul the contract. in reciprocal obligation.
and not a cause of
annulment of contract.

Valid obligation. Voidable 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 • Unexcused failure there of renders the
fixed by the parties will not cause delay. obligor liable for losses and damages caused
• XPN: (a) Express stipulation that demand is thereby. [Article 1170]
not necessary; (b) The law EXPRESSLY so • Includes not only any illicit act which
declares (i.e., taxes); (c) Time is of the impairs the strict and faithful fulfillment of
essence of the contract – the designation of the obligation, but also every kind of
time when the thing is to be delivered or the defective performance.
service is to be rendered was a controlling
motive for the establishment of the
contract; (d) Demand would be useless as CATHAY PACIFIC AIRWAYS VS. VASQUEZ
when the obligor has rendered it beyond
his power to perform. G.R. NO. 150843, MARCH 14, 2003
2. Reciprocal Obligation C. J. Davide, Jr.
• Fulfillment by both parties should be In this case Cathay upgraded the seats of Sps.
simultaneous;
• Neither party incurs in delay if the other Vasquez, from business class to first class.
does not comply or is not ready to comply Under the law the debtor is bound to deliver
in a proper manner with what is incumbent the thing or service contracted. Although the
upon him. debtor in this case provided for a better seat, it
• General Rule: From the moment one of the is still considered breach for being in
parties fulfills his obligation, delay by the contravention of the tenor of the obligation.
other begins (Art. 1169) Cathay was adjudged liable for payment of
• XPN: When different dates for the damages.
performance of obligation is fixed by the
parties; Demand is necessary in such
cases. INVOLUNTARY BREACH OF OBLIGATION
Fortuitous Event

VIII. OBLIGATIONS AND CONYTACTS

• Extraordinary events not foreseeable or avoidable.
• It is any extraordinary event which cannot be
BAR QUESTION (2015) foreseen, or which, though foreseen, is
X, a dressmaker, accepted clothing materials inevitable. In other words, it is an event which
from Karla to make two dresses for her. On the is either impossible to foresee or impossible to
day X was supposed to deliver Karla's dresses, X avoid.
called up Karla to tell her that she had an urgent • The essence of a fortuitous event consists of
matter to attend to and will deliver them the next being a happening independent of the will of
day. That night, however, a robber broke into her the obligor and which happening, makes the
shop and took everything including Karla's two normal fulfillment of the obligation impossible.
dresses. X claims she is not liable to deliver
Karla's dresses or to pay for the clothing
materials considering she herself was a victim of Liability in case of Fortuitous Event
the robbery which was a fortuitous event and • General Rule: No person shall be responsible
over which she had no control. Do you agree? Why? for those events which could not be
(3%) foreseen (accident), or which, though
SUGGESTED ANSWER foreseen, were inevitable (force majeure).
No, I do not agree with the contention of X. The [Article 1174]
law provides that except when it is otherwise • Except in cases:
declared by stipulation, or when the law provides,  Expressly specified by law (i.e. delay)
or the nature of the obligation requires the [Article 552 (2), 1165 (3), 1268, 1942,
assumption of risk, no person shall be liable for 2147, 2148 and 2159];
those events which could not be foreseen or
which though foreseen were inevitable (Article  When it is otherwise declared by stipulation, or
1174, Civil Code). Based on the facts, X was  When the nature of the obligation
supposed to deliver the dress the day immediately requires the assumption of risk. [Article
before the robbery. Demand is dispensed with in 1174]
this case, since demand would be useless
because X already stated that she cannot perform  When the object of the prestation is generic.
the obligation on the agreed time. Thus, X cannot
invoke fortuitous event as a defense because she Some Exceptions Expressly Specified by Law
had already incurred in delay at the time of the • Article 552 – The obligor is a possessor in bad faith;
occurrence of the loss. • Article 1165 – The obligor delays or has
promised to deliver the same thing to two or
ALTERNATIVE: more persons who do not have the same
Yes, I agree that X is not liable since the loss was interest;
due to a fortuitous cause. The rule is that before • Article 2147 – The negotiorum gestor or
the debtor may be put in default, there must first officious manager who undertakes risky
be a judicial or extrajudicial demand by the transactions, prefers his interest to that of
creditor. (Article 1169, Civil Code}. This is true the owner, fails to return the property upon
even if a period may have been stipulated for the demand by the owner, or assumes
performance of the obligation unless by management in bad faith;
stipulation of the parties, demand has been • Article 1G7G – The depositary who uses the
waived by them. The facts are silent as to thing without the depositor’s permission,
whether Karla has made any demand upon X to
fulfill her obligation to deliver the dresses and, the delays its return, or allows others to use it.
mere arrival of the period does not necessarily put • Article 1268 – When the obligation to deliver
the debtor in actionable delay without proof that a determinate thing proceeds from a
demand was dispensed with based on their criminal offense, unless prior to its loss the
agreement. Hence, at the time of the fortuitous person who should receive it refused
loss, the debtor X was not yet in acceptance without justification.
default. Thus, X is not liable for damages.

111
Requisites of a Fortuitous Event 2) Accion Pauliana/Rescissory Action [Article 1171,
Whether an act of man or an act of God, to Article 1381] - An action to rescind contracts
constitute a fortuitous event, it is essential that: entered into by the debtor in fraud of creditors.
• The event must be independent of the will of the
debtor; Requisites
• The event must be either unforeseeable or 1. There is a credit in favor of plaintiff;
inevitable; 2. The debtor has performed an act subsequent
• The event must have prevented the debtor to the contract, giving advantage to other
from complying with his obligation in a normal persons;
manner; 3. The creditor is prejudiced by the debtor's act
• The debtor must be free from any participation which are in favor of 3rd parties and
in the aggravation of the injury resulting to the rescission will benefit the creditor;
creditor. 4. The creditor has no other legal remedy;
5. The debtor's acts are fraudulent.
REMEDIES OF AGGRIEVED PARTY FOR BREACH OF
OBLIGATION C. OTHER REMEDIES:
• Attach and execute debtor's property which is not
A. PRINCIPAL REMEDIES exempt [Article 2236]
1. Specific performance in obligations to give • Accion directa [Article 1729, Article 1652]
specific things, substitute performance in an
obligation to do (since the obligor cannot be • Replevin, garnishment, receivership, etc.
compelled to do it himself) or to deliver generic
things, or equivalent performance for damages. TRANSMISSIBILITY OF OBLIGATIONS
2. Rescission (Resolution) of a reciprocal General Rule: All rights acquired by virtue of an
obligation, unless there is a just cause to fix a obligation are transmissible. [Article 1178]
period. Exceptions:
3. Damages - Those in the performance of their
obligation are guilty of fraud, negligence or a) prohibited by law;
delay and those who in any manner contravene b) prohibited by stipulations; and
the tenor thereof are liable for damages.

VIII. OBLIGATIONS AND CONYTACTS

c) purely personal.
Positive Personal Obligation
Article 1178. Subject to the laws, all rights
• The creditor may not compel the debtor to acquired in virtue of an obligation are
perform the act required against the latter’s will transmissible, if there has been no stipulation to
because it amounts to involuntary servitude. the contrary.
• 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. 4. DIFFERENT KINDS OF OBLIGATIONS – CIVIL
• This same rule shall be observed if he does it in
contravention of the tenor of the obligation . CODE, ARTS. 117G-1230
Furthermore it may be decreed that what has
been poorly done be undone. (Art 1167) 1) PURE OBLIGATIONS
• Every obligation whose performance does not
Negative Personal Obligation depend upon a future or uncertain event, or
When the obligation consists in not doing, and the upon a past event unknown to the parties, is
obligor does what has been forbidden him, it shall demandable at once.
also be undone at his expense. [Article 1168] • It is one which is not subject to any condition
and no specific date is mentioned for its
On performance and rescission (resolution) fulfillment and is, therefore, immediately
demandable.
• The remedies are not cumulative but alternative.
• If fulfillment becomes impossible, the injured
party may still seek rescission after he has 2) CONDITIONAL OBLIGATIONS
chosen fulfillment. • In conditional obligations, the acquisition of
• The court shall likewise decree rescission where rights, as well as the extinguishment or loss of
fulfillment is prohibited by lawful authority. those already acquired, shall depend upon the
• The right to rescind is NOT ABSOLUTE. If the happening of the event which constitutes the
court finds that the breach is slight and casual condition.
and not so substantial and fundamental as to • Condition - It is a future and uncertain event,
defeat the object of the parties, it may instead or past event unknown to the parties, upon
grant a period. the happening of which the effectivity or
• Without a just cause, there would be no reason extinguishment of an obligation (or rights)
to fix a period. [Article 1191] depends.
• The acquisition of rights (SUSPENSIVE), as well
B. SUBSIDIARY REMEDIES as the extinguishment or loss of those already
acquired (RESOLUTORY), shall depend upon
Where principal remedies are unavailable or the happening of the event which constitutes
ineffective. the condition. [Article 1181]
• When the debtor binds himself to pay when his
means permit him to do so, the obligation shall
1) Accion subrogatoria/Subrogatory Action [Article be deemed to be one with period. [Article
1171] - An action against the debtor’s debtor. 1181]
Requisites: SUSPENSIVE V. RESOLUTORY CONDITION
1. Creditor must have right of return against debtor;
SUSPENSIVE CONDITION RESOLUTORY CONDITION
2. The debt is due and demandable;
3. There is a failure of the debtor to collect his own when the acquisition of when the obligation is at
debt from 3rd persons, either through malice or rights or demandability once due and demandable,
negligence; of the obligation must but the right is
4. Debtor's assets are insufficient; await the occurrence of extinguished or lost upon
the condition. the fulfillment of the
5. The right of action is not purely personal. condition.

112
JAVIER AND JAVIER V. CA J. Carandang
G.R. NO. L-481G4. MARCH 15, 1GG0 A "potestative condition" is a condition the fulfillment
J. Regalado of which depends exclusively upon the will of the
debtor, in which case, the conditional obligation is void.
When a contract is subject to a suspensive Article 1182 of the Civil Code reads:
condition, its birth or effectivity can take place
only if and when the event which constitutes the
condition happens or is fulfilled. If the suspensive
condition does not take place, the 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

CORPORATION
G.R. NO. 242074, NOVEMBER 10, 2021
Article 1182. When the fulfillment of the OJDTC and Oscar is a pure potestative condition,
condition depends upon the sole will of the dependent on the sole will or discretion of OJDTC
debtor, the conditional obligation shall be and Oscar. However, the said condition is imposed
void. If it depends upon chance or upon the not on the inception or birth of the
will of a third person, the obligation shall contract/obligation as the Second MOA was
take effect in conformity with the already perfected and even partially executed
provisions of this Code. (OJDTC and Oscar provided for partial payment in
the same document).
Case law distinguishes between a
potestative condition imposed on the birth Rather, the condition is imposed on the
of the obligation and a potestative performance or fulfillment of OJDTC and Oscar's
condition imposed on the obligation's obligation to reimburse or pay their outstanding
fulfillment. In the latter scenario, only the obligation with petitioner. Hence, conformably
condition is voided, leaving unaffected the with jurisprudence, only the condition providing

VIII. OBLIGATIONS AND CONYTACTS

obligation itself. for payment on a "best effort" basis is treated as
void, the obligation to return petitioners' money
In this case, the condition found in the is unaffected. Simply put, the obligation of
Second MOA, that is, the full payment of OJDTC and Oscar to pay petitioners is considered
the obligation through the best efforts of 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 (1GG7)
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 good IMPROVEMENT IN REAL OBLIGATION
customs or public policy and those prohibited
by law shall annul the obligation which 1. Loss
depends upon them. • Without Debtor’s Fault—the obligation shall
• If the obligation is divisible, the part thereof be extinguished.
which is not affected by the impossible • With Debtor’s Fault—he shall be obliged to
condition or unlawful condition shall be valid. pay damages
• The condition not to do an impossible thing 2. Deterioration
shall be considered as not having been agreed • Without debtor’s fault—the impairment is to
upon. be borne by the creditor
• In law on donations and in testamentary • With debtor’s fault—the creditor may choose
succession, such conditions are simply between the rescission of the obligation and
disregarded. it fulfillment, with indemnity for damages in
• Obligations which are made to depend on either case.
casual or mixed conditions are VALID. 3. Improvement
• By it’s nature or by time—the improvement shall
Effects of Impossible Conditions inure to the benefit of the creditor.
1. Conditional obligation is void – both obligation • At the expense of the debtor—he shall have
and condition are void no other right than that granted to the
2. Conditional obligation is valid – if condition is usufructuary. Hence: the debtor can only ask
negative, it is disregarded and obligation is reimbursement for necessary expenses
rendered pure and valid [Article 546], remove the improvements
3. Only the affected obligation is void – if the without injuring the principal property, or off-
obligation is divisible, the part not affected by set the value against damage sustained by
the impossible condition shall be valid the property.
4. Only the condition is void – if obligation is pre-
existing, not depending on fulfillment of the
condition which is impossible for its existence, RESCISSION OF RECIPROCAL OBLIGATIONS

VIII. OBLIGATIONS AND CONYTACTS

only the condition is void General Rule: The power to rescind obligations is
5. Condition considered not imposed – if implied in reciprocal ones, in case one of the
impossible/unlawful condition is attached for obligors should not comply with what is
a simple or remuneratory donation as well as incumbent upon him. [Article 1191]
to a testamentary disposition, condition is
considered not imposed while the obligation is Remedy of Injured Party
valid. a) Fulfillment of the obligation with the payment
of damages.
BAR QUESTION (2003) b) Rescission of the obligation with the payment of
Are the following obligations valid, why, and if damages.
they are valid, when is the obligation demandable c) Rescission, after fulfillment, if the latter
in each case? should become impossible.
a) If the debtor promises to pay as soon as he General Rule: The court shall decree the rescission
claimed.
has the XPN: Unless there be just cause authorizing the
means to pay; fixing of period.
b) If the debtor promises to pay when he likes;
c) If the debtor promises to pay when he When Rescission Is Not Permitted
becomes a lawyer; Rescission will not be permitted for slight or casual
d) If the debtor promises to pay if his son, who is breach of the contract, but only for such
sick breaches as are so substantial and fundamental
with cancer, does not die within one year. as to defeat the object of the parties in making
SUGGESTED ANSWER the agreement.
a)The obligation is valid. It is an obligation Art. 11G1 does NOT apply to the following:
subject to an indefinite period because the debtor
binds himself to pay when his means permit him • Contracts of partnership where a partner fails
to do so. (Article 1180, NCC).The creditor must to pay the whole amount which he has bound to
file an action in court to fix the period, and when contribute to the common fund [Article 1786
the definite period as set by the court arrives, the and 1788]
obligation to pay becomes demandable (Article • Sales of real or personal property by
1197, NCC). installments. (governed by Recto Law and
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 authority
Considering that the fulfillment of the suspensive to regard it as rescinded and to insist upon the
condition is subject to the sole will of the debtor, original demand.
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 of
suspensive condition, i.e. the future and a term or period.
uncertain event of his becoming a lawyer. The • A term or period is an interval of time, which,
performance of this obligation does not depend exerting an influence on an obligation as a
solely on the will of the debtor but also on other consequence of a juridical act, either
factors outside the debtor’s control. suspends its demandability or produces
extinguishment. It is an event which must
d) The obligation is valid. The death of the son of necessarily happen. (Future and Certain)
cancer within one year is made a negative • Article 1180. When the debtor binds himself to
suspensive condition to his making the payment. pay when his means permit him to do so, the
The obligation is demandable if the son does not obligation shall be deemed to be one with a
die within one year. (Article 1185, period.
NCC).

114
Benefit of Term or Period When Court may Fix Period
Whenever in an obligation a period is a) If the obligation does not fix a period, but
designated, it is presumed to have been from its nature and circumstances it can be
established for the benefit of both the creditor and inferred that a period was intended;
the debtor. [Article 1196] b) If the duration of the period depends upon the
will of the debtor; and
Instances When Debtor Loses The Benefit Of The Term c) If the debtor binds himself to pay when his
or Period means permit him to do so (Art 1180
• When after the obligation has been d) If fixing the period is justified. [Article 1191]
contracted, he becomes insolvent.
• XPN: Unless he gives a guaranty or security Note:
for the debt
• Whenever he does not furnish to the creditor When obligation is demandable at once:
the guaranties or securities which he has • Pure obligations (Art. 1179, par. 1)
promised. • Obligations with a resolutory condition (Art. 1179, par.
• When by his own acts he has impaired said
guarantees or securities after their 2)
establishment and when through a fortuitous • Obligations with a resolutory term (Art. 1193, par. 2)
event they disappear. • Obligations with a condition not to do an
• XPN: Unless he immediately gives new ones impossible thing (Art. 1183, par. 2)
equally satisfactory. BAR QUESTION (1GG1)
• When the debtor violates any undertaking in M and N were very good friends. N borrowed P10,
consideration of which the creditor agreed to 000.00 from M. Because of their close relationship,
the period. the promissory note executed by N provided that he
BAR QUESTION (2013) would pay the loan “whenever his means permit.”
• When
Gary is a the debtor
tobacco attempts
trader to a lending investor.
and also Subsequently, M and N quarreled. M now asks you
He sold tobacco leaves to Homer for delivery within a
abscond. to collect the loan because he is in dire need of
month, although the period for delivery was not money. What legal action, if any, would you
guaranteed. Despite Gary's efforts to deliver on time,
transportation problems and government red tape take in behalf of M?
hindered his effort, and he could only deliver after 30

VIII. OBLIGATIONS AND CONYTACTS

days. Homer refused to accept the late delivery and to SUGGESTED ANSWER
pay on the ground that the agreed term had not been “M” must bring an action against “N’’ for the purpose
complied with. of asking the court to fix the duration of the term or
As lending investor, Gary granted a P1,000,000 loan to period for payment. According to the Civil Code,
Isaac to be paid within two years from execution of the when the debtor binds himself to pay when his
contract. As security for the loan, Isaac promised to means permit him to do so, the obligation shall be
deliver to Gary his Toyota Innova within seven (7) days, deemed to be one with a period. (Arts. 1180 and
but Isaac failed to do so. Gary was thus compelled to
demand payment for the loan before the end of the 1197)
agreed two-year term. Normally, before an action for collection may be
(1) Was Homer justified in refusing to accept the tobacco maintained by “M” against “N,’’ the former must first
leaves?
bring an action asking the court to fix the period of
(2) Can Gary compel Isaac to pay his loan even before
the end of the two-year period?
payment. However, a case combining such action
with that of an action for collection may be allowed
SUGGESTED ANSWER if it can be shown that a separate action for
1)No. Homer was not justified in refusing to accept the collection would be a mere formality because no
delivery. It is clear that the period for delivery was not
guaranteed. Obligations arising from contracts have the additional proofs other than the admitted facts will
force of law between the contracting parties and must be presented and would serve no purpose other
be complied with in good faith. There is nothing stated
in the facts which would indicate that Gary acted in than to delay. Here, there is no legal obstacle to
bad faith or deliberately delayed the delivery. such course of action. (Borromeo vs. Court of
Appeals, 47 SCRA 65)
2) Yes, Gary can compel Isaac to immediately pay
the loan. Isaac lost his right to make use of the period 4. ALTERNATIVE OR FACULTATIVE
because he failed to furnish the guaranty or security in
consideration of which Gary agreed to the period. As • Simple Obligation - If there is only one prestation.
a result, the obligation which was If there are several prestations, it could be
originally with a period became immediately demandable Conjunctive or Distributive.
• For Distributive, it could be Alternative or Facultative.
BAR QUESTION (1G73)
D borrowed P2, 000.00 from C in 1958. The debt is ALTERNATIVE OBLIGATION
evidenced by a promissory note executed by D wherein
he promised to pay as soon as he has money or as • A person alternatively bound by different
soon as possible. C has made repeated demands upon prestations
D for payment, but up to now no payment has been
made. Suppose that C will bring an action shall completely perform one of them. [Article 1199]
against D for payment of the debt, will the action prosper? • The creditor cannot be compelled to receive
SUGGESTED ANSWER
part of one or part of the other undertaking.
No, the action will not prosper. In similar cases decided
by the Supreme Court (Gonzales vs. Jose, 66 Phil. 369; Right of Choice
Patente vs. Omega, 49 OG 4846) it was held, that where
the debtor promises to pay his obligation as soon as he The right of choice belongs to the debtor.
has money or as soon as possible, the duration of the The creditor may exercise the right only when the
term or period depends exclusively upon the will of the same has been expressly granted to him.
debtor; consequently, the only remedy of the creditor is
to bring an action against the debtor in accordance
with Art. 1197 of the Civil Code for the purpose of Effect of Loss
asking the court to fix the duration of the term or When choice belongs to the debtor:
period. It is only after the duration of the term or period 1. Loss by reason of fortuitous event
has been fixed by the court that any other action
involving the fulfilment or performance of the a) All are lost – obligation is extinguished.
obligation can be maintained. This has always b) Some but not all are lost – debtor shall choose
been the from among the remainder
consistent doctrine in this jurisdiction
c) Only one remains – deliver that which
remains. Obligation becomes simple.

115
2. Loss due to debtor’s fault ART. 1211. Solidarity may exist although the
a) All are lost – creditor shall have a right to creditors and the debtors may not be bound in the
recover value of the last thing which same manner and by the same period and
disappeared or service which become conditions.
impossible, with indemnity for damages.
b) Some but not all are lost – debtor shall choose ART. 1212. Each one of the solidary creditors may
from among the remainder without damages. do whatever may be useful to the others, but not
c) Only one remains – deliver that which remains anything which may be prejudicial to the latter.
• Mere extension of time for payment given by the
3. Loss due to creditor’s fault creditor to a solidary debtor, does not release
others from the obligation.
a) Some but not all are lost – debtor may perform • If prejudicial, the solidary creditor who effected
any from those that remains OR ask for the novation shall reimburse the others for
rescission of contract with damages. damages incurred by them;
b) All are lost – obligation is extinguished. • If beneficial and the creditor who effected the
novation is able to secure performance shall be
liable to the others for the share;
When choice belongs to creditor
1. Due to fortuitous event NOVATION in SOLIDARY OBLIGATIONS
a) All are lost – obligation is extinguished. • If effected by substituting another person in
b) Some but not all are lost – the creditor shall place of the debtor, the solidary creditor who
choose from among the remainder. effected the novation is liable for the acts of the
c) Only one remains – deliver that which new debtor;
remains. Obligation becomes simple. • In novation by subrogation, when a third person
is subrogated to the rights of the other creditors,
2. Due to debtor’s fault the creditor effecting the novation is liable for
their share in the credit. But if the creditor
a) All are lost – creditor may claim the value of subrogates a third person in his place such
any of the prestations lost, with indemnity for amounts to an assignment of his rights which he
damages. cannot do without the consent of other creditors.

VIII. OBLIGATIONS AND CONYTACTS

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 REMISSION in SOLIDARY OBLIGATIONS
to damages. • Total remission - obligation is totally
extinguished but the solidary debtor who
obtained it does not entitle him to
FACULTATIVE OBLIGATION reimbursement from his co-debtors.
• When only one prestation has been agreed • Partial remission for the benefit of one of the
upon, but the obligor may render another in debtors and it covers only part of his share but
substitution, the obligation is called his character as a solidary debtor is not affected.
facultative. [Article 1206] • Creditor/s responsible for the remission are liable
• Substitution becomes effective only from the to reimburse others for the share in the
time it has been communicated to the obligation corresponding to them
creditor.
• Choice belongs to the debtor. DEFENSES in SOLIDARY OBLIGATIONS
1. Defenses which arise from the nature of the obligation.
Effect of Loss of Substitute 2. Defenses personal to the debtor being
The loss or deterioration of the thing intended as sued or pertaining only to his share.
a substitute, through the negligence of the obligor, 3. Defenses which belong to another debtor.
does not render him liable. But once the BAR QUESTION (1G71)
substitution has been made, the obligor is liable
for the loss of the substitute on account of his X, Y and Z owe A and B P12,000 in a joint obligation.
How many obligations exist in this case, who are the
delay, negligence or fraud. parties in each
obligation and for how much? Why?
5. JOINT AND SOLIDARY OBLIGATIONS SUGGESTED ANSWER
Obligations with multiple parties could either be There are six obligations in the above case. The parties
Joint or Solidary. and the amount of each obligation are:
(1) X as debtor for P2,000 in favor of A as creditor;
Joint Obligations (2) X as debtor for P2,000 in favor of B as creditor;
• Obligacion Mancomunada (3) Y as debtor for P2,000 in favor of A as creditor;
• Each of the debtors liable only for their (4) Y as debtor for P2,000 in favor of B as creditor;
proportionate share of the debt (5) Z as debtor for P2,000 in favor of A as creditor;
• Each of the creditors entitled only for their (6) Z as debtor for P2,000 in favor of B as creditor.
proportionate part of the credit from each The answer is based on Art. 1208 of the Civil Code
debtor which declares that if the obligation is joint, the credit
• The whole obligation is to be paid or fulfilled or debt shall be presumed to be divided into as many
proportionately by different debtors or equal shares as there are creditors or debtors, the
demanded proportionately by different credits or debts being considered as distinct from one
another, subject to the Rules of Court governing the
creditors. multiplicity of suits. Take the credit of P12, 000 for
instance. Since there are two creditors there will also
Solidary Obligations be two credits of P6, 000 for each creditor. In the case
of the debt of P12, 000, since there are three debtors
• Obligacion Solidaria there will also be three debts of P4,000 against each
• Each one of the debtors is bound to render debtor. Now, as far as A, the first creditor, is
and/or each one of the creditors has a right to concerned, if he wants to collect his credit of P6,000, he
demand entire compliance with the prestation. must proceed against all the debtors. Thus he will be
• Each one of the debtors answers not only for able to collect P2, 000.00 from X, P2, 000 from Y,
the portion affecting him, but also for the another P2, 000 from Z.
portion pertaining to others. The same is true in the case of B, the second creditor
• Payment made by one of the solidary
debtors
extinguishes the obligation.
116
 BAR QUESTION (2001) SAMPLE QUESTION
Four foreign medical students rented the apartment AA, BB, CC and DD are joint debtors of creditor EE
of Thelma for a period of one year. After one for 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 boarding entire loan from DD. DD only paid P50,000. Can EE
house. Thelma discovered that they left unpaid demand from AA the payment of
telephone bills in the total amount of P80,000.00. the remaining P150,000 unpaid obligation? Explain.
The lease contract provided that the lessees shall SUGGESTED ANSWER
pay for the telephone services in the leased
premises. Thelma demanded that the fourth student No, EE cannot demand from AA the payment of the
pay the entire amount of the unpaid telephone bills, remaining P150,000 unpaid obligation because the
but the latter is willing obligation is joint.
to pay only one fourth of it. Who is correct? Why? In a joint obligation, each of the debtors is liable
only for a proportionate part of the debt. Since AA is
SUGGESTED ANSWER a joint debtor, he is liable only for his proportionate
part of debt, and creditor EE is entitled to demand
The fourth student is correct. only a proportionate part of the credit. There being
His liability is only joint, hence, pro rata. four debtors, EE can only demand P50,000 from AA,
There is solidary liability only when the obligation representing his proportionate share in
expressly so states or when the law or nature of the the debt. (Article 1207 of the New Civil Code)
obligation requires solidarity (Art. 1207, CC). The
contract of lease in
the problem does not, in any way, stipulate solidarity. BAR QUESTION (2003)
BAR QUESTION (2012) A,B,C,D, and E made themselves solidarily indebted
to X for the amount of P50,000.00. When X
Buko, Fermin and Toti are solidary debtors under demanded payment from A, the latter refused to
a loan obligation of P 300,000.00 which has fallen pay on the following grounds.
due. The creditor has, however, condoned Fermin’s
entire share in the debt. Since Toti has become a) B is only 16 years old.
insolvent, the creditor makes a demand on Buko b) C has already been condoned by X
to pay the debt. How much, if any, may Buko be c) D is insolvent.
compelled to pay? d) E was given by X an extension of 6 months
a)P 200.000.00 without the consent of the other four co-
b)P 300,000.00 debtors.
State the effect of each of the above defenses put up

VIII. OBLIGATIONS AND CONYTACTS

c)P 100,000.00 by A on his obligation to pay X, if such defenses are
d)P 150,000.00 found to be
true.
SUGGESTED ANSWER SUGGESTED ANSWER
a)P 200.000.00 (a) A may avail the minority of B as a defense, but
only for B’s share of P 10,000.00. A solidary debtor
BAR QUESTION (1GG8) may avail himself of any defense which personally
Joey, Jovy and Jojo are solidary debtors under a belongs to a solidary co- debtor, but only as to the
loan obligation of P300,000.00 which has fallen share of that co- debtor.
due. The creditor has, however, condoned Jojo’s
entire share in the debt. Since Jovy has become (b)A may avail of the condonation by X of C’s share of
insolvent, the creditor makes a demand on Joey to
pay the debt. P 10,
1) How much, if any, may Joey be compelled to 000.00. A solidary debtor may, in actions filed by
the creditor, avail himself of all defenses which are
pay? derived from the nature of the obligation and of
2) To what extent, if at all, can Jojo be compelled those which are personal to him or pertain to his
by Joey own share. With respect to those which personally
to contribute to such payment? belong to others, he may avail himself thereof only
as regards that part of the debt for which the latter
SUGGESTED ANSWER are responsible. (Article 1222, NCC).
1. Joey can be compelled to pay only the
remaining balance of P200,000, in view of the (c)A may not interpose the defense of insolvency of
remission of Jojo’s share by the creditor. (Art. D as a defense. Applying the principle of mutual
1219, Civil Code) guaranty among solidary debtors, A guaranteed the
payment of D’s share and of all the other co-
2. Jojo can be compelled by Joey to contribute debtors. Hence, A cannot avail of the defense of D’s
P50,000. The Civil Code provides that when one insolvency.
of the solidary debtors cannot, because of his
insolvency, reimburse his share to the debtor (d)The extension of six (6) months given by X to E
paying the obligation, such share shall be borne by
all his co-debtors, in proportion to the debt of may be availed of by A as a partial defense but only
each. for the share of E, there is no novation of the
Since the insolvent debtor’s share which Joey obligation but only an act of liberality granted to E
paid was P100,000, and there are only two alone
remaining debtors– namely Joey and Jojo – these
two shall share equally the burden of
reimbursement. Jojo may thus be compelled by DIVISIBLE s INDIVISIBLE OBLIGATIONS
Joey to contribute P50,000.00. (Art. 1217. par. 3) • Obligations to give definite things and those
which are not susceptible of partial
performance shall be deemed to be indivisible.
BAR QUESTION (2012) • When the obligation has for its object the
Buko, Fermin and Toti bound themselves solidarily execution of a certain number of days of work,
to pay Ayee the sum of P10,000.00. When the the accomplishment of work by metrical units,
obligation became due and demandable, Ayee or analogous things which by their nature are
sued Buko for the payment of the P 10,000.00. susceptible of partial performance, it shall be
divisible.
Buko moved to dismiss on the ground that there • However, even though the object or service
was failure to implead Fermin and Toti who are may be physically divisible, an obligation is
indispensable indivisible if so provided by law or intended by
the parties.
parties. Will the motion to dismiss prosper? Why? • In obligations not to do, divisibility or
indivisibility shall be determined by the
SUGGESTED ANSWER character of the prestation in each particular
No, because the creditor may proceed against case.
anyone of

117
SPS. LAM V KODAK PHILIPPINES, LTD. If anyone of the debtors in a joint indivisible
G.R. NO. 167615, JANUARY 11, 2016 obligation should fail to comply with his
undertaking, the obligation is converted into one
J. Leonen of indemnity for damages.
• The Letter Agreement contained an indivisible However, debtors AA, BB and CC who were ready
obligation. Through the specified terms and to comply with what is incumbent upon them
conditions, the tenor of the Letter Agreement shall not contribute to the indemnity beyond the
indicated an intention for a single transaction. corresponding portion of the price of the thing or
This intent must prevail even though the articles
involved are physically separable and capable of of the value of the service in which the obligation
being paid for and delivered individually, consists.
consistent with the New Civil Code: On the other hand, debtor DD who failed or
• Article 1225. For the purposes of the preceding refused to comply with his undertaking shall pay
articles, obligations to give definite things and not only his share of such price or value, but also
those which are not susceptible of partial all of the damages suffered by the creditor EE as
performance shall be deemed to be indivisible. a result of the nonfulfillment of the obligation.
• When the obligation has for its object the (Article 1224, New Civil
execution of a certain number of days of work, Code)
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 120G]

• 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
to enforce the credit.
• In case one of the debtors refused – converted
into indemnity to pay the value of the thing or
service due, where each debtors will pay their
proportionate share, and damages to be
shouldered by the debtor at fault.
SAMPLE QUESTION
AA, BB, CC and DD are joint debtors of creditor
EE for the delivery on January 15, 2020 of a
determinate horse that won the 2019 racing
competition. Last January 15, 2020, EE
demanded the delivery of the horse upon all of
the joint debtors. While AA, BB, and CC were
ready to deliver, DD however refused to comply
with the obligation.
What is/are the legal implication/s of DD’s
refusal.
Explain.
SUGGESTED ANSWER
 VIII. OBLIGATIONS AND CONYTACTS
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
and the satisfaction of the penalty at the
same time.
XPN: The creditor may only be entitled to
both rights if the same has been clearly
granted to him.

When court may reduce the penalty

Judge may reduce penalty:
• Principal obligation has been partly/
irregularly complied;
• Even if no performance, the penalty
may also be reduced if iniquitous/
unconscionable. [Article 1229]

118
SSS VS. MOONWALK DEVELOPMENT AND 2. Tendered By The Proper Party
HOUSING CORPORATION • The creditor is not bound to accept payment or
G.R. NO. 73345, APRIL 7, 1GG3 performance by a third person who has no
J. Campos, Jr. interest in the fulfillment of the obligation, unless
there is a stipulation to the contrary. (1236)
• A penal clause is an accessory undertaking to • From the debtor himself or from his duly
assume greater liability in case of breach. It authorized representative;
has a double function: (1) to provide for • From a third person who has been authorized by
liquidated damages, and (2) to strengthen the the parties to make payment;
coercive force of the obligation by the threat • From a third person who has an interest in the
of greater responsibility in the event of breach. fulfillment of the obligation (guarantor, surety,
• From the foregoing, it is clear that a penal creditor paying a preferred creditor)
clause is intended to prevent the obligor from
defaulting in the performance of his obligation. Effect of Payment by a Third Person not interested in the
Thus, if there should be default, 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
debtor – the payor may demand
Modes of Extinguishment of Obligations: reimbursement only up to the amount
1. Payment/performance beneficial to the debtor; payor has no right of
subrogation
2. Loss of the thing due • With knowledge or consent of debtor – payor
3. Condonation or remission of debt has rights of full reimbursement and
4. Confusion or merger subrogation (Art 1236)
3. If payor does not intend to be reimbursed, it is
5. Compensation deemed to be a donation which requires the

VIII. OBLIGATIONS AND CONYTACTS

6. Novation debtor’s consent; the payment, however, is in
7. Annulment, Rescission, Fulfillment of a any case valid as to the creditor who has
resolutory condition, Prescription. accepted. [Article 1238]

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

11G
Incapacitated Creditor APPLICATION OF PAYMENT
Payment to a person who is incapacitated to Designation of the debt to which the payment
administer his property shall be valid if he has must be applied when the debtor has several
kept the thing delivered, or insofar as the obligations of the same kind in favor of the same
payment has been beneficial to him. (Article creditor.
1241)
Requisites of Application of Payment
Payment by debtor after judicial order to retain • There must be only one debtor and only one creditor;
the debt • There must be two or more debts of the same kind;
Payment made to the creditor by the debtor • All the debts must be due, except if there is
after the latter has been judicially ordered to stipulation to the contrary OR application of
retain the debt shall not be valid. (Article payment is made by the party for whose
1243) benefit the term has been constituted
• Amount paid by the debtor is insufficient to
4. Identity Of Payment cover the total amount of all the debts.
• The debtor of a thing cannot compel the
creditor to receive a different one, although Rules on Application of Payment
the latter may be of the same value as, or • Debtor has the right to select which of his
more valuable than that which is due. debts he is paying. He must indicate at the
• In obligations to do or not to do, an act or time of making payment, and not afterwards,
forbearance cannot be substituted by which particular debt is being paid;
another act or forbearance against the • The right to make the application once
obligee's will. (1244) exercised is irrevocable unless the creditor
consents to the change;
• When the obligation consists in the delivery • If not, the creditor makes the application, by so
of an indeterminate or generic thing, whose stating in the receipt that he issues, unless
quality and circumstances have not been there is cause for invalidating the contract;
stated, the creditor cannot demand a thing • If the creditor has not also made the

VIII. OBLIGATIONS AND CONYTACTS

of superior quality. Neither can the debtor application, or the application is not valid, the
deliver a thing of inferior quality. The application is made by operation of law;
purpose of the obligation and other • If debt produces interest, the payment is not
circumstances shall be taken into to be applied to the principal unless the
consideration. (1246) interests are covered;
• Cathay Pacific Airways, Ltd. vs. Sps. • When no application can be inferred from the
Vazquez 399 SCRA 207 – business class to circumstances of payment, it is applied: (a) to
first class 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.
Exceptions:
• Dacion en pago Limitations on Application of Payment
• Novation • In Article 1248, the creditor has the right to
refuse partial payment - the creditor cannot
be compelled partially to receive the
Debts In Money prestations in which the obligation consists.
• The payment of debts in money shall be Neither may the debtor be required to make
made in the currency stipulated, and if it is partial payments.
not possible to deliver such currency, then in • Article 1253 - If the debt produces interest,
the currency which is legal tender in the payment of the principal shall not be deemed
Philippines. to have been made until the interests have
• The delivery of promissory notes payable to been covered.
order, or bills of exchange or other • Also, debtor cannot apply payment to a debt
mercantile documents shall produce the which is not yet liquidated. He cannot choose
effect of payment only when they have been a debt with a period (established for the
cashed, or when through the fault of the creditor’s benefit) before the period has
creditor they have been impaired. (1249) arrived.
• In case an extraordinary inflation or deflation PAYMENT BY CESSION DATION IN PAYMENT
of the currency stipulated should supervene, Consists in the It requires delivery and
the value of the currency at the time of the abandonment of the transmission of
establishment of the obligation shall be the totality of the ownership of a thing
basis of payment, unless there is an property of the debtor owned by the debtor to
agreement to the contrary. (1250) in favor of the the creditor as an
• Extraordinary inflation or deflation exists when creditors in order that accepted equivalent of
there is a decrease or increase in purchasing the same may be the performance of the
power of the currency which is unusual or applied for the obligation.
beyond the common fluctuation in value of satisfaction of their
said currency, not reasonable foreseen or credits. Governed by the law on
was beyond the contemplation of the sales. Obligation is
parties. This requires an official Unless there is a extinguished up to the
pronouncement or declaration by competent stipulation to the value of the property
authorities. (Telengtan Bros. vs US Lines, contrary, cession shall conveyed, unless
483 SCRA 458) only release the stipulation that
debtor from conveyance shall
responsibility for the extinguish entire
5. Tendered In The Proper Place net proceeds of the obligation.
• Place stipulated by the parties thing
• If there is no stipulation, obligation is to assigned.
deliver a determinate thing, payment shall
be made at the place where the thing might
be at the time the obligation was
constituted. 120
• In any other case, the payment shall be
made at the
domicile of the debtor.
Tender Of Payment And Consignation 2. LOSS OF THE THING DUE
‘Tender of payment’ • A thing is lost “when it perishes, or goes out of
It is the act of offering to the creditor what is due him, commerce, or disappears in such a way that its
together with the demand for the creditor to accept it. existence is unknown or (even if known) it
To be valid, the tender of payment must be a "fusion cannot be recovered”. [Article 1189]
of intent, ability, and capability to make good such
offer, which must be absolute and must cover the • In obligations to do, the equivalent term of loss is
amount due.“ “impossibility”.

‘Consignation’ ART 1262. An obligation which consists in the

It is the act of depositing the thing due with the court delivery of a determinate thing shall be extinguished
or judicial authorities whenever the creditor cannot if it should be lost or destroyed without the fault of
accept or refuses to accept without just cause the debtor, and before he has incurred in delay.
payment and it generally requires a prior tender of
payment. When Loss of Thing Will Not Extinguish Liability
There are cases, however, when the loss of the
When Consignation alone is sufficient specific thing even in the absence of fault and delay
• When the creditor is absent or unknown, or will not exempt the debtor from liability. They are:
does not 1) when the law so provides [Articles 1170, 1165 [par. 3],
appear at the place of payment; 1263];
• When he is incapacitated to receive the payment
at the time it is due; 2) when the stipulation so provides;
• When, without just cause, he refuses to give a
3) when the nature of the obligation requires
the assumption of risk [par. 2; Article 1174];
receipt; and
• When two or more persons claim the same right to 4) when the obligation to deliver a specific thing
collect; arises from a crime. [Article 1268]
• When the title of the obligation has been lost.
Effect of Loss of a Generic Thing
Requisites of effective consignation In an obligation to deliver a generic thing, the loss

VIII. OBLIGATIONS AND CONYTACTS

or destruction of anything of the same kind does not
• There is a debt due. extinguish the obligation. [Article 1263]
• Creditor to whom tender of payment was made
refused to accept it without justifiable cause, or he General Rule: The debtor can still be compelled to
was absent, incapacitated of because several deliver a thing of the same kind. The creditor,
persons are claiming or title to obligation has been however, cannot demand a thing of superior quality
lost. and neither can the debtor deliver a thing of inferior
• (1st Notice) Previous notice of consignation has quality. [Article 1246]
been given to person interested in the
performance of obligation.
• Amount is placed at the disposal of court. Effect of Partial Loss of a Specific Thing
• (2nd Notice) After consignation, person • Courts may determine whether, under the given
circumstances, such loss is so important as to
interested was extinguish the obligation. [Article 1264]
notified of the action. • Neither partial loss of the thing nor extreme
• STRICT COMPLIANCE is required difficulty in an obligation to do authorize the
• Prior to acceptance by creditor or declaration by
courts to remake or revise the contract;
court, debtor may withdraw the thing or sum circumstances may only serve to release the
deposited allowing the debt to remain debtor from his obligation in whole or in part.
• If creditor allowed withdrawal, he will lose • In contracts, where the impossibility of things
preference over the thing or sum deposited. and services occur prior to perfection, no
• If valid, expenses are chargeable against the obligation is deemed constituted and loss
creditor. If invalid, expenses shall be against the prevents the contract from acquiring obligatory
debtor, and accrual of interest continues. force. [Articles 1348 C 1409]

B.E. SAN DIEGO, INC. V AZUL Presumption of Fault In Case of Loss of Thing in
G.R. NO. 16G501, JUNE 8, 2007 Possession of the Debtor
J. Velasco Jr. General Rule: Whenever the thing is lost in the
possession of the debtor, it shall be presumed that
It must be borne in mind however that a mere tender the loss was due to his fault.
of payment is not enough to extinguish an obligation. XPN: Unless there is proof to the contrary, and
In Meat Packing Corporation of the Philippines v. without prejudice to the provisions of Article 1165.
Sandiganbayan, we distinguished consignation from This presumption does not apply in case of
tender of payment and reiterated the rule that both earthquake, flood, storm or other natural calamity.
must be validly done in order to effect the [Article 1265]
extinguishment of the obligation, thus:

Consignation is the act of depositing the thing due with CO V COURT OF APPEALS
the court or judicial authorities whenever the creditor G.R. NO. 124G22 JUNE 22, 1GG8
cannot accept or refuses to accept payment, and it J. Martinez
generally requires a prior tender of payment. It should Assuming further that there was no delay, still
be distinguished from tender of payment. Tender is working against private respondent is the legal
the antecedent of consignation, that is, an act presumption under Article 1265 that its possession
preparatory to the consignation, which is the principal, of the thing at the time it was lost was due to its
and from which are derived the immediate fault. This presumption is reasonable since he who
consequences which the debtor desires or seeks to has the custody and care of the thing can easily
obtain. Tender of payment may be extrajudicial, while explain the circumstances of the loss. The vehicle
consignation is necessarily judicial, and the priority of
the first is the attempt to make a private settlement owner has no duty to show that the repair shop was
before proceeding to the solemnities of consignation. at fault. All that petitioner needs to prove, as
Tender and consignation, where validly made, claimant, is the simple fact that private respondent
produces the effect of payment and extinguishes the was in possession of the vehicle at the time it was
obligation. There is no dispute that a valid tender of lost. In this case, private respondent's possession at
payment had been made by respondent. Absent the time of the loss is undisputed.
however a valid consignation, mere tender will not
suffice to extinguish her obligation and consummate
the acquisition of the subject properties.

121
Consequently, the burden shifts to the possessor
who needs to present controverting evidence PHILIPPINE NATIONAL CONSTRUCTION
sufficient enough to overcome that presumption. CORPORATION V COURT OF APPEALS
Moreover, the exempting circumstances —
earthquake, flood, storm or other natural calamity G.R. NO. 1168G6, MAY 5, 1GG7
— when the presumption of fault is not applicable J. Davide, Jr.
do not concur in this case. Accordingly, having • It is a fundamental rule that contracts, once
failed to rebut the presumption and since the case perfected, bind both contracting parties,
does not fall under the exceptions, private and obligations arising therefrom have the
respondent is answerable for the loss. Xxx force of law between the parties and should
be complied with in good faith. But the law
It must likewise be emphasized that pursuant to recognizes exceptions to the principle of the
Articles 1174 and 1262 of the New Civil Code, obligatory force of contracts. One exception
liability attaches even if the loss was due to a is laid down in Article 1266 of the Civil Code.
fortuitous event if "the nature of the obligation Petitioner cannot, however, successfully take
requires the assumption of risk". Carnapping is a
normal business risk for those engaged in the refuge in the said article, since it is
repair of motor vehicles. For just as the owner is applicable only to obligations "to do," and not
exposed to that risk so is the repair shop since the to obligations "to give."
car was entrusted to it. • The obligation to pay rentals or deliver the
thing in a contract of lease falls within the
Impossibility of Performance prestation "to give"; hence, it is not covered
within the scope of Article 1266.
The debtor in obligations to do shall also be • At any rate, the unforeseen event and
released when prestation becomes legally or
physically impossible without the fault of the causes mentioned by petitioner are not the
obligor. (1266) legal or physical impossibilities
contemplated in the said article. Besides,
petitioner failed to state specifically the
Effect of Impossibility of Performance circumstances brought about by "the abrupt
General Rule: Obligations arising from contracts change in the political climate in the
have the force of law between the contracting country" except the alleged prevailing
parties and should be complied with in good faith. uncertainties in government policies on

VIII. OBLIGATIONS AND CONYTACTS

[Article 1159] infrastructure projects.
XPN: The debtor in obligations to do shall also be
released when the prestation becomes legally or • The principle of rebus sic stantibus neither
physically impossible without the fault of the fits in with the facts of the case. Under this
obligor. [Article 1266] theory, the parties stipulate in the light of
certain prevailing conditions, and once
these conditions cease to exist, the contract
If Obligor Has No Fault also ceases to exist.
An obligation to do so becomes legally or physically
impossible which will result in the extinction of the • This theory is said to be the basis of Article 1267
debtor’s obligation after restitution of what he may of
have received, if any, in advance from the other the Civil Code, which provides:
contracting party. • Art. 1267. When the service has become so
difficult as to be manifestly beyond the
Liability Of The Debtor For Impossibility Of contemplation of the parties, the obligor may
Performance also be released therefrom, in whole or in
The debtor incurs no liability for his inability to part.
• This article, which enunciates the doctrine
perform. of unforeseen events, is not, however, an
absolute application of the principle of rebus
When Must Impossibility Take Place sic stantibus, which would endanger the
This impossibility must take place after the security of contractual relations. The parties
constitution of the obligation. to the contract must be presumed to have
• If the obligation is impossible from the very assumed the risks of unfavorable
beginning, the obligation is void. [Article 1183 developments. It is therefore only in
and 1348] In such a case, there is no obligation absolutely exceptional changes of
to be extinguished. circumstances that equity demands
• Note: Article 1266 makes express reference to assistance for the debtor.
obligations to do or personal obligations. In
obligations not to do, impossibility of
performance can hardly take place. Right of Creditor To Proceed Against Third Persons
• The creditor is given the right to proceed
Effect of Difficulty of Performance against the third person responsible for the
loss.
When the service has become so difficult as to be • There is no need for an assignment by the
manifestly beyond the contemplation of the parties, debtor. The rights of action of the debtor are
the obligor may also be released therefrom, in
whole or in part. [Article 1267] transferred to the creditor from the moment
the obligation is extinguished, by operation
Doctrine of Unforeseen Events/ Rebus Sic Stantibus of law to protect the interest of the latter by
reason of the loss. [Article 1269]
• performance of the prestation, though not
impossible, has become so manifestly and
extremely difficult as to be beyond the Rule if Obligation Arises from a Criminal Offense
contemplation of the parties. • General Rule: When the debt of a thing
• When the performance of the service has certain and determinate proceeds from a
become so difficult as to be manifestly beyond criminal offense, the debtor shall not be
the contemplation of both parties, the court is exempted from the payment of its price,
authorized to release the obligor in whole or in whatever may be the cause of loss.
part. It would be doing violence to the intention
of the parties to hold the obligor still responsible. • XPN: Unless the thing having been offered by
(see Report of the Code Commission, p. 133.) him to the person who should receive it, the
latter refused without justification to accept
it. [Article 1268]

122
Article 1174 of the Civil Code of the Philippines
Effect of Delivery Of Private Document Evidencing
• General Rule: No person shall be responsible
for those events which could not be foreseen, a Credit
or which, though foreseen, were inevitable • Implies the renunciation of the action which
• XPN: the former had against the latter [Article
1271]
a) it is specified by law; • Note: Delivery of a private document
b) it is otherwise declared by stipulation; and evidencing a credit must be made
c) the obligation requires the assumption of voluntarily by the creditor to the debtor.
risk.
Presumption of Voluntary Delivery
To exempt the obligor from liability for a breach of • Whenever a private document in which the
debt appears is found in possession of the
an obligation due to force majeure, the following debtor, it shall be presumed that the
requisites must likewise concur: creditor delivered it voluntarily unless the
• the cause of the breach of the obligation contrary is proved. [Article 1272]
must be independent of the will of the debtor; • Note: Possession of the instrument of credit by the
• the event must be either unforeseeable creditor is prima facie proof of non-payment.
or
unavoidable; 4. CONFUSION
• the event must be such as to render it
impossible for the debtor to fulfill his obligation ‘Confusion’ defined
in a normal manner; and It is the merger of the characters of the creditor
• the debtor must be free from any participation and the debtor in one and the same person by
in, or aggravation of the injury to the creditor. virtue of which the obligation is extinguished.

REQUISITES Requisites of Confusion

In order that an obligation to give may be a. It must take place in the person of the

VIII. OBLIGATIONS AND CONYTACTS

extinguished by the loss of the thing, the principal creditor and principal debtor.
b. It must be complete and definite because if
following requisites must be present: not complete the obligation still subsists.
• The obligation is to deliver a specific or
determinate thing;
• The loss of the thing occurs without the fault General Rule: Confusion does not extinguish a joint
of the debtor; and obligation.
• The debtor is not guilty of delay. [Article 1262] XPN: Except as regards the share corresponding
XPN: to the creditor or debtor in whom the two
• When the law so provides;
characters concur. [Article 1277]
• When the stipulation so provides;
• When the nature of the obligation 5. COMPENSATION
requires an assumption of risk; ‘Compensation’ defined
• Loss of the thing is partly due to the fault • It is the extinguishment to the concurrent
of the debtor; amount of the debts of two persons who, in
• Loss of the thing occurs after the debtor their own right, are reciprocally principal
incurred in delay; debtors and creditors of each other.
• When the debtor promised to deliver the same • It involves the simultaneous balancing of
thing to two persons who do not have the two obligations in order to totally extinguish
same interest; them if they are of the same amount or to
• When the obligation to deliver arises from a the extent in which the amount of one is
criminal offense; and covered by that of the other, if of different
• When the object of the obligation is generic. amounts.

3. CONDONATION When Shall Compensation Take Place

‘Condonation’ defined Compensation shall take place when two
• An act of liberality of the obligee, without persons, in their own right, are creditors and
receiving any price or equivalent, renounces debtors of each other.
the enforcement of the obligation, is [Article 1278]
extinguished in its entirety or part.
• May be made expressly or impliedly. Amount of Compensation
a) Total Compensation - Compensation may be
Requisites of Condonation total if two debts are of the same amount.
• It must be gratuitous; b) Partial Compensation - Partial if two debts
• It must be accepted by the obligor; vary in amounts
• The obligation must be demandable at the Compensation shall only be to the extent of the
time of remission; concurrent amount.
• Parties must have the capacity;
• Not inofficious; and Kinds of Compensation
• If it is made expressly, must comply with the a) Legal – by operation of law
forms of donation b) Conventional – by agreement, mutual set-
off of obligations
Effect of Renunciation to Principal Debt c) Judicial – by judgment of court
Renunciation of principal debt shall extinguish
the accessory obligations. The waiver of the
accessory shall leave the principal in force.
[Article 1273]

123
REQUISITES OF LEGAL COMPENSATION CONCEPT OF NOVATION
1. The parties must be creditors and debtors of
each other in their own right. It is the extinguishment of an obligation by the
substitution or change of:
2. The parties must be bound principally. • An obligation by a subsequent one which
3. Both debts consist of a sum of money, or if extinguishes or modifies the first either by
the things due are consumable, they be of changing the object or principal conditions;
the same kind, and also the same quality if
the latter has been stated. • By substituting another in the place of the debtor;
4. Both debts must be due, liquidated and • By subrogating a third person in the rights
of the creditor (Art 1291 NCC)
demandable.
5. Over neither of them there be retention or
controversy, commenced by third persons Kinds of Novation According to Subject
and communicated in due time to the debtor. 1. Real or Objective Novation — occurs when
there is a change of the object or principal
Effect When All Requisites of Legal Compensation conditions of an existing obligation;
2. Personal or Subjective Novation — occurs
Occur when there is a change of either the person
• Compensation takes place by operation of law of the debtor or of the creditor in an
• Extinguishes both debts to the concurrent existing obligation;
amount, even though the creditors and 3. Mixed — occurs when the object or
debtors are not aware of compensation and principal condition of the obligation and the
even though the debts may be payable at debtor or the creditor or both the parties,
different places, but there shall be indemnity are changed. It is a combination of real and
for expenses of exchange or transportation to personal novations.
the place of payment. (Arts 1290 C 1286
NCC)
NATURE OF NOVATION
COMPENSATION OF RESCISSIBLE AND VOIDABLE
• Extinctive Novation - It is EXTINCTIVE when
the old obligation is extinguished by the
DEBTS creation of a new one that takes place of

VIII. OBLIGATIONS AND CONYTACTS

General Rule: When one or both debts are the former;
rescissible or voidable, they may be • Modificatory Novation - It is MODIFICATORY
compensated against each other. before the when the old obligation subsists, as
debts are judicially rescinded or avoided. amended, to the extent it remains
[Article 1284] compatible with the novatory agreement.
Example: EXPRESS AND IMPLIED NOVATION
Q: A owes B 10,000 pesos. B owes A 5,000, but ‘Express Novation’
this loan was obtained when B was still 16 years
old. Can there be legal compensation? When the new obligation declares in unequivocal
A: Yes, there could be legal compensation. The terms that the old obligation is extinguished
debt of A is valid but that of B is voidable. Before
the debt of B is annulled, both debts may be ‘Implied Novation’
compensated against each other up to the • When the new obligation is on every point
concurrent amount of 5,000 if all the requisites incompatible with the old one.
for legal compensation are present. • When not expressed, incompatibility is
required so as to ensure that the parties did
Obligations Which Cannot Be really intend such novation despite their
Compensated NON-COMPENSABLE failure to express it in categorical terms.
DEBTS
Expressed in Articles 1287 and 1288 of the Civil Essential Requisites of Novation
Code. The obligations which cannot be a) The existence of a previous valid obligation;
compensated are as follows: b) The intention or agreement and capacity
1. Contract of depositum - A special real of the parties to extinguish or modify the
contract whereby the depositor entrusts to obligation;
the depository something for safe keeping.
2. Contract of commodatum - A gratuitous c) The extinguishment or modification
contract whereby one of the parties delivers of the
to another something not consumable so that obligation; and
the latter may use the same for a certain
time and return it. d) The creation or birth of a valid new obligation.
3. Future support due by gratuitous title - The
right to receive support cannot be waived nor General Rule: There can be no novation unless
transferred because support is necessary for two distinct and successive binding contracts
subsistence and the right is purely personal take place, between the same parties with the
to the recipient. second designed to replace the preceding
4. Civil liability arising from a penal offense convention.
cannot be compensated.
CCC INSURANCE CORPORATION V KAWASAKI STEEL
6. NOVATION
CORPORATION
• It is a change in the elements of an obligation.
• It is the total or partial extinction of an G.R. NO. 156162, JUNE 22, 2015
obligation through the creation of a new one J. Leonardo-De Castro
which substitutes it. • It is well-settled that novation is never
• It is the substitution or change of an obligation presumed - novatio non praesumitur. As the
by another, which extinguishes or modifies the party alleging novation, the onus of showing
first, either by changing its object or principal clearly and unequivocally that novation had
conditions, by or substituting another in place indeed taken place rests on CCCIC.
of the debtor, or by subrogating a third person
in the rights of the creditor.

124
• There are two ways which could indicate, in fine,
the presence of novation and thereby produce Consent of Creditor Necessary to Substitution.
the effect of extinguishing an obligation by • In both the two modes of substitution, the
another which substitutes the same. The first is consent of the creditor is an indispensable
when novation has been explicitly stated and requirement.
declared in unequivocal terms. The second is • It is not enough for the debtor to merely assign
when the old and the new obligations are his debt to a third person, or for the latter to
incompatible on every point. assume the debt of the former; the consent of
• The test of incompatibility is whether or not the the creditor to the substitution of the debtor is
two obligations can stand together, each one essential and must be had.
having its independent existence. If they cannot,
they are incompatible and the latter obligation
novates the first. Corollarily, changes that breed ROMAGO, INC. V. ASSOCIATED BANK
incompatibility must be essential in nature and G.R. NO. 223450, FEBRUARY 22, 2023
not merely accidental. J. Leonen
• The incompatibility must take place in any of the Novation must be clear and express. While the
essential elements of the obligation, such as its creditor's consent to a change in debtor may be
object, cause or principal conditions thereof; derived from clear and unequivocal acts of
otherwise, the change would be merely
modificatory in nature and insufficient to acceptance, such acts must be wholly consistent
extinguish the original obligation. with the release of the original debtor. Thus,
• CCCIC failed to discharge the burden of proving acceptance of payment from a third person will
novation of the Consortium Agreement by the not necessarily release the original debtor from
Agreement dated August 24, 1989. The Court their obligation.
failed to see the presence of the essential
requisites for a novation of contract, specifically, Moreover, when the contracts are part of a
the irreconcilable incompatibility between the commercial transaction and reduced to writing,
old and new contracts. novation cannot be implied simply from a
creditor's inaction. Silence is, at best, ambiguous
Novation of an Obligation by Substituting the Person in the presumption that both parties are diligent
agents in a commercial transaction.
of the Debtor
Entails the replacement of the debtor by a third

VIII. OBLIGATIONS AND CONYTACTS

Creditor has right to refuse payment by third person
person. without interest in obligation.
• It is also consistent with the rule that a creditor
Effect of a Valid Substitution cannot be compelled to accept payment or
When validly made, it releases the debtor from performance by a third person who has no
the obligation which is then assumed by the third interest in the fulfillment of the obligation.
person as the new debtor. [Article 1236, par. 2]
• The creditor, however, may accept, if he so
wishes, payment from a third party. But mere
EXPROMISION AND DELEGACION DISTINGUISHED acceptance of payments for the benefit of a
Two Forms of Novation by Substitution of the Debtor debtor, whose obligation the third party has
1) Expromission assumed, in the absence of facts
unmistakably showing an intention to make
• The initiative does NOT come from the original the third party alone liable, does not
debtor. constitute a novation consisting in the
• It may be made WITHOUT original debtor’s substitution of a new debtor in lieu of the old
knowledge or against his will one.
• Consent of the creditor and the third person is
required LEGAL AND CONVENTIONAL SUBROGATION
• Insolvency of the new debtor in expromission ‘Novation by Subrogation’
• If substitution is without the knowledge or • It is the transfer of all rights of the creditor to
against the will of the original debtor, the new a third person, who substitutes him in all his
debtor’s insolvency or non-fulfillment of the rights.
obligation shall not give rise to any liability on • When a third person is subrogated to the
the part of the original debtor. [Article 1294] rights of the other creditors, the creditor
2) Delegacion effecting the novation is liable for their share
• The debtor initiates and offers the substitution of in the credit. But if the creditor subrogates a
a new debtor. third person in his place, such amounts to an
assignment of his rights which he cannot do
• The creditor accepts. without the consent of other creditors.
• A third person consents to the substitution and
assumes the obligation.
Legal Subrogation — Takes place without
• Insolvency of the new debtor in delegacion: agreement but by operation of law as a result of
• The insolvency of the new debtor, who has been certain acts performed by the parties.
proposed by the original debtor and accepted by
the creditor, shall not revive the action of the
latter against the original obligor, except when Conventional Subrogation — that which takes
said insolvency was already existing and of place by agreement of the parties.
public knowledge, or known to the debtor, when
he delegated his debt. (Article 1295 NCC) Legal Subrogation is Presumed
a) When a creditor pays another creditor who is
Right of New Debtor Who Pays preferred, even without the debtor’s knowledge;
• In expromission, payment by the new debtor b) When a third person, not interested in the
gives him the right to beneficial obligation, pays with the express or tacit
reimbursement under the second paragraph approval of the debtor;
of Article 1236. c) When even without the knowledge of the
• If the payment was made with the consent of debtor, a person interested in the fulfillment
the original debtor or on his own initiative of the obligation pays, without prejudice to
(delegacion), the new debtor is entitled to the effects of confusion as to the latter’s
reimbursement and subrogation under Article share. [Article 1302]
1237.

125
VICENTE G. HENSON JR., V. UCPB GENERAL
INSURANCE CO., INC.
G.R. NO. 223134, AUGUST 14, 201G B. CONTRACTS
• A contract is a meeting of minds between two
J. Perlas-Bernabe persons whereby one binds himself, with respect
To better understand the concept of legal to the other, to give something or to render
subrogation under Article 2207 of the Civil Code as some service. [Article 1305]
a form of "equitable assignment," it deserves • One or more persons bind himself or themselves
mentioning that there exist intricate differences with respect to another or others, or reciprocally,
between assignment and subrogation, both in their to the fulfillment of a prestation to give, to do, or
legal and conventional senses. not to do.

An assignment of credit has been defined as an 1. ESSENTIAL REQUISITES OF CONTRACT – CIVIL

agreement by virtue of which the owner of a credit
(known as the assignor), by a legal cause - such as CODE, ART. 1318
sale, dation in payment or exchange or donation -
and without need of the debtor's consent, transfers a. Consent – Civil Code, arts. 131G-1346
that credit and its accessory rights to another
(known as the assignee), who acquires the power to
enforce it, to the same extent as the assignor could ‘Consent’ defined
have enforced it against the debtor. It is the conformity of wills and with respect to
Subrogation is the transfer of all the rights of the contracts, it is the agreement of the will of one
creditor to a third person, who substitutes him in all contracting party with that of another or others,
his rights. It may either be legal or conventional. upon the object and terms of the contract.

Legal subrogation is that which takes place without Consent is manifested by:
agreement but by operation of law because of The meeting of the offer and the acceptance upon
certain acts. the thing and the cause which are to constitute the
contract. [Article 1319]
Conventional subrogation is that which takes place
by agreement of parties.
Requisites

VIII. OBLIGATIONS AND CONYTACTS

1. Must be manifested by the concurrence of the
This Court has consistently adhered to the offer and acceptance; [Articles 1319-1326]
distinctions between an assignment of credit, legal 2. Parties must possess the necessary legal
subrogation and a conventional subrogation. capacity; [Articles 1327-1329] and
3. Must be intelligent, free, spontaneous, and
Assignment of credit the consent of the debtor is real. [Articles 1330-1346]
not necessary in order that the assignment may
fully produce the legal effects. What the law FERRER V. ST. MARY'S PUBLISHING
requires in an assignment of credit is not the
consent of the debtor, but merely notice to him as G.R. NO. 258486, AUGUST 2, 2023
the assignment takes effect only from the time he J. Lopez
has knowledge thereof. Article 1318 of the Civil Code states that a contract
is a meeting of minds between two persons,
Conventional Subrogation requires an agreement whereby one party binds himself or herself, with
among the parties concerned - the original creditor, respect to the other, to give something or to render
the debtor, and the new creditor. It is a new some service. By this definition, the existence of a
contractual relation based on the mutual contract rests on the presence of three essential
agreement among all the necessary parties. requisites: 1) the consent of the contracting parties;
2) the object; and 3) the consideration.
Legal Subrogation produces the same effects as
assignment and also, no new obligation is created There is consent when there is acceptance of the
between the subrogee/new creditor and debtor. offer, the thing, and the cause, which are to
constitute the contract. Indeed, a contract is
In sum, as legal subrogation is not equivalent to consensual in nature which is perfected upon the
conventional subrogation, no new obligation is concurrence of the offer and the acceptance. Once
created by virtue of the insurer's payment under perfected, a contract is binding and obligatory
Article 2207 of the Civil Code; also, as legal between the contracting parties.
subrogation is not the same as an assignment of
credit (as the former is in fact, called an "equitable ‘Offer’ defined
assignment"), no privity of contract is needed to It is a proposal made by one party (offerer) to
produce its legal effects. another to enter into a contract. It is more than an
expression of desire or hope. It is really a promise to
Accordingly, "the insurer can take nothing by act or to refrain from acting on condition that the
subrogation but the rights of the insured, and is terms thereof are accepted by the person (offeree)
subrogated only to such rights as the insured to whom it is made.
possesses.
Offer Must Be Certain
The rights of the insurer against the wrongdoer • The offer must be certain or definite and clear,
cannot rise higher than the rights of the insured and not vague or speculative so that the liability
against such wrongdoer, since the insurer as (or the rights) of the parties may be exactly fixed
subrogee, in contemplation of law, stands in the because it is necessary that the acceptance be
place of the insured and succeeds to whatever identical with the offer to create a contract
rights he may have in the matter. Therefore, any without any further act on the part of the offeror.
defense which a wrongdoer has against the insured • is manifested by the meeting of the offer and the
is good against the insurer subrogated to the rights acceptance upon the thing and the cause which
of the insured," and this would clearly include the are to constitute the contract. The offer must be
defense of prescription. certain and the acceptance absolute. (Art 1319)

126
‘Acceptance’ defined When Offer Becomes Ineffective
It is the manifestation by the offeree of his a. Upon the death of either party before
assent to the terms of the offer. Without acceptance is conveyed;
acceptance, there can be no meeting of the b. Civil interdiction of either party before
minds between the parties. [Article 1305] acceptance is conveyed;
A mere offer produces no obligation. c. Insanity, of either party before
acceptance is conveyed; or
Acceptance of Offer Must be Absolute d. Insolvency of either party before
The acceptance of an offer must be absolute, acceptance is conveyed.
unconditional or unqualified, that is, it must be
identical in all respects with that of the offer so Business Advertisements Of Things For Sale
as to produce the consent or meeting of the • Business advertisements of things for sale are
minds necessary to perfect a contract. not definite offers, acceptance of which will
not perfect a contract but are merely
Qualified Acceptance invitations to the reader to make an offer or
• Merely constitutes a counter-offer or a new only as proposals. (1325)
proposal which, in law, is considered a • Advertisement for bidders is mere invitation to
rejection of the original offer and an attempt submit proposals. Advertiser is not bound to
by the parties to enter into a contract on a accept the highest or lowest bidder unless the
different ba sis. contrary appears. (1326)
• A qualified acceptance must, in turn, be BAR QUESTION (1GG1)
accepted absolutely in order that there will be "K" C Co. published in the newspaper an "Invitation
a contract. To Bid" inviting proposals to supply labor and
materials for a construction project described in the
invitation. "L", "M", and "N" submitted bids. When
Acceptance Made By Letter Or Telegram the bids were opened, it appeared that "L"
• General Rule: Acceptance made by letter or submitted the lowest bid. However, "K" C Co.
telegram does not bind the offeror. awarded the contract "N", the highest bidder, on
• XPN: Except from the time it came to his the ground that he was the most experienced and
knowledge. The contract, in such a case, is responsible bidder. "L" brought an action against "K"

VIII. OBLIGATIONS AND CONYTACTS

presumed to have been entered into in the C Co, to compel the award to him and to recover
place where the offer was made. damages. Is "L's" position
meritorious?
Form of acceptance of offer SUGGESTED ANSWER
An acceptance may be: “L's” position is not meritorious. According to the
1. Express - may be oral or written; Civil Code, advertisements for bidders are simply
2. Implied - one that is inferred from act or invitations to make proposals, and the advertiser is
not bound to accept the highest or lowest bidder,
conduct. unless the contrary appears (Art. 1326). It is clear
[Article 1320] that the general rule applies in the instant case. In
its advertisements, "K" C Co., for instance, did not
state that it will award the contract to the lowest
Acceptance By Silence or Inaction. bidder. Therefore, in awarding the contract to
General Rule: Silence cannot be construed as “N", the
acceptance. The acceptance must be defendant company acted in accordance with its
affirmatively and clearly made and evidenced by rights.
words or some acts or conduct communicated to
the offeror. The following cannot give consent to a contract:
XPN: 1. Unemancipated minors
a) where the parties agree expressly or • They refer to those persons who have not
impliedly, that it shall amount to acceptance; yet reached the age of majority (18 years)
b) where specific provisions of law so declare; and are still subject to parental authority.
and 2. Insane or demented persons, and
c) where under the circumstances such • Insane during lucid interval – valid
silence constitutes estoppel. [Article 1431]
• Under state of drunkenness or hypnotic spell –
Matters That May Be Fixed By The Offeror voidable (1328)
• Time 3. Deaf-mutes who do not know how to write.
• When the offeror has not fixed a period for the • They are persons who are deaf and dumb.
offeree to accept the offer, and the offer is • Deaf-mutes who do not know how to write
made to a person present, the acceptance cannot give consent to a contract; If the
must be made immediately; hence, the deaf-mute knows how to write, the
offeree cannot complain that he was not given contract is valid for then he is capable of
a reasonable period within which to accept or giving intelligent consent.
reject the offer of the offeror.
• Place Rule When Incapable Parties Enter Into a Contract
• Manner of acceptance [Article 1321] 1. If one of the parties is incapable of giving consent:
Voidable.
General Rule: All matters fixed must be complied 2. If both parties are incapable of giving
with otherwise the offer shall be deemed consent: Unenforceable unless ratified.
terminated.
XPN: An acceptance departing from the terms of Vices of Consent
the offer constitutes a counter-offer.
a) Violence
Offer Made Through An Agent b) Intimidation
• It is accepted from the time acceptance is c) Mistake
communicated to him. [Article 1322] d) Fraud
• Article 1322 applies only if the offer is made
through the agent and the acceptance is e) Undue Influence [Article 1330]
communicated through him.

127
Article 133G. Failure to disclose facts, when there
is a duty to reveal them, as when the parties are BURDEN OF PROOF
bound by confidential relations, constitutes Article 1332. When one of the parties is unable to
fraud. read, or if the contract is in a language not
understood by him, and mistake or fraud is
alleged, the person enforcing the contract must
Article 1340. The usual exaggerations in trade, show that the terms thereof have been fully
when the other party had an opportunity to know explained to the former.
the facts, are not in themselves fraudulent.

Article 1341. A mere expression of an opinion b. Object – Civil Code, arts. 1347-134G
does not signify fraud, unless made by an expert
and the other party has relied on the former's The thing, right or service which is the subject
special knowledge. matter of the obligation arising from the
contract.
Vices of Declaration (vicios de la declaracion)
Requisites:
Simulation of Contracts
1. Must be within the commerce of man;
Requisites of Fraud under Art. 1338: 2. Should be real or possible;
1. One party must have employed fraud or 3. Should be licit; and
insidious words or machinations 4. Should be determine, or at least possible
of determination as to its kind.
2. It must have been serious;
3. It induced the other party to enter into a
Things Which Cannot Be the Object of Contracts
contract; (Art. 1347-134G)
4. It must have been employed by one
contracting party upon the other, and not General Rule: All things or services may be the
employed by both contracting parties or by object of contracts.
third persons; Exceptions:
5. Damage or injury resulted to the other party; 1. Things outside the commerce of men;
6. It must be made in bad faith, i.e. with 2. Intransmissible rights;

VIII. OBLIGATIONS AND CONYTACTS

knowledge of its falsify 3. Future inheritance except in cases
expressly authorized by law.
Simulation of Contracts (Arts. 1345-1346) 4. Services contrary to law, morals, good
customs, public order or public policy;
• A deliberate declaration contrary to the will of 5. Impossible things or services;
the parties.
• Agreement of the parties to the apparently 6. Objects not possible of determination as to their
valid act. kind.
• The purpose is to deceive or to hide from third
persons although it is not necessary that the c. Cause – Civil Code, arts. 1350-1355
purpose be illicit or for purposes of fraud.
Cause’ or ‘Consideration’ defined
Kinds of simulation of contract: It is the immediate, direct or most proximate
1. Absolute (simulados) – parties do not intend to reason which explains and justifies the creation of
be bound by the contract at all. Status: an obligation through the will of the contracting
VOID parties.
2. Relative (disimulados) – parties conceal their
true agreement. It binds the parties to their Essential Requisites of Cause
real agreement, when it does not prejudice
a third person and is not intended for any a) Existing at the time of the celebration of the contract;
purpose contrary to law, morals, good b) Licit or lawful; and
customs, public order or public policy. c) True
Cause or consideration is the WHY of the
Article 1342. Misrepresentation by a third person contract. It is the essential reason which moves
does not vitiate consent, unless such the contracting parties to enter into the contract.
misrepresentation has created substantial
mistake and the same is mutual. Article 1350. In onerous contracts the cause is
understood to be, for each contracting party, the
Article 1343. Misrepresentation made in good prestation or promise of a thing or service by the
faith is not fraudulent but may constitute other; in remuneratory ones, the service or
error. benefit which is remunerated; and in contracts of
pure beneficence, the mere liberality of the
benefactor.
‘Mistake’ defined
• Refer to substance of the thing which is the Article 1351. The particular motives of the parties
object of the contract or to those conditions in entering into a contract are different from the
that principally moved one or both parties to cause thereof.
enter into contract.
• Mistake as to identity or qualifications will Article 1352. Contracts without cause, or with
vitiate consent only when such have been the unlawful cause, produce no effect whatever. The
principal cause of the contract cause is unlawful if it is contrary to law, morals,
• Simple mistake if account shall give rise to good customs, public order or public policy.
correction (1331)
• There is no mistake if the party knew the Article 1353. The statement of a false cause in
doubt, contingency or risk affecting the object contracts shall render them void, if it should not
of the contract (1333) be proved that they were founded upon another
• Mutual error as to legal effect of the cause which is true and lawful.
agreement when the real purpose of the
parties is frustrated may vitiate consent.
(1334)
128
Article 1354. Although the cause is not stated in
the contract, it is presumed that it exists and is • A promise of marriage where carnal
lawful, unless the debtor proves the contrary. knowledge is the consideration of the promise
as being contrary to morals.
Article 1355. Except in cases specified by law, • Employment contract providing that within 5
lesion or inadequacy of cause shall not invalidate years from termination, the employee cannot
a contract, unless there has been fraud, mistake work with another company without the
or undue influence. written permission of the employer as being
an unreasonable restraint and contrary to
public policy
2. PRINCIPLES OF CONTRACTS – CIVIL • Waiver of right to transfer to another school in
CODE, a scholarship grant as being contrary to public
order and public policy.
ARTS. 115G AND 1305-1317
a. Obligatory Force c. Relativity

Principle of Obligatory Force Principle of Relativity of Contracts (Art. 1311)

Articles 115S & 1315 of the Civil Code General Rule: Contracts take effect only between
• Article 115G. Obligations arising from contracts parties, their assigns and heirs.
have the force of law between the contracting • Transmissible/ transferrable
parties and should be complied with in good Note: When rights under a contract are
faith. assignable and assigned as such, the assignee
• Article 1315. Contracts are perfected by mere may be harmed or affected. The same goes for
consent, and from that moment the parties are heirs of a contracting party who has died.
bound not only to the fulfillment of what has
been expressly stipulated but also to all the Exception to rule of transferability of obligations to
consequences which, according to their nature,
may be in keeping with good faith, usage and heirs and assigns
law. Not transmissible by:

VIII. OBLIGATIONS AND CONYTACTS

• A contract, once perfected, has the force of 1. law,
law between the parties, with which they are
bound to comply in good faith, and neither 2. by stipulation,
one may, without consent of the other, renege 3. or by nature (purely personal).
therefrom.
• Contracts are the law and, as a result, courts ASIAN TERMINAL, INC. VS. PADOSON STAINLESS
must enforce them between the contracting
parties. STEEL CORPORATION
• Courts cannot make a contract or a stipulation G.R. NO. 211876, JUNE 25, 2018
if there is none. J. Tijam
The basic principle of relativity of contracts is
IP E-GAME VENTURES, INC. V TAN that contracts can only bind the parties who
G.R. NO. 23G576, JUNE 30, 2021 entered into it, and cannot favor or prejudice a
J. J. Lopez third person, even if he is aware of such contract
and has acted with knowledge thereof. Indeed,
It is well-established that a contract is the law "where there is no privity of contract, there is
between the parties. Obligations arising from likewise no obligation or liability to speak about."
contracts have the force of law between the
contracting parties and should be complied with
in good faith. "Unless the stipulations in a contract EXCEPTIONS TO THE RULE ON PRIVITY OF CONTRACTS
are contrary to law, morals, good customs, public Exceptions to the rule of relativity:
order, or public policy, the same are binding as 1. Beneficial stipulation/stipulation pour autrui –
between the parties." From the moment the A beneficial stipulation in favour of a third
contract is perfected, the parties are bound not person.
only to the fulfillment of its stipulations, but also 2. When the third person comes into possession
the consequences which, according to their of the object of a contract creating real
nature, may be in keeping with good faith, rights; (Art. 1312)
usage, and law. 3. Where the contract is entered into in order to
defraud a creditor; (Art. 1313) Here, the
b. Autonomy creditor may ask for its rescission.
4. Where the third person induces a contracting
party to violate his contract (Art. 1314). Such
Principle of Autonomy of Contracts [Article 1306] third person can be held liable for damages.
• Contracting parties may establish such 5. Accion Directa – Art 1652 when lessor may
stipulations, clauses, terms, conditions as they sue sub- lessee for rent due from lessee
may deem convenient, provided they are not
contrary to law, morals, good customs, public
order or public policy. [Article 1306] Requisites in Stipulation Pour Autrui:
• 2 aspects: (1) freedom to decide whether or 1. there is a stipulation in favor of a third person;
not one should enter into contractual 2. the stipulation is a part, not the whole, of the
relationship at all; (2) freedom to stipulate contract;
upon whatever terms the parties wish and 3. the contracting parties clearly and
agree. deliberately conferred a favor to the third
person — the favor is not an incidental
Limitation on freedom to stipulate on specific benefit;
terms: Stipulations should not be contrary to law, 4. the favor is unconditional and uncompensated;
morals, good customs, public order, or public 5. the third person communicated his or her
policy. acceptance of the favor before its revocation;
and
The following agreements have been held to 6. the contracting parties do not represent, or are not
contravene the principle of autonomy of contracts: authorized by, the third party.
• Sale of land covered by a homestead patent
within the
5-year prohibitory period, as being contrary to
law.

12G
 BAR QUESTION (1G80) BAR QUESTION (2002)
O, a very popular movie star, was under contract Printado is engaged in the printing business. Suplico
with P Movie Productions to star exclusively in the supplies printing paper to Printado pursuant to an
latter’s films for two years. O was prohibited by the order agreement under which Suplico binds himself
contract to star in any film produced by another to deliver the same volume of paper every month
producer. X Film Co. induced O to break her for a period of 18 months, with Printado in turn
contract with P Movie Productions by giving her agreeing to pay within 60 days after each delivery.
twice her salary. P Movie Productions sued X Film Suplico has been faithfully delivering under the
Co. for damages. X Film Co. contended that it had a order agreement for 10 months but thereafter
right to compete for the services of O and that her stopped doing so, because Printado has not made
contract with P Movie Productions was in restraint of any payment at all. Printado has also a standing
trade and a restriction on her freedom of contract. contract with publisher Publico for a printing of
Whose contention would you 10,000 volumes of school textbooks. Suplico was
sustain? aware of said printing contract. After printing 1,000
volumes, Printado fails to perform under its printing
SUGGESTED ANSWER contract with Publico. Suplico sues Printado for the
value of unpaid deliveries under their order
The contention of P Movie Productions should be agreement. At the same time, Publico sues Printado
sustained. According to the Civil Code, any third for damages for breach of contract with respect to
person who induces another to violate his contract their own printing agreement. In the suit filed by
shall be liable for damages to the other contracting Suplico, Printado counters that: A) Suplico cannot
party. In the law of torts, we call this “interference demand payment for deliveries made under their
with contractual relation.’’ However, in order that it will order agreement until Suplico has completed
be actionable, it is necessary that the following performance under said contract; B) Suplico should
requisites must concur: (a) the existence of a valid pay damages for breach of contract; and C) Sulpico
contract; should be liable for Printado’s breach of his contract
(b) knowledge on the part of the third person of the with Publico because the order agreement between
existence of such contract; and (c) interference by Suplico and Printado was for the benefit of
the third person without legal justification or
excuse. All of these requisites Publico. Are the contentions of Printado tenable?
are present in the case at bar.
BAR QUESTION (1GG1)
Roland, a basketball star, was under contract for one
year to play-for-play exclusively for Lady Love, Inc.
SUGGESTED ANSWER

VIII. OBLIGATIONS AND CONYTACTS

However, even before the basketball season could
open, he was offered a more attractive pay plus No, the contentions of Printado are untenable.
fringes benefits by Sweet Taste, Inc. Roland Printado having failed to pay for the printing papers
accepted the offer and transferred to Sweet Taste. covered by the delivery invoices on time, Suplico
Lady Love sues Roland and Sweet Taste for breach has the right to cease making further delivery. It is
of contract. Defendants claim that the restriction to clear that Suplico did not violate the order
play for Lady Love alone is void, hence, agreement (Integrated Packaging Corporation v.
unenforceable, as it constitutes an undue Court of Appeals, (333 SCRA 170, F.R. No. 115117,
interference with the right of Roland to enter into June 8, 2000). Suplico cannot be held liable for
contracts and the impairment of his freedom to play damages, for breach of contract, as it was not he
and enjoy basketball. who violated the order agreement, but Printado.
Can Roland be bound by the contract he entered Into with Suplico cannot be held liable for Printado’s breach
Lady Love or can he disregard the same? Is he liable at of contract with Publico. He is not party to the
all? How about Sweet Taste? Is it liable to Lady Love? agreement entered into by and between Printado
and Publico. Theirs is not a stipulation pour autrui.
Such contracts do not affect third persons like
SUGGESTED ANSWER Suplico because of the basic civil law principle of
Roland is bound by the contract he entered into relativity of contracts which provides that contracts
with Lady Love and he cannot disregard the same, can only bind the parties who entered it, and it
under the principle of obligatoriness of contracts. cannot favor or prejudice a third person, even if he
Obligations arising from contracts have the force of is aware
law between the parties. of such contract and has acted with the knowledge
thereof.
Yes, Roland is liable under the contract as far as
Lady Love is concerned. He is liable for damages
under Article 1170 of the Civil Code since he
contravened the tenor of his obligation. Not being a d. Consensuality
contracting party, Sweet Taste is not bound by the
contract but It can be held liable under Art. 1314.
The basis of its liability Is not prescribed by contract CONCEPT AND COVERAGE
but is founded on quasi-delict, assuming that Sweet General Rule: Contracts are perfected by the
Taste knew of the contract. Article 1314 of the Civil meeting of the minds of the contracting parties.
Code provides that any third person who induces They are obligatory in any form (oral or written) as
another to violate his contract shall be liable for long as parties have agreed to undertake their
damages to the other contracting party. obligations under the contract. It is indispensable
in any contract that the parties thereto give their
Roland is bound by the contract he entered into consent
with Lady Love and he cannot disregard the same,
under the principle of obligatoriness of contracts. Article 1305. A contract is a meeting of minds
Obligations arising from contracts have the force of between two persons whereby one binds himself,
law between the parties. with respect to the other, to give something or to
render some service.
Yes, Roland is liable under the contract as far as
Lady Love is concerned. He is liable for damages
under Article 1170 of the Civil Code since he Article 1315. Contracts are perfected by mere
contravened the tenor of his obligation. Not being a consent, and from that moment the parties are
contracting party, Sweet Taste is not bound by the bound not only to the fulfillment of what has
contract but It can be held liable under Art. 1314. been expressly stipulated but also to all the
The basis of its liability Is not prescribed by contract consequences which, according to their nature,
but is founded on quasi-delict, assuming that Sweet may be in keeping with good faith, usage and
Taste knew of the contract. Article 1314 of the Civil law.
Code provides that any third person who induces
another to violate his contract shall be liable for Article 1316. Real contracts, such as deposit,
damages to the other contracting party 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 party
2. Example: Deposit, Commodatum imposes a ready¬-made form of contract on the
other in which almost all of the provisions are
3. Formal Contracts drafted by one party, thereby reducing the
4. Contracts covered under the Statute of 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 as binding as
e. Mutuality any other contract. The Court only struck down
contracts of adhesion as void when the weaker
party has been imposed upon in dealing with the
Mutuality (Art. 1308) dominant bargaining party as to be reduced to the
Article 1308. The contract must bind both alternative of taking it or leaving it, being
contracting parties; its validity or compliance completely deprived of the opportunity to bargain on
cannot be left to the will of one of them. equal footing. (Villa Crista Monte Realty C
• Principle flows from legal tie (vinculum juris) Development Corporation vs. Equitable PCI, And
• Reason why a suspensive condition whose The Ex-officio Sheriff Of Quezon City And/Or His
fulfillment depends solely on the will of the Deputy Or Authorized Representatives G.R. No.
debtor is void (Article 1182) 208336, November 21, 2018)
• Validity or fulfillment may be left to (1) the will of
a third person, whose decision shall not be QUIAMBAO V. CHINA BANKING CORPORATION
binding until made known to both the G.R. NO. 238462, MAY 12, 2021
contracting parties (Art. 1309) or (2) chance. J. Lopez
• Determination of third person shall not be In a contract of adhesion, one imposes a ready-
binding until it has been made known to the made contract to the other whose sole participation
parties. is either to accept or reject the agreement. The
• It shall not be obligatory if it is evidently parties do not bargain on equal footing in the
inequitable – the courts may decide what is execution of this kind of contract given that the
equitable under the circumstances. debtor is limited "to take it or leave it" option and
• Example: Loan contract provides that lender there is no room for negotiation. However, such
can increase or decrease the interest every contract is not entirely prohibited. The one adhering
year as it may deem necessary. is free to give his consent inasmuch as he is also
• Escalation clauses are not invalid per se for as free to reject it completely. Inarguably, the

VIII. OBLIGATIONS AND CONYTACTS

long as they are not solely potestative but amendments to the REM are contracts of adhesion.
based on reasonable and valid standards. It was China Banking Corporation which drafted and
prepared the standard forms on which Elena and
Daniel merely affixed their signatures. At the trial, it
Article 1308 of the Civil Code expresses what is was established that Elena and Daniel signed the
known in law as the principle of mutuality of amendments to the REM in blank. They presented
contracts. It provides that "the contract must bind pro forma blank documents that China Banking
both the contracting parties; its validity or Corporation is giving to all borrowers for signature.
compliance cannot be left to the will of one of Corollarily, any ambiguity in the provisions of these
them." This binding effect of a contract on both documents must be interpreted against China
parties is based on the principle that the obligations BAR QUESTION (2018)
Banking Corporation.
arising from the contracts have the force of law Newlyweds Sam and Sienna had contracted with
between the contracting parties, and there must be Sangria Hotel for their wedding reception. The couple
mutuality between them based essentially on their was so unhappy with the service, claiming, among
equality under which it is repugnant to have one other things, that there was an unreasonable delay in
party bound by the contract while leaving the other the service of dinner and that certain items promised
were unavailable. The hotel claims that, while there
free therefrom. The ultimate purpose is to render was a delay in the service of the meals, the same was
void a contract containing a condition which makes occasioned by the sudden increase of guests to 450
its fulfillment dependent solely upon the from the guaranteed expected number of 350, as
uncontrolled will of one of the contracting parties. stated in the Banquet and Meeting Services Contract.
(Allied Banking Corp. v. CA, G.R. No. 124290, In the action for damages for breach of contract
January 16, 1998) instituted by the couple, they claimed that the Banquet
and Meeting Services Contract was a contract of
adhesion since they only provided the number of
guests and chose the menu. On the other hand, the
BAR QUESTION (2016) hotel's defense was that the proximate cause of the
B Bank, a large universal bank, regularly extends complainant's injury was the unexpected increase in
revolving credit lines to business establishments their guests, and this was what set the chain of events
under what it terms as socially responsible that resulted in the alleged inconveniences. Was the
banking and private business partnership Banquet and Meeting Services Contract a contract of
relations. All loans that are extended to clients adhesion? If yes, is the contract void?
have a common "Escalation Clause”, to wit: “B
Bank hereby reserves its right to make
successive increases in interest rates in SUGGESTED ANSWER
accordance with the bank’s adopted policies as Yes, it is a contract of adhesion. It is one wherein one
approved by the Monetary Board; Provided that party imposes a ready-made form of contract on the
each successive increase shall be with the written other in which almost all of the provisions are drafted
assent of the depositor.” X, a regular client of the by one party, thereby reducing the participation of the
bank, contends that the "Escalation Clause" is other to affixing its signature or to adhering to the
contract.
unfair, unconscionable and contrary to law,
morals, public policy ALTERNATIVE
and customs. Rule on the issue and explain. No, a contract of adhesion is not invalid per se as they
are binding as ordinary contracts. While the Court has
SUGGESTED ANSWER occasionally struck down contracts of adhesion as void,
it did so only when the weaker party has been imposed
The ”escalation clause” is valid because each upon in dealing with the dominant bargaining party
successive increase shall be with the written and reduced to the alternative of taking it or leaving it,
assent of the depositor. This stipulation does not
violate the principle of mutuality of contracts and
completely deprived of the opportunity to bargain on 131
equal footing. There is no showing in the given facts
it would only have been void if the supposed that the couple had been deprived of opportunity to
consent is given prior to the increase in interest bargain on
rate. equal footing with the hotel
 3. REAL VS. CONSENSUAL CONTRACTS; Rule In Case Mistake
FORMS, REFORMATION AND a) Must be mutual and refer not to the
INTERPRETATION – CIVIL CODE, ARTS. 1356- agreement itself but to the manner the true
agreement is reflected or expressed in the
137G instrument. (1361)
b) May be ordered at the instance of either
REAL V. CONSENSUAL parties or his successors in interest, otherwise
it may only be brought by the petition of the
• Consensual contracts are perfected upon injured party or his heirs and assigns. [1368]
meeting of the minds.
• Real Contracts require delivery for perfection. Instances When There Can Be No Reformation:
• Simple donations inter vivos wherein no
Article 1315. Contracts are perfected by mere condition is imposed;
consent, and from that moment the parties are • Wills;
bound not only to the fulfillment of what has
been expressly stipulated but also to all the • When the real agreement is void. [Article 1366]
consequences which, according to their nature,
may be in keeping with good faith, usage and law. Other Instances When Reformation Is Not The Remedy
• If mistake, fraud, inequitable conduct or
Article 1316. Real contracts, such as deposit, accident has prevented a meeting of the
pledge and commodatum, are not perfected until minds of the parties, the proper remedy is the
the delivery of the object of the obligation. annulment of the contract. [Article 1359]
• When one of the parties brought an action to
enforce the instrument [Article 1367] - no
REFORMATION OF INSTRUMENTS subsequent reformation can be asked by him
• Article 1359. When, there having been a based on the Principle of Estoppel.
meeting of the minds of the parties to a
contract, their true intention is not expressed RUDI V STAGER
in the instrument purporting to embody the

VIII. OBLIGATIONS AND CONYTACTS

agreement, by reason of mistake, fraud, G.R. NO. 232825, SEPTEMBER 16, 2020
inequitable conduct or accident, one of the J. Lopez
parties may ask for the reformation of the Facts:
instrument to the end that such true intention
may be expressed. Lydia Stager owns a 6,100-square meter (sq m)
real property identified as Lot No. 199 and
• If mistake, fraud, inequitable conduct, or situated in Barangay Manoc-Manoc, Boracay
accident has prevented a meeting of the Island. The land adjoins the sea on its eastern
minds of the parties, the proper remedy is not part and is generally flat at the center but has an
reformation of the instrument but annulment elevated rocky northern part. In 1991, Lydia
of the contract. offered to sell the entire lot to Ulysses Rudi
• Remedy by means of which a written Banico but he only agreed to buy an area
instrument is reformed so as to express or suitable for building a beach resort. Accordingly,
conform to the real intention of the parties Ulysses' lawyer drafted a Deed of Absolute Sale
when some error or mistake has been over the 800-sq m portion of the land for
committed. P350,000.00. On February 8, 1992, Lydia and
Ulysses signed the contract.
Requisites of Reformation of Instruments
1. Meeting of the minds of the parties; Upon payment of the purchase price, Ulysses
took possession of the flat terrain and hired a
2. Their true intention is not expressed in surveyor. However, Ulysses discovered that the
the instrument; land described in the deed of sale refers to the
3. Failure to express true intention is due to elevated and rocky portion and not the flat area
mistake, fraud, inequitable conduct or which he bought and occupied. Ulysses
accident; and confronted Lydia who promised to make
4. Clear and convincing proof of mistake, necessary corrections. At that time, Lydia
accident, relative simulation, fraud, or convinced Ulysses to buy an additional 400-
inequitable conduct. square meter portion of Lot No. 199 that is
adjacent to the flat terrain for P160,000.00 on
REFORMATION V. ANNULMENT installment basis. Ulysses agreed on the
condition that Lydia will amend the deed of sale
reflecting the correct location, area and
REFORMATION ANNULMENT consideration.
Presupposes that there The contract was not
is a valid contract but validly entered into as On October 19, 1992, the parties entered into a
the when their minds did contract to sell over the 400-square meter lot.
document/instrument not meet or if the Ulysses gave initial payment and Lydia issued
executed does not consent was vitiated the corresponding receipt. Meantime, Ulysses
express their true began constructing the resort and paid the
intention remaining amount. In 1997, Ulysses asked Lydia
to prepare the amended deed of sale but she
Gives life to the Involves a complete refused because he still has an unpaid balance of
contract by making nullification of the P12,000.00. Yet, Ulysses maintained that he
the instrument contract already paid Lydia more than P160,000.00.
conform to the true
intention of the parties Issue:
WoN the Deed of Absolute Sale between Lydia
When Parties May Ask For Reformation and Ulysses failed to reflect the true intention of
a. When there has been meeting of the minds the parties allowing reformation of the
of the parties to a contract; instrument.
b. When their true intention is not expressed
in the instrument purporting to embody the
agreement;
c. When by reason of fraud, mistake,
inequitable conduct or accident.

132
Ruling: General Terms
All the requisites for an action for reformation of Even if the terms used in the contract/agreement
instruments to prosper are present. may be general, the interpretation should NOT
ever be far from the intention of the parties. (Art
First, there was a meeting of minds between the 1372)
contracting parties. In executing the Deed of
Absolute Sale dated February 8, 1992, Lydia Construe in favor of validity/effectivity
conveyed the 800-sq m portion of Lot No. 199 to
Ulysses who accepted it in consideration of • When an agreement is susceptible of several
P350,000.00. meanings, one of which would render it
effectual, it should be given that
interpretation.
Second, the written instrument did not express • If one interpretation makes a contract valid or
the true intention of the parties. It bears effective and the other makes it illegal or
emphasis that Ulysses bought an area suitable meaningless, the former interpretation is one
for building a beach resort. Upon payment of the which is warranted. (Art 1373)
purchase price, Ulysses occupied the flat terrain,
surveyed it and began constructing the resort. Various stipulations read in harmony
Verily, Ulysses would not possess the flat terrain
if it was not the lot sold to him. Besides, the flat • A contract must be interpreted as a whole and
terrain is a proper location for building the resort the intention of the parties is to be gathered
and not the elevated rocky northern part. At any from the entire instrument and not from
rate, Lydia should have objected when Ulysses particular words, phrases, or clauses.
occupied the flat terrain if it were true that she • All provisions should, if possible, be so
was still the owner of such area. interpreted as to harmonize with each other.
(Art 1374 NCC)
Quite the contrary, Lydia promised to rectify the
erroneous description of the lot in the deed of Meaning in keeping with nature and object of
sale. She did not protest the construction of the agreement
resort and instead, offered Ulysses an additional Words used in a contract which are susceptible
400-sq m portion of Lot No. 199 that is adjacent to two or more meanings shall be understood to
follow that meaning which is most in keeping

VIII. OBLIGATIONS AND CONYTACTS

to the flat terrain. Moreover, Lydia acknowledged
the transaction over the 800-sq m lot before the with the nature and object of the agreement. (Art
barangay and presented a notarized Deed of 1375 NCC)
Absolute Sale dated December 6, 2001,
containing the accurate description of the flat Construe against party who caused obscurity
terrain. At this juncture, we stress that Lydia The interpretation of obscure words or
never rebutted these acts and even admitted stipulations in a contract shall not favor the party
them in her answer. who caused the obscurity (Art 1377)
Third, there is a mistake in identifying the exact Rules when doubts cannot be settled
location of the lot which caused the failure of the
instrument to disclose the parties' real 1. Doubts refer to incidental circumstances of a
agreement. gratuitous contract, the least transmission of
rights and interests shall prevail.
2. If the contract is onerous, the doubt shall be
In Quiros v. Arjona, this Court held that the settled in favor of the greatest reciprocity of
inability to identify the exact location of the interests.
inherited property did not negate the principal 3. If the doubts are cast upon the principal
object of the contract. This is an error occasioned object of the contract in such a way that it
by the failure of the parties to describe the cannot be known what may have been the
subject property, which is correctible by intention or will of the parties, the contract
reformation and does not indicate the absence of shall be null and void. (Art 1378)
the principal object as to render the contract
void. In that case, the object is determinable as 4. DEFECTIVE CONTRACTS
to its kind and can be determined without need
of a new contract. a. Rescissible – Civil Code, arts. 1380-138G
INTERPRETATION OF A CONTRACT
‘Rescissible Contracts’ defined
It is the determination of the meaning of the Contracts which are valid but defective because of
terms or injury or damage to either of the contracting parties
or to third persons, as a consequence of which it
words used by the parties in their contract. may be rescinded by means of a proper action for
rescission.
Literal or plain meaning rule
It is a cardinal rule in the interpretation of Article 1381. The following contracts are rescissible:
contracts that if the terms of a contract are clear 1) Those which are entered into by guardians
and leave no doubt upon the intention of the whenever the wards whom they represent suffer
contracting parties, the literal meaning of its lesion by more than one-fourth of the value of
stipulation shall control. the things which are the object thereof;
2) Those agreed upon in representation of
absentees, if the latter suffer the lesion stated in
Intention prevails the preceding number;
If words clearly appear to be contrary to the 3) Those undertaken in fraud of creditors when the
evident intention of the parties, INTENTION shall latter cannot in any other manner collect the
prevail. (Art 1370) claims due them;
4) Those which refer to things under litigation if
they have been entered into by the defendant
How to determine intention without the knowledge and approval of the
Intention to be determined according to litigants or of competent judicial authority;
circumstances. Their contemporaneous and 5) All other contracts specially declared by law to be
subsequent acts shall be principally considered. subject to rescission.
(Art 1371)

133
Article 1382. Payments made in a state of
insolvency for obligations to whose fulfillment PRESUMED IN FRAUD OF CREDITORS
the debtor could not be compelled at the time Article 1387. All contracts by virtue of which the
they were effected, are also rescissible. debtor alienates property by gratuitous title are
presumed to have been entered into in fraud of
creditors, when the donor did not reserve
Contracts that are rescissible (Arts. 1381-1382) sufficient property to pay all debts contracted
before the donation.
A. Lesion • Alienations by onerous title are also presumed
fraudulent when made by persons against whom
1. Those entered into by guardians where the some judgment has been rendered in any
ward suffers lesion of more than ¼ of the instance or some writ of attachment has been
value of the things which are objects thereof. issued. The decision or attachment need not
2. Those agreed upon in representation of refer to the property alienated, and need not
absentees, if the latter suffer lesion by more have been obtained by the party seeking the
than ¼ of the value of the things which are rescission.
subject thereof. • In addition to these presumptions, the design
to defraud creditors may be proved in any
B. Fraud other manner recognized by the law of
1. Those undertaken in fraud of creditors when evidence.
the latter cannot in any manner claim what
are due them. (accion pauliana) SIGUAN V. LIM
2. Those which refer to things under litigation if G.R. NO. 134685, NOVEMBER 1G, 1GGG
they have been entered into by the defendant C. J. Davide, Jr.
without the knowledge and approval of the
litigants and the court. • The action to rescind contracts in fraud of
3. Payments made in a state of insolvency for creditors is known as accion pauliana. For this
obligations whose fulfillment the debtor could action to prosper, the following requisites
not be compelled at the time they were must be present: (1) the plaintiff asking for
effected. rescission has a credit prior to the alienation,
although demandable later; (2) the debtor has
made a subsequent contract conveying a
Effect If Contract Entered Into By Guardian patrimonial benefit to a third person; (3) the

VIII. OBLIGATIONS AND CONYTACTS

If contract was entered into by guardian upon creditor has no other legal remedy to satisfy
securing court approval, the contract is not his claim; (4) the act being impugned is
rescissible notwithstanding alleged lesion. (Art. fraudulent; (5) the third person who received
1386) the property conveyed, if it is by onerous title,
has been an accomplice in the fraud.
• The general rule is that rescission requires the
If the guardian entered into a contract that existence of creditors at the time of the
requires court approval and the same was not alleged fraudulent alienation, and this must be
secured, the contract is unenforceable under Art. proved as one of the bases of the judicial
1403 (1), irrespective of whether there is lesion pronouncement setting aside the contract.
or not because it was entered into in the name of Without any prior existing debt, there can
another without authority. neither be injury nor fraud. While it is
necessary that the credit of the plaintiff in the
Requisites of rescission: accion pauliana must exist prior to the
1. Contract must be rescissible under Arts. 1381 fraudulent alienation, the date of the judgment
and 1382. enforcing it is immaterial. Even if the
judgment be subsequent to the alienation, it is
2. Party asking for rescission must have no merely declaratory, with retroactive effect to
other legal means to obtain reparation for the the date when the credit was constituted.
damages suffered by him. [Article 1383] • For this presumption of fraud to apply, it must
3. Person demanding rescission must be able to be established that the donor did not leave
return whatever he may be obliged to restore adequate properties which creditors might
if rescission is granted. [Article 1385] have recourse for the collection of their credits
4. Things which are the object of the contract existing before the execution of the donation.
must not have passed legally to the Petitioner's alleged credit existed only a year
possession of a third person acting in good after the deed of donation was executed. She
faith [Article 1385]; and cannot, therefore, be said to have been
5. Action must be brought within four years. prejudiced or defrauded by such alienation.
[Article 1389]
b. Voidable – Civil Code, arts. 13G0-1402
Requisites before a contract entered into in FRAUD
OF CREDITORS may be rescinded: Those which possess all the essential elements
1. There is a credit existing prior to the for validity but the consent is vitiated either by
celebration contract; lack of legal capacity of one of the contracting
2. There is fraud, or at least, the intent to parties or by mistake violence, intimidation,
commit fraud to the prejudice of the creditor undue influence or fraud even though there may
seeking rescission; have been no damage to the contracting parties.
3. Creditor cannot in any legal manner collect
his credit; and Cause - The following contracts are voidable or
4. Object of the contract must not be legally in annullable:
the possession of a third person who did not 1. Those where ONE of the parties is incapable
act in bad faith. of giving consent to a contract;
5. The action to rescind contracts in fraud of 2. Those where the consent is vitiated by
creditors mistake, violence, intimidation, undue
influence of fraud (Art. 1390)
is known as accion pauliana.

134
Fraud has been defined to include an inducement
through insidious machination. Insidious Reason Contracts Become Unenforceable
machination refers to a deceitful scheme or plot 1. They are entered into without or in excess of
with an evil or devious purpose. Deceit exists where authority [Article 1403 (1); Article 1317];
the party, with intent to deceive, conceals or omits 2. They do not comply with the Statute of frauds
to state material facts and, by reason of such [Article 1403 (2)];
omission or concealment, the other party was 3. Both contracting parties do not possess the
induced to give consent that would not otherwise required legal capacity.
have been given. (R.S. Tomas v. Rizal Cement
Comp. G.R.No.173155) STATUTE OF FRAUDS
Prescriptive Period for Action for Annulment a) An agreement that by its terms is not to be
performed within a year from the making
• Contracts entered into by incapacitated person – thereof;
within 4 years from the time guardianship b) A special promise to answer for the debt,
ceases; default, or miscarriage of another;
• Where consent is vitiated by violence, c) An agreement made in consideration of
intimidation or undue influence – within 4 years marriage, other than a mutual promise to
from the time such violence, intimidation or marry; [Note: marriage settlements must be in
undue influence ceases; writing for validity under the Family Code]
• Where consent is vitiated by mistake or fraud – d) An agreement for the sale of goods, chattels or
within 4 years from the time of the discovery of things in action, at a price not less than five
such mistake or fraud. [Article 1391] hundred pesos;
e) An agreement for the leasing for a longer period
Who May Institute Action For Annulment than one year, or for the sale of real property or
General Rule: Action for annulment may be instituted of an interest therein;
by all who are thereby obliged principally or f) A representation as to the credit of a third person.
subsidiarily. A stranger to the contract cannot
institute an action for annulment. [Article 1397]
Application of Statute of Frauds
Requisites For Action For Annulment: Applies to: Executory Contracts
a) Plaintiff must have interest in the contract;

VIII. OBLIGATIONS AND CONYTACTS

b) Plaintiff is the victim and not the party Does not apply to:
responsible for the vice or defect. • Contracts that are partially or completely fulfilled;
Ratification • Actions which are neither for specific
performance of the contract nor for the violation
• May be effected expressly or tacitly. thereof.
• It is understood that there is tacit ratification if, • Note: The provision mentions “unenforceable by
with knowledge of the reason which renders the action.” The prohibition, thus, applies on actions
contract voidable and such reason having which spring from the enforcement of the
ceased, the person who has a right to invoke it contract.
should execute an act which necessarily implies
and intention to waive his right.
• It does not require conformity of the party who Ratification of Contracts Infringing the Statute of Frauds
has no right to bring the action. Such contracts may be ratified by:
• It cleanses the contract from all its defect from • Failure to object to the presentation of oral
the moment it was constituted. evidence to prove such contracts; or
• Acceptance of benefits under these contracts.
Effects of Annulment [Article 1405]
• Note: The unenforceability of a contract can only
• In contract has not yet been consummated be assailed by parties thereto (Art. 1408). This
parties shall be released from the obligations defense is personal to the party to the
arising therefrom; agreement.
• If the contract has already been consummated,
rules provided in Articles 1398-1402 shall
govern. d. Void – Civil Code, arts. 140G-1422
• Arts. 1398-1399 – Obligation of mutual restitution.
• Arts. 1400-1402 – Effect of failure to make In general, they are those which lack absolutely
either in fact or in law one or some of the elements
restitution. essential for its validity.

c. Unenforceable – Civil Code, arts. 1403-1408 Note: The defense of illegality of contract is not
available to third persons whose interests are not
directly affected (Art. 1421)
Those which cannot be enforced by proper action
unless A contract which is the direct result of a previous
illegal contract, is also void and inexistent (Art.
they are ratified, because, either: 1422)
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 Contracts which are INEXISTENT and VOID AB INITIO
(Art. 1403 (2), see supra under Forms of 1. Those whose cause, object or purpose is contrary
Contracts ; to law, morals, good customs, public order or
3. Both contracting parties do not possess the public policy;
required legal capacity. 2. Those which are absolutely simulated or fictitious;
3. Those whose cause or object did not exist at the
Note: time of the transaction;
• The Statute of frauds applies only to EXECUTORY 4. Those whose object is outside the commerce of men;
CONTRACTS, not to those that are partially or 5. Those which contemplate an impossible service;
completely fulfilled. 6. Those where the intention of the parties relative
• Further, the statute does not apply to actions to the principal object of the contract cannot be
which are neither for specific performance of the ascertained; and
contract nor for the violation thereof. Take note 7. Those expressly prohibited or declared void by law.
that the provision mentions “unenforceable by [Article 1409]
action.” The prohibition, thus, applies on actions
which spring from the enforcement of the
contract.

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

VOID VOIDABLE RESCISSIBLE UNENFORCEABLE

VIII. OBLIGATIONS AND CONYTACTS

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 of to one of the parties or comply with the
one or some of the one of the contracting to a third person. Statute of Frauds, or
elements of validity. parties. both contracting
parties are legally
incapacitated.
As to effect
Valid and enforceable Valid and enforceable
GR: does not produce until annulled by a until rescinded by a Cannot be enforced by
any legal effect. competent competent a proper action in
court.
court. court.
As to prescription
Corresponding action
Action/defense for the Action for annulment for recovery if there
declaration of nullity or defense of Action for rescission was total or partial
or inexistence does annullability may may performance under
not prescribe. prescribe. No. 1 or 3 of Art.
prescribe.
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 contracting party. prejudiced or damaged contracting party.
affected. by
the contract.
Direct or collateral attack

Direct or collateral Direct Direct Direct or collateral

136
 C. ESTOPPEL Elements of Estoppel in Pais
In relation to the party sought to be estopped:
1. Conduct amounting to false representation or
Estoppel (Article 1431) concealment of material facts or at least
calculated to convey the impression that the
Estoppel is a condition or a state by virtue of facts are otherwise than and consistent with
which an admission or representation is rendered those which the party subsequently attempts to
conclusive upon the person making it, and assert;
cannot be denied or disproved as against the 2. Intent or at least expectation that this conduct
person relying thereon. shall be acted upon, or at least influence the
other party;
Concept of Estoppel 3. Knowledge, actual or constructive, of the real facts
• Estoppel is a bar which precludes a person
from denying or asserting anything to the In relation to the party claiming the estoppel:
contrary of that which has, in contemplation of 1. Lack of knowledge or of the means of knowing
law, been established as the truth, either by the truth as to the facts in question;
the acts of judicial or legislative officers or by 2. Reliance, in good faith, upon the conduct or statement
his own deed or representation, either as to the facts in question;
expressed or implied.
• It concludes the truth in order to prevent fraud 3. Action or inaction based thereon of such
character as to change the position or status of
and falsehood, and imposes silence on a party the party claiming the estoppel to his injury,
only when in conscience and honesty he detriment, or prejudice
should not be allowed to speak.
Admissions
Kinds of Estoppel A party may be estopped to insist upon a claim,
1. Technical Estoppels assert an objection, or take a position which is
• Estoppel by record – the preclusion to deny the inconsistent with an admission which he had
truth of matters set forth in a record, whether previously made and in reliance upon which the
judicial or legislative, and also to deny the other party has changed his position.
facts adjudicated by a court of competent
jurisdiction Silence or Inaction

VIII. OBLIGATIONS AND CONYTACTS

Example: the conclusiveness of a judgment on This is sometimes referred to as estoppel by “standing by”
the parties to a case
or “laches.”
• Estoppel by deed – a bar which precludes one
party to a deed and his privies from asserting Mere innocent silence will not work an estoppel.
as against the other party and his privies any There must also be some element of turpitude or
negligence connected with the silence by which
right or title in derogation of the deed, or from another is misled to his injury. But one who invokes
denying the truth of any material facts this doctrine of estoppel must show not only
asserted in it; - a written instrument is unjustified inaction but also some unfair injury
necessary for there to be estoppel by deed would result to him unless the action is held barred.

2. Equitable Estoppel or Estoppel in Pais Instances of Estoppel under the Civil Code
• It arises when one by his acts, representations 1. When a person who is not the owner of the
or admissions, or by his silence when he ought thing sells or alienates and delivers it, and later
to speak out, intentionally or through culpable the seller or grantor acquires title thereto, such
negligence, induces another to believe certain title passes by operation of law to the buyer or
facts to exist, and such other rightfully relies grantee (Art 1434)
and acts on such belief, so that he will be 2. If a person in representation of another sells or
prejudiced if the former is permitted to deny alienates a thing, the former cannot
the existence of such facts. subsequently set up his own title as against the
• It takes place in a situation where because if a buyer or grantee (Art 1435)
party’s action or omission, he is denied the 3. A lessee or a bailee is estopped from asserting
right to plead or prove an otherwise important title to the thing leased or received, as against
the lessor or bailor (Art 1436)
fact. 4. One who has allowed another to assume
apparent ownership of personal property for the
This may be estoppel: purpose of making any transfer of it, cannot, if
he received the sum for which a pledge has
• by conduct or by acceptance of benefits been constituted, set up his own title to defeat
• by representation or concealment the pledge of property made by the other to a
• by silence pledgee who received the same in good faith
and for value (Art 1438)
• by omission 5. Estoppel Against Owner: When in a contract
• by laches between third persons concerning immovable
property, one of them is misled by a person
with respect to the ownership of real right over
Some doctrines: the real estate, the latter is precluded from
• Conduct because of ignorance or mistake does asserting his legal title or interest therein,
not result in estoppel provided all these requisites are present:
• Just because a person is silent does not a) There must be fraudulent representation or
necessarily mean that he will be in estoppel; wrongful concealment of facts known to the
there should have been a duty or obligation to party estopped;
speak b) The party precluded must intend that the
• A mere promise to perform or to omit at some other should act upon the facts as
future time does not necessarily result in misrepresented;
estoppel (promissory estoppel); for this to c) The party misled must have been unaware
of the true facts; and
exist, the promise must have been relied upon
and prejudice would result unless estoppel is d) The party defrauded must have acted in
applied accordance with the misrepresentation. (Art 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.

VIII. OBLIGATIONS AND CONYTACTS

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

138
 IX. CONTRACT OF SALE
A. Nature and Form (Civil Code, arts. 1458-
1488) F. Recto Law (Civil Code, art. 1484)
B. Capacity to Buy or Sell (Civil Code, arts. G. Maceda Law (R.A. No. 6552)
148G-14G2) H. Rights of Unpaid Seller (Civil Code, arts.
C. Obligations of the Vendor (Civil Code, 1525-1535)
arts. 145G-1505) I. Conventional Redemption (Civil Code, arts.
D. Double Sale (Civil Code, art. 1544) 1601 and 1606-1618); Legal Redemption
E. Effects of Loss of Thing Sold (Civil Code, (Civil Code, arts. 161G-1623)
arts. 14G3-14G4) J. Equitable Mortgage (Civil Code, arts.
1602- 1605)
A. NATURE AND FORM 2. SUBJECT MATTER
(CIVIL CODE, ARTS. 1458-1488) • determinate thing which is the object of the contract.
• The seller and the buyer must agree to sell and
‘Contract of Sale’ buy a thing certain.
• If they cannot agree as to which thing is to be
By the contract of sale one of the contracting sold and bought, there is no meeting of the
parties obligates himself to transfer the minds.
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 Requisites for a Valid Subject Matter
absolute or conditional. (Art. 1458 NCC) • Within the commerce of men
• Must be licit
ESSENTIAL REQUISITES • Existing, Future, Contingent
The essential elements of a contract of sale are • Determinate or Determinable
the following:
1. Consent or meeting of the minds - consent to Article 1460. NCC states that the "requisite that the
transfer ownership in exchange for the price; thing be determinate is satisfied if at the time the
2. Determinate subject matter; and contract is entered into, the thing is capable of
being made determinate without the necessity of a
3. Price certain in money or its equivalent. new or further agreement between the parties"
1. CONSENT EMPTIO REI SPERATAE V. EMPTIO SPEI
meeting of the minds to transfer the ownership
in exchange for the price. EMPTIO REI SPERATAE EMPTIO SPEI
the seller must agree to receive a purchase price
certain from the buyer to whom he shall deliver Sale of a thing having Sale of mere hope or
the thing purchased and, potential existence. expectancy.
the buyer must agree to pay a purchase price
certain to the seller who binds himself to deliver
to the buyer the thing purchased. Uncertainty is with Uncertainty is with
regard to the quantity regard to the existence
Article 131G. Consent is manifested by the meeting and quality of the thing of the thing.
of the offer and the acceptance upon the thing and not the existence
and the cause which are to constitute the of the thing.
contract. The offer must be certain and the
acceptance absolute. A qualified acceptance
constitutes a counter-offer. Object is a future thing, Object is a present
which must be thing, which is the
determinate or specific. hope or expectancy.
The buyer and the seller must agree on the
following:
Sale is subject to a Sale is effective even if
a) the purchase price; and suspensive condition – the thing does not
b) the thing to be sold and paid for. that the thing will exist. come into existence,
Such that if it does not since the subject
PALATTAO V. COURT OF APPEALS exist, there is no matter is the hope
contract for lack of an itself, unless it is a vain
G.R. No. 131726, May 7, 2002 object. hope.
J. Ynares-Santiago
Contracts that are consensual in nature, like a
contract of sale, are perfected upon mere meeting 3. PRICE CERTAIN IN MONEY OR ITS EQUIVALENT
of the minds. Once there is concurrence between Requisites for a Valid Consideration
the offer and the acceptance upon the subject
matter, consideration, and terms of payment, a • Certain or ascertainable at the time of perfection
contract is produced. The offer must be certain. To • In money or its equivalent
convert the offer into a contract, the acceptance
must be absolute and must not qualify the terms of • Real
the offer; it must be plain, unequivocal,
unconditional, and without variance of any sort from Payment of the Price
the proposal. A qualified acceptance, or one that
involves a new proposal, constitutes a counter-offer The vendor shall not be bound to deliver the
and is a rejection of the original offer. thing sold, if the vendee has not paid him the
Consequently, when something is desired which is price, or if no period for the payment has been
not exactly what is proposed in the offer, such fixed in the contract.
acceptance is not sufficient to generate consent
because any modification or variation from the General Rule: Delivery must be simultaneous with
terms of the offer annuls the offer. the payment of the price
XPN: Even without payment, delivery must be
made if a period for payment has been fixed by
the parties.

13G
Effect of non-payment of price THREE STAGES
Non-payment of price does not cancel or avoid
the sale, as the sale is still considered perfected. 1. Negotiation – covers the period when
But it is a cause for either: parties indicate their interest but no
concurrence of offer and acceptance.
a. Specific performance or 2. Perfection – meeting of the minds upon the
b. Rescission. object and price.
3. Consummation – parties perform their
Effect of Inadequacy of Price respective undertakings.
General Rule: Mere inadequacy of the price does
not affect the validity of the sale. STATUTE OF FRAUDS | ART. 1403 (2)
XPN: While contract of sale is consensual, the
1. Fraud, mistake, or undue influence Statute of Frauds requires certain sales
indicative of a defect in consent transaction to be in writing or evidenced by
2. Parties really intended a donation or some some note or memorandum, and subscribed by
other act the party charged, or by his agent to be
enforceable:
or contract a) An agreement that by its terms is not to be
3. In Judicial Sale, where the inadequacy is performed within a year from the making
shocking to the conscience of man. thereof;
b) An agreement for the sale of goods,
Effect where price is simulated chattels or things in action, at a price not
• Absolutely simulated – the sale is void less than five hundred pesos, unless the
buyer accept and receive part of such
• False Price – relatively simulated; parties are goods and chattels, or the evidences, or
bound by true agreement. some of them, of such things in action or
• Where the deed of sale states that the pay at the time some part of the purchase
purchase price has been paid but in fact has money; but when a sale is made by auction
never been paid, the deed of sale is null and and entry is made by the auctioneer in his
void ab initio for lack of consideration. sales book, at the time of the sale, of the
Moreover, Art. 1471 of the Civil Code, provides
that “if the price is simulated, the sale is void” amount and kind of property sold, terms of
(Catindig v. Vda. De Meneses, Roxas v. CA, sale, price, names of the purchasers and
G.R. No. 165851, February 2, 2011) person on whose account the sale is made,
it is a sufficient memorandum; and,
c) An agreement for the sale of real property or of

IX. CONTRACT OF SALE

CHINGKOE V. CHINGKOE
G.R. NO. 244076, MARCH 16, 2022
an
J. Lopez interest therein.
Settled is the rule that notarized documents XPN:
enjoy the presumption of regularity which can be 1. There has been partial performance/execution
overturned only by clear and convincing 2. There has been failure to object to
evidence. Being duly notarized, the Deed of Sale presentation of evidence aliunde as to the
carries with it the presumption of regularity, existence of a contract without being in
authenticity, and due execution. "It has been the writing and which is covered by the Statute
consistent rule that without clear, convincing, of Fraud.
and more than preponderant evidence to 3. When sales are effected through electronic
controvert the presumption of regularity, the commerce.
evidentiary weight conferred upon such public
document with respect to its execution, as well as
the statements and the authenticity of the Public instrument is not required for validity of
signatures thereon, stand." xxx Sale of a piece of land
The provision of Article 1358 of the Civil Code
Given that Faustino failed to overturn the on the necessity of a public document is only
presumption of regularity in favor of the Deed of for convenience, not for validity or
Sale, the attestation of payment in it sufficiently enforceability. It is not a requirement for the
proves that Felix has fully paid the purchase validity of the contract of sale of a parcel of
price. Invariably, Faustino cannot now be allowed land that this be embodied in a public
to disavow the contractual effects of the instrument. Thus, the non-appearance of the
notarized deed. It is true that parol evidence may parties before the notary public who notarized
be admitted to challenge the contents of an the deed does not necessarily nullify nor
agreement "where a mistake or imperfection of render the parties’ transaction void ab initio.
the writing, or its failure to express the true (Penalosa vs. Santos, 363 SCRA 545)
intent and agreement of the parties, or the
validity of the agreement is put in issue by the
pleadings." However, evidence must be clear Note: Statute of Frauds that requires the sale of
and convincing and of sufficient credibility as to land or any interest therein to be in writing for
overturn the written agreement. The flimsy enforceability.
protestations of Faustino are not substantiated • If sale is already enforceable due to doctrine
by any compelling evidence. As borne out by the of part performance (Statute of Frauds only
notarized deed, a perfected contract of sale was applies to executory contracts), the remedy
forged between the parties, and Faustino is under Article 1357 of the Civil Code;
received in full the payment of P3,130,000.00 • right to compel the other to execute the
from Felix for the sale of the subject property. proper public instrument so that a valid
Faustino even caused the preparation of the contract can be registered; this applies to
Deed and if its terms were not in consonance cases where contract is valid and
with his expectations, he could have easily enforceable, but specific form (public
insisted on the provisions he wanted. Thus, the instrument) is required for convenience
RTC was correct in its findings. (registration).

140
 BAR QUESTION (1G88)
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 executed verbally. One year later, A and B sold
the entire land to X. Is the sale OPTION CONTRACT
executed verbally by X to Y valid and binding? Reasons An accepted unilateral promise to buy or to sell a
SUGGESTED ANSWER determinate thing for a price certain is binding
The sale, although not contained in a public instrument upon the promisor if the promise is supported by a
or formal writing, is nevertheless valid and binding for consideration distinct from the price. (Art. 1479,
the time-honored rule is that even a verbal contract of NCC)
sale of real estate produces legal effects between the
parties. In the premises, Art. 1434 of the Civil Code,
which declares that when a person who is not the SPS. LITONJUA V. LsR CORPORATION
owner of a thing sells or alienates and delivers it, and G.R. No. 130722, March 27, 2000
later the seller or grantor acquires title thereto, such En Banc
title passes by operation of law to the buyer or
grantee, is applicable, (Bucton An accepted unilateral promise which specifies
vs. Gabar, 55 SCRA 499.) the thing to be sold and the price to be paid,
when coupled with a valuable consideration
distinct and separate from the price, is what may
1. CONTRACT OF SALE VS. CONTRACT TO SELL properly be termed a perfected contract of option.
This contract is legally binding, and in sales, it
conforms with the second paragraph of Article
CONTRACT TO SELL 1479.
A contract to sell may be defined as a bilateral
contract whereby the prospective seller, while
expressly reserving the ownership of the subject Observe, however, that the option is not the
property despite delivery thereof to the prospective contract of sale itself. The optionee has the right,
buyer, binds himself to sell the said property but not the obligation, to buy. Once the option is
exclusively to the prospective buyer upon fulfillment of exercised timely, i.e., the offer is accepted before
the condition agreed upon, that is, full payment of the a breach of the option, a bilateral promise to sell
purchase price. and to buy ensues and both parties are then
reciprocally bound to comply with their
CORONEL V. COURT OF APPEALS respective undertakings.
G.R. NO. 103577OCTOBER 07, 1GG6
J. Melo A negotiation is formally initiated by an offer. An
• A contract to sell may not be considered as a
imperfect promise (policitacion) is merely an
contract of sale because the first essential element offer. Public advertisements or solicitations and
(Consent or meeting of the minds, that is, consent the like are ordinarily, construed as mere
to transfer ownership in exchange for the price) is invitations to make offers or only as proposals.
These relations, until a contract is perfected, are

IX. CONTRACT OF SALE

lacking.
• In a contract to sell, the prospective seller explicitly not considered binding commitments. Thus, at
reserves the transfer of title to the prospective any time prior to the perfection of the contract,
buyer, meaning, the prospective seller does not as either negotiating party may stop the
yet agree or consent to transfer ownership of the negotiation. The offer, at this stage, may be
property subject of the contract to sell until the withdrawn; the withdrawal is effective
happening of an event, which for present purposes immediately after its manifestation, such as by its
we shall take as the full payment of the purchase mailing and not necessarily when the offeree
price. learns of the withdrawal.
• What the seller agrees or obliges himself to do is to
fulfill his promise to sell the subject property when
the entire amount of the purchase price is delivered Where a PERIOD is given to the offeree within which
to him. to accept the offer, the following rules generally
• In other words, the full payment of the purchase
price partakes of a suspensive condition, the non- govern.
fulfillment of which prevents the obligation to sell 1. If the period is not itself founded upon or
from arising and thus, ownership is retained by the supported by a consideration, the offeror is still
prospective seller without further remedies by the free and has the right to withdraw the offer
prospective buyer. before its acceptance, or, if an acceptance has
been made, before the offeror's coming to know
of such fact, by communicating that withdrawal
CONTRACT TO SELL CONTRACT OF SALE
to the offeree. The right to withdraw, however,
must not be exercised whimsically or arbitrarily;
otherwise, it could give rise to a damage claim
The ownership is reserved The title passes to the under Article 19 of the Civil Code which ordains
to the seller and is not to buyer upon the delivery that "every person must, in the exercise of his
pass until full payment of of the thing sold.
the price. rights and in the performance of his duties, act
with justice, give everyone his due, and observe
The title remains in the The vendor has lost and honesty and good faith.
vendor if the vendee does cannot recover the 2. If the period has a separate consideration, a
not comply with the ownership of the thing contract of "option" is deemed perfected, and it
condition precedent of sold until and unless the would be a breach of that contract to withdraw
making payment at the time contract of sale itself is the offer during the agreed period. The option,
specified in the contract. resolved and set aside. however, is an independent contract by itself,
and it is to be distinguished from the projected
main agreement (subject matter of the option)
which is obviously yet to be concluded. If, in
In case of non-payment of In case of non-payment fact, the optioner-offeror withdraws the offer
price, there can be no of price, an action for before its acceptance (exercise of the option) by
action for specific specific performance or the optionee-offeree, the latter may not sue for
performance but only for for rescission can be specific performance on the proposed contract
damages. filed by injured party.
("object" of the option) since it has failed to
reach its own stage of perfection. The optioner-
offeror, however, renders himself liable for
Failure to fully pay the price damages for breach of the option.
is not a breach but an event
that prevents the obligation
of the vendor to convey title
from becoming effective. 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
property in the event the owner decides to sell • Earnest money is something of value given by
the same. the buyer to the seller to show that the buyer is
It is based on the current offer to sell of the seller really in earnest, and to bind the bargain.
or offer to purchase of any prospective buyer. • It is actually a partial payment of the purchase
Only after the optionee fails to exercise its right of price and is considered as proof of the perfection
first priority under the same terms and within the of the contract.
period contemplated could the owner validly
offer to sell the property to a third person, again, Art. 1482. Whenever earnest money is given in a
under the same terms as offered to the optionee contract of sale, it shall be considered as part of the
(Paranaque Kings Enterprises, Inc. v. CA, G.R. No. price and as proof of the perfection of the contract.
111538, February 26, 1997).
OPTION MONEY EARNEST MONEY
RIVIERA FILIPINA, INC. vs. CA Separate and Partial payment and part
G.R. No. 117355 - April 5, 2002 distinct of the purchase price
consideration from the
J. De Leon, Jr. purchase
In order to have full compliance with the price
contractual right granting petitioner the first Sale is not yet Given only when there is
option to purchase, the sale of the properties for a
the price for which they were finally sold to a third perfected
person should have likewise been first offered to perfected sale
the former. Further, there should be identity of The would-be-buyer is not Buyer is bound to pay
terms and conditions to be offered to the buyer required to buy the
holding a right of first refusal if such right is not to balance of the price
be rendered illusory. Lastly, the basis of the right
of first refusal must be the current offer to sell of RIZALINO V. PARAISO DEVELOPMENT CORPORATION
the seller or offer to purchase of any prospective
buyer. G.R. No. 1574G3, February 5, 2007
J. Chico-Nazario
Thus, the prevailing doctrine is that a right of first • Earnest Money and Option Money Distinguished
refusal means identity of terms and conditions to From Each Other
be offered to the lessee and all other prospective • Earnest Money in a Contract To Sell
buyers and a contract of sale entered into in
violation of a right of first refusal of another "Earnest money" and "option money" are not the same but
person, while valid, is rescissible. distinguished thus:
a) earnest money is part of the purchase price,
while option money is the money given as a

IX. CONTRACT OF SALE

distinct consideration for an option contract;
b) earnest money is given only where there is
already a sale, while option money applies to a
BAR QUESTION (1GG6) sale not yet perfected; and,
c) when earnest money is given, the buyer is bound
Ubaldo is the owner of a building which has been to pay the balance, while when the would-be buyer
leased by Remigio for the past 20 years. Ubaldo gives option money, he is not required to buy, but
has repeatedly assured Remigio that if he should may even forfeit it depending on the terms of the
decide to sell the building, he will give Remigio option.
the right of first refusal. On June 30, 1994, Ubaldo • Earnest money, under Article 1482 of the Civil
informed Remigio that he was willing to sell the Code, is ordinarily given in a perfected contract
building for P5 Million. The following day, Remigio of sale. However, earnest money may also be
sent a letter to Ubaldo offering to buy the building given in a contract to sell.
at P4.5 Million. Ubaldo did not reply. One week • In a contract to sell, earnest money is generally
later, Remigio received a letter from Santos intended to compensate the seller for the
informing him that the building has been sold to opportunity cost of not looking for any other
him by Ubaldo for P5 Million, and that he will not buyers. It is a show of commitment on the part of
renew Remigio's lease when it expires. Remigio the party who intimates his or her willingness to
filed an action against Ubaldo and Santos for go through with the sale after a specified period
cancellation of the sale, and to compel Ubaldo to or upon compliance with the conditions stated in
execute a deed of absolute sale in his favor, the contract to sell.
based on his right of first refusal. • Opportunity cost is defined as "the cost of the
foregone alternative." In a potential sale, the
(a) Will the action prosper? Explain. seller reserves the property for a potential buyer
(b) If Ubaldo had given Remigio an option to and foregoes the alternative of searching for other
purchase the building instead of a right of offers.
first refusal, will your • This Court, in Philippine National Bank v. Court of
answer be the same? Explain. Appeals, construed earnest money given in a
contract to sell as "consideration for [seller's]
promise to reserve the subject property for [the
buyer]." The seller, "in excluding all other
SUGGESTED ANSWER prospective buyers from bidding for the subject
(a) No, the action to compel Ubaldo to execute property ... [has given] up what may have been
the deed of absolute sale will not prosper. The more lucrative offers or better deals.”
right of first refusal implies that the offer of the • Earnest money, therefore, is paid for the seller's
person in whose favor that right was given must benefit. It is part of the purchase price while at
conform with the same terms and conditions as the same time proof of commitment by the
those given to the offeree. In this case, however, potential buyer. Absent proof of a clear
Remigio was offering only P4.5 Million instead of agreement to the contrary, it is intended to be
forfeited if the sale does not happen without the
P5 Million. seller's fault. For this reason, the Court, in
Racelis v. Javier, ruled that "[t]here is no unjust
(b)Yes, the answer will be the same. The action enrichment on the part of the seller should the
will not prosper because an option must be initial payment be deemed forfeited. After all,
supported by a consideration separate and the owner could have found other offers or a
distinct from the purchase price. In this case, better deal. The earnest money given by
there is no separate consideration. Therefore, the respondents is the cost of holding this search in
option may be withdrawn by Ubaldo at any abeyance."
time. (Art. 1324, NCC)
142
 B. CAPACITY TO BUY OR SELL C. OBLIGATIONS OF THE VENDOR
(CIVIL CODE, ARTS. 148G-14G2) (CIVIL CODE, ARTS. 145G-
1505)
CAPACITY TO BUY AND SELL The vendor has the obligation to:
General Rule: All persons who are authorized • Transfer ownership of the thing sold
to obligate themselves, may enter into a
contract of sale. Disqualifications: • Deliver the thing including accessions
and accessories
1. Husband and wife cannot sell property to • Warrant the thing against eviction and hidden
each defects
other; Except: Separation of property • Take care of the thing pending delivery
2. The following cannot acquire by purchase, • Pay for the expenses, unless otherwise stipulated
even at public or judicial auction, either in
person or through another:
a) Guardian, the property of the person or Delivery of the subject matter
persons who may be under his Article 14G7. The thing sold shall be
guardianship understood as delivered, when it is placed in
b) Agents, the property whose the control and possession of the vendee.
administration or sale may have been
entrusted to them, unless the consent Two types of Delivery
of the principal has been given;
c) Executors and administrators, the 1. Actual – physical delivery
property of the estate under 2. Constructive – execution of public
administration. instrument, traditio symbolica, traditio
d) Public officers and employees, the constitutum possessorium, traditio brevi
property of the State or of any manu, traditio longa manu, and quasi-
subdivision thereof, or of any traditio
government-owned or controlled
corporation, or institution, the • Traditio Symbolica - Parties make use of a
administration of which has been token symbol to represent the thing
intrusted to them; this provision shall delivered.
apply to judges and government experts • Traditio Constitutum Possesorium - Vendor
who, in any manner whatsoever, take continues in possession of the thing sold not
part in the sale. as owner but in some other capacity.
e) Justices, judges, prosecuting attorneys, • Traditio brevi manu - Vendee has already in
clerks of superior and inferior courts,

IX. CONTRACT OF SALE

the possession of the thing sold by virtue of
and other officers and employees another title.
connected with the administration of • Traditio longa manu - This form of delivery is
justice, the property and rights in effected by the seller pointing out the object
litigation or levied upon an execution that will be sold to the buyer, with the
before the court within whose intention that ownership shall pass. This is
jurisdiction or territory they exercise normally done where the object is bulky or
their respective functions; this difficult to move.
prohibition includes the act of acquiring • Quasi-traditio - In case of incorporeal rights,
by assignment and shall apply to the vendee use his rights as new owner with
lawyers, with respect to the property and the consent of the vendor.
rights which may be the object of any
litigation in which they may take part
by virtue of their profession. PUBLIC INSTRUMENT
f) Any others specially disqualified by law. • Article 14G8. When the sale is made through
(Arts 1490-1491) a public instrument, the execution thereof
shall be equivalent to the delivery of the
thing which is the object of the contract, if
Kinds of Incapacity from the deed the contrary does not appear
1. Absolute – in case of persons who cannot or cannot clearly be inferred.
bind themselves • With regard to movable property, its
2. Relative – when certain persons, under delivery may also be made by the delivery of
certain circumstances, cannot buy certain the keys of the place or depository where it
property (Wolfson v. Estate of Martinez, is stored or kept.
G.R. No. L-5970, October 13, 1911) • Article 1501. With respect to incorporeal
3. Special Disqualification – Art 1491-1492, NCC property, the provisions of the first
paragraph of article 1498 [execution of
Absolute Incapacity public instrument] shall govern. In any other
case wherein said provisions are not
• Minors applicable, the placing of the titles of
• Insane or Demented ownership in the possession of the vendee
• Deaf-mutes who do not know how to write or the use by the vendee of his rights, with
the vendor's consent, shall be understood as
• Civil Interdiction a delivery.
• Judicially declared incompetent
“ON SALE OR RETURN”
Effect of Incapacity Article 1502. When goods are delivered to the
• Both parties are incapacitated – buyer "on sale or return" to give the buyer an
option to return the goods instead of paying
unenforceable the price, the ownership passes to the buyer
• One party is incapacitated – voidable on delivery, but he may revest the ownership
in the seller by returning or tendering the
goods within the time fixed in the contract, or, if
In case of Necessaries referred to in Art 2G0 no time has been fixed, within a reasonable
Where necessaries are those sold and time.
delivered to a minor or other person without
capacity to act, he must pay a reasonable
price therefor. (Art 1489, NCC)

143
“ON APPROVAL OR ON TRIAL OR ON SATISFACTION” Under Article 1263 of the Civil Code, "[i]n an
Article 1502. xxx obligation to deliver a generic thing, the loss or
When goods are delivered to the buyer on destruction of anything of the same kind does not
approval or on trial or on satisfaction, or other extinguish the obligation." If the obligation is
similar terms, the ownership therein passes to generic in the sense that the object thereof is
the buyer: designated merely by its class or genus without any
(1) When he signifies his approval or acceptance particular designation or physical segregation from
to the seller or does any other act adopting all others of the same class, the loss or destruction
the transaction; of anything of the same kind even without the
(2) If he does not signify his approval or debtor's fault and before he has incurred in delay
acceptance to the seller, but retains the will not have the effect of extinguishing the
goods without giving notice of rejection, then if obligation. This rule is based on the principle that
a time has been fixed for the return of the the genus of a thing can never perish. Genus
goods, on the expiration of such time, and, if nunquan perit. An obligation to pay money is
generic; therefore, it is not excused by fortuitous
no time has been fixed, on the expiration of a loss of any specific property of the debtor.
reasonable time. What is a reasonable time is
a question of fact.
Lost in part only
RISK OF LOSS/RES PERIT DOMINO The vendee may choose between withdrawing from
the contract and demanding the remaining part,
• The owner bears the loss paying its price in proportion to the total sum
• When the loss occurred before perfection of agreed upon
sale, the thing perishes with the owner – Res
perit domino (NCC, Art. 1504) Specific Goods
• When the loss occurred after perfection but
before delivery, the risk of loss is borne by the Where the parties purport a sale of specific goods,
seller because it is delivery that transfers and the goods without the knowledge of the seller
ownership except contrary stipulation in the have perished in part or have wholly or in a
contract. material part so deteriorated in quality as to be
substantially changed in character, the buyer may
• When the loss occurred after delivery, the at his option treat the sale:
buyer bears the risk of the loss (Res perit
domino) 1. As avoided; or
2. As valid in all of the existing goods or in so
much thereof as have not deteriorated, and as
Article 1504. Unless otherwise agreed, the goods binding the buyer to pay the agreed price for
remain at the seller’s risk until the ownership the goods in which the ownership will pass, if
therein is transferred to the buyer. But when the sale was divisible.
ownership therein is transferred to the buyer, the

IX. CONTRACT OF SALE

BAR QUESTION (1GGG)
goods are at the buyer’s risk whether actual
delivery has been made or not, except that: A granted B the exclusive right to sell his brand of
Maong pants in Isabela, the price for his merchandise
(1) Where delivery of the goods has been made payable within 60 days from delivery, and promising B
to the buyer or to a bailee for the buyer, in a commission of 20% on all sales. After the delivery of
pursuance of the contract and the ownership the merchandise to B but before he could sell any of
in the goods has been retained by the seller them, B’s store in Isabela was completely burned
merely to secure performance by the buyer of without his fault, together with all of A's pants. Must B
his obligations under the contract, the goods pay A for his lost pants? Why?
are at the buyer's risk from the time of such
delivery; SUGGESTED ANSWER
(2) Where actual delivery has been delayed The contract between A and B is a sale not an agency
through the fault of either the buyer or seller to sell because the price is payable by B upon 60 days
the goods are at the risk of the party in fault. 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
GAISANO CAGAYAN, INC. V. INSURANCE COMPANY thing perishes for the owner. Hence, B must still pay the
OF NORTH AMERICA price.
G.R. No. 14783G, June 8, 2006 BAR QUESTION (1G81)
J. Austria-Martinez "S", an American resident of Manila, about to leave
Petitioner argues that IMC bears the risk of loss on a vacation, sold his car to "B" for U.S. $2,000.00,
because it expressly reserved ownership of the the payment to be made ten days after delivery to
goods by stipulating in the sales invoices that "[i]t "X", a third party depositary agreed upon, who shall
is further agreed that merely for purpose of deliver the car to "B" upon receipt by "X" of the
securing the payment of the purchase price the purchase price. It was stipulated that ownership is
retained by "S" until delivery of the car to "X". Five
above described merchandise remains the days after delivery of the car to "X", it was destroyed
property of the vendor until the purchase price in a fire which gutted the house of "X", without the
thereof is fully paid.” fault of either "X" or "B". Is buyer "B" still legally
obligated to pay the purchase price? Explain.
The present case clearly falls under paragraph
(1), Article 1504 of the Civil Code. xxx Thus,
when the seller retains ownership only to insure SUGGESTED ANSWER
that the buyer will pay its debt, the risk of loss is "B" is still legally obligated to pay the purchase
borne by the buyer. Accordingly, petitioner bears price. It must be observed that "S" had already
the risk of loss of the goods delivered. delivered the car to "X", the third party depositary or
bailee. It was agreed that ownership is retained by
"S" until delivery to "X". Therefore, in effect, there
The rationale for this is that the rule that an was already a transfer of the right of ownership over
obligor should be held exempt from liability when the car to "B". Consequently, "B" shall assume the
the loss occurs thru a fortuitous event only holds fortuitous loss of the car. As a matter of fact, even if
true when the obligation consists in the delivery it was agreed that "S" shall retain the ownership of
of a determinate thing and there is no stipulation the car until the purchase price has been paid by
holding him liable even in case of fortuitous "B", the end result will still be the same. Since
event. It does not apply when the obligation is eventually, the purpose is to secure performance by
pecuniary in nature. the buyer of his obligation to pay the purchase price,
by express mandate of the law, the fortuitous loss of
the car shall be assumed by "B". (Note: The above
answer is based on Art.
1504 of the Civil Code.)

144
 D. DOUBLE SALE (CIVIL CODE, ART. 1544) BAR QUESTION (2001)
On June 15, 1995, Jesus sold a parcel of
registered land to Jaime. On June 30, 1995, he
• When the same object of the sale is sold to sold the same land to Jose. Who has a better
different vendees. right if:
• Governed by Article 1544 of the Civil Code. a. the first sale is registered ahead of the
second sale, with knowledge of the latter.
Art. 1544. If the same thing should have been sold Why?;
to different vendees, the ownership shall be b. the second sale is registered ahead of the
transferred to the person who may have first
taken possession thereof in good faith, if it should first
be movable property. sale, with knowledge of the latter? Why?
Should it be immovable property, the ownership SUGGESTED ANSWER
shall belong to the person acquiring it who in (a) The first buyer has the better right if his
good faith first recorded it in the Registry of sale was first to be registered, even though
Property. the first buyer knew of the second sale. The
fact that he knew of the second sale at the
Should there be no inscription, the ownership time of his registration does not make him
shall pertain to the person who in good faith was
first in the possession; and, in the absence as acting in bad faith because the sale to
thereof, to the person who presents the oldest him was ahead in time, hence, has a
title, provided there is good faith. priority in right. What creates bad faith in
the case of double sale of land is
Requisites: knowledge of a previous sale.
a) 2 or more sales transactions must constitute
valid sales transactions; (b) The first buyer is still to be preferred, where
b) 2 or more sales transactions must pertain to the second sale is registered ahead of the
exactly the same subject matter;
c) 2 or more buyers at odds over the rightful first sale but with knowledge of the latter.
ownership of the subject matter must each This is because the second buyer, who at
represent conflicting interests; and the time he registered his sale knew that
d) 2 or more buyers at odds over the rightful the property had already been sold to
ownership of the subject matter must have someone else, acted in bad faith. (Article
bought from the very same seller. 1544, NCC)
CHENG V. GENATO
G.R. NO. 12G760, DECEMBER 2G, 1GG8
J. Martinez E. EFFECTS OF LOSS OF THING SOLD
Requisites of Double Sale

IX. CONTRACT OF SALE

(CIVIL CODE, ARTS. 14G3-14G4)
• The two (or more) sales transactions in the
issue must pertain to exactly the same subject
matter, and must be valid sales transactions. Loss of Object Before Sale
• The two (or more) buyers at odds over the Refers to a case of loss of the object even before the
rightful ownership of the subject matter must
each represent conflicting interests; and perfection of the contract.
• The two (or more) buyers at odds over the
rightful ownership of the subject matter must Effect of Loss of Object Before Sale
each have bought from the very same seller.
• General Rule: The contract shall be void in
EFFECT OF DOUBLE SALE case of loss of object before the contract
1. Movable – Owner who is first to possess in has been perfected.
good faith shall be preferred • Rationale: Because there is no cause or
2. Immovable consideration.
a) First to register in good faith
b) No registration – first to possess in good faith Who bears the loss of the object?
c) No registration C no possession in good The seller will have to bear the loss.
faith –
person who presents oldest title in good COMPLETELY LOST V. PARTIALLY LOST
faith Note: Art. 1544 of the Civil Code has no
application to lands not registered with the Torrens COMPLETELY LOST PARTIALLY LOST
system. If the sale is not registered, it is binding
only as between the seller and the buyer, it does Contract shall be Withdrawal/Avoided (or
not affect innocent third persons. Further, this deemed rescission of the
does not also apply to contract to sell. void contract)
’Purchaser in Good Faith’ defined Specific performance
One who buys the property without notice that as to remainder by
some other person has a right to, or interest in payment
such property; and pays a full and fair price for or proportional price
the same at the time of such purchase, or before
he has notice of the claim or interest of some
other person in the property
Note: PRIOR TEMPORE, POTIOR JURE - This
principle applies in a situation where Art. 1544 is
inapplicable due to absence of requisite/s.
Requisite: The only requisite of this rule is priority in
time. The only one who can invoke this is the first
vendee.
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) Features of Maceda Law
1. After paying installment for at least 2 years,
Recto Law (Sale of Personal Property in Installment) buyer is entitled to a mandatory grace period
• This covers contracts of sale of personal of 1 month for every year of installment to
property by installment (Act No. 4122). It is pay unpaid installment without interest
also applied to contracts purporting to be 2. In case installments paid were less than 2
leases of personal property with option to years, seller shall give buyer a grace period
buy, when the lessor has deprived the of not less than 60 days.
lessee of the possession or enjoyment of the 3. If buyer fails to pay at expiration of grace
thing (PCI Leasing and Finance Inc. v. period, seller may cancel contract after 30
Giraffe- X Creative Imaging, Inc. G.R. No. days from notice of cancellation through
142618, July 12, 2007) Notarial Notice of Cancellation. (Rillo v. CA,
• Note: Recto law applies only to sale payable G.R. No. 125347, June 19, 1997).
in installments and not to sale where there is 4. After the lapse of the grace period, seller
an initial payment and the balance is may cancel the contract provided he pays the
payable in the future, because such is a buyer the CASH SURRENDER VALUE which is
straight sale, not a sale by installments. equivalent to 50% of all payments, and after
five years of installment an additional 5% for
every year but not to exceed 90% of total
Alternative remedies of the Seller: payments made.
• Specific performance – Exact fulfillment 5. The cancellation of the contract takes effect
should the buyer fail to pay. If availed, the 30 days from service of notarial notice of
unpaid seller cannot anymore choose other cancellation and upon payment of the cash
remedies. surrender value
• Rescission – Cancel the sale if buyer fails to
pay 2 or more installments. General Rule: Stipulation in any contract which is
• Foreclosure on chattel mortgage if buyer fails contrary to the provisions of Maceda Law shall be
to pay 2 or more installments. He shall have declared null and void. [Sec. 7, Maceda Law]
no further action against the purchaser to
recover any unpaid balance of the price. Any Other Rights of Buyer
agreement to the contrary shall be void. 1. The buyer shall have the right to sell his
rights or assign the same to another person.

IX. CONTRACT OF SALE

Effect of filing a case for specific performance [Sec. 5, Maceda Law]
• The seller can collect from the buyer for the 2. The buyer shall have the right to reinstate
sum of money the buyer failed to pay. In the contract by updating the account during
case the sum collected is insufficient, the the grace period and before actual
court can still order for the levy of the cancellation of the contract. [Sec. 5, Maceda
Law]. The deed of sale or assignment shall be
property subject of the sale transaction to done by notarial act.
cover the balance. 3. The buyer shall have the right to pay in
• Moreover, if the action instituted is for advance any installment or the full unpaid
specific performance and the mortgaged balance of the purchase price any time
property is subsequently attached and sold, without interest and to have such full
the sale thereof does not amount to a payment of the purchase price annotated in
foreclosure of the mortgage; the seller- the certificate of title covering the property.
creditor is entitled to a deficiency judgment [Sec. 6, Maceda Law]
(Industrial Finance Corp v. Ramirez, G.R. No.
L-43821, May 26, 1977) PRYCE PROPERTIES CORP. V. NOLASCO
G. MACEDA LAW (R.A. NO. 6552) G.R. NO. 203GG0, AUGUST 24, 2020
J. Hernando
Basic remedies of a defaulting buyer under Section
Republic Act No. 6552 or also known as Realty 6 of RA 6552:
Installment Buyer Act.  Claim refund or pay in advance or in full.
Legislation written by Ernesto Maceda and was • It has been held that in the absence of a
approved on August 26, 1972. lawful rescission of a contract governed by
RA 6552, the same remains valid and
Purpose of the Law subsisting.
• We affirm the courts below in directing the
To protect property owners from unfavorable refund of the deposit payments made by
terms that may occur from sale transactions Nolasco to Pryce. While this buyer's option
funded by an installment agreement by to claim refund is not explicitly mentioned
describing the rights of the buyers regarding in RA 6552, equity considerations have
refund entitlement and grace periods. already filled up this legal vacuum as
declared in Orbe. In the said case, the
Transactions Covered buyer therein failed to make at least two
All transactions or contracts involving the sale or years of installment payments in
financing of real estate on installment payments, consideration of a purchase of a lot. The
including residential condominium apartments seller, however, failed to cancel their
[Sec. 3, Maceda Law] contract through a valid notarial act and
sold the lot in issue to a third person. The
Exclusions to Coverage Court, finding the provisions of RA 6552
applicable to the transaction, ordered the
• Industrial Lots refund of the amounts actually paid by the
• Commercial Buildings buyer, justifying the same with equitable
• Sales to tenants under R.A. No. 3844, as reasons as laid out by relevant
jurisprudence.
amended by
R.A. No. 6389.

146
 H. RIGHTS OF UNPAID SELLER f. Instance when the Seller may maintain an Action
(CIVIL CODE, ARTS. 1525-1535) for Damages
The buyer wrongfully neglects or refuses to
accept and pay for the goods
UNPAID SELLER
The seller of goods is deemed to be an unpaid seller In General, sales are extinguished
I. CONVENTIONAL by the same
REDEMPTION
when: causes as all other obligations:
1. The whole of the price has not been paid or
(CIVIL CODE, ARTS. 1601 AND 1606-1618);
1. Payment/performance
tendered. 2. Prescription
LEGAL REDEMPTION
2. A bill of exchange or other negotiable 3. Loss (CIVIL
of thingCODE,
due ARTS. 161G-1623)
instrument has been received as conditional
payment, and the condition on which it was 4. Condonation/remission
received has been broken by reason of the 5. Confusion/merger
dishonor of the instrument, the insolvency of 6. Compensation
the buyer, or otherwise.
7. Rescission
8. Annulment
REMEDIES OF UNPAID SELLER
a. Possessory lien 9. Novation
• Seller not bound to deliver object of the 10. Fulfillment of the Resolutory condition
contract of sale if buyer has not paid him the 11. Redemption (Conventional or Legal)
price.
• This is a lien on the goods, or the right to CONVENTIONAL REDEMPTION
retain them for the price while he is in Conventional redemption shall take place when the
possession of them. vendor reserves the right to repurchase the thing
• Instances: sold, with the obligation to comply with the
 When the goods sold without stipulation provisions of article 1616 and other stipulations
as to credit. which may have been agreed upon. (Art 1601, NCC)
 Goods sold on credit, but term of credit
has expired. Requisites for a Vendor to Avail the Right of Repurchase

IX. CONTRACT OF SALE

 Buyer becomes insolvent. (Art 1527) Vendor must return to the vendee:
a. The price of the sale
b. Stoppage in Transitu b. The expenses of the contract, and any other
• It is a right which the seller of goods on credit legitimate payments made by reason of the
has to recall them or retake them while they sale;
are in the possession of a carrier or other c. The necessary and useful expenses made on
middleman who received them for delivery to the thing sold. [Article 1616]
the buyer, on discovery of insolvency of the
buyer. (Art 1530) Period of redemption
• Requisites: • When there is a period agreed upon: not to
a. Unpaid seller exceed 10 years
b. Title of goods must have passed to the • No period agreed upon: 4 years.
• Period to redeem expired (+there is a suit on the
buyer; nature of the contract: 30 Days from final
c. Goods must be in transit judgment (Art 1606)
d. Insolvent buyer
e. Seller must either actually take possession Effect if no redemption was made
of the goods sold or give notice of his Art. 1607. In case of real property, the consolidation
claim to the carrier or other person in of ownership in the vendee by virtue of the failure
possession; of the vendor to comply with the provisions of
article 1616 shall not be recorded in the Registry of
c. Special right of resale Property without a judicial order, after the vendor
• Unpaid seller may exercise this right if he has has been duly heard
a right of lien or he has stopped the goods in
transitu in the following authorized causes: SPS. VELARDE V. HEIRS OF CONCEPCION
a. Goods are perishable; G.R. NO. 1G0057, OCTOBER 17, 2022
b. Stipulated the right of resale in case of J. M. Lopez
default, "The essence of a pacto de retro sale is that title
or and ownership of the property sold are immediately
vested in the vendee a retro, subject [only] to the
c. Buyer in default for unreasonable time. (Art resolutory condition of repurchase by the vendor a
1533) retro within the stipulated period." Once the vendor
a retro fails to redeem the property within the
d. Special right to rescind agreed period, absolute ownership is vested upon
the vendee a retro by operation of law. Here, as
• Unpaid seller may exercise having the right of agreed upon under the Deed of Sale with Right of
lien or he has stopped the goods in transitu Repurchase, Concepcion had five years or until
may rescind the transfer of title and resume 1983 to repurchase the properties, but as admitted
ownership in the following cases: in the quitclaim and waiver of rights, she failed to
a. Seller expressly reserved right to rescind do so. Without anything more required from both
in case of buyer’s default; parties, thus, irrevocable title to the properties
b. Buyer’s default for an unreasonable were automatically transferred to Isagani in 1983
length of time (Art 1597) since the resolutory condition was not fulfilled.

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
• 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
• The goods cannot readily be resold for a
reasonable price, and the buyer wrongfully
refuses to accept the goods, whether or not
ownership has passed.
147
For instance, our pronouncement in Spouses
Cruz v. Leis, is highly-instructive: Justice Edgardo Paras, referring to the origins
It bears stressing that notwithstanding Article of the requirement, would explain in his
1c07, the commentaries on the New Civil Code that
recording in the Registry of Property of the despite actual knowledge, the person having
consolidation of ownership of the vendee is not a the right to redeem is STILL entitled to the
condition sine qua non to the transfer of written notice. Both the letter and the spirit of
ownership. Petitioners are the owners of the the New Civil Code argue against any attempt to
subject property since [none of the vendors with widen the scope of the "written notice" by
right to repurchase] redeemed the same within including therein any other kind of notice such
the one-year period stipulated in the "Kasunduan." as an oral one, or by registration. If the intent of
The essence of a pacto de retro sale is that title the law has been to include verbal notice or any
and ownership of the property sold are
other means of information as sufficient to give
immediately vested in the vendee a retro, subject
the effect of this notice, there would have been
to the resolutory condition of repurchase by the
no necessity or reason to specify in the article
vendor a retro within the stipulated period.
that said notice be in writing, for under the old
Failure thus of the vendor a retro to perform said
law, a verbal notice or mere information was
resolutory condition vests upon the vendee by
operation of law absolute title and ownership
already deemed sufficient.
over the property sold. As title is already vested
in the vendee a retro, his failure to consolidate Time and time again, it has been repeatedly
declared by this Court that where the law
his title under Article 1c07 of the Civil Code does speaks in clear and categorical language,
not impair such title or ownership for the method there is no room for interpretation. There is
prescribed thereunder is merely for the purpose only room for application. Where the language
of a statute is clear and unambiguous, the law
of registering the consolidated title. is applied according to its express terms, and
interpretation should be resorted to only where
LEGAL REDEMPTION a literal interpretation would be either
It is the right to be subrogated, upon the same impossible or absurd or would lead to an
terms and conditions stipulated in the contract, injustice. The law is clear in this case, there
in the place of one who acquires a thing by must first be a written notice to the family of
purchase or dation in payment, or by any other Bañas.
transaction whereby ownership is transmitted by
onerous title. In sum, the explicit requirement of written notice

IX. CONTRACT OF SALE

may only be dispensed with upon a showing that
INSTANCES OF LEGAL REDEMPTION the co-owners already had sufficient knowledge of
1. Sale of a co-owner of his share to a stranger the
(NCC, sale and they were guilty of laches in the exercise of
Art. 1620); their redemption right.
2. When a credit or other incorporeal right in Absent these factors, the strict letter of the
litigation is sold (NCC, Art. 1634) law must apply — the written notice from the
3. Sale of an heir of his hereditary rights to a seller remains to be an indispensable
stranger (NCC, Art. 1088) requirement to commence the running of the
4. Sale of adjacent rural lands not exceeding 1 30-day redemption period.
hectare (NCC, Art. 1621)
5. Sale of adjacent small urban lands bought J. EQUITABLE MORTGAGE
merely for speculation (NCC, Art. 1622)
(CIVIL CODE, ARTS. 1602-1605)
NOTICE REQUIREMENT
‘Equitable Mortgage’ defined
Art. 1623. The right of legal pre-emption or
redemption shall not be exercised except within One which, although lacking in some formality,
thirty days from the notice in writing by the or form, or words, or other requisites demanded
prospective vendor, or by the vendor, as the by a statute, reveals the intention of the parties
case may be. The deed of sale shall not be to charge real property as security for a debt,
recorded in the Registry of Property, unless and contains nothing impossible or contrary to
accompanied by an affidavit of the vendor that law.
he has given written notice thereof to all possible
redemptioners. Requisites for Presumption of Equitable Mortgage
"The right of redemption of co-owners excludes to Arise
that of a. The parties entered into a contract
adjoining owners." denominated as a contract of sale.
b. The intention of the parties was to secure an
Note: Knowledge is insufficient – the mere fact existing
that the redemptioner is already aware of the debt by way of mortgage.
existence of the sale will not excuse the written
notice. (Barcellano v. Banas et. al. G.R. No.
165287, September 14, 2011) REPUELA V. ESTATE OF THE SPS. LARAWAN
G.R. NO. 21G638. DECEMBER 07, 2016
RAMA s LAURON V. SPS. NOGRA s SPS. RAMA J. Mendoza
G.R. NO. 21G556, SEPTEMBER 14, 2021 • There is no single conclusive test to determine
J. M. Lopez whether a deed of sale, absolute on its face, is
really a simple loan accommodation secured
Indeed, Article 1623 is clear. A cardinal rule in by a mortgage.
statutory construction is that when the law is • Article 1602, in relation to Article 1604 of the
clear and free from any doubt or ambiguity, there Civil Code, however, enumerates several
is no room for construction or interpretation; instances when a contract, purporting to be,
and in fact styled as, an absolute sale, is
Our ruling in Barcellano v. Bañas, citing Justice presumed to be an equitable mortgage.
Edgardo
Paras, is highly instructive:
148
Cases Wherein The Contract Shall Be Presumed BAR QUESTION (1G7G)
In a document dated June 10, 1960 and
To Be An Equitable Mortgage expressly denominated "Deed of Sale with
1. When the price of a sale with right to Right to Repurchase," AB sold his land to CD.
repurchase is unusually inadequate; Substantially, the document provided among
2. When the vendor remains in possession as others: "I, AB, being in great need of money,
lessee or otherwise; hereby sell my 10- hectare coconut land to CD
3. When upon or after the expiration of the for P2,000.00. It is agreed that I have the right
right to repurchase another instrument to repurchase this land in 10 years. If I fail to
extending the period of redemption or buy back the property, I shall deliver
granting a new period is executed; possession thereof to CD." Upon failure of AB
4. When the purchaser retains for himself a to repurchase the property, CD, in 1971,
part of the purchase price; consolidated his title and files an action to
5. When the vendor binds himself to pay the taxes recover possession. AB files an answer offering
on the thing sold; to return the P2,000.00 plus interest at the
6. In any other case where it may be fairly legal rate. Will the action of CD prosper? Why?
inferred that the real intention of the
parties is that the transaction shall secure
the payment of a debt or the performance SUGGESTED ANSWER
of any other obligation. [Article 1602] The action of CD will not prosper. The contract
in the instant case is not a true contract of sale
Note: In case of doubt, a contract purporting to with right of repurchase. The purchase price is
be a sale with right to repurchase and absolute unusually inadequate and the vendor is still in
sale shall be construed as an equitable possession of the property. There is now a
mortgage. presumption that the real covenant or
agreement is an equitable mortgage. This is
strengthened by the fact that AB, the vendor,
Pacto De Retro Sale was in dire straights: he was in great need of
• The title and ownership of the property sold money. The land, therefore, is merely the
is immediately vested in the vendee a retro, security for the loan.
subject to the restrictive condition of
repurchase by the vendor a retro within the ALTERNATIVE ANSWER:

IX. CONTRACT OF SALE

period provided.
• The payment of the repurchase price does The look
action of CD will not prosper. Whether we
at the deed of sale as a true contract of
not merely render the document null and
void but there is the obligation on the part sale with right of repurchase or a mere
of the vendee to sell back the property. contract of equitable mortgage, the effect in
• A sale with pacto de retro transfers the legal the instant case will be the same. If it is a true
title to the vendee and this, in the absence contract of sale with right of repurchase,
of an agreement to the contrary, carries according to the Civil Code, the vendor may
with it the right of possession. still exercise the right to repurchase within
thirty days from the time final judgment was
rendered in a civil action on the basis that the
Effect of Inadequacy of Price in a Pacto de Retro contract was a true sale with right to
Sale repurchase. If it is a mere equitable mortgage
The inadequacy of the price cannot be because of the gross inadequacy of the
considered a ground for rescinding the purchase, the fact that the vendor is still in
contract. possession of the property, and the fact that
AB was in great need of money, the vendor
(mortgagor) may still exercise his right to
Pacto de retro vs. Equitable mortgage redeem the property by paying the mortgage
• In pacto de retro – ownership is immediately loan plus interest prior to
transferred to the vendee, subject only to foreclosure.
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)

14G
 X. CONTRACT OF LEASE
A. General Provisions (Civil Code, arts. 1642-1645)
B. Rights and Obligations of Lessor and Lessee (Civil Code, arts. 1654-167G)
C. Sublease and Assignment of Lease (Civil Code, arts. 164G-1652)
A. GENERAL PROVISIONS
e) Justices, judges, prosecuting attorneys, clerks
(CIVIL CODE, ARTS. 1642-1645) 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
‘Contract of Lease’ before the court within whose jurisdiction or
It is a contract by which the owner temporarily territory they exercise their respective
grants the use of his property or the rendering of functions; this prohibition includes the act of
some service to another who undertakes to pay acquiring by assignment and shall apply to
some rent, compensation or price. lawyers, with respect to the property and
A contract where one of the parties binds rights which may be the object of any
himself to give to another the enjoyment or litigation in which they may take part by virtue
use of a thing for a price certain, and for a of their profession;
period which may be definite or indefinite. f) Any others specially disqualified by law.
However, no lease for more than ninety-nine
years shall be valid. 2. OBJECT OR SUBJECT MATTER (Arts. 1642-1645)

ESSENTIAL ELEMENTS OF LEASE (Consent, Object, Lease of Things – one of the parties binds himself
Consideration) 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
1. CONSENT for more than ninety-nine years shall be valid.
• General Rule: No person can be compelled
Lease of Work or Service – one of the parties
to binds himself to execute a piece of work or to
become a lessee against his will. render to the other some service for a price
• XPN: In industrial accession where both the certain, but the relation of principal and agent
landowner and the builder, planter or sower does not exist between them.
acted in good faith. The builder or planter
can be compelled to pay reasonable rent if LEASE OF CONSUMABLE GOODS
they cannot be obliged by the landowner to General Rule: Consumable Goods cannot be the
buy the land because its value is subject matter of a contract of lease of things
considerably more than that of the building (NCC, Art. 1648, 1st part)
or trees. In case of sower, he can also he Reason: To use or enjoy them, they will have to
compelled to pay proper rent by the be consumed. This cannot be done by the lessee
landowner (NCC, Art. 448). since ownership over them is NOT transferred to
the lessee by the contract of lease.
XPN:
PERSONS DISQUALIFIED TO BE LESSEES
1. Husband and wife • If they are merely to be exhibited as for display
General Rule: Husband and wife cannot lease to purposes; or,
each other their separate properties • If they are accessory to an industrial establishment
XPN: (e.g. oil in an industrial firm)
• If a separation of property was agreed upon
in the marriage settlement. 3. CAUSE OR CONSIDERATION
• If there has been a judicial separation under • The cause or consideration in lease contracts
Art. 135 refers to rentals (for things), royalties (for
rights), or compensation (for services).
of the Family Code; (Art. 1490 NCC) • Money, fruits or some other useful thing, the
Note: The prohibition applies even to common important thing is that what is given by the
law spouses. For otherwise said spouses would lessee has value.
be placed in a better position than legitimate
spouses. FORM OF LEASE CONTRACT
General Rule: Lease may be made orally
2. Persons referred to under Art. 14G1 of NCC - XPN: If the lease of real property is made for
because of fiduciary relationships. more than one year, it must be in writing, in
a) The guardian, the property of the person or compliance with the Statute of Frauds [NCC, Art.
persons who may be under his 1403 (2)(e)]
guardianship;
b) Agents, the property whose administration PURPOSE OF RECORDING A LEASE
or sale may have been intrusted to them, • A lease DOES NOT have to be recorded in the
unless the consent of the principal has Registry of Property to be binding between the
been given; parties. Registration is useful only for the
c) Executors and administrators, the property purposes of notifying strangers to the
of the estate under administration; transaction (NCC, Art. 1648).
d) Public officers and employees, the property • Registration is not essential for the validity of
of the State or of any subdivision thereof, the contract but is needed to make it effective
or of any government-owned or controlled regarding third persons.
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;

150
EFFECTS IF THE LEASE OF REAL PROPERTY IS 5. Return the thing leased upon the
NOT REGISTERED termination of the lease, as he received it,
1. The lease is not binding on innocent third save what has been lost or impaired by the
persons such as a purchaser (Salonga, et al. lapse of time, or by ordinary wear and tear,
v- Acuña, C.A., 54 O.G. 2943); or from an inevitable cause (Art. 1665)
2. Naturally, such an innocent third person is Note: In the absence of a statement
allowed to terminate the lease in case he buys concerning the condition of the thing at the
the property from the owner-lessor. (NCC, Art time the lease was constituted, the law
1676) (2009 BAR); presumes that the lessee received it in
3. When a third person already knows of the good condition, unless there is proof to the
existence and duration of the lease, he is contrary. (Art. 1666)
bound by such lease even if it has not been
recorded. The reason is simple: actual 6. Responsible for the deterioration or loss of
knowledge is, for this purpose, equivalent to the thing leased, UNLESS he proves that it
registration (Quimson v. Suarez, G.R. No. L- took place without his fault. Lessee is liable
21381, April 5 1924; and Gustilo v. Maravilla, for the deterioration caused by members of
G.R. No. L-2338 December 12, 1925). his household and by guests and visitors.
(Arts. 1667 C 1668)
Note: But if the sale is fictitious and was only Note: This burden of proof on the lessee
resorted to for the purpose of extinguishing the does not apply when the destruction is due
lease, the supposed vendee cannot terminate the to earthquake, flood, storm or other natural
lease. The sale is presumed fictitious if at that calamity. (Art. 1667)
time the supposed vendee demands the
termination of the lease, the sale is not recorded
in the Registry of Property (Art. 1676, 3rd Rules if urgent repairs are necessary (Art. 1662)
paragraph, NCC). 1. If repairs last for NOT MORE THAN 40 days,
Lessee is obligated to tolerate the work.
B. RIGHTS AND OBLIGATIONS OF LESSOR 2. If repairs last for MORE THAN 40 days
Lessee can ask for reduction of the rent in
AND LESSEE (CIVIL CODE, ARTS. 1654-167G) proportion to the time (including the 1st 40
OBLIGATIONS OF LESSOR AND LESSEE days he was deprived of possession/use)
Note: In either case, rescission may be availed
in case of dwelling place, and the property
Obligations of the Lessor (1654) becomes uninhabitable.
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 Remedies in case of breach of obligations:

X. CONTRACT OF LEASE
suitable for use, unless there is contrary 1. Lessee may suspend the payment of the
stipulation. rent in case the lessor fails to make the
3. Maintain the lessee in peaceful and adequate necessary repairs or to maintain the lessee
enjoyment of the lease for the duration of the in peaceful and adequate enjoyment of the
contract. (Art. 1654) property leased. (Art. 1658)
4. Pay the lessee one-half of the value of the 2. In case of breach, aggrieved party may ask
improvements at the time of the termination for the rescission of the contract and
of the lease when the lessee makes, in good indemnification for damages, or damages
faith, useful improvements which are suitable only, allowing the contract to remain in
to the use for which the lease is intended, force. (Art.1659)
without altering the form or substance of the
property leased. (Art. 1678)
RIGHTS OF LESSOR AND LESSEE
OBLIGATIONS OF LESSEE
Rights of the Lessor:
1. To pay the price of the lease according to the
1. Right to continue same business - The
terms lessor of a business or industrial
stipulated. establishment may continue engaging in
2. Use the thing leased as a diligent father of the the same business or industry to which the
family.
lessee devotes the thing leased, unless
there is a stipulation to the contrary. (Art.
3. Pay expenses for the deed of lease. (Art. 1657) 1656)
4. To inform the lessor within the shortest 2. Right to eject the Lessee in cases provided
possible time: under Art. 1673.
a. Every usurpation or untoward act which Grounds for ejectment:
any third person may have committed or
may be openly preparing to carry out a. When period agreed upon, or period in
upon the thing leased. Articles 1682 and 1687 has expired;
b. Need of all necessary repairs in order to b. Lack of payment of price stipulated;
keep it suitable for the use to which it has c. Violation of any conditions agreed upon
been devoted. (Art. 1663) in the contract;
Effects if the lessee failed to notify the lessor: d. Lessee devotes the thing leased to any
The lessee shall be liable for the damages use or service not stipulated, or he fails
which, through his negligence, may be to observe diligence of a good father of
suffered by the proprietor. a family in the use thereof.
3. Limited right to alter form of the thing
Effects if the lessor fail to make urgent repairs leased - The lessor cannot alter the form of
the thing leased in such a way as to impair
The lessee may: the use to which the thing is devoted under
i. Order repairs at the lessor's cost the terms of the lease. (Art. 1661)
ii. Sue for damages
iii. Suspend the payment of the rent; or
iv. Ask for rescission, in case of substantial
damage to him

151
Rights of the Lessee: Venue of payment in Art. 1251:
1. Right to peaceful and adequate enjoyment of
the lease for the duration of the contract. 1. Place designated in the obligation
(Art. 1654). 2. There being no express stipulation and if the
2. Right to terminate the lease if dwelling place undertaking is to deliver a determinate thing
is in dangerous condition - If a dwelling place - wherever the thing might be at the moment
or any other building intended for human the obligation was constituted.
habitation is in such a condition that its use 3. In any other case, the place of payment shall
brings imminent and serious danger to life or be the domicile of the debtor.
health, the lessee may terminate the lease at
once by notifying the lessor, even if at the TERM OF LEASE CONTRACT
time the contract was perfected the former General Rule: The law does not allow perpetual
knew of the dangerous condition or waived lease. There must be a period which may either
the right to rescind the lease on account of be definite or indefinite. No lease for more than
this condition. (Art. 1660) 99 years shall be valid.
3. Right to file direct action against the intruder
in case of a mere act of trespass which a When no period is fixed:
third person may cause on the use of the
thing leased. (Art. 1664) a) In case of lease of rural lands (Art. 1682) - all
the time necessary for the gathering of the
4. Freedom to choose between a proportional fruits which the whole estate leased may
reduction of the rent and a rescission of the yield in one year, or which it may yield once,
lease in cases of partial destruction brought although two or more years have to elapse
by fortuitous events. (Art. 1655) for the purpose.
5. Suspend payment in case the lessor fails to b) In case of lease of urban lands (Art. 1687); -
make the necessary repairs or to maintain from year to year, if the rent agreed upon is
the lessee in peaceful and adequate annual; from month to month, if it is monthly;
enjoyment of the property leased. (Art. 1658) from week to week, if the rent is weekly; and
6. Right to make use of the periods established from day to day, if the rent is to be paid daily;
in Articles 1682 and 1687. or
7. Right to sublease the property, provided that c) Lease during the lifetime of one of the parties
it is not prohibited. - A lease of things during the lifetime of one of
• A lessee may generally sublease the the parties is valid, which is considered one
property in the absence of express for life, ending upon the death of the party
prohibition because the lessee remains a who could have terminated the contract.
party to the lease even if he has already
created a sublease thereon. e.g. He still Implied new lease (Tacita reconduccion)
must pay rent to the lessor
If the lessee continues in possession of the thing
• Two leases and two distinct judicial leased for 15 days with the acquiescence of the

X. CONTRACT OF LEASE
relations: lessor, notwithstanding the expiration of the
 between the lessor and the lessee contract of lease, it is understood that there is an
 between the sublessor (lessee) and the implied new lease, not for the period of the
sublessee original contract, but for the time established by
Article 1682 and 1687. The other terms of the
8. Right to be reimbursed of one-half of the contract shall be revived.
value of the improvements at the time of
termination of lease, when such useful
improvements is made in good faith and Possession in Bad Faith
which are suitable to the use for which the Art. 1671. If the lessee continues enjoying the
lease is intended. (Art. 1678) thing after the expiration of the contract, over the
9. Right to remove the improvements, even lessor's objection, the former shall be subject to
though the principal thing may suffer damage the responsibilities of a possessor in bad faith.
thereby, if the lessor refuses to reimburse
him of the useful improvements mentioned in Right of a purchaser to terminate the lease
the next preceding item. (Art. 1678) Art. 1676. The purchaser of a piece of land which is
under a lease that is not recorded in the Registry of
Rights to Improvement Property may terminate the lease, save when
1. If Lessee in good faith makes USEFUL there is a stipulation to the contrary in the
contract of sale, or when the purchaser knows of
improvements: lessor shall pay ½ of the value; the existence of the lease.
if Lessor refuses, Lessee may remove even
though it will cause damage to the principal If the buyer makes use of this right, the lessee
may demand that he be allowed to gather the
thing. He shall not cause any more fruits of the harvest which corresponds to the
impairment than necessary. current agricultural year and that the vendor
2. Ornamental expenses: Lessee not entitled to indemnify him for damages suffered.
reimbursement; he may remove provided no
damage is caused to the principal thing, and If the sale is fictitious, for the purpose of
if Lessor does not chose to retain by paying extinguishing the lease, the supposed vendee
their value at the time the lease is cannot make use of the right granted in the first
extinguished. paragraph of this article. The sale is presumed to
be fictitious if at the time the supposed
Place and time for the payment of lease: vendee demands the termination of the lease, the sale
Art. 167G. If nothing has been stipulated is not recorded in the Registry of Property.
concerning the place and the time for the
payment of the lease, the provisions or Article Art. 1677. The purchaser in a sale with the right of
1251 shall be observed as regards the place; and redemption cannot make use of the power to
with respect to the time, the custom of the place eject the lessee until the end of the period for
shall be followed. the redemption.

152
 PMO V. NOCOM ET AL. BAR QUESTION (2014)
G.R. NO. 250477, NOVEMBER 0G, 2020 Isaac leased the apartment of Dorotea for two
(2) years. Six (6) months after, Isaac subleased
J. Lopez a portion of the apartment due to financial
Indeed, a fine distinction exists between a stipulation difficulty. Is the sublease contract valid?
to renew a lease and one to extend it beyond the
original term. A renewal clause creates an obligation to a. Yes, it is valid for as long as all the
execute a new lease for the additional period. It elements of a
connotes the cessation of the old agreement and the valid sublease contract are present.
emergence of a new one. On the other hand, an
extension clause operates of its own force to create an b. Yes, it is valid if there is no express
additional term. It does not require the execution of a prohibition for subleasing in the lease
new contract between the parties. In this case, the contract.
compromise agreement did not require the parties to c. No, it is void if there is no written consent
enter into another lease contract. Quite the contrary, on the part of the lessor.
the agreement confirmed, ratified and validated the d. No, it is void because of breach of the
existing amended contract of lease. Verily, the lease
compromise agreement leaves no room for
equivocation or interpretation. As such, no amount of contract.
extraneous sources are necessary in order to ascertain SUGGESTED ANSWER
the parties' intent. Relatively, the heirs of Mariano
cannot unduly stretch the import of the PMO's letter b. Yes, it is valid if there is no express
dated February 24, 2011 beyond its nature as a mere prohibition for
demand to pay the increase in monthly rental. The
letter cannot also be taken as detached and isolated BAR QUESTION (2013)
from the other acts of the PMO that are incompatible Anselmo is the registered owner of a land and
with the theory of renewal. Particularly, PMO's a house that his friend Boboy occupied for a
reminder about the expiration of the contract, its nominal rental and on the condition that Boboy
refusal to accept rental payment, and demand to would vacate the property on demand. With
peacefully vacate the building, render renewal out of Anselmo's knowledge, Boboy introduced
the question. Taken together, the parties to the renovations consisting of an additional
compromise agreement vividly intended for an bedroom, a covered veranda, and a concrete
extension of the lease period, and not renewal of the block fence, at his own expense. Subsequently,
contract.
Anselmo needed the property as his residence
and thus asked Boboy to vacate and turn it
MAÑAS V. NICOLASORA over to him. Boboy, despite an extension, failed
G.R. NO. 208845, FEBRUARY 03, 2020 to vacate the property, forcing Anselmo to send
J. Leonen him a written demand to vacate. In his own
written reply, Boboy signified that he was ready

X. CONTRACT OF LEASE
Article 1643 of the Civil Code provides: to leave but Anselmo must first reimburse him
Article 1643. In the lease of things, one of the the value of the improvements he introduced on
parties binds himself to give to another the the property as he is a builder in good faith.
enjoyment of use of a thing for a price certain, and
for a period which may be definite or indefinite. Anselmo refused, insisting that Boboy cannot
However, no lease for more than ninety-nine years ask for reimbursement as he is a
shall be valid. mere lessee.
Based on Article 1643, the lessor's main obligation
is to allow the lessee to enjoy the use of the thing
leased. Other contract stipulations unrelated to this SUGGESTED ANSWER
— for instance, the right of first refusal—cannot be
presumed included in the implied contract renewal. Boboy's claim that he is a builder in good faith
The law itself limits the terms that are included in has no basis. A builder in good faith is someone
implied renewals. One cannot simply presume that who occupies the property in the concept of an
all conditions in the original contract are also owner. The provisions on builder-planter-sower
revived; after all, a contract is based on the under the Civil Code cover cases in which the
meeting of the minds between parties. builder, planter and sower believe themselves
to be owners of the land, or at least, to have a
CJH DEVELOPMENT CORPORATION V. ANICETO claim of title thereto.
G.R. NO. 224006, JULY 06, 2020
J. Leonen As Boboy is a lessee of the property, even if he
was paying nominal rental, Article 1678 is
Clearly, there was an implied lease between the applicable. Under this provision, if the lessee
parties. When the lease expired on May 17, 2007, makes, in good faith, useful improvements
CJH Development acquiesced to Aniceto's
continued occupancy. It did not send a notice to which are suitable to the use for which the
vacate and even accepted Aniceto's monthly lease is intended, without altering the form or
payments until February 28, 2008. As it was paid substance of the property leased, the lessor
monthly, the implied lease ran on a month-to- upon the termination of the lease shall pay the
month renewal, in accordance with Article 1687 of lessee one-half of the value of improvements at
the Civil Code. It follows that the lease would be that time. Should the lessor refuse to reimburse
terminated by the end of each month, and CJH said amount, the lessee may remove the
Development may choose not to renew the lease improvements, even though the principal thing
and demand repossession of the premises. may suffer damage thereby
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- ALTERNATIVE
to-month implied lease was terminated. The lessee No. Boboy cannot be held liable for damages.
can no longer insist on staying in the premises The lessor, Anselmo, refused to reimburse one-
against the lessor's will because there is no longer half of the value of the improvements, so the
a contract of lease to speak of. lessee, Boboy, may remove the same, even
though the principal thing may suffer damage
thereby. If in removing the useful
improvements Boboy caused more impairment153
in the property leased than is necessary, he
will be liable for
damages (Art. 1678).
 BAR QUESTION (2018)
Simon owned a townhouse that he rented out to
C. SUBLEASE AND ASSIGNMENT OF LEASE
Shannon, a flight attendant with Soleil Philippine (CIVIL CODE, ARTS. 164G-1652)
Airlines (SPA). They had no written contract but
merely agreed
Assignment of Lease on a three (3)- year lease.
Shannon had been using the townhouse as her
Lessee
• base in cannot assign
Manila and hadthe lease
been contract
paying rentalswithout
for the consent of the lessor, unless there is a
stipulation
more than atoyear
the when
contrary. (Art. 1649)
she accepted a better job
offer from Sing Airlines. This meant that • When in the contract of lease of things there
Singapore was going to be her new base and so is no express prohibition, the lessee may
she decided, without informing Simon, to sublease sublet the thing leased, in whole or in part,
the townhouse to Sylvia, an office clerk in SPA. without prejudice to his responsibility for
a. Can Simon compel Shannon to reduce the the performance of the contract toward the
lease agreement into writing? lessor. (Art. 1650)
b. Does the sublease without Simon’s knowledge
and Effect of Assignment of Lease
consent constitute a ground for terminating the Original lessee’s personality disappears and
lease? SUGGESTED ANSWER there remains only in the juridical relation two
(a) Yes, Simon can compel Shannon to reduce
persons: the lessor and the assignee (who is
the agreement into writing. While an agreement for converted into a lessee)
the leasing of real property for a longer period
than one year is covered by the Statute of Frauds, General Rule: A lease cannot be assigned to a
thus, requiring a written memorandum of its third person without the lessor’s consent.
essential provisions under Article 1403, Civil XPN: If there was a stipulation in the lease
Code, the contract was taken out of the operation contract between the lessor and the lessee
of the Statute of Frauds under the Doctrine of that the latter is allowed to assign the lease to
Part Performance. The statute of frauds applies a third person.
only to executory contracts, and not to contracts
that are already executed partially or fully. Under Rationale: Assignment of a lease constitutes
Article 1357 of the Civil Code, the contracting novation.
parties may compel each other to observe the
form of contract required by law if the contract is
valid and enforceable. Right of Lessee to Sublease
General Rule: A lessee may sublease the leased
(b) No, it does not constitute a ground for property in the absence of express prohibition
terminating the lease. In the contract of lease of in the contract of lease.
things, if there is no express prohibition, the Rationale: Lessee is still a party to the contract
lessee may sublet the thing leased (Article 1650, of lease.
Civil Code).

X. CONTRACT OF LEASE
Note: Prohibition of the lessee to sublease the
In this contract, there appears to be no property will only be in effect if it is expressly
prohibition regarding subleasing; thus, there is
no violation of the contract which can be used as stated in the contract of lease. If it is implied,
a ground for terminating the contract. The act of lessee is still allowed to sublease the property.
a lessee in subleasing the thing without notifying
the lessor leased is not one of the causes for
which the lessor may terminate the lease and SUBLEASE VS. ASSIGNMENT
judicially eject the lessee (Article 1673, Civil Code).
SUBLEASE ASSIGNMENT
the lessee retains BARanQUESTION
interest(2001)
in the lease; he remains a party to the the lessee makes an
On January 1, 1980, Nestor leased the fishpond of
contract
Mario for a period of three years at a monthly absolute transfer of
rental of P1,000.00, with an option to purchase his interest as lessee;
the same during the period of the lease for the thus, he dissociates
price of P500,000.00. After the expiration of the the sublessee does himself from the
three-year period, Mario allowed Nestor to not have any direct original contract of
remain in the leased premises at the same rental action against the lease
rate. On June 15, 1983, Nestor tendered the lessor the assignee has a
amount of P500,000.00 to Mario and demanded can be done even direct action against
that the latter execute a deed of absolute sale of without the the lessor
the fishpond in his favor. Mario refused, on the permission of the
ground that Nestor no longer had an option to lessor (unless there be cannot be done unless
buy the fishpond. Nestor filed an action for an express the lessor consents
specific performance. Will the action prosper prohibition)
or not? Why? Liability of sublessee toward lessor
Although the sublessee is not the party to the
SUGGESTED ANSWER contract of lease, the sublessee is still directly
liable to the lessor for acts appertaining to the
No, the action will not prosper. use and preservation of the property.

The implied renewal of the lease on a month-to- Direct action by the lessor
month basis did not have the effect of extending
the life of the option to purchase which expired The lessor may bring an action directly against
at the end of the original lease period. The lessor the sublessee if he does not use and preserve
is correct in refusing to sell on the ground that the thing leased in accordance with the
the option had expired since implied new lease agreement between the lessor and the lessee
only renewed the obligation of the lessor to allow or with the nature of the property.
the lessee the use and possession of the property
and not the other terms of the original contract
of lease extraneous thereto.
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.

X. CONTRACT OF LEASE

155
 XI. AGENCY
A. Nature, Form, and Kinds (Civil Code, arts. 1868-1883)
B. Obligations of Agent and Principal (Civil Code, arts. 1864-1G18)
C. Extinguishment (Civil Code, arts. 1G1G-1G32)
FORM OF APPOINTMENT OF AN AGENT
A. NATURE, FORM, AND KINDS
General Rule: There are no formal requirements
(CIVIL CODE, ARTS. 1868-1883) governing the appointment of an agent
Contract of Agency XPN: when the law requires a specific form.
Example: when sale of land or any interest
By the contract of agency, one person binds therein is through an agent, the authority of the
himself to render some service or to do something latter must be in writing; otherwise, the sale shall
in representation or on behalf of another, with the be void. (Art. 1874)
consent or authority of the latter (NCC, Art 1868) • If principal specially informs another that a
third person is his agent - Third person is a
Note: The essence of agency is representation. duly authorized agent with respect to the
For a Contract of Agency to exist, it is essential person who received the special information
that the principal consents that the agent shall act • If principal states by public advertisement that
on the former’s behalf and the agent consents so he has given a power of attorney to a third
as to act. person - Third person is a duly authorized
agent with regard to any person.
Characteristics of Agency Note: Revocation requires same manner - The
1. Bilateral – if it is for compensation, it gives power shall continue to be in full force until the
rise to reciprocal rights and obligations. notice is rescinded in the same manner in which
2. Unilateral – if gratuitous, it creates obligations it was given. (Art. 1873)
for only one of the parties.
3. Nominate – it has its own name NATURE OF THE RELATIONSHIP BETWEEN PRINCIPAL
4. Consensual – it is perfected by mere consent. AND AGENT
5. Principal – it can stand by itself without need It is fiduciary in nature that is based on trust and
of another contract confidence. The agent is estopped from asserting
6. Preparatory and progressive – it is entered into or acquiring an interest adverse to that of his
means for other purposes that deal with the principal
public in particular manner for the agent to
enter into juridical acts with the public in the QUALIFICATION OF A PRINCIPAL
name of the principal. (Villanueva and
Villanueva vs Tiansay, 2015) • Natural or juridical persons; and
7. Generally onerous • He must have capacity to act
8. Representative relation – the agent acts for
and on behalf of the principal on the matters Note: if a person is capacitated to act for himself
within the scope of his authority and said acts or his own right, he can act through an agent.
have the same legal effect as if they were
personally executed by the principal. JOINT PRINCIPALS
9. Fiduciary and revocable – for the creation of
legal relationship of representation by the Two or more persons appoint an agent for a
agent on behalf of the principal, the powers common transaction or undertaking. The liability
of the former are essentially derived from the of the joint principals is solidary.
latter. Neither the principal nor the agent can
be legally made to remain in the relationship Requisites for solidary liability of joint principals
when they choose to have it remained a. There are two or more principals;
Presumption b. They have all concurred in the appointment
of the same agent;
Agency is never presumed. The relation between c. Agent is appointed for a common
principal and agent must exist as a fact with the transaction or undertaking.
burden of proof resting upon the person alleging
the agency. RESPONSIBILITY OF TWO OR MORE AGENTS
General Rule: The agents are jointly liable.
PARTIES TO A CONTRACT OF AGENCY XPN: Solidarity has been expressly stipulated,
1. Principal (Mandante) - One whom the agent wherein each of the agents becomes solidarily
represents and from whom he derives his liable for the non- fulfillment of the agency and
authority; he is the person represented. negligence of his fellow agent.
2. Agent (Mandatario) - One who acts for and
represents another; he is the person acting in RULE ON THE EXECUTION OF AGENCY
a representative capacity General Rule: the agent is bound by his
ACTS THAT A PRINCIPAL MAY DELEGATE TO HIS AGENT acceptance to carry out the agency, in
accordance with the instruction of the principal
General Rule: what a man may do in person, he and is liable for damages which, through his non-
may do through another. performance, the principal may suffer
XPN: XPN: if its execution could manifestly result in
• Personal acts; loss or damage to the principal.
• Acts not allowed by law ACCEPTANCE OF APPOINTMENT
• Not allowed by stipulations No formalities like in appointment - There are no
formal requirements governing the acceptance of
appointment by an agent.

156
ARTICLE 1870. Acceptance by the agent may also
be express, or implied from his acts which carry 8. To lease any real property to another person
out the agency, or from his silence or inaction for more than one year;
according to the circumstances. 9. To bind the principal to render some service
without compensation;
10. To bind the principal in a contract of partnership;
Other examples of implied acceptance:
11. To obligate the principal as a guarantor or surety;
1. Between persons who are present if the
principal delivers his power of attorney to the 12. To create or convey real rights over
agent and the latter receives it without any immovable property;
objection. (Art. 1871) 13. To accept or repudiate an inheritance;
2. Between persons who are absent - 14. To ratify or recognize obligations contracted
a. When the principal transmits his power of before the agency;
attorney to the agent, who receives it 15. Any other act of strict dominion. [Article 1878]
without any objection;
b. When the principal entrusts to him by LIMITATIONS ON SPA
letter or telegram a power of attorney 1. A special power to sell excludes the power to
with respect to the business in which he is
habitually engaged as an agent, and he mortgage.
did not reply to the letter or telegram. 2. A special power to mortgage does not
(Art. 1872) include the power to sell.
3. A special power to compromise does not
authorize submission to arbitration.
CLASSIFICATION OF AGENCY AS TO AUTHORITY
CONFERRED LIMITATIONS ON AGENT’S ACTION
Agency Couched In General or Specific Terms 1. He must act within the scope of his authority
Couched in General Terms 2. He may do such acts as may be conducive to
• Comprises only acts of administration, even if the accomplishment of the purpose of the
the principal should state that he withholds no agency (Art. 1881)
power or that the agent may execute such 3. His authority shall not be considered exceeded
acts as he may consider appropriate, or even should it have been performed in a manner
though the agency should authorize a general more advantageous to the principal than that
and unlimited management. [Article 1877] specified by him. (Art.1882)
• Examples of Acts of Administration 4. Agent acting in his own name:
 To lease real property to another person • the principal has no right of action against
for one year or less, provided the lease is the persons with whom the agent has
not registered. [Article 1878, No. 8 by contracted; neither have such persons
implication] against the principal.
 To make customary gifts for charity or to • the agent is the one directly bound in favor
employees in the business managed by the of the person with whom he has
agent. [Article 1878, No. 6] contracted, as if the transaction were his
 To borrow money if it is urgent and own.
indispensable for the preservation of the Except: when the contract involves things
things under administration. [Article 1878, belonging to the principal.

XI. AGENCY
No. 7] This is without prejudice to the actions
between the principal and agent. (Art.
1883)
Couched in Specific Terms
• ‘Special Power of Attorney (SPA)’ INSTANCES WHEN THE AGENT MAY INCUR PERSONAL
• This refers to a clear mandate (express or LIABILITY
implied) specifically authorizing the
performance of the act, and must therefore be 1. Agent exceeds his authority
distinguished from an agency couched in 2. Acts of the agent prevented the performance
general terms. on the part of the principal; and
3. When a person acts as agent without
authority or without a principal; and
Cases Wherein Special Power Of Attorney Is 4. A person who acts as an agent of an
Necessary: incapacitated principal unless the third
1. To make such payments as are not person was aware of the incapacity at the
time of the making of the contract.
usually
considered as acts of administration; AGENCY BY NECESSITY
2. To effect novations which put an end to • Agency cannot be created by necessity.
obligations already in existence at the time • What is created instead is additional
the agency was constituted; authority in an agent appointed and authorized
3. To compromise, to submit questions to before the emergency arose. By virtue of the
arbitration, to renounce the right to appeal existence of an emergency, the authority of
from a judgment, to waive objections to the an agent is correspondingly enlarged in order
venue of an action or to abandon a to cope with the exigencies or the necessities
prescription already acquired; of the moment.
4. To waive any obligation gratuitously;
5. To enter into any contract by which the REQUISITES FOR THE ADDITIONAL AUTHORITY
ownership of an immovable is transmitted or OF AGENT IN CASES OF NECESSITY
acquired either gratuitously or for a valuable
consideration; 1. Real existence of emergency;
6. To make gifts, except customary ones for 2. Inability of the agent to communicate with
charity or those made to employees in the the principal;
business managed by the agent; 3. Exercise of additional authority is for the principal’s
7. To loan or borrow money, unless the latter protection; and
act be urgent and indispensable for the
preservation of the things which are under 4. Adoption of fairly reasonable means, premises duly
administration; considered.

157
RULE REGARDING DOUBLE AGENCY 8. Duty to render an accounting (stipulation on
General Rule: it is disapproved by law for being
against public policy and sound morality. exemption is void)
XPN: where the agent acted with full knowledge • Every agent is bound to render an account of
and consent of the principals. his transactions and to deliver to the principal
whatever he may have received by virtue of
the agency, even though it may not be owing
RIGHT OF RETENTION BY LEGAL PLEDGE to the principal
Instances when the agent may retain in pledge • Every stipulation exempting the agent from
the object 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 of the G. Be responsible in certain cases for the acts of
agency
2. If the principal fails to indemnify the agent for the substitute appointed by him.
all damages which the execution of the • Agent may appoint a substitute, UNLESS prohibited
agency may have caused the latter, without • Agent is responsible for acts of substitute in case:
fault or negligence on his part
1) When he was not given the power to appoint one
2) When he was given such power, but
without designating the person, and the
B. OBLIGATIONS OF AGENT AND PRINCIPAL person appointed was notoriously
(CIVILOFCODE,
OBLIGATIONS ARTS. 1864-1G18)
AN AGENT incompetent or insolvent.
• All acts of the substitute appointed against the
1. Carry out agency. prohibition of the principal shall be void (Art.
• If appointment was accepted, he should 1892)
carry out the agency • In the cases mentioned in Nos. 1 and 2, the
• He is liable for the damages which, through principal may furthermore bring an action
his non- performance, the principal may against the substitute with respect to the
suffer (Art. 1883) obligations which the latter has contracted
• The agent is responsible not only for fraud, under the substitution. (Art. 1893)
but also for negligence, which shall be
judged with more or less rigor by the courts, 10. Joint liability of 2 or more agents UNLESS
according to whether the agency was or solidarity is stipulated
was not for a compensation. (Art. 1909)
• The responsibility of two or more agents, even
though they have been appointed
2. NOT to carry out the agency simultaneously, is not solidary, if solidarity has
He should not carry out the agency if its not been expressly stipulated. (Art. 1894)
execution would manifestly result in loss or • If solidarity has been agreed upon, each of the
damage to the principal (Art. 1888) agents is responsible for the non-fulfillment of
the agency, and for the fault or negligence of
his fellow agents, except when fellow agents
3. Act in accordance with the instructions of the acted beyond the scope of their authority (Art.
principal. 1895)

XI. AGENCY
• Follow the principal’s instructions
• If there is none, do all that a good father of 11. Duty to pay interest on sums personally used
a family would do, as required by the nature The agent owes interest on the sums he has
of the business (Art. 1887) applied to his own use from the day on which he
did so, and on those which he still owes after the
extinguishment of the agency. (Art. 1896)
4. Finish the business even after death of the
principal 12. Liability on Contracts:
He must also finish the business already begun • The agent is not personally liable to the party
on the death of the principal, should delay with whom he contracts UNLESS:
entail danger (Art. 1884)
1) He expressly binds himself; or
2) He exceeds the limits of the authority
5. If appointment is declined, he should take care without giving such party sufficient notice
of goods with ordinary diligence of his powers (Art. 1897)
• He is bound to observe the diligence of a • The principal cannot set up the ignorance of
good father of a family in the custody and the agent as to circumstances whereof he
preservation of the goods forwarded to him himself was, or ought to have been, aware
by the owner until the latter should appoint (Art. 1899)
an agent. • If the agent contracts in the name of the
• The owner shall as soon as practicable principal, exceeding the scope of his authority,
either appoint an agent or take charge of and the principal does not ratify the contract, it
the goods. (Art. 1885) shall be void if the party with whom the agent
contracted is aware of the limits of the powers
granted by the principal. In this case,
6. If allowed to borrow however, the agent is liable if he undertook to
secure the principal’s ratification. (Art. 1898)
Agent may become the creditor at current
interest rate 13. Third person may require proof of authority
• A third person with whom the agent wishes to
7. If allowed to lend at interest contract on behalf of the principal may require
Agent may not become the debtor unless the presentation of the power of attorney, or
principal consents (Art 1890) the instructions as regards the agency.

158
• Private or secret orders and instructions of the
principal do not prejudice third persons who Exceptions to the theory of imputed knowledge
have relied upon the power of attorney or 1. The agent’s interests are adverse to those of
instructions shown them. (Art. 1902) the principal.
• So far as third persons are concerned, an act 2. The agent’s duty is not to disclose the
is deemed to have been performed within the information, as where he is informed by way of
scope of the agent's authority, if such act is confidential information.
within the terms of the power of attorney, as 3. The person claiming the benefit of the rule
colludes with the agent to defraud the principal.
written, even if the agent has in fact exceeded
the limits of his authority according to an
understanding between the principal and the Obligations of a person who declines an agency
agent. (Art. 1900) A person who declines an agency is still bound to
• A third person cannot set up the fact that the observe the diligence of a good father of the family
agent has exceeded his powers, if the in the custody and preservation of goods forwarded
principal has ratified, or has signified his to him by the owner. This is based on equity.
willingness to ratify the agent's acts. (Art.
1901) Breach of loyalty of the agent
• In case of breach of loyalty, the agent is NOT
14. Responsible for the goods as described in the entitled to commission.
consignment • The forfeiture of the commission will take place
regardless of whether the principal suffers any
The commission agent shall be responsible for injury by reason of such breach of loyalty. It does
the goods received by him in the terms and not even matter if the agency is for gratuitous
conditions and as described in the consignment, one, or that the principal obtained better results,
unless upon receiving them he should make a or that usage and customs allow a receipt of such
written statement of the damage and a bonus.
deterioration suffered by the same. (Art. 1903)
Agency by Estoppel
15. To distinguish/ designate goods with countermarks It is when one leads another to believe that certain
The commission agent who handles goods of the person is his agent, when as a matter of fact such
same kind and mark, which belong to different is not true, and the latter acts on such
owners, shall misrepresentation, the former cannot disclaim
distinguish them by countermarks, and liability, for he has created an agency by estoppel.
designate the merchandise respectively
belonging to each principal. (Art. 1904) Rules regarding estoppel in agency
1. Estoppel of agent - one professing to act as
16. Not allowed to sell on credit agent for another may be estopped to deny his
The commission agent cannot, without the agency both as against his asserted principal
express or implied consent of the principal, sell and the third persons interested in the
transaction in which he engaged.
on credit. Should he do so, the principal may
demand from him payment in cash, but the 2. Estoppel of principal
commission agent shall be entitled to any a. As to agent

XI. AGENCY
interest or benefit, which may result from such b. As to sub agent
sale. (Art. 1905) c. As to third person
17. Duty to notify principal if allowed to sell on Doctrine of Apparent Authority
credit Should the commission agent, with
The principal is liable only as to third persons who
authority of the principal, sell on credit, he shall have been led reasonably to believe by the conduct
so inform the principal, of the principal that such actual authority exists,
with a statement of the names of the buyers. although none has been given.
Should he fail to do so, the sale shall be deemed
to have been made for cash insofar as the OBLIGATIONS OF A PRINCIPAL
principal is concerned. (Art. 1906)
1. Comply with obligations contracted by the agent
• The principal must comply with all the
18. Duty to timely collect credits obligations which the agent may have
The commission agent who does not collect the contracted within the scope of his authority.
credits of his principal at the time when they • As for any obligation wherein the agent has
become due and demandable shall be liable for exceeded his power, the principal is not
damages, unless he proves that he exercised bound, EXCEPT:
due diligence for that purpose. (Art. 1907) 1) When he ratifies it expressly or tacitly.
(Art. 1910)
2) He is solidarily liable with the agent if he
1G. With Guarantee Commission bear risk of allowed him to act as though he had full
collection powers (Art. 1911)
Should the commission agent receive on a sale, 2. Duty to advance funds
in addition to the ordinary commission, another • He must advance to the agent, should the
called a guarantee commission, he shall bear the latter so request, the sums necessary for the
risk of collection and shall pay the principal the execution of the agency. (Art. 1912)
proceeds of the sale on the same terms agreed 3. Legal Pledge (Agent)
upon with the purchaser. (Art. 1907) • The agent may retain in pledge the things
which are the object of the agency until the
Theory of Imputed Knowledge principal effects the reimbursement and pays
the indemnity for funds advanced and
The importance of the duty to give information of damages caused by execution of agency.
material facts becomes readily apparent when it (Art. 1914)
is borne in mind that knowledge of the agent is
imputed to the principal even though the agent
never communicated such knowledge to the
principal.

15G
4. Reimburse the agent for all advances made by REVOCATION OF AGENCY
him even if the business or undertaking was not General Rule: agency is revocable at will by the
successful provided the agent is free from fault. principal.
• General Rule: principal is liable for the XPN: an agency is irrevocable.
expenses incurred by the agents.
• XPN: 1. If a bilateral contract depends upon it.
2. If it is the means of fulfilling an obligation
1) If the agent acted in contravention of already contracted.
the principal’s instructions, unless 3. If partner is appointed manager and his
principal should wish to avail himself of removal from the management is
the benefits derived from the contract. unjustifiable.
2) When the expenses were due to the fault 4. If it has been constituted in the common
of the agent.
3) When the agent incurred them with interest of the principal and the agent, or in
knowledge that an unfavorable result the interest of a third person who has
would ensue, if the principal was not accepted the stipulation in his favor.
aware thereof; or 5. Stipulation pour atrui.
4) When it was stipulated that the XPN to the XPN: When the agent acts to defraud the
expenses would be borne by the agent,
or that the latter would be allowed only principal.
a certain sum.
KINDS OF REVOCATION
Two persons deal separately with Principal and Revocation may either be:
Agent- Earlier is preferred a. express or
• When two persons contract with regard to the b. implied.
same thing, one of them with the agent and
the other with the principal, and the two
contracts are incompatible with each other, A contract of agency is impliedly revoked when
that of prior date shall be preferred, without the principal:
prejudice to the provisions of article 1544 on
Double Sale. (An. 1916) 1. Appoints a new agent for the same business
• if the agent has acted in good faith, the or transaction.
principal shall be liable in damages to the 2. Directly manages the business entrusted to
third person whose contract must be rejected. the agent
If the agent acted in bad faith, he alone shall 3. After granting the general power of attorney
be responsible. (Art. 1917) to an agent, which results in the revocation
of the former as regards the special matter
involved in the latter.
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 EFFECT OF DIRECT MANAGEMENT BY THE PRINCIPAL
obligation of the principal, the latter is not bound General Rule: the agency is revoked for there
by the illicit acts of the agent, even if it is done in would no longer be any basis for the
connection with the agency. representation previously conferred. But the
XPN: principal must act in good faith and not merely to
1. Where the tort was committed by the agent avoid his obligation to the agent.

XI. AGENCY
because of defective instructions from the XPN: the only desire of the principal is for him
principal or due to lack of necessary vigilance and the agent to manage the business together.
or supervision on his part; or
2. When the tort consists in the performance of REVOCATION OF AGENCY WHEN THE AGENT IS
an act which is within the powers of an agent
but becomes criminal only because of the APPOINTED BY TWO OR MORE PRINCIPALS
manner in which the agent has performed it; When two or more principals have granted a
the principal is civilly liable to 3rd persons power of attorney for a common transaction, any
who acted in good faith. one of them may revoke the same without the
consent of the others.
C. EXTINGUISHMENT NECESSITY OF NOTICE OF REVOCATION
(CIVIL CODE, ARTS. 1G1G-1G32)
MODES OF EXTINGUISHMENT 1. As to the agent – express notice is not always
necessary; sufficient notice if the party to be
1. By agreement to extinguish notified actually knows, or has reason to
2. By its revocation know, a fact indicating that his authority has
3. By the withdrawal of the agent; been terminated/suspended; revocation
4. By the death, civil interdiction, insanity or without notice to the agent will not render
insolvency of the principal or of the agent. invalid an act done in pursuance of the
5. By the dissolution of the firm or corporation authority.
which entrusted or accepted the agency; 2. As to 3rd persons – express notice is necessary.
6. By the accomplishment of the object or a. As to former customers – actual notice
purpose of the agency. must be given to them because they
7. By the expiration of the period for which the always assume the continuance of the
agency was constituted. agency relationship
b. As to other persons- notice by publication
Note: the list is not exclusive: may also be is enough.
extinguished by the modes of extinguishment of
obligations in general whenever they are WHEN THE AGENT CAN WITHDRAW FROM THE
applicable, like loss of the thing and novation.
AGENCY
The agent may renounce or withdraw from the
agency at any time, without the consent of the
principal, even in violation of the latter’s
contractual rights; subject to liability for breach
of contract or for tort.

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, executed a Special Power of Attorney
reason of the withdrawal by the agent, the (SPA) appointing his nephew, John Paul, as his
latter must indemnify the principal attorney-in-fact. John Paul was given the power to
therefor, unless the agent should base his deal with treasure-hunting activities on Joe
withdrawal upon the impossibility of Miguel's land and to file charges against those
continuing the performance of the agency who may enter it without the latter's authority.
without grave detriment to himself. Joe Miguel agreed to give John Paul forty percent
2. The agent must continue to act until the (40%) of the treasure that may be found on the
principal has had reasonable opportunity to land. Thereafter, John Paul filed a case for
take the necessary steps to meet the damages and injunction against Lilo for illegally
situation even if he should withdraw from entering Joe Miguel's land. Subsequently, he
the agency. hired the legal services of Atty. Audrey agreeing
to give the latter thirty percent (30%) of Joe
Miguel's share in whatever treasure that may be
KINDS OF WITHDRAWAL BY THE AGENT found in the land. Dissatisfied however with the
1. Without just cause – the law imposes upon strategies implemented by John Paul, Joe
the agent the duty to give due notice to the Miguel unilaterally revoked the SPA
principal and to indemnify the principal granted to John Paul. Is the revocation proper?
should the latter suffer damage by reason
of such withdrawal.
2. With just cause – if the agent withdraws SUGGESTED ANSWER
from the agency for a valid reason as when No, the revocation was not proper. As a rule, a
the withdrawal is based on the impossibility contract of agency may be revoked by the
of continuing with the agency without grave principal at will. However, an agency ceases to
detriment to himself or is due to a fortuitous be revocable at will if it is coupled with an
event, the agent cannot be held liable. interest or if it is a means of fulfilling an
obligation already contracted (Art. 1927). In the
case at bar, the agency may be deemed an
DEATH OF PRINCIPAL TO THE CONTRACT OF agency coupled with an interest not only because
AGENCY of the fact that John Paul expects to receive 40%
General Rule: Agency is extinguished. of whatever treasure may be found but also
because he also contracted the services of a
Exceptions: lawyer pursuant to his mandate under the
• The agency shall remain in full force and effect contract of agency, and he therefore stands to be
even after the death of the principal, if it has liable to the lawyer whose services he has
been constituted in the common interest of the contracted. (Sevilla v.
BAR QUESTION (2013)
latter and of the agent, or in the interest of a Tourist World Service, G.R. No. L-41182-3 April 16,
third person who has accepted the stipulation Jo-Ann
1988) asked her close friend, Aissa, to buy
in his favor. (Art 1930) some groceries for her in the supermarket.
• Anything done by the agent, without Was there a nominate contract entered into
knowledge of the death of the principal or of between Jo-Ann and

XI. AGENCY
any other cause which extinguishes the Aissa? In the affirmative, what was it? Explain.
agency, is valid and shall be fully effective with SUGGESTED ANSWER
respect to third persons who may have Yes, there was a nominate contract. On the
contracted with him in good faith. (Art 1931) assumption that Aissa accepted the request of
her close friend Jo- Ann to buy some groceries
LOPEZ V. HON. COURT OF APPEALS for her in the supermarket, what they entered
into was a nominate contract of Agency.
G.R. NO. 163G5G, AUGUST 1, 2018
J. Bersamin Article 1868 of the New Civil Code provides
One of the modes of extinguishing a contract of that by the contract of agency a person binds
agency is by the death of either the principal or himself to render some service or to do
the agent. In Rallos v. Felix Go Chan C Sons something in representation or on behalf of
Realty Corporation, the Court declared that another, with the consent or authority of the
because death of the principal extinguished the latter.
agency, it should follow a fortiori that any act of
the agent after the death of his principal should
be held void ab initio unless the act fell under the BAR QUESTION (2004)
exceptions established under Article 1930 and As an agent, AL was given a guarantee
Article 1931 of the Civil Code. The exceptions commission, in addition to his regular
should be strictly construed. In other words, the commission, after he sold 20 units of
general rule is that the death of the principal or, by refrigerators to a customer, HT Hotel. The
analogy, the agent extinguishes the contract of customer, however, failed to pay for the units
agency, unless any of the circumstances provided sold. AL’s principal, DRBI, demanded from AL
for under Article 1930 or Article 1931 obtains; in payment for the customer’s accountability. AL
which case, notwithstanding the death of either objected, on the ground that his job was only to
principal or agent, the contract of agency sell and not to collect payment for units
continues to exist. bought by the customer. Is AL’s objection
valid? Can DRBI collect from him or not? Reason.
DEATH OF AGENT SUGGESTED ANSWER
If the agents dies, his heirs must notify the No, AL’s objection is not valid and DRBI can
principal thereof, and in the meantime adopt collect from AL. Since AL accepted a guarantee
such measure as the circumstances may commission, in addition to his regular
demand in interest of the latter. commission, he agreed to bear the risk of
collection and to pay the principal the
proceeds of the sale on the same terms
agreed upon 161
with the purchaser (Article 1907, Civil Code)
 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

XI. AGENCY
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. 1G33-1G61)
B. Deposit (Civil Code, arts. 1G62-200G)
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 COMMODATUM

Refer to all transactions involving the purchase or
loan of goods, services, or money in the present Kinds of Commodatum:
with a promise to pay or deliver in the future. 1. Ordinary Commodatum - Use by the bailee
of the thing is for a certain period of time
(Art. 1933)
A. MUTUUM AND 2. Precarium - One whereby the bailor may
COMMODATUM (CIVIL CODE, demand the thing loaned at will;
Mutuum and Commodatum It exists in cases where:
ARTS.
Article 1G33. By1G33-1G61)
the contract of loan, one of the a. neither the duration of the contract nor
parties delivers to another, either something not the use to which the thing loaned
consumable so that the latter may use the should be devoted has been stipulated.
same for a certain time and return it, in which b. if the use of the thing is merely tolerated by
case the contract is called a commodatum; or
money or other consumable thing, upon the the owner. (Art. 1947)
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. NATURE OF COMMODATUM
• Commodatum is essentially gratuitous. 1. Cause
• Simple loan may be gratuitous or with a • essentially gratuitous (otherwise, if there
stipulation to pay interest. Is compensation, it might be lease)
• In commodatum the bailor retains the • commodatum is similar to donation in
ownership of the thing loaned, while in that it confers a benefit to the recipient;
simple loan, ownership passes to the the presumption is that the bailor has
borrower. loaned the thing for having no need
therefore (Art. 1946)
Characteristics of the Contract of Loan 2. Purpose
1. Real contract – delivery is essential for • temporary use of the thing loaned but not
perfection of the loan BUT a promise to lend, its fruits, unless stipulated or is incidental
being consensual, is binding upon the parties (otherwise, if the bailee is not entitled to
2. Unilateral contract – once the subject matter the use of the thing, it might be deposit)
has 3. Subject matter
been delivered, only the borrower has the • generally non-consumable goods but if
the consumable goods are noT for
obligation consumption, such may be the subject of
the commodatum, as when merely for
Considerations of the Contract of Loan exhibition (Art. 1936)
• As to borrower – the acquisition of the thing 4. Bailor need not be the owner of the thing loaned
• As to lender – the right to demand its return or (Art 1G38)
its equivalent • it is sufficient that he has a possessory interest
• a mere lessee or usufructuary may lend
KINDS OF LOANS but the borrower or bailee himself may
1. COMMODATUM - Where the bailor (lender) not lend nor lease the thing loaned to him
delivers to the bailee (borrower) a non- to a third person (Art. 1932[2])
consumable thing so that the latter may use 5. Purely personal
it for a certain time and return the identical a. Death of either party terminates the
thing contract UNLESS there is stipulation to
2. MUTUUM OR SIMPLE LOAN - Where the lender the contrary
delivers to the borrower money or other b. Generally, bailee can neither lend nor
consumable thing upon the condition that the lease the object to a 3rd person in the
latter will pay the same amount of the same
kind and quality absence of some agreement to that
effect
c. Use of the thing loaned may extend to
Article 1G34. An accepted promise to deliver the bailee’s household (who are not
something by way of commodatum or simple considered 3rd persons) except:
loan is binding upon parties, but the
commodatum or simple loan itself shall not be 1. when there is a contrary stipulation
perfected until the delivery of the object of the 2. nature of the thing forbids such use
contract. 6. Enjoyment of fruits
• Mutuum and Commodatum are REAL
CONTRACTS which require delivery for • a stipulation to make use of fruits is valid,
perfection. but it is never presumed. The enjoyment
• Delivery is necessary in view of the purpose of of the fruits must only be incidental to
the contract which is to TRANSFER either the the use of the thing itself, for if it is the
use or ownership of the thing loaned. main cause, the contract may be one of
usufruct.

163
OBLIGATIONS OF THE BAILEE (Arts 1G41-1G45) OBLIGATIONS OF THE BAILOR
1. To pay for the Ordinary expenses for the 1. Primary obligation of the bailor:
use and preservation of the thing loaned (Art.
1941) General Rule: To allow the bailee the use of the
thing loaned for the duration of the period
2. To pay for all Other expenses stipulated or until the accomplishment of the
XPN: Other than those referred to in Art. purpose for w/c the commodatum was constituted
1941 and 1949 (refund of extraordinary XPN: the bailor may demand the return or its
expenses in full, or in half (if incurred while temporary use upon:
bailee in actual use) (Art. 1950) Reason: a. bailor has an URGENT NEED FOR THE THING
Bailee makes use of the thing. Expenses for (Art. 1946) – the contract is suspended
ostentation are to borne by the bailee Reason: the right of the bailor is based on the fact that
because they are not necessary for the commodatum is essentially gratuitous
preservation of the thing. a. bailee commits AN ACT OF INGRATITUDE (Art. 1948)
For Extraordinary expenses for preservation, • if the bailee should commit an offense against
bailor must reimburse the bailee, since he is the person, the honor or the property of the
the one who profits from said expenses. bailor, or of the wife or children under his
3. To take good Care of the thing with the parental authority
diligence of a • if the bailee imputes to the bailor any criminal
offense, or any act involving moral turpitude,
good father of a family (Art. 1163) even though he should prove it, unless the crime
4. To be liable for Loss, except due to a or the act has been committed against the
fortuitous event UNLESS under exceptional bailee himself, his
circumstances (Art 1942) wife, or children under his authority; and
5. The bailee has NO RIGHT to Retain the thing • if the bailee unduly refuses the bailor support
loaned as security for claims he has against when the bailee is legally or morally bound to
the bailor, even though they may be by give support to the bailor
reason of extraordinary expenses (Art. 1944) Reason: the person who commits any of the acts of
Reasons: ingratitude makes himself unworthy of the trust
a. Ownership remains in bailor – the bailee reposed upon him by the bailor.
acquires only the use of thing, the
ownership of which remains w/ the bailor; 2. May demand the thing at will when the contract is
b. Only temporary use given to bailee – the precarium
bailee would be violating the bailor’s trust in
him to return the thing as soon as the ‘Precarium’ defined
period stipulated expires or the purpose a kind of commodatum where the bailor may
has been accomplished. demand the thing at will. It has been defined as a
XPN to Right of Retention: Claim for damages contract by which the owner of a thing, at the
suffered because the bailor did not advise request of another person, gives the latter the thing
bailee of the flaws known to him (Arts. 1951; for use as long as the owner shall please.
1944)
6. A bailee does not answer for the Deterioration 3. To refund the extraordinary expenses (Art. 1G4G)
of the thing loaned due only to the use General Rule on reimbursement: Notice should be
thereof and without his fault; given by the bailee to the bailor regarding such
7. Liability when there are 2 or more bailees: extraordinary
The presumption is that they are solidarily
liable (Art. 1945) expenses
Reason for the presumption: to safeguard Rationale: notice is required because it is possible
effectively the right of the bailor. The law that the bailor may not want to incur the
presumes that the bailor takes into account extraordinary expense at all.
XPN: where the extraordinary expenses are so

XII. CREDIT TRANSACTIONS

the personal integrity and responsibility of all urgent that the reply to the notification cannot be
the bailees and that, therefore, he would not awaited w/o danger.
have constituted the commodatum if there
were only one bailee.
4. If the extraordinary expenses arise from the actual
BAILEE’S LIABILITY FOR LOSS EVEN DUE use of the thing and even though bailee acted w/o
TO FORTUITOUS EVENT fault, the expenses will be borne equally by both the
General Rule: the bailee is not liable for loss or bailor and the bailee (50-50) (Art. 1G4G)
damage due to a fortuitous event (Art. 1174)
Reasons:
Rationale: the bailor retains the ownership of the
a. the bailee pays ½ because of the benefit derived from
thing
the use of the thing loaned to him;
loaned. b. the bailor pays the other ½ because he is the
XPN: (Art. 1942 – punishes the bailee for his owner and the thing will be returned to him
improper acts although they may not be the
proximate cause of the loss)
a. Bad faith – if the bailee devotes the thing to XPN: Stipulation to the contrary that provide for a
any purpose different from that for which it different apportionment of such expenses or that
has been loaned they shall be borne by the bailee or bailor alone
b. Has been delivered with Appraisal - the thing
loaned has been delivered with appraisal of 5. The depreciation caused by the reasonable and
its value, UNLESS there is a stipulation natural use of the thing is borne by the bailor
exempting the bailee from responsibility in (Art.1G43) Reason: The parties to the contract
case of a fortuitous event
c. Ingratitude - being able to save the thing know that the thing
borrowed or his own thing, he chose to save borrowed cannot be used without deterioration due to
the latter ordinary wear and tear.
d. Lends the subject matter to a 3rd person – he XPN:
lends or leases the thing to a third person a. when there is a stipulation to the contrary;\
who is not a member of his household
e. Delay - he keeps it longer than the period b. when the bailee is guilty of fault or negligence;
stipulated or after the accomplishment of the c. if he devotes the thing to any purpose different from
use for which the commodatum has been that for which has been loaned.
constituted.

164
6. To pay damages for known hidden flaws (Art. 1G51) II. When obligation breached is Non-Monetary
Requisites: (the following must concur) Obligation
a. there is a flaw or defect in the thing loaned a. If already liquidated, rate of interest shall be
b. the flaw or defect is hidden 6% per annum, demandable from date of
c. the bailor is aware thereof judicial or extra- judicial demand (Art. 1169,
Civil Code)
d. he does not advise the bailee of the same b. If unliquidated, no interest
e. the bailee suffers damages by reason of the XPN: When later on established with certainty.
flaw or defect Interest shall still be 6% per annum demandable
XPN: when the defect is not known to the bailor, from the date of judgment because on such date,
he is not liable because commodatum is it is already deemed that the amount of damages
gratuitous. is already ascertained.
7. The bailor has no right of abandonment for III. Compounded Interest
expenses and damages (Art. 1G52) • This is applicable to both monetary and non-
Reason: The expense and/or damages may monetary obligations
exceed the • 6% per annum computed against award of
damages (interest) granted by the court. To
value of the thing loaned. be computed from the date when the court’s
decision becomes final and executory until the
MUTUUM award is fully satisfied by the losing party.
Contract whereby one of the parties delivers to
another money or other fungible thing w/ the IV.Prospective Application
understanding that the same amount of the same • The 6% per annum rate of legal interest shall
kind and quality shall be paid. (Art. 1933) be applied prospectively;
• Final and executory judgments awarding
NATURE OF MUTUUM damages prior to July 1, 2013 shall apply the
a. bilateral - borrower’s promise to pay is the 12% rate;
consideration for the lender’s obligation to furnish • Final and executory judgments awarding
the loan damages on or after July 1, 2013 shall apply
the 12% rate for unpaid obligations until June
b. no criminal liability upon failure to pay 30, 2013; unpaid obligations with respect to
said judgments on or after July 1, 2013 shall
SUBJECT MATTER still incur the 6% rate.
a. fungible or consumable-depending on the
intent of the parties, that the return of the B. DEPOSIT (CIVIL CODE, ARTS. 1G62-200G)
thing is equivalent only and not the identical
thing Deposit
b. Money • A contract of deposit is constituted from the
c. if the transfer of ownership is on a non- moment a person receives a thing belonging to
fungible thing (irreplaceable), with the another, with the obligation of safely keeping it
obligation of the other to give other thing by and of returning the same. (Art. 1962)
agreement, it is a barter • If the safekeeping of the thing delivered is not
the principal purpose of the contract, there is no
deposit but some other contract.
When is a thing considered consumable?
It is consumable when used in a manner CHARACTERISTICS

XII. CREDIT TRANSACTIONS

appropriate for its purpose or nature, like 1. real - because it is perfected only by the
gasoline, rice, money, fruit, firewood, etc. delivery of the subject matter BUT an
agreement to constitute a deposit is binding
PAYMENT OF LOAN INTEREST and enforceable, since it is merely consensual
General Rule: No interest shall be due unless it 2. unilateral - if gratuitous, because only the
has been expressly stipulated in writing (Art. depositary has the obligation
1956) 3. bilateral - if with compensation, because it gives rise to
XPN: Indemnity for damages – the debtor in delay obligations on the part of both depositary and depositor
is liable to pay legal interest as indemnity for
damages even in the absence of a stipulation for CREATION OF DEPOSIT (Art. 1G64)
the payment of interest. may be constituted judicially or extrajudicially
• Interest as indemnity for damages is payable
only in case of default or non-performance of 1. By virtue of a court order; or
contract (Art. 2209). 2. By law
3. By the will of the parties
Basis for computation for indemnity: It is essential that the depositary is not the owner of the
Eastern Shipping Lines vs. Court of Appeals, as property deposited (Art. 1962)
modified by Nacar vs. Gallery Frames based on
BSP-MB Circular No. 799 dated June 21, 2013 KINDS OF DEPOSIT
which lowered the legal rate of interest from 12% 1. Judicial - when an attachment or seizure of
to 6%. property in litigation is order
2. Extrajudicial (Art. 1967)
Rules on Interest a. voluntary- delivery is made by the will of the
I. When obligation breached is Monetary Obligation, depositor or by two or more persons each of
ex. Loans of forbearance of money: whom believes himself entitled to the thing
deposited;
a. Interest due shall be that stipulated in b. necessary- made in compliance with a legal
writing; Interest due shall earn legal interest obligation, or on the occasion of any
of 6% from date of judicial demand (filing of calamity, or by travelers in hotels and inns
the case) (Arts 1996-2004) or by travelers with
b. If no stipulation in writing, interest shall be common carriers (Arts 1734-1735)
6% per annum to be computed from default
(either failure to pay upon extra-judicial
demand or upon judicial demand whichever
is appropriate and subject to the provisions of
Article 1169 of the Civil Code)

165
DEPOSIT IS GENERALLY GRATUITOUS: (Art. 1G65) Liabilities: Depositary is liable for loss of the
General Rule: A deposit is generally gratuitous. thing deposited when:
XPN: a. He transfers the deposit with a third person
a. when there is a contrary stipulation without authority although there is no
negligence on his part and the third
b. where depositary is engaged in the person;
business of storing goods
c. Property is saved from destruction b. He deposits the thing with a third person
without knowledge of the owner who is manifestly careless or unfit although
authorized, even in the absence of
d. Judicial deposit negligence; or
c. The thing is lost through the negligence of
DEPOSITOR IS THE OWNER OF THE THING his employees whether the latter are
General Rule: The depositor must be the owner of manifestly careless or not.
the thing deposited (not required to prove Exemption from liability: The thing is lost
ownership). without the negligence of the third person with
XPN: It may belong to another person than whom he was allowed to deposit the thing if
the such third person is not “manifestly careless or
unfit.
depositor.
when two or more persons claiming to be
entitled to a thing may deposit the same with a 3. Obligation not to change the way of deposit
third person. In such case, the third person (Art. 1G74)
assumes the obligation to deliver to the one to General Rule: Depositary may not change the
whom it belongs. way of the deposit
Interpleader – the action to compel the
depositors to settle their conflicting claims. Here XPN: If there are circumstances indicating that
one of the depositors is not the owner. the depositor would consent to the change.
This
is a situation wherein the depositary would
SUBJECT MATTER OF DEPOSIT (Art. 1G66) reasonably presume that the depositor would
General Rule: only movable or personal property agree to the change if he knows of the facts of
may be the object of deposit, whether voluntary the situation.
or necessary. Requisites
XPN: In judicial deposit, it may cover both
movable and immovable property. a. The depositary must notify the depositor of
such change and
b. Must wait for the reply of the depositor to
FORM OF CONTRACT OF DEPOSIT: such change.
• A contract of deposit may be entered into XPN: If the delay of the reply would cause danger.
orally or in
writing. (Art. 1969) 4. Obligation to collect on the choses in action
• BUT Delivery of the thing deposited is required deposited (Art. 1G75)
for perfection. (It is a real contract, hence,
delivery is required for perfection.) If the thing deposited should earn interest, the
depositary is under the obligation to:
OBLIGATIONS OF THE DEPOSITARY a. Collect the interest as it becomes due;
1. Two primary obligations (Art. 1G72) b. Take such steps as may be necessary to
preserve its value and the right

XII. CREDIT TRANSACTIONS

a. Safekeeping of the object; corresponding to it.
b. Return of the thing when required – even The depositary is bound to collect the capital,
though a specified term or time for such as well as the interest, when due.
may have been stipulated in the contract.
Degree of Care – same diligence as he would
exercise over his property. Contract of rent of safety deposit boxes (Art.
Reasons: 1G75) A contract for the rent of safety deposit
1. Essential requisite of judicial relation which boxes is not an ordinary contract of lease of
involves the depositor’s confidence in his
good faith and trustworthiness; things , but a special kind of deposit; hence, it
2. The presumption that the depositor took into is not to be strictly governed by the provisions
account the diligence which the depositary is on deposit. The prevailing rule in the
accustomed with respect to his own property.
The depositary cannot excuse himself from US is that the relation between a bank renting
liability in the event of loss by claiming that he out safety deposit boxes and its customer with
exercised the same amount of care toward the respect to the contents of the box is that of
thing deposited as he would towards his own if bailor and bailee.
such care is less than that required by the
circumstances. 5. Obligation not to commingle things if so
stipulated (Art. 1G76)
2. Obligation not to transfer deposit (Art. 1G73)
General Rule: the depositary is not allowed to General Rule: The depositary is permitted to
commingle grain or other articles of the same
deposit the thing with a third person. kind and quality.
Reason: A deposit is founded on trust and
confidence and it can be supposed that the Effects:
depositor, in choosing the depositary, has taken a. The various depositors of the mingled
into consideration the latter’s qualification. goods shall own the entire mass in
XPN: The depositary is authorized by common.
express b. Each depositor shall be entitled to such
portion of the entire as the amount
stipulation. deposited by him bears the whole.
XPN: When there is a stipulation to the contrary.

166
6. Obligation not to make use of the things 10. When depositary justified in opening closed and
deposited (Art. 1G77) sealed subject matter (Art. 1G82)
General Rule: Deposit is for safekeeping of the a. The depositary is presumed authorized to do
subject matter and not for its use. so if the key has been delivered to him;
XPN: b. When the instructions of the depositor as
a. Expressly authorized by the depositor; regards the deposit cannot be executed
without opening the box or receptacle.
b. Such use is necessary for its preservation (Necessity)
but limited for the purpose only.
• Effect of unauthorized use: Liability for 11. Obligation to return products, accessories and
damages accessions (Art. 1G83)
• Effects of authorized use: (Art. 1978)
c. If the thing deposited is non-consumable: 12. Obligation to pay interest on sums converted for
General Rule: The contract loses the personal use (Art. 1G83)
character of a deposit and acquires that of
a commodatum despite the fact that the
parties may have denominated it as a 13. The depositary who receives the thing in
deposit. deposit cannot require that the depositor prove his
XPN: Safekeeping is still the principal ownership over the thing (Art. 1G84)
purpose of the contract.
d. If the thing deposited is money or other
consumable thing: 14. Where third person appears to be the owner
General Rule: Converts the contract into a (Art. 1G84)
simple loan or mutuum. The depositary may be relieved from liability when:
XPN: Safekeeping is still the principal
purpose of the contract, but it becomes an a. He advised the true owner of the thing of the deposit.
irregular deposit. Bank deposits are in the b. If the owner, inspite of such information, does
nature of irregular deposits but they are not claim it within the period of one month
really loans governed by the law on loans. (30 days)

7. Liability for loss through fortuitous event (Art. 15. Obligation of the depositary when there are two
1G7G) or more depositors. (Art. 1G85)
a. Divisible thing and joint depositors – each one of
General Rule: The depositary is not liable for the depositors can demand only his share -p-
loss pp[proportionate thereto.
b. Indivisible thing and solidary depositors – rules
through fortuitous event without his fault. on active solidarity
XPN: General Rule: The depositary may return the thing to
a. If it is so stipulated; any one of the solidary depositors
b. If he uses the thing without the XPN: When a demand, judicial or extrajudicial,
for its return has been made by one of them
depositor’s in which case delivery should be made to
permission him.
c. If he delays in its return; c. Return to one of the depositors stipulated - if by
d. If he allows others to use it, even though he stipulation, the thing should be returned to
himself may have been authorized to use one of the depositors, the depositary is bound
to return it only to the person designated
the same. although he has not made any demand for its
return.

XII. CREDIT TRANSACTIONS

Note: Liability for loss without fortuitous event:
Depositary 16. Obligation to return to the person to whom
• presumed at fault (Art. 1265) return must be made. (Art. 1G86)
• in possession a. The depositary is obliged to return the
thing deposited, when required, to:
8. Relation between bank and depositor (Art. • The depositor;
1G80) Fixed, savings, and current deposits of • To his heirs or successors; or
money in banks and similar institutions shall • To the person who may have been designated in
be governed by the the contract.
provisions concerning simple loan. b. If the depositor was incapacitated at the
a. Contract of loan – deposits in banks are time of making the deposit, the property must
really loans because the bank can use the be returned to:
same for its ordinary transactions • His guardian or administrator;
b. Relation of creditor and debtor – the relation • To the depositor himself should he
between a depositor and a bank is that of a acquire capacity.
creditor and a debtor. c. Even if the depositor had capacity at the time
of making the deposit but he subsequently
loses his capacity during the deposit, the
G. Obligation when the thing deposited is closed thing must be returned to his legal
and sealed (Art. 1G81) representative.
The depositary has the obligation to:
17. Obligation to return at the place of return (Art.
a. return the thing deposited when delivered
closed and sealed in the same condition; 1G87) – same as the general rule of law regarding the
b. pay for damages should the seal or lock be place of payment. (Art. 1251)
broken through his fault, which is General Rule: At the place agreed upon by the
presumed unless parties, transportation expenses shall be borne by
proven otherwise; the depositor. XPN: In the absence of stipulation, at
c. Keep the secret of the deposit when the the place where the thing deposited might be even if
it should not be the same place where the original
seal or deposit was made.
lock is broken, with or without his fault.

167
18. Obligation to return upon demand/ arrival of the 3. Effect of death of depositor or depositary.
time of return. (Art. 1G88) (Art. 1995)
General Rule: The thing deposited must be returned a. Deposit gratuitous – death of either of
to the depositor UPON DEMAND, even though a the depositor or depositary extinguishes
specified period or time for such return may have the deposit (personal in nature). By the
been fixed. word “extinguished,” the law really
XPN: means that the depositary is not obliged
a. When the thing is judicially attached while to continue with the contract of deposit.
in the b. Deposit for compensation – not
extinguished by the death of either
depositary’s possession party.
b. When notified of the opposition of a third person
to the return or the removal of the thing
deposited. RIGHT OF RETENTION (Art. 1GG4)
• Depositary has a right to retain the thing in
1G. Right of the depositary to return the thing pledge until full payment of what may be due
deposited. (Art. 1G8G) him by reason of the deposit
Note: in this case, it is the depositary who is • This is an example of pledge created by
returning the deposit WITH OR WITHOUT THE operation of law (Art. 2121)
DEMAND of the depositor General Rule: The • RULE is different in Commodatum, bailee
depositary may return the thing deposited has no right of retention except Art 1951
notwithstanding that a period has been fixed for the (bailor knows flaws in the thing did not
deposit if: advise bailee of such, Art 1944 gives bailee
a. The deposit is gratuitous; right to retain the thing until he is
b. The reason is justifiable. compensated for damages suffered.

Remedy if depositor refuses to receive the thing NECESSARY DEPOSIT vs. VOLUNTARY DEPOSIT
The depositary may deposit the thing at the • Voluntary deposit is made by the free will of
disposal of the judicial authority. the depositor;
• In Necessary deposit, this freedom of choice
Exception: When the deposit is for a valuable is absent;
consideration, the depositary has no right to return
the thing before the expiration of the time NECESSARY DEPOSIT (Art. 1GG6)
designated even if he should suffer inconvenience
as a consequence. A deposit is necessary when:
1. It is made in compliance with a legal
20. Depositary’s liability in case of loss by force obligation; Example: Art 586 – deposit with
majeure or government order. (Art. 1GG0) bank or public institution of bonds or
Depositary is not liable in cases of loss by force instruments of credit
majeure or by government order. However, he has payable to order or bearer given in
the duty to deliver to the depositor money or usufruct when the usufructuary does not
another thing he receives in place of the thing. give proper security for their conservation
2. It takes place on the occasion of any calamity,
21. Liability in case of alienation of the depositary’s such as fire, storm, flood, pillage, shipwreck,
heir. (Art. 1GG1) or other similar events. (deposito miserable)

XII. CREDIT TRANSACTIONS

When alienation is done in GOOD FAITH: • There must be a causal relation between
a. Return the value of the thing deposited the calamity and the constitution of the
b. Assign the right to collect from the buyer. deposit.
The heir does not need to pay the actual price of • Possession of movables passes from one
the thing deposited. person to another by accident or
fortuitously through force of
When alienation is done in BAD FAITH: circumstance, and which law imposes
upon the recipient the obligations of a
a. Liable for damages; bailee
b. Pay the actual price of the thing deposited. • Article 2168 – quasi-contract, owner of
property saved bound to pay just
22. Depositary may retain the thing in pledge until the compensation
full payment of what may be due him by reason of the 3. Made by passengers with common carriers. (Art.
1754) - as to those baggage the passengers
deposit. (Art. 1GG4)
or their agents carry
The thing retained serves as security for the
payment of what may be due to the depositary by 4. Made by travelers in hotels or inns. (Art. 1GG8)
reason of the deposit. (see Art. 1965, 1992, 1993). Before keepers of hotels or inns may be
held responsible as depositaries with
OBLIGATIONS OF THE DEPOSITOR regard to the effects of their guests, the
following must concur:
1. Obligation to pay expenses of preservation. (Art.
Elements
1992) a. They have been previously informed
2. Obligation to pay losses incurred due to about the effects brought by the guests;
character of thing deposited. (Art. 1993) and
General Rule: The depositary must be reimbursed b. The latter have taken the precautions
for loss suffered by him because of the character of
the thing deposited. prescribed regarding their safekeeping.
XPN: Extent of liability
a. Depositor was not aware of the danger; a. Liability in hotel rooms which come
b. Depositor was not expected to know the
under the term “baggage” or articles
dangerous character of the thing; such as clothing as
c. Depositor notified the depositary of such are ordinarily used by travelers
dangerous character; b. Include those lost or damages in hotel annexes
d. Depositary was aware of the danger without
advice from the depositor. such as vehicles in the hotel’s garage.

168
When hotel-keeper liable: (Art. 2000 – 2002)
Note: Hotelkeeper is liable REGARDLESS of the
amount of care exercised in the following cases: C. GUARANTY AND SURETYSHIP (CIVIL CODE,
a. The loss or injury to personal property is ARTS. 2047-2081)
caused by his servants or employees as well GUARANTY
as by strangers (Art. 2000). An accessory contract whereby a person called
b. The loss is caused by the act of a thief or the guarantor binds himself to the creditor to
robber done without the use of arms and fulfill the obligation of the principal debtor in case
irresistible force. (Art. 2001) the latter should fail to do.
Reason: Hotel-keeper is apparently negligent.
Guaranty not presumed (Art. 2055)
When hotel-keeper not liable: Guaranty requires the expression of consent on the
a. The loss or injury is caused by force majeure, part of the guarantor to be bound. It cannot be
like flood, fire, theft or robbery by a stranger presumed because of the existence of a contract
(not the hotel-keeper’s servant or employee) or principal obligation.
with the use of firearms or irresistible force.
XPN: Unless the hotel-keeper is guilty of fault Guaranty covered by the Statute of Frauds (Art. 1403)
or negligence in failing to provide against the • Guaranty must not only be expressed but
loss or injury from this cause. must so be reduced into writing.
b. The loss is due to the acts of the guests, his • Hence, it shall be unenforceable by action,
family, servants, visitors. unless the same or some note or
c. The loss arises from the character of the memorandum thereof be in writing, and
things brought into the hotel. subscribed by the party charged, or by his
agent; evidence, therefore, of the agreement
Exemption or Diminution of Liability cannot be received without the writing, or a
The hotel-keeper cannot free himself from secondary evidence of its contents.
responsibility by posting notices to the effect that • It need not appear in a public document.
he is not liable for the articles brought by the
guest. (Art. 2003) Obligation
1. of the Guarantor – pay or perform the obligation
Limited Liability Stipulation is VOID if the debtor fails to do.
Any stipulation between the hotel-keeper and 2. of the Creditor – pay the guarantor the compensation
the guest whereby the responsibility of the stipulated.
former (as set forth in Art. 1998-2001) is
suppressed or diminished shall be VOID. (Art.
2003) Qualifications of a Guarantor
i. Possesses integrity
Hotel-keeper’s right to retain ii. Has the capacity to bind himself
The hotel-keeper has a right to retain the things iii. Has sufficient property to answer for the
brought into the hotel by the guest, as a security obligation which he guarantees
for credits on account of: iv. Subject to the jurisdiction of the court of the
a. Lodging; place where the obligation is to be complied
with
b. supplies usually furnished to hotel guests.
Reason: It is given to hotel-keepers to
compensate them for the liabilities imposed upon Privileges given to the guarantor
them by law. The right of retention recognized in i. Benefit of excussion

XII. CREDIT TRANSACTIONS

this article is in the nature of a pledge created by ii. Benefit of division
operation of law.
Excussion
SEQUESTRATION OR JUDICIAL DEPOSIT
Right of the guarantor to have the properties of the
When judicial deposit takes place: debtpr exhausted first before the guarantor can be
• Judicial deposit takes place when an made liable to the creditor
attachment or seizure of property in litigation
is ordered by a court. (Art. 2005) For the benefit of Excussion, the guarantor must:
• Nature: Auxiliary to a case pending in court.
i. Set it up against the creditor upon the latter’s
• Purpose: To maintain the status quo during
the pendency of the litigation or to insure the demand for payment from him
right of the parties to the property in case of a ii. Point out to the creditor the available
favorable judgment. properties of the debtor in the Philippines
sufficient to cover the amount of debt.
Depositary of sequestered property: person appointed
The guarantor is not entitled to excussion when:
i. Guarantor has expressly renounced the benefit of
by the court. (Art. 2007) excussion
Obligations: ii. Guarantor solidarily binds himself with the
a. To take care of the property with the principal debtor
diligence of a good father of the family. (Art. If the debtor is insolvent
2008) iii. Principal debtor has absconded or cannot be
b. He may not be relieved of his responsibility sued within the Philippines
until the litigation is ended or the court so iv When it may be presumed that execution
orders. (Art. 2007) . will not result in the satisfaction of the
judgment credit Guarantor failed to point out
leviable properties of the debtor
Applicable law: The Rules of Court are applicable v.
since law on judicial deposit is remedial or
procedural in nature. (Art. 2009) vi
.

16G
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. 2047
ii. They guaranteed only one debtor par. 2)
iii. One debt Nature and extent of suretyship
Division is not available when: i. Primarily and absolutely liable
ii. Pays if debtor does not pay
i. Waived by the guarantor
ii. Guarantor solidarily binds himself with iii. Insurer of the debt
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 direct:
v. When it may be presumed that execution 2. Liability is limited by terms of contract
will not 3. Liability arises only if principal debtor is held liable
result in the satisfaction of the judgment a. In the absence of collusion, the surety is
bound by a judgment against the
credit principal event though he was not a
party to the proceedings;
Continuing guaranty b. The creditor may sue, separately or
together, the principal debtor and the
i. Not limited to a single transaction surety;
ii. Contemplates a future course of dealing c. A demand or notice of default is not
covering a series of transactions required to fix the surety’s liability
iii. Prospective in application. Exception: Where required by the provisions
of the contract of suretyship
NOTE: Surety is not entitled to exhaustion
Rights of Guarantor unlike guarantors
1. before payment 4. Undertaking is to creditor, not to debtor The
surety makes no covenant or agreement with
a. to receive compensation the principal that it will fulfill the obligation
b. to demand relief from the guaranty guaranteed for the benefit of the principal.
against The surety’s undertaking is that the principal
shall fulfill his obligation and that the surety
creditor’s action shall be relieved of liability when the
c. to demand security against debtor’s obligation secured is performed.
insolvency Exception: Unless otherwise expressly
provided. NOTE: Surety is not entitled to
2. after payment notice of principal’s default
a. to seek reimbursement 5. Prior demand by the creditor upon principal
not required Surety is not exonerated by
b. to be subrogated to the rights of the neglect of creditor to sue principal.
creditor
SPS. ONG V. PCIB
Debtor must indemnify guarantor for: G.R. NO. 160466, JANUARY 17, 2005

XII. CREDIT TRANSACTIONS

i. Total amount of debt J. Puno
ii. Legal interests • There is a sea of difference in the rights and
iii. Expenses incurred after notifying the liabilities of a guarantor and a surety. A
debtor that payment had been demanded guarantor insures the solvency of the debtor
from him while a surety is an insurer of the debt
itself. A contract of guaranty gives rise to a
iv. Damages subsidiary obligation on the part of the
guarantor. It is only after the creditor has
EXTINGUISHMENT OF GUARANTY proceeded against the properties of the
1. Same grounds as the modes of principal debtor and the debt remains
extinguishment for ordinary obligation unsatisfied that a guarantor can be held liable
(Payment, Loss, Condonation, Merger, to answer for any unpaid amount. This is the
Compensation, Novation principle of excussion
• In suretyship contract, however, the benefit of
2. Extension of payment excussion is not available to the surety as he
3. Negligence of the creditor is principally liable for the payment of the debt.
4. Failure to send notice of default As the surety insures the debt itself, he
obligates himself to pay the debt if the
5. Death
GUARANTY WARRANTY principal debtor will not pay, regardless of
6. Creditor voluntarily accepts immovable or whether or not the latter is financially capable
other by
Contract property
which in An
a payment of the
undertaking debt,
that the to fulfill his obligation. Thus, a creditor can go
evenisif bound
person the creditor should
to title, afterwards
quality, lose directly against the surety although the
or quantity
the same
another forthrough
the eviction.
of the subject matter of principal debtor is solvent and is able to pay or
fulfillment of a a contract is what it has no prior demand is made on the principal
promise
GUARANTY VS. WARRANTYor been represented to be, debtor. A surety is directly, equally and
engagement of a and relates to some absolutely bound with the principal debtor for
third Party. agreement made the payment of the debt and is deemed as an
ordinarily by the party original promissor and debtor from the
who makes the beginning.
warranty.

170
GUARANTY VS. SURETYSHIP • The interest may be in the form of fruits of the
mortgaged property, without the contract’s losing
GUARANTY SURETYSHIP its nature of a contract of mortgage.

KINDS OF MORTGAGE
Liability depends upon Assumes liability as a
an independent regular party to the 1. Voluntary – one which is agreed to between
agreement to pay the Undertaking. the parties or constituted by the will of the
obligation if the primary owner of the property on which it is created.
debtor fails to do so. 2. Legal – one required by law to be executed in
favor of certain persons (Arts. 2125, 2083)
3. Equitable – one which, although it lacks the
Engagement is a Charged as an proper formalities of a mortgage shows the
collateral undertaking. original intention of the parties to make the property
Promisor. as a security for a debt (provisions governing
equitable mortgage - arts 1365, 1450, 1454,
Secondarily liable – he Primarily liable – 1602, 1603, 1604 and 1607)
contracts to pay if, by undertakes directly for
the use of due diligence, the payment
the debt cannot be paid. without reference ESSENTIAL REQUISITES OF MORTGAGE
to the solvency 1. constituted to secure the fulfillment of a
of the principal, and is principal obligation
so responsible at once the 2. mortgagor is the absolute owner of the thing
latter makes default, mortgaged
without any demand by 3. the persons constituting mortgage have free
the creditor upon the disposal of their property, and in the absence
principal whatsoever or thereof, that they be legally authorized for the
any notice of default.
purpose
4. cannot exist without a valid obligation
Only binds himself to pay Undertakes to pay if the 5. when the principal obligation becomes due, the
if the principal cannot or principal does not pay, thing in which the mortgage consists may be
unable to pay. without regard to his alienated for the payment to the creditor.
ability to do so. 6. appears in a public document duly recorded
in the Registry of Property to be validly
constituted
Insurer of the solvency of Insurer of the debt.
the debtor. PUBLIC INSTRUMENT AND RECORDING
• It is indispensable in order that a mortgage
Does not contract that Pay the creditor without may be validly constituted that it appears in a
the principal will pay, but
qualification if the public instrument duly recorded in the Registry
simply that he is able to principal debtor does not of Property
do so. pay. Hence, the • If in private instrument – no valid mortgage is
responsibility or constituted, but it is still binding upon the
obligation assumed by parties.
the surety is greater or
more onerous than that Article 2125. In addition to the requisites stated in
D. REAL of MORTGAGE
ESTATE a guarantor. article 2085, it is indispensable, in order that a
(CIVIL CODE, ARTS. 2124-2126 mortgage may be validly constituted, that the
document in which it appears be recorded in the
AND 2128-2131) Registry of Property. If the instrument is

XII. CREDIT TRANSACTIONS

Contract of Mortgage not recorded, the mortgage is nevertheless
It is a contract whereby the debtor secures to the binding between the parties. The persons in
creditor the fulfillment of a principal obligation, whose favor the law establishes a mortgage
specially subjecting to such security immovable have no other right than to demand the execution
property or real rights over immovable property and the recording of the document in which the
in case the principal obligation is not complied mortgage is formalized.
with at the time stipulated.
MOBIL OIL PHILIPPINES V. DIOCARES
OBJECTS OF REAL MORTGAGE G.R. NO. L-26371, SEPTEMBER 30, 1G6G
1. Immovables En Banc
2. Alienable real rights in accordance with the SC held that the lower court erred when it did
laws, imposed upon immovables not order the foreclosure of an unrecorded
future property cannot be object of mortgage mortgage. Even if the instrument was not
recorded, "the mortgage is nevertheless binding
between the parties." The law cannot be any
IMPORTANT POINTS clearer. Effect must be given to it as written. The
• As a general rule, the mortgagor retains mortgage subsists; the parties are bound. As
possession of the property, because by the between them, the mere fact that there is as yet
mortgage, the debtor merely subjects the no compliance with the requirement that it be
property to a LIEN but ownership thereof is recorded cannot be a bar to foreclosure.
not parted with.
• Mortgagor may deliver said property to the PARADIGM DEVELOPMENT CORPORATION OF THE
mortgagee without altering the nature of the PHILIPPINES V. BANK OF THE PHILIPPINE ISLANDS
contract of mortgage.
• It is not an essential requisite that the G.R. NO. 1G1174, JUNE 7, 2017
principal of the credit bears interest, or that J. J. Reyes
the interest as compensation for the use of The registration of the REMs, even if contrary to
the principal and the enjoyment of its fruits be the supposed intent of the parties, did not affect the
in the form of a certain percent thereof.
validity of the mortgage contracts.

171
Even assuming that the parties indeed agreed to
register only one of the two REMs, the • Period of redemption starts from the finality of
the judgment until order of confirmation;
subsequent registration of both REMs did not • No need for a special power of attorney in the
affect an already validly executed REM if there contract of mortgage.
was no other basis for the declaration of its nullity.
That the REMs were intended merely as "partial
security" does not make PDCP's argument more EXTRAJUDICIAL FORECLOSURE
plausible because as aptly observed by the CA, An extrajudicial foreclosure may only be effected if in
the PDCP's act of surrendering all the titles to the the mortgage contract covering a real estate, a clause
properties to FEBTC clearly establishes PDCP' s is incorporated therein giving the mortgagee the
intent to mortgage all of the four properties in power, upon default of the debtor, to foreclose the
favor of FEBTC to secure Sengkon's obligation mortgage by an extrajudicial sale of the mortgaged
property.
under the Credit Line. The Court notes that the
principal debtor, Sengkon, has several • No court intervention;
obligations under its Omnibus Line corresponding • Not appealable, it is immediately executory;
to the several credit sub- facilities made available • Foreclosure does not cut off right of all parties involved;
to it by FEBTC. As found by the trial court, PDCP • There is right of redemption;
intended to be bound only for Sengkon' s • Period to redeem starts from date of registration
availments under the Credit Line sub-facility and of certificate of sale;
not for just any of Sengkon's availments. Hence, • Special power of attorney in favor of mortgagee to
it is in this sense that the phrase "partial sell is needed in the contract.
security" should be logically understood.
EFFECT OF MORTGAGE THE COMMONER LENDING CORPORATION v. SPS.
1. creates real rights, a lien inseparable from VILLANUEVA
the property mortgaged, enforceable against G.R. NO. 235260, AUGUST 27, 2020
the whole world J. Lopez
2. creates merely an encumbrance – mortgage Specifically, in extrajudicial foreclosure of real estate
does not involve a transfer, cession or mortgage, a special power to sell the property is
conveyance of property but only constitutes a required which must be either inserted in or attached
lien thereon. A mere mortgagee cannot eject to the deed of mortgage. Apropos is Section 1 of Act
an occupant of the property mortgaged No. 3135,19 as amended by Act No. 4118, thus:
Section 1. When a sale is made under a special power
EXTENT OF MORTGAGE inserted in or attached to any real estate mortgage
hereafter made as security for the payment of money
• Not limited to the property itself but also or the fulfillment of any other obligation, the
extends to all its accessions, improvements, provisions of the following section shall govern as lo
growing fruits and rents or income (Art. 2102) the manner in which the sale and redemption shall be
as well as to proceeds of insurance should the effected, whether or not provision for the same is
property be destroyed, or expropriation value made in the power.
of the property should it be expropriated.
• TO EXCLUDE accessions, accessories and The special power or authority to sell finds support in
improvements subsequently introduced, there civil law. Foremost, in extrajudicial foreclosure, the
must be a stipulation to that effect sale is made through the sheriff by the mortgagees
acting as the agents of mortgagors-owners. Hence,
there must be a written authority from the mortgagor-
STIPULATION FORBIDDING ALIENATION IS VOID owners in favor of the mortgagees. Otherwise, the sale
ARTICLE 2130 – ANY STIPULATION PROHIBITING would be void. Moreover, a special power of attorney
THE OWNER FROM ALIENATING THE MORTGAGED is necessary before entering "into any contract by
PROPERTY which the ownership of an immovable is transmitted
or acquired either gratuitously or for a valuable
SHALL BE VOID

XII. CREDIT TRANSACTIONS

consideration." Thus, the written authority must be a
• Mortgagee can simply withhold consent special power of attorney to sell.
• If alienated, transferee is bound to respect the Here, it is undisputed that no special power to sell was
encumbrance which is a lien on the property attached to the real estate mortgage. TCLC relied on
the express provision of paragraph 3 of the agreement
FORECLOSURE OF MORTGAGE allowing it "to take any legal action as may be
it is the remedy available to the mortgagee by necessary to satisfy the mortgage debt." Yet, the CA
which he subjects the mortgaged property to the construed the provision as a mere grant of authority to
foreclose but not to sell the property. On this point, we
satisfaction of the obligation to secure which the find reversible error on the part of the appellate court.
mortgage was given.
Indeed, while it has been held that a power of sale will
KINDS OF FORECLOSURE not be recognized as contained in mortgage unless it
is given by express grant and in clear and explicit
1. Judicial – governed by Rule 68 of the Rules of terms, and that there can be no implied power of sale
where a mortgage holds by a deed absolute in form, it
Court is generally held that no particular formality is
2. Extrajudicial – governed by Act No. 3135 required in the creation of the power of sale. Any
words are sufficient which evince an intention that the
sale may be made upon default or other contingency.
JUDICIAL FORECLOSURE - A proceeding for In this case, paragraph 3 of the real estate mortgage
judicial foreclosure of mortgage is an action sufficiently incorporated the required special power of
quasi in rem. It is based on a personal claim attorney to sell. It expressly provides that the
against a specific property of the defendant. Its mortgaged property shall be foreclosed, judicially or
purpose is to have the property seized and sold extra judicially, upon failure to satisfy the debt, and
by court order to the end that the proceeds that TCLC, the mortgagee, is appointed as attorney-in-
thereof be applied to the payment of plaintiff’s fact of Spouses Villanueva, the mortgagors, to do any
claim. legal action as may be necessary to satisfy the
• There is court intervention; mortgage debt. xxx
• Decisions are appealable;
• Order of the court cuts off all rights of the
parties impleaded;
• There is equity of redemption except on banks
which
provides for a right of redemption;

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
recovery of the indebtedness
No complaint is filed; Complaint is filed with
2. Mortgagee cannot have both remedies
the
courts; Note: Foreclosure retroacts to the date of
There is a right of No right of redemption registration of mortgage
redemption. Mortgagor except when mortgagee
has a right of is a banking institution; STIPULATION OF UPSET PRICE OR “TIPO”
redemption for 1 year equity of redemption A stipulation of minimum price at which the
from registration of the only (90 to property shall be sold to become operative in the
sale 120 days, and any time event of a foreclosure sale at public auction is
NULL and VOID.
before confirmation
of
foreclosure sale); BPI V. REYES
Mortgagee has to file Mortagagee can move G.R. NO. 18276G, FEBRUARY 1, 2012
a separate action to for deficiency judgment J. Leonardo-De Castro
recover in the It bears also to stress that the mode of forced sale
utilized by petitioner was an extrajudicial
any deficiency; same action foreclosure of real estate mortgage which is
Buyer at public auction Buyer at public auction governed by Act No. 3135, as amended. An
becomes absolute becomes absolute examination of the said law reveals nothing to the
owner only after finality owner only after effect that there should be a minimum bid price
of an action forconfirmation of the or that the winning bid should be equal to the
consolidation of sale; appraised value of the foreclosed property or to
the amount owed by the mortgage debtor.
ownership;
Mortgagee is given a Mortgagee need not be What is clearly provided, however, is that a
special power of given a special power of mortgage debtor is given the opportunity to
attorney in the attorney. redeem the foreclosed property within the term
mortgage contract to of one year from and after the date of sale. In
the case at bar, other than the mere inadequacy
foreclose the of the bid price at the foreclosure sale,
mortgaged property in respondent did not allege any irregularity in the
NATURE OF JUDICIAL FORECLOSURE PROCEEDINGS foreclosure proceedings nor did she prove that a
better price could be had for her property under
1. quasi in rem action the circumstances.
2. foreclosure is only the result or incident of the
failure to pay debt Thus, even if we assume that the valuation of the
3. survives death of mortgagor property at issue is correct, we still hold that the
inadequacy of the price at which it was sold at
NATURE OF POWER OF FORECLOSURE public auction does not invalidate the foreclosure
sale.
BY EXTRAJUDICIAL SALE
1. conferred for mortgagee’s protection Moreover, we fail to see any unjust enrichment

XII. CREDIT TRANSACTIONS

2. an ancillary stipulation resulting from upholding the validity of the
3. a prerogative of the mortgagee foreclosure sale and of the right of the petitioner
to collect any deficiency from respondent. Unjust
enrichment exists when a person unjustly retains
Note: Stipulation of upset price in mortgage a benefit to the loss of another, or when a person
contract is void. retains money or property of another against the
fundamental principles of justice, equity and
RIGHT OF MORTGAGEE TO RECOVER DEFICIENCY good governance. As discussed above, there is a
strong legal basis for petitioners claim against
1. Mortgagee is entitled to recover deficiency respondent for the balance of her loan
2. If the deficiency is embodied in a obligation.
judgment, it is
referred to as deficiency judgment. REDEMPTION
3. Action for recovery of deficiency may be filed it is a transaction by which the mortgagor
even during redemption period. reacquires or buys back the property which may
4. Action to recover prescribes after 10 years have passed under the mortgage or divests the
from the time the right of action accrues property of the lien which the mortgage may
have created.
EFFECT OF INADEQUACY OF PRICE IN FORECLOSURE
SALE KINDS OF REDEMPTION
1. Where there is right to redeem 1. EQUITY OF REDEMPTION
General Rule: Inadequacy of price is ‘Equity of Redemption’ defined
immaterial because the judgment debtor right of the mortgagor to redeem the mortgaged
may redeem the property property after his default in the performance of
XPN: the price is so inadequate as to shock the conditions of the mortgage but before the
the conscience of the court taking into sale of the mortgaged property or confirmation
consideration the peculiar circumstances of sale; *applies to judicial foreclosure of real
2. Property may be sold for less than its fair mortgage
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 no
bearing on the bid price at the public auction,
provided that the public auction was
regularly and honestly conducted. 173
2. RIGHT OF REDEMPTION The right of defendant A right granted to a
“Right of Redemption’ defined mortgagor to extinguish debtor mortgagor, his
the mortgage and successor in interest or
right of the mortgagor to redeem the property retain ownership of the any judicial creditor or
within a certain period after it was sold for the property by paying the judgment creditor or any
satisfaction of the debt; applies only to debt within person having a lien on
extrajudicial foreclosure of real mortgage 90 to 120 days after the property subsequent
Note: the right of redemption, as long as within the the entry of judgment to the mortgage or deed
period prescribed, may be exercised irrespective or even after the of trust under which the
of whether or not the mortgagee has foreclosure sale but property is sold to
subsequently conveyed the property to some prior to confirmation. repurchase the property
other party (Sta. Ignacia Rural Bank, Inc v. CA, within one year even after
230 SCRA 513 [1994]) the confirmation of the
sale and even after the
BPI V. LCL registration of the
G.R. NO. 2433G6. SEPTEMBER 14, 2021 certificate of foreclosure
sale.
J. Lopez
On the correct computation of the redemption
price, the Court had ruled that Section 78 of
Republic Act (RA) No.
337 or the "General Banking Act," as amended, May be exercised even There is no right of
(now Section 47 of RA No. 8791 or the "General after the foreclosure redemption in a judicial
Banking Law of 2000") shall govern in cases sale provided it is foreclosure of mortgage
where the mortgagee is a bank, and not the Rules made before the sale is under Rule 68. This right
of Court in relation to Section 6 of Act No. 3135,30 confirmed by order of of redemption exists only
as amended by Act No. 4118.31 In Ponce de Leon the court. in extrajudicial
v. Rehabilitation Finance Corp., the Court foreclosures where there
explained that Section 78 of RA No. 337 had the is always a right of
effect of amending Section 6 of Act No. 3135 redemption within one
insofar as the redemption price is concerned year from the date of
when the mortgagee is a bank, or a banking or sale(Sec. 3, Act 3135),
credit institution. The conflict between the two but interpreted by the
laws must be resolved in favor of RA No. 337 for Court to mean one year
being a special and subsequent legislation. The from the registration of
ruling was cited and applied in the cases of Sy v. the sale.
Court of Appeals, Union Bank of the Phils. v.
Court of Appeals, Allied Banking Corporation v.
Mateo, and GE Money Bank, Inc. v. Sps. Dizon.
In this case, the mortgagee BPI is a banking May also exist in favor General rule: In judicial
institution. Hence, Section 78 of RA No. 337, as or other foreclosures there is only
further amended by Presidential Decree No. 1828 encumbrances. If an equity of redemption
the effective law at the time the contract of loan subsequent lien which can be exercised
and the deed of real estate mortgage were holders are not prior to the confirmation
executed in 1997, shall govern in computing the impleaded as parties in of the foreclosure sale.
redemption price for the foreclosed properties, the foreclosure suit, This means that after the
viz.: the judgment in favor foreclosure sale but
of the foreclosing before its confirmation,
SEC. 78. x x x. In the event of foreclosure, mortgagee does not the mortgagor may
whether judicially or extrajudicially, of any mortgage bind the other lien exercise his right of pay
on real estate which is security for any loan holders. In this case, the proceeds of the sale
their equity of and prevent the
granted before the passage of this Act or under redemption confirmation of the sale.
the provisions of this Act, the mortgagor or debtor
remains unforeclosed.

XII. CREDIT TRANSACTIONS

whose real property has been sold at public auction,
judicially or extrajudicially, for the full or partial A separate foreclosure
proceeding has to be
payment of an obligation to any bank, banking or brought against them
credit institution, within the purview of this Act shall to require them to
have the right, within one year after the sale of the redeem from the first
mortgagee or from the
real estate as a result of the foreclosure of the party acquiring the title
respective mortgage, to redeem the property by to the mortgaged
paying the amount fixed by the court in the order property.
of execution, or the amount due under the
mortgage deed, as the case may be, with
interest thereon at the rate specified in the If not by banks, the Exception: there is a right
mortgagors merely of redemption if the
mortgage, and all the costs, and judicial and have an equity of foreclosure is in favor of
other expenses incurred by the bank or redemption, which is banks as mortgagees,
institution concerned by reason of the execution simply their right, as whether the foreclosure
mortgagor, to be judicial or
and sale and as a result of the custody of said extinguish the extrajudicial. This right of
property less the income received from the mortgage and retain redemption is explicitly
property. x x x. ownership of the provided in Sec. 47 of the
property by paying the General Banking Law of
Applying the above provision pertaining to secured debt prior to 2000. While the law
extrajudicial foreclosure, the redemption price the confirmation of the mentions the redemption
must consist of the following: (1) the principal foreclosure sale. period to be one year
obligation or the amount due under the mortgage counted from the date of
deed; (2) interest at the rate specified in the registration of the
mortgage; (3) expenses of foreclosure, i.e., certificate in the Registry
Judicial Commission, Publication Fee, and Sheriffs of Property
Fee; and (4) other expenses as a result of the
custody of the property less the income received.
Obviously, both the CA and the RTC did not
adhere to the letters of the law and committed
mistakes in their computation.
EQUITY OF REDEMPTION RIGHT OF REDEMPTION
174
 PERIOD OF REDEMPTION Forms of Security Interest
1. Extra-judicial Foreclosure (Act No. 3135)
• Tangible asset
• Natural person – 1 year from registration of the
certificate of sale with Registry of Deeds • Investment property
• Juridical person – same rule as natural person (1 • Deposit account
year)
Creation of a Security Interest
If Mortgagee is PNB, a bank or banking institution: • It is created by a security agreement.
• Natural person – 1 year from registration of the • It may provide for the creation of a security
certificate of sale with Registry of Deeds interest in a future property, but security
• Juridical person – 3 months (90 days) after interest in that property is created only when
foreclosure or before registration of certificate the grantor acquires rights in it or the power to
of foreclosure whichever is earlier (Sec. 117 of encumber it.
General Banking Law)
Security Agreement
2. Judicial Foreclosure – before confirmation of the A security agreement must be contained in a
sale by the court (only equity of redemption) written contract signed by the parties. It may
Except : Mortgagee is PNB, a bank or banking consist of one or more writings that, taken
institution. Sec. 47, General Banking Law - together, establish the intent of the parties to
confers right of the mortgagor to redeem the create a security interest.
property sold on foreclosure after confirmation The security agreement shall likewise provide for
by the court of the foreclosure sale – which right the language to be used in agreements and
may be exercised by the following: notices. The grantor shall be given the option to
• NATURAL PERSONS - within a period of one have the agreement and notices in Filipino.
year, counted from the date of registration of
the certificate of sale in the Registry of
Property Description of Collateral may be:
• JURIDICAL PERSONS – within a period of 3 a. Specific
months after the foreclosure sale or until the
registration of the certificate of sale, which b. General
ever comes first.
Sufficient Description of Collateral
E. PERSONAL PROPERTY SECURITY ACT As long as it reasonable identifies the collateral
(R.A. NO. 11057)
An Act Strengthening the Secured Transactions Example of Sufficient Description
Legal Framework in the Philippines, Which Shall
Provide for the Creation, Perfection, • "all personal property"
Determination of Priority, Establishment of a • "all equipment"
Centralized Notice Registry, and Enforcement of • "all inventory"
Security Interests in Personal Property, and for
Other Purposes • "all personal property within a generic category"

Purpose PERFECTION OF SECURITY INTEREST

It is the policy of the State to promote economic A security interest shall be perfected when it has
activity by increasing access to least cost credit, been created and the secured creditor has taken
particularly for micro, small, and medium one of the means of perfection;
enterprises (MSMEs), by establishing a unified On perfection, a security interest becomes
and modern legal framework for securing effective against third parties.
obligations with personal property.

XII. CREDIT TRANSACTIONS

Means of Perfection
Scope of the Act i. Registration of a notice with the Registry;
Applies to all transactions of any form that Notice - a statement of information that is
secure an obligation with movable collateral, registered in the Registry relating to a
Except: security interest or lien. The term includes
interests
9497, or in aircrafts subject to Republic Act No. an initial notice.,
the "Civil Aviation Authority Act of 2008", and, amendment notice, and termination notice;
interests in ships subject to Presidential Decree ii. Possession of the collateral by the secured
No. 1521, or the "Ship Mortgage Decree of creditor; Control of investment
1978". iii. property and deposit
account.
PARTIES in PPS
1. GRANTOR PERFECTION OF SECURITY INTEREST IN:
• The person who grants a security interest in
collateral to secure its own obligation or that of ANY TANGIBLE INVESTMENT DEPOSIT
another person;
ASSET PROPERTY ACCOUNT
• A buyer or other transferee of a collateral that
acquires By By By
its right subject to a security interest; Registration Registration Registration
• A transferor in an outright transfer of an
accounts By Possession By Control By Control
receivable; or Perfection by Control
• A lessee of goods; a. The creation of the security interest in
2. SECURED CREDITOR favor of the deposit-taking institution or the
a person that has a security interest. intermediary;
b. The conclusion of a control agreement; or
SECURITY INTEREST c. For an investment property that is an
electronic security not held with an
A property right in collateral that secures intermediary, the notation of the security
payment or other performance of an obligation interest in the books maintained by or on
of the Grantor to the Secured Creditor.
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 issuer or the intermediary, Non-inter mediated securities
the grantor and the secured creditor, according securities other than securities credited to a
to which the issuer or the intermediary agrees securities account and rights in securities
to follow instructions from the secured creditor resulting from the credit of securities to a
with respect to the security, without further securities account;
consent from the grantor;
2) With respect to rights to deposit account,
means an agreement in writing among the Right to Proceeds and Commingled Funds and Money
deposit-taking institution, the grantor and the a) A security interest in personal property shall
secured creditor, according to which the extend to its identifiable or traceable
deposit-taking institution agrees to follow proceeds.
instructions from the secured creditor with
respect to the payment of funds credited to the b) Where proceeds in the form of funds credited
deposit account without further consent from to a deposit account or money are
the grantor; commingled with other funds or money:
3) With respect to commodity contracts, means an 1. The security interest shall extend to the
agreement in writing among the grantor, commingled money or funds,
secured creditor, and intermediary, according notwithstanding that the proceeds have
to which the commodity intermediary will apply ceased to be identifiable to the extent
any value distributed on account of the they remain traceable:
commodity contract as directed by the secured 2. The security interest in the commingled
creditor without further consent by the funds or money shall be limited to the
commodity customer or grantor. amount of the proceeds immediately
DEPOSIT-TAKING INSTITUTION before they were commingled: and
GENERAL RULE: it is not required that a deposit- 3. If at any time after the commingling, the
taking institution or an intermediary enter into a balance credited to the deposit account or
control agreement, even if the grantor so requests. the amount of the commingled money is
XPN: If they entered into such an agreement, they less than the amount of the proceeds
shall not be required to confirm the existence of the immediately before they were
agreement to another person unless requested to commingled, the security interest against
do so by the grantor. the commingled funds or money shall be
limited to the lowest amount of the
CONTINUITY OF SECURITY INTEREST commingled funds or money between the
GENERAL RULE: Security Interest shall continue in time when the proceeds were
collateral notwithstanding (1) sale, (2) lease, (3) commingled and the time the security
license, (4) exchange, or (5) other disposition of the interest in the proceeds is claimed.
collateral.
XPN: If the party who obtains, in the ordinary
course of business, any movable property Section 10. Contractual Limitation on the Creation of a
containing a security interest shall take the same
free of such security interest provided he was in Security Interest.—
good faith [Sec 21, Ibid], or agreed upon by the (a) A security interest in an account receivable
parties. shall be effective notwithstanding any
Good faith shall not exist if the security interest in agreement between the grantor and the
the movable property was registered prior to his account debtor or any secured creditor
obtaining the property. limiting in any way the grantor’s right to
Commodity contract create a security interest.
a commodity futures contract, an option on a (b) Nothing in this section shall affect any
commodity futures contract, a commodity option, or obligation or liability of the grantor for breach
another contract if the contract or option is: of the agreement in subsection (a).
1. Traded on or subject to the rules of a board of (c) Any stipulation limiting the grantor’s right to

XII. CREDIT TRANSACTIONS

trade that has been designated as a contract create a security interest shall be void.
market for such a contract; or (d) This section shall apply only to accounts
2. Traded on a foreign commodity board of trade, receivable arising from:
exchange, or market, and is carried on the (1) A contract for the supply or lease of
books of a commodity intermediary for a goods or services other than financial
commodity customer; services;
Control Agreement (2) A construction contract or a contract for
the sale or lease of real property; and
(1) With respect to securities - means an agreement
in writing among the issuer or the intermediary, (3) A contract for the sale, lease or license of
the grantor and the secured creditor, according intellectual property.
to which the issuer or the intermediary agrees
to follow instructions from the secured creditor
with respect to the security, without further Perfection in Proceeds
consent from the grantor; a. Upon disposition of collateral, a security
(2) With respect to rights to deposit account - means interest shall extend to proceeds of the
an agreement in writing among the deposit- collateral without further act and be
taking institution, the grantor and the secured continuously perfected, if the proceeds are in
creditor, according to which the deposit-taking the form of money, accounts receivable,
institution agrees to follow instructions from the
secured creditor with respect to the payment of negotiable instruments or deposit accounts.
funds credited to the deposit account without b. Upon disposition of the collateral, if the
further consent from the grantor; proceeds are in a form different from money,
(3) With respect to commodity contracts - means an accounts receivable, negotiable instruments
agreement in writing among the grantor, or deposit accounts, the security interest in
secured creditor, and intermediary, according such proceeds must be perfected by one of
to which the commodity intermediary will apply the means applicable to the relevant type of
any value distributed on account of the collateral within fifteen (15) days after the
commodity contract as directed by the secured grantor receives such proceeds; otherwise,
creditor without further consent by the the security interest in such proceeds shall
commodity customer or grantor; not be effective against third parties.

176
Change in Means of Perfection c) A perfected security interest in livestock
A security interest shall remain perfected despite securing an obligation incurred to enable the
a change in the means for achieving perfection: grantor to obtain food or medicine for the
Provided, That there was no time when the livestock shall have priority over any other
security interest was not perfected. security interest in the livestock, if the secured
creditor providing credit for food or medicine
gives written notification to the holder of the
Assignment of Security Interest conflicting perfected security interest in the
If a secured creditor assigns a perfected security same livestock before the grantor receives
interest, an amendment notice may be possession of the food or medicine.
registered to reflect the assignment.
Priority Rules for Specific Cases
Determination of Priority of Security Interests and By Operation of Laws
Liens in the Same Collateral a) Priority and Right of Retention – A person who
determined according to time of registration of a provides services or materials with respect to
notice or perfection by other means, without the goods, in the ordinary course of business,
regard to the order of creation of the security and retains possession of the goods shall have
interests and liens. priority over a perfected security interest in the
goods until the payment thereof. (Section 20,
Chapter 4 of RA No. 11057)
Priority for Investment Property and Deposit Accounts b) Effect of Grantor’s Insolvency – Subject to the
a) A security interest in a deposit account with applicable insolvency law, a security interest
respect to which the secured creditor is the perfected prior to the commencement of
deposittaking institution or the intermediary insolvency proceedings in respect of the grantor
shall have priority over a competing security shall remain perfected and retain the priority it
interest perfected by any method. had before the commencement of the
b) A security interest in a deposit account or insolvency proceedings.
investment property that is perfected by a c) During the insolvency proceedings, the perfected
security interest shall constitute a lien over the
control agreement shall have priority over a collateral. (Section 6.04, Rule VI of IRR)
competing security interest except a security
interest of the deposit-taking institution or
the intermediary. Transferee Exceptions
c) The order of priority among competing Any party who obtains, in the ordinary course of
security interests in a deposit account or business, any movable property containing a
investment property that were perfected by security interest shall take the same free of such
the conclusion of control agreements shall be security interest provided he was in good faith. No
determined on the basis of the time of such good faith shall exist if the security interest in
conclusion of the control agreements. the movable property was registered prior to his
obtaining the property.
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 Effect of the Grantor’s Insolvency on the Priority of a
shall have priority over a security interest in Security Interest.
the deposit account. The security interest shall remain perfected and
e) A security interest in a security certificate retain the priority it had before the commencement
perfected by the secured creditor’s possession of the insolvency proceedings.
of the certificate shall have priority over a
competing security interest perfected by Purchase Money Security Interest
registration of a notice in the Registry. a) A purchase money security interest in equipment
f) A security interest in electronic securities not and its proceeds shall have priority over a
held with an intermediary perfected by a conflicting security interest, if a notice relating

XII. CREDIT TRANSACTIONS

notation of the security interests in the books to the purchase money security interest is
maintained for that purpose by or on behalf registered within three (3) business days after
of the issuer shall have priority over a the grantor receives possession of the
security interest in the same securities equipment.
perfected by any other method. b) A purchase money security interest in consumer
g) A security interest in electronic securities not goods that is perfected by registration of notice
held with an intermediary perfected by the not later than three (3) business days after the
conclusion of a control agreement shall have grantor obtains possession of the consumer
priority over a security interest in the same goods shall have priority over a conflicting
securities perfected by registration of a security interest.
notice in the Registry. c) A purchase money security interest in
h) The order of priority among competing inventory, intellectual property or livestock shall
security interests in electronic securities not have priority over a conflicting perfected
held with an intermediary perfected by the security interest in the same inventory,
conclusion of control agreements is intellectual property or livestock if:
determined on the basis of the time of 1. The purchase money security interest is
conclusion of the control agreements. perfected when the grantor receives
possession of the inventory or livestock, or
Priority Rules for Tangible Assets acquires rights to intellectual property; and
2. Before the grantor receives possession of
a) A security interest in a security certificate the inventory or livestock, or acquires rights
perfected by the secured creditor’s possession in intellectual property, the purchase money
of the certificate shall have priority over a secured creditor gives written notification to
competing security interest perfected by the the holder of the conflicting perfected
registration of a notice in the Registry security interest in the same types of
b) A security interest in an instrument or inventory, livestock, or intellectual property.
negotiable document that is perfected by The notification sent to the holder of the
possession of the instrument or the conflicting security interest may cover
negotiable document shall have priority over multiple transactions between the purchase
a security interest in the instrument or money secured creditor and the grantor
negotiable document that is perfected by without the need to identify each
registration of a notice in the Registry. transaction.

177
d) The purchase money security interest in
equipment or consumer goods perfected e) A notice of lien may be registered by a lien
timely in accordance with subsections (a) and holder without the consent of the person
(b), shall have priority over the rights of a against whom the lien is sought to be
buyer, lessee, or lien holder which arise enforced.
between delivery of the equipment or f) Description of the collateral in a notice shall
consumer goods to the grantor and the time be entered in English.
the notice is registered.
One Notice Sufficient for Security Interests Under
Livestock Multiple Security Agreements
A perfected security interest in livestock securing The registration of a single notice may relate to
an obligation incurred to enable the grantor to security interests created by the grantor under
obtain food or medicine for the livestock shall one (1) or more than one security agreement.
have priority over any other security interest in
the livestock, except for a perfected purchase Effectiveness of Notice
money security interest in the livestock, if the
secured creditor providing credit for food or a) A notice shall be effective at the time it is
medicine gives written notification to the holder discoverable on the records of the Registry.
of the conflicting perfected security interest in b) A notice shall be effective for the duration of
the same livestock before the grantor receives the term indicated in the notice unless a
possession of the food or medicine. continuation notice is registered before the
term lapses.
Fixtures, Accessions, and Commingled Goods c) A notice substantially complying with the
A perfected security interest in a movable requirements of this Chapter shall be effective
property which has become a fixture, or has unless it is seriously misleading.
undergone accession or commingling shall d) A notice that may not be retrieved in a
continue provided the movable property involved search of the Registry against the correct
can still be reasonably traced. In determining identifier of the grantor shall be ineffective
ownership over fixtures, accessions, and with respect to that grantor.
commingled goods, the provisions of Book II of
Republic Act No. 386 or the "Civil Code of the Seriously Misleading Notice
Philippines" shall apply. A notice that does not provide the identification
number of the grantor shall be seriously
Establishment of Electronic Registry misleading.
a. The Registry shall be established in and Amendment of Notice
administered a) A notice may be amended by the registration
by the LRA. of an amendment notice that:
b. The Registry shall provide electronic means b) Identifies the initial notice by its registration
for registration and searching of notices. number; and
c) Provides the new information.
d) An amendment notice that adds collateral
Public Record that is not proceeds must be authorized by the
a. Information contained in a registered notice grantor in writing.
shall be considered as a public record. e) An amendment notice that adds a grantor
b. Any person may search notices registered must be authorized by the added grantor in
in the Registry. writing.
c. The electronic records of the Registry shall f) An amendment notice shall be effective only
be the official records. as to each secured creditor who authorizes it.
g) An amendment notice that adds collateral or
a grantor shall be effective as to the added

XII. CREDIT TRANSACTIONS

Sufficiency of Notice
a) An initial notice of security interest shall not collateral or grantor from the date of its
be rejected: registration.
1. If it identifies the grantor by an Continuation of Notice
identification number, as further
prescribed in the regulations; a) The period of effectiveness of a notice may
be continued by registering an amendment
2. If it identifies the secured creditor or an notice that identifies the initial notice by its
agent of registration number.
the secured creditor by name; b) Continuation of notice may be registered only
3. If it provides an address for the grantor within six (6) months before the expiration of
and secured creditor or its agent; the effective period of the notice.
4. If it describes the collateral: and Termination of Effectiveness of a Notice
5. If the prescribed fee has been tendered,
or an arrangement has been made for a) The effectiveness of a notice may be
payment of fees by other means. terminated by registering a termination
b) If the Registry rejects to register a notice, it notice that:
shall promptly communicate the fact of and 1. Identifies the initial notice by its
reason for its rejection to the person who registration number; and
submitted the notice. 2. Identifies each secured creditor who
c) Each grantor must authorize the registration authorizes the registration of the
of an initial notice by signing a security termination notice.
agreement or otherwise in writing. b) A termination notice terminates effectiveness
d) A notice may be registered before a security of the notice as to each authorizing secured
agreement is concluded. Once a security creditor.
agreement is concluded, the date of Registry Duties
registration of the notice shall be reckoned
from the date the notice was registered. a) For each registered notice, the Registry shall:
1. Assign a unique registration number;
2. Create a record that bears the number
assigned to the initial notice and the date
and time of registration; and
3. Maintain the record for public inspection.

178
b) The Registry shall index notices by the
identification number of the grantor and, for Matters That May be Required by Demand
notices containing a serial number of a motor Upon receipt of the demand submitted under
vehicle, by serial number. Section 39, the secured creditor must register,
c) The Registry shall provide a copy of the within fifteen (15) working days, an amendment
electronic record of the notice, including the or termination notice:
registration number and the date and time of a. Terminating the registration in a case within
registration to the person who submitted it. subsections (a), (d) or (e) of Section 39;
d) The Registry shall maintain the capability to b. Amending the registration to release some
retrieve a record by the identification number property that is no longer collateral in a case
of the grantor, and by serial number of a within subsection
motor vehicle. (c) of Section 39 or that was never collateral
e) The Registry shall maintain records of lapsed under a security agreement between the
notices for a period of ten (10) years after the secured creditor and the grantor in a case
lapse. within subsection (c) of Section 39.
f) The duties of the Registry shall be merely
administrative in nature. By registering a Noncompliance with Demand
notice or refusing to register a notice, the
Registry does not determine the sufficiency, If the secured creditor fails to comply with the
correctness, authenticity, or validity of any demand within fifteen (15) working days after its
information contained in the notice. receipt, the person giving the demand under
Section 39 may ask the proper court to issue an
order terminating or amending the notice as
Search of Registry Records and Certified Report appropriate.
a) The Registry shall communicate the following
information to any person who requests it: Compulsory Amendment or Termination by Court
1. Whether there are in the Registry any
unlapsed notices that indicate the Order
grantor's identification number or vehicle a) The court may, on application by the grantor,
serial number that exactly matches the issue an order that the notice be terminated
relevant criterion provided by the or amended in accordance with the demand,
searcher; which order shall be conclusive and binding-
2. The registration number, and the date and on the LRA: Provided, That the secured
time of registration of each notice; and creditor wrho disagrees with the order of the
3. All of the information contained in each court may appeal the order.
b) The court may make any other order it deems
notice. proper for the purpose of giving effect to an
b) If requested, the Registry shall issue a certified order under subsection (a) of this section.
report of the results of a search that is an c) The LRA shall amend or terminate a notice in
official record of the Registry and shall be accordance with a court order made under
admissible into evidence in judicial subsection (a) of this section as soon as
proceedings without extrinsic evidence of its reasonably practicable after receiving the
authenticity. order.
Section 37. Disclosure of Information.— Enforcement of Security Interest Secured Creditor’s
a. The secured creditor must provide to the Rights
grantor at its request:
1. The current amount of the unpaid secured Right of Redemption
obligation; and Any person who is entitled to receive a
2. A list of assets currently subject to a notification of disposition is entitled to redeem
security interest. the collateral by paying or otherwise performing
b. The secured creditor may require payment of a the secured obligation in full, including the

XII. CREDIT TRANSACTIONS

fee for each request made by the grantor in reasonable cost of enforcement.
subsection (a) in this section, but the grantor General Rule: The right of redemption may be exercised
is entitled to a reply without charge once XPN:
every six (6) months.
c. A security interest in a deposit account shall 1) The person entitled to redeem has not, after
the default, waived in writing the right to
not: redeem;
1. Affect the rights and obligations of the 2) The collateral is sold or otherwise disposed
deposit- taking institution without its of, acquired or collected by the secured
consent; or creditor or until the conclusion of an
2. Require the deposit-taking institution to agreement by the secured creditor for that
provide any information about the deposit purpose; and
account to third parties. 3) The secured creditor has retained the collateral.
When the Grantor May Demand Amendment or
Right of Higher-Ranking Secured. Creditor to Take
Termination of Notice
Over Enforcement
General Rule: A grantor may give a written demand a. Even if another secured creditor or a lien
to the secured creditor to amend or terminate the holder has commenced enforcement, a
effectiveness of the notice if: secured creditor whose security-interest has
a. All the obligations under the security priority over that of the enforcing secured
agreement to which the registration relates
have been performed and there is no creditor or lien holder shall be entitled to take
commitment to make future advances; over the enforcement process.
b. The secured creditor has agreed to release b. The right referred to in subsection (a) of this
part of the collateral described in the notice; section may be invoked at any time before
c. The collateral described in the notice includes the collateral is sold or otherwise disposed of,
an item or kind of property that is not a or retained by the secured creditor or until
collateral under a security agreement the conclusion of an agreement by the
between the secured creditor and the grantor; secured creditor for that purpose.
c. The right of the higher-ranking secured creditor
d. No security agreement exists between the to take over the enforcement process shall
parties; or include the right to enforce the rights by any
e. The security interest is extinguished in method available to a secured creditor under
accordance this Act.
with this Act.

17G
Expedited Repossession of the Collateral Right to Dispose of Collateral
a) The secured creditor may take possession of a. After default, a secured creditor may sell or
the collateral without judicial process if the otherwise dispose of the collateral, publicly or
security agreement so stipulates: Provided, privately, in its present condition or following
That possession can be taken without a any commercially reasonable preparation or
breach of the peace. processing.
b) If the collateral is a fixture, the secured b. The secured creditor may buy the collateral
creditor, if it has priority over all owners and at any public disposition, or at a private
mortgagees, may remove the fixture from disposition but only if the collateral is of a
the real property to which it is affixed without kind that is customarily sold on a recognized
judicial process. The secured creditor shall market or the subject of widely distributed
exercise due care in removing the fixture. standard price quotations.
c) If, upon default, the secured creditor cannot
take possession of collateral without breach
of the peace, the secured creditor may Commercial Reasonableness Required
proceed as follows: a. In disposing of collateral, the secured creditor
1. The secured creditor shall be entitled to shall act in a commercially reasonable
an expedited hearing upon application for manner.
an order granting the secured creditor b. A disposition is commercially reasonable if
possession of the collateral. Such the secerned creditor disposes of the
application shall include a statement by collateral in conformity with commercial
the secured creditor, under oath, verifying practices among dealers in that type of
the existence of the security agreement property.
attached to the application and c. A disposition is not commercially
identifying at least one event of default unreasonable merely because a better price
by the debtor under the security could have been obtained by disposition at a
agreement; different time or by a different method from
2. The secured creditor shall provide the the time and method selected by the secured
debtor, grantor, and, if the collateral is a creditor.
fixture, any real estate mortgagee, a copy d. If a method of disposition of collateral has
of the application, including all supporting been approved in any legal proceeding, it is
documents and evidence for the order conclusively commercially reasonable.
granting the secured creditor possession
of the collateral; and Notification of Disposition
3. The secured creditor is entitled to an
order granting possession of the collateral a. Not later than ten (10) days before
upon the court finding that a default has disposition of the collateral, the secured
occurred under the security agreement creditor shall notify:
and that the secured creditor has a right 1) Not later than ten (10) days before disposition of
to take possession of the collateral. The the collateral, the secured creditor shall notify:
court may direct the grantor to take such
action as the court deems necessary and 2) The grantor may waive the right to be notified.
appropriate so that the secured creditor 3) A notification of disposition is sufficient if
may take possession of the collateral: it identifies the grantor and the secured
Provided, That breach of the peace shall creditor; describes the collateral; states
include entering the private residence of the method of intended disposition; and
the grantor without permission, resorting states the time and place of a public
to physical violence or intimidation, or disposition or the time after which other
being accompanied by a law enforcement disposition is to be made.
officer when taking possession or 4) The requirement to send a notification
confronting the grantor. under this section shall not apply if the
collateral is perishable or threatens to

XII. CREDIT TRANSACTIONS

decline speedily in value or is of a type
Recovery in Special Cases customarily sold on a recognized
Upon default, the secured creditor may without b. The grantor may waive the right to be notified.
judicial process: c. A notification of disposition is sufficient if it
a. Instruct the account debtor to make payment identifies the grantor and the secured
to the secured creditor, and apply such creditor; describes the collateral; states the
payment to the satisfaction of the obligation method of intended disposition; and states
secured by the security interest after the time and place of a public disposition or
deducting the secured creditor’s reasonable the time after which other disposition is to be
collection expenses. On request of the made.
account debtor, the secured creditor shall d. The requirement to send a notification under
provide evidence of its security interest to this section shall not apply if the collateral is
the account debtor when it delivers the perishable or threatens to decline speedily in
instruction to the account debtor; value or is of a type customarily sold on a
b. In a negotiable document that is perfected by recognized market.
possession, proceed as to the negotiable
document or goods covered by the
negotiable document; Application of Proceeds
c. In a deposit account maintained by the a. The proceeds of disposition shall be applied
secured creditor, apply the balance of the in the following order:
deposit account to the obligation secured by 1) The reasonable expenses of taking,
the deposit account; and holding, preparing for disposition, and
d. In other cases of security interest in a deposit disposing of the collateral, including
account perfected by control, instruct the reasonable attorneys’ fees and legal
deposit- taking institution to pay the balance expenses incurred by the secured
of the deposit account to the secured creditor;
creditor’s account. 2) The satisfaction of the obligation secured
by the security interest of the enforcing
secured creditor; and

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

XII. CREDIT TRANSACTIONS

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.

181
 XIII. COMPROMISE AGREEMENT
Compromise Agreement • A compromise is an agreement between two
It is a contract whereby the parties, by making or more persons who, for preventing or
reciprocal concessions, avoid a litigation or put putting an end to a lawsuit, adjust their
an end to one already commenced. [Article respective positions by mutual consent in the
2028] way they feel they can live with. Reciprocal
concessions are the very heart and life of
Characteristics of a Compromise every compromise agreement, where each
party approximates and concedes in the hope
a. Consensual of gaining balance by the danger of losing. It
b. Reciprocal is, in essence, a contract (Clark Development
c. Nominate Corporation v. Mondragon Leisure and
Resorts Corporation et al,
d. Onerous
e. Accessory (in the sense that a prior G.R. No. 150986, March 2, 2007).
conflict is presupposed) • Consent could be given not only by the party
f. Once accepted, it is binding on the parties, himself but also by anyone duly authorized
provided there is no vitiated consent. and acting for and in his behalf
g. It is the settlement of a controversy
principally, and is, but merely incidentally, the Coverage of a Compromise
settlement of a claim. • A compromise comprises only those objects
which are definitely stated therein, or which
Kinds of Compromises by necessary implication from its terms should
1. Judicial - to end a pending litigation be deemed to have been included in the same
(CIVIL CODE, Art. 2036).
2. Extrajudicial - to prevent a litigation from arising • A general renunciation of rights is understood
to refer only to those that are connected with
Judicial Compromise - A compromise agreement the dispute which was the subject of the
that is intended to resolve a matter already compromise (CIVIL CODE, Art. 2036).
under litigation is normally called a judicial
compromise. Once it is stamped with judicial Mitigation of Damages
imprimatur, it becomes more than a mere
contract binding upon the parties. Having the The courts may mitigate the damages to be paid
sanction of the court and entered as its by the losing party who has shown a sincere
determination of the controversy, it has the force desire for compromise. [Article 2031]
and effect of any other judgment. Such
agreement has the force of law and is conclusive When Court Approval is Essential
between the parties. It transcends its identity as The court’s approval is necessary in
a mere contract binding only upon the parties
thereto, for it becomes a judgment that is subject compromises entered into by:
to execution in accordance with the Rules. a. Guardians
• Thus, a compromise agreement that has been b. Parents
made and duly approved by the court attains
the effect and authority of res judicata, although c. Absentee’s representatives or Administrators
no execution may be issued unless the d. Executors of decedents’ estates. [Article 2032]
agreement receives the approval of the court
where the litigation is pending and compliance
with the terms of the agreement is decreed Rule for Compromise Entered Into by Juridical
(Viesca v. Gilinsky, G.R. No. 171698, July Persons The form and the requisites for alienation
4,2007). of property must be observed. [Article 2033].
• Courts as a rule may not impose upon the
parties a Judgment different from their Offer of compromise in civil cases
compromise agreement. It would be an abuse
of discretion. (Municipal Board v. Samahang In civil cases, an offer of compromise is not an
Magsasaka, G.R. No. L-25818, February 25, admission of any liability, and is not admissible in
1975) evidence against the offeror. Neither is evidence
of conduct nor statements made in compromise
negotiations admissible, except evidence
Basic duty of the court whenever a suit is filed otherwise discoverable or offered for another
The court shall endeavor to persuade the litigants purpose, such as proving bias or prejudice of a
in a civil case to agree upon some fair witness, negativing a contention of undue delay,
compromise. [Article 2029] Rationale: Litigation or proving an eff ort to obstruct a criminal
must, if possible, be avoided or minimized. investigation or prosecution. (REVISED RULES ON
EVIDENCE, Sec 28).
Suspension of Civil Action or Proceeding
Every civil action or proceeding shall be Compromise Upon Civil Liability Arising From An
suspended: Offense
1. If willingness to discuss a possible There may be a compromise upon the civil liability
compromise is expressed by one or both arising from an offense; but such compromise
parties; shall not extinguish the public action for the
2. If it appears that one of the parties, before imposition of the legal penalty (Art. 2034).
the commencement of the action or General Rule: If a crime has been committed,
proceeding, offered to discuss a possible there can be a compromise on the civil liability
compromise but the other party refused the but not generally on the criminal liability.
offer. Rationale: Because the social and public interest
demands the punishment of the offender.
Nature of the Contract
• A compromise is a consensual contract, and
as such, it is perfected upon the meeting of
the minds of the parties to the contract.

182
When Compromise is Allowed Rule In Setting Up A Mistake Of Fact
If it arises under the Internal Revenue Code or One of the parties cannot set up a mistake of
any other law administered by the Bureau of fact as against the other if the latter, by virtue of
Internal Revenue. the compromise has withdrawn from a litigation
already commenced. [Article 2038]
Offer of compromise in criminal cases
In criminal cases, except those involving quasi- Discovery of Documents Referring to Matters
offenses (criminal negligence) or those allowed Compromised Upon
by law to be compromised, an offer of
compromise by the accused may be received in General Rule: The discovery of documents
evidence as an implied admission of guilt referring to one or more but not to all of the
(REVISED RULES ON EVIDENCE, Sec 28). questions settled shall not itself be a cause for
annulment or rescission of the compromise.
XPN: Unless said documents have been
Questions on Which There Can Be No Valid concealed by one of the parties. [Article 2039]
Compromise
1. The civil status of persons; Remedy if Compromise Agreement Is Not Fulfilled
2. The validity of a marriage or a legal separation; If one of the parties fails or refuses to abide by
3. Any ground for legal separation; the compromise, the other party may either:
4. Future support; a) Enforce the compromise; or
5. The jurisdiction of courts; b) Regard the compromise as rescinded and
insist upon his original demand. [Article 2041]
6. Future legitime. [Article 2035]
Recovery of Damages
Res Judicata Effect of a Compromise In either case, damages may be recovered if
• A compromise has upon the parties the effect there should be additional injury caused by
and authority of res judicata; but there shall failure to abide by the terms of the compromise.
be no execution except in compliance with a
judicial compromise (Art. 2037). No Necessity for Judicial Rescission
• If the compromise has the effect of a novation,
the surety is released from liability. But if the There is no necessity for a judicial declaration of
compromise is merely a reduction of the rescission, for the party aggrieved may “regard”
obligation, the surety is still liable for the the compromise agreement as already
“rescinded.”
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

XIII. COMPROMISE AGREEMENT

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).
c. If it refers only to one thing to which one of the
parties has no right, as shown by the Newly-
discovered documents (Art. 2039).
d. If after a litigation has been decided by a final 183
judgment, a compromise should be agreed
upon, either or both parties being unaware of
the Existence of the final judgment, the
compromise may be rescinded (Art. 2040)
 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 of
quasi-contract to the end that no one shall be a. There must be voluntary assumption of
unjustly enriched or benefited at the expense of agency or management by the gestor;
another. b. Business or property must be neglected
or abandoned;
Article 2143. The provisions for quasi-contracts in c. Agency/management must not be authorized by
this Chapter do not exclude other quasi-contracts owner either expressly or impliedly;
which may come within the purview of the d. Assumption of agency/management must be
preceding article. made in good faith.
Ratification of the management by the owner of
‘Quasi-Contracts’ defined the business produces the effects of an express
agency, even if the business may not have been
• Are lawful, voluntary, and unilateral acts successful.
which generally require a person to reimburse
or compensate another in accordance with the
principle that no one shall be unjustly enriched Responsibilities of the Officious Manager (Arts
or benefited at the expense of another. [Article 2144, 2145, 2147, 2148, 2152, 2146)
2142]
• Quasi-contract may be described as a juridical
relation that the law creates on the basis of 1. Continue taking charge of the agency or
certain VOLUNTARY and UNILATERAL, but management until the termination of the
LAWFUL, acts of a person, in the interest of affairs and its incidents, but he may require
equity and justice such as the avoidance of the owner, if the latter is in a position to do
what could otherwise be a situation of unjust so, to substitute the officious manager (CIVIL
enrichment. CODE, Art. 2144);
• Quasi-contracts are either nominate 2. Perform his duties with all the diligence of a
(negotiorum gestio and solution indebiti) or good father of a family, and pay the damages
innominate (Articles 2164-2175 NCC) which through his fault or negligence may be
suffered by the owner of the property or
business under management, but the courts
Bases for Quasi-Contracts may however, increase or moderate the
1. No one must unjustly enrich himself at indemnity according to the circumstances of
each case (CIVIL CODE, Art. 2145);
another’s NOTE: A gestor is liable for the acts or
expense; negligence of his employees.
2. If one benefits, he must reimburse; 3. Be liable for the acts of his delegate if he
delegated to another person all or some of
3. Justice and equity. his duties, without prejudice to the direct
obligation of the delegate toward the owner
Kinds of Quasi-Contracts of the business (CIVIL CODE, Art. 2146, par.
1. Negotiorum Gestio – voluntary management 1);
of the property or affairs of another without 4. Be personally liable for contracts which he
the knowledge or consent of the latter. (Art. has entered into with third persons, even
2144-2153) though he acted in the name of the owner,
2. Solutio Indebiti – juridical relation which is and there shall be no right of action between
created when something is received when the owner and third persons except:
there is no right to demand it and it was i. When the owner has expressly or tacitly ratified
unduly delivered by mistake. (Art. 2154- the management, or
2163) ii. When the contract refers to things
3. Other cases (Art. 2164-2175) pertaining to the owner of the business (CIVIL
CODE Art. 2152) NOTE: The responsibility of
A. NEGOTIORIUM GESTIO two or more officious managers shall be
solidary, unless the management was
(CIVIL CODE, ARTS. 2144-2153) assumed to save the things or business
• It is the voluntary administration of the from
property, business or affairs of another, imminent danger (CIVIL CODE, Art. 2146, par. 2);
without his consent or authority, that creates and
an obligation for reimbursement for the 5. The officious manager shall be liable for
necessary expenses the gestor had spent. any fortuitous event:
• Whoever voluntarily takes charge of the i. If he undertakes risky operations which
agency or management of the business or the owner was not accustomed to
property of another, without any power from embark upon;
the latter, is obliged to ii. If he has preferred his own interest to that of the
continue the same until the termination of
the affair
and its incidents, or to require the person owner;
concerned to substitute him, if the owner is in iii. If he fails to return the property or business
the position to do so. after demand by the owner:
If he assumed the management in bad faith
Officious Manager iv (CIVIL CODE, Art. 2147);
Except when the management was
A party who, in the absence of any contract assumed to save the property or
whatsoever, officiously undertakes to do a .
business from imminent danger-
service with respect to the property of another.
v.

184
 BAR QUESTION
a) If he is manifestly unfit to carry the In fear of reprisals from lawless elements
management; besieging his barangay, X abandoned his
b) If by his intervention he prevented a more fishpond, fled to Manila and left for Europe.
competent person from taking up the Seeking that the fish in the fishpond were
management (CIVIL CODE, Art. 2148). ready for harvest, Y, who is in the business of
managing fishponds on a commission basis,
took possession of the property, harvested the
Responsibilities of the Owner (Arts 2150, 2151, fish and sold the entire harvest to Z.
2152) Thereafter, Y borrowed money from W and
The owner of the property shall be liable for used the money to buy new supplies of fish fry
obligations incurred in his interest, and shall and to prepare the fishpond for the next crop.
reimburse the officious manager for the a) What is the Juridical relation between X and
necessary and useful expenses and for Y during X's absence?
damages, which the latter may have suffered b) Upon the return of X to the barangay, what
in the performance of his duties in the are the obligations of Y to X as regards the
following instances: contract with Z?
1. When the owner of the property or c) Upon X's return, what are the obligations of
business enjoyed the advantages of the X as regards Y's contract with W?
officious management although it may not d) What legal effects will result if X expressly
have been expressly ratified by him (CIVIL ratifies Y's management? What would be
CODE, Art. 2150, Par. 1) the obligations of X in favor of Y?
2. When the management has for its purpose Explain all your answers.
the prevention of an imminent and
manifest loss, although no benefit may
have been derived (CIVIL CODE, Art. 2150,
Par. 2).
3. Even if there had been no benefit to the
owner and there has been no imminent
and manifest danger to the property of SUGGESTED ANSWER
business provided: (a)The juridical relation is that of the quasi-
a. The officious manager has acted in contract of "negotiorum gestio". Y is the
good faith; and "gestor" or "officious manager" and X is the
"owner" (Art. 2144, Civil Code).
b. The property or business is intact, ready to be
returned to the owner (CIVIL CODE, Art. 2151)
(b) Y must render an account of his operations
and deliver to X the price he received for the
Extinguishment of management (Article 2153) sale of the harvested fish (Art. 2145, Civil
The management is extinguished: 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 of
provisions of article 2144; 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
manager While A was abroad, the manager of his factory
effects of died
suddenly an express
and B agency,
and C, and X is liable
A's friends, to
took
NEGOTIORUM GESTIO V. IMPLIED AGENCY over
pay its
the management,
commissions without
habituallyhis knowledge.
received by
However,
the gestor assince
manager they(Art.were businessmen
2149,most
Civil Code)
NEGOTIORUM GESTIO IMPLIED AGENCY themselves, they had to entrust of their
As to necessity of authorization duties to X and as a result, the factory suffered
considerable loss.
Gestor should never The agent is actually Are they liable for said losses?
have been authorized authorized to assume XIv. qvAZI-CONTRACTZ
in any manner the agency by virtue of If they are, why and what is the nature of their
the acts of the owner liability?
or by virtue of his
silence, inaction, or SUGGESTED ANSWER
his failure to Here, B and C are liable for the acts of their
repudiate the agency delegate. Under the law, if the officious
manager delegates to another person all or
As to necessity of neglect or abandonment some of his duties, he shall be liable for the
Business or Neglect or acts of the delegate, without prejudice to the
property abandonment is not direct obligation of the latter toward the owner
should be neglected necessary. of the business.
or
Note: So long as the owner dos not know that As to the nature of liability, it is only joint
because the management of the business was
another is acting on his behalf without assumed to avoid an imminent danger. Under
authority, negotiorum gestio exists, but once the law, the responsibility of two or more
he becomes aware of such fact and still he does officious managers shall be solidary, unless the185
management was assumed to save the thing
not repudiate the acts of the agent, the quasi- or business from imminent danger.
contract ceases to exist. It has become an
implied agency.
 B. SOLUTIO INDEBITI When mistake is presumed:
General Rule: It is presumed that there was a mistake
(CIVIL CODE, ARTS. 2154-2163) in the payment if something which had never been
due or had already been paid was delivered. [Article
Solutio indebiti: Definition and Concept 2163]
• Refers to payment by mistake. It is receiving
payment by mistake that is not due or does Burden Of Proof
not have such right to demand such payment. He from whom the return is claimed may prove that
It creates an obligation to return such the delivery was made out of liberality or for any other
payment. just cause.
• It is the quasi-contract that arises when a
person is obliged to return whatever was Right of payer when payment made because of doubt
received by him through error or mistake or • Payer may recover if he proves that it was not due.
received by him although there was no right to [Article 2156]
demand it. • Solidary Liability of the Payees - The responsibility
• If something is received when there is no right of two or more payees, when there has been
to demand it, and it was unduly delivered payment of what is not due, is solidary. [Article
through mistake, the obligation to return it 2157]
arises.
• Mistake in payment (see Arts. 2154 – 2163) Rule when property belongs to a third person:
• The responsibility of two or more payees, The payee shall comply with the provisions of Article
when there has been mistake of payment, is 1S84 [Article 2158]
solidary (Art 2157) • Article 1G84. The depositary cannot demand that
the depositor prove his ownership of the thing
Requisites for Solutio Indebiti deposited.
1. Receipt (not mere acknowledgment) of • Nevertheless, should he discover that the thing has
been stolen and who its true owner is, he must
something. (Art. 2154). advise the latter of the deposit.
2. There was no right to demand it (because the • If the owner, in spite of such information, does not
giver had no obligation). claim it within the period of one month, the
3. The undue delivery was because of mistake of depositary shall be relieved of all responsibility by
fact or law. returning the thing deposited to the depositor.
Note: When the payment was not by mistake or • If the depositary has reasonable grounds to believe
voluntary, but was made because of the coercive that the thing has not been lawfully acquired by the
process of the writ of execution, solutio indebiti depositor, the former may return the same.
does NOT apply.
BAR QUESTION Reimbursement for Improvement and Expenses
"C", a Filipino resident of the U.S., sent to his As regards the reimbursement for improvements and
expenses incurred by him who unduly received the
father "D” in Manila $500.00 through "X" Bank thing, the provisions of Title V of Book II (Possession)
which had a branch in Manila. Due to mistake of shall govern. [Article 2161]
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 Payee who destroys the evidences or proofs of his right in
return of the $4,500.00. "D" refused and the good faith
Bank sued him. Payee shall be exempt from the obligation to restore
Is the Bank entitled to recover from "D"? who, believing in good faith that the payment was
being made of a legitimate and subsisting claim,
SUGGESTED ANSWER destroyed the document, or allowed the action to
Yes, the Bank is entitled to recover the $4,500 from prescribe, or gave up the pledges, or cancelled the
"D". We have in this case an example of a quasi- guaranties for his right. [Article 2162]
contract of solutio indebiti which arises whenever a
person unduly delivers a thing through mistake to Action of Person Who Paid Unduly
another who has no right to demand it (Art 2154,
Civil Code). Its requisites are: He who paid unduly may proceed only against the true
debtor or the guarantors with regard to whom the
(1) There must be a payment or delivery made action is still effective.
by one person to another; BAR QUESTION (2012)
(2) The person who made the payment or
delivery was under no obligation to do so; Siga-an granted a loan to Villanueva in the amount of
and P 540,
(3) The payment or delivery was made by 000.00. Such agreement was not reduced to writing.
reason of mistake. Siga-an demanded interest which was paid by
All of the above requisites are present in the instant Villanueva in cash and checks. The total amount
XIv. qvAZI-CONTRACTZ

Villanueva paid accumulated to P 1, 200, 000.00. Upon

case. advice of her lawyer, Villanueva demanded for the
return of the excess amount of P660,000.00 which was
Rule if payee is in GOOD FAITH ignored by Siga-an.
He who in good faith accepts an undue payment of • Is the payment of interest valid? Explain. (3%)
• Is solutio indebiti applicable? Explain. (2%)
a thing certain and determinate shall: SUGGESTED ANSWER
1. Be responsible for the impairment or loss of • No, the payment of interest in invalid. The law states
the same or its accessories and accessions that no interest shall be due unless it has been
insofar as he has thereby been benefited. expressly stipulated in writing (Art. 1956, New Civil
2. If he has alienated it, she shall return the Code) Hence, Villanueva is entitled to recover the
interests paid since it cannot legally be demanded by
price or Siga-an under an oral contract of loan (Siga-an v.
assign the action to collect the sum. [Article Villanueva, G.R. No. 173227, January 20, 2009).
• Yes, solutio indebiti is applicable because the
2160] overpaid interest of P660,000 is not due.
The law provides when something is received when
there is no right to demand it, and it was unduly
Rule if payee is in BAD FAITH delivered through mistake, the obligation to return
Whoever in bad faith accepts an undue payment it arises. (Article 2154, Civil Code) Since the interest
shall: was not validly reduced into writing,
Siga-an had no right to receive it.
1. Pay legal interest if a sum of money is involved,
2. Be liable for fruits received or which should have
been received if the thing produces fruits
(damages).
3. Be answerable for any loss or impairment of
the thing from any cause, and for damages to 186
the person who delivered the thing, until it is
recovered. [Article 2159]
 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

XIv. qvAZI-CONTRACTZ
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.

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. 21G4) 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. 21G7 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 general CULPA AQUILANA CRIME
law or otherwise upon all persons occupying
the relation to each other that is involved in a Legal basis of liability
given transaction.
• Tort is a common law concept. In common There can be a quasi- There can be no
law, tort is an unlawful violation of private delict as long as there crime unless there is
right, not created by contract, and which is fault or negligence a law clearly
gives rise to an action for damages. resulting in damage or punishing the act.
• A tort is an act or omission that gives rise to injury to another.
injury or harm to another and amounts to a
civil wrong for which courts impose liability.
• In the context of torts, "injury" is the invasion
of any legal right, whereas "harm" is a loss or Criminal Intent
detriment in fact that an individual suffers
Not necessary for Criminal intent is
A. COMMON PRINCIPLES quasi- delict to exist. essential for criminal
Fault or negligence liability to exist.
Quasi-Delict or Culpa Aquilana without intent will
• It is extra-contractual obligations which suffice.
arise only between parties not otherwise
bound by contact, whether express or Nature of Right Violated
implied
• The wrongful or negligent act or omission Right violated is a Right violated is a
which creates a vinculum juris and gives private right. It is a public one. Crime is a
rise to an obligation between two persons wrongful act against a wrong against the
not formally bound by any other obligation private individual. Only State. Affects public
• Governed by Article 2176 of the Civil Code. involves a private interest.
concern.
Elements of Quasi-Delict
Liability
1. An act or omission
2. The presence of fault or negligence in Civil liability only. Every person
the performance of the act Every quasi-delict criminally liable is
3. Injury - The illegal invasion of a legal right. gives rise to liability also civilly liable.
4. Causal connection between the negligent for damages. Includes both civil
act and the injury Employer’s liability is and criminal liability
5. No pre-existing contractual relation direct and primary (but some crimes like
under Art. 2180. illegal possession of
firearm or prohibited
GR: There should be no pre-existing substance do not
contractual relations between the persons give rise to civil
involved liability). The
Exception: The act or omission is a tort employer’s liability is
independent subsidiary under
of the contract. respondeat superior.

1. TORTS VS. CRIMES

Weight of Evidence
Crime Proof of the fault or The guilt of the
• A crime is an act committed or omitted in negligence require accused must be
violation of a law forbidding or commanding only preponderance proved beyond
it and for which a punishment is imposed reasonable doubt.
upon conviction. of evidence.
• Accused is presumed innocent until the
contrary is proven. The prosecution has the Sanction or Penalty
burden of proving guilt beyond reasonable
doubt. Reparation Punishment is either
• Criminal negligence is governed by Art. 365 imprisonment, fine or
of the Revised Penal Code. both; sometimes
or other accessory
indemnification of penalties are
the imposed.
injury or damage.

188
 2. TORTS VS. CONTRACTS negligent acts which may be punishable by law.

Contract B. CLASSIFICATION OF TORTS

It is a “meeting of minds between two persons 1. Negligent Tort - Involves voluntary acts or
whereby one binds himself, with respect to the omissions which result in injury to others,
other, to give something, or render some without intending to cause the same.
service.” • The actor fails to exercise due care in
performing such acts or omissions.
2. Intentional Tort - Includes conduct where
CULPA CONTACTUAL V. CULPA AQUILANA the actor desires to cause the
consequences of his act or believe the
CULPA CONTRACTUAL CULPA AQUILANA consequences are substantially certain to
result from it. They are in Chapter 2 of the
The foundation of the It is a separate Preliminary Title of the NCC entitled
liability of the “Human Relations”, i.e. Arts. 19, 20, 21,
defendant is the source 26.
contract of • Distinguished from negligent tort –
negligence involves foreseeability of the
risk NOT certainty of the harm.
obligation 3. Strict Liability Tort - Where a person is made
independent of liable independent of fault or negligence
upon submission of proof of certain facts.
contract • When strict liability is imposed, conduct
is generally not wrongful in itself, but the
In breach of contract In quasi-delict law imposes liability to compensate for
committed through the the presumptive damages suffered by another.
negligence of responsibility for • Doctrine that holds a person liable for
employee, the the any injuries or damages caused by their
employer cannot erase negligence of products, actions, or animals, even if they
There
his may be concurrence
primary and direct ofhis causes of action
servants can had no intent to harm and were not at
Ex: Common
liability by Carriers
invoking liabilitybemay ariseby
rebutted ex fault.
contractu,ofquasi
exercise ex-delicto
diligence and ex
of proof delicto
of the even
exercise
aif there
goodis only
fathera single
of aactofordue
omission.
care in their 1. NEGLIGENCE – CIVIL CODE, ARTS. 2176-21G4
Either in
family of the
these liabilities may selection
selection be enforced
against the offender subject to Article 2177 –
plaintiff cannot recover damages twice for the ARTICLE 1173. The fault or negligence of the
same act or omission (proscription against obligor consists in the omission of that
double recovery) diligence which is required by the nature of
the obligation and corresponds with the
ELCANO V. HILL circumstances of the persons, of the time and
of the place. When negligence shows bad faith,
G.R. NO. L-24803 MAY 26, 1G77 the provisions of articles 1171 and 2201,
J. Barredo paragraph 2, shall apply.
We do hold, that Article 2176, where it refers to
"fault or negligence” covers not only acts "not If the law or contract does not state the
punishable by law" but also acts criminal (see diligence which is to be observed in the
Arts. 29 to 32 NCC) in character, whether performance, that which is expected of a good
intentional and voluntary or negligent. father of a family shall be required.
Consequently, a separate civil action lies • Negligence has been defined as the failure
against the offender in a criminal act, whether to observe for the protection of the interests
or not he is criminally prosecuted and found of another person that degree of care,
guilty or acquitted, provided that the offended precaution, and vigilance which the
party is not allowed, if he is actually charged circumstances justly demand, whereby such
also criminally, to recover damages on both other person suffers injury.
scores, and would be entitled in such
eventuality only to the bigger award of the • Involves voluntary acts or omissions which
two, assuming the awards made in the two result in injury to others, without intending
cases vary. to cause the same.
• It is the failure to observe for the protection
of the interest of another that degree of
In other words, the extinction of civil liability care, precaution, and vigilance that the
referred to in Par. (e) of Section 3, Rule 111, circumstances justly demand.
refers exclusively to civil liability founded on
Xv. TORTZ AND DAMAGEZ

• Negligence is the omission to do something

Article 100 of the Revised Penal Code, which a reasonable man, guided upon those
whereas the civil liability for the same act considerations which ordinarily regulate the
considered as a quasi-delict only and not as a conduct to human affairs, would do, or
crime is not extinguished even by a doing something which a prudent and
declaration in the criminal case that the reasonable man would not do.
criminal act charged has not happened or has • If the law or contract does not state the
not been committed by the accused. Briefly diligence which is to be observed in the
stated, We here hold, in reiteration of Garcia, performance, that which is expected of a
that culpa aquiliana includes voluntary and good father of a family shall be required.

18G
Test of Negligence b. Banks - are duty-bound to treat the
The standard test in determining whether a deposit accounts of their depositors with
person is negligent in doing an act whereby injury the highest degree of care where the
or damage results to the person or property of fiduciary nature of their relationship with
another is this: could a prudent man, in the their depositors is concerned. But such
position of the person to whom negligence is degree of diligence is not expected to be
attributed, foresee harm to the person injured as exerted by banks in commercial
a reasonable consequence of the course actually transactions that do not involve their
pursued? If so, the law imposes a duty on the fiduciary relationship with their
actor to refrain from that course or to take depositors.
precautions to guard against its mischievous
results, and the failure to do so constitutes
negligence. 3. Slight Diligence
This standard of care can ONLY be applied if it is
stipulated by the parties of a contract. This
Reasonable foresight of harm, followed by the standard of care usually applies on charters.
ignoring of the admonition born of this provision,
is always necessary before negligence can be
held to exist. Degrees of Negligence
1. Gross Negligence - Negligence where there is
Reasonable foresight “want of even slight care and diligence”. Entire
want of care as to raise a presumption that
• What an ordinarily prudent man will do under the person in fault is conscious of the
the same circumstances can be determined by probable consequences of carelessness, and
asking the following: Could a prudent man, in is indifferent or worse, to the danger or injury
the case under consideration, foresee harm as to person or property of others.
a result of the course pursued? If so, it was
the duty of the actor to take precautions to 2. Simple negligence – Negligence where there is
guard against harm. lack of precaution on the part of the offender;
and that the damage impending to be caused
• Did the defendant in doing the alleged is not immediate or the danger is not clearly
negligent act manifest.
use the reasonable care and caution which an
ordinarily prudent person would have used in the Imprudence under the Revised Penal Code
same situation? If not, then he is guilty of 1. Simple imprudence - consists in the lack of
negligence. precaution displayed in those cases in which
the damage impending to be caused is not
immediate nor the danger clearly manifest.
Circumstances to consider in determining negligence: 2. Reckless imprudence - consists in voluntary,
1. Time but without malice, doing or failing to do an
act from which material damage results by
2. Place reason of inexcusable lack of precaution on
3. Emergency Rule the part of the person performing of failing to
4. Gravity of Harm to be Avoided perform such act, taking into consideration
his employment or occupation, degree of
5. Alternative Course of Action intelligence, physical condition and other
6. Social value or utility of the activity circumstances regarding persons, time and
7. Person exposed to the risk place.

PRESUMPTION
2. DEGREES OF DILIGENCE AND NEGLIGENCE;
Proof of Negligence
PRESUMPTION General Rule:
If the plaintiff alleged in his complaint that he
Standard of Care was damaged because of the negligent acts of
It is the degree of care or competence that one is the defendant, the plaintiff has the burden of
expected to exercise in a particular circumstance proving such negligence.
or role. The quantum of proof required is preponderance
of evidence (Rule 133 Revised Rules of Court)
DEGREES OF DILIGENCE Exceptions:
• When the rules or the law provides for cases when
1. Ordinary Diligence (Concept of Pater Familias) negligence is presumed.
• “The diligence of a good father of a family” • Presumptions of Negligence
• A good father of a family means a person of • Res Ipsa Loquitur
ordinary or average diligence.
• The law presumes or requires a man to Presumptions of Negligence
possess ordinary capacity to avoid harming In motor vehicle mishaps, the owner is presumed
his neighbors, unless a clear and manifest negligent if he was in the vehicle and he could
Xv. TORTZ AND DAMAGEZ

incapacity is shown. have used due diligence to prevent the

• General Rule: If the diligence required to comply misfortune. (Art. 2184 Civil Code)
with one's obligations is not stipulated in the XPN: If the owner was not in the motor vehicle,
law or contract, paterfamilias will follow. Article 2184 does not apply. The provisions of
[Article 1173] Article 2180 are applicable. [Article 2184]
2. Extraordinary Diligence It is disputably presumed that a driver was
• Extreme measure of care and caution which negligent if he had been found guilty of reckless
persons of unusual prudence and driving or violating traffic regulations at least twice
circumspection observe for securing or for the next preceding two months. (Article 2184
preserving their own property or rights. Civil Code)
• Provided for by the law or stipulated. XPN: Unless there is proof to the contrary. [Article 2185]
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 cautious
persons, with a due regard for all the
circumstances.” [Art. 1755, NCC]

1G0
 The driver of a motor vehicle is presumed
negligent if at the time of the mishap, he was 3. INTENTIONAL – CIVIL CODE, ARTS. 1G-35
violating any traffic regulation. (Article 2185
Civil Code) • Include conduct where the actor desires to
XPN: Unless there is proof to the contrary. cause the consequences of his act or believe
[Article 2185] the consequences are substantially certain to
result from it.
Prima facie presumption of negligence of the • They are found in Chapter 2 of the Preliminary
defendant arises if death or injury results from Title of the NCC entitled “Human Relations”, i.e.
his possession of dangerous weapons or Arts. 19, 20, 21, 26.
substance. • Distinguished from negligent tort – negligence
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
Presumption of negligence of the common Article. 1G. Every person must, in the exercise of his
carrier arises in case of loss, destruction or rights and in the performance of his duties, act
with justice, give everyone his due, and observe
deterioration of the goods, or in case of death honesty and good faith.
or injury of passengers.
XPN: Upon proof of exercise of extraordinary
diligence. [Article 1735] Standards to follow:
1. to act with justice;
Vicarious Liability - The responsibility treated in 2. to give everyone his due; and
Art. 2180 shall only cease when the persons 3. to observe honesty and good faith.
therein mentioned prove that they observed all
the diligence of a good father of a family to
prevent damage. [2180] Art. 20. Every person who, contrary to law,
wilfully or negligently causes damage to another,
BAR QUESTION (1GG6) shall indemnify the latter for the same.
Marcial, who does not know how to drive, has
always been driven by Ben, his driver of ten Art. 21. Any person who wilfully causes loss or
years whom he had chosen carefully and has injury to another in a manner that is contrary to
never figured in a vehicular mishap. One day, morals, good customs or public policy shall
Marcial was riding at the back seat of his compensate the latter for the damage.
Mercedes Benz being driven along EDSA by Ben.
Absorbed in reading a book, Marcial did not ARDIENTE V. SPS. PASTORFIDE
notice that they were approaching the corner of G.R. NO. 161G21, JULY 17, 2013
Quezon Avenue, when the traffic light had just J. Peralta
turned yellow. Ben suddenly stepped on the gas
to cross the intersection before the traffic light This article sets certain standards which must be
could turn red. But, too late. Midway in the observed not only in the exercise of one's rights,
intersection, the traffic light changed, and a but also in the performance of one's duties. The
Jeepney full of passengers suddenly crossed the law recognizes a primordial limitation on all
car’s path. A collision between the two vehicles rights; that in their exercise, the norms of human
was inevitable. As a result, several jeepney conduct set forth in Article 19 must be observed.
passengers were seriously injured. A suit for A right, though by itself legal because recognized
damages based on culpa aquiliana was filed or granted by law as such, may nevertheless
against Marcial and Ben, seeking to hold them become the source of some illegality. When a
jointly and severally liable for such injuries. May right is exercised in a manner which does not
Marcial be held liable? Explain. conform with the norms enshrined in Article 19
and results in damage to another, a legal wrong is
thereby committed for which the wrongdoer must
SUGGESTED ANSWER be held responsible.
Yes, Marcial should be held liable.
Art. 2164 NCC makes an owner of a motor LOMARDA v. FUDALAN
vehicle solidarily liable with the driver if, being in G.R. No. 246012, June 17, 2020
the vehicle at the time of the mishap, he could J. Perlas-Bernabe
have prevented it by the exercise of due "Article 19, known to contain what is commonly
diligence. The traffic conditions along EDSA at referred to as the principle of abuse of rights,
any time of day or night are such as to require sets certain standards which may be observed not
the observance of utmost care and total alertness only in the exercise of one's rights but also in the
in view of the large number of vehicles running at performance of one's duties." In this regard, case
great speed. Marcial was negligent in that he law states that "[a] right, though by itself legal
rendered himself oblivious to the traffic hazards because [it is] recognized or granted by law as
MALAYAN
by INSURANCE
reading a bookCO., VS. ALBERTO
instead of focusing his such, may nevertheless become the source of
attention on the road 2012
G.R. No. 1G4320, February 1, and supervising the some illegality. When a right is exercised in a
Xv. TORTZ AND DAMAGEZ

manner in Jr.
J. Velasco, which his car was being driven. Thus, manner which does not conform with the norms
he
It failed
is to prevent
worth mentioninghis driver
that fromlike
just attempting
anyQuezon
otherto enshrined in Article 19 and results in damage to
beat the
disputable traffic light
presumptionsat the junction of
or inferences, the another, a legal wrong is thereby committed for
Avenue and EDSA,
presumption of which Marcial,
negligence may bewithout beingora
rebutted which the wrongdoer must be held responsible."
driver himself could have easily
overcome by other evidence to the contrary.
perceived as a reckless course of conduct. Art. 19 is the general rule which governs the
conduct of human relations. By itself, it is not the
basis of an actionable tort. Article 19 describes
the degree of care required so that an actionable
tort may arise when it is alleged together with
Article 20 or Article 21."

1G1
DORAO V. SPS BBB AND CCC ARTICLE 32. Any public officer or employee, or any
G.R. NO. 235737, APRIL 26, 2023 private individual, who directly or indirectly
J. Leonen obstructs, defeats, violates or in any manner
The best interest of a child cannot justify forms of impedes or impairs any of the following rights
cruel or degrading punishment which conflict and liberties of another person shall be liable to
with a child's human dignity, including the latter for damages:
"punishment which belittles, humiliates, 1. Freedom of religion;
denigrates, scapegoats, threatens, scares or 2. Freedom of speech;
ridicules a child." A person who debases, 3. Freedom to write for the press or to
degrades, or demeans the child's intrinsic worth maintain a periodical publication;
and dignity as a human being can be held liable 4. Freedom from arbitrary or illegal detention;
for damages pursuant to Articles 21 and 26 of the
Civil Code. 5. Freedom of suffrage;
6. The right against deprivation of property
without due process of law;
Art. 26. Every person shall respect the dignity,
personality, privacy and peace of mind of his 7. The right to a just compensation when private
neighbors and other persons. The following and property is taken for public use;
similar acts, though they may not constitute a 8. The right to the equal protection of the laws;
criminal offense, shall produce a cause of action 9. The right to be secure in one’s person, house,
for damages, prevention and other relief: papers, and effects against unreasonable
1. Prying into the privacy of another’s residence; searches and seizures;
2. Meddling with or disturbing the private life or 10. The liberty of abode and of changing the same;
family relations of another; 11. The privacy of communication and
3. Intriguing to cause another to be alienated correspondence; cd
from his friends; 12. The right to become a member of
4. Vexing or humiliating another on account of associations or societies for purposes not
his religious beliefs, lowly station in life, place contrary to law;
of birth, physical defect, or other personal 13. The right to take part in a peaceable
condition. assembly to petition the Government for
redress of grievances;
Other provisions on Intentional Torts are found in 14. The right to be free from involuntary servitude
Arts. 27-35 NCC. in any form;
ARTICLE 27. Any person suffering material or 15. The right of the accused against excessive bail;
moral loss because a public servant or employee 16. The right of the accused to be heard by
refuses or neglects, without just cause, to himself and counsel, to be informed of the
perform his official duty may file an action for nature and cause of the accusation against
damages and other relief against the latter, him, to have a speedy and public trial, to
without prejudice to any disciplinary meet the witnesses face to face, and to have
administrative action that may be taken. compulsory process to secure the attendance
of witness in his behalf;
ARTICLE 28. Unfair competition in agricultural, 17. Freedom from being compelled to be a
commercial or industrial enterprises or in labor witness against one’s self, or from being
through the use of force, intimidation, deceit, forced to confess guilt, or from being induced
machination or any other unjust, oppressive or by a promise of immunity or reward to make
highhanded method shall give rise to a right of such confession, except when the person
action by the person who thereby suffers confessing becomes a State witness;
damage. 18. Freedom from excessive fines, or cruel and
unusual punishment, unless the same is
imposed or inflicted in accordance with a
ARTICLE 2G. When the accused in a criminal statute which has not been judicially declared
prosecution is acquitted on the ground that his unconstitutional; and
guilt has not been proved beyond reasonable
doubt, a civil action for damages for the same act 19. Freedom of access to the courts.
or omission may be instituted. Such action
requires only a preponderance of evidence. Upon In any of the cases referred to in this article,
motion of the defendant, the court may require whether or not the defendant’s act or omission
the plaintiff to file a bond to answer for damages constitutes a criminal offense, the aggrieved party
in case the complaint should be found to be has a right to commence an entirely separate
malicious. and distinct civil action for damages, and for
other relief. Such civil action shall proceed
independently of any criminal prosecution (if the
If in a criminal case the judgment of acquittal is latter be instituted), and may be proved by a
based upon reasonable doubt, the court shall so preponderance of evidence.
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 The indemnity shall include moral damages.
that ground. Exemplary damages may also be adjudicated.
Xv. TORTZ AND DAMAGEZ

ARTICLE 30. When a separate civil action is The responsibility herein set forth is not
brought to demand civil liability arising from a demandable from a judge unless his act or
criminal offense, and no criminal proceedings are omission constitutes a violation of the Penal
instituted during the pendency of the civil case, a Code or other penal statute. Pnamei
preponderance of evidence shall likewise be
sufficient to prove the act complained of. ARTICLE 33. In cases of defamation, fraud, and
physical injuries, a civil action for damages,
ARTICLE 31. When the civil action is based on an entirely separate and distinct from the criminal
obligation not arising from the act or omission action, may be brought by the injured party.
complained of as a felony, such civil action may Such civil action shall proceed independently of
proceed independently of the criminal the criminal prosecution, and shall require only a
proceedings and regardless of the result of the preponderance of evidence.
latter.

1G2
ARTICLE 34. When a member of a city or
municipal police force refuses or fails to render 2. STRICT LIABILITY TORT AGAINST ANIMAL
aid or protection to any person in case of POSSESSORS
danger to life or property, such peace officer Article 2183 Civil Code
shall be primarily liable for damages, and the The possessor of an animal or whoever may
city or municipality shall be subsidiarily make use of the same is responsible for the
responsible therefor. The civil action herein damage which it may cause, although it may
recognized shall be independent of any escape or be lost. This responsibility shall cease
criminal proceedings, and a preponderance of only in case the damage should come from force
evidence shall suffice to support such action. majeure or from the fault of the person who has
suffered damage.
ARTICLE 35. When a person, claiming to be BAR QUESTION (2010)
injured by a criminal offense, charges another Primo owns a pet iguana which he keeps in a
with the same, for which no independent civil man-made pond enclosed by a fence situated in
action is granted in this Code or any special his residential lot. A typhoon knocked down the
law, but the justice of the peace finds no fence of the pond and the iguana crawled out of
reasonable grounds to believe that a crime has the gate of Primo’s residence. N, a neighbor who
been committed, or the prosecuting attorney was passing by, started throwing stones at the
refuses or fails to institute criminal iguana, drawing the iguana to move toward him.
proceedings, the complainant may bring a civil N panicked and ran but tripped on something and
suffered a
action for damages against the alleged broken leg. Is anyone liable for N’s injuries? Explain.
offender. Such civil action may be supported
by a preponderance of evidence. Upon the SUGGESTED ANSWER
defendant’s motion, the court may require the No one is liable.
plaintiff to file a bond to indemnify the
defendant in case the complaint should be The possessor of an animal or whoever may
found to be malicious. make use of the same is responsible for the
damage which it may cause, although it may
If during the pendency of the civil action, an escape or be lost. This responsibility shall cease
information should be presented by the only in case the damage should come from force
prosecuting attorney, the civil action shall be majeure or from the fault of the person who has
suspended until the termination of the criminal suffered damage (Art. 2183, NCC).
proceedings.
N’s injury clearly resulted from his own act of
throwing stones at the iguana and his
4. STRICT LIABILITY – CIVIL CODE, ARTS. 2183- subsequent accidental tripping into something as
21G3; R.A. NO. 73G4, ARTS. G7-102 he ran away from the iguana out
of fear.
• Where a person is made liable independent
of fault or negligence upon submission of 3. STRICT LIABILITY TORT AGAINST EMPLOYERS
proof of certain facts.
• When strict liability is imposed, conduct is Article 1711 Civil Code - Owners of enterprises and
generally not wrongful in itself, but the law other employers are obliged to pay compensation
for the death of or injuries to their laborers,
imposes liability to compensate for damages workmen, mechanics or other employees, even
suffered by another. though the event may have been purely
• Doctrine that holds a person liable for any accidental or entirely due to a fortuitous cause, if
injuries or damages caused by their the death or personal injury arose out of and in
products, actions, or animals, even if they the course of the employment. Xxx
had no intent to harm and were not at fault.
4. STRICT LIABILITY TORT AGAINST LGUs
Purpose of Strict Liability Article 218G. Provinces, cities and municipalities
• To protect the public and consumers from shall be liable for damages for the death of, or
injury caused by those products, actions, or injuries suffered by, any person by reason of the
animals, and to remove the burden of proof defective condition of roads, streets, bridges,
from an injured party. public buildings, and other public works under
• Neither negligence nor strict liability torts their control or supervision.
require intent, but in a negligence case there
is a reasonable duty of care owed to a 5. STRICT LIABILITY TORT AGAINST PROPRIETORS
person. Article 21G1. Proprietors shall also be responsible
• In strict liability, there is a duty to everyone for damages caused:
because of the nature of the activity. (1) By the explosion of machinery which has not
• These absolute duties are required so that been taken care of with due diligence, and
persons are safe from extremely hazardous the inflammation of explosive substances
circumstances because of certain which have not been kept in a safe and
presumptions that people hold every day. adequate place;
(2) By excessive smoke, which may be harmful
to persons or property;
Xv. TORTZ AND DAMAGEZ

1. STRICT LIABILITY TORT AGAINST (3) By the falling of trees situated at or near
MANUFACTURERS AND PROCESSORS highways or lanes, if not caused by force
Article 2187 Civil Code majeure;
(4) By emanations from tubes, canals, sewers or
Manufacturers and processors of foodstuffs, deposits of infectious matter, constructed
drinks, toilet articles and similar goods shall be without precautions suitable to the place.
liable for death or injuries caused by any
noxious or harmful substances used, although
no contractual relation exists between them 6. STRICT LIABILITY TORT AGAINST HEAD OF
and the consumers. THE FAMILY
Article 21G3. The head of a family that lives in a
building or a part thereof, is responsible for
damages caused by things thrown or falling from
the same.

1G3
7. STRICT LIABILITY TORT AGAINST MANUFACTURERS • A corporation is civilly liable in the same
s SUPPLIERS under REPUBLIC ACT NO. 73G4 or manner as natural persons for torts, because
THE CONSUMER ACT OF THE PHILIPPINES "generally speaking, the rules governing the
liability of a principal or master for a tort
committed by an agent or servant are the
ARTICLE G7. Liability for the Defective Products. — same whether the principal or master be a
Any Filipino or foreign manufacturer, producer, natural person or a corporation, and whether
and any importer, shall be liable for redress, the servant or agent be a natural or artificial
independently of fault, for damages caused to person. All of the authorities agree that a
consumers by defects resulting from design, principal or master is liable for every tort which
manufacture, construction, assembly and he expressly directs or authorizes, and this is
erection, formulas and handling and making up, just as true of a corporation as of a natural
presentation or packing of their products, as well person. A corporation is liable, therefore,
as for the insufficient or inadequate information whenever a tortious act is committed by an
on the use and hazards thereof. officer or agent under express direction or
authority from the stockholders or members
ARTICLE GG. Liability for Defective Services. — acting as a body, or, generally, from the
The service supplier is liable for redress, directors as the governing body.” (PNB v. CA,
independently of fault, for damages caused to G.R. No. L-¬27155, May 18, 1978)
consumers by defects relating to the rendering
of the services, as well as for insufficient or Partnership Tort
inadequate information on the fruition and hazards
thereof. There is partnership tort where:
1. By any wrongful act or omission of any
partner, acting in the ordinary course of
C. THE TORTFEASOR; JOINT AND DIRECT business of the partnership or with authority
of his co-partners, loss or injury is caused to
LIABILITIES (CIVIL CODE, ART. 21G4) any person, not being a partner in the
LIABILITY OF JOINT TORTFEASORS
partnership;
• Under Article 2194 of the Civil Code, joint 2. One partner, acting within the scope of his
tortfeasors are solidarily liable for the apparent authority, receives money or
resulting damage. property from a third person, and misapplies
• In other words, joint tortfeasors are each liable it; or
as principals, to the same extent and in the 3. The partnership, in the course of its business,
same manner as if they had performed the receives money or property, and it is
wrongful act themselves. misapplied by any partner while it is in the
custody of the partnership.
PHILIPPINE NATIONAL CONSTRUCTION Note: Partners are SOLIDARILY LIABLE with the
CORPORATION V. CA partnership for any penalty or damage arising
from a partnership tort. (Articles 1822 and 1823
G.R. NO. 15G270, AUGUST 22, 2005 NCC)
J. Callejo, Sr.
Where their concurring negligence resulted in D. PROXIMATE CAUSE; CONCEPT;
injury or damage to a third party, they become
joint tortfeasors and are solidarily liable for the DOCTRINE OF LAST CLEAR CHANCE
resulting damage under Article 2194 of the Civil
Code. PROXIMATE CAUSE
• That cause, which, in natural and
DIRECT LIABILITY continuous sequence, unbroken by any
Natural Person efficient intervening cause, produces the
A natural person or human being has physical injury, and without which the result would
not have occurred.
existence. • That cause acting first and producing the
injury, either immediately or by setting
Liability of Natural Persons other events in motion, all constituting a
A. Personal Liability natural and continuous chain of events,
each having a close causal connection with
General Rule: One is only responsible for his own its immediate predecessor, the final event in
act or omission. Thus, a person will generally be the chain immediately effecting the injury as
held liable ONLY for the torts committed by natural and probable result of the cause
himself and NOT by another.
B. Vicarious Liability which first acted, under such circumstances
that the person responsible for the first
A person is not only liable for torts committed by event should, as an ordinarily prudent and
himself, but also for torts committed by others with intelligent person, have reasonable ground
whom he has a certain relation or for whom he is to expect at the moment of his act or
responsible. (Article 2180 Civil Code)
default that an injury to some person might
probably result therefrom.
Rationale: Persons become liable for their own
omission to comply with their duty to exercise
diligence in supervision/care over the persons for Determining Proximate Cause
Xv. TORTZ AND DAMAGEZ

whom they are responsible • There is no exact mathematical formula to

determine proximate cause. It is based upon
Juridical Person mixed considerations of logic, common
• Juridical person exists only in contemplation of
sense, policy and precedent.
• Plaintiff must establish a sufficient link
law. between the act or omission and the
• Juridical persons are also directly liable just damage or injury.
like natural persons whenever a tortuous act is • The link must not be remote or far-fetched.
committed by an officer or agent under the • The damage or injury must be a natural and
express direction or authority of the probable result of the act or omission.
stockholders or members acting as a body, or,
generally, from the directors as the governing
body.
1G4
 DOCTRINE OF LAST CLEAR CHANCE acts or omissions, but also for 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
than that of the other, the one who has the damages caused by the minor children who live
last reasonable opportunity to avoid the in their company.
impending harm and fails to do so, is • Guardians are liable for damages caused by the
chargeable with the consequences of the minors or incapacitated persons who are under
loss without reference to the prior their authority and live in their company.
negligence of the other party (Applicable • The owners and managers of an establishment or
Case: Picart v. Smith) enterprise are likewise responsible for damages
caused by their employees in the service of the
• No recovery can be made if plaintiff is the branches in which the latter are employed or on the
proximate case. occasion of their functions.
• Recovery can be made but such will be • Employers shall be liable for the damages caused
mitigated BARif plaintiff
QUESTIONis (1GG0)
not the proximate by their employees and household helpers acting
cause.
Mr. and Mrs. R own a burned-out building, the within the scope of their assigned tasks, even
firewall
• Each ofbearswhichhis
collapsed
own loss and
if destroyed
negligence the
of though the former are not engaged in any business
shop occupied by the family of Mr. and Mrs. S, or industry.
parties is • The State is responsible in like manner when it
which resulted in injuries to said couple and the acts through a special agent; but not when the
equal
death of in degree.
their daughter. damage has been caused by the official to whom
the task done properly pertains, in which case
Instances
Mr. and Mrs.when S the
haddoctrine is not applicable:
been warned by Mr. C Mrs. what is provided in article 2176 shall be
R
i. to In
vacate
case of theculpa
shopcontractual,
in view of its proximity
where to
neither applicable.
the weakened wall but
the contributory the former
negligence of failed to do
the plaintiff • Lastly, teachers or heads of establishments of
so. Mr.
norChisMrs. S filed
last clearagainst
chanceMr.to and
avoidMrs.
theRloss
an arts and trades shall be liable for damages
action for recovery caused by their pupils and students or
would exonerateof the damages the former
defendant from apprentices, so long as they remain in their
suffered as a result of the collapse of the
liability.
firewall. custody.
ii. The Inpartydefense, Mr. and
charged is Mrs. R rely to
required on the
act The responsibility treated of in this article shall
doctrine of last clear chance alleging that Mr.
instantaneously. cease when the persons herein mentioned prove
and Mrs.
iii. It S had
does notthearise
last clear
where chance to avoid
a passenger that they observed all the diligence of a good father
the accident
demandsifresponsibility
only they heeded the carrier
from the former’sto of a family to prevent damage.
warning to vacate
enforce the shop,
its contractual and therefore Mr.
obligations.
and Mrs. R’s prior negligence should be Art. 211 (Family Code) The father and the mother
iv. If the plaintiff was not negligent.
disregarded. shall jointly exercise parental authority over the
persons of their common children. In case of
If you were the judge, how would you decide the disagreement, the father’s decision shall prevail,
E. VICARIOUS LIABILITY (CIVIL CODE, ART. 2180;
case? State your reasons. unless there is a judicial order to the contrary.
FAMILY CODE, ART. 211) Children shall always observe respect and
reverence towards their parents and are obliged to
obey them as long as the children are under
SUGGESTED
‘Vicarious liability’ defined ANSWER parental authority.
I• would decide in favor of Mr. C Mrs. S. The
Also known as imputed liability
proprietor of
A person for
•responsible
a
is the
building
not damages
only liable
or forstructure
torts
is Art. 221 (Family Code) Parents and other persons
resulting
committed by himself, but also for torts from its exercising parental authority shall be civilly liable
total or partial
committed by collapse,
others withif whom
it should be adue to
he has for the injuries and damages caused by the acts or
thecertain
lack ofrelation
necessary repairs (Arthe2190
is Civil omissions of their unemancipated children living in

Xv. TORTZ AND DAMAGEZ

or for whom
Code). As regards
responsible. (Articlethe
2180defense of “last clear
Civil Code) their company and under their parental authority
chance,” the same is not tenable because subject to the appropriate defenses provided by
accordingPersons
to thebecome
Supreme law.
Rationale: liableCourt in own
for their one case
(De Roy v.toCA,
omission GR L- 80718,
comply with their Jan. 29,
duty1988,
to 157
SCRA 757) exercise
diligently the doctrine care, of last clear chance
control and is Art. 21G (Family Code) Those given the authority and
not applicable
supervision overtothe
instances
persons covered
for whombythey Art 2190 responsibility under the preceding Article (special
of responsible.
are the Civil Code. Further, in Phoenix parental authority) shall be principally and solidarily
Construction, Inc. v.s IAC (G.R. No. L-65295, liable for damages caused by the acts or omissions
March 10, 1987, 148 SCRA 353), the Supreme of the unemancipated minor. The parents, judicial
Concept of Vicarious Liability guardians or the persons exercising substitute
Court held that the role
Art. 2180. The obligation imposedof the common law “last
by article parental authority over said minor shall be
clear chance”
2176 doctrine
is demandable notinonly
relation to Article
for one’s own 2179 subsidiarily liable.
of the Civil Code is merely to mitigate
damages within the context of contributory
negligence.
1G5
The respective liabilities of those referred to in the BAR QUESTION
preceding paragraph shall not apply if it is proved Rommel’s private car, while being driven by the
that they exercised the proper diligence required regular family driver, Amado, hits a pedestrian
under the particular circumstances. causing the latter’s death. Rommel is not in the
All other cases not covered by this and the car when the incident happened. Is Rommel liable
preceding articles shall be governed by the for damages to the heirs of
provisions of the Civil Code on quasi-delicts. 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 prove that he exercised the diligence of
• Parental liability is made a natural or logical a good father of a family (Art. 2180, par. 5, NCC)
consequence of the duties and responsibilities in selecting and supervising his family driver. The
of parents — their parental authority — which owner is presumed liable unless he proves the
includes the instructing, controlling and defense of diligence. If the driver was performing
disciplining of the child. his assigned task when the incident happened,
• Note: The responsibility of the parent ceases Rommel shall be solidarily liable with the driver in
when he proves that he observed the diligence a case based on quasi-delict.
of a good father of a family to prevent
damage. BAR QUESTION (2005) In case the driver is convicted in a criminal case
Under the law on quasi-delict, aside from the persons for reckless imprudence, and he cannot pay the
who caused injury to persons, who is liable under this civil liability, Rommel is subsidiarily liable for the
circumstance: When a 7-year old boy injures his damages awarded against the driver and the
playmate while playing with his defense of diligence is not
father’s rifle. Explain. REYES V. DOCTOLERO
available.
SUGGESTED ANSWER G.R. NO. 1855G7, AUGUST 2, 2017
The parents of the 7-year old boy who caused injury to J. Jardeleza
his playmate are liable under Article 219 of the Family • Although the employer is not the actual
Code since they exercise parental authority over the tortfeasor, the law makes him vicariously liable
person of the boy. (Tamargo v. Court of Appeals, G.R.
No. 85044, June 3,1992; on the basis of the civil law principle of pater
Elcano v. Hill, G.R.
Between Employers and No. L-24803, May 26, 1977). familias for failure to exercise due care and
vigilance over the acts of one's subordinates
Employees Liability of the to prevent damage to another.
Employers • However, the above rule is applicable only if
The liability of the employer under Article 2180 is there is an employer-employee relationship.
direct and immediate; it is not conditioned upon This employer- employee relationship cannot
prior recourse against the negligent employee and be presumed but must be sufficiently proven by
a prior showing of the insolvency of such the plaintiff. The plaintiff must also show that
employee. the employee was acting within the scope of
his assigned task when the tort complained of
General Rule: When an injury is caused by the was committed. It is only then that the
negligence of the employee, there instantly defendant, as employer, may find it necessary
arises a presumption of law that there was to interpose the defense of due diligence in
negligence on the part of the master or employer the selection and supervision of employees.
either in the selection of the servant or
employee, or in the supervision over him after BPI V. CBP AND CITIBANK
selection or both. G.R. NO. 1G75G3, OCTOBER 12, 2020
J. Hernando
Defense against vicarious liability Issue:
Employers carry the burden of proof that there W/N Central Bank of the Philippines is liable for
was no negligence on their part in the selection the bank fraud committed by its two employees
and supervision of the employees, or that at the which resulted in losses to the petitioner BPI.
time of the incident the employees were not
discharging the assigned tasks or on occasion of
their functions. BAR QUESTION (2001) Ruling:
After working overtime up to midnight, Alberto, an The test of liability depends on whether or not the
executive of an insurance company drove a company employees, acting in behalf of CBP, were
vehicle to a favorite Videoke bar where he had some performing governmental or proprietary functions.
drinks and sang some songs with friends to “unwind”. At
2:00 a.m., he drove home, but in doing so, he bumped a The State in the performance of its governmental
tricycle, resulting in the death of its driver. May the
insurance company be held liable for the functions is liable only for the tortuous acts of its
negligent act of Alberto? Why? special agents. On the other hand, the State
becomes liable as an ordinary employer when
SUGGESTED ANSWER performing its proprietary functions.
Xv. TORTZ AND DAMAGEZ

The insurance company is not liable because when the

accident occurred, Alberto was not acting within the Employers shall be liable for the damages caused
assigned tasks of his employment. It is true that under by their employees and household helpers acting
Art. 2180 (par. 5), employers are liable for damages within the scope of their assigned tasks, even
caused by their employees who were acting within the though the former are not engaged in any
scope of their assigned tasks. However, the mere fact
that Alberto was using a service vehicle of the business or industry.
employer at the time of the injurious accident does not
necessarily mean that he was operating the vehicle CBP's establishment of clearing house facilities
within the scope of his employment. for its member banks to which Valentino and
Notwithstanding the fact that Alberto did some overtime Estacio were assigned as Bookkeeper and
work for the company, he was, nevertheless, engaged in Janitor-Messenger, respectively, is a
his own affairs or carrying out a personal purpose at
the time of the accident. governmental function.
(Castilex Industrial Corp. v. Vasquez Jr. (321 SCRA
393[1999]).

1G6
As such, the State or CBP in this case, is liable
only for the torts committed by its employee Concept of Res Ipsa Loquitur
when the latter acts as a special agent but not • Utilizing res ipsa loquitur is a matter of
when the said employee or official performs his evidence, a mode of proof, or a mere
or her functions that naturally pertain to his or procedural convenience, since it furnishes a
her office. A special agent is defined as one substitute for, and relieves a plaintiff of the
who receives a definite and fixed order or burden of producing a specific proof of
commission, foreign to the exercise of the negligence.
duties of his office. • It is peculiar to the law of negligence which
recognizes that prima facie negligence may be
established without direct proof and furnishes
Evidently, both Valentino and Estacio are not a substitute for specific proof of negligence.
considered as special agents of CBP during • It is based in part upon the theory that the
their commission of the fraudulent acts defendant in charge of the instrumentality
against petitioner BPI as they were regular which causes the injury either knows the
employees performing tasks pertaining to their cause of the accident or has the best
offices, namely, bookkeeping and janitorial- opportunity of ascertaining it and that the
messenger. Thus, CBP cannot be held liable for plaintiff has no such knowledge, and therefore
any damage caused to petitioner BPI by is compelled to allege negligence in general
reason of Valentino and Estacio's unlawful terms and to rely upon the proof of the
acts. happening of the accident in order to establish
negligence.
Even on the assumption that CBP is Elements for the Application of the Doctrine
performing proprietary functions, still, it
cannot be held liable because Valentino and 1. The accident was of such character as to
Estacio acted beyond the scope of their duties. warrant an inference that it would not have
Even assuming that CBP is an ordinary happened except for the defendant’s
employer, it still cannot be held liable. negligence
2. The accident must have been caused by an
agency or instrumentality within the exclusive
Article 2180 of the Civil Code provides that an management or control of the person charged
employer shall be liable for the damages with the negligence complained of
caused by their employees acting within the 3. The accident must not have been due to any
scope of their assigned tasks. An act is deemed voluntary action or contribution on the part of
an assigned task if it is "done by an employee, the person injured.
in furtherance of the interests of the employer
or for the account of the employer at the time RAMOS V. CA
of the infliction of the injury or damage." G.R. NO. 124354, DECEMBER 2G, 1GGG
J. Kapunan
Obviously, Valentino and Estacio's fraudulent Control of Instrumentality which caused the
acts of tampering with and pilfering of damage is the fundamental element. Such
documents are not in furtherance of CBP's element of control must be shown to be within
interests nor done for its account as the said the dominion of the defendant. In order to have
acts were unauthorized and unlawful. benefit of the rule, a plaintiff, in addition to
proving injury or damage, must show a situation
F. RES IPSA LOQUITUR where it is applicable, and must establish that
the essential elements of the doctrine were
‘Res Ipsa Loquitur’ Defined present in a particular incident.
It is a Latin phrase that literally means "the
thing or the transaction speaks for itself." AFRICA V. CALTEX (PHIL.) INC.
It is a maxim for the rule that the fact of the G.R. NO. L-12G86, MARCH 31, 1G66
occurrence of an injury, taken with the J. Makalintal
surrounding circumstances, may permit an
inference or raise a presumption of In this case, defendant Caltex was liable for
negligence, or make out a plaintiff's prima damage done to the property of its neighbors
facie case, and present a question of fact for when fire broke out in a Caltex service station.
the defendant to meet with an explanation. The gasoline station, with all its appliances,
equipment and employees, was under the
This rule is grounded on the superior logic of control of the defendant. The persons who knew
ordinary human experience, and it is on the how the fire started were the defendant and its
basis of such experience or common knowledge employees, but they gave no explanation
that negligence may be deduced from the mere whatsoever.
occurrence of the accident itself. Hence, the
rule is applied in conjunction with the doctrine
of common knowledge. G. DAMNUM ABSQUE INJURIA

LAYUGAN V. IAC • Also known as damage without injury.

Xv. TORTZ AND DAMAGEZ

• This arises only when the loss or harm was not the
G.R. NO. 73GG8, NOVEMBER 14, 1G88
result of a violation of a legal duty.
J. Sarmiento • Damage results from a person's exercising his
“Where the thing which causes injury is shown legal rights.
to be under the management of the • Although there was physical damage, there
defendant, and the accident is such as in the was no legal injury as there was no violation of
ordinary course of things does not happen if legal right.
those who have the management used proper • A person may have suffered physical hurt or
care, it affords reasonable evidence, in the injury, but for as long as no legal injury or
absence of an explanation by the defendant, wrong has been done, there is no liability.
that the accident arose from want of care.” • There is no liability even if there is damage
because there was no injury.

1G7
• There can be damage without injury. Damnum absque injuria, or damage without injury,
• In order that a plaintiff may maintain an action arises when the loss or harm was not the result of a
for the injuries of which he complains, he must violation of a legal duty. When this occurs, the
establish that such injuries resulted from a consequences must be borne by the injured
breach of duty which the defendant owed to the person alone, since there is no remedy for
plaintiff. damages resulting from an act which does not
• Custodio v CA – However, the mere fact that the amount to a legal injury or wrong.
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 H. DEFENSES IN TORT ACTIONS
for a legal wrong inflicted by the defendant, and
damage resulting to the plaintiff therefrom.
Wrong without damage, or damage without i. Due Diligence to prevent the Damage under
wrong, does not constitute a cause of action, Article 2180
since damages are merely part of the remedy ii. Acts of Public Officers in the performance
allowed for the injury caused by a breach or of their official duties
wrong.
• There is a material distinction between damages iii. Authority of the law under Art 5 of the NCC
and injury. Injury is the illegal invasion of a legal and Art 11 of the RPC
right; damage is the loss, hurt, or harm which iv. Damnum Absque Injuria
results from the injury; and damages are the v. Plaintiff’s negligence is the proximate cause
recompense or compensation awarded for the
damage suffered. Thus, there can be damage vi. Contributory negligence of the Plaintiff
without injury in those instances in which the vii. Fortuitous Event
loss or harm was not the result of a violation of a
legal duty. These situations are often called viii. Plaintiff’s assumption of risk
damnum absque injuria. ix. Prescription
General Rule: There is no cause of action for acts x. Waiver
done by one person upon his own property in a xi. Emergency Rule or Sudden Peril
lawful and proper manner, although such acts
incidentally cause damage or an unavoidable loss to
another, as such damage or loss is damnum absque (a) CONTRIBUTORY NEGLIGENCE
injuria. 1. An example of a partial defense
2. It is conduct on the part of the injured
No award of Damages in a damnum absque injuria party, contributing as a legal cause to the
• There is no basis for an award of damages. harm he has suffered, which falls below the
• There must first be a breach of duty and standard to which he is required to conform
imposition of liability before damages may be for his own protection.
awarded. 3. This is stated in Article 2179 of the Civil Code.
• Note: The injured person alone bears the
consequences because the law affords no remedy 4. This is also reiterated in Article 2214 of the
for damages resulting from an act that does not Civil Code
amount to a legal injury or wrong.
Art. 217G. When the plaintiff’s own negligence
SANGGACALA ET AL. V. NPC was the immediate and proximate cause of his
G.R. NO. 20G538, JULY 07, 2021 injury, he cannot recover damages. But if his
J. Leonen negligence was only contributory, the
The basis for an award of tort damages is a legal
immediate and proximate cause of the injury
injury to an individual, thus: being the defendant’s lack of due care, the
. . .To warrant the recovery of damages, there must plaintiff may recover damages, but the courts
be both a right of action for a legal wrong inflicted shall mitigate the damages to be awarded.
by the defendant, and damage resulting to the
plaintiff therefrom. Wrong without damage, or Art. 2214. In quasi-delicts, the contributory
damage without wrong, does not constitute a cause negligence of the plaintiff shall reduce the
of action, since damages are merely part of the
remedy allowed for the injury caused by a breach damages that he may recover.
or wrong.
Extent of Mitigation
There is a material distinction between damages It is left to the discretion of the court to
and injury. Injury is the illegal invasion of a legal determine the extent of the mitigation of the
right; damage is the loss, hurt, or harm which defendant’s liability depending on the
results from the injury, and damages are the
recompense or compensation awarded for the circumstances.
damage suffered. Thus, there can be damage
without injury in those instances in which the loss (b) ASSUMPTION OF RISK
or harm was not the result of a violation of a legal
duty. These situations are often called damnum • Doctrine of Assumption of Risk is consistent
absque injuria. with the Latin maxim volenti non fit injuria.
• The risk of a known danger.
Xv. TORTZ AND DAMAGEZ

In order that a plaintiff may maintain an action for the • The general principle underlying the
injuries of which he complains, he must establish defense of assumption of risk is that a
that such injuries resulted from a breach of duty plaintiff who voluntarily assumes a risk of
which the defendant owed to the plaintiff — a harm arising from the negligent or reckless
concurrence of injury to the plaintiff and legal conduct of the defendant cannot recover for
responsibility by the person causing it. The
underlying basis for the award of tort damages is such harm.
the premise that an individual was injured in
contemplation of law. Thus, there must first be the Elements of Assumption of Risk
breach of some duty and the imposition of liability
for that breach before damages may be awarded; it a) The plaintiff must know that the risk is present.
is not sufficient to state that there should be tort b) The plaintiff must further understand its nature.
liability merely because the plaintiff suffered some
pain and suffering. c) The choice to incur it is free and voluntary.

1G8
ESTERIA F. GARCIANO VS. CA
(c) FORTUITOUS EVENT
G.R. NO. G6126 AUGUST 10, 1GG2
J. Griño-Aquino
Art. 1174. Except in cases expressly specified by the
Liability for damages under Articles 19, 20 and 21 of law, or when it is otherwise declared by stipulation,
the Civil Code arises only from unlawful, willful or or when the nature of the obligation requires the
negligent acts that are contrary to law, or morals,
good customs or public policy. xxx assumption of risk, no person shall be responsible for
The Court of Appeals was correct in finding that those events which could not be foreseen, or which,
petitioner's discontinuance from teaching was her own though foreseen, were inevitable.
choice. While the respondents admittedly wanted her
service terminated, they actually did nothing to Essential Characteristics of a Fortuitous Event
physically prevent her from reassuming her post, as a) The cause of the unforeseen and unexpected
ordered by the school's Board of Directors. That the occurrence, or of the failure of the debtor to
school principal and Fr. Wiertz disagreed with the comply with his obligation, must be independent
Board's decision to retain her, and some teachers of human will.
allegedly threatened to resign en masse, even if true,
did not make them liable to her for damages. They b) It must be impossible to foresee the event
were simply exercising their right of free speech or which constitutes the ‘caso fortuito’ or if it can be
their right to dissent from the Board's decision. Their foreseen, it must be impossible to avoid.
acts were not contrary to law, morals, good customs c) The occurrence must be such as to render it impossible
or public policy. They did not "illegally dismiss" her for for the debtor to fulfill his obligation in a normal manner.
the Board's decision to retain her prevailed. She was d) The obligor must be free from any participation
ordered to report for work on July 5, 1982, but she did in the aggravation of the injury resulting to the
not comply with that order. Consequently, whatever
loss she may have incurred in the form of lost earnings creditor.
was self-inflicted. Volenti non fit injuria.
(d) EMERGENCY RULE OR SUDDEN PERIL
NIKKO HOTEL MANILA GARDEN VS. ROBERTO REYES, A.K.A. "Under that rule, one who suddenly finds himself in
"AMAY BISAYA" a place of danger, and is required to act without time
to consider the best means that may be adopted to
G.R. NO. 15425G, FEBRUARY 28, 2005 avoid the impending danger, is not guilty of
J. Chico-Nazario negligence, if he fails to adopt what subsequently
Petitioners Lim and Hotel Nikko contend that pursuant and upon reflection may appear to have been a
to the doctrine of volenti non fit injuria, they cannot be better method, unless the emergency in which he
made liable for damages as respondent Reyes finds himself is brought about by his own
assumed the risk of being asked to leave (and being negligence."
embarrassed and humiliated in the process) as he was
a "gate-crasher.“ (e) PRESCRIPTION - An action based on quasi-delict
The doctrine of volenti non fit injuria ("to which a prescribes in four years from the date of the
person assents is not esteemed in law as injury" ) accident. (Article 1146 Civil Code)
refers to self- inflicted injury or to the consent to injury
which precludes the recovery of damages by one who
has knowingly and voluntarily exposed himself to I. MEDICAL NEGLIGENCE AND MALPRACTICE
danger, even if he is not negligent in doing so.

As formulated by petitioners, however, this doctrine Concept:

does not find application to the case at bar because Tort Liability of medical practitioner for negligence
even if respondent Reyes assumed the risk of being can arise out of delict and quasi-delict. In addition,
asked to leave the party, petitioners, under Articles 19 liability may also be based on contract.
and 21 of the New Civil Code, were still under
obligation to treat him fairly in order not to expose him The duty of the physician to bring skill and care to
to unnecessary ridicule and shame. the amelioration of the condition of his patient has
its foundation in public consideration which is
Thus, the threshold issue is whether or not Ruby Lim inseparable from the nature and exercise of his
acted abusively in asking Roberto Reyes, a.k.a. "Amay calling upon which the public reposes respect and
Bisaya," to leave the party where he was not invited confidence; any slip or breach in the performance
by the celebrant thereof thereby becoming liable under of that duty, no matter how small, is corrosive of
Articles 19 and 21 of the Civil Code. Parenthetically,
and if Ruby Lim were so liable, whether or not Hotel that public faith. (Bernal et al v. Alonzo et al.)
Nikko, as her employer, is 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 medicine that degree of
BAR QUESTION (2012) care and skill which is ordinarily employed by the
Roberto was in Nikko Hotel when he bumped into a profession generally under similar conditions, and in
friend who was then on her way to a wedding like surrounding circumstances.
reception being held in said hotel. Roberto alleged that
he was then invited by his friend to join her at the Standard of Care: Negligence in medical malpractice
wedding reception and carried the basket full of fruits consists in the failure of a physician or surgeon to
which she was bringing to the affair. At the reception, apply to his practice of medicine that degree of care
the wedding coordinator of the hotel noticed him and
asked him, allegedly in a loud voice, to leave as he and skill which is ordinarily employed by the
Xv. TORTZ AND DAMAGEZ

was not in the guest list. He retorted that he had been profession generally under similar conditions, and in
invited to the affair by his friend, who however denied like surrounding circumstances.
doing so. Deeply embarrassed by the incident, Roberto
then sued the hotel for damages under Articles 19 and Duty of Physician: The duty of the physician to bring
21 of the Civil Code. Will Roberto’s action prosper? skill and care to the amelioration of the condition of
Explain. his patient has its foundation in public
consideration which is inseparable from the nature
SUGGESTED ANSWER and exercise of his calling upon which the public
It depends. While the hotel has the right to exclude an reposes respect and confidence; any slip or breach
uninvited guest from the wedding reception, that does in the performance of that duty, no matter how
not give the hotel the license to humiliate Roberto. If small, is corrosive of that public faith. (Batiquin v.
the wedding coordinator of the hotel acted wrongfully CA)
e.g. with abuse of right, unfairly, or in a manner that
exposed Roberto to unnecessary ridicule or shame, his
action will proper. Otherwise, Roberto’s action will
prosper. The hotel is liable for the wrongful acts of its
employees. 1GG
Sources of Liability • Nevertheless, despite the fact that the
There are only five sources of obligations under scope of res ipsa loquitur has been
the New Civil Code. Medical malpractice is not a measurably enlarged, it does not
separate source of obligation. Hence, any liability automatically apply to all cases of medical
of a medical practitioner for negligence should
arise out of any of the sources of obligation negligence as to mechanically shift the
under the New Civil Code. burden of proof to the defendant to show
Tort liability of medical practitioner for negligence that he is not guilty of the ascribed
can arise out of delict and quasi-delict. negligence.
Independently, liability may also arise ex contractu • In order to allow resort to the doctrine,
because of the contract between the doctor and therefore, the following essential requisites
the patient. As in all other cases, the presence of must first be satisfied, to wit:
the contract between doctor and the patient (1) the accident was of a kind that does not
does not bar the existence of liability based on ordinarily occur unless someone is
quasi-delict; the negligence that breaches the negligent;
contract may also be tort. If a criminal case under (2) the instrumentality or agency that
Article 365 is filed, the civil action arising from caused the injury was under the
delict may also be deemed instituted in the exclusive control of the person charged;
criminal case. and
(3) the injury suffered must not have been
Elements of cause of action based on Quasi-Delict due to any voluntary action or
1) Act or omission constituting fault or negligence contribution of the person injured.
2) Damage suffered by the injured party; and
3) The causal relation between the damage and DE JESUS V. UYLOAN
the act or omission.
G.R. NO. 234851, FEBRUARY 15, 2022
Required Proof: C.J. Gesmundo [Justice M. Lopez, Division member]
• Negligence of doctors usually requires Distinction between medical malpractice based
presentation of an expert witness to establish on contract and based on quasi-delict; Elements
the standard to be followed and why the of both; Prescriptive periods
defendant doctor can be said to have failed to
follow the standard of care. Medical malpractice is a particular form of
• However, in certain cases the Doctrine of Res negligence which consists in the failure of a
Ipsa Loquitur may also be applied as in the physician or surgeon to apply to his practice of
case when a scissor is discovered inside the medicine that degree of care and skill which is
body of the victim after surgical operation. ordinarily employed by the profession
generally, under similar conditions, and in like
DR. SOLIDUM VS. PEOPLE surrounding circumstances. In order to
G.R. NO. 1G2123, MARCH 10, 2014 successfully pursue such a claim, a patient
must prove that the physician or surgeon
J. Bersamin either failed to do something which a
Res Ipsa Loquitur in Medical Negligence reasonably prudent physician or surgeon
• Res ipsa loquitur is literally translated as "the would have done, or that he or she did
thing or the transaction speaks for itself." The something that a reasonably prudent physician
doctrine res ipsa loquitur means that "where or surgeon would not have done, and that the
the thing which causes injury is shown to be failure or action caused injury to the patient.
under the management of the defendant, and There are thus four elements involved in
the accident is such as in the ordinary course medical negligence cases, namely: duty,
of things does not happen if those who have breach, injury, and proximate causation.
the management use proper care, it affords
reasonable evidence, in the absence of an
explanation by the defendant, that the accident In Lucas v. Tuaño, this Court explains:
arose from want of care." It is simply "a When a patient engages the services of a
recognition of the postulate that, as a matter physician, a physician¬-patient relationship is
of common knowledge and experience, the generated. And in accepting a case, the
very nature of certain types of occurrences
may justify an inference of negligence on the physician, for all intents and purposes,
part of the person who controls the represents that he has the needed training
instrumentality causing the injury in the and skill possessed by physicians and
absence of some explanation by the surgeons practicing in the same field; and that
defendant who is charged with negligence. It he will employ such training, care, and skill in
is grounded in the superior logic of ordinary the treatment of the patient. Thus, in treating
human experience and on the basis of such his patient, a physician is under a duty [to the
experience or common knowledge, negligence former] to exercise that degree of care, skill
may be deduced from the mere occurrence of and diligence which physicians in the same
the accident itself. general neighborhood and in the same general
• Thus, courts of other jurisdictions have line of practice ordinarily possess and exercise
applied the in like cases. Stated otherwise, the physician
doctrine in the following situations: leaving of a has the duty to use at least the same level of
foreign object in the body of the patient after care that any other reasonably competent
Xv. TORTZ AND DAMAGEZ

an operation, injuries sustained on a healthy physician would use to treat the condition
part of the body which was not under, or in the under similar circumstances.
area, of treatment, removal of the wrong part
of the body when another part was intended,
knocking out a tooth while a patient’s jaw was Thus, where the complaint contains averments
under anesthetic for the removal of his tonsils, of the foregoing elements and the defendant
and loss of an eye while the patient plaintiff doctor failed to observe such degree of care
was under the influence of anesthetic, during which caused damage or harm to the plaintiff
or following an operation for appendicitis, patient, the cause of action is one for medical
among others. negligence under the law on torts rather than
contract.

200
The above complaint indeed states a categorical
declaration of the case being brought on the basis
of a "medical contract between the Plaintiffs and J. DAMAGES; KINDS OF DAMAGES; WHEN MAY
Defendants Uyloan and Ojeda" under the statement
of cause of action against said doctors. However, BE RECOVERED
the rest of the allegations and arguments
unmistakably show that the cause of action is (CIVIL CODE, ARTS. 21G7 AND 2216)
premised upon the law and jurisprudence on Damages Defined
damages in general and medical negligence under • Damages are the recompense or
the Civil Code provisions on quasi-delict. There is no compensation awarded for the injury
mention at all of any express promise on the part suffered.
of the defendant • Indemnification is meant to compensate for
doctors to provide medical treatment or achieve a the injury inflicted and not to impose a
specific result. The absence of an express agreement penalty. A party is entitled to adequate
compensation only for such pecuniary loss
as basis for contractual liability is evident from a plain actually suffered and duly proved.
invocation of an implied contract between the parties.
‘DAMAGE’ AS OPPOSED TO ‘DAMAGES’
The fact that the physician-patient relationship is • Damage is the loss, injury, or deterioration
consensual does not necessarily mean it is a caused by negligence or accident of one
contractual relation, in the sense in which petitioner person to another with respect to another’s
employs this term by equating it with any other property. Damage is the occasion of
damages.
transaction involving exchange of money for services. • Damages is the compensation in money for
Indeed, the medical profession is affected with the loss or damage. It is an adequate
public interest. Once a physician-patient compensation for the value of loss suffered
relationship is established, the legal duty of care
follows. The doctor accordingly becomes duty- or profits which the obligee failed to obtain.
bound to use at least the same standard of care • Indemnification is meant to compensate for
that a reasonably competent doctor would use to the injury inflicted and not to impose a
treat a medical condition under similar penalty. A party is entitled to adequate
circumstances. Breach of duty occurs when the compensation only for such pecuniary loss
doctor fails to comply with, or improperly actually suffered and duly proved.
performs his duties under professional standards.
This determination is both factual and legal, and is
specific to each individual case. If the patient, as a KINDS OF DAMAGES
result of the breach of duty, is injured in body or Damages may be:
in health, actionable malpractice is committed, a. Actual or compensatory;
entitling the patient to damages.
b. Moral;
In the light of the foregoing, We hold that a mere c. Nominal;
reference to an implied contract between the physician d. Temperate or moderate;
and the patient in general is insufficient for pleading a e. Liquidated; or
cause of action under the contract theory of
f. Exemplary or corrective. [2197]
professional malpractice. An action for medical
malpractice based on contract must allege an express
promise to provide medical treatment or achieve a
1. ACTUAL AND COMPENSATORY DAMAGES –
specific result. The following discussion of CIVIL CODE, ARTS. 21GG-2215
established rules on medical malpractice culled
from fairly recent American jurisprudence highlights
this point, viz.: ‘Actual and Compensatory Damages’ defined
Absent an express contract, a physician does not • It is compensation for an injury that will put
impliedly warrant the success of his or her the injured party in the position where it was
treatment but only that he or she will adhere to the before the injury. They pertain to such
applicable standard of care. Thus, there is no cause injuries or losses that are actually sustained
of action for breach of implied contract or implied and susceptible of measurement."
warranty arising from an alleged failure to provide • Actual damages constitute compensation
adequate medical treatment. This allegation clearly for sustained pecuniary loss.
sounds in tort, not in contract; therefore, the • Nevertheless, a party may only be awarded
plaintiff's remedy is an action for malpractice, not actual damages when the pecuniary loss he
breach of contract. A breach of contract complaint or she had suffered was duly proven.
fails to state a cause of action if there is no
allegation of any express promise to cure or to
achieve a specific result. A physician's statements Kinds of Actual/Compensatory Damages (Art 2200)
of opinion regarding the likely result of a medical 1. The loss of what a person already
procedure are insufficient to impose contractual possesses or the loss suffered or actual
liability, even if they ultimately prove incorrect.
loss. (daño emergente/damnum emergens)
2. The unrealized profits or the profits which
Xv. TORTZ AND DAMAGEZ

Clearly, the cause of action in this case is one for the complainant failed to obtain by reason
medical malpractice or medical negligence
premised on the "breach of [the defendant doctors'] of the breach of contract or as a result of
professional duties of skill and care, or their the commission of a quasi-delict (lucro
improper performance by a physician surgeon," cesante)
whereby the plaintiff suffered injury and damages.
Petitioner's attempt to present a hybrid tort and Requisites
contract claim arising from the negligent acts of his
physicians thus fails. Apparently, inclusion of the a. Must be pleaded and proved with certainty
contract approach to seek damages from the b. Must pray for the relief that claim for
defendant physicians was an afterthought intended loss be granted
to revive a stale claim.
c. Plaintiff must prove the loss

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 XPN: It may be recovered in the following cases:
d. Interest 1. When exemplary damages are awarded;
e. Injury to business standing or commercial credit 2. When the defendant’s act or omission has
f. Attorney’s fees compelled the plaintiff to litigate with third
persons or to incur expenses to protect his
g. Indemnity for death interest;
3. In criminal cases of malicious prosecution
Extent and Measure of Damages against the plaintiff;
In Contracts and Ǫuasi Contracts (Art 2201) 4. In case of a clearly unfounded civil action or
i. Obligor in good faith – Liable for damages that proceeding against the plaintiff;
are natural and probable consequences of the 5. Where the defendant acted in gross and
breach, and which 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 demandable
damages which may be reasonably attributed claim;
to the non- performance of the obligation. 6. In actions for legal support;
In Crimes and Ǫuasi Delicts (Art 2202) 7. In actions for the recovery of wages of
household helpers, laborers and skilled
i. Limited to a fair compensation for the harm workers;
done in case of tortious injury
ii. Same as the rule in measuring damages in 8. In actions for indemnity under 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 such liability arising from a crime;
damages whether he has foreseen them or
not. 10. When at least double judicial costs are awarded;
iii. Accused/defendant is responsible not only for 11. In any other case where the court deems it
the natural and probable consequences of his just and equitable that attorney’s fees and
act or omission but for all damages which may expenses of litigation should be recovered.
be reasonably attributed thereto. [Article 2208]
Note: The attorney’s fees and expenses of litigation
must be reasonable.

BAR QUESTION (2013) S.C. MEGAWORLD CONSTRUCTION AND

A collision occurred at an intersection involving a
bicycle and a taxicab. Both the bicycle rider (a DEVELOPMENT V. PARADA
businessman then doing his morning exercise) and the G.R. NO. 183804, SEPTEMBER 11, 2013
taxi driver claimed that the other was at fault. Based
on the police report, the bicycle crossed the J. Reyes
intersection first but the taxicab, crossing at a fast clip Attorney’s fees as part of damages are not
from the bicycle's left, could not brake in time and hit meant to enrich the winning party at the
the bicycle's rear wheel, toppling it and throwing the expense of the losing litigant. They are not
bicycle rider into the sidewalk 5 meters away. The awarded every time a party prevails in a suit
bicycle rider suffered a fractured right knee, sustained
when he fell on his right side on the concrete side because of the policy that no premium should be
walk. He was hospitalized and was subsequently placed on the right to litigate. The award of
operated on, rendering him immobile for 3 weeks and attorney’s fees is the exception rather than the
requiring physical rehabilitation for another 3 months. general rule. As such, it is necessary for the trial
In his complaint for damages, the rider prayed for the court to make findings of facts and law that
award ofP1,000,000 actual damages, P200,000 moral would bring the case within the exception and
damages, P200,000 exemplary damages, P100,000 justify the grant of such award. The matter of
nominal damages and P50,000 attorney's fees.
Assuming the police report to be correct and as the attorney’s fees cannot be mentioned only in the
lawyer for the bicycle rider, what evidence dispositive portion of the decision. They must be
(documentary and testimonial) and legal arguments clearly explained and justified by the trial court
will you present in court to in the body of its decision.
justify the damages that your client claims? (8%)
Interest
SUGGESTED ANSWER • Award of interest in the concept of actual and
I will base the claim of my client on quasi- delict under
Article 2176 of the Civil Code of the Philippines. The compensatory damages.
requisites for a claim under quasi-delict to prosper are • The rate of interest, as well as the accrual
as follows: thereof is imposed as follows, following Nacar
1. Act or omission, there being fault and negligence; v Gallery Frames based on BSP MB Resolution
2. Damage or injury; and No. 796 dated June 21, 2013.
3. Causal connection between the damage and the • Bangko Sentral ng Pilipinas Monetary Board
act or omission. Resolution No. 796 lowered the legal rate of
Xv. TORTZ AND DAMAGEZ

The case clearly involves a quasi-delict where my interest from 12% to 6%. Specifically, the
client, the bicycle rider, suffered injury as a result of rules on interest are now as follows:
the negligence of the over- speeding taxi driver,
without fault on my client’s part. To prove actual
damages, aside from the testimony of my client, I will 1. Monetary Obligations
present his hospital and medical bills. Receipts of the
fees paid on the rehabilitation will also be presented. ex. Loans:
Furthermore, I will present income tax returns, a. If interest stipulated in writing:
contracts and other documents to prove unrealized
profits as a result of his temporary injury. I will also call i. rate of interest shall be that amount
the attending physician to testify as to the extent of the stipulated
injuries suffered by my client, and to corroborate the ii. interest due shall earn legal interest of
contents of the medical documents. Based on Article 6% from date of judicial demand (filing
2202, in quasi-delicts, the defendant shall be liable for of the case)
all damages which are the natural and probable
consequences of the act or omission complained of. It
is not necessary that such damages have been
foreseen or could have been foreseen by the 202
defendant.
b. if not stipulated in writing Rationale: This is so because moral damages are in
i. shall run from date of default (either the category of an award designed to compensate
failure to pay upon extra-judicial the claimant for actual injury suffered, not to
demand or upon judicial demand impose a penalty on the wrongdoer.
whichever is appropriate and subject to
the provisions of Article 1169 of the Civil Art. 2218. In the adjudication of moral damages, the
Code) sentimental value of property, real or personal, may
ii. rate of interest shall be 6% per annum be considered.

2. Non-Monetary Obligations Cases Wherein Moral Damages May be Recovered

a. If already liquidated, rate of interest shall be 1. A criminal offense resulting in physical injuries;
6% per annum, demandable from date of 2. Quasi-delicts causing physical injuries;
judicial or extra- judicial demand (Art. 1169, 3. Seduction, abduction, rape, or other lascivious acts;
Civil Code)
b. If unliquidated, no interest 4. Adultery or concubinage;
XPN: When later on established with certainty, 5. Illegal or arbitrary detention or arrest;
interest shall still be 6% per annum demandable 6. Illegal search;
from the date of judgment because on such date, 7. Libel, slander or any other form of defamation;
the amount of damages is already deemed
ascertained. 8. Malicious prosecution;
9. Acts mentioned in article 309;
3. Compounded Interest 10. Acts and actions referred to in articles 21, 26, 27, 28,
• This is applicable to both monetary and non- 29, 30, 32, 34, and 35.
monetary obligations;
• 6% per annum computed against award of Instances when moral damages may be awarded without
damages (interest) granted by the court. To evidence of Injury:
be computed from the date when the court’s
decision becomes final and executory until the i. Rape Cases
award is fully satisfied by the losing party. ii. Murder Cases
iii. Broadcast is libelous per se
4. The 6% per annum rate of legal interest shall be
applied prospectively: Rights of a Juridical Person to recover moral damages
• Final and executory judgments awarding Generally, a juridical person is not entitled to moral
damages prior to July 1, 2013 shall apply the damages.
12% rate;
• Final and executory judgments awarding Rationale: A corporation, being an artificial person
damages on or after July 1, 2013 shall apply and having existence only in legal contemplation,
the 12% rate for unpaid obligations until June cannot experience physical sufferings, mental
30, 2013; unpaid obligations with respect to anguish, fright, serious anxiety, wounded feelings,
said judgments on or after July 1, 2013 shall moral shock, or social humiliation which are basis of
still incur the 6% rate. moral damages. They can be experienced only by
one having a nervous system; a corporation has “no
feelings, no emotions, no senses.
2. MORAL DAMAGES – CIVIL CODE, ARTS.
2217- XPN: where the corporation has a good reputation that is
2220 debased, resulting in its social humiliation.

Moral damages in a:
‘Moral damages’ defined
a. Quasi-Delict
• These are compensatory damages awarded for
mental pain and suffering or mental anguish • when an act or omission causes physical injuries, or;
resulting from a wrong. • where the defendant is guilty of intentional tort.
• Not punitive in nature. b. Culpa Contractual
• Designed to compensate and alleviate in • When the defendant acted in bad faith or
some way the physical suffering, mental was guilty of gross negligence (amounting to
anguish, fright, serious anxiety, besmirched bad faith) or in wanton disregard of his
reputation, wounded feelings, moral shock, contractual obligation and, exceptionally,
social humiliation, and similar injury unjustly when the act of breach of contract itself is
caused a person. constitutive of tort resulting in physical
• May be recovered if they are the proximate injuries.
result of the c. Culpa Criminal
• Moral damages could be lawfully due when
defendant’s wrongful act or omission. the accused is found guilty of physical
injuries, lascivious acts, adultery or
Moral Damages include: concubinage, illegal or arbitrary detention,
1. Physical suffering illegal arrest, illegal search, or defamation.
Malicious prosecution can also give rise to a
2. Mental anguish
Xv. TORTZ AND DAMAGEZ

claim for moral damages.

3. Fright
4. Serious anxiety Conditions for the Award of Moral Damages
5. Besmirched reputation 1. There must be an injury, whether physical,
6. Wounded feelings mental or psychological, clearly sustained by
the claimant
7. Moral shock 2. There must be a culpable act or omission
8. Social humiliation factually established
3. The wrongful act or omission of the defendant
9. Similar injury. [Article 2217] is the proximate cause of the injury sustained by
the claimant;
Computation for the Award of Moral Damages 4. The award of damages is predicated on any of the cases
• Moral damages is incapable of stated in Article 2219.
pecuniary computation;
• Nevertheless, it must somehow be proportional
to and
in approximation of the suffering inflicted.

203
3. NOMINAL DAMAGES – CIVIL CODE, ARTS. 2221- • In Canada v. All Commodities Marketing
2223 Corporation, temperate damages were also
awarded wherein respondent’s goods did not
reach the Pepsi Cola Plant at Muntinlupa City as
Recoverable where a legal right is technically a result of the negligence of petitioner in
violated and must be vindicated against an conducting its trucking and hauling services,
invasion that has produced no actual present even if the amount of the pecuniary loss had
loss of any kind, or where, from the nature of not been proven.
the case, there has been some injury arising • In Philtranco Services Enterprises, Inc. v.
from a breach of contract or legal duty but the Paras, the respondent was likewise awarded
amount thereof has not been or cannot be temperate damages in an action for breach of
shown. contract of carriage, even if his medical
expenses had not been established with
Elements certainty.
• In People v. Briones, in which the accused was
i. Plaintiff has a right found guilty of murder, temperate damages
ii. Rights of plaintiff is violated were given even if the funeral expenses for the
victim had not been sufficiently proven.
iii. Purpose is to recognize the right violated. • Given these findings, we are of the belief that
temperate and not nominal damages should
4. TEMPERATE OR MODERATE DAMAGES – CIVIL have been awarded, considering that it has
been established that respondent herein
CODE, ARTS. 2224-2225 suffered a loss, even if the amount thereof
cannot be proven with certainty.
Those that are more than nominal but less
than compensatory damages [Article 2224] 5. LIQUIDATED DAMAGES – CIVIL CODE, ARTS.
2226-2228
When May Temperate Damages be Recovered
When some pecuniary loss has been suffered Liquidated damages are those agreed upon by the
but its amount can not be proved with parties to a contract, to be paid in case of breach
certainty. thereof.
Awarding of Temperate Damages When liquidated damages may be equitably reduced:
Must be reasonable under the circumstances i. In case of partial and irregular performance
[Article 2225]
ii. In case it is iniquitous or unconscionable
PHILTRANCO SERVICE ENTERPRISES, INC. V. PARAS
TAN V. FIRST MALAYAN LEASING AND FINANCE CORP.
G.R. NO. 161G0G, APRIL 25, 2012
G.R. NO. 254510, JUNE 16, 2021
J. Bersamin J. Caguioa
In awarding temperate damages in lieu of
actual damages, the CA did not err, because Computation for the Award of Liquidated Damages
Paras and Inland were definitely shown to have The amount of the liquidated damages is purely
sustained substantial pecuniary losses. Clearly, contractual between the parties. The courts will
the costs of Paras’ surgeries and consequential intervene only to equitably reduce the liquidated
rehabilitation, as well as the fact that repairing damages, whether intended as an indemnity or a
Inland’s vehicle would no longer be penalty, if they are iniquitous or unconscionable.
economical justly warranted the CA to
calculate temperate damages of ₱50,000.00 6. EXEMPLARY OR CORRECTIVE DAMAGES – CIVIL
and ₱250,000.00 respectively for Paras and CODE, ARTS. 222G-2235
Inland.
SEVEN BROTHERS SHIPPING CORP. V. DMC- • They are also known as “punitive” or “vindictive”
CONSTRUCTION damages.
G.R. NO. 1G3G14, NOVEMBER 26, 2014 • Exemplary damages are mere additions which
C.J. Sereno may or may not be granted at all depending
upon the necessity of setting an example for
• Temperate or moderate damages may be public good as a form of deterrent to the
recovered when the court finds that some repetition of the same act by anyone.
pecuniary loss has been suffered but its
amount cannot, from the nature of the case,
be provided with certainty. Art. 222G. Exemplary or corrective damages are
imposed, by way of example or correction for the
• Nominal damages are ‘recoverable where a public good, in addition to the moral, temperate,
legal right is technically violated and must
Xv. TORTZ AND DAMAGEZ

liquidated or compensatory damages.

be vindicated against an invasion that has
produced no actual present loss of any kind
or where there has been a breach of Awarding of Exemplary or Corrective Damages
contract and no substantial injury or actual a. Criminal Offenses - crime was committed with
damages whatsoever have been or can be one or more aggravating circumstances
shown. [Article 2230].
• Thus, in Tan v. OMC Carriers, Inc., b. Quasi-delicts - if the defendant acted with
temperate damages were rightly awarded gross negligence [Article 2231].
because plaintiff suffered a loss, although c. Contract and Quasi-Contracts - if the
definitive proof of its amount cannot be defendant acted in a wanton, fraudulent,
presented as the photographs produced as reckless, oppressive, or malevolent manner
evidence were deemed insufficient. [Article 2232].
Established in that case, however, was the
fact that respondent’s truck was responsible
for the damage to petitioner’s property and
that petitioner suffered some form of
pecuniary loss.

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Recovery of Exemplary Damages ALETA V. SOFITEL
This cannot be recovered as a matter of right;
the court will decide whether or not they should G.R. NO. 228150. JANUARY 11, 2023
be adjudicated [Article 2233]. SAJ Leonen
In the absence of competent proof, this Court
Burden of Proof: The burden of proof is on the denies petitioner's claim of actual damages.
plaintiff to show that he is entitled to moral, However, temperate damages may be awarded
temperate or compensatory damages before the even in the absence of proof of actual damages,
court may consider the question of whether or provided that it has been proven that the injured
not exemplary damages should be awarded. party suffered some pecuniary loss. xxx
[Article 2234]
Here, a perusal of the records reveals that
Is a person allowed to renounce exemplary petitioner and his children suffered some
damages? No. A stipulation whereby pecuniary loss by reason of the incident. As
exemplary damages are renounced in advance alleged in the pleadings, the injuries that
shall be null and void [Article 2235 petitioner's children sustained took two weeks to
physically heal. As compensation for the
of the Civil Code]. pecuniary loss which petitioner and his children
suffered, this Court awards temperate damages
RANA V. WONG in the amount of ₱50,000.00.
G.R. NO. 1G2861, JUNE 30, 2014
J. Perlas-Bernabe Petitioner's prayer for moral damages is granted.
Rationale Behind Exemplary Damages Moral damages refer to the compensation awarded
The Court deems that an award of exemplary to an injured party, not for the purpose of penalizing
damages would be inappropriate since these the wrong doer, but as a means to "alleviate in
damages are imposed only "by way of example or some way the physical suffering, mental anguish,
correction for the public good, in addition to the fright, serious anxiety, besmirched reputation,
moral, temperate, liquidated or compensatory wounded feelings, moral shock, social humiliation,
damages.“ and similar injury unjustly caused a person."

BAR QUESTION (1GG4) Article 2219 of the Civil Code categorically states
On January 5, 1992, Nonoy obtained a loan of that moral damages may be awarded in cases
Pl,000,000.00 from his friend Raffy. The promissory involving "[q]uasi-delicts causing physical
note did not stipulate any payment for Interest. The injuries[.]" In awarding moral damages, courts are
note was due on January 5, 1993 but before this given the discretion to determine the amount to be
date the two became political enemies. Nonoy, out of granted, taking into consideration the
spite, deliberately defaulted in paying the note, thus circumstances of a particular case. While there is no
forcing Raffy to sue him. fixed standard, "the amount should not be palpably
1) What actual damages can Raffy recover? and scandalously excessive." Further, in fixing the
2) Can Raffy ask for moral damages from Nonoy? amount, regard must be made to the injury suffered
3) Can Raffy ask for nominal damages? and the wrong committed.
4) Can Raffy ask for temperate damages? Taking into account the injuries sustained by
5) Can Raffy ask for attorney’s fees? petitioner's
children and respondent's concomitant failure to
SUGGESTED ANSWER place sufficient safeguards to ensure the
1)Raffy may recover the amount of the promissory children's safety, this Court finds the award of
note of P1 million, together with interest at the legal moral damages in the amount
rate from the date of judicial or extrajudicial of ₱100,000.00 adequate to recompense for the
demand. In addition, however, inasmuch as the
debtor is in bad faith, he is liable for all damages physical suffering and similar injuries sustained by
which may be reasonably attributed to the non- petitioner and his children.
performance of the obligation. (Art. 2201(2), NCC).
2) Yes, under Article 2220, NCC moral damages are In cases involving quasi-delicts, "exemplary
recoverable in case of breach of contract where the damages may be granted if the defendant acted
defendant acted fraudulently or in bad faith. with gross negligence." Recovery of exemplary
3) Nominal damages may not be recoverable in damages is not a matter of right and is subject to
this case because Raffy may already be indemnified the court's discretion.
of his losses with the award of actual and
compensatory damages. NOMINAL DAMAGES are The prerequisites for the award of exemplary
adjudicated only in order that a right of the plaintiff, damages was discussed in Kierulf v. Court of
which has been violated or invaded by the defendant Appeals:
may be vindicated or recognized, and not for the
purpose of indemnifying the plaintiff for any loss
suffered by him. (Article 2231, Civil Code) Exemplary damages are designed to permit the
courts to mould behavior that has socially
4) Raffy may ask for, but would most likely not be deleterious consequences, and its imposition is
awarded temperate damages, for the reason that
his actual damages may already be compensated required by public policy to suppress the wanton
upon proof thereof with the promissory note. acts of an offender. However, it cannot be
Xv. TORTZ AND DAMAGEZ

TEMPERATE DAMAGES may be awarded only when recovered as a matter of right. It is based entirely
the court finds that some pecuniary loss has been on the discretion of the court. Jurisprudence sets
suffered but its amount cannot, from the nature of certain requirements before exemplary damages
the case, be proved with certainty. (Article 2224, may be awarded, to wit:
Civil Code) "(1) They may be imposed by way of example or
correction only in addition, among others, to
5) Yes, under paragraph 2, Article 2208 of the Civil compensatory damages, and cannot be
Code, considering that Nonoy’s act or omission has
compelled Raffy to litigate to protect his interests. recovered as a matter of right, their
Furthermore. attorneys’ fees may be awarded by the determination depending upon the amount of
court when it is just compensatory damages that may be awarded to
and equitable. (Article 2208(11) Civil Code). the claimant;

205
(2) the claimant must first establish his right to
moral, temperate, liquidated or compensatory The rationale for this rule is that it would be
damages; and anomalous and unfair for the victim's heirs, who
(3)the wrongful act must be accompanied by bad tried and succeeded in presenting receipts and
faith, and the award would be allowed only if the other evidence to prove actual damages, to
guilty party acted in a wanton, fraudulent, receive an amount which is less than that given
reckless, oppressive or malevolent manner“ as temperate damages to those who are not able
Here, the circumstances surrounding the case to present any evidence at all. In the present
warrant the imposition of exemplary damages. case, Francisco's heirs were able to prove, and
were awarded, actual damages in the amount of
₱30,000.00. Since, prevailing jurisprudence
As a luxury hotel which caters to an extensive now fixes the amount of
range of clientele, respondent ought to ensure ₱50,000.00 as temperate damages in murder
that adequate measures are in place to cases, the Court finds it proper to award
guarantee the safety of its guests. By reason of temperate damages to Francisco's heirs, in lieu
the insufficiency of the safety rules posted and of actual damages.
the lifeguards' failure to avert the injuries
sustained by petitioner's children, this Court
awards petitioner ₱50,000.00 as exemplary L. DUTY OF INJURED PARTY
damages.
Doctrine of avoidable consequences
Finally, on account of this dispute's protracted Art. 2203. The party suffering loss or injury must
litigation, P50,000.00 as attorney's fees is exercise the diligence of a good father of a family
awarded. to minimize the damages resulting from the act
or omission in question.
K. DAMAGES IN CASE OF DEATH • 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
Art. 2206. The amount of damages for death caused breach of contract should make reasonable
by a crime or quasi-delict shall be at least three efforts to mitigate the effects of the injury or
thousand pesos, even though there may have been breach.
mitigating circumstances. In addition: • Damages resulting from avoidable
(1) The defendant shall be liable for the loss of the consequences of the breach of a contract or
earning capacity of the deceased, and the other legal duty are not recoverable.
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 VELASCO V. MANILA ELECTRIC CO.
deceased on account of permanent physical G.R. NO. L-183G0, AUGUST 6, 1G71
disability not caused by the defendant, had no En Banc
earning capacity at the time of his death;
(2) If the deceased was obliged to give support Explanation of Art. 2203:
according to the provisions of Article 291, the This codal rule clearly obligates the injured party
recipient who is not an heir called to the to undertake measures that will alleviate and not
decedent's inheritance by the law of testate or aggravate his condition after the infliction of the
intestate succession, may demand support from injury, and places upon him the burden of
the person causing the death, for a period not explaining why he could not do so.
exceeding five years, the exact duration to be
fixed by the court;
(3) The spouse, legitimate and illegitimate Duty-Bound to Carry the Burden of Proof
descendants and ascendants of the deceased • The claimant is duty-bound to point out the
may demand moral damages for mental specific facts that afford a basis for measuring
anguish by reason of the death of the deceased. whatever compensatory damages are borne.
• The burden of proof is on the party who would
PEOPLE V. TOLENTINO be defeated if no evidence would be
G.R. NO. 176385, FEBRUARY 26, 2008 presented on either side.
• The Injured Party must establish his case by a
J. Chico-Nazario preponderance of evidence which means that
a. When death occurs due to a negligent act or evidence, as a whole, adduced by one side is
crime, the following damages may be superior to that of the other.
recovered: • The claimant must prove the actual amount of
b. Civil indemnity for death loss with reasonable certainty premised upon
c. Actual or compensatory damages competent proof and on the best evidence
obtainable.
d. Moral damages
e. Exemplary damages
SPS. RAMOS VS. OBISPO
f. Attorney’s fees and expenses of litigation
G.R. NO. 1G3804, FEBRUARY 27, 2013
g. Interest
J. Villarama
h. Temperate damage in lieu of actual damages. In civil cases, basic is the rule that the party
making allegations has the burden of proving
Xv. TORTZ AND DAMAGEZ

PEOPLE V. RACAL them by a preponderance of evidence. Moreover,

G.R. NO. 224886, SEPTEMBER 4, 2017 parties must rely on the strength of their own
J. Peralta evidence, not upon the weakness of the defense
The trial court's award of actual damages in the offered by their opponent. This principle equally
amount of P30,000.00 must be modified. The holds true, even if the defendant had not been
settled rule is that when actual damages proven by given the opportunity to present evidence
receipts during the trial amount to less than the because of a default order.
sum allowed by the Court as temperate damages,
the award of temperate damages is justified in lieu
of actual damages which is of a lesser amount.
Conversely, if the amount of actual damages
proven exceeds, then temperate damages may no
longer be awarded; actual damages based on the
receipts presented during trial should instead be
granted.
206